Unassociated Document


    Exhibit 4.2

     

     

     

     

    INVESTORS
MORTGAGE HOLDINGS, INC.

    MANAGEMENT
INCENTIVE PLAN

     

     

     

    
 

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              ARTICLE I

            	
              PREAMBLE

            	 
      
	
              ARTICLE
      II

            	
              DEFINITIONS
      AND RULES OF CONSTRUCTION

            	 
      
	
              2.1

            	
              DEFINITIONS

            	
              1

            
	
              2.2

            	
              CONSTRUCTION

            	
              1

            
	
              ARTICLE
      III

            	
              ELIGIBILITY

            	 
      
	
              3.1

            	
              TOP
      HAT GROUP

            	
              2

            
	
              3.2

            	
              CLAWBACK
      PROVISION

            	
              2

            
	
              ARTICLE
      IV

            	
              GRANTS
      AND ALLOCATIONS

            	 
      
	
              4.1

            	
              GRANT
      AND ALLOCATION OF SARS

            	
              3

            
	
              4.2

            	
              SEPARATE
      ACCOUNTS

            	
              3

            
	
              4.3

            	
              INTEREST

            	
              4

            
	
              4.4

            	
              STATUS
      OF ACCOUNTS

            	
              4

            
	
              ARTICLE
      V

            	
              VALUATION

            	 
      
	
              5.1

            	
              SAR
      VALUE

            	
              5

            
	
              5.2

            	
              SHARE
      VALUE

            	
              5

            
	
              ARTICLE
      VI

            	
              VESTING

            	 
      
	
              6.1

            	
              VESTING

            	
              6

            
	
              6.2

            	
              FORFEITURES

            	
              7

            
	
              ARTICLE
      VII

            	
              PAYMENT
      OF BENEFITS

            	 
      
	
              7.1

            	
              REDEMPTIONS

            	
              7

            
	
              7.2

            	
              PAYMENTS
      ON SEPARATION FROM SERVICE, DEATH AND DISABILITY

            	
              7

            
	
              7.3

            	
              CHANGE
      OF CONTROL

            	
              8

            
	
              7.4

            	
              ACCELERATION
      PROHIBITED

            	
              9

            
	
              7.5

            	
              BENEFICIARY
      DESIGNATIONS

            	
              9

            
	
              7.6

            	
              SUSPENSION
      AND CANCELLATION OF PAYMENTS

            	
              10

            
	
              7.7

            	
              WITHHOLDING

            	
              10

            
	
              7.8

            	
              DISTRIBUTIONS
      TREATED AS MADE UPON A DESIGNATED EVENT

            	
              10

            
	
              7.9

            	
              EXCISE
      TAXES

            	
              10

            
	
              ARTICLE
      VIII

            	
              ADJUSTMENT
      OF SARS

            	 
      
	
              8.1

            	
              GENERAL

            	
              11

            
	
              ARTICLE
      IX

            	
              ADMINISTRATION
      OF THE PLAN

            	 
      


    


    
      
         


      

      
        i

        
          

        

      

      
         


      

    


    


    
      	
              9.1

            	
              POWERS
      OF THE PLAN ADMINISTRATOR

            	
              11

            
	
              9.2

            	
              CREATION
      OF COMMITTEE

            	
              11

            
	
              9.3

            	
              LIMITATION
      ON POWERS

            	
              12

            
	
              9.4

            	
              CHAIRMAN
      AND SECRETARY

            	
              12

            
	
              9.5

            	
              APPOINTMENT
      OF AGENTS

            	
              12

            
	
              9.6

            	
              MAJORITY
      VOTE AND EXECUTION OF INSTRUMENTS

            	
              12

            
	
              9.7

            	
              ALLOCATION
      OF RESPONSIBILITIES

            	
              12

            
	
              9.8

            	
              CONFLICT
      OF INTEREST

            	
              12

            
	
              9.9

            	
              ACTION
      TAKEN BY COMPANY

            	
              13

            
	
              9.10

            	
              DELEGATIONS
      OF AUTHORITY

            	
              13

            
	
              ARTICLE
      X

            	
              CLAIMS
      REVIEW PROCEDURE

            	 
      
	
              10.1

            	
              CLAIMS

            	
              13

            
	
              ARTICLE
      XI

            	
              LIMITATION
      ON ASSIGNMENT; PAYMENTS TO LEGALLY INCOMPETENT DISTRIBUTEE;
      CORRECTIONS

            	 
      
	
              11.1

            	
              ANTI-ALIENATION
      CLAUSE

            	
              15

            
	
              11.2

            	
              PERMITTED
      ARRANGEMENTS

            	
              16

            
	
              11.3

            	
              PAYMENT
      TO MINOR OR INCOMPETENT

            	
              16

            
	
              11.4

            	
              UNDERPAYMENT
      OR OVERPAYMENT OF BENEFITS

            	
              16

            
	
              ARTICLE
      XII

            	
              AMENDMENT
      MERGER AND TERMINATION

            	 
      
	
              12.1

            	
              AMENDMENT

            	
              16

            
	
              12.2

            	
              MERGER
      OR CONSOLIDATION OF COMPANY

            	
              17

            
	
              12.3

            	
              TERMINATION
      OF PLAN

            	
              17

            
	
              ARTICLE
      XIII

            	
              GENERAL
      PROVISIONS

            	 
      
	
              13.1

            	
              LIMITATION
      ON PARTICIPANTS’ RIGHTS

            	
              17

            
	
              13.2

            	
              STATUS
      OF PARTICIPANTS AS UNSECURED CREDITORS; SUBORDINATION

            	
              17

            
	
              13.3

            	
              UNIFORM
      ADMINISTRATION

            	
              18

            
	
              13.4

            	
              HEIRS
      AND SUCCESSORS

            	
              18

            
	
              13.5

            	
              COMPLIANCE
      WITH SECTION 409A

            	
              18

            


    

    



    
      
         


      

      
        ii

        
          

        

      

      
         


      

    


    


    INVESTORS
MORTGAGE HOLDINGS, INC.

    MANAGEMENT
INCENTIVE PLAN

     

    ARTICLE
I

    PREAMBLE

     

    By the
adoption of this document, Investors Mortgage Holdings, Inc. (the “Company”)
formally memorializes its adoption of the Investors Mortgage Holdings, Inc.
Management Incentive Plan (the “Plan”), which was approved by its Board of
Directors on June 29, 2007.  The purpose of the Plan is to promote the
success and enhance the value of the Company by providing equity-based
incentives to certain key employees by linking the personal interests of those
key employees to those of the Company’s stockholders through awards of Stock
Appreciation Rights (“SARs”).

     

    The Plan
is effective as of July 1, 2007 (the “Effective Date”) and only applies to
an individual who terminates employment on or after the Effective
Date.

     

    ARTICLE
II

    DEFINITIONS AND RULES OF
CONSTRUCTION

     

    2.1           DEFINITIONS.

     

    A number
of key terms, with specialized meanings, are used throughout the
Plan.  These key terms are identified by the capitalization of the
initial letter of each word or the initial letter of each substantive word
included in a phrase even when the word does not begin a
sentence.  These key terms are defined in various Sections of the Plan
or in the attached Glossary, which is incorporated into and is a part of the
Plan.  All of these key terms are at least listed in the
Glossary.  Whenever these key terms are used, they will be given the
defined meaning unless a clearly different meaning is required by the
context.

     

    2.2           CONSTRUCTION.

     

    The
masculine gender, where appearing in the Plan, shall include the feminine gender
(and vice versa), and the singular shall include the plural, unless the context
clearly indicates to the contrary.  Headings and subheadings are for
the purpose of reference only and are not to be considered in the construction
of this Plan.  If any provision of this Plan is determined to be for
any reason invalid or unenforceable, the remaining provisions shall continue in
full force and effect.  All of the provisions of this Plan shall be
construed in accordance with the laws of the state of Arizona and shall be
administered in accordance with the laws of such state except as otherwise
required by the Employee Retirement Income Security Act of 1974 (“ERISA”), the
Internal Revenue Code of 1986 (the “Code”) or other federal law.  Any
reference to any law shall be deemed to be a reference to that law as
amended.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ARTICLE
III

    ELIGIBILITY

     

    3.1           TOP HAT
GROUP.

     

    For
purposes of Title I of ERISA, the Plan is intended to be an unfunded plan
of deferred compensation covering a select group of management or highly
compensated employees, which is referred to as the “Top Hat Group.”

     

    3.2           CLAWBACK
PROVISION.

     

    (a)          TERMS.  By signing the
Participation Agreement, each Participant will agree that the Participant shall
not engage in any Prohibited Activity.  If a Participant engages in
any Prohibited Activity during the “Clawback Period,” any vested or unvested
SARs will be forfeited.  In addition, the Participant will forfeit any
right to receive any payments for the Participant’s SARs in the future and the
Participant will be required to repay to the Company any amounts paid to the
Participant for the Participant’s SARs within the Clawback
Period.  For purposes of this Plan, the Clawback Period includes the
period during which the Participant is employed by the Company and the 12-month
period beginning on the day on which the Participant’s employment with the
Company terminates.

     

    (b)          PROHIBITED
ACTIVITY DEFINED.  The term “Prohibited Activity” shall mean
and include each of the following:

     

    (1)           The
violation of any provision included in any agreement the Participant has entered
into with the Company, or may in the future enter into with the Company,
pursuant to which the Participant has agreed to refrain from soliciting or
attempting to solicit away from the Company any investors in or borrowers from
any fund sponsored or otherwise organized or serviced by the
Company.

     

    (2)           The
violation of any provision included in any agreement the Participant has entered
into with the Company, or may in the future enter into with the Company,
pursuant to which the Participant has agreed to refrain from soliciting or
attempting to solicit away from the Company any customer of the Company or any
officer, employee or agent of the Company.

     

    (3)           The
violation of any confidentiality, proprietary information, or non-disclosure
provisions included in any agreement the Participant has entered into with the
Company, or may in the future enter into with the Company.

     

    (4)           The
violation of any agreement the Participant has entered into with the Company, or
may in the future enter into with the Company, pursuant to which the Participant
has agreed not to compete in any way with the Company.

     

    (5)           The
violation of any provision included in any agreement the Participant has entered
into with the Company, or may in the future enter into with the Company,
pursuant to which the Participant has agreed to assign to the Company all rights
to any copyrightable or patentable work the Participant invents, improves or
otherwise works on using the Company’s resources during the Participant’s
employment with the Company.

     


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    ARTICLE
IV

    GRANTS AND
ALLOCATIONS

     

    4.1           GRANT AND
ALLOCATION OF SARS.

     

    (a)          GRANT OF
SARS.  No more than
1,000,000 SARs will be available for grant under the Plan.  Subject to
the limitation on the total number of SARs that may be granted pursuant to the
Plan, the number of SARs awarded to any Participant shall be determined by the
Plan Administrator, in its sole discretion.  If any SARs are forfeited
pursuant to Section 6.2 (Forfeitures) or
Section 3.2 (Clawback Provision),
the forfeited SARs will become available for future grants.

     

    (b)          ALLOCATION
OF SARS.  Prior to the
beginning of each Plan Year, or prior to the Effective Date in the first Plan
Year, the Plan Administrator shall select the individuals who will be entitled
to share in the allocation of SARs for that Plan Year.  In selecting
these individuals, the Plan Administrator shall assure that each selected
individual is properly included in the “Top Hat Group” referred to in
Section 3.1 (Top
Hat Group). The Plan Administrator’s selections shall be made in its
discretion and shall be final and binding for all purposes under this
Plan.  Once the individuals are selected, the SARs granted for that
Plan Year will be distributed among the individuals in a manner determined by
the Plan Administrator, in its sole discretion.  The Plan
Administrator, in its sole discretion, may make multiple grants of SARs to the
same Participant in multiple years.

     

    (c)          PARTICIPATION
AGREEMENT.  Each grant of
SARs will be evidenced by a Participation Agreement executed by the
Participant.  Oral grants of SARs shall not be permitted and any
purported oral grant shall be void.  The Participation Agreement shall
set forth the number of SARs awarded to the Participant and the terms of the
award, including the date of the grant (which typically will be either the
Effective Date or the January 1 of the year in which the grant is
made).  In the Participation Agreement, the Plan Administrator, in the
exercise of its discretion, may prescribe special terms that are to apply to
that particular grant, which terms may be inconsistent with the provisions of
this Plan.  The terms of the individual Participation Agreement shall
control to the extent the terms are inconsistent with the Plan
document.  The Participation Agreement and the Plan document shall
constitute the entire, final and complete agreement between the Participant and
the Company with respect to the terms of the award and the Participant’s
rights.

     

    4.2           SEPARATE
ACCOUNTS.

     

    (a)          CREDITING
OF SARS.  The Plan
Administrator shall maintain an Account for each Participant.  As of
the last day of each Plan Year, a Participant’s Account shall be credited with
the number of SARs granted to the Participant with respect to that Plan Year and
all prior Plan Years.

     

    (b)           CONVERSION
TO DOLLAR AMOUNT – SPECIFIED DATE REDEMPTION.  As of
each  Specified Redemption Date described in Section 7.1 (Specified Date
Redemptions), the vested SARs credited to the Participant’s Account that
are to be redeemed on that Specified Redemption Date will be valued in
accordance with Section 5.1 (SAR
Value).  For this purpose, the Share Value as of the
immediately preceding Valuation Date will be used.  The aggregate
dollar value then will be credited to the Participant’s Account and the
Participant’s redeemed SARs will be canceled.

     


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    (c)          CONVERSION
TO DOLLAR AMOUNT – SEPARATION FROM SERVICE, DEATH AND DISABILITY.  As of a
Participant’s Separation from Service, death or Disability, as the case may be,
the vested SARs credited to the Participant’s Account will be valued in
accordance with Section 5.1 (SAR
Value).  For this purpose, the Share Value as of the
immediately preceding Valuation Date will be used.  The aggregate
dollar value will then be credited to the Participant’s Account and the
Participant’s SARs will be canceled.  As provided in Section 6.2
(Forfeitures),
any unvested SARs will be forfeited.  In addition, in order to receive
an allocation of SARs for any Plan Year, the Participant must be employed by the
Company on the last day of the Plan Year for which the SARs are to be
allocated.  As a result, any SARs awarded for the Plan Year in which
the Separation from Service, death or Disability occurs also will be
forfeited.  In the future, the Participant’s Account will be charged
with any distributions made pursuant to Article VII (Payment of Benefits)
and it will be credited with interest in accordance with Section 4.3 (Interest).  Except
as otherwise specifically provided in this Plan document, the crediting of
interest and charges for distributions shall be made in accordance with such
procedures as may be adopted by the Plan Administrator.  Such
procedures shall be uniform and consistent as applied to all Participants who
have an Account at the time, but the procedures may be changed from time to time
by the Plan Administrator.

     

    (d)          CONVERSION
TO DOLLAR AMOUNT – CHANGE OF CONTROL.  As provided in
Section 7.3(b) (Change of Control – Credit
to Account), if a Change of Control occurs, the Participant’s SARs will
become fully vested and a dollar amount, calculated in accordance with
Section 7.3 (Change of Control),
will be credited to the Participant’s Account.

     

    (e)          SUBACCOUNTS.  The Plan
Administrator may create such other subaccounts as the Plan Administrator deems
to be appropriate.

     

    4.3           INTEREST.

     

    Any
dollar amounts credited to a Participant’s Account pursuant to
Section 4.2(c) (Separate Accounts –
Conversion to Dollar Amount – Separation from Service, Death and
Disability) will be credited with interest as of the last day of each
calendar year.  No interest will be credited on SARs or on amounts
credited to a Participant’s Account pursuant to Section 4.2(b) (Separate Accounts –
Conversion to Dollar Amount – Specified Date Redemption) or Section
4.2(d) (Separate
Accounts – Conversion To Dollar Amount – Change Of
Control).  The applicable interest rate shall be six percent,
compounded annually.

     

    4.4           STATUS OF
ACCOUNTS.

     

    The
Accounts are bookkeeping accounts only.  The Company is not under any
obligation to set aside any assets to fund its obligations under this
Plan.

     


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    ARTICLE
V

    VALUATION

     

    5.1           SAR
VALUE.

     

    As of any
Valuation Date, the value of a particular SAR shall equal the difference between
(a) the Share Value as of the Valuation Date and (b) the Base Value
for the SAR.  The Base Value for a SAR shall be set forth in the
Participation Agreement reflecting the grant of that SAR.  If the Base
Value is not specified in the Participation Agreement, the Base Value shall
equal the Share Value (determined on a post-split basis even if the date of the
valuation precedes the date on which the stock split is effective) as of the
December 31 prior to the effective date of the grant of the SAR.  The
Plan Administrator shall maintain records of the Base Value for each SAR
grant.  As a general rule, the Base Value for the initial grants of
SARs will be determined as of December 31, 2006; however, exceptions can be made
by the Plan Administrator, in its sole discretion, on a
Participant-by-Participant basis by specifying a different Base Value in the
Participant’s Participation Agreement.

     

    5.2           SHARE
VALUE.

     

    (a)          CALCULATION
OF SHARE VALUE.  The “Share Value”
shall be determined by the Board of Directors of the Company as of the last day
of each fiscal year.  In calculating the Share Value, the Board of
Directors shall use the following three-step formula:

     

    (1)           The
first step in the calculation of the Share Value is to calculate the Fair Market
Enterprise Value of the Company.  The Fair Market Enterprise Value of
the Company shall be an amount equal to four times the Company’s pre-tax
earnings for the trailing 12-month period, calculated in accordance with
Generally Accepted Accounting Principles (“GAAP”).

     

    (2)           The
second step is to divide the amount determined pursuant to the first step by the
number of issued and outstanding shares of Company stock (determined on a post
split basis even if the date of the valuation precedes the date on which the
stock split is effective) on the date as of which the Share Value is being
determined.

     

    (3)           The
third step is to reduce the amount determined pursuant to step one by 35% to
reflect a combined or aggregate marketability and minority interest
discount.  For example, if the amount determined pursuant to the
second step is $100.00, the Base Value will be $65.00 ($100.00 – ($100 x .35) =
$65.00).

     

    (b)          BOARD
DETERMINATION CONCLUSIVE.  As noted above,
the Share Value shall be determined by the Board of Directors in the exercise of
its discretion.  Any determinations made by the Board of Directors in
good faith shall be binding and conclusive on Participants and any individual or
entity claiming through a Participant.

     

    (c)          RIGHT TO
ALTER VALUATION PROVISIONS.  The Company
believes that the provisions of this Section provide for a fair valuation of the
Company.  Nevertheless, circumstances change and the Company reserves
the right to alter the valuation provisions of this Section if the Board of
Directors, in the exercise of its good faith judgment and based on the advice of
an independent valuation consultant (“Valuation Consultant”) selected by the
Board of Directors, determines that the provisions of this Section no longer
produce a fair value for the Company.  If the Board of Directors
determines that the provisions of this Section should be modified, it will so
notify the Participants and provide the Participants with a written explanation
of the proposed changes.  The Participants shall be given the
opportunity to comment on the changes.  After considering the
Participants’ comments, the Board of Directors will unilaterally amend the
provisions of this Section to implement modifications that in its judgment,
after taking into consideration the Participants’ comments and the comments of
the Valuation Consultant, are fair and equitable.

     


    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    ARTICLE
VI

    VESTING

     

    6.1           VESTING.

     

    (a)          INITIAL
GRANTS OF SARS.  Subject to
paragraphs (c) and (d), the SARs granted to any Participant in the initial Plan
Year will vest according to the following schedule:

     

    (1)           One-fifth
of the SARs became vested on December 31, 2007;

     

    (2)           One-fifth
of the SARs will vest on December 31, 2008;

     

    (3)           One-fifth
of the SARs will vest on December 31, 2009;

     

    (4)           One-fifth
of the SARs will vest on December 31, 2010; and

     

    (5)           The
final one-fifth of the SARs will vest on December 31, 2011.

     

    (b)          FUTURE
GRANTS OF SARS.  Each new grant of
SARs will start a new vesting period.  SARs granted to any Participant
in any subsequent Plan Year will vest according to the following
schedule:

     

    (1)           One-fifth
of the SARs will vest on the last day of the Plan Year for which the SARs are
granted;

     

    (2)           One-fifth
of the SARs will vest on the last day of the first Plan Year following the Plan
Year in which the SARs are granted;

     

    (3)           One-fifth
of the SARs will vest on the last day of the second Plan Year following the Plan
Year in which the SARs are granted;

     

    (4)           One-fifth
of the SARs will vest on the last day of the third Plan Year following the Plan
Year in which the SARs are granted; and

     

    (5)           The
final one-fifth of the SARs will vest on the last day of the fourth Plan Year
following the Plan Year in which the SARs are granted.

     

    (c)          FULL
VESTING.  A Participant
shall have a fully vested interest in the SARs  awarded to him or her
upon the first to occur of the following events:

     


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    (1)           The
Participant’s death while in the employment
of the Company; or

     

    (2)           The
Participant’s attainment of Normal Retirement Age while in employment of the
Company; or

     

    (3)           The
closing of a transaction that results in a Change of Control pursuant to Section
7.3 (Change of
Control).

     

    (d)          SPECIAL
VESTING PROVISIONS.  The generally
applicable vesting provisions set forth above may be modified in the
Participation Agreement applicable to a particular award of SARs.

     

    6.2           FORFEITURES.

     

    A
Participant will forfeit all unvested SARs upon the Participant’s Separation
from Service.  A Participant also will forfeit all SARs, whether
vested or unvested, and any future payments due pursuant to the remaining
provisions of the Plan with respect to SARs, if (a) the Participant is
terminated for Cause or (b) the Participant violates the terms of
Section 3.2 (Clawback
Provision).

     

    ARTICLE
VII

    PAYMENT OF
BENEFITS

     

    7.1           REDEMPTIONS.

     

    (a)          SPECIFIED
DATE REDEMPTIONS.  The Company will
redeem a Participant’s vested SARs in five installments beginning on the fifth
anniversary of the date of grant for such SARs. One-fifth of the SARs will be
redeemed by the Company on the fifth anniversary of the date of grant and an
additional one-fifth of the SARs will be redeemed on each of the sixth, seventh,
eighth and ninth anniversaries of the date of grant of such
SARs.  Each of the dates on which the Company redeems a Participant’s
SARs pursuant to this Section shall be referred to in this Plan as a “Specified
Redemption Date.”  A different set of Specified Redemption Dates will
apply to each separate grant of SARs.  As of each Specified Redemption
Date, the redeemed SARs will be cancelled and the value of the redeemed SARs
will be allocated to the Participant’s Account in accordance with
Section 4.2(b) (Separate Accounts –
Conversion to Dollar Amount – Specified Date Redemptions).  The
amount allocated to the Participant’s Account then will be paid in accordance
with Section 7.1(b) (Redemptions – Form of
Payment).

     

    (b)           FORM OF
PAYMENT. Within
90 days following each Specified Redemption Date, the amount allocated to the
Participant’s Account pursuant to Section 4.2(b) (Separate Accounts –
Conversion to Dollar Amount – Specified Date Redemptions) as of that
Specified Redemption Date will be paid to the Participant in a single lump
sum.

     

    7.2           PAYMENTS
ON SEPARATION FROM SERVICE, DEATH AND
DISABILITY.  

     

    (a)          RULES FOR
OTHER DISTRIBUTION EVENTS.  If a Participant
incurs a Separation from Service, dies or becomes Disabled, the provisions of
Section 7.1 (Redemptions) no
longer will apply.  Instead, all of the Participant’s remaining vested
SARs will be cancelled and the value of the cancelled SARs will be allocated to
the Participant’s Account in accordance with Section 4.2(c) (Separate Accounts –
Conversion to Dollar Amount – Separation from Service, Death and
Disability).  Distributions to the Participant will then begin
in accordance with the following provisions:

     


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    (1)           TERMINATION
BENEFIT.  If a Participant
incurs a Separation from Service for reasons other than death or Disability, the
Participant shall be entitled to begin receiving distributions in accordance
with Section 7.2(c) within 90 days following the Participant’s Separation
from Service.  If at the time of the Participant’s Separation from
Service, the Company or any Affiliate has any stock which is publicly traded on
an established securities market or otherwise, and if the Participant is
considered to be a “Specified Employee,” the distributions to the Participant
shall not commence prior to the first business day following the date which is
six months after the date of the Participant’s Separation from
Service.

     

    (2)           DEATH
BENEFIT.  Upon a
Participant’s death prior to any other Separation from Service, the
Participant’s Beneficiary shall be entitled to begin receiving distributions in
accordance with Section 7.2(c) within 90 days following the day on which
the Plan Administrator receives notice acceptable to it of the Participant’s
death.

     

    (3)           DISABILITY
BENEFIT.  Upon a
Participant’s becoming Disabled prior to any other Separation from Service, the
Participant shall be entitled to begin receiving distributions in accordance
with Section 7.2(c) within 90 days after the Plan Administrator receives
written verification acceptable to it of the Participant’s
Disability.

     

    (b)          AMOUNT.  The payments to
which a Participant (or the Participant’s Beneficiary in the case of the
Participant’s death) is entitled pursuant to Section 7.2(a) shall be based
on the value of the Participant’s Account, determined in accordance with Section
4.2(c) (Separate
Accounts – Conversion to Dollar Amount – Separation from Service, Death and
Disability).

     

    (c)          FORM OF
PAYMENT.  The Participant
will receive a distribution in five equal annual installments.  The
first installment shall be equal to 20% of the total amount initially due
pursuant to Section 7.2(b).  Each remaining installment will
equal the value of the Participant’s Account as of the prior December 31,
divided by the number of installments remaining.  The first
installment shall be made at the time specified in accordance with
Section 7.2(a).  The subsequent installments shall be paid on or
within 30 days of the anniversaries of the date of the first installment,
provided that in all circumstances the installment payment will be made in the
same calendar year as the applicable anniversary date.  Installment
payments also shall be subject to such other uniform rules and procedures, if
any, as may be adopted by the Plan Administrator from time to time.

     

    7.3           CHANGE OF
CONTROL.

     

    (a)          APPLICABILITY.  The
provisions of this Section apply only in the event of a Change of
Control.

     


    
      
         


      

      
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    (b)          CREDIT TO
ACCOUNT.  If a Change of
Control occurs, all vested and unvested SARs will be canceled.  In
exchange for the canceled SARs, the Plan Administrator will credit the
Participant’s Account with an amount equal to the aggregate value (calculated in
accordance with Section 7.3(d) rather than Article V (Valuation)) of the
Participant’s SARs.

     

    (c)          TIMING
AND METHOD OF PAYMENT.  Generally, the
Participant’s Account shall be paid on the same schedule used for making
payments to shareholders.  Nevertheless, the Participant shall receive
payment in full pursuant to this Section on or before the fifth anniversary of
the date of the closing of the transaction which gives rise to a Change of
Control.

     

    (d)          ALTERNATE
VALUATION.  If a Change of
Control occurs, the general valuation provisions of Section 5.2 (Share Value) shall
not apply.  Instead, the Share Value shall be deemed to be the “Deal
Value.”  For this purpose, the “Deal Value” will be the value of the
aggregate consideration that would be received by an owner of the Company from
the purchaser and the Company for one share of the Company if immediately
following the transaction the Company distributed any remaining assets in a
complete liquidation after paying all of its outstanding debts and liabilities,
including the amounts due pursuant to this Plan, any corporate level tax
liabilities and any costs or expenses of the transaction.  Any assets
actually or hypothetically distributed in kind will be valued at fair market
value.  The Deal Value will be conclusively determined by an
independent certified public accountant selected by the Company.

     

    (e)          SPECIAL
RULES.  The general
purpose of this Section is to treat a Participant the same as a shareholder of
the Company in the event of a Change of Control.  Since the Company
cannot contemplate all of the circumstances that might lead to a Change of
Control, the Board of Directors reserves the right to make such adjustments as
it determines to be necessary to accomplish this overriding general purpose as
long as such adjustment does not violate the provisions of Section 409A of
the Code.

     

    7.4           ACCELERATION
PROHIBITED.

     

    Notwithstanding
any other provision of this Plan to the contrary, neither the time nor the
schedule of any payment under this Plan may be accelerated or subject to a
further deferral except as provided in Treas. Reg.
§ 1.409A-3(j)(4).

     

    7.5           BENEFICIARY
DESIGNATIONS.

     

    Each
Participant shall have the right to designate, on forms supplied by and
delivered to the Plan Administrator, a Beneficiary or Beneficiaries to receive
his benefits hereunder in the event of the Participant’s death.  Each
Participant may change his Beneficiary designation from time to time in the
manner described above.  Upon receipt of such designation by the Plan
Administrator, such designation or change of designation shall become effective
as of the date of the notice, whether or not the Participant is living at the
time the notice is received.  There shall be no liability on the part
of the Company or the Plan Administrator with respect to any payment authorized
by the Plan Administrator in accordance with the most recent valid Beneficiary
designation of the Participant in its possession before receipt of a more recent
and valid Beneficiary designation.  If no designated Beneficiary is
living when benefits become payable, or if there is no designated Beneficiary,
the Beneficiary shall be the Participant’s spouse; or if no spouse is then
living, such Participant’s issue, including any legally adopted child or
children, in equal shares by right of representation; or if no such designated
Beneficiary and no such spouse or issue is living upon the death of a
Participant, or if all such persons die prior to the full distribution of such
Participant’s benefits, then the Beneficiary shall be the estate of the
Participant.

     


    
      
         


      

      
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    7.6           SUSPENSION
AND CANCELLATION OF PAYMENTS.

     

    In the
event that a Participant violates the terms of Section 3.2 (Clawback Provision),
the Board of Directors, by written notice to the Participant, may cause further
benefits under this Plan to be cancelled and forfeited.

     

    7.7           WITHHOLDING.

     

    The
Company is authorized to withhold from any payments called for by this Plan all
withholding and other taxes due to the federal and any state governments and to
take such other action as the Company may deem necessary or advisable to enable
the Company and the Participants to satisfy obligations for the payment of
withholding taxes and other tax liabilities relating to any
payment.

     

    7.8           DISTRIBUTIONS
TREATED AS MADE UPON A DESIGNATED EVENT.

     

    If the
Company fails to make any distribution provided for by Section 7.1 (Redemptions),
Section 7.2 (Payments on Separation from
Service, Death and Disability), or Section 7.3 (Change of Control)
either intentionally or unintentionally, within the time period specified in the
Plan, but the payment is made within the same calendar year, such distribution
will be treated as made within the time period specified in the Plan pursuant to
Treas. Reg. § 1.409A-3(d).  In addition, if a distribution is not
made due to a dispute with respect to such distribution, the distribution may be
delayed in accordance with Treas. Reg. § 1.409A-3(g).

     

    7.9           EXCISE
TAXES.

     

    The Code
might place significant tax burdens on both the Participant and the Company if
the total payments made to the Participant that are contingent on certain change
of control events described in Section 280G of the Code exceed prescribed
limits.  For example, if a Participant’s “base period income” (as
defined in Section 280G) is $200,000, the Participant’s limit or “Cap” is
$599,999.  If certain payments to the Participant exceed the Cap by
even $1.00, the Participant is subject to an excise tax under Section 4999 of
the Code of 20% of all amounts paid to the Participant in excess of
$200,000.  In other words, if the Participant’s Cap is $599,999, the
Participant will not be subject to an excise tax if the Participant receives
exactly $599,999.  If the Participant receives $600,000, the
Participant will be subject to an excise tax of $80,000 (20% of
$400,000).

     

    These
limitations do not presently apply to the Participants or the Company due to
various available exceptions.  However, in the event that a Change of
Control involving the Company does result in a Section 280G Event and payments
to the Participant as a result of such event exceed the Section 280G Cap, the
Company’s Board of Directors will consider the advisability of providing the
Participants with some financial assistance to enable them to pay the excise
tax, such as through the addition of a so-called “gross-up”
provision.  At the present time, though, the Company has not
undertaken any obligation to provide a gross-up payment and the Participants are
advised of the potential risk posed by these rules.

     


    
      
         


      

      
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    ARTICLE
VIII

    ADJUSTMENT OF
SARS

     

    8.1           GENERAL.

     

    In the
event of any stock dividend, stock split or any other reorganization or
combination of shares of common stock, the Plan Administrator shall make
appropriate adjustment in the aggregate number of SARs that may be awarded under
this Plan, and in the number of SARs that have been awarded to Participants;
provided, however, that the Plan Administrator shall not be required to
establish any fractional SARs.

     

    ARTICLE
IX

    ADMINISTRATION OF THE
PLAN

     

    9.1           POWERS OF
THE PLAN ADMINISTRATOR.

     

    (a)          GENERAL
POWERS OF PLAN ADMINISTRATOR. The Plan Administrator shall
have the power and discretion to perform the duties assigned to it in this Plan
or required for proper administration of the Plan and shall have all powers
necessary to enable it to properly carry out such duties.  Without
limiting the generality of the foregoing, the Plan Administrator shall have the
power and discretion to construe and interpret this Plan, to hear and resolve
claims relating to the Plan and to decide all questions and disputes arising
under the Plan.  The Plan Administrator shall determine, in its
discretion, the status and rights of a Participant, and the identity of the
Beneficiary or Beneficiaries entitled to receive any benefits payable on account
of the death of a Participant.

     

    (b)          DESIGNATION
OF PARTICIPANTS AND GRANTS OF UNITS.  The Plan
Administrator also shall have the discretion to select or exclude individuals
from participation in the Plan and to determine the number of SARs, if any, that
shall be awarded or made available to a Participant.

     

    (c)          DECISIONS
CONCLUSIVE.  The decisions of
the Plan Administrator upon all matters within the scope of its authority shall
be binding and conclusive upon all persons.

     

    9.2           CREATION
OF COMMITTEE.

     

    The
Company may appoint a committee to perform some or all of the duties of the Plan
Administrator by the adoption of appropriate Board of Directors
resolutions.  The committee must consist of at least two members, and
they shall hold office during the pleasure of the Board of
Directors.  The committee members shall serve without compensation but
shall be reimbursed for all expenses by the Company.  The committee
shall conduct itself in accordance with the provisions of this
Article IX.  The members of the committee may resign with 30 days
notice in writing to the Company and may be removed immediately at any time by
written notice from the Company.

     


    
      
         


      

      
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    9.3           LIMITATION
ON POWERS.

     

    If the
Company appoints a committee to serve as the Plan Administrator, all decisions
of the committee concerning the selection of Participants under Section 3.1
(Top Hat Group)
and grants of SARs under Section 4.1 (Grant and Allocation of
SARs) and the terms of any awards of SARs shall be advisory only and
shall be subject to the prior approval of the Board of Directors or its
designee.

     

    9.4           CHAIRMAN
AND SECRETARY.

     

    The
committee shall elect a chairman from among its members and shall select a
secretary who is not required to be a member of the committee and who may be
authorized to execute any document or documents on behalf of the
committee.  The secretary of the committee or his designee shall
record all acts and determinations of the committee and shall preserve and
retain custody of all such records, together with such other documents as may be
necessary for the administration of this Plan or as may be required by
law.

     

    9.5           APPOINTMENT
OF AGENTS.

     

    The
committee may appoint such other agents, who need not be members of the
committee, as it may deem necessary for the effective performance of its duties,
whether ministerial or discretionary, as the committee may deem expedient or
appropriate.  The compensation of any agents who are not employees of
the Company shall be fixed by the committee within any limitations set by the
Board of Directors.

     

    9.6           MAJORITY
VOTE AND EXECUTION OF INSTRUMENTS.

     

    In all
matters, questions and decisions, the action of the committee shall be
determined by a majority vote of its members.  They may meet
informally or take any ordinary action without the necessity of meeting as a
group.  All instruments executed by the committee shall be executed by
a majority of its members or by any member of the committee designated to act on
its behalf.

     

    9.7           ALLOCATION
OF RESPONSIBILITIES.

     

    The
committee may allocate responsibilities among its members or designate other
persons to act on its behalf.  Any allocation or designation, however,
must be set forth in writing and must be retained in the permanent records of
the committee.

     

    9.8           CONFLICT
OF INTEREST.

     

    No member
of the committee who is a Participant shall take any part in any action in
connection with his participation as an individual.  Such action shall
be voted or decided by the remaining members of the committee.

     


    
      
         


      

      
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    9.9           ACTION
TAKEN BY COMPANY.

     

    Any
action to be taken by the Company shall be taken by resolution adopted by the
Board of Directors; provided, however, that by resolution the Board of Directors
may delegate to any committee of the Board or any officer of the Company the
authority to take any actions hereunder.

     

    9.10           DELEGATIONS
OF AUTHORITY.

     

    All
delegations of responsibility set forth in this document regarding the
determination of benefits and the interpretation of the terms of the Plan confer
discretionary authority upon the Plan Administrator.

     

    ARTICLE
X

    CLAIMS REVIEW
PROCEDURE

     

    10.1           CLAIMS.

     

    (a)          INITIAL
CLAIM.  A Participant or
Beneficiary entitled to benefits need not file a written claim to receive
benefits.  If a Participant, Beneficiary or any other person (all of
whom are referred to in this Section as a “Claimant”) is dissatisfied with the
determination of his benefits, eligibility, participation or any other right or
interest under this Plan, such person may file a written statement setting forth
the basis of the claim with the Plan Administrator.  The Plan
Administrator will notify the Claimant of the disposition of the claim within 90
days after the request is filed with the Plan Administrator.  The Plan
Administrator may have an additional period of up to 90 days to decide the claim
if the Plan Administrator determines that special circumstances require an
extension of time to decide the claim and the Plan Administrator advises the
Claimant in writing of the need for an extension (including an explanation of
the special circumstances requiring the extension) and the date on which it
expects to decide the claim.  If, following the review, the claim is
denied, in whole or in part, the notice of disposition shall set
forth:

     

    (1)           the
specific reason(s) for denial of the claim;

     

    (2)           reference
to the specific Plan provisions upon which the determination is
based;

     

    (3)           a
description of any additional material or information necessary for the Claimant
to perfect the claim and an explanation of why such material or information is
necessary; and

     

    (4)           an
explanation of the Plan’s appeal procedures, and an explanation of the time
limits applicable to the Plan’s appeal procedures, including a statement of the
Claimant’s right to bring a civil action under Section 502(a) of
ERISA.

     


    
      
         


      

      
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    (b)          APPEAL OF
ADVERSE BENEFIT DETERMINATION.

     

    (1)           Within
60 days after receiving the written notice of the disposition of the claim
described in paragraph (a), the Claimant, or the Claimant’s authorized
representative, may appeal such denied claim.  The Claimant may submit
a written statement of his claim (including any written comments, documents,
records and other information relating to the claim) and the reasons for
granting the claim to the Plan Administrator.  The Plan Administrator
shall have the right to request of and receive from the Claimant such additional
information, documents or other evidence as the Plan Administrator may
reasonably require.  If the Claimant does not request an appeal of the
denied claim within 60 days after receiving written notice of the disposition of
the claim as described in paragraph (a), the Claimant shall be deemed to
have accepted the disposition of the claim and such written disposition will be
final and binding on the Claimant and anyone claiming benefits through the
Claimant, unless the Claimant shall have been physically or mentally
incapacitated so as to be unable to request review within the 60-day
period.  The appeal shall take into account all comments, documents,
records and other information submitted by the Claimant relating to the claim,
without regard to whether such documents, records or other information were
submitted or considered in the initial benefit determination or the initial
review.

     

    (2)           A
decision on appeal to the Plan Administrator shall be rendered in writing by the
Plan Administrator ordinarily not later than 60 days after the Claimant requests
review.  A written copy of the decision shall be delivered to the
Claimant.  If special circumstances require an extension of the
ordinary period, the Plan Administrator shall so notify the Claimant of the
extension with such notice containing an explanation of the special
circumstances requiring the extension and the date by which the Plan
Administrator expects to render a decision.  Any such extension shall
not extend beyond 60 days after the ordinary period.  The period of
time within which a benefit determination on review is required to be made shall
begin at the time an appeal is filed in accordance with the provisions of
paragraph (b)(1) above, without regard to whether all the information
necessary to make a decision on appeal accompanies the filing.

     

    If the
appeal to the Plan Administrator is denied, in whole or in part, the decision on
appeal referred to in the first sentence of this paragraph (2) shall set
forth:

     

    (A)           the
specific reason(s) for denial of the claim;

     

    (B)           reference
to the specific Plan provisions upon which the denial is based;

     

    (C)           a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant’s claim for benefits; and

     

    (D)           a
statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA.

     


    
      
         


      

      
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    (c)          RIGHT
TO EXAMINE PLAN DOCUMENTS AND TO SUBMIT MATERIALS.  In connection
with the determination of a claim, or in connection with review of a denied
claim or appeal pursuant to this Section 10.1, the Claimant may examine
this Plan and any other pertinent documents generally available to Participants
relating to the claim and may submit written comments, documents, records and
other information relating to the claim for benefits.  The Claimant
also will be provided, upon request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to the
Claimant’s claim for benefits with such relevance to be determined in accordance
with Section 10.1(d) (Claims –
Relevance).

     

    (d)          RELEVANCE.  For purpose of
this Section 10.1, documents, records, or other information shall be
considered “relevant” to a Claimant’s claim for benefits if such documents,
records or other information:

     

    (1)           were
relied upon in making the benefit determination;

     

    (2)           were
submitted, considered, or generated in the course of making the benefit
determination, without regard to whether such documents, records or other
information were relied upon in making the benefit determination;
or

     

    (3)           demonstrate
compliance with the administrative processes and safeguards required pursuant to
this Section 10.1 regarding the making of the benefit
determination.

     

    (e)          DECISIONS
FINAL; PROCEDURES MANDATORY.  To the extent
permitted by law, a decision on review or appeal shall be binding and conclusive
upon all persons whomsoever.  To the extent permitted by law,
completion of the claims procedures described in this Section 10.1 shall be
a mandatory precondition that must be complied with prior to commencement of a
legal or equitable action in connection with the Plan by a person claiming
rights under the Plan or by another person claiming rights through such a
person.  The Plan Administrator may, in its sole discretion, waive
these procedures as a mandatory precondition to such an action.

     

    (f)          TIME
FOR FILING LEGAL OR EQUITABLE ACTION.  Any legal or
equitable action filed in connection with the Plan by a person claiming rights
under the Plan or by another person claiming rights through such a person must
be commenced not later than the earlier of:  (1) the shortest
applicable statute of limitations provided by law; or (2) two years from
the date the written copy of the Plan Administrator’s decision on review is
delivered to the Claimant in accordance with Section 10.1(b) (Claims – Appeal of Adverse
Benefit Determination).

     

    ARTICLE
XI

    LIMITATION ON ASSIGNMENT;
PAYMENTS TO LEGALLY

    INCOMPETENT DISTRIBUTEE;
CORRECTIONS

     

    11.1           ANTI-ALIENATION
CLAUSE.

     

    No
benefit which shall be payable under the Plan to any person shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of the same shall be
void.  No benefit shall in any manner be subject to the debts,
contracts, liabilities, engagements or torts of any person, nor shall it be
subject to attachment or legal process for or against any person, except to the
extent as may be required by law.

     


    
      
         


      

      
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    11.2           PERMITTED
ARRANGEMENTS.

     

    Section 11.1
(Anti-Alienation
Clause) shall not preclude arrangements for the withholding of taxes from
benefit payments, arrangements for the recovery of benefit overpayments, or
arrangements for direct deposit of benefit payments to an account in a bank,
savings and loan association or credit union (provided that such arrangement is
not part of an arrangement constituting an assignment or
alienation).

     

    11.3           PAYMENT
TO MINOR OR INCOMPETENT.

     

    Whenever
any benefit which shall be payable under the Plan is to be paid to or for the
benefit of any person who is then a minor or determined by the Plan
Administrator to be incompetent by qualified medical advice, the Plan
Administrator need not require the appointment of a guardian or custodian, but
shall be authorized to cause the same to be paid over to the person having
custody of the minor or incompetent, or to cause the same to be paid to the
minor or incompetent without the intervention of a guardian or custodian, or to
cause the same to be paid to a legal guardian or custodian of the minor or
incompetent if one has been appointed or to cause the same to be used for the
benefit of the minor or incompetent.

     

    11.4           UNDERPAYMENT
OR OVERPAYMENT OF BENEFITS.

     

    In the
event that, through mistake or computational error, benefits are underpaid or
overpaid, there shall be no liability for any more than the correct amount of
benefits under the Plan.  Overpayments may be deducted from future
payments under the Plan, and underpayments may be added to future payments under
the Plan.

     

    ARTICLE
XII

    AMENDMENT MERGER AND
TERMINATION

     

    12.1           AMENDMENT.

     

    The
Company shall have the right at any time, by an instrument in writing duly
executed, acknowledged and delivered to the Plan Administrator, to modify, alter
or amend this Plan, in whole or in part, prospectively or retroactively;
provided, however, that the duties and liabilities of the Plan Administrator
shall not be substantially increased without its written consent; and provided
further that the amendment shall not reduce any Participant’s vested interest in
his or her SARs, calculated as of the date on which the amendment is
adopted.

     

    Section 409A
of the Code imposes new requirements on non-qualified deferred compensation
plans.  If such requirements are not satisfied, a Participant’s tax
liability could be accelerated and substantially increased.  If the
Company determines that any provision of this Plan could require the Participant
to pay tax on amounts due pursuant to this Plan before the Participant’s receipt
of such amounts, or subject the Participant to any additional taxes or
penalties, or impose any other material adverse tax consequences on the
Participant or the Company which may be avoided by modifying the terms of the
Plan, the Company may amend the Plan, either prospectively or retroactively, for
the purpose of avoiding such adverse tax consequences.  No such
modification shall deprive the Participant of the economic benefits due under
this Plan.

     


    
      
         


      

      
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    12.2           MERGER OR
CONSOLIDATION OF COMPANY.

     

    The Plan
shall not be automatically terminated by the Company’s acquisition by or merger
into any other employer.  Instead the Plan may be continued after such
acquisition or merger if the successor employer elects and agrees to continue
the Plan.  All rights to amend, modify, suspend, or terminate the Plan
shall be transferred to the successor employer, effective as of the date of the
merger.

     

    12.3           TERMINATION
OF PLAN.

     

    It is the
expectation of the Company that this Plan will be continued
indefinitely.  However, continuance of the Plan is not assumed as a
contractual obligation of the Company and the right is reserved at any time to
terminate this Plan.  The termination of this Plan shall not deprive
any Participant of his vested interest in his Account, determined in accordance
with the provisions of Article VI (Vesting) as of the
date of the termination.  A Participant’s vested interest will be
determined as of the date of the termination and will not increase
thereafter.

     

    Except as
otherwise determined by the Company in compliance with Section 409A, the
termination of the Plan shall not result in an immediate payment to Plan
Participants.  Rather, payments shall only be made in accordance with
the provisions of Section 7.1 (Redemptions),
Section 7.2 (Payments on Separation from
Service, Death and Disability), or Section 7.3 (Change of
Control).

     

    ARTICLE
XIII

    GENERAL
PROVISIONS

     

    13.1           LIMITATION
ON PARTICIPANTS’ RIGHTS.

     

    Participation
in the Plan shall not give any Participant the right to be retained in the
Company’s employ or any right to the grant of a particular number of SARs or to
the grant of any SARs in any particular year.  The Company reserves
the right to dismiss any Participant without any liability for any claim against
the Company.

     

    13.2           STATUS OF
PARTICIPANTS AS UNSECURED CREDITORS; SUBORDINATION.

     

    No assets
of the Company will be segregated from the general assets of the Company for the
payment of benefits under this Plan.  If the Company acquires any
insurance policies or other investments to assist it in meeting its obligations
to Participants, those policies or other investments will nonetheless remain
part of the general assets of the Company.  Participation in this Plan
does not make any Participant a shareholder of the Company and for all purposes
Participants shall be treated as general unsecured creditors of the
Company.  The interests of the Participants, and their claims against
the Company for any payments due pursuant to this Plan, shall be subordinated to
any amounts due to any financial institution or other party that has loaned
money to the Company other than in connection with the sale of goods or services
to the Company.

     


    
      
         


      

      
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    13.3           UNIFORM
ADMINISTRATION.

     

    Whenever
in the administration of the Plan any action is required by the Plan
Administrator, such action shall be uniform in nature as applied to all persons
similarly situated.

     

    13.4           HEIRS AND
SUCCESSORS.

     

    All of
the provisions of this Plan shall be binding upon all persons who shall be
entitled to any benefits hereunder, and their heirs and legal
representatives.

     

    13.5           COMPLIANCE
WITH SECTION 409A.

     

    This Plan
shall be administered in compliance with Section 409A of the Code and each
provision of the Plan shall be interpreted, to the extent possible, to comply
with Section 409A of the Code.

     

    To
signify its adoption of this Plan, the Company has caused this Plan document to
be executed by a duly authorized officer of the Company on this _____ day of
______, 2008.

     

    INVESTORS
MORTGAGE HOLDINGS, INC.


     

    By_______________________________________

       Its______________________________________



    
      
         


      

      
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    a.           GLOSSARY

     

    (a)          “Affiliate” means (1) a corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as is the Company, and (2) any
other trade or business (whether or not incorporated) controlling, controlled
by, or under common control with the Company (within the meaning of
Section 414(c) of the Code).

     

    (b)          “Beneficiary” means the individual(s) or
entity that a Participant, in his most recent written designation filed with the
Plan Administrator, shall have designated to receive his benefit under the Plan
in the event of his death.

     

    (c)          “Board of
Directors” means
the Board of Directors of the Company.

     

    (d)          “Cause” means the termination of a
Participant’s service to the Company or any Affiliate for any one or more of the
following reasons:

     

    (1)           Substantiated,
material and intentional theft or embezzlement from the Company, any Affiliate,
or any entity that provides goods or services to, receives goods or services
from, or otherwise deals with the Company or any Affiliate; or

     

    (2)           The
commission of any felony (excluding traffic offenses other than those involving
driving under the influence of alcohol or drugs) involving moral turpitude that
materially damages the goodwill of the Company in the community; or

     

    (3)           Substantiated,
material and intentional fraud directed at the Company, any Affiliate, or any
individual or entity that provides goods or services to, receives goods or
services from, or otherwise deals with the Company or any Affiliate;
or

     

    (4)           The
repeated and material violation by the Participant of any agreement with the
Company or any Affiliate, any policies of the Company or any Affiliate, or any
directives of the Board of Directors of the Company.  A violation will
not be considered to be “repeated” unless such violation has occurred more than
once and after receipt of written notice from the Company of such
violation.

     

    If the
Company or any Affiliate terminates the Participant’s employment for Cause, it
will provide the Participant with a written Notice of Termination that specifies
the basis or bases on which the Company is electing to terminate the
Participant.  The Participant may then challenge the Company’s
decision in accordance with the claims review procedures of Section 10.1
(Claims).

     

    (e)          “Change of
Control” means
any one or more of the following events:

     

    (1)           The
date that any one person, or more than one person acting as a “Group” (as
defined below), acquires ownership of stock of the Company that, together with
stock held by such person or Group, constitutes more than 50% of the total fair
market value or total voting power of the stock of the Company.  If
any one person or more than one person acting as a Group is considered to own
more than 50% 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 will not be considered to be a “Change of Control.”  In
addition, the acquisition of stock by a “Permitted Transferee” (as defined
below) will be disregarded for purposes of this paragraph (1) and will not
be treated as a Change of Control.  This paragraph (1) only
applies when there is a transfer of stock of the Company (or issuance of stock
of the Company) and stock in the Company remains outstanding after the
transaction.

     


    
      
         


      

      
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    (2)           The
date that any one person, or more than one person acting as a Group, 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 50% 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.  This clause (2) shall not apply to any transfer to
an entity that is controlled by the shareholders of the Company immediately
after the transfer.  In addition, a transfer of assets by the Company
shall be disregarded 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% 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% or more of the total value or voting power of all of
the outstanding stock of the Company; (iv) an entity, at least 50% of the
total value or voting power of which is owned, directly or indirectly, by a
person described in clause (iii); or (v) a Permitted Transferee, as
defined below.  For purposes of this section, a person’s status is
determined immediately after the transfer of the assets.  A transfer
to an entity shall be disregarded for purposes of this Section, and will not be
treated as a Change of Control, if immediately after such transfer Permitted
Transferees own a majority of each and every class of outstanding stock or other
ownership interest of the entity to which the assets are
transferred.

     

    For
purposes of this Section, 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 (in the case of a transaction described in
clause (1)) or assets (in the case of a transaction described in
clause (2)), or a similar business transaction with the
Company.  If a person, including an entity, 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 prior to the transaction giving
rise to the change and not with respect to the ownership interest in the other
corporation.  Persons will not be considered to be acting as a Group
solely because they purchase or own stock of the same corporation at the same
time, or as a result of the same public offering.

     

    The
transfer of stock or assets of the Company in connection with a bankruptcy
filing by or against the Company under Title 11 of the United States Code
will not be considered to be a Change of Control for purposes of this
Plan.

     

    (f)          “Clawback
Period” shall
have the meaning ascribed to it in Section 3.2(a) (Clawback Provision –
Terms).

     


    
      
         


      

      
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    (g)          “Code” means the Internal Revenue
Code of 1986, as amended from time to time.

     

    (h)          “Company” means Investors Mortgage
Holdings, Inc.

     

    (i)          “Disabled” means either that the
Participant is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Company.

     

    (j)          “Effective
Date” means
July 1, 2007.

     

    (k)          “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.

     

    (l)          “Fair
Market Enterprise Value” shall have the meaning
ascribed to it in Section 5.2 (Share
Value).

     

    (m)          “Normal
Retirement Age”
means age 65.

     

    (n)          “Participant” means any individual who
receives a grant of an SAR.

     

    (o)          “Participation
Agreement” means
the Agreement pursuant to which a Participant receives an award of
SARs.

     

    (p)          “Permitted
Transferees”
means and includes (1) Shane Albers and Will Meris; (2) any
descendant of Mr. Albers or Mr. Meris; (3) any trust, partnership,
corporation, limited liability company, limited liability partnership, or other
entity established or created by Mr. Albers or Mr. Meris, but only if and so
long as Mr. Albers or Mr. Meris or members of their immediate families is or are
the owners or holders of a majority of all classes or forms of ownership or
beneficial interests in such entity that have a right to vote with respect to
the management or operation of the affairs of such entity; (4) any
“employee benefit plan” (as such term is defined in ERISA) for the benefit of
some or all of the employees of the Company or any Affiliate; (5) any
Participant in this Plan; and (6) any other individual or entity who has
entered into an agreement with the Company pursuant to which such individual or
entity has received an actual or notional equity based award in connection with
the performance of services for the Company.

     

    (q)          “Plan” means the Investors Mortgage
Holdings, Inc. Management Incentive Plan, as set forth in this document and as
it may be amended from time to time.

     

    (r)          “Plan
Administrator”
means the Board of Directors of the Company, unless Board of Directors of
the Company appoints a committee or other individual to serve as the Plan
Administrator pursuant to Section 9.2 (Creation of
Committee).

     


    
      
         


      

      
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    (s)          “Plan
Year” means,
generally, a 12-month period, commencing on each January 1 and ending each
following December 31.  The initial Plan Year shall commence on
the Effective Date and end on December 31, 2007.

     

    (t)          “Separation
from Service” means either (1) the termination of a Participant’s
employment with the Company and all Affiliates due to death, retirement or other
reasons or (2) a permanent reduction in the level of bona fide services the
Participant provides to the Company to an amount that is no more than 25% of the
average level of bona fide services the Participant provided to the Company in
the immediately preceding 12 months, with the level of bona fide service
calculated in accordance with Treas. Reg.
§ 1.409A-1(h)(1)(ii).  The Participant’s employment relationship
is treated as continuing while the Participant is on military leave, sick leave,
or other bona fide leave of absence (if the period of such leave does not exceed
six months, or if longer, so long as the Participant’s right to reemployment
with the Company or an Affiliate is provided by either statute or
contract).  If the Participant’s period of leave exceeds six months
and the Participant’s right to reemployment is not provided either by statute or
by contract, the employment relationship is deemed to terminate on the first day
immediately following the expiration of such six-month
period.  Whether a termination of employment has occurred will be
determined based upon all of the facts and circumstances and in accordance with
regulations issued by the United States Treasury Department pursuant to
Section 409A of the Code.

     

    (u)          “Share
Value” shall have
the meaning ascribed to it in Section 5.2 (Share
Value).

     

    (v)          “Specified
Employee” means
certain officers and highly compensated employees of the Company as defined in
Treas. Reg. § 1.409A-1(i), and as determined in accordance with such
procedures as may be adopted from time to time by the Plan
Administrator.  The identification date for determining whether any
employee is a Specified Employee during any Plan Year shall be the date
specified by the Plan Administrator in compliance with the above-noted
regulations.

     

    (w)          “Specified
Date Redemption”
shall have the meaning ascribed to it in Section 7.1(a) (Redemptions – Specified Date
Redemptions).

     

    (x)          “Stock
Appreciation Right” or “SAR” means the contractual right
to receive a payment equal to the appreciation, if any, in the Share Value from
the Base Value as determined in accordance with Section 5.1 (SAR
Value).

     

    (y)          “Valuation
Consultant” shall
have the meaning ascribed to it in Section 5.2 (Share
Value).

     

    (z)          “Valuation
Date” means the
last day of each Plan Year.

     


    
      
         


      

      
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