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                               GUARANTEE AGREEMENT

                                 BY AND BETWEEN

                             JAMES RIVER GROUP, INC.

                                       AND

                            WILMINGTON TRUST COMPANY

                          DATED AS OF DECEMBER 15, 2004

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                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I       DEFINITIONS AND INTERPRETATION.................................1

  Section 1.1    Definitions and Interpretation................................1

ARTICLE II      POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.............5

  Section 2.1    Powers and Duties of the Guarantee Trustee....................5
  Section 2.2    Certain Rights of the Guarantee Trustee.......................6
  Section 2.3    Not Responsible for Recitals or Issuance of Guarantee.........8
  Section 2.4    Events of Default; Waiver.....................................8
  Section 2.5    Events of Default; Notice.....................................8

ARTICLE III     GUARANTEE TRUSTEE..............................................9

  Section 3.1    Guarantee Trustee; Eligibility................................9
  Section 3.2    Appointment, Removal and Resignation of
                 the Guarantee Trustee.........................................9

ARTICLE IV      GUARANTEE.....................................................10

  Section 4.1    Guarantee....................................................10
  Section 4.2    Waiver of Notice and Demand..................................10
  Section 4.3    Obligations Not Affected.....................................10
  Section 4.4    Rights of Holders............................................11
  Section 4.5    Guarantee of Payment.........................................12
  Section 4.6    Subrogation..................................................12
  Section 4.7    Independent Obligations......................................12
  Section 4.8    Enforcement by a Beneficiary.................................12

ARTICLE V       LIMITATION OF TRANSACTIONS; SUBORDINATION.....................13

  Section 5.1    Limitation of Transactions...................................13
  Section 5.2    Ranking......................................................13

ARTICLE VI      TERMINATION...................................................14

  Section 6.1    Termination..................................................14

ARTICLE VII     INDEMNIFICATION...............................................14

  Section 7.1    Exculpation..................................................14
  Section 7.2    Indemnification..............................................15
  Section 7.3    Compensation; Reimbursement of Expenses......................16

                                        i

ARTICLE VIII    MISCELLANEOUS.................................................16

  Section 8.1    Successors and Assigns.......................................16
  Section 8.2    Amendments...................................................16
  Section 8.3    Notices......................................................17
  Section 8.4    Benefit......................................................17
  Section 8.5    Governing Law................................................17
  Section 8.6    Counterparts.................................................18
  Section 8.7    Separability.................................................18

                                       ii

                               GUARANTEE AGREEMENT

     This GUARANTEE AGREEMENT (this "Guarantee"), dated as of December 15, 2004,
is executed and delivered by James River Group, Inc., a Delaware corporation
(the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of James
River Capital Trust II, a Delaware statutory trust (the "Issuer").

     WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of the date hereof among Wilmington Trust Company, not
in its individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof those undivided beneficial
interests, having an aggregate liquidation amount of $15,000,000 (the "Capital
Securities"); and

     WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay to the Holders of Capital Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     SECTION 1.1 DEFINITIONS AND INTERPRETATION.

     In this Guarantee, unless the context otherwise requires:

     (a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;

     (b) a term defined anywhere in this Guarantee has the same meaning
throughout;

     (c) all references to "the Guarantee" or "this Guarantee" are to this
Guarantee as modified, supplemented or amended from time to time;

     (d) all references in this Guarantee to "Articles" or "Sections" are to
Articles or Sections of this Guarantee, unless otherwise specified;

     (e) terms defined in the Declaration as at the date of execution of this
Guarantee have the same meanings when used in this Guarantee, unless otherwise
defined in this Guarantee or unless the context otherwise requires; and

     (f) a reference to the singular includes the plural and vice versa.

     "Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

     "Beneficiaries" means any Person to whom the Issuer is or hereafter becomes
indebted or liable.

     "Capital Securities" has the meaning set forth in the recitals to this
Guarantee.

     "Common Securities" means the common securities issued by the Issuer to the
Guarantor pursuant to the Declaration.

     "Corporate Trust Office" means the office of the Guarantee Trustee at which
the corporate trust business of the Guarantee Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Guarantee is located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.

     "Covered Person" means any Holder of Capital Securities.

     "Debentures" means the debt securities of the Guarantor designated the
Floating Rate Junior Subordinated Deferrable Interest Debentures due 2034 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.

     "Declaration Event of Default" means an "Event of Default" as defined in
the Declaration.

     "Event of Default" has the meaning set forth in Section 2.4(a).

     "Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or
made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the
Declaration) which are required to be paid on such Capital Securities to the
extent the Issuer shall have funds available therefor, (ii) the Optional
Redemption Price to the extent the Issuer has funds available therefor, with
respect to any Capital Securities called for redemption by the Issuer, (iii) the
Special Redemption Price to the extent the Issuer has funds available therefor,
with respect to Capital Securities redeemed upon the occurrence of a Special
Event, and (iv) upon a voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Issuer (other than in connection with the
distribution of Debentures to the Holders of the Capital Securities in exchange
therefor as provided in the Declaration), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Capital
Securities to the date of payment, to the extent the Issuer shall have funds
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").

                                       2

     "Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

     "Guarantor" means James River Group, Inc. and each of its successors and
assigns.

     "Holder" means any holder, as registered on the books and records of the
Issuer, of any Capital Securities; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.

     "Indemnified Person" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Guarantee
Trustee.

     "Indenture" means the Indenture dated as of the date hereof between the
Guarantor and Wilmington Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.

     "Issuer" has the meaning set forth in the opening paragraph to this
Guarantee.

     "Liquidation Distribution" has the meaning set forth in the definition of
"Guarantee Payments" herein.

     "Majority in liquidation amount of the Capital Securities" means Holder(s)
of outstanding Capital Securities, voting together as a class, but separately
from the holders of Common Securities, of more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.

     "Obligations" means any costs, expenses or liabilities (but not including
liabilities related to taxes) of the Issuer other than obligations of the Issuer
to pay to holders of any Trust Securities the amounts due such holders pursuant
to the terms of the Trust Securities.

     "Officer's Certificate" means, with respect to any Person, a certificate
signed by one Authorized Officer, as defined in the Declaration, of such Person.
Any Officer's Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee shall include:

          (a) a statement that the officer signing the Officer's Certificate has
     read the covenant or condition and the definitions relating thereto;

          (b) a brief statement of the nature and scope of the examination or
     investigation undertaken by the officer in rendering the Officer's
     Certificate;

                                       3

          (c) a statement that the officer has made such examination or
     investigation as, in such officer's opinion, is necessary to enable such
     officer to express an informed opinion as to whether or not such covenant
     or condition has been complied with; and

          (d) a statement as to whether, in the opinion of the officer, such
     condition or covenant has been complied with.

     "Optional Redemption Price" has the meaning set forth in the Indenture.

     "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

     "Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.

     "Special Event" has the meaning set forth in the Indenture.

     "Special Redemption Price" has the meaning set forth in the Indenture.

     "Subsidiary" means with respect to any Person, (i) any corporation at least
a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency.

     "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.

     "Trust Securities" means the Common Securities and the Capital Securities.

                                       4

                                   ARTICLE II

                        POWERS, DUTIES AND RIGHTS OF THE
                                GUARANTEE TRUSTEE

     SECTION 2.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

     (a) This Guarantee shall be held by the Guarantee Trustee for the benefit
of the Holders of the Capital Securities, and the Guarantee Trustee shall not
transfer this Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 4.4(b) or to a Successor
Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and interest
of the Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.

     (b) If an Event of Default actually known to a Responsible Officer of the
Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall
enforce this Guarantee for the benefit of the Holders of the Capital Securities.

     (c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.4) and is actually known to a
Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee, and use
the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.

     (d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

          (i) prior to the occurrence of any Event of Default and after the
     curing or waiving of all such Events of Default that may have occurred:

               (A) the duties and obligations of the Guarantee Trustee shall be
          determined solely by the express provisions of this Guarantee, and the
          Guarantee Trustee shall not be liable except for the performance of
          such duties and obligations as are specifically set forth in this
          Guarantee, and no implied covenants or obligations shall be read into
          this Guarantee against the Guarantee Trustee; and

               (B) in the absence of bad faith on the part of the Guarantee
          Trustee, the Guarantee Trustee may conclusively rely, as to the truth
          of the statements and the correctness of the opinions expressed
          therein, upon any certificates or opinions furnished to the Guarantee
          Trustee and conforming to the requirements of this

                                       5

          Guarantee; but in the case of any such certificates or opinions that
          by any provision hereof are specifically required to be furnished to
          the Guarantee Trustee, the Guarantee Trustee shall be under a duty to
          examine the same to determine whether or not they conform to the
          requirements of this Guarantee;

          (ii) the Guarantee Trustee shall not be liable for any error of
     judgment made in good faith by a Responsible Officer of the Guarantee
     Trustee, unless it shall be proved that such Responsible Officer of the
     Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining
     the pertinent facts upon which such judgment was made;

          (iii) the Guarantee Trustee shall not be liable with respect to any
     action taken or omitted to be taken by it in good faith in accordance with
     the written direction of the Holders of not less than a Majority in
     liquidation amount of the Capital Securities relating to the time, method
     and place of conducting any proceeding for any remedy available to the
     Guarantee Trustee, or relating to the exercise of any trust or power
     conferred upon the Guarantee Trustee under this Guarantee; and

          (iv) no provision of this Guarantee shall require the Guarantee
     Trustee to expend or risk its own funds or otherwise incur personal
     financial liability in the performance of any of its duties or in the
     exercise of any of its rights or powers, if the Guarantee Trustee shall
     have reasonable grounds for believing that the repayment of such funds is
     not reasonably assured to it under the terms of this Guarantee or security
     and indemnity, reasonably satisfactory to the Guarantee Trustee, against
     such risk or liability is not reasonably assured to it.

     SECTION 2.2 CERTAIN RIGHTS OF THE GUARANTEE TRUSTEE.

     (a) Subject to the provisions of Section 2.1:

          (i) The Guarantee Trustee may conclusively rely, and shall be fully
     protected in acting or refraining from acting upon, any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document believed by it to be genuine and to
     have been signed, sent or presented by the proper party or parties.

          (ii) Any direction or act of the Guarantor contemplated by this
     Guarantee shall be sufficiently evidenced by an Officer's Certificate.

          (iii) Whenever, in the administration of this Guarantee, the Guarantee
     Trustee shall deem it desirable that a matter be proved or established
     before taking, suffering or omitting any action hereunder, the Guarantee
     Trustee (unless other evidence is herein specifically prescribed) may, in
     the absence of bad faith on its part, request and conclusively rely upon an
     Officer's Certificate of the Guarantor which, upon receipt of such request,
     shall be promptly delivered by the Guarantor.

          (iv) The Guarantee Trustee shall have no duty to see to any recording,
     filing or registration of any instrument (or any re-recording, refiling or
     re-registration thereof).

                                       6

          (v) The Guarantee Trustee may consult with counsel of its selection,
     and the advice or opinion of such counsel with respect to legal matters
     shall be full and complete authorization and protection in respect of any
     action taken, suffered or omitted by it hereunder in good faith and in
     accordance with such advice or opinion. Such counsel may be counsel to the
     Guarantor or any of its Affiliates and may include any of its employees.
     The Guarantee Trustee shall have the right at any time to seek instructions
     concerning the administration of this Guarantee from any court of competent
     jurisdiction.

          (vi) The Guarantee Trustee shall be under no obligation to exercise
     any of the rights or powers vested in it by this Guarantee at the request
     or direction of any Holder, unless such Holder shall have provided to the
     Guarantee Trustee such security and indemnity, reasonably satisfactory to
     the Guarantee Trustee, against the costs, expenses (including attorneys'
     fees and expenses and the expenses of the Guarantee Trustee's agents,
     nominees or custodians) and liabilities that might be incurred by it in
     complying with such request or direction, including such reasonable
     advances as may be requested by the Guarantee Trustee; provided, however,
     that nothing contained in this Section 2.2(a)(vi) shall relieve the
     Guarantee Trustee, upon the occurrence of an Event of Default, of its
     obligation to exercise the rights and powers vested in it by this
     Guarantee.

          (vii) The Guarantee Trustee shall not be bound to make any
     investigation into the facts or matters stated in any resolution,
     certificate, statement, instrument, opinion, report, notice, request,
     direction, consent, order, bond, debenture, note, other evidence of
     indebtedness or other paper or document, but the Guarantee Trustee, in its
     discretion, may make such further inquiry or investigation into such facts
     or matters as it may see fit.

          (viii) The Guarantee Trustee may execute any of the trusts or powers
     hereunder or perform any duties hereunder either directly or by or through
     agents, nominees, custodians or attorneys, and the Guarantee Trustee shall
     not be responsible for any misconduct or negligence on the part of any
     agent or attorney appointed with due care by it hereunder.

          (ix) Any action taken by the Guarantee Trustee or its agents hereunder
     shall bind the Holders of the Capital Securities, and the signature of the
     Guarantee Trustee or its agents alone shall be sufficient and effective to
     perform any such action. No third party shall be required to inquire as to
     the authority of the Guarantee Trustee to so act or as to its compliance
     with any of the terms and provisions of this Guarantee, both of which shall
     be conclusively evidenced by the Guarantee Trustee's or its agent's taking
     such action.

          (x) Whenever in the administration of this Guarantee the Guarantee
     Trustee shall deem it desirable to receive instructions with respect to
     enforcing any remedy or right or taking any other action hereunder, the
     Guarantee Trustee (i) may request instructions from the Holders of a
     Majority in liquidation amount of the Capital Securities, (ii) may refrain
     from enforcing such remedy or right or taking such other action until such
     instructions are received, and (iii) shall be protected in conclusively
     relying on or acting in accordance with such instructions.

                                       7

          (xi) The Guarantee Trustee shall not be liable for any action taken,
     suffered, or omitted to be taken by it in good faith, without negligence,
     and reasonably believed by it to be authorized or within the discretion or
     rights or powers conferred upon it by this Guarantee.

     (b) No provision of this Guarantee shall be deemed to impose any duty or
obligation on the Guarantee Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal or in which the Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law to perform any such
act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.

     SECTION 2.3 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.

     The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee.

     SECTION 2.4 EVENTS OF DEFAULT; WAIVER.

     (a) An "Event of Default" under this Guarantee will occur upon the failure
of the Guarantor to perform any of its payment or other obligations hereunder.

     (b) The Holders of a Majority in liquidation amount of the Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.

     SECTION 2.5 EVENTS OF DEFAULT; NOTICE.

     (a) The Guarantee Trustee shall, within 90 days after the occurrence of an
Event of Default, transmit by mail, first class postage prepaid, to the Holders
of the Capital Securities and the Guarantor, notices of all Events of Default
actually known to a Responsible Officer of the Guarantee Trustee, unless such
defaults have been cured before the giving of such notice, provided, however,
that the Guarantee Trustee shall be protected in withholding such notice if and
so long as a Responsible Officer of the Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.

     (b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
from the Guarantor or a Holder of the Capital Securities (except in the case of
a payment default), or a Responsible Officer of the Guarantee Trustee charged
with the administration of this Guarantee shall have obtained actual knowledge
thereof.

                                       8

                                   ARTICLE III

                                GUARANTEE TRUSTEE

     SECTION 3.1 GUARANTEE TRUSTEE; ELIGIBILITY.

     (a) There shall at all times be a Guarantee Trustee which shall:

          (i) not be an Affiliate of the Guarantor, and

          (ii) be a banking corporation or national association organized and
     doing business under the laws of the United States of America or any State
     or Territory thereof or of the District of Columbia, or Person authorized
     under such laws to exercise corporate trust powers, having a combined
     capital and surplus of at least fifty million U.S. dollars ($50,000,000),
     and subject to supervision or examination by Federal, State, Territorial or
     District of Columbia authority. If such corporation or national association
     publishes reports of condition at least annually, pursuant to law or to the
     requirements of the supervising or examining authority referred to above,
     then, for the purposes of this Section 3.1(a)(ii), the combined capital and
     surplus of such corporation or national association shall be deemed to be
     its combined capital and surplus as set forth in its most recent report of
     condition so published.

     (b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 3.1(a), the Guarantee Trustee shall immediately resign in the
manner and with the effect set forth in Section 3.2(c).

     (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall either eliminate such interest or resign to the extent
and in the manner provided by, and subject to this Guarantee.

     SECTION 3.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE.

     (a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor except during an Event of
Default.

     (b) The Guarantee Trustee shall not be removed in accordance with Section
3.2(a) until a Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor Guarantee
Trustee and delivered to the Guarantor.

     (c) The Guarantee Trustee appointed to office shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.

                                       9

     (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.

     (e) No Guarantee Trustee shall be liable for the acts or omissions to act
of any Successor Guarantee Trustee.

     (f) Upon termination of this Guarantee or removal or resignation of the
Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the
Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2
and 7.3 accrued to the date of such termination, removal or resignation.

                                   ARTICLE IV

                                    GUARANTEE

     SECTION 4.1 GUARANTEE.

     (a) The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense (except the
defense of payment by the Issuer), right of set-off or counterclaim that the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.

     (b) The Guarantor hereby also agrees to assume any and all Obligations of
the Issuer and in the event any such Obligation is not so assumed, subject to
the terms and conditions hereof, the Guarantor hereby irrevocably and
unconditionally guarantees to each Beneficiary the full payment, when and as
due, of any and all Obligations to such Beneficiaries. This Guarantee is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.

     SECTION 4.2 WAIVER OF NOTICE AND DEMAND.

     The Guarantor hereby waives notice of acceptance of this Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.

     SECTION 4.3 OBLIGATIONS NOT AFFECTED.

     The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

                                       10

     (a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;

     (b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Optional Redemption Price, Special Redemption
Price, Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, Optional
Redemption Price, Special Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);

     (c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;

     (d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;

     (e) any invalidity of, or defect or deficiency in, the Capital Securities;

     (f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or

     (g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 4.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

     There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

     SECTION 4.4 RIGHTS OF HOLDERS.

     (a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the action or proceeding so directed may not lawfully be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.

                                       11

     (b) Any Holder of Capital Securities may institute a legal proceeding
directly against the Guarantor to enforce the Guarantee Trustee's rights under
this Guarantee, without first instituting a legal proceeding against the Issuer,
the Guarantee Trustee or any other Person. The Guarantor waives any right or
remedy to require that any such action be brought first against the Issuer, the
Guarantee Trustee or any other Person before so proceeding directly against the
Guarantor.

     SECTION 4.5 GUARANTEE OF PAYMENT.

     This Guarantee creates a guarantee of payment and not of collection.

     SECTION 4.6 SUBROGATION.

     The Guarantor shall be subrogated to all (if any) rights of the Holders of
Capital Securities against the Issuer in respect of any amounts paid to such
Holders by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.

     SECTION 4.7 INDEPENDENT OBLIGATIONS.

     The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Capital Securities and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 4.3 hereof.

     SECTION 4.8 ENFORCEMENT BY A BENEFICIARY.

     A Beneficiary may enforce the obligations of the Guarantor contained in
Section 4.1(b) directly against the Guarantor and the Guarantor waives any right
or remedy to require that any action be brought against the Issuer or any other
person or entity before proceeding against the Guarantor. The Guarantor shall be
subrogated to all rights (if any) of any Beneficiary against the Issuer in
respect of any amounts paid to the Beneficiaries by the Guarantor under this
Guarantee; provided, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any
rights that it may acquire by way of subrogation or any indemnity, reimbursement
or other agreement, in all cases as a result of payment under this Guarantee, if
at the time of any such payment, and after giving effect to such payment, any
amounts are due and unpaid under this Guarantee.

                                       12

                                    ARTICLE V

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

     SECTION 5.1 LIMITATION OF TRANSACTIONS.

     So long as any Capital Securities remain outstanding, if (a) there shall
have occurred and be continuing an Event of Default or a Declaration Event of
Default or (b) the Guarantor shall have selected an Extension Period as provided
in the Declaration and such period, or any extension thereof, shall have
commenced and be continuing, then the Guarantor shall not and shall not permit
any Affiliate of the Guarantor controlled by the Guarantor to (x) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Guarantor's or such Affiliate's
capital stock (other than payments of dividends or distributions to the
Guarantor or a Subsidiary of the Guarantor) or make any guarantee payments with
respect to the foregoing; or (y) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Guarantor or any Affiliate of the Guarantor controlled by the Guarantor that
rank pari passu in all respects with or junior in interest to the Debentures
(other than, with respect to clauses (x) and (y) above, (i) repurchases,
redemptions or other acquisitions of shares of capital stock of the Guarantor or
any Subsidiary of the Guarantor in connection with any employment contract,
benefit plan or other similar arrangement with or for the benefit of one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Guarantor or of such Subsidiary (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the occurrence of the Event of
Default, Declaration Event of Default or Extension Period, as applicable, (ii)
as a result of any exchange or conversion of any class or series of the
Guarantor's capital stock (or any capital stock of a Subsidiary of the
Guarantor) for any class or series of the Guarantor's capital stock (or in the
case of a Subsidiary of the Guarantor, any class or series of such Subsidiary's
capital stock) or of any class or series of the Guarantor's indebtedness for any
class or series of the Guarantor's capital stock (or in the case of indebtedness
of a Subsidiary of the Guarantor, of any class or series of such Subsidiary's
indebtedness for any class or series of such Subsidiary's capital stock), (iii)
the purchase of fractional interests in shares of the Guarantor's capital stock
(or the capital stock of a Subsidiary of the Guarantor) pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any stockholders' rights plan, or the issuance of rights, stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).

     SECTION 5.2 RANKING.

     This Guarantee will constitute an unsecured obligation of the Guarantor and
will rank subordinate and junior in right of payment to all present and future
Senior Indebtedness (as

                                       13

defined in the Indenture) of the Guarantor. The Guarantor's obligations in
respect of this Guarantee shall rank pari passu with the Guarantor's obligations
under the Guarantee Agreement by and between the Guarantor and Wilmington Trust
Company, dated as of May 26, 2004. By their acceptance thereof, each Holder of
Capital Securities agrees to the foregoing provisions of this Guarantee and the
other terms set forth herein.

     The right of the Guarantor to participate in any distribution of assets of
any of its Subsidiaries upon any such Subsidiary's liquidation or reorganization
or otherwise is subject to the prior claims of creditors of that Subsidiary,
except to the extent the Guarantor may itself be recognized as a creditor of
that Subsidiary. Accordingly, the Guarantor's obligations under this Guarantee
will be effectively subordinated to all existing and future liabilities of the
Guarantor's Subsidiaries, and claimants should look only to the assets of the
Guarantor for payments hereunder. This Guarantee does not limit the incurrence
or issuance of other secured or unsecured debt of the Guarantor, including
Senior Indebtedness of the Guarantor, under any indenture that the Guarantor may
enter into in the future or otherwise.

                                   ARTICLE VI

                                   TERMINATION

     SECTION 6.1 TERMINATION.

     This Guarantee shall terminate as to the Capital Securities (i) upon full
payment of the Optional Redemption Price or Special Redemption Price of all
Capital Securities then outstanding, (ii) upon the distribution of all of the
Debentures to the Holders of all of the Capital Securities or (iii) upon full
payment of the amounts payable in accordance with the Declaration upon
dissolution of the Issuer. This Guarantee will continue to be effective or will
be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Guarantee.

                                   ARTICLE VII

                                 INDEMNIFICATION

     SECTION 7.1 EXCULPATION.

     (a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

     (b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Issuer or the Guarantor and upon such information,
opinions, reports or statements presented to the Issuer or the Guarantor by any
Person as to matters the Indemnified Person

                                       14

reasonably believes are within such other Person's professional or expert
competence and who, if selected by such Indemnified Person, has been selected
with reasonable care by such Indemnified Person, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Capital Securities might
properly be paid.

     SECTION 7.2 INDEMNIFICATION.

     (a) The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or willful misconduct on
the part of the Indemnified Person, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including, but
not limited to, the costs and expenses (including reasonable legal fees and
expenses) of the Indemnified Person defending itself against, or investigating,
any claim or liability in connection with the exercise or performance of any of
the Indemnified Person's powers or duties hereunder. The obligation to indemnify
as set forth in this Section 7.2 shall survive the resignation or removal of the
Guarantee Trustee and the termination of this Guarantee.

     (b) Promptly after receipt by an Indemnified Person under this Section 7.2
of notice of the commencement of any action, such Indemnified Person will, if a
claim in respect thereof is to be made against the Guarantor under this Section
7.2, notify the Guarantor in writing of the commencement thereof; but the
failure so to notify the Guarantor (i) will not relieve the Guarantor from
liability under paragraph (a) above unless and to the extent that the Guarantor
did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Person(s) which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified Person to employ separate counsel
at the expense of the Guarantor. The Guarantor will not, without the prior
written consent of the Indemnified Persons, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened

                                       15

claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified Persons are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Person from all liability arising out of such claim, action, suit or proceeding.

     SECTION 7.3 COMPENSATION; REIMBURSEMENT OF EXPENSES.

     The Guarantor agrees:

     (a) to pay to the Guarantee Trustee from time to time such compensation for
all services rendered by it hereunder as the parties shall agree to from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and

     (b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or willful misconduct.

     For purposes of clarification, this Section 7.3 does not contemplate the
payment by the Guarantor of acceptance or annual administration fees owing to
the Guarantee Trustee for services to be provided by the Guarantee Trustee under
this Guarantee or the fees and expenses of the Guarantee Trustee's counsel in
connection with the closing of the transactions contemplated by this Guarantee.
The provisions of this Section 7.3 shall survive the resignation or removal of
the Guarantee Trustee and the termination of this Guarantee.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     SECTION 8.1 SUCCESSORS AND ASSIGNS.

     All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders of the Capital Securities then
outstanding. Except in connection with any merger or consolidation of the
Guarantor with or into another entity or any sale, transfer or lease of the
Guarantor's assets to another entity, in each case, to the extent permitted
under the Indenture, the Guarantor may not assign its rights or delegate its
obligations under this Guarantee without the prior approval of the Holders of at
least a Majority in liquidation amount of the Capital Securities.

     SECTION 8.2 AMENDMENTS.

     Except with respect to any changes that do not adversely affect the rights
of Holders of the Capital Securities in any material respect (in which case no
consent of Holders will be required), this Guarantee may be amended only with
the prior approval of the Holders of not less than a Majority in liquidation
amount of the Capital Securities and the Guarantor. The

                                       16

provisions of the Declaration with respect to amendments thereof apply to the
giving of such approval.

     SECTION 8.3 NOTICES.

     All notices provided for in this Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by
first class mail, as follows:

     (a) If given to the Guarantee Trustee, at the Guarantee Trustee's mailing
address set forth below (or such other address as the Guarantee Trustee may give
notice of to the Holders of the Capital Securities and the Guarantor):

          Wilmington Trust Company
          Rodney Square North
          1100 North Market Street
          Wilmington, Delaware 19890-1600
          Attention: Corporate Trust Administration
          Telecopy: 302-636-4140

(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Capital Securities and to the Guarantee Trustee):

          James River Group, Inc.
          1414 Raleigh Road, Suite 415
          Chapel Hill, North Carolina 27517
          Attention: Michael T. Oakes
          Telecopy: 919-883-4177

     (c) If given to any Holder of the Capital Securities, at the address set
forth on the books and records of the Issuer.

     All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

     SECTION 8.4 BENEFIT.

     This Guarantee is solely for the benefit of the Beneficiaries and, subject
to Section 2.1(a), is not separately transferable from the Capital Securities.

     SECTION 8.5 GOVERNING LAW.

     PURSUANT TO SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, THIS GUARANTEE SHALL BE GOVERNED BY, AND

                                       17

CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     SECTION 8.6 COUNTERPARTS.

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

     SECTION 8.7 SEPARABILITY.

     In case one or more of the provisions contained in this Guarantee shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Guarantee, but this Guarantee shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein.

                     Signatures appear on the following page

                                       18

     THIS GUARANTEE is executed as of the day and year first above written.

                                           JAMES RIVER GROUP, INC., as Guarantor

                                           By: /s/ Adam J. Abram
                                               ---------------------------------
                                               Name: Adam J. Abram
                                               Title: Chief Executive Officer

                                          WILMINGTON TRUST COMPANY, as Guarantee
                                          Trustee

                                          By: /s/ Christopher J. Slaybaugh
                                              ----------------------------------
                                              Name: Christopher J. Slaybaugh
                                              Title: Financial Services Officer

                                       19As Adopted by the Board of Directors on September 4, 2003

                             JAMES RIVER GROUP, INC.

                               2003 INCENTIVE PLAN

                  JAMES RIVER GROUP, INC., a Delaware corporation (the
"Company"), hereby establishes and adopts the following 2003 Incentive Plan (the
"Plan").

                                    RECITALS

                  WHEREAS, the Company desires to encourage high levels of
performance by those individuals who are key to the success of the Company or
any subsidiary or affiliate of the Company, to attract new individuals who are
highly motivated and who will contribute to the success of the Company and to
encourage such individuals to remain as officers, employees, consultants,
advisors and/or directors of the Company and its subsidiaries and affiliates by
increasing their proprietary interest in the Company's growth and success.

                  WHEREAS, to attain these ends, the Company has formulated the
Plan embodied herein to authorize the granting of incentive awards through
grants of options to purchase shares ("Options"), grants of share appreciation
rights, grants of Share Purchase Awards (hereafter defined), grants of
Restricted Share Awards (hereafter defined), or any other award made under the
Plan to those persons (each such person a "Participant") whose judgment,
initiative and efforts are, have been, or are expected to be responsible for the
success of the Company or any subsidiary or affiliate of the Company.

                  NOW, THEREFORE, the Company hereby constitutes, establishes
and adopts the following Plan and agrees to the following provisions:

                                   ARTICLE 1.

                               PURPOSE OF THE PLAN

                  1.1. Purpose. The purpose of the Plan is to assist the Company
or any subsidiary or affiliate of the Company in attracting and retaining
selected individuals to serve as directors, officers, consultants, advisors, and
employees of the Company or any subsidiary or affiliate of the Company who will
contribute to the Company's success and to achieve long-term objectives which
will inure to the benefit of all shareholders of the Company through the
additional incentive inherent in the ownership of the Company's Common Stock,
par value $.01 per share (the "Shares"). Options granted under the Plan will be
either "incentive stock options," intended to qualify as such under the
provisions of section 422 of the Internal Revenue Code of 1986, as from time to
time amended (the "Code"), or "nonqualified stock options." For purposes of the
Plan, the term "subsidiary" shall mean "subsidiary corporation" as such term is
defined in section 424(f) of the Code, and "affiliate" shall have the meaning
set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). For purposes of the Plan, the term "Award" shall include a
grant of an Option, a grant

of a share appreciation right, a grant of a Share Purchase Award, a grant of a
Restricted Share Award, or any other award made under the terms of the Plan.

                                   ARTICLE 2.

                            SHARES SUBJECT TO AWARDS

                  2.1. Number of Shares. Subject to the adjustment provisions of
Section 9.9 hereof, the aggregate number of Shares which may be issued under
Awards under the Plan, whether pursuant to Options, Share Purchase Awards,
Restricted Share Awards or any other award under the Plan shall not exceed the
lesser of (a) 17.5% of the outstanding shares of Common Stock, calculated on a
fully-diluted basis assuming conversion of all outstanding shares of Preferred
Stock, the exercise of all warrants and the exercise of any options issued or
issuable under the Plan or (b) 375,438 Shares. No Options to purchase fractional
Shares shall be granted and no fractional shares shall be issued under the Plan.
For purposes of this Section 2.1, the Shares that shall be counted toward such
limitation shall include all Shares:

                  (1)  issued or issuable pursuant to Options that have been or
                       may be exercised;

                  (2)  issued or issuable pursuant to Share Purchase Awards;

                  (3)  issued as, or subject to issuance as a Restricted Share
                       Award; and

                  (4)  issued or issuable under any other award granted under
                       the terms of the Plan.

                  2.2. Shares Subject to Terminated Awards. The Shares covered
by any unexercised portions of terminated Options granted under Articles 4 and
6, Shares forfeited as provided in Section 8.2(a) and Shares subject to any
Awards which are otherwise surrendered by the Participant without receiving any
payment or other benefit with respect thereto may again be subject to new Awards
under the Plan, other than grants of Options intended to qualify as incentive
stock options. In the event the purchase price of an Option is paid in whole or
in part through the delivery of Shares, the number of Shares issuable in
connection with the exercise of the Option shall not again be available for the
grant of Awards under the Plan. Shares subject to Options, or portions thereof,
which have been surrendered in connection with the exercise of share
appreciation rights shall not again be available for the grant of Awards under
the Plan.

                  2.3. Character of Shares. Shares delivered under the Plan may
be authorized and unissued Shares or Shares acquired by the Company, or both.

                                   ARTICLE 3.

                         ELIGIBILITY AND ADMINISTRATION

                  3.1. Awards to Employees, Directors and Others. (a)
Participants who receive Options under Articles 4 and 6 hereof (including share
appreciation rights under Article 5 ("Optionees"), Share Purchase Awards under
Article 7 or Restricted Share Awards or other

                                       2

Share-based awards under Article 8 (in either case, a "Participant") shall
consist of such key officers, employees, consultants, advisors and directors of
the Company or any subsidiary or affiliate of the Company as the Committee
(hereinafter defined) shall select from time to time. The Committee's
designation of an Optionee or Participant in any year shall not require the
Committee to designate such person to receive Awards or grants in any other
year. The designation of an Optionee or Participant to receive Awards or grants
under one portion of the Plan shall not require the Committee to include such
Optionee or Participant under other portions of the Plan.

                  (b)    No Option that is intended to qualify as an "incentive
stock option" may be granted (x) to any individual that is not an employee of
the Company or any subsidiary or affiliate thereof, or (y) to any employee who,
at the time of such grant, owns, directly or indirectly (within the meaning of
Sections 422(b)(6) and 424(d) of the Code), shares possessing more than 10% of
the total combined voting power of all classes of shares of the Company or any
subsidiary or affiliate of the Company, unless at the time of such grant, (i)
the option price is fixed at not less than 110% of the Fair Market Value (as
defined below) of the Shares subject to such Option, determined on the date of
the grant, and (ii) the exercise of such Option is prohibited by its terms after
the expiration of five years from the date such Option is granted.

                  3.2. Administration. (a) The Plan shall be administered by a
committee (the "Committee") consisting of not fewer than two directors of the
Company (the directors of the Company being hereinafter referred to as the
"Directors"), as designated by the Directors. The Directors may remove from, add
members to, or fill vacancies in the Committee. Unless otherwise determined by
the Directors, each member of the Committee is intended to be a "Non-Employee
Director" within the meaning of Rule 16b-3 (or any successor rule) of the
Exchange Act and an "outside director" within the meaning of Section
162(m)(4)(C)(i) of the Code and the regulations thereunder.

                       Any Award to a member of the Committee shall be on terms
consistent with Awards made to other Directors who are not members of the
Committee and who are not employees, except where the Award is approved or
ratified by the Compensation Committee (excluding persons who are also members
of the Committee) of the Board of Directors of the Company.

                       (b)    The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations as it may deem
appropriate for the conduct of meetings and proper administration of the Plan.
All actions of the Committee shall be taken by majority vote of its members. The
Committee is also authorized, subject to the provisions of the Plan, to make
provisions in various Awards pertaining to a "change of control" of the Company
and to amend or modify existing Awards.

                       (c)    Subject to the provisions of the Plan, the
Committee shall have authority, in its sole discretion, to interpret the
provisions of the Plan and any Award thereunder and, subject to the requirements
of applicable law, including Rule 16b-3 of the Exchange Act, to prescribe,
amend, and rescind rules and regulations relating to the Plan or any Award
thereunder as it may deem necessary or advisable. All decisions made by the
Committee pursuant to the

                                       3

provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Directors and employees, and Plan
participants and beneficiaries.

                  3.3. Designation of Consultants/Liability. (a) The Committee
may designate employees of the Company and professional advisors to assist the
Committee in the administration of this Plan and may grant authority to
employees to execute agreements or other documents on behalf of the Committee.

                       (b)    The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of this
Plan and may rely upon any opinion received from any such counsel or consultant
and any computation received from any such consultant or agent. Expenses
incurred by the Committee or the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company. The Committee, its members and
any person designated pursuant to Section 3.3(a) shall not be liable for any
action or determination made in good faith with respect to this Plan. To the
maximum extent permitted by applicable law, no officer or former officer of the
Company or member or former member of the Committee or of the Board shall be
liable for any action or determination made in good faith with respect to this
Plan or any Award granted under it. To the maximum extent permitted by
applicable law and to the extent not covered by insurance, each officer or
former officer and member or former member of the Committee or of the Board
shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Company) or liability (including any sum paid in settlement of a claim with the
approval of the Company), and advanced amounts necessary to pay the foregoing at
the earliest time and to the fullest extent permitted, arising out of any act or
omission to act in connection with this Plan, except to the extent arising out
of such officer's or former officer's, member's or former member's own fraud or
bad faith. Such indemnification shall be in addition to any rights of
indemnification the officers, directors or members or former officers, directors
or members may have under applicable law. Notwithstanding anything else herein,
this indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.

                                   ARTICLE 4.

                                     OPTIONS

                  4.1. Grant of Options. The Committee shall determine, within
the limitations of the Plan, those key officers, employees, consultants,
advisors and Directors of the Company or any subsidiary or affiliate of the
Company to whom Options are to be granted under the Plan, the number of Shares
that may be purchased under each such Option, the option price and other terms
of each such Option, and shall designate such Options at the time of the grant
as either "incentive stock options" or "nonqualified stock options"; provided,
however, that Options granted to employees of an affiliate (that is not also a
subsidiary) or to non-employees of the Company may only be "nonqualified stock
options."

                  All Options granted pursuant to this Article 4 and Article 6
herein shall be authorized by the Committee and shall be evidenced in writing by
share option agreements

                                       4

("Share Option Agreements") in such form and containing such terms and
conditions as the Committee shall determine that are not inconsistent with the
provisions of the Plan, and, with respect to any Share Option Agreement granting
Options that are intended to qualify as "incentive stock options," are not
inconsistent with Section 422 of the Code. The granting of an Option pursuant to
the Plan shall impose no obligation on the recipient to exercise such Option.
Any individual who is granted an Option pursuant to this Article 4 and Article 6
herein may hold more than one Option granted pursuant to such Articles at the
same time and may hold both "incentive stock options" and "nonqualified stock
options" at the same time. To the extent that any Option does not qualify as an
"incentive stock option" (whether because of its provisions, the time or manner
of its exercise or otherwise) such Option or the portion thereof which does not
so qualify shall constitute a separate "nonqualified stock option."

                  4.2. Option Price. (a) Subject to Section 3.1(b), the option
exercise price per each Share purchasable under any "incentive stock option"
granted pursuant to this Article 4, any "nonqualified stock option" granted
pursuant to Article 6 herein, or Options intended to be performance-based
compensation under Section 162(m) of the Code shall not be less than 100% of the
Fair Market Value (as hereinafter defined) of such Share on the date of the
grant of such Option.

                       (b)    The option price per share of each Share
purchasable under any "nonqualified stock option" that is not intended to be
performance-based compensation under Section 162(m) of the Code and is granted
pursuant to this Article 4 shall be such amount as the Committee shall determine
at the time of the grant of such Option.

                  4.3. Other Provisions. Options granted pursuant to this
Article 4 shall be made in accordance with the terms and provisions of Article 9
hereof and any other applicable terms and provisions of the Plan.

                                   ARTICLE 5.

                            SHARE APPRECIATION RIGHTS

                  5.1. Grant and Exercise. Share appreciation rights may be
granted in conjunction with all or part of any Option granted under the Plan
provided such rights are granted at the time of the grant of such Option. A
"share appreciation right" is a right to receive cash or whole Shares, as
provided in this Article 5, in lieu of the purchase of a Share under a related
Option. A share appreciation right or applicable portion thereof shall terminate
and no longer be exercisable upon the termination or exercise of the related
Option, and a share appreciation right granted with respect to less than the
full number of Shares covered by a related Option shall not be reduced until,
and then only to the extent that, the exercise or termination of the related
Option exceeds the number of Shares not covered by the share appreciation right.
A share appreciation right may be exercised by the holder thereof (the
"Holder"), in accordance with Section 5.2 of this Article 5, by giving written
notice thereof to the Company and surrendering the applicable portion of the
related Option. Upon giving such notice and surrender, the Holder shall be
entitled to receive an amount determined in the manner prescribed in Section 5.2
of this Article

                                       5

5. Options which have been so surrendered, in whole or in part, shall no longer
be exercisable to the extent the related share appreciation rights have been
exercised.

                  5.2. Terms and Conditions. Share appreciation rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee, including
the following:

                        (a)    Share appreciation rights shall be exercisable
only at such time or times and to the extent that the Options to which they
relate shall be exercisable in accordance with the provisions of the Plan.

                        (b)    Upon the exercise of a share appreciation right,
a Holder shall be entitled to receive up to, but no more than, an amount in cash
or whole Shares equal to the excess of the then Fair Market Value of one Share
over the option exercise price per Share specified in the related Option
multiplied by the number of Shares in respect of which the share appreciation
right shall have been exercised. The Holder shall specify in his written notice
of exercise, whether payment shall be made in cash or in whole Shares (unless
otherwise provided in the agreement governing the share appreciation right).
Each share appreciation right may be exercised only at the time and so long as a
related Option, if any, would be exercisable or as otherwise permitted by
applicable law.

                        (c)    Upon the exercise of a share appreciation right,
the Option or part thereof to which such share appreciation right is related
shall be deemed to have been exercised for the purpose of the limitation of the
number of Shares to be issued under the Plan, as set forth in Section 2.1 of the
Plan.

                        (d)    With respect to share appreciation rights granted
in connection with an Option that is intended to be an "incentive stock option,"
the following shall apply:

                                  (i) No share appreciation right shall be
transferable by a Holder otherwise than by will or by the laws of descent and
distribution, and share appreciation rights shall be exercisable, during the
Holder's lifetime, only by the Holder.

                                  (ii) Share appreciation rights granted in
connection with an Option may be exercised only when the Fair Market Value of
the Shares subject to the Option exceeds the option exercise price at which
Shares can be acquired pursuant to the Option.

                                       6

                                   ARTICLE 6.

                                 RELOAD OPTIONS

                  6.1. Authorization of Reload Options. Concurrently with the
award of any Option (such Option hereinafter referred to as the "Underlying
Option") to any Participant in the Plan, the Committee may grant one or more
reload options (each, a "Reload Option") to such Participant to purchase for
cash or Shares (held for at least six months or such other period to avoid
accounting charges against the Company's earnings) a number of Shares as
specified below. A Reload Option shall be exercisable for an amount of Shares
equal to (i) the number of Shares delivered by the Optionee to the Company to
exercise the Underlying Option, and (ii) to the extent authorized by the
Committee, the number of Shares used to satisfy any tax withholding requirement
incident to the exercise of the Underlying Option, subject to the availability
of Shares under the Plan at the time of such exercise. Any Reload Option may
provide for the grant, when exercised, of subsequent Reload Options to the
extent and upon such terms and conditions consistent with this Article 6, as the
Committee in its sole discretion shall specify at or after the time of grant of
such Reload Option. Except as otherwise determined by the Committee, a Reload
Option will vest and become exercisable six months after the exercise of an
Underlying Option or Reload Option whereby the Participant delivers to the
Company Shares held by the Optionee for at least six months in payment of the
exercise price and/or tax withholding obligations. Notwithstanding the fact that
the Underlying Option may be an "incentive stock option," a Reload Option is not
intended to qualify as an "incentive stock option" under Section 422 of the
Code.

                  6.2. Reload Option Amendment. Each Share Option Agreement
shall state whether the Committee has authorized Reload Options with respect to
the Underlying Option. Upon the exercise of an Underlying Option or other Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Share Option Agreement.

                  6.3. Reload Option Price. The option exercise price per Share
deliverable upon the exercise of a Reload Option shall be the Fair Market Value
of a Share on the date the corresponding Underlying Option is exercised.

                  6.4. Term and Exercise. Except as otherwise determined by the
Committee, each Reload Option vests and is fully exercisable six months after
its grant (i.e., six months after the corresponding Underlying Option is
exercised). The term of each Reload Option shall be equal to the remaining
option term of the Underlying Option.

                  6.5. Termination of Employment. No additional Reload Options
shall be granted to an Optionee when Options and/or Reload Options are exercised
pursuant to the terms of this Plan following termination of the Optionee's
employment unless the Committee, in its sole discretion, shall determine
otherwise.

                  6.6. Applicability of Other Sections. Except as otherwise
provided in this Article 6, the provisions of Article 9 applicable to Options
shall apply equally to Reload Options.

                                       7

                                   ARTICLE 7.

                              SHARE PURCHASE AWARDS

                  7.1. Grant of Share Purchase Award. The term "Share Purchase
Award" means the right to purchase Shares of the Company and to pay for such
Shares through a loan made by the Company to the Participant (a "Purchase Loan")
as set forth in this Article 7.

                  7.2. Terms of Purchase Loans. (a) Purchase Loan. Each Purchase
Loan shall be evidenced by a promissory note. The term of the Purchase Loan
shall be for a period of years, as determined by the Committee, and the proceeds
of the Purchase Loan shall be used exclusively by the Participant for purchase
of Shares from the Company at a purchase price equal to the Fair Market Value on
the date of the Share Purchase Award.

                        (b)    Interest on Purchase Loan. A Purchase Loan shall
bear interest at whatever rate the Committee shall determine (but not in excess
of the maximum rate permissible under applicable law), payable in a manner and
at such times as the Committee shall determine. Those terms and provisions as
the Committee shall determine shall be incorporated into the promissory note
evidencing the Purchase Loan.

                        (c) Forgiveness of Purchase Loan. Subject to Section 7.4
hereof, the Company may forgive the repayment of up to 100% of the principal
amount of the Purchase Loan, subject to such terms and conditions as the
Committee shall determine and set forth in the promissory note evidencing the
Purchase Loan. A Participant's Purchase Loan can be prepaid at any time, and
from time to time, without penalty.

                  7.3. Security for Loans. (a) Stock Power and Pledge. Purchase
Loans granted to Participants may be secured by a pledge of the Shares acquired
pursuant to the Share Purchase Award. Such pledge, if any, shall be evidenced by
a pledge agreement (the "Pledge Agreement") containing such terms and conditions
as the Committee shall determine. The share certificates for the Shares
purchased by a Participant pursuant to a Share Purchase Award shall be issued in
the Participant's name, but may be held by the Company as security for repayment
of the Participant's Purchase Loan together with a stock power executed in blank
by the Participant (the execution and delivery of which by the Participant may
be a condition to the issuance of the Share Purchase Award). Unless otherwise
determined by the Committee, the Participant shall be entitled to exercise all
rights applicable to such Shares, including, but not limited to, the right to
vote such Shares and the right to receive dividends and other distributions made
with respect to such Shares. If the Shares have been held by the Company, when
the Purchase Loan and any accrued but unpaid interest thereon has been repaid or
otherwise satisfied in full, the Company shall deliver to the Participant the
share certificates for the Shares purchased by a Participant under the Share
Purchase Award. Purchase Loans shall be recourse or non-recourse with respect to
a Participant, as determined by the Committee.

                        (b)    Release and Delivery of Share Certificates During
the Term of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for Shares purchased by a Participant pursuant to a
Share Purchase Award, in such amounts and on

                                       8

such terms and conditions as the Committee shall determine, which shall be set
forth in the Pledge Agreement.

                        (c)    Release and Delivery of Share Certificates Upon
Repayment of the Purchase Loan. The Company shall release and deliver to each
Participant certificates for the Shares purchased by the Participant under the
Share Purchase Award and then held by the Company, provided the Participant has
paid or otherwise satisfied in full the balance of the Purchase Loan and any
accrued but unpaid interest thereon. In the event the balance of the Purchase
Loan is not repaid, forgiven or otherwise satisfied within 90 days after (i) the
date repayment of the Purchase Loan is due (whether in accordance with its term,
by reason of acceleration or otherwise), or (ii) such longer time as the
Committee, in its discretion, shall provide for repayment or satisfaction, the
Company shall retain those Shares then held by the Company in accordance with
the Pledge Agreement.

                        (d)    Recourse Purchase Loans. Notwithstanding
Sections 7.3(a), (b) and (c) above, in the case of a recourse Purchase Loan, the
Committee may make a Purchase Loan on such terms as it determines, including
without limitation, not requiring a pledge of the acquired Shares.

                  7.4. Termination of Employment. (a) Termination of Employment
by Death, Disability or by the Company Without Cause; Change of Control. In the
event of a Participant's termination of employment by reason of death,
"disability" or by the Company without "cause," or in the event of a "change of
control," the Committee shall have the right (but shall not be required) to
forgive the remaining unpaid amount (principal and interest) of the Purchase
Loan in whole or in part as of the date of such occurrence. "Change of Control,"
"disability" and "cause" shall have the respective meanings as set forth in the
promissory note evidencing the Purchase Loan.

                        (b)    Termination of Employment. Subject to
Section 7.4(a) above, in the event of a Participant's termination of employment
for any reason, the Participant shall repay to the Company the entire balance of
the Purchase Loan and any accrued but unpaid interest thereon, which amounts
shall become immediately due and payable, unless otherwise determined by the
Committee.

                  7.5. Restrictions on Transfer. No Share Purchase Award or
Shares purchased through such an Award and pledged to the Company as collateral
security for the Participant's Purchase Loan (and accrued and unpaid interest
thereon) may be otherwise pledged, sold, assigned or transferred (other than by
will or by the laws of descent and distribution).

                                       9

                                   ARTICLE 8.

                                  SHARE AWARDS

                  8.1. Restricted Share Awards. (a) A grant of Shares made
pursuant to Sections 8.1 and 8.2 is referred to as a "Restricted Share Award."
The Committee may grant to any Participant an amount of Shares in such manner,
and subject to such terms and conditions relating to vesting, forfeitability and
restrictions on delivery and transfer (whether based on performance standards,
periods of service or otherwise) as the Committee shall establish (such Shares,
"Restricted Shares"). The terms of any Restricted Share Award granted under this
Plan shall be set forth in a written agreement (a "Restricted Share Agreement")
which shall contain provisions determined by the Committee and not inconsistent
with this Plan. The provisions of Restricted Share Awards need not be the same
for each Participant receiving such Awards.

                        (b)    Issuance of Restricted Shares. As soon as
practicable after the date of grant of a Restricted Share Award by the
Committee, the Company shall cause to be transferred on the books of the Company
Shares registered in the name of the Company, as nominee for the Participant,
evidencing the Restricted Shares covered by the Award; provided, however, such
Shares shall be subject to forfeiture to the Company retroactive to the date of
grant if a Restricted Share Agreement delivered to the Participant by the
Company with respect to the Restricted Shares covered by the Award is not duly
executed by the Participant and timely returned to the Company. All Restricted
Shares covered by Awards under this Article 8 shall be subject to the
restrictions, terms and conditions contained in the Plan and the Restricted
Share Agreement entered into by and between the Company and the Participant.
Until the lapse or release of all restrictions applicable to an Award of
Restricted Shares, the share certificates representing such Restricted Shares
shall be held in custody by the Company or its designee.

                        (c)    Shareholder Rights. Beginning on the date of
grant of the Restricted Share Award and subject to execution of the Restricted
Share Agreement as provided in Sections 8.1(a) and (b), unless the Restricted
Share Agreement provides otherwise, the Participant shall become a shareholder
of the Company with respect to all Shares subject to the Restricted Share
Agreement and shall have all of the rights of a shareholder, including, but not
limited to, the right to vote such Shares and the right to receive distributions
made with respect to such Shares; provided, however, that any Shares distributed
as a dividend or otherwise with respect to any Restricted Shares as to which the
restrictions have not yet lapsed shall be subject to the same restrictions as
such Restricted Shares and shall be represented by book entry and held as
prescribed in Section 8.1(b).

                        (d)    Restriction on Transferability. None of the
Restricted Shares may be assigned or transferred (other than by will or the laws
of descent and distribution), pledged or sold prior to lapse or release of the
restrictions applicable thereto.

                        (e)    Delivery of Shares Upon Release of Restrictions.
Upon expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions
prescribed by the Committee, the restrictions applicable to the Restricted
Shares shall lapse. As promptly as administratively feasible thereafter, subject
to the

                                       10

requirements of Section 10.1, the Company shall deliver to the Participant or,
in case of the Participant's death, to the Participant's beneficiary, one or
more stock certificates for the appropriate number of Shares, free of all such
restrictions, except for any restrictions that may be imposed by law.

                  8.2. Terms of Restricted Shares. (a) Forfeiture of Restricted
Shares. Subject to Section 8.2(b), all Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues in the
service of the Company as an employee (or Director, consultant or advisor, as
the case may be) until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth in the
Restricted Share Agreement. The Committee in its sole discretion, shall
determine the forfeiture period (which may, but need not, lapse in installments)
and any other terms and conditions applicable with respect to any Restricted
Share Award and the Committee has the discretion to modify the terms and
conditions of a Restricted Share Award as long as the rights of the Participant
are not impaired.

                        (b)    Waiver of Forfeiture Period. Notwithstanding
anything contained in this Article 8 to the contrary, the Committee may, in its
sole discretion and subject to the limitations imposed under Code Section 162(m)
and the Treasury Regulations thereunder in the case of a Restricted Share Award
intended to comply with the performance-based compensation exception under Code
Section 162(m), waive the forfeiture period and any other conditions set forth
at grant in any Restricted Share Agreement under appropriate circumstances
(including the death, disability or retirement of the Participant or a material
change in circumstances arising after the date of an Award) as determined by the
Committee in its sole discretion and subject to such terms and conditions
(including forfeiture of a proportionate number of the Restricted Shares) as the
Committee shall deem appropriate.

                  8.3. Other Share-Based Awards. The Committee is authorized to
grant other Share-based awards that are payable in, valued in whole or in part
by reference to, or otherwise based on or related to Shares, including but not
limited to, Shares awarded purely as a bonus and not subject to any restrictions
or conditions, Shares in payment of the amounts due under an incentive or
performance plan sponsored or maintained by the Company or any subsidiary or
affiliate of the Company, share appreciation rights (in tandem with Options),
stock equivalent units, and Awards valued by reference to book value of Shares.
Subject to the provisions of this Plan, the Committee shall have authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of Shares to be awarded pursuant to or referenced by such
Awards, and all other conditions of the Awards. Grants of other Share-based
awards may be subject to such conditions, restrictions and contingencies as the
Committee may determine which may include, but are not limited to, continuous
service with the Company or any subsidiary or affiliate of the Company and/or
the achievement of performance goals.

                  8.4. Objective Performance Goals, Formulae or Standards. If
the grant of Restricted Shares or other Share-based awards or the lapse of
restrictions or vesting of Restricted Shares or other Share-based awards is
based on the attainment of performance goals, the Committee shall establish the
performance goals and the applicable vesting percentage of the Restricted Share
Award or other Share-based award applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable fiscal year or
at such later date as

                                       11

otherwise determined by the Committee and while the outcome of the performance
goals are substantially uncertain. Such performance goals may incorporate
provisions for disregarding (or adjusting for) changes in accounting methods,
corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. With regard to a
Restricted Share Award or other Share-based award that is intended to comply
with Section 162(m) of the Code, to the extent any such provision would create
impermissible discretion under Section 162(m) of the Code or otherwise violate
Section 162(m) of the Code, such provision shall be of no force or effect. The
applicable performance goals shall be based on one or more of the Performance
Criteria set forth in Exhibit A hereto. Other performance goals may be used to
the extent such goals satisfy Section 162(m) of the Code or the Award is not
intended to satisfy the requirements of Section 162(m) of the Code.

                                   ARTICLE 9.

                         GENERALLY APPLICABLE PROVISIONS

                  9.1. Option Period. Subject to Section 3.1(b), the period for
which an Option is exercisable shall be set by the Committee and shall not
exceed ten years from the date such Option is granted, provided, however, in the
case of an Option that is not intended to be an "incentive stock option," the
Committee may prescribe a period in excess of ten years. After the Option is
granted, the option period may not be reduced, subject to expiration due to
termination of employment.

                  9.2. Fair Market Value. If the Shares are listed or admitted
to trading on a securities exchange registered under the Exchange Act, unless
otherwise required by any applicable provision of the Code the "Fair Market
Value" of a Share as of a specified date shall mean the average of the high and
low price of the shares for the day immediately preceding the date as of which
Fair Market Value is being determined (or if there was no reported sale on such
date, on the last preceding date on which any reported sale occurred) reported
on the principal securities exchange on which the Shares are listed or admitted
to trading. If the Shares are not listed or admitted to trading on any such
exchange but are listed as a national market security on the Nasdaq Stock
Market, Inc. ("NASDAQ"), traded in the over-the-counter market or listed or
traded on any similar system then in use, the Fair Market Value of a Share shall
be the average of the high and low sales price for the day immediately preceding
the date as of which the Fair Market Value is being determined (or if there was
no reported sale on such date, on the last preceding date on which any reported
sale occurred) reported on such system. If the Shares are not listed or admitted
to trading on any such exchange, are not listed as a national market security on
NASDAQ and are not traded in the over-the-counter market or listed or traded on
any similar system then in use, but are quoted on NASDAQ or any similar system
then in use, the Fair Market Value of a Share shall be the average of the
closing high bid and low asked quotations on such system for the Shares on the
date in question. If the Shares are not publicly traded, the method for
determining Fair Market Value shall be determined in good faith by the Committee
in its sole discretion. An Option shall be considered granted on the date the
Committee acts to grant the Option or such later date as the Committee shall
specify.

                                       12

                  9.3. Exercise of Options. Vested Options granted under the
Plan shall be exercised by the Optionee thereof (or by his or her executors,
administrators, guardian or legal representative, or by a Permitted Assignee, as
provided in Sections 9.4, 9.6 and 9.7 hereof) as to all or part of the Shares
covered thereby, by the giving of written notice of exercise to the Company,
specifying the number of Shares to be purchased, accompanied by payment of the
full purchase price for the Shares being purchased. Full payment of such
purchase price shall be made at the time of exercise and shall be made (i) in
cash or by certified check or bank check or wire transfer of immediately
available funds, (ii) with the consent of the Committee, by delivery of a
promissory note in favor of the Company upon such terms and conditions as
determined by the Committee, (iii) with the consent of Committee, by tendering
previously acquired Shares (valued at their Fair Market Value, as determined by
the Committee as of the date of tender) that have been owned for a period of at
least six months (or such other period to avoid accounting charges against the
Company's earnings), or (iv) if Shares are traded on a national securities
exchange, the NASDAQ or quoted on a national quotation system sponsored by the
National Association of Securities Dealers, Inc. and the Committee authorizes
this method of exercise, through the delivery of irrevocable instructions to a
broker approved by the Committee to deliver promptly to the Company an amount
equal to the purchase price, or (v) with the consent of the Committee, any
combination of (i), (ii), (iii) and (iv). In connection with a tender of
previously acquired Shares pursuant to clause (iii) above, the Committee, in its
sole discretion, may permit the Optionee to constructively exchange Shares
already owned by the Optionee in lieu of actually tendering such Shares to the
Company, provided that adequate documentation concerning the ownership of the
Shares to be constructively tendered is furnished in a form satisfactory to the
Committee. The notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office
as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event may any Option
granted hereunder be exercised for a fraction of a Share. The Company shall,
subject to Section 10.4 herein, effect the transfer of Shares purchased pursuant
to an Option as soon as practicable, and, within a reasonable time thereafter,
such transfer shall be evidenced on the books of the Company. No person
exercising an Option shall have any of the rights of a holder of Shares subject
to an Option until certificates for such Shares shall have been issued following
the exercise of such Option. No adjustment shall be made for cash dividends or
other rights for which the record date is prior to the date of such issuance.

                  9.4. Non-Transferability. Except as otherwise specifically
provided herein, no Award shall be transferable by the Participant otherwise
than by will or by the laws of descent and distribution. All Options shall be
exercisable, during the Participant's lifetime, only by the Participant. Any
attempt to transfer any Award, except as specifically provided herein, shall be
void, and no such Award shall in any manner be subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
Award, nor shall it be subject to attachment or legal process for or against
such person. Notwithstanding the foregoing, the Committee may determine at the
time of grant or thereafter that an Award (other than (x) an Option that is
intended to be an incentive stock option, (y) a share appreciation right covered
by Section 5.2(d)(i) and (z) a Restricted Share Award) that is otherwise not
transferable pursuant to this Section 9.4 is transferable to a Family Member
(defined below) in whole or in part and in such circumstances, and under such
conditions as specified by the Committee. An Award that is transferred to a
Family Member pursuant to the preceding sentence (i) may not be subsequently

                                       13

transferred otherwise than by will or by the laws of descent and distribution
and (ii) remains subject to the terms of this Plan and the Award agreement.
"Family Member" means, solely to the extent provided for in Securities Act Form
S-8, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee's household (other than a tenant
or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the employee)
control the management of assets, and any other entity in which these persons
(or the employee) own more than 50% of the voting interests or as otherwise
defined in Securities Act Form S-8.

                  9.5. Termination of Employment. Unless the Committee otherwise
determines, in the event of the termination of employment with the Company or
any subsidiary or affiliate of the Company of an Optionee who is an employee or
the termination or separation from service with the Company or any subsidiary or
affiliate of the Company of an advisor, consultant or a Director (who is an
Optionee) for any reason (other than death or disability as provided below), any
Option(s) granted to such Optionee (or its Permitted Assignee) under this Plan
and not previously exercised or expired, to the extent vested on the date of
such termination or separation, shall be exercisable as of such termination for
a period of three months after the date of such termination or separation,
provided, however, that in no instance may the term of the Option, as so
extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or
9.1 above.

                  9.6. Death. In the event an Optionee dies while employed by
the Company or any subsidiary or affiliate of the Company or while serving as a
Director, advisor or consultant of the Company or any subsidiary of the Company,
as the case may be, any Option(s) held by such Optionee (or its Permitted
Assignee) and not previously expired or exercised shall, to the extent
exercisable on the date of death, be exercisable by the estate of such Optionee
or by any person who acquired such Option by bequest or inheritance, or by the
Permitted Assignee at any time within one year after the death of the Optionee,
unless earlier terminated pursuant to its terms, provided, however, that in no
instance may the term of the Option, as so extended, exceed the maximum term
established pursuant to Section 3.1(b)(ii) or 9.1 above.

                  9.7. Disability. In the event of the termination of employment
with the Company or any subsidiary or affiliate of the Company of an Optionee or
separation from service with the Company or any subsidiary or affiliate of the
Company of an Optionee who is a Director, advisor or consultant of the Company
or any subsidiary or affiliate of the Company due to total disability, the
Optionee, or his guardian or legal representative, or a Permitted Assignee shall
have the unqualified right to exercise any Option that has not expired or been
previously exercised and that the Optionee was eligible to exercise as of the
first date of total disability (as determined by the Committee), at any time
within one year after such termination or separation, unless earlier terminated
pursuant to its terms, provided, however, that in no instance may the term of
the Option, as so extended, exceed the maximum term established pursuant to
Section 3.1(b)(ii) or 9.1 above. The term "total disability" shall, for purposes
of this Plan, be defined in the same manner as such term is defined in Section
22(e)(3) of the Code.

                                       14

                  9.8. Terms of Grant. Notwithstanding anything in Section 9.5,
9.6 or 9.7 to the contrary, the Committee may grant an Option under such terms
and conditions as may be provided in the Share Option Agreement given to the
Optionee and the Committee has the discretion to modify the terms and conditions
of an Option after grant as long as no rights of the Participant are impaired,
provided, however, that in no instance may the term of the Option, as so
extended, exceed the maximum term established pursuant to Section 3.1(b)(ii) or
9.1 above.

                  9.9. Adjustments. In the event that the Committee shall
determine that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities, the issuance
of warrants or other rights to purchase Shares or other securities, or other
similar corporate transaction or event affects the Shares with respect to which
Options have been or may be issued under the Plan, such that an adjustment is
determined in good faith by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as the
Committee may deem equitable, adjust any or all of (i) the number and type of
Shares that thereafter may be made the subject of Awards, (ii) the number and
type of Shares subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Option, or, if deemed appropriate, make provision for
a cash payment to the holder of any outstanding Option; provided, in each case,
that with respect to "incentive stock options," no such adjustment shall be
authorized to the extent that such adjustment would cause such options to
violate Section 422(b) of the Code or any successor provision; and provided
further, that the number of Shares subject to any Option denominated in Shares
shall always be a whole number. In the event of any reorganization, merger,
consolidation, split-up, spin-off, or other business combination involving the
Company (each, a "Reorganization"), the Committee may cause any Award
outstanding as of the effective date of the Reorganization to be canceled in
consideration of a cash payment made to or an alternate Award (whether from the
Company or another entity that is a party to the Reorganization), or a
combination thereof, the holder of such canceled Award substantially equivalent
in value to the fair market value of such canceled Award. The determination of
fair market value shall be made by the Committee in its sole discretion.

                  9.10. Amendment and Modification of the Plan. The Compensation
Committee of the Board of Directors of the Company may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable, subject
to any requirement for shareholder approval imposed by applicable law, including
without limitation Sections 162(m) and 422 of the Code, or any rule of any stock
exchange or quotation system on which Shares are listed or quoted; provided that
such Compensation Committee may not amend the Plan, without the approval of the
Company's shareholders, to increase the number of Shares that may be the subject
of Options under the Plan (except for adjustments pursuant to Section 9.9
hereof). In addition, no amendments to, or termination of, the Plan shall in any
way impair the rights of an Optionee or a Participant (or a Permitted Assignee
thereof) under any Award previously granted without such Optionee's or
Participant's consent.

                  9.11. Validity of Awards. The validity of any Award or grant
of Options made pursuant to this Plan shall remain in full force and effect and
shall not be affected by the

                                       15

compliance or noncompliance with Section 162(m) of the Code or Rule 16b-3 of the
Exchange Act.

                                   ARTICLE 10.

                                  MISCELLANEOUS

                  10.1. Tax Withholding. The Company or any subsidiary or
affiliate of the Company shall have the right to make all payments or
distributions made pursuant to the Plan to an Optionee or Participant (or a
Permitted Assignee thereof) net of any applicable federal, state and local taxes
required to be paid as a result of the grant of any Award, exercise of an Option
or stock appreciation rights or any other event occurring pursuant to this Plan.
The Company or any subsidiary or affiliate of the Company shall have the right
to withhold from wages or other payments otherwise payable to such Optionee or
Participant (or a Permitted Assignee thereof) such withholding taxes as may be
required by law, or to otherwise require the Optionee or Participant (or a
Permitted Assignee thereof) to pay such withholding taxes. If the Optionee or
Participant (or a Permitted Assignee thereof) shall fail to make such tax
payments as are required, the Company or any subsidiary or affiliate of the
Company shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to such Optionee or Participant
or to take such other action as may be necessary to satisfy such withholding
obligations. In satisfaction of the requirement to pay required withholding
taxes, the Optionee or Participant (or Permitted Assignee) may make a written
election, which may be accepted or rejected in the discretion of the Committee,
to have withheld a portion of the Shares then issuable to the Optionee (or
Permitted Assignee) pursuant to the Plan, having an aggregate Fair Market Value
equal to the required withholding taxes.

                  10.2. Right of Discharge Reserved. Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any employee, Director,
consultant, advisor or other individual the right to continue in the employment
or service of the Company or any subsidiary or affiliate of the Company or
affect any right that the Company or any subsidiary or affiliate of the Company
may have to terminate the employment or service of (or to demote or to exclude
from future Awards under the Plan) any such employee, Director, consultant,
advisor or other individual at any time for any reason. Except as specifically
provided by the Committee, the Company shall not be liable for the loss of
existing or potential profit with respect to an Award in the event of
termination of an employment or other relationship even if the termination is in
violation of an obligation of the Company or any subsidiary or affiliate of the
Company to the Optionee or Participant.

                  10.3. Unfunded Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company or any subsidiary or affiliate of the
Company and any Optionee, Participant or other person. To the extent any
Optionee or Participant holds any rights by virtue of any grant or award made
under the Plan, such rights shall constitute general unsecured liabilities of
the Company or any subsidiary or affiliate of the Company and shall not confer
upon any participant any right, title, or interest in any assets of the Company
or any subsidiary or affiliate of the Company.

                                       16

                  10.4. Legend. All certificates for Shares delivered under this
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed or any national securities association system
upon whose system the Shares are then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

                  10.5. Listing and Other Conditions. (a) As long as the Shares
are listed on a national securities exchange or system sponsored by a national
securities association, the issue of any Shares pursuant to an Award shall be
conditioned upon such Shares being listed on such exchange or system. The
Company shall have no obligation to deliver such Shares unless and until such
Shares are so listed; provided, however, that any delay in the delivery of such
Shares shall be based solely on a reasonable business decision and the right to
exercise any Option with respect to such Shares shall be suspended until such
listing has been effected.

                        (b)    If at any time counsel to the Company shall be of
the opinion that any sale or delivery of Shares pursuant to any Award is or may
in the circumstances be unlawful or result in the imposition of excise taxes on
the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise with respect to Shares or Award, and the right to any Award shall be
suspended until, in the opinion of said counsel, such sale or delivery shall be
lawful or will not result in the imposition of excise taxes on the Company.

                        (c)    Upon termination of any period of suspension
under this Section 10.5, any Award affected by such suspension which shall not
then have expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension shall
extend the term of any Option.

                        (d)    A Participant shall be required to supply the
Company with any certificates, representations and information that the Company
requests and otherwise cooperate with the Company in obtaining any listing,
registration, qualification, exemption, consent or approval the Company deems
necessary or appropriate.

                  10.6. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Committee shall notify each
Optionee and Participant as soon as practicable prior to the effective date of
such proposed transaction. The Committee in its sole discretion may permit an
Optionee to exercise an Option until ten days prior to such transaction with
respect to all vested and exercisable Shares covered thereby and with respect to
such number of unvested Shares as the Committee shall determine. In addition,
the Committee may provide that any forfeiture provision or Company repurchase
option applicable to any Restricted Share Award shall lapse as to such number of
Shares as the Committee shall determine, contingent upon the occurrence of the
proposed dissolution or liquidation at the time and in the manner contemplated.
To

                                       17

the extent an Option has not been previously exercised, the Option shall
terminate automatically immediately prior to the consummation of the proposed
action. To the extent a forfeiture provision applicable to a Restricted Share
Award has not been waived by the Committee, the related Restricted Share Award
shall be forfeited automatically immediately prior to the consummation of the
proposed action.

                  10.7. Severability. If any provision of the Plan shall be held
unlawful or otherwise invalid or unenforceable in whole or in part, such
unlawfulness, invalidity or unenforceability shall not affect any other
provision of the Plan or part thereof, each of which shall remain in full force
and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or
unenforceable, such unlawfulness, invalidity or unenforceability shall not
prevent any other payment or benefit from being made or provided under the Plan,
and if the making of any payment in full or the provision of any other benefit
required under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or unenforceability shall not
prevent such payment or benefit from being made or provided in part, to the
extent that it would not be unlawful, invalid or unenforceable, and the maximum
payment or benefit that would not be unlawful, invalid or unenforceable shall be
made or provided under the Plan.

                  10.8. Gender and Number. In order to shorten and to improve
the understandability of the Plan document by eliminating the repeated usage of
such phrases as "his or her" and any masculine terminology herein shall also
include the feminine, and the definition of any term herein in the singular
shall also include the plural except when otherwise indicated by the context.

                  10.9. Effective Date of Plan; Termination of Plan. The Plan
shall be effective on the date of the approval of the Plan by the holders of a
majority of the shares entitled to vote thereon, provided such approval is
obtained within 12 months after the date of adoption of the Plan by the Board of
Directors. Awards may be granted under the Plan at any time and from time to
time after the effective date of the Plan and on or prior to September 3, 2013,
on which date the Plan will expire except as to Awards and related share
appreciation rights then outstanding under the Plan. Such outstanding Awards and
stock appreciation rights shall remain in effect until they have been exercised
or terminated, or have otherwise expired.

                  10.10. Nature of Payments. All Awards made pursuant to the
Plan are in consideration of services performed for the Company and any
subsidiary or affiliate of the Company. Any income or gain realized pursuant to
Awards under the Plan and any share appreciation rights constitutes a special
incentive payment to the Optionee, Participant or Holder and shall not be taken
into account, to the extent permissible under applicable law, as compensation
for purposes of any of the employee benefit plans of the Company or any
subsidiary or affiliate of the Company, except as may be determined by the
Committee or by the Directors or directors of the applicable subsidiary or
affiliate of the Company.

                  10.11. Captions. The captions in this Plan are for convenience
of reference only, and are not intended to narrow, limit or affect the substance
or interpretation of the provisions contained herein.

                  10.12. Successors and Assigns. This Plan shall be binding upon
and inure to the benefit of the respective successors and permitted assigns of
the Company and the Participants.

                                       18

                  10.13. Governing Law. The Plan and all determinations made and
actions taken thereunder, to the extent not otherwise governed by the Code or
the laws of the United States, shall be governed by the laws of the State of
Delaware and construed accordingly.

                                   ARTICLE 11.

                                 PUBLIC OFFERING

                  11.1. General. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, including the
Company's initial public offering, the Committee may, in its discretion,
determine that a person shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any Shares issued pursuant to an Award granted
under the Plan without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period of time as may
be requested by the Company or such underwriters and agreed to by the Company's
officers and directors with respect to their Shares; provided, however, that in
no event shall such period exceed 180 days. The limitations of this Article 11
shall in all events terminate two years after the effective date of the
Company's initial public offering. Holders of Shares issued pursuant to an Award
granted under the Plan shall be subject to the provisions of this Article 11
only if the officers and directors of the Company are also subject to similar
arrangements.

                  11.2. Subsequent Changes. In the event of any stock split,
stock dividend, recapitalization, combination of shares, exchange of Shares or
other change affecting the Company's outstanding common stock effected as a
class without the Company's receipt of consideration, any new, substituted or
additional securities distributed with respect to the purchased shares shall be
immediately subject to the provisions of this Article 11, to the same extent the
purchased shares are at such time covered by such provisions.

                  11.3. Stop-Transfer. In order to enforce the limitations of
this Article 11, the Company may impose stop-transfer instructions with respect
to the purchased Shares until the end of the applicable period.

                                       19

                                    EXHIBIT A

                              PERFORMANCE CRITERIA

                  Subject to the last sentence of Section 8.4 of the Plan,
performance goals established for purposes of conditioning the grant of an Award
of Restricted Shares or other Share-based awards based on performance or the
vesting of performance-based Awards of Restricted Shares shall be based on one
or more of the following performance criteria ("Performance Criteria"): (i) the
attainment of certain target levels of, or a specified percentage increase in,
revenues, income before income taxes and extraordinary items, net income,
earnings before income tax, earnings before interest, taxes, depreciation and
amortization, or a combination of any or all of the foregoing; (ii) the
attainment of certain target levels of, or a percentage increase in, after-tax
or pre-tax profits including, without limitation, that attributable to
continuing and/or other operations; (iii) the attainment of certain target
levels of, or a specified increase in, operational cash flow; (iv) the
achievement of a certain level of, reduction of, or other specified objectives
with regard to limiting the level of increase in, all or a portion of, the
Company's bank debt or other long-term or short-term public or private debt or
other similar financial obligations of the Company, which may be calculated net
of such cash balances and/or other offsets and adjustments as may be established
by the Committee; (v) the attainment of a specified percentage increase in
earnings per share or earnings per share from continuing operations; (vi) the
attainment of certain target levels of, or a specified increase in return on
capital employed or return on invested capital; (vii) the attainment of certain
target levels of, or a percentage increase in, after-tax or pre-tax return on
stockholders' equity; (viii) the attainment of certain target levels of, or a
specified increase in, economic value added targets based on a cash flow return
on investment formula; (ix) the attainment of certain target levels in the fair
market value of the shares of the Company's Shares and (x) the growth in the
value of an investment in the Company's Shares assuming the reinvestment of
dividends. For purposes of item (i) above, "extraordinary items" shall mean all
items of gain, loss or expense for the fiscal year determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to a
corporate transaction (including, without limitation, a disposition or
acquisition) or related to a change in accounting principle, all as determined
in accordance with standards established by Opinion No. 30 of the Accounting
Principles Board.

                  In addition, such Performance Criteria may be based upon the
attainment of specified levels of Company (or affiliate, division or other
operational unit of the Company) performance under one or more of the measures
described above relative to the performance of other real estate investment
trusts. To the extent permitted under Code Section 162(m) (including, without
limitation, compliance with any requirements for stockholder approval), the
Committee may: (i) designate additional business criteria on which the
Performance Criteria may be based or (ii) adjust, modify or amend the
aforementioned business criteria.

                                       20

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