EXHIBIT 10.3

MACATAWA BANK CORPORATION

2006 STOCK COMPENSATION PLAN

STOCK OPTION AGREEMENT

(Nonqualified Stock Option)

This STOCK OPTION AGREEMENT is made this {Date}, between MACATAWA BANK
CORPORATION (the “Company”) and employee name, an employee of the Company or one
of its subsidiaries (the “Employee”), pursuant to the Macatawa Bank Corporation
2006 Stock Compensation Plan (the “Plan”). All capitalized defined terms in this
Agreement shall have the meaning ascribed to such terms in the Plan, unless
other wise defined in this Agreement.

IT IS AGREED AS FOLLOWS:

1. Grant of Option. Pursuant to the Plan, the Company hereby grants to the
Employee the option to purchase [Number of Shares] shares of the Company’s
common stock, no par value, on the terms and conditions herein set forth (the
“Option”). All of the shares covered by this Option shall be considered and
hereby are designated as Nonqualified Stock Options.

2. Purchase Price. The purchase price of the shares covered by this Option shall
be [Price per share] per share. The “Committee” (provided for in Article 3 of
the Plan) has determined that such price represents one hundred percent 100% of
the fair market value of a share of the Company’s common stock on this date.

3. Term of Option. The term of this Option shall be for a period of ten
(10) years from the date hereof, subject in each case to earlier termination as
provided in subsequent paragraphs of this Agreement.

4. Employee’s Agreement. In consideration of the granting of the Option, the
Employee agrees to remain in the employ of the Company for a period of at least
thirty six (36) months from the date hereof (the “Minimum Employment Period”).
Such employment, subject to the provisions of any written contract between the
Company and the Employee, shall be at the pleasure of the Board of Directors,
and this Option Agreement shall not impose on the Company any obligation to
retain the Employee in its employ for any period. In the event of the
termination of employment of the Employee for any reason during the Minimum
Employment Period, this Option shall terminate, unless this Option becomes
exercisable as provided in Paragraph 9.

5. Exercise of Option. Except as provided in paragraph 9, this Option shall not
be exercisable prior to the expiration of the Minimum Employment Period.
Thereafter, this Option may be exercised in whole or in part, at any time and
from time to time. This Option may not be exercised as to less than 100 shares
at any one time, unless the number purchased is the total number at that time
purchasable under this Option. This Option shall be exercised by written notice
to the Company. The notice shall state the number of shares with respect to
which the Option is being exercised, shall be signed by the person exercising
this Option, and shall be accompanied by payment of the full purchase price of
the shares in such form as the Committee may accept. This Option agreement shall
be submitted to the Company with the notice for purposes of recording the shares
being purchased, if exercised in part, or for purposes of cancellation if all
shares subject to this Option are being purchased. In the event the Option shall
be exercised pursuant to paragraph 8(c) hereof by any person other than the
Employee, such notice shall be accompanied by appropriate proof of the right of
such person to exercise the Option. To the extent determined by the Committee in
its sole discretion, payment of the purchase price shall be made by: (a) cash,
check, bank draft, or money order, payable to the order of the Company; (b) the
delivery by the Employee of unencumbered shares of common stock of the Company
with a Fair Market Value on the last trading day preceding payment equal to the
total purchase price of the shares to be purchased;

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(c) a combination of (a) and (b), except that no shares of stock which have been
held for less than six months may be delivered in payment of the exercise price.
Upon exercise of all or a portion of this Option, the Company shall issue to the
Employee a stock certificate representing the number of shares with respect to
which this Option was exercised.

6. Tax Withholding. The exercise of this Option is subject to the satisfaction
of withholding tax or other withholding liabilities, if any, under federal,
state and local laws in connection with such exercise or the delivery or
purchase of shares pursuant hereto. The exercise of this Option shall not be
effective unless applicable withholding shall have been effected or obtained in
the following manner or in any other manner acceptable to the Committee. Unless
otherwise prohibited by the Committee, Optionee may satisfy any such withholding
tax obligation by any of the following means or by a combination of such means:
(a) tendering a cash payment; (b) authorizing the Company to withhold from the
shares otherwise issuable to Optionee as a result of the exercise of this Option
a number of shares having a fair market value as of the date that the amount of
tax to be withheld is to be determined (“Tax Date”), which shall be the date of
exercise of the Option, less than or equal to the amount of the withholding tax
obligation; or (c) delivering to the Company unencumbered shares of the
Company’s common stock owned by Optionee having a fair market value, as of the
Tax Date, less than or equal to the amount of the withholding tax obligation.

7. Nontransferability of Option. This Option shall not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated other than by will or
by the laws of descent and distribution, and shall not be subject to execution,
levy, attachment or similar process. Any attempted sale, transfer, assignment,
pledge, hypothecation or other disposition of this Option contrary to the terms
hereof, and any execution, levy, attachment or similar process upon the Option,
shall be null and void and without effect. Following any transfer, this Option
shall continue to be subject to the same terms and conditions immediately prior
to transfer. The designation of a person entitled to exercise this Option after
the Employee’s death will not be deemed a transfer.

8. Termination of Employment.

(a) Termination of Employment for Reasons Other Than Retirement, Disability or
Death. Upon Termination of Employment for any reason other than Retirement or on
account of Disability or death, this Option shall, to the extent rights to
purchase shares hereunder have accrued at the date of such Termination of
Employment and shall not have been fully exercised, be exercisable, in whole or
in part, at any time within a period of three (3) months following Termination
of Employment, subject, however, to prior expiration of the term of this Option
and any other limitations upon its exercise in effect at the date of exercise.

(b) Termination of Employment for Retirement or Disability. Upon Termination of
Employment by reason of Retirement or Disability, this Option shall, to the
extent rights to purchase shares hereunder have accrued at the date of such
Retirement or Disability and have not been fully exercised, be exercisable, in
whole or in part, for a period of three (3) years following such Termination of
Employment, subject to any other limitations imposed by the Plan. If the
Employee dies after such Retirement or Disability, this Option shall be
exercisable in accordance with paragraph 8(c) hereof.

(c) Termination of Employment for Death. Upon Termination of Employment due to
death, this Option shall, to the extent rights to purchase shares hereunder have
accrued at the date of death and shall not have been fully exercised, be
exercisable, in whole or in part, by the personal representative of the
Employee’s estate, by any person or persons who shall have acquired this Option
directly from the Employee by bequest or inheritance, by a person designated to
exercise the Option after the Employee’s death, or a Permitted Transferee only
under the following circumstances and during the following periods: (i) if the
Employee dies while employed by the Company or a subsidiary, at any time within
three (3) years after his or her death, or (ii) if the Employee dies during the
extended exercise period following termination of employment specified in
paragraph 8(b), at any time within the longer of such extended period or one
(1) year after his or her death, subject, in any case, to the earlier expiration
of this Option.

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(d) Termination of Option. If this Option is not exercised within whichever of
the exercise periods specified in paragraph 8(a), 8(b) or 8(c) is applicable,
this Option shall terminate upon expiration of such exercise period.

9. Changes in Capital Structure. The number of shares covered by this Option,
and the price per share, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock of the Company resulting
from any combination of shares or the payment of a stock dividend on the
Company’s common stock or any other increase or decrease in the number of shares
effected without receipt of consideration by the Company.

In the event of a “Change of Control” (as defined in Section 12.2 of the Plan)
of the Company, this Option will be and become fully vested and exercisable
irrespective the Minimum Employment Period and irrespective any vesting schedule
set forth in this Agreement, unless in the case of a transaction described in
clause (iii) or (iv), of Section 12.2 of the Plan, provisions are made in
connection with such transaction for the continuance of the Plan and the
assumption of this Option or the substitution for this Option of a new option
covering the stock of a successor employer corporation, or a parent or
subsidiary thereof, covering the stock of a successor employer corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices.

In the event of a change in the common stock of the Company as presently
constituted, which is limited to a change of all its authorized shares into the
same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the shares subject
to this Option.

Except as expressly provided in this paragraph 9, the Employee shall have no
rights by reason of: (i) any subdivision or combination of shares of stock of
any class, (ii) the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class; or (iii) any
dissolution, liquidation, merger or consolidation or spinoff of assets or stock
of another corporation. Except as provided in this paragraph 9, any issue by the
company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares subject to this
Option.

The grant of this Option shall not affect in anyway the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or assets.

10. Rights as a Shareholder. Neither the Employee nor a transferee of this
Option shall have any rights as a shareholder with respect to any shares covered
hereby until the date he or she shall have become the holder of record of such
shares. No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date on which he or she shall have
become the holder of record thereof, except as provided in paragraph 9 hereof.

11. Modification, Extension and Renewal. Subject to the terms and conditions and
within the limitations of the Plan, the Committee, subject to approval of the
Board of Directors, may modify or renew this Option, or accept its surrender (to
the extent not theretofore exercised) and authorize the granting of a new option
or options in substitution therefore (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification shall, without the consent of the
Employee, alter or impair any rights or obligations hereunder.

12. Postponement of Delivery of Shares and Representations. The Company, in its
discretion, may postpone the issuance and/or delivery of shares upon any
exercise of this Option until completion of such stock exchange listing, or
registration, or other qualification of such shares under any state and/or
federal law,

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rule or regulation as the Company may consider appropriate, and may require any
person exercising this Option to make such representations, including a
representation that it is the Employee’s intention to acquire shares for
investment and not with a view to distribution thereof, and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of shares in compliance with applicable laws, rules and regulations. In
such event, no shares shall be issued to such holder unless and until the
Company is satisfied with the accuracy of any such representations.

13. Subject to Plan. This Option is subject to the terms and provisions of the
Plan. If any inconsistency exists between the provisions of this Agreement and
the Plan, the Plan shall govern.

14. Nonqualified Stock Option. This Option is a Nonqualified Stock Option. This
Option does not qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.

In Witness Whereof, this Stock Option Agreement has been executed the date first
above written.

 

MACATAWA BANK CORPORATION BY  

 

  PHILIP J. KONING ITS   SECRETARY EMPLOYEE

 

PRINT NAME  

 

ADDRESS  

 

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