Document:

EX 10.1

    EXHIBIT
      10.1

    

    AMTRUST
      FINANCIAL SERVICES, INC. 2005 EQUITY INCENTIVE PLAN

    

    
      	
            	1.	
              Preamble.

            

    

     

    AmTrust
      Financial Services, Inc., a Delaware corporation, hereby establishes the AmTrust
      Financial Services, Inc. 2005 Equity Incetive Plan as a means whereby the
      Company may, through awards of (i) incentive stock options within the meaning
      of
      section 422 of the Code, (ii) non-qualified stock options and (iii) restricted
      stock:

     

    
      	 	
              (a)

            	
              provide
                selected officers, directors, employees and consultants with additional
                incentive to promote the success of the Company’s
                business;

            

    

     

    
      	 	
              (b)

            	
              encourage
                such persons to remain in the service of the Company;
                and

            

    

     

    
      	 	
              (c)

            	
              enable
                such persons to acquire proprietary interests in the
                Company.

            

    

     

    
      	
            	2.	
              Definitions
                and Rules of Construction.

            

    

     

    2.01    “Award”
      means the grant of Options and/or Restricted Stock to a
      Participant.

     

    2.02    “Award
      Date” means the date upon which an Option or Restricted Stock is awarded to a
      Participant under the Plan.

     

    2.03    “Board”
      or “Board of Directors” means the board of directors of the
      Company.

     

    2.04    “Cause”
      shall mean any willful misconduct by the Participant which affects the business
      reputation of the Company or willful failure by the Participant to perform
      his
      or her material responsibilities to the Company (including, without limitation,
      breach by the Participant of any provision of any employment, consulting,
      advisory, nondisclosure, non-competition or other similar agreement between
      the
      Participant and the Company or any Subsidiary). The Participant shall be
      considered to have been discharged for “Cause” if the Company determines, within
      30 days after the Participant’s resignation, that discharge for Cause was
      warranted.

     

    2.05    “Change
      of Control” shall be deemed to have occurred on the first to occur of any of the
      following:

     

    
      	 	
              (i)

            	
              any
                “person” (as such term is used in Section 13(d) and 14(d)(2) of the
                Securities Exchange Act of 1934), other than any Subsidiary or any
                employee benefit plan of the Company or a Subsidiary or former Subsidiary,
                is or becomes a beneficial owner, directly or indirectly, of stock
                of the
                Company representing 25% or more of the total voting power of the
                Company’s then outstanding stock;

            

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	 	
              (ii)

            	
              a
                tender offer (for which a filing has been made with the SEC which
                purports
                to comply with the requirements of Section 14(d) of the Securities
                Exchange Act of 1934 and the corresponding SEC rules) is made for
                the
                stock of the Company. In case of a tender offer described in this
                paragraph (ii), the “Change of Control” will be deemed to have occurred
                upon the first to occur of (A) any time during the offer when the
                person
                (using the definition in (i) above) making the offer owns or has
                accepted
                for payment stock of the Company with 25% or more of the total voting
                power of the Company’s outstanding stock or (B) three business days before
                the offer is to terminate unless the offer is withdrawn first, if
                the
                person making the offer could own, by the terms of the offer plus
                any
                shares owned by this person, stock with 50% or more of the total
                voting
                power of the Company’s outstanding stock when the offer terminates;
                or

            

    

     

    
      	 	
              (iii)

            	
              individuals
                who were the Board’s nominees for election as directors of the Company
                immediately prior to a meeting of the shareholders of the Company
                involving a contest for the election of directors shall not constitute
                a
                majority of the Board following the
                election.

            

    

     

    2.06    “Code”
      means the Internal Revenue Code of 1986, as amended from time to time, or any
      successor thereto.

     

    2.07    “Committee”
      means two or more directors elected by the Board of Directors from time to
      time;
      provided, however, that in the absence of an election by the Board, the
      Committee shall mean the Compensation Committee of the Board of Directors,
      or if
      there is no such Committee, then the Board of Directors..

     

    2.08    “Common
      Stock” means the $.01 par value Common Stock of the Company.

     

    2.09    “Company”
      means AmTrust Financial Services, Inc., a Delaware corporation, and any
      successor thereto.

     

    2.10    “Exchange
      Act” shall mean the Securities Exchange Act of 1934, as it exists now or from
      time to time may hereafter be amended.

     

    2.11    “Fair
      Market Value” shall be as determined in good faith by the Committee or the Board
      until such time as the Common Stock is quoted or listed on the Nasdaq Stock
      Market System or a national securities exchange. Thereafter, Fair Market Value
      shall be the closing sale price on such market for the Common Stock on the
      date
      of the Award.

     

    2.12    “Good
      Reason” shall mean any of the following:

     

    
      	 	
              (i)

            	
              any
                significant diminution in the Participant’s title, authority, or
                responsibilities from and after a Change of
                Control;

            

    

     

    
      	 	
              (ii)

            	
              any
                reduction in the base compensation payable to the Participant from
                and
                after a Change of Control; or

            

    

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    
      	 	
              (iii)

            	
              the
                relocation after a Change of Control of the Company’s place of business at
                which the Participant is principally located to a location that is
                greater
                than 50 miles from the site immediately prior to the Change of
                Control.

            

    

     

    2.13    “ISO”
      means an incentive stock option within the meaning of section 422 of the
      Code.

     

    2.14    “NSO”
      means a non-qualified stock option, which is not intended to qualify as an
      incentive stock option under section 422 of the Code.

     

    2.15    “Option”
      means the right of a Participant, whether granted as an ISO or an NSO, to
      purchase a specified number of shares of Common Stock, subject to the terms
      and
      conditions of the Plan.

     

    2.16    “Option
      Price” means the price per share of Common Stock at which an Option may be
      exercised.

     

    2.17    “Participant”
      means an individual to whom an Award has been granted under the
      Plan.

     

    2.18    “Plan”
      means the AmTrust Financial Services, Inc. 2005 Equity Incetive Plan, as set
      forth herein and from time to time amended.

     

    2.19    “Restricted
      Stock” means the Common Stock awarded to a Participant pursuant to Section 8 of
      this Plan.

     

    2.20    “Subsidiary”
      means any entity during any period which the Company owns or controls more
      than
      50% of (i) the outstanding capital stock, or (ii) the combined voting power
      of
      all classes of stock.

     

    2.21    Rules
      of
      Construction:

     

    2.21.1    Governing
      Law and Venue.
      The
      construction and operation of this Plan are governed by the laws of the State
      of
      New York without regard to any conflicts or choice of law rules or principles
      that might otherwise refer construction or interpretation of this Agreement
      to
      the substantive law of another jurisdiction, and any litigation arising out
      of
      this Plan shall be brought in the State of New York or the United States
      District Court for Southern District of New York.

     

    2.21.2    Undefined
      Terms.
      Unless
      the context requires another meaning, any term not specifically defined in
      this
      Plan is used in the sense given to it by the Code.

     

    2.21.3    Headings.
      All
      headings in this Plan are for reference only and are not to be utilized in
      construing the Plan.

     

    2.21.4    Conformity
      with Section 422.
      Any
      ISOs issued under this Plan are intended to qualify as incentive stock options
      described in section 422 of the Code, and

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    all
      provisions of the Plan relating to ISOs shall be construed in conformity with
      this intention. Any NSOs issued under this Plan are not intended to qualify
      as
      incentive stock options described in section 422 of the Code, and all provisions
      of the Plan relating to NSOs shall be construed in conformity with this
      intention.

     

    2.21.5    Gender.
      Unless
      clearly inappropriate, all nouns of whatever gender refer indifferently to
      persons or objects of any gender.

     

    2.21.6    Singular
      and Plural.
      Unless
      clearly inappropriate, singular terms refer also to the plural and vice
      versa.

     

    2.21.7    Severability.
      If any
      provision of this Plan is determined to be illegal or invalid for any reason,
      the remaining provisions are to continue in full force and effect and to be
      construed and enforced as if the illegal or invalid provision did not exist,
      unless the continuance of the Plan in such circumstances is not consistent
      with
      its purposes.

     

    
      	
            	3.	
              Stock
                Subject to the Plan.

            

    

     

    Subject
      to adjustment as provided in Section 11 hereof, the aggregate number of shares
      of Common Stock for which Awards may be issued under this Plan may not exceed
      5,994,300 shares, and the aggregate number of shares of Common Stock for which
      Restricted Stock Awards may be issued under this Plan may not exceed 1,998,100
      shares. Reserved shares may be either authorized but unissued shares or treasury
      shares, in the Board’s discretion. If any Award shall terminate or expire, as to
      any number of shares of Common Stock, new Awards may thereafter be awarded
      with
      respect to such shares. Notwithstanding the foregoing, the total number of
      shares of Common Stock with respect to which Awards may be granted to any
      Participant in any calendar year shall not exceed 343,750 shares (subject to
      adjustment as provided in Section 11 hereof).

     

    
      	
            	4.	
              Administration.

            

    

     

    The
      Committee shall administer the Plan. All determinations of the Committee are
      made by a majority vote of its members. The Committee’s determinations are final
      and binding on all Participants. In addition to any other powers set forth
      in
      this Plan, the Committee has the following powers:

     

    
      	 	
              (a)

            	
              to
                construe and interpret the Plan;

            

    

     

    
      	 	
              (b)

            	
              to
                establish, amend and rescind appropriate rules and regulations relating
                to
                the Plan;

            

    

     

    
      	 	
              (c)

            	
              subject
                to the terms of the Plan, to select the individuals who will receive
                Awards, the times when they will receive them, the number of Options
                and
                Restricted Stock to be subject to each Award, the Option Price, the
                vesting schedule (including any performance targets to be achieved
                in
                connection with the vesting of any Award), the expiration date applicable
                to each Award and other terms, provisions and restrictions of the
                Awards
                (which
                need not be identical) and subject to Section 16 hereof, to amend
                or
                modify any of the terms of outstanding
                Awards;

            

    

     

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	 	
              (d)

            	
              to
                contest on behalf of the Company or Participants, at the expense
                of the
                Company, any ruling or decision on any matter relating to the Plan
                or to
                any Awards;

            

    

     

    
      	 	
              (e)

            	
              generally,
                to administer the Plan, and to take all such steps and make all such
                determinations in connection with the Plan and the Awards granted
                thereunder as it may deem necessary or advisable;
                and

            

    

     

    
      	 	
              (f)

            	
              to
                determine the form in which tax withholding under Section 14 of this
                Plan
                will be made (i.e.,
                cash, Common Stock or a combination
                thereof).

            

    

     

    Except
      to
      the extent prohibited by applicable law or the applicable rules of a stock
      exchange, the Committee may allocate all or any portion of its responsibilities
      and powers to any one or more of its members and may delegate all or any part
      of
      its responsibilities and powers to any person or persons selected by it. Any
      such allocation or delegation may be revoked by the Committee at any
      time.

     

    
      	
            	5.	
              Eligible
                Participants.

            

    

     

    Present
      and future directors, officers, employees and consultants of the Company or
      any
      Subsidiary shall be eligible to participate in the Plan. The Committee from
      time
      to time shall select those officers, directors and employees of the Company
      and
      any Subsidiary of the Company who shall be designated as Participants and shall
      designate in accordance with the terms of the Plan the number, if any, of ISOs,
      NSOs, and shares of Restricted Stock or any combination thereof, to be awarded
      to each Participant.

     

    
      	
            	6.	
              Terms
                and Conditions of Non-Qualified Stock Options.

            

    

     

    Subject
      to the terms of the Plan, the Committee, in its discretion, may award an NSO
      to
      any Participant. Each NSO shall be evidenced by an agreement, in such form
      as is
      approved by the Committee, and except as otherwise provided by the Committee
      in
      such agreement, each NSO shall be subject to the following express terms and
      conditions, and to such other terms and conditions, not inconsistent with the
      Plan, as the Committee may deem appropriate:

     

    6.01    Option
      Period.
      Each
      NSO will expire as of the earliest of:

     

    
      	 	
              (i)

            	
              the
                date on which it is forfeited under the provisions of Section
                10.1;

            

    

     

    
      	
            	(ii)	
              10
                years from the Award Date;

            

    

     

    
      	 	
              (iii)

            	
              in
                the case of a Participant who is an employee of the Company or a
                Subsidiary, three months after the Participant’s termination of employment
                with the Company and its Subsidiaries for any reason other than for
                Cause
                or death or total and permanent
                disability;

            

    

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    
      	 	
              (iv)

            	
              in
                the case of a Participant who is a member of the board of directors
                of the
                Company or a Subsidiary, but not an employee of the Company or a
                Subsidiary, three months after the Participant’s retirement from the board
                for any reason other than for Cause or death or total and permanent
                disability or the sale, merger or consolidation, or similar extraordinary
                transaction involving the Company or Subsidiary, as the case may
                be;

            

    

     

    
      	 	
              (v)

            	
              immediately
                upon the Participant’s termination of employment with the Company and its
                Subsidiaries or service on a board of directors of the Company or
                a
                Subsidiary for Cause;

            

    

     

    
      	 	
              (vi)

            	
              12
                months after the Participant’s death or total and permanent disability;
                or

            

    

     

    
      	 	
              (vii)

            	
              any
                other date specified by the Committee when the NSO is
                granted.

            

    

     

    6.02    Option
      Price.
      At the
      time granted, the Committee shall determine the Option Price of any NSO, which
      may not be less than 85% of the Fair Market Value of the Common Stock subject
      to
      the NSO on the Award Date, and in the absence of such determination, the Option
      Price shall be 100 % of the Fair Market Value of the Common Stock subject to
      the
      NSO on the Award Date.

     

    6.03    Vesting.
      Unless
      otherwise determined by the Committee and set forth in the agreement evidencing
      an Award, NSO Awards shall vest in accordance with Section 10.1.

     

    6.04    Other
      Option Provisions.
      The
      form of NSO authorized by the Plan may contain such other provisions as the
      Committee may from time to time determine.

     

    
      	
            	7.	
              Terms
                and Conditions of Incentive Stock Options.

            

    

     

    Subject
      to the terms of the Plan, the Committee, in its discretion, may award an ISO
      to
      any employee of the Company or a Subsidiary. Each ISO shall be evidenced by
      an
      agreement, in such form as is approved by the Committee, and except as otherwise
      provided by the Committee, each ISO shall be subject to the following express
      terms and conditions and to such other terms and conditions, not inconsistent
      with the Plan, as the Committee may deem appropriate:

     

    7.01    Option
      Period.
      Each
      ISO will expire as of the earliest of:

     

    
      	 	
              (i)

            	
              the
                date on which it is forfeited under the provisions of Section
                10.1;

            

    

     

    
      	 	
              (ii)

            	
              10
                years from the Award Date, except as set forth in Section 7.02
                below;

            

    

     

    
      	 	
              (iii)

            	
              immediately
                upon the Participant’s termination of employment with the Company and its
                Subsidiaries for Cause;

            

    

     

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    
      	 	
              (iv)

            	
              three
                months after the Participant’s termination of employment with the Company
                and its Subsidiaries for any reason other than for Cause or death
                or total
                and permanent disability;

            

    

     

    
      	 	
              (v)

            	
              12
                months after the Participant’s death or total and permanent disability;
                or

            

    

     

    
      	 	
              (vi)

            	
              any
                other date (within the limits of the Code) specified by the Committee
                when
                the ISO is granted.

            

    

     

    Notwithstanding
      the foregoing provisions granting discretion to the Committee to determine
      the
      terms and conditions of ISOs, such terms and conditions shall meet the
      requirements set forth in section 422 of the Code or any successor
      thereto.

     

    7.02    Option
      Price and Expiration.
      The
      Option Price of any ISO shall be determined by the Committee at the time an
      ISO
      is granted, and shall be no less than 100% of the Fair Market Value of the
      Common Stock subject to the ISO on the Award Date; provided, however, that
      if an
      ISO is granted to a Participant who, immediately before the grant of the ISO,
      beneficially owns stock representing more than 10% of the total combined voting
      power of all classes of stock of the Company or its parent or subsidiary
      corporations, the Option Price shall be at least 110% of the Fair Market Value
      of the Common Stock subject to the ISO on the Award Date and in such cases,
      the
      exercise period specified in the Option agreement shall not exceed five years
      from the Award Date.

     

    7.03    Vesting.
      Unless
      otherwise determined by the Committee and set forth in the agreement evidencing
      an Award, ISO Awards shall vest in accordance with Section 10.1.

     

    7.04    Other
      Option Provisions.
      The
      form of ISO authorized by the Plan may contain such other provisions as the
      Committee may, from time to time, determine; provided, however, that such other
      provisions may not be inconsistent with any requirements imposed on incentive
      stock options under Code section 422 and the regulations
      thereunder.

     

    
      	
            	8.	
              Terms
                and Conditions of Restricted Stock Awards.

            

    

     

    Subject
      to the terms of the Plan, the Committee, in its discretion, may award Restricted
      Stock to any Participant at no additional cost to the Participant. Each
      Restricted Stock Award shall be evidenced by an agreement, in such form as
      is
      approved by the Committee, and all shares of Common Stock awarded to
      Participants under the Plan as Restricted Stock shall be subject to the
      following express terms and conditions and to such other terms and conditions,
      not inconsistent with the Plan, as the Committee shall deem
      appropriate:

     

    
      	 	
              (a)

            	
              Restricted
                Period.
                Shares of Restricted Stock awarded under this Section 8 may not be
                sold,
                assigned, transferred, pledged or otherwise encumbered before they
                vest.

            

    

     

    
      	 	
              (b)

            	
              Vesting.
                Unless otherwise determined by the Committee and set forth in the
                agreement evidencing an Award, Restricted Stock Awards under this
                Section
                8 shall vest in accordance with Section
                10.2.

            

    

     

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    
      	 	
              (c)

            	
              Certificate
                Legend.
                Each certificate issued in respect of shares of Restricted Stock
                awarded
                under this Section 8 shall be registered in the name of the Participant
                and shall bear the following (or a similar) legend until such shares
                have
                vested:

            

    

     

    “The
      transferability of this certificate and the shares of stock represented hereby
      are subject to the terms and conditions (including forfeiture) relating to
      Restricted Stock contained in Section 8 of the AmTrust Financial Services,
      Inc.
      2005 Incentive Stock Plan and an Agreement entered into between the registered
      owner and AmTrust Financial Services, Inc. Copies of such Plan and Agreement
      are
      on file at the principal office of AmTrust Financial Services,
      Inc.”

     

    
      	 	
              (d)

            	
              Escrow.
                Any Restricted Stock issued pursuant to this Section 8 shall be held
                by
                the Company in escrow for the benefit of the Participant to whom
                the
                Restricted Stock is awarded. Upon vesting, a certificate for the
                vested
                shares shall be issued to the participant free of the restrictive
                legend
                required by Section 8(c).

            

    

     

    
      	
            	9.	
              Manner
                of Exercise of Options.

            

    

     

    To
      exercise an Option in whole or in part, a Participant (or, after his death,
      his
      executor or administrator) must give written notice to the Committee on a form
      acceptable to the Committee, stating the number of shares with respect to which
      he intends to exercise the Option. The Company will issue the shares with
      respect to which the Option is exercised upon payment in full of the Option
      Price. The Committee may permit the Option Price to be paid in cash or shares
      of
      Common Stock held by the Participant having an aggregate Fair Market Value,
      as
      determined on the date of delivery, equal to the Option Price. The Committee
      may
      also permit the Option Price to be paid by any other method permitted by law,
      including by delivery to the Committee from the Participant of an election
      directing the Company to withhold the number of shares of Common Stock from
      the
      Common Stock otherwise due upon exercise of the Option having an aggregate
      Fair
      Market Value on that date equal to the Option Price. If a Participant pays
      the
      Option Price with shares of Common Stock which were received by the Participant
      upon exercise of one or more ISOs, and such Common Stock has not been held
      by
      the Participant for at least the greater of:

     

    
      	 	
              (a)

            	
              two
                years from the date the ISOs were granted;
                or

            

    

     

    
      	 	
              (b)

            	
              one
                year after the transfer of the shares of Common Stock to the
                Participant;

            

    

     

    the
      use
      of the shares shall constitute a disqualifying disposition and the ISO
      underlying the shares used to pay the Option Price shall no longer satisfy
      all
      of the requirements of Code section 422.

     

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    To
      the
      extent that an Option is not exercised by a Participant when it becomes
      initially exercisable, it shall not expire but shall be carried forward and
      shall be exercisable, on a cumulative basis, until the expiration of the
      exercise period. No partial exercise may be for less than 100 full shares of
      Common Stock.

     

    Notwithstanding
      any other term or provision of the Plan, no Option granted hereunder may be
      exercised and no Award of Restricted Stock shall take effect, in whole or in
      part, unless at the time that the Option or Award has vested (i) the Common
      Stock is quoted or listed on the Nasdaq Stock Market System or other national
      securities exchange, (ii) there has been a sale of in excess of twenty percent
      (20%) of its outstanding shares of the Company to persons not affiliated with
      the Company as the date of the adoption of the Plan, or (iii) all or
      substantially all of the Company’s assets and business have been acquired by
      another corporation or the Company has been merged or consolidated with another
      corporation and the Company is not the surviving corporation of such
      transaction.

     

    
      	
            	10.	
              Vesting.

            

    

     

    10.1    Options.
      A
      Participant may not exercise an Option until it has become vested. The portion
      of an Award of Options that is vested depends upon the period that has elapsed
      since the Award Date. The following schedule applies to any Award of Options
      under this Plan unless the Committee establishes a different vesting schedule
      on
      the Award Date:

     

    
      	
              Number
                of Months

              Since
                Award Date

            	 	
              Vested
                Percentage

            
	
              fewer
                than 12 months

            	 	
              0.0%

            
	
              12
                months

            	 	
              25.00%

            
	
              15
                months

            	 	
              31.25%

            
	
              18
                months

            	 	
              37.50%

            
	
              21
                months

            	 	
              43.75%

            
	
              24
                months

            	 	
              50.00%

            
	
              27
                months

            	 	
              56.25%

            
	
              30
                months

            	 	
              62.50%

            
	
              33
                months

            	 	
              68.75%

            
	
              36
                months

            	 	
              75.00%

            
	
              39
                months

            	 	
              81.25%

            
	
              42
                months

            	 	
              87.50%

            
	
              45
                months

            	 	
              93.75%

            
	
              48
                months or more

            	 	
              100.00%

            

    

     

    Notwithstanding
      the above schedule, unless otherwise determined by the Committee and set forth
      in the agreement evidencing an Award, a Participant’s Awards shall become fully
      vested if a Participant’s employment with the Company and its Subsidiaries or
      service on the board of directors of the Company or a Subsidiary is terminated
      due to: (i) retirement on or after his sixty-fifth birthday; (ii) retirement
      on
      or after his fifty-fifth birthday with consent of the Company; (iii) retirement
      at any age on account of total and permanent disability as determined by the
      Company; or (iv) death. Unless the Committee otherwise provides in the
      applicable agreement evidencing an Award or Section 10.3 applies, if a
      Participant’s employment with or service to the
      Company or a Subsidiary terminates for any other reason, any Awards that are
      not
      yet vested are immediately and automatically forfeited.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    A
      Participant’s employment shall not be considered to be terminated hereunder by
      reason of a transfer of his employment from the Company to a Subsidiary, or
      vice
      versa, or a leave of absence approved by the Participant’s employer. A
      Participant’s employment shall be considered to be terminated hereunder if, as a
      result of a sale or other transaction, the Participant’s employer ceases to be a
      Subsidiary (and the Participant’s employer is or becomes an entity that is
      separate from the Company and its Subsidiaries).

     

    10.2    Restricted
      Stock.
      The
      Committee shall establish the vesting schedule to apply to any Award of
      Restricted Stock that is not associated with an ISO or NSO granted under the
      Plan to a Participant, and in the absence of such a vesting schedule, such
      Award
      shall vest in accordance with Section 10.1.

     

    10.3    Effect
      of “Change of Control”.
      Notwithstanding Sections 10.1 and 10.2 above, if within 12 months following
      a
“Change of Control” the employment of a Participant with the Company and its
      Subsidiaries is terminated, the Board of Directors may vest any Award issued
      to
      the Participant, and in the case of an Award other than a Restricted Stock
      Award, such Award shall be fully exercisable for 90 days following the date
      on
      which the Participant’s service with the Company and its Subsidiaries is
      terminated, but not beyond the date the Award would otherwise expire but for
      the
      Participant’s termination of employment.

     

    
      	
            	11.	
              Adjustments
                to Reflect Changes in Capital Structure.

            

    

     

    11.01    Adjustments.
      If
      there is any change in the corporate structure or shares of the Company, the
      Committee may make any appropriate adjustments, including, but limited to,
      such
      adjustments deemed necessary to prevent accretion, or to protect against
      dilution, in the number and kind of shares of Common Stock with respect to
      which
      Awards may be granted under this Plan (including the maximum number of shares
      of
      Common Stock with respect to which Awards may be granted under this Plan in
      the
      aggregate and individually to any Participant during any calendar year as
      specified in Section 3) and, with respect to outstanding Awards, in the number
      and kind of shares covered thereby and in the applicable Option Price. For
      the
      purpose of this Section 11, a change in the corporate structure or shares of
      the
      Company includes, without limitation, any change resulting from a
      recapitalization, stock split, stock dividend, consolidation, rights offering,
      separation, reorganization, or liquidation (including a partial liquidation)
      and
      any transaction in which shares of Common Stock are changed into or exchanged
      for a different number or kind of shares of stock or other securities of the
      Company or another corporation.

     

    11.02    Cashouts.
      In the
      event of an extraordinary dividend or other distribution, merger,
      reorganization, consolidation, combination, sale of assets, split up, exchange,
      or spin off, or other extraordinary corporate transaction, the Committee may,
      in
      such manner and to such extent (if any) as it deems appropriate and equitable
      make provision for a cash payment or for the substitution or exchange of any
      or
      all outstanding Awards or the cash, securities or property deliverable to the
      holder of any or all outstanding Awards based upon the distribution or
      consideration payable to holders of Common Stock upon or in respect of such
      event; provided, however,
      in each case, that with respect to any ISO no such adjustment may be made that
      would cause the Plan to violate section 422 of the Code (or any successor
      provision).

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    
      	
            	12.	
              Nontransferability
                of Awards.

            

    

     

    ISOs
      are
      not transferable, voluntarily or involuntarily, other than by will or by the
      laws of descent and distribution or pursuant to a qualified domestic relations
      order as defined by the Code. During a Participant’s lifetime, his ISOs may be
      exercised only by him. All other Awards (other than an ISO) are transferable
      by
      will or by the laws of descent and distribution or pursuant to a qualified
      domestic relations order as defined in the Code. With the approval of the
      Committee, a Participant may transfer an Award (other than an ISO) for no
      consideration to or for the benefit of one or more Family Members of the
      Participant subject to such limits as the Committee may establish, and the
      transferee shall remain subject to all the terms and conditions applicable
      to
      the Award prior to such transfer. The transfer of an Award pursuant to this
      Section 12 shall include a transfer of the right set forth in Section 16 hereof
      to consent to an amendment or revision of the Plan and, in the discretion of
      the
      Committee, shall also include transfer of ancillary rights associated with
      the
      Award. For purposes of this Section 12, “Family Members” mean with respect to a
      Participant, any child, stepchild, grandchild, parent, stepparent, grandparent,
      spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
      son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
      adoptive relationships, any person sharing the Participant’s household (other
      than a tenant or employee), a trust in which these persons have more than 50%
      of
      the beneficial interest, a foundation in which these persons (or the
      Participant) control the management of assets, and any other entity in which
      these persons (or the Participant) own more than 50% of the voting
      interests.

     

    
      	
            	13.	
              Rights
                as Stockholder.

            

    

     

    No
      Common
      Stock may be delivered upon the exercise of any Option until full payment has
      been made. A Participant has no rights whatsoever as a stockholder with respect
      to any shares covered by an Option until the date of the issuance of a stock
      certificate for the shares.

     

    
      	
            	14.	
              Withholding
                Tax.

            

    

     

    The
      Committee may, in its discretion and subject to such rules as it may adopt,
      permit or require a Participant to pay all or a portion of the federal, state
      and local taxes, including FICA and Medicare withholding tax, arising in
      connection with any Awards by (i) having the Company withhold shares of Common
      Stock at the minimum rate legally required, (ii) tendering back shares of Common
      Stock received in connection with such Award or (iii) delivering other
      previously acquired shares of Common Stock having a Fair Market Value
      approximately equal to the amount to be withheld.

     

    
      	
            	15.	
              No
                Right to Employment.

            

    

     

    Participation
      in the Plan will not give any Participant a right to be retained as an employee
      or director of the Company or its parent or Subsidiaries, or any right or claim
      to any benefit under the Plan, unless the right or claim has specifically
      accrued under the Plan.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    
      	
            	16.	
              Amendment
                of the Plan.

            

    

     

    The
      Board, at any time and from time to time, may modify or amend the Plan in any
      respect, except that without the approval of the stockholders of the Company,
      the Board may not (a) materially increase the benefits accruing to Participants,
      (b) increase the maximum number of shares which may be issued under the Plan
      (except for permissible adjustments provided in the Plan) or (c) materially
      modify the requirements as to eligibility for participation in the Plan or
      exercise of an option. The termination or any modification or amendment of
      the
      Plan shall not, without the consent of the Pariticipant, affect the
      Participant’s rights under an Award previously granted to him or her. With the
      consent of the Participant affected, the Board may amend outstanding option
      agreements in a manner not inconsistent with the Plan. The Board hereby reserves
      the right to amend or modify the terms and provisions of the Plan and of any
      outstanding options under the Plan to the extent necessary to qualify any or
      all
      options under the Plan for such favorable federal income tax treatment
      (including deferral of taxation upon exercise) as may be afforded ISO’s under
      Section 422A of the Code or any successor provision of the Code.

     

    
      	
            	17.	
              Conditions
                Upon Issuance of Shares.

            

    

     

    An
      Option
      shall not be exercisable and a share of Common Stock shall not be issued
      pursuant to the exercise of an Option, and Restricted Stock shall not be awarded
      until and unless the award of Restricted Stock, exercise of such Option and
      the
      issuance and delivery of such share pursuant thereto shall comply with all
      relevant provisions of law, including, without limitation, the Securities Act
      of
      1933, as amended, the Exchange Act, the rules and regulations promulgated
      thereunder, and the requirements of any stock exchange or national securities
      association upon which the shares of Common Stock may then be listed or quoted,
      and shall be further subject to the approval of counsel for the Company with
      respect to such compliance.

     

    As
      a
      condition to the exercise of an Option, the Company may require the person
      exercising such Option to represent and warrant at the time of any such exercise
      that the shares of Common Stock are being purchased only for investment and
      without any present intention to sell or distribute such shares if, in the
      opinion of counsel for the Company, such a representation is required by any
      of
      the aforementioned relevant provisions of law.

     

    
      	
            	18.	
              Substitution
                or Assumption of Awards by the Company.

            

    

     

    The
      Company, from time to time, also may substitute or assume outstanding awards
      granted by another company, whether in connection with an acquisition of such
      other company or otherwise, by either (a) granting an Award under the Plan
      in
      substitution of such other company’s award, or (b) assuming such award as if it
      had been granted under the Plan if the terms of such assumed award could be
      applied to an Award granted under the Plan. Such substitution or assumption
      shall be permissible if the holder of the substituted or assumed award would
      have been eligible to be granted an Award under the Plan if the other company
      had applied the rules of the Plan to such grant. In the event the Company
      assumes an award granted by another company, the terms and conditions of such
      award shall remain unchanged (except that the exercise price and the number
      and
      nature of Shares issuable upon exercise of any such option will be adjusted
      appropriately pursuant to section 424(a) of the Code). In the event the
Company
      elects to grant a new Award rather than assuming an existing option, such new
      Award may be granted with a similarly adjusted exercise price.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

     

    
      	
            	19.	
              Effective
                Date and Termination of Plan.

            

    

     

    19.01    Effective
      Date.
      This
      Plan is effective as of the date of its adoption by the Board of Directors,
      subject to subsequent approval by the Company’s shareholders.

     

    19.02    Termination
      of the Plan.
      Unless
      sooner terminated in accordance with Section 11.02 hereof, the Plan shall
      terminate upon the earlier of (i) the tenth anniversary of the date of its
      adoption by the Board or (ii) the date on which all shares available for
      issuance under the Plan shall have been issued pursuant to the exercise or
      cancellation of options granted hereunder and/or the issuance of Restricted
      Stock. If the date of termination is determined under (i) above, then options
      outstanding on such date shall continue to have force and effect in accordance
      with the provisions of the instruments evidencing such options.

     

     

    
      
         

      

        -13-EX 10.2

    EXHIBIT
      10.2

    

    INTERCOMPANY
      MANAGEMENT AGREEMENT

    

    This
      Intercompany Management Agreement (the “Agreement”) is entered into as of June
      1, 2006, by and among AmTrust Financial Services, Inc. (“AmTrust”), a Delaware
      corporation, Technology Insurance Company, Inc. (“Technology”), a New Hampshire
      property/casualty insurer, Rochdale Insurance Company (“Rochdale”), a New York
      property/casualty insurer, and Wesco Insurance Company (“Wesco”), a Delaware
      property/casualty insurer.

    

    WHEREAS,
      AmTrust is the sole shareholder of Technology and Wesco and Technology is the
      sole shareholder of Rochdale.

    

    WHEREAS,
      Technology, Rochdale and Wesco desire that AmTrust provide management services
      and AmTrust desires to provide such services.

    

    NOW,
      THEREFORE, AmTrust, Technology, Rochdale and Wesco agree as
      follows:

    

    
      	A.	
              Financial
                Services

            

    

    

    AmTrust
      shall perform all required financial and accounting services for Technology,
      Rochdale and Wesco, including, but not limited to:

    

    
      	 	
              1.

            	
              Federal
                and state tax compliance (including premium and excise
                tax);

            

    

    
      	 	
              2.

            	
              Investment
                management;

            

    

    
      	 	
              3.

            	
              Statutory
                accounting;

            

    

    
      	 	
              4.

            	
              Loss
                reserving;

            

    

    
      	 	
              5.

            	
              GAAP
                accounting;

            

    

    
      	 	
              6.

            	
              Regulatory
                compliance; 

            

    

    
      	 	
              7.

            	
              The
                development of premium and commission
                rates;

            

    

    
      	 	
              8.

            	
              Premium
                collections and refunds

            

    

    

    AmTrust
      shall collect, directly or through appointed producers, premiums on all
      policies, contracts, binders, riders, and endorsements issued on behalf of
      Technology, Rochdale and Wesco and shall deposit such premiums in Fiduciary
      Accounts maintained on behalf of each Technology, Rochdale and Wesco, as the
      case may be. AmTrust shall pay any return premiums payable to policyholders,
      directly or through appointed producers, out of the Fiduciary
      Accounts.

    

    
      	
            	9.	
              Maintenance
                of Fiduciary Accounts

            

    

    

    AmTrust
      shall hold separate and apart from all other funds all monies collected or
      received pursuant to this Agreement. AmTrust shall further hold separate
      and apart from the other parties, monies collected or received on behalf of
      Technology, Rochdale or Wesco. AmTrust shall deposit such monies in accounts
      at
      a federal or state chartered financial institution that is a member of the
      Federal Reserve System. Such accounts shall be referred to as Fiduciary
      Accounts. The Technology Fiduciary Accounts shall be used for all payments
      that
      AmTrust makes on behalf of Technology. The Rochdale Fiduciary Account shall
      be
      used for all payments that AmTrust makes on behalf of Rochdale and the Wesco
      Fiduciary Account shall be used for all payments that AmTrust makes on behalf
      of
      Wesco.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
            	10.	
              Maintenance
                of Books and Records

            

    

    

    AmTrust
      shall maintain complete and orderly files, books, records and accounts of all
      transactions in accordance with generally accepted insurance and accounting
      practices. At a minimum, such files, books, records and accounts
      shall:

     

    
      	 	
              a)

            	
              show
                all accounts between AmTrust and Technology, AmTrust and Rochdale,
                AmTrust
                and Wesco and AmTrust and all
                producers;

            

    

    
      	 	
              b)

            	
              show
                all policies issued, all premiums written, collected, earned and
                unearned,
                all acquisition costs, all return premiums paid and owing, all
                commissions, charges, fees and expenses owed by, received by, or
                owing to
                AmTrust for Technology, Rochdale and Wesco, and the data necessary
                to
                support all such commissions, charges, fees and
                expenses;

            

    

    
      	 	
              c)

            	
              include
                the relevant statistical information required in any statement that
                must
                be provided to any regulatory
                authority.

            

    

    

    AmTrust
      shall retain all such files, books, records and accounts in accordance with
      applicable insurance law.

    

    
      	B.	
              Administrative
                Services

            

    

    

    AmTrust
      shall perform all required administrative services for Technology, Rochdale
      and
      Wesco, including, but not limited to:

    

    
      	
            	1.	
              Form
                and rate filings

            

    

    

    
      	 	
              a)

            	
              obtain
                authorization to utilize standard policy forms and applications or
                shall
                develop forms and applications as
                required;

            

    

    
      	 	
              b)

            	
              make
                all required filings with regulatory
                authorities;

            

    

    
      	 	
              c)

            	
              The
                use and filing of forms and rates by AmTrust shall be subject to
                the
                approval of Technology, Rochdale and Wesco, as the case may
                be.

            

    

    

    
      	 	
              2.

            	
              Prepare
                and submit applications for certificates of
                authority;

            

    

     

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

     

    
      	 	
              3.

            	
              Prepare
                and submit applications for certificate of authority
                expansion;

            

    

    
      	 	
              4.

            	
              Maintain
                rating agency relationships;

            

    

    
      	 	
              5.

            	
              Correspondence
                with Policyholders and Producers;

            

    

    

    
      	C.	
              Underwriting
                Services

            

    

    

    AmTrust
      shall perform the following underwriting services for Technology, Rochdale
      and
      Wesco:

    

    
      	 	
              1.

            	
              Appointment
                of Producers

            

    

    

    AmTrust
      or a designated affiliate as set forth in appropriate agreement may enter into
      producer agreements on behalf of Technology, Rochdale and/or Wesco. Technology,
      Rochdale and Wesco agree to appoint such producers if required in a particular
      state. Prior to entering into any producer agreement, AmTrust or the designated
      affiliate shall ascertain that the producer is lawfully licensed to produce
      the
      type of insurance authorized by the producer agreement. Technology, Rochdale
      and
      Wesco shall each have the right to require cancellation of any producer
      agreement after appropriate notice.

    

    
      	 	
              2.

            	
              Marketing

            

    

    

    AmTrust
      shall require that all producer agreements entered into on behalf of Technology,
      Rochdale and/or Wesco provide that the producer must obtain approval in writing
      from Technology, Rochdale and/or Wesco for any advertisement or promotional
      material.

    

    
      	D.	
              Compensation

            

    

    

    
      	 	
              1.

            	
              Expenses

            

    

    

    
      	 	
              a)

            	
              Technology,
                Rochdale and Wesco each shall reimburse AmTrust for all direct expenses
                that are attributable to it, including but not limited
                to:

            

    

    

    
      	 	
              ·

            	
              Agents’
                commissions

            

    

    
      	 	
              ·

            	
              Reinsurance

            

    

    
      	 	
              ·

            	
              Advertising

            

    

    
      	 	
              ·

            	
              Boards,
                bureaus and associations

            

    

    
      	 	
              ·

            	
              Surveys
                and underwriting reports

            

    

    
      	 	
              ·

            	
              Audits
                of policyholder records

            

    

    
      	 	
              ·

            	
              Salaries

            

    

    
      	 	
              ·

            	
              Payroll
                taxes

            

    

    
      	 	
              ·

            	
              Employee
                Relations and Welfare

            

    

    
      	 	
              ·

            	
              Insurance

            

    

     

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    
      	 	
              ·

            	
              Directors’
                fees

            

    

    
      	 	
              ·

            	
              Travel
                and travel items

            

    

    
      	 	
              ·

            	
              Rent
                and rent items

            

    

    
      	 	
              ·

            	
              Equipment

            

    

    
      	 	
              ·

            	
              Printing
                and stationery

            

    

    
      	 	
              ·

            	
              Legal
                and auditing

            

    

    
      	 	
              ·

            	
              Premium
                taxes

            

    

    
      	 	
              ·

            	
              Insurance
                licenses and fees

            

    

    
      	 	
              ·

            	
              Guaranty
                association assessments

            

    

    

    
      	 	
              b)

            	
              Quarterly,
                all common expenses incurred by AmTrust in connection with this Agreement
                shall be allocated between Technology, Rochdale and Wesco in a manner
                consistent with New Hampshire RSA 401-B:5(a) and New York Insurance
                Department Regulation 30 (11 NYCRR §§ 106.2, 106.3) and Delaware Insurance
                Code, § 5005(a). Salaries shall be allocated to each company based on the
                percentage of total premium written by each
                company.

            

    

    

    
      	 	
              2.

            	
              Fees

            

    

    

    Technology,
      Rochdale and Wesco, collectively, shall pay to AmTrust an annual fee in an
      amount equal to 2% of the total written premium or $750,000, whichever is less.
      Within 30 days of the end of each calendar quarter, the fee shall be allocated
      to each company based on the percentage of total premium written by each company
      in that quarter. 

    

    
      	
            	3.	
              Remittance

            

    

    

    
      	 	 	
              Within
                45 days of the end of each calendar quarter, each of the companies
                shall
                remit payment to AmTrust for expenses and the the part of the annual
                fee
                payable for that quarter. Notwithstanding the foregoing the total
                fee
                payable by the companies shall not exceed $187,500 for any quarter
                or
                $750,000 for the entire calendar
                year.

            

    

    

    
      	E.	
              General
                Provisions

            

    

    

    
      	 	
              1.

            	
              Effective
                Date

            

    

    

    This
      Agreement shall be effective upon its approval by the New Hampshire Insurance
      Department, New York Insurance Department and Delaware Insurance
      Department.

    

    
      	 	
              2.

            	
              Termination

            

    

    

    This
      Agreement may be terminated:

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    
      	 	
              a)

            	
              by
                mutual agreement at any time;

            

    

    
      	 	
              b)

            	
              by
                any party upon giving the greater of thirty (30) days written notice
                or
                the minimum notice required by any applicable
                law;

            

    

    
      	 	
              c)

            	
              for
                cause upon fifteen (15) days written
                notice.

            

    

    

    
      	 	
              3.

            	
              Assignment;
                Binding Agreement

            

    

    

    Neither
      this Agreement nor any of the rights or obligations hereunder may be assigned
      in
      whole or in part. This Agreement shall be binding upon and shall inure to the
      benefit of the parties hereto.

    

    
      	 	
              4.

            	
              Severability
                and Modification

            

    

    

    If
      any of
      the provisions of this Agreement shall be determined to be contrary to law
      or
      unenforceable by any court of competent jurisdiction, the remaining provisions
      shall be severable and shall remain enforceable in accordance with their terms.
      No other changes in, modifications of , or additions to this Agreement shall
      be
      valid unless the same shall be in writing and signed by all the parties
      hereto.

    

    
      	 	
              5.

            	
              Counterparts

            

    

    

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which together will constitute one and the same
      instrument.

    

    
      	 	
              6.

            	
              Headings

            

    

    

    The
      article and section headings contained in this Agreement are inserted for the
      convenience of the parties only and shall not affect in any way its meaning
      or
      interpretation.

    

    
      	 	
              7.

            	
              Governing
                Law

            

    

    

    This
      Agreement, and any amendments hereto, shall be construed and interpreted in
      accordance with the substantive laws of the State of New York.

    

    
      	 	
              8.

            	
              Termination
                of Prior Management Agreement; Entire
                Agreement

            

    

    

    
      	 	 	
              Upon
                the effective date of this Agreement, the Intercompany Management
                Agreement entered into among AmTrust, Technology and Rochdale effective
                January 1, 2001 shall terminate. This Agreement shall thereafter
                constitute the entire agreement between the parties as to the provision
                of
                services hereunder.

            

    

     

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    

    
      	 	
              9.

            	Waiver
              and Further Agreement

    

     

    Any
      waiver of any breach of any terms or conditions of this Agreement shall only
      be
      effective if made in writing signed by the waiving party or parties and shall
      not operate as a waiver of any other breach of such terms or conditions or
      any
      other term or condition. No failure to enforce any provision hereof shall
      operate as a waiver of or estoppel with respect to such provision or of any
      other provisions hereof. No waiver shall act as a continuing waiver except
      to
      the extent specifically stated therein. Each of the parties hereto agrees to
      execute all such further instruments and documents and to take all such further
      action as the other parties may reasonably require in order to effectuate the
      terms and purposes of this Agreement.

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      date
      set forth above.

    

    

    AMTRUST
      FINANCIAL SERVICES, INC.

    

    

    

    ____________________________________

    Barry
      D.
      Zyskind

    President

    

    

    TECHNOLOGY
      INSURANCE COMPANY, INC.

    

    

     

    ___________________________________

    Stephen
      Ungar

    Secretary
      and General Counsel

    

    

    ROCHDALE
      INSURANCE COMPANY

    

    

    

    ___________________________________

    Stephen
      Ungar

    Secretary
      and General Counsel

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    

    

    WESCO
      INSURANCE COMPANY

     

    

    ___________________________________

    Barry
      D.
      Zyskind

    Secretary
      and General Counsel

     

    
      
         

      

        -7-

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