Document:

<PAGE>

                                  EXHIBIT 10.3

<PAGE>

                   FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
                     OF ALPENA AND ALPENA BANCSHARES, M.H.C.

                             1996 STOCK OPTION PLAN

1.      PURPOSE

        The purpose of the First Federal Savings and Loan Association of Alpena
and Alpena Bancshares, M.H.C. 1996 Stock Option Plan (the "Plan") is to advance
the interests of First Federal Savings and Loan Association of Alpena (the
"Bank") and its shareholders by providing Employees and Outside Directors of the
Bank and its affiliates, including Alpena Bancshares, M.H.C., the mutual holding
company of the Bank (the "Company"), upon whose judgment, initiative and efforts
the successful conduct of the business of the Bank and its affiliates largely
depends, with an additional incentive to perform in a superior manner as well as
to attract people of experience and ability to such positions with the Bank and
the Company.

2.      DEFINITIONS

        "AFFILIATE" means any "parent corporation" or "subsidiary corporation"
of the Bank or the Company, as such terms are defined in Section 424(e) or
424(f), respectively, of the Code.

        "AWARD" means an Award of Nonstatutory Stock Options, Incentive Stock
Options, and/or Limited Rights granted under the provisions of the Plan.

        "BENEFICIARY" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

        "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of the Bank
and the Company, as applicable.

        "CHANGE IN CONTROL" means:

        (1)(i)  A reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or the Company or a
similar transaction in which the Bank or Company is not the resulting entity or
the Stock Holding Company is not the resulting entity; (ii) individuals who
constitute the Board of Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent Board"), cease for any reason to
constitute at least a majority thereof, PROVIDED THAT any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-fourths of the directors composing the Incumbent Board or whose
nomination for election by the Bank's or Company's stockholders or members,
respectively, was approved by the Nominating Committee serving under an
Incumbent Board shall be for purposes of this section considered as though he
were a member of the Incumbent Board; or (iii) an acquisition of "control" of
the Bank or the Company as defined by the Home Owners Loan Act, as amended, and
applicable rules and regulations promulgated thereunder as in effect at the time
of the Change in Control (collectively, the "HOLA"), or (iv) an acquisition of
the Bank's stock requiring submission of notice under the Change in Bank Control
Act;

        (2)     In the event the Company converts from the mutual form of
organization to the stock form of organization in a Conversion Transaction at
any time subsequent to the effective date of this Plan, a "Change in Control"
shall mean a change in control of the Bank or the Stock Holding Company of a
nature that: (i) would be required to be reported in response to Item 1a of the
current report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a change in control of the Bank or the Stock Holding Company within
the meaning of the Bank Holding Company Act ("BHCA"); or (iii) without
limitation, results in (a) any "person" (as such term is used in Section 13(d)
and

                                       1
<PAGE>

14(d) of the Exchange Act) becoming the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or the Stock Holding Company representing 25% or more of the Bank's or Stock
Holding Company's outstanding securities ordinarily having the right to vote at
the election of directors, except for any securities purchased by the Bank's or
the Stock Holding Company's employee stock benefit plans; or (b) the Incumbent
Board ceasing for any reason to constitute at least a majority of the Board of
Directors of the Bank or Stock Holding Company; or (c) results in a
reorganization, merger, consolidation, sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

        Notwithstanding anything to the contrary herein, the conversion of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

        "CODE" means the Internal Revenue Code of 1986, as amended.

        "COMMITTEE" means the Stock Benefits Committee (or the equivalent) of
the Board of Directors consisting of at least three Outside Directors of the
Bank or the Company, and all of whom are and must be "disinterested directors"
as that term is defined under Rule 16b-3 under the Exchange Act.

        "COMMON STOCK" means the common stock of the Bank, par value $1.00 per
share.

        "COMPANY" means Alpena Bancshares, M.H.C.

        "CONTINUOUS SERVICE" means employment as an Employee or service as an
Outside Director without any interruption or termination of such employment or
service. In the case of an Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its subsidiaries or its
successor. For purposes of determining Continuous Service, an Outside Director
who terminates service on the Board but who continues to serve the Bank or
Company as a Director Emeritus will not be deemed to have an interruption or
termination of service under the Plan.

        "CONVERSION TRANSACTION" means the conversion of the Company from the
mutual to stock form of organization either on a stand-alone basis or in the
context of a merger conversion with an unrelated entity, as contemplated by
regulations of the Office of Thrift Supervision ("OTS") or any successor
thereof.

        "DATE OF GRANT" means the actual date on which an Award is granted by
the Committee.

        "DIRECTOR" means a member of the Board of Directors.

        "DIRECTOR EMERITUS" means a former Director who, in recognition of his
or her past contributions, has been titled as a director emeritus.

        "DISABILITY" means the permanent and total inability by reason of mental
or physical infirmity, or both, of an Employee to perform the work customarily
assigned to him. Additionally, a medical doctor selected or approved by the
Board of Directors must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears probable that
such Disability will be permanent during the remainder of such Employee's
lifetime.

        "EFFECTIVE DATE" means the date the Plan is ratified by the Board,
following the approval of stockholders.

        "EMPLOYEE" means any person who is currently employed by the Bank or the
Company or an Affiliate, including officers.

        "FAIR MARKET VALUE" means, with respect to the Common Stock, the mean
between the bid and asked price for such Common Stock on the date the Option is
granted or, if there be no bid and asked price on said date, then on the next
prior business day on which there was a bid and asked price. If no bid and asked
price is available,

                                       2
<PAGE>

then the price per share shall be determined by the Committee, using a
reasonable valuation method consistent with the Code and Treasury Regulations.

        "INCENTIVE STOCK OPTION" means an Option granted by the Committee to an
Employee Participant, which Option is designated as an Incentive Stock Option
pursuant to Section 8.

        "LIMITED RIGHT" means the right to receive an amount of cash based upon
the terms set forth in Section 9.

        "NONSTATUTORY STOCK OPTION" means an Option granted by the Committee to
(i) an Outside Director or (ii) to any other Participant and such option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.

        "NORMAL RETIREMENT" means, for an Employee, retirement at the normal or
early retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any successor plan. For an Outside Director, Normal Retirement means
retirement from service on the Board.

        "OFFERING" means the initial public offering of the Common Stock of the
Bank.

        "OPTION" means an Award granted under Section 7 or Section 8.

        "OUTSIDE DIRECTOR" means a Director who is not also an Employee.

        "PARTICIPANT" means an Outside Director or an Employee chosen by the
Committee to participate in the Plan.

        "REORGANIZATION" means the reorganization of First Federal Savings and
Loan Association of Alpena as a mutual holding company and the establishment of
the Bank as its majority-owned subsidiary.

        "STOCK HOLDING COMPANY" means the holding company resulting from a stock
conversion of the Company in a Conversion Transaction.

        "TERMINATION FOR CAUSE" means the termination of employment or service
caused by the individual's personal dishonesty, incompetence, willful
misconduct, any breach of a fiduciary duty involving personal profit or
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or a material breach of a material provision hereof. In
the case of an Outside Director, Termination for Cause means a removal for cause
pursuant to the Bank's Bylaws.

3.      ADMINISTRATION

        The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.

        The Awards of Nonstatutory Options to Outside Directors under Section 7
are intended to comply with Rule 16b-3 under the Exchange Act. Notwithstanding
any term to the contrary appearing herein, unless permitted by Rule
16b-3(c)(2)(ii), neither the Committee nor the Board of Directors shall have the
authority to determine the amount and price of securities to be awarded and/or
timing of awards under Section 7 to designated directors or categories of
directors, which terms shall be set forth herein. To the extent any provision of
the Plan or action by Plan administrators fails to comply with this Section 3,
such provision or action shall be deemed null and void to the extent permitted
by law and deemed advisable by the Board of Directors.

                                       3
<PAGE>

4.      TYPES OF AWARDS

        Awards under the Plan may be granted in any one or a combination of (a)
Incentive Stock Options; (b) Non-Statutory Stock Options; and (c) Limited
Rights.

5.      STOCK SUBJECT TO THE PLAN

        Subject to adjustment as provided in Section 14, the maximum number of
shares reserved for issuance under the Plan is ten percent (10%) of the shares
of Common Stock of the Bank sold in connection with the Offering (or 69,000
shares). The maximum number of shares reserved for issuance to Employees is
44,852 shares or 2.79% of the shares of Common Stock issued in connection with
the Offering. The maximum number of shares reserved for issuance to Outside
Directors is 24,148 shares or 1.50% of the shares of Common Stock issued in
connection with the Offering.

        The shares of Common Stock represented by such options may be either
authorized-but-unissued shares or shares previously issued and reacquired by the
Bank or the Company. The Company may use dividends received from the Bank to
fund the purchase of shares necessary to satisfy the exercise of stock options.
To the extent that options together with any related rights and Limited Rights
granted under the Plan terminate, expire or are cancelled without having been
exercised or, in the case of Limited Rights, without having been exercised for
cash, new Awards may be made with respect to shares underlying such options.

6.      ELIGIBILITY

        Employees shall be eligible to receive Incentive Stock Options,
Nonstatutory Stock Options and/or Limited Rights under the Plan. Outside
Directors shall not be eligible to receive Incentive Stock Options under the
Plan. Outside Directors shall be eligible to receive only Nonstatutory Stock
Options and Limited Rights.

7.      NONSTATUTORY STOCK OPTIONS

        7.1     GRANT OF NONSTATUTORY STOCK OPTIONS

        (a)     GRANTS TO OUTSIDE DIRECTORS. Each Outside Director who is
serving in such capacity on the effective date of the Plan (the "Effective
Date"), shall be granted Options to purchase 6,037 shares of Common Stock of the
Bank, subject to adjustment pursuant to Section 14. Each person who becomes an
Outside Director subsequent to the Effective Date, shall be granted Nonstatutory
Stock Options to purchase 6,037 shares of the Common Stock, subject to
adjustment pursuant to Section 14, to the extent shares remain available under
the Plan. Nonstatutory Stock Options granted under the Plan are subject to the
terms and conditions set forth in this Section 7.

        (b)     GRANTS TO EMPLOYEES. The Committee may, from time to time, grant
Nonstatutory Stock Options to Employees and, upon such terms and conditions as
the Committee may determine, grant Nonstatutory Stock Options in exchange for
and upon surrender of previously granted Awards under the Plan. Nonstatutory
Stock Options granted under the Plan are subject to the terms and conditions set
forth in this Section 7.

        (c)     OPTION AGREEMENT. Each Option shall be evidenced by a written
option agreement between the Bank and the Employee specifying the number of
shares of Common Stock that may be acquired through its exercise and containing
such other terms and conditions that are not inconsistent with the terms of this
grant. The maximum number of shares subject to a Nonstatutory Option that may be
awarded under the Plan to any Employee shall be 17,250.

        (d)     PRICE. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-statutory Stock Option shall be determined by the
Committee on the date the Option is granted. Except as provided below, such
purchase price shall not be less than 100% of the Fair Market Value of the
Common Stock on the date the Option is granted. The purchase price per share of
Common Stock deliverable upon the exercise of each Nonstatutory Stock Option
granted in exchange for and upon surrender of previously granted Awards shall be
not less than 85% of the Fair Market Value of the Common Stock on the date the
Option is granted, but in no event may

                                       4
<PAGE>

the purchase price of any Nonstatutory Stock Option be less than the par value
of the Common Stock. Shares may be purchased only upon full payment of the
purchase price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Common Stock at the Fair Market Value of
such shares.

        (e)     MANNER OF EXERCISE. Nonstatutory Stock Options awarded to
Outside Directors shall vest in a Participant at the rate of twenty percent
(20%) per year commencing from the date of grant. The vested Option may be
exercised from time to time, in whole or in part, by delivering a written notice
of exercise to the President or Chief Executive Officer of the Bank. Such notice
is irrevocable and must be accompanied by full payment of the purchase price in
cash or shares of previously acquired Common Stock of the Bank at the Fair
Market Value of such shares determined on the exercise date.

        (f)     TERMS OF OPTIONS. The term during which each Nonstatutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Nonstatutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant. The Nonstatutory Options awarded to
Employees shall be exercisable in installments, as determined by the Committee.
The Committee shall determine the date on which each installment shall become
exercisable. The shares comprising each installment may be purchased in whole or
in part at any time after such installment becomes exercisable. The Committee,
in its sole discretion, may accelerate the time at which any Nonstatutory Stock
Option awarded to Employees may be exercised in whole or in part, provided that
the Committee may not accelerate the time at which a Nonstatutory Stock Option
may be exercised due to retirement of such Employee. Notwithstanding the above,
in the event of a Change in Control, all Nonstatutory Stock Options shall become
immediately exercisable.

        (g)     TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of an
Employee's employment or upon termination of an Outside Director's service for
any reason other than Normal Retirement, Disability, death, or Termination for
Cause, the Employee's or Outside Director's Nonstatutory Stock Options shall be
exercisable only as to those shares that were immediately purchasable by the
Employee or Outside Directors at the date of termination and only for a period
of one year following termination. In the event of Termination for Cause, all
rights under the Nonstatutory Stock Options shall expire upon termination. In
the event of the Normal Retirement, death or Disability of any Employee or
Outside Director, all Nonstatutory Stock Options held by such Employee or
Outside Director, whether or not exercisable at such time, shall be exercisable
by such person or his legal representatives or beneficiaries for one year
following the date of his death or cessation of employment or service, as
applicable, due to Disability or Normal Retirement, PROVIDED that in no event
shall the period extend beyond the expiration of the Nonstatutory Stock Option
term. Notwithstanding the above, all Nonstatutory Stock Options held by a
Participant whose employment as an Employee or service as an Outside Director
terminates following a Change in Control shall be deemed earned as of the last
day of employment or service with the Bank or an Affiliate and shall be
exercisable for one year following such termination of employment or service.

8.      INCENTIVE STOCK OPTIONS

        8.1     GRANT OF INCENTIVE STOCK OPTIONS

        The Committee, from time to time, may grant Incentive Stock Options to
Employees. Incentive Stock Options granted pursuant to the Plan shall be subject
to the following terms and conditions:

        (a)     OPTION AGREEMENT. Each Option shall be evidenced by a written
option agreement between the Bank and the Employee specifying the number of
shares of Common Stock that may be acquired through its exercise and containing
such other terms and conditions that are not inconsistent with the terms of this
grant.

        (b)     PRICE. The purchase price per share of Common Stock deliverable
upon the exercise of each Incentive Stock Option shall be not less than 100% of
the Fair Market Value of the Common Stock on the date the Incentive Stock Option
is granted. However, if an Employee owns stock possessing more than 10% of the
total combined voting power of all classes of Common Stock (or under Section
424(d) of the Code, is deemed to own stock representing more than 10% of the
total combined voting power of all classes of stock of the Bank or its
Affiliates by reason of the ownership of such classes of common stock directly
or indirectly, by or for any brother, sister, spouse, ancestor or lineal
descendant of such Employee or by or for any corporation, partnership, estate or

                                       5
<PAGE>

trust of which such Employee is a shareholder, partner or beneficiary), the
purchase price per share of Common Stock deliverable upon the exercise of each
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the date the Incentive Stock Option is granted. Shares may
be purchased only upon payment of the full purchase price. Payment of the
purchase price may be made, in whole or in part, through the surrender of shares
of the Common Stock. If previously acquired shares of Common Stock are tendered
in payment of all or part of the exercise price, the value of such shares shall
be determined as of the date of exercise of the Incentive Stock Option.

        (c)     MANNER OF EXERCISE. Incentive Stock Options granted under the
Stock Option Plan shall vest in a Participant at the rate or rates determined by
the Committee. The vested Option may be exercised from time to time, in whole or
in part, by delivering a written notice of exercise to the President or Chief
Executive Officer of the Bank, PROVIDED, HOWEVER, that no Options shall be
exercisable prior to approval of the Plan by stockholders. Such notice is
irrevocable and must be accompanied by full payment of the purchase price in
cash or shares of previously acquired Common Stock. If previously acquired
shares of Common Stock are tendered in payment of all or part of the exercise
price, the Fair Market Value of such shares shall be determined as of the date
of such exercise of the Incentive Stock Option.

        (d)     AMOUNT OF OPTIONS. Incentive Stock Options may be granted to any
Employee in such amounts as determined by the Committee; PROVIDED that the
amount granted is consistent with the terms of Section 422 of the Code.
Notwithstanding the above, the maximum number of shares that may be subject to
an Incentive Stock Option awarded under the Plan to any Employee shall be
17,250. In granting Incentive Stock Options, the Committee shall consider the
position and responsibilities of the Employee, the length and value of his or
her service to the Bank, the Company, or the Affiliate, the compensation paid to
the Employee and the Committee's evaluation of the performance of the Bank, the
Company, or the Affiliate, according to measurements that may include, among
others, key financial ratios, levels of classified assets, and independent audit
findings. In the case of an Option intended to qualify as an Incentive Stock
Option, to the extent required by Section 422 of the Code, the aggregate Fair
Market Value (determined as of the time the Option is granted) of the Common
Stock with respect to which Incentive Stock Options granted are exercisable for
the first time by the Participant during any calendar year (under all plans of
the Participant's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000. The provisions of this Section 8.1(d)
shall be construed and applied in accordance with Section 422(d) of the Code and
the regulations, if any, promulgated thereunder.

        (e)     TERM OF OPTIONS. The term during which each Incentive Stock
Option may be exercised shall be determined by the Committee, but in no event
shall an Incentive Stock Option be exercisable in whole or in part more than 10
years from the Date of Grant. If any Employee, at the time an Incentive Stock
Option is granted to him, owns Common Stock representing more than 10% of the
total combined voting power of the Bank or its Affiliates (or, under Section
424(d) of the Code, is deemed to own Common Stock representing more than 10% of
the total combined voting power of all such classes of Common Stock, by reason
of the ownership of such classes of Common Stock, directly or indirectly, by or
for any brother, sister, spouse, ancestor or lineal descendent of such Employee,
or by or for any corporation, partnership, estate or trust of which such
Employee is a shareholder, partner or beneficiary), the Incentive Stock Option
granted to him or her shall not be exercisable after the expiration of five
years from the Date of Grant. No Incentive Stock Option granted under the Plan
is transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Employee to which it is granted.

        The Committee shall determine the date on which each Incentive Stock
Option shall become exercisable and may provide that an Incentive Stock Option
shall become exercisable in installments. The shares comprising each installment
may be purchased in whole or in part at any time after such installment becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent with the terms of Section 422 of the Code. The Committee, in its
sole discretion, may accelerate the time at which any Incentive Stock Option may
be exercised in whole or in part; PROVIDED that it is consistent with the terms
of Section 422 of the Code. Notwithstanding the above, in the event of a Change
in Control, all Incentive Stock Options shall become immediately exercisable
unless the Fair Market Value of the amount exercisable as a result of a Change
in Control shall exceed $100,000 (determined as of the date of grant). In such
event, the first $100,000 of Incentive Stock Options (determined as of the date
of grant) shall be exercisable as Incentive Stock Options and any excess shall
be exercisable as Nonstatutory Stock Options.

                                       6
<PAGE>

        (f)     TERMINATION OF EMPLOYMENT. Upon the termination of an Employee's
employment for any reason other than Normal Retirement, Disability, Change in
Control, death, or Termination for Cause, his or her Incentive Stock Options
shall be exercisable only as to those shares that were immediately purchasable
by him at the date of termination and only for a period of three months
following termination. In the event of Termination for Cause, all rights under
his or her Incentive Stock Options shall expire upon termination.

        In the event of termination of an Employee's employment due to a Change
in Control, Normal Retirement, death or Disability, all Incentive Stock Options
held by such Employee, whether or not exercisable at such time, shall be
exercisable by such Employee (or in the event of his death, his legal
representative or beneficiary) for one year following the date of his cessation
of employment; PROVIDED, HOWEVER, that, to the extent prohibited by law, such
Options shall not be eligible for treatment as Incentive Stock Options in the
event such Options are exercised more than three months following the Employee's
cessation of employment. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.

        (g)     COMPLIANCE WITH CODE. The Options granted under this Section 8
are intended to qualify as Incentive Stock Options within the meaning of Section
422 of the Code, but the Bank makes no warranty as to the qualification of any
Option as an incentive stock option within the meaning of Section 422 of the
Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code and such failure is not or cannot be
cured, such Option shall be a Nonstatutory Stock Option.

9.      LIMITED RIGHTS

        9.1     GRANT OF LIMITED RIGHTS

        The Committee may grant a Limited Right simultaneously with the grant of
any Option to any Employee or Outside Director with respect to all or some of
the shares covered by such Option. Limited Rights granted under the Plan are
subject to the following terms and conditions:

        (a)     TERMS OF RIGHTS. In no event shall a Limited Right be
exercisable in whole or in part before the expiration of six months from the
date of grant of the Limited Right. A Limited Right may be exercised only in the
event of a Change in Control.

        The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.

        Upon exercise of a Limited Right, the related Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.

        (b)     PAYMENT. Upon exercise of a Limited Right, the holder shall
promptly receive from the Bank an amount of cash equal to the difference between
the Fair Market Value on the Date of Grant of the related Option and the Fair
Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which such Limited
Right is being exercised. In the event of a Change of Control in which pooling
accounting treatment is a condition to the transaction, the Limited Right shall
be exercisable solely for shares of stock of the Bank, or in the event of a
merger transaction, for shares of the acquiring corporation, or its parent, as
applicable. The number of shares to be received on the exercise of such Limited
Right shall be determined by dividing the amount of cash that would have been
available under the first sentence above by the Fair Market Value at the time of
exercise of the shares underlying the Option subject to the Limited Right.

10.     SURRENDER OF OPTION

                                       7
<PAGE>

        In the event of a Participant's termination of employment or termination
of service as a result of death or Disability, the Participant (or his personal
representative(s), heir(s), or devisee(s)) may, in a form acceptable to the
Committee, make application to surrender all or part of the Options held by such
Participant in exchange for a cash payment from the Bank of an amount equal to
the difference between the Fair Market Value of the Common Stock on the date of
termination of employment or service and the exercise price per share of the
Option on the Date of Grant. Whether the Bank accepts such application or
determines to make payment, in whole or part, is within its sole discretion, it
being expressly understood that the Bank is under no obligation to any
Participant to make such payments. In the event that the Bank accepts such
application and determines to make payment, such payment shall be in lieu of the
exercise of the underlying Option and such Option shall cease to be exercisable.

11.     RIGHTS OF A SHAREHOLDER; NON-TRANSFERABILITY

        A Participant shall have no rights as a shareholder with respect to any
shares covered by a Non-statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in the Plan or in
any Award granted confers on any person any right to continue in the employ of
the Bank or its Affiliates or to continue to perform services for the Bank or
its Affiliates or interferes in any way with the right of the Bank or its
Affiliates to terminate his or her services as an Employee or Director at any
time.

        No Award under the Plan shall be transferable by the optionee other than
by will or the laws of descent and distribution and may only be exercised during
his or her lifetime by the Participant, or by a guardian or legal representative
of the Participant.

12.     AGREEMENT WITH PARTICIPANTS

        Each Award of Options, and/or Limited Rights shall be evidenced by a
written agreement, executed by the Participant and the Bank or its Affiliates
that describes the conditions for receiving the Awards including the date of
Award, the purchase price if any, applicable periods, and any other terms and
conditions as may be required by the Board of Directors or applicable securities
law.

13.     DESIGNATION OF BENEFICIARY

        A Participant, with the consent of the Committee, may designate a person
or persons to receive, in the event of death, any Option or Limited Rights Award
to which he or she would then be entitled. Such designation will be made upon
forms supplied by and delivered to the Bank and may be revoked in writing. If a
Participant fails effectively to designate a Beneficiary, then his estate will
be deemed to be the Beneficiary.

14.     DILUTION AND OTHER ADJUSTMENTS

        In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, pro-rata return of
capital to all shareholders, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, or other
increase or decrease in such shares without receipt or payment of consideration,
the Committee will make such adjustments to previously granted Awards, to
prevent dilution or enlargement of the rights of the Participant, including any
or all of the following:

        (a)     adjustments in the aggregate number or kind of shares of Common
        Stock that may be awarded under the Plan;

        (b)     adjustments in the aggregate number or kind of shares of Common
        Stock covered by Awards already made under the Plan; or

        (c)     subject to Section 8.1(b), adjustments in the purchase price of
        outstanding Incentive and/or Nonstatutory Stock Options, or any Limited
        Rights attached to such options.

        No such adjustments, however, may change materially the value of
benefits available to a Participant under a previously granted Award.

                                       8
<PAGE>

15.     LIMITATIONS UPON EXERCISE OF OPTIONS

        Notwithstanding any other provision of the Plan, so long as the Company
remains in the mutual form of organization and so long as any applicable statute
or regulation requires the Company to own at least a majority of the outstanding
shares of Common Stock, an Option granted under the Plan may not be exercised if
the exercise of such an Option would result in the Company owning less than a
majority of the Common Stock. Nothing herein shall preclude the Bank from
issuing additional authorized but unissued shares of Common Stock to the Company
to allow for the exercise of options that would otherwise have resulted in the
Company owning less than a majority of the Common Stock.

16.     TREATMENT OF OPTIONS IN THE EVENT OF A CONVERSION TRANSACTION

        In the event that the Company converts to stock form in a Conversion
Transaction, any Options outstanding shall, at the option of the holder, (i) be
convertible into Options for common stock of the Stock Holding Company, or (ii)
if vested, be exercised by the holder prior to the effective date of the
Conversion Transaction and the holder shall be entitled to exchange, in the same
manner as other minority stockholders of the Bank, the shares of Common Stock
received upon such exercise for shares of common stock of the Stock Holding
Company. If for any reason such options are not to be converted or such shares
are not exchanged, the holders of Options under the Plan shall receive cash
payment for the shares of Common Stock represented by the Options in an amount
equal to the Fair Market Value of the underlying Options or the initial offering
price of the common stock of the Stock Holding Company for which the Common
Stock underlying the Option would otherwise be exchanged, less the original
exercise price of such Options and, with respect to Options that have been
exercised, the Stock Holding Company shall redeem such shares for cash in the
same manner as such redemption would occur for other minority stockholders of
the Bank. Any exchange, conversion of Options, or cash payment for shares shall
be subject to applicable federal and state regulations and, if necessary,
subject to the approval of the appropriate regulatory authorities.

17.     WITHHOLDING

        There may be deducted from each distribution of cash and/or Common Stock
under the Plan the amount of tax required by any governmental authority to be
withheld.

18.     AMENDMENT OF THE PLAN

        The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect; PROVIDED, HOWEVER, that if necessary to continue
to qualify the Plan under the Securities and Exchange Commission Rule 16b-3, the
approval by a majority of the shares of Common Stock represented in person or by
proxy at an annual or special meeting of the Bank shall be required for any such
modification or amendment that:

        (a)     increases the maximum number of shares for which Options may be
                granted under the Plan (SUBJECT, HOWEVER, to the provisions of
                Section 14);

        (b)     reduces the exercise price at which Awards may be granted
                (SUBJECT, HOWEVER, to the provisions of Sections 7, 8, and 14;

        (c)     extends the period during which Options may be granted or
                exercised beyond the times originally prescribed (subject,
                however, to the provisions of Sections 7 and 8; or

        (d)     changes the persons eligible to participate in the Plan.

        Failure to ratify or approve amendments or modifications to subsections
(a) through (d) of this Section 18 by shareholders shall be effective only as to
the specific amendment or modification requiring such ratification. Other
provisions, sections, and subsections of the Plan will remain in full force and
effect.

                                       9
<PAGE>

        No such termination, modification or amendment may affect the rights of
a Participant under an outstanding Award.

19.     APPROVAL BY STOCKHOLDERS

        The Plan shall be approved by stockholders of the Bank. No Options shall
be granted pursuant to the Plan prior to such stockholder approval.

20.     EFFECTIVE DATE OF PLAN

        The Plan shall become effective upon the date adopted by the Board of
Directors, following the approval of stockholders.

21.     TERMINATION OF THE PLAN

        The right to grant Awards under the Plan will terminate upon the earlier
of ten (10) years after the Effective Date or the date on which the exercise of
Options or related rights equaling the maximum number of shares reserved under
the Plan occurs as set forth in Section 5. The Board of Directors has the right
to suspend or terminate the Plan at any time; PROVIDED that no such action will,
without the consent of a Participant, affect adversely his rights under a
previously granted Award.

                                       10
<PAGE>

22.     APPLICABLE LAW

        The Plan will be administered in accordance with federal law and the
laws of the State of Michigan.

Adopted February 27, 1996

ATTEST:                                   FIRST FEDERAL SAVINGS AND LOAN
                                          ASSOCIATION OF ALPENA

   /s/ Robert H. Nowicki              By:   /s/ Duane I. Dickey
----------------------------------        --------------------------------------
Robert H. Nowicki                         Duane I. Dickey
Corporate Secretary                       President and Chief Executive Officer

                                          ALPENA BANCSHARES, M.H.C.

   /s/ Robert H. Nowicki              By:   /s/ Duane I. Dickey
----------------------------------        --------------------------------------
Robert H. Nowicki                         Duane I. Dickey
Corporate Secretary                       President and Chief Executive Officer

----------------------------------
Date Approved by Stockholders

                                       11<PAGE>

                                  EXHIBIT 10.4

<PAGE>

                         FIRST FEDERAL SAVINGS AND LOAN
                            ASSOCIATION OF ALPENA AND
                            ALPENA BANCSHARES, M.H.C.
                       1996 RECOGNITION AND RETENTION PLAN

1.      ESTABLISHMENT OF THE PLAN

        First Federal Savings and Loan Association of Alpena (the "Bank") and
Alpena Bancshares, M.H.C. (the "Company") hereby establish the 1996 Recognition
and Retention Plan (the "Plan") upon the terms and conditions hereinafter stated
in the Plan.

2.      PURPOSE OF THE PLAN

        The purpose of the Plan is to retain Employees and Outside Directors of
experience and ability by providing such persons with a proprietary interest in
the Bank as compensation for their contributions to the Bank and the Company and
their Affiliates and as an incentive to make such contributions and to promote
the Bank's growth and profitability in the future.

3.      DEFINITIONS

        The following words and phrases when used in the Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:

        "AFFILIATE" means any "parent corporation" or "subsidiary corporation"
of the Bank or the Company, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.

        "AWARD" means the grant of Restricted Stock, as provided in the Plan.

        "BANK" means First Federal Savings and Loan Association of Alpena.

        "BENEFICIARY" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.

        "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the Bank
and the Company, as applicable.

        "CAUSE" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Bank or an Affiliate.

        "CHANGE IN CONTROL" means:

        (1)(i)  A reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or the Company or a
similar transaction in which the Bank or Company is not the resulting entity or
the Stock Holding Company is not the resulting entity; (ii) individuals who
constitute the Board of Directors of the Bank or the Board of Directors of the
Company as of the date hereof (the "Incumbent Board"), cease for any reason to
constitute at least a majority thereof, PROVIDED THAT any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-fourths of the directors composing the Incumbent Board or whose
nomination for election by the Bank's or Company's stockholders or members,
respectively, was

                                       1
<PAGE>

approved by the Nominating Committee serving under an Incumbent Board shall be
for purposes of this section considered as though he were a member of the
Incumbent Board; or (iii) an acquisition of "control" of the Bank or the Company
as defined by the Home Owners Loan Act, as amended, and applicable rules and
regulations promulgated thereunder as in effect at the time of the Change in
Control (collectively, the "HOLA"), or (iv) an acquisition of the Bank's stock
requiring submission of notice under the Change in Bank Control Act;

        (2)     In the event the Company converts from the mutual form of
organization to the stock form of organization in a Conversion Transaction at
any time subsequent to the effective date of the Plan, a "Change in Control"
shall mean a change in control of the Bank or the Stock Holding Company of a
nature that: (i) would be required to be reported in response to Item 1a of the
current report on Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a change in control of the Bank or the Stock Holding Company within
the meaning of the Bank Holding Company Act ("BHCA"); or (iii) without
limitation, results in (a) any "person" (as such term is used in Section 13(d)
and 14(d) of the Exchange Act) becoming the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Bank or the Stock Holding Company representing 25% or more of the Bank's or
Stock Holding Company's outstanding securities ordinarily having the right to
vote at the election of directors, except for any securities purchased by the
Bank's or the Stock Holding Company's employee stock benefit plans; or (b) the
Incumbent Board ceasing for any reason to constitute at least a majority of the
Board of Directors of the Bank or Stock Holding Company; or (c) results in a
reorganization, merger, consolidation, sale of all or substantially all of the
assets of the Bank or the Stock Holding Company or similar transaction.

        Notwithstanding anything to the contrary herein, the conversion of the
Company to stock form, on a stand-alone basis, shall not be a Change in Control.

        "CODE" means the Internal Revenue Code of 1986, as amended.

        "COMMITTEE" means the Stock Benefits Committee of the Board appointed by
the Bank which shall consist of at least three Outside Directors of the Bank or
the Company, all of whom are and must be "disinterested directors," as that term
is defined under Rule 16b-3 of the Securities Exchange Act of 1934.

        "COMMON STOCK" means shares of the common stock of the Bank, par value
of $1.00 per share.

        "COMPANY" means Alpena Bancshares, M.H.C.

        "CONTINUOUS SERVICE" means employment as an Employee or service as an
Outside Director without any interruption or termination of such employment or
service. In the case of an Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Bank or in the case of transfers between payroll
locations of the Bank or between the Bank, its parent, its subsidiaries or its
successor. For purposes of determining Continuous Service, an Outside Director
who terminates service on the Board but who continues to serve the Bank or
Company as a Director Emeritus will not be deemed to have an interruption or
termination of service under the Plan.

        "CONVERSION TRANSACTION" means the conversion of the Company from the
mutual to stock form of organization either on a stand-alone basis or in the
context of a merger conversion, as provided by regulations of the OTS.

        "DIRECTOR" means a member of the Board of Directors.

        "DIRECTOR EMERITUS" means a former Director, who in recognition of his
or her past contributions, has been titled as a director emeritus.

        "DISABILITY" means the permanent and total inability by reason of mental
or physical infirmity, or both, of an Employee to perform the work customarily
assigned to him. Additionally, a medical doctor selected or approved by the
Board of Directors must advise the Committee that it is either not possible to
determine when such Disability

                                       2
<PAGE>

will terminate or that it appears probable that such Disability will be
permanent during the remainder of such Employee's lifetime.

        "EFFECTIVE DATE" means the date the Plan is ratified by the Board,
following the approval of stockholders.

        "EMPLOYEE" means any person who is currently employed by the Bank, the
Company or an Affiliate, including officers.

        "ESCROW AGENT" means the person designated by the Board or the Committee
to hold the Restricted Stock as agent for the parties until the lapse of the
restrictions imposed by Section 6.1.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

        "NORMAL RETIREMENT" means, for an Employee, retirement at the normal or
early retirement date as set forth in the Bank's Employee Stock Ownership Plan,
or any successor plan. For an Outside Director, Normal Retirement means
retirement from service on the Board.

        "OFFERING" means the initial public offering of the Common Stock of the
Bank.

        "OTS" means the Office of Thrift Supervision, or any successor thereto.

        "OUTSIDE DIRECTOR" means a Director who is not also an Employee.

        "RECIPIENT" means an Employee or Director who receives an Award under
the Plan.

        "REORGANIZATION" means the reorganization of First Federal Savings and
Loan Association of Alpena as a mutual holding company and the establishment of
the Bank as its majority-owned subsidiary.

        "RESTRICTED PERIOD" means the period of time selected by the Board or
the Committee, as applicable, for the purpose of determining when restrictions
are in effect under Section 6 with respect to Restricted Stock.

        "RESTRICTED STOCK" means shares that have been awarded under the Plan to
a Recipient subject to the restrictions referred to in Section 6, so long as
such restrictions are in effect.

        "STOCK HOLDING COMPANY" means the holding company resulting from a stock
conversion of the Company in a Conversion Transaction.

4.      ADMINISTRATION OF THE PLAN

        4.1     ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in this and other sections of the Plan. The interpretation and construction by
the Committee of any provision of the Plan or of any Award granted hereunder
shall be final and binding. The Committee shall act by vote or written consent
of a majority of its members. Subject to the express provisions and limitations
of the Plan, the Committee may adopt such rules, regulations and procedures as
it deems appropriate for the conduct of its affairs. The Committee shall report
its actions and decisions with respect to the Plan to the Board at appropriate
times, but in no event less than one time per calendar year.

        4.2     ROLE OF THE BOARD. The members of the Committee shall be
appointed or approved by, and will serve at the pleasure of, the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee. The Board shall have all of the powers allocated to
it in this and other sections of the Plan, may take any action under or with
respect to the Plan that the Committee is authorized to take, and may reverse or
override any action taken or decision made by the Committee under or with
respect to the Plan, PROVIDED, HOWEVER, that the Board may not revoke any Award
except in the case of revocation for Cause or, with respect to unearned Awards,
in the event a Recipient of an Award voluntarily terminates employment with the
Bank prior to Normal Retirement.

                                       3
<PAGE>

        4.3     PLAN ADMINISTRATION RESTRICTIONS. The Plan is intended to comply
with Rule 16b-3 under the Securities Exchange Act of 1934. Notwithstanding any
term to the contrary appearing herein, unless permitted by Rule 16b-3(c)(2)(ii),
subsequent to the establishment of the Plan, neither the Committee nor the Board
shall have the authority to determine the amount and price of securities to be
awarded and/or timing of awards to Outside Directors, which terms shall be set
forth in the Plan. To the extent any provision of the Plan or action by the
Committee or Board fails to comply with this Section 4.3, such provision or
action shall, to the extent permitted by law and deemed advisable by the Board,
be deemed null and void.

        4.4     LIMITATION ON LIABILITY. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Awards granted under it. If a member of the Board or the Committee
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Bank shall indemnify such member against
expense (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Bank, the Company and its
Affiliates and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

5.      ELIGIBILITY; AWARDS

        5.1     ELIGIBILITY. Employees and Outside Directors are eligible to
receive Awards.

        5.2     AWARDS TO EMPLOYEES. The Committee may determine which of the
Employees referenced in Section 5.1 will be granted Awards and the number of
shares covered by each Award; PROVIDED, HOWEVER, that in no event shall any
Awards be made that will violate the Plan, the Charter, Bylaws or Plan of
Reorganization from Mutual Savings Bank to Mutual Holding Company and Stock
Issuance Plan of the Bank or any applicable federal or state law or regulation.
Shares of Restricted Stock that are awarded by the Committee shall, on the date
of the Award, be registered in the name of the Recipient and transferred to the
Recipient, in accordance with the terms and conditions established under the
Plan. The total number of shares that will be awarded or reserved for Employees
under the Plan shall be 17,940 shares.

        In the event Restricted Stock is forfeited for any reason, the
Committee, from time to time, may determine which of the Employees referenced in
Section 5.1 will be granted additional Awards to be awarded from forfeited
Restricted Stock. In selecting those Employees to whom Awards will be granted
and the amount of Restricted Stock covered by such Awards, the Committee shall
consider the position and responsibilities of the Employees, the length and
value of their services to the Bank and its Affiliates, the compensation paid to
the Employees and any other factors the Committee may deem relevant, and the
Committee may request the written recommendation of the Chief Executive Officer
and other senior executive officers of the Bank, the Company and its Affiliates.
All allocations by the Committee shall be subject to review, and approval or
rejection, by the Board.

        Subject to Sections 6.3 and 6.4, no Restricted Stock shall be earned
unless the Employee maintains Continuous Service until the restrictions lapse.

        5.3     AWARDS TO OUTSIDE DIRECTORS. Each Outside Director serving on
the Board of the Bank or the Company on the Effective Date shall be issued an
Award equal to 2,415 shares of Restricted Stock. The total number of shares that
will be awarded or reserved for Outside Directors under the Plan shall be 9,660
shares.

        Any person who becomes an Outside Director subsequent to the date of
approval of the Plan by stockholders shall receive an Award of Restricted Stock
equal to 2,415 shares, subject to availability.

        No Restricted Stock shall be earned by an Outside Director unless the
Outside Director maintains Continuous Service until the restrictions lapse.

                                       4
<PAGE>

        5.4     MANNER OF AWARD. As promptly as practicable after a
determination is made pursuant to Sections 5.2 and 5.3 that an Award has been
granted, the Committee shall notify the Recipient in writing of the grant of the
Award, the number of shares of Restricted Stock covered by the Award, and the
terms upon which the Restricted Stock subject to the Award may be earned. Upon
notification of an Award of Restricted Stock, the Recipient shall execute and
return to the Bank a restricted stock agreement setting forth the terms and
conditions under which the Recipient shall earn the Restricted Stock (the
"Restricted Stock Agreement"), together with a stock power endorsed in blank.
Thereafter, the Recipient's Restricted Stock and stock power shall be deposited
with the Escrow Agent specified by the Bank, who shall hold such Restricted
Stock under the terms and conditions set forth in the Restricted Stock
Agreement. Each certificate representing an Award under the Plan shall be
registered in the name of the Recipient.

        5.5     TREATMENT OF FORFEITED SHARES. In the event shares of Restricted
Stock are forfeited by a Recipient hereunder, such shares shall be returned to
the Bank and shall be held and accounted for and re-awarded pursuant to the
terms of the Plan.

6.      TERMS AND CONDITIONS OF RESTRICTED STOCK

        The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant Awards of Restricted Stock to Employees and,
in addition to the terms and conditions contained in this Section 6, to provide
such other terms and conditions (which need not be identical among Recipients)
in respect of such Awards, and the vesting thereof, as the Committee shall
determine.

        6.1     GENERAL RULES. Restricted Stock shall be earned by an Employee
at the rate determined by the Committee at the time of grant of the Award;
PROVIDED, HOWEVER, that no shares shall be earned for any year in which the Bank
is not meeting all of its fully phased-in capital requirements. Awards granted
to Outside Directors shall be earned by an Outside Director at the rate of
twenty percent (20%) of the aggregate number of shares covered by the Award per
year commencing one year from the date of grant. Subject to any such other terms
and conditions as the Committee shall provide with respect to awards to
Employees, shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Recipient, except as hereinafter
provided, during the Restricted Period. The Committee shall have the authority,
in its discretion, to accelerate the time at which any or all of the
restrictions shall lapse with respect to Awards issued to Employees, or to
remove any or all of such restrictions, whenever it may determine that such
action is appropriate by reason of changes in applicable tax or other laws or
other changes in circumstances occurring after the commencement of such
Restricted Period.

        6.2     CONTINUOUS SERVICE; FORFEITURE. Except as provided in Sections
6.3 and 6.4, if an Employee or Outside Director ceases to maintain Continuous
Service for any reason, unless the Committee shall otherwise determine, all
shares of Restricted Stock theretofore awarded to such Employee or Outside
Director and which at the time of such termination of Continuous Service are
subject to the restrictions imposed by Section 6.1 shall upon such termination
of Continuous Service be forfeited.

        6.3     EXCEPTION FOR TERMINATION DUE TO DEATH, DISABILITY OR NORMAL
RETIREMENT. Notwithstanding the general rules contained in Sections 6.1 and 6.2,
Restricted Stock awarded to a Recipient whose employment or service terminates
due to death, Disability, or Normal Retirement that has not theretofore been
earned, shall be deemed earned as of the Recipient's last day of employment or
service.

        6.4     EXCEPTION FOR TERMINATIONS AFTER A CHANGE IN CONTROL.
Notwithstanding the general rules contained in Sections 6.1 and 6.2, all
Restricted Stock held by a Recipient whose employment or service terminates
following a Change in Control shall be deemed earned as of the Recipient's last
day of employment or service.

        6.5     REVOCATION FOR CAUSE. Notwithstanding anything herein to the
contrary, if a Recipient is terminated for cause or has engaged in conduct that
would justify termination for cause, the Board may by resolution immediately
revoke, rescind and terminate any Award, or portion thereof, previously awarded
under the Plan, whether or not yet earned, to the extent Restricted Stock has
not been redelivered by the Escrow Agent to the Recipient.

                                       5
<PAGE>

        6.6     RESTRICTED STOCK LEGEND. Each certificate representing an Award
under the Plan shall be registered in the name of the Recipient and deposited by
the Recipient, together with a stock power endorsed in blank, with the Escrow
Agent and shall bear the following (or a similar) legend:

                        "The transferability of this certificate and the shares
                of stock represented hereby are subject to the terms and
                conditions (including forfeiture) contained in the First Federal
                Savings and Loan Association of Alpena and Alpena Bancshares,
                M.H.C. 1996 Recognition and Retention Plan. Copies of such Plan
                are on file in the offices of the Secretary of First Federal
                Savings and Loan Association of Alpena, 100 South Second Avenue,
                Alpena, Michigan 49707."

        6.7     PAYMENT OF DIVIDENDS AND RETURN OF CAPITAL. After an Award has
been granted but before such Award has been earned, the Recipient shall receive
any cash dividends or stock dividends paid with respect to such shares, or shall
share in any pro-rata return of capital to all shareholders with respect to the
Common Stock. Unless the Recipient has made an election under Section 83(b) of
the Code, cash dividends or other amounts so paid on shares that have not yet
been earned by the Recipient shall be treated as compensation income (or, in the
case of an Outside Director, self-employment income) to the Recipient when paid.

        6.8     VOTING OF RESTRICTED SHARES. After an Award has been granted,
the Recipient as owner of such shares shall have the right to vote such shares.

        6.9     DELIVERY OF EARNED SHARES. At the expiration of the restrictions
imposed by Section 6.1, the Escrow Agent shall redeliver to the Recipient (or
where the relevant provision of Section 6.3 applies in the case of a deceased
Recipient, to his Beneficiary), the certificate(s) deposited with it and the
shares represented by such certificate(s) shall be free of the restrictions
imposed by Section 6.1.

7.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

        In the event of any change in the outstanding shares subsequent to the
Effective Date by reason of any reorganization (other than the Reorganization),
recapitalization, stock split, combination or exchange of shares, merger,
consolidation or any change in the corporate structure or shares of the Bank,
the maximum aggregate number and class of shares as to which Awards may be
granted under the Plan shall be appropriately adjusted. Any shares of stock or
other securities received, as a result of any of the foregoing, by a Recipient
shall be subject to the same restrictions and the certificate(s) or other
instruments representing or evidencing such shares or securities shall be
legended and deposited with the Escrow Agent in the manner provided in Section
6.6.

8.      ASSIGNMENTS AND TRANSFERS

        No Award nor any right or interest of a Recipient in any instrument
evidencing any Award may be assigned, encumbered or transferred except, in the
event of the death of a Recipient, by will or the laws of descent and
distribution.

9.      EMPLOYEE RIGHTS UNDER THE PLAN

        No Employee shall have a right to be selected as a Recipient nor, having
been so selected, to be selected again as a Recipient and no Employee or other
person shall have any claim or right to be granted an Award under the Plan or
under any other incentive or similar plan of the Bank or an Affiliate. Neither
the Plan nor any action taken thereunder shall be construed as giving any
Employee any right to be retained in the employ of the Bank or an Affiliate.

                                       6
<PAGE>

10.     WITHHOLDING TAX

        Upon the termination of the Restricted Period with respect to any shares
of Restricted Stock (or at such earlier time, if any, that an election is made
by the Employee under Section 83(b) of the Code, or any successor provision
thereto, to include the value of such shares in taxable income), the Bank or its
Affiliate, as applicable, shall have the right to require the Employee or other
person receiving such shares to pay the Bank or Affiliate the amount of any
taxes that the Bank or Affiliate is required to withhold with respect to such
shares, or, in lieu thereof, to retain or sell without notice, a sufficient
number of shares held by it to cover the amount required to be withheld. The
Bank or Affiliate shall have the right to deduct from all dividends paid with
respect to shares of Restricted Stock the amount of any taxes which the Bank or
Affiliate is required to withhold with respect to such dividend payments.

11.     TREATMENT OF RESTRICTED STOCK IN THE EVENT OF CONVERSION TRANSACTION

        In the event that the Company converts to stock form in a Conversion
Transaction, any Restricted Stock shall be exchanged into shares of Common Stock
of the Stock Holding Company, PROVIDED, HOWEVER, that if for any reason such
shares are not to be exchanged, the Stock Holding Company shall, simultaneously
with the closing of the Conversion Transaction, purchase Restricted Stock for
cash equal to the fair market value of such Restricted Stock or Shares. Any
exchange of shares or cash payment for shares shall be subject to applicable
federal and state regulations and, if necessary, subject to the approval of the
appropriate Regulatory authorities.

12.     AMENDMENT OR TERMINATION

        The Board of the Bank or the Company may amend, suspend or terminate the
Plan or any portion thereof at any time, but (except as provided in Section 6)
no amendment shall be made without approval of the stockholders of the Bank that
shall (i) materially increase the aggregate number of shares with respect to
which Awards may be made under the Plan, (ii) materially increase the aggregate
number of shares that may be subject to Awards to Recipients who are not
Employees, or (iii) change the class of persons eligible to participate in the
Plan; PROVIDED, HOWEVER, that no such amendment, suspension or termination shall
impair the rights of any Recipient, without his consent, in any Award
theretofore made pursuant to the Plan.

13.     GOVERNING LAW

        The Plan shall be governed by the laws of the State of Michigan.

14.     TERM OF PLAN

        The Plan shall become effective upon its ratification by the Board of
the Bank and the Company, following the approval of the Plan by stockholders. It
shall continue in effect until the earlier of (i) fifteen years from the
Effective Date, unless sooner terminated under Section 12, or (ii) the date upon
which all shares of Common Stock available for award hereunder have vested in
the Recipients of such Awards.

                                       7
<PAGE>

        IN WITNESS WHEREOF, the Bank and the Company have caused this Plan to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, as of the 27th day of February, 1996.

ATTEST:                                    FIRST FEDERAL SAVINGS AND LOAN
                                           ASSOCIATION OF ALPENA

   /s/ Robert H. Nowicki               By:    /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

                                           ALPENA BANCSHARES, M.H.C.

   /s/ Robert H. Nowicki               By:   /s/ Duane I. Dickey
------------------------------------       -------------------------------------
Robert H. Nowicki                          Duane I. Dickey
Corporate Secretary                        President and Chief Executive Officer

------------------------------------
Date Approved by Stockholders

                                       8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]