Document:

EX-4(H) THIRD SUPPLEMENTAL INDENTURE

 

Exhibit No. 4(H)

THE PROGRESSIVE CORPORATION

and

STATE STREET BANK AND TRUST COMPANY, as

Successor Trustee

THIRD SUPPLEMENTAL INDENTURE

6.375% Senior Notes due 2012

     THIS THIRD SUPPLEMENTAL INDENTURE, dated as of December 7, 2001, between THE PROGRESSIVE
CORPORATION, an Ohio corporation (the “ISSUER”) and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company (“SSB”), in its capacity as Successor Trustee.

W I T N E S S E T H:

     WHEREAS, the Issuer entered into an Indenture, dated as of September 15, 1993 (as supplemented
by the First Supplemental Indenture, dated as of March 15, 1996, the “INDENTURE”), with the First
National Bank of Boston, in its

capacity as Trustee, pursuant to which the Issuer may from time to time issue its unsecured
debentures, notes and other evidences of indebtedness in one or more series; and

     WHEREAS, the Issuer entered into a Supplemental Indenture, dated as of March 15, 1996,
confirming the succession of SSB as trustee under the Indenture;

and

     WHEREAS, the Issuer entered into a Second Supplemental Indenture, dated as of February 26,
1999;

     WHEREAS, Article Eight of the Indenture provides for various matters with respect to any
series of Securities issued under the Indenture to be established in an indenture supplemental to
the Indenture; and

     WHEREAS, Section 8.1(c) of the Indenture provides that the Issuer, when authorized by its
Board of Directors, and the Trustee may from time to time and at any time enter into an indenture
supplemental to the Indenture to add on to the covenants of the Issuer certain further covenants,
restrictions, conditions or provisions.

     NOW THEREFORE:

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     In consideration of the premises and other good and valuable consideration, the parties hereto
mutually covenant and agree as follows:

ARTICLE 1

RELATION TO INDENTURE; DEFINITIONS

     SECTION 1.01. Integral Part. This Third Supplemental Indenture constitutes an integral part of
the Indenture.

     SECTION 1.02. General Definitions. For all purposes of this Third Supplemental Indenture:

     (a) capitalized terms used herein without definition shall have the meanings specified in the
Indenture;

     (b) all references herein to Articles and Sections, unless otherwise specified, refer to the
corresponding Articles and Sections of this Third Supplemental Indenture; and

     (c) the terms “HEREIN”, “HEREOF”, “HEREUNDER” and other words of similar import refer to this
Third Supplemental Indenture.

     SECTION 1.03. Definitions. The following definitions shall apply to this Third Supplemental
Indenture:

     “CONSOLIDATED TANGIBLE NET WORTH” means, at any date, the total assets appearing on the
consolidated balance sheet of the Issuer and its consolidated subsidiaries as of the end of the
then most recent fiscal quarter of the Issuer, prepared in accordance with generally accepted
accounting principles, less the
sum of (a) the total liabilities appearing on such balance sheet and (b) intangible assets.
“INTANGIBLE ASSETS” means, for the purposes of this definition, the value, as shown on or reflected
in such balance sheet, of (i)
all trade names, trademarks, licenses, patents, copyrights and goodwill, (ii) organizational costs
and (iii) unamortized debt discount and expense, less unamortized premium.

     “DESIGNATED SECURITIES” means the series of Securities designated by the Issuer as its “6.375%
Senior Notes due 2012”.

     “DESIGNATED SUBSIDIARY” means (i) Progressive Casualty Insurance Company, an Ohio corporation,
so long as it remains a subsidiary of the Issuer, (ii) any other consolidated subsidiary of the
Issuer the assets of which
constitute 10% or more of the Total Assets, and (iii) any subsidiary that is a successor to all or
substantially all of the business or properties of any such subsidiary.

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     “TOTAL ASSETS” means, at any date, the total assets appearing on the consolidated balance
sheet of the Issuer and its consolidated subsidiaries as of the end of the then most recent fiscal
quarter of the Issuer, prepared in accordance with generally accepted accounting principles.

ARTICLE 2

ADDITIONAL COVENANTS

     SECTION 2.01. Limitation on Liens. The Issuer will not, nor will it permit any Designated
Subsidiary to, incur, issue, assume or guarantee any indebtedness for money borrowed if (i) that
indebtedness is secured by a pledge,

mortgage, deed of trust or other lien on any shares of stock or indebtedness of any Designated
Subsidiary (a “LIEN”), and (ii) the aggregate amount of the indebtedness so secured exceeds an
amount equal to 15% of the Issuer’s Consolidated Tangible Net Worth, unless the Designated
Securities are also secured equally and ratably with such other indebtedness. For purposes of this
restriction, a “LIEN” will not include the pledge to, or deposit with, any state or provincial
insurance regulatory authorities of any investment securities by the Issuer or any of its subsidiaries.

     The foregoing restriction shall not apply to indebtedness secured by:

     (a) Liens on any shares of stock or indebtedness of or acquired from a corporation merged or
consolidated with or into, or otherwise acquired by, the Issuer or a Designated Subsidiary;

     (b) Liens to secure indebtedness of a Designated Subsidiary to the Issuer or to another
Designated Subsidiary, but only as long as such indebtedness is owned or held by the Issuer or a
Designated Subsidiary; and

     (c) Any extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any lien referred to in (a) and (b).

     SECTION 2.02. Consolidation, Merger, Sale, Conveyance and Lease. The Issuer will not
consolidate or merge with or into any other Person or Persons, or sell, convey or lease all or
substantially all of its property to any other Person, unless:

     (a) the Person formed by such consolidation, or into which the Issuer is merged or which
acquires or leases all or substantially all of the property of the Issuer, is a corporation or
other entity organized under the laws of the

United States, any state thereof or the District of Columbia, and such Person expressly assumes the
Issuer’s obligations under the Designated Securities and the Indenture; and

     (b) immediately after giving effect to the transaction, no Event of Default exists.

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     This restriction shall not apply if the Issuer is the Person that survives any such
transaction.

         In the event of a conflict between any provision in this Section and any provision in Article
9 of the Indenture, Article 9 of the Indenture shall govern.

ARTICLE 3

MISCELLANEOUS PROVISIONS

     SECTION 3.01. Applicability of this Third Supplemental Indenture. The provisions of this Third
Supplemental Indenture will be applicable solely to the Designated Securities.

     SECTION 3.02. Adoption, Ratification and Confirmation. The Indenture, as supplemented by this
Third Supplemental Indenture, is in all respects hereby adopted, ratified and confirmed.

     SECTION 3.03. Counterparts. This Third Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed an original; and all such counterparts
shall together constitute but one and the same instrument.

     SECTION 3.04. GOVERNING LAW. THIS THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

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     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be
duly executed and their respective corporate seals to be hereunto fixed and attested as of the day
and year first written above.

	 	 	 	 	 	 	 
	 	 	THE PROGRESSIVE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen D. Peterson	 	 
	 

	 	 	 	 

Stephen D. Peterson

Treasurer
	 	 

	 	 	 	 	 
	Attest:	 	 
	 
	By:

	 	/s/ Charles E. Jarrett	 	 
	 

	 	 

Charles E. Jarrett

Secretary
	 	 

	 	 	 	 	 	 	 
	 	 	STATE STREET BANK AND TRUST

      COMPANY, as Successor Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dori Ann Seakas	 	 
	 

	 	 	 	 

Name: Dori Ann Seakas

Title: Officer
	 	 

	 	 	 	 	 
	Attest:	 	 
	 
	By:

	 	/s/ Patrick E. Thebado	 	 
	 

	 	 

Name: Patrick E. Thebado

Title: Vice President
	 	 

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STATE OF OHIO

                     ss:

COUNTY OF CUYAHOGA

     On this ___th day of December, 2001, before me personally came Stephen D. Peterson, to me
personally known, who, being by me duly sworn, did depose and say that he is a resident of Cuyahoga
County, Ohio; that he is an officer of THE PROGRESSIVE CORPORATION, one of the corporations
described in and which executed

the above instrument; that he knows the corporate seal of said corporation; that the seal affixed
to said instrument is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he
signed his name thereto by like authority.

	 	 	 	 	 
	 

	 	 

Notary Public

My commission expires:
	 	 

[Notarial Seal]

STATE OF MASSACHUSETTS                       ss.:

COUNTY OF SUFFOLK

     On this ___th day of December, 2001, before me personally came, to me personally known, who,
being by me duly sworn, did depose and say that he is a resident of Bristol County, Massachusetts;
that he is an authorized officer of STATE STREET BANK AND TRUST COMPANY, one of the corporations
described in and which executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to said instruments is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he signed her name
thereto by like authority.

	 	 	 	 	 
	 

	 	 

Notary Public
	 	 
	 

	 	My commission expires:	 	 

[Notary Seal]

- 6 -EX-4(I) SENIOR NOTE SECURITY

 

Exhibit No. 4(I)

(Face of Security)

     Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation (“DTC”) to the Issuer or its agent for registration of transfer,
exchange or payment, and such certificate is registered in the name of Cede & Co., or in such other
name as requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner hereof,
Cede & Co., has an interest herein.

REGISTERED NO. R-001                                                                                                                                                       $350,000,000

CUSIP No. 743315 AK 9

THE PROGRESSIVE CORPORATION

6.375% SENIOR NOTE DUE 2012

          THE PROGRESSIVE CORPORATION, an Ohio corporation (the “Issuer”), for value received, hereby
promises to pay to CEDE & Co., c/o The Depository Trust Company, 55 Water Street, New York, New
York 10041 or registered assigns, at the office or agency of the Issuer at the office of the
Trustee in Boston, Massachusetts, the principal sum of THREE HUNDRED AND FIFTY MILLION DOLLARS
($350,000,000) on January 15, 2012, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private debts, and to pay
interest semiannually on January 15 and July 15 of each year, commencing on July 15, 2002, on said
principal sum at said office or agency, in like coin or currency, at the rate per annum specified
in the title of this Note, from the January 15 or the July 15, as the case may be, next preceding
the date of this Note to which interest has been paid, unless the date hereof is a date to which
interest has been paid, in which case from the date of this Note, or unless no interest has been
paid on the Notes, in which case from December 11, 2001, until payment of said principal sum has
been made or duly provided for; provided, that payment of interest may be made at the option of the
Issuer by check mailed to the address of the person entitled thereto as such address shall appear
on the Security Register. Notwithstanding the foregoing, if the date hereof is after the fifteenth
day of January or July, as the case may be, and before the following January 15 or July 15, this
Note shall bear interest from such January 15 or July 15; provided, that if the Issuer shall
default in the payment of interest due on such January 15 or July 15, then this Note shall bear
interest from the next preceding January 15 or July 15, to which interest has been paid or, if no
interest has been paid on this Note, from December 11, 2001. The interest so payable on any
January 15 or July 15 will, subject to certain exceptions provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Note is registered at the close of
business on January 1 or July 1, as the case may be, next preceding such January 15 or July 15.

          Reference is made to the further provisions of this Note set forth on the reverse hereof.
Such further provisions shall for all purposes have the same effect as though fully set forth at
this place.

          This Note shall not be valid or become obligatory for any purpose until the certificate of
authentication hereon shall have been signed by the Trustee under the Indenture referred to on the
reverse hereof.

 

 

     IN WITNESS WHEREOF, The Progressive Corporation has caused this instrument to be signed by its
duly authorized officers and has caused its corporate seal to be affixed hereto or imprinted
hereon.

THE PROGRESSIVE CORPORATION

	 	 	 	 	 	 	 
	[CORPORATE SEAL]

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

.....................................................................................................................................................

Treasurer

	 	 	 	 	 
	Attest:
	 	 	 	 
	 

	 	 

    Charles E. Jarrett

    Secretary
	 	 

Dated:  December 11, 2001

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

     This is one of the Securities, of the series designated herein, referred to in the
within-mentioned Indenture.

	 	 	 	 	 	 	 
	 	 	STATE STREET BANK AND TRUST

COMPANY, as Trustee
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

 

 

(Back of Security)

THE PROGRESSIVE CORPORATION

6.375% SENIOR NOTE DUE 2012

     This Note is one of a duly authorized issue of debentures, notes, bonds or other evidences of
indebtedness of the Issuer (hereinafter called the “Securities”) of the series hereinafter
specified, all issued or to be issued under and pursuant to an indenture dated as of September 15,
1993, as heretofore supplemented and amended (herein called the “Indenture”), between the Issuer
and State Street Bank and Trust Company, as Trustee (herein called the “Trustee”), to which
Indenture and all indentures supplemental thereto reference is hereby made for a description of the
rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the
Issuer and the Holders of the Securities. The Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject to different
redemption provisions (if any), may be subject to different sinking, purchase or analogous funds
(if any) and may otherwise vary as in the Indenture provided. This Note is one of a series
designated as the 6.375% Senior Notes Due 2012 of the Issuer, limited in initial aggregate
principal amount to $350,000,000.

     In case an Event of Default, as defined in the Indenture, with respect to the 6.375% Senior
Notes Due 2012 shall have occurred and be continuing, the principal hereof may be declared, and
upon such declaration shall become, due and payable, in the manner, with the effect and subject to
the conditions provided in the Indenture.

     The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of
the Holders of not less than 66-2/3% in aggregate principal amount of the Securities at the time
Outstanding (as defined in the Indenture) of all series to be affected (voting as one class),
evidenced as in the Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the Holders of the Securities of
each such series; provided, however, that no such supplemental indenture shall (i) extend the final
maturity of any Security, or reduce the principal amount thereof, or reduce the rate or extend the
time of payment of any interest thereon, or impair or affect the rights of any Holder to institute
suit for the payment thereof, without the consent of the Holder of each Security so affected or
(ii) reduce the aforesaid percentage of Securities, the Holders of which are required to consent to
any such supplemental indenture, without the consent of the Holder of each Security so affected.
It is also provided in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, prior to any declaration accelerating the maturity of such
Securities, the Holders of a majority in aggregate principal amount Outstanding of the Securities
of such series may on behalf of the Holders of all the Securities of such series waive any such
past default or Event of Default and its consequences. The preceding sentence shall not, however,
apply to a default in the payment of the principal of or premium, if any, or interest on any of the
Securities. Any such consent or waiver by the Holder of this Note (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all

 

 

future Holders and
owners of this Note and any Note which may be issued in exchange or substitution herefor,
irrespective of whether or not any notation thereof is made upon this Note or such other Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the
principal of and interest on this Note
in the manner, at the respective times, at the rate and in the coin or currency herein
prescribed.

     The Notes are issuable in registered form without coupons in denominations of $1,000 and any
integral multiple of $1,000 at the office or agency of the Issuer at the office of the Trustee in
Boston, Massachusetts, and in the manner and subject to the limitations provided in the Indenture,
but without the payment of any service charge. Notes may be exchanged for a like aggregate
principal amount of Notes of other authorized denominations.

     The Notes of the series designated as the 6.375% Senior Notes due 2012 are subject to
redemption upon not more than 60 or less than 30 days’ notice by mail, in whole at any time or in
part from time to time at the option of the Issuer on any date (a “Redemption Date”), at a
redemption price equal to the accrued and unpaid interest on the principal amount being redeemed to
the redemption date plus the greater of (i) 100% of the principal amount of the Notes to be
redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and
interest on the Note (not including any portion of such payments of interest accrued to the date of
redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate (defined below), plus 20 basis
points.

     “Adjusted Treasury Rate” means, with respect to any date of redemption, the rate per year
equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a
price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for that date of redemption.

     “Comparable Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term of the Securities to be
redeemed that would be used, at the time of selection and under customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the remaining term of the
Note.

     “Comparable Treasury Price” means, with respect to any date of redemption, the average of the
Reference Treasury Dealer Quotations for the date of redemption, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or if the trustee obtains fewer than three Reference
Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations.

     “Quotation Agent” means Goldman, Sachs & Co. or another Reference Treasury Dealer appointed by
the Issuer.

     “Reference Treasury Dealer” means each of Goldman, Sachs & Co. and Salomon Smith Barney Inc.
and their respective successors and, at the option of the Issuer, other nationally recognized
investment banking firms that are

 

 

primary dealers of U.S. government securities in New York City.
If any of the foregoing ceases to be a primary dealer of U.S. government securities in New York
City, the Issuer must substitute another primary dealer of U.S. government securities.

     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any date of redemption, the average, as determined by the Trustee, of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m., New York City time,
on the third business day before the date of redemption.

     In the event of redemption of this Note in part only, a new Note or Notes of this series and
of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.

     Upon due presentment for registration of transfer of this Note at the office or agency of the
Issuer at the office of the Trustee in Boston, Massachusetts, a new Note or Notes of authorized
denominations for an equal aggregate principal amount will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.

     The Issuer, the Trustee and any authorized agent of the Issuer or the Trustee may deem and
treat the registered Holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment of, or on account of, the principal hereof and, subject to the
provisions on the face hereof, interest hereon, and for all other purposes, and neither the Issuer
nor the Trustee nor any authorized agent of the Issuer or the Trustee shall be affected by notice
to the contrary.

     No recourse under or upon any obligation, covenant or agreement of the Issuer in the Indenture
or any indenture supplemental thereto or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator, shareholder, officer or
director, as such, of the Issuer or of any successor corporation, either directly or through the
Issuer or any successor corporation, under any rule of law, statute or constitutional provision or
by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.

     Terms used herein which are defined in the Indenture shall have the respective meanings
assigned thereto in the Indenture.

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

	 	 	 	 	 
	 	 	 	 	 
	 	 
	 	 	 
	 	 

	 	 	 
	 	 	 	 	 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

 

 

 

attorney to transfer said
Note on the books of the Issuer, with full power of substitution in the
premises.

Dated                                                                                                                                   

NOTICE: The signature to this assignment must correspond with the name as written upon the face of
the within instrument in every particular, without alteration or enlargement or any change
whatever.

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