Exhibit 10.5
Amended and Restated Employment Agreement
     This Amended and Restated Employment Agreement (this “Agreement”), is made
this 31st day of July, 2008 by and between Century Surety Company (the
“Company”) and Greg D. Ewald (“Employee”).
Recitals
     Whereas, the Company and Employee entered into an Employment Agreement on
August 5, 2004 (the “Original Agreement”), pursuant to which Employee desired to
be so employed under the terms and conditions therein set forth for a period
through at least the second anniversary of the Original Agreement;
     Whereas, the Company, Meadowbrook Insurance Group, Inc. (“Meadowbrook”) and
Employee entered into an agreement on February 20, 2008 (“Merger Letter”)
whereby the parties agreed to amend certain terms and conditions of the Original
Agreement;
     Whereas, the Company and Employee desire to amend and restate the Original
Agreement to comply with the applicable requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”), and to provide for
certain payments upon the occurrence of certain termination events following a
Change in Control (as defined below).
Statement of Agreement
     Now, therefore, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Employee agree that the Original Agreement is hereby amended and restated in its
entirety as follows:
SECTION 1
EMPLOYMENT AND DUTIES
     1.1 Duties and Position. During the term of this Agreement, Employee shall
provide services to the Company in accordance with this Agreement in the
capacity with the Company identified on Exhibit A; provided, however, that at
the request of the Company’s Chief Executive Officer or Christopher J. Timm
(“Supervisory Officer”) at any time and from time to time, Employee shall serve
in such other capacity or capacities with the company or any Affiliate (as that
term is defined in Section 5.3).
     1.2 Standard of Performance. Employee shall faithfully perform the duties
assigned to him pursuant to this Agreement. Employee agrees to abide by the
Company’s rules, regulations, policies and practices as they are presently in
force and as they may be revoked, adopted or modified at any time and from time
to time during the term of this Agreement.
     1.3 Time Devoted to the Company. Employee shall be required to devote
substantially full time and attention to his duties under this Agreement.
Subject to the obligations of Employee pursuant to Section 4.5 hereof and the
immediately preceding sentence, Employee may engage in any other activity,
whether for pecuniary gain or not, which does not materially interfere with his
obligations under this Agreement.

 

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SECTION 2
COMPENSATION AND BENEFITS
     2.1 Base Salary. The Company agrees to pay or cause to be paid to Employee
for Employee’s services during the term of this Agreement an annual base salary
at the gross rate prior to all taxes and other withholdings of not less than
$301,862. The base salary will be subject to annual review and may be adjusted
from time to time under the direction of the Chief Executive Officer considering
factors such as Employee’s performance, compensation of similar management
employees of similarly sized companies and other pertinent factors (the “Base
Salary”). The Base Salary shall be payable to Employee in accordance with the
then current payment policies of the Company for its employees.
     2.2 Performance Based Incentive Bonus. Employee shall be entitled to an
annual performance based cash incentive bonus in an amount up to 40 percent of
the Base Salary (the “Bonus”). The Bonus shall be earned and paid in accordance
with the Company’s performance based incentive compensation plan (the “Incentive
Plan”). A copy of the Performance Goals as so established under the Incentive
Plan shall be provided to Employee. The Bonus shall be payable as provided in
the Incentive Plan.
     2.3 Stock Options and Restricted Stock. ProCentury Corporation
(“ProCentury”), Parent of the Company, granted to Employee effective as of the
Effective Date non-qualified stock options (to be known as the “IPO Options”)
and restricted shares (to be known as the “IPO Restricted Stock”) of the
ProCentury’s no par value common stock as set forth in Exhibit B. Each such
grant, including all IPO Options and IPO Restricted Stock, shall be governed by,
and subject to the terms of, the ProCentury’s 2004 Stock Option and Award Plan
(the “Stock Option Plan”). The IPO Options have an exercise price equal to the
fair market value of the Shares as determined by the offering price in the
Initial Public Offering. The shares subject to the IPO Options vest monthly over
three years of service after the date of the Original Agreement, and the shares
of Restricted Stock vest annually over five years of service after the date of
the Original Agreement. To the extent not contrary to applicable law, all of the
IPO Options shall become fully vested and remain exercisable pursuant to their
respective terms for the remainder of their respective Exercise Periods,
effective upon termination of Employee’s employment by reason of death,
discharge by the Company pursuant to 3.4(a) other than for Cause, or
“retirement” or “disability” within the meaning of the Stock Option Plan. All
options granted after or in addition to the IPO Options, all shares of
Restricted Stock awarded after or in addition to the IPO Restricted Stock, and
any and all other awards to Employee pursuant to the Stock Option Plan shall be
subject to such terms and conditions as shall be determined at the time of any
such award under the direction of the ProCentury Board pursuant to the Stock
Option Plan. Notwithstanding the foregoing, to the extent not contrary to
applicable law, if Section 3.9 of the Agreement and Plan of Merger, dated as of
February 20, 2008, by and among the Company, Meadowbrook and MBKPC, Inc. (the
“Merger Agreement”), is amended or is not complied with by the parties, in
either case, such that the Restricted Stock and ProCentury Options (as each are
defined in the Merger Agreement) do not become fully vested in connection with
the Merger (as defined in the Merger Letter), all restricted shares granted to
Employee prior to the date of the

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Merger pursuant to the Stock Option Plan shall become fully vested, effective
upon the Merger. ProCentury shall exercise best efforts to register with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
the issuance of shares of stock issued pursuant to the Stock Option Plan and to
satisfy the current public information requirements of Rule 144(c) for purpose
of allowing Employee to resell such shares.
     2.4 Benefits. In addition to the compensation to be paid under this
Agreement, the Company shall provide to, or for the benefit of, Employee the
following employee benefits:

  (a)   Participation in retirement plans, if any, which are made available from
time to time to the salaried employees of the Company or its Affiliates, to the
extent that Employee is eligible to participate therein pursuant to the terms
and conditions of such plans.     (b)   Participation in health, disability and
other welfare benefit and insurance plans, if any, which are made available from
time to time to the salaried employees of the Company or its Affiliates, to the
extent that Employee is eligible to participate therein pursuant to the terms
and conditions of such plans.     (c)   Sick leave in accordance with the
policies of the Company in effect from time to time.     (d)   Reasonable
vacation time consistent with past practice or as otherwise approved by the
Chief Executive Officer for other officers designated by the Chief Executive
Officer.     (e)   Such other benefits as may be approved by the ProCentury
Board or appropriate oversight committee of that Board on a case-by-case basis
for proper business purpose.

     2.5 Reimbursement of Business Expenses. Employee shall be entitled to
receive reimbursement for, or payment of, the legitimate business expenses
incurred by Employee on behalf of the Company in accordance with the Company
policy in effect from time to time, including meals, lodging, transportation and
other travel expenses.
SECTION 3
TERM OF AGREEMENT; TERMINATION
     3.1 Term. This Agreement shall become effective on the date first written
above and shall continue in force until terminated in accordance with this
Section 3. Employee’s employment with the Company pursuant to this Agreement
shall terminate concurrently with the termination of this Agreement.
     3.2 Termination upon Death. Employee’s employment under this Agreement
shall terminate automatically upon the death of Employee.
     3.3 Termination by Mutual Agreement. This Agreement may terminate at any
time upon the mutual agreement of the Company and Employee.

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     3.4 Termination by the Company.

  (a)   The Company may terminate Employee’s employment under this Agreement at
any time, without Cause (as defined in Section 3.4(c)), upon thirty (30) days
prior written notice of termination to Employee. The Company, in its sole
discretion but without derogation to any rights of Employee under Section 2, may
place Employee on administrative leave during the thirty (30) day notice period.
    (b)   The Company may terminate Employee’s Employment under this Agreement
with Cause immediately upon written notice of termination to Employee, unless a
later termination date is specified in the notice.     (c)   For the purposes of
this Agreement, “Cause” for termination shall exist if Employee is:

  (1)   Convicted of, or pleads guilty or nolo contender to, in a court of
competent jurisdiction, a felony amounting to embezzlement, fraud, theft or
other act of dishonesty;     (2)   Convicted of, or pleads guilty or nolo
contendere to, in a court of competent jurisdiction, a felony resulting in death
or substantial bodily or psychological harm to, or other act of moral turpitude
harming, any person;     (3)   Barred or suspended for a period of more than
60 days by any court or regulatory agency of competent jurisdiction from
performing employment duties for, engaging in any activities on behalf of, or
otherwise being associated with, the Company;     (4)   Found liable by any
court of competent jurisdiction for conduct undertaken with deliberate intent to
cause harm or injury, or undertaken with reckless disregard to the harm or
injury that would be caused, to the Company or any employee, supplier, customer
or other person doing business with the Company other than conduct taken
pursuant to advice of legal counsel to the Company; or     (5)   Found by the
Chief Executive Officer or Supervisory Officer on behalf of the Company to have

  (A)   Willfully caused the Company other than pursuant to the advice of
Company legal counsel to violate a law which, in the opinion of Company legal
counsel, is reasonable grounds for civil or criminal penalties against the
Company;     (B)   Willfully engaged in conduct which constitutes a violation of
the established written policies or procedures of the Company regarding the
conduct of its employees, including policies regarding sexual harassment of
employees and use of illegal drugs or substances;

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  (C)   Willfully engaged in conduct demonstrably and materially injurious to
the goodwill and reputation of the Company;     (D)   Willfully engaged in any
act of dishonesty against the Company; or     (E)   Intentionally criticized,
ridiculed or disparaged the Company or ProCentury in any communications or with
any customer or client, vendor or supplier, or in any public statement.

     3.5 Termination by Employee.

  (a)   Except as set forth in Section 3.5(b), Employee may terminate his
employment under this Agreement at any time, upon thirty (30) days prior written
notice to the Company. The Company, in its sole discretion but without
derogation to any rights of Employee under Section 2, may place Employee on
administrative lease during the thirty (30) day notice period.     (b)  
Employee may terminate his employment under this Agreement, upon fifteen (15)
days prior written notice to the Company, if he resigns for Good Reason (as
defined in Section 3.5(c) below), of the Company; provided that Employee shall
not resign pursuant to this Section 3.5(b) if, prior to the expiration of the
fifteen (15) day notice period, the Company causes the facts or events giving
rise to the Good Reason for resignation to no longer exist and provides evidence
of a form and nature satisfactory to Employee that such facts or events no
longer and will not in the foreseeable future exist. The Company, in its sole
discretion but without derogation to any rights of Employee under Section 2, may
place Employee on administrative leave during the fifteen (15) day notice
period. Notwithstanding anything to the contrary contained herein, Employee
shall not be required to perform any act stated in his written notice of
resignation as Good Reason for his resignation for the period beginning with the
giving of such written notice and ending with the effective date of the
termination of his employment.     (c)   Employee shall be considered to have
resigned for Good Reason if:

  (1)   Employee ceases to hold the positions and titles of Senior Vice
President — Underwriting as contemplated by Section 1.1 of this Agreement;    
(2)   Employee is assigned, without his consent, authority or responsibility
materially inconsistent with the authority and responsibility contemplated by
Section 1.1 of this Agreement, including without limitation any material
diminution of his authority and responsibility or change in reporting
requirements;

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  (3)   Employee’s Base Salary is reduced, or there is any material delay in the
payment of Employee’s Base Salary, or there is any material reduction in the
nature and amount of benefits (including benefits under the Incentive Plan or
the Stock Option Plan or any successor plans thereto) theretofore provided to
Employee pursuant to Section 2.     (4)   Any requirement is imposed for
Employee to reside or travel outside of the Columbus, Ohio area, other than on
travel reasonably required to carry out Employee’s obligations under this
Agreement and consistent with past practice;     (5)   Employee becomes disabled
to the extent that he cannot, with reasonable accommodation, effectively perform
the requirements of his position for a period of three consecutive months (which
determination shall be made by a physician of Employee’s choice who is
reasonably acceptable to the Company); or     (6)   The Company commits a
material breach of this Agreement (other than breaches which may be covered by
some other subsection of this Section 3.5(c)), which breach is not cured within
thirty (30) days after written notice thereof is given by Employee.

  (d)   A Change in Control shall be deemed to have occurred if there is:

  (1)   A purchase or other acquisition in any one or more transactions by any
person, entity or group of persons (within the meaning of section 13(d)(3) or
14(d)(2) of the Exchange Act or any comparable successor provisions), directly
or indirectly, which results in the beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of such person, entity or group
of persons equaling fifty percent (50%) or more of the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (“Voting Securities”); excluding, however, any
acquisition (A) by the Company or any person controlled by the Company or the
Board of Directors of the Company, (B) by any employee benefit plan or related
trust sponsored or maintained by the Company, (C) by Employee, or (D) by another
group including Employee, but only if Employee and other executives of the
Company control such group;     (2)   A change, within any rolling two-year
period beginning with any date on or after the Effective Date, in the
composition of the Board such that the individuals who constitute the Board (the
“Incumbent Board”) at the beginning of such rolling period cease for any reason
to constitute at least a majority of the Board; provided, however, that for
purposes of this definition, any individual who becomes a member of the Board
after the Effective Date, whose election, or nomination for election, by the
Company’s security-holders was approved by a vote of at least a majority

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      of those individuals who are members of the Board and who were also
members of the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board; and provided, however, that any such
individual whose initial assumption of office occurs as a result of or in
connection with either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of any person other than the Board shall not be so considered as a member of the
Incumbent Board;

  (3)   A merger, reorganization or consolidation to which the Company is a
party or a sale or other disposition of all or substantially all of the assets
of the Company (each, a “Corporate Transaction”); excluding however, any
Corporate Transaction pursuant to which (A) persons who were security holders of
the Company immediately prior to such Corporate Transaction own (solely because
of their Voting Securities owned immediately prior to such Corporate
Transaction) immediately thereafter more than 50 percent of the combined voting
power entitled to vote in the election of directors of the then outstanding
securities or the company surviving the Corporate Transaction and (B)
individuals who constitute the Incumbent Board will immediately after the
consummation of the Corporate Transaction constitute at least a majority of the
members of the board of directors of the company surviving such Corporate
Transaction; or     (4)   Approval by the security-holders of the Company of a
plan of complete liquidation or dissolution of the Company.

     3.6 Compensation Upon Termination. In addition to any employee benefits to
which Employee is entitled pursuant to Section 2.4 and any reimbursement of
business expenses pursuant to Section 2.5 (with respect to which Employee and
the Company shall reasonably cooperate), Employee shall be entitled to the
following upon termination of Employment under this Agreement, subject, however,
to compliance by employee with the covenants of Section 4:

  (a)   In the event that Employee resigns pursuant to Section 3.5(a) (other
than for Good Reason), Employee shall be entitled to receive and the Company
shall cause to be paid (1) any earned but unpaid Base Salary through the
effective date of termination and (2) any award for which a Bonus was earned
under the Incentive Plan for any Performance Period which ended prior to the
effective date of termination but was not theretofore paid to Employee. All such
amounts shall be paid by the Company in a single sum cash payment within thirty
(30) days after the date of Employee’s discharge or resignation.     (b)   In
the event that the Company discharges Employee pursuant to Section 3.4(b) for
Cause, Employee shall be entitled to receive and the Company shall cause to be
paid (1) any earned but unpaid Base Salary through the effective date of
termination and (2) any award for which a Bonus was earned under the Incentive
Plan for any Performance Period which ended prior to the effective date of

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      termination but was not theretofore paid to Employee; and (3) the pro-rata
portion of Employee’s IPO Restricted Stock award granted pursuant to Section 2.3
determined as the numbers of months from the date of grant through the date of
termination divided by 60 (sixty) multiplied by the number of shares of
Employee’s IPO Restricted Stock granted pursuant to Section 2.3. All such
amounts shall be paid by the Company in a single sum cash payment within thirty
(30) days after the date of Employee’s discharge or resignation.

  (c)   In the event that Employee’s employment is terminated by death,
Employee’s estate or personal representative shall be entitled to receive and
the Company shall cause to be paid (1) any earned but unpaid Base Salary through
the date of Employee’s death; (2) any award for which a Bonus was earned under
the Incentive Plan for any Performance Period which ended prior to the effective
date of termination but was not theretofore paid to Employee; (3) payment of
Employee’s then current Base Salary for the ninety (90) day period following the
date of his death; (4) an amount equal to the Target Incentive Award established
for Employee under the Incentive Plan for the then current Performance Period
had Employee’s employment not been terminated and had Employee satisfied all
Performance Goals established with respect to such Performance Period,
multiplied by a fraction the numerator of which is the number of days in the
then current Performance Period under the Incentive Plan occurring prior to and
including the date of Employee’s death, and the denominator of which is the
number of days of the whole Performance Period; and (5) continued benefits (to
the same extent and at the same level as were provided by the Company to
Employee’s family members immediately prior to Employee’s death) under the
health, disability and other welfare benefit and insurance plan(s) referenced in
Section 2.4(b), for the ninety (90) day period following the date of
termination, and, to the extent permitted pursuant to such health, disability
and other welfare benefit and insurance plan(s). All such amounts and benefits
(other than the benefits continued pursuant to Section 3.6(c)(5) above, which
shall be payable or made available in accordance with the terms of the
applicable plan) shall be paid or provided by the Company in a single sum cash
payment within thirty (30) days after the date of Employee’s death; provided
that the Company has obtained satisfactory evidence of Employee’s death.     (d)
   

  (1)   Except as provided in Section 3.6(d)(2) below, in the event that the
Company discharges Employee pursuant to Section 3.4(a) other than for Cause or
Employee resigns pursuant to Section 3.5(b) for Good Reason, Employee shall be
entitled to receive and the Company shall cause to be paid (A) any earned but
unpaid Base Salary through the date of termination; (B) any award for which a
bonus was earned under the Incentive Plan for any Performance Period which ended
prior to the effective date of termination but was not theretofore paid to
Employee, plus an amount equal to the product of (i) the Bonus, if any,
established for Employee under Section 2.2 of this Agreement for the fiscal year
in

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      which such termination occurred had Employee’s employment not been
terminated and had Employee satisfied all Performance Goals established with
respect to such Performance Period, multiplied by (ii) a fraction, the
denominator of which shall be twelve (12) and the numerator of which shall be
twelve (12); (C) payment of Employee’s then current Base Salary for the twelve
(12) month period (the “Continuation Period”) following the date of termination
and (D) continued benefits (to the same extent and at the same benefit level as
were provided by the Company to Employee immediately prior to termination) under
the retirement plans referenced in Section 2.4(a), the health, disability and
other welfare benefit and insurance plans referenced in Section 2.4(b);
provided, that if any such plans are terminated, or benefits thereunder reduced
or eliminated, during the Continuation Period, or if, as a result of termination
or otherwise, Employee ceases to be eligible to participate in any such plans
during such Continuation Period, the Company shall provide to Employee
substitute benefits which are no less favorable to Employee than those received
by Employee under such plan(s) for the remainder of the Continuation Period.
Subject to Section 3.8, all such amounts and benefits (other than the amounts
referenced in Section 3.6(d)(1)(C), which shall be paid in accordance with
Section 3.6(f), and the Continuation Benefits referenced in Section 3.6(d)(2),
which shall be payable or made available in accordance with the terms of the
applicable benefit plan and Section 3.6(f)), otherwise available under this
Agreement shall be paid or made available by the Company in a single sum cash
payment within thirty (30) days after the date of Employee’s discharge or
resignation.

  (2)   Notwithstanding anything to the contrary in Section 3.6(d)(1) above, in
the event that (A) a Change in Control occurs and (B) within the twelve
(12) month period immediately following the date on which the Change in Control
occurs, (i) the Company discharges Employee pursuant to Section 3.4(a) other
than for Cause or (ii) Employee resigns pursuant to Section 3.5(b) for Good
Reason, Employee shall be entitled to receive and the Company shall cause to be
paid in a single sum cash payment and within thirty (30) days of Employee’s
termination of employment an amount equal to (a) any earned but unpaid Base
Salary through the date of termination; plus (b) any award for which a Bonus was
earned under the Incentive Plan for any Performance Period which ended prior to
the effective date of termination but was not theretofore paid to Employee; plus
(c) the product of one (1) times Employee’s then current Base Salary at the date
of termination, and (d) the product of one (1) times the Bonus, if any,
established for Employee under Section 2.2 of this Agreement for the fiscal year
in which such termination occurred had Employee’s employment not been terminated
and had Employee satisfied all Performance Goals established with respect to
such Performance Period. In addition, Employee shall be entitled to continued
benefits (to the same extent and at the same benefit level as were provided by
the Company to Employee immediately prior to termination (the “Continuation
Benefits”)

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      under the retirement plans referenced in Section 2.4(a), the health,
disability and other welfare benefit and insurance plans referenced in
Section 2.4(b), for the twelve (12) month period following the date of
termination, and, to the extent permitted pursuant to such health, disability
and other welfare benefit and insurance plan(s), for such longer period as to
which Employee or Employee’s beneficiaries pay the cost of coverage thereof;
provided, that if any such plans are terminated, or benefits thereunder reduced
or eliminated, during such twelve (12) month period, or if, as a result of
termination or otherwise, Employee ceases to be eligible to participate in any
such plans during such twelve (12) month period, the Company shall provide to
Employee substitute benefits which are no less favorable to Employee than those
received by Employee under such plan(s). Subject to Section 3.8, all such
amounts and benefits (other than the amounts referenced in Section 3.6(d)(1)(C),
which shall be paid in accordance with Section 3.6(e), and the Continuation
Benefits, which shall be payable or made available in accordance with the terms
of the applicable benefit plan and Section 3.6(f)), otherwise available under
this Agreement shall be paid by the Company in a single sum cash payment within
thirty (30) days after the date of Employee’s discharge or resignation.

  (3)   If, as a result of a Change in Control, Executive is subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), the Company
shall reimburse Executive for the amount of such tax, and shall pay Executive
such additional amount or amounts as may be necessary to place Executive in the
same financial position after consideration of any and all potential related
state, federal, and other taxes (including any interest or penalties imposed
with respect to such taxes, provided that Executive properly reports the Excise
Tax) that he would have been in if he had not incurred such Excise Tax
liability. The Company shall reimburse Executive for the amount of any required
withholding with respect to the Excise Tax and the taxes thereon at the time of
such withholding, and the remainder of any amount due under this
Section 3.6(d)(3) shall be paid by the Company to Executive no later than the
fifteenth day of March of the calendar year following the calendar year in which
the Excise Tax is imposed.

  (e)   Except as otherwise provided in Section 3.6(c) or 3.6(d), Employee’s
right, upon and after the termination of his employment under this Agreement
pursuant to this Section 3 or otherwise, to receive any benefit under the plans,
if any, in which Employee is entitled to participate pursuant to Section 2.4
shall be determined under the provisions of those plans.     (f)   Any amount or
benefit that is payable or to be provided to Employee, or on his behalf, in
accordance with Section 3.6(d) and which is not payable or to be provided in a
single sum cash payment shall be paid or provided to Employee, Employee’s estate
or personal representative, or Employee’s beneficiaries, as applicable, in a
series of substantially equal payments, in accordance with the

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      Company’s current payment policies for the period established in this
Section 3.6. Subject to Section 3.6(g), such payments or benefits shall commence
being made within thirty (30) days of Employee’s discharge or resignation.

  (g)   Notwithstanding any provision of this Agreement to the contrary, no
payment shall be made or benefit provided under Section 3.6 unless the event
triggering the payment or provision of benefits constitutes a “separation from
service” as determined under Code Section 409A. However, in the event Employee
is a “specified employee” (as determined under Code Section 409A) at the time of
the triggering event, then any payment or benefit that is otherwise due Employee
under this Agreement which is determined to provide for a deferral of
compensation pursuant to Code Section 409A shall not commence being paid or made
available to Employee until after six (6) months from the date of his separation
from service.

     3.7 Notices. Any termination of Employee’s employment for which notice of
termination is required to be given pursuant to this Section 3 shall be
communicated in a writing which shall indicate the specific provision in this
Section 3 relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated.
     3.8 General Release. Notwithstanding anything in this Section 3 or
otherwise to the contrary, at the election of the Company no amount shall be
payable under this Section 3 in excess of (a) any earned but unpaid Base Salary
through the date of Employee’s death; (b) any award under the Incentive Plan
which was earned pursuant to the terms and conditions of such plan prior to the
effective date of termination but was not theretofore paid to Employee, unless
Employee (or his personal representative or trustee of his estate, in the case
of his disability or death) executes a general release of known claims (in form
and containing provisions reasonably required by the Company), provided,
however, that any such general release shall be mutual with respect to known
claims of the Company against Employee and known claims of Employee against the
Company.
     3.9 No Mitigation. In the event of the termination of Employee’s employment
hereunder for any reason, Employee shall have no obligation to mitigate damages.
SECTION 4
CONFIDENTIALITY AND NON-COMPETITION
     4.1 Confidential and Proprietary Information. Except as otherwise provided
in Section 4.2, the term “Confidential and Proprietary Information” shall mean
all trade secrets and confidential and proprietary information of the Company,
whether in written or oral, tangible or intangible form, including, without
limitation, the following:

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  (a)   The whole or any portion or phase of any data or information relating to
the Company’s processes or techniques relating to its business, whether or not
copyrighted, copyrightable, patented or patentable, (1) which is or has been
disclosed to Employee or about which Employee became or shall become aware of as
a consequence of, or through or during Employee’s employment with the Company
and (2) which has value to the Company;     (b)   Any software, programs,
calculations, instructions or other intellectual property and embodiments
thereof of any media, including electro magnetic, and in any form, including
source code and object code, whether or not copyrighted, copyrightable, patented
or patentable;     (c)   Business plans, marketing concepts and marketing and
sales information of the Company;     (d)   Financial, pricing and/or credit
information regarding the Company or customers and/or suppliers of the Company;
    (e)   The names, addresses, policy expiration dates and telephone numbers of
customers, agents, brokers, or suppliers of the Company;     (f)   The internal
corporate policies and procedures of the Company;     (g)   Any information of
any nature whatsoever that gives the Company the opportunity to obtain any
advantage over its competitors who do not have access to or use of such
information;     (h)   Any Company insurance information, including underwriting
manuals, insurance programs, program rates, program and product forms, product
descriptions, underwriting rules, lists of agents or brokers, reinsurance forms
and agreements, reinsurance data, claims data, claims manuals, and lists of
outside claims attorneys and panels (regardless of what is generally known in
the insurance industry);     (i)   Any other information designated by the
Company as confidential or proprietary at the time of its disclosure to
Employee.

The term “Confidential and Proprietary Information” also shall include all trade
secret, confidential or proprietary information of any customer, agent,
supplier, or prospective customer, agent or supplier of the Company and any
other information considered as proprietary information in any applicable
jurisdiction to the business or property of Company, whether in written or oral,
tangible or intangible form, which have been disclosed to the Company pursuant
to the Company’s agreement to maintain the confidentiality of such information.

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     4.2 Excluded Information. Notwithstanding anything in Section 4.1 to the
contrary, the term “Confidential and Proprietary Information” shall not include
any data or information that (a) is voluntarily disclosed by the Company (except
for such public disclosure that has been made by or through Employee or by a
third person with the knowledge of Employee without authorization by the
Company); (b) has been independently developed and disclosed by parties other
than Employee or the Company to the public generally without a breach of any
obligation of confidentiality by any such person running directly or indirectly
to the Company; or (c) otherwise enters the public domain through lawful means.
     4.3 Protective Agreements. Employee agrees and acknowledges that the
Confidential and Proprietary Information is the property of the Company, and
that such information is sensitive, confidential and important and is furnished
by the Company to Employee under the terms and conditions of this Agreement only
for use in Company business. Employee shall use all such Confidential and
Proprietary Information only for its intended use and shall maintain the
confidentiality of all Confidential and Proprietary Information that is
confidential and the proprietary rights of the Company to all Confidential and
Proprietary Information that is proprietary (whether such Confidential and
Proprietary Information is obtained prior to or after the date of this
Agreement) during the term of this Agreement and at all times thereafter
provided, however, that Employee may disclose Confidential and Proprietary
Information in the performance of his employment to the extent that he
reasonably believes such disclosure is necessary in order to perform his duties.
     4.4 Return of Company Property. Employee agrees that upon termination of
this Agreement, Employee shall immediately surrender to the Company, without
request, or, at the Company’s request and in the Company’s sole discretion,
destroy or cause to be destroyed all memoranda, notes, reports, documents,
software and disks and all copies and other reproductions and extracts thereof,
including those prepared by Employee, which are in Employee’s possession or
under his control and which contain or are derived from Confidential and
Proprietary Information.
     4.5 Covenant Not to Compete or Solicit. Employee shall not, directly or
indirectly, do any of the following during the term of this Agreement and for a
period of twelve (12) months:

  (a)   Be employed by, serve as consultant or independent contractor to,
directly or indirectly beneficially own any equity or similar interest in
(except as the holder of not more than one percent (1%) of the voting securities
of any publicly traded entity or as a shareholder of the Company or any
successor thereto), or otherwise engage in, any property and casualty insurance
company business or agency that directly or indirectly competes with any
insurance company subsidiary of the Company in the continental United States,
Canada or the Bahamas;

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  (b)   Solicit or cause to be solicited, directly or indirectly, any agents or
brokers under contract with the Company for any purpose (other than, during the
term of this Agreement, as an employee of the Company on behalf of the Company),
without the prior written consent of the Company, which written consent
specifically refers to this Agreement; or     (c)   Solicit or cause to be
solicited, directly or indirectly, or in any way be responsible for, an offer of
employment to any employee of the Company.

     4.6 Additional Covenants. During the term of this Agreement, Employee shall
not take advantage of any Company opportunity without first offering the
opportunity with full disclosure of material facts to the Company and receiving
notice that the Company has declined such opportunity. For this purpose,
“Company opportunity” means any opportunity to engage in a business activity:
(a) of which Employee becomes aware (1) by virtue of Employee’s relationship
with, or in connection with performing functions in the business of, or in using
facilities or other resources of the Company; and (2) under circumstances that
should reasonably lead Employee to believe that the person offering the
opportunity expects it to be offered to the Company; or (b) which Employee knows
is closely related to a business in which the Company is engaged or expected to
engage.
     4.7 Remedies for Breach. Employee agrees that, in the event of any breach
or threatened breach of any provision of this Section 4 by Employee, the Company
shall be entitled to a temporary restraining order and other temporary or
permanent injunctive relief, provided that the Company has shown irreparable
harm. In addition, Employee shall forfeit all rights to any unpaid amounts of
any compensation owed by the Company pursuant to Section 3.6 as liquidated
damages for any such breach or threatened breach, and Employee agrees that such
damages are reasonable, and not a penalty, based upon the facts and
circumstances of the parties and with due regard to expectations that Employee
will fully comply with Section 4. No remedy conferred upon the Company by this
Agreement is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law, in equity or by statute.
     4.8 Reasonableness of Restrictions. Employee agrees and understands that
there are significant business reasons for the restrictions contained in this
Agreement and that such restrictions are reasonable and necessary to protect
legitimate business interests of the Company. Without limiting the generality of
the foregoing, Employee agrees and understands that because the Company may sell
its products, technology and services nationally and internationally, the
geographic scope of Employee’s agreement not to compete with the Company is both
reasonable and necessary.

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     4.9 Severability. If any provision of this Section 4 is held invalid,
illegal or unenforceable, the remaining provisions shall continue in full force
and effect. If any provision of this Section 4 is for any reason held to be
excessively broad as to time, duration, geographic scope, activity or subject,
it shall be construed, by limiting and reducing it, so as to be enforceable to
the extent permitted by applicable law.
     4.10 Scope of Section 4. As used in this Section 4, the term the “Company”
shall include all Affiliates of the Company.
SECTION 5
MISCELLANEOUS
     5.1 Indemnification. The Company shall indemnify Employee if he was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by or in the right of
the Company) by reason of the fact that he is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, trustee, officer, employee, partner, joint venturer or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees and expenses),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action, suit or
proceeding, had no reasonable cause to believe his conduct was unlawful. No
indemnification shall be made in respect of any derivative claim, issue or
matter as to which Employee shall have been adjudged to be liable to the Company
unless, and only to the extent that, the court in which such action, suit or
proceeding was brought shall determine upon application that, despite the
adjudication of liability, but in view of all the circumstances of the ease,
Employee is fairly and reasonably entitled to indemnity for such expenses.
Expenses (including reasonable attorneys’ fees and expenses) incurred in
defending any civil or criminal action, suit or proceeding referred to in this
Section shall be paid by the Company in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
Employee to repay such amount, unless it shall ultimately be determined that he
is not entitled to be indemnified by the Company as authorized in this Section.
The indemnification provided by this Section shall not be deemed exclusive of
any other rights to which Employee may be entitled under the common law, the
Ohio corporate law or the charter documents of the Company or any agreement,
vote of its shareholders or directors, or otherwise, both as to action in his
official capacity or as to action in another capacity while holding such office.

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     5.2 Key Man Life Insurance; COLI. Employee agrees to cooperate with the
Company in connection with, and consent to the placement of, “key man” or other
corporate owned insurance on Employee’s life by the Company.
     5.3 Affiliates. As used in this Agreement, an entity shall be deemed to be
an Affiliate of another entity if it controls, is controlled by or is under
common control with the other entity, where “control” means the power to vote
not less than ten percent (10%) of the voting securities of an entity.
     5.4 No Conflict. Employee represents that the performance by Employee of
all the terms of this Agreement, as an Employee of the Company, has not, does
not and will not breach any agreement as to which Employee is or was a party and
which requires Employee to keep any information in confidence or in trust.
Employee has not entered into, and will not enter into, any written or oral
agreement in conflict herewith.
     5.5 Notices. Any and all notices required to be given under this Agreement
shall be given, and be deemed given, as follows: (a) by personal delivery which
shall be deemed given when delivered; (b) by U. S. first-class mail, postage
prepaid, which shall be deemed given the third (3rd) day after deposit; or
(c) by telecopy (if telecopy number is listed) with confirmation of receipt
which shall be deemed given when sent. Any such notice shall be addressed, if to
the Company at its principal place of business (attn: Chief Executive Officer)
and, if to Employee at his most current home address on record with the Company
for payroll and other corporate purposes, unless a different address for notice
purposes is designated by Employee in a written notice complying with and
referring to this Section 5.5.
     5.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to conflict of law
principles.
     5.7 Amendment and Waiver. This Agreement shall not be amended or modified,
and none of the provisions hereof shall be waived, except in a writing signed on
behalf of the Company and by Employee or, in the case of a waiver, on behalf of
the party making a waiver. In the event that any obligation, agreement or
covenant contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
     5.8 Section Headings. Section headings contained in this Agreement are for
convenience only and shall not be considered in construing any provision hereof.
     5.9 Assignment. This Agreement is personal to Employee and Employee may not
assign or delegate any of his rights or obligations hereunder. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon
Employee and the Company and their respective heirs, administrators, executors,
successors and assigns, including successive as well as immediate heirs,
administrators, executors, successors and assigns.

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     5.10 Entire Agreement. This Agreement terminates, cancels and supersedes
all previous written and oral employment agreements or other agreements relating
to the relationship of Employee with the Company entered into between the
parties hereto. This Agreement contains the entire understanding of the parties
hereto with respect to the subject matter of this Agreement. Employee is
represented by independent legal counsel or has had the opportunity to retain
independent legal counsel to represent Employee’s interests. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring any party by virtue of authorship of any of the
specific provisions of the Agreement. EMPLOYEE ACKNOWLEDGES THAT, BEFORE PLACING
HIS SIGNATURE HEREUNDER, HE HAS READ ALL OF THE PROVISIONS OF THIS AGREEMENT,
AND HAS THIS DAY RECEIVED A COPY HEREOF.
     5.11 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such invalidity or unenforceability without
thereby rendering invalid or unenforceable the remaining terms and provisions
hereof or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
     5.12 Dispute Resolution.

  (a)   Notwithstanding any provision herein to the contrary, any determination
of (1) whether Cause for termination or Good Reason for resignation exists and
(2) whether something “materially” affects anything, or is “substantially” or
“reasonably” or “effectively” done, or is “material” or “reasonable,” as such
terms are used in this Agreement, shall be made in the first instance by the
Board or one of its appropriate oversight committees.     (b)   Any controversy,
claim or dispute arising out of or relating to this Agreement or the breach,
termination, enforceability or validity of this Agreement, including the
determination of the scope or applicability of the agreement to arbitrate set
forth in this Section 5.12(b) and any dispute of any determination by the
Company pursuant to Section 5.12(a), shall be determined exclusively by binding
arbitration in the City of Columbus, Ohio. The arbitration shall be governed by
the rules and procedures of the American Arbitration Association (the “AAA”)
under its

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      Commercial Arbitration Rules and its Supplementary Procedures for Large,
Complex Disputes; provided that persons eligible to be selected as arbitrators
shall be limited to attorneys-at-law each of whom (i) is on the AAA’s Large.
Complex Case Panel or a Center for Public Resources (“CPR”) Panel of
Distinguished Neutrals, or has professional credentials comparable to those of
the attorneys listed on such AAA and CPR Panels and (ii) has actively practiced
law (in private or corporate practice or as a member of the judiciary) for at
least 15 years in the State of Ohio concentrating in either general commercial
litigation or general corporate and commercial matters. Any arbitration
proceeding shall be before one arbitrator mutually agreed to by the parties to
such proceeding (who shall have the credentials set forth above) unless the
amount in question exceeds $100,000, in which event, the mediation shall be by a
panel of three mediators or, if the parties are unable to agree to the
arbitrator(s) within 15 business days of the initiation of the arbitration
proceedings, then by the AAA. No provision of, nor the exercise of any rights
under, this Section 5.12(b) shall limit the right of any party to request and
obtain from a court of competent jurisdiction in the State of Ohio, County of
Franklin (which shall have exclusive jurisdiction for purposes of this
Section 5.12) before, during or after the pendency of any arbitration,
provisional or ancillary remedies and relief including injunctive or mandatory
relief or the appointment of a receiver. The institution and maintenance of an
action or judicial proceeding for, or pursuit of, provisional or ancillary
remedies shall not constitute a waiver of the right of any party, even if it is
the plaintiff, to submit the dispute to arbitration if such party would
otherwise have such right. Each of the parties hereby submits unconditionally to
the exclusive jurisdiction of the state and federal courts located in the County
of Franklin, State of Ohio for purposes of this provision, waives objection to
the venue of any proceeding in any such court or that any such court provides an
inconvenient forum and consents to the service of process upon it in connection
with any proceeding instituted under this Section 5.12 in the same manner as
provided for the giving of notice under this Agreement. Judgment upon the award
rendered may be entered in any court having jurisdiction. The parties hereby
expressly consent to the nonexclusive jurisdiction of the state and federal
courts situated in the County of Franklin, State of Ohio for this purpose and
waive objection to the venue of any proceeding in such court or that such court
provides an inconvenient forum. The arbitrator(s) shall award recovery of all
costs (including attorneys’ fees, administrative fees, arbitrators’ fees and
court costs) to the prevailing party. No arbitrator shall have power, by award
or otherwise, to vary any of the provisions of this Agreement.

     5.13 Code Section 409A Compliance. This Agreement is intended to be
operated in compliance with the provisions of Code Section 409A (including any
rulings or regulations promulgated thereunder). In the event that any provision
of this Agreement fails to satisfy the provisions of Code Section 409A, then
such provision shall be void and shall not apply to a payment or benefit
otherwise due Employee, to the extent practicable. In the event that it is
determined to not be feasible to so void a provision of this Agreement as it
applies to a payment or benefit due Employee or Employee’s beneficiary(ies),
such provision shall be construed in a manner so as to comply with the
requirements of Code Section 409A. The Company expressly reserves the right to
amend this Agreement, in its sole discretion, to comply with Code Section 409A
in the event it later determines that any provision herein causes this Agreement
not to comply with Code Section 409A.

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     5.14 Remedy for Breach. The Company agrees that, in the event of any breach
or threatened breach of this Agreement by the Company, Employee shall be
entitled to any appropriate remedy in law or in equity. No remedy conferred upon
Employee by this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement now or hereafter
existing at law, in equity or by statute. The Company shall pay all legal
expenses (including reasonable attorney’s fees and expenses) and other damages
incurred by Employee as the result of or in connection with any breach of this
Agreement by the Company. The Company is aware that, following a Change in
Control, the Board of ProCentury or a shareholder of ProCentury or the Company
may cause or attempt to cause the Company to refuse to comply with its
obligations under this Agreement, or may cause or attempt to cause the Company
to institute, or may institute, litigation seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action to deny
Employee the benefits intended under this Agreement. In these circumstances, the
purpose of this Agreement could be frustrated. It is the intent of the Company
that Employee not be required to incur the expenses associated with the
enforcement of Employee’s rights under this Agreement by litigation or other
legal action because the cost and expense thereof would substantially detract
from the benefits intended to be extended to Employee thereunder, nor be bound
to negotiate any settlement of Employee’s rights thereundre under threat of
incurring such expenses. Accordingly, (a) if following a Change in Control
(i) Employee concludes that the Company has failed to comply with any of its
obligations under this Agreement or (ii) the Company or any other person on
behalf of the Company or any shareholder or affiliate of the Company takes any
action to declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish, or recover from
Employee the benefits intended to be provided to Employee thereunder, and (b) if
Employee has complied with all of Employee’s obligations under this Agreement,
the Company irrevocably authorizes Employee form time to time to retain counsel
of Employee’s choice at the expense of the Company as provided in this Section,
to represent Employee in connection with the initiation or defense of any
litigation or other legal action, whether by or against the Company or any
director, officer, shareholder or other person affiliated with the Company, in
any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to Employee’s entering into an attorney-client relationship with such
counsel, and in that connection, the Company and Employee agree that a
confidential relationship shall exist between Employee and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Company as
hereinabove provided shall be paid or reimbursed to Employee by the Company on a
regular periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices
(provided that such statements need not contain descriptions of the services
performed). The payment of such fees and expenses shall not be contingent upon
the success of such counsel. Employee shall repay to the Company all such
amounts paid by the Company under this Section, and the Company shall not be
obligated to make further payments hereunder, in connection with a contest
originated by Employee if the trier of fact in such contest determines that
Employee’s claim was patently frivolous.

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Signatures
     In Witness Whereof, the parties have executed this Agreement as of the date
set forth above.

                      THE COMPANY:
CENTURY SURETY COMPANY       EMPLOYEE:
GREG D. EWALD    
 
                    By:   /s/ Edward F. Feighan       /s/ Greg D.Ewald          
           
 
  Edward F. Feighan       Signature    
 
  Its:   Chairman and Chief Executive Officer            

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EXHIBIT A
Employee’s Capacity with the Company
SENIOR VICE PRESIDENT — UNDERWRITING

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EXHIBIT B
IPO STOCK OPTIONS AND SHARES OF RESTRICTED STOCK
IPO Stock Options: 20,000 (twenty thousand) shares of common stock to vested
monthly over a period of three years pursuant to the terms of the Stock Option
Plan.
Restricted Stock: 29,750 (twenty nine thousand seven hundred and fifty) shares
of common stock to vest annually over five years of employment pursuant to the
terms of the Stock Option Plan.

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