<PAGE> 1
As filed with the Securities and Exchange Commission on August 3, 1995
Registration No. 33-51034
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
to
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
THE PROGRESSIVE CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-0963169
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
6300 Wilson Mills Road, Mayfield Village, Ohio 44143
(Address of Principal Executive Offices) (Zip Code)
THE PROGRESSIVE RETIREMENT SECURITY PROGRAM
(formerly known as The Progressive Corporation
Long-Term Savings Plan)
(Full title of the plan)
David M. Schneider, Secretary
The Progressive Corporation
6300 Wilson Mills Road
Mayfield Village, Ohio 44143
(Name and address of agent for service)
(216) 461-5000
(Telephone number, including area code, of agent for service)
Pursuant to Rule 416(a) under the Securities Act of 1933, the amount of
securities registered under the Registration Statement shall include an
indeterminate number of additional Common Shares that may become issuable
pursuant to the anti-dilution provisions of the Plan.
1
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POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8 REGISTRATION STATEMENT
- - - - - - - - - - - - - - - - - - - -
THE PROGRESSIVE CORPORATION
- - - - - - - - - - - - - - - - - - - -
REGISTRATION COVERS SHARES ISSUABLE
TO PREVENT DILUTION RESULTING FROM STOCK
SPLITS, STOCK DIVIDENDS OR SIMILAR TRANSACTIONS
The Registration Statement is hereby amended to reflect that the name of The
Progressive Corporation Long-Term Savings Plan has been changed to The
Progressive Retirement Security Program ("Plan").
The Registration Statement is also hereby amended to provide that, pursuant to
Rule 416(a) under the Securities Act of 1933, as amended, the amount of
securities registered under the Registration Statement shall include an
indeterminate number of additional Common Shares that may become issuable
pursuant to the anti-dilution provisions of the Plan.
PART II
Information Required in the Registration Statement
Item 8 - Exhibits
4 - The Progressive Retirement Security Program (1994 Amendment and
Restatement) and the First through Third Amendments thereto.
2
<PAGE> 3
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in Mayfield Village,
Ohio, on August 3, 1995.
THE PROGRESSIVE CORPORATION
By:/s/David M. Schneider
-----------------------------------
David M. Schneider, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the date indicated below.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
Peter B. Lewis* Chairman of the Board, President and Director
- -------------------- (Principal Executive Officer)
Peter B. Lewis
/s/Charles B. Chokel Principal Financial Officer
- ------------------------
Charles B. Chokel
/s/Jeffrey W. Basch Principal Accounting Officer
- ----------------------
Jeffrey W. Basch
Milton N. Allen* Director
- ----------------------
Milton N. Allen
B. Charles Ames* Director
- ----------------------
B. Charles Ames
Stephen R. Hardis* Director
- ------------------------
Stephen R. Hardis
</TABLE>
3
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<TABLE>
<S> <C>
Director
- ----------------------
Janet Hill
Norman S. Matthews* Director
- ----------------------
Norman S. Matthews
Donald B. Shackelford* Director
- --------------------------
Donald B. Shackelford
Paul B. Sigler* Director
- --------------------
Paul B. Sigler
<FN>
Dated: August 3, 1995
* David M. Schneider, by signing his name hereto, does sign this document on
behalf of the persons indicated above pursuant to powers of attorney duly
executed by such persons and filed as an exhibit to the Registration
Statement.
</TABLE>
By: /s/David M. Schneider
-------------------------------
David M. Schneider
Attorney-in-fact
Dated: August 3, 1995
4
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EXHIBIT INDEX
-------------
4 The Progressive Retirement Security Program (1994 Amendment and
Restatement) and the First through Third Amendments thereto
5
<PAGE> 1
EXHIBIT 4
---------
The Progressive Retirement Security Program
(1994 Amendment and Restatement) and the
First through Third Amendments thereto
6
<PAGE> 2
THE PROGRESSIVE RETIREMENT SECURITY PROGRAM
(1994 Amendment and Restatement)
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<CAPTION>
PAGE NO.
--------
ARTICLE 1
---------
INTRODUCTION
------------
<S> <C> <C>
1.1 Name of Plan 1
------------
1.2 Effective Date 1
--------------
1.3 Type and Purpose of Plan 1
------------------------
ARTICLE 2
---------
DEFINITIONS
-----------
2.1 Account 1
-------
2.2 Active LTSP Participant 1
-----------------------
2.3 Active SDRP Participant 1
-----------------------
2.4 Administrator 1
-------------
2.5 Affiliated Company 1
------------------
2.6 Anniversary Shares 1
------------------
2.7 Article 1
-------
2.8 Beneficiary 1
-----------
2.9 Board 2
-----
2.10 Code or IRC 2
-----------
2.11 Company 2
-------
2.12 Company Stock Fund 2
------------------
2.13 Compensation 2
------------
2.14 Compensation Deferral Agreement 2
-------------------------------
2.15 Contributions 2
-------------
2.16 Covered Employee 2
----------------
2.17 Covered Employment 2
------------------
2.18 Disability or Disabled 2
----------------------
2.20 Eligible Compensation 3
---------------------
2.21 Employee 3
--------
2.22 Employer 3
--------
2.23 Employer Forfeiture Account 3
---------------------------
2.24 Employer Matched Contributions 3
------------------------------
2.25 Employer SDRP Contributions 3
---------------------------
2.26 Employment 3
----------
2.27 Entry Date 3
----------
2.28 ERISA 3
-----
2.29 Excess ADP Contributions 3
------------------------
2.30 Excess Aggregate Contributions 3
------------------------------
2.31 Excess Deferral 3
---------------
2.32 Former Employer Supplemental Contribution Account 3
-------------------------------------------------
2.33 Former Participant 3
------------------
2.34 Former PAYSOP Account 3
---------------------
2.35 Fund 3
----
2.36 Hardship 5
--------
2.37 "Highly Compensated Employee" 5
-----------------------------
2.38 Inactive LTSP Participant 6
-------------------------
2.39 Inactive SDRP Participant 6
-------------------------
2.40 Investment Funds 6
----------------
2.41 Maternity or Paternity Absence 6
------------------------------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
2.42 Merger 6
------
2.43 Non-highly Compensated Employee 6
-------------------------------
2.44 Normal Retirement Age 6
---------------------
2.45 Normal Retirement Date 6
----------------------
2.46 Participant 6
-----------
2.47 Partnership Share 6
-----------------
2.48 Payroll Deduction Agreement 7
---------------------------
2.49 Plan 7
----
2.50 Plan Year 7
---------
2.51 Post-Tax Contributions 7
----------------------
2.52 Pre-Tax Contributions 7
---------------------
2.53 Qualified Domestic Relations Order (QDRO) 7
-----------------------------------------
2.54 Retirement 7
----------
2.55 Section 7
-------
2.56 Service, Hour of Service and Year of Service 7
--------------------------------------------
2.57 Spouse 7
------
2.58 Stock 7
-----
2.59 Termination of Employment 7
-------------------------
2.60 Trust 7
-----
2.61 Trust Agreement 7
---------------
2.62 Trustee 7
-------
2.63 Valuation Date 7
--------------
ARTICLE 3
---------
PARTICIPATION
-------------
3.1 Eligibility for Participation 8
-----------------------------
3.2 Commencement of Participation 8
-----------------------------
3.3 Transfers of Employment 8
-----------------------
3.4 Suspension of Contributions 8
---------------------------
3.5 Former Participants and Re-participation 9
----------------------------------------
ARTICLE 4
---------
DEPOSITS AND CONTRIBUTIONS
--------------------------
4.1 Pre-Tax Contributions 9
---------------------
4.2 Post-Tax Contributions 9
----------------------
4.3 Employer Matched Contributions 9
------------------------------
4.3A SDRP Contributions 10
------------------
4.4 Change in Amount of Contributions 10
---------------------------------
4.5 Suspension of Contributions 10
---------------------------
4.6 Remittance of Contributions 11
---------------------------
4.7 Return of Contributions 11
-----------------------
ARTICLE 5
---------
MAXIMUM CONTRIBUTIONS
---------------------
5.1 Limitations on Pre-Tax Contributions 11
------------------------------------
5.2 Limitations on Post-Tax Contributions and Employer Matched
----------------------------------------------------------
Contributions 14
--------------
ARTICLE 6
---------
ACCOUNTS
--------
6.1 Accounts 16
--------
6.2 Accounts Represent Undivided Interests 17
--------------------------------------
6.3 Account Values 17
--------------
</TABLE>
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<TABLE>
<S> <C> <C>
6.4 Valuation of Investment Funds 17
-----------------------------
6.5 Allocation of Net Gain or Loss of Investment Funds to Accounts 17
--------------------------------------------------------------
6.6 Basis of Valuation 17
------------------
6.7 Administration of Pre-Tax Contribution Account 18
----------------------------------------------
6.8 Administration of Post-Tax Contribution Account 18
-----------------------------------------------
6.9 Administration of Employer Matched Contribution Account 18
-------------------------------------------------------
6.10 Administration of Former PAYSOP Account 18
---------------------------------------
6.11 Administration of the Former Employer Supplemental Contribution
---------------------------------------------------------------
Account 18
-------
6.12 Administration of the Suspense Account 18
--------------------------------------
6.13 Administration of the Employer Forfeiture Account 19
-------------------------------------------------
6.14 Crediting of Contributions 19
--------------------------
6.15 Employee Contribution Records 19
-----------------------------
ARTICLE 7
---------
RETIREMENT, DISABILITY OR DEATH
-------------------------------
7.1 Benefit at Retirement 19
---------------------
7.2 Disability Benefit 19
------------------
7.3 Death Benefit 20
-------------
ARTICLE 8
---------
VESTING AND TERMINATIONS
------------------------
8.1 Vesting 20
-------
8.2 Termination of Employment 21
-------------------------
8.3 Forfeitures 21
-----------
8.4 Reemployment 21
------------
ARTICLE 9
---------
PAYMENT OF BENEFITS
-------------------
9.1 Application for Payment 21
-----------------------
9.2 Time of Payment 21
---------------
9.3 Form of Payment 23
---------------
9.4 Determination of Value of Payment 23
---------------------------------
9.5 Claims Procedure 23
----------------
9.6 Facility of Payment 24
-------------------
ARTICLE 10
----------
WITHDRAWALS AND LOANS DURING EMPLOYMENT
---------------------------------------
10.1 In-Service Withdrawals from Pre-Tax Contribution Account 24
--------------------------------------------------------
10.2 In-Service Withdrawals from Post-Tax Contribution Account 25
---------------------------------------------------------
10.3 In-Service Withdrawals from Employer Matched Contribution
---------------------------------------------------------
Account 25
--------
10.4 No Withdrawals Available from Other Accounts 25
--------------------------------------------
10.5 Payment of Withdrawals 26
----------------------
10.6 Loans to Participants 26
---------------------
ARTICLE 11
----------
SERVICE
-------
11.1 Service 28
-------
11.2 Prior Service Reinstated 29
------------------------
11.3 Year of Service 29
---------------
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
ARTICLE 12
----------
PLAN OPERATION AND ADMINISTRATION
---------------------------------
<S> <C> <C>
12.1 Powers of Administrator 29
-----------------------
12.2 Nondiscriminatory Exercise of Authority 30
---------------------------------------
12.3 Reliance on Tables, etc. 30
------------------------
12.4 Named Fiduciary 30
---------------
12.5 Indemnification 30
---------------
12.6 Notices to Administrator 30
------------------------
ARTICLE 13
----------
AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
13.1 Amendment 30
---------
13.2 Termination 31
-----------
13.3 Liquidation of the Fund 32
-----------------------
ARTICLE 14
----------
ADOPTION OF THE PLAN BY OTHER EMPLOYERS
---------------------------------------
14.1 Adoption with Approval 32
----------------------
14.2 Procedure for Adoption 32
----------------------
14.3 Effect of Adoption 32
------------------
14.4 Termination of Adoption 32
-----------------------
ARTICLE 15
----------
LIMITATIONS OF ANNUAL ADDITIONS
-------------------------------
15.1 General Limitations 33
-------------------
15.2 Excess Amount 33
-------------
15.3 Aggregation of Plans of the Employer 34
------------------------------------
15.4 Definitions 35
-----------
15.5 Top-Heavy Plan Requirements 36
---------------------------
ARTICLE 16
----------
INVESTMENT OF CONTRIBUTIONS
---------------------------
16.1 Investment Funds 40
----------------
16.2 Administration of Company Stock Fund 41
------------------------------------
16.3 Deposit of Contributions 41
------------------------
16.4 Investment Elections of Participants 41
------------------------------------
16.5 Election to Transfer Interest Between Investment Funds 41
------------------------------------------------------
16.6 Other Provisions Concerning Investment Elections and Transfers 42
--------------------------------------------------------------
16.7 Former PAYSOP Accounts 42
----------------------
ARTICLE 17
----------
MISCELLANEOUS PROVISIONS
------------------------
17.1 Headings 42
--------
17.2 Plan Not Contract of Employment 42
-------------------------------
17.3 Vested Rights 42
-------------
17.4 Severability 42
------------
17.5 General Undertaking 43
-------------------
17.6 Action by Company 43
-----------------
17.7 No Responsibility for Acts of an Insurer 43
----------------------------------------
17.8 Spendthrift 43
-----------
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
17.9 Number and Gender 43
-----------------
17.10 Governing Law 43
-------------
17.11 Merger, Consolidation. and Transfer of Assets 43
---------------------------------------------
17.12 Receipt of Assets from Qualified Plans 43
--------------------------------------
17.13 Interpretation of Plan 44
----------------------
17.14 Satisfaction of Claims 44
----------------------
17.15 Service of Process 44
------------------
17.16 Warranties 44
----------
17.17 Leased Employees 44
----------------
17.18 Direct Rollover Distributions 45
-----------------------------
17.19 Plan Addenda 45
------------
</TABLE>
<PAGE> 8
ARTICLE 1
---------
INTRODUCTION
------------
1.1 Name of Plan
------------
This Plan shall be known as The Progressive Retirement Security Program.
Prior to July 1, 1994, this Plan was known as The Progressive
Corporation Long-Term Savings Plan.
1.2 Effective Date
--------------
Except as otherwise expressly provided herein, this Plan, as amended and
restated, shall be effective as of July 1, 1994.
1.3 Type and Purpose of Plan
------------------------
Pursuant to Section 401(a)(27) of the Code, the Plan is hereby
designated as a profit-sharing plan. The primary purpose of the Plan
is to encourage Employee savings, to facilitate Employee Stock
ownership and to provide benefits upon a Participant's or Former
Participant's Retirement, death, Disability or Termination of
Employment.
ARTICLE 2
---------
DEFINITIONS
-----------
The following terms, when used herein with initial capital letters, shall have
the meaning given to them in this Article 2.
2.1 ACCOUNT shall mean one of several records maintained pursuant to
Section 6 to record a Participant's, Former Participant's, or
Beneficiary's interest in the Investment Funds.
2.2 ACTIVE LTSP PARTICIPANT shall have the meaning set forth in Article 3.
2.3 ACTIVE SDRP PARTICIPANT shall have the meaning set forth in Article 3.
2.4 ADMINISTRATOR, which is the administrator for purposes of ERISA and the
plan administrator for purposes of the Code, shall mean Progressive
Casualty Insurance Company, an Ohio corporation, or its successors.
2.5 AFFILIATED COMPANY shall mean any corporation, trade or business if it
and the Company are members of a controlled group of corporations, or
are under common control, or are members of an affiliated service group,
within the meaning of Code Sections 414(b), 414(c), and 414(m),
respectively; provided, however, that for purposes of Code Section 415,
the definitions prescribed by Code Sections 414(b) and 414(c) shall be
modified as provided by Code Section 415(h) by substituting "more than
50%" common control for "at least 80%" common control. This term shall
also include any entity required to be treated as an Affiliated Company
under Code Section 414(o).
2.6 ANNIVERSARY SHARES shall mean such shares of Stock, if any, as may be
awarded on or before February 28, 1992 to Employees by the Company upon
completion of five (5) year increments of Years of Service.
2.7 ARTICLE shall mean an Article of this Plan.
2.8 BENEFICIARY as to a Participant or Former Participant who is married at
the time of his death, shall mean his Spouse or such other person(s) as
he has designated with the consent of his Spouse, and, as to a
Participant or Former Participant who is not married at the time of
his death, shall be such person(s) as he has designated. A
Participant or Former Participant may change his Beneficiary
designation at any time, provided that no such change shall be
effective as to any married Participant or Former Participant who
predeceases his Spouse, unless the Spouse has consented to the change.
Each consent of a Spouse shall be irrevocable, but shall be effective
only with respect to the particular Beneficiary designation to which it
1
<PAGE> 9
pertains. All Beneficiary designations (including changes) and consents
of a Spouse shall be made in writing on such forms as the Administrator
shall prescribe, and shall become effective only when received by the
Administrator; provided, however, that a Beneficiary designation
(including a change) or a consent of a Spouse received by the
Administrator 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 or Former Participant's death, all benefits due
from the Plan upon the Participant's or Former Participant's death
shall be paid to the Participant's or Former Participant's (i) Spouse,
if the Participant or Former Participant was married at the time of
his/her death or (ii) estate, if the Participant or Former Participant
was not married at the time of his/her death. Notwithstanding the
foregoing, consent of a Spouse shall not be required if the
Participant or Former Participant and his/her Spouse are legally
separated or the Spouse cannot be located.
2.9 BOARD shall mean the Board of Directors of the Company.
2.10 CODE OR IRC shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
2.11 COMPANY shall mean The Progressive Corporation or its successor(s).
2.12 COMPANY STOCK FUND shall mean an Investment Fund consisting
exclusively of Stock.
2.13 COMPENSATION of a Participant or Former Participant for a Plan
Year shall mean all amounts that are received by him/her during
such Plan Year from the Employer that are reported as wages on
IRS Form W-2 for such Plan Year, plus (i) the amount
contributed by the Employer to the Trustee pursuant to a
Compensation Deferral Agreement reduced by amounts required by
Section 5.1(c), and (ii) amounts of pay reduced in accordance
with an arrangement established by the Employer which qualifies
under Section 125 of the Code. However, the maximum annual
dollar amount that will be recognized as Compensation is
$150,000 in all cases. Such $150,000 limit shall be
automatically adjusted in accordance with regulations under
Section 401(a)(17) of the Code. If, as a result of the
application of the rules of Section 414(q)(6) of the Code, the
adjusted $150,000 limit is exceeded, then the limit shall be
prorated among the affected individuals in proportion to each
such individual's Compensation, as determined under this
Section 2.13 prior to the application of the limit.
2.14 COMPENSATION DEFERRAL AGREEMENT shall mean an arrangement
pursuant to which the Employee agrees to reduce his Eligible
Compensation, pursuant to Section 4.1 hereof, and the Employer
agrees to contribute to the Plan the amount equal to the amount
reduced as a Pre-Tax Contribution. The Compensation Deferral
Agreement shall also serve to provide such other information
about the Participant as the Administrator shall require.
2.15 CONTRIBUTIONS shall mean a Participant's Pre-Tax Contributions
and Post-Tax Contributions.
2.16 COVERED EMPLOYEE shall mean an Employee of the Employer,
earning Eligible Compensation, excluding (i) any such Employee
whose terms and conditions of Employment are negotiated with
the Employer by or through a certified or recognized collective
bargaining organization unless such negotiation provides for
his/her inclusion, (ii) those Employees classified by the
Employer as temporary under its personnel policies and
procedures and for whom the employment relationship is
maintained on a task or project specific basis for a period of
less than six months, and (iii) Employees who are residents of
Canada.
2.17 COVERED EMPLOYMENT shall mean the period or periods during
which an Employee is a Covered Employee.
2.18 DISABILITY OR DISABLED shall mean that a Participant shall be
totally disabled (as defined in the Long-Term Disability Plan
coverage provided by the Company, whether or not such
Participant is eligible for such coverage) for a period of
twelve (12) consecutive calendar months beginning on the first
day of disability absence.
2.19 EFFECTIVE DATE shall mean July 1, 1994.
2
<PAGE> 10
2.20 ELIGIBLE COMPENSATION of a Participant shall mean his base
salary, straight time hourly wages, overtime pay, vacation pay,
holiday pay, jury duty pay, taxable sick pay, military pay,
funeral pay, lump sum salary adjustments and retroactive
payments of any of the foregoing items pursuant to any back pay
award (but only to the extent such retroactive payments are
actually paid in periods during which a Compensation Deferral
Agreement is in effect). However, the maximum annual dollar
amount that will be recognized as Eligible Compensation is
$150,000 per year in all cases. Such $150,000 limit shall be
automatically adjusted in accordance with regulations under
Section 401(a)(17) of the Code.
2.21 EMPLOYEE shall mean any person who renders services to an
Employer or Affiliated Company as a common law employee
(including any common law employee who is employed as an
officer).
2.22 EMPLOYER shall mean the Company. The term Employer shall also
include any Affiliated Company which adopts the Plan pursuant
to Article 14, but only for such period as such company
continues in its adoption of the Plan.
2.23 EMPLOYER FORFEITURE ACCOUNT shall mean the Account maintained
and administered in accordance with Section 6.13 hereof.
2.24 EMPLOYER MATCHED CONTRIBUTIONS shall mean those amounts
contributed by the Employer pursuant to Section 4.3 hereof.
2.25 EMPLOYER SDRP CONTRIBUTIONS shall mean those amounts
contributed by the Employer pursuant to Section 4.3A.
2.26 EMPLOYMENT shall mean the period or periods during which an
individual is an Employee.
2.27 ENTRY DATE shall mean the first day of the pay period
coincident with or immediately following the date on which a
Participant satisfies the requirements for participation
contained in Section 3.1(b).
2.28 ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time hereafter.
2.29 EXCESS ADP CONTRIBUTIONS shall mean the amount of the Pre-Tax
Contributions of the Highly Compensated Employees for the Plan
Year above the maximum amount permitted under Section 5.1.
2.30 EXCESS AGGREGATE CONTRIBUTIONS shall mean the amount of the
Post-Tax Contributions and Employer Matching Contributions of
the Highly Compensated Employees for the Plan Year above the
maximum amount of such Post-Tax Contributions and Employer
Matching Contributions permitted under Section 5.2(d).
2.31 EXCESS DEFERRAL shall mean a Pre-Tax Contribution in excess of
the permitted maximum deferral amount set forth in Section
5.1(d), or an amount designated as such by the Employee where
the excess is generated by aggregation of pre-tax contributions
to plans other than this Plan.
2.32 FORMER EMPLOYER SUPPLEMENTAL CONTRIBUTION ACCOUNT, as to each
Participant shall mean the Account derived from the Employer
Supplemental Contributions (within the meaning of the Plan as
previously in effect), if any, made in respect of the
Participant during periods that the Plan provided for such
contributions.
2.33 FORMER PARTICIPANT shall mean a Participant who has terminated
Employment but who has one or more Accounts remaining in the
Plan.
2.34 FORMER PAYSOP ACCOUNT shall mean the Account described in
Section 6.10.
2.35 FUND shall mean the assets held by the Trustee in accordance
with the provisions of the Plan and the Trust Agreement.
3
<PAGE> 11
2.36 HARDSHIP shall mean an immediate and heavy financial need of a
Participant arising from any of the following items:
(a) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant or his/her Spouse or
dependents (as defined in Code Section 152).
(b) Purchase (excluding mortgage payments) of a principal
residence for the Participant.
(c) Payment of tuition and related educational fees for the next
twelve months of post-secondary education for the Participant
or his/her Spouse or dependents.
(d) Prevention of the eviction of the Participant from his
principal residence or the foreclosure on the mortgage of the
Participant's principal residence.
2.37 "HIGHLY COMPENSATED EMPLOYEE" shall mean any Employee or former
Employee who, during the Plan Year or the preceding Plan Year:
[a] was at any time a five percent owner;
[b] received annual Compensation from the Employer in excess of
$75,000, as adjusted for increases in the cost of living;
[c] received annual Compensation from the Employer in excess of
$50,000, as adjusted for increases in the cost of living
and was in the top-paid group of Employees for the Plan
Year. An Employee is in the top-paid group of Employees
for any Plan Year if such Employee is in the group
consisting of the top twenty percent (20%) of the Employees
when ranked on the basis of Compensation paid during the
Plan Year; or
[d] was at any time an officer of the Employer and received
Compensation greater than 50% of the dollar limitation in
effect under Code Section 415(b)(1)(A), as adjusted for
increases in the cost of living.
The term Highly Compensated Employee also includes Employees who meet at
least one of the criteria in Section 2.37[a], [b], or [d], in the
current Plan Year, and who are one of the 100 Employees who received
the most Compensation from the Employer during such year.
In determining which Employees are Highly Compensated Employees, an
Employee not described in paragraphs [b], [c], or [d] above for the
preceding year will not be treated as falling under the categories
described in paragraphs [b], [c], or [d] for the current year. The
Employer may adopt any reasonable, nondiscriminatory tie-breaking or
rounding rules necessary to determine which Employees are Highly
Compensated Employees, provided that such rules are uniformly and
consistently applied. If no officer has satisfied the Compensation
requirement of paragraph [d] above during the Plan Year, the highest
paid officer for such year will be treated as a Highly Compensated
Employee, unless provided otherwise by regulations. In determining an
individual's Compensation under this section, Compensation from each
Employer required to be aggregated under Code Sections 414(b), (c), (m),
and (o) will be taken into account. For purposes of this section, the
determination of Compensation will be made without regard to Code
Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of Employer
contributions made pursuant to a salary reduction agreement, without
regard to Code Section 403(b).
A former Employee will be treated as a Highly Compensated Employee if
such Employee separated from service (or was deemed to have separated)
prior to the Plan Year, performs no service for the Employer during the
Plan Year, and was a Highly Compensated Employee for either the
separation year or any Plan Year ending on or after the Employee's 55th
birthday.
4
<PAGE> 12
If during the Plan Year or the preceding Plan Year, an Employee is
a family member of either [1] a five percent owner who is an
Employee or former Employee; or [2] a High Compensated Employee
who is one of the ten most Highly Compensated Employees ranked on
the basis of Compensation paid by the Employer during such year,
then the family member and the five percent owner or top-ten
Highly Compensated Employee will be treated as one Employee
receiving Compensation and Plan contributions equal to the sum of
such Compensation and contributions of both individuals. For
purposes of this section, a family member includes the spouse,
lineal ascendants and descendants of the Employee or former
Employee, and the spouses of such lineal ascendants and
descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the number
of Employees treated as officers, and the Compensation that is
considered, will be made in accordance with Code Section 414(q).
2.38 INACTIVE LTSP PARTICIPANT shall have the meaning set forth in
Article 3.
2.39 INACTIVE SDRP PARTICIPANT shall have the meaning set forth in
Article 3.
2.40 INVESTMENT FUNDS shall mean the funds established from time to
time by the Trustee pursuant to Section 16.1.
2.41 MATERNITY OR PATERNITY ABSENCE shall mean an absence from work by
an Employee for any period
(a) By reason of pregnancy of the Employee,
(b) By reason of the birth of a child of the Employee,
(c) By reason of the placement of a child with the Employee in
connection with the adoption of such child by such
Employee, or
(d) For purposes of caring for such child for a period
immediately following such birth or placement.
An absence will not be considered a "Maternity or Paternity
Absence" unless the Employee provides the Administrator with
information within 5 working days demonstrating that the absence
is for one of the four permitted reasons outlined above.
Nothing in this Plan shall require the Employer to grant a paid or
unpaid leave of absence to any Employee.
2.42 MERGER shall mean the merger of The Progressive Corporation
Supplemental Retirement Plan into this Plan, effective July 1,
1994.
2.43 NON-HIGHLY COMPENSATED EMPLOYEE means an Employee not considered a
Highly Compensated Employee under Section 2.37.
2.44 NORMAL RETIREMENT AGE shall mean attainment by the Participant of
age 65.
2.45 NORMAL RETIREMENT DATE shall mean the first of the month following
the date on which a Participant attains Normal Retirement Age.
2.46 PARTICIPANT shall mean a Covered Employee who has satisfied and
continues to satisfy the requirements set forth in Section 3.1(a)
and/or 3.1(b) for participation and shall include an Active LTSP
Participant, Active SDRP Participant, Inactive LTSP Participant
and Inactive SDRP Participant.
2.47 PARTNERSHIP SHARE shall mean the share of Stock awarded on or
before October 30, 1991 to all Employees upon completion of 30
calendar days from his or her date of employment.
5
<PAGE> 13
2.48 PAYROLL DEDUCTION AGREEMENT shall mean an arrangement pursuant to
which an Employee agrees, pursuant to Section 4.2 hereof, to have
a stipulated percentage of his Eligible Compensation deducted from
such Eligible Compensation and deposited in the Fund as a Post-Tax
Contribution. The Payroll Deduction Agreement shall also serve to
provide such other information about the Participant as the
Administrator shall require.
2.49 PLAN shall mean The Progressive Retirement Security Program, as
set forth in this document, as the same may be amended or restated
from time to time hereafter.
2.50 PLAN YEAR shall mean a calendar year.
2.51 POST-TAX CONTRIBUTIONS shall mean those amounts contributed by the
Participant pursuant to a Payroll Deduction Agreement and to
Section 4.2 hereof. These may have been formerly known as Optional
Employee Contributions, but hereafter shall be Post-Tax
Contributions.
2.52 PRE-TAX CONTRIBUTIONS shall mean those amounts which the Employer
is obligated to contribute to the Plan pursuant to a Compensation
Deferral Agreement and to Section 4.1 hereof. These may have been
formerly known as Deferred Income Contributions, but hereafter
shall be Pre-Tax Contributions.
2.53 QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) shall mean any judgment,
decree or order as defined in Section 414(p) of the Code.
2.54 RETIREMENT shall mean a Participant's or Former Participant's
Termination of Employment on or after his/her Normal Retirement
Date.
2.55 SECTION shall mean a Section of this Plan.
2.56 SERVICE, HOUR OF SERVICE AND YEAR OF SERVICE for purposes of this
Plan, are defined in Article 11 hereof, except that, for purposes
of Article 3, Year of Service shall mean any twelve (12)
consecutive month period during which an Employee completes at
least one thousand (1,000) Hours of Service, and, "Hours of
Service", for purposes of computing a Year of Service under
Article 3, shall mean all hours required to be taken into account
under 29 C.F.R. 2530.200b-2(a).
2.57 SPOUSE shall mean the legal spouse of a Participant or Former
Participant on the date of his/her death.
2.58 STOCK means the Common Stock, $1.00 par value, of the Company.
2.59 TERMINATION OF EMPLOYMENT shall mean the earlier of (i) the last
day worked after which an Employee quits, retires, is discharged,
or dies, or (ii) the first anniversary of the first date of
continuous absence from employment for any other reason.
2.60 TRUST shall mean the Trust created and maintained by the Trust
Agreement and known as The Progressive Retirement Security Program
Trust.
2.61 TRUST AGREEMENT shall mean the agreement of trust between the
Company and Trustee executed in furtherance of the Plan, as the
same may be amended from time to time hereafter.
2.62 TRUSTEE shall mean the person (or persons), bank or trust company
selected from time to time by the Company to serve as Trustee (or
co-Trustees) under the Plan.
2.63 VALUATION DATE shall mean such date or dates as shall be
established from time to time by the Administrator for the purpose
of valuing the Investment Funds and adjusting Accounts hereunder,
which dates need not be uniform with respect to each Investment
Fund or Account; provided, however, that each Investment Fund
shall be valued, and each Account shall be adjusted no less often
than quarterly.
6
<PAGE> 14
ARTICLE 3
---------
PARTICIPATION
-------------
3.1 Eligibility for Participation
-----------------------------
(a) Each Covered Employee shall be eligible to become an LTSP
Participant in the Plan (pursuant to Section 3.2), after
thirty (30) calendar days from his date of employment.
(b) Each Covered Employee shall be eligible to become an SDRP
Participant in the Plan as of the Entry Date coincident
with or immediately following the date such Covered
Employee both attains age twenty-one (21) and has completed
a Year of Service, provided that such Covered Employee is a
Covered Employee on such Entry Date.
3.2 Commencement of Participation
-----------------------------
(a) A Covered Employee who meets the eligibility provisions of
Section 3.1(a) hereof may become an Active LTSP Participant
by filing a Compensation Deferral Agreement or a Payroll
Deduction Agreement with the Administrator and providing
such other information as the Administrator shall require.
The Compensation Deferral Agreement will stipulate the
amount of the Participant's Pre-Tax Contributions. The
Payroll Deduction Agreement will stipulate the amount of
the Participant's Post- Tax Contributions. Such
Participant's Pre-Tax Contributions and Post-Tax
Contributions shall be effective as of the first payroll
period next following receipt and processing of the
Participant's Compensation Deferral Agreement or Payroll
Deduction Agreement (as applicable) by the Administrator.
(b) A covered Employee who meets the eligibility provisions of
Section 3.1(b) shall automatically become an Active SDRP
Participant on the Entry Date referred to in Section
3.1(b).
3.3 Transfers of Employment
-----------------------
(a) An Active LTSP Participant who transfers from Covered
Employment to Employment other than Covered Employment
shall become an Inactive LTSP Participant and his/her
Contributions, if applicable, shall be suspended in
accordance with Section 4.5 hereof.
(b) An Active SDRP Participant who transfers from Covered
Employment to Employment other than Covered Employment
shall become an Inactive SDRP Participant and his/her SDRP
Contributions shall cease automatically.
(c) An Inactive LTSP Participant who transfers from Employment
other than Covered Employment to Covered Employment will
become an Active LTSP Participant on the date such Employee
resumes Covered Employment. Should such Active LTSP
Participant elect to make Pre-Tax Contributions or Post-Tax
Contributions hereunder, such Contributions will be
effective with the first payroll period next following
receipt and processing of the Active Participant's
Compensation Deferral Agreement or Payroll Deduction
Agreement (as applicable) by the Administrator.
(d) An Inactive SDRP Participant who transfers from Employment
other than Covered Employment to Covered Employment will
become an Active SDRP Participant on the date such Employee
resumes Covered Employment.
3.4 Suspension of Contributions
---------------------------
An Active LTSP Participant whose Contributions are suspended
pursuant to Section 4.5 at his/her option shall continue to be
considered an Inactive LTSP Participant.
7
<PAGE> 15
3.5 Former Participants and Re-participation
----------------------------------------
(a) Termination of Employment shall cause an Active Participant
or Inactive Participant to become and remain a Former
Participant until such time he/she has no remaining
Accounts under the Plan.
(b) A Former Participant who returns to Employment other than
Covered Employment shall become an Inactive Participant.
(c) Any individual who ceases to be an Active LTSP Participant
or Inactive LTSP Participant (including Former
Participants) because of a Termination of Employment and
who subsequently returns to Covered Employment will become
an Active LTSP Participant on the date such Employee
resumes Covered Employment. Should such Active LTSP
Participant elect to make Pre-Tax Contributions or Post-Tax
Contributions hereunder, such Contributions will be
effective with the first payroll period next following
receipt and processing of the Active LTSP Participant's
Compensation Deferral Agreement or Payroll Deduction
Agreement (as applicable) by the Administrator.
(d) Any individual who ceases to be an Active SDRP Participant
or Inactive SDRP Participant (including Former
Participants) because of a Termination of Employment and
who subsequently returns to Covered Employment will become
an Active SDRP Participant on the date such Employee
resumes Covered Employment.
ARTICLE 4
---------
DEPOSITS AND CONTRIBUTIONS
--------------------------
4.1 Pre-Tax Contributions
---------------------
Each Active LTSP Participant may, pursuant to a Compensation
Deferral Agreement, have the Employer contribute on his or her
behalf an amount to the Plan known as Pre-Tax Contributions (as
defined in Section 2.52) of not less than one percent (1%) or more
than eighteen percent (18%) (in any percentage to one hundredth of
a percent) of his/her Eligible Compensation subject to the
limitations of Sections 5.1 and Article 15. The percentage
contributed under this Section 4.1, when combined with the
percentage contributed under Section 4.2, cannot exceed eighteen
percent (18%) of the Active LTSP Participant's Eligible
Compensation in the aggregate.
4.2 Post-Tax Contributions
----------------------
Each Active LTSP Participant may elect, pursuant to a Payroll
Deduction Agreement, to contribute an amount of not less than one
percent (1%) or more than eighteen percent (18%) (in any
percentage to one hundredth of a percent) of his/her Eligible
Compensation, subject to limitations of Section 5.2 and Article
15. The percentage contributed under this Section 4.2, when
combined with the percentage contributed under Section 4.1, cannot
exceed eighteen percent (18%) of the Active LTSP Participant's
Eligible Compensation in the aggregate.
4.3 Employer Matched Contributions
------------------------------
The Employer shall contribute in respect of each Active LTSP
Participant Employer Matched Contributions equal to one hundred
percent (100%) on the first one percent and fifty percent (50%) on
up to the next four percent of such Active LTSP Participant's
Pre-Tax Contributions and/or Post-Tax Contributions. For purposes
of determining the amount of Employer Matched Contributions to be
allocated to each Active LTSP Participant for a particular payroll
period, only Pre-Tax Contributions and Post-Tax Contributions
attributable to such payroll period, both of which in the
aggregate do not exceed five percent (5%) of Eligible Compensation
for such payroll period, will be taken into consideration. The
Employer Matched Contribution will first be attributable to
Pre-Tax Contributions, if any, and then to Post-Tax Contributions,
if any. The Employer, with the approval of its Board of
Directors, may increase or decrease the amount of Employer Matched
Contributions at any time and from time to time for any reason.
8
<PAGE> 16
4.3A SDRP Contributions
------------------
Each pay period the Employer shall contribute a percentage of the
FICA Taxable Compensation paid to each Active SDRP Participant
during such pay period determined in accordance with the following
table, based on such Active SDRP Participant's Years of Service,
as defined in Section 2.56, as of the first day of such pay
period:
<TABLE>
<CAPTION>
CONTRIBUTION
YEARS OF SERVICE PERCENTAGE
---------------- ----------
<S> <C>
Less than 5 years 1%
At least 5 years but
less than 10 years 2%
At least 10 years but
less than 15 years 3%
At least 15 years but
less than 20 years 4%
20 years or more 5%
</TABLE>
Each Employer SDRP Contribution shall be promptly allocated
to such Active SDRP Participant's Account as soon as
practicable after it is made. For purposes of this Section,
an Active SDRP Participant's "FICA Taxable Compensation"
for a given Plan Year shall consist of that portion of his
or her Eligible Compensation which is not in excess of the
dollar amount specified as the maximum contribution and
benefit base applicable to old-age, survivors, and
disability insurance under Title II of the Social Security
Act, as in effect on the first day of such Plan Year (the
"Taxable Wage Base").
4.4 Change in Amount of Contributions
---------------------------------
(a) The percentage of Eligible Compensation designated by a
Participant as his/her Pre-Tax Contributions and/or
Post-Tax Contributions shall continue in effect,
notwithstanding any change in his/her Eligible
Compensation, until he/she elects to change such
percentage.
(b) An Active LTSP Participant may elect to change his/her
percentage of Pre-Tax Contributions and/or Post-Tax
Contributions by filing a written election with the
Administrator on such forms as the Administrator shall
specify. Any such change shall become effective with the
first payroll period next following receipt and processing
of the Participant's revised Compensation Deferral
Agreement or Payroll Deduction Agreement (as applicable) by
the Administrator.
4.5 Suspension of Contributions
---------------------------
(a) An Active LTSP Participant may elect to suspend all of
his/her Pre-Tax Contributions and/or Post Tax Contributions
by filing a written election with the Administrator on such
forms as the Administrator shall specify. Such suspension
shall become effective with the first payroll period next
following receipt and processing of the suspension request
by the Administrator.
(b) The Pre-Tax and Post-Tax Contributions of a Participant who
becomes an Inactive LTSP Participant pursuant to Section
3.3(a) (Transfers of Employment) shall be suspended
automatically beginning with the first payroll period
thereafter, and may not be resumed until he/she becomes an
Active LTSP Participant pursuant to Article 3.
(c) All suspensions of Pre-Tax and Post-Tax Contributions shall
be indefinite in duration and a Participant shall not be
permitted to make up such suspended Contributions.
9
<PAGE> 17
(d) An Active LTSP Participant who has elected to suspend all
of his/her Pre-Tax Contributions and/or Post-Tax
Contributions shall be eligible to resume making such
Contributions as of the first payroll period next following
receipt and processing of a new Compensation Deferral
Agreement or Payroll Deduction Agreement (as applicable) by
the Administrator.
4.6 Remittance of Contributions
---------------------------
It is the Company's intent to remit Contributions to the Trustee
as soon as practical after the close of the payroll period for
which they are attributable. In no event, however, will
Contributions be remitted to the Trustee later than ninety (90)
days following the date they are deducted from the Participant's
Eligible Compensation. In no event will Employer Matched
Contributions and Employer SDRP Contributions be remitted to the
Trustee later than ninety (90) days following the close of the
month in which they are granted.
4.7 Return of Contributions
-----------------------
Except as provided in Section 15.2, in Section 6.13 regarding
forfeitures, and in this Section 4.7, the assets of the Plan shall
never revert to or be used by the Employer. Contributions made by
the Employer to the Trust by reason of a mistake of fact may be
returned to the Employer within one year after the payment of the
contribution. Furthermore, contributions made by the Employer to
the Trust are conditioned upon the deductibility of the
contribution under Code Section 404 and, to the extent the
deduction is disallowed, may be returned to the Employer within
one year after disallowance of the deduction. Any amount returned
to the Employer by reason of this Section 4.7 shall not include
earnings attributable thereto and shall be reduced by any losses
attributable thereto.
ARTICLE 5
---------
MAXIMUM CONTRIBUTIONS
---------------------
5.1 Limitations on Pre-Tax Contributions
------------------------------------
(a) For purposes of determining the maximum Pre-Tax
Contribution, contributions by the Employer designated as
Pre-Tax Contributions shall be expressed as a percentage of
Compensation for each Participant and each Covered Employee
who is eligible to be, but who is not, a Participant.
(b) The Actual Deferral Percentage for each Participant and
Covered Employee for the Plan Year shall be determined in
accordance with Code Section 401(k) and the regulations
thereunder.
The Actual Deferral Percentage for eligible Highly Compensated
Employees for the Plan Year shall be the average of the ratios of
the eligible Highly Compensated Employees. This will be compared
to the Actual Deferral Percentage for the Non-highly Compensated
Employees for the Plan Year, which will be the average of the
ratios of the eligible Non-highly Compensated Employees.
The Actual Deferral Percentage for any Plan Year for eligible
Highly Compensated Employees shall not exceed the greater of
either (i) or (ii) below:
(i) One hundred and twenty-five percent (125%) of the
Actual Deferral Percentage of the eligible
Non-highly Compensated Employees, or
(ii) The lesser of the amounts determined under (A) or
(B) following (or such other amount as may be
prescribed in applicable regulations under the Code
to prevent multiple use of the alternative
limitation set forth in this clause (ii)):
(A) Two hundred percent (200%) of the Actual
Deferral Percentage of eligible
Non-highly Compensated Employees, or
10
<PAGE> 18
(B) The Actual Deferral Percentage of the
eligible Non-highly Compensated Employees
plus two percentage points (2%).
Notwithstanding any other provision of this Plan, the Pre-Tax
Contributions shall be limited to the extent necessary to meet this test.
(c) Procedure to Limit Pre-Tax Contributions
----------------------------------------
(i) Prior to the End of the Plan Year
--------------------------------
The Administrator may determine prior to the end of the
Plan Year whether there is a reasonable expectation that
the Actual Deferral Percentage results satisfy the test
contained in Section 5.1(b).
In the event that the test described in Section 5.1(b) will
not be satisfied, the following procedure will be followed:
(A) The future Pre-Tax Contributions, previously
authorized, for each Highly Compensated Employee
whose Pre-Tax Contributions are at the highest
available whole percentage shall be reduced by a
uniform percentage, not to exceed one percent (1%),
of each Active Participant's Compensation such that
the Actual Deferral Percentage for the Highly
Compensated Employees will satisfy a test in Section
5.1(b). If the test is still not satisfied after the
adjustments in the immediately preceding sentence
have been made, then similar adjustments shall be
made to the Pre-Tax Contributions for each Highly
Compensated Active Participant whose Pre-Tax
Contributions are at the next highest available
whole percentage until such time as the Actual
Deferral Percentage for the Highly Compensated
Employees will satisfy a test in Section 5.1(b). The
process shall continue until such time as a test in
Section 5.1(b) is satisfied, or the reduction has
eliminated all future contributions.
(B) Any such reduction of future, previously authorized
Pre-Tax Contributions shall remain in force until
the January 1 immediately following.
(C) The amount resulting from a reduction in a
Participant's future Pre-Tax Contribution in Section
5.1(c)(i)(B) shall be treated as taxable income to
the Employee for the month in which the reduction
occurs and subsequent months through the end of the
Plan Year. The Employer shall withhold those taxes
required by law on such increase in taxable income.
(ii) Subsequent to End of Plan Year
------------------------------
(A) If it is determined subsequent to the end of the
Plan Year that the test in Section 5.1(b) has not
been met, the Excess ADP Contributions and the
income allocable thereto for the Highly Compensated
Employees must be calculated.
(1) Amount
------
The amount of Excess ADP Contributions for
each Highly Compensated Employee is
determined using the leveling method as set
forth in Section 5.1(c)(i)(A).
(2) Designation and Distribution
----------------------------
Such Excess ADP Contributions are to be
designated as such by the Company and must be
distributed to the appropriate Highly
Compensated Employee within twelve months of
the close of the Plan Year, reduced by Excess
11
<PAGE> 19
Deferrals previously distributed, if any.
Any Employer Matched Contributions relating
to such Excess ADP Contributions shall be
considered to have been made in respect of
the Highly Compensated Employee's Post-Tax
Contributions to the extent possible, and
otherwise shall be forfeited and applied in
accordance with Section 6.13.
(3) Calculation of Income for Plan Year
-----------------------------------
The income allocable to the Excess ADP
Contribution must also be distributed within
twelve months of the close of the Plan Year.
The determination of allocable income for the
Plan Year is made by multiplying the net gain
(as set forth in Article 6) for the Plan Year
allocable to Pre-Tax Contributions by a
fraction, the numerator of which is the
Excess ADP Contribution for the Highly
Compensated Employee for the Plan Year and
the denominator of which is the sum of (i)
such Employee's total Pre-Tax Contribution
Account balance as of the beginning of the
Plan Year, plus (ii) such Employee's Pre-Tax
Contributions for the Plan Year.
(d) Maximum Deferral
----------------
(i) The maximum annual amount of any Participant's Pre-Tax
Contributions beginning in the calendar year 1987 is
$7,000. Such $7,000 amount shall be automatically adjusted
in subsequent years in the same manner as the $90,000
amount is adjusted under Code Section 415(d).
(ii) (A) If the maximum deferral set forth in Section
5.1(d)(i) above is exceeded for a Non-highly
Compensated Employee, such amount may not be
considered when performing the test in Section
5.1(b).
(B) If a Highly Compensated Employee has an Excess
Deferral, regardless of distribution after the
close of the Plan Year as set forth in (v) below,
it must be taken into account in the performance
of the test in Section 5.1(b).
(iii) Corrective Distribution During Plan Year
----------------------------------------
If there has been an Excess Deferral, a corrective
distribution may be made to the Employee DURING THE PLAN
YEAR IF:
(A) The Employee requests such distribution and designates
in writing the distribution as an Excess Deferral, and
(B) The correcting distribution is made after the Plan
received the amount of the Excess Deferral, and
(C) The Plan designates in writing the distribution as a
distribution of an Excess Deferral.
(D) Calculation of Income During Plan Year
--------------------------------------
The income allocable to the Excess Deferral is to be
distributed with the Excess Deferral. The determination of
allocable income during the Plan Year is made by multiplying
the income allocable to Pre-Tax Contributions for the period
from the beginning of the Plan Year to the date on which the
distribution is made by a fraction, the numerator of which
is the amount of Excess Deferral made by the Employee for
the Plan Year, and the denominator of which is the sum of
(i) such Employee's total Pre-Tax Contribution Account
balance as of the beginning of the
12
<PAGE> 20
Plan Year plus (ii) such Employee's Pre-Tax
Contributions for such Plan Year through the date
of distribution.
(iv) Corrective Distribution After the End of the Plan Year
------------------------------------------------------
(A) If the Employee notifies the Plan of the amount
of Excess Deferrals not later than March 15
following the close of the Plan Year, then not
later than April 15 following the close of the
Plan Year, the Plan may distribute the Excess
Deferrals and any income allocable to such
amount.
(B) Calculation of Income for the Plan Year
---------------------------------------
The income allocable to the Excess Deferral must
also be distributed by the April 15 following the
close of the Plan Year. The determination of
allocable income for the Plan Year is made by
multiplying the net gain (as set forth in Article
6) for the Plan Year allocable to Pre-Tax
Contributions by a fraction, the numerator of
which is the amount of Excess Deferrals made by
the Employee in the Plan Year, and the
denominator of which is the sum of (i) such
Employee's total Pre-Tax Contribution Account
balance as of the beginning of the Plan Year,
plus (ii) such Employee's Pre-Tax Contributions
for the Plan Year.
(v) No corrective distribution of Excess Deferrals will be
permitted after the April 15 following the close of the
Plan Year for which there was a Pre-Tax Contribution.
(vi) Any Excess Deferral remaining in the Plan shall be
subject to the Pre-Tax Contribution withdrawal
restrictions found in Section 9.1 and shall be
includable in the Employee's gross income when
distributed from the Plan.
(e) A Participant's Pre-Tax Contributions may also be limited under
Article 15.
5.2 Limitations on Post-Tax Contributions and Employer Matched Contributions
------------------------------------------------------------------------
(a) For purposes of determining the maximum Post-Tax Contribution and
Employer Matched Contribution, a Contribution Deferral Percentage
shall be determined for each Participant and each Employee who is
eligible to be, but who is not, a Participant.
(b) The Contribution Deferral Percentage for each Participant and
Covered Employee shall be determined in accordance with Code
Section 401 (m) and the regulations thereunder. The Contribution
Deferral Percentage for eligible Highly Compensated Employees for
the Plan Year shall be the average of the ratios of the eligible
Highly Compensated Employees. This will be compared to the
Contribution Deferral Percentage for the Non-highly Compensated
Employees for the Plan Year, which will be the average of the
ratios of the eligible Non-highly Compensated Employees.
(c) The Contribution Deferral Percentage for any Plan Year for
eligible Highly Compensated Employees shall not exceed the greater
of either (i) or (ii) below:
(i) One hundred and twenty-five percent (125%) of the
Contribution Deferral Percentage of the eligible
Non-highly Compensated Employees, or
(ii) The lesser of the amounts determined under (A) or (B)
following (or such other amount as may be prescribed in
applicable regulations under the Code to prevent
multiple use of the alternative limitation set forth in
this clause (ii)):
(A) Two hundred percent (200%) of the Contribution
Deferral Percentage of eligible Non-highly
Compensated Employees, or
13
<PAGE> 21
(B) The Contribution Deferral Percentage of the
eligible Non-highly Compensated Employees plus
two percentage points (2%).
(d) Procedure to Limit Post-Tax and Employer Matched Contribution
-------------------------------------------------------------
(i) Prior to the End of the Plan Year
---------------------------------
The Administrator may determine prior to the end of the
Plan Year whether there is a reasonable expectation
that the Contribution Deferral Percentage results
satisfy either of the tests contained in Section
5.2(c). In the event that neither of the tests
described in Section 5.2 will be satisfied, the
following procedure will be followed:
(A) The future unmatched Post-Tax Contributions,
previously authorized, for each Highly
Compensated Employee whose Contribution Deferral
Percentages are at the highest available whole
percentage shall be reduced by a uniform
percentage, not to exceed one percent (1%), of
each Active Participant's Compensation such that
the Contribution Deferral Percentage for the
Highly Compensated Employees will satisfy a test
in Section 5.2(c). If a test in Section 5.2(c) is
still not satisfied after the adjustments in the
immediately preceding sentence have been made,
then similar adjustments shall be made to the
unmatched Post-Tax Contributions for each Highly
Compensated Active Participant whose Contribution
Deferral Percentage is at the next highest
available whole percentage until such time as the
Contribution Deferral Percentage for the Highly
Compensated Employees will satisfy a test in
Section 5.2(c). This process shall continue until
one of the tests is satisfied, or there are no
further unmatched Post-Tax Contributions to
reduce, or the Contribution Deferral Percentage
would be reduced below the highest level
attributable to a Highly Compensated Employee.
(B) In the event that none of the tests described in
Section 5.2(c) will be satisfied under (A) above,
the future matched Post-Tax Contributions and the
Employer Matched Contributions attributable to
them for each Highly Compensated Employee whose
Contribution Deferral Percentage is at the
highest available whole percentage shall be
reduced by a uniform percentage, to the nearest
one-hundredth of one percent (.01%), but not to
exceed one percent (1%), of each Active
Participant's Compensation such that the
Contribution Deferral Percentage for the Highly
Compensated Employees will satisfy a test in
Section 5.2(c). If a test in Section 5.2(c) is
still not satisfied after the adjustments in the
immediately preceding sentence have been made,
then similar adjustments shall be made to the
matched Post-Tax Contributions and attributable
Employer Matched Contributions for each Highly
Compensated Active Participant whose Contribution
Deferral Percentage is at the next highest
available whole percentage until such time as the
Contribution Deferral Percentage for the Highly
Compensated Employees will satisfy a test in
Section 5.2(c). This process shall continue until
such time as a test in Section 5.2(c) is
satisfied.
(C) Any such reduction of future Post-Tax
Contributions or Employer Matched Contributions
shall remain in force until the January 1
immediately following.
(D) The amount resulting from a reduction in an
Active Participant's future Post-Tax Contribution
in Section 5.2 will not be considered a
Contribution and no future Employer Matched
Contributions will be made relating to such.
14
<PAGE> 22
(ii) Subsequent to the End of the Plan Year
--------------------------------------
(A) If it is determined subsequent to the end of the
Plan Year that the tests in Section 5.2(c) have
not been met, the Excess Aggregate Contributions
and the income allocable thereto for the Highly
Compensated Employees must be calculated.
(1) Amount
------
The amount of Excess Aggregate Contributions
for each Highly Compensated Employee is
determined using the leveling method as set
forth in Sections 5.2(d)(i)(A) and
5.2(d)(i)(B).
(2) Designation and Distribution
----------------------------
Such Excess Aggregate Contributions are to
be designated as such by the Company and to
the extent consisting of Post-Tax
Contributions, must be distributed to the
appropriate Highly Compensated Employee
within twelve months of the close of the
Plan Year, and, to the extent consisting of
Employer Matched Contributions, shall be
forfeited and applied in accordance with
Section 6.13.
(3) Calculation of Income for Plan Year
-----------------------------------
The income allocable to the Excess Aggregate
Contribution must also be distributed within
twelve months of the close of the Plan Year.
The determination of allocable income for
the Plan Year is made by multiplying the net
gain (as set forth in Article 6) for the
Plan Year allocable to Post-Tax
Contributions and Employer Matched
Contributions by a fraction, the numerator
of which is the Excess Aggregate
Contribution for the Highly Compensated
Employee for the Plan Year and the
denominator of which is the sum of (i) such
Employee's total Post-Tax Contribution
Account balance plus Employer Matched
Contribution Account balance as of the
beginning of the Plan Year plus (ii) such
Employee's Post-Tax Contributions and
Employer Matched Contributions for the Plan
Year.
(e) A Participant's Post-Tax and Employer Matched Contributions may
also be limited under Article 15.
ARTICLE 6
---------
ACCOUNTS
--------
6.1 Accounts
--------
The Administrator shall maintain in the name of each Participant or Former
Participant such of the following Accounts as shall be applicable:
(a) A Pre-Tax Contribution Account;
(b) A Post-Tax Contribution Account;
(c) An Employer Matched Contribution Account;
(d) An Employer SDRP Contribution Account;
(e) A Former PAYSOP Account; and
15
<PAGE> 23
(f) A Former Employer Supplemental Contribution Account;
Such Accounts shall be administered in the manner hereinafter
provided.
6.2 Accounts Represent Undivided Interests
--------------------------------------
The portion of balances standing to the credit of the Pre-Tax
Contribution Account, the Post-Tax Contribution Account, the
Employer Matched Contribution Account, the Employer SDRP
Contribution Account, the Former PAYSOP Account, the Former
Employer Supplemental Contribution Account, the Employer
Forfeiture Account and the suspense account referred to in Section
6.12 that is invested in one of the Investment Funds shall
represent an undivided interest in such fund.
6.3 Account Values
--------------
The value of an Account on any date shall be its value determined
on the coinciding or immediately preceding Valuation Date, plus
any contributions and amounts subsequently credited thereto, and
less any distributions subsequently made therefrom.
6.4 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
and loss of such Fund since the immediately preceding Valuation
Date. The net gain or loss shall include any unrealized and
realized profits or losses, and any dividends, interest, or other
income and any expenses which are due or accrued, but shall not
include contributions made by the Employer or a Participant and
distributions made to a Participant, Former Participant or
Beneficiary. The cost basis for shares of Company Stock purchased
since the prior Valuation Date shall be the average cost per
share; such average based on all purchase and sale prices in the
Fund since the prior Valuation Date.
6.5 Allocation of Net Gain or Loss of Investment Funds to Accounts
--------------------------------------------------------------
(a) As of each Valuation Date, the net gain or loss of each
Investment Fund shall be allocated among the appropriate
Accounts in proportion to the ratio of:
(i) The value of the portion of each such Account that
is, and has been continuously, invested in such
Investment Fund as of the immediately preceding
Valuation Date, adding one-half of the
contributions added to such Investment Fund after
such Valuation Date and on or before the
subsequent Valuation Date, and subtracting
distributions, withdrawals or loans made from such
Investment Fund on or after the prior Valuation
Date but prior to the subsequent Valuation Date; to
(ii) The aggregate of the amounts computed under clause
(i) above for all Accounts that are invested in
such Investment Fund as of such immediately
preceding Valuation Date.
(b) The Administrator may, however, adopt such procedures as it
considers equitable to establish a proportionate crediting
of the net gain or loss of the Investment Fund or
Investment Funds for contributions made since the last
Valuation Date.
(c) In determining the value of the appropriate Accounts under
Section 6.5 as of the immediately preceding Valuation
Date, there shall be excluded any amounts forfeited in
accordance with Section 8.3 since such date.
6.6 Basis of Valuation
------------------
In determining the value of any Investment Fund pursuant to the
provisions of Section 6.4, 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
16
<PAGE> 24
Valuation Date, then at the quoted bid price on the Valuation
Date. Securities not listed on a recognized stock 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 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.
6.7 Administration of Pre-Tax Contribution Account
----------------------------------------------
(a) There shall be credited to the Pre-Tax Contribution Account
of a Participant all Pre-Tax Contributions made pursuant to
Section 4.1 and all Qualified Plan Rollover Contributions
made pursuant to Section 17.12 on behalf of such
Participant.
(b) There shall be charged against such Account withdrawals by
the Participant pursuant to Section 10.1 hereof.
6.8 Administration of Post-Tax Contribution Account
-----------------------------------------------
(a) There shall be credited to the Post-Tax Contribution Account
of a Participant all Post-Tax Contributions made by such
Participant under this Plan.
(b) There shall be charged against such Account withdrawals by
the Participant in accordance with Section 10.2 hereof.
6.9 Administration of Employer Matched Contribution Account
-------------------------------------------------------
(a) There shall be credited to the Employer Matched Contribution
Account of a Participant all Employer Matched Contributions
made on behalf of such Participant under this Plan.
(b) There shall be charged against such Account withdrawals by
the Active Participant in accordance with Section 10.3
hereof.
6.9A Administration of Employer SDRP Contribution Account
----------------------------------------------------
There shall be credited to the Employer SDRP Contribution Account
of a Participant all Employer SDRP Contributions made on behalf of
such Participant under this Plan. No withdrawals or loans are
permitted from such Account.
6.10 Administration of Former PAYSOP Account
---------------------------------------
No further amounts shall be credited to the Former PAYSOP Account.
Such Account shall consist of stock and funds of the Participant's
or Former Participant's former PAYSOP and former Supplemental
PAYSOP Account (as such contributions ceased, effective December
31,1987). No withdrawals or loans are permitted from such
Account.
6.11 Administration of the Former Employer Supplemental Contribution
---------------------------------------------------------------
Account
-------
No amounts attributable to Plan Years after 1988 shall be credited
to the Former Employer Supplemental Contribution Account of a
Participant or Former Participant (as such provision ceased to be
effective as of December 31, 1988). No withdrawals or loans are
permitted from such Account.
6.12 Administration of the Suspense Account
--------------------------------------
(a) There shall be credited to a suspense account the amount
of any Contributions, Employer Matched Contributions and
Employer SDRP Contributions for a Participant which are
in excess of the amount permitted under Article 15
hereof.
17
<PAGE> 25
(b) The balance in such suspense account at the close of such
Plan Year shall be accounted for as follows:
(i) The Post-Tax Contributions considered as excess
under (a) above, including gains or less losses,
shall be returned to the Participant before the end
of the next Plan Year.
(ii) All such other Contributions, Employer Matched
Contributions and Employer SDRP Contributions that
are considered as excess under (a) above shall
remain credited to this suspense account and
reallocated in the following Plan Year as Employer
Matched Contributions and Employer SDRP
Contributions for such Plan Year (and succeeding
Plan Years if necessary).
6.13 Administration of the Employer Forfeiture Account
-------------------------------------------------
(a) There shall be credited to the Employer Forfeiture
Account all funds creditable to such Account as provided
in Section 8.3 hereof.
(b) There shall be charged against such Account all amounts
withdrawn from time to time and reallocated as Employer
Matched Contributions or Employer SDRP Contributions.
6.14 Crediting of Contributions
--------------------------
Pre-Tax Contributions and Post-Tax Contributions shall be credited
to the appropriate Account or Accounts of such Participants no
later than the end of the quarter for which such contributions are
attributable or as soon thereafter as administratively possible.
Employer Matched Contributions and Employer SDRP Contributions
made for the benefit of Participants with respect to a particular
Plan Year shall be credited to the appropriate Accounts of such
Participants no later than the end of the quarter for which such
Contributions are attributable or as soon thereafter as
administratively possible.
6.15 Employee Contribution Records
-----------------------------
The Administrator shall maintain a Pre-Tax Contribution record in
the name of each Participant or Former Participant, in which shall
be entered, in dollars and cents, the amount of each Pre-Tax
Contribution made on behalf of such Participant; and a Post-Tax
Contribution record in which shall be entered, in dollars and
cents, the amount of each Post-Tax Contribution made by such
Participant. Each such record shall at all times carry a current
cumulative balance as of the preceding Valuation Date plus
Contributions, distributions and withdrawals made in the interim
since such Valuation Date.
ARTICLE 7
---------
RETIREMENT, DISABILITY OR DEATH
-------------------------------
7.1 Benefit at Retirement
---------------------
Upon attaining his/her Normal Retirement Age hereunder, a
Participant shall be one hundred percent (100%) vested in and
eligible to receive upon separation from service the value of
his/her Pre-Tax Contribution Account, Post-Tax Contribution
Account, Employer Matched Contribution Account, Employer SDRP
Contribution Account, Former PAYSOP Account, and Former Employer
Supplemental Contribution Account in the manner provided in
Article 9 hereof.
7.2 Disability Benefit
------------------
A Participant who is Disabled shall be one hundred percent (100%)
vested in and eligible to receive the value of his/her Pre-Tax
Contribution Account, Post-Tax Contribution Account, Employer
Matched Contribution Account, Employer SDRP Contribution Account,
Former PAYSOP Account, and Former Employer Supplemental
Contribution Account in the manner provided in Article 9 hereof.
18
<PAGE> 26
7.3 Death Benefit
-------------
Upon the death of a Participant, his/her Beneficiary shall be
eligible to receive one hundred percent (100%) of the value of
his/her Pre-Tax Contribution Account, Post-Tax Contribution
Account, Employer Matched Contribution Account, Employer SDRP
Contribution Account, Former PAYSOP Account, and Former Employer
Supplemental Contribution Account in the manner provided in
Article 9 hereof. Notwithstanding anything in the Plan to the
contrary, as to each Participant for whom funds were transferred
to an Employer SDRP Contribution Account as a result of the
Merger, such Participant's Beneficiary shall not be entitled to
receive the value of such Participant's Employer SDRP Contribution
Account, unless such Beneficiary is named in a single written
designation that expressly applies to both the Long-Term Savings
Plan portion and the Self-Directed Retirement Plan portion of The
Progressive Retirement Security Program. In the absence of such a
designation, such Participant's Employer SDRP Contribution Account
shall be paid upon such Participant's death to such Participant's
"Beneficiary" under and within the meaning of The Progressive
Corporation Supplemental Retirement Plan, as in effect immediately
prior to the Merger.
ARTICLE 8
---------
VESTING AND TERMINATIONS
------------------------
8.1 Vesting
-------
A Participant is vested in his/her Accounts as follows:
(a) Participant Accounts
--------------------
Each Participant and Former Participant is one hundred
percent (100%) vested in his/her Pre-Tax Contribution
Account, Post- Tax Contribution Account, and Former PAYSOP
Account.
(b) Employer Matched Contribution Account
-------------------------------------
(i) Each Participant and Former Participant shall be
vested in his/her Employer Matched Contribution
Account in accordance with the following schedule:
<TABLE>
<CAPTION>
Vested
Years of Service Percentage
---------------- ----------
<S> <C>
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
(ii) Notwithstanding (i) above, and due to the fact
that class year vesting was eliminated effective
December 31,1988, this transitional vesting
section shall apply to any Participant for whom
it produces a greater vested benefit than (i)
above. A Participant's vested benefit in his/her
Employer Matched Contribution Account as of
December 31,1988 will be frozen (for calculation
purposes only) and the amount maintained
separately. To calculate the vested percentage
of a Participant's Employer Matched Contribution
Account, the frozen December 31,1988 balance
will be added to the subsequent Employer Matched
Contributions. This sum will be multiplied by
the appropriate vested percentage corresponding
to the Participant's Years of Service as
determined in (i) above.
19
<PAGE> 27
(c) Former Employer Supplemental Contribution Account and
----------------------------------------------------
Employer SDRP Contribution Account
----------------------------------
Each Participant or Former Participant shall be vested in
his/her Former Employer Supplemental Contribution Account
and Employer SDRP Contribution Account in accordance with
the following schedule:
<TABLE>
<CAPTION>
Vested
Years of Service Percentage
---------------- ----------
<S> <C>
Less than 5 0%
5 or more 100%
</TABLE>
8.2 Termination of Employment
-------------------------
The final vesting status of a Participant who terminates his/her
Employment for any reason other than Retirement, Disability or
death shall be determined as of his/her Termination of Employment,
taking into consideration the provisions of Section 11.1. Such
Participant shall become a Former Participant and shall be
eligible to receive the value of his/her Pre-Tax Contribution
Account, Post-Tax Contribution Account, Former PAYSOP Account, and
the vested portion of his/her Employer Matched Contribution
Account, the vested portion of his/her Employer SDRP Contribution
Account and the vested portion of his/her Former Employer
Supplemental Contribution Account as provided in Article 9 hereof.
8.3 Forfeitures
-----------
If a Former Participant who terminated Employment for reasons
other than Retirement, Disability or death does not return to
Employment during the Plan Year in which his/her Termination of
Employment occurs, or if he/she dies after his/her Termination of
Employment during that Plan Year, then the non-vested portion of
his/her Employer Matched Contribution Account, Employer SDRP
Contribution Account and Former Employer Supplemental Contribution
Account shall be provisionally forfeited and such forfeiture shall
be applied in accordance with Section 6.13 hereof.
8.4 Reemployment
------------
If a Participant who ceased to be an Employee returns to active
Employment, an amount equal to the value of the provisionally
forfeited non-vested portion of his/her Employer Matched
Contribution Account, Employer SDRP Contribution Account and
Former Employer Supplemental Contribution Account, determined as
of the Valuation Date coincident with or next following the date
he/she last ceased to be an Employee, will be reinstated by
crediting such amounts to the Employee's respective Employer
Matched Contribution Account, Employer SDRP Contribution Account
and Former Employer Supplemental Contribution Account. The amounts
so reinstated will be made from any unapplied forfeitures then
available under the Plan, provided, however, that if unapplied
forfeitures are less than the amount to be reinstated, the
Employer will make a supplemental contribution to eliminate such
insufficiency.
ARTICLE 9
---------
PAYMENT OF BENEFITS
-------------------
9.1 Application for Payment
-----------------------
Application for distribution of benefits under this Plan shall be
made by a Participant or Former Participant (or other claimant) in
accordance with Section 9.5 hereof and approved by the
Administrator before payment commences.
20
<PAGE> 28
9.2 Time of Payment
---------------
(a) Distribution of benefits to a Participant (or Former Participant)
on account of Retirement shall be made as soon as practicable
after the Valuation Date coincident with or next following his/her
Retirement.
(b) Distribution of benefits to a Participant on account of Disability
shall be made as soon as practicable after the Valuation Date
coincident with or next following the Disabled Participant's
application pursuant to Section 9.1.
(c) In no event, however, will benefit payments to a Participant (or
Former Participant) commence later than April 1 of the calendar
year next following the calendar year in which such Participant
(or Former Participant) attains age seventy and one-half (70-1/2).
Any individual who receives a distribution of benefits prior to
age fifty-nine and one-half (59-1/2) shall be advised by the
Administrator that an additional federal income tax penalty may be
imposed on all or a portion of such distribution unless made on
account of death or Disability.
(d) In the case of a Participant (or Former Participant) who dies
before benefit payments have commenced all benefits in respect of
such Participant (or Former Participant) shall be paid to his or
her Beneficiary in a lump sum as soon as practicable after the
Valuation Date coincident with or next following his or her death.
(e) Subject to Section 9.2(h), distribution of benefits to a
Participant who terminates Employment for reasons other than
Retirement, Disability or death shall be made as soon as
practicable after the Valuation Date coincident with or next
following the date of his/her Termination of Employment where the
Participant (or Former Participant) has made proper application.
(f) If proper application has been made, distribution shall be made,
in any event, not later than sixty (60) days after the close of
the Plan Year in which the Participant or Former Participant
attains age sixty-five (65) or terminates his/her Employment,
whichever is later.
Where the amount to be distributed cannot be determined,
distribution may be delayed, but in no event beyond sixty (60)
days after such amount is determined.
(g) Notwithstanding anything to the contrary in this Section 9.2,
while such Participant is in the employ of the Employer, no
distribution from the Former PAYSOP Account may be made from a
Participant's Account before the end of the eighty-fourth month
beginning after the month in which it was allocated. In fact, no
withdrawals are permitted from the Former PAYSOP Account pursuant
to Section 10.4.
(h) Notwithstanding anything provided in this Section 9.2 to the
contrary, if the lump sum value of a Participant's Accounts does
not exceed three thousand five hundred dollars ($3,500),
determined as of the Valuation Date coinciding with or immediately
preceding his/her proposed date of distribution,the lump sum value
of such Accounts shall be paid in total, in cash (unless the
Employee elects Company Stock from his/her Former PAYSOP Account
or Company Stock Fund pursuant to Section 9.4), whether or not
application for payment has been made in accordance with Section
9.1. Such $3,500 amount shall be automatically adjusted in
subsequent years in accordance with regulations.
(i) No distribution shall be made to any Participant before his Normal
Retirement Date unless:
(i) his prior written consent has been obtained by the
Administrator; or
(ii) the aggregate balance of his Accounts, determined as of the
Valuation Date coinciding with or immediately preceding the
proposed date of distribution, does not exceed $3,500.
21
<PAGE> 29
If the Participant's consent is required under this Section
9.2(i), but is not obtained by the Administrator prior to
the time the distribution is to be made under Section 9.2,
the distribution shall be made as soon as reasonably
practicable following the earlier of (1) the Participant's
Normal Retirement Date, (2) the date the Administrator
receives satisfactory evidence of the Participant's death,
or (3) the date the Administrator obtains the Participant's
written consent.
9.3 Form of Payment
---------------
A Participant, Former Participant or Beneficiary shall receive the
value of his/her Accounts payable in cash or shares of Company
Stock (if invested in Company Stock Fund at Termination) as
elected by the Participant in the form of a lump sum payment.
However, if a Participant's entire Account consists of only the
Partnership Share, the distribution shall be in cash (due to the
small value of such an Account).
9.4 Determination of Value of Payment
---------------------------------
The value of the Accounts to be distributed to a Participant,
Former Participant or Beneficiary shall be determined as of the
Valuation Date coincident with or immediately following the
receipt of request for such distribution. However, if the
Participant's Termination of Employment occurs within forty-five
(45) days prior to a Valuation Date, and if receipt of the request
for distribution occurs within forty-five (45) days following the
Participant's Termination of Employment, even if such receipt of
the request for distribution occurs subsequent to the Valuation
Date in question, such Valuation Date will be used to value the
Accounts.
9.5 Claims Procedure
----------------
(a) The Administrator shall establish reasonable procedures
under which a claimant, who may be a Participant, Former
Participant or Beneficiary, may present a claim for
benefits under this Plan.
(b) Unless such claim is allowed in full by the Administrator,
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:
(i) The specific reason(s) for the denial;
(ii) Specific reference(s) to any pertinent provision(s) of
the Plan or rules promulgated pursuant thereto on
which the denial is based;
(iii)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
(v) An explanation of the steps to be taken if the claimant
wishes to resubmit his/her claim for review.
(c) 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
Administrator for a review of such denial. The claimant or
his/her representative, may review documents held by the
Administrator and pertinent to the denial of such claim,
and may submit a written statement of issues and comments.
(d) If an appeal is timely filed, the Administrator 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
22
<PAGE> 30
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; and
(iii) Make specific reference to pertinent provision(s) of the
Plan.
9.6 Facility of Payment
-------------------
If the Administrator determines that a Participant, Former Participant or
Beneficiary entitled to receive benefits under this Plan is (at the time
such benefit is payable) a minor or physically, mentally or legally
incompetent to receive such benefit and that another person or an
institution has legal custody of such minor or incompetent individual, the
Administrator may cause payment to be made to such person or institution
having custody of such Participant, Former Participant or Beneficiary.
Such payment, to the extent made, shall operate as a complete discharge of
obligation by the Administrator, the Employer, the Trustee and the Fund.
ARTICLE 10
----------
WITHDRAWALS AND LOANS DURING EMPLOYMENT
---------------------------------------
10.1 In-Service Withdrawals from Pre-Tax Contribution Account
--------------------------------------------------------
(a) If a Participant has attained age 59-1/2, such Participant may at
any time, by filing written application with the Administrator,
make an in-service withdrawal from his/her Pre-Tax Contribution
Account.
(b) (i) If a Participant has not attained age 59-1/2, such
Participant may make an in-service withdrawal from his/her
Pre-Tax Contribution Account only in the event of Hardship
and only to the extent that such in-service withdrawal is
necessary to satisfy the Hardship. The Participant must
request the withdrawal in writing from the Administrator.
(ii) Safe-Harbor
-----------
A request for an in-service withdrawal will be deemed to be
necessary to satisfy a Hardship only if all of the
following requirements are met:
(A) The amount of the withdrawal does not exceed the
amount of the Hardship plus amounts necessary to
pay any federal, state or local income taxes or
penalties reasonably anticipated to result from
the withdrawal, and
(B) The Participant has obtained all withdrawals
(other than Hardship withdrawals) and all
nontaxable loans available under this Plan and any
other plan maintained by the Employer, and
(C) The Participant certifies in writing that the
amount of the requested Hardship withdrawal is
necessary to satisfy an immediate and heavy
financial need and that such need cannot
reasonably be relieved (i) through reimbursement
or compensation by insurance or otherwise, (ii) by
liquidation of assets, (iii) by discontinuing Plan
contributions, (iv) by other distributions or
non-taxable loans from any other plans maintained
by Progressive or any other current or former
employer of the Participant or (v) by borrowing
from commercial sources on reasonable commercial
terms.
23
<PAGE> 31
(c) The amount of the Pre-Tax Contribution Account available
for withdrawal shall include:
(i) The Pre-Tax Contributions and earnings as of
December 31, 1988, and
(ii) The Pre-Tax Contributions made on or after January
1,1989, but shall not include any income on such
Account subsequent to that date.
10.2 In-Service Withdrawals from Post-Tax Contribution Account
---------------------------------------------------------
(a) A Participant may at any time file a written application
with the Administrator to make a voluntary withdrawal of
not less than $250.00 from his/her Post-Tax Contribution
Account for any reason.
(b) The entire Post-Tax Contribution Account balance
including income attributable to such Account, is
available for withdrawal. Any withdrawal will be
processed as follows:
(i) First, from the pre-1987 Post-Tax Contribution
Account balance,
(ii) Next, from income on the pre-1987 Post-Tax
Contribution Account balance together with
Contributions (and income thereon) made to the
post-1986 Post-Tax Contribution Account.
Such amount shall be on a pro rata basis between
Contributions and income thereon, pursuant to Code Section
72.
10.3 In-Service Withdrawals from Employer Matched Contribution Account
-----------------------------------------------------------------
(a) An Active Participant may file a written application with
the Administrator to make a withdrawal from his/her
vested Employer Matched Contribution Account balance not
to exceed the following:
(i) if the Active Participant has been a Participant
in the Plan for less than five (5) years, an
amount equal to the sum of all Employer Matched
Contributions made in respect to such Participant
at least two (2) years prior to the date of the
withdrawal; or
(ii) if the Active Participant has been a Participant
in the Plan for at least five (5) years, the
entire vested balance of such Participant's
Employer Matched Contribution Account.
An Active Participant may make such a withdrawal no more
frequently than once per Plan Year.
(b) An in-service withdrawal from an Active Participant's
Employer Matched Contribution Account is not available
unless the Active Participant has filed an application
and is eligible to receive a withdrawal of Contributions
pursuant to either 10.1 or 10.2, subject to the further
requirement that a withdrawal of all available Post-Tax
Contributions pursuant to 10.2 must first occur.
10.4 No Withdrawals Available from Other Accounts
--------------------------------------------
(a) No withdrawals under any circumstances shall be available
from:
(i) The non-vested portion of the Employer Matched
Contribution Account,
(ii) The Former PAYSOP Account,
(iii) The Former Employer Supplemental Contribution
Account, or
(iv) The Employer SDRP Contribution Account.
24
<PAGE> 32
(b) No withdrawals are available to anyone other than an
Active Participant and Inactive Participants as
specifically noted in Sections 10.1 and 10.2; that is, no
Former Participants or Beneficiaries are eligible to make
withdrawals from any Accounts, as they may request
distribution pursuant to Section 9.1.
10.5 Payment of Withdrawals
----------------------
(a) Withdrawals shall be processed not less frequently than
bi-weekly. Withdrawals shall be distributed as soon as
practicable after the date the Participant's application
for withdrawal is received, provided full documentation
is enclosed.
(b) The amount of the withdrawal shall be based upon the
value of the Participant's Pre-Tax Contribution Account,
Post-Tax Contribution Account, and Employer Matched
Contribution Account (as restricted by Section 10.3) as
applicable, determined as of the Valuation Date
coincident with or immediately preceding the
Administrator's receipt of a request for such withdrawal;
provided, however, all Stock shall be valued using the
closing price on the business day immediately preceding
the date the withdrawal is processed.
(c) Unless the Participant otherwise directs in writing, each
withdrawal shall be charged to each of the Investment
Funds in which any portion of his/her Accounts are
invested in the proportion that the balance held in such
Investment Fund bears to the aggregate balance held in
all such Investment Funds.
10.6 Loans to Participants
---------------------
(a) As approved by the Administrator, a Participant may at
any time borrow an amount as set forth in Section
10.6(b) under the terms and conditions of this Section
10.6.
(b) The Administrator shall investigate each application for
a loan. In addition to such rules and regulations as
the Administrator may adopt, all loans shall comply with
the following terms and conditions:
(i) An application for a loan by a Participant
shall be made in writing to the Administrator
on such forms as the Administrator shall
prescribe. The loan application will include a
promissory note executed by the borrowing
Participant obligating the Participant to repay
the loan through payroll deduction of
substantially level payments made no less
frequently than quarterly within the term
described in Section 10.6(b)(vi).
(ii) No loans will be available for the purchase of
a primary residence.
(iii) Each loan shall be secured by the borrower's
entire right, title and interest in and to the
trust fund (not to exceed the amount of the
loan), evidenced by the Participant's
collateral promissory note for the amount of
the loan, including interest, payable to the
order of the Trustee.
(iv) The minimum loan amount shall be one thousand
dollars ($1,000).
(v) The loan amount requested must be a multiple of
$100. The outstanding balance of each loan
amount (plus the highest outstanding balance of
all other loans made from this Plan within the
immediately preceding twelve-month period)
shall not exceed the lesser of:
(A) $50,000; or
(B) Fifty percent (50%) of
the Participant's vested
Account(s) based on the
Participant's Pre-Tax
Contribution Account,
Post-Tax Contribution
Account, and Employer Matched
Contribution Account.
25
<PAGE> 33
(vi) The period of repayment of any loan shall not exceed
three (3) years.
(vii) Repayment Options: A loan may be prepaid without penalty
by paying the balance of the loan plus accrued interest
in a lump sum payment.
(viii) Each loan shall bear interest at a rate to be set and
reviewed periodically by the Administrator and, in
determining the interest rate, the Administrator shall
take into consideration commercial interest rates
currently being charged by persons in the business of
lending money for loans which would be made under
similar circumstances. The Administrator shall not
discriminate among Participants in the matter of
interest rates. To the extent permitted by law, the
interest rate on any loan will not be adjusted.
(ix) No application for a loan by the Participant will be
approved as long as an outstanding balance for a loan
remains in the name of such Participant.
(c) (i) Loans shall be processed not less frequently than
bi-weekly. For all purposes relating to loans, the value
of the Participant's Account shall be determined as of
the Valuation Date coinciding with or immediately
following receipt of a loan application by the
Administrator; provided, however, all Stock shall be
valued using the closing price on the business day
immediately preceding the date the withdrawal is
processed.
(d) A Participant whose Employment terminates shall have 30 days from
the date of termination to repay the loan. Repayment must be made
by check or money order in a lump sum for the remaining loan
balance plus accrued interest. However, a Participant whose
active Employment terminates as a result of a leave of absence
approved by his or her Employer may continue to repay his or her
loan in installments payable in the amounts and at the times that
payroll deduction payments would have been made had he continued
in active Employment.
(e) In the event of a default on any loan the entire outstanding
principal balance of the loan plus all accrued interest shall be
immediately due and payable and the Administrator is authorized
(to the extent permitted by law) to take any and all actions
necessary or appropriate to collect such sums. However,
foreclosure on and reduction of a Participant's Plan benefits in
repayment of a loan shall not occur until an event has occurred
which would entitle the Participant or his/her Beneficiary to
receive a distribution of his/her Plan benefits, provided that the
amount of such distribution shall be reduced by the outstanding
principal amount of the loan plus all accrued interest. For
purposes of the preceding provisions, "default" means any of the
following events:
(i) failure of any Participant whose Employment has
terminated to repay the entire outstanding principal
balance of the loan plus accrued interest within the
time specified in Section 10.6(d); or
(ii) any other failure of a Participant to make any required
payment of principal or interest on any loan within
thirty (30) days following the date such payment was
due.
(f) Anything in this Section 10.6 to the contrary notwithstanding, all
loans will comply with the terms of Code Section 72(p).
(g) The source of funds for each loan shall be those Trust assets
comprising first, the Participant's Post-Tax Contribution Account,
followed by the Participant's Pre-Tax Contribution Account, and
finally, the vested portion of the Participant's Employer Matched
Contribution Account. Within each such Account funds for the
Participant's loan shall be withdrawn from each Investment Fund in
which any portion of such Account is invested in the proportion
that the balance held in such Investment Fund bears to the
aggregate balance held in all such Investment Funds, unless the
Participant elects otherwise in writing.
26
<PAGE> 34
(h) Funds paid by a Participant in repayment of a loan shall be
invested in the same manner as the Participant has elected for
Pre-Tax and/or Post-Tax Contributions, as applicable.
(i) Notwithstanding the foregoing, no loan shall be made to a
Participant during the period in which the Administrator is making
a determination of whether a domestic relations order affecting
the Participant's Account is a Qualified Domestic Relations Order.
Further, if the Administrator is in receipt of a Qualified
Domestic Relations Order with respect to any Participant's
Account, it may prohibit such Participant from obtaining a loan
until the alternate payee's rights under such order are satisfied.
(j) In the event that a payment is required to be made to a
Beneficiary upon the death of a Participant or an alternate payee
pursuant to a Qualified Domestic Relations Order, while the
Participant whose Account is the subject of such order has a loan
outstanding, the Administrator, in its discretion, may direct that
the Participant's promissory note be transferred to such
Beneficiary or alternate payee, as applicable.
ARTICLE 11
----------
SERVICE
-------
11.1 Service
-------
An Employee's eligibility for benefits under the Plan shall be based on
his Period of Service. For purposes of this Article 11, the following
terms shall have the meanings shown.
(a) HOUR OF SERVICE shall mean an hour for which an Employee is paid,
or entitled to payment, for the performance of duties for the
Employer or any Affiliated Company.
(b) PERIOD OF SEVERANCE shall mean the period of time which begins on
an Employee's Termination of Employment date and which ends if
he/she again completes an Hour of Service.
(c) PERIOD OF SERVICE shall include the periods described in (i) and
(ii) below.
(i) Period of Service shall include each period of time
beginning on an Employee's date of employment or
re-employment, as applicable, and ending on his/her next
succeeding Termination of Employment.
(ii) Period of Service shall include the Period of Severance
following an Employee's Termination of Employment date
which resulted from his/her having quit, retired, or
been discharged, if he/she again performs an Hour of
Service before the first anniversary of the earlier of:
(A) The date on which he/she quit, retired, or was
discharged, or
(B) The date on which he/she began an absence
during which he/she quit, retired, or was
discharged.
(iii) An Employee's Period of Service shall be determined by
aggregating all the periods required to be taken into
account under this Section 11.1(c) with less than whole
years aggregated on the basis that twelve (12) months
equals one (1) year and where any beginning or final
fraction of a month shall equal one twelfth (1/12th) of
a Year of Service. If the final month of employment
includes the annual anniversary of their first date of
employment, the Employee must work through such
anniversary date in order to receive that month of
Service.
27
<PAGE> 35
(d) Determination of Termination of Employment
------------------------------------------
(i) A Termination of Employment shall be deemed not to have
occurred when an Employee is or has been absent from his
employment either with or without pay due to:
(A) A leave of absence granted by the Employer,
provided the Employee resumes his employment
promptly on the termination of such leave. The
decision of the Employer on all questions of
leaves of absence shall be final and
conclusive.
(B) Service in the Armed Forces of the United
States, including the Merchant Marine, to the
extent the Employee retains reemployment rights
with the Employer by law. Should an Employee
fail to report for employment within the time
required by law, or should he/she take
employment elsewhere following military service
before resuming employment with the Company,
his/her Termination of Employment date shall be
deemed to be the day he/she loses his
reemployment rights with the Company under the
law.
(ii) The Termination of Employment for a Maternity or
Paternity Absence shall be the first anniversary of the
first day of absence from employment due to a Maternity
or Paternity Absence.
11.2 Prior Service Reinstated
------------------------
Upon reemployment of an Employee whose Termination of Employment under
Section 11.1 occurred on or after the Effective Date as defined in Section
2.19, whether or not distribution has been made, any pre-break Period of
Service shall be restored as of the date of his employment.
11.3 Year of Service
---------------
An Employee shall be credited with one Year of Service for each full year
in his/her Period of Service.
ARTICLE 12
----------
PLAN OPERATION AND ADMINISTRATION
---------------------------------
12.1 Powers of Administrator
-----------------------
The Administrator will have full power to administer the Plan in all its
details. 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;
(c) to compute the amount of benefits which will be payable to any
Participant, Former Participant, Beneficiary or other person in
accordance with the provisions of the Plan;
(d) to authorize disbursements from the Trust;
(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;
28
<PAGE> 36
(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 and fiduciary responsibilities in accordance with
Section 405 of ERISA.
12.2 Nondiscriminatory Exercise of Authority
---------------------------------------
The Administrator shall exercise its authority in a nondiscriminatory
manner so that all persons similarly situated will receive substantially
the same treatment.
12.3 Reliance on Tables, etc.
------------------------
The Administrator 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 who is retained by the Administrator to assist it in administering
the Plan.
12.4 Named Fiduciary
---------------
The Administrator will be a "named fiduciary" for purposes of ERISA with
authority to control and manage the operation and administration of the
Plan, and will be responsible for complying with all of the reporting and
disclosure requirements of ERISA.
12.5 Indemnification
---------------
In addition to whatever rights of indemnification to which employees,
officers and directors of the Company and of the other Employers may be
entitled under the articles of incorporation, regulations, or bylaws of
the Company or such Employers, under any provision of law, or under any
other agreement, the Company shall satisfy any liability actually and
reasonably incurred by any such employee, officer or director, including
expenses, attorney's 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 Employers or the
Administrator 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.
12.6 Notices to Administrator
------------------------
The Administrator shall designate one or more addresses where notices and
other communications to the Administrator shall be sent. No notice or
other communication shall be considered to have been given to or received
by the Administrator until it has been delivered to the Administrator's
attention at one of such designated addresses.
ARTICLE 13
----------
AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
13.1 Amendment
---------
The Company may amend the Plan and Trust Agreement in any respect at
any time, for any reason and as to all Employers by action of the Company's
Board of Directors, provided, however, that any amendment that is required
by law or that will not require any Employer to increase the contributions
it must make to the Plan may be approved by the Company's Chairman,
President or Chief Executive Officer, or the holder of
29
<PAGE> 37
any similar successor office, which approval shall be conclusively
evidenced by such officer's execution of such amendment, and
further provided that the Company may not:
(a) amend the Plan or Trust Agreement in such manner as
would cause or permit any part of the assets of the
Trust to be diverted to purposes other than for the
exclusive benefit of Participants, Former Participants
and their Beneficiaries (except as permitted herein),
unless such amendment is permitted by law, governmental
regulation or ruling;
(b) amend the Plan or Trust Agreement retroactively in such
a manner as would deprive any Participant or Former
Participant of any benefit to which he/she was entitled
under the Plan by reason of Contributions made prior to
the amendment, unless such amendment is necessary to
conform the Plan or Trust Agreement to, or satisfy the
conditions of, any law, governmental regulation or
ruling, or to permit the Trust and the Plan to meet the
requirements of Sections 401(a) and 501(a) of the Code;
(c) to amend the Plan or Trust Agreement in such manner as
would increase the duties or liabilities of the Trustee
or reduce its fee for services thereunder, unless the
Trustee consents thereto in writing;
(d) amend the Plan to reduce a Participant's vesting
percentage determined as of the later of the date such
amendment is effective or adopted; or
(e) amend the Plan to revise the vesting schedule unless:
(i) Each Participant's vesting percentage under
such amendment is not less at any time than the
vesting percentage determined without regard to
such amendment; or
(ii) Each Participant who has completed three or
more Years of Service (whether or not
consecutive) is permitted to make an election
to have his/her vesting percentage determined
without respect to such amendment; such an
election shall be irrevocable and shall be made
within the period beginning with the date on
which such amendment is adopted and ending no
later than the latest of the following:
(A) Sixty (60) days after the day such
amendment is adopted;
(B) Sixty (60) days after the date such
amendment becomes effective; or
(C) Sixty (60) days after the day the
Participant is issued written notice of
the amendment.
13.2 Termination
-----------
The Company has established the Plan with the bona fide intention
and expectation that contributions will be continued indefinitely,
but the Company will have no obligation or liability whatsoever to
maintain the Plan for any given length of time and may discontinue
contributions under the Plan, terminate the Plan or permit any
Employer to withdraw from the Plan at any time for any reason by
action of the Company's Board of Directors without any liability
whatsoever for any such discontinuance, termination or withdrawal.
In the event of the termination or partial termination of the
Plan, the balance of each affected Participant's Accounts shall be
nonforfeitable. Upon termination of the Plan, the Trustee will
distribute to each Participant, Former Participant or Beneficiary,
as the case may be, the value of the Participant's, Former
Participant's or Beneficiary's Accounts, determined as of the
Valuation Date coinciding with or immediately following the date
of termination, in a single lump sum cash payment. However, if a
successor plan is established within the meaning of, and within
the time limits prescribed by, Section 401(k)(2)(B)(i)(II) of the
Code or applicable regulations thereunder, distributions shall be
made to Participants and Former Participants only in accordance
with Articles 7 and 10. Upon the completion of distributions to
all Participants, Former Participants or Beneficiaries, as the
case may be, no Participant, Former Participant , Beneficiary or
person claiming under or through them, will have any claims in
respect of the Plan.
30
<PAGE> 38
13.3 Liquidation of the Fund
-----------------------
The Trust and the Fund 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 13.
ARTICLE 14
----------
ADOPTION OF THE PLAN BY OTHER EMPLOYERS
---------------------------------------
14.1 Adoption with Approval
----------------------
Any Affiliated Company or corporation (hereinafter referred to as
"Participating Employer") may adopt and become a party to this
Plan with the consent of the Company and subject to such terms and
conditions as the Company may require or approve.
14.2 Procedure for Adoption
----------------------
A Participating Employer may adopt the Plan and become an Employer
hereunder by executing an instrument in writing evidencing such
adoption on the order of its Board of Directors and filing a copy
thereof with the Company. Upon approval of the Participating
Employer's adoption of the Plan by the Company and the delivery of
the instruments evidencing the Participating Employer's adoption
of the Plan and the Company's approval thereof to the Trustee, the
Participating Employer's adoption of the Plan shall be effective
as of the date specified in said instruments.
14.3 Effect of Adoption
------------------
(a) If there is more than one Employer hereunder, the costs
and expenses in connection with the Plan and Fund each
year shall be shared by all Employers.
(b) Each Participating Employer shall also pay for that
portion of the Contribution of the Employers
attributable to Pre-Tax Contributions made under the
Plan by its Covered Employees but the Contributions of
Employers included in an affiliated group under the Code
with the Company may be paid by the Company on behalf of
itself and the other Participating Employers or may be
allocated among such Participating Employers by the
Company as will permit the deduction for purposes of
Federal taxes.
(c) Each Participating Employer, as a condition of continued
participation in this Plan, delegates to the Company the
sole power and authority to administer and operate the
Plan, including the power and authority to:
(i) Appoint and remove the Trustee;
(ii) Consent to the adoption of this Plan by other
Participating Employers;
(iii) Amend or terminate the Plan or Trust; and
(iv) Determine the amount of Employer contributions.
14.4 Termination of Adoption
-----------------------
(a) Each Participating Employer may elect separately to
withdraw from the Plan, but amendments may be made only
by the Company. Any such withdrawal shall be expressed
in an instrument in writing executed by the withdrawing
Participating Employer on order of its Board of
Directors and filed with the Company and the Trustee.
31
<PAGE> 39
(b) Upon withdrawal from the Plan by a Participating
Employer, and subject to the provisions of ERISA, the
Code, and other applicable law, the portion of the Fund
attributable to the proportionate interests of the
Participants affected by said termination of
participation may, in the discretion of the Company:
(i) Be retained in the Fund and benefits paid in
accordance with the terms of the Plan in effect
at the time the Participating Employer
terminated its participation in the Plan;
(ii) Be transferred (along with the liability for
the payment of benefits) to another qualified
retirement plan maintained by the Participating
Employer terminating participation in the Plan;
or
(iii) Be dealt with in any other manner consistent
with the provisions of ERISA, the Code, or
other applicable law.
In the event the portion of the Fund attributable to the
proportionate interests of the Participants and Former
Participants affected by the termination of
participation of a Participating Employer is retained in
the Fund, the Administrator may direct the Trustee to
segregate such portion of the Fund.
ARTICLE 15
-----------
LIMITATIONS OF ANNUAL ADDITIONS
-------------------------------
15.1 General Limitations
-------------------
Notwithstanding anything provided herein to the contrary, the
maximum annual addition, as defined in Section 15.4, credited to
the Accounts of a Participant for any Plan Year shall not exceed
the lesser of:
(a) Twenty-five percent (25%) of the Participant's
compensation as defined in Code Section 415(c)(3) for
that Plan Year; or
(b) Thirty thousand dollars ($30,000) (or, if greater, one
fourth of the dollar limitation in effect under Code
Section 415(b)(1)(A)), provided that as of January 1 of
each Plan Year, the dollar limitation as adjusted by the
Commissioner of Internal Revenue for such Plan Year
shall be substituted for the dollar amount specified in
this Section 15.1(b).
15.2 Excess Amount
-------------
(a) Prior to the determination of a Participant's actual
compensation for a Plan Year, the maximum annual
addition for a Participant may be determined on the
basis of a reasonable estimation of his/her compensation
for a Plan Year with Contributions then appropriately
limited.
(b) If such additions exceed the maximum due to a reasonable
error in estimating a Participant's annual Compensation
or under other limited facts and circumstances which the
Commissioner of Internal Revenue finds justifiable, such
excess Post-Tax Contributions and Income shall be
returned to Employees pursuant to Section 5.2 (except
that the Employer Match attributable to any such
Post-Tax Contributions shall be deposited in a suspense
account as described below). Should an excess remain
(Pre-Tax Contributions, Employer Matched Contributions,
Employer SDRP Contributions), a suspense account shall
be established to hold such excess and such excess shall
be allocated in the succeeding Plan Year (and subsequent
Plan Years as necessary) as the Employer Matched
Contribution and/or Employer SDRP Contribution for all
Plan Participants.
32
<PAGE> 40
15.3 Aggregation of Plans of the Employer
------------------------------------
(a) If the Employer is or becomes a member of a group of
employers which constitute a controlled group of
corporations (within the meaning of Code Section 414(b)
as modified by Code Section 415(h)) or which constitute
trades or businesses under common control (within the
meaning of Code Section 414(c) as modified by Code
Section 415(h)) or which constitute an affiliated
service group (within the meaning of Code Section
414(m)), such group of employers shall be treated as one
employer for purposes of this Article 15.
(b) For purposes of applying the limitation of this Article
15, all defined benefit plans (whether or not
terminated) of the Employer shall be treated as one
defined benefit plan and all defined contribution plans
(whether or not terminated) shall be treated as one
defined contribution plan. However, multi-employer plans
shall not be aggregated with multi-employer plans. If
an Employer maintains both a plan which is not a
multi-employer plan and a plan which is a multi-
employer plan, the plan which is not a multi-employer
plan shall be aggregated with the multi-employer plan
only to the extent that the benefits provided under the
multi-employer plan are provided by such Employer with
respect to the Participant.
(c) If an excess amount results from the aggregation of
annual additions under this Plan and under any other
defined contribution plan sponsored by the Employer:
(i) The excess amount shall be attributable to the
plan under which annual additions were last
allocated; or
(ii) If annual additions were allocated on a date
under this Plan which coincides with an
allocation date of the other defined
contribution plan, the excess amount
attributable to this Plan shall be a pro rata
portion of the excess amount determined by the
ratio of the annual additions that would have
been allocated to the Participant under this
Plan to the total annual additions that would
have been allocated to the Participant under
all such defined contribution plans (with the
ratio being determined without regard to the
limitations imposed by this Article 15).
(d) Where a Participant is a Participant at any time in both
a defined contribution plan and a defined benefit plan
sponsored by the Employer, the sum of the defined
benefit fraction and the defined contribution fraction
for any Plan Year shall not exceed 1.0. If, at the
close of the Plan Year, the limitation set forth in this
Section 15.3(d) would be exceeded, the Participant's
annual additions under the defined contribution plan(s)
shall be reduced in accordance with the terms of the
defined contribution plan(s) (after any benefits under
the defined benefit plan(s) in excess of the limitations
of Code Section 415 have been appropriately reduced) so
that the defined contribution fraction is equal to the
difference between 1.0 and the defined benefit fraction.
(e) If the sum of the defined benefit fraction and the
defined contribution fraction hereof would exceed 1.0
for Plan Year 1982, the numerator of the defined
contribution fraction will be adjusted, in accordance
with Regulations prescribed by the Commissioner of
Internal Revenue, by subtracting an amount (not
exceeding such numerator) so that the sum of the defined
benefit fraction and the defined contribution fraction
does not exceed 1.0. This numerator, as adjusted herein,
will be used for the calculation of the defined
contribution fraction for Plan Years commencing on and
after January 1, 1983.
33
<PAGE> 41
15.4 Definitions
-----------
For purposes of this Article 15:
(a) (i) ANNUAL ADDITION means the sum of the following
amounts allocated on behalf of a Participant
for a Plan Year:
<TABLE>
<S> <C>
(A) Employer Matched Contributions;
(B) Forfeitures;
(C) Pre-Tax Contributions;
(D) Post-Tax Contributions;
(E) Employer SDRP Contributions;
(F) Partnership Share Contribution, if applicable; and
(G) Anniversary Share Contributions, if applicable.
</TABLE>
(ii) Annual additions shall not include:
(A) The forfeitures and/or
Employer contributions which
are used to restore a
Participant's (or
Beneficiary's) benefit under
Section 8.4 hereof,
(B) Loan repayments, or
(C) Transfers of Funds from
another qualified plan.
(b) Compensation shall be as defined in Code Section 415(c)(3).
(c) The defined benefit fraction for any Plan Year is a fraction, the
numerator of which is the Participant's projected annual benefit
(determined as of the close of the Plan Year) under the defined
benefit plan and the denominator of which is the lesser of:
(i) The product of 1.25 multiplied by the dollar limitation
in effect under Code Section 415(b)(1) for such Plan
Year; or
(ii) The product of 1.4 multiplied by one hundred percent
(100%) of the Participant's average compensation for the
three consecutive calendar years in which he/she
received the highest compensation while an Employee.
(d) Defined benefit plan means a qualified plan as defined in Code
Section 414(j).
(e) The defined contribution fraction for any Plan Year is a fraction,
the numerator of which is the sum of annual additions to the
Participant's Accounts under the Plan as of the close of such Plan
Year and all prior Plan Years and the denominator of which is the
sum of the lesser of the following amounts determined for such
Plan Year and each prior Year of Service:
(i) The product of 1.25 multiplied by the dollar limits
under Code Section 415(c)(1)(A) for such Plan Years; or
(ii) The product of 1.4 multiplied by twenty-five percent
(25%) of the Participant's compensation for such Plan
Years.
34
<PAGE> 42
(f) DEFINED CONTRIBUTION PLAN means a qualified plan as defined in
Code Section 414(i).
(g) EXCESS AMOUNT means the excess of the Participant's annual
addition for the Plan Year over the maximum annual addition
permitted under this Article 15 for the Plan Year.
(h) MULTI-EMPLOYER PLAN MEANS a multi-employer plan as defined in Code
Section 414(f).
(i) PROJECTED ANNUAL BENEFIT means an amount equal to the annual
benefit to which the Participant would be entitled to receive
under the terms of the defined benefit plan in which he/she is a
participant assuming that the Participant continues participation
until his/her normal retirement age, that his/her compensation
continues at the same rate as in effect in the Plan Year in
consideration until his/her normal retirement age is attained and
that all relevant factors used to determine benefits under such
plan remain constant. Projected annual benefit is a benefit
expressed in the form of either a single life annuity or qualified
joint and survivor annuity disregarding any ancillary benefits or
benefits attributable to a rollover contribution.
15.5 Top-Heavy Plan Requirements
----------------------------
(a) GENERAL RULE. For any Plan Year for which this Plan is a
top-heavy plan as defined in Section 15.5(g) below, any other
provisions of this Plan to the contrary notwithstanding, this Plan
shall be subject to the following provisions:
(i) The vesting provisions of Section 15.5(b) below:
(ii) The minimum Contribution provisions of Section 15.5(c)
below;
(iii) The limitation on Compensation set by Section 15.5(c)
below; and
(iv) The limitation on Contributions set by Section 15.5(e)
below.
(b) VESTING PROVISIONS. Each Participant who has completed at least
three Years of Service and has completed an Hour of Service during
any Plan Year in which the Plan is a top-heavy plan shall have a
nonforfeitable right to the benefit accrued under this Plan.
Each Participant's nonforfeitable accrued benefit shall not be
less than his/her nonforfeitable accrued benefit determined as of
the last day of the last Plan Year in which the Plan was a
top-heavy plan. If the Plan ceases to be top heavy, each
Participant with three or more years of service, whether or not
consecutive, shall have his/her nonforfeitable accrued benefit
determined in accordance with this Article 15 and separately in
accordance with the terms of Article 8, and such will be
considered an amendment to the vesting schedule to be governed by
Section 13.1(e).
(c) Minimum Contribution Provisions
-------------------------------
(i) Each Covered Employee who is a Non-key employee (as
defined in Section 15.5(i) below) and who has not
separated from service as of the last day of the Plan
Year shall be entitled to have a contribution made on
his/her behalf by the Employer of not less than the
lesser of:
(A) Three percent (3%) (the "Minimum Contribution
Percentage") of the Covered Employee's
Compensation for such Plan Year, or
(B) The largest percentage of Compensation
allocated to the Account of any Key Employee
for such Plan Year. Such allocations shall
include all Pre-Tax Contributions made pursuant
to Section 4.1 of the Plan during such Plan
Year.
35
<PAGE> 43
(ii) Where Section 15.5(c)(i) is found to apply after
calculation of the amounts to be allocated has been
made, Section 15.5(c)(i) shall be implemented by first
reducing the Forfeitures to be allocated among the
Accounts of Key Employees to the extent necessary; then
by the Employer contributing an additional amount of
current or accumulated profits to the extent necessary;
and finally by reducing the contribution allocated to
the Accounts of Key Employees and reallocating it to
Non-key Employees to the extent necessary.
(iii) For purposes of this Section 15.5, Compensation shall be
as defined in Section 2.13 of the Plan; however,
excluding any Pre-Tax Contributions made pursuant to
Section 4.1.
(d) LIMITATION ON COMPENSATION. Compensation taken into account under
this Section 15.5 and Eligible Compensation under Article 4 for
purposes of computing contributions under this Plan shall not
exceed the first two hundred thousand dollars ($200,000) for any
Plan Year in which the Plan is deemed to be top heavy. Such amount
shall be adjusted automatically for each Plan Year to the amount
prescribed by the Secretary of the Treasury or his/her delegate
pursuant to regulations for the calendar year in which such Plan
Year commences.
(e) LIMITATION ON CONTRIBUTIONS. In the event that the Employer also
maintains a defined benefit plan providing benefits on behalf of
Participants in this Plan, one of the two following provisions
shall apply:
(i) If, for the Plan Year, this Plan would not be a
top-heavy plan as defined in Section 15.5(g) below if
"ninety percent (90%)" were substituted for "sixty
percent (60%)," then Section 15.5(c) shall apply for
such Plan Year as if amended so that "four percent (4%)"
were substituted for "three percent (3%)."
(ii) If, for the Plan Year, this Plan would continue to be a
top-heavy plan as defined in Section 15.5(g) below if
"ninety percent (90%)" were substituted for "sixty
percent (60%)," then the denominator of both the defined
contribution plan fraction and the defined benefit plan
fraction shall be calculated as set forth in Section
15.4 hereof for the limitation year ending in such Plan
Year by substituting "1.0" for "1.25" in each place such
figure appears, except with respect to any individual
for whom there are no Employer contributions or accruals
for such individual under the defined benefit plan.
(f) COORDINATION WITH OTHER PLANS. In the event that the Employer
maintains a top-heavy defined benefit plan under which
contributions are provided on behalf of participants under this
plan, the amount of contributions and forfeitures allocated
hereunder to the account of each Non-key Employee also covered
under the defined benefit plan shall be at least 5% of average
annual compensation for years in the testing period.
If the plan is subject to Section 15.5(e)(ii) but the employer
does not substitute "1.0" for "1.25" as required by Section
15.5(e)(ii), the amount of contributions and forfeitures allocated
hereunder to such participant shall be 7-1/2% of average annual
compensation during the testing period.
(g) TOP-HEAVY PLAN DEFINITION. This Plan shall be a top-heavy plan
for any Plan Year if, as of the determination date (as defined in
Section 15.5(g)(i) below), the present value aggregate of the
Accounts under the Plan for Participants (including Former
Participants) who are Key Employees (as defined in Section 15.5(h)
below) exceeds sixty percent (60%) of the present value of the
aggregate of the Accounts of all Employees or if this Plan is
required to be in an aggregation group (as defined in Section
15.5(g)(iii) below) which for such Plan Year is a top-heavy group
(as defined in Section 15.5(g)(iv) below).
(i) DETERMINATION DATE means for any Plan Year the last day
of the immediately preceding Plan Year (except that for
the first Plan Year of this Plan the determination date
means the last day of such Plan Year).
36
<PAGE> 44
(ii) The present value of the aggregate of the Accounts shall
be the sum of the Account balances determined as of the
most recent Valuation Date that is within the 12-month
period ending on the determination date, and the
adjustment for contributions due as of the determination
date, and as described in the Regulations under the
Code, as amended.
(iii) AGGREGATION GROUP means the group of plans, if any, that
includes both the group of plans that are required to be
aggregated and the group of plans that are permitted to
be aggregated.
(A) The group of plans that are required to be
aggregated (the required aggregation group)
includes:
(1) Each plan of the Employer for a Plan
Year containing the Determination Date
or any of the four preceding years in
which a Key Employee is a participant,
including collectively bargained plans
and terminated plans maintained at any
time within the last five years ending
on the applicable termination date; and
(2) Each other plan of the Employer,
including collectively bargained plans
of the Employer, which enables a plan
in which a Key Employee is a
participant to meet the requirements of
either Code Section 401(a)(4) or Code
Section 410 prohibiting discrimination
as to contributions or benefits in
favor of Employees who are officers,
shareholders, or the highly
compensated, or prescribing the minimum
participation standards.
(B) The group of plans that are permitted to be
aggregated (the permissive aggregation group)
includes the required aggregation group plus
any plan that is not part of the required
aggregation group that the Administrator
certifies as constituting a plan within the
permissive aggregation group. Such plans may be
added to the permissive aggregation group only
if, after the addition, the aggregation group
as a whole continues to meet the requirements
of both Code Sections 401(a)(4) and 410.
(iv) TOP-HEAVY GROUP means the aggregation group, if as of
the applicable determination date, the sum of the
present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans included in
the aggregation group plus the aggregate of the accounts
of Key Employees under all defined contribution plans
included in the aggregation group exceeds sixty percent
(60%) of the sum of the present value of the cumulative
accrued benefits for all Employees, excluding former Key
Employees under all such defined benefit plans plus the
aggregate accounts for all Employees, excluding former
Key Employees under such defined contribution plans. If
the aggregation group that is a top-heavy group is a
required aggregation group, each plan in the group will
be top-heavy. If the aggregation group that is a
top-heavy group is a permissive aggregation group, only
those plans that are part of the required aggregation
group will be treated as top heavy. If the aggregation
group is not a top-heavy group, no plan within such
group will be top heavy.
(v) In determining whether this Plan constitutes a top-heavy
plan, the Committee (or its agent) shall make the
following adjustments in connection therewith:
(A) When more than one plan is aggregated, the
Administrator shall determine separately for
each plan as of each plan's determination date
the present value of the accrued benefits or
account balance. The results shall then be
aggregated by adding the results of each plan
as of the determination dates for such plans
that fall within the same calendar year.
37
<PAGE> 45
(B) In determining the present value of the
cumulative accrued benefit or the amount of the
account of any Employee, such present value or
account shall include the amount in dollar
value of the aggregate distributions made to
such Employee under the applicable plan during
the five-year period ending on the
determination date unless reflected in the
value of the accrued benefit or account balance
as of the most recent Valuation Date. Such
amounts shall include distributions to such
Employees which represented the entire amount
credited to their accounts under the applicable
plan.
(C) Further, in making such determination, such
present value or such account shall include any
rollover contribution (or similar transfer) as
follows:
(1) If the rollover contribution (or
similar transfer) is initiated by the
Employee and made to or from a plan
maintained by another Employer, the
plan providing the distribution shall
include such distribution in the
present value or such account.
(2) If the rollover contribution (or
similar transfer) is not initiated by
the Employee or made from a plan
maintained by another Employer, the
plan accepting the distribution shall
include such distribution in the
present value or such account. The plan
making the distribution shall not
include the distribution in the present
value or such account.
(D) Further, in making such determination, in any
case where an individual is a Non-key Employee,
as defined in Section 15.5(i) below, with
respect to an applicable plan, but was a Key
Employee with respect to such plan for any
prior Plan Year, any accrued benefit and any
account of such Employee shall be altogether
disregarded. For this purpose, to the extent
that a Key Employee is deemed to be a Key
Employee if he/she met the definition of Key
Employee within any of the four preceding Plan
Years, this provision shall apply following the
end of such period of time.
(E) If any individual has not performed any
services for any Employer maintaining the Plan
at any time during the five-year period ending
on the determination date, any accrued benefit
and Account of such individual shall not be
taken into account.
(h) KEY EMPLOYEE means any Employee, former Employee or Beneficiary of
an Employee or former Employee under this Plan who, at any time
during the Plan Year of the determination date or during any of
the four preceding Plan Years, is or was one of the following:
(i) An officer of the Employer having an annual Compensation
greater than fifty percent (50%) of the amount in effect
under Section 415(b)(1)(A) for any such Plan Year.
Whether an individual is an officer shall be determined
by the Committee on the basis of all the facts and
circumstances, such as an individual's authority, duties
and terms of office, not on the mere fact that the
individual has the title of an officer. For any such
Plan Year, there shall be treated as officers no more
than the lesser of:
(A) Fifty (50) Employees; or
(B) Ten percent (10%) of the Employees or, if
greater than ten percent (10%), three Employees.
For this purpose, the highest paid officers shall be
selected and business organizations other than
corporations shall be deemed to have no officers.
38
<PAGE> 46
(ii) One of the ten Employees having annual Compensation from
the Employer of more than the limitation in affect under
Code Section 415(c)(1)(A) and owning (or considered as
owning, in accordance with applicable principles, such
as Code Section 318 or a successor provision) the
largest interests in the Employer. If two Employees have
the same interest in the Employer, the Employee having
the greater annual Compensation from the Employer shall
be treated as having a larger interest. An Employee who
has some ownership interest is considered to be one of
the top ten owners unless at least ten other Employees
own a greater interest than that Employee.
However, an Employee will not be considered a top ten
owner for a Plan Year if the Employee earns less than
the maximum dollar limitation on contributions and other
annual additions to a Participant's Account in a defined
contribution Plan under the Code, as amended, as in
effect for the calendar year in which the determination
date falls.
(iii) Any person who owns (or is considered as owning, in
accordance with applicable principles, such as Code
Section 318 or a successor provision) more than five
percent (5%) of the outstanding stock of the Employer or
stock possessing more than five percent (5%) of the
combined total voting power of all stock of the
Employer.
(iv) Any person who owns (or is considered as owning, in
accordance with applicable principles, such as Code
Section 318 or a successor provision) more than one
percent (1%) of the outstanding stock of the Employer or
stock possessing more than five percent (5%) of the
combined total voting power of all stock of the Employer
and receives annual Compensation from the Employer of
more than one hundred and fifty thousand dollars
($150,000). For purposes of this subsection,
Compensation means all items includable as compensation
for purposes of applying the limitations on
contributions and other annual additions to a
Participant's account in a defined contribution plan and
the maximum benefit payable under a defined benefit plan
under the Code.
(i) NON-KEY EMPLOYEE means any Employee (and any Beneficiary of an
Employee) who is not a Key Employee as defined in this Section
15.5.
(j) COLLECTIVE BARGAINING RULES. The provisions of Sections 15.5(b),
15.5(c) and 15.5(d) do not apply with respect to any Employee
included in a unit of Employees covered by a collective bargaining
agreement unless retirement benefits were the subject of good
faith bargaining.
ARTICLE 16
----------
INVESTMENT OF CONTRIBUTIONS
---------------------------
16.1 Investment Funds
----------------
The Trustee 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: (i)
securities issued by investment companies advised by affiliates of
the Trustee, (ii) guaranteed investment contracts chosen by the
Trustee, and (iii) collective investment trusts maintained by the
Trustee for qualified plans. Each such Investment Fund shall be
held and administered by the Trustee as a separate, common fund
within the Trust Fund. The interest of each Participant or Former
Participant under the Plan in any such Investment Fund shall be an
undivided interest. Any dividends, interest, or other income
received by the Trustee in respect of any Investment Fund shall be
reinvested by the Trustee in that Investment Fund.
39
<PAGE> 47
16.2 Administration of Company Stock Fund
------------------------------------
Stock to be held in the Company Stock Fund shall be purchased at
fair market value on the open market or from the Company through
the issuance of authorized but previously unissued shares at the
option of the Company. Such Stock may also be obtained through
the exercise of stock rights. The Trustee shall vote the shares
of Stock allocated to the Accounts of each Participant or Former
Participant in accordance with such Participant's or Former
Participant's written instructions. If a Participant's or Former
Participant's voting instructions are not received by the Trustee
by the tenth day prior to any meeting of shareholders of the
Company, the Trustee shall vote the shares of stock allocated to
such Participant's or Former Participant's Accounts in the same
proportion as those shares for which voting instructions are
received by the Trustee.
The Trustee shall vote the shares of Stock held in the Company
Stock Fund which have not been allocated to Participants' or
Former Participants' Accounts as of the record date of any meeting
of shareholders of the Company in the same proportion as those
allocated shares for which voting instructions are received by the
Trustee.
16.3 Deposit of Contributions
------------------------
All Employer Matched Contributions, Partnership Shares,
Anniversary Shares, and contributions to Former PAYSOP Account
shall be invested by the Trustee in the Company Stock Fund at all
times. All Pre-Tax Contributions, Post-Tax Contributions,
Employer SDRP Contributions and Qualified Plan Rollover
Contributions and contributions to the Former Employer
Supplemental Contribution Account made hereunder in respect of a
Participant shall be invested by the Trustee in such Investment
Funds as the Administrator shall direct based on the Participant's
investment election made in accordance with Section 16.4 (or, in
the case of a Participant who fails to make such an investment
election, in an Investment Fund consisting of guaranteed
investment contracts) and shall be credited to the Participant's
Accounts in accordance with Article 6.
16.4 Investment Elections of Participants
------------------------------------
Each Participant shall make an investment election in the manner
prescribed by the Administrator, directing the manner in which his
Pre-Tax Contributions, Post-Tax Contributions, Employer SDRP
Contributions, Qualified Plan Rollover Contributions and
contributions to the Former Employer Supplemental Contribution
Account shall be invested by the Trustee. Such investment
election shall specify that such Pre-Tax Contributions, Post Tax
Contributions, Employer SDRP Contributions, Qualified Plan
Rollover Contributions and contributions to the Former Employer
Supplemental Contribution Account shall be deposited in one or
more of the Investment Funds in percentages that are each an
integral multiple of 10% and that in the aggregate equal 100%.
Each Participant's investment election shall remain in effect
until he changes it in accordance with such procedures and
limitations as are prescribed by the Administrator. Each
investment election change made by a Participant pursuant to this
Section 16.4 shall apply only to Pre-Tax Contributions, Post-Tax
Contributions, Employer SDRP Contributions, Qualified Plan
Rollover Contributions and contributions to the Former Employer
Supplemental Contribution Account received by the Trustee after
the change is made. Pre-Tax Contributions, Post-Tax
Contributions, Employer SDRP Contributions, Qualified Plan
Rollover Contributions and contributions to the Former Employer
Supplemental Contribution Account deposited in an Investment Fund
pursuant to this Section 16.4 may be transferred to another
Investment Fund only in accordance with Section 16.5.
16.5 Election to Transfer Interest Between Investment Funds
------------------------------------------------------
Subject to the first sentence of Section 16.3, a Participant who
has an interest in any Investment Fund may elect to transfer all
or a portion of such interest to any of the other Investment Funds
in accordance with such procedures and limitations as are
prescribed by the Administrator.
40
<PAGE> 48
16.6 Other Provisions Concerning Investment Elections and Transfers
--------------------------------------------------------------
The procedures and limitations prescribed by the Administrator
pursuant to Sections 16.4 and 16.5 may include, without
limitation, provisions which (i) limit transfers to specified
dollar amounts or percentages (ii) limit to not less than four the
number of transfers that each Participant may make each Plan Year
(iii) limit to not less than four the number of investment
election changes that each Participant may make each Plan Year
(iv) limit the dates as of which transfers and investment election
changes may become effective and (v) 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. Each investment election and investment election
change made in accordance with this Article 16 and with the
procedures and limitations established by the Administrator shall
be given effect as soon as practicable following the date the
investment election or investment election change is received by
the Administrator. Each transfer request made in accordance with
this Article 16 and with the procedures and limitations
established by the Administrator shall be given effect within one
week following the Administrator's receipt of the request.
16.7 Former PAYSOP Accounts
----------------------
Notwithstanding the first sentence of Section 16.3, a Participant
who has held a Former PAYSOP Account for at least ten (10) years
and who has attained age 55, may, during the first quarter of any
subsequent Plan Year elect to transfer all or any portion of the
balance of his Former PAYSOP Account from the Company Stock Fund
to any of the other Investment Funds.
ARTICLE 17
----------
MISCELLANEOUS PROVISIONS
------------------------
17.1 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).
17.2 Plan Not Contract of Employment
-------------------------------
The existence of the Plan shall not create or change any contract
of Employment between the Employer and its Employees, whether
Participants or Former Participants hereunder or not. The right of
the Employer to take corrective, disciplinary or other action with
respect to its Employees, including terminating their respective
Employment at any time for any reason, shall not be affected by
any provision of this Plan, and the Employer will not be deemed
responsible to provide continuing Employment for any reason, at
any time solely by reason of this Plan.
17.3 Vested Rights
-------------
No person shall have any vested rights under the Plan except to
the extent that such rights may accrue to him/her as provided
under the Plan. Furthermore, any person with vested rights under
the Plan shall look solely to the Plan and the assets thereunder
for satisfaction of such vested rights.
17.4 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.
41
<PAGE> 49
17.5 General Undertaking
-------------------
All parties to this Plan and any persons claiming any interest
whatsoever hereunder shall perform all and any acts that may be
necessary for carrying out its terms. This Plan and the acts and
decisions of the parties hereto, shall be binding upon the heirs,
executors, administrators, successors, and assignees of any party
hereto or any persons claiming any benefit hereunder.
17.6 Action by Company
-----------------
Whenever, under the terms of the Plan or Trust Agreement, the
Company is required or permitted to take action, such action may
be taken, unless otherwise provided by the Plan or Trust Agreement
or by action of the Board, by any officer of the Company.
17.7 No Responsibility for Acts of an Insurer
----------------------------------------
Neither the Employer, the Company, the Administrator nor the
Trustee shall be responsible for any action or inaction of an
insurer, nor shall they be required to institute legal action in
connection with the same.
17.8 Spendthrift
-----------
Benefits and interests under this Plan shall not be anticipated,
assigned (in law or in equity), alienated, subjected to
attachment, garnishment, levy, execution, or other legal or
equitable process, or be otherwise subject to the claim of
creditors, except under the terms of a Qualified Domestic
Relations Order.
17.9 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.
17.10 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.
17.11 Merger, Consolidation. and Transfer of Assets
---------------------------------------------
Before this Plan can be merged or consolidated with any other
plan, or its assets or liabilities transferred to another plan,
each Participant in the Plan must be entitled to receive a benefit
immediately after the merger, transfer or consolidation (as if the
Plan had then terminated) which is equal to or greater than the
benefit he/she would have been entitled to receive immediately
before the merger, consolidation or transfer (as if the Plan had
then terminated).
17.12 Receipt of Assets from Qualified Plans
--------------------------------------
An Employee (whether or not otherwise a Participant) may make a
rollover contribution to the Plan at any time consisting of a
"Qualified Plan Rollover Contribution" or an "Individual
Retirement Account Rollover Contribution" (each defined below).
Any rollover contribution shall be held in the Participant's
Pre-Tax Contribution Account, shall be invested in accordance with
the direction of the Participant pursuant to Article 16 and shall
be distributed as provided in Articles 7 and 9.
42
<PAGE> 50
"Qualified Plan Rollover Contribution" means an "eligible rollover
distribution" within the meaning of Section 402(c)(4) of the Code.
The Employee may transfer any portion of the cash he receives in
such distribution ( or the cash proceeds of the sale of other
property received in such distribution) to the trust under this
Plan provided that the Administrator receives such amounts from
the Employee on or before the 45th day after the day on which he
received the property distributed. The maximum amount which may
be transferred shall not exceed the fair market value of all the
property received in the distribution reduced by (a) the sum of
(i) the amount of the Employee's own contributions under such Plan
and (ii) any other amounts considered as contributed by him
(determined by applying Section 72(f) of the Code) less (b) any
amounts previously distributed to him from such other plan and not
includable in his gross income. The amount so transferred must
consist of cash distributed from such other plan or any portion of
the cash proceeds from the sale of distributed property other than
case, to the extent permitted by Section 402(c) of the Code.
"Individual Retirement Account Rollover Contribution" means the
entire amount received by an Employee from an individual
retirement account representing the entire amount in the account
(the "qualifying amount") if no part of the amount in the account
is attributable to any source other than a rollover contribution
from (i) an employee's trust described in Section 401(a) of the
Code, which is exempt from tax under Section 501(a) of the Code,
or (ii) a qualified annuity plan meeting the requirements of
Section 403(a) and any earnings on such sums. An Individual
Retirement Account Rollover Contribution will be accepted only if
the entire qualifying amount was received by the Employee in cash
and only such cash amount is included in the Individual Retirement
Account Rollover Contribution.
17.13 Interpretation of Plan
----------------------
It is the intent of the Company that this Plan shall qualify under
Code Section 401(a) and Code Section 501 and meet all applicable
requirements of ERISA. Accordingly, the Plan and Trust Agreement
shall be construed and interpreted in such manner as to give
effect to this intent and shall be administered at all times and
in all respects in a nondiscriminatory manner.
17.14 Satisfaction of Claims
----------------------
Any payment to any Participant, Former 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 Employer, the Company, the Administrator, or
the Trustee, any of whom may require the Participant, Former
Participant or Beneficiary (or legal representative), as a
condition precedent to such payment to execute a release and
receipt therefor.
17.15 Service of Process
------------------
The Administrator shall be the designated agent of the Plan for
the service of process in connection with all matters affecting
the Plan.
17.16 Warranties
----------
Neither the Company, any Employer, the Administrator, nor the
Trustee warrant against any loss or diminution in the value of
Accounts.
17.17 Leased Employees
----------------
Notwithstanding anything herein to the contrary, any person who,
with respect to any Employer or Affiliated Company, is a "leased
employee", as defined in Section 414(n)(2) of the Code (other than
a leased employee excludable pursuant to Section 414(n)(5) of the
Code) shall be treated as an Employee for all Plan purposes except
eligibility to participate, entitlement to Contributions and
Employer Matched Contributions, and crediting of Service.
However, if any such leased employee becomes an Employee, he shall
be credited with Service for all periods that he was, with respect
to any Employer or Affiliated Company, a leased employee, in
accordance with and subject to the provisions and limitations of
Article 11 of the Plan, as if he had been an Employee during such
periods.
43
<PAGE> 51
17.18 Direct Rollover Distributions
-----------------------------
(a) This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a
distributee's election under this Section, a distributee
may elect, at the time and in the manner prescribed by
the Plan Administrator, to have any portion of an
eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in
a direct rollover.
(b) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include:
any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the
extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
(c) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover
distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement
account or individual retirement annuity.
(d) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former
spouse.
(e) Direct rollover: A direct rollover is a payment by the
plan to the eligible retirement plan specified by the
distributee.
17.19 Plan Addenda
------------
The Addendum attached hereto entitled "Addendum to The Progressive
Retirement Security Program (formerly known as The Progressive
Corporation Long-Term Savings Plan) ("Plan") Re: Former
Participants Under The Progressive Corporation Supplemental
Retirement 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 25th day of May, 1994.
THE PROGRESSIVE CORPORATION
By /s/ David M. Schneider
----------------------------------------------------
Title: Secretary
------------------------------------------------
44
<PAGE> 52
THIRD AMENDMENT TO THE PROGRESSIVE RETIREMENT
SECURITY PROGRAM
(1994 AMENDMENT AND RESTATEMENT)
WHEREAS, The Progressive Retirement Security Program is currently
maintained pursuant to a 1994 Amendment and Restatement and the First and
Second Amendments thereto ("Plan"); and
WHEREAS, it is deemed desirable to amend the Plan further;
NOW THEREFORE, effective June 1, 1995, the Plan is hereby amended in the
respects hereinafter set forth.
1. The following is hereby added to the Plan as new Section 17.20:
"17.20 Adjustment. In the event of any 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 available
for issuance under the Plan, as may be approved by the Company, in
its sole discretion."
2. Except as expressly set forth in this Amendment, the terms and provisions
of the Plan shall remain entirely unchanged and continue in full force and
effect.
IN WITNESS WHEREOF, The Progressive Corporation has hereunto caused this
Amendment to be executed by its duly authorized representative, effective as of
the date set forth above.
THE PROGRESSIVE CORPORATION
By:/s/ David M. Schneider
----------------------------------------------
Title: Secretary
------------------------------------------
<PAGE> 53
SECOND AMENDMENT TO THE PROGRESSIVE RETIREMENT
SECURITY PROGRAM
(1994 AMENDMENT AND RESTATEMENT)
WHEREAS, The Progressive Retirement Security Program is currently
maintained pursuant to a 1994 Amendment and Restatement and the First Amendment
thereto ("Plan"); and
WHEREAS, it is deemed desirable to amend the Plan further;
NOW THEREFORE, effective April 1, 1995, the Plan is hereby amended in the
respects hereinafter set forth.
1. Section 2.36(c) of the Plan is hereby amended and restated in its entirety
to provide as follows:
"(c) Payment of tuition, related educational fees, and room
and board expenses, for the next twelve months of
post-secondary education for the Participant or his/her
Spouse or dependents."
2. Except as expressly set forth in this Amendment, the terms and provisions
of the Plan shall remain entirely unchanged and continue in full force and
effect.
IN WITNESS WHEREOF, The Progressive Corporation has hereunto caused this
Amendment to be executed by its duly authorized representative, effective as of
the date set forth above.
THE PROGRESSIVE CORPORATION
By: /s/ David M. Schneider
---------------------------------------------
Title: Secretary
-----------------------------------------
<PAGE> 54
FIRST AMENDMENT TO THE PROGRESSIVE RETIREMENT
SECURITY PROGRAM
(1994 AMENDMENT AND RESTATEMENT)
WHEREAS, The Progressive Retirement Security Program is currently
maintained pursuant to a 1994 Amendment and Restatement ("Plan"); and
WHEREAS, it is deemed desirable to amend the Plan further;
NOW THEREFORE, the Plan is hereby amended in the respects hereinafter
set forth. Except as otherwise indicated, all such amendments shall be
effective as of July 1, 1994.
1. Section 8.3 of the Plan is hereby amended and restated in its entirety
to provide as follows:
"8.3 Forfeitures
-----------
If a Former Participant who terminated Employment for reasons
other than Retirement, Disability or death does not return to
Employment during the Plan Year in which his/her Termination
of Employment occurs, or if he/she dies after his/her
Termination of Employment during that Plan Year, then the
following provisions shall apply to the non-vested portion of
his/her Employer Matched Contribution Account, Employer SDRP
Contribution Account and Former Employer Supplemental
Contribution Account:
a) If he/she is 0% vested in his/her Employer
SDRP Contribution Account and/or his/her
Former Employer Supplemental Contribution
Account, he/she shall be deemed to have
received a distribution of $0.00 Dollars from
such Employer SDRP Contribution Account,
and/or Former Employer Supplemental
Contribution Account, as the case may be, and
the balance of such Account(s) shall be
provisionally forfeited and such forfeiture
shall be applied in accordance with Section
6.13 hereof.
b) If he/she is less than 100% vested in his/her
Employer Matched Contribution Account, the
non-vested portion of such Account shall be
provisionally forfeited and such forfeiture
shall be applied in accordance with Section
6.13 hereof as of the earlier of (i) the date
he/she receives a distribution of the vested
portion of such Account, (ii) the fifth
anniversary of the date of his/her
Termination of Employment or (iii) the date
he/she dies."
2. The second sentence of Section 13.2 of the Plan is hereby amended and
restated in its entirety to provide as follows:
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<PAGE> 55
"In the event of the termination or partial termination of the
Plan or the complete discontinuance of contributions under the
Plan, the balance of each affected Participant's Accounts
shall be nonforfeitable."
3. Section 2.56 of the Plan is hereby amended and restated in its
entirety to provide as follows:
"SERVICE, HOUR OF SERVICE AND YEAR OF SERVICE for purposes of
this Plan are defined in Article 10 hereof, except that, for
purposes of Article 3 Year of Service shall mean any 12
consecutive month period beginning on the date an Employee
first performs on Hour of Service (or any anniversary thereof)
during which the Employee completes at least 1,000 Hours of
Service."
4. Section 11.1(a) of the Plan is hereby amended and restated in its
entirety to provide as follows:
"HOUR OF SERVICE shall mean each hour credited to an Employee
in accordance with the following provisions:
(a) An Employee shall be credited with one Hour
of Service for each hour for which such
Employee is paid, or entitled to payment, by
an Employer for the performance of duties
during the applicable computation period,
with such Hours of Service being credited for
the Plan Year in which the duties were
performed.
(b) An Employee shall be credited with an Hour of
Service for each hour for which back pay,
irrespective of mitigation of damages, has
been either awarded or agreed to by an
Employer for the performance of services
during a Plan Year, with such Hours of
Service being credited for the Plan Year or
Plan Years to which the award or agreement
pertains (rather than the Plan Year or Plan
Years in which the award, agreement, or
payment is made).
(c) An Employee also shall be credited with one
Hour of Service for each hour for which he is
paid, or entitled to payment, by an Employer
on account of a period of time during which
no duties are performed (irrespective of
whether the employment relationship has
terminated) due to vacation, holiday,
illness, incapacity (including disability),
layoff, jury duty, military duty or leave of
absence but excluding payments for
reimbursement for medical or medically
related expenses and payments under a plan
maintained solely for the purpose of
complying with applicable workmen's
compensation or unemployment compensation and
disability insurance
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<PAGE> 56
laws; provided, however, that not more than 501 Hours
of Service shall be credited to an Employee under this
paragraph (c), on account of any single continuous
period during which the Employee performs no duties
for an Employer (whether or not such period occurs in a
single computation period). A payment shall be deemed
to be made by or due from an Employer regardless of
whether such payment is made by or due from the
Employer directly, or indirectly through, among others,
trust fund, or insurer, to which the Employer
contributes or pays premiums. Such Hours of Service
shall be credited for the Plan Year or, on a ratable
basis, for the Plan Years with respect to which the
payments are made."
5. The following is hereby added at the end of Section 15.5(c)(i) of the
Plan:
"The contribution required by this Section 15.5(c)(i) shall be
made regardless of the Non-key employee's level of
compensation or whether he/she has earned credit for a 1,000
Hours of Service in the Plan Year."
6. The following is hereby added at the end of Section 2.13 of the Plan:
"In applying the rules of Section 414(q)(6) of the Code, the
term "family" shall include only the spouse of the Participant
and any lineal descendants of the Participant who have not
attained age 19 before the close of the year."
7. Section 6.3 of the Plan is hereby amended and restated in its entirety
to provide as follows:
"The value of an Account on any date shall be its value
determined on the coinciding or immediately preceding
Valuation Date plus any contributions and other amounts
subsequently credited thereto, and less any distributions and
other amounts subsequently charged thereto."
8. Section 6.5(a)(i) is hereby amended and restated in its entirety to
provide as follows:
"The value of the portion of each such Account that is, and
has been continuously, invested in such Investment Fund as of
the immediately preceding Valuation Date; to"
9. Section 9.2(h) of the Plan is hereby amended and restated in its
entirety to provide as follows:
"Notwithstanding anything provided in this Section 9.2 to the
contrary, if the lump sum value of a Participant's Accounts
does not exceed Three Thousand Five Hundred Dollars ($3,500),
as determined annually by the Administrator, the
Administrator, shall direct that the
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<PAGE> 57
lump sum value of such Accounts be paid in total, in cash
(unless the Employee elects Company Stock from his/her Former
PAYSOP Account or Company Stock Fund pursuant to Section 9.4),
as soon as administratively feasible following the Participant's
Termination of Employment, whether or not application for
payment has been made in accordance with Section 9.1.
Distribution will not be made without the Participant's consent
if the lump sum value of the Participant's Accounts is $3,500
or more at the time of proposed distribution or at the time
of any prior distribution. Such Three Thousand Five Hundred
Dollar ($3,500) amount shall be automatically adjusted in
subsequent years in accordance with regulations under the Code."
10. Section 9.4 of the Plan is hereby amended and restated in its entirety
to provide as follows:
"The value of the Accounts to be distributed to a Participant,
Former Participant or Beneficiary shall be determined as of
the earliest Valuation Date that is at least seven (7) days
after receipt of a written request for such distribution."
11. The following is hereby added to the Plan as new Section 5.3:
5.3 Procedure if Multiple Use Limitation is Exceeded
------------------------------------------------
(i) If it is determined subsequent to the
performance of the tests in Sections 5.1 and
5.2 and subsequent to the end of the Plan
Year, that there has been an impermissible
multiple use of the alternative limitations
set forth in Sections 5.1(b)(ii) and
5.2(c)(ii), the Contribution Deferral
Percentage for each Highly Compensated
Employee must be reduced in the same manner
as set forth in Section 5.2(d) so that there
is no multiple use of the alternative
limitation. The required reduction shall be
treated as an Excess Aggregate Contribution,
in the same manner as set forth in Section
5.2(d)(ii).
(ii) If the reduction in (i) above is not
sufficient, then the Actual Deferral
Percentage for each Highly Compensated
Employee must be reduced in the same manner
as set forth in Section 5.1(c) so that there
is no multiple use of the alternative
limitation. The required reduction shall be
treated as an Excess ADP Contribution, in
the same manner as set forth in Section
5.1(c)(ii).
12. Effective November 1, 1994, Section 3.1(a) of the Plan is hereby
amended and restated in its entirety to provide as follows:
"Each Covered Employee shall be eligible to become an LTSP
Participant in the Plan (pursuant to Section 3.2), after the
later of (i)
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<PAGE> 58
thirty (30) calendar days from his/her date of employment or
(ii) the date he/she becomes a Covered Employee."
13. Effective November 1, 1994, Clause (ii) of Section 2.16 of the Plan is
hereby amended and restated in its entirety to provide as follows:
"(ii) those Employees classified by the Employer as temporary
under its personnel policies and procedures, and".
14. Effective November 1, 1994, the following is hereby added at the end
of Section 2.16 of the Plan:
"Notwithstanding the provisions of clause (ii) above, an
Employee who has been classified by the Employer as temporary
under its personnel policies and procedures and who performs
at least one thousand (1,000) Hours of Service during any
twelve (12) consecutive month period beginning on his/her date
of hire (or any anniversary thereof) shall be considered a
Covered Employee effective as of the first day following such
twelve (12) consecutive month period."
15. The following is hereby added at the end of Section 15.4(c) of the
Plan:
"Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual
benefits under such plans which the Participant had accrued as
of the close of the last limitation year beginning before
January 1, 1987, disregarding any changes in the terms and
conditions of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements
of section 415 for all limitation years beginning before
January 1, 1987."
16. The first sentence of Section 17.17 of the Plan is hereby amended and
restated in its entirety to provide as follows:
"Notwithstanding anything herein to the contrary, any person
who, with respect to any Employer or Affiliated Company, is a
leased employee shall be treated as an Employee for all
Plan purposes, except eligibility to participate, entitlement
to Contributions and Employer Matched Contributions and
Crediting of Service. For purposes of the preceding sentence,
"leased employee" means any person who provides services to
a recipient, but who is not an employee of the recipient, if
(i) such services are provided pursuant to an agreement
between the recipient and any other person ("leasing
organization") (ii) such person has performed such services
for the recipient (or for the recipient and related persons)
on a substantially full-time basis
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<PAGE> 59
for a period of at least one (1) year and (iii) such services
are of a type historically performed, in the business field of
the recipient, by employees, excluding, however, any such
person who (i) is covered by a plan which is maintained by
the leasing organization and which 1) is a money purchase
pension plan with a non-integrated employer contribution rate
for each participant of at least 10% of compensation 2) is a
plan that provides full and immediate vesting and 3), is a
plan that permits each employee of the leasing organization
(other than employees who perform substantially all of their
services for the leasing organization) to immediately
participate in such plan and (ii) performs services for a
recipient as to which leased employees (determined without
regard to the preceding provisions) do not constitute more
than 20% of the recipient's non-highly compensated work force.
17. The following is hereby added to the Plan as new section 9.2(j):
"All distributions under the Plan with comply with code Section
401(a)(9) and the regulations thereunder."
18. Section 2.12 of the Plan is hereby amended and restated in its
entirety to provide as follows:
"COMPANY STOCK FUND shall mean an Investment Fund consisting
principally of Stock."
19. Except as expressly set forth in this Amendment, the terms and
provisions of the Plan shall remain entirely unchanged and continue in
full force and effect.
IN WITNESS WHEREOF, The Progressive Corporation has hereunto caused this
Amendment to be executed by its duly authorized representative, effective as of
the date set forth above.
THE PROGRESSIVE CORPORATION
By:/s/ David M. Schneider
-------------------------
Title: Secretary
----------------------
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