Agreement and Plan of Merger, dated as of February 14, 2021, by and among Protective Insurance Corporation, The Progressive Corporation and Carnation Merger Sub Inc

Exhibit A Surviving Corporation Articles of Incorporation

Exhibit B Surviving Corporation Bylaws

Schedule I Governmental Consents

This AGREEMENT AND PLAN OF MERGER (together with all annexes, letters, schedules and exhibits hereto, this “Agreement”), dated as of February 14, 2021, is by and among The Progressive Corporation, an Ohio corporation (“Parent”), Carnation Merger Sub Inc., an Indiana corporation and wholly owned indirect subsidiary of Parent (“Merger Sub”), and Protective Insurance Corporation, an Indiana corporation (the “Company”).

WHEREAS, the Company and Merger Sub each has determined that it is advisable, fair to and in the best interests of its respective shareholders to effect a merger (the “Merger”) of Merger Sub with and into the Company pursuant to Chapter 40 of the Indiana Business Corporation Law (the “IBCL”) upon the terms and subject to the conditions set forth in this Agreement, pursuant to which each outstanding share of Class A common stock, without par value, of the Company (the “Company Class A Shares”) and each outstanding share of Class B common stock, without par value, of the Company (the “Company Class B Shares” and, together with the Company Class A Shares, the “Company Common Shares”) shall be converted into the right to receive the Merger Consideration, as set forth herein, all upon the terms and subject to the conditions of this Agreement;

WHEREAS, acting on the unanimous recommendation of the Special Committee of the Board of Directors (the “Special Committee”), the Board of Directors of the Company (the “Company Board of Directors”) has unanimously adopted resolutions at a meeting duly called and at which the Company Board of Directors was present (i) determining that this Agreement, the Merger and the other transactions contemplated hereby are fair to, advisable and in the best interests of the Company and its shareholders (the “Company Shareholders”), (ii) approving and adopting this Agreement, the Merger and the other transactions contemplated hereby and (iii) declaring the advisability of this Agreement, the Merger and the other transactions contemplated hereby, and recommending the approval by the holders of Company Class A Shares (the “Company Voting Shareholders”) of this Agreement, the Merger and the other transactions contemplated hereby;

WHEREAS, the Board of Directors of Merger Sub has adopted resolutions (i) determining that this Agreement, the Merger and the other transactions contemplated hereby are at a price and on terms that are fair to, advisable and in the best interests of Merger Sub and its sole shareholder, (ii) approving and adopting this Agreement, the Merger and the other transactions contemplated hereby and (iii) declaring the advisability of this Agreement, the Merger and the other transactions contemplated hereby and recommending the approval by its sole shareholder of this Agreement, the Merger and the other transactions contemplated hereby;

WHEREAS, the Board of Directors of Parent and Progressive Commercial Holdings, Inc., a Delaware corporation, as the sole shareholder of Merger Sub, in each case has adopted and approved this Agreement, the Merger and the other transactions contemplated hereby;

WHEREAS, contemporaneously with the execution and delivery of this Agreement, and as an inducement to Parent’s willingness to enter into this Agreement, certain Company Voting Shareholders are executing and delivering a voting and support agreement with Parent and the Company (the “Company Voting Agreement”); and

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the parties hereby agree as follows:

“Action” means any action, claim, suit, proceeding, litigation, hearing, charge, mediation, arbitration, audit, examination or investigation by or before any Governmental Authority or any arbitrator or mediator.

“Affiliate” of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person; provided that, prior to the Closing, (a) Parent and its Affiliates (other than the Company and its Subsidiaries) shall not be deemed to be Affiliates of the Company and its Subsidiaries and (b) the Company and its Subsidiaries shall not be deemed to be affiliates of Parent and its Affiliates (other than the Company and its Subsidiaries) for any purpose hereunder.

“Affordable Care Act” means, collectively, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010.

“Articles of Merger” means the articles of merger with respect to the Merger, containing the provisions required by, and executed in accordance with, the IBCL.

“Benefit Plan” means each (a) “employee benefit plan” within the meaning of Section 3(3) of ERISA (but without regard to whether such plan is subject to ERISA), and (b) other employment agreement, consultant, bonus, stock option, stock purchase, performance award or other equity-based award, incentive compensation, profit sharing, savings, retirement (including early retirement and supplemental retirement), disability, vacation, deferred compensation, severance, termination, salary continuation, retention, change of control and other similar fringe, welfare or other employee benefit plans, benefit programs, benefit agreements, benefit contracts, benefit policies or benefit arrangements (whether or not in writing), in each case, (i) which is maintained, administered or contributed to by the Company or any of its Subsidiaries for the benefit of or relating to any current or former director, officer or employee of the Company or its Subsidiaries, or (ii) with respect to which the Company or any of its Subsidiaries would reasonably be expected to have any liability (contingent or otherwise).

“BMA” means the Bermuda Monetary Authority.

“Book-Entry Shares” means each entry in the books of the Company (or its transfer agent) representing uncertificated Shares.

“Burdensome Condition” means a condition that Parent or any of its Subsidiaries (including the Surviving Corporation and its Subsidiaries after the Closing) take or refrain from taking any action (including any amendment, waiver or termination of any material agreement, including this Agreement) or suffer to exist any restriction, condition or requirement which (i) is imposed by an Insurance Regulator and would require Parent or any of its Subsidiaries to agree to any material operational restriction on its business or any restriction on the payment of dividends (other than restrictions on dividends imposed by applicable Indiana insurance Laws or any incremental limitation on dividends or distributions specifically imposed by an Insurance Regulator with a duration of two (2) years or less following the Closing), (ii) is imposed by a Governmental Authority and would require Parent or any of its Subsidiaries to make any divestiture or disposition, discontinue or license any portion of its business or assets, to accept or enter into any hold separate order or consent decree or to place any assets in trust (other than any that relates to the Company and its Subsidiaries and would not be material to the Company and its Subsidiaries, taken as a whole), (iii) is imposed by an Insurance Regulator and would require Parent or any of its Subsidiaries to make any capital commitment or capital guarantee or keep well or similar capital maintenance undertaking, in each case that would be material relative to Parent and its Subsidiaries, taken as a whole (with “material” for this purpose measured relative to the size of the Company and its Subsidiaries, taken as a whole), as a result of the transactions contemplated by this Agreement or (iv) individually or in the aggregate has or would reasonably be likely to have a material adverse effect on the Company and its Subsidiaries, taken as a whole, as a result of the transactions contemplated by this Agreement; provided that none of the following shall constitute or be taken into account in determining whether a Burdensome Condition has occurred or exists: (A) any proposed changes to the business and operations of the Company and its Subsidiaries by Parent or its Subsidiaries or (B) other than for purposes of clause (ii) above, the identity of Parent and its Subsidiaries.  Prior to Parent being entitled to invoke a Burdensome Condition, each of the parties and their respective Representatives shall promptly confer in good faith in order to (x) exchange and review their respective views and positions as to any Burdensome Condition or potential Burdensome Condition and (y) discuss and present to, and engage with, the applicable Governmental Authority regarding any approaches or actions that would avoid any actual Burdensome Condition or mitigate its impact so it is no longer a Burdensome Condition, and Parent shall use its reasonable best efforts to take, or cause to be take, any such actions in respect thereof which may mitigate a Burdensome Condition (other than any actions which themselves would constitute a Burdensome Condition).

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York or Indianapolis, Indiana are authorized or obligated by Law or executive order to be closed.

“Certificate” means each certificate representing one or more Shares.

“Change in Circumstance” means any event or development that is material to the Company and its Subsidiaries, taken as a whole, occurring after the execution and delivery of this Agreement, that was not known to, or reasonably foreseeable by, the Company Board of Directors or any committee thereof prior to the date hereof and which does not relate to (a) a Takeover Proposal or any matter related thereto or consequences thereof, (b) events or developments arising from the announcement or existence of this Agreement or actions taken pursuant to this Agreement or in connection with the transactions contemplated hereby, or (c) changes in the market price or trading volume of the Company Common Shares (but not the underlying cause thereof).

“Code” means the Internal Revenue Code of 1986.

“Company 10-K” means the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

“Company Articles of Incorporation” means the Amended and Restated Articles of Incorporation of the Company as in effect as of the date hereof.

“Company Balance Sheet” means the consolidated balance sheet of the Company as of December 31, 2019, and the footnotes thereto set forth in the Company 10-K.

“Company By-Laws” means the Code of By-Laws of the Company as in effect as of the date hereof.

“Company Confidentiality Agreement” means the Confidentiality Agreement between the Company and an indirect subsidiary of Parent dated October 5, 2020.

“Company Disclosure Letter” means the Company Disclosure Letter dated the date hereof and delivered by the Company to Parent prior to the execution of this Agreement.

“Company Equity Awards” means the Company RSAs.

“Company Equity Plans” means, collectively, the Company Long-Term Incentive Plan, effective as of February 13, 2017, and the Company Restricted Stock Compensation Plan, effective on or about February 2010.

“Company Financial Statements” means all of the financial statements of the Company and its Subsidiaries included in the Company Reports.

“Company Material Adverse Effect” means any fact, effect, change, event, circumstance, occurrence or development that, individually or in the aggregate, has or is reasonably likely to have a material adverse effect on the business, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, nor be taken into account in determining whether there has been or will be, a Company Material Adverse Effect: (a) changes within or affecting the general property and casualty insurance industry, the United States or global economy, or changes within or affecting global or United States economic or capital market conditions (including changes in the credit, debt, financial, or currency markets), (b) changes in or adoption of any applicable Laws or applicable accounting regulations or principles or interpretations thereof (including changes in GAAP or in SAP prescribed or permitted by the applicable Insurance Regulators and accounting pronouncements by the SEC, the National Association of Insurance Commissioners and the Financial Accounting Standards Board), (c) changes in global or national political conditions (including political action or inaction, the outbreak or escalation of war, military action, insurrection, sabotage or acts of terrorism), (d) changes due to any acts of God, natural disasters, man-made disasters, disease outbreak, global public health emergency (as declared by the World Health Organization), epidemics or pandemics (including COVID-19 and any worsening thereof or any COVID-19 Measures), (e) change, event, effect, development or circumstance arising out of the announcement of this Agreement and the transactions contemplated hereby or the pendency of the Merger or the identity of the parties to this Agreement, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any Governmental Authorities or any customers, suppliers, reinsurers, agents, policyholders, partners, officers or employees of the Company and its Subsidiaries; provided, however, that this clause (e) shall not apply with respect to the representations and warranties made by the Company in Section 4.05 of this Agreement, (f) actions taken or omitted to be taken pursuant to the express provisions of this Agreement to obtain any consent, approval, authorization or waiver under applicable Law in connection with the Merger and the other transactions contemplated hereby, (g) the entering into and performance of this Agreement and the transactions contemplated hereby, including compliance with the covenants set forth herein, or any action taken or omitted to be taken by the Company at the express written request or with the prior written consent of Parent or Merger Sub, (h) the effects of any breach, violation or non-performance of any provision of this Agreement by Parent or any of its Affiliates, (i) any initiated or threatened Action against the Company, any of its Affiliates or any of their respective directors or officers arising out of this Agreement or the transactions contemplated hereby, (j) any failure in and of itself (but not the underlying cause thereof) by the Company to meet any published analyst estimates or expectations of the Company’s revenues, premiums written, earnings or other financial performance or results of operations for any period or any failure in and of itself (but not the underlying cause thereof) by the Company to meet its internal or published projections, budgets, plans or forecasts of its revenues, premiums written, earnings or other financial performance or results of operations or any change in the price or trading volume of the Company Common Shares, (k) changes in the value of the investment assets owned by a Company Insurance Subsidiary (but not the underlying cause thereof) or (l) changes or developments in and of itself (but not the underlying cause thereof) in the credit, financial strength or other rating of the Company, any of its Subsidiaries or its outstanding debt, (m) any effect, change, event, occurrence or circumstance arising out of, resulting from or related to the matters described in Section 1.01A of the Company Disclosure Letter; provided, further, however, that any effect, change, event or occurrence referred to in clause (a), (b), (c) or (d) may be taken into account in determining whether or not there has been a Company Material Adverse Effect to the extent such effect, change, event or occurrence has a disproportionate adverse effect on the Company and its Subsidiaries, taken as a whole, relative to other participants operating in the industries and geographies in which the Company and its Subsidiaries operate (in which case the incremental disproportionate effect or effects may be taken into account in determining whether or not a Company Material Adverse Effect has occurred).

“Company Permits” means all Permits necessary for the lawful conduct of the businesses of the Company and its Subsidiaries and for the Company and its Subsidiaries to own, lease or operate its properties and assets.

“Company Reports” means all forms, reports, schedules, statements, information, registration statements and other documents (as amended or supplemented since the time of filing) filed or furnished or required to be filed or furnished by the Company with the SEC since December 31, 2018, and all certifications required pursuant to the Sarbanes-Oxley Act of 2002.

“Company Required Vote” means the affirmative vote of the holders of at least a majority of the Company Class A Shares entitled to vote in favor of approval of this Agreement, the Merger and the other transactions contemplated hereby.

“Company RSA” means each Company Common Share granted pursuant to a Company Equity Plan or otherwise that is subject to transfer restrictions or other restrictions that may lapse on the basis of time.

“Company Share Rights” means, other than Company RSAs, any options, warrants, convertible securities, subscriptions, stock appreciation rights, phantom stock plans, stock equivalents, preemptive rights or other rights, agreements, arrangements or commitments (contingent or otherwise) obligating the Company to issue or sell any shares of capital stock or voting securities of, or options, warrants, convertible securities, subscriptions, stock appreciation rights, phantom stock plans, stock equivalents, preemptive rights or other equity interests in, the Company or the value of which is determined in whole or part by reference to any of the foregoing.

“Company Shareholders Meeting” means a meeting of the Company Voting Shareholders to be called to consider the Merger, including giving effect to any adjournment or postponement thereof.

“Company Termination Fee” shall be $13,335,000.

“Confidentiality Agreements” means the Company Confidentiality Agreement and the Parent Confidentiality Agreement.

“Contract” means any note, bond, mortgage, indenture, contract, agreement, lease, legally binding commitment or legally binding undertaking, in each case whether written or oral.

“Control” means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise.

“COVID-19” means SARS-CoV-2 or COVID-19, and any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks.

“COVID-19 Measures” means any commercially reasonable actions taken (or commercially reasonably not taken) by the Company and its Subsidiaries (after the date hereof, in consultation with Parent) as a reasonably necessary or appropriate response to COVID-19 to (a) protect the health and safety of the Company’s or its Subsidiaries’ employees or (b) respond to third-party supply or service disruptions caused by COVID-19, including in each case of the preceding clauses (a) and (b) in response to any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar Law, directive, guidelines or recommendations promulgated by any industry group or any Governmental Authority in response to COVID-19.

“Effective Time” means the effective time of the Merger, which shall be the time the Articles of Merger are duly filed with and accepted by the Indiana Secretary, or such later time as is permissible in accordance with the IBCL and as agreed by the parties hereto and specified in such Articles of Merger.

“Environmental Laws” means any Laws governing pollution or the protection of human health or the environment, including laws relating to the protection of wetlands, pollution, contamination or the use, generation, management, handling, transport, treatment, disposal, storage, release or threatened release of hazardous substances.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any Person, whether or not incorporated, that together with the Company is treated as a single employer for purposes of Section 4001(b)(1) of ERISA or under Section 414 of the Code.

“Exchange Act” means the Securities Exchange Act of 1934.

“Fraud” means any material misrepresentation of past or existing fact made with knowledge of or reckless disregard for the falsity of the statement, that is relied upon by another party to that party’s detriment.

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any non-U.S., national, supranational, state, county, regional, municipal or local government or any court of competent jurisdiction, administrative or regulatory agency or commission (including the Nasdaq Global Market) or other governmental authority or agency.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

“Indiana Secretary” means the Secretary of State of the State of Indiana.

“Insurance Laws” means all Laws applicable to the business of insurance or the regulation of insurance companies.

“Insurance Regulators” means all Governmental Authorities regulating the business of insurance under Insurance Laws.

“Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, corporate names, assumed business names, logos, symbols, trade dress, and other similar designations of origin, whether registered or unregistered, together with the goodwill connected with the use of and symbolized by, and all common law rights, registrations, applications and renewals for, any of the foregoing (“Trademarks”); (b) Internet domain name registrations (“Domain Names”); (c) patents, patent applications, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions, and extensions thereof (“Patents”); (d) copyrights, whether registered or unregistered, in both published and unpublished works and copyrightable works (including Internet websites and content thereof and computer software, data, applications, data bases and documentation thereof), and all applications and registrations thereof; (e) trade secrets and all other confidential information, ideas, know-how, inventions, formulae, models, and methodologies (whether patentable or not reduced to practice); and (f) other intellectual property and related proprietary rights, interests and protections, including, without limitation, any of the foregoing rights, interests and protections in social media pages, user names and account handles.

“IRS” means the Internal Revenue Service.

“Knowledge” means, with respect to (a) the Company as it relates to any fact or other matter, the actual knowledge of the natural Persons set forth in Section 1.01B of the Company Disclosure Letter of such fact or matter as of the date hereof, in each case, after reasonable inquiry, and (b) Parent as it relates to any fact or other matter, the actual knowledge of the natural Persons set forth in Section 1.01 of the Parent Disclosure Letter of such fact or matter as of the date hereof, in each case, after reasonable inquiry; provided that, in the case of the foregoing (a) and (b), for clarity, with respect to Intellectual Property, such inquiry is not required to include freedom to operate analyses, clearance searches, validity or noninfringement analyses or opinions, or any other similar analyses or opinions of counsel.

“Law” means any U.S. or non-U.S. national, regional or local law, statute, ordinance, regulation, judgment, decree, injunction or other legally binding obligation imposed by or on behalf of a Governmental Authority.

“Lien” means any lien, mortgage, pledge, deed of trust, security interest, license, restriction, claim, option to purchase, charge, encumbrance or hypothecation.

“Order” means any order, writ, judgment, injunction, decree, stipulation, determination, or award entered by or with any Governmental Authority.

“Parent Confidentiality Agreement” means the confidentiality and use provisions in the Non-Disclosure and Exclusivity Agreement between an indirect subsidiary of Parent and the Company dated January 8, 2020.

“Parent Disclosure Letter” means the Parent Disclosure Letter dated the date hereof and delivered by Parent to the Company prior to the execution of this Agreement.

“Parent Material Adverse Effect” means a material impairment in the ability of Parent to perform its obligations under this Agreement and consummate the transactions contemplated hereby on or prior to the Outside Termination Date.

“Paying Agent” means a bank or trust company reasonably satisfactory to the Company that is organized and doing business under the Laws of the United States or any state thereof appointed by Parent to act as paying agent for payment of the Merger Consideration.

“Permit” means any authorization, license, permit, certificate, approval, award, order or any similar authorization of any Governmental Authority.

“Permitted Liens” means (a) Liens for Taxes, assessments or other charges by Governmental Authorities not yet due and payable or the amount or validity of which is being contested in good faith and for which adequate reserves have been established in accordance with GAAP or SAP, as applicable, (b) mechanics’, materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar Liens granted or which arise in the ordinary course of business, (c) Liens securing payment, or any obligation, of the applicable Person or its Subsidiaries with respect to outstanding Indebtedness so long as there is no default under such Indebtedness, (d) Liens granted in the ordinary course of the insurance or reinsurance business of the applicable Person or its Subsidiaries on cash and cash equivalent instruments or other investments, including Liens granted (i) in connection with (A) pledges of such instruments or investments to collateralize letters of credit delivered by the applicable Person or its Subsidiaries, (B) the creation of trust funds for the benefit of ceding companies, (C) underwriting activities of the applicable Person or its Subsidiaries, (D) deposit liabilities, (E) statutory deposits and (F) ordinary-course securities lending and short-sale transactions and (ii) with respect to investment securities held in the name of a nominee, custodian or other record owner, (e) pledges or deposits by the applicable Person or any of its Subsidiaries under workmen’s compensation Laws, unemployment insurance Laws or similar legislation, or good faith deposits in connection with bids, tenders, Contracts (other than for the payment of Indebtedness) or leases to which such entity is a party, or deposits to secure public or statutory obligations of such entity or to secure surety or appeal bonds to which such entity is a party, or deposits as security for contested Taxes, in each case incurred or made in the ordinary course of business, (f) gaps in the chain of title evident from the records of the relevant Governmental Authority maintaining such records, (g) in the case of the Company and its Subsidiaries, Liens created by or through the actions of Parent or any of its Affiliates, (h) easements, rights-of-way, zoning ordinances, entitlements, encroachments, building and other land use regulations imposed by Governmental Authorities having jurisdiction over such real property, restrictions and conditions of record incurred or suffered in the ordinary course of business and which, individually or in the aggregate, do not and would not reasonably be likely to materially impair the use (or contemplated use), utility or value of the applicable real property or otherwise materially impair the present or contemplated business operations at such location, and (i) such other Liens or imperfections that do not materially detract from the value of or materially impair the use (or contemplated use) of the property affected by such Lien or imperfection.

“Person” means any individual, corporation, partnership (general or limited), limited liability company, limited liability partnership, trust, joint venture, joint-stock company, syndicate, association, entity, unincorporated organization or Governmental Authority.

“Proxy Statement” means the proxy statement of the Company, and any amendment or supplement thereto, relating to the solicitation of votes in favor of the approval of this Agreement and the transactions contemplated hereby, including the Merger, at the Company Shareholders Meeting.

“Representatives” means directors, officers, employees, consultants, auditors, attorneys and financial advisors and other agents or advisors.

“SAP” means, as to any Company Insurance Subsidiary, the statutory accounting principles and practices prescribed or permitted by the applicable Insurance Regulator of the jurisdiction in which it is domiciled.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933.

“Subsidiary” of any Person means any corporation, partnership, limited liability company, joint venture or other legal entity of which such Person (either directly or through or together with another Subsidiary of such Person) owns more than 50% of the voting stock, equity interests or general partnership interests of such corporation, partnership, limited liability company, joint venture or other legal entity, as the case may be; provided that, prior to the Closing, the Company and its Subsidiaries shall not be deemed to be Subsidiaries of Parent or its Affiliates for any purpose hereunder.

“Subsidiary Share Rights” means any options, warrants, convertible securities, subscriptions, stock appreciation rights, phantom stock plans or stock equivalents, preemptive rights or other rights, agreements, arrangements or commitments (contingent or otherwise) of any character issued or authorized by the Company or any Subsidiary of the Company obligating the Company or any of its Subsidiaries to issue or sell any shares of capital stock or voting securities of, or options, warrants, convertible securities, subscriptions, stock appreciation rights, phantom stock plans, stock equivalents, preemptive rights or other equity interests in, any Subsidiary of the Company or the value of which is determined in whole or part by reference to any of the foregoing.

“Superior Proposal” means a bona fide written Takeover Proposal that did not result from a breach of Section 6.06 and that the Company Board of Directors determines in good faith (after consultation with its financial advisor and outside counsel), considering all financial, legal, regulatory and other factors as the Company Board of Directors considers to be appropriate, is reasonably expected to be consummated and, if consummated, would be more favorable to the shareholders of the Company than the Merger; provided that for the purposes of this definition of “Superior Proposal,” all references in the term Takeover Proposal to “10% or more” shall be deemed to be references to “more than 50%,” all references to “Company Class A Shares, Company Class B Shares or Company Common Shares” shall be deemed references to “Company Class A Shares, Company Class B Shares and Company Common Shares” and all references to “any class of equity securities” shall be deemed to be references to “each class of equity securities.”

“Surviving Corporation” means the corporation surviving the Merger.

“Takeover Proposal” means any inquiry, indication of interest, proposal or offer from any Third Party relating to (a) any direct or indirect acquisition or purchase, in a single transaction or a series of transactions, of (i) 10% or more of the outstanding (A) Company Class A Shares, (B) Company Class B Shares or (C) Company Common Shares or (ii) 10% or more (based on the fair market value thereof, as determined by the Company Board of Directors) of the assets (including capital stock of the Subsidiaries of the Company) of the Company and its Subsidiaries, taken as a whole, (b) any tender offer or exchange offer that, if consummated, would result in any Third-Party owning, directly or indirectly, 10% or more of the outstanding (i) Company Class A Shares, (ii) Company Class B Shares or (iii) Company Common Shares or (c) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, binding share exchange or similar transaction involving the Company pursuant to which any Third Party (or the shareholders of any Third Party) would own, directly or indirectly, 10% or more of any class of equity securities of the Company or of the surviving entity in a merger or the resulting direct or indirect parent of the Company or such surviving entity, other than, in each case, the transactions contemplated hereby, (d) any issuance, sale or disposition, directly or indirectly, to any Person or group of any securities (or options, rights, warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 10% or more of the voting power of the Company, or (e) any combination of the foregoing (in each case, other than the Merger and the transactions contemplated by this Agreement).

“Takeover Proposal Documentation” means any letter of intent, memorandum of understanding, agreement in principle, merger agreement, share purchase agreement, asset purchase agreement, acquisition agreement, option agreement or similar agreement relating to a Takeover Proposal (other than a confidentiality agreement referred to in Section 6.06(a)).

“Tax” or “Taxes” means all federal, state, local and non-U.S. income, profits, franchise, gross receipts, environmental, customs duties, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy, license, estimated, real property, personal property, windfall profits, occupation, premium, social security (or similar), workers compensation, transfer, registration, alternative or other tax, duty, fee or assessment of any nature whatsoever (together with any interest or penalty, addition to Tax or additional amount imposed with respect thereto by any Governmental Authority).

“Tax Return” means any and all returns, reports, statements, certificates, schedules, filings, documents or similar statements required to be filed with a Governmental Authority with respect to any Tax, including any and all information, returns, claims for refund, amended returns or declarations of estimated Tax and any and all attachments, amendments, supporting workpapers and supplements thereto.

“Third Party” means any Person or group (as defined in Section 13(d)(3) of the Exchange Act) other than Parent, Merger Sub or any Affiliates thereof.

“Treasury Regulation” means the regulations promulgated under the Code.

“Willful Breach” means a material breach of this Agreement that is a consequence of an act or omission undertaken by the breaching party with the Knowledge that the taking of or the omission of taking such act would, or would reasonably be expected to, cause or constitute a material breach of this Agreement.

Adverse Recommendation Change Section 6.06(b)

Agreement Preamble

Annual Bonus Section 6.08(e)

Bankruptcy and Equity Exception Section 4.02

Chosen Courts Section 9.08

Closing Section 2.02

Closing Conditions Measurement Date Section 2.02

Closing Date Section 2.02

Company Preamble

Company 401(k) Plan Section 6.08(e)

Company Board of Directors Recitals

Company Class A Shares Recitals

Company Class B Shares Recitals

Company Common Shares Recitals

Company Employee Section 6.08(a)

Company Fundamental Representations Section 7.02(a)

Company Incentive Plan Section 6.08(e)

Company Insurance Subsidiary Section 4.11

Company Recommendation Section 6.05

Company RSA Consideration Section 2.07(a)

Company Shareholders Recitals

Company Statutory Statements Section 4.12(a)

Company Voting Agreement Recitals

Company Voting Shareholders Recitals

Continuation Period Section 6.08(a)

Domain Names Section 1.01

Employee Matters Section 4.13

Exchange Fund Section 3.01

Excluded Shares Section 2.04(b)

Form A Section 6.03(c)

IBCL Recitals

Indebtedness Section 6.01(h)

Indemnified Parties Section 6.09(a)

Investment Assets Section 2.07(a)

Letter of Transmittal Section 3.02(a)

Material Contract Section 4.10(a)

Maximum Premium Section 6.09(b)

Merger Recitals

Merger Consideration Section 2.04(a)

Merger Sub Preamble

New Plans Section 6.08(d)

Old Plans Section 6.08(d)

Outside Termination Date Section 8.01(f)

Owned Real Property Section 4.19

Parent Preamble

Parent Fundamental Representations Section 7.03(a)

Patents Section 1.01

Payment Date Section 6.08(e)

Payor Section 3.07

Permitted Investments Section 3.01

Purchaser 401(k) Plan Section 6.08(e)

Reinsurance Contracts Section 4.13

Required Documents Section 3.02(b)

Shares Section 2.04(a)

Special Committee Recitals

Takeover Laws Section 4.22

Trademarks Section 1.01

Except as disclosed in any report, schedule, form, statement or other document filed with, or furnished to, the SEC by the Company and publicly available on or after January 1, 2018, and at least three (3) Business Days prior to the date of this Agreement (but excluding any forward-looking disclosure set forth in any section titled “Risk Factors” or “forward-looking statements” (or similarly captioned section) or in any other section to the extent the disclosure is a forward-looking statement or predictive, cautionary or forward-looking in nature and provided that any such disclosure will not operate as an exception to any Company Fundamental Representation) or set forth in the Company Disclosure Letter (it being understood that any information set forth in one section or subsection of the Company Disclosure Letter shall be deemed to apply to and qualify the Section or subsection of this Agreement to which it corresponds in number and each other Section or subsection of this Agreement or the Company Disclosure Letter to the extent its relevance to such Section or subsection is reasonably apparent on its face), the Company represents and warrants to Parent and Merger Sub as follows:

Except as set forth in the Parent Disclosure Letter (it being understood that any information set forth in one section or subsection of the Parent Disclosure Letter shall be deemed to apply to and qualify the Section or subsection of this Agreement to which it corresponds in number and each other Section or subsection of this Agreement or the Parent Disclosure Letter to the extent its relevance to such Section or subsection is reasonably apparent on its face), Parent and Merger Sub jointly and severally represent and warrant to the Company as follows:

The party desiring to terminate this Agreement pursuant to this Section 8.01 (other than clause (a) hereof) shall give written notice of such termination to the other party in accordance with Section 9.02, specifying the provision or provisions hereof pursuant to which such termination is effected.

if to Parent or Merger Sub, to

The Progressive Corporation
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
Email:  ***@***
Attention: Chief Legal Officer

with a copy to (which shall not constitute notice):

Baker & Hostetler LLP
Key Tower, 127 Public Square, Suite 2000
Cleveland, Ohio 44114
Email:  ***@***
Attention: John M. Gherlein

Email:  ***@***
Attention: John J. Harrington

if to the Company, to

Protective Insurance Corporation
111 Congressional Blvd., Suite 500
Carmel, IN 46032
Email:  ***@***
Attention: General Counsel

with a copy to (which shall not constitute notice):

Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West,
New York, New York 10001
Email:  ***@***
Attention: Todd E. Freed

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of the date first written above.

THE PROGRESSIVE CORPORATION

By:  
 Name: 
 Title: 

CARNATION MERGER SUB INC.

By: 
 Name: 
 Title: 

PROTECTIVE INSURANCE COMPANY

By: 
 Name: 
 Title: