Document:

Exhibit 10.02 to KMB American Corporation Form 8-K dated April 18, 2006

EXHIBIT 10.02

 

KMG AMERICA CORPORATION

2004 EQUITY INCENTIVE PLAN

Nonqualified Stock Option Agreement

Number of shares subject to Nonqualified Stock Option: _________

THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of the ____ day of ________, 20__, by and between KMG AMERICA CORPORATION, a Virginia corporation (the “Company”), and _____________________ (the “Participant”), is made pursuant and subject to the provisions of the Company’s 2004 Equity Incentive Plan (the “Plan”), a summary of which is attached hereto. All terms used but not defined herein that are defined in the Plan have the same meaning given them in the Plan.

1.            Grant of Option. Pursuant to the Plan, effective as of the fifth business day prior to the last calendar day of the calendar quarter in which the Participant begins employment with the Company or an Affiliate or, if the Participant was hired on or after the fifth business day prior to the last calendar day of such quarter, then the fifth business day prior to the last calendar day of the next calendar quarter (the “Date of Grant”), the Company grants to the Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, the right and option to purchase from the Company all or any part of an aggregate of ______ shares of the common stock of the Company (the “Common
Stock”) at an exercise price per share equal to the Fair Market Value of a share of the Common Stock on the trading day immediately preceding the Date of Grant. This Option is intended to be treated as a nonqualified stock option, which is not subject to Code Section 422. This Option is exercisable as hereinafter provided.

2.            Terms and Conditions. This Option is subject to the following terms and conditions:

	
             
  	
            (a)
 	
            Expiration Date. This Option shall expire at 11:59 p.m. on the tenth annual anniversary of the Date of Grant (the “Expiration Date”). In no event shall the Expiration Date be later than 10 years from the Date of Grant.
 

	
             
  	
            (b)
 	
            Vesting and Exercise of Option. Except as provided herein, this Option shall become exercisable at the time or times set forth on Schedule A attached hereto. Once this Option has become exercisable in accordance with the preceding sentence, it shall continue to be exercisable until the earlier of the termination of the Participant’s rights hereunder as set forth on Schedule A attached hereto or until the Expiration Date. A partial exercise of this Option shall not affect the Participant’s right to exercise the Option with respect to the remaining shares, subject to the conditions of the Plan and this Agreement.
 

	
             
  	
            (c)
 	
            Method of Exercise and Payment for Shares. This Option shall be exercised by delivering written notice of exercise to the attention of the Company’s Secretary 
 

 

1

 

by using the form attached hereto as Exhibit A. The exercise date shall be (i) in the case of notice by mail, the date of postmark; or (ii) if delivered in person, the date of delivery. Such notice shall be accompanied by payment of the Option price in full. The Participant may pay part or all of the Option price (i) in cash; (ii) by certified check; (iii) by tendering shares of Common Stock (which, if acquired from the Company, have been held by the Participant for at least six months); (iv) by a broker-assisted cashless exercise; or (v) by any combination of the aforementioned methods of payment. Such notice of exercise shall be accompanied by payment, in cash or any other method allowed for payment of the Option price, of any required income and employment withholding taxes attributable to the exercise of the Option.

	
             
  	
            (d)
 	
            Transferability. This Option generally is nontransferable. Generally, during the Participant’s lifetime, only the Participant may exercise this Option, except that notwithstanding the foregoing, this Option may be transferred by will or by the laws of descent and distribution, and during the Participant’s lifetime, may be transferred by the Participant to the Participant’s children, grandchildren, spouse, one or more trusts for the benefit of such family members or a partnership in which such family members are the only partners, which transferees comprise the class of transferees who may rely on a Form S-8 Registration Statement under the Securities Act of 1933 to sell shares issuable upon exercise of Options granted under the Plan. Any such transferee to whom this Option is
transferred shall be bound by the same terms and conditions that govern this Option; provided, however, that the transferee may not transfer this Option except by will or the laws of descent and distribution. If this Option is transferred, the Option must be transferred in its entirety to the same person or persons or entity or entities. No right or interest of the Participant in this Option shall be liable for, or subject to, any lien, obligation or liability of the Participant.
 

3.            Representations and Warranties of Participant. The Participant represents and warrants to the Company at the time of exercise of the Option that:

	
             
  	
            (a)
 	
            Agrees to Terms of the Plan and Agreement. The Participant has received or has access to copies of the Company’s most recently filed Form 10-K, a summary of the Plan and the Plan. The Participant has read the Form 10-K, and has read and understands the terms of the summary of the Plan, the Plan and this Agreement, and agrees to be bound by their terms and conditions. The Participant acknowledges that there may be adverse tax consequences upon acquisition or disposition of the shares of Common Stock received upon exercise of this Option, and that Participant should consult a tax adviser prior to such acquisition or disposition. 
 

	
             
  	
            (b)
 	
            Purchase for Own Account for Investment. The shares of Common Stock received upon exercise of this Option will be acquired for the Participant’s own account for investment purposes only and not with a view to, or for sale in connection with, a distribution of such shares within the meaning of the Securities Act of 1933, as amended (the “Securities Act”). The Participant has no present intention of selling or otherwise disposing of all or any portion of such shares. 
 

 

2

 

 

	
             
  	
            (c)
 	
            Access to Information. The Participant has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that the Participant reasonably considers important in making a decision to acquire the shares of Common Stock and the Participant has had ample opportunity to ask questions of the Company’s representatives concerning such matters and this investment.
 

	
             
  	
            (d)
 	
            Understanding of Risks. The Participant is fully aware of: (i) the highly speculative nature of an investment in the Common Stock; (ii) the financial hazards involved in an investment in the Common Stock; (iii) the lack of liquidity of the Common Stock and the restrictions on transferability of the Common Stock (e.g., that the Participant may not be able to sell or dispose of the Common Stock or use it as collateral for loans); (iv) the qualifications and backgrounds of the management of the Company; and (v) the tax consequences of investment in the Common Stock. The Participant is capable of evaluating the merits and risks of this investment, has the ability to protect his own interests in this transaction and is financially capable of bearing a total loss
of this investment. 
 

	
             
  	
            (e)
 	
            No General Solicitation. At no time was the Participant presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale and purchase of the shares of Common Stock.
 

	
             
  	
            (f)
 	
            Compliance with Securities Laws. The shares of Common Stock received upon exercise of this Option have been registered with the Securities and Exchange Commission (“SEC”) under the Securities Act and, notwithstanding any other provision of this Agreement or the Plan to the contrary, the right to acquire any such shares is expressly conditioned upon compliance with the Securities Act and all applicable state securities laws. The Participant agrees to cooperate with the Company to ensure compliance with such laws.
 

	
             
  	
            (g)
 	
            No Transfer Unless Registered or Exempt. The Participant understands that he may not transfer any shares of Common Stock received upon exercise of this Option unless such shares are registered under the Securities Act or qualified under applicable state securities laws or unless, in the opinion of counsel to the Company, exemptions from such registration and qualification requirements are available. The Participant understands that only the Company may file a registration statement with the SEC and that the Company is under no obligation to do so with respect to the shares. The Participant has also been advised that exemptions from registration and qualification may not be available or may not permit the Participant to transfer all or any of the shares of Common Stock in the amounts or at the times
proposed by him.
 

4.            Minimum Exercise. This Option may not be exercised for less than 500 shares of Common Stock unless it is exercised for the full number of shares that remain subject to the Option.

 

3

 

 

5.            Fractional Shares. Fractional shares shall not be issuable hereunder, and when any provision hereof may entitle the Participant to a fractional share, such fractional share shall be disregarded.

6.            Change in Capital Structure. The terms of this Option shall be adjusted in accordance with the terms and conditions of the Plan as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock splits, subdivisions or consolidations of shares or other similar changes in capitalization.

7.            Notice. Any notice or other communication given pursuant to this Agreement, or in any way with respect to this Option, shall be in writing and shall be personally delivered or mailed by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

	
             
 	
            If to the Company:
 	
             KMG America Corporation
 

12600 Whitewater Drive, Suite 150

Minnetonka, MN 55343

Attention: Secretary

 

	
             
 	
            If to the Participant:
 	
            __________________________
 
	
             
 	
            __________________________
 
	
             
 	
            __________________________
 

Either party may change its notice address by delivering to the other party notice of such change in accordance with this Paragraph 7.

8.            No Right to Continued Employment. This Option does not confer upon the Participant any right with respect to continued employment by the Company or any Affiliate, nor shall it interfere in any way with the right of the Company or any Affiliate to terminate the Participant’s employment at any time without assigning a reason therefor.

9.            Participant Bound by Plan. The Participant hereby acknowledges receipt of a copy of the summary of the Plan and agrees to be bound by all the terms and provisions of the Plan.

10.          Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, transferees and personal representatives of the Participant and the successors of the Company.

11.          Conflicts. In the event of any conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.

12.          Prohibition on Solicitation. In consideration of the compensation and benefits extended to him as an employee of the Company or its Affiliate, the Participant agrees that, during the term of the Participant’s employment with the Company or its Affiliate and for the 12 month period immediately thereafter, the Participant shall not, for any reason whatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any other person, 

 

4

 

persons, company, firm, partnership, corporation, business, group or other entity (each, a “Person”) with whom the Participant works or is affiliated:

	
             
  	
            (a)
 	
            solicit and/or hire any Person who is on the date the Participant’s employment by the Company or its Affiliate terminates for any reason (the “Date of Termination”), or has been within six months prior to the Date of Termination, an employee of the Company or its Affiliates;
 

	
             
  	
            (b)
 	
            solicit, induce or attempt to induce or hire any Person who is, at the Date of Termination, or has been within six months prior to the Date of Termination, an actual customer, client, business partner, or a prospective customer, client, business partner of the Company or its Affiliates; for the purpose or with the intent of (i) inducing or attempting to induce such Person to cease doing business with the Company or its Affiliates; (ii) enticing or attempting to entice such Person to do business with the Participant or any Affiliate of the Participant; or (iii) in any way interfering with the relationship between such Person and the Company or its Affiliates; or
 

	
             
  	
            (c)
 	
            solicit, induce or attempt to induce any Person who is or that is, at the time of the Date of Termination, or has been within six months prior to the Date of Termination, a supplier, licensee or consultant of, or provider of goods or services to the Company or its Affiliates, for the purpose or with the intent of (i) inducing or attempting to induce such Person to cease doing business with the Company or its Affiliates; or (ii) in any way interfering with the relationship between such Person and the Company or its Affiliates. 
 

Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia, except to the extent federal law applies.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by a duly authorized officer, and the Participant has affixed his signature hereto.

COMPANY:

KMG AMERICA CORPORATION

 

By:                                          
                                      

	
             
 	
            Name:
 	
            Kenneth U. Kuk
 

	
             
 	
            Title:
 	
            Chairman, President and Chief Executive Officer
 

PARTICIPANT:

                                          
                                          
  

 

5

 

 

SCHEDULE A

 

Vesting Schedule

This Option shall vest and become exercisable with respect to 1/4 of the underlying shares of Common Stock on the first, second, third and fourth anniversaries, respectively, of the Date of Grant; provided, however, that the Participant will forfeit this Option with respect to all underlying shares of Company common stock for which this Option has not vested and become exercisable if his employment with the Company or its Affiliate is terminated for any reason. Any portion of this Option which has vested prior to the termination of the Participant’s employment with the Company or its Affiliate shall not be exercisable any later than 90 days after termination of Participant’s employment with the Company or its Affiliate. 

 

This Restricted Stock Award (“Award”) shall vest with respect to 1⁄4 of the shares of Company common stock on the first, second, third and fourth anniversaries, respectively, of the date of grant; provided, however, that this Award shall become exercisable with respect to 100% of the shares of Company common stock subject to this Award, upon (i) termination of the Participant’s employment by the Company or the Board, other than a termination for “Cause” or any resignation by the Participant without “Good Reason,” following a Change in Control, (ii) a termination of the Participant’s employment by the Company without “Cause,” (iii) a termination of the Participant’s employment by the Participant for “Good Reason,” (iv) a termination of the Participant’s employment upon the
Participant’s death, or (v) a termination of the Participant’s employment in accordance with Section _______________ of the Employment Agreement, and that the Participant will forfeit this Award with respect to all shares of Company common stock for which this Award has not vested if he is terminated for “Cause” or he terminates his employment for other than “Good Reason.”

 

6

 

 

EXHIBIT A

KMG AMERICA CORPORATION – NOTICE OF EXERCISE OF OPTION

To Be Executed by the Registered Holder in Order to Exercise the Option

 

	
            TO:  
 	
            KMG America Corporation, Attention:  James Nelson, Secretary
 	
             

	
             
 	
            12600 Whitewater Drive, Suite 150, Minnetonka, Minnesota 55343
 

 

The undersigned hereby irrevocably elects to exercise the following Option(s) to purchase for cash, that number of shares issuable upon the exercise of such Option(s), and, if requested, certificate(s) for such shares shall be issued as indicated.

 

	
            Type of
Option 

(ISO/ NQSO)
 	
            Option
Grant
Date
 	
            Original Number
of Option Shares
Granted
 	
            Number of
Shares being
Exercised
 	
            Per
Share
Exercise
Price
 	
            Indicate Method of Payment 

(Cashier’s Check, Certified Check, Money
Order or Cashless Exercise with 

Check from Broker)
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 

 

If applicable, please indicate the full legal name(s) that the shares of stock in a form of stock certificate should be issued to:

 

 

	
             
 	
             
 
	
             
 	
            (Print Name)
 
	
             
 	
             
 
	
             
 	
            Please insert social security or other identifying number of above registered holder of certificate (________________) and address 

   
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            (Print Name)
 
	
             
 	
             
 
	
             
 	
            Please insert social security or other identifying number of above registered holder of certificate (________________) and address 

  
 
	
             
 	
             
 
	
             
 	
             
 
	
            Option Holder Address:
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            Phone Number:
 	
             
 
	
             
 	
             
 
	
            Date:  _________, 20__
 	
             
 
	
             
 	
            Option Holder Signature*
 
	
             
 	
             
 
	
             
 	
            *The signature on the Notice of Exercise of Option must correspond to the name as written upon the face of the Option in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your position(s) and title(s) with such entity.
 

 

 

 

PLEASE SEND COMPLETED FORM, ALONG WITH INDICATED PAYMENT, TO KMG AMERICA!Chemical Financial Corporation Exhibit 10.1 to Form 8-K - 04/21/06

EXHIBIT 10.1

CHEMICAL FINANCIAL CORPORATION

STOCK INCENTIVE PLAN OF 2006

SECTION 1

Establishment of Plan; Purpose of
Plan

1.1     Establishment
of Plan. The Company hereby
establishes the STOCK INCENTIVE PLAN OF 2006 for its corporate
and Subsidiary officers and other key employees. The Plan
permits the grant and award of Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Stock Awards
and other stock-based and stock-related awards.

1.2     Purpose of
Plan. The purpose of the Plan is to
provide Participants with an increased incentive to contribute
to the long-term performance and growth of the Company and its
Subsidiaries, to join the interests of Participants with the
interests of the Company’s shareholders through the
opportunity for increased stock ownership and to attract and
retain Participants. The Plan is further intended to provide
flexibility to the Company in structuring long-term incentive
compensation to best promote the foregoing objectives. Within
that context, it is intended that the Plan may provide
performance-based compensation under Section 162(m) of the
Code and the Plan shall be interpreted, administered and amended
to achieve that purpose.

SECTION 2

Definitions

The following words have the following meanings
unless a different meaning plainly is required by the context:

2.1     “Act”
means the Securities Exchange Act of 1934, as amended.

2.2     “Affiliate”
means any organization controlling, controlled by or under
common control with the Company.

2.3     “Board”
means the Board of Directors of the Company.

2.4     “Change
in Control,” unless otherwise
defined in an Incentive Award agreement, means an occurrence of
a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A
issued under the Act. Without limiting the inclusiveness of the
definition in the preceding sentence, a Change in Control of the
Company shall be deemed to have occurred as of the first day
that any one or more of the following conditions is satisfied:
(a) any Person is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company’s then outstanding securities; (b) the failure
at any time of the Continuing Directors to constitute at least a
majority of the Board; or (c) any of the following occur:
(i) any merger or consolidation of the Company, other than
a merger or consolidation in which the voting securities of the
Company immediately prior to the merger or consolidation
continue to represent (either by remaining outstanding or being
converted into securities of the surviving entity) 60% or more
of the combined voting power of the Company or surviving entity
immediately after the merger or consolidation with another
entity; (ii) any sale, exchange, lease, mortgage, pledge,
transfer or other disposition (in a single transaction or a
series of related transactions) of assets or earning power
aggregating more than 50% of the assets or earning power of the
Company on a consolidated basis; (iii) any complete
liquidation or dissolution of the Company; (iv) any
reorganization, reverse stock split or recapitalization of the
Company which would result in a Change in Control as otherwise
defined in this Plan; or (v) any transaction or series of
related transactions having, directly or indirectly, the same
effect as any of the foregoing.

2.5     “Code”
means the Internal Revenue Code of 1986, as amended. Each
reference herein to a section or sections of the Code shall,
unless otherwise noted, be deemed to include a reference to the
rules and regulations issued under such section or sections of
the Code.

2.6     “Committee”
means the Compensation and Pension Committee of the Board or
such other committee as the Board may designate from time to
time. The Committee shall consist of at least two members of the
Board and all of its members shall be “non-employee
directors” as defined in Rule 16b-3 issued under the
Act and “outside directors” as defined in
Section 162(m) of the Code.

2.7     “Common
Stock” means the Company’s
common stock, par value $1 per share.

2.8     “Company”
means Chemical Financial Corporation, a Michigan corporation,
and its successors and assigns.

2.9     “Continuing
Directors” means the individuals
who were either (a) first elected or appointed as a
director prior to January 17, 2006, or
(b) subsequently appointed as a director, if appointed or
nominated by at least a majority of the Continuing Directors in
office at the time of the nomination or appointment, but
specifically excluding any individual whose initial assumption
of office occurs as a result of either an actual or threatened
solicitation subject to Rule 14a-12(c) of
Regulation 14A issued under the Act or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board.

1

 

2.10     “Covered
Employee” means any Employee who
is or may become a “Covered Employee,” as defined in
Section 162(m) of the Code, and who is designated, either
as an individual Employee or class of Employees, by the
Committee within the shorter of (i) 90 days after the
beginning of the Performance Period, or (ii) the period of
time after the beginning of the Performance Period and before
25% of the Performance Period has elapsed, as a “Covered
Employee” under this Plan for such applicable Performance
Period.

2.11     “Director”
means a member of the Board.

2.12     “Disability”
means an inability of a Participant to perform his or her
employment duties due to physical or mental disability for a
continuous period of 180 days or longer and the Participant
is eligible for benefits under the Company’s long-term
disability policy.

2.13     “Employee”
means an employee of the Company or one of its Subsidiaries or
Affiliates.

2.14     “Incentive
Award” means the award or grant
of a Stock Option, a Stock Appreciation Right, Restricted Stock,
a Restricted Stock Unit, a Stock Award, or another stock-based
or stock-related award, to a Participant pursuant to the Plan.

2.15     “Market
Value” shall equal the mean of
the highest and lowest sales prices of shares of Common Stock
reported on Nasdaq (or any successor exchange or system that is
the primary stock exchange or system for trading of Common
Stock) on the day immediately prior to the date of grant,
exercise or vesting, as applicable, or if Nasdaq (or any such
successor) is closed on that date, the last preceding date on
which Nasdaq (or any such successor) was open for trading and on
which shares of Common Stock were traded.

2.16     “Mature
Shares” means shares of Common
Stock that a Participant has owned for at least six months and
that meet any other holding requirements established by the
Committee for the shares to be used for attestation.

2.17     “Nasdaq”
means The Nasdaq Stock Market.

2.18     “Participant”
means a corporate officer or any key employee of the Company or
its Subsidiaries who is granted an Incentive Award under the
Plan.

2.19     “Performance”
means the level of achievement of the performance goals
established by the Committee pursuant to Section 10.1.

2.20     “Performance
Measures” means measures as
described in Section 10 on which the performance goals are
based.

2.21     “Performance
Period” means the period of time
during which the performance goals must be met to determine the
degree of payout, the vesting, or both, with respect to an
Incentive Award that is intended to qualify as Performance-Based
Compensation.

2.22     “Performance-Based
Compensation” means compensation
under an Incentive Award that satisfies the requirements of
Section 162(m) of the Code for certain
“performance-based compensation” paid to Covered
Employees. Notwithstanding the foregoing, nothing in this Plan
shall be construed to mean that an Incentive Award which does
not satisfy the requirements for performance-based compensation
under Section 162(m) of the Code does not constitute
performance-based compensation for other purposes, including
Section 409A of the Code.

2.23     “Person”
has the same meaning as set forth in Sections 13(d) and
14(d)(2) of the Act.

2.24     “Plan”
means the Chemical Financial Corporation Stock Incentive Plan of
2006 as set forth herein, as it may be amended from time to time.

2.25     “Restricted
Period” means the period of time
during which Restricted Stock, Restricted Stock Units or other
stock-based or stock-related awards that are awarded under the
Plan are subject to the risk of forfeiture, restrictions on
transfer and other restrictions or conditions pursuant to
Sections 7 or 8. The Restricted Period may differ among
Participants and may have different expiration dates with
respect to shares of Common Stock covered by the same Incentive
Award.

2.26     “Restricted
Stock” means Common Stock awarded
to a Participant pursuant to Section 7 of the Plan while
such Common Stock remains subject to the risk of forfeiture,
restrictions on transfer and other restrictions or conditions
pursuant to Section 7.

2.27     “Restricted
Stock Unit” means an award to a
Participant pursuant to Section 7 of the Plan and described
as a “Restricted Stock Unit” in Section 7.

2.28     “Retirement”
means the voluntary termination of all employment by the
Participant after the Participant has attained 55 years of
age and completed 10 years of service with the Company or
any of its Subsidiaries or as otherwise may be set forth in the
Incentive Award agreement or other grant document with respect
to a Participant and a particular Incentive Award.

2.29     “Stock
Appreciation Right” or
“SAR” means any right granted to a Participant
pursuant to Section 6 of the Plan.

2.30     “Stock
Award” means an award of Common
Stock awarded to a Participant pursuant to Section 8 of the
Plan.

2.31     “Stock
Option” means the right to
purchase Common Stock at a stated price for a specified period
of time. For purposes of the Plan, a Stock Option may only be a
nonqualified stock option.

2

 

2.32     “Subsidiary”
means any corporation or other entity of which 50% or more of
the outstanding voting stock or voting ownership interest is
directly or indirectly owned or controlled by the Company or by
one or more Subsidiaries of the Company. The term
“Subsidiary” includes present and future Subsidiaries
of the Company.

2.33     “Termination”
or “Cessation” of employment shall be
considered to occur on the date on which the Employee is no
longer obligated to perform services for the Company or any of
its Subsidiaries and the Employee’s right to re-employment
is not guaranteed by statute, contract or written policy of the
Company, regardless of whether the Employee continues to receive
compensation from the Company or any of its Subsidiaries after
such date. The following shall not be considered such a
termination or cessation: (i) a transfer of an employee
among the Company and its Subsidiaries; (ii) a leave of
absence, duly authorized in writing by the Company, for military
service or for any other purpose approved by the Company if the
period of such leave does not exceed 90 days; (iii) a
leave of absence in excess of 90 days, duly authorized in
writing by the Company, provided that the employee’s right
to re-employment is guaranteed by statute, contract or written
policy of the Company; or (iv) a termination of employment
as an officer with continued service as an Employee or director.

SECTION 3

Administration

3.1     Power and
Authority. The Committee shall
administer the Plan. The Committee may delegate any, some or all
of its record keeping, calculation, payment and other
ministerial or administrative authority and responsibility from
time to time to and among one or more individuals, who may be
members of the Committee or Employees, but all actions taken
pursuant to delegated authority and responsibility shall be
subject to such review, change and approval by the Committee as
the Committee considers appropriate. Except as limited in the
Plan or as may be necessary to ensure, to the extent that the
Committee so desires, that the Plan provides Performance-Based
Compensation, the Committee shall have all of the express and
implied powers and duties set forth in the Bylaws of the Company
and the Plan, shall have full power and authority to interpret
the provisions of the Plan and Incentive Awards granted under
the Plan and shall have full power and authority to supervise
the administration of the Plan and Incentive Awards granted
under the Plan and to make all other determinations and do all
things considered necessary or advisable for the administration
of the Plan. All determinations, interpretations and selections
made by the Committee regarding the Plan shall be final and
conclusive. The Committee shall hold its meetings at such times
and places as it considers advisable. Action may be taken by a
written instrument signed by all of the members of the Committee
and any action so taken shall be fully as effective as if it had
been taken at a meeting duly called and held. The Committee
shall make such rules and regulations for the conduct of its
business as it considers advisable.

3.2     Grants or
Awards to Participants. In accordance
with and subject to the provisions of the Plan, the Committee
shall have the authority to determine all provisions of
Incentive Awards as the Committee may consider necessary or
desirable and as are consistent with the terms of the Plan,
including, without limitation, the following: (a) the
persons who shall be selected as Participants; (b) the
nature and, subject to the limitations set forth in
Sections 4.1 and 4.2 of the Plan, extent of the Incentive
Awards to be made to each Participant (including the number of
shares of Common Stock to be subject to each Incentive Award,
any exercise or purchase price, the manner in which an Incentive
Award will vest or become exercisable and the form of payment
for the Incentive Award); (c) the time or times when
Incentive Awards will be granted; (d) the duration of each
Incentive Award; and (e) the restrictions and other
conditions to which payment or vesting of Incentive Awards may
be subject.

3.3     Amendments or
Modifications of Incentive Awards.
Subject to Section 12, the
Committee shall have the authority to amend or modify the terms
of any outstanding Incentive Award in any manner, provided that
the amended or modified terms are not prohibited by the Plan as
then in effect, including, without limitation, the authority to:
(a) modify the number of shares or other terms and
conditions of an Incentive Award; (b) extend the term of an
Incentive Award; (c) accelerate the exercisability or
vesting or otherwise terminate, waive or modify any restrictions
relating to an Incentive Award; (d) accept the surrender of
any outstanding Incentive Award; and (e) to the extent not
previously exercised or vested, authorize the grant of new
Incentive Awards in substitution for surrendered Incentive
Awards; provided, that Incentive Awards issued under the
Plan may not be repriced, replaced, regranted through
cancellation or modified without shareholder approval if the
effect of such repricing, replacement, regrant or modification
would be to reduce the exercise price or base price of such
Incentive Awards to the same Participants.

3.4     Indemnification
of Committee Members. Neither any
member or former member of the Committee, nor any individual or
group to whom authority or responsibility is or has been
delegated, shall be personally responsible or liable for any act
or omission in connection with the performance of powers or
duties or the exercise of discretion or judgment in the
administration and implementation of the Plan. Each person who
is or shall have been a member of the Committee, and any other
individual or group exercising delegated authority or
responsibility with respect to the Plan, shall be indemnified
and held harmless by the Company from and against any cost,
liability or expense

3

 

imposed or incurred in connection with such
person’s or the Committee’s taking or failing to take
any action under the Plan or the exercise of discretion or
judgment in the administration and implementation of the Plan.
This Section 3.4 shall not be construed as limiting the
Company’s or any Subsidiary’s ability to terminate or
otherwise alter the terms and conditions of the employment of an
individual or group exercising delegated authority or
responsibility with respect to the Plan, or to discipline any
such person. Each such person shall be justified in relying on
information furnished in connection with the Plan’s
administration by any appropriate person or persons.

SECTION 4

Shares Subject to the Plan

4.1     Number of
Shares. Subject to adjustment as
provided in Section 4.3 of the Plan, the total number of
shares available for Incentive Awards under the Plan shall be
1,000,000 shares of Common Stock; plus shares subject to
Incentive Awards that are canceled, surrendered, modified,
exchanged for substitute Incentive Awards or that expire or
terminate prior to the exercise or vesting of the Incentive
Awards in full and shares that are surrendered to the Company in
connection with the exercise or vesting of Incentive Awards,
whether previously owned or otherwise subject to such Incentive
Awards. Such shares shall be authorized and may be unissued
shares, shares issued and repurchased by the Company (including
shares purchased on the open market) and shares issued and
otherwise reacquired by the Company.

4.2     Limitation
Upon Incentive Awards. No Participant
shall be granted, during any calendar year, Incentive Awards
with respect to more than 25% of the total number of shares of
Common Stock available for Incentive Awards under the Plan set
forth in Section 4.1 of the Plan, subject to adjustment as
provided in Section 4.3 of the Plan, but only to the extent
that such adjustment will not affect the status of any Incentive
Award theretofore issued or that may thereafter be issued as
Performance-Based Compensation. The purpose of this
Section 4.2 is to ensure that the Plan provides
Performance-Based Compensation and this Section 4.2 shall
be interpreted, administered and amended if necessary to achieve
that purpose.

4.3     Adjustments.

		
	 	
    (a)     Stock
    Dividends and Distributions. If the
    number of shares of Common Stock outstanding changes by reason
    of a stock dividend, stock split, recapitalization or other
    general distribution of Common Stock or other securities to
    holders of Common Stock, then the Committee shall provide that
    the number and kind of securities subject to outstanding
    Incentive Awards and reserved for issuance under the Plan,
    together with applicable exercise prices and base prices, as
    well as the number and kind of securities available for future
    issuance under the Plan and the limitation provided in
    Section 4.2, shall be adjusted in such manner and at such
    time as it determines shall be appropriate under the
    circumstances. No fractional shares shall be issued pursuant to
    the Plan and any fractional shares resulting from such
    adjustments shall be eliminated from the respective Incentive
    Awards.
    
	 
	 	
    (b)     Other Actions
    Affecting Common Stock. If there
    occurs, other than as described in Section 4.3(a), any
    merger, business combination, recapitalization,
    reclassification, subdivision or combination approved by the
    Board that would result in the persons who were shareholders of
    the Company immediately prior to the effective time of any such
    transaction owning or holding, in lieu of or in addition to
    shares of Common Stock, other securities, money and/or property
    (or the right to receive other securities, money and/or
    property) immediately after the effective time of such
    transaction, then the Committee shall provide that the
    outstanding Incentive Awards (including exercise prices and base
    prices) and reserves for Incentive Awards under the Plan shall
    be adjusted in such manner and at such time as it determines
    shall be appropriate under the circumstances. It is intended
    that in the event of any such transaction, Incentive Awards
    under the Plan shall entitle the holder of each Incentive Award
    to receive (upon exercise in the case of Stock Options and
    SARs), in lieu of or in addition to shares of Common Stock, any
    other securities, money and/or property receivable upon
    consummation of any such transaction by holders of Common Stock
    with respect to each share of Common Stock outstanding
    immediately prior to the effective time of such transaction;
    upon any such adjustment, holders of Incentive Awards under the
    Plan shall have only the right to receive in lieu of or in
    addition to shares of Common Stock such other securities, money
    and/or other property as provided by the adjustment. If the
    agreement, resolution or other document approved by the Board to
    effect any such transaction provides for the adjustment of
    Incentive Awards under the Plan in connection with such
    transaction, then the adjustment provisions contained in such
    agreement, resolution or other document shall be final and
    conclusive.
    

SECTION 5

Stock Options

5.1     Grant.
A Participant may be granted one or
more Stock Options under the Plan. No Participant shall have any
rights as a shareholder with respect to any shares of stock
subject to Stock Options granted hereunder until such shares
have been issued. For purposes of determining the

4

 

number of shares available under the Plan, each
Stock Option shall count as the number of shares of Common Stock
subject to the Stock Option. Stock Options shall be subject to
such terms and conditions, consistent with the other provisions
of the Plan, as may be determined by the Committee in its sole
discretion. In addition, the Committee may vary, among
Participants and among Stock Options granted to the same
Participant, any and all of the terms and conditions of the
Stock Options granted under the Plan. Subject to the limitation
imposed by Section 4.2 of the Plan, the Committee shall
have complete discretion in determining the number of Stock
Options granted to each Participant. Stock Options issued under
the Plan shall be nonqualified stock options and shall not be
considered incentive stock options as defined in
Section 422(b) of the Code.

5.2     Stock Option
Agreements. Stock Options shall be
evidenced by stock option agreements, certificates of award, or
both, containing the terms and conditions applicable to such
Stock Options. To the extent not covered by a stock option
agreement or certificate of award, the terms and conditions of
this Section 5 shall govern.

5.3     Stock Option
Exercise Price. The per share Stock
Option exercise price shall be determined by the Committee, but
shall be a price that is equal to or greater than 100% of the
Market Value on the date of grant. The date of grant of a Stock
Option shall be the date the Stock Option is authorized by the
Committee or a future date specified by the Committee as the
date for issuing the Stock Option.

5.4     Medium and
Time of Payment. The exercise price
for each share purchased pursuant to a Stock Option granted
under the Plan shall be payable in cash or, if the Committee
consents or provides in the applicable stock option agreement or
grant, in shares of Common Stock or other consideration
substantially equivalent to cash. The Committee may require that
only Mature Shares be used to pay the exercise price. The time
and terms of payment may be amended with the consent of a
Participant before or after exercise of a Stock Option. Except
as limited by the Act, the Sarbanes-Oxley Act of 2002 or other
laws, rules or regulations, the Committee may from time to time
authorize payment of all or a portion of the Stock Option
exercise price in the form of a promissory note or other
deferred payment installments according to such terms as the
Committee may approve; provided, however, that such
promissory note or other deferred payment installments shall be
with full recourse and shall bear a market rate of interest. The
Board may restrict or suspend the power of the Committee to
permit such loans and may require that adequate security be
provided. The Committee may implement a program for the
broker-assisted cashless exercise of Stock Options.

5.5     Limits on
Exercisability. Stock Options shall be
exercisable for such periods, not to exceed 10 years and
one day from the date of grant, as may be fixed by the
Committee. At the time of exercise of a Stock Option, the holder
of the Stock Option, if requested by the Committee, must
represent to the Company that the shares are being acquired for
investment and not with a view to the distribution thereof. The
Committee may in its discretion require a Participant to
continue the Participant’s service with the Company or its
Subsidiaries for a certain length of time prior to a Stock
Option becoming exercisable and may eliminate such delayed
vesting provisions.

5.6     Restrictions
on Transferability.

		
	 	
    (a)     General.
    Unless the Committee otherwise
    consents or permits (before or after the stock option grant) or
    unless the stock option agreement or grant provides otherwise,
    Stock Options granted under the Plan may not be sold, exchanged,
    transferred, pledged, assigned or otherwise alienated or
    hypothecated except by will or the laws of descent and
    distribution, and, as a condition to any transfer permitted by
    the Committee or the terms of the stock option agreement or
    grant, the transferee must execute a written agreement
    permitting the Company to withhold from the shares subject to
    the Stock Option a number of shares having a Market Value at
    least equal to the amount of any federal, state or local
    withholding or other taxes associated with or resulting from the
    exercise of a Stock Option. All provisions of a Stock Option
    that are determined with reference to the Participant, including
    without limitation those that refer to the Participant’s
    employment with the Company or its Subsidiaries, shall continue
    to be determined with reference to the Participant after any
    transfer of a Stock Option.
    
	 
	 	
    (b)     Other
    Restrictions. The Committee may impose
    other restrictions on any shares of Common Stock acquired
    pursuant to the exercise of a Stock Option under the Plan as the
    Committee considers advisable, including, without limitation,
    holding periods or further transfer restrictions, forfeiture or
    “claw-back” provisions, and restrictions under
    applicable federal or state securities laws.
    

5.7     Termination
of Employment. Unless the Committee
otherwise consents or permits (before or after the stock option
grant) or unless the stock option agreement or grant provides
otherwise:

		
	 	
    (a)     General.
    If a Participant is no longer employed
    by the Company or its Subsidiary for any reason other than the
    Participant’s Retirement, death, Disability or termination
    for cause, the Participant may exercise his or her Stock Options
    in accordance with their terms for a period of 3 months after
    such termination of employment, but only to the extent the
    Participant was
    

5

 

		
	 	
    entitled to exercise the Stock Options on the
    date of termination.
    
	 
	 	
    (b)     Death.
    If a Participant dies either while an
    Employee or otherwise during a time when the Participant could
    have exercised a Stock Option, the Stock Options issued to such
    Participant shall be exercisable in accordance with their terms
    by the personal representative of such Participant or other
    successor to the interest of the Participant for a period of one
    year after such Participant’s death to the extent that the
    Participant was entitled to exercise the Stock Options on the
    date of death or termination, whichever first occurred, but not
    beyond the original term of the Stock Options.
    
	 
	 	
    (c)     Disability.
    If a Participant ceases to be employed
    by the Company or one of its Subsidiaries due to the
    Participant’s Disability, he or she may exercise his or her
    Stock Options in accordance with their terms for one year after
    he or she ceases to be employed unless such Stock Options
    earlier expire by their terms, but only to the extent that the
    Participant was entitled to exercise the Stock Options on the
    date of such event and not beyond the original terms of the
    Stock Options.
    
	 
	 	
    (d)     Participant
    Retirement. If a Participant ceases to
    be employed by the Company or one of its Subsidiaries due to
    Retirement, the Participant may exercise his or her Stock
    Options in accordance with their terms after such termination of
    employment unless such Stock Options earlier expire by their
    terms.
    
	 
	 	
    (e)     Termination
    for Cause. If a Participant’s
    employment is terminated for cause, the Participant shall have
    no further right to exercise any Stock Options previously
    granted him or her. The Committee or officers designated by the
    Committee shall have absolute discretion to determine whether a
    termination is for cause.
    

SECTION 6

Stock Appreciation Rights

6.1     Grant.
A Participant may be granted one or
more Stock Appreciation Rights under the Plan and such SARs
shall be subject to such terms and conditions, consistent with
the other provisions of the Plan, as shall be determined by the
Committee in its sole discretion. An SAR may relate to a
particular Stock Option and may be granted simultaneously with
or subsequent to the Stock Option to which it relates. Except to
the extent otherwise modified in the grant, (i) SARs not
related to a Stock Option shall be granted subject to the same
terms and conditions applicable to Stock Options as set forth in
Section 5, and (ii) all SARs related to Stock Options
granted under the Plan shall be granted subject to the same
restrictions and conditions and shall have the same vesting,
exercisability, forfeiture and termination provisions as the
Stock Options to which they relate. SARs may be subject to
additional restrictions and conditions. The per-share base price
for exercise or settlement of SARs shall be determined by the
Committee, but shall be a price that is equal to or greater than
the Market Value of such shares on the date of the grant. Other
than as adjusted pursuant to Section 4.3, the base price of
SARs may not be reduced without shareholder approval (including
canceling previously awarded SARs and regranting them with a
lower base price).

6.2     Exercise;
Payment. To the extent a SAR relates
to a Stock Option, the SAR may be exercised only when the
related Stock Option could be exercised and only when the Market
Value of the shares subject to the Stock Option exceed the
exercise price of the Stock Option. When a Participant exercises
such SARs, the Stock Options related to such SARs shall
automatically be cancelled with respect to an equal number of
underlying shares. Unless the Committee decides otherwise (in
its sole discretion), SARs shall only be paid in cash or in
shares of Common Stock. For purposes of determining the number
of shares available under the Plan, each Stock Appreciation
Right shall count as one share of Common Stock, without regard
to the number of shares, if any, that are issued upon the
exercise of the Stock Appreciation Right and upon such payment.

SECTION 7

Restricted Stock and Restricted Stock
Units

7.1     Grant.
Subject to the limitations set forth
in Sections 4.1 and 4.2 of the Plan, Restricted Stock and
Restricted Stock Units may be granted to Participants under the
Plan. Shares of Restricted Stock are shares of Common Stock the
retention, vesting and/or transferability of which is subject,
during specified periods of time, to such conditions (including
continued employment and/or achievement of performance goals
established by the Committee pursuant to Section 10) and
terms as the Committee deems appropriate. Restricted Stock Units
are Incentive Awards denominated in units of Common Stock under
which the issuance of shares of Common Stock is subject to such
conditions (including continued employment and/or achievement of
performance goals established by the Committee pursuant to
Section 10) and terms as the Committee deems appropriate.
For purposes of determining the number of shares available under
the Plan, each Restricted Stock Unit shall count as the number
of shares of Common Stock subject to the Restricted Stock Unit.
Unless determined otherwise by the Committee, each Restricted
Stock Unit shall be equal to one share of Common Stock and shall
entitle a Participant to either shares of Common Stock or an
amount of cash determined with reference to the value of shares
of Common Stock. To the extent determined by the

6

 

Committee, Restricted Stock and Restricted Stock
Units may be satisfied or settled in cash, in shares of Common
Stock or in a combination thereof. Restricted Stock and
Restricted Stock Units granted pursuant to the Plan need not be
identical but shall be consistent with the terms of the Plan.
Subject to the requirements of applicable law, the Committee
shall determine the price, if any, at which awards of Restricted
Stock or Restricted Stock Units, or shares of Common Stock
issuable pursuant to Restricted Stock Unit awards, shall be sold
or awarded to a Participant, which may vary from time to time
and among Participants.

7.2     Restricted
Stock Agreements. Awards of Restricted
Stock and Restricted Stock Units shall be evidenced by
restricted stock or restricted stock unit agreements or
certificates of award containing such terms and conditions,
consistent with the provisions of the Plan, as the Committee
shall from time to time determine. Unless the restricted stock
or restricted stock unit agreement or certificate of award
provides otherwise, awards of Restricted Stock and Restricted
Stock Units shall be subject to the terms and conditions set
forth in this Section 7.

7.3     Vesting.
The grant, issuance, retention,
vesting and settlement of shares of Restricted Stock and
Restricted Stock Units shall occur at such time and in such
installments as determined by the Committee or under criteria
established by the Committee. The Committee shall have the right
to make the timing of the grant and/or issuance of, the ability
to retain and the vesting and/or the settlement of Restricted
Stock Units and shares of Restricted Stock subject to continued
employment, passage of time and/or such performance criteria as
deemed appropriate by the Committee.

7.4     Termination
of Employment. Unless the Committee
otherwise consents or permits (before or after the grant of
Restricted Stock or Restricted Stock Units) or unless the
restricted stock or restricted stock unit agreement or grant
provides otherwise:

		
	 	
    (a)     General.
    If a Participant ceases to be an
    Employee during the Restricted Period for any reason other than
    death, Disability, Retirement or termination for cause, each
    share of Restricted Stock and Restricted Stock Unit still
    subject in full or in part to restrictions at the date of such
    termination shall automatically be forfeited and returned to the
    Company.
    
	 
	 	
    (b)     Death,
    Retirement or Disability. In the event
    a Participant terminates his or her employment with the Company
    because of death, Disability or Retirement during the Restricted
    Period, the restrictions remaining on any or all shares of
    Restricted Stock and Restricted Stock Units shall terminate
    automatically with respect to that respective number of such
    shares or Restricted Stock Units (rounded to the nearest whole
    number) equal to the respective total number of such shares or
    Restricted Stock Units granted to such Participant multiplied by
    the number of full months that have elapsed since the date of
    grant divided by the total number of full months in the
    respective Restricted Period. All remaining shares of Restricted
    Stock and Restricted Stock Units shall be forfeited and returned
    to the Company; provided, that the Committee may, in its
    sole discretion, waive the restrictions remaining on any or all
    such remaining shares of Restricted Stock and Restricted Stock
    Units either before or after the death, Disability or Retirement
    of the Participant.
    
	 
	 	
    (c)     Termination
    for Cause. If a Participant’s
    employment is terminated for cause, the Participant shall have
    no further right to receive any Restricted Stock or Restricted
    Stock Units and all Restricted Stock and Restricted Stock Units
    still subject to restrictions at the date of such termination
    shall automatically be forfeited and returned to the Company.
    For purposes of the Plan, the Committee or officers designated
    by the Committee shall have absolute discretion to determine
    whether a termination is for cause.
    

7.5     Restrictions
on Transferability.

		
	 	
    (a)     General.
    Unless the Committee otherwise
    consents or permits or unless the terms of the restricted stock
    or restricted stock unit agreement or grant provide otherwise:
    (i) neither shares of Restricted Stock nor Restricted Stock
    Units may be sold, exchanged, transferred, pledged, assigned or
    otherwise alienated or hypothecated during the Restricted Period
    except by will or the laws of descent and distribution; and
    (ii) all rights with respect to Restricted Stock and
    Restricted Stock Units granted to a Participant under the Plan
    shall be exercisable during the Participant’s lifetime only
    by such Participant or his or her guardian or legal
    representative.
    
	 
	 	
    (b)     Other
    Restrictions. The Committee may impose
    other restrictions on any shares of Common Stock acquired
    pursuant to an award of Restricted Stock or issuable pursuant to
    Restricted Stock Unit awards under the Plan as the Committee
    considers advisable, including, without limitation, holding
    periods or further transfer restrictions, forfeiture or
    “claw-back” provisions, and restrictions under
    applicable federal or state securities laws.
    

7.6     Legending of
Restricted Stock. In addition to any
other legend that may be set forth on a Participant’s share
certificate, any certificates evidencing shares of Restricted
Stock awarded pursuant to the Plan shall bear the following
legend:

		
	 	
    The shares represented by this certificate were
    issued subject to certain restrictions under the Chemical
    Financial Corporation Stock Incentive Plan of 2006 (the
    “Plan”). This certificate is held subject to the terms
    and conditions contained in a restricted stock
    

7

 

		
	 	
    agreement that includes a prohibition against the
    sale or transfer of the stock represented by this certificate
    except in compliance with that agreement and that provides for
    forfeiture upon certain events. Copies of the Plan and the
    restricted stock agreement are on file in the office of the
    Secretary of the Company.
    

The Committee may require that certificates
representing shares of Restricted Stock be retained and held in
escrow by a designated employee or agent of the Company or any
Subsidiary until any restrictions applicable to shares of
Restricted Stock so retained have been satisfied or lapsed.

7.7     Rights as a
Shareholder. A Participant shall have
all dividend, liquidation and other rights with respect to
Restricted Stock held of record by such Participant as if the
Participant held unrestricted Common Stock; provided,
that the unvested portion of any award of Restricted Stock shall
be subject to any restrictions on transferability or risks of
forfeiture imposed pursuant to this Section 7 and the terms
and conditions set forth in the Participant’s restricted
stock agreement. Unless the Committee otherwise determines or
unless the terms of the applicable restricted stock unit
agreement or grant provide otherwise, a Participant shall have
all dividend and liquidation rights with respect to shares of
Common Stock subject to awards of Restricted Stock Units held by
such Participant as if the Participant held unrestricted Common
Stock. Unless the Committee determines otherwise or unless the
terms of the applicable restricted stock or restricted stock
unit agreement or grant provide otherwise, any noncash dividends
or distributions paid with respect to shares of unvested
Restricted Stock and shares of Common Stock subject to unvested
Restricted Stock Units shall be subject to the same restrictions
and vesting schedule as the shares to which such dividends or
distributions relate.

7.8     Voting
Rights. Unless otherwise determined by
the Committee, Participants holding shares of Restricted Stock
granted hereunder may exercise full voting rights with respect
to those shares during the Restricted Period. Participants shall
have no voting rights with respect to shares of Common Stock
underlying Restricted Stock Units unless and until such shares
are reflected as issued and outstanding shares on the
Company’s stock ledger.

SECTION 8

Stock-Based Awards

8.1     Grant.
Subject to the limitations set forth
in Sections 4.1 and 4.2 of the Plan, in addition to any
Stock Options, Stock Appreciation Rights, Restricted Stock, or
Restricted Stock Units that a Participant may be granted under
the Plan, a Participant may be granted one or more other types
of awards based on or related to shares of Common Stock
(including the grant of Stock Awards). Such awards shall be
subject to such terms and conditions, consistent with the other
provisions of the Plan, as may be determined by the Committee in
its sole discretion. Such awards shall be expressed in terms of
shares of Common Stock or denominated in units of Common Stock.
For purposes of determining the number of shares available under
the Plan, each such unit shall count as the number of shares of
Common Stock to which it relates.

8.2     Rights as a
Shareholder.

		
	 	
    (a)     Stock Awards.
    A Participant shall have all voting,
    dividend, liquidation and other rights with respect to shares of
    Common Stock issued to the Participant as a Stock Award under
    this Section 8 upon the Participant becoming the holder of
    record of the Common Stock granted pursuant to such Stock Award;
    provided, that the Committee may impose such restrictions
    on the assignment or transfer of Common Stock awarded pursuant
    to a Stock Award as it considers appropriate.
    
	 
	 	
    (b)     General.
    With respect to shares of Common Stock
    subject to awards granted under the Plan other than Stock
    Options, Stock Appreciation Rights, Restricted Stock, Restricted
    Stock Units and Stock Awards, a Participant shall have such
    rights as determined by the Committee and set forth in the
    respective award agreements; and the Committee may impose such
    restrictions on the assignment or transfer of Common Stock
    awarded pursuant to such awards as it considers appropriate.
    

SECTION 9

Change in Control

9.1     Acceleration
of Vesting. If a Change in Control of
the Company occurs, then, unless the Committee or the Board
otherwise determines and expressly states in the agreements
governing one or more Incentive Awards, without action by the
Committee or the Board: (a) all outstanding Stock Options
and Stock Appreciation Rights shall become vested and
exercisable in full immediately prior to the effective time of a
Change in Control and shall remain exercisable during the
remaining terms thereof, regardless of whether the Participants
to whom such Stock Options and Stock Appreciation Rights have
been granted remain in the employ or service of the Company or
any Subsidiary; and (b) all other outstanding Incentive
Awards shall become immediately fully vested and exercisable and
nonforfeitable.

9.2     Cash Payment
for Stock Options and Stock Appreciation Rights.
If a Change in Control of the Company
occurs, then the Committee, in its sole discretion and without
the consent of any Participant affected thereby, may determine
that some or all Participants holding outstanding Stock Options
and/or Stock Appreciation Rights

8

 

shall receive, with respect to and in lieu of
some or all of the shares of Common Stock subject to such Stock
Options and/or Stock Appreciation Rights, as of the effective
date of any such Change in Control of the Company, cash in an
amount equal to the excess of the greater of (a) the
highest sales price of the shares on Nasdaq on the date
immediately prior to the effective date of such Change in
Control of the Company or (b) the highest price per share
actually paid in connection with any Change in Control of the
Company, over the exercise price per share of such Stock Options
and/or the base price per share of such Stock Appreciation
Rights. Upon a Participant’s receipt of such amount with
respect to some or all of his or her Stock Options and/or Stock
Appreciation Rights, the respective Stock Options and/or Stock
Appreciation Rights shall be cancelled and may no longer be
exercised by such Participant.

SECTION 10

Performance Measures

10.1     Performance
Measures. Unless and until the
Committee proposes for shareholder vote and the shareholders
approve a change in the general Performance Measures set forth
in this Section 10, the performance goals upon which the
payment or vesting of an Incentive Award to a Covered Employee
that is intended to qualify as Performance-Based Compensation
may be based shall be limited to the following Performance
Measures:

		
	 	
    (a) Net income (before or after taxes,
    interest, depreciation, and/or amortization);
    
	 
	 	
    (b) Net income per share;
    
	 
	 	
    (c) Return on equity;
    
	 
	 	
    (d) Cash earnings;
    
	 
	 	
    (e) Cash earnings per share (reflecting
    dilution of the Common Stock as the Committee deems appropriate
    and, if the Committee so determines, net of or including
    dividends);
    
	 
	 	
    (f) Cash earnings return on equity;
    
	 
	 	
    (g) Operating income;
    
	 
	 	
    (h) Operating income per share;
    
	 
	 	
    (i) Operating income return on equity;
    
	 
	 	
    (j) Return on assets;
    
	 
	 	
    (k) Cash flow;
    
	 
	 	
    (l) Cash flow return on capital;
    
	 
	 	
    (m) Return on capital;
    
	 
	 	
    (n) Productivity ratios;
    
	 
	 	
    (o) Share price (including without
    limitation growth measures, total shareholder return or
    comparison to indices);
    
	 
	 	
    (p) Expense or cost levels;
    
	 
	 	
    (q) Margins;
    
	 
	 	
    (r) Operating efficiency;
    
	 
	 	
    (s) Efficiency ratio;
    
	 
	 	
    (t) Customer satisfaction, satisfaction
    based on specified objective goals or a Company-sponsored
    customer survey;
    
	 
	 	
    (u) Economic value added measurements;
    
	 
	 	
    (v) Market share or market penetration with
    respect to specific designated products or services, product or
    service groups and/or specific geographic areas;
    
	 
	 	
    (w) Reduction of losses, loss ratios,
    expense ratios or fixed costs;
    
	 
	 	
    (x) Employee turnover; and
    
	 
	 	
    (y) Specified objective social goals.
    

One or more Performance Measures may be used to
measure the performance of one or more of the Company, its
Subsidiaries, its Affiliates, or any combination of the
foregoing, compared to pre-determined levels, as the Committee
may deem appropriate, or compared to the performance of a
pre-established peer group, or published or special index that
the Committee, in its sole discretion, deems appropriate. The
Committee also has the authority to provide for accelerated
vesting of any Incentive Award based on the achievement of
performance goals pursuant to the Performance Measures specified
in this Section 10.

10.2     Evaluation
of Performance. The Committee may
provide in any such Incentive Award that any evaluation of
Performance may include or exclude any of the following events
or their effects that occurs during a Performance Period:
(a) asset write-downs, (b) litigation or claim
judgments or settlements, (c) changes in tax laws,
accounting principles, or other laws or provisions affecting
reported results, (d) any reorganization and restructuring
programs, (e) extraordinary nonrecurring items as described
in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition
and results of operations appearing in the Company’s annual
report to shareholders for the applicable fiscal year,
(f) acquisitions, mergers, divestitures or accounting
changes, (g) amortization of goodwill or other intangible
assets, (h) discontinued operations, and (i) other
special charges or extraordinary items. To the extent such
inclusions or exclusions affect Incentive Awards to Covered
Employees, they shall be prescribed in a form that meets the

9

 

requirements of Section 162(m) of the Code
for deductibility.

10.3     Committee
Discretion. In the event that
applicable tax laws, securities laws, or both, change to permit
Committee discretion to alter the governing Performance Measures
without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes
without obtaining shareholder approval. In addition, in the
event that the Committee determines that it is advisable to
grant Incentive Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such
grants without satisfying the requirements of
Section 162(m) of the Code and may base vesting on
Performance Measures other than those set forth in
Section 10.1.

10.4     Adjustment
of Performance-Based Compensation.
Incentive Awards that are designed to
qualify as Performance-Based Compensation, and that are held by
Covered Employees, may not be increased or adjusted upward. The
Committee shall retain the discretion to decrease or adjust such
Incentive Awards downward, and such Incentive Awards may be
forfeited in whole or in part.

10.5     Performance-Based
Compensation Conditioned on Performance.
Payment of Performance-Based
Compensation to a Participant for a Performance Period under
this Plan shall be entirely contingent upon achievement of the
performance goals established by the Committee pursuant to this
Section 10, the satisfaction of which must be substantially
uncertain when established by the Committee for the Performance
Period.

10.6     Time of
Determination of Performance Goals by Committee.
All performance goals to be made by
the Committee for a Performance Period pursuant to this
Section 10 shall be established in writing by the Committee
during the first 90 days of such Performance Period and
before 25% of the Performance Period has elapsed.

10.7     Objective
Standards. Performance-Based
Compensation shall be based solely upon objective criteria,
consistent with this Section 10, from which an independent
third party with knowledge of the facts could determine whether
the performance goal or range of goals is met and from that
determination could calculate the Performance-Based Compensation
to be paid. Although the Committee has authority to exercise
reasonable discretion to interpret this Plan and the criteria it
shall specify pursuant to this Section 10 of the Plan, it
may not amend or waive such criteria after the 90th day of the
respective Performance Period. The Committee shall have no
authority or discretion to increase any Performance-Based
Compensation or to construct, modify or apply the measurement of
a Participant’s Performance in a manner that will directly
or indirectly increase the Performance-Based Compensation for
the Participant for any Performance Period above the amount
determined by the applicable objective standards established
within the time period set forth in Section 10.6.

SECTION 11

General Provisions

11.1     No Rights to
Incentive Awards. No Participant or
other person shall have any claim to be granted any Incentive
Award under the Plan and there is no obligation of uniformity of
treatment of Participants or holders or beneficiaries of
Incentive Awards under the Plan. The terms and conditions of
Incentive Awards of the same type and the determination of the
Committee to grant a waiver or modification of any Incentive
Award and the terms and conditions thereof need not be the same
with respect to each Participant or the same Participant.

11.2     Withholding.
The Company or a Subsidiary shall be
entitled to: (a) withhold and deduct from future wages of a
Participant (or from other amounts that may be due and owing to
a Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts
necessary to satisfy any and all federal, state, local and
foreign withholding and employment-related tax requirements
attributable to an Incentive Award, including, without
limitation, the grant, exercise or vesting of, or payment of
dividends with respect to, an Incentive Award or a disqualifying
disposition of Common Stock received upon exercise of an
incentive stock option; or (b) require a Participant
promptly to remit the amount of such withholding to the Company
before taking any action with respect to an Incentive Award.
Unless the Committee determines otherwise, withholding may be
satisfied by withholding Common Stock to be received upon
exercise or vesting of an Incentive Award or by delivery to the
Company of previously owned Common Stock. The Company may
establish such rules and procedures concerning timing of any
withholding election as it deems appropriate.

11.3     Compliance
With Laws; Listing and Registration of Shares.
All Incentive Awards granted under the
Plan (and all issuances of Common Stock or other securities
under the Plan) shall be subject to all applicable laws, rules
and regulations, and to the requirement that if at any time the
Committee shall determine, in its discretion, that the listing,
registration or qualification of the shares covered thereby upon
any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with,
the grant of such Incentive Award or the issuance or purchase of
shares thereunder, such Incentive Award may not be exercised in
whole or in part, or the restrictions on such Incentive Award
shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.

10

 

11.4     No Limit on
Other Compensation Arrangements.
Nothing contained in the Plan shall
prevent the Company or any Subsidiary from adopting or
continuing in effect other or additional compensation
arrangements, including the grant of Stock Options and other
stock-based and stock-related awards, and such arrangements may
be either generally applicable or applicable only in specific
cases.

11.5     No Right to
Employment. The grant of an Incentive
Award shall not be construed as giving a Participant the right
to be retained in the employ of the Company or any Subsidiary.
The Company or any Subsidiary may at any time dismiss a
Participant from employment, free from any liability or any
claim under the Plan, unless otherwise expressly provided in the
Plan or in any written agreement with the Participant.

11.6     No Liability
of Company. The Company and any
Subsidiary or Affiliate which is in existence or hereafter comes
into existence shall not be liable to a Participant or any other
person as to: (a) the non-issuance or non-sale of Common
Stock as to which the Company has been unable to obtain from any
regulatory body having jurisdiction the authority deemed by the
Company’s counsel to be necessary to the lawful issuance
and sale of any shares hereunder; (b) any tax consequence
to any Participant or other person due to the receipt, exercise
or settlement of any Incentive Award granted hereunder; and
(c) any provision of law or legal restriction that
prohibits or restricts the transfer of shares of Common Stock
issued pursuant to any Incentive Award.

11.7     Suspension
of Rights under Incentive Awards. The
Company, by written notice to a Participant, may suspend a
Participant’s and any transferee’s rights under any
Incentive Award for a period not to exceed 60 days while
the termination for cause of that Participant’s employment
with the Company and its Subsidiaries is under consideration.

11.8     Governing
Law. The validity, construction and
effect of the Plan and any rules and regulations relating to the
Plan shall be determined in accordance with the laws of the
State of Michigan and applicable federal law.

11.9     Severability.
In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality
or invalidity shall not affect the remaining provisions of the
Plan and the Plan shall be construed and enforced as if the
illegal or invalid provision had not been included, unless such
construction would cause the Plan to fail in its essential
purposes.

SECTION 12

Termination and Amendment

12.1     Board and
Committee Actions. The Board may
terminate the Plan at any time or may from time to time amend or
alter the Plan or any aspect of it as it considers proper and in
the best interests of the Company; provided, that no such
amendment may be made, without the approval of shareholders of
the Company, that would (i) reduce the exercise price at
which Stock Options, or the base price at which Stock
Appreciation Rights, may be granted below the prices provided
for in Sections 5.3 and 6.1, respectively (ii) reduce
the exercise price of outstanding Stock Options or the base
price of outstanding Stock Appreciation Rights,
(iii) increase the individual maximum limits in
Section 4.2 or (iv) otherwise amend the Plan in any
manner requiring shareholder approval by law or under Nasdaq
listing requirements or other applicable Nasdaq rules.

12.2     No
Impairment. Notwithstanding anything
to the contrary in Section 12.1, no such amendment or
alteration to the Plan or to any previously granted award
agreement or Incentive Award shall be made which would impair
the rights of the holder of the Incentive Award, without such
holder’s consent; provided, that no such consent
shall be required if the Committee determines in its sole
discretion and prior to the date of any Change of Control that
such amendment or alteration is required or advisable in order
for the Company, the Plan or the Incentive Award to satisfy any
law or regulation or to meet the requirements of or avoid
adverse financial accounting consequences under any tax or
accounting standard, law or regulation.

SECTION 13

Effective Date and Duration of the
Plan

The Plan shall take effect January 17, 2006,
subject to approval by the shareholders at the 2006 Annual
Meeting of Shareholders or any adjournment thereof or at a
Special Meeting of Shareholders. Unless earlier terminated by
the Board of Directors, no Incentive Award shall be granted
under the Plan after January 16, 2016.

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00102-of-00352.parquet"}]]