Exhibit 10.2



 





Exhibit 10.2







No Stock or other security shall be delivered, and no option or other right to acquire any
stock or other security shall be exercisable, pursuant to this Award except upon effective
registration under the Securities Act of 1933 as amended and the securities laws of each applicable
state or other jurisdiction or upon acceptance by the Company of an opinion of counsel in such form
and by such counsel as satisfactory to counsel for the Company that such registration is not
required.







ProCentury Corporation

Restricted Stock Award Agreement

for

Restricted Stock 

under the

2004 Stock Option and Award Plan




To _________________:1




     Congratulations! ProCentury Corporation is awarding you this Stock Grant of Restricted Stock
pursuant to its 2004 Stock Option and Award Plan (the “Plan) and your Executive Employment
Agreement (“Employment Agreement”). Except to the extent that reference is made to your Employment
Agreement, all capitalized terms used in this Award Agreement shall have the same meaning as
defined in the Plan. Your Stock Grant is subject to acceptance by your signing of a copy of this
Award Agreement under the heading “Acceptance” and returning the signed copy before the close of
business on _________, 200___.



     The purpose of this Award Agreement is to summarize some of the terms and conditions of your
Stock Grant as well as the shares of Restricted Stock to be issued. This Award Agreement makes
numerous references to the Plan and is governed by the Plan document except to the extent that
reference is made to your Employment Agreement. You as the Participant may obtain a copy of the
current Plan document at any time by contacting the Company Secretary at



465 Cleveland Avenue

Westerville, OH 43082

(614)-895-2000.










	1	 The Company entered into this agreement with
the individuals listed on Annex A attached hereto.




 









 










Your Stock Grant




     Your
Stock Grant entitles you to receive _________ (___) shares of
Restricted Stock all of which are designated as Performance Vesting Shares. As soon as you sign
and return a signed copy of the Acceptance, certificates evidencing these shares of Restricted
Stock (containing a notation regarding the restrictions on transfer of these shares discussed
below) will be issued in your name as record holder. Unless and until these shares are forfeited
as discussed below, you will be entitled to all rights and incidents of ownership of these
Restricted Shares, including all dividend and voting rights, from the Date of Grant. However,
until the shares become Vested Shares, you will not be entitled to offer for sale, sell, pledge,
assign, encumber, or otherwise transfer or dispose of such Unvested Shares or any interest in such
shares until satisfaction of all such restrictions imposed by the Plan or this Award Agreement.



Vesting of Your Restricted Stock




     Your Performance Vesting Shares are subject to a Performance Vesting Schedule that requires
the Company to achieve an average return on equity of 10% for the two fiscal years preceding the
applicable vesting date (the “ROE Target”) before a portion of those shares will become Vested
Shares. Pursuant to your Performance Vesting Schedule, 1/4th of the total number of your
Performance Vesting Shares will become Vested Shares on each anniversary of the Date of Grant,
provided (a) your Service with the Company has continued from Date of Grant until such anniversary
date, and (b) the ROE Target has been achieved. The entire number of your Performance Vesting
Shares will become vested, if at all, if your Service with the Company continues until ______,
200___ (the 4th anniversary of the Date of Grant) and the ROE Target has been achieved as
of each anniversary date of the Date of Grant through and including _________, 200_.



     In addition and notwithstanding any provision in the Plan to the contrary, your Unvested
Shares will become Vested Shares upon severance of your Service for any of the following reasons –




	•  	Death;
	 
	•  	Disability or Retirement within the meaning of the Plan;
	 
	•  	Discharge by the Company other than for Cause within the meaning of your Employment
Agreement;
	 
	•  	Resignation by you for Good Reason within the meaning of your Employment Agreement; or
	 
	•  	Resignation or discharge for any reason other than Cause upon or after a Change in
Control within the meaning of your Employment Agreement –




whichever is first to occur (constituting a “Date of Vesting” within the meaning of the Plan).




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     At death, your Vested Shares (including any Unvested Shares that become Vested Shares will be
transferred pursuant to your will or applicable laws of descent and distribution.



     Until your shares of Restricted Stock become Vested Shares, the certificates evidencing your
shares will contain a notation that these shares may not be transferred other than by reversion to
the Company upon forfeiture as discussed below, and these certificates will be held by an
appropriate officer of the Company with stock transfer powers signed by you in transferable form as
provided in Section 5.3 of the Plan. If your shares become Vested Shares and all requirements for
withholding of federal, state, local, and foreign taxes are satisfied, a new certificate without
any notation of the foregoing restrictions will be delivered to you, and each share represented by
this new certificate will no longer constitute a share of Restricted Stock.



Forfeiture of Your Restricted Stock is Not Vested




     If your Service is terminated for any reason other than one constituting a Date of Vesting
described above, you will forfeit all rights and incidents of ownership in and to all Unvested
Shares. In the event of such forfeiture, the certificates representing those Unvested Shares will
be cancelled, and all such Unvested Shares will revert to the Company.



Taxation




     Unless you make an election under section 83(b) of the Code to be taxed at the Date of Grant,
your Unvested Shares of Restricted Stock will not be taxable to you until they become Vested
Shares, at which time the market value of the Shares then vesting is subject to the Participant as
compensation at ordinary income rates for the year of the vesting. Any additional appreciation in
value of the Stock realized upon the sale of the stock after you vest is taxable as a sale of
property at capital gains rates. You may elect under section 83(b) of the Code to be taxed earlier
at ordinary income rates so that appreciation realized thereafter will be taxable at capital gains
rates. You are required to notify the Company if you make such an election under section 83(b).
Although the Company can give you no assurance as to the taxability to you, you may contact the
Company Secretary for further information generally describing the tax aspects of Restricted Stock.



Miscellaneous




     Your Unvested Shares are not transferable except to the extent they become vested at your
death.



     This Award Agreement and your Restricted Stock are subject to other terms and conditions set
forth in the Plan, including: (i) withholding requirements for taxes, (ii) immediate forfeiture of
all Unvested Shares if your Service is terminated for Cause, (iii) certain restrictions in the case
of a public offering, and (iv) certain securities law restrictions.



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     One of the restrictions to facilitate any future public offering by the Company is that by
accepting this Award you agree on behalf of yourself and your heirs, legal representatives,
successors, and assigns that in the event of any underwritten public offering of any Company
securities made by the Company pursuant to an effective registration statement filed under the
Securities Act, neither you nor any such heirs, legal representatives, successors, and assigns will
directly or indirectly sell, offer to sell, solicit an offer to buy, grant any option to purchase,
contract to sell (including, without limitation, any short sale), or otherwise dispose or offer to
dispose of any interest, equitable or beneficial, in any of such shares for such period of time
from and after the effective date of such registration statement except as provided in the Plan or
pursuant to such public offering.



     Finally, in the case of any conflict with the terms of this Award Agreement, the terms of the
Plan shall prevail and govern except in the case of any conflict between the terms of the Plan and
the terms of your Employment Agreement shall prevail.



	 	 	 	 	 
	 	 	ProCentury Corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:
	 	Edward F. Feighan
	

	 	Title:
	 	Chairman, President and Chief
	

	 	 	 	Executive Officer






Acceptance




     The Participant is familiar with the terms of this Award Agreement and the terms and
conditions of the Plan. The Participant understands that this Award and any Stock granted or
issued pursuant hereto are intended to be held for purposes of investment only and not for further
distribution by the Participant. By signing below, the Participant accepts this Award subject to
all of such terms and conditions and agrees to hold any Stock granted or issued pursuant to this
Award for purposes of investment only and not for further distribution unless and until the Company
advises the Participant such Stock may be distributed without registration under the Securities Act
or such Stock is to be distributed pursuant to such a registration.



	 	 	 	 	 
	Dated:
	 	 	 	 
	

	 
	 	 
	

	 	 	 	Participant Name






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Annex A




	 	 	 	 	 	 	 
	Participant	 	Grant Date	 	Number of Shares
	 
	Edward F. Feighan
	 	March 22, 2005	 	 	19,365        	 
	 
	Christopher C. Timm
	 	March 22, 2005	 	 	18,000        	 
	 
	Charles D. Hamm, Jr.
	 	March 22, 2005	 	 	17,659        	 







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