Document:

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EXHIBIT 10.5

                              AMENDED AND RESTATED
                           CHANGE IN CONTROL AGREEMENT
                                 JANUARY 3, 2006

     This is an amended and restated agreement (the "Agreement") of that certain
agreement by and between MBT Financial Corp., a Michigan Corporation ("MBT") and
H. Douglas Chaffin ("Executive") dated July 30, 2001.

                                    RECITALS

     WHEREAS, MBT is a bank holding company whose principal subsidiary is
engaged in the business of banking and businesses incidental thereto.

     WHEREAS, Executive possesses unique skills, knowledge and experience
relating to the business of MBT.

     WHEREAS, MBT desires to retain the future services of Executive, and, in
that connection, Executive desires to be assured that, in the event of a change
in the control of MBT, Executive will be provided with an adequate severance
payment for termination without cause or as compensation for Executive's
severance because of a material change in his duties and functions.

     WHEREAS, MBT desires to be assured of the objectivity of Executive in
evaluating a potential change of control and advising whether or not a potential
change of control is in the best interest of MBT and its shareholders.

     WHEREAS, MBT desires to induce Executive to remain in the employ of the
Company following a change of control to provide for continuity of management.

     NOW, THEREFORE, in consideration of the premises and of their mutual
covenants expressed in this Agreement, the parties hereto make the following
agreement, intending to be legally bound thereby:

SECTION 1 - DEFINITIONS.

A.   Board - "Board" shall mean the Board of Directors of MBT.

B.   MBT -"MBT" means MBT Financial Corp., a Michigan corporation and the parent
     corporation of Monroe Bank & Trust.

C.   Cause - "Cause" shall mean and be limited to Executive's (a) criminal
     dishonesty, (b) refusal to perform his duties on an exclusive and
     substantially full-time basis, (c) refusal to act in accordance with any
     specific substantive instructions given by Company with respect to
     Executive's performance of duties normally associated with his position
     prior to the Change in Control, or (d) engaging in conduct which could be
     materially damaging to Company without a reasonable good faith belief that
     such conduct was in the best interest of Company.

D.   Change in Control - "Change in Control" shall have the meaning set forth on
     Exhibit A.

E.   Code - "Code" shall mean the Internal Revenue Code of 1986, as amended from
     time to time.

F.   Company - "Company" means MBT, Monroe Bank & Trust and all other members of
     MBT's Affiliated Group, over which Executive has managerial control, as the
     term "Affiliated Group" is defined in Section 1504 of the Code, and shall
     include any predecessor or successor corporations of the Company and its
     Affiliated Group.

G.   Compensation - "Compensation" shall mean Executive's then current annual
     base salary plus any cash bonuses for the last whole calendar year
     preceding Executive's termination of employment. Compensation shall not
     include any amount, other than base salary and cash bonuses, included in
     Executive's taxable compensation for federal income tax purposes and
     reported to Executive and Internal Revenue Service ("IRS") such as the
     reporting of previously deferred compensation or gain realized upon
     exercise of any non qualified stock options.

H.   Exchange Act - "Exchange Act" means the Securities Exchange Act of 1934.

SECTION 2 - TERM OF AGREEMENT.

This Agreement shall terminate on the date which is the latest of: (i) Company's
payment of any amounts due under Section's 4 and 6, (ii) the performance of
Executive's obligations under Section 9 hereof, and (iii) the earliest of:

     1.   The date this Agreement is mutually rescinded;

     2.   The date which is two (2) years after the date of a Change in Control.

     3.   Before a Change in Control, on the date which Monroe Bank & Trust, or
          any other member of the Company's Affiliated Group, and over which
          Executive has managerial control, which is a depository institution
          which is insured by an agency of any state or the United States
          Federal Government:

          a.   becomes insolvent; or

          b.   has appointed any conservator or receiver; or

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          c.   is determined by an appropriate federal banking agency to be in a
               troubled condition, as defined in the applicable law and
               regulations; or

          d.   is assigned a composite rating of 4 or 5 by the appropriate
               federal banking agency or is informed in writing by the Federal
               Deposit Insurance Corporation that it is rated a 4 or 5 under the
               Uniform Financial Institution's Rating System of the Federal
               Financial Institutions Examination Council; or

          e.   has initiated against it by the Federal Deposit Insurance
               Corporation a proceeding to terminate or suspend deposit
               insurance; or

          f.   reasonably determines in good faith and with due care that the
               payments called for under this Agreement, or the obligations and
               promises assumed and made under this Agreement have become
               proscribed under applicable law or regulations. Provided,
               however, if such law or regulations apply prospectively only, or
               for some other reason do not apply to this Agreement, then this
               Agreement shall not be deemed by Company to be proscribed.

SECTION 3 - REDUCTION IN COMPENSATION PROSCRIBED AFTER A CHANGE IN CONTROL.

From the date of a Change in Control to the date of termination of this
Agreement Executive shall receive as compensation, while still employed by
Company, a salary at a rate no less than the highest rate in effect during the
one-year period before the Change in Control, and shall, in addition, be
entitled to receive a bonus equal to at least the average of the last three
years bonuses paid before the Change in Control. In addition, during such
period, the Company shall pay and provide for Executive at no cost to Executive,
all of his then-current fringe benefits, including but not limited to health,
disability, dental, life insurance and club memberships, all of which shall be
at levels and amounts no less favorable than levels and amounts in effect as of
the Change in Control.

SECTION 4 - PAYMENTS DUE AFTER A CHANGE IN CONTROL.

A.   If during the term of this Agreement and after the date of a Change in
     Control, Executive is discharged without Cause or Executive resigns because
     he has: (i) been demoted, (ii) had his compensation reduced, (iii) had his
     principal place of employment transferred away from Monroe County,
     Michigan, or a county contiguous thereto, or (iv) had his job title, status
     or responsibility materially reduced, then the Company shall make the
     payments to Executive set forth in subsection D of this Section 4.

B.   If Executive voluntarily terminates employment not earlier than six (6)
     months and not later than nine (9) months following a Change in Control,
     then the Company shall make the payments to Executive set forth in
     subsection D of this Section 4.

C.   If Executive is discharged by Company other than for Cause and there is a
     Change in Control within two years following the discharge, then the
     Company shall make the payments to Executive set forth in subsection D of
     this Section 4.

D.   In the event of the termination of Executive's employment as described in
     A, B or C above, Executive shall be entitled to receive a cash payment
     equal to one (1) times his Compensation. The payment required shall be paid
     at the end of the first month commencing after the Executive's termination
     of employment in the case of a benefit entitlement under Subsection A, or B
     above. In the event of termination of employment as described in C above,
     payment shall be made immediately upon the Change in Control. If
     Executive's employment is terminated as described in Subsection A or
     Subsection B above, then in addition to the above cash payment, Company
     shall make an additional cash payment equal to twelve months of the then
     current cost of any club memberships provided by the Company for the
     benefit of Executive and continue at no cost to Executive for the term of
     the Benefit Period as defined below, Executive's coverage in Company's
     health, disability, dental, and life insurance at the same levels that had
     been provided immediately prior to his termination of employment. The
     Benefit Period shall commence on the date of termination of the Executive's
     employment and shall end on the last day of the 12th consecutive whole
     month thereafter.

     In the event Executive dies before collecting all amounts and benefits due
     under this Section, any payments owing shall be paid to the person or
     persons as stated in the last designation of beneficiary concerning this
     Agreement signed by Executive and filed with Company, and if not, then to
     the personal representative of Executive.

     The payments and benefits provided for herein are in lieu of compensation,
     benefits or amounts the Executive might otherwise be entitled to under the
     Company's severance policy or otherwise payable by the Company be reason of
     termination of employment.

E.   In the event the payments required under this Agreement, when added
     together with any other amounts required to be included by Executive under
     the provisions of the Code, result in an "Excess Parachute Payment," as
     that term is defined in Section 280G of the Code, then the amount of the
     payments provided for in this agreement

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     shall be increased in an amount equal to 250% of any excise tax imposed
     under Section 4999 (or any successor thereto) of the Code and otherwise
     payable by the Executive.

F.   Any subsequent employment by Executive shall not reduce the obligation of
     the Company to make the full payments and provide the full benefits
     specified herein and Executive shall have no obligation to seek other
     employment or otherwise mitigate the effect of his discharge from
     employment.

G.   Notwithstanding the provisions of this agreement providing for payment of
     benefits, if at the time a benefit would otherwise be payable, Employee is
     a "specified employee" [as defined below], and the payment provided for
     would be deferred compensation with the meaning of the Internal Revenue
     Code (the "Code"), section 409A, the distribution of the Employee's benefit
     may not be made until six months after the date of the Employee's
     separation from service with the Company [as that term may be defined in
     Section 409A(a)(2)(A)(i) of the Code and regulations promulgated
     thereunder], or, if earlier the date of death of the Employee. This
     requirement shall remain in effect only for periods in which the stock of
     the Company is publicly traded on an established securities market. For
     purposes of this subparagraph a "specified employee" shall mean any
     Employee of the Company who is a "key employee" of the Company within the
     meaning of Code section 416(i). This shall include any Employee who is (i)
     a 5-percent owner of the Company's common stock, or (ii) an officer of the
     Company with annual compensation from the Company of $130,000.00 or more,
     or (iii) a 1-percent owner of Company's common stock with annual
     compensation from the Company of $150,000.00 or more (or such higher annual
     limit as may be in effect for years subsequent to 2005 pursuant to indexing
     section 416(i) of the Code). The provisions of this subparagraph have been
     adopted only in order to comply with the requirements added by Code section
     409A. These provisions shall be interpreted and administered in a manner
     consistent with the requirements of Code section 409A, together with any
     regulations or other guidance which may be published by the Treasury
     Department or Internal Revenue Service interpreting such Code section 409A.

SECTION 5 - QUALIFIED AND NON-QUALIFIED RETIREMENT PENSION PLANS.

Nothing in this Agreement shall reduce any pension benefits or benefits from
other qualified or non-qualified retirement plans maintained by Company to which
Executive is otherwise entitled without regard to this Agreement.

SECTION 6 - PROVISION FOR OUTPLACEMENT SERVICES.

In the event of the termination of employment of Executive requiring the
payments specified in Section 4 of this Agreement, Executive shall be entitled
to six months of out-placement services following termination of employment.
Such services shall include employment counseling, resume services, executive
placement services and similar services generally provided to executives by
professional executive out placement service providers. All costs of such out
placement services shall be paid for by the Company.

SECTION 7 - ARBITRATION.

Subject to the Company's right to seek injunctive relief under Section 9 of this
Agreement, the parties hereto agree to arbitrate any issue, misunderstanding,
disagreement or dispute in connection with the terms in effect in this Agreement
in accordance with the Rules of the American Arbitration Association, before one
arbitrator mutually agreeable to the parties. If either party determines that
the parties have been unable to agree upon one arbitrator, then such party may
appoint one arbitrator and require the other party to appoint a second
arbitrator. Whereupon, the two appointed arbitrators shall appoint a third
neutral arbitrator. If the arbitrators selected by the parties are unable or
fail to agree upon the third arbitrator, the American Arbitration Association
shall select the third arbitrator. Failure by a party to either (i) accept as
mutually agreeable, or (ii) appoint an arbitrator, within 30 days of receipt of
notice of the appointment of an arbitrator by the other party, shall be deemed
as acceptance of arbitration by such single arbitrator. The arbitration shall
occur in Monroe, Michigan, or such other place as mutually agreed upon. The
prevailing party shall be entitled to recover any and all costs associated with
any arbitration proceeding (and any subsequent proceeding to enforce rights
thereunder) including the recovery of reasonable attorneys fees. Judgement on
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.

SECTION 8 - RIGHT TO OTHER BENEFITS.

Except as otherwise specified herein, nothing in this Agreement shall abridge,
eliminate, or cause Executive to lose Executive's right or entitlement to any
other Company benefit to which Executive may be entitled due to his status as an
employee under any plan or policy of Company on such terms and conditions as are
required of any employee under any plan or policy of Company. Further, nothing
in this Agreement shall create in Executive any greater rights or entitlements,
except as specified in this Agreement. The plans and policies referred to in
this Section 8 include, but are

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not limited to, life insurance plans, dental, disability or health insurance
benefits, severance policies, club memberships, and accrued vacation pay.

SECTION 9 - NONCOMPETITION AND NONSOLICITATION AGREEMENT AND BUSINESS
PROTECTION.

Notwithstanding anything to the contrary contained elsewhere in this Agreement:

A.   Noncompetition Agreement and Nonsolicitation Agreement

     1.   In view of Executive's importance to the success of the Company,
          Executive and Company agree that the Company would likely suffer
          significant harm from Executive's competing with Company during
          Executive's term of employment with Company and for some period of
          time thereafter. Accordingly, Executive agrees that Executive shall
          not engage in competitive activities while employed by Company and
          during the Restricted Period. Executive shall be deemed to engage in
          competitive activities if he shall, without the prior written consent
          of the Company, (i) in Monroe County, Michigan and counties contiguous
          thereto (including the municipalities therein), render services
          directly or indirectly, as an employee, officer, director, consultant,
          advisor, partner or otherwise, for any organization or enterprise
          which competes directly or indirectly with the business of Company or
          any of its affiliates in providing financial products or services
          (including, without limitation, banking, insurance, or securities
          products or services) to consumers and businesses, or (ii) directly or
          indirectly acquires any financial or beneficial interest in (except as
          provided in the next sentence) any organization which conducts or is
          otherwise engaged in a business or enterprise in Monroe County,
          Michigan, and counties contiguous thereto (including all
          municipalities therein) which competes directly or indirectly with the
          business of Company or any of its affiliates in providing financial
          products or services (including, without limitation, banking,
          insurance or securities products or services) to consumers and
          businesses. Notwithstanding the preceding sentence, Executive shall
          not be prohibited from owning less that 1 percent of any publicly
          traded corporation, whether or not such corporation is in competition
          with Company. For purposes of this paragraph 9 the term "Restricted
          Period" shall equal one year, commencing as of the date of Executive's
          termination of employment.

     2.   While employed by Company and for a period of one (1) year following
          Executive's termination of employment with Company, Executive agrees
          that Executive shall not, in any manner, directly or indirectly, (i)
          solicit by mail, by telephone, by personal meeting, or by any other
          means, either directly or indirectly, any customer or prospective
          customer of Company to whom Executive provided services, or for whom
          Executive transacted business, or whose identity become known to
          Executive in connection with Executive's services to Company
          (including employment with or services to any predecessor or successor
          entities), to transact business with a person or an entity other than
          the Company or its affiliates or reduce or refrain from doing any
          business with the Company or its affiliates or (ii) interfere with or
          damage (or attempt to interfere with or damage) any relationship
          between Company or its affiliates and any such customer or prospective
          customer. The term "solicit" as used in this Agreement means any
          communication of any kind whatsoever, inviting, encouraging or
          requesting any person to take or refrain from taking any action with
          respect to the business of Company and its subsidiaries.

     3.   While employed by Company and for a period of one (1) year following
          Executive's termination of employment with Company, Executive agrees
          that Executive shall not, in any manner, directly or indirectly,
          solicit any person who is an employee of Company or any of its
          affiliates to apply for or accept employment or a business opportunity
          with any other person or entity.

     4.   The parties agree that nothing herein shall be construed to limit or
          negate the common law of torts or trade secrets where it provides
          broader protection than that provided herein.

B.   Confidential Information

Executive has obtained and may obtain confidential information concerning the
businesses, operations, financial affairs, organizational and personnel matters,
policies, procedures and other non-public matters of Company and its affiliates,
and those of third-parties that is not generally disclosed to persons not
employed by Company or its subsidiaries. Such information (referred to herein as
the "Confidential Information") may have been or may be provided in written form
or orally. Executive shall not disclose to any other person the Confidential
Information at any time during his employment with Company or after the
termination of his employment, provided that Executive may disclose such
Confidential Information only to a person who is then a director, officer,
employee, partner, attorney or agent of Company who, in Executive's reasonable
good faith judgment, has a need to know the Confidential Information.

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C.   Remedies

     1.   Executive acknowledges that a violation on Executive's part of this
          Section 9 would cause immeasurable and irreparable damage to Company.
          Accordingly, Executive agrees that notwithstanding Section 7 hereof,
          Company shall be entitled to injunctive relief in any court of
          competent jurisdiction for any actual or threatened violation of any
          of the provisions of this Section 9, in addition to any other remedies
          it may have.

     2.   In addition to Company's right to seek injunctive relief as set forth
          in subparagraph 1 above of this Section 9.C, in the event that
          Executive shall violate the terms and conditions of this Section 9,
          Company may: (i) make a general claim for damages and (ii) terminate
          any payments or benefits payable by Company, if applicable, to
          Executive.

     3.   The Board shall be responsible for determining whether Executive shall
          have violated this Section 9, and in the absence of Executive's
          ability to show that the Board has acted in bad faith and without fair
          dealing, such decision will be final and binding. Upon the request of
          Executive, the Company shall provide an advance opinion as to whether
          a proposed activity would violate the provisions of this Agreement.

SECTION 10 - NOTICE AND PAYMENTS.

All payments required or permitted to be made under the provisions of this
Agreement, and all notices and other communications required or permitted to be
given or delivered under this Agreement to Company or to Executive, which
notices or communications must be in writing, shall be deemed to have been given
if delivered by hand, or mailed by first-class mail, addressed as follows:

A.   If to Company:

     MBT Financial Corp
     102 E. Front Street
     Monroe, MI 48161
     Attn: Chairman, Compensation Committee

B.   If to Executive:

     H. Douglas Chaffin
     c/o MBT Financial Corp
     102 E. Front Street
     Monroe, MI 48161

Company or Executive may, by notice given to the other from time to time and at
any time, designate a different address for making payments required to be made,
and for the giving of notices or other communications required or permitted to
be given, to the party designating such new address.

SECTION 11 - PAYROLL TAXES.

Any payment required or permitted to be made or given to Executive under this
Agreement shall be subject to the withholding and other requirements of
applicable laws, and to the deduction requirements of any benefit plan
maintained by Company in which Executive is a participant, and to all reporting,
filing and other requirements in respect of such payments, and Company shall use
it best efforts promptly to satisfy all such requirements.

SECTION 12 - GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of
the State of Michigan.

SECTION 13 - DUPLICATE ORIGINALS.

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be a duplicate original, but all of which, taken together, shall
constitute a single instrument.

SECTION 14 - CAPTIONS.

The captions contained in this Agreement are included only for convenience of
reference and do not define, limit, explain or modify this Agreement or its
interpretations, construction or meaning and are in no way to be construed as a
part of this Agreement.

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SECTION 15 - SEVERABILITY.

If any provision of this Agreement or the application of any provision to any
person or any circumstances shall be determined to be invalid or unenforceable,
such provision or portion thereof shall nevertheless be effective and
enforceable to the extent determined reasonable. Such determination shall not
affect any other provision of this Agreement or the application of said
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of Company and
Executive that if any provision of this Agreement is susceptible of two or more
constructions, one of which would render the provision enforceable and the other
or others of which would render the provisions unenforceable, then the
provisions shall have the meaning which renders it enforceable.

SECTION 16 - NUMBER AND GENDER.

When used in this Agreement, the number and gender of each pronoun shall be
construed to be such number and gender as the context, circumstances or its
antecedent may require.

SECTION 17 - SUCCESSOR AND ASSIGNS.

This Agreement shall inure to the benefit of and be binding upon the successors
and assigns (including successive, as well as immediate, successors and assigns)
of Company; provided, however, that Company may not assign this Agreement or any
of its rights or obligations hereunder to any party other than a corporation
which succeeds to substantially all of the business and assets of Company by
merger, consolidation, sale of assets or otherwise. This Agreement shall inure
to the benefit of and be binding upon the successor and assigns (including
successive, as well as immediate, successors and assigns) of Executive;
provided, however, that the right of Executive under this Agreement may be
assigned only to his personal representative or trustee or by will or pursuant
to applicable laws of descent and distribution.

SECTION 18 -PRIOR AGREEMENT SUPERCEDED.

This Agreement supersedes the previous agreement dated July 30, 2001.

IN WITNESS WHEREOF, the parties hereto have caused this Amended Agreement to be
executed on and to be effective on January 18, 2006.

In the Presence of:                     EXECUTIVE

                                             /s/  H. Douglas Chaffin
                                        ----------------------------------------
/s/ Bonnie S. Snyder                        H. Douglas Chaffin
/s/ Donald M. Lieto

In the Presence of:                     MBT FINANCIAL CORP.

                                             /s/ William D. McIntyre, Jr.
                                        ----------------------------------------
/s/ Bonnie S. Snyder                        By: William D. McIntyre, Jr.
/s/ Donald M. Lieto                         Its: Chairman

Exhibit A
Change in Control Definition

               A "Change in Control" shall mean a "Change in Ownership" as
     defined in (a) hereof; a "Change in Effective Control" as defined in (b),
     hereof; or a "Change in Ownership of a Substantial Portion of Assets" as
     defined in (c) hereof.

     (a)  Change in Ownership. For purposes of this Agreement, a "change in the
          ownership" of the Company occurs on the date that any one person, or
          more than one person acting as a group (as defined in subsection (d)
          hereof, acquires ownership of stock of the Company that, together with
          stock held by such person or group, constitutes more than 50 percent
          of the total fair market value or total voting power of the stock of
          the Company. However, if any one person, or more than one person
          acting as a group, is considered to own more than 50 percent of the
          total fair market value or total voting power of the stock of the
          Company, the acquisition of additional stock by the same person or
          persons is not

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          considered to cause a change in the ownership of the Company (or to
          cause a change in the effective control of the Company (within the
          meaning of subsection (b) hereof. An increase in the percentage of
          stock owned by any one person, or persons acting as a group, as a
          result of a transaction in which the Company acquires its stock in
          exchange for property will be treated as an acquisition of stock for
          purposes of this section.

     (b)  Change in the Effective Control. For purposes of this Agreement, a
          change in the effective control of the Company occurs on the date that
          either -

          (i)  Any one person, or more than one person acting as a group (as
               determined under subsection (d) hereof, acquires (or has acquired
               during the 12-month period ending on the date of the most recent
               acquisition by such person or persons) ownership of stock of the
               Company possessing 35 percent or more of the total voting power
               of the stock of the Company; or

          (ii) a majority of members of the Company's board of directors is
               replaced during any 12-month period by directors whose
               appointment or election is not endorsed by a majority of the
               members of the Company's board of directors prior to the date of
               the appointment or election.

                    In the absence of an event described in subsection (b)(i) or
          (ii) above, a change in the effective control of a Company will not
          have occurred.

     (c)  Change in the Ownership of a Substantial Portion of the Company's
          Assets. For purposes of this Agreement, a change in the ownership of a
          substantial portion of the Company's assets occurs on the date that
          any one person, or more than one person acting as a group (as
          determined in subsection(d) hereof, acquires (or has acquired during
          the 12-month period ending on the date of the most recent acquisition
          by such person or persons) assets from the Company that have a total
          gross fair market value equal to or more than 40 percent of the total
          gross fair market value of all of the assets of the Company
          immediately prior to such acquisition or acquisitions. For this
          purpose, gross fair market value means the value of the assets of the
          Company, or the value of the assets being disposed of, determined
          without regard to any liabilities associated with such assets.

                    There is no Change in Control Event under this subsection
          (c) when there is a transfer to an entity that is controlled by the
          shareholders of the Company immediately after the transfer, as
          provided in this paragraph. A transfer of assets by the Company is not
          treated as a change in the ownership of such assets if the assets are
          transferred to --

          (i)  A shareholder of the Company (immediately before the asset
               transfer) in exchange for or with respect to its stock;

          (ii) An entity, 50 percent or more of the total value or voting power
               of which is owned, directly or indirectly, by the Company;

          (iii) A person, or more than one person acting as a group, that owns,
               directly or indirectly, 50 percent or more of the total value or
               voting power of all the outstanding stock of the Company; or

          (iv) An entity, at least 50 percent of the total value or voting power
               of which is owned, directly or indirectly, by a person described
               in subsection (iii) hereof.

                    For purposes of this subsection(c) and except as otherwise
          provided, a person's status is determined immediately after the
          transfer of the assets. For example, a transfer to a corporation in
          which the transferor corporation has no ownership interest before the
          transaction, but which is a majority-owned subsidiary of the
          transferor corporation after the transaction is not treated as a
          change in the ownership of the assets of the transferor corporation.

<PAGE>

     (d)  Persons Acting as a Group. Persons will not be considered to be acting
          as a group solely because they purchase assets or purchase or own
          stock of the same corporation at the same time, or as a result of the
          same public offering. However, persons will be considered to be acting
          as a group if they are owners of a corporation that enters into a
          merger, consolidation, purchase or acquisition of stock, purchase or
          acquisition of assets, or similar business transaction with the
          Company. If a person, including an entity shareholder, owns stock in
          both corporations that enter into a merger, consolidation, purchase or
          acquisition of stock, or similar transaction, such shareholder is
          considered to be acting as a group with other shareholders in a
          corporation only to the extent of the ownership in that corporation
          prior to the transaction giving rise to the change and not with the
          ownership interest in the other corporation.exv10w3

 

Exhibit 10.3

EMPLOYEE STOCK OPTION AGREEMENT

     THIS EMPLOYEE STOCK OPTION AGREEMENT (the “Agreement”) is made and entered into effective the
     day of      , 200   , by and between PETROHAWK ENERGY CORPORATION, a Delaware corporation
(the “Company”), and           (“Employee”).

     WHEREAS, to carry out the purposes of the Company’s Second Amended and Restated 2004 Employee
Incentive Plan (the “Plan”), the Company desires to afford Employee the opportunity to purchase
shares of the common stock of the Company (“Stock”).

     NOW THEREFORE, in consideration of the mutual agreements and other matters set forth herein
and in the Plan, the Company and Employee hereby agree as follows:

     1. Grant of Option. The Company hereby grants to Employee the right and option
(“Option”) to purchase all or any part of an aggregate of      shares of Stock, on the terms
and conditions set forth herein and in the Plan, which Plan is incorporated herein by reference.
This Option is intended to constitute an Incentive Stock Option, within the meaning of 422(b) of
the Internal Revenue Code of 1986, as amended (the “Code”); except that to the extent that the
aggregate Fair Market Value of Stock (determined at the time the Option is granted) with respect to
which Incentive Stock Options are exercisable for the first time by Employee during any calendar
year under all incentive stock option plans of the Company and its parent and subsidiary
corporations exceeds One Hundred Thousand Dollars ($100,000), such excess Incentive Stock Options
shall be treated as Non-Statutory Stock Options.

     2. Purchase Price. The purchase price of Stock purchased pursuant to the exercise of
this Option shall be $     per share, which has been determined to be the Fair Market Value of
the Stock. For all purposes of this Agreement, Fair Market Value of Stock shall be determined in
accordance with the provisions of the Plan.

     3. Vesting of Option. The Option granted hereunder shall vest as follows:

	 	(a)	 	the option to purchase
          shares of Stock is vested and exercisable as of           , 200   ;
	 
	 	(b)	 	the option to purchase
          shares
of Stock is vested and exercisable as of
          , 200   ;
	 
	 	(c)	 	the option to purchase           shares of Stock is vested and exercisable as of           , 200  .

     Subject to the earlier expiration of this Option as herein provided, this Option may be
exercised by written notice to the Company at is principal executive office addressed to the
attention of its chief executive officer. This Option must be exercised on or before January 11, 2016 or it will expire
worthless.

 

 

     The shares of Stock that are the subject of the Option are shares of Stock as presently
constituted, but if, and whenever, prior to the expiration of an Option theretofore granted, the
Company shall effect a subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Option may thereafter be exercised (a) in the event of an increase in
the number of outstanding shares of Stock shall be proportionately increased, and the purchase
price per share shall be proportionately reduced, and (b) in the event of a reduction in the number
of outstanding shares of Stock shall be proportionately reduced, and the purchase price per share
shall be proportionately increased.

     If the Company recapitalizes and/or reclassifies its capital stock, the number and class of
shares of Stock covered by an Option theretofore granted shall be adjusted as provided in the Plan.

     4. Transferability: This Option is not transferable or assignable other than by will
or the laws of descent and distribution or pursuant to a qualified domestic relations order (as
defined by Section 414(p) of the Code). If an Incentive Stock Option is transferred pursuant to a
qualified domestic relations order, the Option shall cease to qualify as an Incentive Stock option
as of the date of such transfer. The Committee (defined hereafter) may authorize the transfer of
all or a portion of the Non-Statutory Stock Options subject to the terms of the Plan. The
Non-Statutory Stock Option shall be exercisable by the transferee only to the extent, and for the
periods, specified in paragraphs 3 and 5 of this Agreement.

     No transfer by will, trust, or by the laws of descent and distribution shall be effective to
bind the Company unless the Compensation Committee of the board of directors of the Company or
other such committee as the Board shall appoint to administer the Plan as permitted by the Plan
(collectively herein the “Committee”) has been furnished with a copy of the deceased Employee’s
enforceable will, trust or such other evidence as the Committee deems necessary to establish the
validity of the transfer. Any attempted transfer in violation of this provision shall be void and
ineffective.

     5. Exercise of Option. This Option may be exercised only by Employee during Employee’s
lifetime while Employee remains an employee of the Company and will terminate and cease to be
exercisable upon Employee’s termination of employment with the Company for any reason, except that:

	 	(a)	 	If Employee’s employment with the Company terminates by reason of disability
within the meaning of section 22(e)(3) of the Code, this Option may be exercised in
full (whether or not the option is fully vested) by Employee (or Employee’s estate or
the person who acquires this Option by will or the laws of descent and distribution or
otherwise by reason of death of Employee) but only within such period of time ending
on the earlier of (i) the date that is one (1) year following

2

 

	 	 	 	such termination or
(ii) the expiration of the term of the Option as set forth in the Agreement.
	 
	 	(b)	 	If Employee dies while in employ of the Company, Employee’s estate, or the
person who acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Employee, may exercise Employee’s Option in full
(whether or not the Option is fully vested) but only within such period of time ending
on the earlier of (i) the date that is one (1) year following Employee’s death or (ii)
the expiration of the term of the Option as set forth in the Agreement.
	 
	 	(c)	 	If Employee is terminated without Cause, Employee may exercise Employee’s
Option but only within such period of time ending on the earlier of (i) the date that
is three months following the termination of such person’s employment or (ii) the
expiration of the term of the Option as set forth in the Agreement. For purposes of
this Agreement, “Cause” shall mean Employee’s gross negligence or willful misconduct in
performance of the duties of Employee’s employment, or Employee’s final conviction of a
felony or of a misdemeanor involving moral turpitude.
	 
	 	(d)	 	If Employee voluntarily terminates employment with the Company, Employee may
exercise Employee’s Option on the earlier of (i) the date that is three months
following termination of such person’s employment or (ii) the expiration of the term of
the Option as set forth in the Agreement, IF AND ONLY IF, the Company provides written
consent to Employee providing that Employee may exercise the Option during such period.

     The purchase price upon exercise of any Option shall be payable to the Company in full either:
(a) in cash or its equivalent, or (b) subject to prior approval by the Committee in its discretion,
by tendering previously acquired shares of Stock having an aggregate Fair Market Value at the time
of exercise equal to the total purchase price (provided that the shares of Stock tendered have been
held by Employee for at least six (6) months prior to their tender to satisfy the option price), or
(c) subject to prior approval by the Committee in its discretion, by withholding shares of Stock
which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of
exercise equal to the total purchase price, or (d) subject to prior approval by the Committee in
its discretion, by a combination of (a), (b), and (c) above. Any payment in shares of Stock shall
be effected as provided for in the Plan. The Committee, in its discretion, also may allow the
purchase price to be paid with such other consideration as shall constitute lawful consideration
for the issuance of shares of Stock (including, without limitation, effecting a “cashless
exercise,” as defined in the Plan, with a broker of the Option), subject to applicable securities
law restrictions and tax withholdings, or by any other means which the Committee determines to be
consistent with the Plan’s purpose and applicable law.

     As soon as practicable after receipt of a written notification of exercise and full payment,
the Company shall deliver, or cause to be delivered, to or on behalf of Employee, in the name of

3

 

Employee or other appropriate recipient, share certificates for the number of shares of Stock purchased
under the Option. Unless and until such certificates have been issued by the Company to Employee,
Employee (or other person permitted to exercise this Option in the event of Employee’s death) shall
not be or have any rights or privileges of a stockholder of the Company with respect to the shares
acquirable upon an exercise of this Option.

     6. Withholding of Tax. To the extent that the exercise of this Option or the
disposition of shares of Stock acquired by exercise of this Option results in compensation income
to Employee for federal or state income tax purposes, Employee shall deliver to the Company at the
time of such exercise or disposition such amount of money or shares of Stock as the Company may
require to meet its obligation under applicable tax laws or regulations, and, if Employee fails to
do so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafter
payable to Employee any tax required to be withheld by reason of such resulting compensation
income. Upon an exercise of this Option, the Company is further authorized in its discretion to
satisfy any such withholding requirement out of any cash or shares of Stock distributable to
Employee upon such exercise.

     Except as may otherwise be permitted by the Code, in the event of a permitted transfer of a
Non-Statutory Stock Option hereunder, Employee shall remain subject to withholding taxes upon
exercise. In addition, the Company shall have no obligation to provide any notices to the
transferee including, for example, notice of the termination of a stock option following Employee’s
termination of employment.

     7. Securities Laws. Employee agrees that the shares of Stock which Employee may
acquire by exercising this Option will not be sold or otherwise disposed of in any manner which
would constitute a violation of any applicable securities laws, whether federal or state. Employee
also agrees (i) that the certificates representing the shares of Stock purchased under this Option
may bear such legend or legends as the Committee deems appropriate in order to assure compliance
with applicable securities laws, and (ii) that the Company may refuse to register the transfer of
such shares of Stock purchased under this Option on the stock transfer records of the Company if
such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a
violation of any applicable securities laws and (iii) that the Company may give related
instructions to its transfer agent, if any, to stop registration of the transfer of the shares of
Stock purchased under this Option.

     8. Employment Relationship. For the purposes of this Agreement, Employee shall be
considered to be in employment of the Company as long as Employee remains an employee of either the
Company or a parent or subsidiary corporation (as defined in Section 424 of the Code) of the
Company, or a corporation or a parent or subsidiary of such corporation assuming or substituting a
new option for this Option. Nothing contained in this Agreement shall confer upon Employee the
right to continue in the employ of the Company or its parent or subsidiary or any other corporation
affiliated with the Company, or interfere in any way with the rights of the Company or its parent
or subsidiaries or any other corporation affiliated with the Company to terminate Employee’s
employment. Any question as to whether and when there has been a

4

 

termination of such employment, and the cause for such termination, shall be determined by the Committee and its determination shall be final.

     9. Representations and Warranties of Employee. The Employee represents and warrants
to the Company as follows:

	 	(a)	 	The Employee has received a copy of the Plan and has read and understands the
terms of the Plan and this Agreement, and agrees to be bound by their terms and
conditions. The Employee acknowledges that there may be adverse tax consequences
related to the Options and their vesting and exercise, and that Employee should consult
a tax advisor prior to such time.
	 
	 	(b)	 	The Employee agrees to sign such additional documentation as may reasonably
required from time to time by the Company in connection with this Agreement.

     10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under Employee.

     11. Governing Laws. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware.

     12. Modification. This Agreement may not be modified except in writing signed by the
parties hereto or their respective successors and permitted assigns.

     13. Headings. The headings of paragraphs in this Agreement are for convenience of
reference only, do not constitute a part of this Agreement, and shall not be deemed to limit or
alter any of the provisions of this Agreement.

     14. Defined Terms. Except as otherwise provided in this Agreement, or unless the
context clearly indicates otherwise, capitalized terms used but not defined in this Agreement have
the definitions as provided in the Plan. In the event of a conflict or inconsistency between the
discretionary terms and provisions of the Plan and the provisions of this Agreement, this Agreement
shall govern and control.

[remainder of page intentionally left blank]

5

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed, by its officer
thereunto duly authorized, and Employee has executed this Agreement, all as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	PETROHAWK ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 
	 

	 	EMPLOYEE
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Printed Name:	 	 	 	 
	 

	 	 	 	 	 	 

6

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