Document:

EX-10.40

 

Exhibit 10.40

AMENDMENT TO THE

TOLLGRADE COMMUNICATIONS, INC.

1995 LONG-TERM INCENTIVE COMPENSATION PLAN

     WHEREAS, Tollgrade Communications, Inc. (the “Company”) sponsors the Tollgrade Communications,
Inc. 1995 Long-Term Incentive Compensation Plan (the “Plan”);

     WHEREAS, pursuant to Section 15.1 of the Plan, the board of directors of the Company has the
authority to amend the Plan; and

     WHEREAS, the Company wishes to amend the Plan to reflect the provisions of Section 409A of the
Internal Revenue Code of 1986, as amended.

     NOW, THEREFORE, the Plan is hereby amended effective as of January 1, 2005 as follows:

1.      Section 8.6 is deleted in its entirety and reserved.

2.      Section 9.4 is amended in its entirety to read as follows:

	 	9.4	 	Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares shall be made in a single lump sum within 2 1/2 months following
the close of the applicable Performance Period. Subject to the terms of this Plan, the
Appropriate Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash or in Shares (or in a combination thereof) which have
an aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period. Such Shares may be
granted subject to any restrictions deemed appropriate by the Appropriate
Administrator.

3.      Article 12 is deleted in its entirety and reserved.

     IN WITNESS WHEREOF, the Company’s duly authorized officer has caused this Amendment to be
executed this 13th day of December, 2007.

	 	 	 	 	 
	 	TOLLGRADE COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Sara M. Antol
 	 
	 	Title:  	  General Counsel and SecretaryEX-10.41

 

Exhibit 10.41

AMENDMENT TO THE

TOLLGRADE COMMUNICATIONS, INC.

1998 EMPLOYEE INCENTIVE COMPENSATION PLAN

     WHEREAS, Tollgrade Communications, Inc. (the “Company”) sponsors the Tollgrade Communications,
Inc. 1998 Employee Incentive Compensation Plan (the “Plan”);

     WHEREAS, pursuant to Section 14.1 of the Plan, the board of directors of the Company has the
authority to amend the Plan; and

     WHEREAS, the Company wishes to amend the Plan to reflect the provisions of Section 409A of the
Internal Revenue Code of 1986, as amended.

     NOW, THEREFORE, the Plan is hereby amended effective as of January 1, 2005 as follows:

1.      Section 8.6 is deleted in its entirety and reserved.

2.      Section 9.4 is amended in its entirety to read as follows:

	 	9.4	 	Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares shall be made in a single lump sum within 2 1/2 months following
the close of the applicable Performance Period. Subject to the terms of this Plan, the
Committee, in its sole discretion, may pay earned Performance Units/Shares in the form
of cash or Shares (or in a combination thereof) which have an aggregate Fair Market
Value equal to the value of the earned Performance Units/Shares at the close of the
applicable Performance Period. Such Shares may be granted subject to any restrictions
deemed appropriate by the Committee.

3.      Article 11 is deleted in its entirety and reserved.

     IN WITNESS WHEREOF, the Company’s duly authorized officer has caused this Amendment to be
executed this 13th day of December, 2007.

	 	 	 	 	 
	 	TOLLGRADE COMMUNICATIONS, INC.

 	 
	 	By:  	/s/ Sara M. Antol
 	 
	 	Title:  	General Counsel and SecretaryEX-10.7

 

Exhibit 10.7

NON-QUALIFIED PLAN

TRUST AGREEMENT

     This Non-Qualified Plan Trust Agreement (“Trust Agreement”) entered into as of January 1,
2008 by and between ProCentury Corporation (the “Employer”) and Merrill Lynch Bank & Trust Co.,
FSB, (the “the Trustee”) with respect to a trust forming part of the ProCentury Corporation
Deferred Compensation Plan (the “Plan”).

     WHEREAS, the Employer has adopted the Non-Qualified Deferred Compensation Plan identified
above.

     WHEREAS, the Employer has incurred or expects to incur liability under the terms of such Plan
with respect to the individuals participating in such Plan.

     WHEREAS, the Employer wishes to establish a trust (the “Trust”) and to contribute to the Trust
assets that shall be held therein, subject to the claims of the Employer’s creditors in the event
of the Employer’s Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan;

     WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded
arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the
purpose of providing deferred compensation for a select group of management or highly compensated
employees for purpose of Title I of the Employee Retirement Income Security Act of 1974, as
amended.

     WHEREAS, it is the intention of the Employer to make contributions to the Trust to provide
itself with a source of funds to assist it in the meeting of its liabilities under the Plan;

     NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be
comprised, held and disposed of as follows:

SECTION 1.

ESTABLISHMENT OF TRUST

     (a) Deposit of Funds. The Employer hereby deposits with the Trustee in trust such cash and/or
marketable securities, if any, which shall become the principal of the Trust to be held,
administered and disposed of by the Trustee as provided in this Trust Agreement.

     (b) Irrevocability. The Trust hereby established shall be irrevocable.

     (c) Grantor Trust. The Trust is intended to be a grantor trust, of which the Employer is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended, and shall be construed accordingly.

     (d) Trust Assets. The principal of the Trust, and any earnings thereon, shall be held separate
and apart from other funds of the Employer and shall be used exclusively for the uses

 

 

and purposes of Plan participants and general creditors as herein set forth. Plan participants
and their beneficiaries shall have no preferred claim on, or any beneficial ownership interest in,
any assets of the Trust. Any rights created under the Plan and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries against the Employer. Any
assets held by the Trust will be subject to the claims of the Employer’s general creditors under
federal and state law in the event of Insolvency, as defined in Section 3(a) herein.

     (e) Additional Deposits. The Employer, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in trust
with the Trustee to augment
the principal to be held, administered and disposed of by the Trustee as provided in this Trust
Agreement. Neither the Trustee nor any Plan participant or beneficiary shall have any right to
compel such additional deposits.

     (f) Acceptance of Additional Deposits. The Trustee shall not be obligated to receive such cash
and/or property unless prior thereto the Trustee has agreed that such cash and/or property is
acceptable to the Trustee and the Trustee has received such reconciliation, allocation, investment
or other information concerning, or representation with respect to, the cash and/or property as the
Trustee may require. The Trustee shall have no duty or authority to (a) require any deposits to be
made under the Plan or to the Trustee; (b) compute any amount to be deposited under the Plan to the
Trustee; or (c) determine whether amounts received by the Trustee comply with the Plan. Assets of
the Trust may, in the Trustee’s discretion, be held in an account with an affiliate of the Trustee.

SECTION 2.

PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES

     (a) Payment of Benefits by Trustee. With respect to each Plan participant, the Employer shall
deliver to the Trustee a schedule (the “Payment Schedule”) that indicates the amounts payable in
respect of the participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to the Trustee for determining the amounts so payable, the form in which
such amounts are to be paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. The Payment Schedule shall be delivered to the Trustee
not more than thirty (30) business days nor fewer than fifteen (15) business days prior to the
first date on which a payment is to be made to the Plan participant. Any change to a Payment
Schedule shall be delivered to the Trustee not more than thirty (30) business days nor fewer than
fifteen (15) business days prior to the date on which the first payment is to be made in accordance
with the changed Payment Schedule. Except as otherwise provided herein, the Trustee shall make
payments to Plan participants and their beneficiaries in accordance with such Payment Schedule. The
Trustee shall make provisions for the reporting and withholding of any federal, state or local
taxes that may be required to be withheld with respect to the payment of benefits pursuant to the
terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine
that such amounts have been reported, withheld and paid by the Employer, it being understood
between the parties hereto that (1) the Employer shall on a timely basis provide the Trustee
specific information as to the amount of taxes to be withheld and (2) the Employer shall be
obligated to receive such withheld taxes from the Trustee and properly pay and report such amounts
to the appropriate taxing authorities.

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     (b) Entitlement to Benefits. The entitlement of a Plan participant or his or her beneficiaries
to benefits under the Plan shall be determined by the Employer or such party as it shall designate
under the Plan, and any claim for such benefits shall be considered and reviewed under the
procedures set out in the Plan.

     (c) Payment of Benefits by Employer. The Employer may make payment of benefits directly to
Plan participants or their beneficiaries as they become due under the terms of the Plan. If the
Employer determines to make a payment of a deferred compensation benefit directly to a participant
or beneficiary as the benefit becomes payable to the participant or such participant’s beneficiary
under the terms of the Plan, the Employer shall notify the Trustee of the decision to make payment
of the benefit directly to the participant or the participant’s beneficiary prior to the time the
benefit becomes payable to the participant or the participant’s beneficiary. The Employer shall
provide written certification to the Trustee evidencing such payment, and may at that time or at a
subsequent time request reimbursement from the Trustee of the amount of such payment. The Trustee,
upon receipt of such written certification and such request, shall distribute such amount to the
Employer. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient
to make payments of benefits in accordance with the terms of the Plan, the Employer shall make the
balance of each payment as it falls due. The Trustee shall notify the Employer where principal and
earnings are not sufficient.

     (d) No Duty to Determine Sufficiency. The Trustee shall have no responsibility to determine
whether the Trust is sufficient to meet the liabilities under the Plan, and shall not be liable for
payments or Plan liabilities in excess of the value of the assets held in the Trust.

SECTION 3.

TRUSTEE RESPONSIBILITY REGARDING

PAYMENTS IN THE EVENT OF INSOLVENCY

     (a) Insolvency. The Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Employer is Insolvent. The Employer shall be considered “Insolvent” for
purposes of this Trust Agreement if (i) the Employer is unable to pay its debts as they become due,
or (ii) the Employer is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.

     (b) Notice of Insolvency. At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust, for which the Employer is treated as
grantor and owner shall be subject to the claims of general creditors of the Employer under federal
and state law as set forth below.

          (i) The Board of Directors and the Chief Executive Officer of the Employer (or, if there is no
Chief Executive Officer, the highest ranking officer) shall have the duty to inform the Trustee in
writing of the Insolvency of the Employer. If a person claiming to be a creditor of the Employer
alleges in writing to the Trustee that the Employer has become Insolvent, the Trustee shall
determine whether the Employer is Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.

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          (ii) Unless the Trustee has actual knowledge of the Insolvency of the Employer, or has
received notice from the Employer or a person claiming to be a creditor alleging that the Employer
is Insolvent, the Trustee shall have no duty to inquire whether the Employer is Insolvent. The
Trustee may in all events rely on such evidence concerning the solvency of the Employer as may be
furnished to the Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the solvency of the Employer.

          (iii) If at any time the Trustee has determined that the Employer is Insolvent, the Trustee
shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of
the Trust for the benefit of the general creditors of the Employer. Nothing in this Trust Agreement
shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of the Employer with respect to benefits due under the Plan or
otherwise.

          (iv) The Trustee shall resume the payment of benefits to Plan participants or their
beneficiaries in accordance with Section 2 of this Trust Agreement only after the Trustee has
determined that the Employer is not Insolvent (or is no longer Insolvent).

     (c) Amount of Payments after Insolvency. Provided that there are sufficient assets, if the
Trustee discontinues the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such discontinuance shall include
the aggregate amount of all payments due to Plan participants or their beneficiaries under the
terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments
made to Plan participants provided for hereunder during any such period of discontinuance; provided
that the Employer has given the Trustee the information with respect to such payments made during
the period of discontinuance prior to resumption of payments by the Trustee.

     (d) Parent Assets after Insolvency. Notwithstanding the foregoing provisions of this Section
3, to the extent a parent corporation, if any (“Parent”), contributes Parent stock or other assets
to the Trust to satisfy any subsidiary corporation’s obligations to the Plan participants and
beneficiaries (“Parent Assets”), such Parent Assets are subject to claims of both the general
creditors of the subsidiary corporation as well as the general creditors of the Parent.

SECTION 4.

PAYMENTS TO THE EMPLOYER

Except as provided in Section 2(c) and Section 3 hereof, since the Trust is irrevocable, in
accordance with Section 1(b) hereof, the Employer shall have no right or power to direct the
Trustee to return to the Employer or to divert to others any of the Trust assets before the payment
of all benefits have been made to Plan participants and their beneficiaries pursuant to the terms
of the Plan and this Trust Agreement.

SECTION 5.

INVESTMENT AUTHORITY

     (a) Investment of Principal and Interest. The Trustee shall invest and reinvest the principal
and income of the Trust as directed by the Employer (including directions that the

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Trustee follow Plan participants’ deemed investment elections made in accordance with the
terms of the Plan), which directions may be changed from time to time, all in accordance with
procedures established by the Trustee. The Trustee may limit the categories of assets in which the
Trust may be invested.

     (b) Voting Rights. The Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by the Employer. All rights associated with assets of the Trust shall
be exercised by the Trustee or the person designated by the Trustee, and shall in no event be
exercised by or rest with Plan participants, except that voting rights with respect to Trust assets
will be exercised by the Employer, unless an investment adviser has been appointed pursuant to
Section 5(d) and voting authority has been delegated to such investment adviser.

     (c) Substitution of Assets. The Employer shall have the right at any time, and from time to
time in its sole discretion, to substitute assets of equal fair market value for any asset held by
the Trust. This right is exercised by the Employer in a nonfiduciary capacity without the approval
or consent of any person in a fiduciary capacity.

     (d) Appointment of Investment Manager. The Employer may appoint one or more investment
managers, including any entities affiliated with the Trustee, who shall have the power to manage,
acquire, or dispose of such portion of the assets of the Trust as the Employer shall determine
subject to the following:

          (i) An investment manager shall act in accordance with the provisions of an investment
management agreement entered into between it and the Employer, an executed copy of which investment
management agreement shall be filed with the Trustee;

          (ii) Each such investment manager must be: (i) registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) if not registered as an investment adviser under such Act
because of paragraph (1) of Section 203A(a) of such Act, is registered as an investment adviser
under the laws of the state (referred to in such paragraph (1)) in which it maintains its principal
office and place of business and satisfied any applicable filing requirements; (iii) a bank, as
defined in said Act; (iv) an insurance company qualified to manage, acquire and dispose of the
assets of the Plan under the laws of more than one state of the United States; or (v) an
independent third party that shall be designated or appointed by the Employer, and that shall
provide investment advice on a discretionary or nondiscretionary basis with respect to that portion
of the assets of the Trust as the Employer shall specify from time to time by written direction(s)
to the Trustee;

          (iii) The indicia of ownership of the assets of the Trust shall be held by the Trustee at all
times, unless another custodian is appointed by the Employer;

          (iv) Any entity affiliated with the Trustee may act as broker or dealer to execute
transactions, including the purchase of any securities directly distributed, underwritten, or
issued by an entity affiliated with, the Trustee, at standard commission rates, mark-ups or
concessions, and to provide other management or investment services with respect to such trust,
including the custody of assets;

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          (v) Any direction provided to the Trustee by an investment manager shall be provided in
writing or given orally and confirmed in writing, or by telephonic or electronic methods acceptable
to the Trustee as soon as practicable. Alternatively, an investment manager may provide investment
instructions directly to the broker or dealer and receipt by the Trustee of a confirmation of the
transaction from the broker or dealer shall be conclusive evidence of
such transactions. In either
case, the Trustee shall have the authority within twenty-four (24) hours of receipt of such
direction from the investment manager or confirmation of a transaction to instruct the investment
manager to rescind the transaction if the Trustee determines that the investment is inconsistent
with its operational or administrative requirements; and

          (vi) The Trustee may pay any such investment manager for any such services from the assets of
the Trust without reduction for any fees or compensation paid to the Trustee for its services as
trustee.

     Notwithstanding any other provision of the Trust Agreement to the contrary, with respect to
the investment of the assets of the Trust managed by an investment manager, the Trustee shall have
only the duty to follow the directions of the investment manager and the Trustee shall not be
liable to anyone and shall be completely indemnified and held harmless by the Employer:

	 	(I)	 	for an act or omission of the investment manager (including an act or omission
by the Trustee pursuant to the direction of the investment manager) with respect to the
investment of such assets;
	 
	 	(II)	 	for failing to act with respect to the investment or reinvestment of such
assets absent direction from the investment manager; or
	 
	 	(III)	 	for failing to invest, periodically review, diversify or otherwise deal with
the investment of such assets.

     In the event the Employer is Insolvent for purposes of Section 3 and the Employer fails to
provide effective investment instructions to the Trustee as provided in Section 5(a), the Trustee
may appoint one or more investment advisers who are registered as investment advisers under the
Investment Advisers Act of 1940, who may be affiliates of the Trustee, to provide investment advice
on a discretionary or nondiscretionary basis with respect to all or a specified portion of the
assets of the Trust.

     (e) Powers of Trustee. Subject to Section 5(a), the Trustee, or the Trustee’s designee, is
authorized and empowered:

          (i) To invest and reinvest Trust assets, together with the income therefrom, in common stock,
preferred stock, convertible preferred stock, bonds, debentures, convertible debentures and bonds,
mortgages, notes, commercial paper and other evidences of indebtedness (including those issued by
the Trustee), shares of mutual funds (which funds may be sponsored, managed or offered by an
affiliate of the Trustee), guaranteed investment contracts, bank investment contracts, other
securities, policies of life insurance, annuity contracts, options, options to buy or sell
securities or other assets, and all other property of any type (personal, real or mixed, and
tangible or intangible);

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          (ii) To deposit or invest all or any part of the assets of the Trust in savings accounts or
certificates of deposit or other deposits in a bank or savings and loan association or other
depository institution, including the Trustee or any of its affiliates, provided with respect to
such deposits with the Trustee or an affiliate the deposits bear a reasonable interest rate;

          (iii) To hold, manage, improve, repair and control all property, real or personal, forming
part of the Trust; to sell, convey, transfer, exchange, partition, lease for any term, even
extending beyond the duration of this Trust, and otherwise dispose of the same from time to time;

          (iv) To hold in cash, without liability for interest, such portion of the Trust as is pending
investments, or payment of expenses, or the distribution of benefits;

          (v) To take such actions as may be necessary or desirable to protect the Trust from loss due
to the default on mortgages held in the Trust including the appointment of agents or trustees in
such other jurisdictions as may seem desirable, to transfer property to such agents or trustees, to
grant to such agents such powers as are necessary or desirable to protect the Trust, to direct such
agent or trustee, or to delegate such power to direct, and to remove such agent or trustee;

          (vi) To settle, compromise or abandon all claims and demands in favor of or against the Trust;

          (vii) To exercise all of the further rights, powers, options and privileges granted, provided
for, or vested in trustees generally under the laws of the state in which the Trustee has its
principal place of business so that the powers conferred upon the Trustee herein shall not be in
limitation of any authority conferred by law, but shall be in addition thereto;

          (viii) To borrow money from any source and to execute promissory notes, mortgages or other
obligations and to pledge or mortgage any trust assets as security; and

          (ix) To maintain accounts at, execute transactions through, and lend on an adequately secured
basis stocks, bonds or other securities to, any brokerage or other firm, including any firm which
is an affiliate of the Trustee.

SECTION 6.

ADDITIONAL POWERS OF THE TRUSTEE

     To the extent necessary or which it deems appropriate to implement its powers under Section 5
or otherwise to fulfill any of its duties and responsibilities as the Trustee of the Trust, the
Trustee shall have the following additional powers and authority:

     (a) To register securities, or any other property, in its name or in the name of any nominee,
including the name of any affiliate or the nominee name designated by any affiliate, with or
without indication of the capacity in which property shall be held, or to hold securities in bearer form and to
deposit any securities or other property in a depository or clearing corporation;

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     (b) To designate and engage the services of, and to delegate powers and responsibilities to,
such agents, representatives, advisers, counsel and accountants as the Trustee considers necessary
or appropriate, any of whom may be an affiliate of the Trustee or a person who renders services to
such an affiliate, and, as part of its expenses under this Trust Agreement, to pay their reasonable
expenses and compensation;

     (c) To make, execute and deliver, as the Trustee, any and all deeds, leases, mortgages,
conveyances, waivers, releases or other instruments in writing necessary or appropriate for the
accomplishment of any of the powers listed in this Trust Agreement; and

     (d) Generally to do all other acts which the Trustee deems necessary or appropriate for the
protection of the Trust.

SECTION 7.

DISPOSITION OF INCOME

     During the term of this Trust Agreement, all income received by the Trust, net of expenses and
taxes, shall be accumulated and reinvested.

SECTION 8.

ACCOUNTING BY THE TRUSTEE

     The Trustee shall keep accurate and detailed records of all investments, receipts,
disbursements, and all other transactions required to be made, including such specific records as
shall be agreed upon in writing between the Employer and the Trustee. Within ninety (90) calendar
days following the close of each calendar year and within ninety (90) calendar days after removal
or resignation of the Trustee, the Trustee shall deliver to the Employer a written account of its
administration of the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing all cash, securities and other
property held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. The Trustee may satisfy its obligation under this Section 8 by
rendering to the Employer monthly statements setting forth the information required by this Section
separately for the month covered by the statement.

SECTION 9.

RESPONSIBILITY AND INDEMNITY OF THE TRUSTEE

     (a) Standard of Conduct. The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like capacity and familiar
with such matters would use in the conduct of an enterprise of a like character and with like aims,
provided, however, that the Trustee shall incur no liability to any person for any action taken
pursuant to a direction, request or approval given by the Employer which is contemplated by, and in
conformity with, the terms of the Plan and this Trust and is given in writing by the Employer or in
such other manner prescribed by the Trustee. The Trustee shall also incur no liability to any
person for any failure to act in the absence of direction, request or

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approval from the Employer which is contemplated by, and in conformity with, the terms of this
Trust. In the event of a dispute between the Employer and a party, the Trustee may apply to a court
of competent jurisdiction to resolve the dispute.

     (b) Indemnification of Trustee. The Employer hereby indemnifies the Trustee and each of its
affiliates (collectively, the “Indemnified Parties”) against, and shall hold them harmless from,
any and all loss, claims, liability, and expense, including reasonable attorneys’ fees, imposed
upon or incurred by any Indemnified Party as a result of any acts taken, or any failure to act, in
accordance with the directions from the Employer or any designee of the Employer, or by reason of
the Indemnified Party’s good faith execution of its duties with respect to the Trust, including,
but not limited to, its holding of assets of the Trust. The Trustee is authorized to prosecute or
defend actions, suits, claims or proceedings for the protection of Trust assets and of the Trustee
in the performance of the duties of the Trustee and to represent the Trust in all actions, suits,
claims or proceedings. The Trustee shall have the authority to pay, contest or settle any claim by
or against the Trust by compromise, arbitration or otherwise; to release, in whole or in part, any
claim belonging to the Trust to the extent that the claim is deemed uncollectible by the Trustee.
Notwithstanding the foregoing, the Trustee may only pay or settle a claim assessed against the
Trust by the Employer if it is compelled to do so by a final order of a court of competent
jurisdiction which is not subject to appeal. The Employer agrees to indemnify the Trustee against
the Trustee’s costs, expenses and liabilities (including, without limitation, attorneys’ fees and
expenses) relating thereto. The Employer’s obligations in the foregoing regard shall be satisfied
promptly by the Employer, provided that in the event the loss, claim, liability or expense involved
is determined by a no longer appealable final judgment entered in a lawsuit or proceeding to have
resulted from the gross negligence or willful misconduct of the Trustee, the Trustee shall promptly
on request thereafter return to the Employer any amount previously received by the Trustee under
this Section with respect to such loss, claim, liability or expense. If the Employer does not pay
such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment
from the Trust without direction from the Employer.

     (c) Legal Counsel. The Trustee may consult with legal counsel (who may also be counsel for the
Employer generally) with respect to any of its duties or obligations hereunder.

     (d) Other Advisers. The Trustee may hire agents, accountants, actuaries, investment advisers,
financial consultants or other professionals to assist it in performing any of its duties or
obligations hereunder.

     (e) Authority of Trustee. The Trustee shall have, without exclusion, all powers conferred on
the Trustee by applicable law, unless expressly provided otherwise herein, provided, however, that
if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a
beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion
of the policy to a different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.

     (f) Loan Against Insurance Policy. However, notwithstanding the provisions of Section 9(e)
above, the Trustee may loan to the Employer the proceeds of any borrowing against an insurance
policy held as an asset of the Trust.

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     (g) Limitation on Trustee. Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or to applicable law, the Trustee shall not have any power that could give this
Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning
of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.

SECTION 10.

COMPENSATION AND EXPENSES OF THE TRUSTEE

     The Trustee is authorized, unless otherwise agreed by the Trustee, to withdraw from the Trust
without direction from the Employer the amount of its fees in accordance with the fee schedule
agreed to in writing by the Employer and the Trustee. The Employer shall pay all administrative
expenses, but if not so paid, the expenses shall be paid from the Trust.

SECTION 11.

RESIGNATION AND REMOVAL OF THE TRUSTEE

     (a) Resignation of Trustee. The Trustee may resign at any time by written notice to the
Employer, which shall be effective sixty (60) calendar days after receipt of such notice unless the
Employer and the Trustee agree otherwise.

     (b) Removal of Trustee. The Trustee may be removed by the Employer on sixty (60) calendar
days’ written notice or upon shorter written notice accepted by the Trustee.

     (c) Transfer of Assets to Successor.

          (i) Upon resignation or removal of the Trustee and appointment of a successor Trustee, all
assets shall subsequently be transferred to the successor Trustee. The transfer shall be completed
within 60 days after receipt of notice of resignation, removal or transfer, unless the Employer
extends the time limit, provided that the Trustee is provided assurance by the Employer
satisfactory to the Trustee that all fees and expenses reasonably anticipated will be paid.

          (ii) Upon settlement of the account and transfer of the Trust assets to the successor Trustee,
all rights and privileges under this Trust Agreement shall vest in the successor Trustee and all
responsibility and liability of the Trustee with respect to the Trust and assets thereof shall
terminate subject only to the requirement that the Trustee execute all necessary documents to
transfer the Trust assets to the successor Trustee.

SECTION 12.

APPOINTMENT OF SUCCESSOR

     (a) Employer Appointment of Successor. If the Trustee resigns or is removed in accordance with
Section 11(a) or Section 11(b), the Employer may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under state law, as a
successor to replace the Trustee upon resignation or removal. The appointment shall be effective
when accepted in writing by the new Trustee, who shall have all of the rights and powers of the
former Trustee, including ownership rights in the Trust assets. The former

10

 

Trustee shall execute any instrument necessary or reasonably requested by the Employer or the
successor Trustee to evidence the transfer.

     (b) Court Appointment of Successor. If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12(a) hereof, by the effective date of resignation or removal
under Section 11(a) or Section 11(b). If no such appointment has been made, the Trustee may apply
to a court of competent jurisdiction for appointment of a successor or for instructions. All
expenses of the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.

     (c) Duty of Successor Trustee. The successor Trustee need not examine the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject to Sections 8 and 9.
The successor Trustee shall not be responsible for and the Employer shall indemnify and defend the
successor Trustee from any claim or liability resulting from any action or inaction of any prior
Trustee or from any other past event, or any condition existing at the time it becomes successor
Trustee.

SECTION 13.

AMENDMENT OR TERMINATION

     (a) Amendment. This Trust Agreement may be amended by a written instrument executed by the
Trustee and the Employer. Notwithstanding the foregoing, no such amendment shall conflict with the
terms of the Plan or shall make the Trust revocable, since the Trust is irrevocable in accordance
with Section 1(b) hereof.

     (b) Termination by Employer. The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plan. Upon termination of the Trust any assets remaining in the Trust shall be returned to the
Employer. Notwithstanding the preceding sentence, if Parent Assets remain in the Trust at
termination, such Parent Assets shall be returned to Parent.

     (c) Termination with Participant Approval. Upon written approval of participants or
beneficiaries entitled to payment of benefits pursuant to the terms of the Plan, the Employer may
terminate this Trust prior to the time all benefit payments under the Plan have been made. All
assets in the Trust at termination shall be returned to the Employer. Notwithstanding the preceding
sentence, if Parent Assets remain in the Trust at termination, such Parent Assets shall be returned
to Parent.

SECTION 14.

MISCELLANEOUS

     (a) Severability. Any provision of this Trust Agreement prohibited by law shall be ineffective
to the extent of any such prohibition, without invalidating the remaining provisions hereof.

     (b) No Assignment of Benefits. Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or in

11

 

equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.

     (c) Governing Law. This Trust Agreement and its enforcement shall be governed by and construed
in accordance with the laws of the State of New Jersey.

     (d) Survival. The provisions of Sections 2(d), 3(b)(iii), 9(b) and 15 of this Trust Agreement
shall survive termination of this Trust Agreement.

     (e) Conflict with Plan Document. The rights, duties, responsibilities, obligations and
liabilities of the Trustee are as set forth in this Trust Agreement, and no provision of the Plan
or any other documents shall affect such rights, responsibilities, obligations and liabilities. If
there is a conflict between provisions of the Plan and this Trust Agreement with respect to any
subject involving the Trustee, including but not limited to the responsibility, authority or powers
of the Trustee, the provisions of this Trust Agreement shall be controlling.

     (f) Shareholder Communications Act. The Employer agrees that the Trustee will not supply the
Employer’s name to issuers of any securities held in the Trust and, therefore, the Employer will
not receive information regarding those securities directly from the issuer. Instead, the Employer
will receive information from the Trustee, unless the Employer notifies the Trustee in writing
otherwise.

SECTION 15.

ARBITRATION

     By signing this Trust. Agreement, including this arbitration clause, the Employer and the
Trustee agree as follows:

	 	•	 	The Employer and the Trustee are giving up the right to sue each other in court,
including the right to a trial by jury, except as provided by the rules of the
arbitration forum in which a claim is filed.
	 
	 	•	 	Arbitration awards are generally final and binding; a party’s ability to have a
court reverse or modify an arbitration award is very limited.
	 
	 	•	 	The ability of the Employer and the Trustee to obtain. documents, witness statements
and other discovery is generally more limited in arbitration than in court proceedings.
	 
	 	•	 	The arbitrators do not have to explain the reason(s) for their award.
	 
	 	•	 	The panel of arbitrators will typically include a minority of arbitrators who were
or are affiliated with the securities industry.
	 
	 	•	 	The rules of some arbitration forums may impose time limits for bringing a claim in
arbitration. In some cases, a claim that is ineligible for arbitration may be brought
in court.

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	 	•	 	The rules of the arbitration forum in which the claim is filed, and any amendments
thereto, shall be incorporated into this agreement.

     The undersigned Employer and the Trustee agree that all controversies which may arise between
the Employer and the Trustee in connection with this Trust Agreement, including but not limited to
those involving any transaction related to the Plan or the Plan accounts, or the construction,
performance, or breach of this or any other agreement between the Employer and the Trustee, whether
entered into prior to, on, or subsequent to the date hereof; shall be determined by arbitration.

     Any arbitration under this Trust Agreement shall be conducted only before the New York Stock
Exchange, Inc. (“NYSE”), an arbitration facility provided by any other exchange of which Merrill
Lynch, Pierce, Fenner & Smith Incorporated (“MLPF& S”) is a member, or the National Association of
Securities Dealers, Inc. (“ NASD”), and in accordance with its rules then in force.

The Employer may elect in the first instance whether arbitration shall be conducted
before the NYSE, another exchange of which MLPF& S is a member, or the NASD. If the
Employer fails to make such election, by registered letter or telegram addressed to:

Director -— Non-Qualified Deferred Compensation Product

Merrill Lynch, Pierce, Fenner & Smith Incorporated Retirement Group

1400 Merrill Lynch Drive, MSC 0602

Pennington, NJ 08534

before the expiration of five (5) days after receipt of a written request from the Trustee to make
such election, then the Trustee may make such election. Judgment upon the award of arbitrators may
be entered in any court, state or federal, having jurisdiction. No person shall bring a putative or
certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement
against any person who has initiated in court a putative class action, or who is a member of a
putative class who has not opted out of the class with respect to any claims encompassed by the
putative class action until:

	 	(ii)	 	the class certification is denied;
	 
	 	(iii)	 	the class is decertified; or
	 
	 	(iv)	 	the person is excluded from the class by the court.

     Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any
rights under this Trust Agreement except to the extent stated herein.

13

 

Employer Copy

BY SIGNING THIS TRUST AGREEMENT, THE UNDERSIGNED EMPLOYER ACKNOWLEDGES (1) THAT, IN ACCORDANCE WITH
THE ABOVE TERMS, THE UNDERSIGNED IS AGREEING ON BEHALF OF THE PLAN IN ADVANCE TO ARBITRATE ANY
CONTROVERSIES WHICH MAY ARISE WITH THE TRUSTEE AND (2) RECEIPT OF A COPY OF THIS TRUST AGREEMENT,
INCLUDING THIS ARBITRATION CLAUSE.

     IN WITNESS WHEREOF, the Employer and the Trustee have executed this Trust Agreement each by
action of a duly authorized person.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Merrill Lynch Bank & Trust Co., FSB	 	ProCentury Corporation 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Employer
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ A. Scott Roberto	 	 	 	By:	 	/s/ Edward F. Feighan
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Name/Title:	 	A. Scott Roberto/Trust Officer 	 	 	 	Name/Title:	 	Chairman and CEO 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	1-30-08 	 	 	 	Date:	 	12-21-07
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Add second signature if required:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Name/Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Date:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

14

 

Trustee Copy

BY SIGNING THIS TRUST AGREEMENT, THE UNDERSIGNED EMPLOYER ACKNOWLEDGES (1) THAT, IN ACCORDANCE WITH
THE ABOVE TERMS, THE UNDERSIGNED IS AGREEING ON BEHALF OF THE PLAN IN ADVANCE TO ARBITRATE ANY
CONTROVERSIES WHICH MAY ARISE WITH THE TRUSTEE AND (2) RECEIPT OF A COPY OF THIS TRUST AGREEMENT,
INCLUDING THIS ARBITRATION CLAUSE.

     IN WITNESS WHEREOF, the Employer and the Trustee have executed this Trust Agreement each by
action of a duly authorized person.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Merrill Lynch Bank & Trust Co., FSB	 	ProCentury Corporation 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Employer
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ A. Scott Roberto	 	 	 	By:	 	/s/ Edward F. Feighan
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Name/Title:	 	A. Scott Roberto/Trust Officer 	 	 	 	Name/Title:	 	Chairman and CEO 
	 

	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	1-30-08 	 	 	 	Date:	 	12-21-07
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Add second signature if required:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Name/Title:	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Date:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

15

 

SIPC INSURANCE AND ADDITIONAL COVERAGE

     The securities and cash we hold in your account are protected by the Securities Investor
Protection Corporation (SIPC) for up to $500,000 (inclusive of up to a maximum of $ I00,000 for
cash).

     In addition, Merrill Lynch has obtained “excess-SIPC” coverage from Lloyd’s of London. The
Lloyd’s policy provides further protection for each customer (including up to $1.9 million for
cash), subject to an aggregate loss limit of $600 million for all customer claims.

     Neither SIPC protection nor the additional “excess-SIPC” coverage applies to deposits made
through a bank deposit program or to. the other assets that are not securities.

     Each account held by a separate customer (as defined by applicable law) is treated separately
for purposes of the above protection.

     You may obtain further information about SIPC, including the SIPC Brochure, via SIPC’s website
at http//wwwsipc.org or by calling SIPC at (202) 371-8300.

FutureComp is a registered service mark of Merrill Lynch & Co., Inc.

Merrill Lynch Trust Company; A Division of Merrill Lynch Bank & Trust Co., FSB.

©June 2007 Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Printed in the U.S.A.

Member, Securities Investor Protection Corporation (SIPC).

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