EX-10.4






EXHIBIT 10.4




AMENDMENT NO. 1 TO THE

MEADOWBROOK INSURANCE GROUP, INC.

LONG TERM INCENTIVE PLAN




     WHEREAS, Meadowbrook Insurance Group, Inc. (“the Company”) maintains the Meadowbrook Insurance
Group, Inc. Long Term Incentive Plan (“the Plan”) for certain eligible employees; and



     WHEREAS, the Company has reserved the right to amend the Plan, and wishes to do so to comply
with the applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”).



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


1. The following definition is added to the Plan:




     “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without
regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an
established securities market or otherwise.


2. Section 2(t) of the Plan is amended to provide as follows and all references in the Plan to the
term “Hostile Change in Control” shall be replaced by the term “Change in Control:”



(t) For purposes of this Plan, a “Change in Control” shall be deemed to have taken place upon:




     (1) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
35% or more of either (a) the then outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this subparagraph 1, the
following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from
the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the
Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with
clauses (a), (b) and (c) of subparagraph 3 of this Section (t); or



     (2) Within any 12 month period, individuals who, as of the date hereof, constitute the Board
of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual who becomes a director
subsequent to the date hereof and whose election, or nomination for election by the



 









 







Company’s shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director, without written objection to
such nomination) shall be deemed to be a member of the Incumbent Board; provided, further, that
notwithstanding the immediately preceding proviso, any individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or contests by or on
behalf of a Person, other than the Board of Directors of the Company, shall not be deemed to be a
member of the Incumbent Board; or



     (3) Consummation of a reorganization, merger, share exchange or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a “Business Combination”), in
each case, unless, following such Business Combination: (a) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 65% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same proportions
as their ownership, immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be; (b) no Person
(excluding any corporation resulting from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation resulting from the Business Combination)
beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination; and (c) at least a majority of the
members of the board of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board immediately prior to the time of the execution of the initial
agreement, or of the action of the Board of Directors of the Company, providing for such Business
Combination; or



     (4) Approval by the stockholders of the Company of a complete liquidation or dissolution of
the Company.


Notwithstanding the aforementioned, no event shall be considered a Change in Control, unless the
event also constitutes a change in the ownership or effective control pursuant to Section
409A(a)(2)(A)(v) and the final regulations promulgated thereunder.



3. Section 2(x) of the Plan is amended to provide as follows:




     (x) “Performance Period” means the three year period designated by the Committee to be used to
determine Bonus Awards under this Plan, with the first Performance Period being



 









 







the period commencing January 1, 2004 and ending December 31, 2006. Notwithstanding the foregoing,
the Committee may, in its discretion shorten a performance period and adjust the performance
targets and the bonus targets set under Section 5 to a one or two year period. Any pro rata awards
that the Committee determines are payable shall be based on the Committee’s determination that the
pro-rata performance targets have been satisfied and shall otherwise be paid as provided by this
Plan.


4. Section 2(bb) of the Plan is amended to provide as follows:




     (bb) “Retirement” means a Participant’s termination of employment with the Company and all of
its Subsidiaries on or after the date on which the Participant has attained age 62 and completed at
least 10 years of service with the Company or its Subsidiaries and is not employed elsewhere.


5. Section 5(e) of the Plan is amended to provide as follows:



(e) The Company shall pay Cash Awards to Participants in three installments, with the first
installment being paid no later than March 1 of the calendar year following the end of the
applicable Performance Period and the second and third installments being paid in the next
succeeding calendar years no later than March 1 of the each year. The second and third
installments shall be credited with interest at the Crediting Rate, determined as of the beginning
of each calendar year. Notwithstanding any provision of this Plan to the contrary, if the
Participant is considered a Specified Employee at Separation from Service under such procedures as
established by the Company in accordance with Section 409A of the Code, benefit distributions that
are made upon Separation from Service may not, to the extent required by Section 409A, commence
earlier than 6 months after the date of Separation from Service. Any such distribution or series
of distributions to be made due to a Separation from Service shall commence no earlier than the
first day of the seventh month following the Separation from Service, provided that to the extent
permitted by Section 409A of the Code, only payments scheduled to be paid during the first 6 months
after the date of such Separation from Service shall be delayed and such delayed payments shall be
paid in a single sum on the first day of the seventh month following the date of such Separation
from Service.



6. Sections 5(g)(iii) and (iv) are added to the Plan to provide as follows:




     (iii) A termination of employment for purposes of Section 5(g)(ii) shall only be means the
Participant’s termination of employment for any reason other than death provided the termination of
employment is a Separation from Service as defined in Code Section 409A and the regulations
promulgated thereunder.



     (iv) Notwithstanding any provision of this Plan to the contrary, if the Participant is
considered a Specified Employee at Separation from Service under such procedures as established by
the Company in accordance with Section 409A of the Code, the payment of amounts payable under this
Plan that are considered deferred compensation and that are made upon Separation from Service may
not, to the extent required by Section 409A of the Code, commence earlier than six months after the
date of such Separation from Service. Therefore, in



 









 







the event this Section (iv) is applicable to the Participant, any distribution or series of
distributions to be made due to a Separation from Service shall commence no earlier than the first
day of the seventh month following the Separation from Service, provided that to the extent
permitted by Section 409A of the Code, only payments scheduled to be paid during the first six
months after the date of such Separation from Service shall be delayed and such delayed payments
shall be paid in a single sum on the first day of the seventh month following the date of
such Separation from Service.


7. Section 5(h)(iii) is amended to provide as follows:




     (ii) Retirement, Death, Disability or Termination with Good Reason or by Company without
Cause. In the event a Participant’s employment with the Company and its Subsidiaries is terminated
by the Company or its Subsidiaries without Cause, by the Participant for Good Reason or due to the
Participant’s death, Disability, Retirement, the Participant (or the Participant’s beneficiary)
shall (i) be entitled to the payment of any Cash Award previously declared by the Committee that
has not yet been paid to the Participant, such payment to occur, unless otherwise determined by the
Committee, at the same time as such payments would have been made pursuant to Error! Reference
source not found.Error! Reference source not found.; (ii) except as otherwise provided in a
Restricted Stock Agreement, become vested in all shares of Restricted Stock that have not yet
become vested; and (iii) be entitled to a pro rata portion of the Bonus Award for the Performance
Period in which such termination of employment occurs based on the performance criteria designated
by the Committee for the Performance Period, including the Company’s actual performance for the
Performance Period and such pro rata Bonus Award shall be paid at the same time as the Bonus Award
is paid to Participants whose employment has not terminated.


8. Section 5(h) is amended to provide as follows:




     (h) Effect of Change in Control. In the event of a Change in Control of the Company,
Participants shall immediately following the effective date of the Change in Control be entitled to
the payment of (i) a pro rata portion of the Bonus Award for the Performance Period in which the
Change in Control occurs based on the Company’s ROE as of such date; (ii) Cash Awards that have not
yet been paid for a Performance Period ending prior to the effective date of the Change in Control;
and (iii) to the extent provided in a Restricted Stock Agreement, all shares of Restricted Stock
shall become fully vested and nonforfeitable. The Committee may, in its discretion, determine that
a change in control that is not otherwise a Change in Control, nonetheless invokes the provisions
of subsections 5(h)(i) through (iii) of this Plan, provided that such event also constitutes a
change in the ownership or effective control pursuant to Section 409A(a)(2)(A)(v) and the final
regulations promulgated thereunder.


9. Section 11 is hereby added to the Plan to provide as follows:




     11. Compliance with Code Section 409A. Solely to the extent that compensation under this is
considered deferred compensation under Code Section 409A, this Plan shall at all times be
administered and the provisions of this Plan shall be interpreted consistent with the requirements
of Section 409A of the Internal Revenue Code and any and all regulations



 









 







thereunder, including such regulations as may be promulgated after the Effective Date of this Plan.
Upon the inclusion of any portion of the amounts payable to a Participant under this Plan into the
Participant’s income as a result of the failure of this Plan to comply with the requirements of
Section 409A of the Code, the Company shall distribute such portion of the compensation payable to
the Participant in a single lump sum as soon as is administratively practicable following the
discovery of such failure.


10. Section 12 is hereby added to the Plan to provide as follows:




     12. Distributions upon Income Inclusion under Code Section 409A. Upon the inclusion of any
Cash Award or Bonus Award into the Participant’s income as a result of the failure of this Plan to
comply with the requirements of Section 409A of the Code, the Company shall distribute such portion
of any Cash Award or Bonus Award to the Participant in a single lump sum as soon as is
administratively practicable following the discovery of such failure.



     IN WITNESS WHEREOF, the Company has executed this Amendment by its duly authorized officer,
on this 30th day of December, 2008.



	 	 	 	 	 	 	 
	 	 	MEADOWBROOK INSURANCE GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Robert S. Cubbin	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	By: Robert S. Cubbin	 	 
	 

	 	 	 	Its: President & CEO