CREDIT ACCEPTANCE CORPORATION
INCENTIVE COMPENSATION PLAN
<DOCUMENT>
<TYPE>EX-10.(Q)
<SEQUENCE>5
<FILENAME>k86601exv10wxqy.txt
<DESCRIPTION>INCENTIVE COMPENSATION PLAN
<TEXT>
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                                                                   Exhibit 10(q)

                          CREDIT ACCEPTANCE CORPORATION
                           INCENTIVE COMPENSATION PLAN

                             EFFECTIVE APRIL 1, 2004


                              I. GENERAL PROVISIONS


         1.01 PURPOSE. The Plan, which was adopted by the Company's Board on the
Effective Date, is intended to attract and retain highly competent, effective
and loyal Employees and Non-Employee Directors in order to create per share
intrinsic value for shareholders.

         1.02 PARTICIPANTS. Participants in the Plan shall be such Employees
(including Employees who are directors) and Non-Employee Directors of the
Company or of an Affiliate as the Committee may select from time to time. The
Committee may grant Options, Restricted Stock Awards, Restricted Stock Units and
Performance Awards to an individual upon the condition that the individual
become an Employee or Non-Employee Director of the Company or of an Affiliate,
provided that the Option, Restricted Stock Award, Restricted Stock Unit or
Performance Award shall be deemed to be granted only on the date that the
individual becomes an Employee or Non-Employee Director.

         1.03 DEFINITIONS. As used in this Plan, the following terms have the
meaning described below:

                  (a) "AFFILIATE" OR "AFFILIATES" means a corporation or other
entity that is affiliated with the Company and includes any parent or subsidiary
of the Company, as defined in Code Sections 424(e) and (f), respectively.

                  (b) "AGREEMENT" means the written agreement that sets forth
the terms of a Participant's Option, Restricted Stock Award, Restricted Stock
Unit or Performance Award.

                  (c) "BOARD" means the Board of Directors of the Company.

                  (d) "BUSINESS COMBINATION" means (1) any reorganization,
merger, share exchange or consolidation of the Company, or (2) any sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company.

                  (e) "CASHLESS EXERCISE PROCEDURE" means delivery to the
Company by a Participant exercising an Option of a properly executed exercise
notice, acceptable to the Company, together with irrevocable instructions to the
Participant's broker to deliver to the Company sufficient cash to pay the
exercise price and any applicable income and employment withholding taxes, in
accordance with a written agreement between the Company and the brokerage firm.


<PAGE>

                  (f) "CAUSE" means (1) with respect to any Participant who is a
party to a written employment agreement with the Company or any Affiliate,
"Cause" as defined in such employment agreement, or (2) with respect to any
Participant who is not a party to a written employment agreement with the
Company or any Affiliate, personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or receipt of a final cease-and-desist order. In
determining willfulness, no act or failure to act on a Participant's part shall
be considered "willful" unless done or omitted to be done by the Participant not
in good faith and without reasonable belief that the Participant's action or
omission was in the best interests of the Company.

                  (g) "CHANGE IN CONTROL" means the occurrence of any of the
following events:

                           (1) If the Incumbent Directors cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election or
nomination for election by the Company's shareholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Directors
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without written
objection to such nomination) shall be considered to be an Incumbent Director;
provided further, that any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies by or on behalf of a person other than the Board shall not be
considered an Incumbent Director.

                           (2) If there shall be consummated a Business
Combination, other than (A) a merger or consolidation effected to implement a
reorganization of the Company's ownership wherein the Company shall become a
wholly-owned subsidiary of another corporation and the shareholders of the
Company shall become shareholders of such other corporation without any material
change in each shareholder's proportionate ownership of such other corporation
from that owned in the Company prior to such merger or consolidation; and (B) a
Business Combination following which: (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
outstanding Common Stock and outstanding Voting Stock immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 65% of,
respectively, the then outstanding shares of Common Stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the Surviving
Corporation in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding Common Stock
and Voting Stock, as the case may be; (ii) no person or entity beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the Surviving Corporation or the combined voting power
of the then outstanding voting securities of the Surviving Corporation
(excluding any person or entity who beneficially owned 20% or more of the






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outstanding Common Stock or Voting Stock prior to such Business Combination, the
Surviving Corporation and any employee benefit plan (or related trust) of the
Company or the Surviving Corporation); and (iii) at least a majority of the
members of the board of directors of the Surviving Corporation were Incumbent
Directors immediately prior to the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination.

                           (3) Approval by the shareholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company.

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

                  (i) "CODE SECTION 162(M) PERFORMANCE AWARDS" is defined in
Section 4.02 of the Plan.

                  (j) "CODE SECTION 162(M) RESTRICTED STOCK AWARD AND RESTRICTED
STOCK UNITS" is defined in Section 3.07 of the Plan.

                  (k) "COMMITTEE" means the Board acting as a whole, or a
committee of two or more "non-employee directors" (as defined in Rule 16b-3
under the Exchange Act) who also constitute "outside directors" (as defined
under Code Section 162(m) if applicable at the time) if designated by the Board
to administer the Plan. The fact that a Committee member shall fail to qualify
under Rule 16b-3 under the Exchange Act or Code Section 162(m) shall not
invalidate any grant or award made by the Committee, if the grant or award is
otherwise validly granted under the Plan.

                  (l) "COMMON STOCK" means shares of the Company's authorized
and unissued common stock, or reacquired shares of such common stock.

                  (m) "COMPANY" means Credit Acceptance Corporation and any
successor thereto.

                  (n) "DISABILITY" means disability as defined in Section 22(e)
of the Code.

                  (o) "EFFECTIVE DATE" means April 1, 2004, the date on which
the Board adopted the Plan.

                  (p) "EMPLOYEE" means an employee of the Company or Affiliate,
who has an "employment relationship" with the Company or an Affiliate, as
defined in Treasury Regulation 1.421-7(h); and the term "employment" means
employment with the Company, or an Affiliate of the Company.

                  (q) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended from time to time and any successor thereto.

                  (r) "FAIR MARKET VALUE" means, with respect to a share of
Common Stock on the Grant Date, the average of the high and low sale prices of
Common Stock


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on the Nasdaq Stock Market ("NSM") as reported in The Wall Street Journal for
the Grant Date. In the event that there were no Common Stock transactions on
such date, the Fair Market Value shall be determined as of the immediately
preceding date on which there were Common Stock transactions. Unless otherwise
specified in the Plan, "Fair Market Value" for purposes of determining the value
of Common Stock on the date of exercise means (i) if shares acquired or to be
acquired upon exercise were sold by the Participant exercising the option on the
date of exercise, the average sale price of such shares, or (ii) if shares
acquired or to be acquired upon exercise were not sold on the date of exercise
by the Participant exercising the option, the average of the high and low sale
prices of such Common Stock on the NSM on the last date preceding the exercise
on which there were Common Stock transactions, as reported in The Wall Street
Journal. If the Common Stock is not listed for trading on the NSM on the
relevant date, (1) the average of the high and low sale prices on the securities
exchange (or, if there is more than one, the principal such exchange) on which
the Common Stock is traded as reported in The Wall Street Journal for the
relevant date; (2) if the shares are not listed for trading on any securities
exchange or the NSM on such date but bid and ask information is reported by
Nasdaq or another generally accepted reporting service, the average of the high
bid and low asked prices of the shares, as so reported by Nasdaq or, if not
reported by Nasdaq, another generally accepted reporting service, for the
relevant date; (3) if none of the foregoing is applicable, the fair market value
of a share as of the relevant date, as determined by the Committee; provided
that for purposes of determining the value of Common Stock on the date of
exercise under the circumstances described in this sentence, if shares acquired
or to be acquired upon exercise were sold on the date of exercise by the
Participant exercising the option, "Fair Market Value" means the average sale
price of such shares.

                  (s) "GRANT DATE" means the date on which the Committee
authorizes an individual Option, Restricted Stock Award, Restricted Stock Unit
or Performance Award, or such later date as shall be designated by the
Committee.

                  (t) "INCENTIVE STOCK OPTION" means an Option that is intended
to meet the requirements of Section 422 of the Code and is designated as such in
the Agreement evidencing the grant.

                  (u) "INCUMBENT DIRECTORS" means the members of the Board on
the Effective Date.

                  (v) "NON-EMPLOYEE DIRECTOR" means a director of the Company or
an Affiliate who is not an Employee.

                  (w) "NONQUALIFIED STOCK OPTION" means an Option that is not an
Incentive Stock Option.

                  (x) "OPTION" means either an Incentive Stock Option or a
Nonqualified Stock Option.

                  (y) "PARTICIPANT" means the individuals described in Section
1.02.



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                  (z) "PERFORMANCE AWARD" means a performance award granted
pursuant to Article IV.

                  (aa) "PLAN" means the Credit Acceptance Corporation Incentive
Compensation Plan, the terms of which are set forth herein, as amended from time
to time.

                  (bb) "RESTRICTED PERIOD" means the period of time during which
Common Stock subject to a Restricted Stock Award, Restricted Stock Unit or
Performance Award is subject to transfer restrictions that make it
nontransferable.

                  (cc) "RESTRICTED STOCK" means Common Stock that is subject to
a Restricted Period pursuant to Article III or Article IV.

                  (dd) "RESTRICTED STOCK AWARD" means an award of Common Stock
that is subject to a Restricted Period, granted pursuant to Article III.

                  (ee) "RESTRICTED STOCK UNIT" means a right granted pursuant to
Article III to receive Restricted Stock or an equivalent value in cash pursuant
to the terms of the Plan and the related Agreement.

                  (ff) "RETIREMENT" means a Participant's voluntary cessation of
employment, or voluntary cessation of services as a Non-Employee Director,
following the Participant's 65th birthday.

                  (gg) "SURVIVING CORPORATION" means the corporation resulting
from a Business Combination referred to in Section 1.03(g)(2)(B) of the Plan,
including, without limitation, the surviving corporation in a merger involving
the Company and a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries.

                  (hh) "VOTING STOCK" means the securities ordinarily having the
right to vote in the election of directors to the Board.

         1.04 ADMINISTRATION. (A) The Plan shall be administered by the
Committee, in accordance with Rule 16b-3 under the Exchange Act and Code Section
162(m), if applicable. The Committee, at any time and from time to time, subject
to Sections 2.02 and 7.07, may grant Options, Restricted Stock Awards,
Restricted Stock Units and Performance Awards to such Employees and for such
number of shares of Common Stock as it shall designate. The Committee shall
interpret the Plan, prescribe, amend, and rescind rules and regulations relating
to the Plan, and make all other determinations necessary or advisable for its
administration. The decision of the Committee on any question concerning the
interpretation of the Plan or its administration with respect to any Option,
Restricted Stock Award, Restricted Stock Unit or Performance Award granted under
the Plan shall be final and binding upon all Participants. Notwithstanding the
foregoing, the Committee shall not waive any restrictions on a Code Section
162(m) Performance Award, Restricted Stock Award or Restricted Stock Unit.


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<PAGE>

         (b) To the extent permitted by applicable law, the Committee may
delegate to one or more officers or managers of the Company or a committee of
such officers or managers, the authority, subject to such terms and limitations
as the Committee shall determine, to grant Options, Restricted Stock Awards,
Restricted Stock Units and Performance Awards to, or to cancel, modify, waive
rights with respect to, alter, discontinue or terminate Options, Restricted
Stock Awards, Restricted Stock Units or Performance Awards held by Participants
who are not officers or directors of the Company for purposes of Section 16 of
the Exchange Act.

         1.05 STOCK. The total number of shares of Company Common Stock
available for grants and awards under this Plan shall be One Million
(1,000,000). The maximum number of shares of Common Stock that may be subject to
Option grants under the Plan to any salaried employee during any two-year period
shall not exceed 500,000 shares. Shares subject to any portion of a terminated,
forfeited, cancelled or expired Option, Restricted Stock Award, Restricted Stock
Unit or Performance Award granted hereunder may again be subjected to grants and
awards under the Plan as of the date of such termination, forfeiture,
cancellation or expiration. All amounts in this Section 1.05 shall be adjusted,
as applicable, in accordance with Article VI.

                                II. STOCK OPTIONS

         2.01 GRANT OF OPTIONS. The Committee may grant Options to Participants
and, to the extent Options are granted, shall determine the general terms and
conditions of exercise, including any applicable vesting or performance
requirements, which shall be set forth in a Participant's Agreement. The
Committee may designate any Option granted as either an Incentive Stock Option
or a Nonqualified Stock Option, or the Committee may designate a portion of an
Option as an Incentive Stock Option and the remainder as a Nonqualified Stock
Option. An Option shall expire no later than the close of business on the tenth
anniversary of the Grant Date. Any Participant may hold more than one Option,
Restricted Stock Award, Restricted Stock Unit or Performance Award under the
Plan and any other plan of the Company or Affiliate.

         2.02 INCENTIVE STOCK OPTIONS. Any Option intended to constitute an
Incentive Stock Option shall comply with the requirements of this Section 2.02
and shall only be granted to an Employee. No Incentive Stock Option shall be
granted with an exercise price below its Fair Market Value on the Grant Date. An
Incentive Stock Option shall not be granted to any Participant who owns (within
the meaning of Code Section 424(d)) stock of the Company or any Affiliate
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or a Affiliate unless, at the Grant Date, the exercise
price for the Option is at least 110% of the Fair Market Value of the shares
subject to the Option and the Option, by its terms, is not exercisable more than
5 years after the Grant Date. The aggregate Fair Market Value of the underlying
Common Stock (determined at the Grant Date) as to which Incentive Stock Options
granted under the Plan (including a plan of an Affiliate) may first be exercised
by a Participant in any one calendar year shall not exceed $100,000. To the
extent that an Option intended to constitute an Incentive Stock Option shall
violate the foregoing $100,000 limitation (or any other limitation set forth in
Code Section 422), the portion of the Option that exceeds


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the $100,000 limitation (or fails any other Code Section 422 requirement) shall
be deemed to constitute a Nonqualified Stock Option.

         2.03 OPTION PRICE. The Committee shall determine the per share exercise
price for each Option granted under the Plan, but no Option shall be granted
with an exercise price below 100% of the Fair Market Value of Common Stock on
the Grant Date.

         2.04 PAYMENT FOR OPTION SHARES. The purchase price for shares of Common
Stock to be acquired upon exercise of an Option granted hereunder shall be paid
in full in cash or by personal check, bank draft or money order at the time of
exercise; provided, however, that in lieu of such form of payment, the Committee
may permit a Participant to pay such purchase price in whole or in part by
tendering shares of Common Stock that have been held at least six months, which
are freely owned and held by the Participant independent of any restrictions,
hypothecations or other encumbrances, duly endorsed for transfer (or with duly
executed stock powers attached), or in any combination of the above. If shares
of Common Stock are tendered in payment of all or part of the exercise price,
they shall be valued for such purpose at their Fair Market Value on the date of
exercise. At the discretion of the Committee, as set forth in a Participant's
Option Agreement, the purchase price may be paid by using the Cashless Exercise
Procedure if the relevant agreement between the Company and the Participant's
broker referred to in the definition of such term has been executed by the
Company and such broker.

         2.05 ACCELERATION. The Committee may, in its discretion, accelerate a
Participant's right to exercise an Option.

                     III. RESTRICTED STOCK AWARDS AND UNITS

         3.01 TERMS OF RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS. The
Committee shall have the authority to grant Restricted Stock Awards and
Restricted Stock Units to such Participants and for such number of shares of
Common Stock as it shall designate. Such Awards and Units shall be evidenced by
an Agreement that shall specify the terms thereof, including the Restricted
Period, the number of shares of Common Stock subject to the Award or Unit, and
such other provisions, which may include, among other things, vesting and
performance goals, as the Committee shall determine.

         3.02 TRANSFERABILITY. Except as provided in this Article III of the
Plan, the shares of Common Stock subject to a Restricted Stock Award or
Restricted Stock Unit may not be transferred, pledged, assigned, or otherwise
alienated or hypothecated until the termination of (a) the applicable Restricted
Period or for such period of time as shall be established by the Committee and
specified in the applicable Agreement, or (b) upon the earlier satisfaction of
other conditions as specified by the Committee and set forth in the applicable
Agreement. Prior to the end of the Restricted Period, all rights with respect to
the Common Stock subject to a Restricted Stock Award or Restricted Stock Unit
granted to a Participant shall be exercisable during the Participant's lifetime
only by the Participant or the Participant's legal representative.



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<PAGE>

         3.03 OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any shares of Common Stock subject to a Restricted Stock Award
or Restricted Stock Unit as it may deem advisable including, without limitation,
restrictions under applicable federal or state securities laws, and shall legend
any certificates representing such shares to give appropriate notice of such
restrictions.

         3.04 CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 3.03 or Article IV, any certificate
representing shares of Common Stock subject to a Restricted Stock Award or
Restricted Stock Unit or Performance Award shall bear the following legend:

         The sale or other transfer of the shares of stock represented by this
         certificate, whether voluntary, involuntary or by operation of law, is
         subject to certain restrictions on transfer set forth in the Credit
         Acceptance Corporation Incentive Compensation Plan (the "Plan"), rules
         and administrative guidelines adopted pursuant to such Plan and an
         Agreement dated ______ __, _____. A copy of the Plan, such rules and
         such Agreement may be obtained from the Secretary of the Company.

         3.05 REMOVAL OF RESTRICTIONS. Except as otherwise provided under the
Plan, if the Restricted Period has elapsed or been waived by the Committee with
respect to all or a portion of the Restricted Stock represented by a
certificate, the holder thereof shall be entitled to have the legend required by
Section 3.04 removed from such stock certificate with respect to the shares as
to which the Restricted Period has elapsed. Any certificate evidencing the
remaining shares shall bear the legend required by Section 3.04 and Article IV.
The Committee shall have the discretion to waive the applicable Restricted
Period with respect to all or any part of the Common Stock subject to a
Restricted Stock Award, or Restricted Stock Unit or Performance Share Award that
has not been granted pursuant to Code Section 162(m). The Company shall have the
right to retain any certificate representing shares of Common Stock subject to a
Restricted Stock Award, Restricted Stock Unit or Performance Award until such
time as all conditions and/or restrictions applicable to such shares of Common
Stock have been satisfied.

         3.06 VOTING AND DIVIDEND RIGHTS. During the Restricted Period,
Participants shall be considered record owners of any shares of Common Stock
subject to any Restricted Stock Award or Restricted Stock Unit held by them for
purposes of determining who is entitled to vote or receive dividends with
respect to such shares. If any dividends or distributions are paid in shares of
Common Stock during the Restricted Period, the dividend or other distribution
shares shall be subject to the same restrictions on transferability as the
shares of Common Stock with respect to which they were paid.

         3.07 RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS GRANTED UNDER
CODE SECTION 162(M). The Committee, at its discretion, may designate certain
Restricted Stock Awards and Restricted Stock Units as granted pursuant to Code
Section 162(m) ("Code Section 162(m) Restricted Stock Award and Restricted Stock
Units"). Such Restricted Stock Awards and Restricted Stock Units must comply
with the following additional requirements, which override any other provision
set forth in this Article III:



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<PAGE>

                  (a) CODE SECTION 162(M) GRANTS. Each Code Section 162(m)
         Restricted Stock Award and Restricted Stock Unit shall be based upon
         pre-established, objective performance goals that are intended to
         satisfy the performance-based compensation requirements of Code Section
         162(m) and the regulations promulgated thereunder. Further, at the
         discretion of the Committee, a Restricted Stock Award or Restricted
         Stock Unit also may be subject to goals and restrictions in addition to
         the performance requirements.

                  (b) PERFORMANCE GOALS. Each Code Section 162(m) Restricted
         Stock Award or Restricted Stock Unit shall be based upon the attainment
         of specified levels of Company or Affiliate performance (or combination
         thereof) during a specified performance period, as measured by any or
         all of the following: (i) economic profit; (ii) earnings per share;
         (iii) operating income; (iv) net income; (v) revenue; (vi) book value
         per share, (vii) return on capital; (viii) total loan originations;
         (ix) origination quality measures such as charge-off rates, collection
         rates, dollars collected or similar measures; (x) loan performance
         measures such as charge-off rates, collection rates, dollars collected;
         (xi) annual profitability; and (xii) market capitalization.

                  (c) COMMITTEE DETERMINATIONS. For each designated performance
         period, the Committee shall (i) select those Employees who shall be
         eligible to receive a Restricted Stock Award or Restricted Stock Unit;
         (ii) determine the performance period, which may be a one, two, three,
         four or five fiscal year period; (iii) determine the target levels of
         Company or Affiliate performance; and (iv) determine the number of
         shares or compensation subject to a Restricted Stock Award or
         Restricted Stock Unit to be paid to each selected Employee. The
         Committee shall make the foregoing determinations prior to the
         commencement of services to which a Restricted Stock Award or
         Restricted Stock Unit relates (or within the permissible time period
         established under Code Section 162(m)) and while the outcome of the
         performance goals and targets is uncertain.

                  (d) COMMITTEE CERTIFICATION. For each performance period, the
         Committee shall certify, in writing: (i) if the Company or its
         Affiliate(s) (as applicable) has attained the performance targets; and
         (ii) the cash or number of shares (or combination thereof) pursuant to
         the Restricted Stock Award or Restricted Stock Unit that shall be paid
         to each selected Employee or that become freely transferable upon
         attainment of the performance targets and/or other restrictions. The
         Committee may not waive all or part of the conditions, goals and
         restrictions applicable to the receipt of full or partial payment of a
         Restricted Stock Award or Restricted Stock Unit. No part of a Code
         Section 162(m) Restricted Stock Award or Restricted Stock Unit shall be
         paid or become transferable until the Committee certifies in writing
         that the performance goals and restrictions have been satisfied.

                  (e) DIVIDENDS. Any dividends paid on Restricted Stock during
         the Restricted Period automatically shall be reinvested on behalf of
         the Employee in additional shares of Restricted Stock under the Plan,
         and such additional shares



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<PAGE>

         shall be subject to the same performance goals and restrictions as the
         other shares under the Restricted Stock Award.

                  (f) FORMULA. Grants of Restricted Stock and Restricted Stock
         Units that are intended to satisfy Code Section 162(m) shall be subject
         to a formula to be approved by the Compensation Committee and
         shareholders in accordance with Treasury regulations under Code Section
         162(m).



                  (g) NONALIENATION. Except as provided in this Article III of
         the Plan, the shares pursuant to a Code Section 162(m) Restricted Stock
         Award or Restricted Stock Unit granted hereunder may not be
         transferred, pledged, assigned, or otherwise alienated or hypothecated
         until the applicable performance targets and other restrictions are
         satisfied, as shall be certified in writing by the Committee. All
         rights with respect to a Restricted Stock Award or Restricted Stock
         Unit granted hereunder shall apply only to such Employee or the
         Employee's legal representative.

                  (h) REMOVAL OF LEGEND. Except as otherwise provided in this
         Article III of the Plan, and subject to applicable federal and state
         securities laws, shares covered by each Code Section 162(m) Restricted
         Stock Award or Restricted Stock Unit granted under the Plan shall
         become freely transferable by the Employee after the Committee has
         certified that the applicable performance targets and restrictions have
         been satisfied. Once the shares are released from the restrictions, the
         Employee shall be entitled to have the legend required by Section 3.04
         of the Plan removed from the applicable Common Stock certificate.

                             IV. PERFORMANCE AWARDS

         4.01 PERFORMANCE AWARDS. The Committee is authorized to grant
Performance Awards to eligible Participants. Subject to the terms of the Plan, a
Performance Award granted under the Plan (a) may be denominated or payable in
cash or shares of Common Stock (including, without limitation, Restricted
Stock), and (b) shall confer on the holder thereof rights valued as determined
by the Committee and payable to, or exercisable by, the holder of the
Performance Award, in whole or in part, upon the achievement of such performance
goals during such performance period, as the Committee shall establish. Subject
to the terms of the Plan, the performance goals to be achieved during any
performance period, the length of any performance period, the amount of any
Performance Award granted, the amount of any payment or transfer to be made
pursuant to any Performance Award, and the other terms and conditions of any
Performance Award, including the effect upon such Award of termination of the
Participant's employment and/or directorship, shall be determined by the
Committee.

         4.02 PERFORMANCE AWARDS GRANTED UNDER CODE SECTION 162(M). The
Committee, at its discretion, may designate certain Performance Awards as
granted pursuant to Code Section 162(m) ("Code Section 162(m) Performance
Awards"). Such



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Performance Awards must comply with the following additional requirements, which
override any other provision set forth in this Article IV:

                  (a) CODE SECTION 162(M) GRANTS. Each Code Section 162(m)
         Performance Award shall be based upon pre-established, objective
         performance goals that are intended to satisfy the performance-based
         compensation requirements of Code Section 162(m) and the regulations
         promulgated thereunder. Further, at the discretion of the Committee, a
         Performance Award also may be subject to goals and restrictions in
         addition to the performance requirements.

                  (b) PERFORMANCE GOALS. Each Code Section 162(m) Performance
         Award shall be based upon the attainment of specified levels of Company
         or Affiliate performance (or combination thereof) during a specified
         performance period, as measured by any or all of the following: (i)
         economic profit; (ii) earnings per share; (iii) operating income; (iv)
         net income; (v) revenue; (vi) book value per share, (vii) return on
         capital; (viii) total loan originations; (ix) 3-month gross charge-off
         rate; (x) 36-month gross charge-off rate; (xi) annual profitability;
         and (xii) market capitalization.

                  (c) COMMITTEE DETERMINATIONS. For each designated performance
         period, the Committee shall (i) select those Employees who shall be
         eligible to receive a Code Section 162(m) Performance Award; (ii)
         determine the performance period, which may be a one, two, three, four
         or five fiscal year period; (iii) determine the target levels of
         Company or Affiliate performance; and (iv) determine the Performance
         Award to be paid to each selected Employee. The Committee shall make
         the foregoing determinations prior to the commencement of services to
         which a Performance Award relates (or within the permissible time
         period established under Code Section 162(m)) and while the outcome of
         the performance goals and targets is uncertain. No part of a
         Performance Award shall be paid or become transferable until the
         Committee certifies in writing that the performance goals and
         restrictions have been satisfied.

                  (d) COMMITTEE CERTIFICATION. For each performance period, the
         Committee shall certify, in writing: (i) if the Company or its
         Affiliate(s) (as applicable) has attained the performance targets; and
         (ii) the cash or number of shares (or combination thereof) pursuant to
         the Performance Award that shall be paid to each selected Employee (or
         the number of shares that are to become freely transferable, if a
         Performance Award is granted subject to attainment of the designated
         performance goals). The Committee may not waive all or part of the
         conditions, goals and restrictions applicable to the receipt of full or
         partial payment of a Performance Award.

                  (e) FIRST FORM - VOTING AND DIVIDEND RIGHTS. Code Section
         162(m) Performance Awards may be granted in two different forms, at the
         discretion of the Committee. Under the first form, the Employee shall
         receive a Performance Award that consists of a certificate of Common
         Stock legended in accordance



                                       11
<PAGE>

         with Section 3.04, restricted from transfer prior to the satisfaction
         of the designated performance goals and restrictions, as determined by
         the Committee and specified in the Employee's Agreement. Prior to
         satisfaction of the performance goals and restrictions, the Employee
         shall be entitled to vote the performance shares. Further, any
         dividends paid on such shares during the performance and/or Restricted
         Period automatically shall be reinvested on behalf of the Employee in
         additional performance shares under the Plan, and such additional
         shares shall be subject to the same performance goals and restrictions
         as the other shares under the Performance Award.

                  (f) SECOND FORM. Under the second form, the Employee shall
         receive an Agreement from the Committee that specifies the performance
         goals and restrictions that must be satisfied before the Company shall
         issue the payment, which may be cash, a designated number of shares of
         Common Stock, or a combination thereof. Any certificate for shares
         under such form of Performance Award shall be issued only after the
         Committee certifies in writing that the performance goals and
         restrictions have been satisfied.

                  (g) FORMULA. Performance Awards that are intended to satisfy
         Code Section 162(m) shall be subject to a formula to be approved by the
         Compensation Committee and shareholders in accordance with Treasury
         regulations under Code Section 162(m).

                  (h) NON-ALIENATION. Except as provided in this Article IV of
         the Plan, the shares pursuant to a Code Section 162(m) Performance
         Award granted hereunder may not be transferred, pledged, assigned, or
         otherwise alienated or hypothecated until the applicable performance
         targets and other restrictions are satisfied, as shall be certified in
         writing by the Committee. All rights with respect to a Code Section
         162(m) Performance Award granted hereunder shall apply only to such
         Employee or the Employee's legal representative.

                  (i) REMOVAL OF LEGEND. Except as otherwise provided in this
         Article IV of the Plan, and subject to applicable federal and state
         securities laws, shares covered by each Code Section 162(m) Performance
         Share Award made under the Plan shall become freely transferable by the
         Employee after the Committee has certified that the applicable
         performance targets and restrictions have been satisfied. Once the
         shares are released from the restrictions, the Employee shall be
         entitled to have the legend required by Section 3.04 removed from the
         applicable Common Stock certificate.

                    V. TERMINATION OF EMPLOYMENT AND SERVICES

         5.01. OPTIONS.

                  (a) Unless otherwise provided in the applicable Agreement, if,
prior to the date that an Option first becomes exercisable, a Participant's
status as an Employee or Non-Employee Director is terminated for any reason, the
Participant's right to exercise



                                       12
<PAGE>

the Option shall terminate and all rights thereunder shall cease as of the close
of business on the date of such termination.

                  (b) For any Nonqualified Stock Option unless otherwise
provided in the applicable Agreement and for any Incentive Stock Option, if, on
or after the date that the Option first becomes exercisable, a Participant's
status as an Employee or Non-Employee Director is terminated (1) for Cause, any
unexercised portion of the Option (whether then exercisable or not) shall, as of
the time of the Cause determination, immediately terminate, (2) due to death or
Disability, then the Option, to the extent that it is exercisable on the date of
termination, shall be exercisable only until the earlier of the one year
anniversary of such termination or the "expiration date" set forth in the
applicable Agreement, (3) for any other reason (except as provided in the next
sentence), then the Option, to the extent that it is exercisable on the date of
termination, shall be exercisable only until the earlier of the three month
anniversary of such termination or the "expiration date" set forth in the
applicable Agreement. For any Nonqualified Stock Option, unless otherwise
provided in the applicable Agreement, if, on or after the date that the Option
first becomes exercisable, a Participant's status as an Employee or Non-Employee
Director is terminated due to Retirement, or is terminated involuntarily (other
than for Cause or due to death or Disability) within 6 months following a Change
in Control, then the Option, to the extent that it is exercisable on the date of
termination, shall be exercisable until the "expiration date" set forth in the
applicable Agreement. The Committee, at its discretion, may designate in the
applicable Agreement a different post-termination period for exercise of a
Nonqualified Stock Option and may extend the exercise period of any Option, but
in no event may the post-termination exercise period exceed the tenth
anniversary of the Grant Date; it being understood that the extension of the
exercise term for an Incentive Stock Option may cause such Option to become a
Nonqualified Stock Option.

                  (c) Shares subject to Options that are not exercised within
the time allotted for exercise shall expire and be forfeited by the Participant
as of the close of business on the date they are no longer exercisable.

         5.02 RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS. Unless
otherwise provided in the applicable Agreement, if the status as an Employee or
Non-Employee Director of a Participant holding a Restricted Stock Award or
Restricted Stock Unit terminates for any reason prior to the lapse of the
Restricted Period, any shares of Common Stock subject to a Restricted Stock
Award or Restricted Stock Unit as to which the Restricted Period has not yet
lapsed or been waived shall be forfeited by the Participant; provided, however,
that the Committee, in its sole discretion, may waive or change the remaining
restrictions or add additional restrictions with respect to any Restricted Stock
Award or Restricted Stock Unit that would otherwise be forfeited, as it deems
appropriate.

         5.03 PERFORMANCE AWARDS. Unless otherwise provided in the applicable
Agreement, if the status as an Employee or Non-Employee Director of a
Participant holding a Performance Award terminates for any reason prior to
satisfaction of the performance requirements of such Award, such Award
automatically shall be forfeited by


                                       13
<PAGE>

the Participant to the extent such requirements are not satisfied; provided,
however, that the Committee, in its sole discretion, may waive or change the
remaining requirements or add additional requirements with respect to any
Performance Award or portion thereof that would otherwise be forfeited, as it
deems appropriate.

         5.04 OTHER PROVISIONS. Neither the transfer of a Participant from one
corporation or division to another corporation or division among the Company and
any of its Affiliates nor a leave of absence under the Company's leave policy
shall be deemed to constitute a termination of status as a Participant for
purposes of the Plan.

                      VI. ADJUSTMENTS AND CHANGE IN CONTROL

         6.01 ADJUSTMENTS.

                  (a) If the Committee shall determine that any dividend or
other distribution (whether in the form of cash, Common Stock, other securities,
or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other corporate transaction or event affects the
Common Stock such that an adjustment is appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (1) the number and type of shares of Common
Stock which thereafter may be made the subject of Options, Restricted Stock
Awards, Restricted Stock Units and Performance Awards, (2) the number and type
of shares of Common Stock subject to outstanding Options, Restricted Stock
Awards, Restricted Stock Units and Performance Awards, and (3) the exercise
price with respect to any Option, or, if deemed appropriate, cancel outstanding
Options and make provision for a cash payment to the holders thereof; provided,
however, in each case, that with respect to Incentive Stock Options any such
adjustment shall be made in accordance with Section 422 of the Code or any
successor provision thereto to the extent that such Option is intended to remain
an Incentive Stock Option.

                  (b) The foregoing adjustments shall be made by the Committee
or, if such adjustment is required by the Board, then by the Board at the
recommendation of the Committee. Any such adjustment shall provide for the
elimination of any fractional share that might otherwise become subject to an
Option, Restricted Stock Award, Restricted Stock Unit or Performance Award.

         6.02 CHANGE IN CONTROL. Upon the occurrence of a Change in Control, or
if the Committee determines in its sole discretion that a Change in Control has
occurred, then Options, Restricted Stock Awards, Restricted Stock Units and
Performance Awards shall be treated as the Committee may determine (including
acceleration of vesting and cash settlements of Options) at the time of grant or
at a subsequent date, as provided in the recipient's Agreement. If no such
provision is made in the recipient's Agreement and no subsequent determination
is made by the Committee, then (a) any Option granted



                                       14
<PAGE>

hereunder immediately shall become exercisable in full, regardless of any
installment provision applicable to such Option; (b) any remaining Restricted
Period on any shares of Common Stock subject to a Restricted Stock Award or
Restricted Stock Unit granted hereunder immediately shall lapse; and (c) the
performance requirements for a Performance Award granted hereunder shall be
deemed to have been satisfied in full.

         6.03 MERGER. If the Company is a party to any merger, consolidation,
reorganization, or sale of substantially all of its assets, each holder of
outstanding Option, Restricted Stock Award, Restricted Stock Unit or Performance
Award, to the extent that such Option, Award or Unit remains outstanding
thereafter, shall be entitled to receive, in lieu of the shares of Common Stock
to which such holder would otherwise be entitled, upon the exercise of such
Option or the lapse of the Restricted Period on shares of Common Stock subject
to a Restricted Stock Award or Restricted Stock Unit or the satisfaction of the
performance requirements for a Performance Award, the securities and/or property
which a shareholder owning the number of shares subject to the holder's Option,
Restricted Stock Award, Restricted Stock Unit or Performance Award would be
entitled to receive pursuant to such merger, consolidation, reorganization or
sale of assets.

                               VII. MISCELLANEOUS

         7.01 PARTIAL EXERCISE/FRACTIONAL SHARES. The Committee may permit, and
shall establish procedures for, the partial exercise of Options granted under
the Plan. No fractional shares shall be issued in connection with the exercise
or payment of a grant or award under the Plan; instead, the Fair Market Value of
the fractional shares shall be paid in cash, or at the discretion of the
Committee, the number of shares shall be rounded down to the nearest whole
number of shares, and any fractional shares shall be disregarded.

         7.02 RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of
the Plan, the Committee may impose such conditions on a Restricted Stock Award,
Restricted Stock Unit, Performance Award or the exercise of an Option
(including, without limitation, the right of the Committee to limit the time of
exercise to specified periods) as may be required to satisfy the requirements of
Rule 16b-3 of the Exchange Act (as such rule may be in effect at such time).

         7.03 RIGHTS PRIOR TO ISSUANCE OF SHARES. No Participant shall have any
rights as a shareholder with respect to shares covered by an Option, Restricted
Stock Award, Restricted Stock Unit or Performance Award until the issuance of
such shares as reflected on the books and records of the Company or its transfer
agent. No adjustment shall be made for dividends or other rights with respect to
such shares for which the record date is prior to the date the shares are
issued.

         7.04 NON-ASSIGNABILITY. No Option, Restricted Stock Award, Restricted
Stock Unit or Performance Award shall be transferable by a Participant except by
will or the laws of descent and distribution. During the lifetime of a
Participant, an Incentive Stock Option shall be exercised only by the
Participant. No transfer of an Option, Restricted




                                       15
<PAGE>

Stock Award, Restricted Stock Unit or Performance Award shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of the will or such evidence as the Company may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee of the terms and conditions of the Option, Restricted Stock Grant
Award, Restricted Stock Unit or Performance Award.

         7.05 SECURITIES LAWS.

                  (a) Anything to the contrary herein notwithstanding, the
Company's obligation to sell and deliver Common Stock pursuant to the exercise
of an Option, or deliver Common Stock pursuant to a Restricted Stock Award,
Restricted Stock Unit or Performance Award is subject to such compliance with
federal and state laws, rules and regulations applying to the authorization,
issuance or sale of securities as the Company deems necessary or advisable. The
Company shall not be required to sell or deliver Common Stock unless and until
it receives satisfactory assurance that the issuance or transfer of such shares
shall not violate any of the provisions of the Securities Act of 1933, the
Exchange Act, any other applicable federal laws, or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder or those of any
stock exchange or stock market on which the Common Stock may be listed or
traded, the provisions of any state laws governing the sale of securities, or
that there has been compliance with the provisions of such acts, rules,
regulations and laws.

                  (b) The Committee may impose such restrictions on any shares
of Common Stock subject to or underlying an Option, Restricted Stock Award,
Restricted Stock Unit or Performance Award as it may deem advisable, including,
without limitation, restrictions (i) under applicable federal securities laws,
(ii) under the requirements of any stock exchange or other recognized trading
market upon which such shares of Common Stock are then listed or traded, or
(iii) under any blue sky or state securities laws applicable to such shares. No
shares shall be issued until counsel for the Company has determined that the
Company has complied with all requirements under appropriate securities laws.

         7.06 WITHHOLDING AND TAXES. The Company shall have the right to
withhold from a Participant's compensation or require a Participant to remit
sufficient funds to satisfy applicable withholding for income and employment
taxes upon the exercise of an Option, the lapse of a Restricted Period or the
satisfaction of the performance requirements relating to a Performance Award. A
Participant may use the Cashless Exercise Procedure or may tender previously
acquired shares of Common Stock that have been held at least six months to
satisfy the withholding obligation in whole or in part, such shares being valued
for such purpose at Fair Market Value; provided that the Company shall not
withhold from exercise more shares than are necessary to satisfy the established
requirements of federal, state and local tax withholding obligations.

         7.07 TERMINATION AND AMENDMENT.

                  (a) The Board may terminate the Plan, or the granting of
Options, Restricted Stock Awards, Restricted Stock Units or Performance Awards
under the Plan,



                                       16
<PAGE>

at any time. No new grants or awards of Incentive Stock Options shall be made
under the Plan after the tenth anniversary of the Effective Date.

                  (b) The Board may amend or modify the Plan at any time and
from time to time.

                  (c) No amendment, modification or termination of the Plan
shall adversely affect any Option, Restricted Stock Award, Restricted Stock Unit
or Performance Award previously granted under the Plan in any material way
without the consent of the Participant holding the Option, Restricted Stock
Award, Restricted Stock Unit or Performance Award.

         7.08 EFFECT ON EMPLOYMENT OR SERVICES. Neither the adoption of the Plan
nor the granting of any Option, Restricted Stock Award, Restricted Stock Unit or
Performance Award pursuant to the Plan shall be deemed to create any right in
any individual to be retained or continued in the employment or services of the
Company or an Affiliate.

         7.09 USE OF PROCEEDS. The proceeds received from the sale of Common
Stock pursuant to the Plan shall be used for general corporate purposes of the
Company.

         7.10 SHAREHOLDER APPROVAL OF PLAN. The Plan shall be subject to the
approval of the holders of at least a majority of the votes cast on the matter
at a meeting of shareholders of the Company held within 12 months after adoption
of the Plan by the Board. No Option, Restricted Stock Award, Restricted Stock
Unit or Performance Award granted under the Plan may be exercised or paid out in
whole or in part unless the Plan has been approved by the shareholders as
provided herein. If not approved by shareholders within 12 months after approval
by the Board, the Plan and any Options, Restricted Stock Awards, Restricted
Stock Units or Performance Awards granted under the Plan shall be rescinded.

         7.11 GOVERNING LAW. The Plan and all actions taken under the Plan shall
be governed and construed in accordance with Michigan law.



                                       17
<PAGE>



         THIS PLAN is hereby executed as of April 16, 2004 in accordance with
the Board resolutions adopted on such date.

                                          CREDIT ACCEPTANCE CORPORATION


                                               By: /s/ Charles A. Pearce
                                               ---------------------------------
                                               Charles A. Pearce
                                               Corporate Secretary






                                       18

</TEXT>
</DOCUMENT>
