Document:

EX-10(A) AIRCRAFT MANAGEMENT AGREEMENT

 

Exhibit No. 10(A)

AIRCRAFT

MANAGEMENT AGREEMENT

     This Management Agreement (the “Agreement”) made and entered into as of this 23rd
day of April, 1999, by and between Village Transport Corp., a Delaware corporation having an office
at 6300 Wilson Mills Road, Mayfield Village, Ohio 44143 (“Manager”), and ACME Operating
Corporation, an Ohio corporation having an office at 6300 Wilson Mills Road, Mayfield Village, Ohio
44143 (“ACME”).

WITNESSETH:

     WHEREAS, ACME pursuant to an Aircraft Lease Agreement (“Lease”) dated of even date herewith,
leases the aircraft (the “Aircraft”) bearing the manufacturer’s Serial Number and Federal Aviation
Administration Registration Number set forth on the Schedule hereto, equipped with two General
Electric CF 34-1A engines as more particularly described in the Lease Schedule (hereinafter called
the “Aircraft”); and

     WHEREAS, ACME is desirous of engaging the services of Manager to provide certain management
services with respect to the Aircraft; and

     WHEREAS, Manager is desirous of providing certain management services pertaining to the
Aircraft on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, the parties hereto hereby agree as follows:

     1. ACME hereby engages Manager, and Manager hereby agrees, to provide certain
management services with respect to the Aircraft for the benefit of the ACME.

     2. Manager hereby agrees for the benefit and at the direction of ACME that it
shall provide the services set forth below:

     3. (a) Throughout the term of this Agreement, Manager shall, at ACME’s cost and expense, (1)
inspect, maintain, service, repair, overhaul and test the Aircraft by duly competent personnel, in
accordance with FAA approved maintenance and preventive repair programs therefor, so as to keep the
Aircraft in good operating condition, ordinary wear and tear excepted, and in such condition as may
be necessary to enable the airworthiness certification of the Aircraft to be maintained in good
standing at all times under 49 U.S.C. § 40101, et seq., as in effect from time to time; (2) maintain all records, logs and other materials required by the
FAA to be maintained in respect of the Aircraft and make the same available for ACME’s inspection;
and (3) comply with all laws of each and every jurisdiction in which the Aircraft may be operated
and with all rules of the FAA and each and every other legislative, executive, administrative or
judicial body exercising any power or jurisdiction over the Aircraft, and shall maintain the
Aircraft in proper condition for operation under such laws and rules including, without limitation,
all manufacturers recommended maintenance. Manager also agrees not to

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operate or locate the Aircraft, or suffer the Aircraft to be operated or located, in any area excluded from coverage by
any insurance required by the terms of this Agreement.

     (b)    The cost of compliance with any airworthiness or similar directive, or regulation issued
by the FAA or other governmental agency (“Airworthiness Directive”) and the cost of complying with
any mandatory or recommended service bulletins or letters, shall be borne by ACME.

     4.    (a) Manager hereby agrees to identify and make available to ACME at the inception of this
Agreement, certain pilots, from a group of professionally qualified pilots who shall be familiar
with and licensed to operate the Aircraft, from which ACME shall, in its own discretion, designate
two (2) of such pilots to operate the Aircraft for ACME, and thereafter such designated pilots
shall be ACME’s pilots of the Aircraft. The pilot designation shall be in writing and signed by
ACME, which writing shall be binding upon ACME.

          (b)    ACME shall be permitted to remove any of such pilots by providing written notice to
Manager and designate new pilots, who shall thereafter be ACME’s pilots of the Aircraft.

          (c)    Notwithstanding the foregoing, the pilots designated by ACME shall be subject to (i)
availability, (ii) the rules and regulations promulgated by the FAA, and (iii) strikes and labor
disputes.

          (d)    ACME may at any time provide its own pilots upon twenty-four (24) hours prior notice to
Manager.

          (e)    ACME hereby directs Manager and Manager hereby agrees to make all necessary take-off,
flight and landing arrangements for flights operated by ACME. Manager shall pay, at Manager’s cost
and expense, the following operating expenses relating to the Aircraft: crew salary and benefits,
telephone and costs associated with providing information services. ACME shall, at all reasonable
times, have the right to inspect Manager’s records with respect to the Aircraft.

          (f)    ACME will pay all operating expenses related to the Aircraft except those set forth in
paragraph (e) of this Section 4. Such operating expenses shall include, but shall not be limited
to: fuel, storage, domestic landing fees, all federal, state and local taxes, charges, imposts,
duties and excise taxes and with respect to flights outside the 48 contiguous states of the
continental United States (the “Continental United States”), for foreign permit, overflight,
navigation, and air space fees, customs, head taxes and similar assessments relating to the
ownership, operation, maintenance or the use of the Aircraft by ACME, registration and handling
costs, catering, crew travel and lodging, hangar and tie-down costs, flight planning and weather
contract services, maintenance supplies, outside pilot services (if any), equipment costs, sales
and use taxes and any other taxes and licensing fees associated with the Aircraft.

     5.    ACME shall obtain, at ACME’s expense, all-risk aircraft hull insurance with no deductible
with respect to the Aircraft, against any loss, theft or damage to the Aircraft, including

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extended coverage with respect to any engines or parts while removed from the Aircraft, for the fair market
value of the Aircraft, naming Manager and ACME, as named insureds and loss payees with losses
payable as their respective interests may appear. ACME shall likewise pay for and arrange to
procure liability insurance for the Aircraft in the form and substance and with such insurers
approved by Manager but in an amount not less than One Hundred Million Dollars ($100,000,000)
single limit liability coverage and shall cause ACME and Manager, to be named as additional
insureds. Copies of such policies and certificates of Insurance shall be furnished by the ACME to
Manager promptly upon the execution of this Agreement. Such Insurance shall be maintained by ACME
in full force and effect throughout the term hereof and the insurer shall provide ACME and Manager
thirty (30) days advance notice of cancellation or material alteration. All such insurance shall
contain a Breach of Warranty Endorsement in favor of ACME and Manager.

     6.    At ACME’s direction, Manager hereby agrees that it will provide assistance to and consult
with ACME in all matters regarding the Aircraft including but not limited to:

	 	(a)	 	FAA and manufacturers correspondence and directives;
	 
	 	(b)	 	Enforcement of warranty claims;
	 
	 	(c)	 	Enforcement, litigation and settlement of insurance matters; and
	 
	 	(d)	 	Parts replacement, services and maintenance arrangements.

     7.    As compensation for the services to be performed by Manager hereunder, ACME hereby agrees
to pay to Manager an annual Management Fee in an amount equal to $405,200; provided, that the
parties agree to adjust the Management Fee at each anniversary of the date hereof. The Management Fee shall be payable in twelve equal monthly installments each of which
shall be due on the first day of each calendar month during the term of this Agreement.

     8.    In addition, ACME agrees that it shall provide Manager with the following information for
each proposed flight:

	 	(a)	 	proposed departure point;
	 
	 	(b)	 	destination;
	 
	 	(c)	 	date and time of flight;
	 
	 	(d)	 	the number of anticipated passengers;
	 
	 	(e)	 	the nature and extent of luggage to be carried;
	 
	 	(f)	 	the date and time of a return flight, if any; and

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	 	(g)	 	any other information concerning the proposed flight that may
be pertinent or is reasonably required by Manager.

     9.    Manager agrees that, throughout the term of this Agreement, it shall not cause or permit,
through any of its own acts or failures to act, any liens, claims or encumbrances to attach to the
Aircraft other than mechanics liens to be discharged in the ordinary course of business.

     10.    ACME acknowledges that Manager shall have no liability for delay or failure to furnish the
pilots pursuant to this Agreement. Manager shall not otherwise be liable to ACME for any direct,
indirect, special, consequential or other damages caused directly or indirectly by any such delay
or failure to furnish the pilots. ACME and Manager further agree that when, in the reasonable view
of ACME or the pilots of the Aircraft, safety may be compromised, ACME or the pilots may terminate
a flight, refuse to commence a flight, or take other action necessitated by such safety
considerations without liability for loss, injury, damage or delay. ACME can dictate other
limitations of flights. ACME acknowledges that the ACME shall operate the Aircraft at all times in
accordance with applicable FAA Regulations.

     11.    Upon the occurrence of an Event of Default (as hereinafter defined) under this Agreement,
Manager will cease all activities hereunder. In addition to the foregoing, Manager shall have all
right to bring an action or claim against ACME for all sums which may be due and owing hereunder and to pursue all other remedies available to it at law or in equity. For
purposes hereof, the term “Event of Default” shall mean the occurrence and continuation of any of
the following events of default hereunder:

            (a)    The failure of ACME to pay when due the Management Fee set forth in Section 7 hereof or
any taxes or similar assessments levied or imposed against components of such fee, as set forth in
said Section 7, with a ten (10) day period of grace after written notice of nonpayment;

            (b)    The material breach by ACME of any other provision of this Agreement, which material
breach shall continue for thirty (30) days after written notice to ACME;

            (c)    If ACME shall:

          (1) admit in writing its inability to pay, or fail to pay, its debts generally as they
become due;

          (2) file a petition in bankruptcy or a petition to take advantage of any insolvency act
or file an answer admitting or failing to deny the material
allegations of such petition;

          (3) make an assignment for the benefit of its creditors;

          (4) consent to the appointment of, or possession by, a custodian for itself or for the
whole or substantially all of its property; or

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          (5)    file a petition or answer seeking reorganization or arrangement or other aid or
relief under any bankruptcy or insolvency laws or any other law for the relief of debtors or
file an answer admitting, or fail to deny, the material allegations of a petition filed
against it for any such relief.

            (d) If a court of competent jurisdiction shall enter an order, judgment or decree appointing,
without the consent of ACME, a custodian for ACME or the whole or substantially all of its
property, or approving a petition filed against it seeking liquidation, reorganization or
arrangement of ACME under any bankruptcy or insolvency laws or any other law for the relief of
debtors, and such order, judgment or decree shall not be vacated or set aside or stayed within
sixty (60) days from the date of entry thereof; or,

            (e) If, under the provision of any law for the relief of debtors, any court of competent
jurisdiction or custodian shall assume custody or control of ACME or of the whole or any
substantial part of its property without the consent of ACME, and such custody or control shall not
be terminated or stayed within sixty (60) days from the date of assumption of such custody or
control.

     12.    This Agreement shall commence on the date of execution hereof and shall terminate on the
earlier of (i) thirty (30) days after the date Manager elects to terminate this Agreement as a
result of ACME’s default, or (ii) after the first anniversary hereof, thirty (30) days after either
party elects, by written notice to the other party, to terminate this Agreement.

     13.    Manager represents and warrants to ACME as follows:

            (a) Manager is a corporation duly and validly organized and existing in good standing under
the laws of the state of its incorporation. Manager has the power and authority to enter into this
Agreement and to execute, deliver or receive all other instruments and documents executed and
delivered and received, in connection with the transactions contemplated hereunder;

            (b) There is no action, suit or proceeding pending against Manager before or by any court,
administrative agency or other governmental authority, or threatened, which brings into question
the validity of, or in any way legally or financially (in the case of performance) impairs or would
if adversely determined impair the execution, delivery or performance by Manager of this Agreement;

            (c) The execution and delivery of this Agreement by Manager and the performance by it of its
obligations hereunder, have been duly authorized by all necessary corporate action of Manager and
do not violate or conflict with (i) any provision of Manager’s Certificate of Incorporation or
By-Laws, (ii) any law or any order, writ, injunction, decree, rule or regulation of any court,
administrative agency or any other governmental authority or (iii) any Agreement entered into or
binding on Manager or its affiliated companies, whether relating to the Aircraft or otherwise;

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            (d) This Agreement constitutes the valid and binding obligations of Manager enforceable in
accordance with its terms, subject, however, to (i) laws of general application affecting
creditors’ rights and (ii) judicial discretion, to which equitable remedies are subject; and

            (e) Manager is not subject to any restriction (which has not been complied with) or agreement
which, with or without the giving of notice, the passage of time, or both, prohibits or would be
violated by, or be in conflict with, the execution, delivery and consummation of this Agreement.

     14. ACME represents and warrants to Manager as follows:

            (a) ACME is duly and validly organized and existing in good standing under the laws of the
state of its incorporation;

            (b) ACME has the power and the authority to enter into this Agreement, and to carry out the
transactions contemplated hereunder;

            (c) The execution and delivery of this Agreement by ACME, and the performance of its
obligations hereunder, have been duly authorized by all necessary action of ACME and do not violate
or conflict with (i) any provision of ACME’s Certificate of Incorporation or By-Laws or (ii) any
law or any order, writ, injunction, decree, rule or regulation of any court, administrative agency
or any other governmental authority. There is no action, suit or proceeding pending or threatened
against ACME before any court, administrative agency or other governmental authority which brings
into question the validity of, or might in any way impair, the execution, delivery or performance
by ACME of this Agreement; and

            (d) This Agreement constitutes the valid and binding obligations of the ACME enforceable in
accordance with its terms, subject, however, to (i) laws of general application affecting
creditors’ rights and (ii) judicial discretion, to which equitable remedies are subject.

     15. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto,
their representatives, successors and permitted assigns. This Agreement shall not be assignable by
either party except upon the express written consent of the other party.

     16. This Agreement constitutes the entire understanding among the parties with respect to the
subject matter hereof, and any changes or modifications hereto must be in writing and signed by
authorized representatives of both parties. The parties hereto further agree that the courts of
the United States and State of Ohio shall have jurisdiction over the parties with regard to any
disputes arising under this Agreement or arising out of the operation, maintenance, inspection,
servicing or occupancy of the Aircraft during the term of the Agreement and that this Agreement
shall be interpreted and governed by the laws of the State of Ohio.

     17. Any notice, request or other communication to either party by the other hereunder shall be
made in writing and shall be deemed given on the earlier of the date (i) personally delivered with
receipt acknowledged, or (ii) telecopied at time of transmission or (iii) three (3)

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days after mailed by certified mail, return receipt requested, postage prepaid and addressed to the party at
the address set forth in the first paragraph of this Agreement. The address of a party to which notices or copies of notices are to be given may be changed from time to time by such
party by written notice to the other party.

     18. This Agreement may be executed in one or more counterparts each of which shall be deemed
an original, all of which together shall constitute one and the same agreement.

     19. In the event that any one or more of the provisions of this Agreement shall for any reason
be held to be invalid, illegal or unenforceable, the remaining provisions of this Agreement shall
be unimpaired and the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable provision, which, being valid, legal and enforceable, comes closest to the intention of
the parties underlying the invalid, illegal or unenforceable provision.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and
year first above written. The persons signing below warrant their signatures.

ACME Operating Corporation

	 	 	 
	By: /s/ Peter B. Lewis
	 	 
	      Peter B. Lewis, President
	 	 
	 
	 	 
	Village Transport Corp.
	 
	 	 
	By: David M. Schneider
	 	 
	      David M. Schneider, Secretary
	 	 

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SCHEDULE

	 	 	 	 	 
	Minimum Telephonic Notice:

	 	24 hours

	Serial No.:

	 	 	3007	 
	FAA Registration No.:

	 	N711SX

9EX-10(P) FORM OF NONQUALIFIED STOCK OPTION AGREMNT

 

Exhibit No. 10(P)

NON-QUALIFIED STOCK OPTION AGREEMENT

This Agreement (the “Agreement”) is made as of the                    day of                                        , 19                    ,
between The Progressive Corporation, an Ohio corporation (the “Company”), and <NAME> (the
“Optionee”). The Company hereby grants Optionee an option (the “Option”) to purchase
<TOTAL_SHARES> Common Shares, $1.00 par value, (the “Common Shares”) of the Company for a per
share purchase price of $___(the “Option Price”). The Option has been granted pursuant to
The Progressive Corporation 1989 Incentive Plan (as amended and restated) (the “Plan”) and shall
include and be subject to all provisions of the Plan, which are hereby incorporated herein by
reference, and shall be subject to the following provisions of this Agreement:

1. TERM. The Option shall become exercisable on                                         (the “Vesting Date”) and may be
exercised, in whole or in part, at any time thereafter until                                         (the “Expiration
Date”), on which date the Option shall expire and no longer be exercisable.

2. METHOD OF EXERCISE. Subject to Section 1 above, the Option shall be exercisable from time to
time by written notice (in form approved or furnished by the Company) to the Committee which shall:

(a) state that the Option is thereby being exercised, the number of Common Shares with respect
to which the Option is being exercised, each person in whose name any certificates for the
Common Shares should be registered and his or her address and social security number;

(b) be signed by the person or persons entitled to exercise the Option and, if the Option is
being exercised by anyone other than the Optionee, be accompanied by proof satisfactory to
counsel for the Company of the right of such person or persons to exercise the Option under the
Plan and all applicable laws and regulations; and

(c) be accompanied by such representations, warranties and agreements, in form and substance
satisfactory to counsel for the Company, with respect to the investment intent of such person
or persons exercising the Option as the Company may request.

3. PAYMENT OF PRICE. Upon exercise of the Option, the Company shall deliver a certificate or
certificates for the Common Shares purchased thereunder to the specified person or persons at the
specified time upon receipt of the full purchase price for such Common Shares: (a) by certified or
bank cashier’s check, or (b) by any other method of payment or combination thereof authorized by
the Plan.

4. TRANSFERABILITY. The Option shall not be transferable by the Optionee other than by will or by
the laws of descent and distribution. Subject to the following sentence, during the lifetime of the
Optionee, the Option shall be exercisable (subject to any other applicable restrictions on
exercise) only by the Optionee for his or her own account. Upon the death or disability of the
Optionee, the Option shall be exercisable (subject to any other applicable restrictions on
exercise) only by the Optionee’s estate (acting

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through its fiduciary) or by the Optionee’s duly authorized legal representative, during the period
and to the extent authorized in the Plan.

5. TERMINATION OF EMPLOYMENT. If the employment of the Optionee by the Company (or any of its
Subsidiaries or Affiliates) terminates:

(a) due to involuntary termination without cause or due to retirement (with the employer’s
approval, but subject to Section 5(e) below), the Option may be exercised to the extent
exercisable at the date of such termination, during the lesser of (i) two months after such
date, or (ii) the balance of the Option’s term;

(b) due to death or disability, the provisions of Section 5(b)(6) or 5(b)(7) of the Plan, as
applicable, shall apply;

(c) due to resignation by the Optionee (other than by reason of a Qualified Retirement, as
provided at Section 5(e) below), the Optionee may exercise the Option, to the extent of the
lesser of (A) the number of Common Shares as to which the Option is exercisable on the date the
Optionee ceases to be an employee or (B) the number of Common Shares as to which the Option was
exercisable ninety days prior to such date, reduced by any Common Shares acquired by exercise
of the Option within such ninety day period, at any time within two (2) months after the date
that the Optionee ceases to be an employee (but in no event after expiration of the original
term of the Option) and the Option shall not be or become exercisable as to any additional
Common Shares after the date that the Optionee ceases to be an employee;

(d) due to termination for cause, the Option and all rights to purchase Common Shares
thereunder shall immediately terminate; and

(e) due to a Qualified Retirement (as defined below), the following provisions shall apply
(subject in all cases to Section 5(e)(v) hereof):

(i) if the Option has vested and is exercisable as of the Qualified Retirement Date (as
defined below), the Option shall not terminate upon the retirement of the Optionee, and, to
the extent that it has not been previously exercised, may be exercised by the Optionee, in
whole or in part, at any time between the Qualified Retirement Date and the Expiration
Date;

(ii) subject to Section 5(e)(iii) hereof, if the Option is not vested and exercisable as of
the Qualified Retirement Date, the Option shall not terminate in its entirety upon the
retirement of the Optionee; instead, the Option (A) shall remain in effect with respect to
fifty percent (50%) of the Common Shares which are subject to the Option as of the
Qualified Retirement Date and, as to such Common Shares, shall vest and become exercisable
on the Vesting Date and may be exercised by the Optionee, in whole or in part, at any time
between the Vesting Date and the Expiration Date, and (B) shall terminate, effective as of
the Qualified Retirement Date, with respect to the remaining fifty percent (50%) of the
Common Shares that are subject to the Option as of the Qualified Retirement Date;

(iii) notwithstanding Section 5(e)(ii) above, if the Option is not vested and exercisable
as of the Qualified Retirement Date, but has a Vesting Date which is no later than four (4)
months after the Qualified Retirement Date, then, notwithstanding the Optionee’s
retirement, the full Option (or, if the Option is subject to installment vesting, that portion thereof which is scheduled to vest on such
Vesting Date) shall remain in effect, shall vest on such Vesting Date and

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may be exercised by the Optionee, in whole or in part, at any time between such Vesting Date and the
Expiration Date;

(iv) if the Optionee dies after the date of his or her retirement and has not exercised the
Option, in whole or in part, prior to his or her death, the Optionee’s estate shall have
the right to exercise the Option as to (A) all Common Shares, if any, as to which the
Option has vested and is exercisable as of the date of the Optionee’s death, plus (B) the
additional Common Shares, if any, as to which the Option would have become exercisable
within one (1) year from the date of the Optionee’s death pursuant to Section 5(e)(ii)
and/or (iii) hereof, as applicable, but for the death of the Optionee, at any time during
the one (1) year period beginning on the date of the Optionee’s death (or such other period
as the Committee may specify), and the balance of the Option shall terminate as of the date
of the Optionee’s death;

(v) if the Committee determines that the Optionee is or has engaged in any Disqualifying
Activity (as defined below), then (1) to the extent that the Option has vested and is
exercisable as of the Disqualification Date (as defined below), the Optionee shall have the
right to exercise the Option during the lesser of two months from the Disqualification Date
or the balance of the Option’s term and (2) to the extent that the Option is not vested and
exercisable as of the Disqualification Date, the Option shall terminate as of such date.
Any determination by the Committee, which may act upon the recommendation of the Chief
Executive Officer or other senior officer of the Company, that the Optionee is or has
engaged in any Disqualifying Activity, and as to the Disqualification Date, shall be final
and conclusive.

(vi) As used in this Section 5(e), the following terms are defined as follows:

(A) QUALIFIED RETIREMENT — any termination of the Optionee’s employment with the
Company or its Subsidiaries for any reason (other than death, Disability or an
involuntary termination for Cause) if, at or immediately prior to the date of such
termination, the Optionee satisfies both of the following conditions:

(1) the Optionee shall be 55 years of age or older; and

(2) the sum of the Optionee’s age and completed years of service as an employee of
the Company or its Subsidiaries (disregarding fractions, in both cases) shall total
70 or more.

(B) QUALIFIED RETIREMENT DATE — the date as of which the Optionee’s employment with the
Company or its Subsidiaries shall terminate pursuant to a Qualified Retirement.

(C) DISQUALIFYING ACTIVITY — means and includes each of the following acts or
activities:

(1) directly or indirectly serving as a principal, shareholder, partner,
director, officer, employee or agent of, or as a consultant, advisor or in
any other capacity to, any business or entity which competes with the Company
or its Subsidiaries in any business or activity then conducted by the Company
or its Subsidiaries to an extent deemed material by the Committee; or

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(2) any disclosure by the Optionee, or any use by the Optionee for his or her
own benefit or for the benefit of any other person or entity (other than the
Company or its Subsidiaries), of any confidential information or trade secret
of the Company or its Subsidiaries to an extent deemed material by the
Committee; or

(3) any material violation of any of the provisions of the Company’s Code of
Conduct or any agreement between the Optionee and the Company; or

(4) making any other disclosure or taking any other action which is determined
by the Committee to be materially detrimental to the business, prospects or
reputation of the Company or its Subsidiaries.

The ownership of less than 2% of the outstanding voting shares of a publicly
traded corporation which competes with the Company or its Subsidiaries shall
not constitute a Disqualifying Activity.

(D) DISQUALIFICATION DATE — the date of any determination by the Committee that the
Optionee is or has engaged in any Disqualifying Activity.

6. RESTRICTIONS ON EXERCISE. The Option is subject to all restrictions set forth in this Agreement
or in the Plan. As a condition to any exercise of the Option, the Company may require the Optionee
or his successor to make any representation and warranty to comply with any applicable law or
regulation or to confirm any factual matters requested by counsel for the Company.

7. TAXES. The Optionee hereby agrees that he or she shall pay to the Company, in cash, any federal,
state and local taxes of any kind required by law to be withheld with respect to the Option granted
to him or her hereunder or the exercise thereof. If the Optionee does not make such payment to the
Company, the Company shall have the right to deduct from any payment of any kind otherwise due to
the Optionee from the Company (or from any Subsidiary or Affiliate of the Company), any federal,
state and local taxes of any kind required by law to be withheld with respect to the Option, the
exercise thereof or the Common Shares to be purchased by the Optionee under this Agreement. The
Option shall not be treated as an incentive stock option under Section 422 or any successor Section
thereto of the Internal Revenue Code of 1986, as amended.

8. DEFINITIONS. Unless otherwise defined in this Agreement, capitalized terms will have the same
meanings given them in the Plan.

	 	 	 	 	 
	THE PROGRESSIVE CORPORATION	 	 
	 
	 	 	 	 
	DATE OF GRANT:                     , 19                    	 	 
	 
	 	 	 	 
	BY:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	TITLE:
	 	 	 	 
	 

	 	 

	 	 

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ACCEPTANCE OF AGREEMENT

The Optionee hereby: (a) acknowledges receiving a copy of the Plan Description dated
                                         (the “Plan Description”) relating to the Plan, and represents that he or she is
familiar with all of the material provisions of the Plan, as set forth in the Plan Description; (b)
accepts this Agreement and the Option granted to him or her under this Agreement subject to all
provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee relating to the Plan, this Agreement or the
Option granted hereunder.

Optionee:                                                                                                                         

Date:                                         , 19                    

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