PAULSON CAPITAL CORPORATION
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of this 1999 Stock Option Plan (the "Plan") is to enable Paulson Capital
Corporation (the "Company") to attract and retain the services of selected employees, officers, and directors of
the Company and of any subsidiary thereof, and to provide added incentive to such persons by increasing their
ownership interests in the Company.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below and in paragraph 7, the
shares to be offered under the Plan shall consist of Common Stock of the Company, and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed 500,000 shares. The shares issued
under the Plan may be authorized and unissued shares or reacquired shares. If an option granted under the Plan
expires, terminates or is canceled, the unissued shares subject to such option shall again be available under the
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by the Board of Directors; provided,
however, that prior to shareholder approval of the Plan, any awards shall be subject to and conditioned on
approval of the Plan by a majority of the votes cast at a shareholders' meeting at which a quorum is present.
Options may be granted under the Plan at any time after the effective date and before termination of the Plan.
(b) DURATION. The Plan shall continue in effect until all shares available for issuance under the Plan have been
issued and all restrictions on such shares have lapsed. The Board of Directors may suspend or terminate the Plan
at any time except with respect to options then outstanding under the Plan.
4. ADMINISTRATION. The Plan shall be administered by a committee of the Board of Directors of the
Company (the "Committee"), which shall determine and designate from time to time the persons to whom awards
shall be made and the amount and other terms and conditions of the awards. Subj