Document:

EX-10.16

 

Exhibit 10.16

THE PROGRESSIVE CORPORATION

2007 INFORMATION TECHNOLOGY INCENTIVE PLAN

1. The Progressive Corporation and its subsidiaries (“Progressive” or the “Company”) have
adopted The Progressive Corporation 2007 Information Technology Incentive Plan (the “Plan”) as part
of their overall compensation program for employees assigned to the Company’s Information
Technology Organization (“IT Organization”).

2. There is a strong correlation between computer systems availability and the economic
performance of the Company. All three sales channels, customer service and claims handling are
dependent on electronic systems. When systems are down, Progressive incurs lost productivity costs
and, in some cases, may forfeit revenue opportunities. The Plan is designed to incent employees
within the IT Organization to find creative ways to eliminate scheduled and unscheduled system
downtime, and shift the risk associated with technology changes away from times when downtime is
most costly to the business.

3. A significant aspect of the Plan is that it encourages continuous improvement. Each
year, the complexity of the Progressive computing environment increases, as we introduce new
applications and increasingly target systems to the end consumer. The target payout for the Plan
at a 1.0 Performance Factor will be set at the amount of “up time points” earned the previous year
(adjusted proportionately for any change in the duration of the current Plan year). In order to
receive a payout above the target, the performance achieved needs to exceed the previous year’s
performance level (as so adjusted) in a more complex environment. Plan years will coincide with
Progressive’s fiscal years.

4. All regular employees of Progressive (including managers) who are assigned primarily to the IT
Organization are eligible to be selected for participation in the Plan. The Chief Executive
Officer, after consulting with the Chief Human Resource Officer, (collectively, the “Designated
Officers”) shall have the authority to select Plan participants for any given Plan year.

5. Subject to Paragraph 10 below, annual payments under the Plan will be determined by
application of the following formula:

Annual IT Incentive Payment = Paid Earnings x Target Percentage x IT Performance Factor.

     The Annual IT Incentive Payment payable to any participant with respect to any given Plan
year, as determined by such formula, will be adjusted by a weighing factor, as described in
Paragraph 10, and will not exceed $75,000.00.

	6.	 	Paid Earnings for any Plan year means and include the following: regular, used Earned
Time Benefit, sick, holiday (excluding, for all 

 purposes hereunder, premium holiday pay for exempt
employees), funeral and overtime pay, and retroactive payments of any of the foregoing items,
received by the participant during the Plan year for work or services performed as an officer or
employee
of Progressive.

     For purposes of the Plan, Paid Earnings shall exclude all other types of compensation,
including, without limitation, any short-term or long-term disability payments made to the
participant, the earnings replacement component of any worker’s compensation award, payments from
the discretionary cash fund or any other bonus or incentive compensation awards, any dividend
payments and any unused Earned Time Benefit.

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     Notwithstanding the foregoing, if at the end of the 24th pay period of a Plan year,
any Plan participant’s then current annual salary exceeds his or her salary range maximum plus
$105, then for purposes of computing his or her Annual IT Incentive Payment under the Plan, his or
her Paid Earnings shall be equal to the sum of: (i) his or her regular, used Earned Time Benefit,
sick, holiday and funeral pay for each bi-weekly pay period during the Plan year, but not to
exceed 1/26th of his or her annual salary range maximum (as in effect as of the end of
the applicable pay period) for any such bi-weekly pay period; plus (ii) the full amount of the
following items, if any, received by such participant during that Plan year: (a) overtime pay, and
(b) retroactive payments of regular, used Earned Time Benefit, sick, holiday, overtime and funeral
pay.

7. Target Percentages vary by position and shall be determined on an annual basis by the
Designated Officers.

8. In the discretion of the Designated Officers, participants in this Plan may also participate
in The
Progressive Corporation 2007 Gainsharing Plan, or any other incentive plan maintained by the
Company, or any successor thereto.

9. The IT Performance Factor

     The IT Performance Factor is based on application availability and accuracy measured on a
point system, and may vary from 0 to 2.0. Points are awarded for every day that production
systems, both
mainframe and client/server, are outage free. If there is an outage in any production system, all
of the points relating to that application are lost for that day. Measured applications, measured
hours, outage definitions, point values and administrative guidelines will be defined on an annual
basis by or under the direction of the Designated Officers. A Performance Matrix approved by the
Designated Officers will assign a Performance Score to various point levels that may be achieved.

     For 2007, and for each Plan year thereafter until otherwise determined by the Designated
Officers, the applicable Plan rules shall be as set forth in Schedule I attached hereto.

     The best possible score in any given week is 10 points per application. Attached hereto as
Schedule II is the 2007 Performance Matrix with the breakdown of scores and related outcomes. For
2007, a target of 1.00 will be achieved by earning between 10,251 and 10,254 points out of a
possible 10,920 points. The Designated Officers will establish the applicable performance targets,
the Performance Scores that will be awarded for various point levels achieved and the maximum
potential points that may be earned and the resulting Performance Score for subsequent Plan years.

10. If, for any Plan year, an employee has been selected to participate in both the Plan and
another incentive plan offered by the Company, then with respect to such employee, the Annual IT
Incentive Payment formula set forth in Paragraph 5 hereof will be appropriately adjusted by
applying a weighting factor to reflect the proportion of the employee’s total annual incentive
opportunity that is being provided by the Plan. The Designated Officers shall have full authority
to determine the incentive plan or plans in which any employee shall participate during any plan
year and, if an employee is selected to participate in more than one plan, the weighting factor
that will apply to each such plan.

11. Subject to Paragraph 12 below, no later than December 31 of each Plan year, each participant
will receive an initial payment in respect of his or her Annual IT Incentive Payment for that Plan
year equal to 75% of an amount calculated on the basis of Paid Earnings for the first 24 pay
periods of the Plan year, estimated earnings for the remainder of the Plan year and performance
data through November of the Plan year. No later than February 15 of the following year, each
participant shall

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receive the balance of his or her Annual IT Incentive Payment, if any, for such
Plan year, based on his or her Paid Earnings and performance data for the entire Plan year.

12. Unless otherwise determined by the Committee (as defined below), and except as expressly
provided herein, in order to be entitled to receive an Annual IT Incentive Payment for any Plan
year, the participant must be assigned to the IT Organization and be an active employee of the
Company on November 30 of that Plan year (“Qualification Date”). Individuals who are hired on or
after December 1 of any Plan year are not entitled to receive an Annual IT Incentive Payment for
that Plan year.

     Any participant who is on a leave of absence covered by the Family and Medical Leave Act of
1993, personal leave of absence approved by the Company, 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 IT Incentive Payment for that Plan year, calculated as provided in Paragraphs 5 and 11 above
and based on the amount of Paid Earnings received by such participant for the Plan year.

     Annual IT Incentive Payments will be net of any legally required deductions for federal, state
and local taxes and other items.

13. The right to any Annual IT Incentive Payment 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.

14. The Plan shall be administered by or under the direction of the Compensation Committee of
the Board of Directors of The Progressive Corporation (“Committee”). The Committee shall have the
authority to adopt, alter, modify, amend and repeal such rules, guidelines, procedures and
practices governing the Plan as it shall, from time to time, in its sole discretion, deem
advisable.

     The Committee shall 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 shall be final and binding on Progressive, all Plan
participants and all other parties. No such interpretation or determination shall be relied on as a
precedent for any similar action or decision.

     Unless otherwise determined by the Committee, all of the authority of the Committee hereunder
(including, without limitation, the authority to administer the Plan, select participants in the
Plan, interpret the provisions of the Plan, waive any of the requirements specified herein and make
determinations hereunder and to establish, change or modify performance targets and measures) may
be exercised by the Designated Officers. In the event of a dispute or conflict, the determination
of the Committee will govern.

15. 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.

16. The Plan will be unfunded and all payments due under the Plan shall be made from
Progressive’s general assets.

17. 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 employees or change any of their job
titles, duties or compensation.

18. The Company shall have the unrestricted right to set off against or recover out of any Annual

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IT Incentive Payment or other sums owed to any participant under the Plan any amounts owed by such
participant to the Company.

19. This Plan supersedes any and all prior plans, agreements, understandings and arrangements
regarding bonuses or other cash incentive compensation payable to participants by or due from
Progressive and relating to the availability of computer systems. Without limiting the generality
of the foregoing, this Plan supersedes and replaces The
Progressive Corporation 2006 Information Technology Incentive Plan (the “Prior Plan”), which is and
shall be deemed to be terminated as of December 29, 2006 (the “Prior Plan Termination Date”);
provided, that any bonuses or other sums earned and payable under the Prior Plan with respect to
any Plan year ended on or prior to the Prior Plan Termination Date shall be unaffected by such
termination and shall be paid to the appropriate participants when and as provided thereunder.

20. This Plan is adopted, and is to be effective, as of December 30, 2006, which is the
commencement of Progressive’s 2007 fiscal year. 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.

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

Schedule I

Information Technology Incentive Plan

2007 Rules

1. System Measurements

The intent of this program is to ensure that incidents that have major business impact are
counted as an outage. An outage is defined as an event (excluding a telecommunication failure)
that prevents 100 or more customers from using an application for more than 15 minutes. We define
a customer as anyone who uses our applications or is the recipient of output from our systems.
Examples include, but are not limited to: agents, policyholders, claimants, quote requestors, body
shop personnel, and internal users.

The measured hours are 24 hours a day, Monday through Saturday. All day Sunday is measured with
the exception of our weekly system maintenance window which is from 3:30am until 8:00am EST and,
also, one (1) Sunday a quarter from Midnight to 8:00am EST.

Individual application outage clarifications will take precedent over these time frames. See chart
below:

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	System	 	Additional Outage Clarifications
	Cash Disbursements (CDS)

	 	An outage is defined for Monday through
Friday as anytime the system is not
available by 7 am. An exception would be
any requested Saturday or Sunday access
requested by the system owner 24 hours in
advance.
	 
	 	 
	 
	 	 
	Claims MyCars
	 	 
	 
	 	 
	Claims Decision Point
	 	 
	 
	 	 
	Claims PACMan
	 	 
	 
	 	 
	Claims Web Tracker
	 	 
	 
	 	 
	ClaimStation

	 	An outage is defined as a claim
representative’s inability to process
claims transactions. This would include
the ability to log in, monitor and assign
claims, view current claim status,
document next steps, make payments,
evaluation of current claim, and
add/update claim data. As additional
core claims transactions are integrated
into ClaimStation, they will be included
six months after country wide rollout of
the new functionality in ClaimStation.
	 
	 	 
	Commercial Auto (PRAT/WFC)

 

Connect
	 	 
	 
	 	 
	FAO

	 	An outage is defined as an agent’s
inability to process transactions,
exclusive of quoting. Transactions
included in the FAO outage calculation
are the highest volume transactions
performed by agents. These vital business
transactions include logging into the
website, making payments, making policy
changes, viewing/printing policy
documents, and viewing policy, claims and
financial reports. An exception would be
one (1) Sunday a month (Sunday before
Month End) from 3:30am until 5:30am EST.
	 
	 	 
	Internet Special Lines

	 	An outage is defined as an event
(excluding call routing licensing issues)
preventing quoting and/or selling. An
exception would be one (1) Sunday a month
(Sunday before Month End) from 3:30am
until 5:30am EST.
	 
	 	 
	Internet Auto

	 	An outage is defined as an event
(excluding call routing licensing issues)
preventing quoting and/or selling. An
exception would be one (1) Sunday a month
(Sunday before Month End) from 3:30am
until 5:30am EST.
	 
	 	 
	Internet Comparison Rating

	 	An outage is defined as an event
preventing quoting of both the Comparison
and Progressive rates and/or the selling
of the Progressive rate, once the quote
has entered the Internet Comparison
application. This excludes intentional
DNQ (Do Not Quote) situations for
competitors driven by competitor
eligibility rules and call routing
licensing issues. An exception would be
one (1) Sunday a month (Sunday before
Month End) from 3:30am until 5:30am EST,
and quarterly scheduled extended
Maintenance times.
	 
	 	 
	Online Services
	 	 
	 
	 	 
	Ownership Work Bench (OWB)
	 	 
	 
	 	 
	Billing Systems

	 	An outage for the start of day is defined
as anytime the POLARIS/ProBill
transactions are not available by 6:00am
Monday through Saturday.
	 
	 	 
	Policy Services Work Flow (POWR)

	 	An outage is defined as anytime their
scanning system is totally unavailable
(both locations down) for more than 30
minutes excluding their daily batch
window between midnight and 4:00am EST.
	 
	 	 
	ProRater Uploads
	 	 

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	System	 	Additional Outage Clarifications
	PROTEUS (Atlantic, Gulf, 

Midwest, Pacific)

	 	An outage for start of day is defined as
anytime the 30 minute back-up occurs
after 6:00am, or causes the application
to be unavailable over 30 minutes.
	 
	 	 
	Server Based Rating (SBR)

	 	An outage is defined as an event
(excluding call routing licensing issues)
that prevents agents from quoting,
selling and printing/e-mailing new
policies or prevents consumers from
quoting or printing. An exception
would be one (1) Sunday a month (Sunday
before Month End) from 3:30am until
5:30am EST.
	 
	 	 
	Call Flow

	 	A call routing outage is defined as
anytime 100 unique customers calls are
not successfully completed to Progressive
(i.e., fast busy, non-working number
recording) within a 15 minute period due
to a Progressive error.
	 
	 	 
	Speech Self Service

	 	An outage is defined as an application or
infrastructure event impacting 100 unique
callers in a 15 minute period that
prevents the application from responding
to calls, receiving menu transactions, or
successfully completing a requested
transaction. Exceptions would include
customer disconnects, call recording
failures, a 10 minute daily window
between 2 a.m. — 4 a.m. for ProBill file
switching, and scheduled monthly and
quarterly maintenance windows (monthly
from 3:30 — 8am EST and quarterly from
midnight to 8:00am EST).

2. Customer Experience

An incident impacting 100 or more customers is defined as any of the following:

	 	•	 	The business issues an ACC, Letter, call-out, email, etc. because of an IT related problem
	 
	 	•	 	E-mails are sent multiple times to the same person
	 
	 	•	 	EFT (electronic fund transfers) incorrectly occur multiple times
	 
	 	•	 	Bills are sent to the wrong person
	 
	 	•	 	Billing is incorrect by more than $1.00
	 
	 	•	 	Documents are retransmitted (post office, fax or email) for any of the conditions below:

	 	o	 	Print was incorrect
	 
	 	o	 	Forms were missing
	 
	 	o	 	Forms were sent in error

	 	•	 	Policyholder personal information is compromised by sharing or sending data to the wrong
person or agent.

3. Availability
of an Application.

There can be times when an application is available but a particular transaction could be out
of service or malfunctioning. For our measurement purposes, this would typically be counted as an
outage.

We recognize there could be an occasion where the unavailable transaction represents insignificant
lost functionality and may affect less than 100 customers. These transactions being unavailable
would not be counted as an outage.

4. Vendor Service Outages

Vendors are a critical component to our service delivery. We work with three types of
vendors, Transaction Service Vendors (Equifax, Choicepoint, Discover, State MVR Centers, etc.),
Infrastructure Vendors (IBM, Microsoft, Oracle, etc.), and Hosting Vendors (Convergys). It is the
responsibility of the appropriate I/T group to manage and evaluate the quality of service received
from these vendors.

For purposes of this program, service disruptions caused by a Transaction Service Vendor or a
Hosting Vendor site not being available, that is entirely a vendor issue, will not be counted as an
outage. However, we have several arrangements for conversion to an alternate vendor or alternate
vendor site

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during an outage. If we are unable to execute the conversion because of a Progressive
related issue, this would be counted as an outage.

For purposes of this program, service disruptions caused by an Infrastructure Vendor will be
counted as an outage.

5. Slow Response Time

Occasionally an application is available but the response time is poor. Slow response time
will not be counted as an outage.

6. Scheduled Maintenance

Occasionally, system or facility work needs to be performed that cannot be completed during
our normal maintenance hours (see rule #1 for maintenance hours). In spite of this downtime being
scheduled in advance with our customers, it will be counted as an outage.

7. IT Performance and Customer Experience Point Values

IT Performance

Any day without an outage will be awarded the maximum number of points for that day. Point values
per day are weighted to correspond with the value to the business based on the volume of
transactions. The maximum number of points earned per week is 10 points per application as defined
in Rule#1. The point value maximum, by day, is outlined in the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Day	 	Points per Application	 	# of Applications	 	Maximum Points Per Day
	Monday
	 	 	2.0	 	 	 	21	 	 	42	 
	Tuesday
	 	 	2.0	 	 	 	21	 	 	42	 
	Wednesday
	 	 	1.5	 	 	 	21	 	 	31.5	 
	Thursday
	 	 	1.5	 	 	 	21	 	 	31.5	 
	Friday
	 	 	1.5	 	 	 	21	 	 	31.5	 
	Saturday
	 	 	1.0	 	 	 	21	 	 	21	 
	Sunday
	 	 	0.5	 	 	 	21	 	 	10.5	 
	Total
	 	 	10.0	 	 	 	21	 	 	210	 

Point values will not be adjusted for holidays. In other words, if a holiday is celebrated on a
Monday it will be given a 2 point value.

IT Customer Experience 

Outages that negatively affect customers will be assessed points from the following scale, based on
the number of customers impacted.

	 	 	 	 	 
	Customers >	 	Customers <	 	Points
	100
	 	9,999	 	5
	10,000
	 	99,999	 	10
	100,000
	 	~	 	20

8. Communications of Status

On a daily basis, we will communicate any outage in the Morning Status Report issued Monday
through Friday by ETG. The outage will be highlighted in red.

Each Monday, IT Control will distribute to all IT staff, the “Weekly IT Performance Report”,
indicating the previous week’s results as well as the annualized point factor. In addition, a
monthly report with year-to-date information will be distributed to all IT staff by the first
Friday of the fiscal month.

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9. Appeal Process

Anyone within the organization has the right to appeal an outage. All appeals should be made
by email to Ed Locker. Ed will ensure the appeal is presented in the Post Mortem review of the
incident. If the
outage was misrepresented, a reversal will be carried in the Weekly IT Performance Report and all
associated status reports.

If the outage requires a judgment call, it will be reviewed by David Krew, Tom Cunningham, Chris
Garson, and Molly Gessler who will act as the Ruling Committee. All judgments made by the Ruling
Committee are final.

10. Earned Points Chart for 2007

The attached 2007 Earned Points Chart correlates annual points earned to the IT Performance
Factor.

Schedule II

INFORMATION TECHNOLOGY INCENTIVE PLAN

2007 EARNED POINTS CHART

	 	 	 	 	 
	ANNUAL POINTS EARNED	 	 	 	IT PERFORMANCE
	Minimum	 	Maximum	 	FACTOR
	0
	 	9,827
	 	0.00
	9,828
	 	9,831
	 	0.01
	9,832
	 	9,836
	 	0.02
	9,837
	 	9,840
	 	0.03
	9,841
	 	9,844
	 	0.04
	9,845
	 	9,848
	 	0.05
	9,849
	 	9,853
	 	0.06
	9,854
	 	9,857
	 	0.07
	9,858
	 	9,861
	 	0.08
	9,862
	 	9,865
	 	0.09
	9,866
	 	9,870
	 	0.10
	9,871
	 	9,874
	 	0.11
	9,875
	 	9,878
	 	0.12
	9,879
	 	9,883
	 	0.13
	9,884
	 	9,887
	 	0.14
	9,888
	 	9,891
	 	0.15
	9,892
	 	9,895
	 	0.16
	9,896
	 	9,900
	 	0.17
	9,901
	 	9,904
	 	0.18
	9,905
	 	9,908
	 	0.19
	9,909
	 	9,912
	 	0.20

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	ANNUAL POINTS EARNED	 	 	 	IT PERFORMANCE
	Minimum	 	Maximum	 	FACTOR
	9,913
	 	9,917
	 	0.21
	9,918
	 	9,921
	 	0.22
	9,922
	 	9,925
	 	0.23
	9,926
	 	9,929
	 	0.24
	9,930
	 	9,934
	 	0.25
	9,935
	 	9,938
	 	0.26
	9,939
	 	9,942
	 	0.27
	9,943
	 	9,947
	 	0.28
	9,948
	 	9,951
	 	0.29
	9,952
	 	9,955
	 	0.30
	9,956
	 	9,959
	 	0.31
	9,960
	 	9,964
	 	0.32
	9,965
	 	9,968
	 	0.33
	9,969
	 	9,972
	 	0.34
	9,973
	 	9,976
	 	0.35
	9,977
	 	9,981
	 	0.36
	9,982
	 	9,985
	 	0.37
	9,986
	 	9,989
	 	0.38
	9,990
	 	9,994
	 	0.39
	9,995
	 	9,998
	 	0.40
	9,999
	 	10,002
	 	0.41
	10,003
	 	10,006
	 	0.42
	10,007
	 	10,011
	 	0.43
	10,012
	 	10,015
	 	0.44
	10,016
	 	10,019
	 	0.45
	10,020
	 	10,023
	 	0.46
	10,024
	 	10,028
	 	0.47
	10,029
	 	10,032
	 	0.48
	10,033
	 	10,036
	 	0.49
	10,037
	 	10,041
	 	0.50
	10,042
	 	10,045
	 	0.51
	10,046
	 	10,049
	 	0.52
	10,050
	 	10,053
	 	0.53
	10,054
	 	10,058
	 	0.54
	10,059
	 	10,062
	 	0.55
	10,063
	 	10,066
	 	0.56
	10,067
	 	10,070
	 	0.57
	10,071
	 	10,075
	 	0.58
	10,076
	 	10,079
	 	0.59
	10,080
	 	10,083
	 	0.60
	10,084
	 	10,087
	 	0.61
	10,088
	 	10,092
	 	0.62
	10,093
	 	10,096
	 	0.63
	10,097
	 	10,100
	 	0.64
	10,101
	 	10,105
	 	0.65
	10,106
	 	10,109
	 	0.66
	10,110
	 	10,113
	 	0.67
	10,114
	 	10,117
	 	0.68
	10,118
	 	10,122
	 	0.69

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	ANNUAL POINTS EARNED	 	 	 	IT PERFORMANCE
	Minimum	 	Maximum	 	FACTOR
	10,123
	 	10,126
	 	0.70
	10,127
	 	10,130
	 	0.71
	10,131
	 	10,134
	 	0.72
	10,135
	 	10,139
	 	0.73
	10,140
	 	10,143
	 	0.74
	10,144
	 	10,147
	 	0.75
	10,148
	 	10,152
	 	0.76
	10,153
	 	10,156
	 	0.77
	10,157
	 	10,160
	 	0.78
	10,161
	 	10,164
	 	0.79
	10,165
	 	10,169
	 	0.80
	10,170
	 	10,173
	 	0.81
	10,174
	 	10,177
	 	0.82
	10,178
	 	10,181
	 	0.83
	10,182
	 	10,186
	 	0.84
	10,187
	 	10,190
	 	0.85
	10,191
	 	10,194
	 	0.86
	10,195
	 	10,198
	 	0.87
	10,199
	 	10,203
	 	0.88
	10,204
	 	10,207
	 	0.89
	10,208
	 	10,211
	 	0.90
	10,212
	 	10,216
	 	0.91
	10,217
	 	10,220
	 	0.92
	10,221
	 	10,224
	 	0.93
	10,225
	 	10,228
	 	0.94
	10,229
	 	10,233
	 	0.95
	10,234
	 	10,237
	 	0.96
	10,238
	 	10,241
	 	0.97
	10,242
	 	10,245
	 	0.98
	10,246
	 	10,250
	 	0.99
	10,251
	 	10,254
	 	1.00
	10,255
	 	10,259
	 	1.01
	10,260
	 	10,265
	 	1.02
	10,266
	 	10,270
	 	1.03
	10,271
	 	10,275
	 	1.04
	10,276
	 	10,280
	 	1.05
	10,281
	 	10,286
	 	1.06
	10,287
	 	10,291
	 	1.07
	10,292
	 	10,296
	 	1.08
	10,297
	 	10,301
	 	1.09
	10,302
	 	10,307
	 	1.10
	10,308
	 	10,312
	 	1.11
	10,313
	 	10,317
	 	1.12
	10,318
	 	10,323
	 	1.13
	10,324
	 	10,328
	 	1.14
	10,329
	 	10,333
	 	1.15
	10,334
	 	10,338
	 	1.16
	10,339
	 	10,344
	 	1.17
	10,345
	 	10,349
	 	1.18

-10-

 

	 	 	 	 	 
	ANNUAL POINTS EARNED	 	 	 	IT PERFORMANCE
	Minimum	 	Maximum	 	FACTOR
	10,350
	 	10,354
	 	1.19
	10,355
	 	10,359
	 	1.20
	10,360
	 	10,365
	 	1.21
	10,366
	 	10,370
	 	1.22
	10,371
	 	10,375
	 	1.23
	10,376
	 	10,380
	 	1.24
	10,381
	 	10,386
	 	1.25
	10,387
	 	10,391
	 	1.26
	10,392
	 	10,396
	 	1.27
	10,397
	 	10,402
	 	1.28
	10,403
	 	10,407
	 	1.29
	10,408
	 	10,412
	 	1.30
	10,413
	 	10,417
	 	1.31
	10,418
	 	10,423
	 	1.32
	10,424
	 	10,428
	 	1.33
	10,429
	 	10,433
	 	1.34
	10,434
	 	10,438
	 	1.35
	10,439
	 	10,444
	 	1.36
	10,445
	 	10,449
	 	1.37
	10,450
	 	10,454
	 	1.38
	10,455
	 	10,460
	 	1.39
	10,461
	 	10,465
	 	1.40
	10,466
	 	10,470
	 	1.41
	10,471
	 	10,475
	 	1.42
	10,476
	 	10,481
	 	1.43
	10,482
	 	10,486
	 	1.44
	10,487
	 	10,491
	 	1.45
	10,492
	 	10,496
	 	1.46
	10,497
	 	10,502
	 	1.47
	10,503
	 	10,507
	 	1.48
	10,508
	 	10,512
	 	1.49
	10,513
	 	10,518
	 	1.50
	10,519
	 	10,523
	 	1.51
	10,524
	 	10,528
	 	1.52
	10,529
	 	10,533
	 	1.53
	10,534
	 	10,539
	 	1.54
	10,540
	 	10,544
	 	1.55
	10,545
	 	10,549
	 	1.56
	10,550
	 	10,554
	 	1.57
	10,555
	 	10,560
	 	1.58
	10,561
	 	10,565
	 	1.59
	10,566
	 	10,570
	 	1.60
	10,571
	 	10,576
	 	1.61
	10,577
	 	10,581
	 	1.62
	10,582
	 	10,586
	 	1.63
	10,587
	 	10,591
	 	1.64
	10,592
	 	10,597
	 	1.65
	10,598
	 	10,602
	 	1.66
	10,603
	 	10,607
	 	1.67

-11-

 

	 	 	 	 	 
	ANNUAL POINTS EARNED	 	 	 	IT PERFORMANCE
	Minimum	 	Maximum	 	FACTOR
	10,608
	 	10,612
	 	1.68
	10,613
	 	10,618
	 	1.69
	10,619
	 	10,623
	 	1.70
	10,624
	 	10,628
	 	1.71
	10,629
	 	10,633
	 	1.72
	10,634
	 	10,639
	 	1.73
	10,640
	 	10,644
	 	1.74
	10,645
	 	10,649
	 	1.75
	10,650
	 	10,655
	 	1.76
	10,656
	 	10,660
	 	1.77
	10,661
	 	10,665
	 	1.78
	10,666
	 	10,670
	 	1.79
	10,671
	 	10,676
	 	1.80
	10,677
	 	10,681
	 	1.81
	10,682
	 	10,686
	 	1.82
	10,687
	 	10,691
	 	1.83
	10,692
	 	10,697
	 	1.84
	10,698
	 	10,702
	 	1.85
	10,703
	 	10,717
	 	1.86
	10,718
	 	10,731
	 	1.87
	10,732
	 	10,746
	 	1.88
	10,747
	 	10,760
	 	1.89
	10,761
	 	10,775
	 	1.90
	10,776
	 	10,789
	 	1.91
	10,790
	 	10,804
	 	1.92
	10,805
	 	10,818
	 	1.93
	10,819
	 	10,833
	 	1.94
	10,834
	 	10,847
	 	1.95
	10,848
	 	10,862
	 	1.96
	10,863
	 	10,876
	 	1.97
	10,877
	 	10,891
	 	1.98
	10,892
	 	10,905
	 	1.99
	10,906
	 	10,920
	 	2.00

-12-EX-10.64

 

Exhibit No. 10.64

THE PROGRESSIVE CORPORATION EXECUTIVE SEPARATION

ALLOWANCE PLAN

SECTION 1 — DEFINITIONS

	1.1	 	“Affiliated Company” — means any entity in which the Company owns, directly or
indirectly, more than fifty percent (50%) of the stock or assets.

	1.2	 	“Annual Salary” — as to each Eligible Employee means his/her annualized base salary
or other base wages immediately prior to his/her Termination Date (including any geographic
differential). This term does not include commissions, stock-related awards, incentive
compensation, separate pay adjustments or allowances or any other forms of remuneration.

	1.3	 	“Group I Employees” — are those Eligible Employees who are parties to written
employment agreements duly authorized and executed by and between the Eligible Employee and
Progressive the benefits to which are triggered by a “Change of Control” as defined in those
written agreements.

	1.4	 	“Group II Employees” — are those Eligible Employees who, immediately preceding their
Termination Date and for at least two years prior thereto, had Gainsharing and Non-Qualified
Stock Option (“NQSO”) targets under the then applicable Gainsharing Plan and Incentive Plan,
respectively, of greater than fifty percent (50%), exclusive of Group I Employees.

	1.5	 	“Group III Employees” — are those Eligible Employees who, immediately preceding their
Termination Date and for at least two years prior thereto, had Gainsharing and NQSO targets
under the then applicable Gainsharing and Incentive Plan, respectively, of thirty-five percent
(35%) and greater, exclusive of Group I Employees and Group II Employees.

	1.6	 	“Company” — means The Progressive Corporation, an Ohio corporation, or its
successors.

	1.7	 	“Disability” — means the inability to perform work due to illness, injury or
pregnancy-related condition.

	1.8	 	“Eligible Employee” — means regular, non-temporary, non-union executive employees of
Progressive who qualify either as a Group I Employee, Group II Employee or a Group Employee as
defined hereunder.

	1.9	 	“Misconduct” — means an Eligible Employee’s commission of a terminable offense under
Progressive’s Code of Conduct, as reasonably determined in good faith by the Company.

	1.10	 	“PCIC” — means Progressive Casualty Insurance Company, an Ohio corporation, or its
successors.

	1.11	 	“Plan” — means The Progressive Corporation Executive Separation Allowance Plan, as
set forth herein and as the same may be amended from time to time.

 

 

	1.12	 	“Progressive” — includes the Company and any other entity which from time to time is
an Affiliated Company.

	1.13	 	“Reduction in Force” — means a reduction by Progressive in the number of employees
working in any of Progressive’s operating divisions.

	1.14	 	“Reorganization” — means Progressive’s elimination of one or more positions or
redefinition of the job duties of one or more positions.

	1.15	 	“Separation Agreement and General Release” — means an agreement and release
substantially in the forms attached hereto as Exhibits A and B together with such changes,
additions and deletions as Progressive, in its sole discretion, may specify.

	1.16	 	“Termination Date” — means the effective date of any Eligible Employee’s termination
of employment with Progressive.

SECTION 2 — ENTITLEMENT TO SEPARATION ALLOWANCE

	2.1	 	An Eligible Employee shall be entitled to receive a Separation Allowance under this Plan if
(a) Progressive terminates his/her employment for reasons other than resignation (including
retirement), job elimination, death, Disability, unsatisfactory job performance or Misconduct;
and (b) the Eligible Employee signs a Separation Agreement and General Release and delivers it
to the Company within ninety (90) days after the Eligible Employee’s Termination Date. In no
event shall any Eligible Employee be entitled to receive a Separation Allowance if (x) his/her
employment terminates as a result of a resignation (including retirement), a Reduction in
Force or Reorganization, death, Disability, failure to meet job performance standards,
Misconduct or any reason other than as a result of the circumstances described in (a) above,
or (y) he/she fails to deliver a signed Separation Agreement and General Release to the
Company within the time specified above.

SECTION 3 — AMOUNT OF SEPARATION ALLOWANCE

	3.1	 	The Separation Allowance payable to each Eligible Employee who is entitled to such allowance
under Section 2 above shall be in the amount as provided below:

	 	 	 
	Eligible Employee	 	Separation Allowance
	Group I Employee

	 	One year Annual Salary plus Gainsharing. The amount
paid as Gainsharing shall equal the higher of a) the
highest annual Gainsharing paid to the Group I Employee
during the past three years; or b) payment of the Group
I Employee’s targeted Gainsharing at a factor of 1.0 in
the calendar year of the Termination Date.

 

 

	 	 	 
	Eligible Employee	 	Separation Allowance
	Group II Employee

	 	One-year Annual Salary
	 
	Group III Employee

	 	The greater of a) six months of the Group III
Employee’s Annual Salary; or b) the amount that would
be payable to the Group III Employee if the employee
were entitled to benefits under The Progressive
Corporation Separation Allowance Plan (the “SAP Plan”),
provided that the Separation Allowance paid hereunder
shall in no event exceed the employee’s Annual Salary.

	3.2	 	Each Separation Allowance shall be paid in a lump sum within thirty (30) days following the
later of (i) the Eligible Employee’s Termination Date or (ii) the expiration of the revocation
period referred to in the Eligible Employee’s signed Separation Agreement and General Release.
Alternatively, Progressive, in its sole discretion, may elect to pay any Separation Allowance
in installments over any period not exceeding twenty-four (24) months after the Eligible
Employee’s Termination Date.

	3.3	 	Progressive shall withhold from each Separation Allowance all applicable federal, state, and
local taxes, Social Security taxes and other deductions required by law, and any other amounts
due Progressive for any reason.

	3.4	 	Each Eligible Employee’s Separation Allowance payable under this Plan shall be reduced by the
amount of any state-mandated Separation Allowance or severance payments payable by Progressive
to such Eligible Employee.

	3.5	 	Notwithstanding anything herein to the contrary, no Separation Allowance payments shall be
made under this Plan to any Eligible Employee more than twenty-four (24) months after his/her
Termination Date.

SECTION 4 — ADDITIONAL PAYMENTS AND BENEFITS

	4.1	 	Progressive may elect to provide or pay to any Eligible Employee who is entitled to a
Separation Allowance under this Plan such additional payments or benefits, if any, as
Progressive, in its sole discretion, shall determine, such as outplacement assistance
benefits; reimbursements for the cost of obtaining health, life, disability, employee
assistance or other welfare benefits; and other payments and benefits.

SECTION 5 — PROGRESSIVE DISCRETION

	5.1	 	Notwithstanding anything herein to the contrary, no determination by Progressive as to the
amount, timing or manner of payment of any Separation Allowance or other payment 

 

 

	 	 	or benefit
under this Plan shall be regarded as a precedent or guideline for purposes of determining the
amount, timing or manner of payment of any other Separation Allowance or other payment or
benefit under this Plan, nor shall any such determination otherwise limit Progressive’s
discretion provided for under this Plan in any way.

SECTION 6 — ELIGIBILITY UNDER OTHER PLANS AND AGREEMENTS

	6.1	 	Except as provided in Sections 6.2 and 6.3, this Plan shall entirely supersede and replace
all policies, plans, agreements, understandings and arrangements adopted or entered into
before November 1, 2001 regarding separation allowances, severance pay and/or similar
compensation payable by Progressive to terminated Eligible Employees (other than with respect
to any Eligible Employees who may have incurred Termination Dates prior to November 1, 2001).

	6.2	 	Section 6.1 of this Plan shall not limit any Eligible Employee’s rights, if any, under the
SAP Plan in the event of any Reorganization or Reduction in Force, provided that an
Eligible Employee shall only be entitled to receive benefits under the circumstances
specified under the Plan and the SAP Plan and shall not be entitled to receive benefits
under both this Plan and the SAP Plan.

	6.3	 	Individual employment, separation, severance and other agreements that include provisions
regarding separation allowances, severance pay and/or similar compensation following
termination of employment and that are entered into in writing with an Eligible Employee shall
supersede and replace this Plan, except as otherwise expressly provided by such agreements;
however, no such agreement entered into on or after November 1, 2001 shall be effective or
enforceable unless approved in writing by PCIC’s Chief Human Resources Officer or the holder
of any similar successor office, and nothing in this Plan shall be construed as ratifying or
validating any such agreements that have not been so approved.

SECTION 7 — CLAIMS PROCEDURES

	7.1	 	The Company shall establish reasonable procedures under which a claimant, or his/her duly
authorized representative, may present a claim for benefits under this Plan.

	7.2	 	Unless such claim is allowed in full by the Company, written notice of the denial shall be
furnished to the claimant within ninety (90) days (which may be extended by a period not to
exceed an additional ninety (90) days if special circumstances so require and written notice
to the claimant is given prior to the expiration of the initial ninety (90) day period
describing such circumstances and indicating the date by which the Company expects to render
its determination) setting forth the following in a manner calculated to be understood by the
claimant:

	 	(i)	 	The specific reason(s) for the denial;
	 
	 	(ii)	 	Specific reference(s) to any pertinent provision(s) of the
Plan or rules promulgated pursuant thereto on which the denial is based;
	 
	 	(iii)	 	A description of any additional information or material as
may be necessary to perfect the claim, together with an explanation of why it
is necessary;

 

 

	 	(iv)	 	A description of the Plan’s claims review procedures and the
time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on review; and
	 
	 	(v)	 	An explanation of the steps to be taken if the claimant
wishes to resubmit his/her claim for review.

	7.3	 	Within a reasonable period of time after the denial of the claim, but in any event, not to be
more than sixty (60) days, the claimant or his/her duly authorized representative may make
written application to the Company for a review of such denial. The claimant or his/her
representative, may, upon request and free of charge, review or receive copies of documents,
records and other information relevant to the claimant’s claim for benefits, and may submit
written comments, documents, records and other information relating to the claim for benefits.

	7.4	 	If an appeal is timely filed, the Company shall conduct a full and fair review of the claim
and mail or deliver to the claimant its written decision within sixty (60) days after the
claimant’s request for review (which may be extended by a period not to exceed an additional
sixty (60) days if special circumstances or a hearing so require and written notice to the
claimant is given prior to the expiration of the initial sixty (60) day period describing such
special circumstances and indicating the date by which the Company expects to render its
determination). In conducting its review, the Company shall take into account all comments,
documents, records and other information submitted by the claimant relating to the claim,
without regard to whether such information was submitted or considered in the initial benefit
determination. The Company’s decision on review shall:

	 	(i)	 	Be written in a manner calculated to be understood by the
claimant;
	 
	 	(ii)	 	State the specific reason(s) for the decision;
	 
	 	(iii)	 	Make specific reference to pertinent provision(s) of the Plan;
	 
	 	(iv)	 	State that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents,
records and other information relevant to the claimant’s claim for benefits;
and
	 
	 	(v)	 	Include a statement of the claimant’s right to bring a civil
action under Section 502(a) of ERISA.

	7.5	 	If a period of time is extended, as permitted under Sections 7.2 and 7.4 above, due to a
claimant’s failure to submit information to decide a claim, the period for making the benefit
determination on review shall be tolled from the date on which the notification of the
extension is sent to the claimant until the date on which the claimant responds to the request
for additional information.”

SECTION 8 — AMENDMENT AND TERMINATION

	8.1	 	This Plan may be amended, modified or terminated by the Company in whole or in part at any
time for any reason without the consent of any Affiliated Company or any employee or other
person, provided that, except for legally required amendments, 

 

 

	 	 	modifications and terminations,
no such amendment, modification or termination shall impair the rights of any Eligible
Employee who incurs a Termination Date prior to the date the Company adopts such amendment or
modification or approves such termination.

SECTION 9 — RIGHTS OF SETOFF

	9.1	 	Progressive shall have the unrestricted right and power to set off against, or recover out
of, any payments owed an Eligible Employee or other person under this Plan, at the time such
payments would have otherwise been payable under this Plan, any amounts owed to Progressive by
such Eligible Employee or other person.

SECTION 10 — FUNDING

	10.1	 	All payments pursuant to this Plan shall be made from Progressive’s general funds and nothing
contained herein shall be deemed to require Progressive to, and Progressive shall
not, physically segregate any sums from its general funds, or create any trust or escrow
account, or make any special deposit, in respect of any amounts payable hereunder.

SECTION 11 — ADMINISTRATION

	11.1	 	The Company shall be the Administrator of this Plan and shall be the “named fiduciary” within
the meaning of Section 402 of the Employee Retirement Income Security Act of 1974, as amended,
and, except as specified elsewhere herein, shall exercise all rights and duties with respect
hereto, including without limitation, the right:

	 	(a)	 	to make and enforce such rules and regulations as are necessary or proper for
the efficient administration of this Plan; and
	 
	 	(b)	 	to interpret and construe this Plan and to decide all disputes and other
matters arising hereunder, including but not limited to the right to determine
eligibility for benefits and resolve possible ambiguities, inconsistencies or
omissions. All such rules, interpretations and decisions shall be applied in a
uniform manner to all persons similarly situated.

Except as otherwise specifically provided herein, no action or decision taken in accordance
with this Plan by the Company or Progressive shall be relied upon as a precedent for any
similar action or decision under any circumstances.

SECTION 12 — EFFECTIVE DATE

	12.1	 	This Plan shall be effective November 1, 2001, but only as to Eligible Employees who incur
Termination Dates on or after such date.

     IN WITNESS WHEREOF, The Progressive Corporation has hereunto caused this Plan to be executed
by its duly authorized representative as of the 31st day of October, 2001.

     THE PROGRESSIVE CORPORATION

	 	 	 	 	 
	 	 	 
	 	By:  	                     /s/ Charles E. Jarrett
 	 
	 	 	Charles E. Jarrett, Secretary 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT A

SEPARATION AGREEMENT AND GENERAL RELEASE

(GROUP I AND II EMPLOYEES)

THIS AGREEMENT is entered into as of the ___day of                     , 20___
between (“Employee”) and                      (“Employer”) pursuant to The
Progressive Corporation Executive Separation Allowance Plan (the “Plan”).

     WHEREAS, Employee’s employment with Employer terminated (or will terminate) effective                     , 200___; and

     WHEREAS, Employee desires to receive certain employment termination benefits under the Plan;
and

     WHEREAS, the Plan provides employment termination benefits only to employees who sign a
Separation Agreement and General Release in the form specified in the Plan;

     NOW, THEREFORE, Employee and Employer hereby agree as follows:

	 	1.	 	Employer shall pay Employee a separation allowance of
$           pursuant to Section 3 of
the Plan in a lump sum on      , 200   [in monthly installments
commencing      , 200     ], subject to the limitations specified in the Plan.
	 
	 	2.	 	Employer shall pay Employee for all credited ETB in accordance with
Employer’s standard practices within thirty (30) days following the expiration of the
revocation period referred to at the end of this Agreement or at such earlier time as
may be required by law.
	 
	 	3.	 	Employee shall be entitled to continue his/her and his/her dependents’
medical, dental and vision coverages under The Progressive Corporation Group Insurance
Plan (“Group Insurance Plan”), subject to the terms, conditions and limitations of the
Group Insurance Plan. Employee also shall be entitled to the conversion privileges,
if any, applicable to his/her life insurance and/or other coverages under the Group
Insurance Plan.
	 
	 	4.	 	Employer shall provide the following additional payments and/or benefits to
Employee:
	 
	 	5.	 	Employee’s entitlement to pension benefits, if any, shall be determined in
accordance with The Progressive Corporation Long-Term Savings Plan.
	 
	 	6.	 	Employee shall be entitled to whatever other rights or benefits are available
to former employees of Progressive under any other written employee benefit plans or
programs maintained by Progressive, subject to the terms, conditions and limitations
of those plans and programs.

 

 

	 	7.	 	With the exception of the rights and benefits contained in, or expressly
referred to in this Agreement, Employee hereby waives any and all rights and benefits
Employee now has or might hereafter have acquired under the Plan, The Progressive
Corporation Separation Allowance Plan, The 200___Gainsharing Program and any other
compensation or bonus programs, employee benefit plans and fringe benefit programs
maintained by Progressive or any of its affiliates by virtue of Employee’s employment
with Progressive or the termination thereof.
	 
	 	8.	 	Employee acknowledges the forfeiture of any and all unvested non-qualified
stock options (“NQSOs”) awarded to Employee under The Progressive Corporation 1989
Incentive Plan or The Progressive Corporation 1995 Incentive Plan (the “Incentive
Plans”). Employee’s rights, if any, under The Progressive Corporation Executive
Deferred Compensation Plan, The Progressive Pension Plan and The Incentive Plans
(collectively, the “Programs”) shall be determined in accordance with the governing
provisions of the Programs as in effect from time to time. For purposes of such
Programs, Employee shall be considered to have terminated employment with Progressive
on the Separation Date.
	 
	 	9.	 	In consideration of the above undertakings of Employer, Employee hereby
releases Employer, Progressive and their respective affiliates, officers, directors,
employees, agents, successors and assigns (collectively, the “Released Entities”),
from any and all claims, liabilities, demands, actions, suits and causes of action,
whether known or unknown, that Employee ever had or now has against any of the
Released Entities, including but not limited to claims arising under the Age
Discrimination in Employment Act, as amended, and other claims relating to Employee’s
employment with Progressive and the termination of that employment, and claims under
The Progressive Corporation Separation Allowance Plan (collectively “Claims”). [If
Employee is a California resident, Employee acknowledges that he/she has read and
understands California Civil Code Section 1542, which reads as follows:

“A general release does not
extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing
the release, which if known by him must have
materially affected his settlement with the debtor.”

	 	 	 	Employee hereby waives the provisions and protections of California Civil Code
Section 1542 and agrees that the above release shall apply to all Claims that
Employee ever had or now has against the Released Entities, regardless of whether
Employee currently is aware of the Claims or suspects that they exist.]

 

 

	 	10.	 	Employee further agrees that he will not, during the twenty-four (24) month
period after the Separation Date, solicit or recruit any person who is a Progressive
employee at the time of such solicitation or recruitment (unless such person has
theretofore been given notice of the termination of his/her employment by Progressive)
to act as an employee, consultant, agent or independent contractor with respect to any
insurance or other business.
	 
	 	11.	 	Employee agrees that Employee will maintain the confidentiality of
confidential information which Employee has received by virtue of his/her employment
with Progressive and will refrain from using such information or disclosing it to
anyone other than Progressive or its employees. For purposes of this Agreement,
confidential information is information which Progressive endeavors to keep
confidential, including, without limitation, customer lists, employee lists, rate
schedules, underwriting information, the terms of contracts and policies, marketing
plans, program designs, trade secrets, proprietary information, and any such
information provided by a third party to Progressive in confidence. Employee
represents that promptly following his/her execution of this Agreement, Employee will
return to Progressive any records in his/her possession containing confidential
information of Progressive or records which are the property of Progressive.
	 
	 	12.	 	In the event of any actual or threatened breach by Employee of the provisions
of Paragraphs 10 or 11, Progressive shall be entitled to an injunction (including an
ex parte temporary restraining order) restraining Employee from
violating these provisions. The period provided in Paragraph 10 shall not run and
will be suspended during the period of any violation by Employee of Paragraph 10 and,
at the conclusion of any such violation, the period will run for its remaining term.
Progressive shall also be entitled to recover, as liquidated damages, the amount
equal to fifty percent (50%) of the severance paid to Employee under this Agreement.
	 
	 	13.	 	All payments to be made by Employer under this Agreement are subject to
applicable tax withholding, other legally required deductions and (except to the
extent prohibited by law) amounts due Progressive for any reason.
	 
	 	14.	 	All capitalized terms used in this Agreement shall have the meanings given to
them in the Plan, unless otherwise required clearly by the context.
	 
	 	15.	 	This Agreement, together with the Plan and the other documents referred to
herein, constitute the entire agreement of the parties, superseding all prior oral or
written representations, agreements and understandings relating to the subject matter
of this Agreement. Any modifications of this Agreement must be in a writing signed by
both parties in order to be effective. Employee may not assign this Agreement or any
of his/her

 

 

	 	 	 	rights or obligations hereunder without Employer’s prior written consent. This
Agreement is subject to the terms, provisions and limitations of the Plan in all
respects.
	 
	 	16.	 	Employee has read and understands all of the terms of this Agreement and
Employee has been encouraged to consult with an attorney. Employee acknowledges that
he/she has been given a period of at least                      (___) days to
review this Agreement with an attorney and individuals of his/her own choice and
consider its effect, including Employee’s release of rights. Employee signs this
Agreement in exchange for the consideration to be given to him/her, which Employee
acknowledges is adequate and satisfactory. Neither Progressive nor its agents,
representatives or employees have made any representations to Employee concerning the
terms or effects of this Agreement other than those contained in this Agreement or the
Plan.

IMPORTANT! BEFORE YOU SIGN THIS AGREEMENT YOU SHOULD CONSULT WITH AN ATTORNEY. ALSO,
AFTER YOU HAVE SIGNED THIS AGREEMENT YOU HAVE SEVEN (7) DAYS WITHIN WHICH TO REVOKE IT FOR
ANY REASON. YOU DO NOT NEED EMPLOYER’S CONSENT IN ORDER TO REVOKE THIS AGREEMENT, BUT YOU
MUST GIVE WRITTEN NOTICE OF YOUR REVOCATION TO EMPLOYER WITHIN THE SEVEN (7) DAY REVOCATION
PERIOD. THIS AGREEMENT WILL NOT BE EFFECTIVE OR ENFORCEABLE UNTIL THE EXPIRATION OF THE
SEVEN (7) DAY REVOCATION PERIOD.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated above.

	 	 	 
	 
	 

Witness

	 	 Employee
	 
	 	 
	 

Witness

	 	 Employer
	 
	 	 
	 

	 	By:
	 
	 	 
	 

	 	Title:

 

 

EXHIBIT B

SEPARATION AGREEMENT AND GENERAL RELEASE

(GROUP III EMPLOYEES)

THIS AGREEMENT is entered into as of the ___day of                     , 20___between (“Employee”) and                      (“Employer”) pursuant to The
Progressive Corporation Executive Separation Allowance Plan (the “Plan”).

     WHEREAS, Employee’s employment with Employer terminated (or will terminate) effective                     , 200___; and

     WHEREAS, Employee desires to receive certain employment termination benefits under the Plan;
and

     WHEREAS, the Plan provides employment termination benefits only to employees who sign a
Separation Agreement and General Release in the form specified in the Plan;

     NOW, THEREFORE, Employee and Employer hereby agree as follows:

	 	1.	 	Employer shall pay Employee a separation allowance of
$          
pursuant to Section 3 of the Plan in a lump sum on
     , 200    [in monthly installments
commencing      , 200     ], subject to the limitations specified in the Plan.
	 
	 	2.	 	Employer shall pay Employee for all credited ETB in accordance with
Employer’s standard practices within thirty (30) days following the expiration of the
revocation period referred to at the end of this Agreement or at such earlier time as
may be required by law.
	 
	 	3.	 	Employee shall be entitled to continue his/her and his/her dependents’
medical, dental and vision coverages under The Progressive Corporation Group Insurance
Plan (“Group Insurance Plan”), subject to the terms, conditions and limitations of the
Group Insurance Plan. Employee also shall be entitled to the conversion privileges,
if any, applicable to his/her life insurance and/or other coverages under the Group
Insurance Plan.
	 
	 	4.	 	Employer shall provide the following additional payments and/or benefits to
Employee:
	 
	 	5.	 	Employee’s entitlement to pension benefits, if any, shall be determined in
accordance with The Progressive Corporation Long-Term Savings Plan.
	 
	 	6.	 	Employee shall be entitled to whatever other rights or benefits are available
to former employees of Progressive under any other written employee benefit plans or
programs maintained by Progressive, subject to the terms, conditions and 

 

 

	 	7.	 	With the exception of the rights and benefits contained in, or expressly
referred to in this Agreement, Employee hereby waives any and all rights and benefits
Employee now has or might hereafter have acquired under the Plan, The Progressive
Corporation Separation Allowance Plan, The 200___Gainsharing Program and any other
compensation or bonus programs, employee benefit plans and fringe benefit programs
maintained by Progressive or any of its affiliates by virtue of Employee’s employment
with Progressive or the termination thereof.
	 
	 	8.	 	Employee acknowledges the forfeiture of any and all unvested non-qualified
stock options (“NQSOs”) awarded to Employee under The Progressive Corporation 1989
Incentive Plan or The Progressive Corporation 1995 Incentive Plan (the “Incentive
Plans”). Employee’s rights, if any, under The Progressive Corporation Executive
Deferred Compensation Plan, The Progressive Pension Plan and The Incentive Plans
(collectively, the “Programs”) shall be determined in accordance with the governing
provisions of the Programs as in effect from time to time. For purposes of such
Programs, Employee shall be considered to have terminated employment with Progressive
on the Separation Date.
	 
	 	9.	 	In consideration of the above undertakings of Employer, Employee hereby
releases Employer, Progressive and their respective affiliates, officers, directors,
employees, agents, successors and assigns (collectively, the “Released Entities”),
from any and all claims, liabilities, demands, actions, suits and causes of action,
whether known or unknown, that Employee ever had or now has against any of the
Released Entities, including but not limited to claims arising under the Age
Discrimination in Employment Act, as amended, and other claims relating to Employee’s
employment with Progressive and the termination of that employment, and claims under
The Progressive Corporation Separation Allowance Plan (collectively “Claims”). [If
Employee is a California resident, Employee acknowledges that he/she has read and
understands California Civil Code Section 1542, which reads as follows:

“A general release does not
extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing
the release, which if known by him must have
materially affected his settlement with the debtor.”

	 	 	 	Employee hereby waives the provisions and protections of California Civil Code
Section 1542 and agrees that the above release shall apply to all Claims that
Employee ever had or now has against the Released Entities, regardless of whether
Employee currently is aware of the Claims or suspects that they exist.]
	 
	 	10.	 	Employee agrees that Employee will maintain the confidentiality of
confidential information which Employee has received by virtue of his/her

 

 

	 	 	 	employment with Progressive and will refrain from using such information or
disclosing it to anyone other than Progressive or its employees. For purposes of
this Agreement, confidential information is information which Progressive endeavors
to keep confidential, including, without limitation, customer lists, employee
lists, rate schedules, underwriting information, the terms of contracts and
policies, marketing plans, program designs, trade secrets, proprietary information,
and any such information provided by a third party to Progressive in confidence.
Employee represents that promptly following his/her execution of this Agreement,
Employee will return to Progressive any records in his/her possession containing
confidential information of Progressive or records which are the property of
Progressive.
	 
	 	11.	 	In the event of any actual or threatened breach by Employee of the provisions
of Paragraphs 10, Progressive shall be entitled to an injunction (including an
ex parte temporary restraining order) restraining Employee from
violating these provisions. Progressive shall also be entitled to recover, as
liquidated damages, the amount equal to fifty percent (50%) of the severance paid to
Employee under this Agreement.
	 
	 	12.	 	All payments to be made by Employer under this Agreement are subject to
applicable tax withholding, other legally required deductions and (except to the
extent prohibited by law) amounts due Progressive for any reason.
	 
	 	13.	 	All capitalized terms used in this Agreement shall have the meanings given to
them in the Plan, unless otherwise required clearly by the context.
	 
	 	14.	 	This Agreement, together with the Plan and the other documents referred to
herein, constitute the entire agreement of the parties, superseding all prior oral or
written representations, agreements and understandings relating to the subject matter
of this Agreement. Any modifications of this Agreement must be in a writing signed by
both parties in order to be effective. Employee may not assign this Agreement or any
of his/her rights or obligations hereunder without Employer’s prior written consent.
This Agreement is subject to the terms, provisions and limitations of the Plan in all
respects.
	 
	 	15.	 	Employee has read and understands all of the terms of this Agreement and
Employee has been encouraged to consult with an attorney. Employee acknowledges that
he/she has been given a period of at least                      (___) days to
review this Agreement with an attorney and individuals of his/her own choice and
consider its effect, including Employee’s release of rights. Employee signs this
Agreement in exchange for the consideration to be given to him/her, which Employee
acknowledges is adequate and satisfactory. Neither Progressive nor its agents,
representatives or employees have made any representations to Employee concerning the
terms or effects of this Agreement other than those contained in this Agreement or the
Plan.

 

 

	 	 	IMPORTANT! BEFORE YOU SIGN THIS AGREEMENT YOU SHOULD CONSULT WITH AN ATTORNEY. ALSO,
AFTER YOU HAVE SIGNED THIS AGREEMENT YOU HAVE SEVEN (7) DAYS WITHIN WHICH TO REVOKE IT FOR
ANY REASON. YOU DO NOT NEED EMPLOYER’S CONSENT IN ORDER TO REVOKE THIS AGREEMENT, BUT YOU
MUST GIVE WRITTEN NOTICE OF YOUR REVOCATION TO EMPLOYER WITHIN THE SEVEN (7) DAY REVOCATION
PERIOD. THIS AGREEMENT WILL NOT BE EFFECTIVE OR ENFORCEABLE UNTIL THE EXPIRATION OF THE
SEVEN (7) DAY REVOCATION PERIOD.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated above.

	 	 	 
	 
	 

Witness

	 	 Employee
	 
	 	 
	 

Witness

	 	 Employer
	 
	 	 
	 

	 	Title:

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