Document:

Argonaut Group, Inc.

	

Exhibit 10.1 

ARGONAUT GROUP, INC.

NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN 
(as amended 3/26/2004) 

1. Purpose. 

The purpose of this Non-Employee
 Director Stock Option Plan (the “Plan”) of Argonaut Group,  Inc., a Delaware
 corporation (the “Company”),  is to attract and retain qualified and competent  persons
to serve as members of the Board of Directors of the Company (the “Board of Directors”)
by providing a means whereby such persons may acquire stock  ownership in the Company.
 The Plan will provide a means  whereby such  directors  may purchase  shares of the
Common Stock of the Company  pursuant to options  which are not  “incentive  stock
options” under Section 422 of the Internal Revenue Code, as amended (the “Code”). 

2. Administration. 

The Plan shall be administered by
the Board of Directors or by a Committee selected by the Board of Directors  consisting
of two or more persons, to whom administration of the Plan has been duly delegated (the
 “Committee”).  Any action of the Board of Directors or the Committee with respect to
 administration  of the Plan shall be taken by a majority vote or written consent of its
members. 

Subject to the  provisions of the
Plan,  the Board of Directors or Committee  shall have  authority  (i) to construe and
interpret the Plan,  (ii) to define the terms used therein, (iii) to prescribe,  amend
and rescind rules and regulations  relating to the Plan, and (iv) to make all other
 determinations  necessary or advisable for the administration of the Plan.  All
 determinations  and  interpretations  made by the Board of  Directors or  Committee
 shall be binding and  conclusive  on all  participants  in the Plan and their legal
representatives and beneficiaries. 

The Board of Directors and the
Committee  shall have no discretion  with respect to the selection of directors to
receive  options,  the number of shares  subject to the Plan or to each option granted
 hereunder,  or the purchase  price for shares  subject to option grants  hereunder.  The
Board of Directors and the Committee  shall have no authority  (absent stockholder
approval) to materially increase benefits under the Plan. 

3. Shares Subject to the Plan. 

Subject to adjustment as provided in
paragraph 15 hereof,  the shares to be offered under the Plan shall consist of the
 Company’s  authorized  but unissued  Common Stock,  and the aggregate  amount of such
stock which may be issued upon exercise of all options under the Plan shall not exceed
250,000 of such shares.  If any option granted under the Plan shall expire or terminate
for any reason,  without  having been  exercised in full, the  unpurchased  shares
subject  thereto shall again be available for options to be granted under the Plan. 

4. Eligibility and Participation. 

Only Directors of the Company who
are not regular employees of the Company (“Non-Employee Directors”) are eligible to
participate in the Plan. 

5. Schedule of Option Grants. 

Subject to paragraph 15, grants
under the Plan shall be made in accordance with the following schedule: 

	

          (a)
Initial  Grants.  Each  Non-Employee  Director who is serving on the date on which the
 stockholders  of this Company  approve this Plan shall receive an option to purchase
5,000 shares of Common Stock on such date. 

          (b)
Annual Grants.  Immediately after each annual meeting of stockholders of the Company
(beginning with the Company’s 2004 annual meeting),  each Non-Employee  Director who is
in office at such time shall be granted an option to purchase 5,000 shares of Common
Stock. 

          (c)
Grants to New  Non-Employee  Directors.  Upon the appointment or election to the Board of
Directors of a Non-Employee  Director who was not previously a member of the Board of
 Directors,  such  Non-Employee  Director  shall be granted an option to purchase  5,000
shares of Common Stock on the date of  appointment  or election;  provided,  however,  a
Non-Employee  Director who is first made a member of the Board of Directors in connection
 with the vote of  stockholders of the Company at its annual meeting shall not be
entitled to receive the grant described in this subparagraph (c). 

6. Duration
of Options.  

Each option
and all rights  associated  therewith  shall  expire  seven (7) years after the date on
which such option is  granted,  and shall be subject to earlier  termination  as provided
herein.  

7. Purchase
Price.  

The purchase
 price of the stock  covered by each option shall be equal to one hundred  percent
 (100%) of the fair market value of such stock on the date the option is granted as
determined  in paragraph  9. The purchase  price of the shares upon  exercise of an
option shall be paid in full at the time of exercise (i) in cash or by  certified,
 cashier’s or personal  check  payable to the order of the Company or (ii) by delivery of
shares of Common  Stock of the Company  already  owned by, and in the  possession  of the
option  holder (subject to any required holding period imposed by the Board of Directors
or the Committee),  or any combination thereof.  Shares of Common Stock used to satisfy
the exercise price of an option shall be valued at their fair market value  determined
(in accordance  with paragraph 9 hereof) as of the close of business on the date of
exercise (or if such date is not a business day, as of the close of the business day
immediately preceding such date).  

8. Exercise
of Options.  

Subject to
the other  provisions of this Plan,  the option  granted under this Plan shall become
vested in one of two ways: (1) one year after the date of grant if granted at other than
the annual meeting or, (2) one day prior to the next scheduled annual meeting if granted
at the previous annual meeting; provided,  however, upon the occurrence of a Change of
Control (as defined below), each option shall become immediately vested and exercisable.
 No option may be exercised for a fraction of a share and no partial exercise of any
option may be for less than one hundred (100) shares.  

For purposes
of this Plan, “Change of Control” shall mean the occurrence of any of the following:  

          a)
Any “Person” or “Group” (as such terms are defined in Section 13(d) of the  Securities
 Exchange Act of 1934 (the  “Exchange  Act”) and the rules and  regulations  promulgated
thereunder) is or becomes the “Beneficial Owner” (within the meaning of Rule 13d-3 under
the Exchange Act),  directly or indirectly,  of securities of the Company, or of any
entity resulting from a merger or consolidation  involving the Company,  representing
more than fifty percent (50%) of the combined voting power of the then outstanding
 securities of the Company or such entity. 

          b)
The individuals who, as of the date that this Plan is approved by the  stockholders of
the Company,  are members of the Board of Directors (the “Existing  Directors”),  cease,
for any reason,  to  constitute  more than fifty  percent  (50%) of the number of
 authorized  directors of the Company as  determined  in the manner  prescribed  in the
 Company’s Certificate of Incorporation and Bylaws;  provided,  however, that if the
election, or nomination for election, by the Company’s  stockholders of any new director
was approved by a vote of at least fifty percent (50%) of the Existing Directors,  such
new director shall be considered an Existing Director;  provided further, however, that
no individual shall be considered  an Existing  Director if such  individual  initially
 assumed  office as a result of either an actual or  threatened  “Election  Contest”  (as
 described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened  solicitation of proxies by or on behalf of anyone other than the Board (a
“Proxy  Contest”),  including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest. 

	

          c)
The consummation of (x) a merger,  consolidation or reorganization to which the Company
is a party,  whether or not the Company is the Person surviving or resulting therefrom,
or (y) a sale, assignment,  lease, conveyance or other disposition of all or
substantially all of the assets of the Company, in one transaction or a series of related
transactions, to any Person other than the Company,  where any such transaction or series
of related  transactions as is referred to in clause (x) or clause (y) above in this
subparagraph (c) (a “Transaction”)  does not  otherwise  result in a “Change in Control”
 pursuant to  subparagraph  (a) of this  definition  of “Change in Control”;  provided,
 however,  that no such Transaction  shall  constitute a “Change in Control” under this
 subparagraph if the Persons who were the  stockholders of the Company  immediately
 before the consummation of such Transaction  are the  Beneficial  Owners,  immediately
 following the  consummation  of such  Transaction,  of fifty percent (50%) or more of
the combined  voting power of the then outstanding voting securities of the Person
surviving or resulting from any merger,  consolidation or reorganization referred to in
clause (x) above in this subparagraph (c) or the Person to whom the assets of the Company
are sold, assigned,  leased,  conveyed or disposed of in any transaction or series of
related transactions  referred in clause (y) above in this subparagraph (c). 

9. Fair Market Value of Common Stock. 

The fair market value of a share of
Common Stock of the Company shall be determined  for purposes of the Plan by reference to
the closing price on the principal  stock  exchange on which such shares are then listed
or, if such shares are not then listed on an exchange,  by reference to the closing price
(if a National Market Issue) or the mean between the bid and asked price (if other
 over-the-counter  issue) of a share as supplied by the National Association of
Securities Dealers through Nasdaq (or its successor in function),  in each case as
reported by The Wall Street  Journal,  for the date on which the option is granted or
 exercised,  or if such date is not a business  day, for the business day  immediately
preceding  such date (or, if for any reason no such price is available,  in such other
manner as the Board of Directors or the Committee  may deem  appropriate  to reflect the
then fair market value thereof). 

10. Withholding Tax. 

Upon the exercise of options,  the
Company shall have the right to require the  participant to pay the Company the amount of
any taxes which the Company may be required to withhold (if any) with respect to such
shares. 

11. Nontransferability. 

An option granted under the Plan
shall, by its terms, be  non-transferable  by the option holder,  either  voluntarily or
by operation of law, otherwise than by will or the laws of descent and distribution,  and
shall be exercisable  during option holder’s lifetime only by the option holder,
 regardless of any community property interest therein of the spouse of the option
holder,  or such spouse’s  successors in interest.  If the spouse of the option holder
shall have acquired a community  property  interest in such option,  the option holder,
or the option holder’s permitted successors in interest, may exercise the option on
behalf of the spouse of the option holder or such spouse’s successors in interest. 

12. Holding of Stock After Exercise
of Option. 

At the discretion of the Board of
Directors or Committee, any option may provide that the option holder, by accepting such
option,  represents and agrees, for the option holder and the option holder’s permitted
 transferees (by will or the laws of descent and distribution),  that none of the shares
purchased upon exercise of the option will be acquired with a view to any sale,  transfer
or distribution  of said shares in violation of the Securities Act of 1933, as amended,
 and the rules and regulations  promulgated  thereunder,  or any applicable state “blue
sky” laws, and the person entitled to exercise the same shall furnish evidence
 satisfactory to the Company  (including a written and signed  representation) to that
effect in form and substance  satisfactory to the Company,  including an indemnification
of the Company in the event of any violation of the Securities Act of 1933 or state blue
sky law by such person. 

	

13. Termination of Status as
Non-Employee Director. 

If an option holder ceases to be a
Non-Employee  Director for any reason any unvested  options held by such option holder
shall  immediately  become void and of no further force or effect.  Any options which are
vested as of the date of cessation  (“Termination  Date”) shall be  exercisable  for a
period of three (3) months after the  Termination  Date to the extent exercisable on the
Termination Date and shall thereafter expire and be void and of no further force or
effect; provided,  however, where such cessation occurs as a result of the option
 holder’s death or permanent and total  disability  (within the meaning of Section
 22(e)(3) of the Code),  the vested portion of the option shall be exercisable for one
year following the Termination Date; provided, further, in no event shall any options be
exercisable after the scheduled expiration date of such options. 

14. Privileges of Stock Ownership. 

No person  entitled to exercise any
option  granted  under the Plan shall have any of the rights or  privileges  of a
 stockholder  of the Company in respect of any shares of stock issuable upon exercise of
such option until  certificates  representing such shares shall have been issued and
delivered.  No shares shall be issued and delivered upon the exercise of any option
unless and until there shall have been full  compliance  with all applicable
 requirements  of the Securities Act of 1933 (whether by  registration or satisfaction of
exemption  conditions),  all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and any other requirements of
law or of any regulatory bodies having jurisdiction over such issuance and delivery. 

15. Adjustments. 

If the  outstanding  shares of the
Common Stock of the Company are  increased,  decreased,  changed into or exchanged for a
different  number or kind of shares or securities of the Company through reorganization,
recapitalization,  reclassification, stock dividend, stock split, reverse stock split or
other similar transaction, an appropriate and proportionate adjustment  shall be made in
the maximum  number and kind of shares as to which  options  may be granted  under this
Plan  pursuant to  paragraph 3 and the numbers of options to be granted  pursuant to
paragraph 5. A corresponding  adjustment  changing the number or kind of shares
 allocated to unexercised  options or portions  thereof,  which shall have been granted
prior to any such change,  shall likewise be made. Any such adjustment in the outstanding
options shall be made without change in the aggregate purchase price applicable to the
unexercised portion of the option but with a corresponding adjustment in the price for
each shares or other unit of any security covered by the option. 

Upon the dissolution or liquidation
of the Company, or upon a reorganization,  merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the  surviving
 corporation,  or upon a sale of  substantially  all the property or more than eighty
 percent (80%) of the then  outstanding  stock of the Company to another corporation, the
Plan shall terminate, and all options theretofore granted hereunder shall terminate. 

Notwithstanding  the foregoing,  the
Board of Directors or the Committee may provide in writing in connection  with such
 transaction  for any or all of the following  alternatives (separately or in
combinations):  (i) for the options theretofore granted to become immediately
 exercisable  notwithstanding the provisions of paragraph 8; (ii) for the assumption by
the successor  corporation  of the options  theretofore  granted or the  substitution  by
such  corporation  for such options of new options  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;  (iii) for the  continuance  of the Plan by
such successor  corporation in which event the Plan and the options theretofore granted
shall continue in the manner and under the terms so provided;  or (iv) for the payment in
cash or stock in lieu of and in complete satisfaction of such options. 

Adjustments under this paragraph 15
shall be made by the Board of Directors or Committee,  whose  determination as to what
adjustments shall be made, and the extent thereof,  shall be final, binding and
conclusive. No fractional shares of stock shall be issued under the Plan on any such
adjustment. 

16. Amendment and Termination of
Plan. 

The Board of Directors or the
 Committee  may at any time suspend or terminate  the Plan.  The Board of Directors or
the Committee may also at any time amend or revise the terms of the Plan, provided that
no such amendment or revision shall, unless permitted under the provisions of paragraph
15 or unless appropriate  stockholder  approval of such amendment or revision is
obtained,  (i) increase the maximum number of shares in the aggregate  which may be sold
pursuant to options granted under the Plan pursuant to paragraph 3, (ii) permit the
granting of options to anyone other than as provided in paragraph 4, (iii) increase the
number of options to be granted  pursuant to paragraph 5, (iv) increase the maximum term
of stock options provided for in paragraph 6, or (v) change the purchase price of stock
options set forth in paragraph 7. 

	

17. Effective Date of Plan. 

Effectiveness of the Plan is subject
to approval by the holders of the outstanding voting stock of the Company.  The Plan
shall be deemed approved by the holders of the outstanding voting  stock of the Company
by the  affirmative  vote of the holders of a majority of the voting  shares of the
Company  represented  and voting at a duly held  meeting at which a quorum is present.Exhibit 10.1

	

Exhibit 10.1 

ARGONAUT GROUP, INC.

AMENDED AND RESTATED STOCK INCENTIVE PLAN 
(as amended and restated on April 2, 2004) 

     1. Purpose. 

        The
purpose of this amended and restated Stock Incentive Plan (the “Plan”) of
Argonaut Group, Inc., a Delaware corporation (the “Company”), is to secure for
the Company and its stockholders the benefits arising from stock ownership by selected
executive and other key employees of the Company or its subsidiaries and such other
persons as the Board of Directors of the Company, or Committee thereof constituted for the
purpose, may from time to time determine. This Plan amends and restates in its entirety
the Company’s Amended and Restated Stock Option Plan (as amended and restated
effective March 16, 1999, as further amended effective April 25, 2000, and as further
amended and restated on February 4, 2002). 

        The
Plan provides a means whereby (a) such employees or other persons may purchase shares of
the Common Stock of the Company pursuant to “non-incentive” or
“non-qualified” stock options; (b) such employees may purchase shares of the
Common Stock of the Company pursuant to options which will qualify as “incentive
stock options” under Section 422 of the Internal Revenue Code, as amended (the
“Code”); (c) such employees who are also officers of the Company or its
subsidiaries may receive shares of the Common Stock of the Company, or cash in lieu
thereof, pursuant to stock appreciation rights granted in tandem with such options; and
(d) such employees or other persons may receive awards of Common Stock of the Company
pursuant to restricted stock grants. Awards of stock options as described in clauses (a)
and (b) above and restricted stock awards as described in clause (d) above are sometimes
collectively referred to in this Plan as “Stock Awards.” 

     2. Administration. 

        The
Plan shall be administered by the Board of Directors of the Company (the “Board of
Directors”) or by a Committee consisting of two or more persons, all of whom are
“Non-Employee Directors” and “Outside Directors”, to whom
administration of the Plan has been duly delegated (the “Committee”). For these
purposes, a “Non-Employee Director” shall have the meaning set forth in Rule
16b-3 adopted pursuant to the Securities and Exchange Act of 1934 (the “Exchange
Act”), and an “Outside Director” shall have the meaning set forth in
Section 162(m) of the Code. Any action of the Board of Directors or the Committee with
respect to administration of the Plan shall be taken by a majority vote or written consent
of its members. 

        Subject
to the provisions of the Plan, the Board of Directors or Committee shall have authority
(a) to construe and interpret the Plan, (b) to define the terms used therein, (c) to
prescribe, amend and rescind rules and regulations relating to the Plan, (d) to determine
the individuals to whom and the time or times at which Stock Awards shall be granted,
whether Stock Awards consisting of stock options will be incentive stock options or
non-qualified stock options, whether to include a stock appreciation right with an option
and the terms of such rights, the number of shares to be subject to each Stock Award, the
purchase price (if any) for Stock Awards consisting of restricted stock, the exercise
price for Stock Awards consisting of stock options, the service, performance and/or
vesting requirements applicable to Stock Awards, the number of installments, if any, in
which Stock Awards consisting of stock options may be exercised, and the duration of each
Stock Award consisting of stock options, (e) to approve and determine the duration of
leaves of absence which may be granted to participants without constituting a termination
of their employment for the purposes of the Plan, and (vi) to make all other
determinations necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Board of Directors or Committee shall be
binding and conclusive on all participants in the Plan and their legal representatives and
beneficiaries. 

	

     3. Shares Subject to the Plan. 

        Subject
to adjustment as provided in paragraph 16 hereof, the shares to be issued under the Plan
shall consist of the Company’s authorized but unissued Common Stock, provided that
the aggregate amount of such stock which may be issued under the Plan (including pursuant
to any options granted pursuant to the Company’s 1986 Stock Option Plan prior to its
amendment and restatement) shall not exceed Six Million Two Hundred and Fifty Thousand
(6,250,000) of such shares, of which One Million, Two Hundred and Fifty Thousand
(1,250,000) shares of such aggregate share amount shall be allocated to restricted stock
awards and Five Million (5,000,000) shares shall be allocated to stock option awards, and
provided, further, that no optionee may receive Stock Awards, during any fiscal year of
the Company or portion thereof, of stock options that, in the aggregate, cover more than
Three Hundred Thousand (300,000) shares, except that in connection with his or her initial
service, an optionee may be granted Stock Awards covering up to an additional Three
Hundred Thousand (300,000) shares. If any option granted under the Plan (including any
options granted pursuant to the Company’s Amended and Restated Stock Option Plan
prior to its amendment and restatement) shall expire or terminate for any reason (other
than surrender at the time of exercise of a related stock appreciation right provided for
in paragraph 8 hereof), without having been exercised in full, or if any shares subject to
a restricted stock grant under the Plan are not earned and are thereby forfeited to the
Company, such unpurchased or unearned shares shall again be available for Stock Awards to
be granted under the Plan. 

     4. Eligibility and Participation. 

        All
executive and other key employees of the Company or of any subsidiary corporation (as
defined in Section 424(f) of the Code) shall be eligible for selection to fully
participate in the Plan, except that only such employees who are also officers of the
Company or a subsidiary of the Company shall be eligible to receive stock appreciation
rights. Directors of the Company who are not regular employees of the Company are not
eligible to participate in the Plan. Other non-employees may participate in the Plan with
respect to non-qualified stock options and/or restricted stock awards, but only selected
executives and other key employees of the Company or a subsidiary may receive incentive
stock options under the Plan. An individual who as been granted a Stock Award may, if such
individual is otherwise eligible, be granted an additional Stock Award or Stock Awards
(pursuant to the Plan or any other plan or plans of the Company) if the Board of Directors
or Committee shall so determine, subject to the other provisions of the Plan. No incentive
stock option may be granted to any person who, at the time the incentive stock option is
granted, owns shares of the Company’s outstanding Common Stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of the
Company (and of its affiliates if applicable), unless the exercise price of such option is
at least 110 percent (110%) of the fair market value of the stock subject to the option
and such option by its terms is not exercisable after the expiration of five years from
the date such option is granted. 

        All
Stock Awards granted under the Plan shall be granted within ten years from April 2, 2004. 

	

     5. Duration of Options. 

        Each
option and all rights associated therewith shall expire on such date as the Board of
Directors or Committee may determine, and shall be subject to earlier termination as
provided herein; provided, however, that in the case of incentive stock options, each
incentive stock option and all rights associated therewith shall expire in any event
within ten (10) years of the date on which such incentive stock option is granted and
provided that in the case of non-qualified stock options, each non-qualified stock option
and all rights associated therewith for grants made after the effective date of the Plan
as amended on April 2, 2004 shall expire within seven (7) years of the date on which such
non-qualified stock option is granted. 

     6. Purchase Price. 

        The
purchase price (if any) applicable to restricted stock awards shall be determined by the
Board of Directors or the Committee. The exercise price for the stock covered by each
option shall be determined by the Board of Directors or the Committee, but in the case of
incentive stock options, shall not be less than one hundred percent (100%) of the fair
market value of such stock on the date the incentive stock option is granted and, in the
case of non-qualified stock options, shall not be less than one hundred percent (100%) of
the fair market value of such stock on the date the non-qualified stock option is granted. 

        Other
than in connection with a change in the Company’s capitalization (as described in
paragraph 16 of the Plan), the exercise price of a Stock Award may not be reduced without
stockholder approval. 

        The
exercise price of shares upon exercise of an option shall be paid in full at the time of
exercise: (a) in cash or by certified, cashier’s or personal check payable to the
order of the Company or (b) by delivery of shares of Common Stock of the Company already
owned by, and in the possession of the option holder, or any combination thereof. Shares
of Common Stock used to satisfy the exercise price of an option shall be valued at their
fair market value determined (in accordance with paragraph 9 hereof) as of the close of
business on the date of exercise (or if such date is not a business day, as of the close
of the business day immediately preceding such date). 

     7. Exercise of Options. 

        The
aggregate fair market value (determined at the time the options are granted) of the shares
covered by incentive stock options granted to any one employee under this Plan or any
other incentive stock option plan of the Company which may become exercisable for the
first time in any one calendar year shall not exceed $100,000; provided, however, that if
the Code or the regulations thereunder shall permit a greater amount of incentive stock
options to vest in any calendar year, then such higher limit shall be applicable, subject
to the provisions of the specific option agreement. Subject to the foregoing, each option
granted under this Plan shall be exercisable in such installments during the period prior
to its expiration date as the Board of Directors or Committee shall determine; provided
that, unless otherwise determined by the Board of Directors or Committee, if the option
holder shall not in any given installment period purchase all of the shares which the
option holder is entitled to purchase in such installment period, then the option
holder’s right to purchase any shares not purchased in such installment period shall
continue until the expiration date or sooner termination of the option holder’s
option. Any option may be exercised for a fraction of a share and no partial exercise of
any option may be for less than One Hundred (100) shares. 

     8. Stock Appreciation Rights. 

        If
deemed appropriate by the Board of Directors or the Committee, any stock option granted to
an officer of the Company or a subsidiary of the Company may be coupled with a stock
appreciation right at the time of the grant of the option, or, the Board of Directors or
Committee may grant a stock appreciation right to any such officer at any time after
granting an option to such officer prior to the end of the term of such associated option.
Such stock appreciation right shall be subject to such terms and conditions not
inconsistent with the Plan as the Board of Directors or Committee shall impose, provided
that: 

	

             a) A stock appreciation right shall be exercisable to the extent, and only to the
          extent, the associated option is exercisable and shall be exercisable only for
          such period as the Board of Directors or Committee may determine (which period
          may expire prior to the expiration date of the option); 

             b) A stock appreciation right shall entitle the option holder to surrender to the
          Company unexercised the option to which it is related, or any portion thereof,
          and to receive from the Company in exchange therefore that number of shares
          (rounded down to the nearest whole number) having an aggregate value equal to
          the excess of the fair market value of one share (determined as thereinafter
          provided) over the option price per share specified in such option multiplied by
          the number of shares subject to the option, or portion thereof, which is so
          surrendered; and 

             c) The Board of Directors or Committee may elect to settle, or the stock
          appreciation right may permit the optionee to elect to receive (subject to
          approval by the Board of Directors or Committee), any part or all of the
          Company’s obligation arising out of the exercise of a stock appreciation
          right by the payment of cash equal to the aggregate fair market value of that
          part or all of the shares it would otherwise be obligated to deliver, provided
          that in no event shall cash be payable upon exercise of a stock appreciation
          right unless the transaction is exempt from the operation of Section 16(b) of
          the Exchange Act. 

     9. Fair Market Value of Common Stock. 

        The
fair market value of a share of Common Stock of the Company shall be determined for
purposes of the Plan by reference to the closing price on the principal stock exchange on
which such shares are then listed or, if such shares are not then listed on an exchange,
by reference to the closing price (if a National Market Issue) or the mean between the bid
and asked price (if other over-the-counter issue) of a share as supplied by the National
Association of Securities Dealers through Nasdaq (or its successor in function), in each
case as reported by The Wall Street Journal, for the date on which the Stock Award or
stock appreciation right is granted or exercised, or if such date is not a business day,
for the business day immediately preceding such date (or, if for any reason no such price
is available, in such other manner as the Board of Directors or the Committee may deem
appropriate to reflect the then fair market value thereof). 

     10. Withholding Tax. 

        Upon
(i) the disposition by an employee or other person of shares of Common Stock acquired
pursuant to the exercise of an incentive stock option granted pursuant to the Plan within
two years of the granting of the incentive stock option or within one year after exercise
of the incentive stock option, (ii) the exercise of “non-incentive” or
“non-qualified” options, (iii) the exercise of a stock appreciation right, or
(iv) the grant date or date on which shares subject to a restricted stock award vest or
otherwise cease to be subject to a substantial risk of forfeiture, the Company shall have
the right to: (a) require such employee or such other person to pay the Company the amount
of any taxes which the Company may be required to withhold with respect to such shares,
(b) require such employee to deliver shares of Common Stock of the Company already owned
by, and in the possession of the option holder, valued at their fair market value
determined (in accordance with paragraph 9 hereof) as of the close of business on the date
of exercise (or if such date is not a business day, as of the close of the business day
immediately preceding such date) sufficient to satisfy the amount of any taxes which the
Company may be required to withhold with respect to an option exercise; or (c) deduct from
all amounts paid in cash with respect to the exercise of a stock appreciation right the
amount of any taxes which the Company may be required to withhold with respect to such
exercise. 

	

     11. Nontransferability. 

        A
Stock Award (and any accompanying appreciation right) granted under the Plan shall, by its
terms, be non-transferable by the holder (in the case of Stock Awards consisting of
restricted stock grants, until such shares are vested and earned), either voluntarily or
by operation of law, otherwise than by will or the laws of descent and distribution, and,
in the case of Stock Awards consisting of stock options, shall be exercisable during the
option holder’s lifetime only by the option holder, regardless of any community
property interest therein of the spouse of the option holder, or such spouse’s
successors in interest. If the spouse of the option holder shall have acquired a community
property interest in such option (or accompanying stock appreciation right), the option
holder, or the option holder’s permitted successors in interest, may exercise the
option (or accompanying stock appreciation right) on behalf of the spouse of the option
holder or such spouse’s successors in interest. 

     12. Certain Securities Laws Matters. 

        At
the discretion of the Board of Directors or Committee, any Stock Award may provide that
the recipient, by accepting such Stock Award, represents and agrees, for the recipient and
the recipient’s permitted transferees (by will or the laws of descent and
distribution), that none of the shares acquired pursuant to a Stock Award or any
accompanying stock appreciation right will be acquired with a view to any sale, transfer
or distribution of said shares in violation of the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, or any applicable state “blue
sky” laws, and the recipient of such Stock Award or any person entitled to exercise
any Stock Award consisting of stock options shall furnish evidence satisfactory to the
Company (including a written and signed representation) to that effect in form and
substance satisfactory to the Company, including an indemnification of the Company in the
event of any violation of the Securities Act of 1933 or state blue sky law by such person. 

     13. Termination of Employment. 

        If
a holder of an option granted under this Plan who is employed by the Company or one of its
subsidiaries ceased to be so employed for any reason other than the option holder’s
death or permanent and total disability (within the meaning of Section 22(e)(3) of the
Code), the option holder’s option (and any accompanying stock appreciation right)
shall immediately become void and of no further force or effect; provided, however, that
if such cessation of employment shall be due to option holder’s voluntary resignation
with the consent of the Board of Directors of the Company or such subsidiary, expressed in
the form of a written resolution, or to option holder’s retirement under the
provisions of any pension or retirement plan of the Company or of such subsidiary then in
effect, then, such option shall be exercisable for a period of three (3) months after the
date option holder ceases to be an employee of the Company or such subsidiary (unless by
its terms it sooner expires) to the extent exercisable on the date of such cessation of
employment and shall thereafter expire and be void and of no further force or effect. A
leave of absence approved in writing by the Board of Directors or Committee shall not be
deemed a termination of employment for the purposes of this paragraph 14, but no option
may be exercised during any such leave of absence, except during the first three (3)
months thereof. 

     14. Death or Permanent Disability. 

        If
the holder of an incentive stock option dies or becomes permanently and totally disabled
as defined in paragraph 14 while option holder is employed by the Company or one of its
subsidiaries, option holder’s option (and any accompanying stock appreciation right)
shall expire one (1) year after the date of such death or permanent and total disability
unless by its terms it sooner expires. During such period after death, such option (and
any accompanying stock appreciation right) may, to the extent that it remained unexercised
(but exercisable by the option holder according to such option’s terms) on the date
of such death, be exercised by the person or persons to whom the option holder’s
rights under the option shall pass by option holder’s will or by the laws of descent
and distribution. The death or disability of a holder of a non-qualified stock option, or
of a recipient of a restricted stock award, will have the effect specified in the
individual option or restricted stock agreement as determined by the Board of Directors or
the Committee. 

	

     15. Privileges of Stock Ownership. 

        No
person entitled to exercise any option or stock appreciation right or to receive a
restricted stock award granted under the Plan shall have any of the rights or privileges
of a stockholder of the Company in respect of any shares of stock issuable upon exercise
of such option or stock appreciation right or in respect of such restricted stock award
until certificates representing such shares shall have been issued and delivered. In the
case of Stock Awards consisting of restricted stock grants, the Company shall be entitled
to defer the issuance and delivery of such certificates until the shares subject to such
restricted stock grants have vested and been earned. Shares subject to Stock Awards shall
not be issued and delivered unless and until there shall have been full compliance with
all applicable requirements of the Securities Act of 1933 (whether by registration or
satisfaction of exemption conditions), all applicable listing requirements of any national
securities exchange on which shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having jurisdiction over such issuance and
delivery. 

     16. Adjustments. 

        If
the outstanding shares of the Common Stock of the Company are increased, decreased,
changed into or exchanged for a different number or kind of shares or securities of the
Company through reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar transaction, an appropriate and proportionate
adjustment shall be made in the maximum number and kind of shares as to which Stock Awards
may be granted under this Plan. A corresponding adjustment changing the number or kind of
shares allocated to unexercised options and outstanding restricted stock awards or
portions thereof, which shall have been granted prior to any such change, shall likewise
be made. Any such adjustment in the case of outstanding options shall be made without
change in the aggregate purchase price applicable to the unexercised portion of the
options but with a corresponding adjustment in the price for each shares or other unit of
any security covered by the options. 

        Upon
the dissolution or liquidation of the Company, or upon a reorganization, merger or
consolidation of the Company with one or more corporations as a result of which the
Company is not the surviving corporation, or upon a sale of substantially all the property
or more than eighty percent (80%) of the then outstanding stock of the Company to another
corporation, the Plan shall terminate, and all options and stock appreciation rights
theretofore granted and all restricted stock awards not theretofore earned (by time
vesting, performance or otherwise, as specified in the individual restricted stock
agreement governing the award, as determined by the Board of Directors or the Committee)
shall terminate. 

        Notwithstanding
the foregoing, the Board of Directors or the Committee may provide in writing in
connection with such transaction for any or all of the following alternatives (separately
or in combinations): (i) for the options and any accompanying stock appreciation rights
theretofore granted to become immediately exercisable, notwithstanding the provisions of
paragraph 7, and/or for the restricted awards to become immediately vested and earned;
(ii) for the assumption by the successor corporation of the Stock Awards and stock
appreciation rights theretofore granted or the substitution by such corporation for such
Stock Awards and rights of new options, rights and restricted stock 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; (iii) for the continuance of
the Plan by such successor corporation in which event the Plan and the Stock Awards and
any accompanying stock appreciation rights theretofore granted shall continue in the
manner and under the terms so provided; or (iv) for the payment in cash or stock in lieu
of and in complete satisfaction of such Stock Awards and rights. 

        Adjustments
under this paragraph 16 shall be made by the Board of Directors or Committee, whose
determination as to what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive. No fractional shares of stock shall be issued under the
Plan on any such adjustment. 

	

        At
the discretion of the Board of Directors or the Committee, any Stock Award may contain
provisions to the effect that upon the happening of certain events, including a change in
control (as defined by the Board of Directors or Committee in the agreement evidencing the
Stock Award) of the Company, any outstanding Stock Awards and accompanying stock
appreciation rights not theretofore exercisable or vested and earned shall immediately
become exercisable or vested and earned in their entirety, notwithstanding any of the
other provisions of the Stock Award. 

     17. Amendment and Termination of Plan. 

        The
Board of Directors or the Committee may at any time suspend or terminate the Plan. The
Board of Directors or the Committee may also at any time amend or revise the terms of the
Plan, provided that no such amendment or revision shall, unless appropriate stockholder
approval of such amendment or revision is obtained, increase the maximum number of shares
in the aggregate which may be issued pursuant to Stock Awards granted under the Plan,
except as permitted under the provisions of paragraph 16, change the minimum purchase
price of incentive stock options set forth in paragraph 6, reduce the exercise price of a
Stock Award as set forth in paragraph 6, increase the maximum term of incentive stock
options provided for in paragraph 5, or permit the granting of Stock Awards or stock
appreciation rights to anyone other than as provided in paragraph 4. 

        At
any time that the federal tax law is changed or amended with respect to incentive stock
options, this Plan shall be deemed automatically amended to provide to the holders of
incentive stock options the full benefit of the law, as amended, without any action being
taken by the Board, the Committee or the stockholders of the Company. Notwithstanding the
foregoing, no amendment, suspension or termination of the Plan shall, without specific
actions of the Board of Directors or the Committee and the consent of the Stock Award
recipient, in any way modify, amend, alter or impair any rights or obligations under any
Stock Awards or accompanying stock appreciation right theretofore granted under the Plan. 

     18. Effective Date of Plan. 

        Effectiveness
of the Plan is subject to approval by the holders of the outstanding voting stock of the
Company as hereinafter provided within twelve months from the date the Plan is adopted by
the Board of Directors. The Plan shall be deemed approved by the holders of the
outstanding voting stock of the Company by (i) the affirmative vote of the holders of a
majority of the voting shares of the Company represented and voting at a duly held meeting
at which a quorum is present or (ii) the written consent of the holders of a majority of
the outstanding voting shares of the Company. Any Stock Awards granted under the Plan
prior to obtaining such stockholder approval shall be granted under the conditions that
the Stock Awards so granted: (1) shall not, in the case of Stock Awards consisting of
stock options, be exercisable prior to such approval, and (2) shall become null and void
if such stockholder approval is not obtained. 

        No
Stock Awards or stock appreciation rights may be granted under the Plan unless and until
(i) the Stock Awards, rights and underlying shares have been qualified with any state
securities authorities, as applicable, or (ii) the Company has been advised by counsel
that such Stock Awards, rights and shares are exempt from such qualification.

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