1
THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
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Exhibit 4(a)
THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
3
TABLE OF CONTENTS
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PAGE NO.
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ARTICLE 1
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DEFINITIONS
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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 "DEFERRAL AGREEMENT" 1
1.10 "DEFERRAL" 1
1.11 "DISABLED" AND "DISABILITY" 1
1.12 "DISTRIBUTION EVENT" 2
1.13 "ELIGIBLE EXECUTIVE" 2
1.14 "ERISA" 2
1.15 "FIXED DEFERRAL PERIOD" 2
1.16 "FIXED INCOME FUND" 2
1.17 "GAINSHARING AWARD" 2
1.18 "INVESTMENT FUND" 2
1.19 "PARTICIPANT" 2
1.20 "PLAN" 2
1.21 "PLAN YEAR" 2
1.22 "TERMINATION OF EMPLOYMENT" 2
1.23 "STOCK" 2
1.24 "TRUST" 2
1.25 "TRUST AGREEMENT" 2
1.26 "TRUSTEE" 3
1.27 "VALUATION DATE" 3
ARTICLE 2
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DEFERRAL OF GAINSHARING AWARDS
------------------------------
2.1 METHOD OF DEFERRAL 3
2.2 DEFERRAL AGREEMENT PROVISIONS 3
2.3 FIXED DEFERRAL PERIODS 3
ARTICLE 3
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DISTRIBUTIONS
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3.1 DATE OF DISTRIBUTION 4
3.2 METHOD OF DISTRIBUTION 4
3.3 AMOUNT OF DISTRIBUTION 4
3.4 FORM OF DISTRIBUTION 4
4
ARTICLE 4
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ACCOUNTS
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4.1 ESTABLISHMENT OF ANNUAL DEFERRAL ACCOUNTS 4
4.2 INITIAL INVESTMENT OF ACCOUNTS 4
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4.3 VALUATION OF INVESTMENT FUNDS 5
4.4 VALUATION OF ACCOUNTS 5
4.5 NATURE OF ACCOUNTS 5
4.6 ACCOUNT STATEMENTS 5
ARTICLE 5
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INVESTMENT FUNDS
----------------
5.1 INVESTMENT FUNDS 6
5.2 INVESTMENT ELECTIONS OF PARTICIPANTS 6
5.3 NATURE OF INVESTMENT FUNDS 6
5.4 LIQUIDATION OF INVESTMENT FUNDS 6
ARTICLE 6
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TRUST
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6.1 ESTABLISHMENT OF TRUST 6
ARTICLE 7
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PLAN OPERATION AND ADMINISTRATION
---------------------------------
7.1 POWERS OF COMMITTEE 7
7.2 NONDISCRIMINATORY EXERCISE OF AUTHORITY 7
7.3 RELIANCE ON TABLES, ETC 7
7.4 INDEMNIFICATION 8
7.5 NOTICES TO COMMITTEE 8
ARTICLE 8
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CLAIMS PROCEDURES
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8.1 ESTABLISHMENT OF CLAIMS PROCEDURES 8
8.2 CLAIMS DENIALS 8
8.3 APPEALS OF DENIED CLAIMS 8
8.4 REVIEW OF APPEALS 9
ARTICLE 9
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AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
9.1 AMENDMENT 9
9.2 TERMINATION 9
9.3 LIQUIDATION OF THE TRUST 10
ARTICLE 10
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MISCELLANEOUS PROVISIONS
------------------------
10.1 HEADINGS 10
10.2 PLAN NOT CONTRACT OF EMPLOYMENT 10
10.3 SEVERABILITY 10
10.4 PROHIBITION ON ASSIGNMENT 10
10.5 NUMBER AND GENDER 10
10.6 GOVERNING LAW 10
10.7 SATISFACTION OF CLAIMS 11
10.8 NO WARRANTIES 11
10.9 TAX WITHHOLDING 11
10.10 FACILITY OF PAYMENT 11
10.11 REPAYMENT OF GAINSHARING AWARDS 11
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10.12 STOCK SUBJECT TO THE PLAN 11
10.13 CONDITIONS TO EFFECTIVENESS OF PLAN 11
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THE PROGRESSIVE CORPORATION EXECUTIVE
DEFERRED COMPENSATION PLAN
The Progressive Corporation hereby establishes The Progressive Corporation
Executive Deferred Compensation Plan, effective as of January 1, 1995.
The Plan is established for the purposes of providing deferred compensation for
a select group of management and highly compensated employees within the
meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
The Plan is intended to be an unfunded plan for purposes of ERISA and the Code
and is not intended to satisfy the qualification requirements of Section 401 of
the Code.
ARTICLE 1
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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 1989
Incentive Plan (amended and restated as of April 24, 1992 and as
further amended as of July 1, 1992 and February 5, 1993).
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.
1.9 "DEFERRAL AGREEMENT" means a written agreement entered into by an
Eligible Executive pursuant to Article 2.
1.10 "DEFERRAL" means an amount credited to an Annual Deferral Account
pursuant to a Deferral Agreement.
1.11 "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.
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1.12 "DISTRIBUTION EVENT" means, as to each Participant, the earliest of
the following events:
(i) the Participant's death;
(ii) the date that the Participant is determined by the Committee
to be Disabled;
(iii) the Participant's Termination of Employment; or
(iv) Change in Control.
1.13 "ELIGIBLE EXECUTIVE" means the Company's Chief Executive Officer,
Chief Operating Officer, Chief Investment and Capital Officer, Chief
Legal Officer, Chief Financial Officer, Chief Information Officer,
Chief Human Resources Officer, Division Presidents and any other
executive of the Company or any Affiliated Company who is designated
in writing as an Eligible Executive by the Committee, excluding,
however, any of the foregoing individuals who are not residents of the
United States or are not working at a location in the United States.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.15 "FIXED DEFERRAL PERIOD" shall have the meaning set forth in Section
2.3.
1.16 "FIXED INCOME FUND" means the Vanguard Investment Contract Trust or
such other Investment Fund as may be designated by the Committee as
the Fixed Income Fund within the meaning of the Plan.
1.17 "GAINSHARING AWARD" means any bonus or other incentive award payable
with respect to a Plan Year under The Progressive Corporation 1994
Executive Bonus Plan, The Progressive Corporation 1994 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, as set forth herein and as it may be amended from
time to time.
1.21 "PLAN YEAR" means 1995 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.
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.
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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.
ARTICLE 2
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DEFERRAL OF GAINSHARING AWARDS
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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. 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 writing and be in the form specified by the
Committee;
(b) it must be irrevocable;
(c) it must apply to only one Gainsharing Award;
(d) it must be signed by the Eligible Executive making the
Deferral and be delivered to the Committee prior to the Plan
Year in which the applicable Gainsharing Award will be earned;
(e) 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(e), no Deferral shall be less than such dollar
amount as the Committee may specify from time to time. All
Deferrals shall be reduced by applicable tax withholding and
other legally required deductions;
(f) 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 or in three (3) annual
installments; and
(g) 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 two (2) years following the end of the Plan Year in which
the Gainsharing Award will be earned.
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ARTICLE 3
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DISTRIBUTIONS
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3.1 Date of Distribution.
--------------------
The balance of each Annual Deferral Account of a Participant shall be
distributed 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.
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 or Disability, 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. If a Participant
elects to receive 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 annually for three years.
3.3 Amount of Distribution.
----------------------
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.
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.
ARTICLE 4
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ACCOUNTS
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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.
4.2 Initial Investment of Accounts.
------------------------------
All initial credits to an Annual Deferral Account of a Participant
shall be deemed to be invested in such Investment Funds as the
Participant shall elect 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
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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. However, the amount of a Deferral
otherwise elected by the Participant to be invested in the Company
Stock Fund shall be reduced to the extent necessary to insure that
only whole shares of Stock are credited and an amount corresponding to
any fractional shares shall be invested in the Fixed Income Fund.
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 or dividends transferred to the Fixed Income
Fund pursuant to the following sentence. Notwithstanding the
preceding provisions of this Section, any cash dividends paid in
respect of Stock shall not be considered part of the gain of the
Company Stock Fund; instead, those dividends shall be considered as
having been transferred to the Fixed Income Fund as of the date such
dividends are paid. 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 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.
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ARTICLE 5
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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 not be revoked or changed. 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. Except as expressly provided in
Section 4.3, amounts deemed to be invested in an Investment Fund
pursuant to this Section may not be transferred to another Investment
Fund.
5.3 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.
5.4 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 guaranteed investment contracts issued by banks and/or
insurance companies or, if none, such other Investment Fund selected
by the Committee.
ARTICLE 6
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TRUST
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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.
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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
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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;
(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.
---------------
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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
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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.
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.
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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
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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 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.
------------------------
9
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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
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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 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.
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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.
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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 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; provided that the
number of shares of Stock to be issued in connection with the Plan
shall always be a whole number. Any fractional shares shall be
eliminated and the value of such fractional shares shall be deemed to
have been transferred to the Fixed Income Fund as of the effective
date of such substitution or adjustment.
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10.13 Conditions to Effectiveness of Plan.
-----------------------------------
Notwithstanding anything in this Plan, the Trust or any Deferral
Agreement to the contrary, the effectiveness of the Plan, the Trust
and all Deferral Agreements is conditioned on the Plan being approved
by the Company's shareholders at the 1995 Annual Meeting of
Shareholders in accordance with Section 162(m) of the Code, Rule 16b-3
under the Securities Exchange Act of 1934 and other applicable law.
If the Plan is not so approved, the Plan, the Trust and all Deferral
Agreements shall be considered void AB INITIO and all amounts
previously deferred pursuant to those Deferral Agreements shall be
paid forthwith to the appropriate Participants as if those Deferral
Agreements had never existed.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by
its duly authorized officers as of this 28th day of December,
1994.
THE PROGRESSIVE CORPORATION
By:/s/ David M. Schneider
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Title: Secretary
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