Document:

STONEWOOD INSURANCE MANAGEMENT, INC.

                           EMPLOYMENT AND ARBITRATION
                                    AGREEMENT

     THIS AGREEMENT dated and effective as of October 1, 2003, between Stonewood
Insurance Management, Inc., a Delaware corporation (the "Company") and Charles
Kenneth Mitchell ("Executive").

                                   WITNESSETH:

     WHEREAS, the Company is in the business of underwriting workers'
compensation insurance for individuals and business entities in the residential
home-building and construction industry;

     WHEREAS, in order to develop and grow its business, the Company has offered
to employ the Executive as President and Chief Executive Officer effective as of
0k. It 9063 ("Effective Date") and the Executive has agreed to be so employed;
and

     WHEREAS, the parties desire to set forth the terms of such employment in
this Employment and Arbitration Agreement ("Agreement");

     NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties agree as
follows.

     1. EMPLOYMENT AND TERM. The Company hereby employs Executive as President
and Chief Executive Officer, and Executive hereby accepts such employment on the
terms set forth in this Agreement. The term of this Agreement shall commence as
of the Effective Date and shall continue until the third anniversary of the
Effective Date. The term of this Agreement shall thereafter be automatically be
renewed for additional three (3) year periods unless written notice to the
contrary shall be given by either party to the other not less than one hundred
eighty (180) days prior to the end of the initial or any renewal term that the
term shall not thereafter be renewed. The initial term plus any renewals thereof
shall hereafter be referred to as the "Term

     2. COMPENSATION AND BENEFITS. Executive shall be paid, as a "Base Salary,"
not less than Three Hundred-Forty Thousand ($340,000) per year, payable in
periodic installments in accordance with the Company's regular payroll
practices. Executive shall be eligible to receive such discretionary bonuses as
the Board of Directors of the Company ("Board"), in its discretion, may
determine. Within one hundred eighty (180) days after the close of each fiscal
year of the Company during the Term, the Board shall review Executive's
performance during such fiscal year and decide whether to increase Executive's
Base Salary and award any discretionary bonus to Executive. Executive

shall also be entitled, during the Term to participate in all retirement,
disability, pension, savings, health, medical, dental, insurance and other
fringe benefits or plans of the Company generally available to executive
employees, including specifically the following at the Company's expense:

          (a) six (6) weeks of paid vacation per annum (not subject to
rollover);

          (b) coverage under the Company's current health care insurance plans,
including coverage for Executive's dependents, on the same terms and conditions,
including any required payment of premiums or other costs by Executive, as are
applicable to other executive employees; and,

          (c) coverage under the Company's group term life and accidental death
and dismemberment and long term disability coverage, all on the same terms and
conditions, including any required payment of premiums or other costs by
Executive, as are applicable to other executive employees.

     3. DUTIES. Executive shall perform all duties and responsibilities normally
associated with the position of President and CEO, and such other reasonable
duties as may be assigned to him by the Company. Executive will devote his
entire working time, attention and energies to carry out and fulfill his duties
and responsibilities under this Agreement. Executive shall not engage in any
employment or consulting for any business entity other than the Company without
permission.

     4. CONFIDENTIAL INFORMATION. Executive will not at any time during the term
of this Agreement or thereafter reveal, divulge or make known to any person,
firm or corporation or use for his personal benefit or the benefit of others
(except the Company), directly or indirectly, any Confidential Information
received or developed by him during the course of his employment. For the
purposes of this Agreement, "Confidential Information" shall be defined to mean
to all confidential and proprietary information and trade secrets of the Company
and any of its parent, holding, sister, subsidiary or other affiliated companies
for which Executive had managerial responsibility (hereinafter referred to
collectively as "Affiliates"), which is not known or generally available to the
general public or within the industry. Such Confidential Information includes,
but is not limited to, (1) all historical and pro forma projections of loss
ratios incurred by the Company or its Affiliates, (2) all historical and pro
forma actuarial data relating to the Company or its Affiliates, (3) historical
and pro forma financial results, revenue statements, and projections for the
Company or its Affiliates, (4) all information relating to the Company's or its
Affiliates' systems and software (other than the portion thereof provided by the
vendor to all purchasers of such systems and software), (5) all information
relating to the Company's or its Affiliates unique underwriting approaches, (6)
all information relating to plans for acquisitions of any business entities or
blocks of business, (7) non-public business plans, (8) non-public information
and lists relating to the Company's or its Affiliates' business relationships
with customers, insurance agents, insurance agencies, wholesale brokers,
wholesale agents, managing general agents, or other individuals or entities
necessary to the sale or marketing of the Company's or

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Affiliates' policies, products, or services; and (9) all other information
relating to the financial, business or other affairs of the Company or its
Affiliates.

     5. COVENANTS OF NON-COMPETITION AND NON-SOLICITATION. Executive
acknowledges and agrees that as the Company's President and Chief Executive
Officer he is responsible for and directly involved in developing goodwill and
business relationships for the benefit of the Company, he is responsible for the
operation and development of the Company's business in each and every location
in the United States where the Company engages in business or which has been
targeted by the Company, he has knowledge of the Company's most proprietary and
valuable Confidential information, and has been and will be compensated for the
development, and supervising the development, of the same, and that he has
unique insight into and knowledge of the skills, talents and capabilities of the
Company's key employees. Executive further acknowledges and agrees that the
restrictions contained in Sections 4 and 5 are reasonable and necessary to
protect the legitimate business interests of the Company, in view of, among
other things, the short duration of the restrictions, the narrow scope of the
restrictions, and the Company's interests in protecting its goodwill, valuable
Confidential Information, trade secrets, and its business relationships with
customers, insurance agents, insurance agencies, wholesale brokers, wholesale
agents, managing general agents, or other individuals or entities necessary to
the sale or marketing of the Company's or its Affiliates' policies, products, or
services. Executive agrees that his background and capabilities will allow him
to seek and accept employment acceptable to him without violation of the
restrictions contained in this Agreement. Executive also acknowledges and agrees
that at the inception of his employment with the Company it was agreed that he
would be bound by non-competition and non-solicitation restrictions, that such
restrictions were a condition of employment, and that this Agreement
memorializes those restrictions. Executive further acknowledges and agrees that
his employment with the Company constitutes sufficient consideration for his
agreement to the non-competition and non-solicitation restrictions set forth in
this Agreement.

          (a) Executive covenants and agrees that during his employment by the
Company, and for the period of one (1) year after his employment with the
Company ceases for any reason (the "Restricted Period"), that

               (1) he will not engage in, assist any other person or entity to
engage in, have an ownership interest in, or be employed by any Competitive
Business in the Territory (as those terms are defined herein);

               (2) he will not perform or provide any services for or on behalf
of any competitor of the Company that are the same or similar in character to
the services performed or provided by Executive in the two year period preceding
Executive's termination of employment with the Company;

               (3) he will not, either individually or through any other person
or entity, induce, advise, request, or solicit any customers, insurance agents,
insurance agencies, wholesale brokers, wholesale agents, managing general
agents, or other individuals or entities necessary to the sale or marketing of
the Company's or Affiliates'

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policies, products, or services, to take any action detrimental to the business
relationships between the Company and that individual or entity. This
restriction shall apply only to those customers, insurance agents, insurance
agencies, wholesale brokers, wholesale agents, managing general agents, or other
individuals or entities necessary to the sale or marketing of the Company's or
Affiliates' policies, products, or services with whom the Company had a business
relationship in the two-year period preceding Executive's termination of
employment with the Company;

               (4) he will not, either individually or through any other person
or entity, induce, advise, request, or solicit any Key Employees (as defined
below) to either leave the Company or to engage in a Competitive Business.

          (b) For purposes of this Agreement, the following terms shall have the
meanings set forth below:

               (1) "Competitive Business" shall mean the business of
underwriting workers' compensation insurance for individuals and business
entities in the residential home-building and construction industry; any other
material business that the Company or any of its Affiliates is engaged in as of
the date of this Agreement and as the business of the Company and its Affiliates
evolves during the Executive's employment; and any business of the Company and
its Affiliates which Executive managed, controlled, or developed during the two
year period preceding Executive's termination of employment with the Company.

               (2) "Territory" shall mean

                    (i) each and every state or other geographical subdivision
               where the Company underwrites insurance , or where the Company is
               in the process of seeking to be licensed or authorized to do
               business at the time of Executive's termination of employment;

                    (ii) each and every county in which the Company maintained
               an office or had business relationships with customers, insurance
               agents, insurance agencies, wholesale brokers, wholesale agents,
               managing general agents, or other individuals or entities
               necessary to the sale or marketing of the Company's or
               Affiliates' policies, products, or services during the two year
               period preceding Executive's termination of employment with the
               Company;

                    (iii) each and every county which was assigned to
               Executive's management or control during the two year period
               preceding Executive's termination of employment with the Company,

                    (iv) each and every county in which Executive conducted,
               managed, controlled, or developed Company business during the

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               two year period preceding Executive's termination of employment
               with the Company, whether or not such location was formally
               assigned to Executive.

               (3) "Key Employees" shall mean any officer, executive,
managerial, sales, marketing, underwriting, claims, finance, actuarial, or
supervisory employee of the Company or its Affiliates under Executive's
management authority during the two year period preceding Executive's
termination of employment with the Company.

          (c) The restrictions contained in this Section shall not prevent the
purchase of ownership by Executive of not more than three percent (3%) of the
securities of any class of any corporation, whether or not such corporation is
engaged in any Competitive Business, which are publicly traded on any securities
exchange or any "over the counter" market.

     6. TERMINATION. Executive's employment hereunder shall terminate under the
following circumstances:

          (a) Termination for Cause. The Company may terminate the employment of
Executive for cause at any time upon written notice to Executive specifying the
cause of the termination. For the purposes of this Section, "for cause" shall
include only discharge resulting from a determination by the Company that: (i)
Executive has willfully violated Section 4 or 5 of this Agreement; (ii)
Executive has grossly neglected his duties hereunder, (iii) Executive has been
convicted of a felony or a crime involving moral turpitude (meaning a crime that
includes the commission of an act of depravity, dishonesty or bad morals); or
(iv) Executive has committed an act of dishonesty, fraud or embezzlement against
the Company.

          In the event that the Company provides written notice of termination
for cause, Executive shall first be entitled to cure any violation of Section 4
or 5 of this Agreement or any alleged neglect of his duties within thirty (30)
days of receiving written notice from the Company specifying in detail the
factual basis for its belief that Executive willfully violated Section 4 or 5 of
this Agreement or grossly neglected his duties hereunder. Following expiration
of the opportunity to cure, the Company will provide Executive with the
opportunity to meet with the Board of Directors to address the allegations and
may be represented by counsel at this meeting. Following the completion of
Executive's presentation, the Board of Directors will take another vote
concerning termination and promptly notify Executive of its decision. If
Executive is terminated for cause, Executive's salary and right to receive
fringe benefits shall terminate on the date of the final vote by the Board of
Directors to terminate Executive.

          (b) Termination for Performance. The Company expects Executive to
deliver financial results for the Company that are equal to or greater than its
peers. The Company may at its discretion terminate Executive for performance if
the Company's operating results as measured by either revenue or earning, are
fifty percent (50%) or less than the Company's approved budget targets.

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          (c) Expiration or Termination Without Cause. The Company may terminate
this Agreement at any time without cause or may elect to have the Term of this
agreement expire.

          (d) Termination by Executive; Resignation.

               (1) Executive may, at his option, terminate this Agreement for
Good Reason. "Good Reason" shall mean the occurrence of any one or more of the
following events:

                    (i) The assignment to the Executive of any duties
               inconsistent in any material adverse respect with his position,
               authority or responsibilities, or any other material adverse
               change in such position, including titles, authority, or
               responsibilities;

                    (ii) The failure by the Company to continue to provide the
               Executive with substantially similar perquisites or benefits
               under the Company's benefit programs; provided, that any
               amendment, modification or discontinuation of any plans or
               benefits that generally affect substantially all domestic
               salaried employees of the Company shall not be deemed to
               constitute Good Reason;

                    (iii) The Company's requiring the Executive to be based at
               any office or location more than 35 miles from the location at
               which he performs his services as of the Effective Date; or

                    (iv) Any breach by the Company of any of the provisions of
               this Agreement or any failure by the Company to carry out any of
               its obligations hereunder, in either case, for a period of thirty
               (30) days after receipt of written notice from the Executive and
               the failure by the Company to cure such breach or failure during
               such thirty (30) day period.

               (2) At any time upon sixty (60) days notice to the Company, the
Executive may resign his employment. However, nothing in this paragraph shall be
construed to alter or affect the Executive's obligations or the time period set
forth in Section 1 with respect to renewal of the Term of this Agreement.

          (e) Termination due to Disability. The Company may terminate
Executive's employment if he is prevented from performing his responsibilities
under this Agreement due to Disability. For the purposes of this Agreement,
"Disability" is defined as Executive's inability to perform his duties by reason
of any incapacity, physical or mental, for a period of more than ninety (90)
days, whether or not consecutive, during any twelve (12) month period.

     7. COMPENSATION AND BENEFITS UPON TERMINATION.

                                        6

          (a) In the event that the Company terminates this Agreement without
cause or elects to have the Term of this Agreement expire, or if Executive
terminates this Agreement for Good Reason, Executive is entitled to receive:

               (1) severance pay in an amount equal to Executive's Base Salary
for a period of eighteen (18) months after the termination date which shall be
paid in accordance with the terms of Section 2 hereof;

               (2) the continuation at the Company's expense of coverage under
all plans, insurance policies and other fringe benefits described in Section 2
hereof, for a period of eighteen (18) months after the termination date;

               (3) any discretionary bonus to which Executive is entitled on the
Executive's last day of employment; and

               (4) any unused vacation and any non reimbursed reasonable
business expenses.

          (b) If Executive is terminated for cause, or the Executive resigns
without Good Reason or elects to have the Term of this Agreement expire, the
Company shall have no further obligations to Executive, except as provided in
any stock option or other bonus or incentive plan to which Executive is
entitled, and Executive shall have no further rights hereunder.

          (c) If Executive is terminated for business performance, Executive is
entitled to receive:

               (1) severance pay in an amount equal to Executive's Base Salary
for twelve (12) months after the termination date which shall be paid in
accordance with the terms of Section 2 hereof;

               (2) the continuation at the Company's expense of coverage under
all plans, insurance policies and other fringe benefits described in Section 2
hereof, for a period of twelve (12) months after the termination date;

               (3) any discretionary bonus to which Executive is entitled on the
Executive's last day of employment; and

               (4) any unused vacation and any non reimbursed reasonable
business expenses.

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          (d) If Executive is terminated due to Disability, Executive is
entitled to receive:

               (1) severance pay in an amount equal to Executive's Base Salary
for twelve (12) months after the termination date which shall be paid in
accordance with the terms of Section 2 hereof;

               (2) the continuation at the Company's expense of coverage under
all health care insurance plans as provided in Section 2(b) hereof, for a period
of twelve (12) months after the termination date.

          (e) The payment of severance pay is expressly conditioned upon
Executive's execution of a Severance and Release Agreement by which Executive
releases any and all legal claims Executive may have against the Company arising
out of or relating to employment with the Company. All compensation and benefits
made pursuant to this Section shall cease if Executive violates any of the terms
of Sections 4 or 5 during the twelve (12) months following his last day of
employment. In addition to this remedy, the Company shall have all other
remedies provided by this Agreement and by law for the breach of Section 4 or
Section 5 hereof.

     8. UNIQUENESS OF SERVICES, REMEDIES. Executive acknowledges that the
services to be rendered under the provisions of this Agreement are of a special,
unique and extraordinary character, involve access to and development of
valuable Confidential, Information and trade secrets, and involve developing and
protecting the Company's goodwill and business relationships with customers,
insurance agents, insurance agencies, wholesale brokers, wholesale agents,
managing general agents, or other individuals or entities necessary to the sale
or marketing of the Company's or Affiliates' policies, products, or services.
Executive acknowledges and agrees that it would be difficult or impossible to
replace such unique services, and that the breach of any provision of this
Agreement might cause the Company irreparable injury and damage, and
consequently the Company shall be entitled, in addition to all other remedies
available to it, to injunctive and equitable relief issued by a tribunal of
competent jurisdiction to prevent a breach of this Agreement, or any part of it,
and to secure the enforcement of this Agreement, without restricting the Company
from other legal and equitable remedies. The parties agree that, in addition to
any equitable relief or compensatory damages, the tribunal may award reasonable
attorneys' fees to the party that brings an action to enforce the terms of this
Agreement if that party prevails in the enforcement action.

     9. WARRANTIES. Executive represents to the Company, which is relying on
this representation, that he is free to enter into this Agreement, and that
Executive is not under any restrictions from a former employer or business which
would preclude Executive from making this Agreement or which would in any way
interfere with or be inconsistent with Executive's obligations to the Company
under this Agreement. Executive understands that the Company does not want
Executive to disclose to the Company any confidential information that Executive
may have obtained from a former employer, although Executive is free to use his
general knowledge and past experience in the performance of Executive's
obligations under this Agreement. If any restrictions exist,

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Executive will discuss such restrictions with the Company and provide all
relevant documents and other information related to these restrictions to the
Company.

     10. NOTICES. Any notices provided for or permitted by this Agreement shall
be in writing and shall be deemed to have been duly given when delivered in
person or three (3) days after it is deposited in a United States Postal
Depository, postage prepaid, registered or certified mail, return receipt
requested, addressed to the party at the address set forth below, or to such
address as a party may designate upon notice in writing:

     To Executive: C. Kenneth Mitchell
                   9700 Koupela Dr.
                   Raleigh, NC 27614

     To Company:   J. Adam Abram
                   Chairman, Stonewood Management Company, Inc.
                   1414 Raleigh Road, Suite 415
                   Chapel Hill, NC 27517

     11. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between Executive and the Company, and this
Agreement shall supersede any all other prior agreements and understandings,
whether oral or written, relating to the employment of Executive by the Company.
This Agreement may not be rescinded, modified or amended except by an instrument
in writing signed both parties.

     12. PARTIAL INVALIDITY. The parties intend and agree that if any clause,
sentence, provision, section, or paragraph of this Agreement shall be held to be
invalid or unenforceable for any reason by a tribunal of competent jurisdiction,
the remaining clauses, sentences, provisions, sections or paragraphs shall
continue to be valid and enforceable. If a tribunal of competent jurisdiction
finds that any part of this Agreement is invalid or unenforceable, but that by
limiting such part it would become valid and enforceable, then both Executive
and the Company intend, agree, and request that such provision be deemed to be
written, intended, construed, and enforced as so limited.

     13. GOVERNING LAW. This Agreement shall be construed and administered in
accordance with the laws of the State of North Carolina, without regard to the
principles of conflicts of law which might otherwise apply.

     14. ASSIGNABILITY. This Agreement may not be assigned by Executive, and all
its terms and conditions shall be binding upon and inure to the benefit of the
Company and its successors. Successors to the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company whether by merger,
consolidation, purchase or otherwise and such successor shall thereafter be
deemed the "Company" for purposes hereof.

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     15. AGREEMENT TO ARBITRATE DISPUTES.

          (a) Arbitration. In the event of disputes between the parties arising
from or related to Executive's employment and/or the terms and conditions of
this Agreement, the parties intend and agree that such disputes shall be
resolved by and through an arbitration proceeding to be conducted under the
rules and auspices of the American Arbitration Association (or any like
organization successor thereto); provided, however, that either party may seek
temporary, preliminary and or permanent injunctive relief with respect to
appropriate matters (including without limitation enforcement of Sections 4 and
5 of this Agreement) in a court of competent jurisdiction without resort to
arbitration. Such arbitration proceeding shall be conducted pursuant to the
commercial arbitration rules (formal or informal) of the American Arbitration
Association as then in effect and in as expedited a manner as is then permitted
by such rules (the "Arbitration"). Both the foregoing agreement of the parties
to arbitrate any and all such claims, and the results, determination, finding,
judgment and/or award rendered through such Arbitration, shall be final and
binding on the parties hereto and may be specifically confirmed and enforced by
legal proceedings in a court of competent jurisdiction.

          (b) Procedure. Such Arbitration may be initiated by written notice
from either party to the other which shall be a compulsory and binding
proceeding on each party. The Arbitration shall be conducted by an-arbitrator
selected in accordance with the procedures of the American Arbitration
Association. Time is of the essence of this arbitration procedure, and the
arbitrator shall be instructed and required to render his or her decision within
thirty (30) days following completion of the Arbitration.

          (c) Venue and Jurisdiction. Any arbitration under this Agreement shall
be conducted in Raleigh, North Carolina. Any legal action to compel arbitration
hereunder or otherwise relating to this Agreement shall be brought exclusively
in a state court or federal court of competent jurisdiction located in the
Raleigh, North Carolina.

          (d) Waiver of Jury Trial. IN THE EVENT OF ANY LITIGATION WITH RESPECT
TO ANY MATTER CONNECTED WITH THIS AGREEMENT OR THE AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREUNDER ALL OF THE PARTIES HERETO WAIVE ALL RIGHTS TO A TRIAL BY
JURY.

                                    * * * * *

                                       10

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

          THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

                                            STONEWOOD INSURANCE MANAGEMENT, INC.

                                      By:   /s/ Adam J. Ambram
                                            ------------------------------------

                                            /s/ Charles Kenneth Mitchell
                                            ------------------------------------
                                            Charles Kenneth Mitchell

                                       11EMPLOYMENT AGREEMENT

         THIS AGREEMENT dated and effective as of April 29, 2005 (the "Effective
Date"), between James River Group, Inc., a Delaware corporation ("Company") and
Michael T. Oakes ("Executive").

                                   WITNESSETH:

         WHEREAS, the Board of Directors of the Company desires to continue to
employ the Executive as Chief Financial Officer, and the Executive has agreed to
continue to be so employed; and

         WHEREAS, the parties desire to set forth herein the terms of such
continued employment;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties agree as follows.

         1. EMPLOYMENT AND TERM. The Company hereby employs Executive as Chief
Financial Officer, and Executive hereby accepts such employment on the terms
hereinafter set forth. The term of this Agreement shall commence as of the
Effective Date and shall continue until the third anniversary of the Effective
Date. The term of this Agreement shall thereafter be automatically be renewed
for additional three (3) year periods unless written notice to the contrary
shall be given by either party to the other not less than one hundred eighty
(180) days prior to the end of the initial or any renewal term that the term
shall not thereafter be renewed. The initial term plus any renewals thereof
shall hereafter be referred to as the "Term".

         2. COMPENSATION. Executive shall be paid a base salary of not less than
Two Hundred Eighty-three Thousand dollars ($283,000) per year, payable in
periodic installments in accordance with the Company's regular payroll
practices. Executive shall be eligible to receive such discretionary bonuses as
the Board of Directors of the Company ("Board"), in its discretion, may
determine. Within one hundred eighty (180) days after the close of each fiscal
year of the Company during the Term, the Board shall review Executive's
performance during such fiscal year and decide whether to increase Executive's
base salary and award any discretionary bonus to Executive. Executive shall also
be entitled during the Term to participate in all retirement, disability,
pension, savings, health, medical, dental, insurance and other fringe benefits
or plans of the Company generally available to executive employees including
specifically the following at the Company's expense:

                           (a) six (6) weeks of paid vacation per annum (not
         subject to rollover);

                           (b) coverage under the Company's current health care
         insurance plans in effect from time to time, including coverage for
         Executive's dependents,

         on the same terms and conditions, including any required payment of
         premiums or other costs by Executive, as are applicable to other
         executive employees; and,

                           (c) coverage under the Company's group term life and
         accidental death and dismemberment and long term disability coverage,
         all on the same terms and conditions, including any required payment of
         premiums or other costs by Executive, as are applicable to other
         executive employees.

         3. DUTIES. Executive shall perform all duties normally associated with
the position of Chief Financial Officer, and such other reasonable duties as may
be assigned to him by the Chief Executive Officer or the Board. Executive will
devote his full business time and effort to discharge his duties.

         4.  PRIVILEGED INFORMATION.

         (a) Executive will not at any time during the Term or thereafter:

                             (i) reveal, divulge or make known to any person,
firm or corporation or use for his personal benefit or the benefit of others
(except the Company), directly or indirectly, any confidential or proprietary
information received or developed by him during the course of his employment.
For the purposes of this Section 4(a)(i) confidential and proprietary
information ("Privileged Information") shall be defined to mean (1) all
historical and pro forma projections of loss ratios incurred by the Company and
any of its direct or indirect subsidiaries (hereinafter referred to as
"Affiliates"), (2) all historical and pro forma actuarial data relating to the
Company and any of the Affiliates, (3) historical and pro forma financial
results, revenue statements, and projections for the Company and its Affiliates,
(4) all information relating to the Company's or the Affiliates' systems and
software (other than the portion thereof provided by the vendor to all
purchasers of such systems and software), (5) all information relating to the
Company's unique underwriting approach, (6) all information relating to plans
for acquisitions of any business entities or blocks of business, (7) non-public
business plans, and (8) all other information relating to the financial,
business or other affairs of the Company and its Affiliates, including their
customers. Section 4(a)(i) shall not apply to Executive following the
termination of his employment with the Company or its Affiliates with respect to
any Privileged Information known or made generally available to the general
public or within the industry.

                             (ii) reveal, divulge or make known to any person,
firm or corporation, or use for his personal benefit or the benefit of others
(except the Company), directly or indirectly, the name or names of any customers
of the Company or any of its Affiliates, nor will he reveal, divulge or make
known to any person, firm or corporation, or use for his personal benefit or the
benefit of others (except the Company), directly or indirectly, any trade
secrets or any knowledge or information, or any fact concerning any business
methods or operational procedures engaged in by the Company or its Affiliates
(collectively, "Privileged Information"); provided, however, the restrictions
set forth in this Section 4(a)(ii) shall not apply to Executive following the
termination of his employment with the Company or its Affiliates with respect to
any Privileged

                                        2

Information known or made generally available to the general public or within
the industry.

         5.  NON-COMPETITION.

                  (a) Executive acknowledges and agrees that (i) the Company has
spent substantial money, time and effort in developing customer goodwill and
relationships for the benefit of the Company, (ii) as the Company's Chief
Financial Officer, Executive has knowledge of the Company's most Confidential
and Privileged Information, and has been and will be compensated for the
development, and supervising the development, of the same, and (iii) Executive
has unique insight into and knowledge of the skills, talents and capabilities of
the Company's key employees. Executive also acknowledges and agrees that
execution of this Agreement provides changes in the terms and conditions of his
employment favorable to Executive that constitute sufficient consideration for
Executive's agreement to the noncompetition restrictions set forth in this
Section.

                  (b) Executive agrees that during his employment by the
Company, and for the restricted period ("Restricted Period") after his
employment with the Company ceases, he will not:

                           (i) compete against the Company by engaging in, or by
assisting any other person or entity to engage in, or by having an ownership
interest in, any Competitive Business in the Territory (as defined below);

                           (ii) compete against the Company by soliciting any
Customer (as defined below) of the Company or its Affiliates to provide any
goods or services in competition against the Company or its Affiliates;

                           (iii) induce or persuade any Customer of the Company
or its Affiliates not to do business with, or to switch business from, the
Company or its Affiliates;

                           (iv) solicit, or assist others in soliciting, Key
Employees (as defined below) to either leave the Company or to engage in a
Competitive Business.

                  (c) For purposes of this Agreement, the following capitalized
terms shall have the meanings set forth below:

                           (i) "Restricted Period" shall mean one (1) year,
unless a court with jurisdiction determines that such period is overbroad or
unenforceable in which case it shall mean either nine (9) months, six (6)
months, or three (3) months, whichever period is the maximum enforceable
Restricted Period.

                           (ii) "Competitive Business" shall mean the business
of acquiring, holding and/or operating insurance companies that offer excess and
surplus line or workers' compensation insurance, and any other material business
that the Company or any of its Affiliates is engaged in as of the date of this
Agreement and as the business of

                                       3

the Company and its Affiliates evolves during its Term; provided, however, that
if a court with jurisdiction determines that such definition is overbroad or
unenforceable, it shall be further limited to the business of the Company and
its Affiliates regarding which Executive had Confidential or Privileged
Information during the last year of the Term, and if this narrowed definition is
still deemed by such court to be overbroad or unenforceable, it shall be further
limited to business of the Company under Executive's management and control
during the last year of the Term;

                           (iii) "Territory" shall mean each and every state or
other United States jurisdiction ("State(s)") where Company is licensed or
approved to underwrite or offer insurance at the end of the Term and/or is then
in the process of seeking to be so licensed or approved; provided, however, that
if a court with jurisdiction determines that such definition is overbroad or
unenforceable, it shall be further limited to States with respect to which
Executive had Confidential or Privileged Information regarding the Company's
business or operations during the last year of the Term, and if this narrowed
definition is still deemed by such court to be overbroad or unenforceable, it
shall be further limited to States where Executive conducted, or supervised the
conduct of, Company business during the last year of the Term;

                           (iv) "Customer" shall mean any customer of the
Company or its Affiliates that purchased products or services from the Company
during the last year of the Term; provided, however, that if a court with
jurisdiction determines that such definition is overbroad or unenforceable, it
shall be further limited to customers about which Executive either had
Confidential or Privileged Information or personal or management responsibility
for customer contact or service, and if this narrowed definition is still deemed
by such court to be overbroad or unenforceable, it shall be further limited to
customers of the Company with which Executive had direct contact during the last
six (6) months of the Term;

                           (v) "Key Employees" shall mean any executive,
managerial, sales, marketing, or supervisory level employee of the Company or
its Affiliates under Executive's management authority during the last year of
the Term.

                  (d) The restrictions contained in this Section 5 shall not
prevent the purchase of ownership by Executive of not more than three percent
(3%) of the securities of any class of any corporation, whether or not such
corporation is engaged in any Competitive Business, which are publicly traded on
any securities exchange or any "over the counter" market.

         6.  TERMINATION.

                  Executive's employment hereunder shall terminate under the
following circumstances:

                  (a) Termination for Cause. The Company may terminate the
employment of Executive for cause at any time upon written notice to Executive
specifying the cause of the termination. For the purposes of this Section, "for
cause" shall include only

                                       4

discharge resulting from a determination by the Company that: (i) Executive has
willfully violated Section 4 or 5 of this Agreement; (ii) Executive has grossly
neglected his duties hereunder; (iii) Executive has been convicted of a felony
or a crime involving moral turpitude (meaning a crime that includes the
commission of an act of depravity, dishonesty or bad morals); or (iv) Executive
has committed an act of dishonesty, fraud or embezzlement against the Company.

                  (b) Expiration or Termination Without Cause. The Company may
terminate this Agreement at any time without cause (which may be for business
performance or for any other reason) or may elect to have the Term of this
agreement expire.

                  (c) Termination by Executive. Executive may, at his option,
terminate this Agreement for Good Reason. "Good Reason" shall mean the
occurrence of any one or more of the following events:

                           (i) The assignment to the Executive of duties
materially and adversely inconsistent with the position of Chief Financial
Officer;

                           (ii) The failure by the Company to continue to
provide the Executive with substantially similar perquisites or benefits under
the Company's benefit programs; provided, that any amendment, modification or
discontinuation of any plans or benefits that generally affect substantially all
domestic salaried employees or that generally effect all executive employees of
the Company shall not be deemed to constitute Good Reason;

                           (iii) The Company's requiring the Executive to be
based at any office or location more than 35 miles from the location at which he
performs his services as of the Effective Date; or

                           (iv) Any material breach by the Company of any of the
provisions of this Agreement or any failure by the Company to carry out any of
its material obligations hereunder, in either case, for a period of thirty (30)
days after receipt of written notice from the Executive and the failure by the
Company to cure such breach or failure during such thirty (30) day period.

                  (d) Termination due to Disability. The Company may terminate
Executive's employment if he is prevented from performing his responsibilities
under this Agreement for a consecutive period of six (6) months or longer during
any twelve (12) month period of the Term hereof, by reason of any accident,
illness, or mental or physical disability.

                                       5

         7.  COMPENSATION AND BENEFITS UPON TERMINATION.

                  (a) In the event that the Company terminates this Agreement
without cause or elects to have the Term of this Agreement expire, in either
case other than for business performance, or if Executive terminates this
Agreement for Good Reason, Executive is entitled to receive:

                           (i) an amount equal to Executive's base salary for a
period of thirty-six (36) months after the Termination Date in accordance with
the terms of Section 2 hereof;

                           (ii) the continuation at the Company's expense of
coverage under all plans, insurance policies and other fringe benefits described
in Section 2 hereof, for a period of twelve (12) months after the Termination
Date;

                           (iii) any discretionary bonus to which Executive is
entitled on the Executive's last day of employment; and

                           (iv) any unused vacation and any non reimbursed
reasonable business expenses.

                  (b) If Executive is terminated for cause, or due to
disability, the Company shall have no further obligations to Executive, except
as provided in any stock option or other bonus or incentive plan to which
Executive is entitled, and Executive shall have no further rights hereunder.

                  (c) If Executive is terminated for business performance,
Executive is entitled to receive:

                           (i) an amount equal to Executive's base salary for
eighteen (18) months after the Termination Date in accordance with the terms of
Section 2 hereof;

                           (ii) the continuation at the Company's expense of
coverage under all plans, insurance policies and other fringe benefits described
in Section 2 hereof, for a period of twelve months after the termination date;

                           (iii) any discretionary bonus to which Executive is
entitled on the Executive's last day of employment; and

                           (iv) any unused vacation and any non reimbursed
reasonable business expenses.

                  (d) All compensation and benefits made pursuant to this
Section shall cease if Executive violates any of the terms of Sections 4 or 5
during the twelve (12) months following his last day of employment. In addition
to this remedy, the Company

                                       6

shall have all other remedies provided by this Agreement and by law for the
breach of Section 4 or Section 5 hereof.

         8. UNIQUENESS OF SERVICES, ACKNOWLEDGEMENTS. Executive acknowledges
that the services to be rendered under the provisions of this Agreement are of a
special, unique and extraordinary character, involve access to and development
of confidential, proprietary and Privileged Information, and involve developing
and protecting customer relationships and goodwill, and that it would be
difficult or impossible to replace such services and that, by reason thereof,
Executive agrees and consents that if he violates any of the provisions of this
Agreement, the Company, in addition to any other rights and remedies available
under this Agreement or otherwise, shall be entitled to an injunction to be
issued by a tribunal of competent jurisdiction restricting Executive from
committing or continuing any violation of this Agreement.

         9. FURTHER ACKNOWLEDGEMENTS. Executive further acknowledges and agrees
that the restrictions contained in Sections 4 and 5 are reasonable and necessary
to protect the legitimate interest of the Company, in view of, among other
things, the short duration of the restrictions, the narrow scope of the
restrictions, the Company's interests in protecting its confidential,
proprietary, trade secret and Privileged Information (which Executive agrees has
a useful life of more than one (1) year) and its customer relationships and
goodwill, Executive's background and capabilities which will allow him to seek
and accept employment without violation of the restrictions, Executive's
substantial equity interest in the Company, and Executive's entitlements under
this Agreement. If any provision contained in Section 4 or 5 is adjudged
unreasonable in any proceeding, then such provision shall be deemed modified by
reducing the period of time during which such provision is applicable and/or, if
applicable, the geographic area to which such provision applies, to the extent
necessary for such provision to be adjudged reasonable and enforceable.

         10. NOTICES. Any notices provided for or permitted by this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
in person or three (3) days after it is deposited in a United States Postal
Depository, postage prepaid, registered or certified mail, return receipt
requested, addressed to the party for whom intended at such party's address set
forth below or to such other address as such party may designate by notice in
writing given in the manner provided below:

To Executive:      Michael T. Oakes
                   James River Group, Inc.
                   1414 Raleigh Road
                   Suite 415
                   Chapel Hill, NC 27517

To Company:        James River Group, Inc.
                   1414 Raleigh Road
                   Suite 415
                   Chapel Hill, NC 27517

                                       7

         11. ENTIRE AGREEMENT: AMENDMENTS. This Agreement constitutes the entire
agreement and understanding between Executive and the Company with respect to
the subject matter hereof and shall supersede any all other prior agreements and
understandings, whether oral or written, relating thereto or the employment of
Executive by the Company. This Agreement may not be rescinded, modified or
amended except by an instrument in writing signed by the party hereto against
whom any such waiver is sought to be enforced.

         12. PARTIAL INVALIDITY. The invalidity or unenforceability, by statue,
court decision or otherwise, of any term or condition of this Agreement shall
not affect the validity or enforceability of any other term or condition hereof.

         13. GOVERNING LAW. This Agreement shall be construed and administered
in accordance with the laws of the State of North Carolina, without regard to
the principles of conflicts of law which might otherwise apply.

         14. ASSIGNABILITY. This Agreement may not be assigned by Executive, and
all its terms and conditions shall be binding upon and inure to the benefit of
the Company and its successors. Successors to the Company shall include, without
limitation, any corporation or corporations acquiring, directly or indirectly,
all or substantially all of the assets of the Company whether by merger,
consolidation, purchase or otherwise and such successor shall thereafter be
deemed the "Company" for purposes hereof.

         15. DISPUTE RESOLUTION.

               (a) Arbitration. In the event of disputes between the parties
with respect to the terms and conditions of this Agreement, such disputes shall
be resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto); provided, however, that either party may seek temporary,
preliminary and or permanent injunctive relief with respect to appropriate
matters (including without limitation enforcement of Sections 4 and 5 of this
Agreement) without resort to arbitration. Such arbitration proceeding shall be
conducted pursuant to the commercial arbitration rules (formal or informal) of
the American Arbitration Association in as expedited a manner as is then
permitted by such rules (the "Arbitration"). Both the foregoing agreement of the
parties to arbitrate any and all such claims, and the results, determination,
finding, judgment and/or award rendered through such Arbitration, shall be final
and binding on the parties hereto and may be specifically enforced by legal
proceedings.

               (b) Procedure. Such Arbitration may be initiated by written
notice from either party to the other which shall be a compulsory and binding
proceeding on each party. The Arbitration shall be conducted by an arbitrator
selected in accordance with the procedures of the American Arbitration
Association. Time is of the essence of this arbitration procedure, and the
arbitrator shall be instructed and required to render his or her decision within
thirty (30) days following completion of the Arbitration.

                                       8

               (c) Venue and Jurisdiction. Any action to compel arbitration
hereunder or otherwise relating to this Agreement shall be brought exclusively
in a state court or federal court located in the City of Raleigh, North Carolina
provided that if a federal court has jurisdiction over the subject matter
thereof, then such action shall be brought in federal court, and the Company and
Executive hereby irrevocably submit with regard to any such action or proceeding
for itself and in respect to its property, generally and unconditionally, to the
jurisdiction of the aforesaid courts.

               (d) Waiver of Jury Trial. IN THE EVENT OF ANY LITIGATION WITH
RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT OR THE AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREUNDER ALL OF THE PARTIES HERETO WAIVE ALL RIGHTS
TO A TRIAL BY JURY.

                                    * * * * *

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

                  THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.

                               JAMES RIVER GROUP, INC.

                               By: /s/ J. Adam Abram
                                   ---------------------------
                                    J. Adam Abram
                                    Director, President and Chief Executive
                                    Officer

                                   /s/ Michael T. Oakes
                                   ---------------------------
                                    Michael T. Oakes

                                       9

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