EXHIBIT 10.1

FREMONT MICHIGAN INSURACORP, INC.

STOCK-BASED COMPENSATION PLAN

November 18, 2003, as amended and restated effective December 11, 2007

 

1. PURPOSES

The general purposes of this Stock-Based Compensation Plan (the “Plan”) are to
encourage employees and non-employee directors of and consultants to Fremont
Michigan InsuraCorp, Inc. (the “Company”) and its Affiliates (as defined below)
to acquire a proprietary interest in the Company in order to create an increased
incentive to contribute to the Company's future success and prosperity, and to
enhance the ability of the Company and its Affiliates to attract and retain
exceptionally qualified individuals upon whom the sustained progress, growth,
and profitability of the Company depend, thus enhancing the value of the Company
for the benefit of its stockholders.

 

2. DEFINITIONS

“Affiliate” means any entity in which the Company directly or indirectly has a
significant equity interest under generally accepted accounting principles and
any other entity in which the Company has a significant direct or indirect
equity interest as determined by the Committee. The term shall also include any
entity which, with respect to the Company, satisfies the definitions of “parent
corporation” or “subsidiary corporation” stated in Section 424 of the Code.

“Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent, or Other Stock-Based Award
granted under the Plan.

“Award Agreement” means a written agreement, contract, or other instrument or
document evidencing an Award.

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Board acting as a whole, unless a committee of the
Company’s directors is designated by the Board (and changed in the Board's
discretion at any time and from time to time) to administer the Plan and
composed of not less than two directors, each of whom is a “non-employee
director" within the meaning of Rule 16b-3, or, to the extent provided in
Section 3 of the Plan, another director or group of directors to whom authority
has been delegated pursuant to Section 3(m). The above, despite the fact that a
Committee member shall fail to qualify under the above requirements, shall not
invalidate any Award made by the Committee, if the Award is otherwise validly
made under the Plan.

“Disability” means, with respect to a given Participant at a given time, any
medically determinable physical or mental impairment that the Committee, on the
basis of competent, medical evidence, reasonably determines has rendered or will
render the Participant permanently and totally disabled within the meaning of
Section 422(c)(6) of the Code (or such successor section as is in effect at the
time).

“Dividend Equivalent” means a right granted under Section 6(e) of the Plan.

“Effective Date” means October 15, 2004, the date on which the Fremont Mutual
Insurance Company was converted from a Michigan mutual property and casualty
insurance company to a Michigan stock property and casualty insurance company
and the Company closed its initial public offering of common stock.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value" means, with respect to a Share on a given date: (a) if the
Shares are listed for trading on a national securities exchange (including, for
this purpose, the National Market System (“NMS”) of the National Association of
Securities Dealers Automated Quotation System (“NASDAQ”)) on that date, the
closing Share price on that exchange (or, if there is more then

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one, the principal such exchange), or, for the NMS, the last sale price, on the
day immediately preceding the date as of which fair market value is being
determined, or on the next preceding day on which Shares were there traded if no
Shares were traded on the immediately preceding day; (b) if the Shares are not
listed for trading on any securities exchange (including the NMS) on that date
but are reported by NASDAQ, and market information concerning the Shares is
published on a regular basis in The Wall Street Journal or The New York Times,
the average of the daily bid and low asked prices of the Shares, as so
published, on the day nearest preceding the date in question for which the
prices were published; (c) if (a) is inapplicable and market information
concerning the Shares is not regularly published as described in (b), the
average of the high bid and low asked prices of the Shares in the
over-the-counter market on the day nearest preceding the date in question as
reported by NASDAQ (or, if NASDAQ does not report prices for the Shares, another
generally accepted reporting service); or (d) if none of the above are
applicable, the fair market value of a Share as, of the date in question,
determined by the Committee.

“Non-Qualified Stock Option” means an Option that is not an Incentive Stock
Option.

“Option” means an option to buy Shares granted under Section 6(a) of the Plan.

“Other Stock-Based Award” means a right granted under Section 6(f) of the Plan.

“Participant” means an employee or non-employee director of or consultant to the
Company or any Affiliate designated to be granted an Award under the Plan.

“Performance Award” means a right granted under Section 6(d) of the Plan.

“Restricted Period” means the period of time during which an Award of Restricted
Stock or Restricted Stock Units is subject to transfer restrictions and
potential forfeiture.

“Restricted Stock” means a Share granted under Section 6(c) of the Plan.

“Restricted Stock Unit” means a right granted under Section 6(c) of the Plan
that is denominated in Shares.

“Rule 16b-3” means Securities and Exchange Commission Rule 16b-3 (or any
successor rule or regulation), as applicable with respect to the Company at a
given time.

“Section 16” means Section 16 of the Exchange Act and the rules and regulations
implementing it, or any successor provision, rule, or regulation in effect at a
given time.

“Section 16 Reporting Person” means a person who is a director or officer of the
Company for purposes of Section 16.

“Shares” means shares of the Company's common stock, no par value per share, or
such other securities or property as may become the subject of Awards, or become
subject to Awards, pursuant to an adjustment made under Section 4 (b) of the
Plan.

“Stock Appreciation Right” means a right granted under Section 6(b) of the Plan.

 

3. ADMINISTRATION

The Committee shall administer the Plan. Subject to the terms and limitations
stated in the Plan, and to applicable law, the Committee’s authority shall
include without limitation the power to:

(a) designate Participants;

(b) determine the types of Awards to be granted and the times at which Awards
will be granted;

(c) determine the number of Shares to be covered by Awards and any payments,
rights, or other matters to be calculated in connection with them;

(d) determine the terms and conditions of Awards and amend the terms and
conditions of outstanding Awards, including the acceleration of vesting of
rights granted by Awards and the shortening of a Restricted Period;

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(e) determine how, whether, to what extent, and under what circumstances Awards
may be settled or exercised in cash, Shares, other Awards, or other securities
or property, or canceled, forfeited, or suspended;

(f) determine how, whether, to what extent, and under what circumstances cash,
Shares, other Awards, other securities or property, or other amounts payable
with respect to an Award shall be deferred, whether automatically or at the
election of the holder or of the Committee;

(g) determine the methods and procedures for establishing the value of any
property (including, without limitation, Shares or other securities)
transferred, exchanged, given, or received with respect to the Plan or any
Award;

(h) prescribe and amend the forms of Award Agreements and other instruments
required under or advisable with respect to the Plan;

(i) interpret and administer the Plan, Award Agreements, Awards, and any
contract, document, instrument, or agreement relating to it;

(j) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the administration of the Plan;

(k) decide all questions and settle all controversies and disputes which may
arise in connection with the Plan, Award Agreements, or Awards;

(l) delegate to one or more other directors of the Company (who need not be
"non-employee directors" within the meaning of Rule 16b-3) the authority to
designate and grant Awards to Eligible Participants, provided those Participants
are not Section 16 Reporting Persons; and

(m) make any other determination and take any other action that the Committee
deems necessary or desirable for the interpretation, application, or
administration of the Plan, Award Agreements, or Awards.

All designations, determinations, interpretations, and other decisions with
respect to the Plan, Award Agreements, or any Award shall be within the sole
discretion of the Committee, may be made at any time, and shall be final,
conclusive, and binding. To the extent that and for so long as the Committee may
delegate to one or more other directors its authority to designate Participants
and grant Awards as permitted by subsection (l) above, subsequent references in
the Plan to the "Committee" shall be construed to include such other director or
directors acting pursuant to the delegated authority.

 

4. SHARES AVAILABLE FOR AWARDS

(a) Shares Available. Subject to adjustment as provided in Section 4(b):

(i) Initial Authorization. There shall be an amount of Shares equal to 43,105
shares, being 5% of the Shares issued in the initial public stock offering of
the Company, initially available for issuance under the Plan. Pursuant to
Section 4(b) of the Plan, the number of shares subject to the Plan was increased
to 86,210 to adjust for the two-for-one stock split paid on November 17, 2006.

(ii) Accounting for Awards. For purposes of this Section 4:

(A) if an Award (other than a Dividend Equivalent) is denominated in Shares, the
number of Shares covered by the Award, or to which the Award relates, shall be
counted on the date of grant of the Award against the aggregate number of Shares
available for granting Awards under the Plan, to the extent determinable on that
date, and, as long as the number of Shares is not then determinable, under
procedures adopted by the Committee consistent with the purposes of the Plan;
and

(B) Dividend Equivalents and Awards not denominated in Shares shall be counted
against the aggregate number of Shares available for granting Awards under the
Plan in such amount and at such time as the Committee shall determine under
procedures adopted by the Committee consistent with the purposes of the Plan;
PROVIDED, HOWEVER, that Awards that operate in tandem with (whether granted
simultaneously with or at a different time from), or that are substituted for,
other Awards or restricted stock awards or stock options granted under any other
plan of the Company may be counted or not counted under procedures adopted by
the Committee in order to avoid double counting.

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(iii) Sources of Shares Deliverable under Awards. Any Shares delivered pursuant
to an Award may consist, in whole or in part, of authorized but unissued Shares
or of Shares reacquired by the Company, including but not limited to Shares
purchased on the open market.

(b) Adjustments. Upon the occurrence of any nonrecurring dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), change in the capital or shares of capital stock, recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or extraordinary transaction or event
which affects the Shares, then the Committee shall cause there to be made an
equitable adjustment to prevent dilution or enlargement of rights, as
appropriate, in (i) the number and type of Shares (or other securities or
property) which may be made the subject of Awards under the Plan,
(ii) outstanding Awards, including, without limitation, the number and type of
Shares (or other securities or property) subject to them, and (iii) the grant,
purchase, or exercise price with respect to outstanding Awards, and, if deemed
appropriate, make provision for cash payments to the holders of outstanding
Awards; provided, however, that the number of Shares subject to any Award
denominated in Shares shall always be a whole number.

(c) Limitations Upon Awards. No participant shall be granted, during any
calendar year, Awards with respect to more than 17,000 Shares, which number
shall be calculated and adjusted pursuant to Section 4(b) above only to the
extent that such calculation or adjustment will not affect the status of any
Award theretofore issued or that may thereafter be issued as “performance based
compensation” under Section 162(m) of the Code.

 

5. ELIGIBILITY

(a) Any employee or non-employee director of or consultant rendering services to
the Company or any Affiliate, including any officer or officer-director of the
Company or any Affiliate, as may be selected from time to time by the Committee
or by the directors to whom authority may be delegated pursuant to Section 3(m)
of this Plan, is eligible to be designated a Participant with respect to any
Award, except that an Other Stock-Based Award may not be granted to a Section 16
Reporting Person.

(b) Any Participant may decline to participate in the Plan by providing written
notice of the declination to the Committee within 120 days after receiving
notice of an award granted under the Plan.

 

6. AWARDS

(a) Options. The Committee is authorized to grant Options to eligible
Participants.

(i) Committee Determinations. Subject to the terms and limitations of the Plan,
the Committee shall determine:

(A) the number of shares subject to each Option and the exercise price per Share
(which shall not be less than 100% of the Fair Market Value of a Share on the
date the Option is granted);

(B) the term of each Option; and

(C) the time or times at which an Option may be exercised, in whole or in part,
and the method or methods by which and the form or forms (including, without
limitation, cash, Shares, other Awards, or other property, or any combination of
them, having a fair market value on the exercise date equal to the relevant
exercise price) in which payment of the exercise price with respect to it may be
made or deemed to have been made.

The Committee may impose such additional or other conditions or restrictions on
any Option as it deems appropriate and as are not inconsistent with the terms of
the Plan.

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(ii) Other Terms. Unless otherwise determined by the Committee:

(A) A Participant electing to exercise an Option shall give written notice to
the Company, as may be specified by the Committee, of exercise of the Option and
the number of Shares elected for exercise, such notice to be accompanied by such
instruments or documents as may be required by the Committee, and shall tender
the aggregate exercise price of the Shares elected for exercise.

(B) At the time of exercise of an Option, payment in full in cash shall be made
for all Shares then being purchased.

(C) If the employment, directorship or consulting arrangement of a Participant
terminates for any reason (including termination by reason of the fact that an
entity is no longer an Affiliate) other than the Participant’s death or
Disability, the Participant may afterwards exercise the Option as provided
below, except that the Committee may terminate the unexercised portion of the
Option concurrently with or at any time following termination of the employment
or consulting arrangement (including termination of employment upon a change of
status from employee to consultant) if it shall determine that the Participant
has engaged in any activity detrimental to the interests of the Company or an
Affiliate. If the termination is voluntary on the part of the Participant (other
than by reason of retirement of an employee-Participant on or after normal
retirement date), the Option may be exercised only within thirty days after the
date of termination. If the termination is involuntary on the part of the
Participant, if an employee-Participant retires on or after normal retirement
date, the Option may be exercised within three months after the date of
termination or retirement. For purposes of this subsection (C), a Participant's
employment or consulting arrangement shall not be considered terminated (i) in
the case of approved sick leave or other bona fide leave of absence (not to
exceed one year), (ii) in the case of a transfer of employment or the consulting
arrangement among the Company and Affiliates, or (iii) by virtue of a change of
status from employee to consultant or from consultant to employee, except as
provided above.

(D) If a Participant dies or becomes subject to a Disability at a time when
entitled to exercise an Option, then the Option shall be fully vested and may be
exercised in full or in part, as determined by the Participant’s personal
representative, at any time or times within one year after death or the date of
termination due to a Disability. The Company may decline to deliver Shares to a
designated beneficiary until it receives indemnity against claims of third
parties satisfactory to the Company. Except as so exercised, the Option shall
expire at the end of that period.

(E) An Option may be exercised only if and to the extent the Option was
exercisable at the date of termination of employment, directorship or the
consulting arrangement, and an Option may not be exercised at any time when the
Option would not have been exercisable had the Participant's employment,
directorship or consulting arrangement continued.

(iii) Restoration Options. At the time of grant of an Option (for purposes of
this subsection, an “original Option”) that is not itself a Restoration Option
(as defined below), or at the time a Restoration Option arises, or at any other
time while the grantee continues to be eligible for Awards and the original
Option or a Restoration Option (either, a “predecessor Option”) is outstanding,
the Committee may provide that the predecessor Option shall carry with it a
right to receive an Option (for purposes of this subsection, a “Restoration
Option”) if, while still eligible to be granted an Option, the grantee exercises
the predecessor Option (or a portion of it) and pays some or all of the
applicable exercise price in Shares that have been owned by the grantee for at
least six months prior to exercise. In addition to being subject to any other
terms and conditions (including additional limitations on exercisability) that
the Committee deems appropriate, and except to the extent the Committee
otherwise provides with respect to a given Restoration Option, each Restoration
Option shall be subject to the following;

(A) the number of Shares subject to the Restoration Option shall be the lesser
of: (x) the number of whole Shares delivered in exercise of the predecessor
Option, or (y) the number of Shares available for grant under the Plan at the
time the Restoration Option arises;

(B) the Restoration Option automatically shall arise and be granted (if ever) at
the time of payment of the exercise price in respect of the predecessor Option;

(C) the per Share exercise price of the Restoration Option shall be the Fair
Market Value of a Share on the date the Restoration Option arises;

(D) the expiration date of the Restoration Option shall be the same as that of
the predecessor Option;

(E) the Restoration Option shall first become exercisable six months after it
arises; and

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(F) the Restoration Option shall be a Nonqualified Stock Option.

(b) Stock Appreciation Rights. The Committee is authorized to grant Stock
Appreciation Rights to eligible Participants. Subject to the terms of the Plan,
a Stock Appreciation Right granted under the Plan shall confer on the holder of
it of a right to receive, upon exercise of it, the excess of (i) the Fair Market
Value of one Share on the date of exercise or, if the Committee shall so
determine in the case of any such right other than one related to an Incentive
Stock Option, at any time during a specified period before or after the date of
exercise over (ii) the grant price of the right as specified by the Committee.
Subject to the terms of the Plan, the Committee shall determine the grant price,
term, methods of exercise and settlement of the Stock Appreciation Right, the
effect of termination of the Participant's employment, directorship or
consulting relationships, and any other terms of the Stock Appreciation Right
the Committee deems appropriate. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate.

(c) Restricted Stock and Restricted Stock Units.

(i) Grants. The Committee is authorized to grant Awards of Restricted Stock to
eligible Participants. The Award shall consist of Shares or Restricted Stock
Units, which shall give the Participant the right to receive cash, Shares, other
securities, other Awards, or other property, in each case subject to the
termination of the Restricted Period for the Award determined by the Committee.

(ii) Restrictions. The Restricted Period determined by the Committee for
Restricted Stock and Restricted Stock Units may differ among Participants, and
any Restricted Period may have different expiration dates with respect to
portions of Shares or Units covered by the same Award. During the applicable
Restricted Period, Restricted Stock Units and Restricted Stock shall be
nontransferable (except as provided in Section 6 (g) (v) of the Plan) and
subject to forfeiture as provided in subsection (iv) of this Section 6 (c).
Subject to the terms of the Plan, Awards of Restricted Stock and Restricted
Stock Units also shall be subject to such other restrictions as the Committee
may impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive any dividend or other right or
property), which restrictions may lapse separately or in combination, at such
time or times, in installments or otherwise, as the Committee may determine.
Unless the Committee shall otherwise determine, any Shares or other securities
distributed with respect to Restricted Stock or which a Participant is otherwise
entitled to receive by reason of the Shares shall be subject to the restrictions
contained in the above restrictions and the provisions of the Plan. Participants
shall have all of the rights of a stockholder with respect to Shares of
Restricted Stock.

(iii) Certificates. Any Shares granted as Restricted Stock shall be evidenced by
certificates bearing such restrictive transfer legend as the Committee
determines to be advisable in order to prevent impermissible transfer of the
Shares prior to the end of the applicable Restricted Period, and the
certificates shall be retained in the possession of the Company until the Shares
no longer are subject to forfeiture. Each Award Agreement concerning an Award of
Restricted Stock shall include the grantee's consent to transfer to the Company
of any forfeited Restricted Stock without the need for any further consent,
direction, or other action by the grantee.

(iv) Forfeiture. Except as otherwise determined by the Committee:

(A) If the employment, directorship or consulting arrangement of a Participant
terminates for any reason (including termination by reason of the fact that any
entity is no longer an Affiliate), other than the Participant's death or
Disability or, in the case of an employee, retirement on or after normal
retirement date, all Shares of Restricted Stock and all Restricted Stock Units
that were awarded to the Participant which are still subject to restrictions
shall upon such termination of employment, directorship or the consulting
relationship be forfeited and (in the case of Restricted Stock) transferred back
to the Company. For purposes of this subsection (A), a Participant's employment
or consulting arrangement shall not be considered terminated (i) in the case of
approved sick leave or other bona fide leave of absence (not to exceed one
year), (ii) in the case of a transfer of employment or the consulting
arrangement among the Company and Affiliates, or (iii) other than as provided in
subsection (D) of this Section 6(c)(iv), by virtue of a change of status from
employee to consultant or from consultant to employee.

(B) If a Participant ceases to be employed or retained by the Company or an
Affiliate by reason of death or Disability, or if following retirement a
Participant continues to have rights under an Award of Restricted Stock or
Restricted Stock Units and then dies, the Award shall fully vest and no longer
be subject to forfeiture.

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(C) If an employee ceases to be employed by the Company or an Affiliate by
reason of retirement on or after normal retirement date, the restrictions
contained in the Award of Restricted Stock shall continue to lapse in the same
manner as though employment had not terminated.

(D) However, notwithstanding the provisions of subsections (B) and (C) above, if
a Participant continues to hold an Award of Restricted Stock or Restricted Stock
Units following termination of his employment or consulting arrangement
(including retirement and termination of employment upon a change of status from
employee to consultant), the Restricted Stock or Restricted Stock Units which
remain subject to restrictions shall nonetheless be forfeited, and (in the case
of Restricted Stock) transferred back to the Company, if the Committee at any
time later determines that the Participant has engaged in any activity
detrimental to the interests of the Company or an Affiliate.

(E) At the expiration of the Restricted Period as to Shares covered by an Award
of Restricted Stock, or as to Restricted Stock Units to be settled in Shares,
the Company shall deliver the Shares as to which the Restricted Period has
expired, as follows:

(1) if an assignment to a trust has been made in accordance with
Section 6(g)(v)(B)(2)(c), to the trust; or

(2) if the Restricted Period has expired by reason of death and a beneficiary
has been designated in form approved by the Company, to the beneficiary so
designated; or

(3) in all other cases, to the Participant or the legal representative of the
Participant's estate.

(d) Performance Awards. The Committee is authorized to grant Performance Awards
to eligible Participants. Subject to the terms of the Plan, a Performance Award
granted under the Plan (i) may be denominated or payable in cash, Shares
(including, without limitation, Restricted Stock), other securities, other
Awards, or other property and (ii) shall confer on the holder rights valued as
determined by the Committee and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance period, as the Committee shall establish. Subject
to the terms of the Plan, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award, and the other terms and conditions of any
Performance Award, including the effect upon the Award, of termination of the
Participant's employment, directorship or consulting relationships, shall be
determined by the Committee.

(e) Dividend Equivalents. The Committee is authorized to grant to eligible
Participants Awards under which the holders shall be entitled to receive
payments equivalent to dividends or interest with respect to a number of Shares
determined by the Committee, and the Committee may provide that such amounts (if
any) shall be deemed to have been reinvested in additional Shares or otherwise
reinvested. Subject to the term of the Plan, the Awards may have such terms and
conditions as the Committee shall determine.

(f) Other Stock-Based Awards. The Committee is authorized to grant to eligible
Participants such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to Shares
(including, without limitation, securities convertible into Shares), as are
deemed by the Committee to be consistent with the purposes of the Plan;
PROVIDED, HOWEVER, that the grants may not be made to Section 16 Reporting
Persons. Subject to the terms of the Plan, the Committee shall determine the
terms and conditions of such Other Stock-Based Awards. Shares or other
securities delivered pursuant to a purchase right granted under this
Section 6(f) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Shares, other securities, other Awards, other property, or any combination
of the above, as the Committee shall determine.

(g) General.

(i) No Cash Consideration for Awards. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.

(ii) Awards May Be Granted Separately or Together. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with, or
in substitution for, any other Award or any award granted under any other plan
of the Company or any Affiliate. Awards granted in addition to or in tandem with
other Awards, or in addition to or in tandem with the awards granted under
another plan of the Company or an Affiliate, may be granted either at the same
time as or at a different time from the grant of the other Awards or awards.

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(iii) Forms of Payment under Awards. Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Company or
an Affiliate upon the grant, exercise, or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case in accordance with rules and
procedures established by the Committee. The rules and procedures may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments.

(iv) Limits on Transfer of Awards.

(A) Except as the Committee may otherwise determine, no Award or right under any
Award may be sold, encumbered, pledged, alienated, attached, assigned, or
otherwise transferred in any manner, and any attempt to do any of the above
shall be void and unenforceable against the Company.

(B) Despite the provisions of paragraph (A) above, except as provided in
paragraph (C) below:

(1) An Option may be transferred:

(a) to a death beneficiary designated by the Participant in writing on a form
approved by the Committee; or

(b) by will or the applicable laws of descent and distribution to the personal
representative, executor or administrator of the Participant's estate.

(2) A Participant may assign or transfer rights under an Award of Restricted
Stock or Restricted Stock Units:

(a) to a death beneficiary designated by the Participant in writing on a form
approved by the Committee;

(b) by will or the applicable laws of descent and distribution to the personal
representative, executor or administrator of the Participant's estate; or

(c) to a revocable grantor trust established by the Participant for the sole
benefit of the Participant during the Participant's life, and under the terms of
which the Participant is and remains the sole trustee until death or physical or
mental incapacity. The assignment shall be effected by a written instrument in
form and content satisfactory to the Committee, and the Participant shall
deliver to the Committee a true copy of the agreement or other document
evidencing the trust. If in the judgment of the Committee the trust does not
meet the criteria of a trust to which an assignment is permitted by the terms of
it, or if, after assignment (whether because of amendment, by operation of law,
or for any other reason) the trust no longer meets the criteria, the attempted
assignment shall be void and may be disregarded by the Committee and the Company
and all rights to the Awards shall revert to and remain solely in the
Participant. Notwithstanding a qualified assignment, the Participant, and not
the trust to which rights under an Award may be assigned, for the purpose of
determining compensation arising by reason of the Award shall continue to be
considered an employee, director or consultant, as the case may be, of the
Company or an Affiliate but the trust and the Participant shall be bound by all
of the terms and conditions of the Award Agreement and this Plan. Shares issued
in the name of and delivered to the trust shall be conclusively considered
issuance and delivery to the Participant.

(3) The Committee shall not permit Section 16 Reporting Persons to transfer or
assign Awards except as and to the extent (if any) permitted under Rule 16b-3.

(C) The Committee, the Company, and its officers, agents, and employees may rely
upon any beneficiary designation, assignment, or other instrument of transfer,
copies of trust agreements, and any other documents delivered to any of them by
or on behalf of a Participant, which they believe genuine, and any action taken
by any of them in reliance shall be conclusive and binding upon the Participant,
the personal representatives of the Participant's estate, and all persons
asserting a claim

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based on an Award to the Participant. The delivery by a Participant of a
beneficiary designation, or an assignment of rights under an Award as permitted
under it, shall constitute the Participant's irrevocable undertaking to hold the
Committee, the Company, and its officers, agents, and employees harmless against
claims, including any cost or expense incurred in defending against claims, of
any person (including the Participant) which may be asserted or alleged to be
based on an Award subject to a beneficiary designation or an assignment. In
addition, the Company may decline to deliver Shares to a beneficiary until it
receives indemnity against claims of third parties satisfactory to the Company.

(v) No Change in Control.

(A) Notwithstanding any of the provisions of this Plan or any Award Agreement,
upon a Change in Control of the Company (as defined below) the vesting of all
rights of Participants under outstanding Awards shall be accelerated and all
restrictions shall terminate in order that Participants may fully realize the
benefits intended to be made available under the Awards. The acceleration shall
include, without limitation, the immediate exercisability in full of all Options
and the termination of restrictions on Restricted Stock and Restricted Stock
Units. Further, upon the Change in Control, in addition to the Committee's
authority described in Section 4(b), the Committee, as constituted, before the
Change in Control, is authorized and has sole discretion, as to any Award, to
take any one or more of the following actions: (i) cause any Award then
outstanding to be assumed, or new rights substituted, by the acquiring or
surviving entity or other person giving rise to the Change in Control; (ii) make
such adjustment to any Award then outstanding as the Committee deems appropriate
to reflect the Change in Control; and (iii) provide for the purchase of any
Award, upon the Participant's request, for an amount of cash equal to the amount
that could have been attained upon the exercise of the Award or realization of
the Participant's rights had the Award been currently exercisable or payable.

(B) A Change in Control shall occur if, after the Effective Date:

(1) any “person” or “group” (as those terms are used in Sections 13(d) and 14(d)
of the Exchange Act and applicable regulations), other than pursuant to a
transaction or agreement previously approved by the Board (whether before, at,
or after the Effective Date and including, but not limited to, a transaction or
agreement contemplated by the Plan of Conversion pursuant to which Fremont
Mutual Insurance Company is converted from a Michigan mutual property and
casualty insurance company to a Michigan stock property and casualty insurance
company), directly or indirectly purchases or otherwise becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act) of voting securities
representing 30 percent or more of the combined voting power of all outstanding
voting securities of the Company; or

(2) the stockholders of the Company approve (i) an agreement to merge or
consolidate the Company in a transaction in which the Company is not the
surviving entity, (ii) an agreement to sell or dispose of substantially all of
the Company's assets, or (iii) a plan to liquidate the Company, unless, in the
case of an event described in (i), (ii), or (iii), the Board determines prior to
the occurrence of the event that the effects described in Section 6(g)(v)(A)
will not apply with respect to the event.

(vi) Cash Settlement. Aside from any provision of this Plan or of any Award
Agreement to the contrary, any Award outstanding under it may at any time be
canceled in the Committee's sole discretion upon payment of the value of the
Award to the holder of it in cash or in another Award under it, such value to be
determined by the Committee in its sole discretion.

(vii) Certain Securities Law Considerations. The Company intends, as soon as
possible after the Effective Date, to register with the Securities and Exchange
Commission on Form S-8 the total number of Shares that may be acquired by
Participants under the Plan. Awards granted under the Plan may not be exercised
until the Form S-8 is filed and effective.

(viii) Award Agreements. Each Award shall be evidenced by an Award Agreement in
such form as the Committee shall prescribe.

 

7. AMENDMENT, SUSPENSION, OR TERMINATION; CERTAIN OTHER MATTERS.

Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:

(a) Amendments, Suspension, or Termination. The Board may amend, suspend, or
terminate the Plan or any portion of it at any time, with or without stockholder
approval, and the Board or the Committee may amend any outstanding Award;
provided, however, that (i) no Plan amendment shall be effective until approved
by stockholders of the Company, insofar as stockholder approval is required in
order for the Plan to continue to satisfy the conditions of Rule 16b-3 or any
applicable requirements of a national securities exchange or the NMS, and
(ii) without the consent of an affected Participant no amendment of the Plan or
of any Award may impair the rights of the Participant under any outstanding
Award.

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(b) Adjustments of Awards Upon The Occurrence of Certain Unusual or Nonrecurring
Events. The Committee shall make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4(b) or a
Change in Control as defined in Section 6(g)(v)) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available to holders of outstanding Awards under the Plan.

(c) Correction of Defects, Omissions, And Inconsistencies. The Committee may
correct any defect, supply any omission, or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
effectuate the Plan.

 

8. MISCELLANEOUS

(a) No Rights to Awards. Subject only to the express requirements of the Plan,
there is no obligation for uniformity of treatment of Participants or holders or
beneficiaries of Awards under the Plan, and no Participant or other person shall
have any claim to be granted any Award. The terms and conditions of Awards of
the same type, and the determination of the Committee to grant a waiver or
modification of the terms and conditions of any Award, need not be the same with
respect to the Participant.

(b) Withholding. The Company or any Affiliate shall be authorized to withhold
from any Award granted or any payment due or transfer made under any Award or
under the Plan the amount (in cash, Shares, other securities, other Awards or
other property) of withholding taxes due in respect of an Award, its exercise,
or any payment or transfer under the Award or under the Plan and to take such
other action as may be necessary in the opinion of the Company or Affiliate to
satisfy all obligations for the payment of the taxes.

(c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan
shall prevent the Company or any Affiliate from adopting or continuing in effect
other or additional compensation arrangements, including the grant of options
and other stock-based awards, and the arrangements may be either generally
applicable or applicable only in specific cases.

(d) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Award Agreement or another
written agreement with the Participant.

(e) Governing Law. Except to the extent, if any, preempted by Federal law, the
validity, construction, and effect of the Plan, any rules and regulations
relating to the Plan established by the Committee, and any Award Agreement shall
be determined in accordance with the laws of the State of Michigan.

(f) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, the provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan or the Award, the provision shall be stricken as to the
jurisdiction, person or Award, and the remainder of the Plan and the Award shall
remain in full force and effect.

(g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, the right shall be no greater
than the right of any unsecured general creditor of the Company or any
Affiliate.

(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares, or whether the fractional Shares or any rights shall
be canceled, terminated, or otherwise eliminated.

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(i) Stockholder Status. Neither the grantee of an Award, nor any other person to
whom the Award or the grantee's rights under it may pass, shall be, or have any
right or privileges of, a holder of Shares in respect of any Shares issuable
pursuant to or in settlement of the Award, unless and until certificates
representing the Shares have been issued in the name of the grantee or other
person.

(j) Headings. Headings are given to the Sections and Subsections of the Plan
solely as a convenience to facilitate reference. The headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision of it.

 

9. EFFECTIVENESS AND DURATION

The adoption of the Plan shall be effective as of the Effective Date and shall
continue in effect until terminated by the Board or the expiration of 10 years
from the Effective Date, whichever occurs first.

The Plan was approved by the Board of Directors on November 18, 2003. The Plan,
as amended and restated, was approved by the Board of Directors on December 11,
2007.

 

FREMONT MICHIGAN INSURACORP, INC. By   /s/ Richard E. Dunning  

Richard E. Dunning

 

Its President

By   /s/ Donald E. Bradford  

Donald E. Bradford

 

Its Secretary