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                                                                    EXHIBIT 10.1

                             SOMANETICS CORPORATION
                            2005 STOCK INCENTIVE PLAN

1.    INTRODUCTION

      1.1   Purposes.

      The purposes of the Somanetics Corporation 2005 Stock Incentive Plan (this
"Plan") are (1) to align the interests of the Company's shareholders and the
recipients of awards under this Plan by increasing the proprietary interest of
such recipients in the Company's growth and success, (2) to advance the
interests of the Company by attracting and retaining officers, other employees,
non-employee directors, consultants, advisors, independent contractors and
agents and (3) to motivate such persons to act in the long-term best interests
of the Company and its shareholders.

      1.2   Definitions.

      "Agreement" shall mean the written agreement evidencing an award under
this Plan between the Company and the recipient of such award.

      "Board" shall mean the Board of Directors of the Company.

      "Change in Control" shall have the meaning set forth in Section 4.8(b).

      "Code" shall mean the Internal Revenue Code of 1986, as amended.

      "Committee" shall mean the Board or the committee designated by the Board
to perform any of the functions and duties of the Committee under the Plan.

      "Common Shares" shall mean the common shares, par value $.01 per share, of
the Company.

      "Company" shall mean Somanetics Corporation, a Michigan corporation, or
any successor to Somanetics Corporation.

      "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

      "Fair Market Value" shall mean the average of the high and low transaction
prices of a Common Share on The Nasdaq SmallCap Market on the date as of which
such value is being determined or, if the Common Shares are not listed on The
Nasdaq SmallCap, the average of the high and low transaction prices of a Common
Share on the principal market on which the Common Shares are traded on the date
as of which such value is being determined, or if there shall be no reported
transaction for such date, on the next preceding date for which a transaction
was reported; provided, however, that if Fair Market Value for any date cannot
be so determined, Fair Market Value shall be determined by the Committee by
whatever means or method as the Committee, in the good faith exercise of its
discretion, shall at such time deem appropriate.

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      "Incentive Stock Option" shall mean an option to purchase Common Shares
that meets the requirements of Section 422 of the Code, or any successor
provision, and that is intended by the Committee to constitute an Incentive
Stock Option.

      "Incumbent Board" shall have the meaning set forth in Section 4.8(b)(2).

      "Mature Shares" shall mean previously-acquired Common Shares for which the
holder has good title, free and clear of all liens and encumbrances, and which
such holder either (1) has held for at least six months or (2) has purchased on
the open market.

      "Non Qualified Stock Option" shall mean an option to purchase Common
Shares that is not an Incentive Stock Option.

      "Outstanding Common Shares" shall have the meaning set forth in Section
4.8(b)(1).

      "Outstanding Voting Securities" shall have the meaning set forth in
Section 4.8(b)(1).

      "Person" shall have the meaning set forth in Section 4.8(b)(1).

      "Restricted Stock" shall mean Common Shares that are subject to a
Restriction Period.

      "Restricted Stock Award" shall mean an award of Restricted Stock under
this Plan.

      "Restricted Stock Unit" shall mean a right that entitles the holder to
receive, upon vesting, one Common Share (which may be Restricted Stock) or cash
in an amount equal to the Fair Market Value of one Common Share on the date of
vesting.

      "Restricted Stock Unit Award" shall mean an award of Restricted Stock
Units under this Plan.

      "Restriction Period" shall mean any period designated by the Committee
during which (1) the Common Shares subject to a Restricted Stock Award may not
be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or
disposed of, except as provided in this Plan or the Agreement relating to such
award, or (2) the restrictions applicable to a Restricted Stock Unit Award shall
remain in effect.

      "Stock Award" shall mean a Restricted Stock Award or a Restricted Stock
Unit Award.

      "Subsidiary" shall mean any corporation, limited liability company,
partnership, joint venture or similar entity in which the Company owns, directly
or indirectly, an equity interest possessing more than 25% of the combined
voting power of the total outstanding equity interests of such entity.

      "Tax Date" shall have the meaning set forth in Section 4.5.

      "Ten Percent Holder" shall have the meaning set forth in Section 2.1(a).

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      1.3   Administration.

      This Plan shall be administered by the Committee. Any one or a combination
of the following awards may be made under this Plan to eligible persons: (1)
options to purchase Common Shares in the form of Incentive Stock Options or Non
Qualified Stock Options, and (2) Stock Awards in the form of Restricted Stock or
Restricted Stock Units. The Committee shall, subject to the terms of this Plan,
select eligible persons for participation in this Plan and determine the form,
amount and timing of each award to such persons and, if applicable, the number
of Common Shares and the number of Restricted Stock Units subject to such an
award, the exercise price associated with the award, the time and conditions of
exercise or settlement of the award and all other terms and conditions of the
award, including, without limitation, the form of the Agreement evidencing the
award. The Committee may, in its sole discretion and for any reason at any time,
subject to the requirements of Section 162(m) of the Code and the regulations
thereunder in the case of an award intended to be qualified performance-based
compensation, take action such that (1) all or any outstanding options shall
become exercisable in part or in full, or (2) all or a portion of the
Restriction Period applicable to any outstanding Restricted Stock Award or
Restricted Stock Unit Award shall lapse. The Committee shall, subject to the
terms of this Plan, interpret this Plan and its application and establish rules
and regulations it deems necessary or desirable for the administration of this
Plan and may impose, incidental to the grant of an award, conditions with
respect to the award, such as limiting competitive employment or other
activities. All such interpretations, rules, regulations and conditions shall be
final, binding and conclusive.

      The Committee may, subject to the applicable law (including Section 162(m)
of the Code and the regulations thereunder in the case of an award intended to
be qualified performance-based compensation), delegate some or all of its power
and authority under this Plan to the Chief Executive Officer or other executive
officer of the Company as the Committee deems appropriate.

      No member of the Board or Committee, and neither the Chief Executive
Officer nor any other executive officer to whom the Committee delegates any of
its power and authority under this Plan, shall be liable for any act, omission,
interpretation, construction or determination made in connection with this Plan
in good faith, and the members of the Board and the Committee and the Chief
Executive Officer or other executive officer shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys' fees) arising therefrom to the full
extent permitted by law, except as otherwise may be provided in the Company's
Articles of Incorporation and/or Bylaws, and under any directors' and officers'
liability insurance that may be in effect from time to time.

      A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (1) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (2) acts approved in
writing by all of the members of the Committee without a meeting.

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      1.4   Eligibility.

      Participants in this Plan shall consist of such officers, other employees,
non-employee directors, consultants, advisors, independent contractors and
agents, and persons expected to become officers, other employees, non-employee
directors, consultants, advisors, independent contractors and agents, of the
Company or a Subsidiary as the Committee in its sole discretion may select from
time to time. For purposes of this Plan, references to employment shall also
mean an agency or independent contractor relationship and references to
employment by the Company shall also mean employment by a Subsidiary. The
Committee's selection of a person to participate in this Plan at any time shall
not require the Committee to select such person to participate in this Plan at
any other time.

      1.5   Shares Available.

            (a) Subject to adjustment as provided in Section 4.7, the number of
      Common Shares that shall be available for awards under this Plan shall be
      600,000.

            (b) The Committee may adopt reasonable counting procedures to ensure
      appropriate counting, avoid double counting (as, for example, in the case
      of substitute awards) and make adjustments if the number of Common Shares
      actually delivered differs from the number of shares previously counted in
      connection with an award. To the extent that Common Shares subject to an
      outstanding award granted under this Plan are not issued or delivered to
      the holder of the award or are returned to the Company by the holder of
      the award by reason of (1) the expiration, termination, cancellation or
      forfeiture of such award, (2) the settlement of such award in cash, or (3)
      the delivery or withholding of Common Shares to pay all or a portion of
      the exercise price of an award, if any, or to satisfy all or a portion of
      the tax withholding obligations relating to an award, then such Common
      Shares shall again be available under this Plan. This Section 1.5(b) shall
      apply to Incentive Stock Options only to the extent consistent with
      application Internal Revenue Service regulations relating to Incentive
      Stock Options under the Code.

            (c) Common Shares shall be made available from authorized and
      unissued Common Shares, or authorized and issued Common Shares reacquired
      and held as treasury shares or otherwise or a combination thereof.

            (d) To the extent necessary for an award to be qualified performance
      based compensation under Section 162(m) of the Code and the regulations
      thereunder, the maximum number of Common Shares with respect to which
      options may be granted during any calendar year to any person shall be
      300,000, subject to adjustment as provided in Section 4.7. All shares with
      respect to which an award is granted under this Plan shall be counted for
      purposes of the per-person share limitation of this Section 1.5(d),
      regardless of whether the recipient of the award does not realize the
      benefit of the award as a result of forfeiture, cancellation, expiration,
      termination or other event. If a stock option is modified after grant to
      reduce its exercise price, the modified stock option shall be treated as a
      newly granted stock option for purposes of this per-person share
      limitation, with the shares covered by both the original and the modified

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      grant counting against the number of available shares under this
      per-person share limitation.

2.    STOCK OPTIONS

      2.1   Stock Options.

      The Committee may, in its discretion, grant options to purchase Common
Shares to such eligible persons as may be selected by the Committee. Each
option, or portion thereof, that is not an Incentive Stock Option shall be a
Non-Qualified Stock Option. An Incentive Stock Option may not be granted to any
person who is not an employee of the Company or any subsidiary (as defined in
Section 424 of the Code). Each Incentive Stock Option shall be granted within
ten years of the date this Plan is adopted by the Board. To the extent that the
aggregate Fair Market Value (determined as of the date of grant) of Common
Shares with respect to which options designated as, or intended to be, Incentive
Stock Options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or subsidiary as defined in Section 424 of the Code) exceeds the maximum amount
(currently $100,000) established by the Code, such options shall constitute
Non-Qualified Stock Options.

      Options shall be subject to the following terms and conditions and shall
be subject to such additional terms and conditions, not inconsistent with the
terms of this Plan, as the Committee shall deem advisable:

            (a) Number of Shares and Purchase Price. The number of Common Shares
      subject to an option and the purchase price per Common Share purchasable
      upon exercise of the option shall be determined by the Committee;
      provided, however, that the purchase price per Common Share purchasable
      upon exercise of an option shall not be less than 100% of the Fair Market
      Value of a Common Share on the date of grant of such option; provided
      further, that if an Incentive Stock Option shall be granted to any person
      who, at the time such option is granted, owns capital stock possessing
      more than ten percent of the total combined voting power of all classes of
      capital stock of the Company (or of any parent or subsidiary as defined in
      Section 424 of the Code) (a "Ten Percent Holder"), the purchase price per
      Common Share shall not be less than the minimum price (currently 110% of
      Fair Market Value) required by the Code in order for the option to
      constitute an Incentive Stock Option.

            (b) Exercise Period and Exercisability. The period during which an
      option may be exercised shall be determined by the Committee; provided,
      however, that no option shall be exercised later than ten years after its
      date of grant; provided further, that if an Incentive Stock Option shall
      be granted to a Ten Percent Holder, such option shall not be exercised
      later than five years after its date of grant. The Committee may, in its
      discretion, establish Performance Measures which shall be satisfied or met
      as a condition to the grant of an option or to the exercisability of all
      or a portion of an option. The Committee shall determine whether an option
      shall become exercisable in cumulative or non-cumulative installments and
      in part or in full at any time. An exercisable option, or portion thereof,
      may be exercised only with respect to whole Common Shares.

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            (c) Method of Exercise. An option may be exercised (1) by giving
      written notice to the Company specifying the number of whole Common Shares
      to be purchased and by accompanying such notice with payment therefor in
      full (or by arranging for such payment to the Company's satisfaction)
      either (A) in cash, (B) by delivery (either actual delivery or by
      attestation procedures established by the Company) of Mature Shares having
      an aggregate Fair Market Value, determined as of the date of exercise,
      equal to the aggregate purchase price payable by reason of such exercise,
      (C) except as may be prohibited by applicable law, in cash by a
      broker-dealer acceptable to the Company to whom the optionee has submitted
      irrevocable instructions to promptly deliver to the Company full payment
      for the Common Shares with respect to which the option is exercised from
      the proceeds of the stockbroker's sale of or loan against some or all of
      the Common Shares, or (D) any combination of the foregoing, in each case
      to the extent set forth in the Agreement relating to the option, and (2)
      by executing such documents as the Company may reasonably request. Any
      fraction of a Common Share which would be required to pay such purchase
      price shall be disregarded and the remaining amount due shall be paid in
      cash by the optionee. No certificate representing Common Shares shall be
      delivered until the full purchase price therefor and any withholding taxes
      thereon, as described in Section 4.5, have been paid (or arrangement made
      for such payment to the Company's satisfaction).

      2.2   Termination of Employment or Service.

      Subject to the requirements of the Code, all of the terms relating to the
exercise, cancellation, disposition or other treatment of an option upon a
termination of employment or service with the Company of the holder of such
option, whether by reason of disability, retirement, death or any other reason,
shall be determined by the Committee.

      2.3   No Repricing of Awards.

      Notwithstanding anything in this Plan to the contrary and subject to
Section 4.7, without the approval of shareholders, the Committee will not amend
or replace previously granted options in a transaction that constitutes a
"repricing," as such term is used in the Nasdaq Stock Market Marketplace Rules
and related interpretations or, if the Common Shares are not listed on The
Nasdaq Stock Market, in the rules of the principal market on which the Common
Shares are traded.

3.    STOCK AWARDS

      3.1   Stock Awards.

      The Committee may, in its discretion, grant Stock Awards to such eligible
persons as may be selected by the Committee. The Committee may grant Stock
Awards under this Plan independently, in lieu of, or in conjunction with, any
cash bonus award otherwise payable to an employee pursuant to any bonus or
incentive plan maintained by the Company from time to time.

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      3.2   Terms of Stock Awards.

      Stock Awards shall be subject to the following terms and conditions and
shall be subject to such additional terms and conditions, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable.

            (a) Number of Shares and Other Terms. The number of Common Shares
      subject to a Restricted Stock Award or a Restricted Stock Unit Award, and
      the Restriction Period applicable to a Restricted Stock Award or a
      Restricted Stock Unit Award, shall be determined by the Committee.

            (b) Vesting and Forfeiture. The Agreement relating to a Restricted
      Stock Award or a Restricted Stock Unit Award shall provide, in the manner
      determined by the Committee, in its discretion, and subject to the
      provisions of this Plan, for the vesting of the Common Shares subject to
      such Restricted Stock Award or the vesting of such Restricted Stock Unit
      Award if the holder of such award remains continuously in the employment
      or service of the Company during the specified Restriction Period and for
      the forfeiture of all or a portion of the Common Shares subject to such
      Restricted Stock Award or the forfeiture of such Restricted Stock Unit
      Award if the holder of such award does not remain continuously in the
      employment or service of the Company during the specified Restriction
      Period.

            (c) Share Certificates. During the Restriction Period, a certificate
      or certificates representing a Restricted Stock Award may be registered in
      the holder's name or a nominee name at the discretion of the Company and
      may bear a legend, in addition to any legend which may be required
      pursuant to Section 4.6, indicating that the ownership of the Common
      Shares represented by such certificate is subject to the restrictions,
      terms and conditions of this Plan and the Agreement relating to the
      Restricted Stock Award. All certificates registered in the holder's name
      shall be deposited with the Company, together with stock powers or other
      instruments of assignment (including a power of attorney), each endorsed
      in blank with a guarantee of signature if deemed necessary or appropriate
      by the Company, which would permit transfer to the Company of all or a
      portion of the Common Shares subject to the Restricted Stock Award in the
      event such award is forfeited in whole or in part. Upon termination of any
      Restriction Period (and the satisfaction of any continuation of employment
      or service requirements) applicable to a Restricted Stock Award or to a
      Restricted Stock Unit Award payable in whole or in part in Common Shares,
      in each case subject to the Company's right to require payment of any
      taxes in accordance with Section 4.5, a certificate or certificates
      evidencing ownership of the requisite number of Common Shares shall be
      delivered to the holder of such award.

            (d) Rights with Respect to Restricted Stock Awards. Unless otherwise
      set forth in the Agreement relating to a Restricted Stock Award, and
      subject to the terms and conditions of a Restricted Stock Award, the
      holder of such award shall have all rights as a shareholder of the
      Company, including, but not limited to, voting rights, the right to
      receive dividends and the right to participate in any capital adjustment
      applicable to all holders of Common Shares; provided, however, that a
      distribution with respect to

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      Common Shares, other than a regular cash dividend, shall be deposited with
      the Company and shall be subject to the same restrictions as the Common
      Shares with respect to which such distribution was made.

            (e) Settlement of Vested Restricted Stock Unit Awards. The Agreement
      relating to a Restricted Stock Unit Award (1) shall specify whether such
      award may be settled in Common Shares (including Restricted Stock) or cash
      or a combination thereof and (2) may specify whether the holder thereof
      shall be entitled to receive, on a current or deferred basis, dividend
      equivalents, and, if determined by the Committee, interest on, or the
      deemed reinvestment of, any deferred dividend equivalents, with respect to
      the number of Common Shares subject to such award. Prior to the settlement
      of a Restricted Stock Unit Award in Common Shares, the holder of such
      award shall have no rights as a shareholder of the Company with respect to
      the Common Shares subject to such award.

      3.3   Termination of Employment or Service.

      All of the terms relating to the termination of the Restriction Period
relating to a Restricted Stock Award or a Restricted Stock Unit Award, or any
forfeiture and cancellation of such award upon a termination of employment or
service with the Company of the holder of such award, whether by reason of
disability, retirement, death or any other reason, shall be determined by the
Committee.

4.    GENERAL

      4.1   Effective Date and Term of Plan.

      This Plan shall be effective on the date the Board of Directors of the
Company adopts this Plan, provided that the shareholders of the Company approve
the Plan within 12 months after its adoption by the Board of Directors. This
Plan shall terminate ten years after its effective date, unless terminated
earlier by the Board. Termination of this Plan shall not affect the terms or
conditions of any award granted prior to termination. If this Plan is not
approved by the shareholders of the Company, this Plan and any awards granted
under this Plan shall be null and void.

      4.2   Amendments.

      The Board may amend this Plan as it shall deem advisable, subject to any
requirement of shareholder approval required by applicable law, rule or
regulation, including Section 162(m) and Section 422 of the Code and the
regulations thereunder and any rule of The Nasdaq Stock Market or, if the Common
Shares are not listed on The Nasdaq Stock Market, any rule of the principal
market on which the Common Shares are then traded. No amendment may impair the
rights of a holder of an outstanding award without the consent of such holder.

      4.3   Agreement.

      Each award shall be evidenced by an Agreement executed by the Company and
the recipient of such award and, upon execution by each party and delivery of
the executed

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Agreement to the Company, such award shall be effective as of the effective date
set forth in the Agreement.

      4.4   Non-Transferability of Awards.

      Unless otherwise specified in the Agreement relating to an award, no award
shall be transferable other than by will, the laws of descent and distribution
or pursuant to beneficiary designation procedures approved by the Company.
Except to the extent permitted by the foregoing sentence or the Agreement
relating to an award, each award may be exercised or settled during the holder's
lifetime only by the holder or the holder's legal representative or similar
person. Except to the extent permitted by the second preceding sentence or the
Agreement relating to an award, no award may be sold, transferred, assigned,
pledged, hypothecated, encumbered or otherwise disposed of (whether by operation
of law or otherwise) or be subject to execution, attachment or similar process.
Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any such award, such award and all rights thereunder shall
immediately become null and void.

      4.5   Tax Withholding.

      The Company shall have the right to require, prior to the issuance or
delivery of any Common Shares or the payment of any cash pursuant to an award
made under this Plan, payment by the holder of such award of any Federal, state,
local or other taxes which may be required to be withheld or paid in connection
with such award. In the discretion of the Company (1) the Company may withhold
whole Common Shares which would otherwise be delivered to a holder, having an
aggregate Fair Market Value determined as of the date the obligation to withhold
or pay taxes arises in connection with an award (the "Tax Date"), or withhold an
amount of cash which would otherwise be payable to a holder, in the amount
necessary to satisfy any such obligation or (2) the holder may be permitted to
satisfy any such obligation by any of the following means: (A) a cash payment to
the Company, (B) delivery (either actual delivery or by attestation procedures
established by the Company) to the Company of Mature Shares having an aggregate
Fair Market Value, determined as of the Tax Date, equal to the amount necessary
to satisfy any such obligation, (C) in the case of the exercise of an option,
except as may be prohibited by applicable law, a cash payment by a broker-dealer
acceptable to the Company to whom the optionee has submitted irrevocable
instructions to promptly deliver to the Company an amount (in addition to the
option exercise price) equal to the withholding tax owing in respect of such
option exercised from the proceeds of the stockbroker's sale of or loan against
some or all of the Common Shares subject to the option, or (D) any combination
of the foregoing. Any fraction of a Common Share which would be required to
satisfy such an obligation shall be disregarded and the remaining amount due
shall be paid in cash by the holder.

      4.6   Restrictions on Shares.

      Each award made under this Plan shall be subject to the requirement that
if at any time the Company determines that the listing, registration or
qualification of the Common Shares subject to such award upon any securities
market or under any law, or the consent or approval of any governmental body, or
the taking of any other action is necessary or desirable as a condition of, or
in connection with, the exercise or settlement of such award or the delivery of
shares

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thereunder, such award shall not be exercised or settled and such shares shall
not be delivered unless such listing, registration, qualification, consent,
approval or other action shall have been effected or obtained, free of any
conditions not acceptable to the Company. The Company may require that
certificates evidencing Common Shares delivered pursuant to any award made under
this Plan bear a legend indicating that the sale, transfer or other disposition
thereof by the holder is prohibited except in compliance with the Securities Act
of 1933, as amended, and the rules and regulations thereunder.

      4.7   Adjustment.

      In the event of any stock split, stock dividend, recapitalization,
reorganization, merger, consolidation, combination, exchange of shares,
liquidation, spin-off or other similar change in capitalization or event, or any
distribution to holders of Common Shares other than a regular cash dividend, the
number and class of securities available under this Plan, the number and class
of securities subject to each outstanding award, the purchase price per security
of each outstanding option, and the maximum number of securities with respect to
which awards may be granted in any calendar year to any person shall be
appropriately adjusted by the Committee, such adjustments to be made in the case
of outstanding options without an increase in the aggregate purchase price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive; provided, however, that no fractional shares shall be issued
pursuant to the Plan, no awards may be granted under the Plan with respect to
fractional shares, and any fractional shares resulting from such adjustments
shall be eliminated from any outstanding award.

      4.8   Change in Control.

            (a) Actions Upon A Change In Control. Notwithstanding any provision
      in this Plan, unless otherwise specified in the Agreement relating to an
      award, in the event of a Change in Control, in the Committee's discretion,
      either (1) (a) all outstanding options shall immediately become
      exercisable in full, (b) the Restriction Period applicable to any
      outstanding Restricted Stock Award or Restricted Stock Unit Award shall
      lapse, and (c) there shall be substituted for each Common Share available
      under this Plan, whether or not then subject to an outstanding award, the
      number and class of shares into which each outstanding Common Share shall
      be converted pursuant to such Change in Control, if any; provided that in
      the event of any such substitution, the purchase price per share in the
      case of an option shall be appropriately adjusted by the Committee (whose
      determination shall be final, binding and conclusive), such adjustments to
      be made in the case of outstanding options without an increase in the
      aggregate purchase price, or (2) each outstanding award shall be
      surrendered to the Company by the holder thereof, and each such award
      shall immediately be canceled by the Company, and the holder shall
      receive, within ten days of the occurrence of a Change in Control, a cash
      payment from the Company in an amount equal to (a) in the case of an
      option, the number of Common Shares then subject to such option,
      multiplied by the excess, if any, of the greater of (I) the highest per
      share price offered to shareholders of the Company in any transaction
      whereby the Change in Control takes place, or (II) the Fair Market Value
      of a Common Share on the date of occurrence of the Change in Control. over
      the purchase price per Common Share subject to the option, and (b) in the
      case of a Restricted Stock Award or

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      Restricted Stock Unit Award the number of Common Shares or the number of
      Restricted Stock Units, as the case may be, then subject to such award,
      multiplied by the greater of (A) the highest per share price offered to
      shareholders of the Company in any transaction whereby the Change in
      Control takes place or (B) the Fair Market Value of a Common Share on the
      date of occurrence of the Change in Control.

            (b)   "Change in Control" shall mean:

                  (1) the acquisition by any individual, entity or group (a
            "Person"), including any "person" within the meaning of Section
            13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership
            within the meaning of Rule 13d-3 promulgated under the Exchange Act,
            of 40% or more of either (1) the then outstanding Common Shares of
            the Company (the "Outstanding Common Shares") or (2) the combined
            voting power of the then outstanding securities of the Company
            entitled to vote generally in the election of directors (the
            "Outstanding Voting Securities"); excluding, however, the following:
            (A) any acquisition directly from the Company (excluding any
            acquisition resulting from the exercise of an exercise, conversion
            or exchange privilege unless the security being so exercised,
            converted or exchanged was acquired directly from the Company), (B)
            any acquisition by the Company, (C) any acquisition by an employee
            benefit plan (or related trust) sponsored or maintained by the
            Company or any corporation controlled by the Company, or (D) any
            acquisition by any corporation pursuant to a transaction which
            complies with clauses (1), (2) and (3) of subsection (3) of this
            Section 4.8(b); provided further, that for purposes of clause (B),
            if any Person (other than the Company or any employee benefit plan
            (or related trust) sponsored or maintained by the Company or any
            corporation controlled by the Company) shall become the beneficial
            owner of 40% or more of the Outstanding Common Shares or 40% or more
            of the Outstanding Voting Securities by reason of an acquisition by
            the Company, and such Person shall, after such acquisition by the
            Company, become the beneficial owner of any additional Outstanding
            Common Shares or any additional Outstanding Voting Securities and
            such beneficial ownership is publicly announced, such additional
            beneficial ownership shall constitute a Change in Control;

                  (2) individuals who, as of the date hereof, constitute the
            Board (the "Incumbent Board") cease for any reason to constitute at
            least a majority of such Board; provided that any individual who
            becomes a director of the Company subsequent to the date hereof
            whose election, or nomination for election, by the Company's
            shareholders was approved by the vote of at least a majority of the
            directors then comprising the Incumbent Board shall be deemed a
            member of the Incumbent Board;

                  (3) the consummation of a reorganization, merger or
            consolidation, or sale or other disposition of all or substantially
            all of the assets, of the Company (a "Corporate Transaction");
            excluding, however, a Corporate Transaction pursuant to which (1)
            all or substantially all of the individuals or entities who are the
            beneficial owners, respectively, of the Outstanding Common Shares
            and the

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<PAGE>

            Outstanding Voting Securities immediately prior to such Corporate
            Transaction will beneficially own, directly or indirectly, more than
            60% of, respectively, the outstanding Common Shares, and the
            combined voting power of the outstanding securities entitled to vote
            generally in the election of directors, as the case may be, of the
            corporation resulting from such Corporate Transaction (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 indirectly) in substantially the
            same proportions relative to each other as their ownership,
            immediately prior to such Corporate Transaction, of the Outstanding
            Common Shares and the Outstanding Voting Securities, as the case may
            be, (2) no Person (other than: the Company; any employee benefit
            plan (or related trust) sponsored or maintained by the Company or
            any corporation controlled by the Company; the corporation resulting
            from such Corporate Transaction; and any Person which beneficially
            owned, immediately prior to such Corporate Transaction, directly or
            indirectly, 40% or more of the Outstanding Common Shares or the
            Outstanding Voting Securities, as the case may be) will beneficially
            own, directly or indirectly, 40% or more of, respectively, the
            outstanding Common Shares of the corporation resulting from such
            Corporate Transaction or the combined voting power of the
            outstanding securities of such corporation entitled to vote
            generally in the election of directors and (3) individuals who were
            members of the Incumbent Board will constitute at least a majority
            of the members of the board of directors of the corporation
            resulting from such Corporate Transaction; or

                  (4) the consummation of a plan of complete liquidation or
            dissolution of the Company.

      4.9   Deferrals.

      The Committee may determine that the delivery of Common Shares or the
payment of cash, or a combination thereof, upon the exercise or settlement of
all or a portion of any award made under this Plan shall be deferred, or the
Committee may, in its sole discretion, approve deferral elections made by
holders of awards. Deferrals shall be for such periods and upon such terms as
the Committee may determine in its sole discretion.

      4.10  No Right of Participation, Employment or Service.

      No person shall have any right to participate in this Plan. Neither this
Plan nor any award made under this Plan shall confer upon any person any right
to continued employment by or service with the Company, any Subsidiary or any
affiliate of the Company or affect in any manner the right of the Company, any
Subsidiary or any affiliate of the Company to terminate the employment or
service of any person at any time without liability under this Plan.

      4.11  Rights as Shareholder.

      No person shall have any right as a shareholder of the Company with
respect to any Common Shares or other equity security of the Company which is
subject to an award under this

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<PAGE>

Plan unless and until such person becomes a shareholder of record with respect
to such Common Shares or equity security.

      4.12  Designation of Beneficiary.

      If permitted by the Company, a holder of an award may file with the
Committee a written designation of one or more persons as such holder's
beneficiary or beneficiaries (both primary and contingent) in the event of the
holder's death. To the extent an outstanding option granted under this Plan is
exercisable after the holder's death, such beneficiary or beneficiaries shall be
entitled to exercise such option pursuant to procedures prescribed by the
Committee.

      Each beneficiary designation shall become effective only when filed in
writing with the Committee during the holder's lifetime on a form prescribed by
the Committee. The spouse of a married holder domiciled in a community property
jurisdiction shall join in any designation of a beneficiary other than such
spouse. The filing with the Committee of a new beneficiary designation shall
cancel all previously filed beneficiary designations.

      If a holder fails to designate a beneficiary, or if all designated
beneficiaries of a holder predecease the holder, then each outstanding option
under this Plan held by such holder at the time of the holder's death, to the
extent then or thereafter exercisable, may be exercised by such holder's
executor, administrator, legal representative or similar person, or as otherwise
prescribed under the laws of descent and distribution.

      4.13  Governing Law.

      This Plan, each award under this Plan and the related Agreement, and all
determinations made and actions taken pursuant thereto, to the extent not
otherwise governed by the Code or the other laws of the United States, shall be
governed by the laws of the State of Michigan and construed in accordance
therewith without giving effect to principles of conflicts of laws.

      4.14  Foreign Employees.

      Without amending this Plan, the Committee may grant awards to eligible
persons who are subject to the laws of foreign countries or jurisdictions on
such terms and conditions different from those specified in this Plan as may in
the judgment of the Committee be necessary or desirable to foster and promote
achievement of the purposes of this Plan and, in furtherance of such purposes,
the Committee may make such modifications, amendments, procedures, subplans and
the like as may be necessary or advisable to comply with provisions of laws of
other countries or jurisdictions in which the Company or its Subsidiaries
operate or have employees.

      4.15  Section 409A of the Code.

      Notwithstanding any other provision of the Plan, no award under the Plan
shall have any terms or features (including, without limitation, terms or
features relating to the type of award, time of or events triggering vesting,
method of exercise or payment of withholding tax, method of settlement, form and
timing of consideration payable in settlement, or deferral or other elections),
whether at the time of grant or subsequent to the time of grant, that would
cause the award to be nonqualified deferred compensation that fails to comply
with the requirements under

                                       13

<PAGE>

Section 409A of the Code and the guidance and regulations issued thereunder.
Moreover, notwithstanding any other provision of the Plan, no action may be
taken by the Committee or the Board under or in respect of the Plan (including,
without limitation, Plan amendments under Section 4.2 or adjustments under
Section 4.7) that would cause the Plan or any award under the Plan to be a
nonqualified deferred compensation plan that fails to comply with the
requirements of Section 409A of the Code and the guidance and regulations issued
thereunder.

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