Exhibit 10.1
PROCENTURY CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective November 14, 2007

 

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PROCENTURY CORPORATION
DEFERRED COMPENSATION PLAN
(Amended and Restated Effective November 14, 2007)
SUMMARY
     The following is a summary of certain provisions of the Plan. This summary
is subject to, and qualified in its entirety by, the complete text of the Plan
below.

A.   This Plan is intended to allow elective deferrals by Key Employees and
Directors in the form of Deferred Amounts out of their Compensation and
discretionary contributions by the Employer in the form of Employer Deferrals on
behalf of selected Participants for future payment to Participants or their
Beneficiaries (see Section 1.1).

B.   Any Employer Deferral is discretionary and will only be made on behalf of
such Participants and in such amounts and at such time or times as the Employer
determines in its sole discretion. Any Employer Deferral will be paid upon the
elected Entitlement Date and in the elected Payment Form, as elected by the
respective Participant in the initial Participation Agreement submitted by the
Participant to the Administrator upon entry into the Plan, and may only be
changed in accordance with election change rules under Section 3.3 (see
Sections 3.3, 3.4).

C.   Only Key Employees designated by the Employer and Directors will be
eligible to become Participants, and the Employer will notify each designated
Key Employee and each person who becomes a Director of his or her eligibility to
participate (see Section 3.1).

D.   Each Key Employee and Director will agree to participate for each calendar
year by completing, signing, and delivering to the Employer a Participation
Agreement prior to that calendar year (see Section 3.2). Each Participant will
make such elections of a Deferred Amount for each year and make such other
elections as required by the Participation Agreement (elections as to
Entitlement Date and Payment Form must be made under the Participant’s initial
Participation Agreement). Any elections may be changed only as provided in this
Plan (see Section 3.3).

E.   Each Participant’s right to payment of any Deferred Amounts contributed by
that Participant will be fully vested (see Section 3.5(a)). Each Participant’s
right to payment of any Employer Deferrals contributed on behalf of that
Participant for any calendar year may be subject to forfeiture if the
Participant experiences a Separation from Service before any Employer Deferral
Vesting Date stated in the Participation Agreement giving notice of the Employer
Deferral (see Sections 3.2 and 3.5(b)). Notwithstanding any vesting pursuant to
this Plan, a Participant may forfeit all rights to Employer Deferrals under this
Plan in the event of certain prohibited activities (see Section 3.6).

F.   On or before the Participant’s elected Entitlement Date, the Employer will
make a final determination of the Participant’s Aggregate Account Balance,
debiting any applicable forfeitures, and the Aggregate Account Balance as so
determined will be payable in the elected Payment Form within 60 days. However,
in the event that the Participant is a “Specified Employee” under section 409A
of the Code and the Participant’s elected

 

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    Entitlement Date is based upon the Participant experiencing a Separation
from Service with the Employer, payment of that Participant’s Aggregate Account
Balance will be delayed until the date that is six months after such Separation
from Service (with such installments as would normally be paid during the six
months after the date that the Participant experienced a Separation from Service
accumulated and paid on the first day of the seventh month following the date of
the Separation from Service) (See Sections 5.1, 5.2).

G.   Although the intent of this Plan is that a Participant will not be subject
to federal or Ohio income taxation with respect to any Deferred Amount or
Employer Deferral until it is paid, it is anticipated that each Participant will
be subject to Social Security and Medicare taxation and may be subject to local
income taxation for each year with respect to each Deferred Amount and Employer
Deferral contributed for that year.

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TABLE OF CONTENTS

                                      Page
 
                    SECTION 1.   INTENT     1  
 
                   
 
    1.1     Deferred Compensation Plan     1  
 
    1.2     Top-Hat Plan     1  
 
    1.3     Unfunded Plan     1  
 
    1.4     Not A Qualified Plan     1  
 
                    SECTION 2.   DEFINITIONS AND CONSTRUCTION     1  
 
                   
 
    2.1     Definitions     1  
 
    2.2     Construction     5  
 
                    SECTION 3.   ELIGIBILITY, PARTICIPATION AND VESTING     6  
 
                   
 
    3.1     Eligibility     6  
 
    3.2     Participation     6  
 
    3.3     Change In Participation Agreement     6  
 
    3.4     Employer Deferrals     7  
 
    3.5     Vesting     7  
 
    3.6     Forfeiture In Certain Events     8  
 
                    SECTION 4.   ACCOUNTING AND INVESTMENTS     9  
 
                   
 
    4.1     Separate Accounting     9  
 
    4.2     Investment     10  
 
                    SECTION 5.   PAYMENT OF AGGREGATE ACCOUNT BALANCE     10  
 
                   
 
    5.1     Entitlement     10  
 
    5.2     Payment     10  
 
    5.3     Unforeseeable Emergency     10  
 
    5.4     Designated Beneficiaries     10  
 
                    SECTION 6.   ADMINISTRATION     11  
 
                   
 
    6.1     Administrator     11  
 
    6.2     Committee     11  
 
    6.3     Authority     12  
 
    6.4     Fees     12  
 
    6.5     Bonding     12  
 
                    SECTION 7.   CLAIMS PROCEDURE     12  
 
                   
 
    7.1     Claims     12  
 
    7.2     Denials     12  
 
    7.3     Appeals     12  
 
                    SECTION 8.   MISCELLANEOUS     13  
 
                   
 
    8.1     Amendment And Termination     13  
 
    8.2     Addresses     13  
 
    8.3     Subject To Claims Of Employer Creditors     13  

-i-

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TABLE OF CONTENTS
(continued)

                                      Page  
 
    8.4     No Special Employment Rights     14  
 
    8.5     Tax Withholding     14  
 
    8.6     Non-Assignment     14  
 
    8.7     Miscellaneous     14  

-ii-

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THE PROCENTURY CORPORATION
DEFERRED COMPENSATION PLAN DOCUMENT
(As Amended and Restated Effective November 14, 2007)
     WHEREAS, ProCentury Corporation (the “Company”) maintains the ProCentury
Corporation Deferred Compensation Plan pursuant to the plan document adopted
effective October 29, 2003; and
     WHEREAS, it is desired to amend and restate the Plan to comply with the
requirements of section 409A of the Code;
     NOW, THEREFORE, effective November 14, 2007, the Plan is hereby amended and
restated in its entirety to provide as follows:
SECTION 1.
INTENT
     1.1 DEFERRED COMPENSATION PLAN. The Plan is intended to allow elective
deferrals by Key Employees and Directors who become Participants in the form of
Deferred Amounts out of their Compensation and discretionary contributions by
the Employer in the form of Employer Deferrals on behalf of selected
Participants for future payment to Participants or their Beneficiaries. It is
also intended that, in order to have the right to future payment of any Employer
Deferral, Participants may, at the discretion of the Employer, have to remain in
Service until that Employer Deferral becomes vested. It is additionally intended
that Participants will not be subject to federal or Ohio income taxation with
respect to any Deferred Amount or Employer Deferral until it is paid, although
it is anticipated that such amounts for each year will be subject to Medicare
and Social Security taxation and may be subject to local income taxation for
that year.
     1.2 TOP-HAT PLAN. Participation in the Plan is limited to a select group of
key management or highly compensated employees as such group is described under
sections 201(2), 301(a)(3), and 401(a)(1) of ERISA with the intent that the Plan
will constitute a “top-hat” deferred compensation plan within the meaning of the
regulations promulgated by the Department of Labor under section 3(2)(B)(i) of
ERISA.
     1.3 UNFUNDED PLAN. The Plan is intended to be unfunded for purposes of the
Code and Title I of ERISA in that, although the assets securing the obligations
of the Employer hereunder shall be held in a Rabbi Trust,

  (a)   the Plan constitutes a mere promise by the Employer to pay in the
future; and     (b)   in the event of the Employer’s insolvency, Participants
will have only the rights of unsecured creditors with respect to such Employer’s
obligation to make such payments. “Insolvency” means, for this purpose, that the
Employer is unable to

 

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      pay its debts as they become due or the Employer is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

     1.4 NOT A QUALIFIED PLAN. The Plan is not intended to be a plan described
in section 401(a) or 403(b) of the Code or in section 3(2)(A) of ERISA.
     1.5 CODE SECTION 409A. The Plan is intended to be operated in compliance
with and shall be construed in a manner so as to comply with the requirements of
section 409A of the Code and the regulations thereunder.
SECTION 2.
DEFINITIONS AND CONSTRUCTION
     2.1 DEFINITIONS. The capitalized terms used in this Agreement shall, unless
the context otherwise requires, have the following meaning:

  (a)   “ADMINISTRATOR” means such person or persons designated by the Employer
to administer this Plan; if the Employer fails to make such a designation, the
Employer shall be the Administrator.     (b)   “AFFILIATE” means a corporation,
partnership, joint venture, sole proprietorship or other trade or business that
is considered a single employer with the Employer by application of section 414
of the Code, such that it (1) is part of a “controlled group of corporations”
(within the meaning of Code section 414(b)) with the Employer, (2) is “under
common control” (within the meaning of Code section 414(c)) with the Employer,
or (3) is a member of an “affiliated service group” (within the meaning of Code
section 414(m)) with the Employer.     (c)   “AGGREGATE ACCOUNT BALANCE” means
at any time with respect to any Participant the balance to the credit of the
Participant at such time pursuant to all of the separate accountings of the
Participant’s Deferred Amounts and Employer Deferrals, together with receipts
and expenditures attributable to the investment thereof through such time,
within the meaning of Section 4.1.     (d)   “ANNUAL EMPLOYER DEFERRAL ACCOUNT
BALANCE” for any calendar year means at any time with respect to any Participant
the balance to the credit of the Participant at such time of the separate
accounting of the Employer Deferrals contributed for that calendar year,
together with receipts and expenditures attributable to the investment thereof
through such time, within the meaning of Section 4.1.     (e)   “BENEFICIARY”
means the person or persons designated by the Participant to receive payments
under this Plan.     (f)   “BOARD” means the Employer’s Board of Directors or,
to the extent it delegates authority to the Committee, the Committee.

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  (g)   The term “CALENDAR YEAR” means the 12-month period ending December 31 of
each year.     (h)   “CHANGE IN CONTROL” of the Employer means: (1) the purchase
or other acquisition by any person, entity or group of persons (within the
meaning of section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), 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 a majority or
more of the combined voting power of the then outstanding voting securities of
the Employer entitled to vote generally in the election of Directors, excluding,
however, any acquisition by the Employer or by any employee benefit plan or
related trust sponsored or maintained by the Employer; (2) a merger,
reorganization or consolidation to which the Employer is a party or a sale or
other disposition of all or substantially all of the assets of the Employer
(each, a “corporate transaction”), excluding, however, any corporate transaction
pursuant to which persons who were security holders of the Employer immediately
prior to such corporate transaction (solely because of their voting securities
owned immediately prior to such corporate transaction) own immediately
thereafter more than 50 percent of the combined voting power entitled to vote in
the election of the Board of the then outstanding securities of the company
surviving the corporate transaction; or (3) approval by the security-holders of
the Employer of a plan of complete liquidation or dissolution of the Employer.  
  (i)   “CODE” means the Internal Revenue Code of 1986 (or the corresponding
provisions of any succeeding law regarding the taxation of income by the United
States), as amended and in effect at such time.     (j)   “COMMITTEE” means the
compensation committee, if any, or other committee of the Board duly appointed
to administer the Plan and having such powers as shall be specified by the
Board. Notwithstanding anything to the contrary contained in this Plan, if the
Employer is subject to section 162(m) of the Code, the Committee shall be
composed of, or otherwise any determination regarding any Employer Deferral with
respect to, any person constituting a “covered employee” within the meaning of
section 162(m) of the Code shall be made by, not less than two Directors, each
of whom is intended to be an “outside director” within the meaning of section
162(m) of the Code.     (k)   “COMPENSATION” means with respect to any Key
Employee for any calendar year all compensation, including wages, salary, and
any other benefit of monetary value, whether paid in the form of cash or
otherwise, that is required to be reported on a Form W-2 with respect to the Key
Employee’s Services for the calendar year before reduction for any Deferred
Amount contributed by or on behalf of the Key Employee for the year.
Compensation means with respect to any Director all compensation, including
retainer and meeting fees and any other benefit of a monetary value, whether
paid in the form of cash or otherwise, that is required to be reported on a
Form 1099 or W-2 with respect to the Director’s

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      Services for the calendar year before reduction for any Deferred Amount
contributed by or on behalf of the Director for the year.

  (l)   “DEFERRED AMOUNT” means, with respect to any Participant for any
calendar year, the amount of Compensation that the Participant timely elects for
that calendar year for deferral pursuant to Section 3.2.     (m)   “DEFERRED
AMOUNT ACCOUNT BALANCE” means at any time with respect to any Participant the
balance to the credit of the Participant at such time of the separate accounting
of all Deferred Amounts contributed, together with receipts and expenditures
attributable to the investment thereof through such time, within the meaning of
Section 4.1.     (n)   “DIRECTOR” means each person who serves as a Director of
the Employer’s Board of Directors.     (o)   “DISABILITY RETIREMENT” shall mean
that (1) a Participant is, by reason by any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under the
Employer’s long-term disability plan, or (2) to the extent that there is no such
Employer long-term disability plan in effect at the applicable time, a
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months (which shall be evidenced by the written determination of a
qualified medical doctor selected by the Employer specifying the date upon which
such disability commenced).     (p)   “ELECTION DATE” means the date by which a
Key Employee or a Director must elect to participate by delivering to the
Administrator a completed and signed Participation Agreement for that calendar
year or portion thereof beginning after the Election Date. For each calendar
year, the Election Date for each Participant participating in the Plan as of the
first day of such calendar year shall be December 31st of the immediately
preceding calendar year, or such earlier date as required by the Administrator
in its discretion. Notwithstanding the foregoing to the contrary, for the
calendar year in which a Key Employee or Director first becomes eligible to
participate in the Plan (but only if such Key Empoyee or Director has never been
eligible to participate in another account balance plan of the Employer or an
Affiliate that is aggregated with the Plan under section 409A of the Code), the
Participant’s Election Date shall be 30 days following the date that the
Participant becomes eligible to participate in the Plan, and the elections made
in such Participation Agreement shall apply to Compensation paid for services to
be performed subsequent to the Election Date by the Key Employee or Director.
The date that a Participant becomes eligible to participate in the Plan shall be
the date that such Participant is first eligible to accrue Deferred Amounts or
Employer Deferrals under Section 3.1 of this Plan; for a Key Employee, this

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      date shall be the date set forth in the notice of eligibility from the
Employer; for a Director, this date shall be the first date of the Director’s
Services.     (q)   “EMPLOYER” means ProCentury Corporation and any successor
thereto.     (r)   “EMPLOYER DEFERRAL” means, with respect to any Participant
for any calendar year, the amount of Employer Deferral made by the Employer on
behalf of that Participant for that calendar year pursuant to Section 3.4.    
(s)   “EMPLOYER DEFERRAL VESTING DATE” means, with respect to any Participant’s
Employer Deferral contributed for any calendar year, (1) the date designated by
the Employer in notice to the Participant as the Employer Deferral Vesting Date
for the Employer Deferral for that calendar year, or (2), if earlier, a
Triggering Severance; provided, however, if no date or similar restriction is
set forth in such Participation Agreement, the Employer Deferral shall be deemed
100 percent vested when made except for forfeitures in certain events pursuant
to Section 3.6.     (t)   “ENTITLEMENT DATE” means, with respect to any
Participant, the date elected by the Participant in the initial Participation
Agreement submitted by the Participant to the Administrator upon entry into the
Plan (or, as changed by the submission of a new Participation Agreement in
accordance with Section 3.3). Such date may include (1) the date that the
Participant experiences a Separation from Service, or (2) a date specified by
the Participant in the Participation Agreement. If no date is so elected or if
any date elected is not valid, the Entitlement Date shall be the date upon which
the Participant experiences a Separation from Service with the Employer.     (u)
  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended
and in effect at such time.     (v)   “KEY EMPLOYEE” means any member of a
select group of management or highly compensated employees of the Employer, as
such group is described in sections 201(2), 301(a)(3), and 401(a)(1) of ERISA.  
  (w)   “NORMAL RETIREMENT AGE” means, at any time, a Participant’s Separation
from Service after the date of the Participant’s 65th birthday.     (x)  
“PARTICIPANT” means each eligible Key Employee designated for participation in
the Plan and each Director who has elected to participate in this Plan by
delivering a completed and signed Participation Agreement as provided in
Section 3.2.     (y)   “PARTICIPATION AGREEMENT” means, for any calendar year
for any Participant, the form of Participation Agreement prepared for completion
and execution by an eligible Key Employee or a Director to have deferrals made
to this Plan for such calendar year as provided in Section 3.2.

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  (z)   “PAYMENT FORM” means, with respect to any Participant, the form of
payment of the Aggregate Account Balance elected by the Participant in the
initial Participation Agreement submitted to the Administrator upon entry into
the Plan (or, as changed by the submission of a new Participation Agreement in
accordance with Section 3.3). If no other form of payment is so elected, or if
any form of payment elected is not valid, the Payment Form shall be a lump sum.
The available Payment Forms shall be lump sum and monthly or quarterly
installment payments for period of five, 10 or 15 years.     (aa)   “PLAN” means
The ProCentury Corporation Deferred Compensation Plan established pursuant to
this document, as amended from time to time.     (bb)   “RABBI TRUST” means any
trust created pursuant to a separate trust agreement as set forth in Section 8.3
for the purpose of irrevocably holding assets for the purpose of paying the
Aggregate Account Balance to Participants and Beneficiaries.     (cc)  
“SEPARATION FROM SERVICE” means the Participant’s termination from employment
with the Employer and all Affiliates on account of Participant’s death,
retirement or other such termination of employment, as determined in accordance
with section 409A of the Code and the regulations thereunder. A Participant will
not be deemed to have experienced a Separation from Service if the Participant
is on military leave, sick leave or other bona fide leave of absence, to the
extent such leave does not exceed a period of six months or, if longer, such
longer period of time as is protected by either statute or contract. A
Participant will not be deemed to have experienced a Separation from Service if
the Participant provides continuing services that average more than 20 percent
of the services provided by the Participant to the Employer or its Affiliates
(whether as an employee or an independent contractor) during the immediately
preceding 36-month period of services (or full period of services to the
Employer and its Affiliates if the Participant has provided services to the
Employer or its Affiliates for less than 36 months). If a Participant provides
services both as an employee and as an independent contractor of the Employer,
the Participant must separate from service both as an employee and as an
independent contractor to be treated as having experienced a Separation from
Service. If a Participant ceases providing services as an independent contractor
and begins providing services as an employee, or ceases providing services as an
employee and begins providing services as an independent contractor, the
Participant will not be considered to have a Separation from Service until the
Participant has ceased providing services in both capacities. If a Participant
provides services both as an employee of the Employer and a member of the Board,
the services provided as an employee are not taken into account in determining
whether the Participant has a Separation from Service as a Director for purposes
of a nonqualified deferred compensation plan in which the service provider
participates as a Director that is not aggregated with any plan in which the
service provider participates as an employee under section 409A of the Code and
the regulations thereunder.

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  (dd)   “SERVICE” means with respect to any person all periods for which such
person is entitled to Compensation for services in the employment, or as a
Director, of the Employer or its Affiliates.     (ee)   “SPECIFIED EMPLOYEE”
means a Key Employee who meets the requirements of section 416(i)(1)(A)(i),
(ii) or (iii) of the Code (applied in accordance with the Treasury Regulations
thereunder and disregarding section 416(i)(5)) of the Code at any time during
the 12-month period ending on a specified employee identification date, as
described under section 409A of the Code and the regulations thereunder. If a
Participant is a Specified Employee as of a specified employee identification
date, the Participant is treated as a Specified Employee for the entire 12-month
period beginning on the specified employee effective date.     (ff)  
“TRIGGERING SEVERANCE” means, with respect to any Participant, the Participant’s
Separation from Service (1) for reason of death or Disability Retirement, or
(2) at any time on or after the Participant’s Normal Retirement Age, or
(3) within three years after a Change in Control.     (gg)   “UNFORESEEABLE
EMERGENCY” means a severe financial hardship to a Participant resulting from:
(1) an illness or accident of the Participant, the Participant’s spouse, the
Participant’s Beneficiary, or the Participant’s dependent (as defined in section
152 of the Code, without regard to section 152(b)(1), (b)(2), and (d)(1)(B));
(2) loss of the Participant’s property due to casualty; or (3) other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.

     2.2 CONSTRUCTION. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of this
Plan. Terms defined in the singular shall include the plural, and vice versa,
and pronouns in any gender shall include the masculine, feminine, and neuter, as
the context requires. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
“including” means including, without limitation, and use of the term “or” is not
intended to be exclusive, unless the context clearly requires otherwise. All
references to a “Section” refer to this Plan, unless the context otherwise
requires.
SECTION 3.
ELIGIBILITY, PARTICIPATION AND VESTING
     3.1 ELIGIBILITY. The Employer shall have the sole discretion to designate
those, if any, of its Key Employees that are eligible for participation in this
Plan. No person other than a Director shall be eligible to participate in this
Plan for a given calendar year unless the person receives notice of eligibility
to participate in this Plan and of the Election Date by which to deliver a
completed and signed Participation Agreement to participate in this Plan for
such calendar year or portion thereof beginning after the Election Date pursuant
to Section 3.2. Each Director shall be eligible to participate in this Plan for
each calendar year or portion thereof of the Director’s Services.

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     3.2 PARTICIPATION. In order for an eligible Key Employee or a Director to
participate in this Plan for any calendar year or portion thereof beginning
after the Election Date, the eligible Key Employee or Director shall deliver to
the Employer by the applicable Election Date a completed and signed
Participation Agreement stating the Deferred Amount elected for such calendar
year (or portion thereof) and other elections as may be required by such
Participation Agreement with respect to such Deferred Amount or Employer
Deferral or any account balance thereof. The Participant’s election as to
Entitlement Date and Payment Form with respect to the Participant’s Aggregate
Account Balance shall be selected by the Participant in the initial
Participation Agreement submitted by the Participant to the Administrator upon
entry into the Plan and may only be changed in accordance with Section 3.3
below.
     3.3 CHANGE IN PARTICIPATION AGREEMENT.

  (a)   Except as otherwise provided in Section 3.3(b), after the applicable
Election Date for any calendar year, a Participant may not change or revoke any
election made in the Participation Agreement in effect for that calendar year
(notwithstanding any designation of Beneficiary, which may be made any time
before the payment of the respective portion of the Participant’s Aggregate
Account Balance has begun), and may not change the election as to Entitlement
Date and Payment Form with respect to the Participant’s Aggregate Account
Balance as established by the Participant’s initial Participation Agreement upon
entry into the Plan, except in the case of circumstances found by the
Administrator to constitute an Unforeseeable Emergency, in which event the
Participant shall be permitted to cancel the Participation Agreement
prospectively as deemed appropriate by the Administrator in its sole discretion.
Any such revocation shall take effect as soon as administratively practicable
but not earlier than the first pay period commencing after finding of the
Unforeseeable Emergency. No such revocation shall have any effect on any
Deferred Amount prior thereto.     (b)   With the consent of the Administrator,
a Participant may delay or change the method of payment of Deferred Amounts
and/or Employer Deferrals set forth in the applicable Participation Agreement
subject to the following requirements:

  (1)   The new election, as memorialized under a new Participation Agreement,
may not take effect until at least 12 months after the date upon which the new
election is made;     (2)   If the new election relates to payment on an
Entitlement Date other than a date relating to the Participant’s death,
Disability Retirement or Unforeseeable Emergency, the new election and
Participation Agreement must provide for the deferral of the payment to a new
Entitlement Date that is at least five years from the original Entitlement Date
such payment otherwise would have been made; and     (3)   The new election must
be made at least 12 months prior to the original Entitlement Date.

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     3.4 EMPLOYER DEFERRALS.

  (a)   DISCRETIONARY EMPLOYER DEFERRALS. The Employer shall in its sole
discretion have the right to make a contribution in the form of an Employer
Deferral on behalf of any Participant. The amount and timing of any Employer
Deferral to be contributed on the Participant’s behalf, as well as any Employer
Deferral Vesting Date with respect to the Participant’s Annual Employer Deferral
Account for that calendar year, shall be established by the Employer and
communicated to the Participant via notice no later than December 31st of the
calendar year preceding the calendar year in which such Employer Deferral is to
be made. The Employer has the sole discretion to determine separately with
respect to each Employer Deferral made on behalf of each Participant for any
calendar year whether the Employer Deferral will be subject to a Employer
Deferral Vesting Date, and if so, the Employer Deferral Vesting Date will be so
stated in the Participation Agreement with respect to that Employer Deferral.  
  (b)   NOT A REDUCTION OF COMPENSATION. Any Employer Deferral on behalf of a
Participant for any calendar year shall not reduce the Compensation otherwise
payable to the Participant for that calendar year.     (c)   BOARD APPROVAL.
Notwithstanding any provision in this Plan to the contrary, no Employer Deferral
shall be made on behalf of any Participant who is a Director or officer of the
Company or who is a “covered employee” within the meaning of section 162(m) of
the Code unless such Employer Deferral is determined by the Committee and is
approved or otherwise authorized by the Board. Notwithstanding anything to the
contrary contained in this Plan, if the Company is subject to section 162(m) of
the Code, any determination regarding any Employer Deferral with respect to any
person constituting a “covered employee” within the meaning of section 162(m) of
the Code shall be made by the Committee.

     3.5 VESTING.

  (a)   DEFERRED AMOUNTS. The rights of a Participant to payment of the
Participant’s Aggregate Account Balance consisting of Deferred Amounts and all
receipts and expenditures attributable to the investment thereof shall at all
times be and remain 100 percent vested.     (b)   EMPLOYER DEFERRALS. To the
extent that any Employer Deferral contributed on behalf of any Participant for
any calendar year is subject to an Employer Deferral Vesting Date that has not
occurred, there shall be separate accounting pursuant to Section 4.1 of any
Employer Deferral on behalf of that Participant for that calendar year and all
receipts and expenditures attributable to the investment thereof, and the rights
of the Participant to payment of the Annual Employer Deferral Account Balance
for such calendar year shall remain zero percent vested until the Employer
Deferral Vesting Date designated for such calendar year at which time the Annual
Employer Deferral Account Balance for

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      such calendar year maintained pursuant to Section 4.1 shall automatically
become 100 percent vested. To the extent that any Employer Deferral contributed
for any calendar year is not subject to an Employer Deferral Vesting Date
(including if the Employer Deferral Vesting Date has occurred), the rights of a
Participant to payment of the Participant’s Aggregate Account Balance consisting
of Employer Deferrals for those calendar years and all receipts and expenditures
attributable to the investment thereof shall at all times be and remain
100 percent vested. If a Participant experiences a Separation from Service with
the Employer for reason other than a Triggering Severance before any Annual
Employer Deferral Account Balance becomes 100 percent vested, the Participant
shall forfeit all rights to the unvested portion of each such Annual Employer
Deferral Account Balance that is not fully vested. The Employer shall
redetermine the Participant’s Aggregate Account Balance debiting the unvested
portion therefrom pursuant to Section 4.1(d), and the unvested portion debited
from the Participant’s account shall be distributed to the order of Employer,
including if the Employer so directs, being returned to it from any Rabbi Trust.

     3.6 FORFEITURE IN CERTAIN EVENTS.

  (a)   EVENTS OF FORFEITURE. Notwithstanding any vesting of Employer Deferrals
pursuant to or language to the contrary contained in this Plan, each Participant
shall forfeit all rights to receive or retain, and shall reimburse the Employer
for, all payments received of, all of the Participant’s accounts accounting for
Employer Deferrals and all with all receipts and expenditures attributable to
the investment of such Employer Deferrals, including, but not limited to,
income, expenses, gains, and losses, upon a finding by the Board or any court of
competent jurisdiction that the Participant, during any period of Service as a
Key Employee or at any time thereafter without the written consent of the
Employer, whether in the capacity of a trustee, Director, employee, agent,
consultant or otherwise, has breached any covenant against competition, any
covenant against non-solicitation or any covenant otherwise protecting Employer
property or its confidentiality contained in any valid agreement with the
Employer regarding the employment or compensation of the Participant.     (b)  
REALLOCATION AND REIMBURSEMENT. Upon a finding of an event of forfeiture
pursuant to Section 3.6(a) with respect to any Participant, the Employer shall
redetermine the Participant’s Aggregate Account Balance debiting all Employer
Deferrals and all receipts and expenditures attributable to the investment
thereof, and the amount debited from the Participant’s accounts shall be
distributed to the order of Employer, including if the Employer so directs,
being returned to it from the Rabbi Trust. In addition, if directed by the
Board, the Employer shall, with and subject to the advice of legal counsel, take
appropriate proceedings, including legal proceedings before a court of competent
jurisdiction, to require reimbursement to the Employer by the Participant for
all payments received by the Participant of the Participant’s accounts
consisting of Employer Deferrals and all receipts and expenditures attributable
to the investment thereof.

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  (c)   TERMINATION OF OPERATION OF SECTION 3.6. Notwithstanding any provision
to the contrary contained in this Plan, no activity by any Participant that
occurs after the Participant’s Separation from Service following a Change in
Control shall be found as an event of forfeiture or otherwise result in any
forfeiture under this Section 3.6, with the intent being that the Participant
shall retain all rights under this Plan notwithstanding any activities of the
Participant after the Participant’s Separation from Service following a Change
in Control even if in breach of any covenant against competition otherwise
applicable to the Participant.

SECTION 4.
ACCOUNTING AND INVESTMENTS
     4.1 SEPARATE ACCOUNTING. The Employer shall cause to be maintained with
respect to each Participant a separate accounting of all Deferred Amounts and
Employer Deferrals as follows:

  (a)   DEFERRED AMOUNT ACCOUNT. There shall be a separate accounting of all
Deferred Amounts made by the Participant together with all receipts and
expenditures attributable to the investment thereof, including, but not limited
to, income, expenses, gains, and losses, the balance of which at any time shall
be known as the Participant’s “Deferred Amount Account Balance.”     (b)  
ANNUAL EMPLOYER DEFERRAL ACCOUNTS. To the extent that any Employer Deferral
contributed on behalf of any Participant for any calendar year is subject to an
Employer Deferral Vesting Date that has not occurred, there shall be separate
accounting for each such calendar year of all Employer Deferrals made on behalf
of the Participant for that calendar year together with all receipts and
expenditures attributable to the investment thereof for that calendar year and
each period thereafter, including, but not limited to, income, expenses, gains,
and losses, the balance of which at any time shall be known as the Participant’s
“Annual Employer Deferral Account Balance” for that calendar year.
Notwithstanding the foregoing, to the extent that any Employer Deferral
contributed for any calendar year is not subject to an Employer Deferral Vesting
Date or the Employer Deferral Vesting Date has occurred, the separate Annual
Employer Deferral Account Balances for each such calendar year that are or
become 100 percent vested may be combined and accounted for in the aggregate
rather than on a separate basis for each such calendar year.     (c)   AGGREGATE
ACCOUNT BALANCE. A Participant’s Aggregate Account Balance at any time shall be
the sum of the Participant’s Deferred Amount Account Balance and Annual Employer
Deferral Account Balances for all years at such time.     (d)   DEBITING FOR
FORFEITURE. Notwithstanding the foregoing, upon any cessation of the
Participant’s Service or other event resulting in forfeiture of all or any
portion of any Annual Employer Deferral Account Balance of the Participant

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      for any year, the Employer shall debit from each applicable account
balance the portion of any Employer Deferral, including all receipts and
expenditures attributable to the investment thereof, that is not vested pursuant
to Section 3.5(b) or that is forfeited in certain events pursuant to
Section 3.6.

     4.2 INVESTMENT. The Employer may permit each Participant to give
instructions as to the investment of the Participant’s Aggregate Account Balance
pursuant to such rules as the Employer or, with the Employer’s approval, the
Administrator or Trustee of the Rabbi Trust or its investment agents may from
time to time adopt. Any investment instruction shall be in writing (including
electronic communication) and meet the requirements of any rules in effect at
that time. As long as consistent with such rules, neither the Administrator nor
the Employer nor any Trustee of the Rabbi Trust nor any investment agent shall
be under any duty to question any such direction or investment or to review any
securities or other property, real or personal, or to make any suggestions to
the Participant in connection therewith. Neither the Plan nor the Employer nor
the Administrator nor any such Trustee nor investment agent shall be responsible
or liable for any loss or expense that may arise from or result from compliance
with any direction or from any investment directed by the Participant. Any costs
and expenses related to compliance with any such directions, including any
brokerage fees or commissions broker’s commissions, mark-ups, and discounts, and
other transaction costs, shall be debited against the Participant’s Aggregate
Account Balance.
SECTION 5.
PAYMENT OF AGGREGATE ACCOUNT BALANCE
     5.1 ENTITLEMENT. On or before a Participant’s Entitlement Date, the
Employer shall determine the Participant’s Aggregate Account Balance pursuant to
Section 4.1, including any debiting for forfeitures pursuant to Section 4.1(d),
and the Participant shall become entitled to payment of that Aggregate Account
Balance on the Participant’s Entitlement Date.
     5.2 PAYMENT. Payment of a Participant’s Aggregate Account Balance to which
the Participant has become entitled pursuant to Section 5.1 shall be made or
begin in the Participant’s elected Payment Form within 60 days after the
Participant’s Entitlement Date on such date as shall be determined solely by the
Administrator; provided, however, that if the Participant is a Specified
Employee, payment of such Participant’s Aggregate Account Balance shall in no
event begin before the date that is six months after the date that the
Participant experienced a Separation from Service (other than due to the
Participant’s death or Disability Retirement). In the event that a Participant
who is a Specified Employee has elected installment payments of any portion of
his or her Aggregate Account Balance, such installments that would normally be
paid during the six months after the date that the Participant experienced a
Separation from Service shall be accumulated and paid on the first day of the
seventh month following the date of the Separation from Service. Distributions
shall be subject to such uniform rules and procedures as may be adopted by the
Administrator. If, at the time of the Participant’s death, installments payments
of the Participant’s Aggregate Account Balance have commenced pursuant to this
Section 5.2, such payments shall continue to the Participant’s Beneficiary in
the same time and the same form as if the Participant had remained alive until
the last installment payment was scheduled to be made.

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     5.3 UNFORESEEABLE EMERGENCY. A Participant may petition the Administrator
for payment of all or any portion of the Participant’s Aggregate Account Balance
earlier than the Entitlement Date upon circumstances found by the Administrator
to constitute an Unforeseeable Emergency, in which event the Participant shall
be permitted to receive payment of the portion or amount of the Aggregate
Account Balance as petitioned upon such conditions as the Administrator may
reasonably determine in its sole discretion (in a manner that complies with
section 409A of the Code and the regulations thereunder), provided that the
amount of payment for an Unforeseeable Emergency shall not exceed that
reasonably needed to satisfy the financial hardship (plus such amounts as are
necessary to pay any federal, state, local, or foreign income taxes or penalties
reasonably anticipated to result from such payment). Any such payment shall be
made as soon as administratively practicable but not earlier than the finding of
the Unforeseeable Emergency. Notwithstanding the foregoing, payment may not be
made for an Unforeseeable Emergency to the extent that resulting financial
hardship is or may be relieved (a) through reimbursement or compensation by
insurance or otherwise, (b) by liquidation of the Participant’s assets, to the
extent the liquidation of such assets would not itself cause severe financial
hardship, or (c) by cessation of deferrals under this Plan pursuant to
Section 3.3.
     5.4 DESIGNATED BENEFICIARIES. A Participant may designate one or more
Beneficiaries to receive all or any part of the payments of the Participant’s
Aggregate Account Balance in the event of the Participant’s death. The
designation shall be effective by filing a written notification with the
Administrator in such form as the Administrator may from time to time make
available for such designation. The Participant’s beneficiary designation may be
changed from time to time by similar action. If no such designation is made by
the Participant, payments of the deceased Participant’s Aggregate Account
Balance not otherwise determined by the Payment Form shall be paid to, in the
following order of priority, the Participant’s:

  (a)   Surviving spouse, or if none;     (b)   Children, per stirpes, or if
none;     (c)   Estate.

SECTION 6.
ADMINISTRATION
     6.1 ADMINISTRATOR. This Plan shall be administered by the Employer or such
other person or persons designated by the Employer. Each person so designated
shall serve until the earliest of death, if a natural person; or resignation or
removal as follows:

  (a)   Any person may resign at any time by giving written notice, stating the
effective date of such resignation, to each other person who at such time is
serving and to the Employer; and     (b)   Any person may be removed at any time
by Employer’s giving such person written notice, stating the effective date of
such removal.

The successor to fill any vacancy resulting from death, resignation, or removal
pursuant to this Section shall be filled by designation of another person by the
Employer in its sole discretion.

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     6.2 COMMITTEE. If more than one person is designated by the Employer as a
committee to administer this Plan, any action that may be authorized or taken,
including any determination to be made, by the committee may be taken either at
a meeting of the committee or without a meeting by written consent or by a
combination thereof. Proceedings of the committee shall be held, and action
authorized or taken thereat, from time to time as may be called by any committee
member. The place of any meeting shall be the principal office of the Employer
or such other place as reasonably designated by the person calling the meeting.
Attendance of any committee member at any meeting may be by personal presence,
or by personal participation by telephone or other communications equipment
through which all participating can hear each other or by presence of the
member’s written consent on any matter being considered. Those members who are
present in person or whose written consents on any matter being considered are
present at any meeting of the committee shall constitute a quorum for the
transaction of business at the meeting, and the act of the majority in number of
the committee by vote at any meeting or by written consent at or without a
meeting or by any combination thereof shall be the act of the committee. Any one
or more members of the committee may certify or otherwise state in writing any
action authorized by the committee, and any person may act in reliance upon any
instrument or signature reasonably believed by such person to be genuine of any
member of such committee and may assume that each committee member signing such
certificate or other writing has been duly authorized to do so.
     6.3 AUTHORITY. The Administrator shall have all authority to exercise each
of its responsibilities set forth in this Plan and for proper administration
hereof except to the extent that such authority is reserved to, or delegated to
another person by, the Employer.
     6.4 FEES. No fee or compensation shall be paid to any person for services
provided as a member of the committee.
     6.5 BONDING. No person serving as Administrator and no agents and advisors
employed by it shall be required to be bonded, except as otherwise required by
ERISA.
SECTION 7.
CLAIMS AND APPEAL PROCEDURES
     7.1 CLAIMS. Any claim by a Participant or Beneficiary (“claimant”) for
payments or other rights under this Plan shall be presented in writing delivered
to the Administrator on such forms and in such manner as the Administrator shall
prescribe. Unless and until a claimant makes proper application for benefits in
accordance with the rules and procedures established by the Administrator, such
claimant shall have no right to receive any distribution from or under the Plan.
     7.2 DENIALS. Any denial in whole or part to any claim presented pursuant to
Section 7.1 shall be in writing given to the claimant within 90 days after
receipt of delivery of the claim. The written notice of the claim denial shall
be written in a manner calculated to be understood by the claimant, and shall
contain at least the following information:

  (a)   The specific reason or reasons for the denial;

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  (b)   A specific reference to pertinent Plan provisions upon which the denial
is based;     (c)   A description of any additional material or information
necessary for the claimant to perfect his or her claim, and an explanation of
why the material or information is necessary; and     (d)   A description of the
Plan’s appeal procedures describing the steps to be taken by the claimant and
time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under ERISA in the event of the denial
of the appeal.

     7.3 APPEALS. The claimant may request an appeal of any denial in whole or
part of a claim insofar as it relates to the Payment Form, Entitlement Date, any
vesting date, the accounting of the Aggregate Account Balance and any Annual
Employer Deferral Account Balances, or the validity of any Participation
Agreement or election made therein of any Participant as follows:

  (a)   The claimant shall make such request in writing delivered to the
Administrator not later than 60 days after the claimant’s receipt of the written
denial of the claim given pursuant to Section 7.2;     (b)   The claimant may
include with such request such documents and other information as the claimant
deems reasonable; and     (c)   Any decision on appeal of a denied claim shall
be made not later than 60 days after receipt of delivery of the request, unless
special circumstances require an extension of time for processing, in which case
a decision shall be rendered within a reasonable period of time, but not later
than 120 days after receipt of delivery of the request. Any such decision by the
Administrator upon its review of the appeal shall be in writing and shall
include at least the following information:

  (1)   The specific reason or reasons for the denial of the appeal;     (2)   A
specific reference to pertinent Plan provisions upon which the appeal denial is
based;     (3)   A statement that the claimant is entitled to receive, upon
request and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claim and appeal; and     (4)   A
statement describing the procedures for voluntary dispute resolution offered by
the Plan (if any) and the claimant’s right to obtain information regarding such
procedures, along with a statement of the claimant’s right to bring a civil
action under ERISA.

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SECTION 8.
MISCELLANEOUS
     8.1 AMENDMENT AND TERMINATION. The Employer has the right at any time to
amend or otherwise modify any of the provisions of this Plan in any manner that
it deems advisable and reserves the right to terminate and liquidate the Plan at
any time in its sole discretion. These rights do not require the consent of any
Participant, Beneficiary, or other person. In the event of termination, the
Employer shall specify whether termination will change the time at which
distributions are made; provided that any acceleration of a distribution is
consistent with section 409A of the Code and the regulations thereunder. In the
absence of such specification, the timing of distributions shall be unaffected
by the termination of the Plan.
     8.2 ADDRESSES. For purpose of any payments and notices under this Plan,
each Participant and each Beneficiary of the Participant shall have the
obligation to notify the Administrator of his or her addresses and of any
changes therein. The address for any notice to the Employer or Administrator
shall be the address of the Employer’s principal office.

  (a)   All payments and notices shall, unless otherwise expressly provided, be
deemed to have been properly given (1) if delivered by messenger, when
delivered; (2) if mailed, when deposited in the United States Mail, certified or
registered, postage prepaid, return receipt requested; (3) if e-mailed, telexed,
telegraphed or faxed, when dispatched by e-mail, telex, telegram or fax; or
(4) if delivered by commercial overnight express courier, freight prepaid, when
delivered to such courier, in every case addressed to the party at the address
provided in this Section.     (b)   All notices required to be delivered shall
be deemed to have been delivered (1) if delivered by messenger, when delivered;
(2) if mailed, on the third business day after deposit in the United States
Mail, certified or registered, postage prepaid, return receipt requested; (3) if
e-mailed, telexed, telegraphed or faxed, two hours after being dispatched by
e-mail, telex, telegram or fax if such second hour falls on a business day
within the hours of 9:00 a.m. through 5:00 p.m. of the time in effect at the
place of receipt, or at 9:00 a.m. on that business day if the second hour is
before 9:00 a.m., or at 9:00 a.m. on the next business day thereafter if such
second hour is later than 5:00 p.m. or other than on a business day; or (4) if
delivered by commercial overnight express courier, freight prepaid, the next
business day after delivery to such courier in every case addressed to the party
at the address provided in this Section.

     8.3 SUBJECT TO CLAIMS OF EMPLOYER CREDITORS. To satisfy its obligations for
payment of Aggregate Account Balance to Participants and Beneficiaries, the
Employer shall cause all Deferred Amounts and Employer Deferrals by or on behalf
of all Participants to be paid to the trustee (the “Trustee”) of a certain
“Rabbi” trust (the “Rabbi Trust”) created by the Employer to hold such assets
for such purpose. Notwithstanding the assets held by the Trustee under the Rabbi
Trust, the Employer shall remain liable to make, or cause to made, all payments
of such Aggregate Account Balance as they become due. Notwithstanding any
accounting to the credit of Participants pursuant to Section 4.1 or transfer to
the Trustee of

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the Rabbi Trust pursuant to this Section, neither the Participant nor any
Beneficiary shall have any claim to any assets of the Employer other than as a
general unsecured creditor, and any assets held by the Rabbi Trust shall remain
subject to claims of the Employer’s creditors.
     8.4 NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in this Plan shall be
construed as a contract of employment or deemed to give any Participant the
right to be retained in the employ of the Employer or any equity or other
interest in the assets, business, or affairs of the Employer. A Participant
hereunder shall not have a security interest in assets of the Employer used to
make contributions or pay benefits.
     8.5 TAX WITHHOLDING. The Employer shall make or cause to be made provision
for the reporting and withholding of any federal, state, local, or foreign taxes
that may be required to be withheld with respect to any payment of Aggregate
Account Balance pursuant to this Plan with the appropriate taxing authorities.
     8.6 NON-ASSIGNMENT. Neither any Participant nor Beneficiary shall have any
right to assign, transfer, pledge, or otherwise convey the right to receive any
amount or payments which may become due under this Plan. Any such attempted
assignment, transfer, pledge, or other conveyance shall not be recognized by the
Employer.
     8.7 MISCELLANEOUS. If any provision of this Plan is or becomes invalid,
illegal, or unenforceable in any jurisdiction for any reason, such invalidity,
illegality, or unenforceability shall not affect the remainder of this Plan, and
the remainder of this Plan shall be construed and enforced as if such invalid,
illegal, or unenforceable portion were not contained herein. This agreement
shall be governed by and construed in English language under the laws of the
State of Ohio, United States of America.
SIGNATURE
     IN WITNESS WHEREOF, the Employer has caused this Plan to be executed as of
this____day of ______________, 2007.

            PROCENTURY CORPORATION
      By:                   Title:        

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Form A
(For Participants who will NOT receive an Employer Deferral for the calendar
year and
who have NOT previously executed a Participation Agreement)
INITIAL PARTICIPATION AGREEMENT
FOR
PROCENTURY CORPORATION DEFERRED COMPENSATION PLAN
                                                                        (the
“Participant”) is either an eligible Key Employee (as designated by ProCentury
Corporation (the “Employer”)) or a Director eligible for participation in the
ProCentury Corporation Deferred Compensation Plan (the “Plan”). This
Participation Agreement evidences the Participant’s participation in the Plan
for the calendar year ending December 31, ___. All capitalized terms defined in
the Plan shall have the same meaning as used herein.
          There are five different areas in which the Participant must make an
election regarding participation in the Plan. Please be sure to make an election
in each of the following areas:

(1)   DEFERRED AMOUNT. The Participant hereby irrevocably elects that the
following amount of Compensation for the calendar year be withheld for deferral
pursuant to Section 3.2 of the Plan as follows:

      You may elect to have the Deferred Amount withheld from either salary or
any separate bonus or incentive pay or both by completing the following:     (a)
  SALARY. From periodic payments of my Compensation over the calendar year:    
    Please complete only ONE of the following salary withholdings, if
applicable:         The fixed amount of $                     from the gross
amount of each periodic payment of such Compensation,

or

      The fixed percentage of percent of                      the gross amount
of each periodic payment of such Compensation.     (b)   BONUS OR INCENTIVE PAY.
From any bonus or incentive pay that may be earned during the calendar year
separately from the periodic payments of my Compensation for the year, the fixed
amount of $                     from, or the fixed percentage of
                     percent of, the gross amount of any such bonus or incentive
pay.

 

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    You may not change your Deferred Amount in effect for a given calendar year.
  (2)   INVESTMENT FUNDS. I understand that I must elect the investment funds
that will be used to determine the income, expenses, gains, and losses credited
to my Aggregate Account Balance under the Plan. I understand that my election at
this time supersedes any previous investment election or instruction that I have
made under the Plan. I hereby elect that my account balances under the Plan
shall be credited as if invested in the following percentages in the following
investments:

      Please complete the following in increments of 1%. The sum of the column
“Percentage” must total 100%

          Investment Funds   Percentage
 
      %
 
      %
 
      %
 
      %
 
      %
 
       
TOTAL
    100 %
 
       

    Your investment election will remain in effect until this election is
changed. You may change your election by completing, executing and returning
another Participation Agreement to the Administrator or other form provided for
this purpose by the Administrator. The investment funds available for you to
elect under the Plan may be changed from time to time. In such event that the
investment funds available for election are changed, you will be notified if any
investment fund that you elected is no longer available, and you will have the
opportunity to change your election. If you do not timely change your election
or if any investment fund elected is no longer available, the Employer reserves
the right to reallocate money designated for that elected investment fund among
other available funds.   (3)   ENTITLEMENT DATE. I elect the following date as
the Entitlement Date on which I or my Beneficiary become entitled to payment of
my vested Aggregate Account Balance, and I understand that the Entitlement Date
that I elect here will be my Entitlement Date for my ENTIRE AGGREGATE ACCOUNT
BALANCE accrued under the

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    Plan (and may only be changed in accordance with the restrictions described
on page 4 of this Participation Agreement):

      I elect my Entitlement Date as:
(Please mark and complete only ONE of the following:)

         
 
  ___   My Separation from Service for any reason (including death)
 
       
 
  ___   Regardless of when my Separation from Service occurs, upon the following
date:                     , or if I die before such date, upon my death
 
       
 
  ___   Regardless of when my Separation from Service occurs or death occurs,
upon the following date:                     

(4)   PAYMENT FORM. I elect the following Payment Form for payment of my vested
Aggregate Account Balance under the Plan, and I understand that the Payment Form
that I elect here will be my Payment Form for my ENTIRE AGGREGATE ACCOUNT
BALANCE accrued under the Plan (and may only be changed in accordance with the
restrictions described on page 4 of this Participation Agreement):

      I elect as the Payment Form of my vested Aggregate Account Balance:
(Please mark and complete only ONE of the following:)

                  ___   Lump sum to be paid within 60 days after my Entitlement
Date
 
                ___   In the form, as specified below, payment of which will
begin within 60 days after my Entitlement Date:
 
           
 
      ___   Monthly installments for 5 years
 
           
 
      ___   Monthly installments for 10 years
 
           
 
      ___   Monthly installments for 15 years
 
           
 
      ___   Quarterly installments for 5 years
 
           
 
      ___   Quarterly installments for 10 years
 
           
 
      ___   Quarterly installments for 15 years

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    If you are a Specified Employee, and you experience a Separation from
Service (other than due to death or Disability Retirement), payment of your
vested Aggregate Account Balance under the Plan will not be made or begin before
the date that is six months after the date of your Separation from Service. If
you are a Specified Employee and elect installment payments, the installments
that would normally be paid during the six months after the date that you
experienced a Separation from Service shall be accumulated and paid on the first
day of the seventh month following the date of your Separation from Service.    
  Any Payment Form elected must conform to all limitations in the definition of
“Payment Form” contained in the Plan. If no Entitlement Date is elected or if
any Entitlement Date is not valid, the Entitlement Date shall be the date of
your Separation from Service. If Payment Form is elected or if any Payment Form
is not valid, the Payment Form shall be lump sum.       You may change your
“Entitlement Date” or “Payment Form” election by completing, executing, and
returning another form of Participation Agreement to the Administrator completed
to show the Entitlement Date or Payment Form as so changed; provided, however
that such Entitlement Date and Payment Form must satisfy the following
requirements to be effective:

  1.   The new election, as memorialized under a new Participation Agreement,
may not take effect until at least twelve months after the date upon which the
new election is made;     2.   If the new election relates to payment on an
Entitlement Date other than a date relating to your death, the new election and
Participation Agreement must provide for the deferral of the payment to a new
Entitlement Date that is at least five years from the original Entitlement Date;
and     3.   The new election must be made at least twelve months prior to the
original Entitlement Date.

(5)   BENEFICIARY. I hereby designate the following as my Beneficiary in the
event of my death:

             
 
           
 
    (1 )  
 
 
   
 
 
   
 
 
           
 
    (2 )   If the Beneficiary (Beneficiaries) named in (1) above is not living
on the date payments become payable to such Beneficiary:

4

--------------------------------------------------------------------------------

 

             
 
     
 
 
     
 
 
     
 

      This Beneficiary designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Plan.         You may change
your “Beneficiary” by completing, executing, and returning another form of
Participation Agreement to the Administrator completed to show the Beneficiary
as so changed as long as it is received before your Entitlement Date.

ELECTION DATE. The due date by which you must return this Participation
Agreement completed and signed by you in order to be effective for the calendar
year ending December 31, ___. Return your completed and signed Participation
Agreement to:
 
 
 
AUTHORIZATION. I acknowledge that I have knowingly and voluntarily decided to
participate in the Plan and to have Deferred Amounts contributed to the Plan. I
understand that:

(a)   My Aggregate Account Balance and the other assets of the Plan remain
subject to the claims of the Employer’s general creditors until received by me
or my Beneficiary.   (b)   The Plan is a defined contribution plan, and my
benefit will be my vested Aggregate Account Balance and whatever Payment Form
can be purchased with that Aggregate Account Balance on my Entitlement Date.  
(c)   The Employer is not responsible for any loss that may be sustained as a
result of any elections made by me pursuant to this Participation Agreement or
that may be sustained by my Aggregate Account Balance as a result of any
investment thereof.

5

--------------------------------------------------------------------------------

 

(d)   My rights to Employer Deferrals under this Plan, even if vested, are
subject to forfeiture for certain prohibited activities as provided in
Section 3.6 of the Plan.

Dated:                               

                  Signature of Participant                  Printed Name of
Participant     

This Participation Agreement is not valid or binding until it is accepted as
properly completed and signed by the Administrator.

            ACCEPTED:
    Dated:                                       Signature on behalf of the
Administrator           

6

--------------------------------------------------------------------------------

 

Form B
(For Participants who WILL receive an Employer Deferral for the calendar year
and
who have NOT previously executed a Participation Agreement)
NOTICE AND PARTICIPATION AGREEMENT
REGARDING EMPLOYER DEFERRAL FOR
PROCENTURY CORPORATION DEFERRED COMPENSATION PLAN
NOTICE OF EMPLOYER DEFERRAL
TO BE COMPLETED BY THE EMPLOYER
DATE OF NOTICE:                     
     ProCentury Corporation is pleased to announce that it will be making a
contribution in the form of an Employer Deferral for the account of
                                         (the “Participant”), who is either an
eligible Key Employee (as designated by ProCentury Corporation (the “Employer”))
or is a Director eligible for participation in the ProCentury Corporation
Deferred Compensation Plan (the “Plan”) for the calendar year ending
                    , ___ pursuant to the following terms:
AMOUNT OF EMPLOYER DEFERRAL. The amount of the Employer Deferral is

.

EMPLOYER DEFERRAL VESTING DATE: The date upon which your rights to payment of
the Employer Deferral for this calendar year becomes vested is
                                         (which is known as your Employer
Deferral Vesting Date for this year’s Employer Deferral). Notwithstanding the
foregoing, your Employer Deferral shall automatically become 100 percent vested
upon your Separation from Service (a) for reason of death or Disability
Retirement, (b) at any time on or after your Normal Retirement Age, or (c)
within three years after a Change in Control.
All capitalized terms defined in the Plan shall have the same meaning as used
herein.

 

--------------------------------------------------------------------------------

 

INITIAL PARTICIPATION AGREEMENT
TO BE COMPLETED BY THE PARTICIPANT
          This Participation Agreement evidences the Participant’s elections
regarding the Employer Deferral for the calendar year as described above, as
well as the Deferred Amounts described below (collectively, the “Aggregate
Account Balance”).
                                                                       (the
“Participant”) is either a n eligible Key Employee (as designated by ProCentury
Corporation (the “Employer”)) or a Director eligible for participation in the
ProCentury Corporation Deferred Compensation Plan (the “Plan”). This
Participation Agreement evidences the Participant’s participation in the Plan
for the calendar year ending December 31, 20__. All capitalized terms defined in
the Plan shall have the same meaning as used herein.
          There are five different areas in which the Participant must make an
election regarding participation in the Plan. Please be sure to make an election
in each of the following areas:

(1)   DEFERRED AMOUNT. The Participant hereby irrevocably elects that the
following amount of Compensation for the calendar year shall be withheld for
deferral pursuant to Section 3.2 of the Plan as follows:

      You may elect to have the Deferred Amount withheld from either salary or
any separate bonus or incentive pay or both by completing the following:     (a)
  SALARY. From periodic payments of my Compensation over the calendar year:    
    Please complete only ONE of the following salary withholdings, if
applicable:         The fixed amount of $                     from the gross
amount of each periodic payment of such Compensation,

or

      The fixed percentage of                                          percent
of the gross amount of each periodic payment of such Compensation.     (b)  
BONUS OR INCENTIVE PAY. From any bonus or incentive pay that may be earned
during the calendar year separately from the periodic payments of my
Compensation for the year, the fixed amount of $                     from, or
the

2

--------------------------------------------------------------------------------

 

      fixed percentage of                      percent of, the gross amount of
any such bonus or incentive pay.

      You may not change your Deferred Amount in effect for a given calendar
year.

(2)   INVESTMENT FUNDS. I understand that I must elect the investment funds that
will be used to determine the income, expenses, gains, and losses credited to my
Aggregate Account Balance under the Plan. I understand that my election at this
time supersedes any previous investment election or instruction that I have made
under the Plan. I hereby elect that my account balances under the Plan shall be
credited as if invested in the following percentages in the following
investments:

      Please complete the following in increments of 1%. The sum of the column
“Percentage” must total 100%

          Investment Funds   Percentage
 
      %
 
      %
 
      %
 
      %
 
      %
 
       
TOTAL
    100 %
 
       

    Your investment election will remain in effect until this election is
changed. You may change your election by completing, executing and returning
another Participation Agreement to the Administrator or other form provided for
this purpose by the Administrator. The investment funds available for you to
elect under the Plan may be changed from time to time. In such event that the
investment funds available for election are changed, you will be notified if any
investment fund that you elected is no longer available, and you will have the
opportunity to change your election. If you do not timely change your election
or if any investment fund elected is no longer available, the Employer reserves
the right to reallocate money designated for that elected investment fund among
other available funds.   (3)   ENTITLEMENT DATE. I elect the following date as
the Entitlement Date on which I or my Beneficiary become entitled to payment of
my vested Aggregate Account Balance,

3

--------------------------------------------------------------------------------

 

    and I understand that the Entitlement Date that I elect here will be my
Entitlement Date for my ENTIRE AGGREGATE ACCOUNT BALANCE accrued under the Plan
(and may only be changed in accordance with the restrictions described on pages
5 and 6 of this Notice and Participation Agreement):

      I elect my Entitlement Date as:
(Please mark and complete only ONE of the following:)

         
 
  ___   My Separation from Service for any reason (including death)
 
       
 
  ___   Regardless of when my Separation from Service occurs, upon the following
date:                     , or if I die before such date, upon my death
 
       
 
  ___   Regardless of when my Separation from Service occurs or death occurs,
upon the following date:                                         

(4)   PAYMENT FORM. I elect as the following Payment Form for payment of my
vested Aggregate Account Balance under the Plan, and I understand that the
Payment Form that I elect here will be my Payment Form for my ENTIRE AGGREGATE
ACCOUNT BALANCE accrued under the Plan (and may only be changed in accordance
with the restrictions described on pages 5 and 6 of this Notice and
Participation Agreement):

      I elect as the Payment Form of my vested Aggregate Account Balance:
(Please mark and complete only ONE of the following:)

                  ___   Lump sum to be paid within 60 days after my Entitlement
Date
 
                ___   In the form, as specified below, payment of which will
begin within 60 days after my Entitlement Date:
 
           
 
      ___   Monthly installments for 5 years
 
           
 
      ___   Monthly installments for 10 years
 
           
 
      ___   Monthly installments for 15 years
 
           
 
      ___   Quarterly installments for 5 years
 
           
 
      ___   Quarterly installments for 10 years
 
           
 
      ___   Quarterly installments for 15 years

4

--------------------------------------------------------------------------------

 

    If you are a Specified Employee, and you experience a Separation from
Service (other than due to death or Disability Retirement), payment of your
vested Aggregate Account Balance under the Plan will not be made or begin before
the date that is six months after the date of your Separation from Service. If
you are a Specified Employee and elect installment payments, the installments
that would normally be paid during the six months after the date that you
experienced a Separation from Service shall be accumulated and paid on the first
day of the seventh month following the date of your Separation from Service.    
  Any Payment Form elected must conform to all limitations in the definition of
“Payment Form” contained in the Plan. If no Entitlement Date is elected or if
any Entitlement Date is not valid, the Entitlement Date shall be the date of
your Separation from Service. If Payment Form is elected or if any Payment Form
is not valid, the Payment Form shall be lump sum.       You may change your
“Entitlement Date” or “Payment Form” election by completing, executing, and
returning another form of Participation Agreement to the Administrator completed
to show the Entitlement Date or Payment Form as so changed; provided, however
that such Entitlement Date and Payment Form must satisfy the following
requirements to be effective:

  1.   The new election, as memorialized under a new Participation Agreement,
may not take effect until at least twelve months after the date upon which the
new election is made;     2.   If the new election relates to payment on an
Entitlement Date other than a date relating to your death, the new election and
Participation Agreement must provide for the deferral of the payment to a new
Entitlement Date that is at least five years from the original Entitlement Date;
and     3.   The new election must be made at least twelve months prior to the
original Entitlement Date.

(5)   BENEFICIARY. I hereby designate the following as my Beneficiary in the
case of my death:

  (1)   
 
     
 
     
 
    (2)   If the Beneficiary (Beneficiaries) named in (1) above is not living on
the date payments become payable to such Beneficiary:

5

--------------------------------------------------------------------------------

 

     
 
     
 
     
 

    This Beneficiary designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Plan.       You may change
your “Beneficiary” by completing, executing, and returning another form of
Participation Agreement to the Administrator completed to show the Beneficiary
as so changed as long as it is received before your Entitlement Date.

ELECTION DATE. The due date by which you must return this Participation
Agreement completed and signed by you in order to be effective for the calendar
year ending December 31, ___. Return your completed and signed Participation
Agreement to:
 
 
 
AUTHORIZATION. I acknowledge that I have knowingly and voluntarily decided to
participate in the Plan. I understand that:

(a)   My Aggregate Account Balance and the other assets of the Plan remain
subject to the claims of the Employer’s general creditors until received by me
or my Beneficiary.   (b)   The Plan is a defined contribution plan, and my
benefit will be my vested Aggregate Account Balance and whatever Payment Form
can be purchased with that Aggregate Account Balance on my Entitlement Date.  
(c)   The Employer is not responsible for any loss that may be sustained as a
result of any elections made by me pursuant to this Notice and Participation
Agreement or that may be sustained by my Aggregate Account Balance as a result
of any investment thereof.   (d)   My rights under this Plan, even if vested,
are subject to forfeiture for certain prohibited activities as provided in
Section 3.6 of the Plan.

6

--------------------------------------------------------------------------------

 

Dated:                               

                  Signature of Participant                  Printed Name of
Participant   

This Participation Agreement is not valid or binding until it is accepted as
properly completed and signed by the Administrator.

            ACCEPTED:
    Dated:                                       Signature on behalf of the
Administrator         

7

--------------------------------------------------------------------------------

 

Form C
(For Participants who will NOT receive an Employer Deferral for the calendar
year and
who have previously executed a Participation Agreement)
PARTICIPATION AGREEMENT
FOR
PROCENTURY CORPORATION DEFERRED COMPENSATION PLAN
                                                                       (the
“Participant”) is either a n eligible Key Employee (as designated by ProCentury
Corporation (the “Employer”)) or a Director eligible for participation in the
ProCentury Corporation Deferred Compensation Plan (the “Plan”). This
Participation Agreement evidences the Participant’s participation in the Plan
for the calendar year ending December 31, ___. All capitalized terms defined in
the Plan shall have the same meaning as used herein.
          There are three different areas in which the Participant must make an
election regarding participation in the Plan. Please be sure to make an election
in each of the following areas:

(1)   DEFERRED AMOUNT. The Participant hereby irrevocably elects that the
following amount of Compensation for the calendar year be withheld for deferral
pursuant to Section 3.2 of the Plan as follows:

      You may elect to have the Deferred Amount withheld from either salary or
any separate bonus or incentive pay or both by completing the following:     (a)
  SALARY. From periodic payments of my Compensation over the calendar year:    
    Please complete only ONE of the following salary withholdings, if
applicable:         The fixed amount of $                     from the gross
amount of each periodic payment of such Compensation,

or

      The fixed percentage of                      percent of the gross amount
of each periodic payment of such Compensation.     (b)   BONUS OR INCENTIVE PAY.
From any bonus or incentive pay that may be earned during the calendar year
separately from the periodic payments of my Compensation for the year, the fixed
amount of $                     from, or the

 

--------------------------------------------------------------------------------

 

      fixed percentage of                      percent of, the gross amount of
any such bonus or incentive pay.

    You may not change your Deferred Amount in effect for a given calendar year.
  (2)   INVESTMENT FUNDS. I understand that I must elect the investment funds
that will be used to determine the income, expenses, gains, and losses credited
to my Aggregate Account Balance under the Plan. I understand that my election at
this time supersedes any previous investment election or instruction that I have
made under the Plan. I hereby elect that my account balances under the Plan
shall be credited as if invested in the following percentages in the following
investments:

      Please complete the following in increments of 1%. The sum of the column
“Percentage” must total 100%

          Investment Funds   Percentage
 
    %
 
    %
 
    %
 
    %
 
    %
 
       
TOTAL
    100 %
 
       

    Your investment election will remain in effect until this election is
changed. You may change your election by completing, executing and returning
another Participation Agreement to the Administrator or other form provided for
this purpose by the Administrator. The investment funds available for you to
elect under the Plan may be changed from time to time. In such event that the
investment funds available for election are changed, you will be notified if any
investment fund that you elected is no longer available, and you will have the
opportunity to change your election. If you do not timely change your election
or if any investment fund elected is no longer available, the Employer reserves
the right to reallocate money designated for that elected investment fund among
other available funds.   (3)   BENEFICIARY. I hereby designate the following as
my Beneficiary in the case of my death:

2

--------------------------------------------------------------------------------

 

  (1)   
 
 
 
 
 
    (2)   If the Beneficiary (Beneficiaries) named in (1) above is not living on
the date payments become payable to such Beneficiary:  
 
 
 
 
 

      This Beneficiary designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Plan.       You may change
your “Beneficiary” by completing, executing, and returning another form of
Participation Agreement completed to show the Beneficiary as so changed as long
as it is received before your Entitlement Date (which has been established by
your Initial Participation Agreement).

ELECTION DATE. The due date by which you must return this Participation
Agreement completed and signed by you in order to be effective for the calendar
year ending December 31, ___. Return your completed and signed Participation
Agreement to:
 
 
 
AUTHORIZATION. I acknowledge that I have knowingly and voluntarily decided to
participate in the Plan. I understand that:

(a)   My Aggregate Account Balance and the other assets of the Plan remain
subject to the claims of the Employer’s general creditors until received by me
or my Beneficiary.   (b)   The Plan is a defined contribution plan, and my
benefit will be my vested Aggregate Account Balance and whatever Payment Form
can be purchased with that Aggregate Account Balance on my Entitlement Date
(both of which have been established by your Initial Participation Agreement).  
(c)   The Employer is not responsible for any loss that may be sustained as a
result of any elections made by me pursuant to this Participation Agreement or
that may be sustained by my Aggregate Account Balance as a result of any
investment thereof.

3

--------------------------------------------------------------------------------

 

Dated:                               

                  Signature of Participant                  Printed name of
Participant   

This Participation Agreement is not valid or binding until it is accepted as
properly completed and signed by the Administrator.

            ACCEPTED:
    Dated:                                       Signature on behalf of the
Administrator         

4

--------------------------------------------------------------------------------

 

         

Form D
(For Participants who WILL receive an Employer Deferral for the calendar year
and
who have previously executed a Participation Agreement)
NOTICE AND PARTICIPATION AGREEMENT
REGARDING EMPLOYER DEFERRAL FOR
PROCENTURY CORPORATION DEFERRED COMPENSATION PLAN
NOTICE OF EMPLOYER DEFERRAL
TO BE COMPLETED BY THE EMPLOYER
DATE OF NOTICE:                     
     ProCentury Corporation is pleased to announce that it will be making a
contribution in the form of an Employer Deferral for the account of
                                                             (the
“Participant”), who is either an eligible Key Employee (as designated by
ProCentury Corporation (the “Employer”)) or is a Director eligible for
participation in the ProCentury Corporation Deferred Compensation Plan (the
“Plan”) for the calendar year ending                     , ___ pursuant to the
following terms:
AMOUNT OF EMPLOYER DEFERRAL. The amount of the Employer Deferral is

.

EMPLOYER DEFERRAL VESTING DATE: The date upon which your rights to payment of
the Employer Deferral for this calendar year becomes vested is
                                                             (which is known as
your Employer Deferral Vesting Date for this year’s Employer Deferral).
Notwithstanding the foregoing, your Employer Deferral shall automatically become
100 percent vested upon your Separation from Service (a) for reason of death or
Disability Retirement, (b) at any time on or after your Normal Retirement Age,
or (c) within three years after a Change in Control.
All capitalized terms defined in the Plan shall have the same meaning as used
herein.

 

--------------------------------------------------------------------------------

 

PARTICIPATION AGREEMENT
TO BE COMPLETED BY THE PARTICIPANT
     This Participation Agreement evidences the Participant’s elections
regarding the Employer Deferral described for the calendar year as described
above as well as the Deferred Amounts described below (collectively, the
“Aggregate Account Balance”).
                                                                  (the
“Participant”) is either a n eligible Key Employee (as designated by ProCentury
Corporation (the “Employer”)) or a Director eligible for participation in the
ProCentury Corporation Deferred Compensation Plan (the “Plan”). This
Participation Agreement evidences the Participant’s participation in the Plan
for the calendar year ending December 31, ___. All capitalized terms defined in
the Plan shall have the same meaning as used herein.
     There are three different areas in which the Participant must make an
election regarding participation in the Plan. Please be sure to make an election
in each of the following areas:

(1)   DEFERRED AMOUNT. The Participant hereby irrevocably elects that the
following amount of Compensation for the calendar year shall be withheld for
deferral pursuant to Section 3.2 of the Plan as follows:

      You may elect to have the Deferred Amount withheld from either salary or
any separate bonus or incentive pay or both by completing the following:     (a)
  SALARY. From periodic payments of my Compensation over the calendar year:    
    Please complete only ONE of the following salary withholdings, if
applicable:         The fixed amount of $                     from the gross
amount of each periodic payment of such Compensation,

or

      The fixed percentage of                      percent of the gross amount
of each periodic payment of such Compensation.     (b)   BONUS OR INCENTIVE PAY.
From any bonus or incentive pay that may be earned during the calendar year
separately from the periodic payments of my Compensation for the year, the fixed
amount of $                     from, or the

2

--------------------------------------------------------------------------------

 

      fixed percentage of                      percent of, the gross amount of
any such bonus or incentive pay.

    You may not change your Deferred Amount in effect for a given calendar year.
  (2)   INVESTMENT FUNDS. I understand that I must elect the investment funds
that will be used to determine the income, expenses, gains, and losses credited
to my Aggregate Account Balance under the Plan. I understand that my election at
this time supersedes any previous investment election or instruction that I have
made under the Plan. I hereby elect that my account balances under the Plan
shall be credited as if invested in the following percentages in the following
investments:

      Please complete the following in increments of 1%. The sum of the column
“Percentage” must total 100%

          Investment Funds   Percentage
 
    %
 
    %
 
    %
 
    %
 
    %
 
       
TOTAL
    100 %
 
       

    Your investment election will remain in effect until this election is
changed. You may change your election by completing, executing and returning
another Participation Agreement to the Administrator or other form provided for
this purpose by the Administrator. The investment funds available for you to
elect under the Plan may be changed from time to time. In such event that the
investment funds available for election are changed, you will be notified if any
investment fund that you elected is no longer available, and you will have the
opportunity to change your election. If you do not timely change your election
or if any investment fund elected is no longer available, the Employer reserves
the right to reallocate money designated for that elected investment fund among
other available funds.   (3)   BENEFICIARY. I hereby designate the following as
my Beneficiary in the case of my death:

3

--------------------------------------------------------------------------------

 

  (1)   
 
     
 
     
 
    (2)   If the Beneficiary (Beneficiaries) named in (1) above is not living on
the date payments become payable to such Beneficiary:      
 
     
 
     
 

      This Beneficiary designation revokes all prior designations made by the
undersigned and is subject to all the terms of the Plan.       You may change
your “Beneficiary” by completing, executing, and returning another form of
Participation Agreement completed to show the Beneficiary as so changed as long
as it is received before your Entitlement Date (which has been established by
your Initial Participation Agreement).

ELECTION DATE. The due date by which you must return this Participation
Agreement completed and signed by you in order to be effective for the calendar
year ending December 31, ___. Return your completed and signed Participation
Agreement to:
 
 
 
AUTHORIZATION. I acknowledge that I have knowingly and voluntarily decided to
participate in the Plan. I understand that:

(a)   My Aggregate Account Balance and the other assets of the Plan remain
subject to the claims of the Employer’s general creditors until received by me
or my Beneficiary.   (b)   The Plan is a defined contribution plan, and my
benefit will be my vested Aggregate Account Balance and whatever Payment Form
can be purchased with that Aggregate Account Balance on my Entitlement Date
(both of which have been established by your Initial Participation Agreement).  
(c)   The Employer is not responsible for any loss that may be sustained as a
result of any elections made by me pursuant to this Participation Agreement or
that may be sustained by my Aggregate Account Balance as a result of any
investment thereof.

4

--------------------------------------------------------------------------------

 

(d)   My rights under this Plan, even if vested, are subject to forfeiture for
certain prohibited activities as provided in Section 3.6 of the Plan.

Dated:                               

                  Signature of Participant                  Printed name of
Participant   

This Participation Agreement is not valid or binding until it is accepted as
properly completed and signed by the Administrator.

            ACCEPTED:
    Dated:                                       Signature on behalf of the
Administrator           

5