Document:

EXHIBIT 10.71

 

Exhibit 10.71

AMENDMENT AGREEMENT

     THIS AMENDMENT AGREEMENT (this “Amendment”) is made and entered into as of the
5th day of December, 2006, by and between MEDCATH CORPORATION, a Delaware corporation
(the “Company”), and PHILLIP J. MAZZUCA (the “Executive”).

STATEMENT OF PURPOSE

     The Company and the Executive are parties to equity award agreements (collectively, the
“Grant Agreements”) which granted the Executive stock options and restricted stock awards
under the Company’s equity incentive plans. The Grant Agreements provide that the stock options
and awards will become fully vested, exercisable and free of any resale restrictions upon a “Change
in Control” of the Company. The Grant Agreements currently include in the definition of “Change in
Control” a sale of voting control in the Company by Kohlberg Kravis Roberts & Co., LLC
(“KKR”) or Welsh, Carson, Anderson & Stowe VII, L.P. (“WCAS”) or any their
affiliates.

     On November 3, 2006, KKR, WCAS and their affiliates completed a secondary offering of a
portion of the shares of common stock held by them, and as a result, they ceased to own voting
control of the Company. The Company and the Executive desire to amend the definition of “Change in
Control” in the Grant Agreements to make it clear that a “Change in Control” will occur if any
person (other than KKR, WCAS and their affiliates) acquires voting control of the Company, whether
or not the acquisition of such voting control results from a sale of Company stock by KKR, WCAS or
their affiliates.

     NOW, THEREFORE, the Company and the Executive hereby agree that the definition of “Change in
Control” in the Grant Agreements is amended effective as of the date hereof to read as follows:

“For purposes of this Agreement, “Change in Control” means:

     (i) Sales of all or substantially all of the assets of the Company,
MedCath Holdings Corp. or MedCath Incorporated to an individual,
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity (a “Person”) who is not an affiliate of Kohlberg Kravis
Roberts & Co., LLC (“KKR”) or Welsh, Carson, Anderson & Stowe, VII,
L.P. (“WCAS” and together with KKR, the “Partnerships”);

     (ii) Any “person” or “group” (as such terms are used in Section 13(d)
or 14(d) of the Securities Exchange Act of 1934 and the rules thereunder)
other than either of the Partnerships acquires and becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934), directly or indirectly, of 50% or more of the voting stock of
the Company, MedCath Holdings Corp. or MedCath Incorporated; or

 

 

     (iii) A merger or consolidation of the Company, MedCath Holdings Corp.
or MedCath Incorporated into another Person which is not an affiliate of
either of the Partnerships;

provided, however, that in the event that the Company, MedCath
Holdings Corp. or MedCath Incorporated is merged with another company controlled by
either of the Partnerships or their affiliates and, if the chief executive officer
of the surviving entity (or the ultimate parent) is not a person who has held the
position of chief executive officer of the Company for at least six months, such an
event shall be deemed a Change in Control.”

     Except as expressly or by necessary implication amended hereby, the Grant Agreements shall
continue in full force and effect.

     IN WITNESS WHEREOF, the Company and the Executive have caused this Amendment to be executed as
of the day and year first above written.

	 	 	 	 	 
	 	MEDCATH CORPORATION

 	 
	 	By:  	/s/
O. EDWIN FRENCH 	 
	 	 	O. Edwin French, President 	 
	 	 	 	 
	 	EXECUTIVE 
	 
	 	/s/
PHILLIP J. MAZZUCA 	 
	 	 	Phillip J. Mazzuca 	 
	 

2EXHIBIT 10.72

 

Exhibit 10.72

AMENDMENT NO. 1

MEDCATH CORPORATION

2006 STOCK OPTION AND AWARD PLAN

     THIS AMENDMENT NO. 1 (this “Amendment”) to the MedCath Corporation 2006 Stock Option
and Award Plan (the “Plan”) is made and adopted as of the 5th day of December,
2006, by MEDCATH CORPORATION, a Delaware corporation (the “Company”).

STATEMENT OF PURPOSE

     The Company adopted the Plan effective March 1, 2006 to provide equity-based incentive
compensation to key employees of the Company and its subsidiaries. The awards made under the Plan
provide that the awards will become fully vested, exercisable and free of any resale restrictions
upon a “Change in Control” of the Company. The Plan currently includes in the definition of
“Change in Control” a sale of voting control in the Company by Kohlberg Kravis Roberts & Co., LLC
(“KKR”) or Welsh, Carson, Anderson & Stowe VII, L.P. (“WCAS”) or any their
affiliates.

     On November 3, 2006, KKR, WCAS and their affiliates completed a secondary offering of a
portion of the shares of common stock held by them, and as a result, they ceased to own voting
control of the Company. The Company desires to amend the Plan’s definition of “Change in Control”
to make it clear that a “Change in Control” will occur if any person (other than KKR, WCAS and
their affiliates) acquires voting control of the Company, whether or not the acquisition of such
voting control results from a sale of Company stock by KKR, WCAS or their affiliates.

     NOW THEREFORE, the Company does hereby that the Plan be, and hereby is, amended as follows:

     1. Section (e) of Article II of the Plan is amended in its entirety to read as follows:

(e) “Change in Control” means:

     (i) Sales of all or substantially all of the assets of the Company,
MedCath Holdings Corp. or MedCath Incorporated to an individual,
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity (a “Person”) who is not an affiliate of Kohlberg Kravis
Roberts & Co., LLC (“KKR”) or Welsh, Carson, Anderson & Stowe, VII,
L.P. (“WCAS” and together with KKR, the “Partnerships”);

     (ii) Any “person” or “group” (as such terms are used in Section 13(d)
or 14(d) of the Securities Exchange Act of 1934 and the rules thereunder)
other than either of the Partnerships acquires and becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934), directly or indirectly, of 50% or more

 

 

of the voting stock of the Company, MedCath Holdings Corp. or MedCath
Incorporated; or

     (iii) A merger or consolidation of the Company, MedCath Holdings Corp.
or MedCath Incorporated into another Person which is not an affiliate of
either of the Partnerships;

provided, however, that in the event that the Company, MedCath
Holdings Corp. or MedCath Incorporated is merged with another company controlled by
either of the Partnerships or their affiliates and, if the chief executive officer
of the surviving entity (or the ultimate parent) is not a person who has held the
position of chief executive officer of the Company for at least six months, such an
event shall be deemed a Change in Control.

     2. Except as expressly or by necessary implication amended hereby, the Plan shall continue in
full force and effect.

     IN WITNESS WHEREOF, the Company has caused this Amendment to be executed as of the day and
year first above written.

	 	 	 	 	 
	 	MEDCATH CORPORATION

 	 
	 	By:  	/s/
O. EDWIN FRENCH 	 
	 	 	O. Edwin French, President 	 
	 	 	 	 
	 

2EX-10A

 

Exhibit 10(A)

THE PROGRESSIVE CORPORATION

2007 EXECUTIVE BONUS PLAN

	1.	 	The Plan. The Progressive Corporation and its subsidiaries (“Progressive”) have designed an
executive compensation program consisting of three components: salary, annual bonus and
equity-based incentives. These components have been structured to reflect the market for
executive compensation and to promote both the achievement of corporate goals and performance
that is in the long-term interest of shareholders. The annual bonus component of this program
is performance-based and focuses on current results.
	 
	 	 	This 2007 Executive Bonus Plan (the “Plan”) provides, in whole or in part, the annual bonus
component of Progressive’s executive compensation program for Plan participants.
	 
	2.	 	Administration. The Plan shall be administered by or under the direction of the Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of The Progressive
Corporation. The Committee will have the authority to adopt, amend, revise and repeal such
rules, guidelines, procedures and practices governing the Plan as it, from time to time, in
its sole discretion deems advisable. The Committee will have full authority to determine the
manner in which the Plan will operate, to interpret the provisions of the Plan and to make all
determinations hereunder. All such interpretations and determinations will be final and
binding on Progressive, all Plan participants and all other parties. No such interpretation
or determination may be relied on as a precedent for any similar action or decision. The Plan
will be administered by the Committee in accordance with the requirements of Section 162(m) of
the Internal Revenue Code, as amended, and the rules and regulations promulgated thereunder
(the “Code”).
	 
	3.	 	Participants; Plan Years. Executive officers of Progressive may be selected by the Committee
to participate in the Plan for one or more Plan years. Plan participants may also be eligible
to participate in other Progressive bonus or Gainsharing plans, as determined by the
Committee. Plan years shall coincide with Progressive’s fiscal years.
	 
	4.	 	Formula; Maximum Bonus. Subject to the following sentence, the amount of the annual bonus
earned by any participant under the Plan for any Plan year (“Annual Bonus”) will be determined
by application of the following formula:

Annual Bonus = Paid Salary x Target Percentage x Performance Factor

	 	 	The Annual Bonus payable to any participant with respect to any Plan year shall not exceed
$5,000,000.
	 
	5.	 	Paid Salary. The salary rate of each Plan participant for any Plan year shall be established
by the Committee no later than ninety (90) days after commencement of such Plan year. For
purposes of the Plan, “Paid Salary” shall include regular, used Earned

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	 	 	Time Benefit, sick, holiday and funeral pay, and retroactive payments of any of the
foregoing items, received by the participant during the Plan year for work or services
performed by the participant as an officer or employee of Progressive, but shall exclude all
other types of compensation, including, without limitation: any short-term or long-term
disability payments, discretionary or other bonus or incentive payments, any dividend
payments, unused Earned Time Benefit, and the earnings replacement component of any workers’
compensation award.
	 
	6.	 	Target Percentages. The Target Percentages for the participants in the Plan shall be
determined by the Committee, but will not exceed 200% for any participant. Target Percentages
may vary among Plan participants and may be changed from year to year by the Committee.
	 
	7.	 	The Performance Factor

	 	A.	 	General
	 
	 	 	 	The Performance Factor shall consist of one or more of the following components: a
Core Business Component, one or more Business Unit Components, an Investment
Component or a Net Promoter Score Component (the “Bonus Components” or
“Components”). An appropriate combination of Bonus Components will be designated
for each participant, and the designated Bonus Components will be weighted, based on
such participant’s assigned responsibilities, as determined by the Committee.
	 
	 	 	 	The relative weighting of the Bonus Components may vary among Plan participants and
may be changed from year to year by the Committee.
	 
	 	 	 	For purposes of computing the Performance Factor for any Plan year, a performance
score will be calculated for each of the designated Bonus Components, based on the
performance of the business(es), product(s) or function(s) being measured by that
Component, as described below. The performance score will equal 1.0 if specified
performance objectives are achieved, and can vary from 0 to 2.0, based on actual
performance versus the pre-established objectives. The performance score achieved
for each of the designated Bonus Components will then be multiplied by the
applicable weighting factor to produce a weighted performance score for that
Component. The sum of the weighted performance scores for the applicable Bonus
Components will equal the Performance Factor, which can likewise vary from 0 to 2.0.
The Performance Factor cannot exceed 2.0, regardless of results.
	 
	 	 	 	Actual performance results achieved for any Plan year, which will be used to
calculate the performance score achieved for each of the applicable Bonus
Components, must be certified by the Committee prior to payment of the Annual Bonus.

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	 	B.	 	Core Business Component
	 
	 	 	 	The Core Business Component measures the overall operating performance of
Progressive’s Core Business for the Plan year for which an Annual Bonus payment is
to be made. The Core Business will consist of the Drive (Agency) business unit, the
Direct business unit, the Commercial Auto business unit, the Special Lines business
unit and/or such other business unit(s) (as described below), if any, as shall be
designated and defined by the Committee for the Plan year (the “Core Business
Units”). The performance score for this Component is based on the operating
performance results for the Core Business Units for the Plan year in question.
	 
	 	 	 	In the discretion of the Committee, the performance score for the Core Business may
be determined either by the performance of the Core Business considered as a whole
or by the weighted performance results of the individual Core Business Units.

	 	1.	 	Performance Score Determined by Weighted Operating Results
of Core Business Units 
	 
	 	 	 	Each Plan year, one or more separate performance matrices for each Core
Business Unit will be established by or under the direction of the
Committee. Each such performance matrix will assign a performance score to
various combinations of profitability and growth outcomes for the applicable
Core Business Unit (or an applicable portion of a Core Business Unit), based
on the following performance criteria, as determined by the Committee:

	 	•	 	profitability will be measured by one of the following, as
designated by the Committee:

	 	§	 	combined ratio
	 
	 	§	 	weighted combined ratio
	 
	 	§	 	variation in combined ratio from a targeted combined ratio
	 
	 	§	 	cohort combined ratio (the expected lifetime combined ratio for
a group of policies commencing during a specified time period)
	 
	 	§	 	return on equity, or
	 
	 	§	 	return on revenue, and

	 	•	 	growth will be measured by changes from year to year or
during a Plan year in one of the following, as designated by the
Committee:

	 	§	 	policies in force
	 
	 	§	 	vehicles insured
	 
	 	§	 	net earned premiums
	 
	 	§	 	earned premium per policy or per vehicle
	 
	 	§	 	earned car years, or
	 
	 	§	 	net written premiums.

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	 	 	 	The Committee may select different performance criteria for the various Core
Business Units in a single Plan year, and the performance criteria may be
changed from year to year by the Committee.
	 
	 	 	 	Profitability and growth will be separately determined for each of the Core
Business Units (or the applicable portion of a Core Business Unit), using
the performance criteria designated by the Committee for the Plan year, and
will then be matched using the applicable performance matrix, to determine a
performance score for each Core Business Unit (or the applicable portion of
a Core Business Unit). Where more than one performance matrix is used for a
particular business unit, the performance scores from each portion of such
business unit, as determined by the separate performance matrix, will then
be combined based on a weighting factor approved by the Committee to
determine the performance score for the entire business unit.
	 
	 	 	 	The resulting performance scores for each Core Business Unit will then be
multiplied by a weighting factor (based on the percentage of the total net
earned premiums of the Core Business generated by such Core Business Unit
during the Plan year or such other factor(s) as shall be approved by the
Committee), the weighted performance scores will be combined and the sum of
the weighted performance scores will be the performance score for the Core
Business Component.
	 
	 	2.	 	Performance Score Determined by Core Business as a Whole
(Single Matrix) 
	 
	 	 	 	In the discretion of the Committee, the performance score for the overall
Core Business for a Plan year may be measured using a single performance
matrix, established by or under the direction of the Committee. The
performance matrix will assign a performance score to various combinations
of profitability and growth outcomes for the Core Business as a whole, based
on the performance criteria described above, as selected by the Committee.
Profitability and growth for the Core Business Units will be calculated on
an aggregate basis for the applicable Plan year, and will then be matched
using the performance matrix to determine a performance score for the Core
Business for such Plan year.

	 	C.	 	Business Unit Component
	 
	 	 	 	The Business Unit Component measures the performance of one or more designated
business units (as described below) in terms of any one or more of the following
criteria selected by the Committee:

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	 	•	 	profitability will be measured by one of the following, as
designated by the Committee:

	 	§	 	combined ratio
	 
	 	§	 	weighted combined ratio
	 
	 	§	 	variation in combined ratio from a targeted combined ratio
	 
	 	§	 	cohort combined ratio ( the expected lifetime combined ratio for a group
of policies commencing during a specified time period)
	 
	 	§	 	return on equity, or
	 
	 	§	 	return on revenue; and

	 	•	 	growth will be measured by changes from year to year or during a
Plan year in one of the following, as designated by the Committee:

	 	§	 	policies in force
	 
	 	§	 	vehicles insured
	 
	 	§	 	net earned premiums
	 
	 	§	 	earned premium per policy or per vehicle
	 
	 	§	 	earned car years, or
	 
	 	§	 	net written premiums.

	 	 	 	A business unit may consist of a distribution channel, business group, product,
class or type of business (e.g., designated types of policies written in a
distribution channel or by a business group), function, process or other business
category, such as new or renewal business.
	 
	 	 	 	The Committee may designate one or more Business Unit Components for an individual
Plan participant for any Plan year and, for each such Component, will determine the
applicable criteria by which performance of the unit (or an applicable portion of
the business unit) will be measured, the goals to be achieved and the performance
scores that will result from various levels of performance, and the relative
weighting thereof. The applicable performance criteria, related goals and resulting
performance scores may be set forth in one or more performance matrices, or other
format approved by the Committee, for such business unit. Business Unit Components,
performance criteria, goals, resulting performance scores and relative weightings
may vary among participants and may be changed from year to year by the Committee.

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	 	D.	 	Investment Component
	 
	 	 	 	The Investment Component compares the investment performance of one or more segments
of Progressive’s investment portfolio (each, a “Portfolio”) against the performance
of selected groups of comparable investment funds, investment managers, indexes or
other benchmarks (“Investment Benchmarks”) over such period or periods as shall be
determined by the Committee. Such Investment Benchmarks may be risk-adjusted in
accordance with such formula or other method as may be approved by the Committee.
Investment results are marked to market and adjusted to include the benefit of any
state premium tax abatements attributable to the Portfolio, in order to calculate
total return, which is then compared against the designated Investment Benchmarks to
produce a performance score, pursuant to a formula or other criteria determined by
the Committee, for each Portfolio.
	 
	 	 	 	The applicable Portfolio or Portfolios will be identified, and the related
Investment Benchmarks will be determined, by the Committee and may be changed from
year to year by the Committee.
	 
	 	 	 	In the event that any participant’s Annual Bonus is to be determined by the
performance of two or more Portfolios, the performance scores for each of the
Portfolios will be weighted, based on the average amounts invested from time to time
in each of such Portfolios during the Plan year or other applicable period, and the
weighted performance scores for the applicable Portfolios will be then combined to
produce the performance score for the Investment Component. Investment expense is
not included in determining such performance score.
	 
	 	E.	 	Net Promoter Score Component
	 
	 	 	 	The Net Promoter Score (NPS) Component measures NPS (a survey-based measure of
customer satisfaction and loyalty) for the Core Business as a whole or for a
business unit (or portion thereof) against objectives, as determined by the
Committee. The Committee may determine the applicable criteria by which NPS
performance will be measured, the goals to be achieved, the methods to determine NPS
performance, the performance scores that will result from various levels of
performance and the relative weighting among the NPS results achieved by different
business units, if appropriate. NPS performance criteria and goals, and relative
weightings, may vary among participants and may be changed from year to year by the
Committee.

	8.	 	Timing of Payment; Deferral. The Annual Bonus for any Plan year will be paid to participants
as soon as practicable after the Committee has certified performance results for the Plan
year, but no later than March 15 of the immediately following year. The provisions of this
Paragraph shall be subject to Paragraph 9 hereof.

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	 	 	Any Plan participant who is eligible to participate in The Progressive Corporation Executive
Deferred Compensation Plan (“Deferral Plan”) may elect to defer all or a portion of his or
her Annual Bonus otherwise payable under this Plan, subject to and in accordance with the
terms of the Deferral Plan.
	 
	9.	 	Qualification Date; Leave of Absence; Tax Withholding. Unless otherwise determined by the
Committee, in order to be entitled to receive an Annual Bonus for any Plan year, the
participant must be employed by Progressive on November 30th of the Plan year
(“Qualification Date”).
	 
	 	 	Any participant who is on a leave of absence covered by the Family and Medical Leave Act of
1993, personal leave of absence with the approval of Progressive, military leave or short or
long-term disability on the Qualification Date with respect to any Plan year will be
entitled to receive an Annual Bonus payment for such Plan year, calculated as provided in
Paragraphs 4 through 7 above and based on the amount of Paid Earnings received by such
participant during the Plan year.
	 
	 	 	Annual Bonus payments made to participants will be net of any legally required deductions
for federal, state and local taxes and other items.
	 
	10.	 	Non-Assignability. The right to any of the Annual Bonuses hereunder may not be sold,
transferred, assigned or encumbered by any participant. Nothing herein shall prevent any
participant’s interest hereunder from being subject to involuntary attachment, levy or other
legal process.
	 
	11.	 	Termination and Amendment. The Plan may be terminated, amended or revised, in whole or in
part, at any time and from time to time by the Committee, in its sole discretion; provided
that the Committee may not increase the amount of compensation payable hereunder to any
participant above the amount that would otherwise be payable upon attainment of the applicable
performance goals, or accelerate the payment of any portion of the Annual Bonus due to any
participant under the Plan, without discounting the amount of such payment in accordance with
Section 162(m) of the Code, and further provided that any amendment or revision of the Plan
required to be approved by shareholders pursuant to Section 162(m) of the Code will not be
effective until approved by The Progressive Corporation’s shareholders in accordance with the
requirements of Section 162(m).
	 
	12.	 	Unfunded Obligations. The Plan will be unfunded and all payments due under the Plan will be
made from Progressive’s general assets.
	 
	13.	 	No Employment Rights. Nothing in the Plan shall be construed as conferring upon any person
the right to remain a participant in the Plan or to remain employed by Progressive, nor shall
the Plan limit Progressive’s right to discipline or discharge any of its officers or employees
or change any of their job titles, positions, duties or compensation.

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	14.	 	Recoupment.

	 	A.	 	Progressive shall have the right to recoup any Annual Bonus paid to a
participant hereunder (or an appropriate portion thereof, as hereinafter provided) with
respect to any Plan year, if: (i) the Annual Bonus payment was predicated upon the
achievement during such Plan year of certain financial or operating results (which
includes, for purposes hereof, all of the performance criteria that are available to
the Committee under Paragraph 7 above); (ii) such financial or operating results were
incorrect and were subsequently the subject of a restatement by Progressive within
three (3) years after the date on which such Annual Bonus was paid to the participant;
and (iii) a lower payment would have been made to the participant if the restated
financial or operating results had been known at the time the payment was made. Such
recoupment right shall be available to Progressive whether or not the participant in
question was at fault or responsible in any way in causing such restatement. In such
circumstances, Progressive will have the right to recover from each participant for
such Plan year, and each such participant will refund to Progressive, the amount by
which the Annual Bonus paid to such participant for the Plan year in question exceeded
the lower payment that would have been made based on the restated results, without
interest; provided, however, that Progressive will not seek to recover such amounts
unless the amount due would exceed the lesser of five percent (5%) of the Annual Bonus
previously paid or twenty-thousand dollars ($20,000). Such recovery, at the
Committee’s discretion, may be made by lump sum payment, installment payments, credits
against future bonus payments, or other appropriate mechanism.
	 
	 	B.	 	Notwithstanding the foregoing subsection A., if any participant engaged in
fraud or other misconduct (as determined by the Committee or the Board, in their
respective sole discretion) resulting, in whole or in part, in a restatement of the
financial or operating results used hereunder to determine the Annual Bonuses for a
specific Plan year, Progressive will further have the right to recover from such
participant, and the participant will refund to Progressive upon demand, an amount
equal to the entire Annual Bonus paid to such participant for such Plan year plus
interest at the rate of eight percent (8%) per annum or, if lower, the highest rate
permitted by law, calculated from the date that such bonus was paid to the participant.
Progressive shall further have the right to recover from such participant
Progressive’s costs and expenses incurred in connection with recovering such Annual
Bonus from the participant, including, without limitation, reasonable attorneys fees.
There shall be no time limit on the Company’s right to recover such amounts under this
subsection B., except as otherwise provided by applicable law.
	 
	 	C.	 	The rights contained in this Section shall be in addition to, and shall not
limit, any other rights or remedies that the Company may have under any applicable law
or regulation.

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	15.	 	Right to Set Off. Progressive shall have the unrestricted right to set off against or
recover out of any bonuses or other sums owed to any participant under the Plan any amounts
owed by such participant to Progressive, including, without limitation, any amounts owed by
such participant under Section 14 above.

	16.	 	Shareholder Approval. The Plan is subject to approval by the holders of The Progressive
Corporation’s Common Shares, $1.00 par value (“shareholders”) in accordance with the
requirements of Section 162(m) of the Code, and no Annual Bonus will be paid hereunder unless
the Plan has been so approved. If shareholders do not approve the Plan at the Annual Meeting
of Shareholders in April 2007, this Plan shall automatically terminate and be of no further
force or effect.

	17.	 	Prior Plans. If this Plan is approved by shareholders as provided in Paragraph 16 above,
this Plan shall supersede and replace The Progressive Corporation 2004 Executive Bonus Plan,
as heretofore in effect (the “Prior Plan”), which is and shall be deemed to be terminated as
of December 29, 2006 (the “Termination Date”); provided, that any bonuses or other sums earned
under the Prior Plan with respect to any period ended on or prior to the Termination Date
shall be unaffected by such termination and shall be paid to the appropriate participants when
and as provided thereunder.

	18.	 	Effective Date. This Plan is adopted and, subject to the provisions of Paragraph 16 hereof,
is to be effective, as of December 30, 2006, which is the commencement of Progressive’s 2007
fiscal year. Subject to the provisions of Paragraph 16, this Plan shall be effective for the
2007 Plan year (which coincides with Progressive’s 2007 fiscal year) and for each Plan year
thereafter unless and until terminated by the Committee.

	18.	 	Ohio Law. This Plan shall be interpreted and construed in accordance with the laws of the
State of Ohio.

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