EX-10.1



 





Exhibit 10.1




PROCENTURY CORPORATION




DEFERRED COMPENSATION PLAN




Amended and Restated

Effective November 14, 2007




 









 








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




 









 












	 	 	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-









 





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-











 





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




 









 






	 	 	 	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.




2









 












	 	(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




3









 






	 	 	 	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




4









 












	 	 	 	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.




5









 












	 	(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.




6









 












	 	(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.



7









 





     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.




8









 











     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




9









 












	 	 	 	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.




10









 












	 	(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




11









 












	 	 	 	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.



12









 





     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.




13









 








     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;




14









 












	 	(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.




15









 











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



16









 




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:  	 	 
	 




17











 





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.




 









 












	 	 	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




2









 






	 	 	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






3









 







	 	 	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