Document:

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                                                                   Exhibit 10(H)

                           THE PROGRESSIVE CORPORATION

                            1999 EXECUTIVE BONUS PLAN

                        (AS AMENDED ON FEBRUARY 14, 2001)

1.       The Progressive Corporation and its subsidiaries ("Progressive") have
         designed an executive compensation program consisting of three
         components: salary, annual bonus and equity-based incentives in the
         form of non-qualified stock options. 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.

2.       The 1999 Executive Bonus Plan, as amended (the "Plan") provides the
         annual bonus component of Progressive's executive compensation program
         for Plan participants. The Plan shall be administered by or under the
         direction of the Executive Compensation Committee (the "Committee") of
         the Board of Directors. Executive officers of Progressive may be
         selected by the Committee to participate in the Plan for one or more
         Plan years. Plan years shall coincide with Progressive's fiscal years.

3.       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 $3,000,000.00.

4.       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, "salary" and
         "Paid Salary" shall include regular, vacation, sick, holiday and
         funeral pay 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 not include any (a) short-term or long-term
         disability payments, (b) lump sum merit adjustments, (c) discretionary
         or other bonus or incentive payments or (d) the earnings replacement
         component of any worker's compensation award.

5.       The Target Percentages for the participants in the Plan shall be
         determined by the Committee, but will not exceed 150% for any
         participant. Target Percentages may vary among Plan participants and
         may be changed from year to year by the Committee.

6.       The Performance Factor

         A.       General

                  The Performance Factor shall consist of one or more of the
                  following components: a Core Business Profitability and Growth
                  Component, a Business Segment Performance Component, a Cost
                  Structure Improvement Component and an Investment Performance
                  Component (the "Bonus Components"). An appropriate combination
                  of Bonus Components will be designated for each participant,
                  and the designated Bonus
<PAGE>   2
                  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 amount of the Annual Bonus for
                  any Plan year, the performance score achieved for each of the
                  designated Bonus Components will be multiplied by the
                  applicable weighting factor to produce a Weighted Performance
                  Score. The sum of the Weighted Performance Scores will equal
                  the Performance Factor. The Performance Factor will equal 1.0
                  if specified performance goals are met, and can vary from 0 to
                  2.0, based on actual performance versus the pre-established
                  objectives.

                  Actual performance results achieved for any Plan year, as 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.

         B.       Core Business Profitability and Growth Component

                  The Core Business Profitability and Growth Component measures
                  overalloperating performance of Progressive's Personal Lines
                  segment excluding Midland Financial Group, Inc.) and
                  commercial vehicle insurance business unit (collectively, the
                  "Core Business") for the Plan year for which an Annual Bonus
                  payment is to be made. For purposes of computing a Performance
                  Score for this Component, operating performance results are
                  measured by a Gainsharing Matrix, as established by or under
                  the direction of the Committee for the Plan year, which
                  assigns a Profitability and Growth Performance Score to
                  various combinations of profitability (as measured by the
                  Gainsharing Combined Ratio) and growth (based on year-to-year
                  change in Net Written Premium) outcomes.

                  The Gainsharing Combined Ratio is determined for the Core
                  Business as follows:

                  1.       Each year, a target combined ratio is established by
                           or under the direction of the Committee for all
                           products within the Core Business, determined to
                           yield an average policy life target combined ratio of
                           96.

                  2.       A weighted target combined ratio is calculated based
                           on the various target combined ratios for the
                           constituent product categories, which are weighted on
                           the basis of the Net Earned Premium generated by each
                           such product category for the Plan year.

                  3.       The actual GAAP combined ratio achieved for the Plan
                           year is subtracted from the weighted target combined
                           ratio to determine the extent to which performance is
                           over or under target. This result, whether positive
                           or negative, is subtracted from the average policy
                           life combined ratio target of 96 to determine the
                           Gainsharing Combined Ratio.

                  The Gainsharing Combined Ratio is then matched with growth in
                  Net Written Premium using the Gainsharing Matrix to determine
                  a Core Business Profitability and Growth Performance Score.
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         C.       Business Segment Performance Component

                  The Business Segment Performance Component measures the
                  performance of a designated Business Segment (as defined
                  below) in terms of any one or more of the following criteria
                  selected by the Committee: profitability (measured by the
                  combined ratio, weighted combined ratio, return on equity or
                  return on revenue), growth (measured by net written premium,
                  earned premium or revenues) or operating effectiveness
                  (measured by systems availability or timeliness of response).
                  A Business Segment may consist of a distribution channel,
                  business unit, product, function, process or other business
                  category, such as new or renewal business. The Committee may
                  designate one or more Business Segment Performance Components
                  for an individual Plan participant for any Plan year and, for
                  each such Component, will determine the applicable criteria
                  upon which performance will be measured, the goals to be
                  achieved and the performance scores that will result from
                  various levels of performance. The applicable criteria,
                  related goals and resulting performance scores may be set
                  forth in a Business Segment Performance Matrix or other format
                  approved by the Committee. Business Segment Performance
                  Components, performance criteria, goals and resulting
                  performance scores may vary among participants and may be
                  changed from year to year by the Committee.

         D.       Cost Structure Improvement Component

                  The Cost Structure Improvement Component measures success in
                  achieving cost structure improvement for the Core Business, as
                  a whole, or for an assigned Business Segment, if applicable.
                  Results are reflected in a Cost Structure Improvement Score.
                  For purposes of computing the Cost Structure Improvement
                  Score, cost structure improvement is measured by comparing the
                  sum of the GAAP Underwriting Expense Ratio ("Underwriting
                  Expense Ratio") and Loss Adjustment Expense Ratio ("LAE
                  Ratio") achieved for the Plan year (collectively, "Actual
                  Expense Ratio") against defined expense objectives for that
                  year, as established by or under the direction of the
                  Committee ("Target Expense Ratio"). The Target Expense Ratio,
                  including its individual components, may vary by Business
                  Segment and/or for the Core Business as a whole, and may be
                  changed from year to year by or under the direction of the
                  Committee.

                  The Cost Structure Improvement Score will be computed in
                  accordance with the following formula:

<TABLE>
<CAPTION>
<S>                                             <C>

Cost Structure Improvement Score = 1 + [Target Expense Ratio-Actual Expense Ratio]
                                       -------------------------------------------
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</TABLE>
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         E.       Investment Performance Component

                  The Investment Performance Component compares the investment
                  performance of individual segments of Progressive's investment
                  portfolio ("Portfolio Segments") against the performance of
                  selected groups of comparable investment funds, 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 determined by the
                  Committee. Investment results are marked to market in order to
                  calculate total return, which is then compared against the
                  designated Investment Benchmarks to produce a Performance
                  Score for each Portfolio Segment.

                  The applicable Portfolio Segments 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 Portfolio
                  Segments, the Performance Scores for each of the Portfolio
                  Segments will be weighted, based on the average amounts
                  invested from time to time in each of such Portfolio Segments
                  during the Plan year, and the weighted Performance Scores for
                  the applicable Portfolio Segments will be then combined to
                  produce the Investment Performance Score. Investment expense
                  is not included in determining investment performance vs.
                  benchmark.

8.       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.

         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 the Annual Bonus otherwise payable
         under this Plan, subject to and in accordance with the terms of the
         Deferral Plan.

9.       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 the date designated for payment thereof.
         Annual Bonus payments made to participants will be net of any legally
         required deductions for federal, state and local taxes and other items.

10.      The right to any of the Annual Bonuses hereunder may not be
         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.      The Plan will be administered by or under the direction of the
         Committee. The Committee will have the authority to adopt, alter 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 thereunder. All such interpretations and
         determinations will be final and binding on Progressive, all Plan
         participants
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         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").

12.      The Plan will be subject to approval by the holders of Progressive'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.

13.      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
         Progressive's shareholders in accordance with the requirements of
         Section 162(m).

14.      The Plan will be unfunded and all payments due under the Plan will
         be made from Progressive's general assets.

15.      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, duties or compensation.

16.      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.

17.      This Plan supersedes all prior plans, agreements, understandings and
         arrangements regarding bonuses or other cash incentive compensation
         payable or due to any participant from Progressive. Without limiting
         the generality of the foregoing, this Plan supersedes and replaces The
         Progressive Corporation 1997 Executive Bonus Plan, as heretofore in
         effect (the "Prior Plan"), which is and shall be deemed to be
         terminated as of December 31, 1998 (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.      This Plan is adopted and, subject to the provisions of Paragraph 12
         hereof, is to be effective, as of January 1, 1999. Subject to the
         provisions of Paragraph 12, this Plan shall be effective for 1999 and
         for each year thereafter unless and until terminated by the Committee.

19.      This Plan shall be interpreted and construed in accordance with the
         laws of the State of Ohio.<PAGE>   1
                                                                   Exhibit 10(I)

                           THE PROGRESSIVE CORPORATION

                             DIRECTORS DEFERRAL PLAN

                           (Amendment and Restatement)

1.  PURPOSES OF THE PLAN.

The purposes of this Plan are to attract and retain qualified Directors and to
provide incentives to these Directors through the ability to defer their receipt
of Director Fees and by providing Directors with the opportunity to participate
in the Company's growth.

2. DEFINITIONS.

     (a) "Board" means the Board of Directors of the Company.

     (b) "Common Shares" means units equivalent in value and dividend rights to
     Common Shares, $1.00 par value, of the Company.

     (c) "Company" means The Progressive Corporation.

     (d) "Deferred Account" means the account established by the Company for
     each Director who elects to defer the Fees payable to him as a Director.

     (e) "Director" means any director of the Company who is not an employee
     of the Company.

     (f) "Election Agreement" means the written election to defer Director Fees
     signed by the Director and in the form provided by the Chief Financial
     Officer of the Company.

     (g) "Fees" means the fees payable to a Director by reason of his serving on
     the Board either (i) as a retainer (without regard to attendance at
     meetings) or (ii) on a per meeting basis. "Retainer Fees" means those Fees
     which are payable to a Director by reason of his serving on the Board as a
     retainer (without regard to attendance at meetings), and "Meeting Fees"
     means those Fees which are payable to a Director by reason of his
     attendance at meetings of the Board or any committee thereof.

     (h) "Market Price" means the average of the high and low price at which a
     share of the Company's Common Stock, $1.00 par value, is traded on the NYSE
     on a given date.

     (i) "Member" means any Director who has at any time deferred the receipt of
     Director Fees in accordance with this Plan.

     (j) "Plan" means The Progressive Corporation Directors Deferral Plan.

     (k) "Term" means the duration of the term for which a Director is elected.

     (l) "Year" means the calendar year.
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     (m) Whenever appropriate, words used herein in the singular may be read as
     the plural and the plural may be read as the singular.

     (n) Masculine pronouns used herein shall be deemed to refer to both women
     and men.

3. ELECTION TO DEFER DIRECTOR FEES.

     (a) ELIGIBILITY.

     A Director may elect to defer receipt of all or a portion of his Fees for
     any Year in accordance with Paragraph 3(b) hereof.

     (b) TIME OF ELECTION.

     A Director desiring to defer all or a portion of his Fees for the upcoming
     Year must submit an Election Agreement to the Chief Financial Officer of
     the Company no later than the last day of the Year prior to the Year for
     which the election is to be effective.

     Any Director who was not a Director during the previous Year may make an
     election to defer all or a portion of the Fees for the Year in which the
     Director is elected to the Board by delivering an Election Agreement to the
     Chief Financial Officer of the Company within thirty (30) days of such
     election to the Board. A Director fulfilling the above requirements shall
     be considered a "Member" for purposes of this Plan.

     (c) DURATION AND NATURE OF ELECTION.

     Subject to the following sentence, a Member's election to defer Fees shall
     continue in effect from Year to Year unless modified or revoked by the
     Member through written notice to the Chief Financial Officer of the Company
     prior to the beginning of the Year for which the revocation or modification
     is to apply. Modifications or revocations shall not apply retroactively,
     and once a Member has made, or is deemed to have made, an election to defer
     all or a portion of his Fees for a given Year, such election may not be
     modified or revoked.

4. THE AMOUNT AND DATE OF DEFERRAL.

The Election Agreement of the Member shall indicate the amount of Fees to be
deferred and the date to which the Fees are to be deferred. The deferral of
Retainer Fees shall be subject to Paragraph 7 hereof; the deferral of Meeting
Fees shall be to the earlier of (1) the date selected by the Member in an
Election Agreement, which date shall not be earlier than six months and one day
after the date on which such Fees are credited to the Member's Deferred Account
or (2) the date of the death of the Member. Subject to the preceding sentence, a
Member may (i) select a lump-sum distribution or a series of distributions or
installments and (ii) choose the date on which the lump sum shall be paid or the
installments shall commence. The installments may not be more frequent than
quarterly and may not consist of more than forty (40) quarterly or ten (10)
annual installments. All payments will be made on the first business day of a
calendar quarter. In the case of the death of the Member, distribution of the
deferred Fees shall be made in accordance with Paragraph 8.
<PAGE>   3
5. DEFERRAL ACCOUNTS.

     (a) ACCOUNTS.

     The Company shall establish and preserve one or more accounts for each
     Member. A Member shall designate on the Election Agreement whether to have
     the account valued on the basis of the Common Shares of the Company in
     accordance with Paragraph 5(b) hereof or on the basis of cash in accordance
     with Paragraph 5(c) hereof. A Member may defer a portion of his Fees into
     each type of account. The Company may establish separate accounts for a
     Member to properly account for amounts deferred under the two alternatives
     or during different years. An account valued on the basis of the Company's
     Common Shares shall be known as a "Stock Account" and an account valued on
     the basis of cash shall be known as a "Cash Account." Amounts held in a
     Stock Account may not be transferred to a Cash Account and vice versa.

     (b) STOCK ACCOUNT.

     There shall be credited to a Member's Stock Account, on the last day of
     each quarter, the number of Common Shares (whole or fractional, rounded to
     the nearest thousandth of a share) equal to the quotient obtained by
     dividing (i) the sum of the Fees he elects to defer to his Stock Account
     which otherwise would have been paid to him during the quarter and the
     dividends payable during such quarter on the Common Shares held in his
     Stock Account on the first day of such quarter, by (ii) the Market Price of
     the Common Shares on the last business day of such quarter.

     (c) CASH ACCOUNT.

     If a Member elects to have a portion of his Fees deferred into a Cash
     Account, there will be credited to his Cash Account, on the last day of
     each quarter, an amount equal to the sum of (i) the Fees he elects to defer
     to his Cash Account which otherwise would have been paid to him during the
     quarter and (ii) interest on the balance in the Cash Account on the first
     day of such quarter at a rate based on the rate of interest offered by
     National City Bank, Cleveland, Ohio, on the last business day of such
     quarter on new three-month certificates of deposit.

     (d) CLAIMS OF GENERAL CREDITORS.

     All compensation deferred and amounts credited to the Cash and Stock
     Accounts under this Plan shall remain a part of the general assets of the
     Company. Accordingly, the compensation deferred under this Plan is subject
     to the claims of the Company's general creditors.

6. PAYMENT OF ACCOUNTS.

The accounts established and maintained for each Member shall be distributed in
a lump sum or installments. The selection of the distribution date(s) and the
method of distribution are to be indicated on the Election Agreement to be
submitted by the Member. The election as to the method of and time for payment
of the amount of an account relating to Fees deferred for a particular Year may
not be altered with respect to that particular Year once the election has been
made. Changes in the method of and time for payment of the amount of an account
may be
<PAGE>   4
effected for future Years by notifying the Chief Financial Officer in
writing prior to the beginning of the Year for which the modification is to
apply in accordance with Paragraph 3 above.

With respect to all distributions to be made under the Plan, the following rules
shall apply:

     (i) All distributions, whether from a Stock Account or a Cash Account,
     shall be paid in cash subject to withholding or deduction by the Company of
     any taxes, contributions, payments and assessments which the Company is now
     or may hereafter be required or authorized by law to withhold or deduct
     from distributions;

     (ii) The amount of the distribution from the Stock Account shall be valued
     based on the Market Price of the Company's Common Shares, $1.00 par value,
     on the last business day of the calendar quarter immediately preceding the
     distribution date; and

     (iii) The amount of the distribution from the Cash Account shall be valued
     based on the value of the Cash Account on the last business day of the
     calendar quarter immediately preceding the distribution date.

In the event a Member elects to receive installment payments, the following
rules shall apply:

     (i) The balance of the Stock Account shall be credited, pursuant to
     Paragraph 5(b) above, with additional Common Shares upon the payment of
     dividends until the Stock Account is completely distributed;

     (ii) The balance of the Cash Account shall be credited, pursuant to
     Paragraph 5(c) above, with interest quarterly until the Cash Account is
     completely distributed; and

     (iii) The amount of each installment shall be determined by dividing the
     value of the Stock Account, the Cash Account, or both, by the number of
     installments remaining to be paid to the Member.

7. MINIMUM DEFERRAL.

Retainer Fees shall be deferred as provided in this Paragraph 7. Absent the
filing by a Director of an Election Agreement deferring into a Stock Account all
Retainer Fees which are payable to such Director until a date which is on or
after the Retainer Fee Minimum Deferral Date (as herein defined), the Director
shall be deemed to have filed an election deferring such Fees until the Retainer
Fee Minimum Deferral Date, electing to have such Fees deposited to a Stock
Account and indicating that such Fees shall be distributed in a lump sum on the
first day of the calendar quarter immediately following the Retainer Fee Minimum
Deferral Date. For purposes hereof, the Retainer Fee Minimum Deferral Date shall
be the later of (a) the date which is six (6) months and one day after the date
upon which the Retainer Fees are credited to a Stock Account or (b) the date of
the expiration of the Director's then current Term.

8. DEATH OF MEMBER.

A Member may, in the Election Agreement described in Paragraph 3 above, provide
that, in the event of his death prior to the date or dates on which his account
balance is distributable, the
<PAGE>   5
account balance shall be distributed to his estate or designated beneficiary in
a single distribution or in the installments contemplated by Paragraph 6 above.
This election shall be made at the time of the election contemplated by
Paragraph 3 above. If no such election is made, the account balance shall be
distributed to the estate of the deceased Member in a single distribution
six months after the Member's death.

9. VALUATION OF ACCOUNTS.

Each account shall be valued as of the last day of each calendar quarter until
payment of the account in full to the Member in accordance with Paragraph 6.
Each Member shall receive a statement of his accounts not less than annually.

10. CAPITAL CHANGES.

In the event of any change in the number of outstanding Common Shares, $1.00 par
value, of the Company by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off, reorganization, combination
or exchange of shares or a similar corporate change, the Board shall determine,
in its sole discretion, the extent to which such change equitably requires an
adjustment in the number of Common Shares held in the Stock Accounts and such
adjustment shall be made by the Company and shall be conclusive and binding on
all Members of the Plan.

11. DEFERRED VESTING OF COMMON SHARES.

 Retainer Fees credited to a Member's Stock Account (whether as a result of
filing an election under Paragraph 3(b) or a deemed election under Paragraph 7)
shall not vest upon their being credited to the Member's Stock Account, but
shall become vested only upon the expiration of the Term of such Director to
which the Fees relate or upon such Director's earlier death, resignation due to
disability or removal without cause. If a Director ceases to be a Director for
any reason other than death, resignation due to disability or removal without
cause, the Director shall forfeit all Retainer Fees credited to his Stock
Account during his unexpired Term, along with any dividends attributable
thereto, and the Member's Stock Account shall be reduced accordingly.

12. ADMINISTRATION.

This Plan shall be administered by the Board or by an appropriate Committee of
Directors selected by the Board. The Board or the appropriate Committee shall
have the sole right and authority to interpret and construe the provisions of
this Plan, and its decisions on any matter or dispute arising under the Plan
shall be binding and conclusive upon the Members. If a Member is part of the
Board or Committee that administers this Plan, he shall not participate in any
deliberations or actions of the Board or such Committee relating exclusively to
his membership or participation in this Plan.

13. TERMINATION OR MODIFICATION OF PLAN.

This Plan may be terminated, modified, or amended at the sole discretion of the
Board. If this Plan is terminated, the remaining Deferred Account balances will
be distributed pursuant to the terms of this Plan and no additional deferrals
will be permitted.
<PAGE>   6
14. NON-ALIENATION.

The amounts credited to any accounts maintained under the Plan may not be
pledged, assigned, or transferred by the Director for whom such account is
maintained or by any other individual, and any purported pledge, assignment, or
transfer shall be void and unenforceable.

15. CLAIMS OF OTHER PERSONS.

The provisions of the Plan shall in no event be construed as giving any person,
firm or corporation any legal or equitable right as against the Company or any
subsidiary, or the officers, employees, or directors of the Company or any
subsidiary, except any such rights as are specifically provided for in the Plan
or are hereafter created in accordance with the terms and provisions of the
Plan.

16. SEVERABILITY.

The invalidity and unenforceability of any particular provision of the Plan
shall not affect any other provision hereof, and the Plan shall be construed in
all respects as if such invalid or unenforceable provisions were omitted
herefrom.

17. GOVERNING LAW.

 The provisions of the Plan shall be governed by and construed in accordance
with the laws of the State of Ohio.
<PAGE>   7
                                 AMENDMENT NO. 1

                                       TO

                           THE PROGRESSIVE CORPORATION

                             DIRECTORS DEFERRAL PLAN

                           (AMENDMENT AND RESTATEMENT)

The Progressive Corporation Directors Deferral Plan (Amendment and Restatement)
(the "Plan") is hereby amended as follows:

1. Section 2(g) of the Plan is hereby amended to read as follows:

     (g) "Fees" means the fees payable to a Director by reason of his or her
     serving on the Board and includes both "Retainer Fees" and "Meeting and
     Service Fees." "Retainer Fees" means those Fees which are payable to a
     Director by reason of his or her serving on the Board (without regard to
     attendance at meetings). "Meeting and Service Fees" means those Fees which
     are payable to a Director (i) by reason of his or her attendance at
     meetings of the Board or any committee thereof, or (ii) for participation
     in meetings of the Company's management, or other Board-related activities,
     for which such Director is entitled to receive compensation, as determined
     in the sole discretion of the Chairman of the Board.

2. All references to "Meeting Fees" contained in the Plan are hereby amended to
read "Meeting and Service Fees."

The foregoing amendments will be effective as of October 25, 1996, and will be
applicable to all Plan years beginning on or after January 1, 1997.

                                                          /s/ David M. Schneider
                                                          ----------------------

                                                              David M. Schneider

                                                                       Secretary

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