Exhibit 10.1
CHANGE OF CONTROL SEVERANCE
AGREEMENT
This Agreement is made _____________
___, 2006 between Fremont Michigan InsuraCorp, Inc., a Michigan
corporation, (“Company” or “Corporation”)
and _____________________ (“Executive”). This Agreement
shall become effective upon the date first above written
(“Effective Date”).
Factual Background
The Executive presently serves as
the _____________________________ of the Company. The Board of
Directors of the Company (“Board”) has determined that
it is in the best interest of the Company and its shareholders to
assure that the Company will have the exclusive dedication of the
Executive, notwithstanding the possibility, threat or occurrence of
a Change of Control (as defined below), of the Company. The Board
believes it is important to diminish the inevitable distraction of
the Executive by virtue of the uncertainties and risks created by a
pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the business of
the Company, currently and in the event of any threatened or
pending Change of Control. In order to induce the Executive to
remain in the employ of the Company and in consideration of the
Executive’s agreeing to remain in the employ of the Company,
the parties desire to specify the severance benefits which shall be
due the Executive in the event that his employment with the Company
is terminated under specified circumstances after a Change of
Control of the Company. Because of the nature of Company’s
business, Executive may acquire valuable confidential information
concerning the Company, the Company’s products and programs,
or the Company’s customers.
Agreement
It is therefore agreed:
1. Definitions
. The following words and terms
shall have the meanings set forth below for the purposes of this
Agreement:
(a) Average Annual
Compensation . The Executive’s “Average Annual
Compensation” shall be deemed to mean the average level of
compensation paid to the Executive by the Company and any
subsidiary of the Company during the most recent three calendar
years preceding the Date of Termination, including base salary,
bonuses, and Company contributions to 401(k), deferred
compensation, pension and other retirement plans. Annual
compensation excludes stock-based compensation.
(b) Cause . Termination of
the Executive’s employment for “Cause” shall mean
termination because of (i) willful and continued failure to
perform substantially the Executive’s duties with the Company
or one of its subsidiaries (other than any such failure resulting
from incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to the Executive by
the Board which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
the Executive’s duties, or (ii) the willful engaging by
the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company. For purposes
of this provision, no act or failure to act on the
Executive’s part shall be considered “willful”
unless done, or omitted to be done, by the Executive in bad faith
or without reasonable belief that the Executive’s action or
omission was in the best interest of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or based upon advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of
the Company.
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(c) Change of Control.
“Change of Control” of the Company shall
mean:
(i) 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 25% or more of
either (x) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(y) 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
subsection (i), the following acquisitions shall not constitute a
Change of Control: (aa) any acquisition directly from the Company,
(bb) any acquisition by the Company, (cc) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company or (dd)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (x), (y) and (z) of subsection
(iii) of this Section (c); or
(ii) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board, provided, however, that any individual becoming a director
subsequent to the date hereof 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 shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such 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 consents by or on behalf of a Person
other than the Board; or
(iii) Consummation of a
reorganization, merger 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, (x) 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 50% 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, (y) 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
such Business Combination) beneficially owns, directly or
indirectly, 25% or more 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 (z) at least a majority of the members of the
board of directors of the corporation resulting from such Business
Combination were
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members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) Approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company; or
(v) the sale of substantially all of
the assets and business of the Fremont Insurance Company, a
subsidiary the Company.
(d) Code . “Code”
shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination.
“Date of Termination” shall mean:
(i) if the Executive’s
employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and
(ii) if the Executive’s
employment is terminated for any other reason, the date on which a
Notice of Termination is given or as specified in such
Notice.
(f) Disability . Termination
by the Company of the Executive’s employment based on
“Disability” shall mean termination because of any
physical or mental impairment which qualifies the Executive for
disability benefits under the applicable long-term disability plan
maintained by the Company or any subsidiary or, if no such plan
applies, which would qualify the Executive for disability benefits
under the Federal Social Security System.
(g) Good Reason . Termination
by the Executive of the Executive’s employment for
“Good Reason” shall mean termination by the Executive
following a “Change in Control” of the Corporation
based on:
(i) Without the Executive’s
express written consent, the failure to elect or to re-elect or to
appoint or to re-appoint the Executive to the office of
___________________ of the Company or a material adverse change
made by the Company in the Executive’s functions, duties or
responsibilities in such capacity;
(ii) Without the Executive’s
express written consent, a material reduction by the Company in the
Executive’s base salary, bonus, incentive compensation or a
material reduction in the package of fringe benefits provided to
the Executive, taken as a whole;
(iii) Without the Executive’s
express written consent, the Company requires the Executive to work
in an office which is more than 60 miles from the location of the
Company’s current principal executive office, except for
required travel on business of the Company to an extent
substantially consistent with the Executive’s present
business travel obligations;
(iv) Any purported termination of
the Executive’s employment for Cause, Disability or
Retirement which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph
(i) below; or
(v) The failure by the Company,
after a Change in Control of the Company, to obtain the assumption
of and agreement to perform this Agreement by any successor as
contemplated in Section 11.
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(h) IRS . IRS shall mean the
Internal Revenue Service.
(i) Notice of Termination .
Any purported termination of the Executive’s employment by
the Company for any reason, including without limitation for Cause,
Disability or Retirement, or by the Executive for any reason,
including without limitation for Good Reason, shall be communicated
by written “Notice of Termination” to the other party
affected. For purposes of this Agreement, a “Notice of
Termination” shall mean a dated notice which:
(i) indicates the specific
termination provision in this Agreement relied upon;
(ii) sets
