Document:

EXHIBIT 10.2

 

AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT

 

This
Amended and Restated Change of Control Agreement (this “Agreement”) is entered into as of March 24, 2020 (the “Effective
Date”), by and between Village Bank, a Virginia banking corporation (the “Corporation”), and Max C. Morehead,
Jr. (the “Executive”) and supersedes and replaces the Change of Control Agreement, effective May 1, 2018, between the
Corporation and the Executive.

 

W I T N E S S E
T H:

 

WHEREAS,
the Corporation desires to provide the Executive with the opportunity to receive severance protection in connection with a Change
of Control (as defined herein) of Village Bank and Trust Financial Corp. (the “Holding Company”) on the terms and conditions
set forth herein and, for purpose of effecting the same, the Board of Directors of the Corporation (the “Board”) has
approved this Agreement and authorized its execution and delivery on the Corporation’s behalf to the Executive;

 

WHEREAS,
the Executive has significant experience serving in senior bank management positions, and the Corporation desires to retain the
Executive as a key executive officer of the Corporation whose dedication, availability, advice and counsel to the Corporation is
deemed important to the Board, the Corporation and its shareholders;

 

WHEREAS,
Corporation recognizes that the possibility of a Change of Control exists, and the uncertainty and questions that it may raise
among management may result in the departure or distraction of management personnel to the detriment of the Corporation and its
shareholders;

 

WHEREAS,
the Corporation wishes to retain such well-qualified executives, and it is in the best interests of the Corporation and of the
Executive to secure the services of the Executive to continue employment with the Corporation and/or its affiliates or successors
in interest by merger or acquisition through and after a Change of Control by providing reasonable employment security to Executive
and to recognize the prior service of Executive in the event of a Change of Control;

 

NOW,
THEREFORE, to assure the Corporation of the Executive’s dedication, the availability of Executive’s advice and
counsel to the Corporation, and to induce the Executive to remain in the employ of the Corporation and for other good and valuable
consideration, the receipt and adequacy whereof each party hereby acknowledges, the Corporation and the Executive hereby agree
as follows:

 

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		1.	TERM, EXTENSIONS OF TERM, AND CONTINUING OBLIGATIONS:

 

		(a)	This Agreement will be effective on the Effective Date set forth above and
will expire at the end of the calendar day on March 31, 2022, provided that this Agreement may be extended for an additional period
of up to 24 months at the discretion of the Board. If the Board desires to extend this Agreement, it shall provide the Executive
with at least 15 days’ written notice of the applicable period of such extension. Unless Executive notifies the Corporation
in writing prior to commencement of the extended term that the Executive does not agree to the extension, the Agreement will continue
in effect until the expiration date set by the Board in its notice.

 

		(b)	The parties intend that the covenants and restrictions in Sections 6 and
13 be enforceable against Executive regardless of the reason that Executive’s employment by the Corporation may terminate
and that such covenants and restrictions shall be enforceable against Executive even if this Agreement expires. The existence of
any claim or cause of action by the Executive against the Corporation, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Corporation of the restrictive covenants and confidentiality requirements set
forth in Sections 6 and 13 of this Agreement.

 

		2.	CHANGE OF CONTROL:

 

		(a)	If the Executive’s employment:

 

(i)    is terminated by the Corporation without Cause (and other than on account of the Executive’s death or “Incapacity”
as described in Section 4) within twelve (12) months following a Change of Control, or

 

(ii)    is
terminated by Executive following a reduction in Executive’s base salary of at least 10%, which salary reduction and termination
occur within twelve (12) months following a Change of Control,

 

then, provided that
the Executive signs a release and waiver of claims reasonably satisfactory to the Corporation (to be provided to the Executive
no later than the date of the Executive’s termination), and such release and waiver has become effective no more than 30
days following Executive’s termination, the Executive shall receive a lump sum payment equal to nine (9) months of Executive’s
monthly base salary (as in effect (x) on Executive’s termination date, or (y) immediately prior to the Change
of Control, whichever is greater). Such payment shall be made on the first regularly scheduled payroll date that is at least 30
days following Executive’s termination.

 

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		(b)	For purposes of this Agreement, a “Change of Control” shall mean
(i) the acquisition by any “person” or “group” (as defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), other than Kenneth R. Lehman, the Holding Company, any subsidiary
of the Holding Company or any employee benefit plan of the Holding Company or any Holding Company subsidiary, directly or indirectly,
as “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Holding Company representing
fifty percent (50%) or more of either the then outstanding shares of common stock or the combined voting power of the then outstanding
securities of the Holding Company; (ii) the acquisition by Kenneth R. Lehman, individually or as part of a group, as “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Holding Company representing sixty-six and
two-thirds percent (66 2/3%) or more of either the then outstanding shares of common stock or the combined voting power of the
then outstanding securities of the Holding Company; (iii) either a majority of the directors of the Holding Company elected at
the Holding Company’s most recent annual shareholders meeting shall have been nominated for election other than by or at
the direction of the “incumbent directors” of the Holding Company, or the “incumbent directors” shall cease
to constitute a majority of the directors of the Holding Company (the term “incumbent director” shall mean any director
who was a director of the Holding Company on March 1, 2020 and any individual who becomes a director of the Holding Company subsequent
to March 1, 2020 and who is elected or nominated by or at the direction of at least two-thirds of the then incumbent directors);
(iv) the Holding Company consummates a reorganization, merger, share exchange, consolidation or other business combination (a “Reorganization”)
with any other “person” or “group” (as defined in Sections 13(d) and 14(d) of the Exchange Act) or affiliate
thereof, other than a Reorganization that would result in the outstanding common stock of the Holding Company immediately prior
thereto continuing to represent, either by remaining outstanding or by being converted into common stock of the surviving entity
or a parent or affiliate thereof, at least fifty percent (50%) of the common stock of the Holding Company or such surviving entity
or a parent or affiliate thereof outstanding immediately after the Reorganization; or (v) a plan of complete liquidation of the
Holding Company or an agreement for the sale or disposition by the Holding Company of all or substantially all of the Holding Company’s
assets.

 

		(c)	The Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement under Section 2(a) by seeking other employment or otherwise.

 

		3.	DEATH: In the event of the Executive’s death prior to
becoming entitled to a payment under Section 2(a), this Agreement (if not previously terminated) shall terminate as of the date
of death without any further obligation on the part of the Corporation under this Agreement.

 

		4.	ILLNESS: In the event the Executive is unable to perform the
essential functions of Executive’s job, with or without reasonable accommodations, for a period of four (4) consecutive months
by reason of illness or other physical or mental disability (“Incapacity”), the Corporation may terminate this Agreement
by written notice to Executive (which notice may take effect immediately) without further or additional compensation being due
the Executive from the Corporation pursuant to this Agreement. Notwithstanding any other provision in this Agreement, the Corporation
will comply with the Americans with Disabilities Act and Family Medical Leave Act.

 

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		5.	CAUSE; REGULATORY TERMINATION:

 

		(a)	For purposes of this Agreement, “Cause” shall mean the Executive’s
unlawful or unethical business conduct, dishonesty, willful violation of any law, rule, or regulation (other than traffic violations
or similar offenses), the Executive’s material violation of the Corporation’s work rules, Code of Ethics or policies,
or the Executive’s material breach of this Agreement. Cause shall not exist based on the Executive’s material violation
of the Corporation’s work rules, Code of Ethics or policies, unless the Board has first provided him written notice of any
such failure or breach and a reasonable period of time, not less than ten (10) days, in which to remedy such failure or breach.

 

		(b)	If the Executive is suspended and/or prohibited from participating in the
conduct of the Corporation’s affairs by a notice served under the Federal Deposit Insurance Act or any other regulatory authority,
the Corporation’s obligations under this Agreement shall be terminated and the Corporation thereafter shall have no obligation
to make any payments under this Agreement.

 

		6.	COVENANTS:

 

		(a)	During the term of this Agreement and, if the Executive’s employment
with the Corporation ceases for any reason during the term of this Agreement, for the longer of:

 

(x)    nine
(9) months from and after the date that the Executive is (for any reason) no longer employed by the Corporation; or

 

(y)    nine
(9) months from the date of entry by a court of competent jurisdiction of a final judgment enforcing this covenant in the event
of a breach by the Executive,

 

the Executive will not, directly
or indirectly, on behalf of the Executive or any other person or entity (i) solicit or induce, or attempt to solicit or induce
any person then employed by the Corporation to terminate the employee’s employment with the Corporation or (ii) solicit or
divert away or attempt to solicit or divert away any Customer of the Corporation for the purpose of selling or providing Competitive
Services, provided the Corporation is then still engaged in the sale or provision of Competitive Services.

 

		(b)	For purposes of this Agreement, the term “Customer” means any
individual or entity to whom or to which the Corporation provided Competitive Services within the two years prior to the Executive’s
solicitation or diversion away or attempt to do either (“prohibited action”), or if the prohibited action occurs after
the termination of Executive’s employment with the Corporation, then within the two years prior to the date Executive’s
employment terminates, and: (i) with whom or with which the Executive had direct contact in connection with the provision of such
Competitive Services by the Corporation; or (ii) about whom or which the Executive learned confidential information by way of Executive’s
employment with the Corporation.

 

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		(c)	For purposes of this Agreement, “Competitive Services” means
providing commercial and consumer financial products and services that, as of the date of this Agreement or (if the prohibited
action occurs after the termination of Executive's employment) as of the date of termination of employment, are provided to Customers
of the Corporation, whether such services are provided directly by the Corporation or by others under a contractual arrangement
with the Corporation.

 

		(d)	The Executive agrees that the covenants in this Section 6 are reasonably
necessary to protect the legitimate interests of the Corporation, are reasonable with respect to time and do not interfere with
the interests of the public. The Executive further agrees that the descriptions of the covenants contained in this Section 6 are
sufficiently accurate and definite to inform the Executive of the scope of the covenants. Finally, the Executive agrees that the
consideration set forth in this Agreement is full, fair and adequate to support the Executive’s obligations hereunder and
the Corporation’s rights hereunder. The Executive acknowledges that in the event the Executive’s employment with the
Corporation is terminated for any reason, the Executive will be able to earn a livelihood without violating such covenants.

 

		(e)	The parties intend that the covenants contained in this Section 6 to be completely
severable and independent, and any invalidity or unenforceability of any one or more such covenants will not render invalid or
unenforceable any one or more of the other covenants. The parties further agree that, if the scope or enforceability of a covenant
contained in this Section 6 is in any way disputed at any time, and if permitted by applicable law and public policy, a court or
other trier of fact may modify and reform such provision to substitute such other terms as are reasonable to protect the Corporation’s
legitimate business interests.

 

		(f)	The Executive agrees that, given the nature of the positions held by the
Executive with the Corporation, each and every one of the covenants and restrictions set forth in this Agreement above are reasonable
in scope, length of time and geographic area and are necessary for the protection of the significant investment of the Corporation
in developing, maintaining and expanding its business. Accordingly, the parties hereto agree that in the event of any breach by
the Executive of any of the provisions of Sections 6 and/or 13 of this Agreement that monetary damages alone will not adequately
compensate the Corporation for its losses and, therefore, that it shall be entitled to any and all legal or equitable relief available
to it, specifically including, but not limited to, injunctive relief, and the Executive shall be liable for all damages, including
actual and consequential damages, costs and expenses, and legal costs and actual attorneys fees incurred by the Corporation as
a result of taking action to enforce, or recover for any breach of Section 6 and/or 13.

 

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		(g)	Notwithstanding anything in this Agreement to the contrary, the restrictive
covenants described in this Section 6 shall apply if the Executive experiences a termination of employment with the Corporation
for any reason, with or without a Change of Control, during the term of the Agreement.

 

		(h)	For purposes of this Section 6, the term “Corporation” means the Corporation and any
parent or subsidiary entity with respect to the Corporation.

 

		7.	NOTICES: For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	 	If to the Executive:	Max C. Morehead, Jr.
	 	 	16525 Saville Chase Road
	 	 	Midlothian, Virginia 23112
	 	 	 
	 	If to the Corporation:	Craig D. Bell, Esquire
	 	 	Chairman of Village Bank and Trust Financial Corp.
	 	 	McGuireWoods LLP
	 	 	Gateway Plaza
	 	 	800 East Canal Street
	 	 	Richmond, Virginia 23219-3916 
	 	 	 
	 	With a copy to:	Deborah M. Golding
	 		Vice President, Corporate Secretary
	 	 	Village Bank and Trust Financial Corp.
	 	 	P.O. Box 330
	 	 	Midlothian, Virginia 23113

  

or at such other address as
any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

		8.	MODIFICATION, WAIVERS, APPLICABLE LAW: No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by
the Executive and on behalf of the Corporation by such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of similar or dissimilar provision or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party, which are not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Virginia.

 

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		9.	INVALIDITY, ENFORCEABILITY: The invalidity or unenforceability
of any provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

 

		10.	SUCCESSOR RIGHTS: This Agreement shall inure to the benefit
of and be enforceable by the successors of the Corporation and Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still
be payable to him hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive’s executor or, if there is no such executor, to Executive’s estate.

 

		11.	HEADINGS: Descriptive headings contained in this Agreement
are for convenience only and shall not control or affect the meaning or construction of any provision hereof.

 

		12.	ARBITRATION: With the exception of Sections 6 and 13 and the
enforcement of those sections in accordance with Section 6(f), all other claims under this Agreement will be resolved by binding
arbitration. Any dispute, controversy or claim arising under or in connection with this Agreement shall be settled exclusively
by arbitration, in Richmond, Virginia in accordance with the Employment Arbitration Rules and Procedures Rules of JAMS then in
effect. The Corporation shall pay all administrative fees associated with such arbitration. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. Unless otherwise provided in the rules of the American Arbitration Association, the arbitrators
shall, in their award, allocate between the parties the costs of arbitration, which shall include reasonable attorneys’ fees
and expenses of the parties, as well as the arbitrator’s fees and expenses, in such proportions as the arbitrator deems just.

 

		13.	CONFIDENTIALITY: Executive covenants and agrees that any and
all proprietary information maintained as confidential by the Corporation and concerning the customers or businesses and services
of the Corporation of which Executive has knowledge as a result of Executive’s association with the Corporation in any capacity,
shall be deemed confidential in nature and shall not, without the proper written consent of the Corporation, be directly or indirectly
used, disseminated, disclosed or published by the Executive to third parties other than in connection with the usual conduct of
the business of the Corporation, or as required by law or the Corporation’s or Holding Company’s Code of Ethics. Such
information shall expressly include, but shall not be limited to, confidential and proprietary information concerning the Corporation’s
trade secrets within the meaning of the Virginia Trade Secrets Act, business operations, business records, documented customer
lists or other confidential customer information. Upon termination of employment, the Executive shall deliver to the Corporation
all property in Executive’s possession which belongs to the Corporation including all originals and copies of documents,
forms, records or other information, in whatever form it may exist, concerning the Corporation or its business, customers, products
or services. This Section 13 shall not be applicable to any information which, through no misconduct or negligence of Executive,
has been disclosed to the public by anyone other than Executive.

 

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		14.	409A COMPLIANCE:

 

		(a)	The intent of the parties is that payments and benefits under this Agreement
comply with Internal Revenue Code (“Code”) Section 409A, or satisfy an exemption (e.g., involuntary separation pay)
thereunder, and this Agreement shall be administered and interpreted accordingly. To the maximum extent permitted under Code Section
409A, the terms of this Agreement, including, without limitation, “termination” and “termination of employment,”
and similar terms, shall be interpreted to comply with Section 409A or an applicable exemption. In no event whatsoever shall the
Corporation be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or
damages for failing to comply with Code Section 409A.

 

		(b)	Notwithstanding any other payment schedule provided herein to the contrary,
if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term
under Code Section 409A(a)(2)(B), then the remainder of this Subsection 14(b) shall apply. With regard to any payment that is considered
deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment shall
be made on the date which is the earlier of (x) the expiration of the six (6)-month period measured from the date of such ‘separation
from service’ of the Executive, and (y) the date of the Executive’s death (the “Delay Period”) to the extent
required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section 14 (whether
they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive
in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment
dates specified for them herein.

 

		(c)	For purposes of Code Section 409A, the Executive’s right to receive
any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

 

		(d)	In no event shall any payment under this Agreement that constitutes “deferred
compensation” for purposes of Code Section 409A be offset by any other payment pursuant to this Agreement or otherwise.

 

		15.	REGULATORY REQUIREMENTS AND CLAWBACK: Notwithstanding anything
contained in this Agreement to the contrary, it is understood and agreed that the Corporation (or any of its successors in interest)
shall not be required to make any payment or take any action under this Agreement if:

 

		(a)	such payment or action is prohibited by any governmental agency having jurisdiction
over the Corporation or any of its subsidiaries or affiliates (hereinafter referred to as “Regulatory Authority”) because
the Corporation or any of its subsidiaries or affiliates is declared by such Regulatory Authority to be insolvent, in default or
operating in an unsafe or unsound manner; or

 

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		(b)	such payment or action (i) would be prohibited by or would violate any provision
of state or federal law applicable to the Corporation or its subsidiaries or affiliates, including, without limitation, the Emergency
Economic Stabilization Act of 2008 and the Federal Deposit Insurance Act, each as now in effect or hereafter amended,

 

(ii) would be prohibited
by or would violate any applicable rules, regulations, orders or statements of policy, whether now existing or hereafter promulgated,
of any Regulatory Authority, or (iii) otherwise would be prohibited by any Regulatory Authority.

 

		(c)	Executive agrees that any incentive based compensation or award that Executive
receives, or has received, from the Corporation under this Agreement or otherwise, will be subject to clawback by the Corporation
as may be required by applicable law or stock exchange listing requirement and on such basis as the Board determines, but in no
event with a look-back period of more than three years, unless required by applicable law or stock exchange listing requirement.

 

		16.	POSSIBLE REDUCTION IN PAYMENT AND BENEFITS: No amounts will
be payable and no benefits will be provided under this Agreement to the extent that such payments or benefits, together with other
payments or benefits under other plans, agreements or arrangements, would make the Executive liable for the payment of an excise
tax under Code Section 4999 or any successor provision. The amounts otherwise payable and the benefits otherwise to be provided
under this Agreement shall be reduced in a manner determined by the Holding Company (by the minimum possible amount) that is consistent
with the requirements of Code Section 409A until no amount payable to the Executive will be subject to such excise tax. All calculations
and determinations under this Section 16 shall be made by an independent accounting firm or independent tax counsel appointed by
the Holding Company (the “Tax Advisor”) whose determinations shall be conclusive and binding on the Corporation and
the Executive for all purposes. The Tax Advisor may rely on reasonable, good faith assumptions and approximations concerning the
application of Code Section 280G and Code Section 4999. The Corporation shall bear all costs of the Tax Advisor.

 

(Signatures appear on the following page)

 

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IN WITNESS WHEREOF,
the parties have executed this Agreement effective as of the date first above written.

 

	 	EXECUTIVE	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Max C. Morehead, Jr.	 
	 	 	Max C. Morehead, Jr.	 
	 	 	 	 
	 	Date:	March 24, 2020	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	VILLAGE BANK	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ William G. Foster	 
	 	 	William G. Foster	 
	 	 	President and Chief Executive Officer	 
	 	 	 	 
	 	Date:	March 24, 2020	 

 

 

    	 	10Exhibit

Exhibit 10.1
RESTRICTED STOCK UNIT AWARD AGREEMENT
(2020 Executive Officer Time-Based Award)

This Agreement (“Agreement”) is made this <Grant Date> (“Grant Date”) by and between
<Participant Name> (“Participant”) and The Progressive Corporation (the “Company”).

1.Definitions. Unless otherwise defined or expressly given a different meaning in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in The Progressive Corporation 2015 Equity Incentive Plan (the “Plan”).

2.Award of Restricted Stock Units. The Company grants to Participant an award (the “Award”) consisting of <# of Units> restricted stock units (the “Restricted Stock Units” or “Units”), pursuant to, and subject to, the terms of the Plan.

3. Condition to Participant’s Rights under this Agreement. This Agreement shall not become effective, and Participant shall have no rights with respect to the Award or any Restricted Stock Units, unless and until Participant has fully executed this Agreement and delivered it to the Company. In the Company’s sole discretion, such execution and delivery may be accomplished through electronic means.

4.Restrictions; Vesting.  Subject to the terms and conditions of the Plan and this Agreement, including the provisions of Paragraph 8 below, Participant’s rights in and to the Units shall vest, if at all, according to the following schedule (with such modifications as may be necessary or appropriate, in the Company’s sole discretion, to eliminate or minimize fractional Units from the following vesting schedule):

		
	a.
	One-third of the Units shall vest on January 1, 2023;

		
	b.
	One-third of the Units shall vest on January 1, 2024; and

		
	c.
	One-third of the Units shall vest on January 1, 2025.

The Restricted Stock Units awarded under this Agreement shall vest in accordance with the schedule set forth above unless, prior to the vesting date set forth above, the Award and the applicable Units are forfeited or have become subject to accelerated vesting under the terms and conditions of the Plan or this Agreement.

5.Dividend Equivalents. Subject to this Paragraph 5, with respect to dividends for which a record date occurs during the Restriction Period applicable to any Units, Participant shall be credited with a Dividend Equivalent with respect to each outstanding Restricted Stock Unit, with respect to each vested but not yet distributed Restricted Stock Unit (as contemplated by Paragraph 8(d), and with respect to any Dividend Equivalent Unit (defined below) resulting from prior reinvestments of Dividend Equivalents as provided in this Paragraph. All Dividend Equivalents so credited will be deemed to be reinvested in Restricted Stock Units on the date that the applicable dividend or distribution is made to the Company’s shareholders, in the number of Dividend Equivalent Units determined by dividing the aggregate value of the Dividend Equivalents by the Fair Market Value of the Stock on such date (rounded to the nearest thousandth of a whole Unit or as otherwise reasonably determined by the Company); provided, however, that if Dividend Equivalents cannot be reinvested in Units due to the operation of Section 3(a) of the Plan, such Dividend Equivalents will be credited to Participant as a cash value, which cash value shall be held by the Company (without interest) subject to this Agreement. Any Units resulting from the deemed 

1

reinvestment of dividends in accordance with this Paragraph 5 are referred to herein as “Dividend Equivalent Units.”   Dividend Equivalents shall be subject to the same terms and conditions, and shall vest or be forfeited (as applicable) at the same time, as the Restricted Stock Units to which they relate; provided, however, that (i) if the Restriction Period for any Restricted Stock Unit ends after the record date for, but before the payment date of, a dividend, then any Dividend Equivalents related to such dividend and to Units for which the Restriction Period is ending will be paid in cash or in Stock, in the sole discretion of the Company, as soon as practicable following the payment date for such dividend, and (ii) if Paragraph 8(d) below is applicable and a record date for any dividend occurs after the applicable vesting date but before the applicable Delivery Date (as defined in Paragraph 8(d) below), then any Dividend Equivalents related to such dividend will be paid in cash or in Stock, in the sole discretion of the Company, on or as soon as practicable following the Delivery Date.

6.Units Non-Transferable. No Restricted Stock Units (and no Dividend Equivalents) shall be transferable by Participant other than by will or by the laws of descent and distribution. In the event all or any portion of the Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to offset against the Award any expenses (including attorneys’ fees) incurred by the Company, or any of its Subsidiaries or Affiliates, in connection with such attempted transfer or assignment.

7.Executive Deferred Compensation Plan. If Participant is eligible, and has made the appropriate election, to defer the Award into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral Plan”), and the Award is eligible for deferral under the Deferral Plan, then at the time of vesting, the Restricted Stock Units that would otherwise vest under this Agreement (but not any Dividend Equivalents, which shall be delivered to Participant in accordance with Paragraph 9), instead of being delivered to Participant shall be credited to Participant’s account under the Deferral Plan, subject to and in accordance with the terms and conditions of the Deferral Plan and any related deferral agreement.

8.Termination of Employment.  

(a)Except as otherwise provided in the Plan or in this Paragraph 8, or as otherwise determined by the Committee, if Participant’s employment with the Company or any Subsidiary or Affiliate terminates for any reason, the Award and all Restricted Stock Units (and any related Dividend Equivalents) held by Participant that are unvested or subject to restriction at the time of such termination shall be forfeited automatically immediately after such termination. 

(b)Notwithstanding Paragraph 8(a) above, in the event that Participant’s employment terminates as a result of Participant’s death prior to the Participant’s Qualified Retirement Eligibility Date, then the Restricted Stock Units (and any related Dividend Equivalents) will vest to the extent that the Award would have vested if Participant had remained employed for one year following the date of death, and the balance of the Award, if any, shall be forfeited. The Company will process any vesting pursuant to the terms of the immediately preceding sentence within 30 days following its receipt of notice of Participant’s death.

(c)Notwithstanding Paragraph 8(a) above, in the event that Participant’s employment terminates as a result of Participant’s death on or after the Participant’s Qualified Retirement Eligibility Date, then fifty percent (50%) of each Award Installment (and any related Dividend Equivalents) that is unvested on the date of death will vest and the balance of the Award shall be forfeited. The Company will process any vesting pursuant to the terms of the immediately preceding sentence within 30 days following its receipt of notice of Participant’s death.

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(d)Notwithstanding Paragraph 8(a) above, in the event that Participant’s employment terminates as a result of Participant’s Qualified Retirement, then fifty percent (50%) of each Award Installment (and any related Dividend Equivalents) that is unvested on the Participant’s Qualified Retirement Date will vest immediately after such Qualified Retirement, except that the distribution of Stock deliverable upon such vesting shall not occur until the date that is six (6) months plus one (1) day after such Qualified Retirement Date (the “Delivery Date”).  The remaining fifty percent (50%) of each unvested Award Installment (and any related Dividend Equivalents) shall terminate immediately after such Qualified Retirement. 

		
	(e)
	For purposes of this Paragraph 8:

i.    “Qualified Retirement” shall mean any termination of Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (excluding death and an involuntary termination for Cause) that (A) qualifies as a “separation from service” within the meaning of Section 409A, and (B) occurs on or after the first day of the calendar month in which either of the following conditions are scheduled to be satisfied:

		
	(x)
	the Participant is 55 years of age or older and has completed at least fifteen (15) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; or

		
	(y)
	the Participant is 60 years of age or older and has completed at least ten (10) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates;

provided, however, that if Participant provided any service as an employee to any entity (or one or more of its subsidiaries or affiliates) that became a Subsidiary or Affiliate of the Company as a result of the Company’s acquisition, directly or indirectly, of the assets of such entity (and/or one or more of its subsidiaries or affiliates) or all or a controlling interest in such entity’s capital stock or other equity interests (such entity being the “Acquired Entity”), then Participant’s service as an employee of the Acquired Entity (or one or more subsidiaries or affiliates of the Acquired Entity) prior to the date of such acquisition by the Company shall not be treated as “service as an employee of the Company or one or more of its Subsidiaries or Affiliates” for purposes of this Paragraph 8(e)(i); 

ii.    “Qualified Retirement Eligibility Date” shall mean the first day of the earliest calendar month in which the Participant is scheduled to satisfy either of the age and years-of-service requirements for a Qualified Retirement as defined in Paragraph 8(e)(i) above; and

iii.    “Qualified Retirement Date” means the date as of which Participant’s employment with the Company or its Subsidiaries or Affiliates terminates pursuant to a Qualified Retirement as defined in Paragraph 8(e)(i) above.

(f)Nothing in this Paragraph 8 will be interpreted as altering in any way the provisions of Section 11 of the Plan. 

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9.Delivery at Vesting. Subject to the provisions of the Plan and this Agreement (including Paragraph 8(d)), upon vesting of all or part of the Award, the Company shall deliver to Participant one share of Stock in exchange for each such vested Restricted Stock Unit and for each Dividend Equivalent Unit related thereto and cash in the amount of any other related Dividend Equivalents, and the applicable Restricted Stock Units (and any related Dividend Equivalents) shall be cancelled. Unless determined otherwise by the Company at any time prior to the applicable delivery, each fractional Restricted Stock Unit (and related Dividend Equivalent Unit) shall vest and be settled in an equal fraction of a share of Stock.
 
10.Disqualifying Activity. Notwithstanding any other provision of this Agreement, if the Committee determines that Participant is engaging in, or has engaged in, a Disqualifying Activity, the provisions of Section 10(b) of the Plan will apply. A violation of Paragraph 12 below, and any violation of any non-competition agreement between Participant and the Company or any of its subsidiaries or Affiliates, by Participant shall constitute a “material violation” of an “agreement between the Participant and the Company” within the meaning of clause (iii) of the definition of Disqualifying Activity.

11.Taxes. No later than the date as of which Taxes become due, Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any Taxes and other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the Plan and this Agreement shall be conditioned on such payment or arrangements and the Company and its Subsidiaries and Affiliates, to the extent permitted by law, shall have the right to deduct any such Taxes from any payment of any kind otherwise due to Participant.  At vesting (or Delivery Date, if applicable) of any Award Installment, Restricted Stock Units and any related Dividend Equivalent Units vesting on such vesting date (or being distributed on such Delivery Date) will be valued at the Fair Market Value of the Company’s Stock on such date.

 Unless otherwise determined by the Committee, Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of Restricted Stock Units and related Dividend Equivalents (“Minimum Withholding Obligations”) either (a) by surrendering to the Company Restricted Stock Units that are then vesting or being distributed (or shares of Stock issuable upon such event) with a value sufficient to satisfy the Minimum Withholding Obligations, or (b) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company Restricted Stock Units that are then vesting or being distributed (or shares of Stock issuable upon such event) with a value sufficient to satisfy the Minimum Withholding Obligations.

Under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations by surrendering Restricted Stock Units that are not then vesting (or being distributed on such Delivery Date) or any Restricted Stock Units that Participant has elected to defer under Paragraph 7 above. Any request by Participant to satisfy Minimum Withholding Obligations by surrendering shares of Stock owned by Participant prior to the date of such satisfaction must be specifically approved in advance by the Committee. All payments and surrenders of Units or shares of Stock and any requests for approval of alternative payment arrangements must be made by Participant in accordance with such procedures as may be adopted by the Company in connection therewith, and subject to such rules as have been or may be adopted by the Committee.

12.Non-Solicitation. In consideration of the Award made to Participant under this Agreement, starting on the Grant Date and ending on the date that is exactly twelve (12) months after Participant's “Separation Date” (defined below), Participant shall not directly or indirectly recruit or solicit for hire, or 

4

hire, or assist in any manner in the recruitment, solicitation for hire or hiring, of any employee or officer of the Company or any of its Subsidiaries or Affiliates in each case involving employment by any individual, business or entity other than the Company or one of its Subsidiaries or Affiliates, or in any way induce any such employee or officer to terminate his or her employment with the Company or any of its Subsidiaries or Affiliates. For purposes of this Paragraph, "Separation Date" means the date on which Participant's employment with the Company or one of its Subsidiaries or Affiliates terminates for any reason. The provisions of this Paragraph 12 shall be in addition to, and shall not supersede or replace, the provisions of any employment or other agreement between Participant and the Company or any of its Subsidiaries or Affiliates that contains similar or additional restrictions on Participant.

13.Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to this Award, and, except as provided in Paragraph 12, supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan.

14.Amendment. The Committee may amend the terms of this Award to the fullest extent permitted by Section 12 of the Plan.

15.Acknowledgments. Participant: (i) acknowledges receiving a copy of 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 such Plan Description; (ii) accepts this Agreement and the Award subject to all provisions of the Plan and this Agreement; and (iii) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award.

Participant evidences his or her agreement with the terms and conditions of this Agreement, and his or her intention to be bound by this Agreement, by electronically accepting the Award pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable against Participant and the Company.

THE PROGRESSIVE CORPORATION

By:  /s/  Daniel P. Mascaro     
Vice President & Secretary

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