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                                                                    Exhibit 10.8

                                TOWER GROUP, INC.
                              2001 STOCK AWARD PLAN


1. Purpose.

         The Tower Group, Inc. 2001 Stock Award Plan (hereinafter, the "Plan")
is hereby established to grant to officers and other employees of Tower Group,
Inc. ("Tower Group") or of its parents or subsidiaries (as defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code")), if any (individually and collectively, the "Company"), a
favorable opportunity to acquire common stock, $.01 par value ("Common Stock"),
of Tower Group and thereby to create an incentive for such persons to remain in
the employ of or provide services to the Company and to contribute to its
success.

         2. Definitions.

         For purposes of the Plan:

         2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share of Common Stock paid to
holders of the Shares of Common Stock in any transaction (or series of
transactions) constituting or resulting in a Change in Control or (ii) the
highest Fair Market Value of a Share during the ninety (90) day period ending on
the date of a Change in Control.

         2.2 "Affiliate Corporation" or "Affiliate" means any entity other than
the Company and its Subsidiaries that is designated by the Board or the
Committee as a participating employer under the Plan, provided that the Company
directly or indirectly owns at least 20% of the combined voting power of all
classes of stock of such entity or at least 20% of the ownership interests in
such entity.

         2.3 "Award Agreement" means the written agreement between the Company
and a Grantee evidencing the grant of an Award.

         2.4 "Award" means any Award, SAR or Performance Share, granted to an
Eligible Employee under the Plan.

         2.5 "Board" means the Board of Directors of the Company.

         2.6 "Cause" means, with respect to any Grantee (unless otherwise
defined in the Agreement evidencing a particular Award), any of the following
events, any of which shall result in immediate termination of the unexercised
portion of an Award, (i) intentional failure to perform reasonably assigned
duties, (ii) dishonest or willful misconduct in the performance of duties, (iii)
involvement in a transaction in connection with the performance of duties to the
Company which transaction is adverse to the interests of the Company and which
is engaged in for personal profit, or (iv) willful violation of any law, rule or
regulation in connection with the performance of duties (other than traffic
violations or similar offenses).

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         2.7 "Change in Capitalization" means any increase or reduction in the
number of the Company's issued and outstanding Shares, or any change (including,
but not limited to, a change in value) in the Shares or exchange of Shares for a
different number or kind of shares or other securities of the Company, or other
change in corporate structure by reason of a reclassification, recapitalization,
merger, consolidation, reorganization, spin-off, split-up, issuance of warrants
or rights or debentures, stock dividend, stock split or reverse stock split,
combination or exchange of shares, repurchase of shares, change in corporate
structure or otherwise.

         2.8 A "Change in Control" shall mean the occurrence during the term of
the Plan of either of any "person" (as such term is used in Section 13(c) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding voting
securities.

         2.9 "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code shall be deemed to include successor
provisions thereto and regulations thereunder.

         2.10 "Committee" means a committee, as described in Section 3.1,
appointed by the Board to administer the Plan and to perform the functions set
forth herein.

         2.11 "Company" means Tower Group, Inc. (including any and all Parents
and Subsidiaries currently existing or hereafter acquired or established).

         2.12 "Disability" means a physical or mental infirmity which impairs a
Grantee's ability to perform substantially his or her duties for a period of one
hundred eighty (180) consecutive days.

         2.13 "Disinterested Director" means a director of the Company who is
"disinterested" within the meaning of Rule 16b-3 under the Exchange Act.

         2.14 "Eligible Individual" means any officer or employee of the
Company, or an individual who is designated by the Committee as eligible to
receive Awards subject to the conditions set forth herein.

         2.15 "Employee Award" means an Award granted pursuant to the Plan.

         2.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         2.17 "Fair Market Value" on any date means the average of the high and
low sales prices of the Shares on such date on the principal securities exchange
on which such Shares are listed, or if such Shares are not so listed or admitted
to trading, the arithmetic mean of the per Share closing bid price and closing
asked price per Share on such date as quoted on the quotation system of the
Nasdaq Stock Market, Inc. or such other market in which such prices are
regularly quoted, or, if there have been no published bid or asked quotations
with respect to Shares on such date, the Fair Market Value as established by the
Board in good faith and, in the case of an Incentive Stock Award, in accordance
with Section 422 of the Code.


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         2.18 "Grantee" means a person to whom an Award is being granted under
the Plan.

         2.19 "Incentive Stock Award" means an Award satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Award.

         2.20 "Insurance Law" means the Insurance Law of the State of New York.
References to any provision of the Insurance Law shall be deemed to include
successor provisions thereto and regulations thereunder.

         2.21 "Nonemployee Director" means a director of the Company who is not
an employee of the Company or an Affiliate.

         2.22 "Nonqualified Stock Award" means an Award which is not an
Incentive Stock Award.

         2.23 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

         2.24 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.

         2.25 "Performance Share" means a performance share granted under
Section 6.

         2.26 "Plan" means the Tower Group Inc. 20011999 Stock Award Plan.

         2.27 "Pooling Transaction" means an acquisition of the Company in a
transaction which is intended to be treated as a "pooling of interests" under
generally accepted accounting principles as defined in Opinion No. 16 of the
Accounting Principles Board.

         2.28 "Shares" means the common stock, par value $.01 per share, of the
Company and any securities or other consideration issuable in respect of Shares
in connection with a Change in Capitalization or Change in Control.

         2.29 "Stock Appreciation Right" or "SARs" means a right to receive all
or some portion of the increase in the value of the Shares as provided in
Section 8 hereof.

         2.30 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.

         2.31 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of 424(a) of the Code, which issues or
assumes a stock Award in a transaction to which Section 424(a) of the Code
applies.



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         2.32 "Ten Percent Stockholder" means an Eligible Individual, who, at
the time an Incentive Stock Award is to be granted to him or her owns (within
the meaning of Section 422(b) (6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, or of a Parent or a Subsidiary thereof.

         3. Administration.

         3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. The Committee shall keep minutes of its meetings. A quorum shall consist
of not fewer than two (2) members of the Committee and a majority of a quorum
may authorize any action. Any decision or determination reduced to writing and
signed by a majority of all of the members shall be as fully effective as if
made by a majority, voted at a meeting duly called and held. The Committee shall
consist of at least two (2) directors of the Company each of whom shall be a
Disinterested Director and an Outside Director.

         3.2 No member of the Committee shall be liable for any action, failure
to act, determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder, except for liability arising from his or her
own willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and, to the extent permitted by applicable law, any
liability incurred in connection with defending against, responding to,
negotiating for the settlement of or otherwise dealing with any claim, cause of
action or dispute of any kind arising in connection with any actions in
administering this Plan or in authorizing or denying authorization to any
transaction hereunder.

         3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:

                  (a) determine those Eligible Individuals to whom Employee
Awards shall be granted under the Plan and the number of Employee Awards to be
granted and to prescribe the terms and conditions (which need not be identical)
of each such Employee Award, including the purchase price per Share subject to
each Employee Award, and the Award Agreements evidencing the Awards and make any
amendment or modification to any Award Agreement consistent with the terms of
this Plan;

                  (b) construe and interpret the Plan and the Awards granted
hereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any defect
or supplying any omission, or reconciling any inconsistency in the Plan or in
any Award Agreement, in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with applicable law, including Rule 16b-3
under the Exchange Act and the Code to the extent applicable, and otherwise to
make the Plan fully effective. All decisions and determinations by the Committee
or the Board or the exercise of this power shall be final, binding and
conclusive upon the Company, its Affiliate Corporations, the Awards, and all
other persons having any interest therein;



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                  (c) determine the duration and purposes for leaves of absence
which may be granted to a Grantee on an individual basis without constituting a
termination of employment or service for purposes of this Plan;

                  (d) exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and

                  (e) exercise such powers and perform such acts as it deems
necessary or advisable to promote the best interests of the Company with respect
to the Plan.

         3.4 In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under the Plan,
subject to the provisions of the Code and the Insurance Law. In the event that
the Plan is administered by the Board, then all references to the Committee,
except for Section 3.1, shall be deemed to refer to the Board.

         4. Stock Subject to the Plan.

         4.1 The maximum number of Shares that may be made the subject of Awards
granted under the Plan is 250,000; provided that at no time may the number of
Shares which may be subject to Awards under the Plan exceed five percent of the
authorized shares of Common Stock of the Company in accordance with Section 1207
of the Insurance Law. Upon a Change in Capitalization the maximum number of
Shares shall be adjusted in number and kind pursuant to Section 9. The Company
shall reserve for purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company's treasury, or partly out of each,
such number of Shares as shall be determined by the Board.

         4.2 Upon the granting of an Award, the number of Shares available under
Section 4.1 for the granting of further Awards shall be reduced by the number of
shares subject to such Award granted. Whenever any outstanding Award or portion
thereof expires, is canceled or is otherwise terminated for any reason without
having been exercised or payment having been made in respect of the entire
Award, the Shares allocable to the expired, canceled or otherwise terminated
portion of the Award may again be the subject of Awards granted hereunder.

         4.3 For purposes of this Section, where the exercise price of Awards is
paid by means of the Grantee's surrender of previously owned shares of Common
Stock, only the net number of additional shares issued and which remain
outstanding in connection with such exercise shall be deemed "issued" for
purposes of the Plan.

         5. Award Grants for Eligible Individuals.

         5.1 Authority of Committee. Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Awards, the terms and conditions of which
shall be set forth in an Award Agreement.

         5.2 Eligible Individuals. Officers, directors and other employees of
the Company shall be eligible for selection to participate in the Plan upon
approval by the Committee; provided, however, that only "employees" (within the
meaning of Section 3401(c) of the Code) of the Company shall be eligible for the
grant of Incentive Stock Awards. An individual who has been granted an Award
may, if otherwise eligible, be granted additional Awards if the Committee shall
so determine. No person is eligible to participate in the Plan by matter of
right; only those eligible persons who are selected by the Committee in its
discretion shall participate in the Plan.

         5.3 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Award shall be
determined by the Committee and set forth in the Award Agreement; provided,
however, that

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                  (a) the purchase price per Share under each Incentive Stock
Award shall not be less than 100% of the Fair Market Value of a Share on the
date the Incentive Stock Award is granted (110% in the case of an Incentive
Stock Award granted to a Ten-Percent Stockholder) and

                  (b) the purchase price per Share under each Nonqualified Stock
Award shall not be less than 85% of the Fair Market Value of a Share on the date
the Nonqualified Stock Award is granted.

         5.4 Maximum Duration. Employee Awards granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Award granted hereunder shall not be exercisable after the expiration of ten
(10) years from the date it is granted (five (5) years in the case of an
Incentive Stock Award granted to a Ten-Percent Stockholder), and a Nonqualified
Stock Award shall not be exercisable after the expiration of ten (10) years from
the date it is granted. The Committee may, subsequent to the granting of any
Employee Award, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.

         5.5 Vesting. Subject to Section 7.5 hereof, each Employee Award shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Award expires. The Committee may accelerate the exercisability
of any Award or portion thereof at any time.

         5.6 Modification. No modification of an Employee Award shall adversely
alter or impair any rights or obligations under the Employee Award without the
Grantee's consent.

         5.7 Maximum Number of Share Subject to Award to Single Individual. At
no time shall the number of shares subject to Awards issued to any individual,
including an Award under this Plan, exceed 10% of the Shares authorized to be
awarded under Section 4.1.

         6. Performance Shares. The Committee is authorized to grant Performance
Shares to Eligible Employees on the following terms and conditions:

         6.1 Performance Period. The Committee shall determine a performance
period (the "Performance Period") of one or more years and shall determine the
performance objectives for grants of Performance Shares. Performance objectives
may vary from Eligible Employee to Eligible Employee and shall be based upon
such performance criteria as the Committee may deem appropriate. Performance
periods may overlap and Eligible Employees may participate simultaneously with
respect to Performance Shares and Performance Units for which different
Performance Periods are prescribed.


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         6.2 Award Value. At the beginning of a Performance period, the
Committee shall determine for each Eligible Employee or group of Eligible
Employees with respect to that Performance Period the range of number of Shares,
if any, in the case of Performance Shares which may be fixed or may vary in
accordance with such performance or other criteria specified by the Committee,
which shall be paid to an Eligible Employee as an Award if the relevant measure
of Company performance for the Performance Period is met.

         6.3 Significant Events. If during the course of a Performance Period
there shall occur significant events as determined by the Committee which the
Committee expects to have a substantial effect on a performance objective during
such period, the Committee may revise such objectives; provided, however, that,
if an Award Agreement so provides, the Committee shall not have any discretion
to increase the amount of compensation payable under the Award to the extent
such an increase would cause the Award to lose its qualification as
performance-based compensation for purposes of Section 162m(4)(C) of the Code
and the regulations thereunder.

         6.4 Forfeiture. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of employment during the
applicable Performance Period, Performance Shares for which the Performance
Period was prescribed shall be forfeited; provided, however, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may determine
in an individual case, that restrictions or forfeiture conditions relating to
Performance Shares will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Performance Shares.

         6.5 Payment. Each Performance Share may be paid in whole Shares, or
cash, or a combination of Shares and cash either as a lump sum payment or in
installments, all as the Committee shall determine, at the time of grant of the
Performance Share or otherwise, commencing as soon as practicable after the end
of the relevant Performance Period.

         7. Terms and Conditions Applicable to All Awards.

         7.1 Duration. Each Award shall terminate on the date which is the tenth
anniversary of the grant date, unless terminated earlier as follows:

                  (a) If a Grantee's employment or service terminates for any
reason other than Disability, death or Cause, the Grantee may for a period of
three (3) months after such termination exercise his or her Award to the extent,
and only to the extent, such Award or portion thereof was vested and exercisable
as of the date of the Grantee's employment or service terminated, after which
time the Award shall automatically terminate in full.

                  (b) If a Grantee's employment or service terminates by reason
of the Grantee's Disability, the Grantee may, for a period of one (1) year after
such termination, exercise his or her Award to the extent, and only to the
extent, such Award or portion thereof was vested and exercisable as of the date
the Grantee's employment or service terminated, after which time the Award shall
automatically terminate in full.

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                  (c) If a Grantee's employment or service terminates for Cause,
the Award granted to the Grantee hereunder shall immediately terminate in full
and no rights thereunder may be exercised.

                  (d) If a Grantee dies while employed or in the service of the
Company or an Affiliate or within the three (3) month or twelve (12) month
period described in clause (a) or (b), respectively, of this Section 7.1 the
Award granted to the Grantee may be exercised at any time within twelve (12)
months after the Grantee's death by the person or persons to whom such rights
under the Award shall pass by will, or by the laws of descent and distribution,
after which time the Award shall terminate in full; provided, however, that an
Award may be exercised to the extent, and only to the extent, such Award or
portion thereof was exercisable on the date of death or earlier termination of
the Grantee's services as a Director.

                  (e) Retirement. Upon retirement of a Stock Award Grantee,
Stock Award privileges shall apply to those Shares immediately exercisable at
the date of retirement. The Committee, however, in its discretion, may provide
that any Stock Awards outstanding but not yet exercisable in accordance with a
schedule to be determined by the Committee. Stock Award privileges shall expire
unless exercised within such period of time as may be established by the
Committee, but in no event later than the expiration date of the Stock Award.

         Notwithstanding clauses (a) through (e) above, the Award Agreement
evidencing the grant of an Employee Award may, in the Committee's sole and
absolute discretion, set forth additional or different terms and conditions
applicable to Employee Awards upon a termination or change in status of the
employment or service of an Eligible Individual. Such terms and conditions may
be determined at the time the Employee Award is granted or thereafter.

         7.2 Non-transferability. No Award (except for vested Shares) granted
hereunder shall be transferable by the Grantee to whom granted except by will or
the laws of descent and distribution, and an Award may be exercised during the
lifetime of such Grantee only by the Grantee or his or her guardian or legal
representative. The terms of such Award shall be final, binding and conclusive
upon the beneficiaries, executors, administrators, heirs and successors of the
Grantee.

         7.3 Method of Exercise. The exercise of an Award shall be made only by
a written notice delivered in person or by mail to the Secretary or Chief
Financial Officer of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by payment
therefor and otherwise in accordance with the Award Agreement pursuant to which
the Award was granted. The purchase price for any Shares purchased pursuant to
the exercise of an Award shall be paid in accordance with Section 7.7. The
Grantee shall deliver the Award Agreement evidencing the Award to the Secretary
or Chief Financial Officer of the Company who shall endorse thereon a notation
of such exercise and return such Agreement to the Grantee. No fractional Shares
(or cash in lieu thereof) shall be issued upon exercise of an Award and the
number of Shares that may be purchased upon exercise shall be rounded to the
nearest number of whole Shares.

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         7.4 Rights of Grantees. No Grantee shall be deemed for any purpose to
be the owner of any Shares subject to any Award unless and until (i) the Award
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Grantee and (iii) the Grantee's name
shall have been entered as a stockholder of record on the books of the Company.
Thereupon, the Grantee shall have full voting, dividend and other ownership
rights with respect to such Shares, subject to such terms and conditions as may
be set forth in the applicable Award Agreement.

         7.5 Effect of Change in Control. In the event of a Change in Control,
all Awards outstanding on the date of such Change in Control shall become
immediately and fully vested and exercisable. In addition, to the extent set
forth in an Award Agreement evidencing the grant of an Employee Award, a Grantee
will be permitted to surrender for cancellation within sixty (60) days after
such Change in Control, any Employee Award or portion of an Employee Award to
the extent not yet exercised and the Grantee will be entitled to receive a cash
payment in an amount equal to the excess, if any of (x) (A) in the case of a
Nonqualified Stock Award, the greater of (1) the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Employee Award or
portion thereof surrendered or (2) the Adjusted Fair Market Value of the Shares
subject to the Employee Award or portion thereof surrendered or (B) in the case
of an Incentive Stock Award, the Fair Market Value, on the date preceding the
date of surrender, of the Shares subject to the Employee Award or portion
thereof surrendered, over (y) the aggregate purchase price for such Shares under
the Employee Award or portion thereof surrendered; provided, however, that in
the case of an Employee Award granted within six (6) months prior to the Change
in Control to any Grantee who may be subject to liability under Section 16(b) of
the Exchange Act, such Grantee shall be entitled to surrender for cancellation
his or her Award during the sixty (60) day period commencing upon the expiration
of six (6) months from the date of grant of any such Employee Award. In the
event a Grantee's employment or service with the Company is terminated by the
Company following a Change in Control, each Award held by the Grantee that was
exercisable as of the date of termination of the Grantee's employment or service
shall remain exercisable for a period ending not before the earlier of the first
anniversary of the termination of the Grantee's employment or service or the
expiration of the stated term of the Award.

         7.6 Limits on Incentive Stock Awards. Except as may otherwise be
permitted by the Code, the Committee shall not grant to an Eligible Employee
Incentive Stock Awards, that, in the aggregate, are first exercisable during any
one calendar year to the extent that the aggregate fair market value of the
Common Stock, at the time the Incentive Stock Awards are granted, exceeds
$100,000.

         7.7 Form of Payment Under Awards. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a
Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may
be made in such forms as the Committee shall determine at the date of grant or
thereafter, including, without limitation, cash, Shares, or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The Committee may make rules relating to installment or deferred payments
with respect to Awards, including the rate of interest to be credited with
respect to such payments.



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         8. Stock Appreciation Rights. The Committee may, in its discretion,
either alone or in connection with the grant of an Employee Award, grant Stock
Appreciation Rights in accordance with the Plan, the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Award, a Stock Appreciation Right shall cover the same Shares covered by the
Award (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms. The
Committee shall determine, at the time of grant or thereafter, the time or times
at which a Stock Appreciation Right may be exercised in whole or in part, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by which Shares will be delivered or deemed to be delivered
to Eligible Employees, whether or not a Stock Appreciation Right shall be in
tandem with any other Award, and any other terms and conditions of any Stock
Appreciation Right.

         8.1 Time of Grant. Unless the Committee determines otherwise, an SAR
(1) granted in tandem with a Nonqualified Stock Award may be granted at the time
of grant of the related Nonqualified Stock Award or at any time thereafter or
(2) granted in tandem with an Incentive Stock Award may only be granted at the
time of grant of the related Incentive Stock Award.

         8.2 Stock Appreciation Right Related to an Award.

                  (a) Exercise. Subject to Section 8.8, a Stock Appreciation
Right granted in connection with an Award shall be exercisable at such time or
times and only to the extent that the related Awards are exercisable, and will
not be transferable except to the extent the related Award may be transferable.
A Stock Appreciation Right granted in connection with an Incentive Stock Award
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Award Agreement.

                  (b) Amount Payable. Upon the exercise of a Stock Appreciation
Right related to an Award, the holder shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right (or, if
the Committee shall so determine in the case of any such right, the Fair Market
Value of one Share at any time during a specified period before or after the
date of exercise) over the per Share purchase price under the related Award, by
(B) the number of Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit, in any
manner, the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Award Agreement evidencing the Stock Appreciation
Right at the time it is granted.

                  (c) Treatment of Related Awards and Stock Appreciation Rights
Upon Exercise. Upon the exercise of a Stock Appreciation Right granted in
connection with an Award, the Award shall be canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Award granted in connection with a Stock Appreciation Right
or the surrender of such Award pursuant to Section 7.3, the Stock Appreciation
Right shall be canceled to the extent of the number of Shares as to which the
Award is exercised or surrendered.

         8.3 Stock Appreciation Right Unrelated to an Award. The Committee may
grant to Eligible Individuals Stock Appreciation Rights unrelated to Awards.
Stock Appreciation Rights unrelated to Awards shall contain such terms and
conditions as to exercisability (subject to Section 8.7), vesting and duration
as the Committee shall determine, but, in no event, shall they have a term of
greater than ten (10) years. Upon exercise of a Stock Appreciation Right
unrelated to an Award, the holder shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right (or, if
the Committee shall so determine in the case of any such right, the Fair Market
Value of one Share at any time during a specified period before or after the
date of exercise) over the Fair Market Value of a Share on the date the Stock
Appreciation Right was granted, by (B) the number of Shares as to which the
Stock Appreciation Right is being exercised. Notwithstanding the foregoing, the
Committee may limit, in any manner, the amount payable with respect to any Stock
Appreciation Right by including such a limit in the Award Agreement evidencing
the same Stock Appreciation Right at the time it is granted.

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         8.4 Method of Exercise. Stock Appreciation Rights shall be exercised by
a holder only by a written notice delivered in person or by mail to the
Secretary or Chief Financial Officer of the Company at the Company's principal
executive office, specifying the number of Shares with respect to which the
Stock Appreciation Right is being exercised. If requested by the Committee, the
holder shall deliver the Award Agreement evidencing the Stock Appreciation Right
being exercised and the Award Agreement evidencing any related Award to the
Secretary or Chief Financial Officer of the Company who shall endorse thereon a
notation of such exercise and return such Award Agreement to the holder.

         8.5 Form of Payment. Payment of the amount determined under Sections
8.2(b) or 8.3 may be made in the discretion of the Committee, solely in whole
Shares in a number determined at their Fair Market Value in the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount payable results in a fractional Share, payment for the
fractional Share will be made in cash. Notwithstanding the foregoing, no payment
in the form of cash may be made upon the exercise of a Stock Appreciation Right
pursuant to Sections 8.2(b) or 8.3 to an officer of the Company who is subject
to liability under Section 16(b) of the Exchange Act, unless the exercise of
such Stock Appreciation Right is made either (i) during the period beginning on
the third business day and ending on the twelfth business day following the date
of release for publication of the Company's quarterly or annual statements of
earnings (the "Window Period") or (ii) pursuant to an irrevocable election to
receive cash made at least six (6) months prior to the exercise of such Stock
Appreciation Right.

         8.6 Modification. No modification of an Award shall adversely alter or
impair any rights or obligations under the Award Agreement without the holder's
consent.

         8.7 Effect of Change in Control. In the event of a Change in Control
but subject to Section 8.6, all Stock Appreciation Rights shall become
immediately and fully exercisable. In addition, to the extent set forth in an
Award Agreement evidencing the grant of a Stock Appreciation Right, a holder
will be entitled to receive a payment in cash or stock, in either case, with a
value equal to the excess, if any, of (A) the greater of (x) the Fair Market
Value, on the date preceding the date of exercise, of the underlying Shares
subject to the Stock Appreciation Right or portion thereof exercised and (y) the
Adjusted Fair Market Value, on the date preceding the date of exercise, of the
Shared over (B) the aggregate Fair Market Value, on the date the Stock
Appreciation Right was granted, of the Shares subject to the Stock Appreciation
Right or portion thereof exercised; provided, however, that in the case of a
Stock Appreciation Right granted within six (6) months of the Change in Control
to any holder who may be subject to liability under Section 16(b) of the
Exchange Act, such holder shall be entitled to exercise his or her Stock
Appreciation Right during the sixty (60) day period commencing upon the
expiration of six months from the date of grant of any such Stock Appreciation
Right. In the event of a holder's employment or service with the Company is
terminated by the Company following a Change in Control, each Stock Appreciation
Right held by the holder that was exercisable as of the date of termination of
the holder's employment or service shall remain exercisable for a period ending
but not before the earlier of the first anniversary of the termination of the
holder's employment or service or the expiration of the stated term of the Stock
Appreciation Right.



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<PAGE>

         9. Adjustment Upon Changes in Capitalization.

                  (a) In the event of a Change in Capitalization, the Committee
shall conclusively determine the appropriate adjustments, if any, as it may deem
appropriate in the number and kind of shares authorized by the Plan in the
number and kind of shares covered by Awards granted, in the case of Stock
Awards, in the Award price, and in the case of stock appreciation rights, in the
fair market value.

                  (b) Any such adjustment in the Shares subject to Incentive
Stock Awards (including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by Section 424(h)(3)
of the Code and only to the extent otherwise permitted by Sections 422 and 424
of the Code.

                  (c) If, by reason of a Change of Capitalization, a Grantee
shall be entitled to exercise an Award with respect to new, additional or
different Shares of stock, such new, additional or different Shares shall
thereupon be subject to all of the conditions, restrictions and performance
criteria which were applicable to the Shares subject to the Award, prior to such
Change in Capitalization.

         10. Effect of Certain Transactions. Subject to Sections 7.5 and 8.8 or
as otherwise provided in an Award Agreement, in the event of (i) the liquidation
or dissolution of the Company or (ii) a merger or consolidation of the Company,
the Plan and the Awards issued hereunder shall continue in effect in accordance
with their respective terms.

         11. Interpretation.

                  (a) The Plan is intended to comply with Rule 16b-3-
promulgated under the Exchange Act and the Insurance Law and the Committee shall
interpret and administer the provisions of the Plan or any Award Agreement in a
manner consistent therewith. Any provisions inconsistent with such Rule and the
Insurance Law shall be inoperative and shall not affect the validity of the
Plan.

                  (b) Unless otherwise expressly stated in the relevant Award
Agreement, each Award granted under the Plan is intended to be performance-based
compensation within the meaning of Section 162(m)(4)(C) of the Code. The
Committee shall not be entitled to exercise any discretion otherwise authorized
hereunder with respect to such Awards if the ability to exercise such discretion
or the exercise of such discretion itself would cause the compensation
attributable to such Awards to fail to qualify as performance-based
compensation.

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<PAGE>

         12. Pooling Transactions.

         Notwithstanding anything contained in the Plan or any Award Agreement
to the contrary, in the event of a Change in Control which is also intended to
constitute a Pooling Transaction, the Committee shall take such actions, if any,
which are specifically recommended by an independent public accounting firm
engaged by the Company to the extent reasonably necessary in order to assure
that the Pooling Transaction will qualify as such, including but not limited to
(i) deferring the vesting, exercise, payment or settlement in respect of any
Award, (ii) providing that the payment or settlement in respect of any Award be
made in the form of cash, Shares or securities of a successor or acquirees of
the Company, or a combination of the foregoing, and (iii) providing for the
extension of term of any Award to the extent necessary to accommodate the
foregoing, but not beyond the maximum term permitted for any Award.

         13. Termination and Amendment of the Plan.

         The Plan shall terminate on the preceding the tenth anniversary of the
date of its adoption by the stockholders of the Company, and no Award may be
granted thereafter. The Board may sooner terminate the Plan, and the Board may
at any time and from time to time amend, modify or suspend the Plan; provided,
however, that:

                  (a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Award already granted under the Plan, except
with the consent of the Grantee or holder of an Award nor shall any amendment,
modification or termination deprive any Grantee or holder of an Award of any
Shares which he or she may have acquired through or as a result of the Plan; and

                  (b) To the extent necessary under Section 422 of the Code or
Section 16(b) of the Exchange Act or the Insurance Law and the rules and
regulations promulgated thereunder or other applicable law, no amendment shall
be effective unless approved by the stockholders of the Company in accordance
with applicable law and regulations.

         14. Non-Exclusivity of the Plan.

         The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement
or as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock Awards otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.

         15. Limitation of Liability.

         As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:

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<PAGE>

                  (a) give any person any right to be granted an Award other
than at the sole discretion of the Committee;

                  (b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;

                  (c) limit in any way the right of the Company to terminate the
employment of any person at any time; or

                  (d) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.

         16. Regulations and Other Approvals; Governing Law.

         16.1 Except as to matters of Federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in accordance
with the laws of the State of New York.

         16.2 The obligation of the Company to sell or deliver Shares with
respect to Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable Federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

         16.3 The Board may make such changes as may be necessary or appropriate
to comply with the rules and regulations of any government authority, or to
obtain for Eligible Individuals granted Incentive Stock Awards the tax benefits
under the applicable provisions of the Code and regulations promulgated
thereunder.

         16.4 Each Award is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval or any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Shares, no Awards shall be granted or payment made or Shares issued, in whole or
in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.

         16.5 Notwithstanding anything contained in the Plan or any Award
Agreement to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer to the extent required by the Securities Act and Rule 144 or other
regulations thereunder. The Committee may require an individual receiving Shares
pursuant to an Award granted under the Plan, as a condition precedent to receipt
of such Shares, to represent and warrant to the Company in writing that the
Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an exemption applicable under the Securities Act as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.

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<PAGE>

         17. Miscellaneous.

         17.1 Multiple Agreements. The terms of each Award granted to an
Eligible Individual may differ from other Awards granted under the Plan at the
same time, or at some other time. The Committee may also grant more than one
Award to a given Eligible Individual during the term of the Plan, either in
addition to, or in substitution for, one or more Awards previously granted to
that Eligible Individual.

         17.2 Withholding of Taxes.

                  (a) At such times as a Grantee or holder of a Stock
Appreciation Right recognizes taxable income in connection with the receipt of
Shares or cash hereunder (a "Taxable Event"), the Grantee or holder shall pay
other amounts as may be required by law to be withheld by the Company in
issuance or release from escrow of such Shares or the payment of such cash. The
Company shall have the right to deduct from any payment of cash to a Grantee or
holder an amount equal to the Withholding Taxes in satisfaction of the
obligation to pay Withholding Taxes. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Grantee or holder may make a written
election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee to have withheld a portion of the Shares then
issuable to him or her having an aggregate Fair Market Value, on the date
preceding the date of such issuance, equal to the Withholding Taxes, provided
that in respect of a Grantee or holder who may be subject to liability under
Section 16(b) of the Exchange Act either; (i)(A) the Tax Election is made at
least six (6) months prior to the date of the Taxable Event and (B) the Tax
Election is irrevocable with respect to all Taxable Events of a similar nature
occurring prior to the expiration of six (6) months following a revocation of
the Tax Election; or (ii)(A) the Tax Election is made at least six (6) months
after the date the Award was granted, (B) the Award is exercised during the
Window Period and (C) the Tax Election is made during the Window Period in which
the related Award is exercised or prior to such Window Period and subsequent to
the immediately preceding Window Period. Notwithstanding the foregoing, the
Committee may, by the adoption of rules or otherwise, (i) modify this Section
17.2 or impose such other restrictions or limitations on Tax Elections to be
made at such times and subject to such other conditions as the Committee
determines will constitute exempt transactions under Section 16(b) of the
Exchange Act.

                  (b) If a Grantee makes a disposition, within the meaning of
Section 424 (c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Grantee pursuant to the exercise of an Incentive Stock
Award within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Grantee pursuant to such exercise, the
Grantee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.

         17.3 Effective Date. The effective date of the Plan shall be as
determined by the Board, subject only to the approval by the affirmative vote of
a majority of the stockholders entitled to vote thereon.



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