Document:

Exhibit 10.12

 

Exhibit 10.12

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

ProCentury Corporation

Restricted Stock Award Agreement

for

Restricted Stock

under the

2004 Stock Option and Award Plan

To                               :

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

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

465 Cleveland Avenue

Westerville, OH 43082

(614)-895-2000.

 

 

Your Stock Grant

     Your Stock Grant entitles you to receive                   
(                    ) shares of Restricted
Stock all of which are designated as Service Vesting Shares. As soon as you sign and return a
signed copy of the Acceptance, certificates evidencing these shares of Restricted Stock will be
issued in your name as record holder. Unless and until these shares are forfeited as discussed
below, you will be entitled to all rights and incidents of ownership of these Restricted Shares,
including all dividend and voting rights, from the Date of Grant, which is ___, 200_
contingent upon the successful negotiation of the employment contract dated ___, 200_.
However, until the shares become Vested Shares, you will not be entitled to offer for sale, sell,
pledge, assign, encumber, or otherwise transfer or dispose of such Unvested Shares or any interest
in such shares until satisfaction of all such restrictions imposed by the Plan or this Award
Agreement.

Vesting of Your Restricted Stock

     Your Service Vesting Shares are subject a Service Vesting Schedule that requires you to
complete a period of Service before those shares will become Vested Shares. Pursuant to your
Service Vesting Schedule, ___of the total number of your Service Vesting Shares will become
Vested Shares for each [calendar month/year] of your Service after the Date of Grant such that the
entire number of your Service Vesting Shares will become vested after [___calendar months/years] of
Service after the Date of Grant.

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

	 	•  	Death;

	 	•  	Disability or Retirement within the meaning of the Plan;

	 	•  	Discharge by the Company other than for Cause within the meaning of your
Employment Agreement;

	 	•  	Resignation by you for Good Reason within the meaning of your Employment
Agreement or

	 	•  	Resignation or discharge for any reason other than Cause upon or after a Change
in Control –

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

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

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

Forfeiture of Your Restricted Stock if Not Vested

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

Taxation

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

Miscellaneous

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

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

     One of the restrictions to facilitate any future public offering by the Company is that by
accepting this Award you agree on behalf of yourself and your heirs, legal representatives,
successors, and assigns that in the event of any underwritten public offering of any Company
securities made by the Company pursuant to an effective registration statement filed under the

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Securities Act, neither you nor any such heirs, legal representatives, successors, and assigns will
directly or indirectly sell, offer to sell, solicit an offer to buy, grant any option to purchase,
contract to sell (including, without limitation, any short sale), or otherwise dispose or offer to
dispose of any interest, equitable or beneficial, in any of such shares for such period of time
from and after the effective date of such registration statement except as provided in the Plan or
pursuant to such public offering.

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

	 	 	 	 	 
	 	 	ProCentury Corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Edward F. Feighan
	

	 	Its:
	 	Chairman, President and CEO

Acceptance

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

	 	 	 	 	 
	Dated:
	 	 	 	 
	

	 	 
	 	 
	

	 	 	 	Name of Participant

4Exhibit 10.13

 

Exhibit 10.13

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

ProCentury Corporation

Stock Option Award Agreement

for

Non-Qualified Stock Options

under the

2004 Stock Option and Award Plan

To                               :

     Congratulations! ProCentury Corporation is awarding you this Option to purchase shares of
Stock pursuant to its 2004 Stock Option and Award Plan. All capitalized terms used in this Award
Agreement shall have the same meaning as defined in the Plan. Your Option is subject to acceptance
by your signing a copy of this Award Agreement under the heading “Acceptance” and returning the
signed copy before the close of business on ___, 200_.

     The purpose of this Award Agreement is to summarize some of the terms and conditions of your
Option as well as the shares of Stock purchased upon exercise of the Option. This Award Agreement
makes numerous references to the Plan and is governed by the Plan document. You as the Participant
may obtain a copy of the current Plan document at any time by contacting the Company Secretary at

465 Cleveland Avenue

Westerville, OH 43082

(614)-895-2000.

 

 

Your Option

     Your Option entitles you to purchase up to                   
(                    ) shares of Stock
all of which are designated as Service Vesting Shares subject to vesting as described under
“Vesting of Your Option.”

     The Exercise Price at which you may purchase each such share is ___($___)
which is the Fair Market Value of a share determined as of ___, 200_, which is the Date
of Grant of your Option. Both the number of shares and the Exercise Price are subject to
adjustment for events such as stock splits, etc. as provided in the Plan.

Vesting of Your Option

     Your Service Vesting Shares are subject a Service Vesting Schedule that requires you to
complete a period of Service before you can exercise the Option to purchase those Shares. Pursuant
to your Service Vesting Schedule, ___of the total number of your Service Vesting Shares will
become Vested Shares for each calendar month of your Service after the Date of Grant such that the
entire number of your Service Vesting Shares will become vested after ___calendar months of
Service after the Date of Grant.

     As soon as your Unvested Shares become Vested Shares, you may exercise this Option to purchase
your Vested Shares in any one or more transactions at any time and from time to time during the
remaining term of your Option.

Taxation

     Your Option is designated as a Non-Qualified Stock Option under the Plan. The spread between
the market value and the Exercise Price of the Stock purchased will not be taxable to you until you
exercise the Option, at which time the spread will be taxable to you as compensation at ordinary
income rates. Any additional appreciation in value of the Stock realized upon sale of the stock
after your exercise is taxable to seller as a sale of property at capital gains rates. Although
the Company can give no assurance as to the taxability to you, you may contact the Company
Secretary for further information generally describing the tax aspects of a Non-Qualified Stock
Option.

Exercising Your Option

     You may exercise your Option from time to time at any time during the period from the Date of
Grant until 5:00 p.m. local time at the Company’s office on the calendar day immediately preceding
the 10th anniversary of the Date of Grant, which is the Date of Expiration of your
Option. You may exercise your Option any number of times during this Exercise Period until

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you have purchased all of your Vested Shares subject to the Option. Notwithstanding anything to
the contrary in this Award Agreement, this Option shall automatically expire upon, and no longer be
exercisable after, the first to occur of the following:

	•  	Date of Expiration;

	•  	If you are terminated for Cause, your last day of Service;

	•  	If you resign or are otherwise terminated for any reason other
than Cause, Disability, or Retirement, the first day of the fourth
calendar month beginning after your last day of Service;

	•  	If your Service is terminated for Retirement or Disability or
death, the first anniversary of your last day of Service.

     You exercise your Option by giving notice in writing (as provided in the Plan) to the Company
to the attention of the Company Secretary at the above address. Your notice must state the number
of shares being purchased and must be accompanied with payment of the Exercise Price for those
shares. Unless otherwise agreed with the Company, payment shall be by check in immediately
available funds payable in United States dollars to the order of the Company. Other methods of
payment are allowed under the Plan, and you may discuss the availability of these to you by
contacting the Company Secretary.

Other Terms and Conditions

     Your Option is not transferable except at your death by will or applicable laws of descent and
distribution. During your lifetime, this Option shall be exercisable only by you or, in the case
of your incapacity, your guardian, or legal representative.

     This Award Agreement and your Option are subject to other terms and conditions set forth in
the Plan, including withholding requirements for taxes, immediate termination of this Option if
your Service is terminated for Cause, certain restrictions in the case of a public offering and
certain securities law restrictions.

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

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

	 	 	 	 	 
	 	 	ProCentury Corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Edward F. Feighan
	

	 	Its:
	 	Chairman, President, and CEO

Acceptance

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

	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	

	 	 	 	 	,200	 	 	 
	

	 	 
	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	Participant Name

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