Exhibit 10.1









Exhibit 10.1



 


 




    The
    Navigators Group, Inc.

    Amended and Restated 2005 Stock Incentive Plan



 













 








    Table of
    Contents



 


	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	
    Section 1. Establishment,
    Purpose and Duration
	
 
	 
	
    A-1
	 

	

    1.1
    


	
 
	
    Effective Date and Purpose
	
 
	 
	
    A-1
	 

	

    1.2
    


	
 
	
    Duration of the Plan
	
 
	 
	
    A-1
	 

	

    Section 2. Definitions


	
 
	 
	
    A-1
	 

	

    2.1
    


	
 
	
    “Annual Incentive Award”
	
 
	 
	
    A-1
	 

	

    2.2
    


	
 
	
    “Award”
	
 
	 
	
    A-1
	 

	

    2.3
    


	
 
	
    “Award Agreement”
	
 
	 
	
    A-1
	 

	

    2.4
    


	
 
	
    “Beneficiary”
	
 
	 
	
    A-1
	 

	

    2.5
    


	
 
	
    “Board”
	
 
	 
	
    A-1
	 

	

    2.6
    


	
 
	
    “Bonus Opportunity”
	
 
	 
	
    A-1
	 

	

    2.7
    


	
 
	
    “Cause”
	
 
	 
	
    A-2
	 

	

    2.8
    


	
 
	
    “Change in Control”
	
 
	 
	
    A-2
	 

	

    2.9
    


	
 
	
    “Code”
	
 
	 
	
    A-3
	 

	

    2.10
    


	
 
	
    “Committee”
	
 
	 
	
    A-3
	 

	

    2.11
    


	
 
	
    “Common Stock”
	
 
	 
	
    A-3
	 

	

    2.12
    


	
 
	
    “Company”
	
 
	 
	
    A-3
	 

	

    2.13
    


	
 
	
    “Covered Employee”
	
 
	 
	
    A-3
	 

	

    2.14
    


	
 
	
    “Deferred Compensation Award”
	
 
	 
	
    A-3
	 

	

    2.15
    


	
 
	
    “Disability”
	
 
	 
	
    A-3
	 

	

    2.16
    


	
 
	
    “Dividend Equivalent”
	
 
	 
	
    A-3
	 

	

    2.17
    


	
 
	
    “Effective Date”
	
 
	 
	
    A-3
	 

	

    2.18
    


	
 
	
    “Eligible Person”
	
 
	 
	
    A-3
	 

	

    2.19
    


	
 
	
    “Employer”
	
 
	 
	
    A-3
	 

	

    2.20
    


	
 
	
    “Exchange Act”
	
 
	 
	
    A-3
	 

	

    2.21
    


	
 
	
    “Exercise Date”
	
 
	 
	
    A-3
	 

	

    2.22
    


	
 
	
    “Fair Market Value”
	
 
	 
	
    A-4
	 

	

    2.23
    


	
 
	
    “Good Reason”
	
 
	 
	
    A-4
	 

	

    2.24
    


	
 
	
    “Grant Date”
	
 
	 
	
    A-4
	 

	

    2.25
    


	
 
	
    “Grantee”
	
 
	 
	
    A-4
	 

	

    2.26
    


	
 
	
    “Incentive Stock Option”
	
 
	 
	
    A-4
	 

	

    2.27
    


	
 
	
    “including” or “includes”
	
 
	 
	
    A-4
	 

	

    2.28
    


	
 
	
    “Non-Qualified Stock Option”
	
 
	 
	
    A-4
	 

	

    2.29
    


	
 
	
    “Option”
	
 
	 
	
    A-4
	 

	

    2.30
    


	
 
	
    “Option Price”
	
 
	 
	
    A-4
	 

	

    2.31
    


	
 
	
    “Performance-Based Exception”
	
 
	 
	
    A-4
	 

	

    2.32
    


	
 
	
    “Performance Goal”
	
 
	 
	
    A-4
	 

	

    2.33
    


	
 
	
    “Performance Measures”
	
 
	 
	
    A-5
	 

	

    2.34
    


	
 
	
    “Performance Period”
	
 
	 
	
    A-5
	 

	

    2.35
    


	
 
	
    “Performance Unit”
	
 
	 
	
    A-5
	 

	

    2.36
    


	
 
	
    “Person”
	
 
	 
	
    A-5
	 

	

    2.37
    


	
 
	
    “Plan”
	
 
	 
	
    A-5
	 

	

    2.38
    


	
 
	
    “Restricted Stock”
	
 
	 
	
    A-5
	 

	

    2.39
    


	
 
	
    “Restricted Stock Unit”
	
 
	 
	
    A-5
	 






    

    A-i








 







	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	

    2.40
    


	
 
	
    “Restrictions”
	
 
	 
	
    A-5
	 

	

    2.41
    


	
 
	
    “Retirement”
	
 
	 
	
    A-5
	 

	

    2.42
    


	
 
	
    “Rule 16b-3”
	
 
	 
	
    A-5
	 

	

    2.43
    


	
 
	
    “SEC”
	
 
	 
	
    A-5
	 

	

    2.44
    


	
 
	
    “Section 16 Non-Employee Director”
	
 
	 
	
    A-5
	 

	

    2.45
    


	
 
	
    “Section 16 Person”
	
 
	 
	
    A-5
	 

	

    2.46
    


	
 
	
    “Settlement Date”
	
 
	 
	
    A-6
	 

	

    2.47
    


	
 
	
    “Share”
	
 
	 
	
    A-6
	 

	

    2.48
    


	
 
	
    “Stock Appreciation Right” or “SAR”
	
 
	 
	
    A-6
	 

	

    2.49
    


	
 
	
    “Strike Price”
	
 
	 
	
    A-6
	 

	

    2.50
    


	
 
	
    “Subsidiary”
	
 
	 
	
    A-6
	 

	

    2.51
    


	
 
	
    “Substitute Award”
	
 
	 
	
    A-6
	 

	

    2.52
    


	
 
	
    “Term”
	
 
	 
	
    A-6
	 

	

    2.53
    


	
 
	
    “Termination of Service”
	
 
	 
	
    A-6
	 

	

    2.54
    


	
 
	
    “Year”
	
 
	 
	
    A-6
	 

	

    Section 3. Administration


	
 
	 
	
    A-6
	 

	

    3.1
    


	
 
	
    Committee.
	
 
	 
	
    A-6
	 

	

    3.2
    


	
 
	
    Powers of the Committee
	
 
	 
	
    A-7
	 

	

    Section 4. Shares
    Subject to the Plan and Adjustments


	
 
	 
	
    A-8
	 

	

    4.1
    


	
 
	
    Number of Shares Available for Grants.
	
 
	 
	
    A-8
	 

	

    4.2
    


	
 
	
    Adjustments in Authorized Shares and Awards.
	
 
	 
	
    A-9
	 

	

    4.3
    


	
 
	
    Compliance With Section 162(m) of the Code.
	
 
	 
	
    A-9
	 

	

    4.4
    


	
 
	
    Performance Based Exception Under Section 162(m).
	
 
	 
	
    A-9
	 

	

    Section 5. Eligibility
    and General Conditions of Awards


	
 
	 
	
    A-11
	 

	

    5.1
    


	
 
	
    Eligibility
	
 
	 
	
    A-11
	 

	

    5.2
    


	
 
	
    Award Agreement
	
 
	 
	
    A-11
	 

	

    5.3
    


	
 
	
    General Terms and Termination of Service
	
 
	 
	
    A-11
	 

	

    5.4
    


	
 
	
    Nontransferability of Awards.
	
 
	 
	
    A-12
	 

	

    5.5
    


	
 
	
    Cancellation and Rescission of Awards
	
 
	 
	
    A-13
	 

	

    5.6
    


	
 
	
    Substitute Awards
	
 
	 
	
    A-13
	 

	

    5.7
    


	
 
	
    Exercise by Non-Grantee
	
 
	 
	
    A-13
	 

	

    5.8
    


	
 
	
    No Cash Consideration for Awards
	
 
	 
	
    A-13
	 

	

    Section 6. Stock
    Options


	
 
	 
	
    A-13
	 

	

    6.1
    


	
 
	
    Grant of Options
	
 
	 
	
    A-13
	 

	

    6.2
    


	
 
	
    Award Agreement
	
 
	 
	
    A-13
	 

	

    6.3
    


	
 
	
    Option Price
	
 
	 
	
    A-13
	 

	

    6.4
    


	
 
	
    Vesting
	
 
	 
	
    A-14
	 

	

    6.5
    


	
 
	
    Grant of Incentive Stock Options
	
 
	 
	
    A-14
	 

	

    6.6
    


	
 
	
    Exercise and Payment.
	
 
	 
	
    A-15
	 

	

    Section 7. Stock
    Appreciation Rights


	
 
	 
	
    A-15
	 

	

    7.1
    


	
 
	
    Grant of SARs
	
 
	 
	
    A-15
	 

	

    7.2
    


	
 
	
    Award Agreements
	
 
	 
	
    A-16
	 

	

    7.3
    


	
 
	
    Strike Price
	
 
	 
	
    A-16
	 

	

    7.4
    


	
 
	
    Vesting
	
 
	 
	
    A-16
	 






    A-ii








 







	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	

    7.5
    


	
 
	
    Exercise and Payment.
	
 
	 
	
    A-16
	 

	

    7.6
    


	
 
	
    Grant Limitations
	
 
	 
	
    A-16
	 

	

    Section 8. Restricted
    Stock


	
 
	 
	
    A-16
	 

	

    8.1
    


	
 
	
    Grant of Restricted Stock
	
 
	 
	
    A-16
	 

	

    8.2
    


	
 
	
    Award Agreement
	
 
	 
	
    A-16
	 

	

    8.3
    


	
 
	
    Vesting
	
 
	 
	
    A-17
	 

	

    8.4
    


	
 
	
    Effect of Forfeiture
	
 
	 
	
    A-17
	 

	

    8.5
    


	
 
	
    Escrow; Legends
	
 
	 
	
    A-17
	 

	

    8.6
    


	
 
	
    Stockholder Rights in Restricted Stock
	
 
	 
	
    A-17
	 

	

    Section 9. Restricted
    Stock Units


	
 
	 
	
    A-17
	 

	

    9.1
    


	
 
	
    Grant of Restricted Stock Units
	
 
	 
	
    A-17
	 

	

    9.2
    


	
 
	
    Award Agreement
	
 
	 
	
    A-18
	 

	

    9.3
    


	
 
	
    Crediting Restricted Stock Units
	
 
	 
	
    A-18
	 

	

    Section 10. Performance
    Units


	
 
	 
	
    A-18
	 

	

    10.1
    


	
 
	
    Grant of Performance Units
	
 
	 
	
    A-18
	 

	

    10.2
    


	
 
	
    Value/Performance Goals
	
 
	 
	
    A-19
	 

	

    10.3
    


	
 
	
    Earning of Performance Units
	
 
	 
	
    A-19
	 

	

    10.4
    


	
 
	
    Adjustment on Change of Position
	
 
	 
	
    A-19
	 

	

    10.5
    


	
 
	
    Dividend Rights
	
 
	 
	
    A-19
	 

	

    Section 11. Annual
    Incentive Awards


	
 
	 
	
    A-19
	 

	

    11.1
    


	
 
	
    Annual Incentive Awards
	
 
	 
	
    A-19
	 

	

    11.2
    


	
 
	
    Determination of Amount of Annual Incentive Awards.
	
 
	 
	
    A-19
	 

	

    11.3
    


	
 
	
    Time of Payment of Annual Incentive Awards
	
 
	 
	
    A-20
	 

	

    11.4
    


	
 
	
    Form of Payment of Annual Incentive Awards
	
 
	 
	
    A-20
	 

	

    Section 12. Change
    in Control


	
 
	 
	
    A-20
	 

	

    12.1
    


	
 
	
    Acceleration of Vesting
	
 
	 
	
    A-20
	 

	

    12.2
    


	
 
	
    Special Treatment In the Event of a Change in Control
	
 
	 
	
    A-20
	 

	

    Section 13. Dividend
    Equivalents


	
 
	 
	
    A-21
	 

	

    Section 14. Amendments
    and Termination


	
 
	 
	
    A-21
	 

	

    14.1
    


	
 
	
    Amendment and Termination
	
 
	 
	
    A-21
	 

	

    14.2
    


	
 
	
    Previously Granted Awards
	
 
	 
	
    A-21
	 

	

    Section 15. Beneficiary
    Designation


	
 
	 
	
    A-21
	 

	

    Section 16. Withholding


	
 
	 
	
    A-21
	 

	

    16.1
    


	
 
	
    Required Withholding.
	
 
	 
	
    A-21
	 

	

    16.2
    


	
 
	
    Notification under Section 83(b) of the Code
	
 
	 
	
    A-22
	 

	

    Section 17. General
    Provisions


	
 
	 
	
    A-22
	 

	

    17.1
    


	
 
	
    Governing Law
	
 
	 
	
    A-22
	 

	

    17.2
    


	
 
	
    Severability
	
 
	 
	
    A-22
	 

	

    17.3
    


	
 
	
    Successors
	
 
	 
	
    A-22
	 

	

    17.4
    


	
 
	
    Requirements of Law
	
 
	 
	
    A-22
	 

	

    17.5
    


	
 
	
    Securities Law Compliance
	
 
	 
	
    A-22
	 

	

    17.6
    


	
 
	
    Section 409A
	
 
	 
	
    A-23
	 

	

    17.7
    


	
 
	
    No Rights as a Stockholder
	
 
	 
	
    A-23
	 

	

    17.8
    


	
 
	
    Awards Not Taken Into Account for Other Benefits
	
 
	 
	
    A-23
	 






    A-iii








 







	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	

    17.9
    


	
 
	
    Employment Agreement Supersedes Award Agreement
	
 
	 
	
    A-24
	 

	

    17.10
    


	
 
	
    Non-Exclusivity of Plan
	
 
	 
	
    A-24
	 

	

    17.11
    


	
 
	
    No Trust or Fund Created
	
 
	 
	
    A-24
	 

	

    17.12
    


	
 
	
    No Right to Continued Employment or Awards
	
 
	 
	
    A-24
	 

	

    17.13
    


	
 
	
    Military Service
	
 
	 
	
    A-24
	 

	

    17.14
    


	
 
	
    Construction
	
 
	 
	
    A-24
	 

	

    17.15
    


	
 
	
    No Fractional Shares
	
 
	 
	
    A-24
	 

	

    17.16
    


	
 
	
    Plan Document Controls
	
 
	 
	
    A-24
	 











    A-iv








 








    THE
    NAVIGATORS GROUP, INC.

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 





    Section 1.  Establishment,
    Purpose and Duration



 



    1.1  Effective Date and
    Purpose.  The Navigators Group, Inc., a
    Delaware corporation (the “Company”), hereby
    amends and restates The Navigators Group, Inc. Amended 2005
    Stock Incentive Plan into The Navigators Group, Inc. Amended and
    Restated 2005 Stock Incentive Plan (the
    “Plan”). All awards issued under the prior
    version of this Plan shall be treated as issued under this Plan
    and subject to the terms of this Plan, and all Awards issued on
    or after the effective date of this Plan shall be governed by
    this Plan. The Plan is intended to attract and retain
    exceptionally qualified employees, consultants and directors
    upon whom, in large measure, the sustained progress, growth and
    profitability of the Company depend. By encouraging employees,
    consultants and directors of the Company and its subsidiaries to
    acquire a proprietary interest in the Company’s growth and
    performance, the Company intends to motivate employees,
    consultants and directors to achieve long-term Company goals and
    to more closely align such persons’ interests with those of
    the Company’s other stockholders. The Plan was recommended
    to the Board by the Committee and the Board approved the Plan on
    March 25, 2010, subject to approval by the Company’s
    stockholders. The Plan became effective on May 26, 2010
    (the “Effective Date”), which was the date
    approval by the Company’s stockholders was obtained.



 



    1.2  Duration of the
    Plan.  The Plan shall commence on the
    Effective Date and shall remain in effect, subject to the right
    of the Board of Directors of the Company to amend or terminate
    the Plan at any time pursuant to Section 14 hereof,
    until the earlier to occur of (a) the date all Shares
    subject to the Plan shall have been purchased or acquired and
    the Restrictions on all Restricted Stock granted under the Plan
    shall have lapsed, according to the Plan’s provisions, and
    (b) 10 years from the Effective Date of the Plan. The
    termination of the Plan shall not adversely affect any Awards
    outstanding on the date of such termination.



 



    Section 2.  Definitions



 



    As used in the Plan, in addition to terms elsewhere defined in
    the Plan, the following terms shall have the meanings set forth
    below:



 



    2.1  “Annual Incentive Award”
    means a performance bonus determined under
    Section 11.



 



    2.2  “Award” means any Option
    (including a Non-Qualified Stock Option and an Incentive Stock
    Option), Stock Appreciation Right, Restricted Stock, Restricted
    Stock Unit, Performance Unit, Substitute Award, Dividend
    Equivalent or Annual Incentive Award.



 



    2.3  “Award
    Agreement” means either (a) a written
    agreement either (a) a written agreement entered into by
    the Company and a Grantee setting forth the terms and conditions
    applicable to an Award granted under this Plan, or (b) a
    written or electronic statement issued by the Company to a
    Grantee describing the terms and conditions of such Award,
    including any amendment or modification thereof. The Committee
    may provide for the use of electronic, internet, intranet or
    other non-paper Award Agreement, and the use of electronic,
    internet, intranet or other non-paper means the acceptance
    thereof and actions thereunder by a Grantee.



 



    2.4  “Beneficiary” means
    the Person designated to receive Plan benefits, if any,
    following the Grantee’s death in accordance with
    Section 15.



 



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



 



    2.6  “Bonus
    Opportunity” means a Grantee’s threshold,
    target and maximum bonus opportunity for a Year, provided that
    such bonus opportunity shall be either (a) to the extent
    that the Grantee has entered into an employment agreement with
    the Company, the threshold, target and maximum bonus levels, if
    any, specified in the employment agreement for such Year based
    on the Grantee’s base salary in effect on March 31 of such
    Year, or (b) if there is no employment agreement in effect
    between the Company and the Grantee as of the first day of such
    Year or if the employment agreement does not specify such bonus
    levels, the percentage of such Grantee’s base salary in
    effect on the first day of such Year (or such later date as such
    person is designated as a Grantee) as determined by the
    Committee in its sole discretion within the first 90 days
    of such Year (or before such later date as such person is
    designated as a Grantee).





    

    A-1








 







    2.7  “Cause” means, as
    determined by the Committee, the occurrence of any one of the
    following: (a) any act of dishonesty, willful misconduct,
    gross negligence, intentional or conscious abandonment or
    neglect of duty; (b) a violation of any lawful policy or
    rule of an Employer, including any applicable code of conduct or
    ethics; (c) commission of a criminal activity, fraud,
    embezzlement or any act of moral turpitude; (d) a failure
    to reasonably cooperate in any investigation or proceeding
    concerning the Company; (e) any unauthorized disclosure or
    use of confidential information or trade secrets; or
    (f) any violation of any restrictive covenant, such as a
    non-compete, non-solicit or non-disclosure agreement, between an
    Eligible Person and any Employer; provided, however, that
    in the event a Grantee is party to an employment agreement with
    the Company or a Subsidiary that contains a different definition
    of Cause, the definition of Cause contained in such employment
    agreement shall be controlling.



 



    2.8  “Change in Control” means
    the occurrence of one or more of the following:



 



    (a) A Change in the Ownership of the Company. A change in
    ownership of the Company shall occur on 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; provided,
    however, that, 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 is not considered to cause a change in the
    ownership of the Company.



 



    (b) A Change in the Effective Control of the Company. A
    change in the effective control of the Company occurs on the
    date that either:



 



    (i) any one Person, or more than one Person acting as a
    Group, acquires (or has acquired during the
    12-month
    period ending on the date of the most recent acquisition by such
    Person or Persons) ownership of stock of the Company possessing
    35% or more of the total voting power of the stock of the
    Company; provided, however, that, if any one Person, or
    more than one Person acting as a Group, is considered to
    effectively control the Company, the acquisition of additional
    control of the Company by the same Person or Persons is not
    considered a change in the effective control of the
    Company; or



 



    (ii) a majority of the members of the Company’s Board
    is replaced during any
    12-month
    period by directors whose appointment or election is not
    endorsed by a majority of the members of the Company’s
    Board prior to the date of the appointment or election;
    provided, however, that, if one Person, or more than one
    Person acting as a Group, is considered to effectively control
    the Company, the acquisition of additional control of the
    Company by the same Person or Persons is not considered a change
    in the effective control of the Company.



 



    (c) A Change in the Ownership of a Substantial Portion of
    the Company’s Assets. A change in the ownership of a
    substantial portion of the Company’s assets occurs on the
    date that any one Person, or more than one Person acting as a
    Group, 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 (as defined below) equal to all or
    substantially all of the total Gross Fair Market Value of all of
    the assets of the Company immediately prior to such acquisition
    or acquisitions; provided, however, that, a transfer of
    assets by the Company is not treated as a change in the
    ownership of such assets if the assets are transferred to:



 



    (i) a stockholder 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 Fair Market 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 Fair
    Market Value or voting power of all the outstanding stock of the
    Company; or



 



    (iv) an entity, at least 50% of the total Fair Market Value
    or voting power of which is owned, directly or indirectly, by a
    Person described in clause (iii) of this
    Section 2.8(c).





    

    A-2








 







    For purposes of this definition, “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.



 



    For purposes of this definition, “Group” has
    the meaning ascribed to such term in Treas. Reg.
    Section 1.409A-3(i)(5)(v)(B),
    (vi)(D) or (vii)(C), as applicable.



 



    With respect to Deferred Compensation Awards, stock ownership
    shall be determined under Section 409A of the Code. For
    purposes of this definition, any interpretation or determination
    by the Committee regarding the payment of Deferred Compensation
    Awards in connection with a Change in Control shall take into
    account any applicable guidance and regulations in effect under
    Section 409A of the Code.



 



    2.9  “Code” means the Internal
    Revenue Code of 1986 (and any successor thereto), as amended
    from time to time. References to a particular section of the
    Code include references to regulations and rulings in effect
    thereunder and to successor provisions.



 



    2.10  “Committee” has the
    meaning set forth in Section 3.1(a).



 



    2.11  “Common Stock” means
    common stock, par value $0.10 per share, of the Company.



 



    2.12  “Company” has the
    meaning set forth in Section 1.1.



 



    2.13  “Covered Employee” means
    a Grantee who, as of the last day of the fiscal year in which
    the value of an Award is includable in income for federal income
    tax purposes, is one of the group of “covered
    employees,” within the meaning of Section 162(m) of
    the Code, with respect to the Company.



 



    2.14  “Deferred Compensation
    Award” means an Award that could be subject to
    liability under Section 409A of the Code and does not
    qualify for an exemption from the provisions of
    Section 409A of the Code.



 



    2.15  “Disability” means, as
    determined by the Committee, a mental or physical illness that
    entitles the Grantee to receive benefits under the long-term
    disability plan of an Employer, or if the Grantee is not covered
    by such a plan or the Grantee is not an employee of an Employer,
    a mental or physical illness that renders a Grantee totally and
    permanently incapable of performing the Grantee’s duties
    for the Company or a Subsidiary. Notwithstanding the foregoing,
    with respect to any Deferred Compensation Award, Disability
    shall mean a Grantee’s inability to engage in any
    substantial gainful activity 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, as determined by the
    Committee. Notwithstanding anything to the contrary in this
    Section 2.15, a Disability shall not qualify under
    this Plan if it is the result of (a) a willfully
    self-inflicted injury or willfully self-induced sickness; or
    (b) an injury or disease contracted, suffered, or incurred
    while participating in a felony criminal offense.



 



    2.16  “Dividend Equivalent”
    means any right to receive payments equal to dividends or
    property, if and when paid or distributed, on Shares or
    Restricted Stock Units.



 



    2.17  “Effective Date” has the
    meaning set forth in Section 1.1.



 



    2.18  “Eligible Person” means
    any (a) employee of an Employer, (b) non-employee
    director of an Employer, (c) employees of a corporation
    that has been acquired by an Employer, whether by way of
    exchange or purchase of stock, purchase of assets, merger or
    reverse merger, or otherwise who hold options with respect to
    the stock of such corporation that the Company has agreed to
    assume, and (d) independent contractors or consultants who
    render services to an Employer.



 



    2.19  “Employer” means the
    Company or any Subsidiary.



 



    2.20  “Exchange Act” means the
    Securities and Exchange Act of 1934, as amended, or any
    successors thereto, and the rules and regulations in effect
    thereunder, all as shall be amended from time to time.



 



    2.21  “Exercise Date” means
    the date the holder of an Award that is subject to exercise
    delivers notice of such exercise to the Company, accompanied by
    such payment, attestations, representations and warranties or
    other documentation as required hereunder, under the applicable
    Award Agreement or as the Committee may otherwise specify.





    

    A-3








 







    2.22  “Fair Market Value”
    means, as of any applicable date, (a) the closing sales
    price for one Share on such date as reported on NASDAQ or, if
    the foregoing does not apply, on such other market system or
    stock exchange on which the Company’s Common Stock is then
    listed or admitted to trading, or on the last previous day on
    which a sale was reported if no sale of a Share was reported on
    such date, or (b) if the foregoing subsection (a) does
    not apply, the fair market value of a Share as reasonably
    determined in good faith by the Board in accordance with
    Section 409A of the Code. For purposes of subsection (b),
    the determination of such Fair Market Value by the Board will be
    made no less frequently than every 12 months and will
    either (x) use one of the safe harbor methodologies
    permitted under Treas. Reg.
    Section 1.409A-1(b)(5)(iv)(B)(2)
    (or such other similar regulation provision as may be provided)
    or (y) include, as applicable, the value of tangible and
    intangible assets of the Company, the present value of future
    cash flows of the Company, the market value of stock or other
    equity interests in similar corporations and other entities
    engaged in trades or businesses substantially similar to those
    engaged in by the Company, the value of which can be readily
    determined through objective means (such as through trading
    prices or an established securities market or an amount paid in
    an arms’ length private transaction), and other relevant
    factors such as control premiums or discounts for lack of
    marketability and whether the valuation method is used for other
    purposes that have a material economic effect on the Company,
    its stockholders or its creditors.



 



    2.23  “Good Reason” has the
    meaning set forth in the employment agreement by and between the
    applicable Employer and the Grantee, or, if no such agreement
    exists or such agreement does not define “good reason”
    or any term of similar import, “Good Reason” means any
    of the following acts by an Employer, without the consent of the
    Grantee (in each case, other than an isolated, insubstantial and
    inadvertent action not taken in bad faith and which is remedied
    by the Employer promptly after receipt of notice thereof given
    by the Grantee): (a) a material diminution in the
    Grantee’s position, authority, duties or responsibilities
    as in effect immediately prior to the Change in Control,
    (b) a material reduction in the Grantee’s base salary
    from his or her highest base salary in effect at any time within
    12 months preceding a Change in Control, (c) failure
    to continue the Grantee’s participation in any compensation
    plan in which he or she participated immediately prior to the
    Change in Control (or in a substitute or alternative plan) on a
    basis not materially less favorable, both in terms of the amount
    of benefits provided and the level of the Grantee’s
    participation relative to similarly situated employees, or
    (d) requiring the Grantee to be based at any office or
    location more than 50 miles from the location at which the
    Grantee was stationed immediately prior to the Change in Control.



 



    2.24  “Grant Date” means
    the date on which an Award is granted, which date may be
    specified in advance by the Committee.



 



    2.25  “Grantee” means an
    Eligible Person who has been granted an Award.



 



    2.26  “Incentive Stock Option”
    means an Option granted under Section 6 that is
    intended to meet the requirements of Section 422 of the
    Code.



 



    2.27  “including” or
    “includes” means “including, but
    not limited to,” or “includes, but is not limited
    to,” respectively.



 



    2.28  “Non-Qualified Stock
    Option” means an Option granted under
    Section 6 that is not intended to be an Incentive
    Stock Option.



 



    2.29  “Option” means an
    Incentive Stock Option or Non-Qualified Stock Option.



 



    2.30  “Option Price” means the
    price at which a Share may be purchased by a Grantee pursuant to
    an Option.



 



    2.31  “Performance-Based
    Exception” means the performance-based exception
    from the tax deductibility limitations of Section 162(m) of
    the Code contained in Section 162(m)(4)(C) of the Code
    (including, to the extent applicable, the special provision for
    options thereunder).



 



    2.32  “Performance Goal” means
    the objective or subjective criteria determined by the
    Committee, the degree of attainment of which will affect
    (a) in the case of an Award other than an Annual Incentive
    Award, the amount of the Award the Grantee is entitled to
    receive or retain, and (b) in the case of an Annual
    Incentive Award, the portion of the individual’s Bonus
    Opportunity potentially payable as an Annual Incentive Award.
    Performance Goals may contain threshold, target and maximum
    levels of achievement and, to the extent the Committee intends






    

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    an Award (including an Annual Incentive Award) to comply with
    the Performance-Based Exception, the Performance Goals shall be
    chosen from among the Performance Measures set forth in
    Section 4.4(a).



 



    2.33  “Performance Measures”
    has the meaning set forth in Section 4.4(a).



 



    2.34  “Performance Period”
    means that period established by the Committee at the time
    any Performance Unit is granted or at any time thereafter during
    which any performance goals specified by the Committee with
    respect to such Award are to be measured.



 



    2.35  “Performance Unit” means
    any grant pursuant to Section 10 of (i) a bonus
    consisting of cash or other property, including Shares, the
    amount or value of which,
    and/or the
    entitlement to which, is conditioned upon the attainment of any
    performance goals specified by the Committee, or (ii) a
    unit valued by reference to a designated amount of property
    other than Shares.



 



    2.36  “Person” means any
    individual, sole proprietorship, corporation, partnership, joint
    venture, limited liability company, association, joint-stock
    company, trust, unincorporated organization, institution, public
    benefit corporation, entity or government instrumentality,
    division, agency, body or department.



 



    2.37  “Plan” has the meaning
    set forth in Section 1.1 of this Plan, and also
    includes any appendices hereto.



 



    2.38  “Restricted Stock” means
    any Share issued as an Award under the Plan that is subject to
    Restrictions.



 



    2.39  “Restricted Stock Unit”
    means the right granted as an Award under the Plan to receive a
    Share, conditioned on the satisfaction of Restrictions imposed
    by the Committee, which Restrictions may be time-based,
    performance-based or based upon the occurrence of one or more
    events or conditions.



 



    2.40  “Restrictions” means any
    restriction on a Grantee’s free enjoyment of the Shares or
    other rights underlying Awards, including (a) that the
    Grantee or other holder may not sell, transfer, pledge, or
    assign a Share or right, and (b) such other restrictions as
    the Committee may impose in the Award Agreement (including any
    restriction on the right to vote such Share and the right to
    receive any dividends). Restrictions may be based upon the
    passage of time or the satisfaction of performance criteria or
    the occurrence of one or more events or conditions, and shall
    lapse separately or in combination upon such conditions and at
    such time or times, in installments or otherwise, as the
    Committee shall specify. Awards subject to a Restriction shall
    be forfeited if the Restriction does not lapse prior to such
    date or the occurrence of such event or the satisfaction of such
    other criteria as the Committee shall determine.



 



    2.41  “Retirement” means
    (a) for an employee, the Termination of Service, other than
    for Cause or by reason of his or her death or Disability, on or
    after the earlier to occur of (i) the first day of the
    calendar month in which his or her 65th birthday occurs and
    (ii) the date on which he or she has both attained
    age 55 and completed 10 years of service with an
    Employer, as determined pursuant to the service rules described
    in The Navigators Group, Inc. Money Purchase Plan or
    (b) for a non-employee director, the Termination of
    Service, other than for Cause or by reason of his or her death,
    on or after the first day of the calendar month in which his or
    her 65th birthday occurs. Notwithstanding the foregoing:
    (i) with respect to any Grantee, who prior to the Effective
    Date met the definition of “Retirement” under The
    Navigators Group, Inc. Amended 2005 Stock Incentive Plan, shall
    continue to meet the definition of “Retirement” under
    this Plan; and (ii) with respect to any Award other than a
    Deferred Compensation Award, for a Grantee to satisfy the
    definition of “Retirement” under this Plan, the
    Committee must approve the treatment of a Termination of Service
    as a retirement.



 



    2.42  “Rule 16b-3”
    means
    Rule 16b-3
    promulgated by the SEC under the Exchange Act, as amended from
    time to time, together with any successor rule.



 



    2.43  “SEC” means the United
    States Securities and Exchange Commission, or any successor
    thereto.



 



    2.44  “Section 16 Non-Employee
    Director” means a member of the Board who satisfies
    the requirements to qualify as a “non-employee
    director” under
    Rule 16b-3.



 



    2.45  “Section 16 Person”
    means a person who is subject to potential liability under
    Section 16(b) of the Exchange Act with respect to
    transactions involving equity securities of the Company.





    

    A-5








 







    2.46  “Settlement Date” means
    the payment date for Restricted Stock Units, as set forth in
    Section 9.3(b) or 17.6, as applicable.



 



    2.47  “Share” means a share of
    the Common Stock.



 



    2.48  “Stock Appreciation Right”
    or “SAR” means a
    right granted as an Award under the Plan to receive, as of the
    date specified in the Award Agreement, an amount equal to the
    number of Shares with respect to which the SAR is exercised,
    multiplied by the excess of (a) the Fair Market Value of
    one Share on the Exercise Date over (b) the Strike Price.



 



    2.49  “Strike Price” means the
    per Share price used as the baseline measure for the value of a
    SAR, as specified in the applicable Award Agreement.



 



    2.50  “Subsidiary” means any
    Person that directly, or through one or more intermediaries, is
    controlled by the Company and that would be treated as part of a
    single controlled group of corporations with the Company under
    Sections 414(b) and 414(c) of the Code if the language
    “at least 50 percent” is used instead of “at
    least 80 percent” each place it appears in
    Sections 1563(a)(1), (2) and (3) of the Code and
    Treas. Reg.
    Section 1.414(c)-2.



 



    2.51  “Substitute Award” has
    the meaning set forth in Section 5.6.



 



    2.52  “Term” means the period
    beginning on the Grant Date of an Option or SAR and ending on
    the date such Option or SAR expires, terminates or is cancelled.



 



    2.53  “Termination of Service”
    occurs (a) on the first day on which an individual is for
    any reason no longer providing services to an Employer in the
    capacity of an employee, director, independent contractor or
    consultant or (b) with respect to an individual who is an
    employee, independent contractor or consultant to a Subsidiary,
    the first day on which such entity ceases to be a Subsidiary of
    the Company and such individual is no longer providing services
    to the Company or another Subsidiary; provided,
    however, that the Committee shall have the discretion to
    determine when a Grantee, who terminates services as an
    employee, but continues to provide services in the capacity of a
    consultant or independent contractor immediately following such
    termination, has incurred a Termination of Service.
    Notwithstanding the foregoing, in the case of a Deferred
    Compensation Award, Termination of Service shall mean a
    “separation from service” within the meaning of Treas.
    Reg.
    Section 1.409A-1(h)
    or as permitted under Section 409A of the Code.



 



    2.54  “Year” means a calendar
    year.



 



    Section 3.  Administration



 



    3.1  Committee.



 



    (a) Subject to Section 3.2, the Plan shall be
    administered by the Compensation Committee of the Board unless
    otherwise determined by the Board (the
    ‘‘Committee”). The members of the
    Committee shall be appointed by the Board from time to time and
    may be removed by the Board from time to time. To the extent the
    Board considers it desirable to comply with
    Rule 16b-3
    or meet the Performance-Based Exception, the Committee shall
    consist of two or more directors of the Company, all of whom
    qualify as “outside directors” within the meaning of
    Section 162(m) of the Code and Section 16 Non-Employee
    Directors. The number of members of the Committee shall from
    time to time be increased or decreased, and shall be subject to
    such conditions, in each case if and to the extent the Board
    deems it appropriate to permit transactions in Shares pursuant
    to the Plan to satisfy such conditions of
    Rule 16b-3
    and the Performance-Based Exception as then in effect.



 



    (b) Subject to Section 4.4(c), the Committee
    may delegate, to the fullest extent permitted under Delaware
    General Corporation Law, to the Chief Executive Officer or Chief
    Financial Officer of the Company any or all of the authority of
    the Committee with respect to the grant of Awards to Grantees,
    other than Grantees who are executive officers, or are (or are
    expected to be) Covered Employees
    and/or are
    Section 16 Persons at the time any such delegated
    authority is exercised.





    

    A-6








 







    3.2  Powers of the
    Committee.  Subject to and consistent with the
    provisions of the Plan, the Committee shall have full power and
    authority and sole discretion as follows:



 



    (a) to determine when, to whom (i.e., what Eligible
    Persons) and in what types and amounts Awards should be granted;



 



    (b) to grant Awards to Eligible Persons in any number, and
    to determine the terms and conditions applicable to each Award
    (including conditions intended to comply with Section 409A
    of the Code, the number of Shares or the amount of cash or other
    property to which an Award will relate, any Option Price or
    Strike Price, grant price or purchase price, any limitation or
    Restriction, any schedule for or performance conditions relating
    to the earning of the Award or the lapse of limitations,
    forfeiture restrictions, restrictive covenants, restrictions on
    exercisability or transferability, any performance goals,
    including those relating to the Company
    and/or a
    Subsidiary
    and/or any
    division thereof
    and/or an
    individual,
    and/or
    vesting based on the passage of time, based in each case on such
    considerations as the Committee shall determine);



 



    (c) to determine the benefit (including any Bonus
    Opportunity) payable under any Award and to determine whether
    any performance or vesting conditions, including Performance
    Measures or Performance Goals, have been satisfied;



 



    (d) to determine whether or not specific Awards shall be
    granted in connection with other specific Awards;



 



    (e) to determine the Term, as applicable;



 



    (f) to determine the amount, if any, that a Grantee shall
    pay for Restricted Stock, whether to permit or require the
    payment of cash dividends thereon to be deferred and the terms
    related thereto, when Restricted Stock (including Restricted
    Stock acquired upon the exercise of an Option) shall be
    forfeited and whether such Shares shall be held in escrow or
    other custodial arrangement;



 



    (g) to determine whether, to what extent and under what
    circumstances an Award may be settled in, or the exercise price
    of an Award may be paid in, cash, Shares, other Awards or other
    property, or an Award may be accelerated, vested, canceled,
    forfeited or surrendered or any terms of the Award may be
    waived, and to accelerate the exercisability of, and to
    accelerate or waive any or all of the terms and conditions
    applicable to, any Award or any group of Awards for any reason
    and at any time or to extend the period subsequent to the
    Termination of Service within which an Award may be exercised;



 



    (h) to determine with respect to Awards granted to Eligible
    Persons, whether, to what extent and under what circumstances
    cash, Shares, other Awards, other property and other amounts
    payable with respect to an Award will be deferred, either at the
    election of the Grantee or if and to the extent specified in the
    Award Agreement automatically or at the election of the
    Committee (for purposes of limiting loss of deductions pursuant
    to Section 162(m) of the Code or otherwise) and to provide
    for the payment of interest or other rate of return determined
    with reference to a predetermined actual investment or
    independently set interest rate, or with respect to other bases
    permitted under Section 162(m) or 409A of the Code, for the
    period between the date of exercise and the date of payment or
    settlement of the Award;



 



    (i) to make such adjustments or modifications to Awards to
    Grantees who are working outside the United States as are
    advisable to fulfill the purposes of the Plan or to comply with
    applicable local law and to establish
    sub-plans
    for an Eligible Person outside the United States with such
    provisions as are consistent with the Plan as may be suitable in
    other jurisdictions;



 



    (j) to determine whether a Grantee has a Disability or a
    Retirement;



 



    (k) to determine whether and under what circumstances a
    Grantee has incurred a Termination of Service (e.g.,
    whether Termination of Service was for Cause);



 



    (l) to make, amend, suspend, waive and rescind rules and
    regulations relating to the Plan;



 



    (m) without the consent of the Grantee, to make adjustments
    in the terms and conditions of, and the criteria in, Awards in
    recognition of unusual or nonrecurring events (including events
    described in Section 4.2)






    

    A-7








 







    affecting an Employer or the financial statements of an
    Employer, or in response to changes in applicable laws,
    regulations or accounting principles; provided,
    however, that in no event shall such adjustment increase
    the value of an Award for a person expected to be a Covered
    Employee for whom the Committee desires to have the
    Performance-Based Exception apply;



 



    (n) to appoint such agents as the Committee may deem
    necessary or advisable to administer the Plan;



 



    (o) to determine the terms and conditions of all Award
    Agreements applicable to Eligible Persons (which need not be
    identical) and, with the consent of the Grantee (except as
    provided in this Section 3.2(o) and
    Sections 5.5 and 14.2), to amend any such
    Award Agreement at any time; provided, however,
    that the consent of the Grantee shall not be required for any
    amendment (i) that does not adversely affect the rights of
    the Grantee, or (ii) that is necessary or advisable (as
    determined by the Committee) to carry out the purpose of the
    Award as a result of any new applicable law or regulation or
    change in an existing applicable law or regulation or
    interpretation thereof, or (iii) to the extent the Award
    Agreement specifically permits amendment without consent;



 



    (p) to impose such additional terms and conditions upon the
    grant, exercise or retention of Awards as the Committee may,
    before or concurrently with the grant thereof, deem appropriate,
    including limiting the percentage of Awards which may from time
    to time be exercised by a Grantee, and including requiring the
    Grantee to enter into restrictive covenants;



 



    (q) to correct any defect or supply any omission or
    reconcile any inconsistency, and to construe and interpret the
    Plan, the rules and regulations, and Award Agreement or any
    other instrument entered into or relating to an Award under the
    Plan; and



 



    (r) to take any other action with respect to any matters
    relating to the Plan for which it is responsible and to make all
    other decisions and determinations, including factual
    determinations, as may be required under the terms of the Plan
    or as the Committee may deem necessary or advisable for the
    administration of the Plan.



 



    Any action of the Committee with respect to the Plan shall be
    final, conclusive and binding on all Persons, including the
    Company, its Subsidiaries, any Grantee, any Eligible Person, any
    Person claiming any rights under the Plan from or through any
    Grantee, and stockholders, except to the extent the Committee
    may subsequently modify, or take further action not consistent
    with, its prior action. If not specified in the Plan, the time
    at which the Committee must or may make any determination shall
    be determined by the Committee, and any such determination may
    thereafter be modified by the Committee. The express grant of
    any specific power to the Committee, and the taking of any
    action by the Committee, shall not be construed as limiting any
    power or authority of the Committee.



 



    All determinations of the Committee shall be made by a majority
    of its members; provided, however, that any determination
    affecting any Awards made or to be made to a member of the
    Committee may, at the Board’s election, be made by the
    Board.



 



    Section 4.  Shares Subject
    to the Plan and Adjustments



 



    4.1  Number of Shares Available for
    Grants.



 



    (a) Subject to adjustment as provided in
    Section 4.2, the aggregate number of Shares which
    may be delivered under the Plan shall be the Shares available
    under the prior version of the Plan (i.e.,
    1,500,000 Shares) (the “Available
    Shares”). For purposes of this
    Section 4.1(a), each Share delivered pursuant to the
    Plan shall reduce the Available Shares by one (1) Share. If
    any Shares subject to an Award granted hereunder are forfeited
    or such Award otherwise terminates without the delivery of such
    Shares, the Shares subject to such Award, to the extent of any
    such forfeiture or termination, shall again be or become
    available for grant under the Plan. If any Award is settled in
    cash, the Shares subject to such Award that are not delivered
    shall be again or become available for grants under the Plan.



 



    (b) The Committee shall from time to time determine the
    appropriate methodology for calculating the number of Shares
    that have been delivered pursuant to the Plan. Shares delivered
    pursuant to the Plan may be, in whole or in part, authorized and
    unissued Shares, or treasury Shares, including Shares
    repurchased by the Company for purposes of the Plan.





    

    A-8








 







    (c) The maximum number of shares of Common Stock that may
    be issued under the Plan in this Section 4.1 shall
    not be affected by (i) the payment in cash of dividends or
    Dividend Equivalents in connection with outstanding Awards or
    (ii) any Shares required to satisfy Substitute Awards.



 



    4.2  Adjustments in Authorized Shares and
    Awards.



 



    (a) In the event that the Committee determines that any
    dividend or other distribution (whether in the form of cash,
    Shares, or other securities or property), stock split or
    combination, forward or reverse merger, reorganization,
    subdivision, consolidation or reduction of capital,
    recapitalization, consolidation, scheme of arrangement,
    split-up,
    spin-off or combination involving the Company or repurchase or
    exchange of Shares, issuance of warrants or other rights to
    purchase Shares or other securities of the Company, or other
    similar corporate transaction or event affects the Shares such
    that an adjustment is determined by the Committee to be
    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: (i) the number
    and type of Shares (or other securities or property) with
    respect to which Awards may be granted, (ii) the number and
    type of Shares (or other securities or property) subject to
    outstanding Awards, (iii) the grant or exercise price with
    respect to any Award or, if deemed appropriate, make provision
    for a cash payment to the holder of an outstanding Award,
    (iv) the number and kind of Shares of outstanding
    Restricted Stock or relating to any other outstanding Award in
    connection with which Shares are subject, and (v) the
    number of Shares with respect to which Awards may be granted to
    a Grantee; provided, however, in each case, that
    with respect to Awards of Incentive Stock Options intended to
    continue to qualify as Incentive Stock Options after such
    adjustment, no such adjustment shall be authorized to the extent
    that such adjustment would cause the Incentive Stock Option to
    fail to continue to qualify under Section 424(a) of the
    Code; provided further that the number of Shares subject
    to any Award denominated in Shares shall always be a whole
    number.



 



    (b) Notwithstanding Section 4.2(a), any
    adjustments made pursuant to Section 4.2(a) shall be
    made in such a manner as to ensure that after such adjustment,
    the Awards continue not to be deferred compensation subject to
    Section 409A of the Code (or if such Awards are already
    subject to Code Section 409A, so as not to give rise to
    adverse tax consequences under Section 409A of the Code).



 



    4.3  Compliance With Section 162(m) of the
    Code.



 



    (a) Section 162(m)
    Compliance.  To the extent the Committee
    determines that compliance with the Performance-Based Exception
    is desirable with respect to an Award, Sections 4.3
    and 4.4 shall apply. In the event that changes are made
    to Section 162(m) of the Code to permit flexibility with
    respect to any Awards available under the Plan, the Committee
    may, subject to this Sections 4.3, make any
    adjustments to such Awards as it deems appropriate.



 



    (b) Annual Individual
    Limitations.  No Grantee may be granted Awards
    for Options, or SARs with respect to a number of Shares in any
    one calendar year exceeding 500,000 Shares. No Grantee may
    be granted Awards for Restricted Stock, Restricted Stock Units
    or Performance Units (or any other Award, other than Options or
    SARs, that is determined by reference to the value of Shares or
    appreciation in the value of Shares) with respect to a number of
    Shares in any one calendar year exceeding 250,000 Shares.
    If an Award denominated in Shares is cancelled, the Shares
    subject to the cancelled Award continue to count against the
    maximum number of Shares which may be granted to a Grantee in
    any calendar year. All Shares specified in this
    Section 4.3(b) shall be adjusted to the extent
    necessary to reflect adjustments to Shares required by
    Section 4.2. No Grantee may be granted a cash
    Award, the maximum payout for which would exceed $3,000,000
    during any calendar year. No Grantee may be granted a cash Award
    for a Performance Period of more than one Year, the maximum
    payout for which would exceed $5,000,000.



 



    4.4  Performance Based Exception Under
    Section 162(m).



 



    (a) Performance Measures.  Subject
    to Section 4.4(d), unless and until the Committee
    proposes for stockholder vote and stockholders approve a change
    in the general Performance Measures set forth in this
    Section 4.4(a),






    

    A-9








 







    for Awards (other than Options and SARs) designed to qualify for
    the Performance-Based Exception, the objective performance
    criteria shall be based upon one or more of the following (each
    a “Performance Measure”):



 



    (i) Earnings before any or all of interest, tax,
    depreciation or amortization (actual and adjusted and either in
    the aggregate or on a per-Share basis),



 



    (ii) Earnings (either in the aggregate or on a per-Share
    basis),



 



    (iii) Net income or loss (either in the aggregate or on a
    per-Share basis),



 



    (iv) Operating profit,



 



    (v) Cash flow (either in the aggregate or on a per-Share
    basis),



 



    (vi) Free cash flow (either in the aggregate on a per-Share
    basis),



 



    (vii) Costs,



 



    (viii) Gross or net revenues,



 



    (ix) Reductions in expense levels,



 



    (x) Operating and maintenance cost management and employee
    productivity,



 



    (xi) Share price or total shareholder return (including
    growth measures and total stockholder return or attainment by
    the Shares of a specified value for a specified period of time),



 



    (xii) Net economic value,



 



    (xiii) Economic value added,



 



    (xiv) Return on shareholders’ equity,



 



    (xv) Book value per share,



 



    (xvi) Aggregate product unit and pricing targets,



 



    (xvii) Strategic business criteria, consisting of one or
    more objectives based on meeting specified revenue, market
    share, market penetration, geographic business expansion goals,
    objectively identified project milestones, production volume
    levels, cost targets, and goals relating to acquisitions or
    divestitures,



 



    (xviii) Achievement of objectives relating to diversity,
    employee turnover or other human capital metrics,



 



    (xix) Results of customer satisfaction surveys, and/or



 



    (xx) Debt ratings, debt leverage and debt service;



 



    Provided, however, that applicable Performance Measures
    may be applied on a pre- or post-tax basis; provided further
    that the Committee may, on the Grant Date of an Award
    intended to comply with the Performance-Based Exception, and in
    the case of other Awards, at any time, provide that the formula
    for such Award may include or exclude items to measure specific
    objectives, such as losses from discontinued operations,
    extraordinary gains or losses, the cumulative effect of
    accounting changes, acquisitions or divestitures, foreign
    exchange impacts and any unusual, nonrecurring gain or loss.



 



    (b) Flexibility in Setting Performance
    Measures.  For Awards intended to comply with
    the Performance-Based Exception, the Committee shall set the
    Performance Measures within the time period prescribed by
    Section 162(m) of the Code. The levels of performance
    required with respect to Performance Measures may be expressed
    in absolute or relative levels and may be based upon a set
    increase, set positive result, maintenance of the status quo,
    set decrease or set negative result. Performance Measures may
    differ for Awards to different Grantees. The Committee shall
    specify the weighting (which may be the same or different for
    multiple objectives) to be given to each performance objective
    for purposes of determining the final amount payable with
    respect to any such Award. Any one or more of the Performance
    Measures may apply to the Grantee, a department, unit, division
    or function within the Company or any one or more Subsidiaries;
    and may apply either alone or relative to the






    

    A-10








 







    performance of other companies (including groups of companies),
    businesses or individuals (including industry or general market
    indices).



 



    (c) Adjustments.  The Committee
    shall have the discretion to adjust the determinations of the
    degree of attainment of the pre-established performance goals;
    provided, however, that Awards which are designed to
    qualify for the Performance-Based Exception may not (unless the
    Committee determines to amend the Award so that it no longer
    qualified for the Performance-Based Exception) be adjusted
    upward (the Committee shall retain the discretion to adjust such
    Awards downward). The Committee may not, unless the Committee
    determines to amend the Award so that it no longer qualifies for
    the Performance-Based Exception, delegate any responsibility
    with respect to Awards intended to qualify for the
    Performance-Based Exception. All determinations by the Committee
    as to the achievement of the Performance Measure(s) shall be in
    writing prior to payment of the Award.



 



    (d) Changes to Performance
    Measures.  In the event that applicable laws,
    rules or regulations change to permit Committee discretion to
    alter the governing Performance Measures without obtaining
    stockholder approval of such changes, and still qualify for the
    Performance-Based Exception, the Committee shall have sole
    discretion to make such changes without obtaining stockholder
    approval.



 



    Section 5.  Eligibility
    and General Conditions of Awards



 



    5.1  Eligibility.  The
    Committee may in its discretion grant Awards to any Eligible
    Person, whether or not he or she has previously received an
    Award.



 



    5.2  Award Agreement.  To the
    extent not set forth in the Plan, the terms and conditions of
    each Award shall be set forth in an Award Agreement.



 



    5.3  General Terms and Termination of
    Service.  Except as provided in an Award
    Agreement or as otherwise provided below in this
    Section 5.3, all Options or SARs that have not been
    exercised, or any other Awards that remain subject to
    Restrictions or which are not otherwise vested or exercisable,
    at the time of a Termination of Service shall be cancelled and
    forfeited to the Company. Any Restricted Stock that is forfeited
    by the Grantee upon Termination of Service shall be reacquired
    by the Company, and the Grantee shall sign any document and take
    any other action required to assign such Shares back to the
    Company.



 



    (a) Options and SARS.  Except as
    otherwise provided in an Award Agreement or in
    Section 12:



 



    (i) If the Grantee, who is an employee or director of an
    Employer, incurs a Termination of Service due to his or her
    Disability or Retirement, such Grantee’s outstanding and
    unvested Options and SARs will become fully vested and
    exercisable at the time of such Termination of Service, and all
    of such Grantee’s outstanding Options and SARs will remain
    exercisable for a period of six (6) months from the date of
    such Termination of Service (but not beyond the original Term).
    To the extent the Options or SARs are not exercised at the end
    of such period, the Options or SARs will be immediately
    cancelled and forfeited to the Company.



 



    (ii) If the Grantee incurs a Termination of Service due to
    his or her death, such Grantee’s outstanding and unvested
    Options and SARs will become fully vested and exercisable at the
    time of such Termination of Service, and all of such
    Grantee’s outstanding Options and SARs will remain
    exercisable for a period of six months (but not beyond the
    original Term) after the date of the qualification of a
    representative of his or her estate. To the extent the Options
    or SARs are not exercised at the end of such period, the Options
    or SARs shall be immediately cancelled and forfeited to the
    Company.



 



    (iii) If the Grantee incurs a Termination of Service for
    Cause, all of such Grantee’s Options and SARs, whether
    vested or unvested, will be immediately canceled and forfeited
    to the Company.



 



    (iv) If the Grantee incurs a Termination of Service for any
    reason other than as described in Sections 5.3(a)(i)
    through (iii) or in Section 12, the
    Grantee’s outstanding Options and SARs may thereafter be
    exercised, to the extent they were vested and exercisable at the
    time of such Termination of Service, for a period of
    90 days from the date of such Termination of Service (but
    not beyond the original Term). To the extent the Options or SARs
    are not exercised at the end of such 90 day period, the
    Options or SARs shall be immediately cancelled and forfeited to
    the Company. To the extent the Options and SARs are not vested
    and






    

    A-11








 







    exercisable at the date of such Termination of Service, they
    shall be immediately cancelled and forfeited to the Company.



 



    (b) Restricted Stock.  Except as
    otherwise provided in an Award Agreement or in
    Section 12:



 



    (i) If Termination of Service by a director or employee
    occurs by reason of the Grantee’s Disability or Retirement,
    such Grantee’s Restricted Stock shall become immediately
    vested and no longer subject to the applicable Restrictions.



 



    (ii) If the Grantee incurs a Termination of Service by
    reason of death, such Grantee’s Restricted Stock shall
    become immediately vested and no longer subject to the
    applicable Restrictions.



 



    (iii) If the Grantee incurs a Termination of Service for
    any reason other than as described in
    Section 5.3(b)(i) or (ii) while the
    Grantee’s Restricted Stock is subject to a Restriction(s),
    all of such Grantee’s Restricted Stock that is unvested or
    still subject to Restrictions shall be forfeited by the Grantee
    and must be immediately delivered to the Company.



 



    (c) Dividend Equivalents.  If
    Dividend Equivalents have been credited (but not yet paid to the
    Grantee) with respect to any Award and such Award (in whole or
    in part) is forfeited, all Dividend Equivalents credited in
    connection with such forfeited Award (or portion of an Award)
    shall also be forfeited to the Company.



 



    (d) Performance Awards.  The
    Committee may provide in an Award Agreement that the
    Grantee’s Performance Awards vest upon a Termination of
    Service; provided that the accelerated vesting of any
    Award intended to meet the Performance-Based Exception shall be
    limited to an acceleration described in Section 12.1
    and a Termination of Service because of the Grantee’s death
    or Disability.



 



    (e) Restricted Stock Units.  Unless
    otherwise provided in an Award Agreement, Restricted Stock Units
    will vest pursuant to Section 9.2(b) and the Grantee
    will forfeit any Award of Restricted Stock Units that are
    unvested at the Grantee’s Termination of Service date. The
    Committee has the discretion to provide, in the Award Agreement
    at the time of Grant, that Restricted Stock Units will vest upon
    a Termination of Service, subject to the following:



 



    (i) Vesting acceleration that does not create a
    Deferred Compensation Award.  If the Award
    Agreement limits the Termination of Service events that cause
    the Restricted Stock Units to become fully vested to those that
    do not create a Deferred Compensation Award, then the Restricted
    Stock Units will be paid pursuant to Section 9.3.



 



    (ii) Vesting acceleration that creates a Deferred
    Compensation Award.  If the Award Agreement
    provides that vesting may be accelerated by any event that
    causes the Restricted Stock Units to be a Deferred Compensation
    Award (e.g., full vesting at Retirement), then the Award
    Agreement must specify each event that may result in the payment
    of the Award and the timing of each such payment, as described
    in Section 17.6(c).



 



    (f) Waiver by
    Committee.  Notwithstanding the foregoing
    provisions of this Section 5.3, the Committee may in
    its sole discretion as to all or part of any Award as to any
    Grantee, at the time the Award is granted or thereafter,
    determine that Awards shall become exercisable or vested upon a
    Termination of Service, determine that Awards shall continue to
    become exercisable or vested in full or in installments after
    Termination of Service, extend the period for exercise of
    Options or SARs following Termination of Service (but not beyond
    the original Term), or provide that any Award shall in whole or
    in part not be forfeited upon such Termination of Service.
    Notwithstanding the preceding sentence, the Committee shall not
    have the authority under this Section 5.3(e) to take
    any action with respect to an Award to the extent that such
    action would cause an Award that is not intended to be deferred
    compensation subject to Section 409A of the Code to be
    subject thereto (or if such Awards are already subject to
    Section 409A of the Code, so as not to give rise to
    liability under Section 409A of the Code), unless the
    Grantee consents to such application of Section 409A of the
    Code.



 



    5.4  Nontransferability of Awards.



 



    (a) Each Award and each right under any Award shall be
    exercisable only by the Grantee during the Grantee’s
    lifetime, or, if permissible under applicable law, by the
    Grantee’s guardian or legal representative.





    

    A-12








 







    (b) No Award (prior to the time, if applicable, Shares are
    delivered in respect of such Award), and no right under any
    Award, may be assigned, alienated, pledged, attached, sold or
    otherwise transferred or encumbered by a Grantee other than by
    will or by the laws of descent and distribution, and any such
    purported assignment, alienation, pledge, attachment, sale,
    transfer or encumbrance shall be void and unenforceable against
    any Employer; provided, however, that the designation of
    a Beneficiary to receive benefits in the event of the
    Grantee’s death or the transfer of Restricted Stock by the
    Grantee to the Company shall not constitute an assignment,
    alienation, pledge, attachment, sale, transfer or encumbrance
    for purposes of this Section 5.4(b). If so
    determined by the Committee, a Grantee may, in the manner
    established by the Committee, designate a Beneficiary or
    Beneficiaries to exercise the rights of the Grantee, and to
    receive any distribution with respect to any Award upon the
    death of the Grantee. A transferee, Beneficiary, guardian, legal
    representative or other person claiming any rights under the
    Plan from or through any Grantee shall be subject to the
    provisions of the Plan and any applicable Award Agreement,
    except to the extent the Plan and Award Agreement otherwise
    provide with respect to such persons, and to any additional
    restrictions or limitations deemed necessary or appropriate by
    the Committee.



 



    (c) Nothing herein shall be construed as requiring the
    Committee to honor the order of a domestic relations court
    regarding an Award, except to the extent required under
    applicable law.



 



    5.5  Cancellation and Rescission of
    Awards.  Unless the Award Agreement specifies
    otherwise, the Committee may cancel, rescind, suspend, withhold,
    or otherwise limit or restrict any unexercised or unsettled
    Award at any time if the Grantee is not in compliance with all
    applicable provisions of the Award Agreement and the Plan or is
    in violation of any restrictive covenant or other agreement with
    an Employer.



 



    5.6  Substitute Awards.  The
    Committee may, in its discretion and on such terms and
    conditions as the Committee considers appropriate in the
    circumstances, grant Substitute Awards under the Plan. For
    purposes of this Section 5.6, “Substitute
    Award” means an Award granted under the Plan in
    substitution for stock and stock-based awards (“Acquired
    Entity Awards”) held by current and former employees or
    non-employee directors of, or consultants to, another
    corporation or entity who become Eligible Persons as the result
    of a merger, consolidation or combination of the employing
    corporation or other entity (the “Acquired
    Entity”) with the Company or a Subsidiary or the
    acquisition by the Company or a Subsidiary of property or stock
    of the Acquired Entity immediately prior to such merger,
    consolidation, acquisition or combination (“Acquisition
    Date”) in order to preserve for the Grantee the
    economic value of all or a portion of such Acquired Entity Award
    at such price as the Committee determines necessary to achieve
    preservation of economic value.



 



    5.7  Exercise by
    Non-Grantee.  If any Award is exercised as
    permitted by the Plan by any Person other than the Grantee, the
    exercise notice shall be accompanied by such documentation as
    may reasonably be required by the Committee, including, without
    limitation, evidence of authority of such Person or Persons to
    exercise the Award and, if the Committee so specifies, evidence
    satisfactory to the Company that any death taxes payable with
    respect to such Shares have been paid or provided for.



 



    5.8  No Cash Consideration for
    Awards.  Awards may be granted for no cash
    consideration or for such minimal cash consideration as may be
    required by applicable law.



 



    Section 6.  Stock
    Options



 



    6.1  Grant of
    Options.  Subject to and consistent with the
    provisions of the Plan, Options may be granted to any Eligible
    Person in such number, and upon such terms, and at any time and
    from time to time as shall be determined by the Committee.



 



    6.2  Award Agreement.  Each
    Option grant shall be evidenced by an Award Agreement in such
    form as the Committee may approve that shall specify the Grant
    Date, the Option Price, the Term (which shall not exceed
    10 years from its Grant Date unless the Committee otherwise
    specifies in the Award Agreement), the number of Shares to which
    the Option pertains, the time or times at which such Option
    shall be exercisable and such other provisions (including
    Restrictions) not inconsistent with the provisions of the Plan
    as the Committee shall determine.



 



    6.3  Option Price.  The
    purchase price per Share purchasable under an Option shall be
    determined by the Committee; provided, however,
    that such purchase price shall not be less than 100% of the Fair
    Market Value of a






    

    A-13








 







    Share on the Grant Date. Subject to the adjustment allowed in
    Section 4.2, neither the Committee nor the Board
    shall have the authority or discretion to change the Option
    Price of any outstanding Option. Without the approval of
    shareholders, neither the Committee nor the Board will amend or
    replace previously granted Options or SARs in a transaction that
    constitutes “repricing,” which for this purpose means
    any of the following or any action that has the same effect:
    (a) lowering the exercise price of an Option or SAR after
    it is granted; (b) any other action that is treated as a
    repricing under generally accepted accounting principles;
    (c) cancelling an Option or SAR at a time when its exercise
    prices exceeds the Fair Market Value of the underlying Stock, in
    exchange for another Option or SAR, Restricted Stock, other
    equity, cash or other property; provided, however, that
    the foregoing transactions shall not be deemed a repricing if
    done pursuant to an adjustment authorized under
    Section 4.2.



 



    6.4  Vesting.  Unless
    otherwise specified in the applicable Award Agreement, in
    Section 5.3(a) or in Section 12, Options
    will become vested and exercisable as follows



 



    (i) On the first anniversary of the Grant Date, 25% of the
    Options awarded to the Grantee in the applicable Award Agreement;



 



    (ii) On the second anniversary of the Grant Date, an
    additional 25% of the Options awarded to the Grantee in the
    applicable Award Agreement;



 



    (iii) On the third anniversary of the Grant Date, an
    additional 25% of the Options awarded to the Grantee in the
    applicable Award Agreement; and



 



    (iv) On the fourth anniversary of the Grant Date, the
    remaining 25% of the Options awarded to the Grantee in the
    applicable Award Agreement.



 



    6.5  Grant of Incentive Stock
    Options.  At the time of the grant of any
    Option, the Committee may in its discretion designate that such
    Option shall be made subject to additional restrictions to
    permit it to qualify as an Incentive Stock Option. Any Option
    designated as an Incentive Stock Option:



 



    (a) shall be granted only to an employee of the Company or
    a Subsidiary Corporation (as defined below);



 



    (b) shall have an Option Price of not less than 100% of the
    Fair Market Value of a Share on the Grant Date, and, if granted
    to a person who owns capital stock (including stock treated as
    owned under Section 424(d) of the Code) possessing more
    than 10% of the total combined voting power of all classes of
    capital stock of the Company or any Subsidiary Corporation (a
    ‘‘10% Owner”), have an Option Price not
    less than 110% of the Fair Market Value of a Share on its Grant
    Date;



 



    (c) shall have a Term of not more than 10 years (five
    years if the Grantee is a 10% Owner) from its Grant Date, and
    shall be subject to earlier termination as provided herein or in
    the applicable Award Agreement;



 



    (d) shall not have an aggregate Fair Market Value (as of
    the Grant Date) of the Shares with respect to which Incentive
    Stock Options (whether granted under the Plan or any other
    equity incentive plan of the Grantee’s employer or any
    parent or Subsidiary Corporation (“Other
    Plans”)) are exercisable for the first time by such
    Grantee during any calendar year (“Current
    Grant”), determined in accordance with the provisions
    of Section 422 of the Code, which exceeds $100,000 (the
    “$100,000 Limit”);



 



    (e) shall, if the aggregate Fair Market Value of the Shares
    (determined on the Grant Date) with respect to the Current Grant
    and all Incentive Stock Options previously granted under the
    Plan and any Other Plans which are exercisable for the first
    time during a calendar year (“Prior Grants”)
    would exceed the $100,000 Limit, be, as to the portion in excess
    of the $100,000 Limit, exercisable as a separate option that is
    not an Incentive Stock Option at such date or dates as are
    provided in the Current Grant;



 



    (f) shall require the Grantee to notify the Committee of
    any disposition of any Shares delivered pursuant to the exercise
    of the Incentive Stock Option under the circumstances described
    in Section 421(b) of the Code (relating to holding periods
    and certain disqualifying dispositions) (“Disqualifying
    Disposition”), within 10 days of such a
    Disqualifying Disposition;



 



    (g) shall by its terms not be assignable or transferable
    other than by will or the laws of descent and distribution and
    may be exercised, during the Grantee’s lifetime, only by
    the Grantee; provided, however, that






    

    A-14








 







    the Grantee may, to the extent provided in the Plan in any
    manner specified by the Committee, designate in writing a
    Beneficiary to exercise his or her Incentive Stock Option after
    the Grantee’s death; and



 



    (h) shall, if such Option nevertheless fails to meet the
    foregoing requirements, or otherwise fails to meet the
    requirements of Section 422 of the Code for an Incentive
    Stock Option, be treated for all purposes of this Plan, except
    as otherwise provided in subsections (d) and (e)
    above, as an Option that is not an Incentive Stock Option.



 



    For purposes of this Section 6.5,
    “Subsidiary Corporation” means a corporation
    other than the Company in an unbroken chain of corporations
    beginning with the Company if, at the time of granting the
    Option, each of the corporations other than the last corporation
    in the unbroken chain owns stock possessing 50% or more of the
    total combined voting power of all classes of stock in one of
    the other corporations in such chain. Notwithstanding the
    foregoing and Sections 3.2(o) and 14.2, the
    Committee may, without the consent of the Grantee, at any time
    before the exercise of an Option (whether or not an Incentive
    Stock Option), take any action necessary to prevent such Option
    from being treated as an Incentive Stock Option.



 



    6.6  Exercise and Payment.



 



    (a) Except as may otherwise be provided by the Committee in
    an Award Agreement, Options shall be exercised by the delivery
    of a written notice (“Notice”) to the Company
    setting forth the number of Shares to be exercised, accompanied
    by full payment (including any applicable tax withholding) for
    the Shares made by any one or more of the following means on the
    Exercise Date (or such other date as may be permitted in writing
    by the Secretary of the Company):



 



    (i) cash, personal check or wire transfer; or



 



    (ii) subject to applicable law, through the sale of the
    Shares acquired on exercise of the Option through a
    broker-dealer to whom the Grantee has submitted an irrevocable
    notice of exercise and irrevocable instructions to deliver
    promptly to the Company the amount of sale or loan proceeds
    sufficient to pay for such Shares, together with, if requested
    by the Company, the amount of applicable withholding taxes
    payable by Grantee by reason of such exercise.



 



    (b) Except as otherwise set forth and as otherwise
    determined by the Committee at the time of grant, an Option may
    be exercised either in whole or with respect to not less than
    500 Shares at any one time. Notwithstanding the foregoing,
    in the event that the vested portion of a Grantee’s Option
    pursuant to Section 6.4 is with respect to less than
    500 Shares, such Grantee may exercise the entire vested
    amount.



 



    (c) At the discretion of the Committee and subject to
    applicable law, the Company may loan a Grantee all or any
    portion of the amount payable by the Grantee to the Company upon
    exercise of the Option on such terms and conditions as the
    Committee may determine.



 



    (d) If the Option is exercised as permitted by the Plan by
    any Person other than the Grantee, the Notice shall be
    accompanied by documentation as may reasonably be required by
    the Company, including, evidence of authority of such Person or
    Persons to exercise the Option.



 



    (e) At the time a Grantee exercises an Option or to the
    extent provided by the Committee in the applicable Award
    Agreement, in lieu of accepting payment of the Option Price of
    the Option and delivering the number of Shares of Common Stock
    for which the Option is being exercised, the Committee may
    direct that the Company either (i) pay the Grantee a cash
    amount, or (ii) issue a lesser number of Shares of Common
    Stock, in any such case, having a Fair Market Value on the
    Exercise Date equal to the amount, if any, by which the
    aggregate Fair Market Value (or such other amount as may be
    specified in the applicable Award Agreement, in the case of an
    exercise occurring concurrent with a Change in Control) of the
    Shares of Common Stock as to which the Option is being exercised
    exceeds the aggregate Option Price for such Shares, based on
    such terms and conditions as the Committee shall establish.



 



    Section 7.  Stock
    Appreciation Rights



 



    7.1  Grant of SARs.  Subject
    to and consistent with the provisions of the Plan, the
    Committee, at any time and from time to time, may grant SARs to
    any Eligible Person on a standalone basis only (i.e., not
    in tandem with an






    

    A-15








 







    Option). The Committee may impose such conditions or
    restrictions on the exercise of any SAR as it shall deem
    appropriate.



 



    7.2  Award Agreements.  Each
    SAR shall be evidenced by an Award Agreement in such form as the
    Committee may approve, which shall contain such terms and
    conditions not inconsistent with the provisions of the Plan as
    shall be determined from time to time by the Committee. Unless a
    shorter Term is provided in the Award Agreement, a SAR grant
    shall have a Term 10 years from the date of grant of the
    SAR.



 



    7.3  Strike Price.  The Strike
    Price of a SAR shall be determined by the Committee in its sole
    discretion; provided, however, that the Strike Price
    shall not be less than 100% of the Fair Market Value of a Share
    on the Grant Date of the SAR.



 



    7.4  Vesting.  Unless
    otherwise provided in the Award Agreement,
    Section 5.3(a) or Section 12 awarding
    the SARs, Shares subject to a SAR shall become vested and
    exercisable as follows:



 



    (i) On the first anniversary of the Grant Date, 25% of the
    SARs awarded to the Grantee in the applicable Award Agreement;



 



    (ii) On the second anniversary of the Grant Date, an
    additional 25% of the SARs awarded to the Grantee in the
    applicable Award Agreement;



 



    (iii) On the third anniversary of the Grant Date, an
    additional 25% of the SARs awarded to the Grantee in the
    applicable Award Agreement; and



 



    (iv) On the fourth anniversary of the Grant Date, the
    remaining 25% of the SARs awarded to the Grantee in the
    applicable Award Agreement.



 



    7.5  Exercise and Payment.



 



    (a) Except as may otherwise be provided by the Committee in
    an Award Agreement, SARs shall be exercised by the delivery of a
    written notice to the Company, setting forth the number of
    Shares with respect to which the SAR is to be exercised.



 



    (b) Upon exercise of a SAR, a Grantee shall be entitled to
    receive the number of Shares, rounded down to the nearest whole
    Share, the fair market value of which, in the aggregate, equals
    the Fair Market Value of the number of Shares representing the
    SARs exercised less the Strike Price of such SARs.



 



    (c) Except as otherwise set forth and as otherwise
    determined by the Committee at the time of grant, a SAR may be
    exercised either in whole or with respect to the appreciation of
    not less than 500 Shares at any one time. Notwithstanding
    the foregoing, in the event that the vested portion of a
    Grantee’s SAR pursuant to Section 7.4 is with
    respect to less than 500 Shares, such Grantee may exercise
    the entire vested amount.



 



    (d) No payment of a SAR shall be made unless applicable tax
    withholding requirements have been satisfied in accordance with
    Section 16.1 or otherwise. Any payment by the
    Company in respect of a SAR may be made in cash, Shares, other
    property, or any combination thereof, as the Committee, in its
    sole discretion, shall determine.



 



    7.6  Grant Limitations.  The
    Committee may at any time impose any other limitations or
    Restrictions upon the exercise of SARs which it deems necessary
    or desirable in order to achieve desirable tax results for the
    Grantee or the Company.



 



    Section 8.  Restricted
    Stock



 



    8.1  Grant of Restricted
    Stock.  Subject to and consistent with the
    provisions of the Plan, the Committee, at any time and from time
    to time, may grant Restricted Stock to any Eligible Person in
    such amounts as the Committee shall determine.



 



    8.2  Award Agreement.  Each
    grant of Restricted Stock shall be evidenced by an Award
    Agreement that shall specify the Restrictions, the number of
    Shares subject to the Restricted Stock Award, and such other
    provisions not inconsistent with the provisions of this Plan as
    the Committee shall determine. The Committee may impose such
    Restrictions on any Award of Restricted Stock as it deems
    appropriate, including time-based Restrictions,






    

    A-16








 







    Restrictions based upon the achievement of specific performance
    goals, Restrictions based on the occurrence of a specified
    event,
    and/or
    Restrictions under applicable securities laws.



 



    8.3  Vesting.  Except as
    otherwise provided in the Award Agreement,
    Section 5.3(b) or Section 12, Shares
    subject to a Restricted Stock Award shall become vested as
    specified herein (thereafter being referred to as
    “Unrestricted Stock”):



 



    (i) On the first anniversary of the Grant Date, 25% of the
    Restricted Stock awarded to the Grantee in the applicable Award
    Agreement;



 



    (ii) On the second anniversary of the Grant Date, an
    additional 25% of the Restricted Stock awarded to the Grantee in
    the applicable Award Agreement;



 



    (iii) On the third anniversary of the Grant Date, an
    additional 25% of the Restricted Stock awarded to the Grantee in
    the applicable Award Agreement; and



 



    (iv) On the fourth anniversary of the Grant Date, the
    remaining 25% of the Restricted Stock awarded to the Grantee in
    the applicable Award Agreement.



 



    For purposes of calculating the number of Shares of Restricted
    Stock that become Unrestricted Stock as set forth above, Share
    amounts shall be rounded to the nearest whole Share amount.



 



    8.4  Effect of Forfeiture.  If
    Restricted Stock is forfeited, such Restricted Stock shall cease
    to be outstanding, and shall no longer confer on the Grantee
    thereof any rights as a stockholder of the Company, from and
    after the date of the event causing the forfeiture, whether or
    not the Grantee accepts the Company’s tender of payment for
    such Restricted Stock.



 



    8.5  Escrow; Legends.  The
    Committee may provide that the certificates for any Restricted
    Stock (a) shall be held (together with a stock power
    executed in blank by the Grantee) in escrow by the Secretary of
    the Company until such Restricted Stock becomes nonforfeitable
    or is forfeited
    and/or
    (b) shall bear a legend restricting the transfer of such
    Restricted Stock under the Plan, as follows, unless modified by
    the Committee:.



 



    THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED
    HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE
    NAVIGATORS GROUP INC., INCENTIVE COMPENSATION PLAN (THE
    “PLAN”) APPLICABLE TO RESTRICTED SHARES AND TO
    THE RESTRICTED SHARE AGREEMENT
    DATED          (THE
    “AGREEMENT”), AND MAY NOT BE SOLD, PLEDGED,
    TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE DISPOSED OF OR
    ENCUMBERED IN ANY MANNER DURING THE RESTRICTED PERIOD SPECIFIED
    IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE
    WITH THE SECRETARY OF THE NAVIGATORS GROUP INC..



 



    If any Restricted Stock becomes nonforfeitable, the Company
    shall cause certificates for such Shares to be delivered without
    such legend or shall cause a release of restrictions on a book
    entry account maintained by the Company’s transfer agent.



 



    8.6  Stockholder Rights in Restricted
    Stock.  Restricted Stock, whether held by a
    Grantee or in escrow or other custodial arrangement by the
    Secretary of the Company, shall confer on the Grantee all rights
    of a stockholder of the Company, except as otherwise provided in
    the Plan or Award Agreement. At the time of a grant of
    Restricted Stock, the Committee may require the payment of cash
    dividends thereon to be deferred and, if the Committee so
    determines, reinvested in additional Shares of Restricted Stock.
    Stock dividends and deferred cash dividends issued with respect
    to Restricted Stock shall be subject to the same restrictions
    and other terms as apply to the Shares of Restricted Stock with
    respect to which such dividends are issued. The Committee may in
    its discretion provide for payment of interest on deferred cash
    dividends.



 



    Section 9.  Restricted
    Stock Units



 



    9.1  Grant of Restricted Stock
    Units.  Subject to and consistent with the
    provisions of the Plan and applicable requirements of
    Sections 409A(2), (3) and (4) of the Code, the
    Committee, at any time and from time






    

    A-17








 







    to time, may grant Restricted Stock Units to any Eligible
    Person, in such amount and upon such terms as the Committee
    shall determine. A Grantee shall have no voting rights in
    Restricted Stock Units.



 



    9.2  Award Agreement.  Each
    grant of Restricted Stock Units shall be evidenced by an Award
    Agreement that shall specify the Restrictions, the number of
    Shares subject to the Restricted Stock Units granted, and such
    other provisions as the Committee shall determine in accordance
    with the Plan and Section 409A of the Code.



 



    (a) The Committee may impose such Restrictions on
    Restricted Stock Units, including Restrictions based on the
    passage of time, achievement of specific performance goals,
    time-based Restrictions following the achievement of specific
    performance goals, Restrictions based on the occurrence of a
    specified event,
    and/or
    Restrictions under applicable securities laws.



 



    (b) Except as otherwise provided in the Award Agreement,
    Section 5.3(e) or Section 12, Restricted
    Stock Units shall become vested as specified herein:



 



    (i) On the first anniversary of the Grant Date, 25% of the
    Restricted Stock Units awarded to the Grantee in the applicable
    Award Agreement;



 



    (ii) On the second anniversary of the Grant Date, an
    additional 25% of the Restricted Stock Units awarded to the
    Grantee in the applicable Award Agreement;



 



    (iii) On the third anniversary of the Grant Date, an
    additional 25% of the Restricted Stock Units awarded to the
    Grantee in the applicable Award Agreement; and



 



    (iv) On the fourth anniversary of the Grant Date, the
    remaining 25% of the Restricted Stock Units awarded to the
    Grantee in the applicable Award Agreement.



 



    9.3  Crediting Restricted Stock
    Units.  The Company shall establish an account
    (“RSU Account”) on its books for each Eligible
    Person who receives a grant of Restricted Stock Units.
    Restricted Stock Units shall be credited to the Grantee’s
    RSU Account as of the Grant Date of such Restricted Stock Units.
    RSU Accounts shall be maintained for recordkeeping purposes only
    and the Company shall not be obligated to segregate or set aside
    assets representing securities or other amounts credited to RSU
    Accounts. The obligation to make distributions of securities or
    other amounts credited to RSU Accounts shall be an unfunded,
    unsecured obligation of the Company.



 



    (a) Crediting of Dividend
    Equivalents.  The Committee may, in its
    discretion, pay dividends or otherwise make distributions with
    respect to Shares. Any such Dividend Equivalents shall be
    credited to RSU Accounts on all Restricted Stock Units credited
    thereto as of the record date for such dividend or distribution.
    Such Dividend Equivalents shall be credited to the RSU Account
    in the form of additional Restricted Stock Units in a number
    determined by dividing the aggregate value of such Dividend
    Equivalents by the Fair Market Value of a Share at the payment
    date of such dividend or distribution. The Restrictions on the
    Restricted Stock Units represented by such Dividend Equivalents
    shall lapse simultaneously with the Restrictions on the
    Restricted Stock Units on which such Dividend Equivalents were
    paid.



 



    (b) Settlement of RSU
    Accounts.  The Company shall settle an RSU
    Account by delivering to the holder thereof (which may be the
    Grantee or his or her Beneficiary, as applicable) a number of
    Shares equal to the whole number of Shares underlying the
    Restricted Stock Units then credited to the Grantee’s RSU
    Account (or a specified portion in the event of any partial
    settlement); provided, however, that any fractional
    Shares underlying Restricted Stock Units remaining in the RSU
    Account on the Settlement Date shall be distributed in cash in
    an amount equal to the Fair Market Value of a Share as of the
    Settlement Date multiplied by the remaining fractional
    Restricted Stock Unit. Unless otherwise provided in an Award
    Agreement, the Settlement Date for all Restricted Stock Units
    credited to a Grantee’s RSU Account shall be the as soon as
    administratively practical following when Restrictions
    applicable to an Award of Restricted Stock Units have lapsed,
    but in no event shall such Settlement Date be later than March
    15 of the calendar year following the calendar year in which the
    Restrictions applicable to an Award of Restricted Stock Units
    have lapsed.



 



    Section 10.  Performance
    Units



 



    10.1  Grant of Performance
    Units.  Subject to and consistent with the
    provisions of the Plan, Performance Units may be granted to any
    Eligible Person in such number and upon such terms, and at any
    time and from time to






    

    A-18








 







    time, as shall be determined by the Committee. Performance Units
    shall be evidenced by an Award Agreement in such form as the
    Committee may approve, which shall contain such terms and
    conditions not inconsistent with the provisions of the Plan as
    shall be determined from time to time by the Committee.



 



    10.2  Value/Performance
    Goals.  The Committee shall set performance
    goals in its discretion which, depending on the extent to which
    they are met during a Performance Period, will determine the
    number or value of Performance Units that will be paid to the
    Grantee at the end of the Performance Period. Each Performance
    Unit shall have an initial value that is established by the
    Committee at the time of grant. The performance goals for Awards
    of Performance Units shall be set by the Committee at threshold,
    target and maximum performance levels with the number or value
    of the Performance Units payable tied to the degree of
    attainment of the various performance levels during the
    Performance Period. No payment shall be made with respect to a
    Performance Unit Award if the threshold performance level is not
    satisfied. If performance goals are attained between the
    threshold and target performance levels or between the target
    and maximum performance levels, the number or value of
    Performance Units under such Award shall be determined by linear
    interpolation, unless otherwise provided in an Award Agreement.
    With respect to Covered Employees and to the extent the
    Committee deems it appropriate to comply with
    Section 162(m) of the Code, all performance goals shall be
    based on objective Performance Measures satisfying the
    requirements for the Performance-Based Exception, and shall be
    set by the Committee within the time period prescribed by
    Section 162(m) of the Code and related regulations.



 



    10.3  Earning of Performance
    Units.  Except as provided in
    Section 12, after the applicable Performance Period
    has ended, the holder of Performance Units shall be entitled to
    payment based on the level of achievement of performance goals
    set by the Committee and as described in
    Section 10.2. If the Performance Unit is
    intended to comply with the Performance-Based Exception, the
    Committee shall certify the level of achievement of the
    performance goals in writing before the Award is settled. At the
    discretion of the Committee, the Award Agreement may specify
    that an Award of Performance Units is payable in cash, Shares,
    Restricted Stock or Restricted Stock Units.



 



    10.4  Adjustment on Change of
    Position.  If a Grantee is promoted, demoted
    or transferred to a different business unit of the Company
    during a Performance Period, then, to the extent the Committee
    determines that the Award, the performance goals, or the
    Performance Period are no longer appropriate, the Committee may
    adjust, change, eliminate or cancel the Award, the performance
    goals, or the applicable Performance Period, as it deems
    appropriate in order to make them appropriate and comparable to
    the initial Award, the performance goals, or the Performance
    Period.



 



    10.5  Dividend Rights.  At the
    discretion of the Committee, a Grantee may be entitled to
    receive any dividends or Dividend Equivalents declared with
    respect to Shares deliverable in connection with grants of
    Performance Units that have been earned, but not yet delivered
    to the Grantee.



 



    Section 11.  Annual
    Incentive Awards



 



    11.1  Annual Incentive
    Awards.  Subject to and consistent with the
    provisions of the Plan, Annual Incentive Awards may be granted
    to any Eligible Person in accordance with the provisions of this
    Section 11. The Committee shall designate the
    individuals eligible to be granted an Annual Incentive Award for
    a Year. In the case of an Annual Incentive Award intended to
    qualify for the Performance-Based Exception, such designation
    shall occur within the first 90 days of such year. The
    Committee may designate an Eligible Person as eligible for a
    full Year or for a period of less than a full Year. The
    opportunity to be granted an Annual Incentive Award shall be
    evidenced by an Award Agreement or in such form as the Committee
    may approve, which shall specify the individual’s Bonus
    Opportunity, the Performance Goals, and such other terms not
    inconsistent with the Plan as the Committee shall determine.



 



    11.2  Determination of Amount of Annual
    Incentive Awards.



 



    (a) Aggregate Maximum.  The
    Committee may establish guidelines as to the maximum amount of
    Annual Incentive Awards payable for any Year.



 



    (b) Establishment of Performance Goals and Bonus
    Opportunities.  The Committee shall establish
    Performance Goals for the Year (which may be the same or
    different for some or all Eligible Persons) and shall establish
    the threshold, target and maximum Bonus Opportunity for each
    Grantee for the attainment of specified threshold,






    

    A-19








 







    target and maximum Performance Goals. In the case of an Annual
    Incentive Award intended to qualify for the Performance-Based
    Exception, such designation shall occur within the first
    90 days of the Year. Performance Goals and Bonus
    Opportunities may be weighted for different factors and measures
    as the Committee shall determine.



 



    (c) Committee Certification and Determination of
    Amount of Annual Incentive Award.  The
    Committee shall determine and certify in writing the degree of
    attainment of Performance Goals as soon as administratively
    practicable after the end of each Year but not later than
    60 days after the end of such Year. The Committee shall
    determine an individual’s maximum Annual Incentive Award
    based on the level of attainment of the Performance Goals (as
    certified by the Committee) and the individual’s Bonus
    Opportunity. The Committee reserves the discretion to reduce
    (but not below zero) the amount of an individual’s Annual
    Incentive Award below the maximum Annual Incentive Award. The
    determination of the Committee to reduce (or not pay) an
    individual’s Annual Incentive Award for a Year shall not
    affect the maximum Annual Incentive Award payable to any other
    individual. No Annual Incentive Award intended to qualify for
    the Performance-Based Exception shall be payable to an
    individual unless at least the threshold Performance Goal is
    attained.



 



    (d) Termination of Service.  If a
    Grantee has a Termination of Service during the Year, the
    Committee may, in its absolute discretion and under such rules
    as the Committee may from time to time prescribe, authorize the
    payment of an Annual Incentive Award to such Grantee in
    accordance with the foregoing provisions of this
    Section 11.2 and in the absence of such
    determination by the Committee the Grantee shall receive no
    Annual Incentive Award for such Year.



 



    11.3  Time of Payment of Annual Incentive
    Awards.  Annual Incentive Awards shall be paid
    as soon as administratively practicable after the Committee
    determines the amount of the Award payable under
    Section 11 but not later than two and one-half
    months after the end of such Year.



 



    11.4  Form of Payment of Annual Incentive
    Awards.  An individual’s Annual Incentive
    Award for a Year shall be paid in cash, Shares, Restricted
    Stock, Options or any other form of an Award or any combination
    thereof as provided in the Award Agreement or in such form as
    the Committee may approve.



 



    Section 12.  Change
    in Control



 



    12.1  Acceleration of
    Vesting.  Unless otherwise provided in the
    applicable Award Agreement, upon the occurrence of (a) an
    event satisfying the definition of “Change in Control”
    with respect to a particular Award, and (b) during the one
    year period immediately following such event, a Grantee’s
    involuntary Termination of Service without Cause or a
    Termination of Service for Good Reason by a Grantee, such
    Grantee’s outstanding and unvested Awards shall become
    vested, all Restrictions shall lapse and all Performance Goals
    shall be deemed to be met, as applicable; provided, however,
    that no payment of an Award shall be accelerated to the
    extent such payment would cause such Award to be subject to the
    adverse consequences described in Section 409A of the Code.
    The Committee may, in its discretion, include such further
    provisions and limitations in any Award Agreement as it may deem
    desirable.



 



    12.2  Special Treatment In the Event of a Change
    in Control.  To maintain the Grantee’s
    rights upon the occurrence of any event satisfying the
    definition of “Change in Control” with respect to an
    Award, the Committee, as constituted before such event, may, in
    its sole discretion, as to any such Award, either at the time
    the Award is made hereunder or any time thereafter, take any one
    or more of the following actions: (i) make such adjustment
    to any such Award then outstanding as the Committee deems
    appropriate to reflect such Change in Control; or
    (ii) cause any such Award then outstanding to be assumed,
    or new rights substituted therefore, by the acquiring or
    surviving entity after such Change in Control. Additionally, in
    the event of any Change in Control with respect to Options and
    SARs, the Committee, as constituted before such Change in
    Control, may, in its sole discretion (except as may be otherwise
    provided in the Award Agreement): (a) cancel any
    outstanding unexercised Options or SARs (whether or not vested)
    that have a per Share Option Price or Strike Price (as
    applicable) that is greater than the Change in Control Price; or
    (b) cancel any outstanding unexercised Options or SARs
    (whether or not vested) that have a per Share Option Price or
    Strike Price (as applicable) that is less than or equal to the
    Change in Control Price in exchange for a cash payment of an
    amount equal to (x) the difference between the Change in
    Control Price and the Option Price or Strike Price, multiplied
    by (y) the total number of Shares underlying such Option or
    SAR that are vested and exercisable at the time of the Change in
    Control. The Committee may, in its discretion, include such






    

    A-20








 







    further provisions and limits in any Award Agreement as it may
    deem desirable. The “Change in Control Price”
    means the lower of (i) the per Share Fair Market Value as
    of the date of the Change in Control, or (ii) the price
    paid per Share as part of the transaction which constitutes the
    Change in Control.



 



    Section 13.  Dividend
    Equivalents



 



    The Committee is authorized to grant Awards of Dividend
    Equivalents alone or in conjunction with other Awards (other
    than Options and SARs), on such terms and conditions as the
    Committee shall determine in accordance with Section 409A
    of the Code. Unless otherwise provided in the Award Agreement or
    in Section 9, Dividend Equivalents shall be paid
    immediately when vested and, in no event, later than March 15 of
    the calendar year following the calendar year in which such
    Dividend Equivalents vest. Unless otherwise provided in the
    Award Agreement or in Section 9, if the Grantee
    incurs a Termination of Service prior to the date such Dividend
    Equivalents vest, the Grantee’s right to such Dividend
    Equivalents shall be immediately forfeited.



 



    Section 14.  Amendments
    and Termination



 



    14.1  Amendment and
    Termination.  Subject to
    Section 14.2, the Board may at any time amend,
    alter, suspend, discontinue or terminate the Plan in whole or in
    part without the approval of the Company’s stockholders,
    provided that (a) any amendment shall be subject to the
    approval of the Company’s stockholders if such approval is
    required by any federal or state law or regulation or any stock
    exchange or automated quotation system on which the Shares may
    then be listed or quoted, and (b) any Plan amendment or
    termination will not accelerate the timing of any payments that
    constitute deferred compensation under Section 409A of the
    Code unless such acceleration of payment is permitted by
    Section 409A of the Code. Subject to the foregoing, the
    Committee may amend the Plan at any time provided that
    (i) no amendment shall impair the rights of any Grantee
    under any Award theretofore granted without such Grantee’s
    consent, and (ii) any amendment shall be subject to approval or
    rejection of the Board. The Committee may amend the terms of any
    Award, prospectively or retroactively, but no such amendment
    shall impair the rights of any Grantee without such
    Grantee’s consent, nor shall any such amendment reduce an
    Option Price or the period of Restrictions. Notwithstanding the
    foregoing, the Board shall have the authority to amend the Plan
    and outstanding Awards to take into account changes in law and
    tax and accounting rules, as well as other developments, and to
    grant Awards which qualify for beneficial treatment under such
    rules without a Grantee’s consent and without stockholder
    approval.



 



    14.2  Previously Granted
    Awards.  Except as otherwise specifically
    provided in the Plan (including Sections 3.2(o),
    5.5, 14.1) or in an Award Agreement, no
    termination, amendment or modification of the Plan shall
    adversely affect in any material way any Award previously
    granted under the Plan without the written consent of the
    Grantee of such Award.



 



    Section 15.  Beneficiary
    Designation



 



    Each Grantee under the Plan may, from time to time, name any
    Beneficiary or Beneficiaries (who may be named contingently or
    successfully) to whom any benefit under the Plan is to be paid
    in case of his or her death before he or she receives any or all
    of such benefit. Each such designation shall revoke all prior
    designations by the same Grantee, shall be in a form prescribed
    by the Company, and will be effective only when filed by the
    Grantee in writing with the Company during the Grantee’s
    lifetime. In the absence of any such designation, benefits
    remaining unpaid at the Grantee’s death shall be paid to
    the Grantee’s estate.



 



    Section 16.  Withholding



 



    16.1  Required Withholding.



 



    (a) The Committee in its sole discretion may provide that
    when taxes are to be withheld in connection with the exercise of
    an Option or a SAR or upon the lapse of Restrictions on an Award
    or upon payment of any benefit or right under this Plan (the
    Exercise Date, the date such Restrictions lapse or such payment
    of any other benefit or right occurs hereinafter referred to as
    the “Tax Date”), the Grantee may be required or
    may be permitted to elect to make payment for the withholding of
    federal, state and local taxes, including Social Security and
    Medicare (“FICA”) taxes, by one or a
    combination of the following methods:



 



    (i) payment of an amount in cash equal to the amount to be
    withheld;





    

    A-21








 







    (ii) requesting the Company to withhold from those Shares
    that would otherwise be received upon exercise of the Option or
    a SAR or upon the lapse of Restrictions on, or upon settlement
    of, any other Award, a number of Shares having a Fair Market
    Value on the Tax Date equal to the amount to be withheld; or



 



    (iii) withholding from any compensation otherwise due to
    the Grantee.



 



    The Committee in its sole discretion may provide that the
    maximum amount of tax withholding upon exercise of an Option or
    a SAR or in connection with the settlement of any other Award to
    be satisfied by withholding Shares pursuant to clause (iii)
    above shall not exceed the minimum amount of taxes, including
    FICA taxes, required to be withheld under federal, state and
    local law. An election by Grantee under this subsection is
    irrevocable. Any fractional share amount and any additional
    withholding not paid by the withholding or surrender of Shares
    must be paid in cash. If no timely election is made, the Grantee
    must deliver cash to satisfy all tax withholding requirements,
    unless otherwise provided in the Award Agreement.



 



    (b) Any Grantee who makes a Disqualifying Disposition (as
    defined in Section 6.5(f)) or an election under
    Section 83(b) of the Code shall remit to the Company an
    amount sufficient to satisfy all resulting tax withholding
    requirements in the same manner as set forth in subsection
    (a).



 



    (c) No Award shall be settled, whether in cash or in
    Shares, unless the applicable tax withholding requirements have
    been met to the satisfaction of the Committee.



 



    16.2  Notification under Section 83(b) of
    the Code.  If the Grantee makes the election
    permitted under Section 83(b) of the Code to include in
    such Grantee’s gross income in the year of transfer the
    amounts specified in Section 83(b) of the Code, then such
    Grantee shall notify the Company of such election within
    10 days of filing the notice of the election with the
    Internal Revenue Service, in addition to any filing and
    notification required pursuant to regulations issued under
    Section 83(b) of the Code. The Committee may, in connection
    with the grant of an Award or at any time thereafter, prohibit a
    Grantee from making the election described above.



 



    Section 17.  General
    Provisions



 



    17.1  Governing Law.  The
    validity, construction, and effect of the Plan and any rules and
    regulations relating to the Plan shall be determined in
    accordance with the laws of the State of Delaware, other than
    its law respecting choice of laws and applicable federal law.



 



    17.2  Severability.  If any
    provision of this Plan or any Award is or becomes or is deemed
    to be invalid, illegal or unenforceable in any jurisdiction, or
    as to any Person or Award, or would disqualify the Plan or any
    Award under any law deemed applicable by the Committee, such
    provision shall be construed or deemed amended to conform to
    applicable laws, or if it cannot be construed or deemed amended
    without, in the determination of the Committee, materially
    altering the intent of the Plan or the Award, it shall be
    stricken and the remainder of the Plan and any such Award shall
    remain in full force and effect.



 



    17.3  Successors.  All
    obligations of the Company under the Plan with respect to Awards
    granted hereunder shall be binding on any successor to the
    Company, whether the existence of such successor is the result
    of a direct or indirect purchase, merger, consolidation, or
    otherwise, of all or substantially all of the business
    and/or
    assets of the Company.



 



    17.4  Requirements of
    Law.  The granting of Awards and the delivery
    of Shares under the Plan shall be subject to all applicable
    laws, rules, and regulations, and to such approvals by any
    governmental agencies or national securities exchanges or
    markets as may be required. Notwithstanding any provision of the
    Plan or any Award, Grantees shall not be entitled to exercise,
    or receive benefits under, any Award, and the Company (or any
    Subsidiary) shall not be obligated to deliver any Shares or
    deliver benefits to a Grantee, if such exercise or delivery
    would constitute a violation by the Grantee, the Company or a
    Subsidiary of any applicable law or regulation.



 



    17.5  Securities Law
    Compliance.  If the Committee deems it
    necessary to comply with any applicable securities law, or the
    requirements of any securities exchange or market upon which
    Shares may be listed, the Committee may impose any restriction
    on Awards or Shares acquired pursuant to Awards under the Plan
    as it may deem advisable. All evidence of Share ownership
    delivered pursuant to any Award or the exercise thereof shall be
    subject to such stop transfer orders and other restrictions as
    the Committee may deem advisable under the rules,






    

    A-22








 







    regulations or other requirements of the SEC, any securities
    exchange or market upon which Shares are then listed, and any
    applicable securities law. If so requested by the Company, the
    Grantee shall make a written representation and warranty to the
    Company that he or she will not sell or offer to sell any Shares
    unless a registration statement shall be in effect with respect
    to such Shares under the Securities Act of 1933, as amended, and
    any applicable state securities law or unless he or she shall
    have furnished to the Company an opinion of counsel, in form and
    substance satisfactory to the Company, that such registration is
    not required.



 



    If the Committee determines that the exercise or
    nonforfeitability of, or delivery of benefits pursuant to, any
    Award would violate any applicable provision of securities laws
    or the listing requirements of any national securities exchange
    or national market system on which are listed any of the
    Company’s equity securities, then the Committee may
    postpone any such exercise, nonforfeitability or delivery to
    comply with all such provisions at the earliest practicable date.



 



    17.6  Section 409A.



 



    (a) To the extent applicable and notwithstanding any other
    provision of this Plan, this Plan and Awards hereunder shall be
    administered, operated and interpreted in accordance with
    Section 409A of the Code and Department of Treasury
    regulations and other interpretive guidance in effect
    thereunder, including without limitation, any such regulations
    or other guidance that may be issued after the date on which the
    Board approves the Plan; provided, however, in the event
    that the Committee determines that any amounts payable hereunder
    may be taxable to a Grantee under Section 409A of the Code
    and related Department of Treasury guidance prior to the payment
    and/or
    delivery to such Grantee of such amount, the Company may
    (i) adopt such amendments to the Plan and related Award,
    and appropriate policies and procedures, including amendments
    and policies with retroactive effect, that the Committee
    determines necessary or appropriate to preserve the intended tax
    treatment of the benefits provided by the Plan and Awards
    hereunder
    and/or
    (ii) take such other actions as the Committee determines
    necessary or appropriate to comply with or exempt the Plan
    and/or
    Awards from the requirements of Section 409A of the Code
    and related Department of Treasury guidance, including such
    Department of Treasury guidance and other interpretive materials
    as may be issued after the date on which the Board approves the
    Plan.



 



    (b) The Company and its Subsidiaries make no guarantees to
    any Person regarding the tax treatment of Awards or payments
    made under the Plan, and, notwithstanding the above provisions
    and any agreement or understanding to the contrary, if any
    Award, payments or other amounts due to a Grantee (or his or her
    beneficiaries, as applicable) results in, or causes in any
    manner, the application of an accelerated or additional tax,
    fine or penalty under Section 409A of the Code or otherwise
    to be imposed, then the Grantee (or his or her beneficiaries, as
    applicable) shall be solely liable for the payment of, and the
    Company and its Subsidiaries shall have no obligation or
    liability to pay or reimburse (either directly or otherwise) the
    Grantee (or his or her beneficiaries, as applicable) for, any
    such additional taxes, fines or penalties.



 



    (c) In the case of any Deferred Compensation Award, as may
    be permitted by the Committee in its discretion and as specified
    in the Award Agreement, the following permitted events that pay
    cause the payment of such Award: (i) a specified date (as
    contemplated by applicable guidance under Section 409A of
    the Code), (ii) a Change in Control, (iii) the
    Grantee’s “separation from service” as provided
    in Section 409A(2)(A)(i) of the Code, (iv) the
    Grantee’s death, (v) the Grantee’s Disability or
    (vi) an “unforeseeable emergency” of the Grantee
    as provided in Section 409A(2)(A)(vi). Any payment due to a
    “separation from service” by a “specified
    employee” (as that term is defined in Treas. Reg.
    Section 1.409A-1(i))
    shall be delayed for a period of six months from the
    Grantee’s Termination of Service date. All payments that
    would have been made to such Grantee under the Award Agreement
    but for the required six-month delay described herein will be
    paid to the Grantee in a lump sum on the six month anniversary
    of such separation from service date.



 



    17.7  No Rights as a
    Stockholder.  No Grantee shall have any rights
    as a stockholder of the Company with respect to the Shares
    (except as provided in Section 8.6 with respect to
    Restricted Stock) which may be deliverable upon exercise or
    payment of such Award until such Shares have been delivered to
    him or her.



 



    17.8  Awards Not Taken Into Account for Other
    Benefits.  Awards shall be special incentive
    payments to the Grantee and shall not be taken into account in
    computing the amount of salary or compensation of the Grantee
    for purposes of determining any pension, retirement, death or
    other benefit under (a) any pension, retirement, profit-






    

    A-23








 







    sharing, bonus, insurance or other employee benefit plan of an
    Employer, except as such plan shall otherwise expressly provide,
    or (b) any agreement between an Employer and the Grantee,
    except as such agreement shall otherwise expressly provide.



 



    17.9  Employment Agreement Supersedes Award
    Agreement.  In the event a Grantee is a party
    to an employment agreement with the Company or a Subsidiary that
    provides for vesting or extended exercisability of equity
    compensation Awards on terms more favorable to the Grantee than
    the Grantee’s Award Agreement or this Plan, the employment
    agreement shall be controlling; provided that (a) if
    the Grantee is a Section 16 Person, any terms in the
    employment agreement requiring Compensation Committee of the
    Board, Board or stockholder approval in order for an exemption
    from Section 16(b) of the Exchange Act to be available
    shall have been approved by the Compensation Committee of the
    Board, the Board or the stockholders, as applicable, and
    (b) the employment agreement shall not be controlling to
    the extent the Grantee and Grantee’s Employer agree it
    shall not be controlling, and (c) an employment agreement
    or modification to an employment agreement shall be deemed to
    modify the terms of any pre-existing Award only if the terms of
    the employment agreement expressly so provide.



 



    17.10  Non-Exclusivity of
    Plan.  Neither the adoption of the Plan by the
    Board nor its submission to the stockholders of the Company for
    approval shall be construed as creating any limitations on the
    power of the Board to adopt such other compensatory arrangements
    for employees as it may deem desirable.



 



    17.11  No Trust or
    Fund Created.  Neither the Plan nor any
    Award shall create or be construed to create a trust or separate
    fund of any kind or a fiduciary relationship between the Company
    or any Subsidiary and a Grantee or any other Person. To the
    extent that any Person acquires a right to receive payments from
    the Company or any Subsidiary pursuant to an Award, such right
    shall be no greater than the right of any unsecured general
    creditor of the Company or any Subsidiary.



 



    17.12  No Right to Continued Employment or
    Awards.  No employee shall have the right to
    be selected to receive an Award under this Plan or, having been
    so selected, to be selected to receive a future Award. The grant
    of an Award shall not be construed as giving a Grantee the right
    to be retained in the employ of the Company or any Subsidiary or
    to be retained as a director of the Company or any Subsidiary.
    Further, the Company or a Subsidiary may at any time terminate
    the employment of a Grantee free from any liability, or any
    claim under the Plan, unless otherwise expressly provided in the
    Plan or in any Award Agreement.



 



    17.13  Military
    Service.  Awards shall be administered in
    accordance with Section 414(u) of the Code and the
    Uniformed Services Employment and Reemployment Rights Act of
    1994.



 



    17.14  Construction.  The
    following rules of construction will apply to the Plan:
    (a) the word “or” is disjunctive but not
    necessarily exclusive, and (b) words in the singular
    include the plural, words in the plural include the singular,
    and words in the neuter gender include the masculine and
    feminine genders and words in the masculine or feminine genders
    include the other neuter genders. The headings of sections and
    subsections are included solely for convenience of reference,
    and if there is any conflict between such headings and the text
    of this Plan, the text shall control.



 



    17.15  No Fractional
    Shares.  No fractional Shares shall be issued
    or delivered pursuant to the Plan or any Award, and the
    Committee shall determine whether cash, other securities, or
    other property shall be paid or transferred in lieu of any
    fractional Shares, or whether such fractional Shares or any
    rights thereto shall be canceled, terminated, or otherwise
    eliminated.



 



    17.16  Plan Document
    Controls.  This Plan and each Award Agreement
    constitute the entire agreement with respect to the subject
    matter hereof and thereof; provided that in the event of
    any inconsistency between this Plan and such Award Agreement,
    the terms and conditions of the Plan shall control.





    

    A-24








 








    Exhibit A



 




    THE
    NAVIGATORS GROUP, INC.

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 




    NONQUALIFIED
    STOCK OPTION AGREEMENT



 






    Form of
    Award Agreement



 





    This STOCK OPTION AGREEMENT (this
    “Agreement”), dated
    [          ],
    is by and between The Navigators Group, Inc., a Delaware
    corporation (the “Company”), and
    [          ]
    (the ‘‘Grantee”).



 



    In accordance with Section 6 of The Navigators Group, Inc.
    Amended and Restated 2005 Stock Incentive Plan (the
    “Plan”), and subject to the terms of the Plan
    and this Agreement, the Company hereby grants to the Grantee an
    option (the “Option”) to purchase shares of
    common stock, par value $0.10 per share, of the Company (the
    “Shares”) on the terms and conditions as set
    forth below. The Option granted hereby is not intended to
    constitute an Incentive Stock Option, within the meaning of
    Section 422 of the Internal Revenue Code of 1986, as
    amended (the “Code”). All capitalized terms
    used, but otherwise not defined herein, have the meanings set
    forth in the Plan.



 



    To evidence the Option and to set forth its terms, the Company
    and the Grantee agree as follows:



 



    1.  Grant.  The Committee
    hereby grants this Option to the Grantee on
    [          ]
    (the “Grant Date”) for the purchase from the
    Company of all or any part of an aggregate
    of           Shares
    (subject to adjustment as provided in Section 4.2 of the
    Plan).



 



    2.  Option Price.  The
    purchase price of this Option is $     
    per Share (the ‘‘Option Price”) (subject
    to adjustment as provided in Section 4.2 of the Plan). The
    Option Price is equal to 100% of the Fair Market Value of one
    Share on the Grant Date, as calculated under the Plan.



 



    3.  Term and Vesting of the
    Option.  The Option Term will expire on the
    10th anniversary of the Grant Date, and, except as otherwise
    provided herein, the vested portion of this Option may be
    exercised either upon or following the applicable vesting dates
    (set forth in the table below), as long as such exercise occurs
    before the expiration of this Option as provided in this
    Agreement and the Plan. The applicable vesting dates for the
    Option follow:



 


	 	 	 	 	 
	
 
	
 
	
    Cumulative Percentage

    

	

    Vesting Date


	
 
	
    Exercisable

	 

	

    1st

    Anniversary of Grant Date


	
 
	
 
	
    25
	
    %

	

    2nd

    Anniversary of Grant Date


	
 
	
 
	
    50
	
    %

	

    3rd

    Anniversary of Grant Date


	
 
	
 
	
    75
	
    %

	

    4th

    Anniversary of Grant Date


	
 
	
 
	
    100
	
    %









 



    Notwithstanding the foregoing provisions of this
    Paragraph 3, and except as otherwise determined by the
    Committee, as provided in the Plan or as provided herein, any
    portion of this Option that is not vested (or otherwise not
    exercisable) at the time of the Grantee’s Termination of
    Service with the Company and its Subsidiaries shall not become
    exercisable after such termination and shall be immediately
    cancelled and forfeited to the Company.



 



    4.  Exercisability.  In the
    event the Grantee incurs a Termination of Service for any
    reason, the Grantee will have such rights with respect to this
    Option as are provided for in the Plan.



 



    5.  Change in Control.  Upon a
    Change in Control, the Grantee will have such rights with
    respect to this Option as are provided for in the Plan.



 



    6.  Exercise of Option.  On or
    after the date any portion of the Option becomes exercisable,
    but prior to the expiration of the Option in accordance with
    Paragraph 3, 4 or 5 above, the portion of the Option that
    has






    

    A-1








 







    become exercisable may be exercised in whole or in part by the
    Grantee (or, pursuant to Paragraph 7 hereof, by his or her
    permitted successor) upon delivery of the following to the
    Company:



 



    (a) a written notice of exercise that identifies this
    Agreement and states the number (not less than 500, unless fewer
    than 500 Shares are eligible for purchase) of whole Shares
    then being purchased; and



 



    (b) any combination of cash, certified check, personal
    check or wire transfer payable to the Company, or, unless
    otherwise prohibited by law for either the Company or the
    Grantee, an irrevocable authorization of a third party to sell
    all or a portion of the Shares acquired upon the exercise of the
    Option and promptly remit to the Company a sufficient portion of
    the sale proceeds to pay the entire aggregate Option Price and
    any tax withholdings resulting from such exercise.



 



    Notwithstanding the foregoing, the Grantee (or any permitted
    successor) shall take whatever additional actions, including,
    without limitation, the furnishing of an opinion of counsel, and
    execute whatever additional documents the Company may, in its
    sole discretion, deem necessary or advisable in order to carry
    out or effect one or more of the obligations or restrictions
    imposed by the Plan, this Agreement or applicable law.



 



    No Shares will be issued upon exercise of the Option until full
    payment has been made. Upon satisfaction of the conditions and
    requirements of this Paragraph 6 and the Plan, the Company
    will either (i) credit the number of Shares in respect of
    which the Option was exercised to the Grantee through a book
    entry on the records kept by the Company’s stockholder
    record keeper or (ii) deliver to the Grantee (or his or her
    permitted successor) a certificate or certificates for the
    number of Shares in respect of which the Option will have been
    exercised. Upon exercise of the Option (or a portion thereof),
    the Company will have a reasonable time to issue the Common
    Stock (or credit such Common Stock on the records if applicable)
    for which the Option has been exercised, and the Grantee will
    not be treated as a stockholder for any purposes whatsoever
    prior to such issuance. No adjustment will be made for cash
    dividends or other rights for which the record date is prior to
    the date such Common Stock is issued and transferred (or
    credited, if applicable) in the Company’s official
    stockholder records, except as otherwise provided in the Plan or
    this Agreement.



 



    7.  Limitation Upon
    Transfer.  This Option and all rights granted
    hereunder shall not (a) be transferred by the Grantee,
    other than by will, by the laws of descent and distribution;
    (b) be otherwise assigned, pledged or hypothecated in any
    way; and (c) be subject to execution, attachment or similar
    process. Any attempt to transfer this Option, other than by will
    or by the laws of descent and distribution, or to assign, pledge
    or hypothecate or otherwise dispose of this Option or of any
    rights granted hereunder contrary to the provisions hereof, or
    upon the levy of any attachment or similar process upon this
    Option or such rights, shall be void and unenforceable against
    the Company or any Subsidiary; provided, however, that the
    Grantee may designate a Beneficiary to receive benefits in the
    event of the Grantee’s death. This Option shall be
    exercised during the Grantee’s lifetime only by the Grantee
    or the Grantee’s guardian or legal representative.



 



    8.  Amendment.  No
    discontinuation, modification, or amendment of the Plan may,
    without the written consent of the Grantee, adversely affect the
    rights of the Grantee under this Option, except as otherwise
    provided under the Plan. This Agreement may be amended as
    provided under the Plan, but no such amendment shall adversely
    affect the Grantee’s rights under the Agreement without the
    Grantee’s written consent, unless otherwise permitted by
    the Plan.



 



    9.  Rights as a
    Stockholder.  The Grantee will have the rights
    of a stockholder with respect to the Shares subject to this
    Option only upon becoming the holder of record of such Shares.



 



    10.  Compliance with Applicable
    Law.  Notwithstanding anything herein to the
    contrary, the Company is not obligated to either (a) cause
    to be issued or delivered any certificates for Shares pursuant
    to the exercise of this Option, or (b) cause a book entry
    related to the Shares pursuant to an exercise of this Option to
    be entered on the records of the Company’s stockholder
    record keeper unless and until the Company is advised by its
    counsel that such issuance and delivery (or entry on the
    records, as applicable) of such certificates is in compliance
    with all applicable laws, regulations of governmental authority,
    and the requirements of any exchange upon which Shares are
    traded. The Company may require, as a condition of such issuance
    and delivery (or entry on the records, as applicable) of such
    certificates, and in order to ensure compliance with






    

    A-2








 







    such laws, regulations and requirements, that the Grantee make
    such covenants, agreements, and representations as the Company,
    in its sole discretion, considers necessary or desirable.



 



    11.  No Obligation to Exercise
    Option.  The granting of this Option imposes
    no obligation upon the Grantee to exercise this Option.



 



    12.  Employment Rights.  This
    Agreement is not a contract of employment, and the terms of
    employment of the Grantee or other relationship of the Grantee
    with the Company or its Subsidiaries shall not be affected in
    any way by this Agreement except as specifically provided
    herein. The execution of this Agreement shall not be construed
    as conferring any legal rights upon the Grantee for a
    continuation of an employment or other relationship with the
    Company or its Subsidiaries, nor shall it interfere with the
    right of the Company or its Subsidiaries to discharge the
    Grantee and to treat him or her without regard to the effect
    that such treatment might have upon him or her as a Grantee.



 



    13.  Withholding.  If the
    Company is obligated to withhold an amount on account of any tax
    imposed as a result of the exercise of this Option, the Grantee
    shall be required to pay such amount to the Company, or make
    arrangements satisfactory to the Committee regarding the payment
    of such amount, as provided in Section 16 of the Plan. The
    obligations of the Company under the Plan shall be conditional
    on such payment or arrangements, and the Company shall, to the
    extent permitted by law, have the right to deduct any such taxes
    from any payment otherwise due to the Grantee. The Grantee
    acknowledges and agrees that he or she is responsible for the
    tax consequences associated with the grant and exercise of this
    Option.



 



    14.  Successors and
    Assigns.  Except as otherwise expressly set
    forth in this Agreement, the provisions of this Agreement shall
    inure to the benefit of, and be binding upon, the succeeding
    administrators, heirs and legal representatives of the Grantee
    and the successors and assigns of the Company.



 



    15.  No Limitation on Rights of the
    Company.  The grant of this Option will not in
    any way affect the right or power of the Company to make
    adjustments, reclassifications, or changes in its capital or
    business structure or to merge, consolidate, dissolve,
    liquidate, sell or transfer all or any part of its business or
    assets.



 



    16.  Notices.  Any
    communication or notice required or permitted to be given
    hereunder shall be in writing, and, if to the Company, to its
    principal place of business, attention: Secretary, and, if to
    the Grantee, to the address appearing on the records of the
    Company. Such communication or notice shall be delivered
    personally or sent by certified, registered, or express mail,
    postage prepaid, return receipt requested, or by a reputable
    overnight delivery service. Any such notice shall be deemed
    given when received by the intended recipient. Notwithstanding
    the foregoing, any notice required or permitted hereunder from
    the Company to the Grantee may be made by electronic means,
    including by electronic mail to the Company-maintained
    electronic mailbox of the Grantee, and the Grantee hereby
    consents to receive such notice by electronic delivery. To the
    extent permitted in an electronically delivered notice described
    in the previous sentence, the Grantee shall be permitted to
    respond to such notice or communication by way of a responsive
    electronic communication, including by electronic mail.



 



    17.  Governing Law.  Except to
    the extent preempted by federal law, this Agreement shall be
    construed and enforced in accordance with, and governed by, the
    laws of the State of Delaware without regard to the principles
    thereof relating to the conflicts of laws.



 



    18.  Receipt of Plan.  The
    Grantee acknowledges receipt of a copy of the Plan, and
    represents that the Grantee is familiar with the terms and
    provisions thereof, and hereby accepts this Option subject to
    all the terms and provisions of this Agreement and of the Plan.
    The Option is granted pursuant to the terms of the Plan, the
    terms of which are incorporated herein by reference, and the
    Option shall in all respects be interpreted in accordance with
    the Plan. The Committee shall interpret and construe the Plan
    and this Agreement, and its interpretation and determination
    shall be conclusive and binding upon the parties hereto and any
    other person claiming an interest hereunder, with respect to any
    issue arising hereunder or thereunder.



 



    19.  Condition to Return Signed
    Agreement.  This Agreement shall be null and
    void unless the Grantee signs, dates, and returns this Agreement
    to the Company on or before the
    33rd day

    following the earliest of the date this Agreement is
    (a) placed in the mail addressed to the Grantee at his or
    her home address (as contained






    

    A-3








 







    in the Company’s records); (b) delivered to the
    Grantee at his or her
    e-mail
    address as contained in the Company’s
    e-mail
    directory; or (c) hand delivered to the Grantee.



 



    20.  Construction.  Notwithstanding
    any other provision of this Agreement, this Agreement is made
    and the Awards are granted pursuant to the Plan and are in all
    respects limited by and subject to the express provisions of the
    Plan, as amended from time to time. To the extent any provision
    of this Agreement is inconsistent or in conflict with any term
    or provision of the Plan, the Plan shall govern. The
    interpretation and construction by the Committee of the Plan,
    this Agreement and any such rules and regulations adopted by the
    Committee for purposes of administering the Plan, shall be final
    and binding upon the Grantee and all other persons.



 



    21.  Entire Agreement.  This
    Agreement, together with the Plan, constitute the entire
    obligation of the parties hereto with respect to the subject
    matter hereof and shall supersede any prior expressions of
    intent or understanding with respect to this transaction.



 



    22.  Waiver; Cumulative
    Rights.  The failure or delay of either party
    to require performance by the other party of any provision
    hereof shall not affect its right to require performance of such
    provision unless and until such performance has been waived in
    writing. Each and every right hereunder is cumulative and may be
    exercised in part or in whole from time to time.



 



    23.  Counterparts.  This
    Agreement may be signed in two counterparts, each of which shall
    be an original, but both of which shall constitute but one and
    the same instrument.



 



    24.  Headings.  The headings
    contained in this Agreement are for reference purposes only and
    shall not affect the meaning or interpretation of this Agreement.



 



    25.  Severability.  If any
    provision of this Agreement shall for any reason be held to be
    invalid or unenforceable, such invalidity or unenforceability
    shall not effect any other provision hereof, and this Agreement
    shall be construed as if such invalid or unenforceable provision
    were omitted.



 



    IN WITNESS WHEREOF, this Agreement has been duly executed as of
    the day and year first written above.



 



    The Navigators Group, Inc.



 



    By: ­
    ­



 



    Name: ­
    ­



 



    Title: ­
    ­



 



    Grantee



 



    By: ­
    ­



 



    Name: ­
    ­



 



    Title: ­
    ­





    

    A-4








 








    THE
    NAVIGATORS GROUP, INC.

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 






    INCENTIVE
    STOCK OPTION AGREEMENT



 






    Form of
    Award Agreement



 





    This STOCK OPTION AGREEMENT (this
    “Agreement”), dated
    [          ],
    is by and between The Navigators Group, Inc., a Delaware
    corporation (the “Company”), and
    [          ]
    (the ‘‘Grantee”), an employee of the
    Company or its Subsidiaries.



 



    In accordance with Section 6 of The Navigators Group, Inc.
    Amended and Restated 2005 Stock Incentive Plan (the
    “Plan”), and subject to the terms of the Plan
    and this Agreement, the Company hereby grants to the Grantee an
    option (the “Option”) to purchase shares of common
    stock, par value $0.10 per share, of the Company (the
    “Shares”) on the terms and conditions as set
    forth below. The Option granted hereby is intended to constitute
    an Incentive Stock Option, within the meaning of
    Section 422 of the Internal Revenue Code of 1986, as
    amended (the “Code”). All capitalized terms
    used, but otherwise not defined herein, have the meanings set
    forth in the Plan.



 



    To evidence the Option and to set forth its terms, the Company
    and the Grantee agree as follows:



 



    1.  Grant.  The Committee
    hereby grants this Option to the Grantee on
    [          ]
    (the “Grant Date”) for the purchase from the
    Company of all or any part of an aggregate
    of           Shares
    (subject to adjustment as provided in Section 4.2 of the
    Plan).



 



    2.  Option Price.  The
    purchase price of this Option is $     
    per Share (the ‘‘Option Price”) (subject
    to adjustment as provided in Section 4.2 of the Plan). The
    Option Price is equal to 100% (110% if the Grantee is a 10%
    Owner) of the Fair Market Value of one Share on the Grant Date,
    as calculated under the Plan.



 



    3.  Term and Vesting of the
    Option.  The Option Term will expire on the
    10th (fifth if the Grantee is a 10% Owner) anniversary of the
    Grant Date, and, except as otherwise provided herein, the vested
    portion of this Option may be exercised either upon or following
    the applicable vesting dates (set forth in the table below), as
    long as such exercise occurs before the expiration of this
    Option as provided in this Agreement and the Plan. The
    applicable vesting dates for the Option follow:



 


	 	 	 	 	 
	
 
	
 
	
    Cumulative Percentage

    

	

    Vesting Date


	
 
	
    Exercisable

	 

	

    1st

    Anniversary of Grant Date


	
 
	
 
	
    25
	
    %

	

    2nd

    Anniversary of Grant Date


	
 
	
 
	
    50
	
    %

	

    3rd

    Anniversary of Grant Date


	
 
	
 
	
    75
	
    %

	

    4th

    Anniversary of Grant Date


	
 
	
 
	
    100
	
    %









 



    Notwithstanding the foregoing provisions of this
    Paragraph 3, and except as otherwise determined by the
    Committee, as provided in the Plan or as provided herein, any
    portion of this Option that is not vested (or otherwise not
    exercisable) at the time of the Grantee’s Termination of
    Service with the Company and its Subsidiaries shall not become
    exercisable after such termination and shall be immediately
    cancelled and forfeited to the Company.



 



    4.  Exercisability.  In the
    event the Grantee incurs a Termination of Service for any
    reason, the Grantee will have such rights with respect to this
    Option as are provided for in the Plan.



 



    5.  Change in Control.  Upon a
    Change in Control, the Grantee will have such rights with
    respect to this Option as are provided for in the Plan.



 



    6.  Exercise of Option.  On or
    after the date any portion of the Option becomes exercisable,
    but prior to the expiration of the Option in accordance with
    Paragraph 3, 4 or 5 above, the portion of the Option that
    has






    

    A-5








 







    become exercisable may be exercised in whole or in part by the
    Grantee (or, pursuant to Paragraph 7 hereof, by his or her
    permitted successor) upon delivery of the following to the
    Company:



 



    (a) a written notice of exercise that identifies this
    Agreement and states the number (not less than 500, unless fewer
    than 500 Shares are eligible for purchase) of whole Shares
    then being purchased; and



 



    (b) any combination of cash, certified check, personal
    check or wire transfer payable to the Company, or, unless
    otherwise prohibited by law for either the Company or the
    Grantee, an irrevocable authorization of a third party to sell
    all or a portion of the Shares acquired upon the exercise of the
    Option and promptly remit to the Company a sufficient portion of
    the sale proceeds to pay the entire aggregate Option Price and
    any tax withholdings resulting from such exercise.



 



    Notwithstanding the foregoing, the Grantee (or any permitted
    successor) shall take whatever additional actions, including,
    without limitation, the furnishing of an opinion of counsel, and
    execute whatever additional documents the Company may, in its
    sole discretion, deem necessary or advisable in order to carry
    out or effect one or more of the obligations or restrictions
    imposed by the Plan, this Agreement or applicable law.



 



    No Shares will be issued upon exercise of the Option until full
    payment has been made. Upon satisfaction of the conditions and
    requirements of this Paragraph 6 and the Plan, the Company
    will either (i) credit the number of Shares in respect of
    which the Option was exercised to the Grantee through a book
    entry on the records kept by the Company’s stockholder
    record keeper or (ii) deliver to the Grantee (or his or her
    permitted successor) a certificate or certificates for the
    number of Shares in respect of which the Option will have been
    exercised. Upon exercise of the Option (or a portion thereof),
    the Company will have a reasonable time to issue the Common
    Stock (or credit such Common Stock on the records if applicable)
    for which the Option has been exercised, and the Grantee will
    not be treated as a stockholder for any purposes whatsoever
    prior to such issuance. No adjustment will be made for cash
    dividends or other rights for which the record date is prior to
    the date such Common Stock is issued and transferred (or
    credited, if applicable) in the Company’s official
    stockholder records, except as otherwise provided in the Plan or
    this Agreement.



 



    7.  Limitation Upon
    Transfer.  This Option and all rights granted
    hereunder shall not (a) be transferred by the Grantee,
    other than by will, by the laws of descent and distribution;
    (b) be otherwise assigned, pledged or hypothecated in any
    way; and (c) be subject to execution, attachment or similar
    process. Any attempt to transfer this Option, other than by will
    or by the laws of descent and distribution, or to assign, pledge
    or hypothecate or otherwise dispose of this Option or of any
    rights granted hereunder contrary to the provisions hereof, or
    upon the levy of any attachment or similar process upon this
    Option or such rights, shall be void and unenforceable against
    the Company or any Subsidiary; provided, however, that the
    Grantee may designate a Beneficiary to receive benefits in the
    event of the Grantee’s death. This Option shall be
    exercised during the Grantee’s lifetime only by the Grantee
    or the Grantee’s guardian or legal representative.



 



    8.  Amendment.  No
    discontinuation, modification, or amendment of the Plan may,
    without the written consent of the Grantee, adversely affect the
    rights of the Grantee under this Option, except as otherwise
    provided under the Plan. This Agreement may be amended as
    provided under the Plan, but no such amendment shall adversely
    affect the Grantee’s rights under the Agreement without the
    Grantee’s written consent, unless otherwise permitted by
    the Plan.



 



    9.  Rights as a
    Stockholder.  The Grantee will have the rights
    of a stockholder with respect to the Shares subject to this
    Option only upon becoming the holder of record of such Shares.



 



    10.  Compliance with Applicable
    Law.  Notwithstanding anything herein to the
    contrary, the Company is not obligated to either (a) cause
    to be issued or delivered any certificates for Shares pursuant
    to the exercise of this Option, or (b) cause a book entry
    related to the Shares pursuant to an exercise of this Option to
    be entered on the records of the Company’s stockholder
    record keeper unless and until the Company is advised by its
    counsel that such issuance and delivery (or entry on the
    records, as applicable) of such certificates is in compliance
    with all applicable laws, regulations of governmental authority,
    and the requirements of any exchange upon which Shares are
    traded. The Company may require, as a condition of such issuance
    and delivery (or entry on the records, as applicable) of such
    certificates, and in order to ensure compliance with






    

    A-6








 







    such laws, regulations and requirements, that the Grantee make
    such covenants, agreements, and representations as the Company,
    in its sole discretion, considers necessary or desirable.



 



    11.  No Obligation to Exercise
    Option.  The granting of this Option imposes
    no obligation upon the Grantee to exercise this Option.



 



    12.  Employment Rights.  This
    Agreement is not a contract of employment, and the terms of
    employment of the Grantee or other relationship of the Grantee
    with the Company or its Subsidiaries shall not be affected in
    any way by this Agreement except as specifically provided
    herein. The execution of this Agreement shall not be construed
    as conferring any legal rights upon the Grantee for a
    continuation of an employment or other relationship with the
    Company or its Subsidiaries, nor shall it interfere with the
    right of the Company or its Subsidiaries to discharge the
    Grantee and to treat him or her without regard to the effect
    that such treatment might have upon him or her as a Grantee.



 



    13.  Withholding.  If the
    Company is obligated to withhold an amount on account of any tax
    imposed as a result of the exercise of this Option, the Grantee
    shall be required to pay such amount to the Company, or make
    arrangements satisfactory to the Committee regarding the payment
    of such amount, as provided in Section 16 of the Plan. The
    obligations of the Company under the Plan shall be conditional
    on such payment or arrangements, and the Company shall, to the
    extent permitted by law, have the right to deduct any such taxes
    from any payment otherwise due to the Grantee. The Grantee
    acknowledges and agrees that he or she is responsible for the
    tax consequences associated with the grant and exercise of this
    Option.



 



    14.  Successors and
    Assigns.  Except as otherwise expressly set
    forth in this Agreement, the provisions of this Agreement shall
    inure to the benefit of, and be binding upon, the succeeding
    administrators, heirs and legal representatives of the Grantee
    and the successors and assigns of the Company.



 



    15.  Tax
    Consequences.  Although the Option is intended
    to constitute an “incentive stock option” within the
    meaning of Code Section 422, the Company makes no
    representations or warranties with respect to the tax
    consequences of the grant or exercise of the Option and the
    disposition of the Shares obtained thereby. The Grantee
    should consult his or her own tax advisor for information
    concerning the tax consequences of the grant and exercise of the
    Option.



 



    16.  No Limitation on Rights of the
    Company.  The grant of this Option will not in
    any way affect the right or power of the Company to make
    adjustments, reclassifications, or changes in its capital or
    business structure or to merge, consolidate, dissolve,
    liquidate, sell or transfer all or any part of its business or
    assets.



 



    17.  Notices.  The Grantee
    must notify the Company of an Disqualifying Disposition of a
    Share obtained through the exercise of this Option within
    10 days of such disposition. A Disqualifying Disposition is
    any sale of a Share received from the exercise of an Incentive
    Stock Option and such sale occurs before the later of:
    (a) two years from the Incentive Stock Option Grant Date
    and (b) one year from the date on which the Grantee
    exercises such Option and receives a Share. The Grantee will be
    deemed to have timely notified the Company of a Disqualifying
    Disposition to the extent any Share is sold to pay the Option
    Price pursuant to Paragraph 6(b).



 



    Any communication or notice required or permitted to be given
    hereunder shall be in writing, and, if to the Company, to its
    principal place of business, attention: Secretary, and, if to
    the Grantee, to the address appearing on the records of the
    Company. Such communication or notice shall be delivered
    personally or sent by certified, registered, or express mail,
    postage prepaid, return receipt requested, or by a reputable
    overnight delivery service. Any such notice shall be deemed
    given when received by the intended recipient. Notwithstanding
    the foregoing, any notice required or permitted hereunder from
    the Company to the Grantee may be made by electronic means,
    including by electronic mail to the Company-maintained
    electronic mailbox of the Grantee, and the Grantee hereby
    consents to receive such notice by electronic delivery. To the
    extent permitted in an electronically delivered notice described
    in the previous sentence, the Grantee shall be permitted to
    respond to such notice or communication by way of a responsive
    electronic communication, including by electronic mail.





    

    A-7








 







    18.  Governing Law.  Except to
    the extent preempted by federal law, this Agreement shall be
    construed and enforced in accordance with, and governed by, the
    laws of the State of Delaware without regard to the principles
    thereof relating to the conflicts of laws.



 



    19.  Receipt of Plan.  The
    Grantee acknowledges receipt of a copy of the Plan, and
    represents that the Grantee is familiar with the terms and
    provisions thereof, and hereby accepts this Option subject to
    all the terms and provisions of this Agreement and of the Plan.
    The Option is granted pursuant to the terms of the Plan, the
    terms of which are incorporated herein by reference, and the
    Option shall in all respects be interpreted in accordance with
    the Plan. The Committee shall interpret and construe the Plan
    and this Agreement, and its interpretation and determination
    shall be conclusive and binding upon the parties hereto and any
    other person claiming an interest hereunder, with respect to any
    issue arising hereunder or thereunder.



 



    20.  Condition to Return Signed
    Agreement.  This Agreement shall be null and
    void unless the Grantee signs, dates, and returns this Agreement
    to the Company on or before the
    33rd day

    following the earliest of the date this Agreement is
    (a) placed in the mail addressed to the Grantee at his or
    her home address (as contained in the Company’s records);
    (b) delivered to the Grantee at his or her
    e-mail
    address as contained in the Company’s
    e-mail
    directory; or (c) hand delivered to the Grantee.



 



    21.  Construction.  Notwithstanding
    any other provision of this Agreement, this Agreement is made
    and the Awards are granted pursuant to the Plan and are in all
    respects limited by and subject to the express provisions of the
    Plan, as amended from time to time. To the extent any provision
    of this Agreement is inconsistent or in conflict with any term
    or provision of the Plan, the Plan shall govern. The
    interpretation and construction by the Committee of the Plan,
    this Agreement and any such rules and regulations adopted by the
    Committee for purposes of administering the Plan, shall be final
    and binding upon the Grantee and all other persons.



 



    22.  Entire Agreement.  This
    Agreement, together with the Plan, constitute the entire
    obligation of the parties hereto with respect to the subject
    matter hereof and shall supersede any prior expressions of
    intent or understanding with respect to this transaction.



 



    23.  Waiver; Cumulative
    Rights.  The failure or delay of either party
    to require performance by the other party of any provision
    hereof shall not affect its right to require performance of such
    provision unless and until such performance has been waived in
    writing. Each and every right hereunder is cumulative and may be
    exercised in part or in whole from time to time.



 



    24.  Counterparts.  This
    Agreement may be signed in two counterparts, each of which shall
    be an original, but both of which shall constitute but one and
    the same instrument.



 



    25.  Headings.  The headings
    contained in this Agreement are for reference purposes only and
    shall not affect the meaning or interpretation of this Agreement.



 



    26.  Severability.  If any
    provision of this Agreement shall for any reason be held to be
    invalid or unenforceable, such invalidity or unenforceability
    shall not effect any other provision hereof, and this Agreement
    shall be construed as if such invalid or unenforceable provision
    were omitted.





    

    A-8








 







    IN WITNESS WHEREOF, this Agreement has been duly executed as of
    the day and year first written above.



 



    The Navigators Group, Inc.



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­



 



    Grantee



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­





    

    A-9








 








    THE
    NAVIGATORS GROUP,
    INC.
    

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 




    STOCK
    APPRECIATION RIGHTS AGREEMENT



 




    Form of
    Award Agreement



 





    This STOCK APPRECIATION RIGHTS AGREEMENT (this
    “Agreement”), dated
    [          ],
    is by and between The Navigators Group, Inc., a Delaware
    corporation (the “Company”), and
    [          ]
    (the “Grantee”).



 



    In accordance with Section 7 of The Navigators Group, Inc.
    Amended and Restated 2005 Stock Incentive Plan (the
    “Plan”), and subject to the terms of the Plan
    and this Agreement, the Company hereby grants to the Grantee a
    stock appreciation right (a “SAR”) on the terms
    and conditions as set forth below. All capitalized terms used,
    but otherwise not defined herein, have the meanings set forth in
    the Plan.



 



    To evidence the SAR and to set forth its terms, the Company and
    the Grantee agree as follows:



 



    1.  Grant.  The Committee
    hereby grants to the Grantee on
    [          ]
    (the “Grant Date”) a SAR
    covering           shares
    (the “SAR Shares”) of the Company’s Common
    Stock.



 



    2.  SAR Share Price.  The
    price of each SAR Share is $      (the
    “SAR Share Price”) (subject to adjustment as
    provided in Section 4.2 of the Plan). The SAR Share Price
    is equal to 100% of the Fair Market Value of one Share on the
    Grant Date, as calculated under the Plan.



 



    3.  Term and Vesting of the
    SAR.  The SAR Term will expire on the
    10th

    anniversary of the Grant Date, and, except as otherwise provided
    herein, the vested portion of this SAR may be exercised either
    upon or following the applicable vesting dates (set forth in the
    table below), as long as such exercise occurs before the
    expiration of this SAR as provided in this Agreement and the
    Plan. The applicable vesting dates for the SAR follow:



 


	 	 	 	 	 
	
 
	
 
	
    Cumulative Percentage 

    

	

    Vesting Date


	
 
	
    Exercisable

	 

	

    1st

    Anniversary of Grant Date


	
 
	
 
	
    25
	
    %

	

    2nd

    Anniversary of Grant Date


	
 
	
 
	
    50
	
    %

	

    3rd

    Anniversary of Grant Date


	
 
	
 
	
    75
	
    %

	

    4th

    Anniversary of Grant Date


	
 
	
 
	
    100
	
    %









 



    Notwithstanding the foregoing provisions of this
    Paragraph 3, and except as otherwise determined by the
    Committee, as provided in the Plan or as provided herein, any
    portion of this SAR that is not vested (or otherwise not
    exercisable) at the time of the Grantee’s Termination of
    Service with the Company and its Subsidiaries shall not become
    exercisable after such termination and shall be immediately
    cancelled and forfeited to the Company.



 



    4.  Exercisability.  In the
    event the Grantee incurs a Termination of Service for any
    reason, the Grantee will have such rights with respect to this
    SAR as are provided for in the Plan.



 



    5.  Change in Control.  Upon a
    Change in Control, the Grantee will have such rights with
    respect to this SAR as are provided for in the Plan.



 



    6.  Exercise of SAR.



 



    (a) Notice.  On or after the date
    any portion of the SAR becomes exercisable, but prior to the
    expiration of the SAR in accordance with Paragraph 3, 4 or
    5 above, the portion of the SAR that has become exercisable may
    be exercised in whole or in part by the Grantee (or, pursuant to
    Paragraph 7 hereof, by his or her permitted successor) upon
    delivery of written notice to the Company of exercise which
    identifies this Agreement and states the number (not less than
    500, unless fewer than 500 SAR Shares are eligible for exercise)
    of whole SAR Shares then being exercised.



 



    (b) Payment.  As of the date of
    exercise of the SAR, the Company shall settle the exercised
    portion of the SAR as provided in Section 7.5 of the Plan.
    The amount of the payment for each SAR Share exercised shall






    

    A-10








 







    equal (i) the Fair Market Value of a Share on the date of
    exercise, less (ii) the SAR Price for each such exercised
    SAR Share. The exercised SAR shall be settled in whole shares of
    Stock, and cash for the value of a fractional share of Stock.



 



    (c) Additional
    Information.  Notwithstanding the foregoing,
    the Grantee (or any permitted successor) shall take whatever
    additional actions, including, without limitation, the
    furnishing of an opinion of counsel, and execute whatever
    additional documents the Company may, in its sole discretion,
    deem necessary or advisable in order to carry out or effect one
    or more of the obligations or restrictions imposed by the Plan,
    this Agreement or applicable law.



 



    (d) Delivery of Shares.  Upon
    satisfaction of the conditions and requirements of this
    Paragraph 6 and the Plan, the Company will either
    (i) credit the number of Shares in respect of which the SAR
    was exercised to the Grantee through a book entry on the records
    kept by the Company’s stockholder record keeper or
    (ii) deliver to the Grantee (or his or her permitted
    successor) a certificate or certificates for the number of
    Shares in respect of which the SAR will have been exercised.
    Upon exercise of the SAR (or a portion thereof), the Company
    will have a reasonable time to issue the Common Stock (or credit
    such Common Stock on the records if applicable) for which the
    SAR has been exercised, and the Grantee will not be treated as a
    stockholder for any purposes whatsoever prior to such issuance.
    No adjustment will be made for cash dividends or other rights
    for which the record date is prior to the date such Common Stock
    is issued and transferred (or credited, if applicable) in the
    Company’s official stockholder records, except as otherwise
    provided in the Plan or this Agreement.



 



    7.  Limitation Upon
    Transfer.  This SAR and all rights granted
    hereunder shall not (a) be transferred by the Grantee,
    other than by will, by the laws of descent and distribution;
    (b) be otherwise assigned, pledged or hypothecated in any
    way; and (c) be subject to execution, attachment or similar
    process. Any attempt to transfer this SAR, other than by will or
    by the laws of descent and distribution, or to assign, pledge or
    hypothecate or otherwise dispose of this SAR or of any rights
    granted hereunder contrary to the provisions hereof, or upon the
    levy of any attachment or similar process upon this SAR or such
    rights, shall be void and unenforceable against the Company or
    any Subsidiary; provided, however, that the Grantee may
    designate a Beneficiary to receive benefits in the event of the
    Grantee’s death. This Grantee shall be exercised during the
    Grantee’s lifetime only by the Grantee or the
    Grantee’s guardian or legal representative.



 



    8.  Amendment.  No
    discontinuation, modification, or amendment of the Plan may,
    without the written consent of the Grantee, adversely affect the
    rights of the Grantee under this SAR, except as otherwise
    provided under the Plan. This Agreement may be amended as
    provided under the Plan, but no such amendment shall adversely
    affect the Grantee’s rights under the Agreement without the
    Grantee’s written consent, unless otherwise permitted by
    the Plan.



 



    9.  Rights as a
    Stockholder.  The Grantee will have the rights
    of a stockholder with respect to the Shares subject to this SAR
    only upon becoming the holder of record of such Shares.



 



    10.  Compliance with Applicable
    Law.  Notwithstanding anything herein to the
    contrary, the Company is not obligated to either (a) cause
    to be issued or delivered any certificates for Shares pursuant
    to the exercise of this SAR, or (b) cause a book entry
    related to the Shares pursuant to an exercise of this SAR to be
    entered on the records of the Company’s stockholder record
    keeper unless and until the Company is advised by its counsel
    that such issuance and delivery (or entry on the records, as
    applicable) of such certificates is in compliance with all
    applicable laws, regulations of governmental authority, and the
    requirements of any exchange upon which Shares are traded. The
    Company may require, as a condition of such issuance and
    delivery (or entry on the records, as applicable) of such
    certificates, and in order to ensure compliance with such laws,
    regulations and requirements, that the Grantee make such
    covenants, agreements, and representations as the Company, in
    its sole discretion, considers necessary or desirable.



 



    11.  No Obligation to Exercise
    SAR.  The granting of this SAR imposes no
    obligation upon the Grantee to exercise this SAR.



 



    12.  Employment Rights.  This
    Agreement is not a contract of employment, and the terms of
    employment of the Grantee or other relationship of the Grantee
    with the Company or its Subsidiaries shall not be affected in
    any way by this Agreement except as specifically provided
    herein. The execution of this Agreement






    

    A-11








 







    shall not be construed as conferring any legal rights upon the
    Grantee for a continuation of an employment or other
    relationship with the Company or its Subsidiaries, nor shall it
    interfere with the right of the Company or its Subsidiaries to
    discharge the Grantee and to treat him or her without regard to
    the effect that such treatment might have upon him or her as a
    Grantee.



 



    13.  Withholding.  If the
    Company is obligated to withhold an amount on account of any tax
    imposed as a result of the exercise of this SAR, the Grantee
    shall be required to pay such amount to the Company, or make
    arrangements satisfactory to the Committee regarding the payment
    of such amount, as provided in Section 16 of the Plan. The
    obligations of the Company under the Plan shall be conditional
    on such payment or arrangements, and the Company shall, to the
    extent permitted by law, have the right to deduct any such taxes
    from any payment otherwise due to the Grantee. The Grantee
    acknowledges and agrees that he or she is responsible for the
    tax consequences associated with the grant and exercise of this
    SAR.



 



    14.  Successors and
    Assigns.  Except as otherwise expressly set
    forth in this Agreement, the provisions of this Agreement shall
    inure to the benefit of, and be binding upon, the succeeding
    administrators, heirs and legal representatives of the Grantee
    and the successors and assigns of the Company.



 



    15.  No Limitation on Rights of the
    Company.  The grant of this SAR will not in
    any way affect the right or power of the Company to make
    adjustments, reclassifications, or changes in its capital or
    business structure or to merge, consolidate, dissolve,
    liquidate, sell or transfer all or any part of its business or
    assets.



 



    16.  Notices.  Any
    communication or notice required or permitted to be given
    hereunder shall be in writing, and, if to the Company, to its
    principal place of business, attention: Secretary, and, if to
    the Grantee, to the address appearing on the records of the
    Company. Such communication or notice shall be delivered
    personally or sent by certified, registered, or express mail,
    postage prepaid, return receipt requested, or by a reputable
    overnight delivery service. Any such notice shall be deemed
    given when received by the intended recipient. Notwithstanding
    the foregoing, any notice required or permitted hereunder from
    the Company to the Grantee may be made by electronic means,
    including by electronic mail to the Company- maintained
    electronic mailbox of the Grantee, and the Grantee hereby
    consents to receive such notice by electronic delivery. To the
    extent permitted in an electronically delivered notice described
    in the previous sentence, the Grantee shall be permitted to
    respond to such notice or communication by way of a responsive
    electronic communication, including by electronic mail.



 



    17.  Governing Law.  Except to
    the extent preempted by federal law, this Agreement shall be
    construed and enforced in accordance with, and governed by, the
    laws of the State of Delaware without regard to the principles
    thereof relating to the conflicts of laws.



 



    18.  Receipt of Plan.  The
    Grantee acknowledges receipt of a copy of the Plan, and
    represents that the Grantee is familiar with the terms and
    provisions thereof, and hereby accepts this SAR subject to all
    the terms and provisions of this Agreement and of the Plan. The
    SAR is granted pursuant to the terms of the Plan, the terms of
    which are incorporated herein by reference, and the SAR shall in
    all respects be interpreted in accordance with the Plan. The
    Committee shall interpret and construe the Plan and this
    Agreement, and its interpretation and determination shall be
    conclusive and binding upon the parties hereto and any other
    person claiming an interest hereunder, with respect to any issue
    arising hereunder or thereunder.



 



    19.  Condition to Return Signed
    Agreement.  This Agreement shall be null and
    void unless the Grantee signs, dates, and returns this Agreement
    to the Company on or before the thirty-third
    (33rd)

    day following the earliest of the date this Agreement is
    (a) placed in the mail addressed to the Grantee at his or
    her home address (as contained in the Company’s records);
    (b) delivered to the Grantee at his or her
    e-mail
    address as contained in the Company’s
    e-mail
    directory; or (c) hand delivered to the Grantee.



 



    20.  Construction.  Notwithstanding
    any other provision of this Agreement, this Agreement is made
    and the Awards are granted pursuant to the Plan and are in all
    respects limited by and subject to the express provisions of the
    Plan, as amended from time to time. To the extent any provision
    of this Agreement is inconsistent or in conflict with any term
    or provision of the Plan, the Plan shall govern. The
    interpretation and construction by the Committee of the Plan,
    this Agreement and any such rules and regulations adopted by the






    

    A-12








 







    Committee for purposes of administering the Plan, shall be final
    and binding upon the Grantee and all other persons.



 



    21.  Entire Agreement.  This
    Agreement, together with the Plan, constitute the entire
    obligation of the parties hereto with respect to the subject
    matter hereof and shall supersede any prior expressions of
    intent or understanding with respect to this transaction.



 



    22.  Waiver; Cumulative
    Rights.  The failure or delay of either party
    to require performance by the other party of any provision
    hereof shall not affect its right to require performance of such
    provision unless and until such performance has been waived in
    writing. Each and every right hereunder is cumulative and may be
    exercised in part or in whole from time to time.



 



    23.  Counterparts.  This
    Agreement may be signed in two counterparts, each of which shall
    be an original, but both of which shall constitute but one and
    the same instrument.



 



    24.  Headings.  The headings
    contained in this Agreement are for reference purposes only and
    shall not affect the meaning or interpretation of this Agreement.



 



    25.  Severability.  If any
    provision of this Agreement shall for any reason be held to be
    invalid or unenforceable, such invalidity or unenforceability
    shall not effect any other provision hereof, and this Agreement
    shall be construed as if such invalid or unenforceable provision
    were omitted.



 



    IN WITNESS WHEREOF, this Agreement has been duly executed as of
    the day and year first written above.



 



    The Navigators Group, Inc.



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­



 



    Grantee



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­





    

    A-13








 








    THE
    NAVIGATORS GROUP,
    INC.
    

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 




    RESTRICTED
    STOCK AGREEMENT



 




    Form of
    Award Agreement



 





    This RESTRICTED STOCK AGREEMENT (this
    “Agreement”), dated
    [          ],
    is by and between The Navigators Group, Inc., a Delaware
    corporation (the “Company”), and
    [          ]
    (the ‘‘Grantee”).



 



    In accordance with Section 8 of The Navigators Group, Inc.
    Amended and Restated 2005 Stock Incentive Plan (the
    “Plan”), and subject to the terms of the Plan
    and this Agreement, the Company hereby grants to the Grantee an
    award of shares of restricted common stock, par value $0.10 per
    share, of the Company (the “Shares”) on the
    terms and conditions as set forth below. All capitalized terms
    used, but otherwise not defined herein, have the meanings set
    forth in the Plan.



 



    To evidence the award of Restricted Stock and to set forth its
    terms, the Company and the Grantee agree as follows:



 



    1.  Grant.  The Committee
    hereby grants to the Grantee on
    [          ]
    (the “Grant
    Date”)           Shares
    (subject to adjustment as provided in Section 4.2 of the
    Plan) of Restricted Stock.



 



    2.  Vesting of the
    Shares.  Subject to the provisions of
    Paragraphs 3 and 4 of this Agreement, the Shares shall
    cease to be restricted and shall become non-forfeitable
    (thereafter being referred to as “Unrestricted
    Stock”) as follows:



 


	 	 	 	 	 
	
 
	
 
	
    Cumulative Percentage

    

	

    Vesting Date


	
 
	
    Unrestricted

	 

	

    1st

    Anniversary of Grant Date


	
 
	
 
	
    25
	
    %

	

    2nd

    Anniversary of Grant Date


	
 
	
 
	
    50
	
    %

	

    3rd

    Anniversary of Grant Date


	
 
	
 
	
    75
	
    %

	

    4th

    Anniversary of Grant Date


	
 
	
 
	
    100
	
    %









 



    Notwithstanding the foregoing provisions of this
    Paragraph 2, and except as otherwise determined by the
    Committee, as provided in the Plan or as provided herein, any
    portion of Shares that is not vested at the time of the
    Grantee’s Termination of Service with the Company and its
    Subsidiaries shall be immediately cancelled and forfeited to the
    Company.



 



    3.  Termination of
    Service.  In the event the Grantee incurs a
    Termination of Service for any reason, the Grantee will have
    such rights with respect to this Restricted Stock as are
    provided for in the Plan.



 



    4.  Change in Control.  Upon a
    Change in Control, the Grantee will have such rights with
    respect to the Shares of Restricted Stock as are provided for in
    the Plan.



 



    5.  Stock Certificates and
    Escrow.  The certificates for the Shares shall
    be held in escrow by the Company until and to the extent such
    Shares become Unrestricted Stock. The Shares and the related
    certificates, together with any assets or securities held in
    escrow hereunder, will either be (a) surrendered to the
    Company for cancellation to the extent such Shares are forfeited
    by the Grantee pursuant to the terms of the Plan or this
    Agreement or (b) released to the Grantee to the extent such
    Shares become Unrestricted Stock pursuant to Paragraph 2, 3
    or 4 above.



 



    6.  Limitation Upon
    Transfer.  The Restricted Stock and all rights
    granted hereunder shall not (a) be transferred by the
    Grantee, other than by will, by the laws of descent and
    distribution; (b) be otherwise assigned, pledged or
    hypothecated in any way; and (c) be subject to execution,
    attachment or similar process. Any attempt to transfer the
    Restricted Stock, other than by will or by the laws of descent
    and distribution, or to assign, pledge or hypothecate or
    otherwise dispose of such Restricted Stock or of any rights
    granted hereunder contrary to the provisions hereof, or upon the
    levy of any attachment or similar process upon this Award or
    such rights, shall be void and unenforceable against the Company
    or any Subsidiary; provided, however, that the Grantee may
    designate a Beneficiary to receive benefits in the event of the
    Grantee’s death.





    

    A-14








 







    7.  Tax Consequences.



 



    (a) Code Section 83(b).  The
    Grantee understands that, at his or her option, he or she is
    entitled to make the election permitted under Code
    Section 83(b), to include in gross income in the taxable
    year that includes the Grant Date, the Fair Market Value of such
    Shares at the time of grant, notwithstanding that such Shares
    are, due to the Restrictions, subject to a substantial risk of
    forfeiture within the meaning of the Code.



 



    (b) General.  The Grantee
    acknowledges and agrees that the Grantee is responsible for all
    taxes and tax consequences with respect to the grant of the
    Shares or the lapse of Restrictions otherwise imposed by this
    Agreement. The Grantee further acknowledges that it is the
    Grantee’s responsibility to obtain any advice that the
    Grantee deems necessary or appropriate with respect to any and
    all tax matters that may exist as a result of the grant of the
    Shares or the lapse of restrictions otherwise imposed by this
    Agreement. Notwithstanding any other provision of this
    Agreement, the Shares, together with any other assets or
    securities held in escrow hereunder, shall not be released to
    the Grantee unless, as provided in Section 16 of the Plan,
    the Grantee shall have paid to the Company, or made arrangements
    satisfactory to the Company regarding the payment of, any
    federal, state, local or foreign taxes of any kind required by
    law to be withheld with respect to the grant of the Shares or
    the lapse of restrictions otherwise imposed by this Agreement.



 



    8.  Amendment.  No
    discontinuation, modification, or amendment of the Plan may,
    without the written consent of the Grantee, adversely affect the
    rights of the Grantee under this Agreement, except as otherwise
    provided under the Plan. This Agreement may be amended as
    provided under the Plan, but no such amendment shall adversely
    affect the Grantee’s rights under the Agreement without the
    Grantee’s written consent, unless otherwise permitted by
    the Plan.



 



    9.  Rights as a
    Stockholder.  The Grantee shall be entitled to
    receive any dividends that become payable on or after the Grant
    Date with respect to the Shares; provided, however, that no
    dividends shall be payable (a) with respect to the Shares
    on account of record dates occurring prior to the Grant Date,
    and (b) with respect to forfeited Shares on account of
    record dates occurring on or after the date of such forfeiture.
    The Grantee shall be entitled to vote the Shares on or after the
    Grant Date to the same extent as would have been applicable to
    the Grantee if the Shares had then been Unrestricted Shares;
    provided, however, that the Grantee shall not be entitled to
    vote (i) the Shares on account of record dates occurring
    prior to the Grant Date, and (ii) with respect to forfeited
    Shares on account of record dates occurring on or after the date
    of such forfeiture.



 



    10.  Compliance with Laws and
    Regulations.  Notwithstanding anything herein
    to the contrary, the Company shall not be obligated to cause to
    be issued or delivered any certificates for Shares, unless and
    until the Company is advised by its counsel that the issuance
    and delivery of such certificates is in compliance with all
    applicable laws, regulations of governmental authority, and the
    requirements of any exchange upon which the Common Stock is
    traded. The Company may require, as a condition of the issuance
    and delivery of such certificates and in order to ensure
    compliance with such laws, regulations, and requirements, that
    the Grantees make such covenants, agreements, and
    representations as the Company, in its sole discretion,
    considers necessary or desirable.



 



    11.  Employment Rights.  This
    Agreement is not a contract of employment, and the terms of
    employment of the Grantee or other relationship of the Grantee
    with the Company shall not be affected in any way by this
    Agreement except as specifically provided herein. The execution
    of this Agreement shall not be construed as conferring any legal
    rights upon the Grantee for a continuation of an employment or
    other relationship with the Company, nor shall it interfere with
    the right of the Company to discharge the Grantee and to treat
    him or her without regard to the effect which such treatment
    might have upon him or her as a Grantee.



 



    12.  Disclosure
    Rights.  Except as required by applicable law,
    the Company (or any of its affiliates) shall not have any duty
    or obligation to disclose affirmatively to a record or
    beneficial holder of Common Stock, Restricted Stock or
    Unrestricted Stock, and such holder shall have no right to be
    advised of, any material information regarding the Company at
    any time prior to, upon or in connection with receipt of the
    Shares.



 



    13.  Successors and
    Assigns.  Except as otherwise expressly set
    forth in this Agreement, the provisions of this Agreement shall
    inure to the benefit of, and be binding upon, the succeeding
    administrators, heirs and legal representatives of the Grantee
    and the successors and assigns of the Company.





    

    A-15








 







    14.  No Limitation on Rights of the
    Company.  This Agreement shall not in any way
    affect the right of the Company to adjust, reclassify,
    reorganize or otherwise make changes in its capital or business
    structure, or to merge, consolidate, dissolve, liquidate, sell
    or transfer all or any part of its business or assets.



 



    15.  Notices.  Any
    communication or notice required or permitted to be given
    hereunder shall be in writing, and, if to the Company, to its
    principal place of business, attention: Secretary, and, if to
    the Grantee, to the address appearing on the records of the
    Company. Such communication or notice shall be delivered
    personally or sent by certified, registered, or express mail,
    postage prepaid, return receipt requested, or by a reputable
    overnight delivery service. Any such notice shall be deemed
    given when received by the intended recipient. Notwithstanding
    the foregoing, any notice required or permitted hereunder from
    the Company to the Grantee may be made by electronic means,
    including by electronic mail to the Company-maintained
    electronic mailbox of the Grantee, and the Grantee hereby
    consents to receive such notice by electronic delivery. To the
    extent permitted in an electronically delivered notice described
    in the previous sentence, the Grantee shall be permitted to
    respond to such notice or communication by way of a responsive
    electronic communication, including by electronic mail.



 



    16.  Governing Law.  The
    interpretation, performance and enforcement of this Agreement
    shall be governed by and enforced in accordance with the laws of
    the State of Delaware (other than its laws respecting choice of
    law).



 



    17.  Receipt of Plan.  The
    Grantee acknowledges receipt of a copy of the Plan, and
    represents that the Grantee is familiar with the terms and
    provisions thereof, and hereby accepts the Shares subject to all
    the terms and provisions of this Agreement and of the Plan. The
    Shares are granted pursuant to the terms of the Plan, the terms
    of which are incorporated herein by reference, and the Shares
    shall in all respects be interpreted in accordance with the
    Plan. The Committee shall interpret and construe the Plan and
    this Agreement, and its interpretation and determination shall
    be conclusive and binding upon the parties hereto and any other
    person claiming an interest hereunder, with respect to any issue
    arising hereunder or thereunder.



 



    18.  Condition to Return Signed
    Agreement.  This Agreement shall be null and
    void unless the Grantee signs, dates, and returns this Agreement
    to the Company on or before the 33rd day following the
    earliest of the date this Agreement is (a) placed in the
    mail addressed to the Grantee at his or her home address (as
    contained in the Company’s records); (b) delivered to
    the Grantee at his or her
    e-mail
    address as contained in the Company’s
    e-mail
    directory; or (c) hand delivered to the Grantee.



 



    19.  Construction.  Notwithstanding
    any other provision of this Agreement, this Agreement is made
    and the Shares are granted pursuant to the Plan and are in all
    respects limited by and subject to the express provisions of the
    Plan, as amended from time to time. To the extent any provision
    of this Agreement is inconsistent or in conflict with any term
    or provision of the Plan, the Plan shall govern. The
    interpretation and construction by the Committee of the Plan,
    this Agreement and any such rules and regulations adopted by the
    Committee for purposes of administering the Plan, shall be final
    and binding upon the Grantee and all other persons.



 



    20.  Entire Agreement.  This
    Agreement, together with the Plan, constitute the entire
    obligation of the parties hereto with respect to the subject
    matter hereof and shall supersede any prior expressions of
    intent or understanding with respect to this transaction.



 



    21.  Waiver; Cumulative
    Rights.  The failure or delay of either party
    to require performance by the other party of any provision
    hereof shall not affect its right to require performance of such
    provision unless and until such performance has been waived in
    writing. Each and every right hereunder is cumulative and may be
    exercised in part or in whole from time to time.



 



    22.  Counterparts.  This
    Agreement may be signed in two counterparts, each of which shall
    be an original, but both of which shall constitute but one and
    the same instrument.



 



    23.  Headings.  The headings
    contained in this Agreement are for reference purposes only and
    shall not affect the meaning or interpretation of this Agreement.





    

    A-16








 







    24.  Severability.  If any
    provision of this Agreement shall for any reason be held to be
    invalid or unenforceable, such invalidity or unenforceability
    shall not effect any other provision hereof, and this Agreement
    shall be construed as if such invalid or unenforceable provision
    were omitted.



 



    IN WITNESS WHEREOF, this Agreement has been duly executed as of
    the day and year first written above.



 



    The Navigators Group, Inc.



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­



 



    Grantee



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­





    

    A-17








 








    THE
    NAVIGATORS GROUP,
    INC.
    

    AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN



 






    RESTRICTED
    STOCK UNIT AGREEMENT



 






    Form of
    Award Agreement



 





    This RESTRICTED STOCK UNIT AGREEMENT (this
    “Agreement”), dated
    [          ],
    is by and between The Navigators Group, Inc., a Delaware
    corporation (the “Company”), and
    [          ]
    (the ‘‘Grantee”).



 



    In accordance with Section 9 of The Navigators Group, Inc.
    Amended and Restated 2005 Stock Incentive Plan (the
    “Plan”), and subject to the terms of the Plan
    and this Agreement, the Company hereby grants to the Grantee an
    award of Restricted Stock Units (“RSUs”) on the
    terms and conditions as set forth below. Each RSU covered by
    this Agreement represents an unfunded and unsecured promise of
    the Company to issue to the Grantee, on or after the date the
    RSUs become vested, the Fair Market Value of one Share pre such
    RSU. All capitalized terms used, but otherwise not defined
    herein, have the meanings set forth in the Plan.



 



    To evidence the award of RSUs and to set forth its terms, the
    Company and the Grantee agree as follows:



 



    1.  Grant.  The Committee
    hereby grants to the Grantee on
    [          ]
    (the “Grant
    Date”)          
    RSUs (subject to adjustment as provided in Section 4.2 of
    the Plan).



 



    2.  Vesting of the RSUs.  The
    aggregate RSU award will cease to be restricted and shall become
    non-forfeitable and payable to the Grantee as follows:



 


	 	 	 	 	 
	
 
	
 
	
    Cumulative Unrestricted

    

	

    Vesting Date


	
 
	
    Percentage

	 

	

    1st

    Anniversary of Grant Date


	
 
	
 
	
    25
	
    %

	

    2nd

    Anniversary of Grant Date


	
 
	
 
	
    50
	
    %

	

    3rd

    Anniversary of Grant Date


	
 
	
 
	
    75
	
    %

	

    4th

    Anniversary of Grant Date


	
 
	
 
	
    100
	
    %









 



    Notwithstanding the foregoing provisions of this
    Paragraph 2, and except as otherwise determined by the
    Committee, as provided in the Plan or as provided herein, any
    portion of the RSUs that is not vested at the time of the
    Grantee’s Termination of Service with the Company and its
    Subsidiaries will be immediately cancelled and forfeited to the
    Company.



 



    3.  Payment upon Vesting of
    RSUs.  Subject to the terms of this Agreement,
    following the vesting of RSUs hereunder, the Company shall issue
    to the Grantee (or, in the event of the Grantee’s death, to
    his or her Beneficiary) the number of Shares of a Fair Market
    Value equal to the value of to the number of vested RSUs (with
    one RSU having a value equal to the Fair Market Value of one
    Share). Such issuance shall be made to the Grantee in the form
    of Shares as soon as administratively practicable, but in no
    event later than two and one-half months following the end of
    the calendar year in which the RSUs vest pursuant to
    Paragraph 2 above.



 



    4.  Limitation Upon
    Transfer.  At any time prior to vesting in
    accordance with Paragraph 2, the RSUs, or any interest
    therein, cannot be directly or indirectly transferred, sold,
    assigned, pledged, hypothecated, encumbered or otherwise
    disposed; provided, however, that in the event of the
    Grantee’s death prior to the payment of a vested RSU, the
    Company will provide payment to the Beneficiary of the Grantee.



 



    5.  Plan Amendment.  No
    discontinuation, modification, or amendment of the Plan may,
    without the written consent of the Grantee, adversely affect the
    rights of the Grantee under this Agreement, except as otherwise
    provided under the Plan. This Agreement may be amended as
    provided under the Plan, but no such amendment shall adversely
    affect the Grantee’s rights under the Agreement without the
    Grantee’s written consent, unless otherwise permitted by
    the Plan.



 



    6.  Rights as a
    Stockholder.  The Grantee will have the rights
    of a stockholder with respect to the Shares subject to this RSU
    only upon becoming the holder of record of such Shares.





    

    A-18








 







    7.  Compliance with Applicable
    Law.  Notwithstanding anything herein to the
    contrary, the Company shall not be obligated to cause to be
    issued or delivered any certificates for Shares, unless and
    until the Company is advised by its counsel that the issuance
    and delivery of such certificates is in compliance with all
    applicable laws, regulations of governmental authority, and the
    requirements of any exchange upon which the Common Stock is
    traded. The Company may require, as a condition of the issuance
    and delivery of such certificates and in order to ensure
    compliance with such laws, regulations, and requirements, that
    the Grantees make such covenants, agreements, and
    representations as the Company, in its sole discretion,
    considers necessary or desirable.



 



    8.  Employment Rights.  This
    Agreement is not a contract of employment, and the terms of
    employment of the Grantee or other relationship of the Grantee
    with the Company shall not be affected in any way by this
    Agreement except as specifically provided herein. The execution
    of this Agreement shall not be construed as conferring any legal
    rights upon the Grantee for a continuation of an employment or
    other relationship with the Company, nor shall it interfere with
    the right of the Company to discharge the Grantee and to treat
    him or her without regard to the effect which such treatment
    might have upon him or her as a Grantee.



 



    9.  Tax Consequences.  The
    Grantee acknowledges and agrees that the Grantee is responsible
    for all taxes and tax consequences with respect to the grant of
    the RSUs, the lapse of restrictions, and delivery of Shares. The
    Grantee further acknowledges that it is the Grantee’s
    responsibility to obtain any advice that the Grantee deems
    necessary or appropriate with respect to any and all tax matters
    that may exist as a result of the RSUs, the lapse of
    restrictions, and delivery of Shares. Notwithstanding any other
    provision of this Agreement, the Shares, together with any other
    assets or securities held in escrow hereunder, shall not be
    released to the Grantee unless, as provided in Section 16
    of the Plan, the Grantee shall have paid to the Company, or made
    arrangements satisfactory to the Company regarding the payment
    of, any federal, state, local or foreign taxes of any kind
    required by law to be withheld with respect to the grant of the
    RSUs, the lapse of restrictions, and delivery of Shares.



 



    10.  Condition to Return Signed
    Agreement.  This Agreement shall be null and
    void unless the Grantee signs, dates, and returns this Agreement
    to the Company on or before the
    33rd day

    following the earliest of the date this Agreement is
    (a) placed in the mail addressed to the Grantee at his or
    her home address (as contained in the Company’s records);
    (b) delivered to the Grantee at his or her
    e-mail
    address as contained in the Company’s
    e-mail
    directory; or (c) hand delivered to the Grantee.



 



    11.  Successors and
    Assigns.  Except as otherwise expressly set
    forth in this Agreement, the provisions of this Agreement shall
    inure to the benefit of, and be binding upon, the succeeding
    administrators, heirs and legal representatives of the Grantee
    and the successors and assigns of the Company.



 



    12.  No Limitation on Rights of the
    Company.  This Agreement shall not in any way
    affect the right of the Company to adjust, reclassify,
    reorganize or otherwise make changes in its capital or business
    structure, or to merge, consolidate, dissolve, liquidate, sell
    or transfer all or any part of its business or assets.



 



    13.  Notices.  Any
    communication or notice required or permitted to be given
    hereunder shall be in writing, and, if to the Company, to its
    principal place of business, attention: Secretary, and, if to
    the Grantee, to the address appearing on the records of the
    Company. Such communication or notice shall be delivered
    personally or sent by certified, registered, or express mail,
    postage prepaid, return receipt requested, or by a reputable
    overnight delivery service. Any such notice shall be deemed
    given when received by the intended recipient. Notwithstanding
    the foregoing, any notice required or permitted hereunder from
    the Company to the Grantee may be made by electronic means,
    including by electronic mail to the Company-maintained
    electronic mailbox of the Grantee, and the Grantee hereby
    consents to receive such notice by electronic delivery. To the
    extent permitted in an electronically delivered notice described
    in the previous sentence, the Grantee shall be permitted to
    respond to such notice or communication by way of a responsive
    electronic communication, including by electronic mail.



 



    14.  Governing Law.  The
    interpretation, performance and enforcement of this Agreement
    shall be governed by and enforced in accordance with the laws of
    the State of Delaware (other than its laws respecting choice of
    law).





    

    A-19








 







    15.  Receipt of Plan.  The
    Grantee acknowledges receipt of a copy of the Plan, and
    represents that the Grantee is familiar with the terms and
    provisions thereof, and hereby accepts the Shares subject to all
    the terms and provisions of this Agreement and of the Plan. The
    RSUs are granted pursuant to the terms of the Plan, the terms of
    which are incorporated herein by reference, and the RSUs shall
    in all respects be interpreted in accordance with the Plan. The
    Committee shall interpret and construe the Plan and this
    Agreement, and its interpretation and determination shall be
    conclusive and binding upon the parties hereto and any other
    person claiming an interest hereunder, with respect to any issue
    arising hereunder or thereunder.



 



    16.  Construction.  Notwithstanding
    any other provision of this Agreement, this Agreement is made
    and the Awards are granted pursuant to the Plan and are in all
    respects limited by and subject to the express provisions of the
    Plan, as amended from time to time. To the extent any provision
    of this Agreement is inconsistent or in conflict with any term
    or provision of the Plan, the Plan shall govern. The
    interpretation and construction by the Committee of the Plan,
    this Agreement and any such rules and regulations adopted by the
    Committee for purposes of administering the Plan, shall be final
    and binding upon the Grantee and all other persons.



 



    17.  Entire Agreement.  This
    Agreement, together with the Plan, constitute the entire
    obligation of the parties hereto with respect to the subject
    matter hereof and shall supersede any prior expressions of
    intent or understanding with respect to this transaction.



 



    18.  Waiver; Cumulative
    Rights.  The failure or delay of either party
    to require performance by the other party of any provision
    hereof shall not affect its right to require performance of such
    provision unless and until such performance has been waived in
    writing. Each and every right hereunder is cumulative and may be
    exercised in part or in whole from time to time.



 



    19.  Counterparts.  This
    Agreement may be signed in two counterparts, each of which shall
    be an original, but both of which shall constitute but one and
    the same instrument.



 



    20.  Headings.  The headings
    contained in this Agreement are for reference purposes only and
    shall not affect the meaning or interpretation of this Agreement.



 



    21.  Severability.  If any
    provision of this Agreement shall for any reason be held to be
    invalid or unenforceable, such invalidity or unenforceability
    shall not effect any other provision hereof, and this Agreement
    shall be construed as if such invalid or unenforceable provision
    were omitted.



 



    IN WITNESS WHEREOF, this Agreement has been duly executed as of
    the day and year first written above.



 



    The Navigators Group, Inc.



 



    By: ­
    ­




    Name: ­
    ­




    Title: ­
    ­



 



    Grantee



 



    By:
    ­
    ­




    Name:
    ­
    ­




    Title: ­
    ­





    

    A-20