Document:

<PAGE>

                                                                    EXHIBIT 10.1

                       THE 200_ EQUITY PARTICIPATION PLAN
                                       OF
                             AMBASSADORS GROUP, INC.

       Ambassadors Group, Inc., a Delaware corporation (the "Company"), has
adopted The 200_ Equity Participation Plan of Ambassadors Education Group, Inc.
(the "Plan"), effective as of ____________, 200_, for the benefit of its
eligible employees, consultants and directors. The Plan consists of two plans,
one for the benefit of key Employees (as such term is defined below) and
consultants and one for the benefit of Independent Directors (as such term is
defined below).

       As of the date of adoption of this Plan, all of the outstanding common
stock of the Company is held by Ambassadors International, Inc., a Delaware
corporation ("Ambassadors"), but the Company and Ambassadors have entered into a
Master Separation and Distribution Agreement dated _____________, 200_ (the
"Separation Agreement"), pursuant to which the businesses of the parties are to
be separated (the "Separation") and all of the shares of common stock of the
Company is to be distributed pro rata to the holders of Ambassadors common stock
(the "Distribution"). Pursuant to the Separation Agreement, the Company and
Ambassadors have also entered into an Employee Matters Agreement dated
___________, 200_. The Company has adopted this Plan pursuant to Section 5 of
the Employee Matters Agreement, and pursuant to Section 5 of the Employee
Matters Agreement, the Company is required to grant replacement stock options
under this Plan to all persons holding Ambassadors stock options (the
"Ambassadors Options") issued under the Ambassadors Equity Participation Plan
(as defined in the Separation Agreement) who are employees of the Company.
Options in the Company will be issued in exchange for the Ambassadors Options.

       The purposes of this Plan are as follows:

              (1) To provide an additional incentive for directors, key
       Employees and consultants to further the growth, development and
       financial success of the Company by personally benefitting through the
       ownership of Company stock and/or rights which recognize such growth,
       development and financial success.

              (2) To enable the Company to obtain and retain the services of
       directors, key Employees and consultants considered essential to the long
       range success of the Company by offering them an opportunity to own stock
       in the Company and/or rights which will reflect the growth, development
       and financial success of the Company.

              (3) To offset the loss of value of the Ambassadors Options due to
       the Distribution, to grant Options to the persons holding Ambassadors
       Options at the Date of Distribution (as defined in the Separation
       Agreement) pursuant to Section 5.3 of the Employee Matters Agreement.

                                    ARTICLE I
                                   DEFINITIONS

       1.1 GENERAL. Wherever the following terms are used in this Plan they
shall have the meaning specified below, unless the context clearly indicates
otherwise.

<PAGE>

       1.2 AFFILIATED COMPANY. "Affiliated Company" shall mean any corporation
which is a Parent of the Company or a Subsidiary of the Company or of any Parent
of the Company.

       1.3 BOARD. "Board" shall mean the Board of Directors of the Company.

       1.4 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.

       1.5 COMMITTEE. "Committee" shall mean the Compensation Committee of the
Board, or a subcommittee of the Board, appointed as provided in Section 9.1.

       1.6 COMMON STOCK. "Common Stock" shall mean the common stock of the
Company, par value $0.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any warrants,
options or other rights to purchase Common Stock. Debt securities of the Company
convertible into Common Stock shall be deemed equity securities of the Company.

       1.7 COMPANY. "Company" shall mean Ambassadors Education Group, Inc.

       1.8 DEFERRED STOCK. "Deferred Stock" shall mean Common Stock awarded
under Article VII of this Plan.

       1.9 DIRECTOR. "Director" shall mean a member of the Board.

       1.10 DIVIDEND EQUIVALENT. "Dividend Equivalent" shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends paid on
Common Stock awarded under Article VII of this Plan.

       1.11 EMPLOYEE. "Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Company or of any
corporation which is a Parent of the Company, or of any corporation which is a
Subsidiary of the Company or of any Parent of the Company.

       1.12 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

       1.13 FAIR MARKET VALUE. "Fair Market Value" of a share of Common Stock as
of a given date shall be (i) the mean between the highest and lowest selling
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on such date, or if shares were not
traded on such date, then on the closest preceding date on which a trade
occurred, or (ii) if Common Stock is not traded on an exchange, the mean between
the closing representative bid and asked prices for the Common Stock on such
date as reported by NASDAQ or, if NASDAQ is not then in existence, by its
successor quotation system; or (iii) if Common Stock is not publicly traded, the
Fair Market Value of a share of Common Stock as established by the Committee (or
the Board, in the case of Options granted to Independent Directors) acting in
good faith.

                                       2
<PAGE>

       1.14 GRANTEE. "Grantee" shall mean an Employee or consultant granted a
Performance Award, Dividend Equivalent, Stock Payment or Stock Appreciation
Right, or an award of Deferred Stock, under this Plan.

       1.15 INCENTIVE STOCK OPTION. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.

       1.16 INDEPENDENT DIRECTOR. "Independent Director" shall mean a member of
the Board who is not an Employee of the Company or its Subsidiaries.

       1.17 NON-QUALIFIED STOCK OPTION. "Non-Qualified Stock Option" shall mean
an Option which is not designated as an Incentive Stock Option by the Committee.

       1.18 OPTION. "Option" shall mean a stock option granted under Article III
of this Plan. An Option granted under this Plan shall, as determined by the
Committee, be either a Non-Qualified Stock Option or an Incentive Stock Option;
provided, however, that Options granted to Independent Directors and consultants
shall be Non-Qualified Stock Options.

       1.19 OPTIONEE. "Optionee" shall mean an Employee, consultant or
Independent Director granted an Option under this Plan.

       1.20 PARENT. "Parent" shall mean shall mean any corporation of which the
Company is a Subsidiary.

       1.21 PERFORMANCE AWARD. "Performance Award" shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash, Common
Stock or a combination of both, awarded under Article VII of this Plan.

       1.22 PLAN. "Plan" shall mean The 2001 Equity Participation Plan of
Ambassadors Education Group, Inc.

       1.23 RESTRICTED STOCK. "Restricted Stock" shall mean Common Stock awarded
under Article VI of this Plan.

       1.24 RESTRICTED STOCKHOLDER. "Restricted Stockholder" shall mean an
Employee or consultant granted an award of Restricted Stock under Article VI of
this Plan.

       1.25 RULE 16B-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.

       1.26 STOCK APPRECIATION RIGHT. "Stock Appreciation Right" shall mean a
stock appreciation right granted under Article VIII of this Plan.

                                       3
<PAGE>

       1.27 STOCK PAYMENT. "Stock Payment" shall mean (i) a payment in the form
of shares of Common Stock, or (ii) an option or other right to purchase shares
of Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
or consultant in cash, awarded under Article VII of this Plan.

       1.28 SUBSIDIARY. "Subsidiary" of a referenced corporation shall mean any
corporation owned by the referenced corporation through an unbroken chain of
corporations if each of the corporations other than the last corporation in the
unbroken chain then owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

       1.29 TERMINATION OF CONSULTANCY. "Termination of Consultancy" shall mean
the time when the engagement of an Optionee, Grantee or Restricted Stockholder
as a consultant to the Company, or to any corporation which is a Parent of the
Company, or to any corporation which is a Subsidiary of the Company or of any
Parent of the Company, is terminated for any reason, with or without cause,
including without limitation, resignation, discharge, death or retirement; but
excluding terminations where there is a simultaneous commencement of employment
with the Company, or with any corporation which is a Parent of the Company, or
with any corporation which is a Subsidiary of the Company or of any Parent of
the Company. The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment.
Notwithstanding any other provision of this Plan, the Company, or any
corporation which is a Parent of the Company, or any corporation which is a
Subsidiary of the Company or of any Parent of the Company, has an absolute and
unrestricted right to terminate a consultant's service at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.

       1.30 TERMINATION OF DIRECTORSHIP. "Termination of Directorship" shall
mean the time when an Optionee who is an Independent Director ceases to be a
Director for any reason, including, but not by way of limitation, a termination
by resignation, failure to be elected, death or retirement. The Board, in its
sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship. With respect to any person
who has received an award due to being a Director of Ambassadors, this section
shall be deemed to relate to termination of his or her directorship of
Ambassadors.

       1.31 TERMINATION OF EMPLOYMENT. "Termination of Employment" shall mean
the time when the employee-employer relationship between the Optionee, Grantee
or Restricted Stockholder and the Company, any Parent of the Company, or any
Subsidiary of either the Company or any Parent of the Company is terminated for
any reason, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment, continuing employment
of an Optionee, Grantee or Restricted Stockholder by the Company, any Parent of
the Company, or any Subsidiary of either the Company or any Parent of the
Company, (ii) at the discretion of the Committee, terminations which result in

                                       4
<PAGE>

a temporary severance of the employee-employer relationship, and (iii) at the
discretion of the Committee, terminations which are followed by the simultaneous
establishment of a consulting relationship by the Company, any Parent of the
Company, or any Subsidiary of either the Company or any Parent of the Company
with the former employee. The Committee, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether particular leaves of absence constitute Terminations of
Employment; provided, however, that, with respect to Incentive Stock Options, a
leave of absence, change in status from an employee to an independent contractor
or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section. Notwithstanding any other provision of this Plan,
the Company, any Parent of the Company, or any Subsidiary of either the Company
or any Parent of the Company has an absolute and unrestricted right to terminate
an Employee's employment at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in writing.

                                   ARTICLE II
                             SHARES SUBJECT TO PLAN

       2.1 SHARES SUBJECT TO PLAN.

              (a) The shares of stock subject to Options, awards of Restricted
       Stock, Performance Awards, Dividend Equivalents, awards of Deferred
       Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock,
       initially shares of the Company's Common Stock, par value $0.01 per
       share. The aggregate number of such shares which may be issued upon
       exercise of such options or rights or upon any such awards under the Plan
       shall not exceed One Million Eight Hundred Thousand (1,800,000). The
       shares of Common Stock issuable upon exercise of such options or rights
       or upon any such awards may be either previously authorized but unissued
       shares or treasury shares.

              (b) To the extent required by Section 162(m) of the Code, shares
       subject to Options which are cancelled continue to be counted against the
       Award Limit and if, after grant of an Option, the price of shares subject
       to such Option is reduced, the transaction is treated as a cancellation
       of the Option and a grant of a new Option and both the Option deemed to
       be canceled and the Option deemed to be granted are counted against the
       Award Limit. Furthermore, to the extent required by Section 162(m) of the
       Code, if, after grant of a Stock Appreciation Right, the base amount on
       which stock appreciation is calculated is reduced to reflect a reduction
       in the Fair Market Value of the Company's Common Stock, the transaction
       is treated as a cancellation of the Stock Appreciation Right and a grant
       of a new Stock Appreciation Right and both the Stock Appreciation Right
       deemed to be canceled and the Stock Appreciation Right deemed to be
       granted are counted against the Award Limit.

       2.2 UNEXERCISED OPTIONS AND OTHER RIGHTS. If any Option, or other right
to acquire shares of Common Stock under any other award under this Plan, expires
or is cancelled without having been

                                       5
<PAGE>

fully exercised, the number of shares subject to such Option or other right but
as to which such Option or other right was not exercised prior to its expiration
or cancellation may again be optioned, granted or awarded hereunder, subject to
the limitations of Section 2.1.

                                   ARTICLE III
                               GRANTING OF OPTIONS

       3.1 ELIGIBILITY. Subject to the Award Limit, any Employee or consultant
selected by the Committee pursuant to Section 3.4(a)(i) shall be eligible to be
granted an Option. Each Independent Director of the Company shall be eligible to
be granted Options at the times and in the manner set forth in Section 3.4(d).

       3.2 DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be granted an
Incentive Stock Option under this Plan if such person, at the time the Incentive
Stock Option is granted, owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, any
Parent of the Company, or any Subsidiary of either the Company or any Parent of
the Company unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

       3.3 QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive Stock Option
shall be granted unless such Option, when granted, qualifies as an "incentive
stock option" under Section 422 of the Code. No Incentive Stock Option shall be
granted to any person who is not an Employee.

       3.4 GRANTING OF OPTIONS.

              (a) The Committee shall from time to time, in its absolute
       discretion, and subject to the applicable limitations of this Plan:

                     (i) Determine which Employees are key Employees and select
              from among the key Employees or consultants (including Employees
              or consultants who have previously received Options or other
              awards under this Plan) such of them as in its opinion should be
              granted Options;

                     (ii) Subject to the Award Limit, determine the number of
              shares to be subject to such Options granted to the selected key
              Employees or consultants;

                     (iii) Determine whether such Options are to be Incentive
              Stock Options or Non-Qualified Stock Options and whether such
              Options are to qualify as performance-based compensation as
              described in Section 162(m)(4)(C) of the Code; and

                     (iv) Determine the terms and conditions of such Options,
              consistent with this Plan; provided, however, that the terms and
              conditions of Options intended to qualify as performance-based
              compensation as described in Section 162(m)(4)(C) of the Code
              shall include, but not be limited to, such terms and conditions as
              may be necessary to meet the applicable provisions of Section
              162(m) of the Code.

                                       6
<PAGE>

              (b) Upon the selection of a key Employee or consultant to be
       granted an Option, the Committee shall instruct the Secretary of the
       Company to issue the Option and may impose such conditions on the grant
       of the Option as it deems appropriate. Without limiting the generality of
       the preceding sentence, the Committee may, in its discretion and on such
       terms as it deems appropriate, require as a condition on the grant of an
       Option to an Employee or consultant that the Employee or consultant
       surrender for cancellation some or all of the unexercised Options, awards
       of Restricted Stock or Deferred Stock, Performance Awards, Stock
       Appreciation Rights, Dividend Equivalents or Stock Payments or other
       rights which have been previously granted to him under this Plan or
       otherwise. An Option, the grant of which is conditioned upon such
       surrender, may have an option price lower (or higher) than the exercise
       price of such surrendered Option or other award, may cover the same (or a
       lesser or greater) number of shares as such surrendered Option or other
       award, may contain such other terms as the Committee deems appropriate,
       and shall be exercisable in accordance with its terms, without regard to
       the number of shares, price, exercise period or any other term or
       condition of such surrendered Option or other award.

              (c) Any Incentive Stock Option granted under this Plan may be
       modified by the Committee to disqualify such option from treatment as an
       "incentive stock option" under Section 422 of the Code.

              (d) When a person is initially elected to the Board and is then an
       Independent Director, each such new Independent Director automatically
       shall be granted an Option to purchase ten thousand (10,000) shares of
       Common Stock (subject to adjustment as provided in Section 10.3) on the
       date of his or her election to the Board. Members of the Board who are
       Employees who subsequently retire from the Company and remain on the
       Board will not receive an Option grant pursuant to this Section 3.4(d).
       All the foregoing Option grants authorized by this Section 3.4(d) are
       subject to stockholder approval of the Plan. Upon adoption of this Plan,
       the persons who are then Independent Directors of the Company will be
       granted Options as provided above as though they are then initially
       elected to the Board.

              (e) On the Distribution Date, the Company shall grant
       Non-Qualified Stock Options to all persons who are employees of the
       Company and are holding Ambassadors Options issued by Ambassadors under
       the Ambassadors Equity Participation Plan, all of which are non-qualified
       stock options. Each such Option shall be issued in exchange for each
       outstanding Ambassadors Option, and it shall be identical to the
       Ambassadors Option as to exercisability, expiration dates, and certain
       other terms except exercise price and number of shares underlying such
       option. The exercise price of and number of shares underlying each such
       Option shall be determined pursuant to Section 5 of the Employee Matters
       Agreement. The purpose of the adjustment in exercise price and number of
       shares underlying each such option shall be to preserve the economic
       value of the Ambassadors Options.

                                       7
<PAGE>

                                   ARTICLE IV
                                TERMS OF OPTIONS

       4.1 OPTION AGREEMENT. Each Option shall be evidenced by a written Stock
Option Agreement, which shall be executed by the Optionee and an authorized
officer of the Company and which shall contain such terms and conditions as the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall determine, consistent with this Plan. Stock Option Agreements
evidencing Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Stock Option Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

       4.2 OPTION PRICE. The price per share of the shares subject to each
Option shall be set by the Committee; provided, however, that such price shall
be no less than the par value of a share of Common Stock, and in the case of
Options intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, as well as Options granted to Independent
Directors, such price shall be no less than 100% of the Fair Market Value of a
share of Common Stock on the date the Option is granted and in the case of
Incentive Stock Options such price shall not be less than the greater of: (i)
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted, or (ii) 110% of the Fair Market Value of a share of Common Stock on
the date such Option is granted in the case of an individual then owning (within
the meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary of the
Company. The foregoing notwithstanding, the exercise price of the Options
granted pursuant to Section 3.4(e) shall be determined pursuant to Section 5.3.3
of the Employee Matters Agreement.

       4.3 OPTION TERM. The term of an Option (other than an Option granted to
an Independent Director) shall be set by the Committee in its discretion;
provided, however, that, in the case of Incentive Stock Options, the term shall
not be more than ten (10) years from the date the Incentive Stock Option is
granted, or five (5) years from such date if the Incentive Stock Option is
granted to an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary of the Company. The foregoing
notwithstanding, the option terms of the Options granted pursuant to Section
3.4(e) shall be identical to the option terms of the matching Ambassadors
Options.

       4.4 OPTION VESTING.

              (a) The period during which the right to exercise an Option in
       whole or in part vests in the Optionee shall be set by the Committee and
       the Committee may determine that an Option may not be exercised in whole
       or in part for a specified period after it is granted; provided, however,
       that no Option granted to a person subject to Section 16 of the Exchange
       Act shall be exercisable until at least six months have elapsed from (but
       excluding) the date on which the Option was granted. At any time after
       grant of an Option, the Committee (or the Board) may, in its sole
       discretion and subject to whatever terms and conditions it selects,
       accelerate the period during

                                       8
<PAGE>

       which an Option vests. Notwithstanding the foregoing, all Options granted
       to Independent Directors shall become exercisable in cumulative annual
       installments of 25% on each of the first, second, third and fourth
       anniversaries of the date of Option grant, and the term of each such
       Option shall be ten years without variation or acceleration hereunder,
       except as provided in Section 10.4 and except that any Option granted to
       an Independent Director shall become immediately exercisable in full upon
       the retirement of the Independent Director in accordance with the
       Company's retirement policy applicable to Directors. The foregoing
       notwithstanding, with respect to the Options granted pursuant to Section
       3.4(e), the periods during which the right to exercise an Option in whole
       or in part vests in the Optionee shall be identical to such periods of
       the matching Ambassadors Options.

              (b) No portion of an Option which is unexercisable at Termination
       of Employment, Termination of Directorship or Termination of a
       Consultancy, as applicable, shall thereafter become exercisable, except
       as may be otherwise provided by the Committee with respect to Options
       granted to Employees or consultants, either in the Stock Option Agreement
       or in a resolution adopted following the grant of the Option.

              (c) To the extent that the aggregate Fair Market Value of stock
       with respect to which "incentive stock options" (within the meaning of
       Section 422 of the Code, but without regard to Section 422(d) of the
       Code) are exercisable for the first time by an Optionee during any
       calendar year (under the Plan and all other incentive stock option plans
       of the Company and any Subsidiary of the Company) exceeds $100,000, such
       Options shall be treated as Non-Qualified Options to the extent required
       by Section 422 of the Code. The rule set forth in the preceding sentence
       shall be applied by taking Options into account in the order in which
       they were granted. For purposes of this Section 4.4(c), the Fair Market
       Value of stock shall be determined as of the time the Option with respect
       to such stock is granted.

       4.5 CONSIDERATION. In consideration of the granting of an Option, the
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company or any Subsidiary of the Company for a period of at
least one year after the Option is granted (or until the next annual meeting of
stockholders of the Company, in the case of an Independent Director). Nothing in
this Plan or in any Stock Option Agreement hereunder shall confer upon any
Optionee any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary of the Company, or as a director of the Company, or
shall interfere with or restrict in any way the rights of the Company and any
Subsidiary of the Company, which are hereby expressly reserved, to discharge any
Optionee at any time for any reason whatsoever, with or without good cause. The
foregoing shall not apply to the Options granted pursuant to Section 3.4(e).

                                    ARTICLE V
                               EXERCISE OF OPTIONS

       5.1 PARTIAL EXERCISE. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to fractional
shares and the Committee (or the Board,

                                       9
<PAGE>

in the case of Options granted to Independent Directors) may require that, by
the terms of the Option, a partial exercise be with respect to a minimum number
of shares.

       5.2 MANNER OF EXERCISE. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of
the Company or his office:

              (a) A written notice complying with the applicable rules
       established by the Committee or the Board stating that the Option, or a
       portion thereof, is exercised. The notice shall be signed by the Optionee
       or other person then entitled to exercise the Option or such portion;

              (b) Such representations and documents as the Committee or the
       Board, in its absolute discretion, deems necessary or advisable to effect
       compliance with all applicable provisions of the Securities Act of 1933,
       as amended, and any other federal or state securities laws or
       regulations. The Committee or Board may, in its absolute discretion, also
       take whatever additional actions it deems appropriate to effect such
       compliance including, without limitation, placing legends on share
       certificates and issuing stop-transfer notices to agents and registrars;

              (c) In the event that the Option shall be exercised pursuant to
       Section 10.1 by any person or persons other than the Optionee,
       appropriate proof of the right of such person or persons to exercise the
       Option; and

              (d) Full cash payment to the Secretary of the Company for the
       shares with respect to which the Option, or portion thereof, is
       exercised. However, at the discretion of the Committee (or the Board, in
       the case of Options granted to Independent Directors), the terms of the
       Option may (i) allow a delay in payment up to thirty (30) days from the
       date the Option, or portion thereof, is exercised; (ii) allow payment, in
       whole or in part, through the delivery of shares of Common Stock owned by
       the Optionee, duly endorsed for transfer to the Company with a Fair
       Market Value on the date of delivery equal to the aggregate exercise
       price of the Option or exercised portion thereof; (iii) subject to the
       timing requirements of Section 5.3, allow payment, in whole or in part,
       through the surrender of shares of Common Stock then issuable upon
       exercise of the Option having a Fair Market Value on the date of Option
       exercise equal to the aggregate exercise price of the Option or exercised
       portion thereof; (iv) allow payment, in whole or in part, through the
       delivery of property of any kind which constitutes good and valuable
       consideration; (v) allow payment, in whole or in part, through the
       delivery of a full recourse promissory note bearing interest (at no less
       than such rate as shall then preclude the imputation of interest under
       the Code) and payable upon such terms as may be prescribed by the
       Committee or the Board, or (vi) allow payment through any combination of
       the consideration provided in the foregoing subparagraphs (ii), (iii),
       (iv) and (v). In the case of a promissory note, the Committee or the
       Board may also prescribe the form of such note and the security to be
       given for such note. The Option may not be exercised, however, by
       delivery of a promissory note or by a loan from the Company when or where
       such loan or other extension of credit is prohibited by law.

       5.3 CERTAIN TIMING REQUIREMENTS. At the discretion of the Committee (or
Board, in the case of Options granted to Independent Directors), shares of
Common Stock issuable to the Optionee upon exercise of the Option may be used to
satisfy the Option exercise price or the tax withholding

                                       10
<PAGE>

consequences of such exercise, in the case of persons subject to Section 16 of
the Exchange Act, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
Optionee to use shares of Common Stock issuable to the Optionee upon exercise of
the Option to pay all or part of the Option price or the withholding taxes made
at least six months prior to the payment of such Option price or withholding
taxes.

       5.4 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company shall not
be required to issue or deliver any certificate or certificates for shares of
stock purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:

              (a) The admission of such shares to listing on all stock exchanges
       on which such class of stock is then listed;

              (b) The completion of any registration or other qualification of
       such shares under any state or federal law, or under the rulings or
       regulations of the Securities and Exchange Commission or any other
       governmental regulatory body which the Committee or Board shall, in its
       absolute discretion, deem necessary or advisable;

              (c) The obtaining of any approval or other clearance from any
       state or federal governmental agency which the Committee or Board shall,
       in its absolute discretion, determine to be necessary or advisable;

              (d) The lapse of such reasonable period of time following the
       exercise of the Option as the Committee or Board may establish from time
       to time for reasons of administrative convenience; and

              (e) The receipt by the Company of full payment for such shares,
       including payment of any applicable withholding tax.

       5.5 RIGHTS AS STOCKHOLDERS. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of the Company in respect of
any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders.

       5.6 OWNERSHIP AND TRANSFER RESTRICTIONS. The Committee (or Board, in the
case of Options granted to Independent Directors), in its absolute discretion,
may impose such restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and may
be referred to on the certificates evidencing such shares. The Committee may
require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the transfer of such shares to such Employee. The

                                       11
<PAGE>

Committee may direct that the certificates evidencing shares acquired by
exercise of an Option refer to such requirement to give prompt notice of
disposition.

                                   ARTICLE VI
                            AWARD OF RESTRICTED STOCK

       6.1 AWARD OF RESTRICTED STOCK.

              (a) The Committee shall from time to time, in its absolute
       discretion:

                     (i) Select from among the key Employees or consultants
              (including Employees or consultants who have previously received
              other awards under this Plan) such of them as in its opinion
              should be awarded Restricted Stock; and

                     (ii) Determine the purchase price, if any, and other terms
              and conditions applicable to such Restricted Stock, consistent
              with this Plan.

              (b) The Committee shall establish the purchase price, if any, and
       form of payment for Restricted Stock; provided, however, that such
       purchase price shall be no less than the par value of the Common Stock to
       be purchased. In all cases, legal consideration shall be required for
       each issuance of Restricted Stock.

              (c) Upon the selection of a key Employee or consultant to be
       awarded Restricted Stock, the Committee shall instruct the Secretary of
       the Company to issue such Restricted Stock and may impose such conditions
       on the issuance of such Restricted Stock as it deems appropriate.

       6.2 RESTRICTED STOCK AGREEMENT. Restricted Stock shall be issued only
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected key Employee or consultant and an authorized officer of the Company and
which shall contain such terms and conditions as the Committee shall determine,
consistent with this Plan.

       6.3 CONSIDERATION. As consideration for the issuance of Restricted Stock,
in addition to payment of any purchase price, the Restricted Stockholder shall
agree, in the written Restricted Stock Agreement, to remain in the employ of, or
to consult for, the Company or any Subsidiary of the Company for a period of at
least one year after the Restricted Stock is issued. Nothing in this Plan or in
any Restricted Stock Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of, or as a consultant for, the
Company or any Subsidiary of the Company or shall interfere with or restrict in
any way the rights of the Company and any Subsidiary of the Company, which are
hereby expressly reserved, to discharge any Restricted Stockholder at any time
for any reason whatsoever, with or without good cause.

       6.4 RIGHTS AS STOCKHOLDERS. Upon delivery of the shares of Restricted
Stock to the escrow holder pursuant to Section 6.7, the Restricted Stockholder
shall have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his
Restricted Stock Agreement, including the right to receive all dividends and
other distributions

                                       12
<PAGE>

paid or made with respect to the shares; provided, however,that in the
discretion of the Committee, any extraordinary distributions with respect to the
Common Stock shall be subject to the restrictions set forth in Section 6.5.

       6.5 RESTRICTION. All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that no share of Restricted Stock granted to a person subject to Section 16 of
the Exchange Act shall be sold, assigned or otherwise transferred until at least
six months have elapsed from (but excluding) the date on which the Restricted
Stock was issued, and provided, further, that by a resolution adopted after the
Restricted Stock is issued, the Committee may, on such terms and conditions as
it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Restricted Stock Agreement. Restricted Stock may not
be sold or encumbered until all restrictions are terminated or expire. Unless
provided otherwise by the Committee, if no consideration was paid by the
Restricted Stockholder upon issuance, a Restricted Stockholder's rights in
unvested Restricted Stock shall lapse upon Termination of Employment or, if
applicable, upon the termination of his consulting relationship with the
Company.

       6.6 REPURCHASE OF RESTRICTED STOCK. The Committee shall provide in the
terms of each individual Restricted Stock Agreement that the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to restrictions under the Restricted Stock Agreement immediately
upon a Termination of Employment or, if applicable, upon a termination of any
consulting relationship between the Restricted Stockholder and the Company, at a
cash price per share equal to the price paid by the Restricted Stockholder for
such Restricted Stock; provided, however, that provision may be made that no
such right of repurchase shall exist in the event of a Termination of Employment
or Termination of Consultancy without cause, or following a change in control of
the Company or because of the Restricted Stockholder's retirement, death or
disability, or otherwise.

       6.7 ESCROW. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.

       6.8 LEGEND. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.

                                       13
<PAGE>

                                   ARTICLE VII
                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

       7.1 PERFORMANCE AWARDS. Any key Employee or consultant selected by the
Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to the market value, book value, net profits or
other measure of the value of Common Stock or other specific performance
criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee, or may
be based upon the appreciation in the market value, book value, net profits or
other measure of the value of a specified number of shares of Common Stock over
a fixed period or periods determined by the Committee. In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular key Employee or
consultant.

       7.2 DIVIDEND EQUIVALENTS. Any key Employee or consultant selected by the
Committee may be granted Dividend Equivalents based on the dividends declared on
Common Stock, to be credited as of dividend payment dates, during the period
between the date an Option, Stock Appreciation Right, Deferred Stock or
Performance Award is granted, and the date such Option, Stock Appreciation
Right, Deferred Stock or Performance Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Committee.

       7.3 STOCK PAYMENTS. Any key Employee or consultant selected by the
Committee may receive Stock Payments in the manner determined from time to time
by the Committee. The number of shares shall be determined by the Committee and
may be based upon the Fair Market Value, book value, net profits or other
measure of the value of Common Stock or other specific performance criteria
determined appropriate by the Committee on the date such Stock Payment is made
or on any date thereafter.

       7.4 DEFERRED STOCK. Any key Employee or consultant selected by the
Committee may be granted an award of Deferred Stock in the manner determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the market value, book
value, net profits or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by
the Committee. Common Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a vesting schedule or
performance criteria set by the Committee. Unless otherwise provided by the
Committee, a Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.

       7.5 PERFORMANCE AWARD AGREEMENT, DIVIDEND EQUIVALENT AGREEMENT, DEFERRED
STOCK AGREEMENT, STOCK PAYMENT AGREEMENT. Each Performance Award, Dividend
Equivalent, award of

                                       14
<PAGE>

Deferred Stock and/or Stock Payment shall be evidenced by a written agreement,
which shall be executed by the Grantee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with this Plan.

       7.6 TERM. The term of a Performance Award, Dividend Equivalent award of
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.

       7.7 EXERCISE UPON TERMINATION OF EMPLOYMENT. A Performance Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
only while the Grantee is an Employee or consultant; provided that the Committee
may determine that the Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment may be exercised subsequent to Termination of
Employment or Termination of Consultancy without cause, or following a change in
control of the Company, or because of the Grantee's retirement, death or
disability, or otherwise.

       7.8 PAYMENT ON EXERCISE. Payment of the amount determined under Section
7.1 or 7.2 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.4.

       7.9 CONSIDERATION. In consideration of the granting of a Performance
Award, Dividend Equivalent award of Deferred Stock and/or Stock Payment, the
Grantee shall agree, in a written agreement, to remain in the employ of, or to
consult for, the Company or any Subsidiary of the Company for a period of at
least one year after such Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment is granted. Nothing in this Plan or in any
agreement hereunder shall confer on any Grantee any right to continue in the
employ of, or as a consultant for, the Company or any Subsidiary of the Company
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary of the Company, which are hereby expressly reserved, to discharge any
Grantee at any time for any reason whatsoever, with or without good cause.

                                  ARTICLE VIII
                            STOCK APPRECIATION RIGHTS

       8.1 GRANT OF STOCK APPRECIATION RIGHTS. Subject to the Award Limit, a
Stock Appreciation Right may be granted to any key Employee or consultant
selected by the Committee. A Stock Appreciation Right may be granted (i) in
connection and simultaneously with the grant of an Option, (ii) with respect to
a previously granted Option, or (iii) independent of an Option. A Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with this Plan as the Committee shall impose, and shall be
evidenced by a written Stock Appreciation Right Agreement, which shall be
executed by the Grantee and an authorized officer of the Company. The Committee,
in its discretion, may determine whether a Stock Appreciation Right is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code and Stock Appreciation Right Agreements evidencing Stock
Appreciation Rights intended to so qualify shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Without limiting the generality of the foregoing, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of a Stock Appreciation Right to an

                                       15
<PAGE>

Employee or consultant that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards of Restricted Stock
or Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, or other rights which have been previously
granted to him under this Plan or otherwise. A Stock Appreciation Right, the
grant of which is conditioned upon such surrender, may have an exercise price
lower (or higher) than the exercise price of the surrendered Option or other
award, may cover the same (or a lesser or greater) number of shares as such
surrendered Option or other award, may contain such other terms as the Committee
deems appropriate, and shall be exercisable in accordance with its terms,
without regard to the number of shares, price, exercise period or any other term
or condition of such surrendered Option or other award.

       8.2 COUPLED STOCK APPRECIATION RIGHTS.

              (a) A Coupled Stock Appreciation Right ("CSAR") shall be related
       to a particular Option and shall be exercisable only when and to the
       extent the related Option is exercisable.

              (b) A CSAR may be granted to the Grantee for no more than the
       number of shares subject to the simultaneously or previously granted
       Option to which it is coupled.

              (c) A CSAR shall entitle the Grantee (or other person entitled to
       exercise the Option pursuant to this Plan) to surrender to the Company
       unexercised a portion of the Option to which the CSAR relates (to the
       extent then exercisable pursuant to its terms) and to receive from the
       Company in exchange therefor an amount determined by multiplying the
       difference obtained by subtracting the Option exercise price from the
       Fair Market Value of a share of Common Stock on the date of exercise of
       the CSAR by the number of shares of Common Stock with respect to which
       the CSAR shall have been exercised, subject to any limitations the
       Committee may impose.

       8.3 INDEPENDENT STOCK APPRECIATION RIGHTS.

              (a) An Independent Stock Appreciation Right ("ISAR") shall be
       unrelated to any Option and shall have a term set by the Committee. An
       ISAR shall be exercisable in such installments as the Committee may
       determine. An ISAR shall cover such number of shares of Common Stock as
       the Committee may determine; provided, however, that no ISAR granted to a
       person subject to Section 16 of the Exchange Act shall be exercisable
       until at least six months have elapsed from (but excluding) the date on
       which the Option was granted. The exercise price per share of Common
       Stock subject to each ISAR shall be set by the Committee. An ISAR is
       exercisable only while the Grantee is an Employee or consultant; provided
       that the Committee may determine that the ISAR may be exercised
       subsequent to Termination of Employment or Termination of Consultancy
       without cause, or following a change in control of the Company, or
       because of the Grantee's retirement, death or disability, or otherwise.

              (b) An ISAR shall entitle the Grantee (or other person entitled to
       exercise the ISAR pursuant to this Plan) to exercise all or a specified
       portion of the ISAR (to the extent then exercisable pursuant to its
       terms) and to receive from the Company an amount determined by
       multiplying the difference obtained by subtracting the exercise price per
       share of the ISAR from the Fair Market

                                       16
<PAGE>

Value of a share of Common Stock on the date of exercise of the ISAR by the
number of shares of Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.

       8.4 PAYMENT AND LIMITATIONS ON EXERCISE.

              (a) Payment of the amount determined under Section 8.2(c) and
       8.3(b) above shall be in cash, in Common Stock (based on its Fair Market
       Value as of the date the Stock Appreciation Right is exercised) or a
       combination of both, as determined by the Committee. To the extent such
       payment is effected in Common Stock it shall be made subject to
       satisfaction of all provisions of Section 5.4 hereinabove pertaining to
       Options.

              (b) Grantees of Stock Appreciation Rights who are subject to
       Section 16 of the Exchange Act may, in the discretion of the Board or
       Committee, be required to comply with any timing or other restrictions
       under Rule 16b-3 applicable to the settlement or exercise of a Stock
       Appreciation Right.

       8.5 CONSIDERATION. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of, or to consult for, the Company or
any Subsidiary of the Company for a period of at least one year after the Stock
Appreciation Right is granted. Nothing in this Plan or in any Stock Appreciation
Right Agreement hereunder shall confer on any Grantee any right to continue in
the employ of, or as a consultant for, the Company or any Subsidiary of the
Company or shall interfere with or restrict in any way the rights of the Company
and any Subsidiary of the Company, which are hereby expressly reserved, to
discharge any Grantee at any time for any reason whatsoever, with or without
good cause.

                                   ARTICLE IX
                                 ADMINISTRATION

       9.1 COMPENSATION COMMITTEE. The Compensation Committee (or a subcommittee
of the Board assuming the functions of the Committee under this Plan) shall
consist of two or more Independent Directors appointed by and holding office at
the pleasure of the Board, each of whom is both a "disinterested person" as
defined by Rule 16b-3 and an "outside director" for purposes of Section 162(m)
of the Code. Appointment of Committee members shall be effective upon acceptance
of appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may be filled by the Board.

       9.2 DUTIES AND POWERS OF COMMITTEE. It shall be the duty of the Committee
to conduct the general administration of this Plan in accordance with its
provisions. The Committee shall have the power to interpret this Plan and the
agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments are granted or awarded, and to adopt such rules for the
administration, interpretation, and application of this Plan as are consistent
therewith and to interpret, amend or revoke any such rules. Notwithstanding the
foregoing, the full Board, acting by a majority of its

                                       17
<PAGE>

members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any such grant or award
under this Plan need not be the same with respect to each Optionee, Grantee or
Restricted Stockholder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. 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 this Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.

       9.3 MAJORITY RULE. The Committee shall act by a majority of its members
in attendance at a meeting at which a quorum is present or by a memorandum or
other written instrument signed by all members of the Committee.

       9.4 COMPENSATION: PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS. Members of
the Committee shall receive such compensation for their services as members as
may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the administration of this Plan shall be
borne by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company's officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees. Grantees,
Restricted Stockholders, the Company and all other interested persons. No
members of the Committee or Board shall be personally liable for any action,
determination or interpretation made in good faith with respect to this Plan,
Options, awards of Restricted Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments, and all members of
the Committee shall be fully protected by the Company in respect of any such
action, determination or interpretation.

                                    ARTICLE X
                            MISCELLANEOUS PROVISIONS

       10.1 NOT TRANSFERABLE. Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution, unless and until such rights or awards have been exercised, or the
shares underlying such rights or awards have been issued, and all restrictions
applicable to such shares have lapsed. No Option, Restricted Stock award,
Deferred Stock award, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment or interest or right therein shall be liable for the
debts, contracts or engagements of the Optionee, Grantee or Restricted
Stockholder or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect.

                                       18
<PAGE>

       During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under the
Plan. After the death of the Optionee or Grantee, any exercisable portion of an
Option or other right or award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement or other
agreement, be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or Grantee's will or under the
then applicable laws of descent and distribution.

       10.2 AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN. This Plan may be
wholly or partially amended or otherwise modified, suspended or terminated at
any time or from time to time by the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action by
the Committee, no action of the Committee may, except as provided in Section
10.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under this Plan or modify the Award Limit, and no action of
the Committee may be taken that would otherwise require stockholder approval as
a matter of applicable law, regulation or rule. Notwithstanding the foregoing,
the provisions of this Plan relating to formula Option grants to Independent
Directors, including the amount, price and timing thereof, shall not be amended
more than once in any six-month period other than to comport with changes, in
the Code, the Employee Retirement Income Security Act, or the respective rules
thereunder. No amendment, suspension or termination of this Plan shall, without
the consent of the holder of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, alter or impair any rights or obligations under any Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments theretofore granted
or awarded, unless the award itself otherwise expressly so provides. No Options,
Restricted Stock, Deferred Stock, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted or awarded during any
period of suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:

              (a) The expiration of ten years from the date the Plan is adopted
       by the Board; or

              (b) The expiration of ten years from the date the Plan is approved
       by the Company's stockholders under Section 10.5.

       10.3 CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY. In the event that
the outstanding shares of Common Stock are hereafter changed into or exchanged
for cash or a different number or kind of shares or other securities of the
Company, or of another corporation, by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock splitup, stock
dividend, or combination of shares, appropriate adjustments shall be made by the
Committee in the number and kind of shares for which Options, Restricted Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents,
Deferred Stock awards or Stock Payments may be granted, including adjustments of
the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued and of the Award limit described in Section 1.2, and appropriate
adjustments shall be made by the Board in the number and kind of shares for the
purchase of which Options are granted to Independent Directors under Section
3.4(d).

                                       19
<PAGE>

       In the event of such a change or exchange, subject to the other
provisions of this Plan, the Committee (or the Board, in the case of Options
granted to Independent Directors) shall also make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, or portions thereof then unexercised, shall be exercisable and in the
number and kind of shares of outstanding Restricted Stock or Deferred Stock.
Such adjustment shall be made with the intent that after the change or exchange
of shares, each Optionee's and each Grantee's and each Restricted Stockholder's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in an outstanding Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment may include a necessary
or appropriate corresponding adjustment in Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment exercise price, but
shall be made without change in the total price applicable to the Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment, or the unexercised portion thereof (except for any change in the
aggregate price resulting from rounding-off of share quantities or prices).

       Where an adjustment of the type described above is made to an Incentive
Stock Option under this Section, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(h)(3) of the Code.

       Notwithstanding the foregoing, in the event of such a reorganization,
merger, consolidation, recapitalization, reclassification, stock splitup, stock
dividend or combination, or other adjustment or event which results in shares of
Common Stock being exchanged for or converted into cash, securities or other
property, the Company will have the right to terminate this Plan as of the date
of the exchange or conversion, in which case all options, rights and other
awards under this Plan shall become the right to receive such cash, securities
or other property, net of any applicable exercise price.

       In the event of a "spin-off" or other substantial distribution of assets
of the Company which has a material diminutive effect upon the Fair Market Value
of the Company's Common Stock, the Committee (or the Board, in the case of
Options granted to Independent Directors) may in its discretion make an
appropriate and equitable adjustment to the Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment exercise price to
reflect such diminution.

       10.4 MERGER OF THE COMPANY. In the event of the merger or consolidation
of the Company with or into another corporation, the exchange of all or
substantially all of the assets of the Company for the securities of another
corporation, the acquisition by another corporation or person of all or
substantially all of the Company's assets or 80% or more of the Company's then
outstanding voting stock or the liquidation or dissolution of the Company:

              (a) At the discretion of the Committee (or the Board, in the case
       of Options granted to Independent Directors), the terms of an Option,
       Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
       Payment may provide that it cannot be exercised after such event.

                                       20
<PAGE>

              (b) In its discretion, and on such terms and conditions as it
       deems appropriate, the Committee (or the Board, in the case of Options
       granted to Independent Directors) may provide either by the terms of such
       Option, Performance Award, Stock Appreciation Right, Dividend Equivalent
       or Stock Payment or by a resolution adopted prior to the occurrence of
       such event that, for a specified period of time prior to such event, such
       Option, Performance Award, Stock Appreciation Right, Dividend Equivalent
       or Stock Payment shall be exercisable as to all shares covered thereby,
       notwithstanding anything to the contrary in this Plan or in the
       provisions of such Option, Performance Award, Stock Appreciation Right,
       Dividend Equivalent or Stock Payment.

              (c) In its discretion, and on such terms and conditions as it
       deems appropriate, the Committee (or the Board, in the case of Options
       granted to Independent Directors) may provide either by the terms of such
       Option, Performance Award, Stock Appreciation Right, Dividend Equivalent
       or Stock Payment or by a resolution adopted prior to the occurrence of
       such event that upon such event, such Option, Performance Award, Stock
       Appreciation Right, Dividend Equivalent or Stock Payment shall be assumed
       by the successor corporation, or a parent or subsidiary thereof, or shall
       be substituted for by similar options, rights or awards covering the
       stock of the successor corporation, or a parent or subsidiary thereof,
       with appropriate adjustments as to the number and kind of shares and
       prices.

              (d) In its discretion, and on such terms and conditions as it
       deems appropriate, the Committee may provide either by the terms of a
       Restricted Stock award or Deferred Stock award or by a resolution adopted
       prior to the occurrence of such event that, for a specified period of
       time prior to such event, the restrictions imposed under a Restricted
       Stock Agreement or a Deferred Stock Agreement upon some or all shares of
       Restricted Stock or Deferred Stock may be terminated, and, in the case of
       Restricted Stock, some or all shares of such Restricted Stock may cease
       to be subject to repurchase under Section 6.6 after such event.

              (e) None of the foregoing discretionary terms of this Section 10.4
       shall be permitted with respect to Options granted under Section 3.4(d)
       to Independent Directors to the extent that such discretion would be
       inconsistent with the requirements of Rule 16b-3.

       10.5 APPROVAL OF PLAN BY STOCKHOLDERS. This Plan will be submitted for
the approval of the Company's stockholders within twelve months after the date
of the Board's initial adoption of this Plan, Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments may be granted and
Restricted Stock or Deferred Stock may be awarded prior to such stockholder
approval, provided that such Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments shall not be exercisable and such
Restricted Stock or Deferred Stock shall not vest prior to the time when this
Plan is approved by the stockholders, and provided further that if such approval
has not been obtained at the end of said twelve-month period, all Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments previously granted and all Restricted Stock or Deferred Stock
previously awarded under this Plan shall thereupon be cancelled and become null
and void.

       10.6 TAX WITHHOLDING. The Company shall be entitled to require payment in
cash or deduction from other compensation payable to each Optionee, Grantee or
Restricted Stockholder of any sums

                                       21
<PAGE>

required by federal, state or local tax law to be withheld with respect to the
issuance, vesting or exercise of any Option, Restricted Stock, Deferred Stock,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment. Subject to the timing requirements of Section 5.3, the Committee (or
the Board, in the case of Options granted to Independent Directors) may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee,
Grantee or Restricted Stockholder to elect to have the Company withhold shares
of Common Stock (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld.

       10.7 LOANS. The Committee may, in its discretion, extend one or more
loans to key Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted under this Plan, or the issuance of Restricted Stock or Deferred
Stock awarded under this Plan. The terms and conditions of any such loan shall
be set by the Committee.

       10.8 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND PERFORMANCE-BASED
COMPENSATION. Notwithstanding any other provision of this Plan, any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment granted, or Restricted Stock or Deferred Stock awarded, to a key
Employee or Director who is then subject to Section 16 of the Exchange Act shall
be subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3
of the Exchange Act) that are requirements for the application of such exemptive
rule, and this Plan shall be deemed amended to the extent necessary to conform
to such limitations. Furthermore, notwithstanding any other provision of this
Plan, any Option or Stock Appreciation Right intended to qualify as performance-
based compensation as described in Section 162(m)(4)(C) of the Code shall be
subject to any additional limitations set forth in Section 162(m) of the Code
(including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and this Plan shall be deemed amended to the extent necessary to conform to such
requirements.

       10.9 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The adoption of
this Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary of the Company. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or consultants of the
Company or any Subsidiary of the Company or (ii) to grant or assume options or
other rights otherwise than under this Plan in connection with any proper
corporate purpose including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, firm or association.

       10.10 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or

                                       22
<PAGE>

Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem necessary or desirable to assure compliance with all applicable
legal requirements. To the extent permitted by applicable law, the Plan,
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

       10.11 TITLES. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Plan.

       10.12 GOVERNING LAW. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

                                       23<PAGE>

                                                                    EXHIBIT 10.2

                             AMBASSADORS GROUP, INC.
                             A DELAWARE CORPORATION

                       NONQUALIFIED STOCK OPTION AGREEMENT
                          FOR EMPLOYEES AND CONSULTANTS

       THIS AGREEMENT, dated ___________________, 200_, is made by and between
Ambassadors Group, Inc. a Delaware corporation hereinafter referred to as the
"Company," and __________________________________________________, an employee
of or consultant to the Company or a Subsidiary of the Company, hereinafter
referred to as "Optionee":

       WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock; and

       WHEREAS, the Company wishes to issue to Optionee a Non-qualified Stock
Option pursuant to The 2001 Equity Participation Plan of Ambassadors Group, Inc.
(the "Plan"), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and,

       WHEREAS, the Committee, appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the Non-Qualified Option provided for herein to the
Optionee as an inducement to enter into or remain in the service of the Company
or its Subsidiaries or to provide services to the Company or it Subsidiaries as
a consultant and as an incentive for increased efforts during such service, and
has advised the Company thereof and instructed the undersigned officers to issue
said Option;

       NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

1. DEFINITIONS. Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary.

       1.1. "BOARD" shall mean the Board of Directors of the Company.

       1.2. "CAUSE" shall mean (i) the Optionee's failure or refusal to perform
       specific and lawful directions with respect to the Optionee's employment
       with or agreement to provide services to the Company, (ii) the commission
       by the Optionee of a felony or the perpetration by the Optionee of an act
       of fraud, dishonesty, or misrepresentation against, or breach of
       fiduciary duty toward, the Company, or (iii) any willful act or omission
       by the Optionee which is injurious in any material respect to the
       financial condition or business reputation of the Company.

       1.3. "CODE" shall mean the Internal Revenue Code of 1986, as amended.

       1.4. "COMMITTEE" shall mean the Compensation Committee of the Board, or a
       subcommittee of the Board, appointed as provided in Section 9.1 of the
       Plan.

       1.5. "COMMON STOCK" shall mean the common stock of the Company, par value
       $.01 per share.

       1.6. "DIRECTOR" shall mean a member of the Board.

                                       1
<PAGE>

       1.7. "EMPLOYEE" shall mean any officer or other employee (as defined in
       accordance with Section 3401(c) of the Code) of the Company, or of any
       corporation which is a Subsidiary.

       1.8. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
       amended.

       1.9. "FAIR MARKET VALUE" of a share of Common Stock as of a given date
       shall be (I) the mean between the highest and lowest selling price of a
       share of Common Stock on the principal exchange on which shares of Common
       Stock are then trading, if any, on such date, or if shares were not
       traded on such date, then on the closest preceding date on which a trade
       occurred, or (ii) if Common Stock is not traded on an exchange, the mean
       between the closing representative bid and asked prices for the Common
       Stock on such date as reported by NASDAQ or, if NASDAQ is not then in
       existence, by its successor quotation system; or (iii) if Common Stock is
       not publicly traded, the Fair Market Value of a share of Common Stock as
       established by the Committee acting in good faith.

       1.10. "OPTION" shall mean a non-qualified stock option granted under this
       Agreement and Article III of the Plan.

       1.11. "OPTIONEE" shall mean an Employee or consultant granted an Option
       under this Agreement and the Plan.

       1.12. "PLAN" shall mean The 2001 Equity Participation Plan of Ambassadors
       Education Group, Inc.

       1.13. "QDRO" shall mean any qualified domestic relations order as defined
       by the Code or Title I of the Employee Retirement Income Security Act of
       1974, as amended, or the rules and regulations thereunder.

       1.14. "RULE 16B-3" shall mean that certain Rule 16b-3 under the Exchange
       Act, as such Rule may be amended from time to time.

       1.15. "SECRETARY" shall mean the Secretary of the Company.

       1.16. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

       1.17. "SUBSIDIARY" shall mean any corporation in an unbroken chain of
       corporations beginning with the Company if each of the corporations other
       than the last corporation in the unbroken chain then owns stock
       possessing 50 percent or more of the total combined voting power of all
       classes of stock in one of the other corporations in such chain.

       1.18. "TERMINATION OF CONSULTANCY" shall mean the time when the
       engagement of Optionee as a consultant to the Company or a Subsidiary is
       terminated for any reason, with or without Cause, including without
       limitation, resignation, discharge, death or retirement; but excluding
       terminations where there is a simultaneous commencement of employment
       with the Company or any Subsidiary. The Committee, in its absolute
       discretion, shall determine the effect of all matters and questions
       relating to Termination of Consultancy, including, but not by way of
       limitation, the question of whether a Termination of Consultancy resulted
       from a discharge for Cause, and all questions of whether particular
       leaves of absence Terminations of Employment. Notwithstanding any other
       provision of this Plan, the Company or any Subsidiary has an absolute and
       unrestricted right to terminate a consultant's service at any time for
       any reason whatsoever, with or without Cause, except to the extent
       expressly provided otherwise in writing.

                                       2
<PAGE>

       1.19. "TERMINATION OF EMPLOYMENT" shall mean the time when the
       employee-employer relationship between the Optionee and the Company or
       any subsidiary is terminated for any reason, including, but not by way of
       limitation, a termination by resignation, discharge, death, disability or
       retirement; but excluding (I) terminations where there is a simultaneous
       re-employment, continuing employment of an Optionee by the Company or any
       Subsidiary, (II) at the discretion of the Committee, terminations which
       result in a temporary severance of the employee-employer relationship,
       and (III) at the establishment of a consulting relationship by the
       Company or a Subsidiary with the former employee. The Committee, in its
       absolute discretion, shall determine the effect of all matters and
       questions relating to the Termination of the Employment, including, but
       not by way of limitation, the question of whether a Termination of
       Employment resulted from a discharge for Cause, and all questions of
       whether particular leaves of absence constitute Terminations of
       Employment. Notwithstanding any other provision of this Plan, the Company
       or any Subsidiary has an absolute and unrestricted right to terminate an
       Employee's employment at any time for any reason whatsoever, with or
       without Cause, except to the extent expressly provided otherwise in
       writing.

2. GRANT OF OPTION.

       2.1. GRANT OF OPTION. In consideration of the Optionee's agreement to
       remain in the employ of (or consult for) the Company or its Subsidiaries
       for a period of at least one year after the option is granted and for
       other good and valuable consideration, on the date hereof the Company
       irrevocably grants to the Optionee the option to purchase any part or all
       of an aggregate of ______________________ shares of its Common Stock upon
       the terms and conditions set forth in this Agreement.

       2.2. PURCHASE PRICE. The purchase price of the shares of stock covered by
       the option shall be $_______ per share without commission or other
       charge.

       2.3. CONSIDERATION TO COMPANY. In consideration of the granting of this
       Option by the Company, the Optionee agrees to render faithful and
       efficient services to the Company or a Subsidiary, with such duties and
       responsibilities as the Company shall from time to time prescribe, for a
       period of at least one year for the date this Option is granted. Nothing
       in the Plan or this Agreement shall confer upon any Optionee any right to
       continue in the employ of, or as a consultant for, the Company or any
       Subsidiary, or as a director of the Company, or shall interfere with or
       restrict in any way the rights of the Company and any Subsidiary, which
       are hereby expressly reserved, to discharge the Optionee at any time for
       any reason whatsoever, with or without Cause.

       2.4. ADJUSTMENTS IN OPTION.

              2.4.1. In the event that the outstanding shares of the stock
              subject to the Option are changed into or exchanged for a
              different number or kind of shares of the Company or other
              securities of the Company, or of another corporation, by reason of
              reorganization, merger, consolidation, recapitalization,
              reclassification, stock split-up, stock dividend or combination of
              shares, the Committee shall make an appropriate and equitable
              adjustment in the number and kind of shares as to which the
              Option, or portions thereof then unexercised, shall be
              exercisable, to the end that after such event the Optionee's
              proportionate interest shall be maintained as before the
              occurrence of such event. Such adjustment in the Option may
              include any necessary corresponding adjustment in the Option price
              per share, but shall be made without change in the total price
              applicable to the unexercised portion of the Option (except for
              any change in the aggregate price resulting from

                                       3
<PAGE>

              rounding-off of share quantities or prices). Any such adjustment
              made by the Committee shall be final and binding upon the
              Optionee, the Company and other interested person.

              2.4.2. Notwithstanding the foregoing, in the event of such a
              reorganization, merger, consolidation, recapitalization,
              reclassification, stock split-up, stock dividend or combination,
              or other adjustment or event which results in shares of Common
              Stock being exchanged for or converted into cash, securities or
              other property, the Company will have the right to terminate the
              Plan as of the date of the exchange or conversion, in which case
              all options, rights and other awards under this Plan shall become
              the right to receive such cash, securities or other property, net
              of any applicable exercise price.

              2.4.3. In the even of a "spin-off" or other substantial
              distribution of assets of the Company which has a material
              diminutive effect upon the Fair Market Value of the Company's
              Common Stock, the Board may in its discretion make an appropriate
              and equitable adjustment to the Option to reflect such diminution.

3. PERIOD OF EXERCISABILITY.

       3.1. COMMENCEMENT OF EXERCISABILITY:

              3.1.1. Subject to Section 5.6, the Option shall become exercisable
              in four cumulative installments as follows:

                     3.1.1.1. The first installment shall consist of twenty-five
                     percent (25%) of the shares covered by the Option and shall
                     become exercisable on the first anniversary of the date the
                     Option is granted.

                     3.1.1.2. The second installment shall consist of
                     twenty-five percent (25%) of the shares covered by the
                     Option and shall become exercisable on the second
                     anniversary of the date the Option is granted.

                     3.1.1.3. The third installment shall consist of twenty-five
                     percent (25%) of the shares covered by the Option and shall
                     become exercisable on the third anniversary of the date the
                     Option is granted.

                     3.1.1.4. The fourth installment shall consist of
                     twenty-five percent (25%) of the shares covered by the
                     Option and shall become exercisable on the fourth
                     anniversary of the date the Option is granted.

              3.1.2. No portion of the Option which is unexercisable at
              Termination of Employment or Termination of Consultancy, as
              applicable, shall thereafter become exercisable.

       3.2. DURATION OF EXERCISABILITY. The installments provided for in Section
       3.1.1 are cumulative. Each such installment which becomes exercisable
       pursuant to Section 3.1.1 shall remain exercisable until it becomes
       unexercisable under Section 3.3.

       3.3. EXPIRATION OF OPTION. The Option may not be exercised to any extent
       by anyone after the first to occur of the following events:

              3.3.1. The expiration of ten years from the date the Option was
              granted; or

                                       4
<PAGE>

              3.3.2. The time of the Optionee's Termination of Employment or
              Termination of Consultancy unless such Termination of Employment
              or Termination of Consultancy, as applicable, results from death,
              retirement, disability or discharge without Cause; or

              3.3.3. The expiration of three months from the date of the
              Optionee's Termination of Employment or Termination of Consultancy
              by reason of retirement or discharge without Cause, unless the
              Optionee dies within said three-month period; or

              3.3.4. The expiration of one year from the date of the Optionee's
              Termination of Employment or Termination of Consultancy by reason
              of disability; or

              3.3.5. The expiration of one year from the date of the Optionee's
              death; or

              3.3.6. The effective date of either the merger or consolidation of
              the Company with or into another corporation, the exchange of all
              or substantially all of the assets of the Company for the
              securities of another corporation, the acquisition by another
              corporation or the Company's then outstanding voting stock, or the
              liquidation or dissolution of the Company, unless the Committee
              waives this provision in connection with such transaction. At
              least ten days prior to the effective date of such merger,
              consolidation, exchange, acquisition, liquidation or dissolution,
              the Committee shall give the Optionee notice of such event if the
              Option has then neither been fully exercised nor become
              unexercisable under this Section 3.3.

       3.4. ACCELERATION OF EXERCISABILITY. In the event of the merger or
       consolidation of the Company with or into another corporation, the
       exchange of all or substantially all of the assets of the Company for the
       securities of another corporation, the acquisition by another corporation
       or person of all or substantially all of the Company's assets or eighty
       percent (80%) or more of the Company's then outstanding voting stock, or
       the liquidation or dissolution of the company, the Committee may, in its
       absolute discretion and upon such terms and conditions as it deems
       appropriate, provide by resolution, adopted prior to such event and
       incorporated in the notice referred to in Section 3.3.6 that at some time
       prior to the effective date of such event this Option shall be
       exercisable as to all shares covered hereby, notwithstanding that this
       Option may not yet have become fully exercisable under Section 3.1.1;
       provided, however, that this acceleration of exercisability shall not
       take place if:

              3.4.1. This Option becomes unexercisable under Section 3.3 prior
              to said effective date; or

              3.4.2. In connection with such an event, provision is made for an
              assumption of the Option or substitution therefor of a new option
              by an employer corporation or a parent or subsidiary of such
              corporation; and

       provided further, that nothing in this Section 3.4 shall make this Option
       exercisable if it is otherwise unexercisable by reason of Section 5.6.

              The Committee may make such determinations and adopt such rules
       and conditions as it, in its absolute discretion, deems appropriate in
       connection with such acceleration of exercisability, including, but not
       by way of limitation, provisions to ensure that any such acceleration and
       resulting exercise shall be conditioned upon the consummation of the
       contemplated corporate transaction. None of the foregoing discretionary
       terms of this Section shall be permitted to the extent that such
       discretion would be inconsistent with the requirements of Rule 16b-3.

                                       5
<PAGE>

4. EXERCISE OF OPTION.

       4.1. PERSON ELIGIBLE TO EXERCISE. During the lifetime of the Optionee,
       only the Optionee, or an alternate payee under a QDRO, may exercise the
       Option or any portion thereof. After the death of the Optionee, and
       exercisable portion of the Option may, prior to the time when the Option
       becomes unexercisable under Section 3.3, be exercised by the Optionee's
       personal representative or by any person empowered to do so under the
       Optionee's will or under the then applicable laws of descent and
       distribution.

       4.2. PARTIAL EXERCISE. Any exercisable portion of the Option or the
       entire Option, if then wholly exercisable, may be exercised in whole or
       in part at any time prior to the time when the Option or portion thereof
       becomes unexercisable under Section 3.3; provided, however, that each
       partial exercise shall be for not less than one hundred shares (or
       minimum installment set forth in Section 3.1, if a smaller number of
       shares) and shall be for whole shares only.

       4.3. MANNER OF EXERCISE. The Option, or any exercisable portion thereof,
       may be exercised solely by delivery to the Secretary or the Secretary's
       office of all of the following prior to the time when the Option or such
       portion becomes unexercisable under Section 3.3:

              4.3.1. Notice in writing signed by the Optionee or the other
              person then entitled to exercise the Option or portion, stating
              that the Option or portion is thereby exercised, such notice
              complying with all applicable rules established by the Committee
              or the Board; and

              4.3.2. Payment of the purchase price by one of the following
              means:

                     4.3.2.1. Full payment (in cash) for the shares with respect
                     to which such Option or portion is exercised; or

                     4.3.2.2. With the consent of the Committee, payment delayed
                     for up to thirty (30) days from the date the Option, or
                     portion thereof, is exercised; or

                     4.3.2.3. With the consent of the Committee, (i) shares of
                     the Company's Common Stock owned by the Optionee duly
                     endorsed for transfer to the Company or (ii) subject to the
                     timing requirements of Section 4.4, shares of the Company's
                     Common Stock issuable to the Optionee upon exercise of the
                     Option, with a Fair Market Value on the date of the Option
                     exercise equal to the aggregate purchase price of the
                     shares with respect to which such Option or portion is
                     exercised; or

                     4.3.2.4. With the consent of the Committee, property of any
                     kind which constitutes good and valuable consideration; or

                     4.3.2.5. With the consent of the Committee, a full recourse
                     promissory note bearing interest (at no less than such rate
                     as shall then preclude the imputation of interest under the
                     Code or successor provision) and payable upon such terms as
                     may be prescribed by the Committee or the Board.
                     Notwithstanding the foregoing, upon exercise Optionee shall
                     pay such amount in cash of the total consideration as
                     required pursuant to Section 154 of the Delaware general
                     Corporation Law (including any successor provisions). Until
                     such time as the Optionee has paid the full consideration
                     required hereunder, any shares of Common Stock issuable
                     upon exercise of the

                                       6
<PAGE>

                     Option and delivered to the Optionee shall be designated as
                     partly paid. The Committee may also prescribe the form of
                     such note and security to be given for such note. The
                     Option may not be exercised, however, by delivery of a
                     promissory note or by a loan from the Company when or where
                     such loan or other extension of credit is prohibited by
                     law; or,

                     4.3.2.6. With the consent of the Committee, any combination
                     of the consideration provided in the foregoing
                     subparagraphs 4.3.2.1 through 4.3.2.5; and,

              4.3.3. A bona fide written representation and agreement, in a form
              satisfactory to the Committee or the Board, signed by the Optionee
              or other person then entitled to exercise such Option or portion,
              stating that the shares of stock are being acquired for the
              Optionee's own account, for investment and without any present
              intention of distributing or reselling said shares of any of them
              except as may be permitted under the Securities Act and then
              applicable rules and regulations thereunder, and that the Optionee
              or other person then entitled to exercise such Option or portion
              will indemnify the Company against and hold it free and harmless
              from any loss, damage, expense or liability resulting to the
              Company if any sale or distribution of the shares by such person
              is contrary to the representation and agreement referred to above.
              The Committee may, in its absolute discretion, take whatever
              additional actions it deems appropriate to insure the observance
              and performance of such representation and agreement and to effect
              compliance with the Securities Act and any other federal or state
              securities laws or regulations. Without limiting the generality of
              the foregoing, the Committee may require an opinion of counsel
              acceptable to it to the effect that any subsequent transfer of
              shares acquired on an Option exercise does not violate the
              Securities Act, and may issue stop-transfer orders covering such
              shares. Share certificates evidencing stock issued on exercise of
              this Option shall bear an appropriate legend referring to the
              provisions of this subsection 4.3.3 and the agreements herein. The
              written representation and the agreement referred to in the first
              sentence of this subsection 4.3.3 shall, however, not be required
              if the shares to be issued pursuant to such exercise have been
              registered under the Securities Act, and such registration is then
              effective in respect of such shares; and

              4.3.4. Full payment to the Company (or other employer corporation)
              of all amounts which, under federal, state or local tax law, it is
              required to withhold upon exercise of the Option; with the consent
              of the Committee, (i) shares of the Company's Common Stock owned
              by the Optionee duly endorsed for transfer, or (ii) subject to the
              timing requirements of Section 4.4, shares of the Company's Common
              Stock issuable to the Optionee upon exercise of the Option, having
              a Fair Market Value at the date of Option exercise equal to the
              sums required to be withheld, may be used to make all or part of
              such payment; and

              4.3.5. In the event the Option or portion shall be exercised
              pursuant to Section 4.1 by any person or persons other than the
              Optionee, appropriate proof of the right of such person or persons
              to exercise the Option.

       4.4. CERTAIN TIMING REQUIREMENTS. Shares of the Company's Common Stock
       issuable to the Optionee upon exercise of the Option may be used to
       satisfy the Option price or the tax withholding consequences of such
       exercise only (i) during the period beginning on the third (3rd) business
       day following the date of release of the quarterly or annual summary
       statement of sales and earnings of the Company and ending on the twelfth
       business day following such date or (ii) pursuant to an irrevocable
       written election by the Optionee to use shares of the Company's Common
       Stock issuable to the Optionee upon exercise of the Option to pay all or
       part of the Option price or the withholding taxes (subject to the
       approval of the Committee) made at least six months prior to the payment
       of such Option price or withholding taxes.

                                       7
<PAGE>

       4.5. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The shares of stock
       deliverable upon the exercise of the Option, or any portion thereof, may
       be either previously authorized but unissued shares or issued shares
       which have then been reacquired to issue or deliver any certificate or
       certificates for shares of stock purchased upon the exercise of the
       Option or portion thereof prior to fulfillment of all of the following
       conditions:

              4.5.1. The admission of such shares to listing on all stock
              exchanges on which such class of stock is then listed; and

              4.5.2. The completion of any registration or other qualification
              of such shares under any state or federal law or under rulings or
              regulations of the Securities and Exchange Commission or of any
              other governmental regulatory body, which the Committee or Board
              shall, in its absolute discretion, deem necessary or advisable;
              and

              4.5.3. The obtaining of any approval or other clearance from any
              state or federal governmental agency which the Committee or Board
              shall, in its absolute discretion, determine to be necessary or
              advisable; and

              4.5.4. The receipt by the Company of full payment for such shares,
              including payment of all amounts which, under federal, state or
              local tax law, it is required to withhold upon exercise of the
              Option; and

              4.5.5. The lapse of such reasonable period of time following the
              exercise of the Option as the Committee or Board may from time to
              time establish for reasons of administrative convenience.

       4.6. RIGHTS AS A SHAREHOLDER. The holder of the Option shall not be, nor
       have any of the rights or privileges of, a shareholder of the Company in
       respect of any shares purchasable upon the exercise of any part of the
       Option unless and until certificates representing such shares shall have
       been issued by the Company to such holder.

                                    ARTICLE V
                                OTHER PROVISIONS

       5.1 ADMINISTRATION. The Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Committee in good faith shall be final and
binding upon the Optionee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan or the Option. 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 this Plan except
with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or
any regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.

       5.2 OPTION NOT TRANSFERABLE. Neither the Option nor any interest or right
therein or part thereof shall be liable for the debts, contracts or engagements
of the Optionee or the Optionee's successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted

                                       8
<PAGE>

disposition thereof shall be null and void and of no effect; provided, however,
that this Section 5.2 shall not prevent transfers by will or by the applicable
laws of descent and distribution.

       5.3 SHARES TO BE RESERVED. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of stock as will
be sufficient to satisfy the requirements of this Agreement.

       5.4 NOTICES. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Optionee shall be addressed to the Optionee at the
address given beneath the Optionee's signature hereto. By a notice given
pursuant to this Section 5.4, either party may hereafter designate a different
address for notices to be given to such party. Any notice which is required to
be given to the Optionee shall, if the Optionee is then deceased, be given to
the Optionee's personal representative if such representative has previously
informed the Company of the representative's status and address by written
notice under this Section 5.4. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

       5.5 TITLES. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

       5.6 STOCKHOLDER APPROVAL. The Plan will be submitted for approval by the
Company's stockholders within twelve (12) months after the date the Plan was
initially adopted by the Board. This Option may not be exercised to any extent
to any extent by anyone prior to the time when the Plan is approved by the
shareholders, and if such approval has not been obtained by the end of said
twelve-month period, this Option shall thereupon be canceled and become null and
void.

       5.7 CONSTRUCTION. This Agreement shall be administered, interpreted and
enforced under the laws of the State of Delaware.

       5.8 CONFORMITY TO SECURITIES LAWS. The Optionee acknowledges that the
Plan is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including
without limitation Rule 16b-3. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and the Option is granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

       5.9 AMENDMENTS. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Optionee or such
other person as may be permitted to exercise the Option pursuant to Section 4.1
and by a duly authorized representative of the Company.

       IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto.

                         AMBASSADORS GROUP, INC.

                         By
                           -------------------------------------
                                 President

                                       9
<PAGE>

                         By
                           -------------------------------------
                                 Secretary

------------------------------
         Optionee

------------------------------
------------------------------
     Address

Optionee's Taxpayer
Identification Number:

------------------------------

                                       10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]