- 1 -




                                                               FORM S-8

           Filed With the Securities and Exchange Commission on August 27, 1999
                                         Registration No. _____________

                                       UNITED STATES
                             SECURITIES AND EXCHANGE COMMISSION
                                    Washington, D.C. 20549
                                          FORM S-8
                                REGISTRATION STATEMENT UNDER
                                  THE SECURITIES ACT OF 1933


                                    ARGONAUT GROUP, INC.
                      (Exact name of issuer as specified in its charter)
                                     DELAWARE 95-4057601
                       (State of other jurisdiction of (I.R.S. Employer
                       incorporation or organization) Identification No.)

                         1800 AVENUE OF THE STARS,  SUITE 1175,
                               LOS ANGELES,    CA   90067
              (Address   of Principal   Executive   Offices)  (Zip Code)





                                       1
<PAGE>



                                        - 2 -



                                   ARGONAUT GROUP, INC.
                          AMENDED AND RESTATED STOCK OPTION PLAN
                                 (Full title of the Plan)

JAMES B HALLIDAY                             Copies to:
Vice President and Treasurer                 Edmund M. Kaufman, Esq.
Argonaut Group, Inc.                         Richard C. Wirthlin, Esq.
1800 Avenue of the Stars, Suite 1175         Irell & Manella LLP
Los Angeles, California  90067               1800 Avenue of the Stars, Ste. 900
Telephone:  (310) 553-0561                   Los Angeles, California  90067
(Name and address of agent for service)      Telephone:  (310) 277-1010


<TABLE>
<CAPTION>

                            CALCULATION OF REGISTRATION FEE

                                                    Proposed Maximum        Proposed Maximum         Amount of
 Title of Securities   to       Amount to be         Offering Price         Aggregate Offering      Registration
      be Registered              Registered           per Share1               Price                 Fee
      ---------------         ----------------    -------------- ---           -----                ----------
<S>                           <C>                 <C>                       <C>                    <C>

Common Stock Issuable upon     500,000 shares           $23.938              $11,969,000           $3,327.38
exercise of options and/or
stock appreciation rights
</TABLE>





1  Estimated  solely  for  the purpose  of  calculating   the registration  fee.
   The fee has been  calculated  pursuant  to Rule  457 (g)  based  upon the
   closing price per share of the Registrants'  Common  Stock on the  NASDAQ
   National  Market system on August 20, 1999, a date within 15 days prior to
   the date of filing of this Registration Statement.





                                       2
<PAGE>



                            EXPLANATORY NOTE

                  Argonaut  Group,  Inc. (the  "Company")  filed  registration
statements  on Form S-8 on February 13, 1987 (Reg.  No.33-12034) and on December
 9, 1997 (Reg. No. 333-10712)  (collectively,  the "Previous  Registrations")
relating to the registration of shares of common stock, $0.10 par value
("Common Stock"), of the Company.

                  Pursuant  to  General   Instruction   E  of  Form  S-8,   this
Registration  Statement on Form S-8 (the "Registration  Statement") registers an
additional  500,000  shares of the Company's  Common Stock which may be acquired
upon the exercise of stock options granted to employees of the Company.

                  The  Previous   Registrations   are  hereby   incorporated  by
reference pursuant to General Instruction E to Form S-8.





                                       3
<PAGE>




                                        II-12

                                         II-1

                        PART II

                     Item 8. EXHIBITS.



       -------------------------- ---------------------------------------------
                EXHIBIT
                NUMBER                                         DESCRIPTION
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                   5              Legal Opinion of Irell & Manella LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.1             Consent of Independent Auditors - Arthur
                                  Andersen LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.2             Consent of Irell & Manella LLP (included in
                                  legal opinion filed as Exhibit 5)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                  24              Power of Attorney (included on the signature
                                  pages filed herewith)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 99.1             Argonaut Group, Inc. Amended and Restated
                                  Stock Option Plan(1)
       -------------------------- ---------------------------------------------

         (1) Filed herewith





                                                              SIGNATURES


Pursuant to the  requirements  of the  Securities  Act of 1933,  the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its be  half  by the  undersigned,  thereunto  duly
authorized, in the City of Los Angeles, State of California, on August 25, 1999.


                                                     ARGONAUT GROUP, INC.



                                                    By  /s/ Charles E. Rinsch
                                                     Charles E. Rinsch
                                                     President and Director
                                                   (Principal Executive Officer)








                                       5
<PAGE>



                                                           POWER OF ATTORNEY


KNOW ALL MEN BY THESE PRESENTS:

                  That the undersigned officers and directors of Argonaut Group,
Inc., a Delaware corporation, do hereby constitute and appoint Charles E. Rinsch
and James B Halliday,  and each of them, the lawful  attorney-in-fact and agent,
with full power and  authority  to do any and all acts and things and to execute
any and all instruments which said attorney and agent determines to be necessary
or  advisable  or  required  to  enable  said  corporation  to  comply  with the
Securities Act of 1933, as amended,  and any rules or regulation or requirements
of the  Commission  in  connection  with this  Registration  Statement.  Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and  authority to sign the names of the  undersigned  officers
and directors in the capacities indicated below to this Registration  Statement,
to  any  and  all  amendments,   both  pre-effective  and  post-effective,   and
supplements  to this  Registration  Statement and to any and all  instruments or
documents filed as part of or in connection with this Registration  Statement or
amendments or supplements  thereof,  and each of the undersigned hereby ratifies
and  confirms  all that said  attorney and agent shall do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.

                  IN WITNESS WHEREOF,  each of the undersigned has executed this
Power of Attorney as of August 25, 1999.

                  Pursuant to the  requirements  of the  Securities Act of 1933,
this  registration  statement has been signed by the following persons on August
25, 1999 in the capacities indicated.

SIGNATURE                                                 TITLE
---------                                                 -----
/s/ Charles E. Rinsch                              President and Director
------------------------------------------
Charles E. Rinsch                                 (Principal Executive Officer)

/s/ James B Halliday                               Vice President and Treasurer,
--------------------------------------------
James B Halliday                                  (Principal Accounting Officer)

/s/ George A. Roberts                              Director
------------------------------------------
George A. Roberts

/s/ Michael T. Gray                                Director
--------------------------------------------
Michael T. Gray

/s/ Jerrold V. Jerome                              Director
--------------------------------------------
Jerrold V. Jerome

/s/ Fayez S. Sarofim                               Director
------------------------------------
Fayez S. Sarofim

/s/ Mark B. Watson, III                            Director
------------------------------------
Mark B. Watson, III


                                       4

                                       6
<PAGE>



                                            LIST OF EXHIBITS



       -------------------------- ---------------------------------------------
                EXHIBIT
                NUMBER                                         DESCRIPTION
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                   5              Legal Opinion of Irell & Manella LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.1             Consent of Independent Auditors - Arthur
                                  Andersen LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.2             Consent of Irell & Manella LLP (included in
                                  legal opinion filed as Exhibit 5)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                  24              Power of Attorney (included on the signature
                                  pages filed herewith)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 99.1             Argonaut Group, Inc. Amended and Restated
                                  Stock Option Plan(1)
       -------------------------- ---------------------------------------------

         (1) Filed herewith




                                       7
<PAGE>



                                                 EXHIBIT 5


                                   LEGAL OPINION OF IRELL & MANELLA LLP
                                   [LETTERHEAD OF IRELL & MANELLA LLP]
                                              August 26, 1999




Argonaut Group, Inc.
1800 Avenue of the Stars Suite 1175
Los Angeles, California 90067


Ladies and Gentlemen:
         We  have  acted  as  counsel  for  Argonaut  Group,   Inc.  a  Delaware
corporation  (the  "Company"),  in connection  with the proposed filing with the
Securities  and Exchange  Commission  expected to be made on or about August 27,
1999 under the Securities Act of 1933, as amended,  of a Registration  Statement
on Form  S-8 (the  "Registration  Statement")  for the  purpose  of  registering
500,000  shares of the Company's  Common  Stock,  par value $0.10 per share (the
"Shares").

         As your counsel in connection with this  transaction,  we have examined
such matters and  documents  as we have deemed  necessary or relevant as a basis
for this opinion.

         Based on these  examinations,  it is our opinion that the Shares,  when
issued and paid for in the manner  referred  to in the  Registration  Statement,
will be legally and validly issued, fully-paid and non-assessable.

         We consent to the use of this opinion as an exhibit to the Registration
Statement.

                                                 Very Truly Yours,

                                                 /s/ Irell & Manella LLP
                                                 Irell & Manella LLP



                                       8
<PAGE>


                                            EXHIBIT 23.1




CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent  public  accountants,  we hereby consent to the  incorporation by
reference in this registration statement on Form S-8 of our report dated January
7, 1999,  incorporated by reference in Argonaut Group,  Inc.'s Form 10-K for the
year ended December 31, 1998, and to all references to our firm included in this
registration statement.


 /s/ Arthur Andersen
San Francisco, California
August 25, 1999





                                       9
<PAGE>



                              EXHIBIT 99.1


                            ARGONAUT GROUP, INC.
                     AMENDED AND RESTATED STOCK OPTION PLAN
                    (as amended and restated March 16, 1999)


1.       Purpose.

         The purpose of this amended and restated Stock Option 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.  The Plan
will  provide a means  whereby (i) 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"),  (ii) such employees or other persons may purchase shares of the Common
Stock of the  Company  pursuant  to  "non-incentive"  or  "non-qualified"  stock
options  and (iii) 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.

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", 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").  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, (iv) to determine the individuals to whom and
the time or times at which options  shall be granted,  whether such 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  option,  the  option  price,  the  number of
installments, if any, in which each option may be exercised, and the duration of
each  option,  (v) 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.

                                       10
<PAGE>

3.       Shares Subject to the Plan.

         Subject to adjustment as provided in paragraph 16 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 (including any options  granted  pursuant
to the Company's 1986 Stock Option Plan prior to its amendment and  restatement)
shall not exceed Two Million five hundred  thousand  (2,500,000) of such shares.
If any option granted under the Plan (including any options granted  pursuant to
the Company's  1986 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, the unpurchased  shares subject
thereto shall again be available for options 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,  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  an  option  may,  if such
individual is otherwise eligible,  be granted an additional option or options 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 options  granted  under the Plan shall be granted  within ten years
from March 16, 2009.

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.

                                       11
<PAGE>

6.       Purchase Price.

         The  purchase  price  of 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.  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,  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:

(1) 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);

(2) 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  therefor  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

(3) 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.

                                       12
<PAGE>

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 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,  or (iii) the
exercise of a stock appreciation  right, 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
or (b) 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 cash amounts.

11.      Nontransferability.

         An option (and any accompanying  appreciation  right) 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 (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.      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 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 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
<PAGE>

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 13, 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 of Option Holder.

         If the holder of an incentive stock option dies or becomes  permanently
and  totally  disabled  (as  defined in  paragraph  13) 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 will have the effect specified in the individual
option 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
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  until  certificates
representing  such shares shall have been issued and delivered.  No shares shall
be issued and delivered  upon the exercise of any option or  accompanying  stock
appreciation  rights 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.

                                       14
<PAGE>

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  options  may be granted
under this  Plan.  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 and stock appreciation rights 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 and
any  accompanying  stock  appreciation  rights  theretofore  granted  to  become
immediately exercisable  notwithstanding the provisions of paragraph 7; (ii) for
the   assumption  by  the  successor   corporation  of  the  options  and  stock
appreciation  rights theretofore granted or the substitution by such corporation
for such options and rights of new options and rights  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  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
options 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
option 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  option)  of  the  Company,   any  outstanding   options  and
accompanying  stock  appreciation  rights  not  theretofore   exercisable  shall
immediately  become  exercisable in their entirety,  notwithstanding  any of the
other provisions of the option.

                                       15
<PAGE>

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 sold  pursuant  to  options  granted  under  the  Plan,  except as
permitted  under the provisions of paragraph 16, or change the minimum  purchase
price of  incentive  stock  options set forth in  paragraph  6, or increase  the
maximum term of incentive  stock options  provided for in paragraph 5, or permit
the  granting of options or stock  appreciation  rights to anyone  other than as
provided in paragraph 6.

         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 option holder, in any
way modify, amend, alter or impair any rights or obligations under any option 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 options granted under the Plan
prior to  obtaining  such  stockholder  approval  shall  be  granted  under  the
conditions  that the options so granted:  (1) shall not be exercisable  prior to
such approval,  and (2) shall become null and void if such stockholder  approval
is not obtained.

         No options or stock  appreciation  rights may be granted under the Plan
unless  and  until (i) the  options,  rights  and  underlying  shares  have been
qualified with the California  Corporation  Commissioner or (ii) the Company has
been  advised by counsel  that such  options,  rights and shares are exempt from
such qualification.


                                       16
<PAGE>
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{"company-data": {"conformed-name": "ARGONAUT GROUP INC", "cik": "0000800082", "assigned-sic": "6331", "irs-number": "954057601", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-86101", "film-number": "99701786"}, "business-address": {"street1": "1800 AVE OF THE STARS STE 1175", "city": "LOS ANGELES", "state": "CA", "zip": "90067", "phone": "3105530561"}, "mail-address": {"street1": "250 MIDDLEFIELD ROAD", "city": "MENCO PARK", "state": "CA", "zip": "94025"}}
- 1 -

                                                               FORM S-8

           Filed With the Securities and Exchange Commission on August 27, 1999
                                         Registration No. _____________

                                       UNITED STATES
                             SECURITIES AND EXCHANGE COMMISSION
                                    Washington, D.C. 20549
                                          FORM S-8
                                REGISTRATION STATEMENT UNDER
                                  THE SECURITIES ACT OF 1933

                                    ARGONAUT GROUP, INC.
                      (Exact name of issuer as specified in its charter)
                                     DELAWARE 95-4057601
                       (State of other jurisdiction of (I.R.S. Employer
                       incorporation or organization) Identification No.)

                         1800 AVENUE OF THE STARS,  SUITE 1175,
                               LOS ANGELES,    CA   90067
              (Address   of Principal   Executive   Offices)  (Zip Code)

                                       1
- 2 -

                                   ARGONAUT GROUP, INC.
                          AMENDED AND RESTATED STOCK OPTION PLAN
                                 (Full title of the Plan)

JAMES B HALLIDAY                             Copies to:
Vice President and Treasurer                 Edmund M. Kaufman, Esq.
Argonaut Group, Inc.                         Richard C. Wirthlin, Esq.
1800 Avenue of the Stars, Suite 1175         Irell & Manella LLP
Los Angeles, California  90067               1800 Avenue of the Stars, Ste. 900
Telephone:  (310) 553-0561                   Los Angeles, California  90067
(Name and address of agent for service)      Telephone:  (310) 277-1010
CALCULATION OF REGISTRATION FEE

                                                    Proposed Maximum        Proposed Maximum         Amount of
 Title of Securities   to       Amount to be         Offering Price         Aggregate Offering      Registration
      be Registered              Registered           per Share1               Price                 Fee
      ---------------         ----------------    -------------- ---           -----                ----------
Common Stock Issuable upon     500,000 shares           $23.938              $11,969,000           $3,327.38
exercise of options and/or
stock appreciation rights
1  Estimated  solely  for  the purpose  of  calculating   the registration  fee.
   The fee has been  calculated  pursuant  to Rule  457 (g)  based  upon the
   closing price per share of the Registrants'  Common  Stock on the  NASDAQ
   National  Market system on August 20, 1999, a date within 15 days prior to
   the date of filing of this Registration Statement.

                                       2
EXPLANATORY NOTE

                  Argonaut  Group,  Inc. (the  "Company")  filed  registration
statements  on Form S-8 on February 13, 1987 (Reg.  No.33-12034) and on December
 9, 1997 (Reg. No. 333-10712)  (collectively,  the "Previous  Registrations")
relating to the registration of shares of common stock, $0.10 par value
("Common Stock"), of the Company.

                  Pursuant  to  General   Instruction   E  of  Form  S-8,   this
Registration  Statement on Form S-8 (the "Registration  Statement") registers an
additional  500,000  shares of the Company's  Common Stock which may be acquired
upon the exercise of stock options granted to employees of the Company.

                  The  Previous   Registrations   are  hereby   incorporated  by
reference pursuant to General Instruction E to Form S-8.

                                       3
II-12

                                         II-1

                        PART II

                     Item 8. EXHIBITS.

       -------------------------- ---------------------------------------------
                EXHIBIT
                NUMBER                                         DESCRIPTION
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                   5              Legal Opinion of Irell & Manella LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.1             Consent of Independent Auditors - Arthur
                                  Andersen LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.2             Consent of Irell & Manella LLP (included in
                                  legal opinion filed as Exhibit 5)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                  24              Power of Attorney (included on the signature
                                  pages filed herewith)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 99.1             Argonaut Group, Inc. Amended and Restated
                                  Stock Option Plan(1)
       -------------------------- ---------------------------------------------

         (1) Filed herewith

                                                              SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its be  half  by the  undersigned,  thereunto  duly
authorized, in the City of Los Angeles, State of California, on August 25, 1999.

                                                     ARGONAUT GROUP, INC.

                                                    By  /s/ Charles E. Rinsch
                                                     Charles E. Rinsch
                                                     President and Director
                                                   (Principal Executive Officer)

                                       5
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

                  That the undersigned officers and directors of Argonaut Group,
Inc., a Delaware corporation, do hereby constitute and appoint Charles E. Rinsch
and James B Halliday,  and each of them, the lawful  attorney-in-fact and agent,
with full power and  authority  to do any and all acts and things and to execute
any and all instruments which said attorney and agent determines to be necessary
or  advisable  or  required  to  enable  said  corporation  to  comply  with the
Securities Act of 1933, as amended,  and any rules or regulation or requirements
of the  Commission  in  connection  with this  Registration  Statement.  Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and  authority to sign the names of the  undersigned  officers
and directors in the capacities indicated below to this Registration  Statement,
to  any  and  all  amendments,   both  pre-effective  and  post-effective,   and
supplements  to this  Registration  Statement and to any and all  instruments or
documents filed as part of or in connection with this Registration  Statement or
amendments or supplements  thereof,  and each of the undersigned hereby ratifies
and  confirms  all that said  attorney and agent shall do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.

                  IN WITNESS WHEREOF,  each of the undersigned has executed this
Power of Attorney as of August 25, 1999.

                  Pursuant to the  requirements  of the  Securities Act of 1933,
this  registration  statement has been signed by the following persons on August
25, 1999 in the capacities indicated.

SIGNATURE                                                 TITLE
---------                                                 -----
/s/ Charles E. Rinsch                              President and Director
------------------------------------------
Charles E. Rinsch                                 (Principal Executive Officer)

/s/ James B Halliday                               Vice President and Treasurer,
--------------------------------------------
James B Halliday                                  (Principal Accounting Officer)

/s/ George A. Roberts                              Director
------------------------------------------
George A. Roberts

/s/ Michael T. Gray                                Director
--------------------------------------------
Michael T. Gray

/s/ Jerrold V. Jerome                              Director
--------------------------------------------
Jerrold V. Jerome

/s/ Fayez S. Sarofim                               Director
------------------------------------
Fayez S. Sarofim

/s/ Mark B. Watson, III                            Director
------------------------------------
Mark B. Watson, III

                                       4

                                       6
LIST OF EXHIBITS

       -------------------------- ---------------------------------------------
                EXHIBIT
                NUMBER                                         DESCRIPTION
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                   5              Legal Opinion of Irell & Manella LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.1             Consent of Independent Auditors - Arthur
                                  Andersen LLP(1)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 23.2             Consent of Irell & Manella LLP (included in
                                  legal opinion filed as Exhibit 5)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                  24              Power of Attorney (included on the signature
                                  pages filed herewith)
       -------------------------- ---------------------------------------------
       -------------------------- ---------------------------------------------
                 99.1             Argonaut Group, Inc. Amended and Restated
                                  Stock Option Plan(1)
       -------------------------- ---------------------------------------------

         (1) Filed herewith

                                       7
EXHIBIT 5

                                   LEGAL OPINION OF IRELL & MANELLA LLP
                                   [LETTERHEAD OF IRELL & MANELLA LLP]
                                              August 26, 1999

Argonaut Group, Inc.
1800 Avenue of the Stars Suite 1175
Los Angeles, California 90067

Ladies and Gentlemen:
         We  have  acted  as  counsel  for  Argonaut  Group,   Inc.  a  Delaware
corporation  (the  "Company"),  in connection  with the proposed filing with the
Securities  and Exchange  Commission  expected to be made on or about August 27,
1999 under the Securities Act of 1933, as amended,  of a Registration  Statement
on Form  S-8 (the  "Registration  Statement")  for the  purpose  of  registering
500,000  shares of the Company's  Common  Stock,  par value $0.10 per share (the
"Shares").

         As your counsel in connection with this  transaction,  we have examined
such matters and  documents  as we have deemed  necessary or relevant as a basis
for this opinion.

         Based on these  examinations,  it is our opinion that the Shares,  when
issued and paid for in the manner  referred  to in the  Registration  Statement,
will be legally and validly issued, fully-paid and non-assessable.

         We consent to the use of this opinion as an exhibit to the Registration
Statement.

                                                 Very Truly Yours,

                                                 /s/ Irell & Manella LLP
                                                 Irell & Manella LLP

                                       8
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent  public  accountants,  we hereby consent to the  incorporation by
reference in this registration statement on Form S-8 of our report dated January
7, 1999,  incorporated by reference in Argonaut Group,  Inc.'s Form 10-K for the
year ended December 31, 1998, and to all references to our firm included in this
registration statement.

 /s/ Arthur Andersen
San Francisco, California
August 25, 1999

                                       9
EXHIBIT 99.1

                            ARGONAUT GROUP, INC.
                     AMENDED AND RESTATED STOCK OPTION PLAN
                    (as amended and restated March 16, 1999)

1.       Purpose.

         The purpose of this amended and restated Stock Option 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.  The Plan
will  provide a means  whereby (i) 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"),  (ii) such employees or other persons may purchase shares of the Common
Stock of the  Company  pursuant  to  "non-incentive"  or  "non-qualified"  stock
options  and (iii) 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.

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", 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").  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, (iv) to determine the individuals to whom and
the time or times at which options  shall be granted,  whether such 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  option,  the  option  price,  the  number of
installments, if any, in which each option may be exercised, and the duration of
each  option,  (v) 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.

                                       10
3.       Shares Subject to the Plan.

         Subject to adjustment as provided in paragraph 16 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 (including any options  granted  pursuant
to the Company's 1986 Stock Option Plan prior to its amendment and  restatement)
shall not exceed Two Million five hundred  thousand  (2,500,000) of such shares.
If any option granted under the Plan (including any options granted  pursuant to
the Company's  1986 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, the unpurchased  shares subject
thereto shall again be available for options 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,  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  an  option  may,  if such
individual is otherwise eligible,  be granted an additional option or options 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 options  granted  under the Plan shall be granted  within ten years
from March 16, 2009.

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.

                                       11
6.       Purchase Price.

         The  purchase  price  of 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.  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,  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:

(1) 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);

(2) 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  therefor  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

(3) 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.

                                       12
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 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,  or (iii) the
exercise of a stock appreciation  right, 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
or (b) 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 cash amounts.

11.      Nontransferability.

         An option (and any accompanying  appreciation  right) 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 (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.      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 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 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.

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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 13, 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 of Option Holder.

         If the holder of an incentive stock option dies or becomes  permanently
and  totally  disabled  (as  defined in  paragraph  13) 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 will have the effect specified in the individual
option 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
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  until  certificates
representing  such shares shall have been issued and delivered.  No shares shall
be issued and delivered  upon the exercise of any option or  accompanying  stock
appreciation  rights 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.

                                       14
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  options  may be granted
under this  Plan.  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 and stock appreciation rights 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 and
any  accompanying  stock  appreciation  rights  theretofore  granted  to  become
immediately exercisable  notwithstanding the provisions of paragraph 7; (ii) for
the   assumption  by  the  successor   corporation  of  the  options  and  stock
appreciation  rights theretofore granted or the substitution by such corporation
for such options and rights of new options and rights  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  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
options 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
option 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  option)  of  the  Company,   any  outstanding   options  and
accompanying  stock  appreciation  rights  not  theretofore   exercisable  shall
immediately  become  exercisable in their entirety,  notwithstanding  any of the
other provisions of the option.

                                       15
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 sold  pursuant  to  options  granted  under  the  Plan,  except as
permitted  under the provisions of paragraph 16, or change the minimum  purchase
price of  incentive  stock  options set forth in  paragraph  6, or increase  the
maximum term of incentive  stock options  provided for in paragraph 5, or permit
the  granting of options or stock  appreciation  rights to anyone  other than as
provided in paragraph 6.

         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 option holder, in any
way modify, amend, alter or impair any rights or obligations under any option 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 options granted under the Plan
prior to  obtaining  such  stockholder  approval  shall  be  granted  under  the
conditions  that the options so granted:  (1) shall not be exercisable  prior to
such approval,  and (2) shall become null and void if such stockholder  approval
is not obtained.

         No options or stock  appreciation  rights may be granted under the Plan
unless  and  until (i) the  options,  rights  and  underlying  shares  have been
qualified with the California  Corporation  Commissioner or (ii) the Company has
been  advised by counsel  that such  options,  rights and shares are exempt from
such qualification.

                                       16