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EXHIBIT 10.3
 
MACATAWA BANK CORPORATION
 2006 STOCK COMPENSATION PLAN

ARTICLE 1
 ESTABLISHMENT AND PURPOSE OF THE PLAN

1.1        Establishment of the Plan. MACATAWA BANK CORPORATION, a Michigan
corporation (the “Company”), hereby establishes a stock compensation plan to be
known as the “Macatawa Bank Corporation 2006 Stock Compensation Plan” (the
“Plan”), as set forth in this document. The Plan permits the granting of stock
options, restricted stock, and other stock-based awards to employees of the
Company and its subsidiaries.
 
1.2        Purpose of the Plan. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company’s shareholders,
through stock-based compensation, by aligning the personal interests of the
Company’s employees with those of its shareholders. The Plan is also designed to
allow employees to participate in the Company’s future, as well as to enable the
Company to attract, retain and award such employees. Compensation related to
Awards under the Plan is generally intended to qualify as “performance-based
compensation” under Section 162(m) of the Internal Revenue Code of 1986, as
amended (“Code”).

1.3        Term of Plan. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date (“Termination Date”), provided
that Awards granted prior to the Termination Date may extend beyond that date.

ARTICLE 2
 DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings set forth
below:

2.1        Award means any award under this Plan of any Options, Restricted
Stock, Performance Shares or Other Stock-Based Award.
 
2.2        Award Agreement means an agreement evidencing the grant of an Award
under this Plan. Awards under the Plan shall be evidenced by Award Agreements
that set forth the details, conditions and limitations for each Award, as
established by the Committee and shall be subject to the terms and conditions of
the Plan.
 
2.3        Award Date means the date that an Award is made, as specified in an
Award Agreement.

2.4        Board means the Board of Directors of the Company.

2.5        Change in Control is defined in Article 12.

2.6        Code means the Internal Revenue Code of 1986, as amended.

 
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2.7        Committee means the Committee, as specified in Article 3, appointed
by the Board to administer the Plan, no members of which shall be eligible to
receive an Award pursuant to the Plan.

2.8        Common Stock means the Common Stock, no par value per share, of the
Company.

2.9        Disability means permanent and total disability as determined under
the rules and guidelines established by the Committee for purposes of the Plan.

2.10      Effective Date means February 16, 2006.

2.11      Employee means any person employed by the Company or a Subsidiary
(including officers and directors who are also employees).

2.12      Fair Market Value means the closing sale price of the Company’s Common
Stock for such date on the National Association of Securities Dealers Automated
Quotation System or any successor system then in use (“NASDAQ”). If no sale of
shares of Common Stock is reflected on NASDAQ on a date, then “Fair Market
Value” shall be determined according to the closing sale price on the next
preceding day on which there was a sale of shares of Common Stock reflected on
NASDAQ. If the Common Stock is not traded on NASDAQ but is traded on another
recognized market, then the “Fair Market Value” for such date shall be the
closing sale price on that market. If the shares of Common Stock are not
actively traded in any recognized market, then the “Fair Market Value” shall be
determined by such procedures as may be determined by the Committee.

2.13      Incentive Stock Option or ISO means an option to purchase shares of
Common Stock granted under Article 6, which is designated as an Incentive Stock
Option and is intended to meet the requirements of Section 422 of the Code.
 
2.14      Non-Employee Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.

2.15      Nonqualified Stock Option or NQSO means an option to purchase shares
of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.

2.16      Option means an Incentive Stock Option or a Nonqualified Stock Option.

2.17      Option Price means the price at which a share of Common Stock may be
purchased by a Participant pursuant to an Option, as determined by the
Committee.

2.18      Other Stock-Based Award means an Award under Article 9 of this Plan
that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock.

2.19      Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.

2.20      Permitted Transferee means (i) the spouse, a child, or a grandchild of
a Participant (each an “Immediate Family Member”), (ii) a trust for the
exclusive benefit of a Participant and/or one or more Immediate Family Members,
or (iii) a partnership or limited liability company whose only partners or
members are a Participant and/or one or more Immediate Family Members.
 
 
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2.21      Performance Shares means an Award granted under Article 8 of this Plan
evidencing the right to receive Common Stock or cash of an equivalent value at
the end of a specified performance period and upon achievement of specified
performance goals or objectives.

2.22      Retirement means the termination of a Participant’s employment with
the Company or a Subsidiary after the Participant attains the age and years of
service as determined under the rules and guidelines established by the
Committee in its discretion for purposes of the Plan.

2.23      Restricted Stock means an Award granted to a Participant under Article
7 of this Plan.

2.24      Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the “Act”), as amended
from time to time or any successor rule.

2.25      Subsidiary means any corporation in which the Company owns directly,
or indirectly through subsidiaries, at least fifty percent (50%) of the total
combined voting power of all classes of stock, or any other entity (including,
but not limited to, partnerships and joint ventures) in which the Company owns
at least fifty percent (50%) of the combined equity thereof.

2.26      Termination of Employment means the termination of a Participant’s
employment with the Company or a Subsidiary. A Participant employed by a
Subsidiary shall also be deemed to incur a Termination of Employment if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become an Employee of the Company or another Subsidiary.

ARTICLE 3
 ADMINISTRATION

3.1        The Committee. The Plan shall be administered by a Committee
designated by the Board consisting of not less than three (3) directors who
shall be appointed from time to time by the Board, each of whom shall qualify as
a Non-Employee Director. Initially, the Committee shall consist of all directors
of the Company who are Non-Employee Directors.

3.2        Committee Authority. Subject to the Company’s Articles of
Incorporation, Bylaws and the provisions of this Plan, the Committee shall have
full authority to grant Awards to employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:
 
 
(a)        To select the employees of the Company or a Subsidiary to whom Awards
may be granted under the Plan;
 
(b)        To determine whether and to what extent Options, Restricted Stock,
Performance Shares and Other Stock-Based Awards, or any combination thereof are
to be granted under the Plan;
 
(c)        To determine the number of shares of Common Stock to be covered by
each Award;
 
(d)        To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares Common Stock
relating thereto, based on such factors as the Committee shall determine in its
sole discretion;
 
 
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(e)        To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in conjunction with or
apart from other cash compensation arrangement made by Company other than under
the terms of this Plan;
 
(f)        To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
 
(g)        To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award shall be
deferred.
 
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously granted under the Plan or
cause the Plan or the Award not to meet the requirements of Rule 16b-3. A
majority of the Committee shall constitute a quorum, and the acts of a majority
of a quorum at any meeting, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The interpretation and construction by the Committee of any
provisions of the Plan or any Award granted under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs, executors and assigns. No member of the Board or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or an Award granted hereunder.

ARTICLE 4
 COMMON STOCK SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 12.1, the maximum aggregate number
of shares of Common Stock which may be issued under this Plan shall not exceed
500,000 shares, which may be either unauthorized and unissued Common Stock or
issued Common Stock reacquired by the Company (“Plan Shares”).

Determinations as to the number of Plan Shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Committee shall determine from time to time, which shall be
consistent with the requirements of Rule 16b-3 and such interpretations thereof.
If an Award expires unexercised or is forfeited, canceled, terminated or settled
in cash in lieu of Common Stock, the shares of Common Stock that were
theretofore subject (or potentially subject) to such Award may again be made
subject to an Award Agreement; provided, however, that any such shares subject
to a forfeited or canceled Award shall not again be made subject to an Award
Agreement to any Participant who received, directly or indirectly, any of the
benefits of ownership of the securities underlying such Award, excluding the
right to vote such shares.
 
 
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ARTICLE 5
 ELIGIBILITY

The persons who shall be eligible to receive Awards under the Plan shall be such
Employees as the Committee shall select from time to time. In making such
selections, the Committee shall consider such factors as the Committee in its
discretion shall deem relevant. Participants may hold more than one Award, but
only on the terms and subject to the restrictions set forth in the Plan and
their respective Award Agreements.

ARTICLE 6
 STOCK OPTIONS

6.1        Options. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either an
Incentive Stock Option (“ISO”) or a Nonqualified Stock Option (“NQSO”).

6.2        Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.

6.3        Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000 limitation
imposed by Section 422(d) of the Code. Notwithstanding any provision of this
Plan providing for an extended period to exercise Options following a
termination of employment, an Option will be taxed as an Incentive Stock Option
only if it is exercised within the Incentive Stock Option time periods stated in
the tax Code (within three months after termination of employment, unless the
individual is disabled, in which case the three month period is extended to one
year).

6.4        Terms of Options. Options granted under the Plan shall be evidenced
by Award Agreements in such form as the Committee shall, from time to time
approve, which Agreement shall comply with and be subject to the following terms
and conditions:
 
(a)        Option Price. The Option Price per share of Common Stock purchasable
under an Option shall be determined by the Committee at the time of grant but
shall be not less than one hundred percent (100%) of the Fair Market Value of
the Common Stock at the Award Date.

(b)        Option Term. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten (10) years after the date the
Option is granted.

(c)        Exercisability. Except as provided in Section 12.2, no Option shall
be exercisable in either in whole or in part prior to the first anniversary of
the Award Date. Thereafter, an Option shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
and set forth in the Award Agreement. If the Committee provides that any Option
is exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine.
 
 
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(d)        Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of shares
to be purchased. Such notice shall be accompanied by payment in full of the
purchase price in such form as the Committee may accept. Notwithstanding the
foregoing, an Option shall not be exercisable with respect to less than 100
shares of Common Stock unless the remaining shares covered by an Option are
fewer than 100 shares. If and to the extent determined by the Committee in its
sole discretion at or after grant, payment in full or in part may also be made
in the form of Common Stock owned for at least six months by the Participant
(and for which the Participant has good title free and clear of any liens and
encumbrances) or Restricted Stock. No shares of stock shall be issued until
payment has been made. A Participant shall generally have the rights to
dividends or other rights of a shareholder with respect to shares subject to the
Option when the optionee has given written notice of exercise, has paid for such
shares as provided herein, and, if requested, has given the representation
described in Section 13.1 of the Plan. Notwithstanding the foregoing, if payment
in full or in part has been made in the form of Restricted Stock, an equivalent
number of shares of Common Stock issued on exercise of the Option shall be
subject to the same restrictions and conditions, and during the remainder of the
Restriction Period (as defined in Section 7.3(a)), applicable to the shares of
Restricted Stock surrendered therefor.
 
(e)        Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution, provided, however, a Nonqualified Stock
Option may be transferred, without consideration, to a Permitted Transferee if
the Participant satisfies such conditions to the transfer as may be required by
the Committee. A Permitted Transferee shall succeed to all rights and benefits
(except any right to further transfer of the Option) and be subject to all
obligations and limitations applicable to the original Participant. However,
such rights and benefits (except any right to further transfer of the Option),
and obligations and limitations shall be determined as if the original
Participant continued to hold the Option, whereby provisions of this Plan
dealing with termination of employment, retirement, disability or death of a
Participant will continue to refer to the original Participant regardless of
whether a Nonqualified Stock Option has been transferred to a Permitted
Transferee. The Company shall have no obligation to notify a Permitted
Transferee of the termination of employment, retirement, disability, or death of
a Participant. Further, all Options shall be exercisable, during the
Participant’s lifetime, only by such Participant, or, in the case of a
Nonqualified Stock Option, by a Participant or a Permitted Transferee, as the
case may be. The designation of a person entitled to exercise an Option after a
person’s death will not be deemed a transfer.
 
(f)        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, each Option held by the
Participant shall, to the extent rights to purchase shares under such Option
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 such Options and any other
limitations on the exercise of such Options in effect at the date of exercise.
 
 
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(g)        Termination of Employment for Retirement or Disability. Upon
Termination of Employment by reason of Retirement or Disability, each Option
held by such Participant shall, to the extent rights to purchase shares under
the Option have accrued at the date of such Retirement or Disability and shall
not have been fully exercised, remain exercisable in whole or in part, for a
period of three (3) years following such Termination of Employment, subject,
however, to prior expiration according to its terms and other limitations
imposed by the Plan. If the Participant dies after such Retirement or
Disability, the Participant’s Options shall be exercisable in accordance with
Section 6.4(h) below.
 
(h)        Termination of Employment for Death. Upon Termination of Employment
due to death, each Option held by such Participant shall, to the extent rights
to purchase shares under the Options 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 Participant’s estate or by any person or persons
who shall have acquired the Option directly from the Participant by bequest or
inheritance only under the following circumstances and during the following
periods: (i) if the Participant dies while employed by the Company or a
Subsidiary, at any time within three (3) years after his death, or (ii) if the
Participant dies during the extended exercise period following Termination of
Employment specified in Section 6.4(g), at any time within the longer of such
extended period or one (1) year after death, subject, however, in any case, to
the prior expiration of the term of the Option and any other limitation on the
exercise of such Option in effect at the date of exercise.
 
(i)        Termination of Options. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f), (g) or (h) is
applicable shall terminate upon expiration of such exercise period.
 
(j)        Purchase and Settlement Provisions. The Committee may at any time
offer to purchase an Option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made.
 
ARTICLE 7
 RESTRICTED STOCK
 
7.1        Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the Participant, the time or times
within which such Awards may be subject to forfeiture, the vesting schedule and
rights to acceleration thereof, and all other terms and conditions of the
Awards. The Committee may condition the grant of Restricted Stock upon the
achievement of specific business objectives, measurements of individual or
business unit or Company performances, or such other factors as the Committee
may determine. The provisions of Restricted Stock awards need not be the same
with respect to each Participant, and such Awards to individual Participants
need not be the same in subsequent years.

7.2        Awards and Certificates. A prospective Participant selected to
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has executed an Award Agreement
evidencing the Award and has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
such Award. Further, such Award shall be subject to the following conditions:
 
 
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(a)        Acceptance. Awards of Restricted Stock must be accepted within a
period of 20 days (or such shorter period as the Committee may specify at grant)
after the Award Date, by executing an Award Agreement and by paying whatever
price (if any) the Committee has designated for such shares of Restricted Stock.

(b)        Legend. The Committee in its discretion may elect to have shares of
Restricted Stock issued in book-entry form with an appropriate notation
referencing any applicable restrictions. Alternatively, the Committee may in its
discretion determine that a Participant receiving a Restricted Stock Award be
issued a stock certificate in respect of such shares of Restricted Stock. Any
such stock certificates shall be registered in the name of such Participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of the
Macatawa Bank Corporation 2006 Stock Compensation Plan and related Award
Agreement entered into between the registered owner and the Company, dated
___________________. Copies of such Plan and Agreement are on file in the
offices of the Company, 10753 Macatawa Drive, Holland, Michigan 49424.”

(c)        Custody. The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any award of Restricted
Stock, the Participant shall have delivered a duly signed stock power, endorsed
in blank, relating to the Common Stock covered by such Award.
 
7.3        Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:

(a)        Restriction Period. Subject to the provisions of this Plan and the
Award Agreement, during a period set by the Committee (the “Restriction
Period”), the Participant shall not be permitted to sell, transfer, pledge, or
assign shares of Restricted Stock awarded under this Plan. Subject to these
limits, the Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions in
whole or in part, based on service, performance and/or such other factors or
criteria as the Committee may determine.

(b)        Rights as Shareholder. Except as provided in this subsection (b) and
subsection (a) above, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a holder of shares of Common Stock of the
Company including the right to receive any dividends. The Committee, in its sole
discretion, as determined at the time of Award, may permit or require the
payment of dividends to be deferred. If any dividends or other distributions are
paid in shares of Common Stock, such shares shall be subject to the same
restrictions on transferability and forfeitability as the shares of Restricted
Stock with respect to which they were paid.

(c)        Termination of Employment. Subject to the applicable provisions of
the Award Agreement and this Article 7, upon Termination of Employment for any
reason during the Restriction Period, all Restricted Shares still subject to
restriction will vest or be forfeited in accordance with the terms and
conditions established by the Committee as specified in the Award Agreement.
 
 
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(d)        Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock, the certificates for such
shares shall be delivered to the Participant.

ARTICLE 8
 PERFORMANCE SHARES

8.1        Award of Performance Shares. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the eligible persons to whom and the time or times at which
Performance Shares shall be awarded, the number of Performance Shares to be
awarded to any person, the duration of the period (the “Performance Period”)
during which, and the conditions under which, receipt of the Performance Shares
will be deferred, and the other terms and conditions of the Award in addition to
those set forth in Section 8.2, as specified in the Award Agreement. The
Committee may condition the grant of Performance Shares upon the achievement of
specific business objectives, measurements of individual or business unit or
Company performance, or such other factors or criteria as the Committee shall
determine. The provisions of the award of Performance Shares need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.

8.2        Terms and Conditions. Performance Shares awarded pursuant to this
Article 8 shall be subject to the following terms and conditions:

(a)        Nontransferability. Subject to the provisions of this Plan and the
related Award Agreement, Performance Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Performance Period. At
the expiration of the Performance Period, share certificates or cash of an
equivalent value (as the Committee may determine in its sole discretion) shall
be delivered to the Participant, or his legal representative, in a number equal
to the shares covered by the Award Agreement.

(b)        Dividends. Unless otherwise determined by the Committee at the time
of Award, amounts equal to any cash dividends declared during the Performance
Period with respect to the number of shares of Common Stock covered by a
Performance Share Award will not be paid to the Participant.

(c)        Termination of Employment. Subject to the provisions of the Award
Agreement and this Article 8, upon Termination of Employment for any reason
during the Performance Period for a given Award, the Performance Shares in
question will vest or be forfeited in accordance with the terms and conditions
established by the Committee at or after grant.

(d)        Accelerated Vesting. Based on service, performance and/or such other
factors or criteria as the Committee may determine and set forth in the Award
Agreement, the Committee may, at or after grant, accelerate the vesting of all
or any part of any award of Performance Shares and/or waive the deferral
limitations for all or any part of such Award.
 
 
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ARTICLE 9
 OTHER STOCK-BASED AWARDS

9.1        Other Awards. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, Common Stock (“Other Stock-Based Awards”), may be granted either alone or in
addition to or in tandem with Options, Restricted Stock or Performance Shares.
Subject to the provisions of this Plan, the Committee shall have authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of shares of Common Stock to be awarded pursuant to such
awards, and all other conditions of the Awards. The Committee may also provide
for the grant of Common Stock under such Awards upon the completion of a
specified performance period. The provisions of Other Stock-Based Awards need
not be the same with respect to each Participant and such Awards to individual
Participants need not be the same in subsequent years.

9.2        Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article 9 shall be set forth in an Award Agreement and shall be subject to the
following terms and conditions:
 
(a)        Nontransferability. Subject to the provisions of this Plan and the
Award Agreement, shares of Common Stock subject to Awards made under this
Article 9 may not be sold, assigned, transferred, pledged, or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period lapses.

(b)        Dividends. Unless otherwise determined by the Committee at the time
of Award, subject to the provisions of this Plan and the Award Agreement, the
recipient of an Award under this Article 9 shall be entitled to receive,
currently or on a deferred stock basis, dividends or other distributions with
respect to the number of shares of Common Stock covered by the Award.

(c)        Vesting. Any Award under this Article 9 and any Common Stock covered
by any such Award shall vest or be forfeited to the extent so provided in the
Award Agreement, as determined by the Committee, in its sole discretion.

(d)        Waiver of Limitation. In the event of the Participant’s Retirement,
Disability or death, or in cases of special circumstances, the Committee may, in
its sole discretion, waive in whole or in part any or all of the limitations
imposed hereunder (if any) with respect to any or all of an Award under this
Article 9.

(e)        Price. Common Stock issued or sold under this Article 9 may be issued
or sold for no cash consideration or such consideration as the Committee shall
determine and specify in the Award Agreement.

ARTICLE 10
 TERMINATION OR AMENDMENT OF THE PLAN

The Board may at any time amend, discontinue or terminate this Plan or any part
thereof (including any amendment deemed necessary to ensure that the Company may
comply with any applicable regulatory requirement); provided, however, that,
unless otherwise required by law, the rights of a Participant with respect to
Awards granted prior to such amendment, discontinuance or termination, may not
be impaired without the consent of such Participant and, provided further,
without the approval of the Company’s shareholders, no amendment may be made
which would (i) increase the aggregate number of shares of Common Stock that may
be issued under this Plan (except by operation of Section 12.1); (ii) change the
definition of Employees eligible to receive Awards under this Plan; (iii)
decrease the option price of any Option to less than one hundred percent (100%)
of the Fair Market Value on the date of grant for an Option; (iv) extend the
maximum option period under Section 6.4(b) of the Plan; or (v) cause the Plan
not to comply with either Rule 16b-3, or any successor rule under the Act, or
Section 162(m) of the Code. The Committee may amend the terms of any Award
theretofore granted, prospectively or retroactively, but, subject to Section
12.2, no such amendment or other action by the Committee shall impair the rights
of any Participant without the Participant’s consent. Awards may not be granted
under the Plan after the Termination Date, but Awards granted prior to such date
shall remain in effect or become exercisable pursuant to their respective terms
and the terms of this Plan.
 
 
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ARTICLE 11
 UNFUNDED PLAN

This Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.

ARTICLE 12
 ADJUSTMENT PROVISIONS

12.1        Antidilution. Subject to the provisions of this Article 12, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.

12.2        Change in Control. Notwithstanding Section 12.1, upon the occurrence
of a Change in Control, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless, in
the case of a transaction described in clause (iii) or (iv) in the following
definition of Change in Control, provisions are made in connection with such
transaction for the continuance of the Plan and the assumption of or the
substitution for such Awards of new Awards 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. As used in this
Plan, “Change in Control” shall mean a change in control of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Act; provided that, for
purposes of this Plan, a Change in Control shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company which represent 20% or more of the combined voting power of the
Company’s then outstanding securities; (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company’s stockholders, of
each new director is approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding any individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such term is used
in Rule 14a-11 of Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board; (iii) there is consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of Common Stock are converted into cash, securities or
other property, other than a merger of the Company in which the holders of
Common Stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger; (iv) there is consummated any consolidation or merger of the Company in
which the Company is the continuing or surviving corporation in which the
holders of Common Stock immediately prior to the merger do not own at least
fifty percent (50%), or such greater percentage as shall be set in any agreement
with any Participant, or more of the stock of the surviving corporation
immediately after the merger; (v) there is consummated any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company; or (vi) the
stockholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.
 
 
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12.3        Adjustments by Committee. Any adjustments pursuant to this Article
12 will be made by the Committee, whose determination as to what adjustments
will be made and the extent thereof will be final, binding, and conclusive. No
fractional interest will be issued under the Plan on account of any such
adjustments. Only cash payments will be made in lieu of fractional shares.

ARTICLE 13

GENERAL PROVISIONS

13.1        Legend. The Committee may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.

All certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

13.2        No Right to Employment. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any Subsidiary by which an
Employee is employed to terminate his or her employment at any time.

13.3        Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made pursuant to this Plan, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Unless otherwise prohibited by the
Committee, each Participant 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 the Participant a number of shares having a Fair Market Value as of
the “Tax Date”, less than or equal to the amount of the withholding tax
obligation; or (c) delivering to the Company unencumbered shares owned by the
Participant having a Fair Market Value, as of the Tax Date, less than or equal
to the amount of the withholding tax obligation. The “Tax Date” shall be the
date that the amount of tax to be withheld is determined.
 
 
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13.4        No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically provided in this Plan or
as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, attach, sell,
transfer, assign, pledge, encumber or charge, any such benefits shall be void,
and any such benefit shall not in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such benefit, nor shall it be subject to attachment or legal process
for or against such person.

13.5        Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.

13.6        Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.

13.7        Rights as a Shareholder. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.

ARTICLE 14
SHAREHOLDER APPROVAL

The Plan shall be submitted to the Company’s shareholders for approval.
 
 
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