EXHIBIT NO. 10(A)
THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(2000 AMENDMENT AND RESTATEMENT)
TABLE OF CONTENTS
PAGE NO.
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ARTICLE 1
DEFINITIONS
1.1 "Affiliated Company" 1
1.2 "Annual Deferral Account" or "Account" 1
1.3 "Beneficiary" 1
1.4 "Change in Control" 1
1.5 "Code" 1
1.6 "Committee" 1
1.7 "Company" 1
1.8 "Company Stock Fund" 1
1.9 "Deduction Limitation" 1
1.10 "Deferral Agreement" 2
1.11 "Deferral" 2
1.12 "Disabled" and "Disability" 2
1.13 "Distribution Event" 2
1.14 "Eligible Executive" 2
1.15 "ERISA" 2
1.16 "Fixed Deferral Period" 2
1.17 "Fixed Income Fund" 2
1.18 "Gainsharing Award" 2
1.19 "Investment Fund" 2
1.20 "Participant" 2
1.21 "Plan" 2
1.22 "Plan Year" 2
1.23 "Termination of Employment" 3
1.24 "Stock" 3
1.25 "Trust" 3
1.26 "Trust Agreement" 3
1.27 "Trustee" 3
1.28 "Valuation Date" 3
1.29 "Withdrawal Amount" 3
ARTICLE 2
DEFERRAL OF GAINSHARING AWARDS
2.1 Method of Deferral 3
2.2 Deferral Agreement Provisions 3
2.3 Fixed Deferral Periods 4
ARTICLE 3
DISTRIBUTIONS AND WITHDRAWALS
3.1 Date of Distribution 4
3.2 Method of Distribution 4
3.3 Amount of Distribution 5
3.5 Withdrawal Election 5
ARTICLE 4
ACCOUNTS
4.1 Establishment of Annual Deferral Accounts 6
4.2 Initial Investment of Accounts 6
4.3 Valuation of Investment Funds 6
4.4 Valuation of Accounts 6
4.5 Nature of Accounts 6
4.6 Account Statements 7
ARTICLE 5
INVESTMENT FUNDS
5.1 Investment Funds 7
5.2 Investment Elections of Participants 7
5.3 Transfers 7
5.4 Nature of Investment Funds 8
5.5 Liquidation of Investment Funds 8
ARTICLE 6
TRUST
6.1 Establishment of Trust 8
ARTICLE 7
PLAN OPERATION AND ADMINISTRATION
7.1 Powers of Committee 8
7.2 Nondiscriminatory Exercise of Authority 9
7.3 Reliance on Tables, etc 9
7.4 Indemnification 9
7.5 Notices to Committee 9
ARTICLE 8
CLAIMS PROCEDURES
8.1 Establishment of Claims Procedures 9
8.2 Claims Denials 10
8.3 Appeals of Denied Claims 10
8.4 Review of Appeals 10
ARTICLE 9
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendment 10
9.2 Termination 11
9.3 Liquidation of the Trust 11
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Headings 11
10.2 Plan Not Contract of Employment 11
10.3 Severability 11
10.4 Prohibition on Assignment 11
10.5 Number and Gender 12
10.6 Governing Law 12
10.7 Satisfaction of Claims 12
10.8 No Warranties 12
10.9 Tax Withholding 13
10.10 Facility of Payment 13
10.11 Repayment of Gainsharing Awards 13
10.12 Stock Subject to the Plan 13
THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
(2000 AMENDMENT AND RESTATEMENT)
WHEREAS, The Progressive Corporation maintains The Progressive Corporation
Executive Deferred Compensation Plan pursuant to a January 1, 1997 Amendment and
Restatement and the First through Sixth Amendments thereto; and
WHEREAS, it is desired to further amend and restate the Plan;
NOW, THEREFORE, effective December 1, 2000 the Plan is hereby amended and
restated in its entirety to provide as follows:
ARTICLE 1
DEFINITIONS
1.1 "Affiliated Company" means any corporation included in the affiliated
group of corporations as defined in Section 1504 of the Code
(determined without regard to 1504(b)) of which the Company is the
common parent corporation.
1.2 "Annual Deferral Account" or "Account" shall have the meaning set forth
in Section 4.1.
1.3 "Beneficiary" means such person(s) as the Participant has designated. A
Participant may change his Beneficiary designation at any time. All
Beneficiary designations (including changes) shall be made in writing
on such forms as the Committee shall prescribe, and shall become
effective only when received and accepted by the Committee; provided,
however, that a Beneficiary designation (including a change) received
by the Committee after the designating Participant's death shall be
disregarded. In the absence of a Beneficiary designation, or if the
designated Beneficiary is no longer living or in existence at the time
of the Participant's death, all distributions payable from the Plan
upon the Participant's death shall be paid to the Participant's estate.
1.4 "Change in Control" means a "Change in Control" or "Potential Change in
Control" within the meaning of The Progressive Corporation 1995
Incentive Plan (as amended from time to time).
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
1.6 "Committee" means the Executive Compensation Committee of the Board of
Directors of the Company, or any successor committee.
1.7 "Company" means The Progressive Corporation, an Ohio corporation, or
its successors.
1.8 "Company Stock Fund" means an Investment Fund consisting of Stock and
cash, and administered in accordance with such rules regarding
reinvestment of dividends and treatment of fractional shares as the
Committee shall prescribe.
1.9 "Deduction Limitation" means the following described limitation on a
payment that may otherwise be distributable under the Plan. If the
Committee determines in good faith prior to a Change in Control that
there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Company would not be deductible
by the Company solely by reason of the limitation under Code Section
162(m), then to the extent deemed necessary by the Committee to ensure
that the entire amount of any distribution to the Participant pursuant
to this Plan prior to a Change in Control is deductible, the Committee
may elect to defer all or any portion of a distribution under this
Plan. Any amounts deferred pursuant to this limitation shall continue
to be deemed to be invested as provided in Article 5. The amounts so
deferred (subject to investment gains and losses) shall be distributed
to the Participant or his or her Beneficiary (if the Participant
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dies) at the earliest possible date, as determined by the Committee in
good faith, on which the deductibility of compensation paid or payable
to the Participant for the taxable year of the Company during which the
distribution is made will not be limited by Code Section 162(m), or, if
earlier, upon a Change in Control. Notwithstanding anything to the
contrary in this Plan, the Deduction Limitation shall not apply to any
distributions made after a Change in Control.
1.10 "Deferral Agreement" means an agreement entered into by an Eligible
Executive pursuant to Article 2.
1.11 "Deferral" means an amount credited to an Annual Deferral Account
pursuant to a Deferral Agreement.
1.12 "Disabled" and "Disability" means that a Participant is expected to be
unable to perform the duties of his usual occupation for at least
twelve (12) consecutive months, as determined by the Committee.
1.13 "Distribution Event" means, as to each Participant, the earliest of the
following events:
(i) the Participant's death;
(ii) the Participant's Termination of Employment; or
(iii) Change in Control.
1.14 "Eligible Executive" means any executive of the Company or any
Affiliated Company who is designated in writing as an Eligible
Executive by the Committee, excluding, however, individuals who are not
residents of the United States or are not working at a location in the
United States.
1.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.16 "Fixed Deferral Period" shall have the meaning set forth in Section
2.3.
1.17 "Gainsharing Award" means any bonus or other incentive award payable
with respect to a Plan Year under The Progressive Corporation 1999
Executive Bonus Plan, The Progressive Corporation 1999 Gainsharing
Plan, The Progressive Corporation 1999 Information Services Incentive
Plan, The Progressive Capital Management Bonus Plan, the Diversified
Business Group 1999 Gainsharing Plan, or any other plan or program as
may be designated by the Committee.
1.18 "Investment Fund" means a device established from time to time by the
Committee pursuant to Section 5.1 that is used to calculate gains and
losses in amounts deferred by Participants under the Plan.
1.19 "Participant" means an Eligible Executive who has deferred receipt of a
portion of any Gainsharing Award pursuant to a Deferral Agreement.
Participation shall begin on the date that a Deferral Account is
established in the name of the Participant and shall end on the date
that the Participant dies or receives a distribution of the balance of
all his Deferral Accounts.
1.20 "Plan" means The Progressive Corporation Executive Deferred
Compensation Plan (2000 Amendment and Restatement), as set forth herein
and as it may be amended from time to time.
1.21 "Plan Year" means 2000 and each subsequent calendar year.
1.22 "Termination of Employment" means the voluntary or involuntary
cessation of a Participant's active employment with the Company and all
Affiliated Companies as a result of any reason other than death,
Disability and approved leave of absence.
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1.23 "Stock" means the Common Shares, $1.00 par value, of the Company.
1.24 "Trust" shall mean the trust maintained pursuant to the Trust Agreement
and known as The Progressive Corporation Executive Deferred
Compensation Trust.
1.25 "Trust Agreement" shall mean the agreement of trust between the Company
and the Trustee executed in furtherance of the Plan, as the same may be
amended from time to time.
1.26 "Trustee" shall mean the person selected from time to time by the
Company to serve as trustee under the Trust Agreement.
1.27 "Valuation Date" shall mean each day that the New York Stock Exchange
is open for trading.
1.28 "Withdrawal Amount" shall have the meaning provided in Article 3.
ARTICLE 2
DEFERRAL OF GAINSHARING AWARDS
2.1 Method of Deferral.
Each Eligible Executive may elect to defer receipt of all or a portion
of his/her Gainsharing Award in respect of any Plan Year in excess of
applicable tax withholding and other deductions required to be made in
respect of the Gainsharing Award by signing a Deferral Agreement and
delivering it to the Committee or by completing a Deferral Agreement
and transmitting it to the Committee via the Company's electronic mail
system.. If a Gainsharing Award is payable in installments, each
installment, whether or not payable in the same Plan Year, shall be
subject to the same Deferral Agreement.
2.2 Deferral Agreement Provisions .
Each Deferral Agreement must satisfy all of the following requirements:
(a) it must be in the form specified by the Committee;
(b) it must be delivered in writing, or transmitted
electronically, to the Committee in accordance with such
procedures as the Committee may establish from time to time.
(c) it must be irrevocable;
(d) it must apply to only one Gainsharing Award;
(e) it must be delivered to the Committee in writing, or received
by the Committee via the Company's electronic mail system,
prior to the Plan Year in which the applicable Gainsharing
Award will be earned;
(f) it must specify the percentage of the Eligible Executive's
Gainsharing Award to be deferred, which percentage shall not
be less than ten percent (10%). The same deferral percentage
shall apply to each installment of a Gainsharing Award covered
by the Deferral Agreement. However, a Deferral Agreement may
provide for the deferral of a percentage of that portion of a
Gainsharing Award that exceeds a specified gross dollar
amount, which percentage shall not be less than ten percent
(10%). Notwithstanding the preceding provisions of this
Section 2.2(f), no Deferral shall be less than such dollar
amount as the Committee may specify from time to time.
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(g) it must specify whether the balance of the Annual Deferral
Account to be established pursuant to that Deferral Agreement
will be distributed in a lump sum, in three (3) annual
installments, in five (5) annual installments, or in ten (10)
annual installments; and
(h) it must contain such other provisions, conditions and
limitations as may be required by the Company or the
Committee.
2.3 Fixed Deferral Periods .
"If an Eligible Executive wishes to defer receipt of all or a portion
of any Gainsharing Award for a fixed period of time ("Fixed Deferral
Period"), then his/her Deferral Agreement relating to such Gainsharing
Award shall specify that Fixed Deferral Period, which shall not be less
than three (3) years following the end of the Plan Year in which the
Gainsharing Award will be earned and which shall end on the date the
Eligible Executive attains age 43, 47, 51, 55 or 59."
ARTICLE 3
DISTRIBUTIONS AND WITHDRAWALS
3.1 Date of Distribution .
Distribution of the balance of each Annual Deferral Account of a
Participant shall be made or shall commence within thirty (30) days
following the earlier of (i) the date a Distribution Event occurs, (ii)
the date on which the Fixed Deferral Period, if any, applicable to such
Account expires, or (iii) the date, if any, selected by the Company, in
its sole discretion, pursuant to Section 9.2. If distribution is to be
made in installments, payment of installments following the first
installment shall be made within thirty (30) days following each
anniversary of the date referred to in clause (i) or (ii) of the
preceding sentence, as applicable, until all installments have been
paid. The Committee, in its sole discretion, may also permit
distribution of the balance of all of a Participant's Annual Deferral
Accounts to be made or commence at any time following the date the
Participant is determined by the Committee to be Disabled. If the
Committee approves such a Disability distribution, no further Deferrals
shall be made with respect to the Disabled Participant following the
date of the Committee's approval, and each Deferral Agreement to which
such Participant is a party shall be of no further effect.
3.2 Method of Distribution .
"Each distribution of the balance of an Annual Deferral Account made on
account of the Participant's death shall be made to the Participant's
Beneficiary. Each distribution made on account of the Participant's
death, termination of the Plan or a Change in Control shall be paid in
a lump sum. Each distribution made on account of the Participant's
Termination of Employment or expiration of a Fixed Deferral Period
shall be paid in either a lump sum or installments, as specified in the
applicable Deferral Agreement. Each distribution made on account of the
Participant's Disability shall be paid in either a lump sum or
installments, as determined by the Committee in its sole discretion. If
a Participant elects to receive (or, in the case of Disability, begins
receiving) payment in installments and dies prior to payment of all
installments, the balance remaining unpaid at his/her death shall be
paid to his/her Beneficiary in a lump sum. Installment payments shall
be paid in three (3) annual installments, in five (5) annual
installments or in ten (10) annual installments, as specified in the
applicable Deferral Agreement. Notwithstanding the preceding provisions
of this Section 3.2, a Participant may elect to change the method of
distribution elected in respect of any distribution to be made on
account of Termination of Employment or expiration of a Fixed Deferral
Period to any of the four permissible options (lump sum, in three (3)
annual installments, in five (5) annual installments or in ten (10)
annual installments). Each such change must be made in writing on such
forms as the Committee shall specify and must be delivered to the
Committee at least one (1) year prior to Termination of Employment or
expiration of the Fixed Deferral Period.
3.3 Amount of Distribution .
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The amount of each lump sum payment shall be equal to the balance of
the Annual Deferral Account, as of the Valuation Date immediately
preceding the date of distribution. The amount of each installment
payment shall be equal to the balance of the Annual Deferral Account as
of the Valuation Date immediately preceding the date of payment
multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of years remaining in the period
over which installments are to be paid. Installment distributions to be
made in Stock shall be rounded to the nearest whole share.
Notwithstanding anything in the Plan to the contrary, all
distributions, except those made on account of a Change in Control, are
subject to the Deduction Limitation.
3.4 Form of Distribution .
All distributions shall be made in cash, except that a distribution
representing amounts invested in the Company Stock Fund shall be made
in Stock with any fractional shares of Stock to be made in cash.
3.5 Withdrawal Election.
A Participant may elect at any time to withdraw all of his/her Annual
Deferral Account balances, less a withdrawal penalty equal to 10% of
such amount (the net amount shall be referred to as the "Withdrawal
Amount"). This election can be made at any time before or after
Disability, death or Termination of Employment, and whether or not the
Participant is in the process of being paid pursuant to an installment
payment schedule. No partial withdrawals of the Withdrawal Amount shall
be allowed. The Withdrawal Amount shall be paid in a lump sum, except
to the extent the Deduction Limitation requires otherwise. The
Participant shall make a withdrawal election by giving the Committee
advance written notice of the election in a form specified by the
Committee. The election shall be irrevocable. The Participant shall be
paid (or, if the Deduction Limitation applies, commence to be paid) the
Withdrawal Amount within 30 days after the Committee's receipt of
his/her election. Once the Withdrawal Amount is paid, or commences to
be paid, the Participant's participation in the Plan shall terminate
and the Participant shall not be eligible to participate in the Plan
thereafter. If the Deduction Limitation applies, the entire balance of
all of the Participant's Annual Deferral Accounts shall be reduced by
the 10% withdrawal penalty effective on the date that payment of the
Withdrawal Amount is to commence, even though final payment of the last
portion of the Withdrawal Amount will not be made until permitted by
the Deduction Limitation provisions. Any portion of the Withdrawal
Amount not paid immediately shall continue to be deemed to be invested
as provided in Article 5. If a Participant dies prior to payment of any
portion of a Withdrawal Amount, the remaining portion shall be paid to
his/her Beneficiary in a lump sum, subject to the Deduction Limitation.
The provisions of Section 3.4 shall apply to all withdrawals under this
Section 3.5.
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ARTICLE 4
ACCOUNTS
4.1 Establishment of Annual Deferral Accounts .
The Committee shall establish an Annual Deferral Account in the name of
each Participant for each Gainsharing Award, or portion thereof, that
is the subject of a Deferral Agreement. Such Account shall be
established as of the first date that such Gainsharing Award or portion
otherwise would have been paid to the Participant. Each Annual Deferral
Account shall be credited with the deferred portion of such Gainsharing
Award. Thereafter, all Annual Deferral Accounts shall be valued and
administered as provided in this Article. "Notwithstanding anything in
the Plan to the contrary, the Trustee may combine two (2) or more of
any Participant's Annual Deferral Accounts into a single Account, if
the Annual Deferral Accounts to be combined (i) are subject to Fixed
Deferral Periods ending on the same date or (ii) are not subject to
Fixed Deferral Periods at all."
4.2 Investment of Accounts .
All credits to an Annual Deferral Account of a Participant shall be
deemed to be invested in such Investment Funds as the Participant shall
elect from time to time in accordance with Article 5. The number of
shares of Stock to be credited to a Participant's Account by virtue of
a Participant's election to invest a portion of a Deferral in the
Company Stock Fund shall be determined on the date of the Deferral,
based on the closing price of Stock on the immediately preceding
Valuation Date as quoted in the New York Stock Exchange composite
trading.
4.3 Valuation of Investment Funds .
As of each Valuation Date, the Trustee shall compute the value of each
Investment Fund from which shall be determined the net gain or loss of
such Investment Fund since the immediately preceding Valuation Date.
The net gain or loss shall include any unrealized and realized profits
and losses, and any dividends, interest or other income and any
expenses which are due or accrued, but shall not include distributions
from such Investment Fund. In determining the value of each Investment
Fund, the Trustee shall use the following values: securities listed on
any nationally recognized securities exchange shall be valued at the
closing price reported on any such exchange on the Valuation Date, or,
if there were no sales on the Valuation Date, then at the quoted bid
price on the Valuation Date. Securities not listed on a recognized
securities exchange shall be valued at the quoted closing bid price on
the Valuation Date. A unit of participation in a common trust fund
maintained by the Trustee or a share in a mutual fund shall be valued
at the unit value, or share price respectively, in effect at the close
of business on the Valuation Date. Securities with respect to which
there were no available sale prices or bid prices on the Valuation
Date, and any other investments, shall be valued at prices deemed by
the Trustee to represent the fair market value thereof on the Valuation
Date.
4.4 Valuation of Accounts .
As of each Valuation Date, the net gain or loss of each Investment Fund
shall be allocated among the appropriate Annual Deferral Accounts in
accordance with such procedures as the Committee shall establish, which
procedures shall apply uniformly to all Participants.
4.5 Nature of Accounts .
All credits to each Annual Deferral Account of each Participant shall
be recorded as a liability on the books of the Company. However, no
Participant or Beneficiary shall have any proprietary rights of any
nature with respect to any Account of any Participant or with respect
to any funds, securities or other property owned by the Company or any
Affiliated Company that is held in the Trust or that otherwise may be
represented from time to time by Investment Funds. All
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payments under the Plan shall be made from the Trust or from the
Company's general funds and in no event shall any Participant or
Beneficiary have any claims or rights to any payment hereunder that are
superior to any claims or rights of any general creditor of the
Company.
4.6 Account Statements .
The Committee will furnish each Participant with quarterly statements
of the value of each of his/her Annual Deferral Accounts.
ARTICLE 5
INVESTMENT FUNDS
5.1 Investment Funds .
The Committee shall establish and maintain the Company Stock Fund and
such other Investment Funds as are specified from time to time by the
Company. In this regard, the Company may choose to offer as Investment
Funds any investment vehicles, including without limitation: (i)
securities issued by investment companies advised by affiliates of the
Trustee, (ii) guaranteed investment contracts recommended by the
Trustee, and (iii) collective investment trusts maintained by the
Trustee.
5.2 Investment Elections of Participants .
Each Participant shall make an investment election in the manner
prescribed by the Committee, directing the manner in which his/her
Deferrals shall be deemed to be invested. Each investment election must
be made at the time the applicable Deferral Agreement is signed and may
be changed upon notice to the Committee at least five (5) business days
prior to the deemed deposit of the applicable Deferral into one or more
Investment Funds. Such elections and notices to the Committee must be
made in writing or through the Company's electronic mail system in
accordance with such procedures as the Committee may prescribe. Each
Participant may make a separate investment election for each of his/her
Annual Deferral Accounts. Each investment election shall specify that
Deferrals shall be deemed to be deposited in one or more of the
Investment Funds in percentages that are each an integral multiple of
1% and that in the aggregate equal 100% of the Deferral.
5.3 Transfers. Amounts deemed to be invested in an Investment Fund pursuant
to this Section may be transferred to another Investment Fund in
accordance with such procedures and limitations as the Committee shall
prescribe. The procedures and limitations prescribed by the Committee
may include, without limitation, provisions which (i) limit transfers
to specified dollar amounts or percentages (ii) limit the number of
transfers that each Participant may make each Plan year (iii) limit the
dates as of which transfers may become effective and (iv) impose
waiting periods or other restrictions in connection with multiple
transfers in and out of the same Investment Fund. All such procedures
and limitations shall apply uniformly to similarly situated
Participants.
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5.4 Nature of Investment Funds.
Notwithstanding anything in the Plan, Trust or any Deferral Agreement
to the contrary, no Participant shall have any rights or interests in
any particular funds, securities or property of the Company, any
Affiliated Company or the Trust, or in any investment vehicle in which
Deferrals are deemed to be invested, by virtue of any investment
election made by the Participant under the Plan or any transactions
engaged in by the Trust. Each Annual Deferral Account, however, shall
be credited/charged in accordance with Article 4 with gains/losses as
if the Participant in fact had made a corresponding actual investment.
5.5 Liquidation of Investment Funds.
If any Investment Fund is liquidated or otherwise ceases to exist
without a successor, then that portion of each Account balance that
previously has been deemed to have been invested in that Investment
Fund shall be deemed to have been transferred to an Investment Fund
consisting of money market instruments, or, if none, such other
Investment Fund selected by the Committee.
ARTICLE 6
TRUST
6.1 Establishment of Trust.
The Company shall establish and maintain a Trust to provide a source of
funds to assist the Company in meeting its liabilities under the Plan.
Within thirty (30) days following the end of each Plan Year ending
after the Trust has become irrevocable pursuant to the Trust Agreement,
the Company shall be required to irrevocably deposit additional cash or
other property to the Trust in an amount sufficient to pay each
Participant or Beneficiary the benefits payable pursuant to the terms
of the Plan as of the close of that Plan year.
The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan Participants and general
creditors of the Company as set forth herein and in the Trust
Agreement. Plan Participants and their Beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets
of the Trust. Any rights created under the Plan and the Trust Agreement
shall be mere unsecured contractual rights of Plan Participants and
their Beneficiaries against Company. Any assets held by the Trust will
be subject to the claims of the Company's general creditors under
federal and state law in the event of Insolvency, as defined in the
Trust Agreement. All assets deposited in the Trust shall be held,
administered and distributed by the Trustee in accordance with the
Trust Agreement. The Company shall pay directly, or reimburse the
Trustee for, all taxes due in respect of any income or gains on Trust
assets.
ARTICLE 7
PLAN OPERATION AND ADMINISTRATION
7.1 Powers of Committee .
The Committee will have full power to administer the Plan. Such power
includes, but is not limited to, the following authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the
Plan;
(b) to interpret the Plan and to decide all matters arising
thereunder, including the right to resolve or remedy any
ambiguities, inconsistencies or omissions. All such
interpretations shall be final and binding on all parties;
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(c) to compute the amounts payable to any Participant or
Beneficiary or other person in accordance with the provisions
of the Plan;
(d) to authorize disbursements from the Trust or the Plan;
(e) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be
required under ERISA, the Code or other applicable law;
(f) to appoint such agents, counsel, accountants and consultants
as may be desirable to assist in administering the Plan;
(g) To exercise the other powers that are expressly granted to it
herein, or that are impliedly necessary for it to carry out
any of its responsibilities hereunder; and
(h) by written instrument, to delegate any of the foregoing
powers.
7.2 Nondiscriminatory Exercise of Authority .
The Committee shall exercise its authority in a nondiscriminatory
manner so that all persons similarly situated will receive
substantially the same treatment.
7.3 Reliance on Tables, etc .
The Committee will be entitled, to the extent permitted by law, to rely
conclusively on all tables, valuations, certificates, opinions and
reports which are furnished by any accountant, Trustee, counsel or
other expert retained by the Committee to assist it in administering
the Plan.
7.4 Indemnification .
In addition to whatever rights of indemnification to which employees,
officers and directors of the Company and the Affiliated Companies may
be entitled under the articles of incorporation, regulations or bylaws
of the Company or the Affiliated Companies, under any provision of law,
or under any other agreement, the Company shall satisfy any liabilities
actually and reasonably incurred by any such employee, officer or
director, including expenses, attorneys' fees, judgments, fines and
amounts paid in settlement, in connection with any threatened, pending,
or completed action, suit, or proceeding which is related to the
exercise or failure to exercise by such person or persons of any of the
powers, authority, responsibilities, or discretion of the Company, the
Affiliated Companies or the Committee provided under the Plan or the
Trust Agreement, or reasonably believed by such person or persons to be
provided thereunder, and any action taken by such person or persons in
connection therewith.
7.5 Notices to Committee .
The Committee shall designate one or more addresses to which notices
and other communications to the Committee shall be sent. No notice or
other communication shall be considered to have been given to or
received by the Committee until it has been delivered to the
Committee's attention at one of such designated addresses.
ARTICLE 8
CLAIMS PROCEDURES
8.1 Establishment of Claims Procedures .
The Committee shall establish reasonable procedures under which a
claimant, who may be a Participant or Beneficiary, may present a claim
for benefits under this Plan.
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8.2 Claims Denials .
Unless such claim is allowed in full by the Committee, written notice
of the denial shall be furnished to the claimant within ninety (90)
days (which may be extended by a period not to exceed an additional
ninety (90) days if special circumstances so require and proper written
notice to the claimant is given prior to the expiration of the initial
ninety (90) day period) setting forth the following in a manner
calculated to be understood by the claimant:
(a) The specific reason(s) for the denial;
(b) Specific reference(s) to any pertinent provision(s) of the
Plan or rules promulgated pursuant thereto on which the denial
is based;
(c) A description of any additional information or material as may
be necessary to perfect the claim, together with an
explanation of why it is necessary; and
(d) An explanation of the steps to be taken if the claimant wishes
to resubmit his/her claim for review.
8.3 Appeals of Denied Claims .
Within a reasonable period of time after the denial of the claim, but
in any event not to be more than sixty (60) days, the claimant or
his/her duly authorized representative may make written application to
the Committee for a review of such denial. The claimant or his/her
representative may review documents held by the Committee and pertinent
to the denial of such claim, and may submit a written statement of
issues and comments together with such application for review.
8.4 Review of Appeals .
If an appeal is timely filed, the Committee shall conduct a full and
fair review of the claim and mail or deliver to the claimant its
written decision within sixty (60) days after the claimant's request
for review (which may be extended by a period not to exceed an
additional sixty (60) days if special circumstances or a hearing so
require and proper written notice to the claimant is given prior to the
expiration of the initial sixty (60) day period). Such decision shall:
(i) Be written in a manner calculated to be
understandable by the claimant;
(ii) State the specific reason(s) for the decision;
(iii) Make specific reference to pertinent provision(s) of
the Plan upon which such decision is based; and
(iv) Be final and binding on all parties.
ARTICLE 9
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendment .
The Company may amend the Plan and Trust Agreement in any respect at
any time for any reason by action of the Committee without liability to
any Participant, Beneficiary or other person for any such amendment or
for any other action taken pursuant to this Section 9.1, provided that
any amendment required to be approved by the Company's shareholders
pursuant to Section 162(m) of the Code shall not be effective until
approved by the Company's shareholders in accordance with the
requirements of Section 162(m) and further provided that no such
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amendment shall be made retroactively in a manner that would deprive
any Participant of any rights or benefits which have accrued to his/her
benefit under the Plan as of the date such amendment is proposed to be
effective, unless such amendment is necessary to comply with applicable
law.
9.2 Termination .
The Company may terminate the Plan at any time for any reason by action
of the Committee without any liability to any Participant, Beneficiary
or other person for any such termination or for any other action taken
pursuant to this Section 9.2. Following termination of the Plan, and
notwithstanding the provisions of any Deferral Agreement entered into
prior to such termination, no additional Deferrals may be made
hereunder, but all existing Accounts shall continue to be administered
in accordance with the Plan, as in effect immediately prior to
termination, and shall be distributed in accordance with such terms of
the Plan and the applicable Deferral Agreements, unless and until the
Company elects to accelerate distribution as provided below. At any
time on or after the effective date of termination of the Plan, the
Company, in its sole discretion, may elect to accelerate the
distribution of the entire balance of each Participant's Accounts. Such
accelerated distributions shall be made in accordance with Article 3,
except that all distributions shall be made in a lump sum based on the
value of the Accounts, determined as of the Valuation Date immediately
preceding the date of distribution. Upon the completion of
distributions to all Participants or Beneficiaries, as the case may be,
no Participant, Beneficiary or person claiming under or through them,
will have any claims in respect of the Plan.
9.3 Liquidation of the Trust .
The Trust shall continue in existence after the termination of the Plan
for such period of time as may be required to complete the liquidation
thereof in accordance with the terms of this Article 9.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Headings .
The headings of the Plan have been inserted for convenience of
reference only and are not to be deemed controlling in any
constructions of the provisions herein (other than with respect to
defined terms).
10.2 Plan Not Contract of Employment .
The existence of the Plan shall not create, evidence or change any
contract of employment with any Participant. The right of the Company
and all Affiliated Companies to take corrective, disciplinary or other
action with respect to their employees, including terminating their
respective employment at any time for any reason, shall not be affected
by any provision of this Plan, and the Company and the Affiliated
Companies will not be deemed responsible to provide continuing
employment for any reason, at any time solely by reason of this Plan.
10.3 Severability .
If any provision of the Plan shall be invalid, such provision shall be
fully severable, and the remainder of the Plan and the application
thereof shall not be affected thereby.
10.4 Prohibition on Assignment .
No right or interest under the Plan of any Participant or Beneficiary
shall be subject at any time or in any manner to anticipation,
alienation, assignment (either at law or in equity), encumbrance (as
security or otherwise), garnishment, levy, execution, or other legal or
equitable process, and
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no Participant or Beneficiary shall have the power at any time or in
any manner to anticipate, transfer, assign (either at law or in
equity), alienate, or subject to attachment, garnishment, levy,
execution or other legal or equitable process, or in any way encumber,
such Participant's or Beneficiary's rights or interests under the Plan,
and any attempt to do so shall be void; provided, however, that the
Company shall have the unrestricted right to set off against or recover
out of any payments due a Participant or Beneficiary at the time such
payments would have otherwise been payable hereunder, any amounts owed
the Company or any Affiliated Company by such Participant or
Beneficiary.
10.5 Number and Gender .
Any use of the singular shall be interpreted to include the plural and
the plural the singular. Any use of the masculine, feminine or neuter
shall be interpreted to include the masculine, feminine and neuter, as
the context shall require.
10.6 Governing Law .
To the extent not preempted by Federal law, the provisions of the Plan
shall be construed, regulated and administered under the laws of the
State of Ohio.
10.7 Satisfaction of Claims .
Any payment to any Participant or Beneficiary in accordance with the
terms of the Plan shall, to the extent thereof, be in full satisfaction
of all claims hereunder, whether they be against the Company, the
Committee, or the Trustee, any of whom may require the Participant or
Beneficiary (or legal representative), as a condition precedent to such
payment to execute a release and receipt therefor.
10.8 No Liability .
Participation in the Plan is entirely at the risk of each Participant.
Neither the Company, any Affiliated Company, the Committee, the Trustee
nor any other person associated with the Plan shall have any liability
for any loss or diminution in the value of Accounts, or for any failure
of the Plan to effectively defer recognition of income or to achieve
any Participant's desired tax treatment or financial results.
10.9 Tax Withholding .
All payments under the Plan shall be subject to federal, state and
local income tax withholding and other legally required deductions.
10.10 Facility of Payment .
If the Committee determines that a Participant or Beneficiary entitled
to receive a payment under this Plan is (at the time such payment is to
be made) a minor or physically, mentally or legally incompetent to
receive such payment and that another person or an institution has
legal custody of such minor or incompetent individual, the Committee
may cause payment to be made to such person or institution having
custody of such Participant or Beneficiary. Such payment, to the extent
made, shall operate as a complete discharge of obligation by the
Committee, the Company, the Trustee and the Trust.
10.11 Repayment of Gainsharing Awards .
If any amount credited to an Annual Deferral Account represents a
portion of a Gainsharing Award that is subsequently found to be
repayable by the Participant to the Company or any Affiliated Company
pursuant to the plan pursuant to which the Gainsharing Award was made,
the
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amount of that credit shall nevertheless remain unaffected by that
repayment obligation, and the Participant shall make the required
repayment out of his/her own funds.
10.12 Stock Subject to the Plan .
Subject to adjustment as provided below, the total number of shares of
Stock reserved and available for issuance in connection with the Plan
is Three Hundred Thousand (300,000). Any Stock issued hereunder may
consist, in whole or in part, of authorized and unissued shares or
treasury shares. If there is a merger, reorganization, consolidation,
recapitalization, share dividend, share split, combination of shares or
other change in corporate structure of the Company affecting the Stock,
such substitution or adjustment shall be made in the aggregate number
of shares of Stock reserved for issuance under the Plan as may be
approved by the Committee in its sole discretion.
10.13 The Addendum attached hereto entitled "Addendum to The Progressive
Corporation Executive Deferred Compensation Plan ("Plan") Re: Former
Participants under the Midland Companies Amended and Restated Director
and Executive Cash or Deferred Compensation Plan" is hereby
incorporated herein by reference and made a part hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officers as of this 1st day of December, 2000.
THE PROGRESSIVE CORPORATION
By: W. Thomas Forrester
-------------------
Title: Treasurer
---------
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ADDENDUM TO THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN ("PLAN")
RE: FORMER PARTICIPANTS UNDER
THE MIDLAND COMPANIES AMENDED AND RESTATED DIRECTOR
AND EXECUTIVE CASH OR DEFERRED COMPENSATION PLAN
This Addendum sets forth certain provisions governing Participants in
the Plan who were "Participants" under and within the meaning of The Midland
Companies Amended and Restated Director and Executive Cash or Deferred
Compensation Plan ("Midland Plan") prior to the merger of the Midland Plan into
the Plan effective December 1, 2000 ("Merger"). To the extent the provisions of
this Addendum are inconsistent with the regular provisions of the Plan, the
provisions of this Addendum shall control.
1. Each person who is a "Participant" under and within the
meaning of the Midland Plan immediately prior to the Merger
shall become a Participant under and within the meaning of the
Plan as of December 1, 2000, (if he/she has not already become
a Participant under the regular provisions of the Plan)
provided that if he/she does not qualify as an Eligible
Executive, then he/she shall not be eligible to make deferral
elections under Article 2 in respect of periods following the
Merger. Individuals described in this Section 1 of this
Addendum are sometimes referred to below in this Addendum as
"Former Midland Participants".
2. All amounts to which each Former Midland Participant is
entitled under the Midland Plan as of the time of the Merger
("Transferred Deferrals") shall be credited to a special
Account ("Transferred Deferral Account") which shall be valued
and administered as provided in Article 4 of the Plan. All
amounts credited to a Transferred Deferral Account shall be
deemed to be invested as directed by such Former Midland
Participant pursuant to Article 5 of the Plan. That portion of
each Former Midland Participant's Transferred Deferral Account
attributable to matching contributions under the Midland Plan
shall vest as provided in Article V of the Midland Plan, as in
effect at the time of the Merger. Each Former Midland
Participant's Transferred Deferral Account shall be
distributed as provided in Article VIII of the Midland Plan,
as in effect at the time of the Merger.
3. There will, from time to time on or after December 1, 2000, be
delivered to the Trustee certain assets previously held in the
Trust maintained pursuant to the Midland Plan ("Transferred
Midland Assets"). All Transferred Midland Assets shall be
held, administered and distributed by the Trustee in
accordance with the Trust Agreement and Article 6 of the Plan.
4. The Company hereby assumes all obligations under this Addendum
to Former Midland Participants in respect of Transferred
Deferrals, effective upon consummation of the Merger.