Document:

JAMES RIVER GROUP, INC.

                               2005 INCENTIVE PLAN

                     Adopted by the Board of Directors as of
                  April 28, 2005, effective              ,2005

                                    CONTENTS

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Article 1. Establishment, Purpose, and Duration                                1
Article 2. Definitions                                                         1
Article 3. Administration                                                      5
Article 4. Shares Subject to the Plan and Maximum Awards                       6
Article 5. Eligibility and Participation                                       8
Article 6. Options                                                             8
Article 7. Share Appreciation Rights                                          10
Article 8. Restricted Shares and Restricted Share Units                       12
Article 9. Performance Units/Performance Shares                               14
Article 10. Cash-Based Awards and Other Share-Based Awards                    15
Article 11. Performance Measures                                              16
Article 12. Nonemployee Director Awards                                       18
Article 13. Dividend Equivalents                                              18
Article 14. Beneficiary Designation                                           18
Article 15. Rights of Participants                                            18
Article 16. Change of Control                                                 18
Article 17. Amendment, Modification, Suspension, and Termination              19
Article 18. Withholding                                                       19
Article 19. Successors                                                        20
Article 20. General Provisions                                                20

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                             JAMES RIVER GROUP, INC.
                               2005 INCENTIVE PLAN

ARTICLE 1 ESTABLISHMENT, PURPOSE, AND DURATION

     1.1 Establishment. James River Group, Inc., a Delaware corporation (the
"Company"), establishes an incentive compensation plan to be known as the 2005
Incentive Plan (the "Plan"), as set forth in this document.

     The Plan permits the grant of Cash-Based Awards, Nonqualified Options,
Incentive Options, Share Appreciation Rights (SARs), Restricted Shares,
Restricted Share Units, Performance Shares, Performance Units, and Other
Share-Based Awards.

     The Plan shall become effective upon shareholder approval (the "Effective
Date") and shall remain in effect as provided in Section 1.3 hereof.

     1.2 Purpose of the Plan. The purpose of the Plan is to provide a means
whereby Employees, Directors, and Third Party Service Providers of the Company
develop a sense of proprietorship and personal involvement in the development
and financial success of the Company, and to encourage them to devote their best
efforts to the business of the Company, thereby advancing the interests of the
Company and its shareholders. A further purpose of the Plan is to provide a
means through which the Company may attract able individuals to become Employees
or serve as Directors, or Third Party Service Providers of the Company and to
provide a means whereby those individuals upon whom the responsibilities of the
successful administration and management of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the welfare of the Company.

     1.3 Duration of the Plan. Unless sooner terminated as provided herein, the
Plan shall terminate ten (10) years from the Effective Date. After the Plan is
terminated, no Awards may be granted but Awards previously granted shall remain
outstanding in accordance with their applicable terms and conditions and the
Plan's terms and conditions. Notwithstanding the foregoing, no Incentive Options
may be granted more than ten (10) years after the earlier of (a) adoption of the
Plan by the Board, and (b) the Effective Date.

ARTICLE 2 DEFINITIONS

     Whenever used in the Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.

     2.1 "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations of the Exchange Act.

     2.2 "Annual Award Limit" or "Annual Award Limits" have the meaning set
forth in Section 4.3.

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     2.3 "Award" means, individually or collectively, a grant under this Plan of
Cash-Based Awards, Nonqualified Options, Incentive Options, SARs, Restricted
Shares, Restricted Share Units, Performance Shares, Performance Units, or Other
Share-Based Awards, in each case subject to the terms of this Plan.

     2.4 "Award Agreement" means either (i) a written agreement entered into by
the Company and a Participant setting forth the terms and provisions applicable
to an Award granted under this Plan, or (ii) a written statement issued by the
Company to a Participant describing the terms and provisions of such Award.

     2.5 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning
ascribed to such term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.

     2.6 "Board" or "Board of Directors" means the Board of Directors of the
Company.

     2.7 "Cash-Based Award" means an Award granted to a Participant as described
in Article 10.

     2.8 "Code" means the U.S. Internal Revenue Code of 1986, as amended from
time to time.

     2.9 "Committee" means the committee designated by the Board to administer
this Plan. The members of the Committee shall be appointed from time to time by
and shall serve at the discretion of the Board and, unless otherwise determined
by the Board, the Committee shall consist of no fewer than two directors, each
of whom is (i) a "Non-Employee Director" within the meaning of Rule 16b-3 (or
any successor rule) of the Exchange Act, (ii) an "outside director" within the
meaning of Section 162(m) of the Code, and (iii) an "independent director" for
purposes of the rules and regulations of the Nasdaq Stock Market, Inc.
("NASDAQ").

     2.10 "Company" means James River Group, Inc., a Delaware corporation, and
any successor thereto as provided in Article 20 herein.

     2.11 "Covered Employee" means a Participant who is a "covered employee," as
defined in Code Section 162(m) and the Treasury Regulations promulgated under
Code Section 162(m), or any successor statute.

     2.12 "Director" means any individual who is a member of the Board of
Directors of the Company.

     2.13 "Effective Date" has the meaning set forth in Section 1.1.

     2.14 "Employee" means any employee of the Company, its Affiliates, and/or
its Subsidiaries.

     2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

                                       2

     2.16 "Fair Market Value" or "FMV" means a price that is based on the
opening, closing, actual, high, low, or average selling prices of a Share
reported on the NASDAQ or other established stock exchange (or exchanges) on the
applicable date, the preceding trading day, the next succeeding trading day, or
an average of trading days, as determined by the Committee in its discretion.
Unless the Committee determines otherwise, if the Shares are traded over the
counter at the time a determination of its Fair Market Value is required to be
made hereunder, its Fair Market Value shall be deemed to be equal to the average
between the reported high and low or closing bid and asked prices of a Share on
the most recent date on which Shares were publicly traded. In the event Shares
are not publicly traded at the time a determination of their Fair Market Value
is required to be made hereunder, the determination of their Fair Market Value
shall be made by the Committee in such manner as it deems appropriate. Such
definition(s) of FMV shall be specified in each Award Agreement and may differ
depending on whether FMV is in reference to the grant, exercise, vesting,
settlement, or payout of an Award.

     2.17 "Full Value Award" means an Award other than in the form of an ISO,
NQSO, or SAR, and which is settled by the issuance of Shares.

     2.18 "Freestanding SAR" means an SAR that is granted independently of any
Options, as described in Article 7.

     2.19 "Grant Price" means the price established at the time of grant of an
SAR pursuant to Article 7, used to determine whether there is any payment due
upon exercise of the SAR.

     2.20 "Incentive Option" or "ISO" means an Option to purchase Shares granted
under Article 6 to an Employee and that is designated as an Incentive Option and
that is intended to meet the requirements of Code Section 422, or any successor
provision.

     2.21 "Insider" shall mean an individual who is, on the relevant date, an
officer or Director of the Company, or a more than ten percent (10%) Beneficial
Owner of any class of the Company's equity securities that is registered
pursuant to Section 12 of the Exchange Act, as determined by the Board in
accordance with Section 16 of the Exchange Act.

     2.22 "Nonemployee Director" means a Director who is not an Employee.

     2.23 "Nonemployee Director Award" means any NQSO, SAR, or Full Value Award
granted, whether singly, in combination, or in tandem, to a Participant who is a
Nonemployee Director pursuant to such applicable terms, conditions, and
limitations as the Board or Committee may establish in accordance with this
Plan.

     2.24 "Nonqualified Option" or "NQSO" means an Option that is not intended
to meet the requirements of Code Section 422, or that otherwise does not meet
such requirements.

     2.25 "Option" means an Incentive Option or a Nonqualified Option, as
described in Article 6.

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     2.26 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.

     2.27 "Other Share-Based Award" means an equity-based or equity-related
Award not otherwise described by the terms of this Plan, granted pursuant to
Article 10.

     2.28 "Participant" means any eligible individual as set forth in Article 5
to whom an Award is granted.

     2.29 "Performance-Based Compensation" means compensation under an Award
that satisfies the requirements of Section 162(m) of the Code and the applicable
Treasury Regulations thereunder for certain performance-based compensation paid
to Covered Employees.

     2.30 "Performance Measures" means (i) those measures described in Section
11.3 hereof on which the performance goals are based, or (ii) such other
measures that have been approved by the Company's shareholders as contemplated
by Article 11 of this Plan in order to qualify Awards as Performance-Based
Compensation.

     2.31 "Performance Period" means the period of time during which the
performance goals must be met in order to determine the degree of payout and/or
vesting with respect to an Award.

     2.32 "Performance Share" means an Award granted under Article 9 herein and
subject to the terms of this Plan, denominated in Shares, the value of which at
the time it is payable is determined as a function of the extent to which
corresponding performance criteria have been achieved.

     2.33 "Performance Unit" means an Award granted under Article 9 herein and
subject to the terms of this Plan, denominated in units, the value of which at
the time it is payable is determined as a function of the extent to which
corresponding performance criteria have been achieved.

     2.34 "Period of Restriction" means the period when Restricted Shares or
Restricted Share Units are subject to a substantial risk of forfeiture (based on
the passage of time, the achievement of performance goals, or upon the
occurrence of other events as determined by the Committee, in its discretion),
as provided in Article 8.

     2.35 "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.

     2.36 "Plan" means this 2005 Incentive Plan, as it may hereinafter be
amended or restated.

     2.37 "Plan Year" means the Company's fiscal year as may be in effect from
time to time. The Company's current fiscal year is the twelve month period
beginning on January 1st of a particular year and ending on December 31st of
such year.

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     2.38 "Restricted Shares" means an Award granted to a Participant pursuant
to Article 8.

     2.39 "Restricted Share Unit" means an Award granted to a Participant
pursuant to Article 8, except no Shares are actually awarded to the Participant
on the date of grant.

     2.40 "Share" or "Shares" means the Company's shares of common stock, par
value $.01 per share.

     2.41 "Share Appreciation Right" or "SAR" means an Award, designated as a
SAR, pursuant to the terms of Article 7 herein.

     2.42 "Subsidiary" means any corporation, partnership, limited liability
company or other entity, whether domestic or foreign, in which the Company has
or obtains, directly or indirectly, a proprietary interest.

     2.43 "Tandem SAR" means an SAR that is granted in connection with a related
Option pursuant to Article 7 herein, the exercise of which shall require
forfeiture of the right to purchase a Share under the related Option (and when a
Share is purchased under the Option, the Tandem SAR shall similarly be
canceled).

     2.44 "Third Party Service Provider" means any consultant, agent, advisor,
or independent contractor who renders services to the Company, a Subsidiary, or
an Affiliate that (a) are not in connection with the offer and sale of the
Company's securities in a capital raising transaction, and (b) do not directly
or indirectly promote or maintain a market for the Company's securities.

     2.45 "Treasury Regulations" means the regulations promulgated under the
Code.

     2.46 "Withholding Taxes" means any federal, state, local or foreign income
taxes, withholding taxes, or employment taxes required to be withheld by law or
regulations.

ARTICLE 3 ADMINISTRATION

     3.1 General. The Committee shall be responsible for administering the Plan,
subject to this Article 3 and the other provisions of the Plan. The Committee
may employ attorneys, consultants, accountants, agents, and other individuals,
any of whom may be an Employee, and the Committee, the Company, and its officers
and Directors shall be entitled to rely upon the advice, opinions, or valuations
of any such individuals. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Participants, the Company, and all other interested individuals.

     3.2 Authority of the Committee. The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of the Plan and any
Award Agreement or other agreement or document ancillary to or in connection
with the Plan, to determine eligibility for Awards and to adopt such rules,
regulations, forms, instruments, and guidelines for administering the Plan as
the Committee may deem necessary or proper. Such authority shall

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include, but not be limited to, selecting Award recipients, establishing all
Award terms and conditions, including the terms and conditions set forth in
Award Agreements, and, subject to Article 17, adopting modifications and
amendments to the Plan or any Award Agreement, including without limitation, any
that are necessary to comply with the laws of the countries and other
jurisdictions in which the Company, its Affiliates, and/or its Subsidiaries
operate.

     3.3 Delegation. The Committee may delegate to one or more of its members or
to one or more officers of the Company, and/or its Subsidiaries and Affiliates
or to one or more agents or advisors such administrative duties or powers as it
may deem advisable, and the Committee or any individual to whom it has delegated
duties or powers as aforesaid may employ one or more individuals to render
advice with respect to any responsibility the Committee or such individual may
have under the Plan. The Committee may, by resolution, authorize one or more
officers of the Company to do one or more of the following on the same basis as
can the Committee: (a) designate Employees to be recipients of Awards; (b)
designate Third Party Service Providers to be recipients of Awards; and (c)
determine the size of any such Awards; provided, however, (i) the Committee
shall not delegate such responsibilities to any such officer for Awards granted
to an Employee that is considered an Insider; (ii) the resolution providing such
authorization sets forth the total number of Awards such officer(s) may grant;
and (iii) the officer(s) shall report periodically to the Committee regarding
the nature and scope of the Awards granted pursuant to the authority delegated.
Notwithstanding the foregoing, the Committee may not delegate to any officer the
ability to take any action or make any determination regarding issues arising
out of Code Section 162(m).

ARTICLE 4 SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

     4.1 Number of Shares Available for Awards. Subject to adjustment as
provided in Section 4.4 herein, the maximum number of Shares available for
issuance to Participants under the Plan (the "Share Authorization") shall be
equal to the lesser of (i) ten percent of the total number of Outstanding Shares
determined on the Effective Date of this Plan and (ii) 2,500,000 Shares. Any
Shares that are subject to Awards of Options or Share Appreciation Rights shall
be counted against these limits as one Share for every Share issuable pursuant
to such Awards. For purposes of this Section 4.1, "Outstanding Shares" on the
Effective Date shall mean the total number of Shares outstanding, determined on
a fully diluted basis, assuming that all then outstanding options and warrants
have been exercised and all securities convertible into Shares have been
converted, and including all Shares available for issuance under this Plan, but
excluding from the computation of "Outstanding Shares"all then unexercised
compensatory options granted to employees or directors prior to the Company's
initial public offering under the Company's 2003 Incentive Plan and otherwise.

     4.2 Share Usage. Shares covered by an Award shall only be counted as used
to the extent they are actually issued. Any Shares related to Awards which
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged
with the Committee's permission, prior to the issuance of Shares, for Awards not
involving Shares, shall be available again for grant under the Plan. The Shares
available for issuance under the Plan may be authorized and unissued Shares or
treasury Shares.

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     4.3 Annual Award Limits. Unless and until the Committee determines that an
Award to a Covered Employee shall not be designed to qualify as
Performance-Based Compensation, the following limits (each an "Annual Award
Limit" and, collectively, "Annual Award Limits") shall apply to grants of such
Awards under the Plan:

          (a) Options: The maximum aggregate number of Shares subject to Options
granted in any one Plan Year to any one Participant shall be 750,000 Shares.

          (b) SARs: The maximum number of Shares subject to Share Appreciation
Rights granted in any one Plan Year to any one Participant shall be 750,000
Shares.

          (c) Restricted Shares or Restricted Share Units: The maximum aggregate
grant with respect to Awards of Restricted Shares or Restricted Share Units in
any one Plan Year to any one Participant shall be 750,000.

          (d) Performance Units or Performance Shares: The maximum aggregate
Award of Performance Units or Performance Shares that any one Participant may
receive in any one Plan Year shall be 750,000 Shares (if such Award is payable
in Shares), or equal to the value of 750,000 Shares. For this purpose, to the
extent an Award is payable in cash or property other than Shares, then such
Award shall be treated as payable in such number of Shares having a value equal
to the value of the cash or property (other than Shares) payable under such
Award, determined as of the earlier of the date of vesting or payout.

          (e) Cash-Based Awards: The maximum aggregate amount awarded or
credited with respect to Cash-Based Awards to any one Participant in any one
Plan Year may not exceed $3,000,000.

          (f) Other Share-Based Awards: The maximum aggregate grant with respect
to Other Share-Based Awards pursuant to Section 10.2 in any one Plan Year to any
one Participant shall be 750,000 Shares.

     The above Annual Award Limits are intended to comply with Code Section
162(m) and the Treasury Regulations thereunder, and shall be applied and/or
construed in such a way to ensure compliance with Code Section 162(m) and the
Treasury Regulations thereunder.

     4.4 Adjustments in Authorized Shares. In the event of any corporate event
or transaction (including, but not limited to, a change in the Shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, or other distribution of stock or
property of the Company, combination of Shares, exchange of Shares, dividend in
kind, or other like change in capital structure or distribution (other than
normal cash dividends) to shareholders of the Company, or any similar corporate
event or transaction, the Committee, in its sole discretion, in order to prevent
dilution or enlargement of Participants' rights under the Plan, shall substitute
or adjust, as applicable, the number and kind of Shares that may be issued under
the Plan or under particular forms of Awards, the number and kind of Shares
subject to

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outstanding Awards, the Option Price or Grant Price applicable to outstanding
Awards, the Annual Award Limits, and other value determinations applicable to
outstanding Awards.

     The Committee, in its sole discretion, may also make appropriate
adjustments in the terms of any Awards under the Plan to reflect or related to
such changes or distributions and to modify any other terms of outstanding
Awards, including modifications of performance goals and changes in the length
of Performance Periods. The determination of the Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under the
Plan.

     Subject to the provisions of Article 17, without affecting the number of
Shares reserved or available hereunder, the Committee may authorize the issuance
or assumption of benefits under this Plan in connection with any merger,
consolidation, spin-off, split-off, split-up, acquisition of property or stock,
or reorganization (collectively, a "Reorganization") upon such terms and
conditions as it may deem appropriate, subject to compliance with the ISO rules
under Section 422 of the Code and the provisions of Section 409A of the Code,
where applicable. Without limiting the foregoing, in the event of any
Reorganization, the Committee or the Board may cause any Award outstanding as of
the effective date of the Reorganization to be cancelled in consideration of a
cash payment or alternate Award made to the holder of such cancelled Award equal
in value to the fair market value of such cancelled Award; provided, however,
that nothing in this Section 4.4 shall permit the repricing, replacing or
regranting of Options or SARs in violation of Section 17.1 or the provisions of
Section 409A of the Code.

ARTICLE 5 ELIGIBILITY AND PARTICIPATION

     5.1 Eligibility. Individuals eligible to participate in this Plan include
all key Employees, Directors, and Third Party Service Providers.

     5.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible individuals, those
individuals to whom Awards shall be granted and shall determine, in its sole
discretion, the nature of, any and all terms permissible by law, and the amount
of each Award.

ARTICLE 6 OPTIONS

     6.1 Grant of Options. Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee, in
its sole discretion; provided that ISOs may be granted only to eligible
Employees of the Company or of any parent or subsidiary corporation (as
permitted by Section 422 of the Code and the Treasury Regulations thereunder).

     6.2 Award Agreement. Each Option grant shall be evidenced by an Award
Agreement that shall specify the Option Price, the maximum duration of the
Option, the number of Shares to which the Option pertains, the conditions upon
which an Option shall become vested and exercisable, and such other provisions
as the Committee shall determine which are not inconsistent with the terms of
the Plan. The Award Agreement also shall specify whether the Option is intended
to be an ISO or a NQSO.

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     6.3 Option Price. The Option Price for each grant of an Option under this
Plan shall be as determined by the Committee and shall be specified in the Award
Agreement. The Option Price shall be: (i) based on 100% of the FMV of the Shares
on the date of grant or (ii) set at a premium to the FMV of the Shares on the
date of grant.

     6.4 Duration of Options. Each Option granted to a Participant shall expire
at such time as the Committee shall determine at the time of grant; provided,
however, no Option shall be exercisable later than the tenth anniversary date of
its grant. Notwithstanding the foregoing, for Options (other than ISOs) granted
to Participants outside the United States, the Committee has the authority to
grant Options that have a term greater than ten years.

     6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which terms and restrictions need
not be the same for each grant or for each Participant.

     6.6 Payment. Options granted under this Article 6 shall be exercised by the
delivery of a notice of exercise to the Company or an agent designated by the
Company in a form specified or accepted by the Committee, or by complying with
any alternative procedures which may be authorized by the Committee, setting
forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.

     A condition of the issuance of the Shares as to which an Option shall be
exercised shall be the payment of the Option Price. The Option Price of any
Option shall be payable to the Company in full either: (a) in cash or its
equivalent; (b) by tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided that except as otherwise determined
by the Committee, the Shares that are tendered must have been held by the
Participant for at least six months prior to their tender to satisfy the Option
Price or have been purchased on the open market); (c) by a combination of (a)
and (b); or (d) any other method approved or accepted by the Committee in its
sole discretion, including, without limitation, if the Committee so determines,
a cashless (broker-assisted) exercise.

     Subject to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to
the Participant evidence of book entry Shares, or upon the Participant's
request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).

     Unless otherwise determined by the Committee, all payments under all of the
methods indicated above shall be paid in United States dollars.

     6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, minimum holding period requirements, restrictions under applicable
federal securities laws, under the requirements of any

                                       9

stock exchange or market upon which such Shares are then listed and/or traded,
or under any blue sky or state securities laws applicable to such Shares.

     6.8 Termination of Employment. Each Participant's Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant's employment or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Options issued pursuant to this
Article 6, and may reflect distinctions based on the reasons for termination.

     6.9 Transferability of Options.

          (a) Incentive Options. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. Further, all ISOs
granted to a Participant under this Article 6 shall be exercisable during his
lifetime only by such Participant.

          (b) Nonqualified Options. Except as otherwise provided in a
Participant's Award Agreement or otherwise determined at any time by the
Committee, no NQSO granted under this Article 6 may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution; provided that the Board or Committee
may permit further transferability, on a general or a specific basis, and may
impose conditions and limitations on any permitted transferability. Further,
except as otherwise provided in a Participant's Award Agreement or otherwise
determined at any time by the Committee, or unless the Board or Committee
decides to permit further transferability, all NQSOs granted to a Participant
under this Article 6 shall be exercisable during his lifetime only by such
Participant. With respect to those NQSOs, if any, that are permitted to be
transferred to another individual, references in the Plan to exercise or payment
of the Option Price by the Participant shall be deemed to include, as determined
by the Committee, the Participant's permitted transferee.

     6.10 Notification of Disqualifying Disposition. If any Participant shall
make any disposition of Shares issued pursuant to the exercise of an ISO under
the circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten days thereof.

     6.11 Special ISO Rules for 10% Shareholders. If any Participant to whom an
ISO is to be granted is, on the date of grant, the owner of Shares (determined
using applicable attribution rules) possessing more than 10% of the total
combined voting power of all classes of equity securities of his or her employer
(or of its parent or subsidiary), then the following special provisions will
apply to the ISO granted to that Participant:

          (a) The Option Price per Share of the ISO will not be less than 110%
of the Fair Market Value of the Shares underlying such ISO on the date of grant;
and

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          (b) The ISO will not have a term in excess of 5 years from the date of
grant.

ARTICLE 7 SHARE APPRECIATION RIGHTS

     7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Committee. The Committee may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SARs. Notwithstanding the foregoing,
SARs may be granted only if Shares are traded on an established securities
market at the date of grant.

     Subject to the terms and conditions of the Plan, the Committee shall have
complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.

     The Grant Price for each grant of a Freestanding SAR shall be determined by
the Committee and shall be specified in the Award Agreement. The Grant Price
shall be: (i) based on 100% of the FMV of the Shares on the date of grant or
(ii) set at a premium to the FMV of the Shares on the date of grant

     7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement
that shall specify the Grant Price, the term of the SAR, and such other
provisions as the Committee shall determine.

     7.3 Term of SAR. The term of an SAR granted under the Plan shall be
determined by the Committee, in its sole discretion, and except as determined
otherwise by the Committee and specified in the SAR Award Agreement, no SAR
shall be exercisable later than the tenth anniversary date of its grant.
Notwithstanding the foregoing, for SARs granted to Participants outside the
United States, the Committee has the authority to grant SARs that have a term
greater than ten years.

     7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes.

     7.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part
of the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option. A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.

     Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR
will expire no later than the expiration of the underlying ISO; (b) the exercise
of the Tandem SAR may not have economic and tax consequences more favorable than
the exercise of the ISO followed by an immediate sale of the underlying Shares,
and the value of the payout with respect to the Tandem SAR may be for no more
than 100% of the excess of the Fair Market Value of the Shares subject to the
underlying ISO at the time the Tandem SAR is exercised over the Option Price of
the underlying ISO; (c) the Tandem SAR may be exercised only when the Fair
Market Value of

                                       11

the Shares subject to the ISO exceeds the Option Price of the ISO; (d) the
Tandem SAR may be exercised only when the underlying ISO is eligible to be
exercised; and (e) the Tandem SAR is transferable only when the underlying ISO
is transferable, and under the same conditions.

     7.6 Payment of SAR Amount. SARs granted under this Plan shall be payable
only in Shares. Upon the exercise of an SAR, a Participant shall be entitled to
receive from the Company such number of Shares determined by multiplying:

          (a) The excess of the Fair Market Value of a Share on the date of
exercise over the Grant Price; by

          (b) The number of Shares with respect to which the SAR is exercised.

     Such product shall then be divided by the Fair Market Value of a Share on
the date of exercise. The resulting number (rounded down to the next whole
number) is the number of Shares to be issued to the Participant upon exercise of
an SAR.

     7.7 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant's employment with or provision of
services to the Company, its Affiliates, and/or its Subsidiaries, as the case
may be. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination.

     7.8 Nontransferability of SARs. Except as otherwise provided in a
Participant's Award Agreement or otherwise determined at any time by the
Committee, no SAR granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement or otherwise determined at any time by the
Committee, all SARs granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant. With respect to those SARs, if
any, that are permitted to be transferred to another individual, references in
the Plan to exercise of the SAR by the Participant or payment of any amount to
the Participant shall be deemed to include, as determined by the Committee, the
Participant's permitted transferee.

     7.9 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Shares received upon exercise of a SAR granted
pursuant to the Plan as it may deem advisable or desirable. These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold the Shares received upon exercise of a SAR for a specified period of time.

ARTICLE 8 RESTRICTED SHARES AND RESTRICTED SHARE UNITS

     8.1 Grant of Restricted Shares or Restricted Share Units. Subject to the
terms and provisions of the Plan, the Committee, at any time and from time to
time, may grant Restricted

                                       12

Shares and/or Restricted Share Units to Participants in such amounts as the
Committee shall determine. Restricted Share Units shall be similar to Restricted
Shares except that no Shares are actually awarded to the Participant on the date
of grant.

     8.2 Restricted Shares or Restricted Share Unit Agreement. Each Restricted
Share and/or Restricted Share Unit grant shall be evidenced by an Award
Agreement that shall specify the Period(s) of Restriction, the number of
Restricted Shares or the number of Restricted Share Units granted, and such
other provisions as the Committee shall determine. Notwithstanding anything in
this Article 8 to the contrary, delivery of Shares pursuant to an Award of
Restricted Share Units (or an Award of Restricted Shares) shall be made no later
than 2-1/2 months after the close of the Company's first taxable year in which
such Shares are no longer subject to a risk of forfeiture (within the meaning of
Section 409A of the Code).

     8.3 Transferability. Except as provided in this Plan or an Award Agreement,
the Restricted Shares and/or Restricted Share Units granted herein may not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable Period of Restriction established by the
Committee and specified in the Award Agreement (and in the case of Restricted
Share Units until the date of delivery or other payment), or upon earlier
satisfaction of any other conditions, as specified by the Committee, in its sole
discretion, and set forth in the Award Agreement or otherwise at any time by the
Committee. All rights with respect to the Restricted Shares and/or Restricted
Share Units granted to a Participant under the Plan shall be available during
his lifetime only to such Participant, except as otherwise provided in an Award
Agreement or at any time by the Committee.

     8.4 Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Restricted Shares or Restricted Share Units granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Participants pay a stipulated purchase price for each
Restricted Share or each Restricted Share Unit, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting
following the attainment of the performance goals, time-based restrictions,
and/or restrictions under applicable laws or under the requirements of any stock
exchange or market upon which such Shares are listed or traded, or holding
requirements or sale restrictions placed on the Shares by the Company upon
vesting of such Restricted Share or Restricted Share Units.

     To the extent deemed appropriate by the Committee, the Company may retain
the certificates representing Restricted Shares in the Company's possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied or lapse.

     Except as otherwise provided in this Article 8, Restricted Shares covered
by each Restricted Share Award shall become freely transferable by the
Participant after all conditions and restrictions applicable to such Shares have
been satisfied or lapse (including satisfaction of any applicable tax
withholding obligations), and Restricted Share Units shall be paid in cash,
Shares, or a combination of cash and Shares as the Committee, in its sole
discretion shall determine.

                                       13

     8.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 8.4, each certificate representing Restricted Shares granted
pursuant to the Plan may bear a legend such as the following or as otherwise
determined by the Committee in its sole discretion:

          "The sale or transfer of Shares of stock represented by this
          certificate, whether voluntary, involuntary, or by operation of law,
          is subject to certain restrictions on transfer as set forth in the
          James River Group, Inc. 2005 Incentive Plan, and in the associated
          Award Agreement. A copy of the Plan and such Award Agreement may be
          obtained from James River Group, Inc."

     8.6 Voting Rights. Unless otherwise determined by the Committee and set
forth in a Participant's Award Agreement, to the extent permitted or required by
law, as determined by the Committee, Participants holding Restricted Shares
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction. A Participant shall
have no voting rights with respect to any Restricted Share Units granted
hereunder.

     8.7 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Restricted Shares
and/or Restricted Share Units following termination of the Participant's
employment with or provision of services to the Company, its Affiliates, and/or
its Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Restricted
Shares or Restricted Share Units issued pursuant to the Plan, and may reflect
distinctions based on the reasons for termination.

     8.8 Section 83(b) Election. The Committee may provide in an Award Agreement
that the Award of Restricted Shares is conditioned upon the Participant making
or refraining from making an election with respect to the Award under Section
83(b) of the Code. If a Participant makes an election pursuant to Section 83(b)
of the Code concerning a Restricted Share Award, the Participant shall be
required to file promptly a copy of such election with the Company.

ARTICLE 9 PERFORMANCE UNITS/PERFORMANCE SHARES

     9.1 Grant of Performance Units/Performance Shares. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Performance Units and/or Performance Shares to Participants in such
amounts and upon such terms as the Committee shall determine.

     9.2 Value of Performance Units/Performance Shares. Each Performance Unit
shall have an initial value that is established by the Committee at the time of
grant. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the date of grant. The Committee shall set
performance goals in its discretion which, depending on the extent to

                                       14

which they are met, will determine the value and/or number of Performance
Units/Performance Shares that will be paid out to the Participant.

     9.3 Earning of Performance Units/Performance Shares. Subject to the terms
of this Plan, after the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive payout of the
value and number of Performance Units/Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.

     9.4 Form and Timing of Payment of Performance Units/Performance Shares.
Payment of earned Performance Units/Performance Shares shall be as determined by
the Committee and as evidenced in the Award Agreement. Subject to the terms of
the Plan, the Committee, in its sole discretion, may pay earned Performance
Units/Performance Shares in the form of cash or in Shares (or in a combination
thereof) equal to the value of the earned Performance Units/Performance Shares
at the close of the applicable Performance Period, or as soon as practicable
after the end of the Performance Period. Any Shares may be granted subject to
any restrictions deemed appropriate by the Committee. The determination of the
Committee with respect to the form of payout of such Awards shall be set forth
in the Award Agreement pertaining to the grant of the Award. Notwithstanding
anything in this Article 9 to the contrary, delivery of Shares, cash or other
property pursuant to an Award of Performance Units/Performance Shares shall be
made no later than 2-1/2 months after the close of the Company's first taxable
year in which delivery of such Shares, cash or other property is no longer
subject to a risk of forfeiture (within the meaning of Section 409A of the
Code).

     9.5 Termination of Employment. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Performance Units
and/or Performance Shares following termination of the Participant's employment
with or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Awards of
Performance Units or Performance Shares issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination.

     9.6 Nontransferability. Except as otherwise provided in a Participant's
Award Agreement or otherwise determined at any time by the Committee,
Performance Units/Performance Shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, except as otherwise provided in a
Participant's Award Agreement or otherwise determined at any time by the
Committee, a Participant's rights under the Plan shall be exercisable during his
lifetime only by such Participant.

ARTICLE 10 CASH-BASED AWARDS AND OTHER SHARE-BASED AWARDS

     10.1 Grant of Cash-Based Awards. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Cash-Based
Awards to Participants in

                                       15

such amounts and upon such terms, including the achievement of specific
performance goals, as the Committee may determine.

     10.2 Other Share-Based Awards. The Committee may grant other types of
equity-based or equity-related Awards not otherwise described by the terms of
this Plan (including the grant or offer for sale of unrestricted Shares) in such
amounts and subject to such terms and conditions, as the Committee shall
determine. Such Awards may involve the transfer of actual Shares to
Participants, or payment in cash or otherwise of amounts based on the value of
Shares and may include, without limitation, Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.

     10.3 Value of Cash-Based and Other Share-Based Awards. Each Cash-Based
Award shall specify a payment amount or payment range as determined by the
Committee. Each Other Share-Based Award shall be expressed in terms of Shares or
units based on Shares, as determined by the Committee. The Committee may
establish performance goals in its discretion. If the Committee exercises its
discretion to establish performance goals, the number and/or value of Cash-Based
Awards or Other Share-Based Awards that will be paid out to the Participant will
depend on the extent to which the performance goals are met.

     10.4 Payment of Cash-Based Awards and Other Share-Based Awards. Payment, if
any, with respect to a Cash-Based Award or an Other Share-Based Award shall be
made in accordance with the terms of the Award, in cash or Shares as the
Committee determines. Notwithstanding anything in this Article 10 to the
contrary, delivery of Shares, cash or other property pursuant to a Cash-Based
Award or Other Share-Based Award shall be made no later than 2-1/2 months after
the close of the Company's first taxable year in which delivery of such Shares,
cash or other property is no longer subject to a risk of forfeiture (within the
meaning of Section 409A of the Code).

     10.5 Termination of Employment. The Committee shall determine the extent to
which the Participant shall have the right to receive Cash-Based Awards or Other
Share-Based Awards following termination of the Participant's employment with or
provision of services to the Company, its Affiliates, and/or its Subsidiaries,
as the case may be. Such provisions shall be determined in the sole discretion
of the Committee, such provisions may be included in an Award Agreement entered
into with each Participant, but need not be uniform among all Awards of
Cash-Based Awards or Other Share-Based Awards issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination.

     10.6 Nontransferability. Except as otherwise determined by the Committee,
neither Cash-Based Awards nor Other Share-Based Awards may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
by the Committee, a Participant's rights under the Plan, if exercisable, shall
be exercisable during his lifetime only by such Participant. With respect to
those Cash-Based Awards or Other Share-Based Awards, if any, that are permitted
to be transferred to another individual, references in the Plan to exercise or
payment of such Awards by or to the Participant shall be deemed to include, as
determined by the Committee, the Participant's permitted transferee.

                                       16

ARTICLE 11 PERFORMANCE MEASURES

     11.1 General.

          (a) Certain Awards granted under the Plan may be granted in a manner
such that the Awards qualify as Performance-Based Compensation and thus are
exempt from the deduction limitation imposed by Section 162(m) of the Code.
Awards shall only qualify as Performance-Based Compensation if, among other
things, at the time of grant the Committee is comprised solely of two or more
"outside directors" (as such term is used in Section 162(m) of the Code and the
Treasury Regulations thereunder).

          (b) Awards intended to qualify as Performance-Based Compensation may
be granted to Participants who are or may be Covered Employees at any time and
from time to time, as shall be determined by the Committee. The Committee shall
have complete discretion in determining the number, amount and timing of awards
granted to each Covered Employee.

          (c) The Committee shall set performance goals at its discretion which,
depending on the extent to which they are met, will determine the number and/or
value of Awards intended to qualify as Performance-Based Compensation that will
be paid out to the Covered Employees, and may attach to such Performance-Based
Compensation one or more restrictions.

     11.2 Other Awards. Either the granting or vesting of Awards intended to
qualify as Performance-Based Compensation (other than Options and SARs) granted
under the Plan shall be subject to the achievement of a performance target or
targets, as determined by the Committee in its sole discretion, based on one or
more of the performance measures specified in Section 11.3 below. With respect
to such Performance-Based Compensation:

          (a) the Committee shall establish in writing (x) the objective
performance-based goals applicable to a given period and (y) the individual
Covered Employees or class of Covered Employees to which such performance-based
goals apply no later than 90 days after the commencement of such period (but in
no event after 25 percent of such period has elapsed);

          (b) no Performance-Based Compensation shall be payable to or vest with
respect to, as the case may be, any Covered Employee for a given period until
the Committee certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been satisfied; and

          (c) after the establishment of a performance goal, the Committee shall
not revise such performance goal or increase the amount of compensation payable
thereunder (as determined in accordance with Section 162(m) of the Code) upon
the attainment of such performance goal.

     11.3 Performance Measures. Unless and until the Committee proposes for
shareholder vote and the shareholders approve a change in the general
Performance Measures set forth in this Article 11, the performance goals upon
which the payment or vesting of an Award to a Covered

                                       17

Employee that is intended to qualify as Performance-Based Compensation shall be
limited to the following Performance Measures:

          (a) Net earnings or net income (before or after taxes);

          (b) Earnings per share;

          (c) Net sales growth;

          (d) Net operating profit;

          (e) Return measures (including, but not limited to, return on assets,
capital, invested capital, equity, or sales);

          (f) Cash flow (including, but not limited to, operating cash flow,
free cash flow, and cash flow return on capital);

          (g) Earnings before or after taxes, interest, depreciation, and/or
amortization;

          (h) Gross or operating margins;

          (i) Productivity ratios; and

          (j) Share price (including, but not limited to, growth measures and
total shareholder return).

     Any Performance Measure(s) may be used to measure the performance of the
Company, Subsidiary, and/or Affiliate as a whole or any business unit of the
Company, Subsidiary, and/or Affiliate or any combination thereof, as the
Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of peer companies, or published or
special index that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Measure (j) above as compared to various
stock market indices.

     11.4 Evaluation of Performance. The Committee may provide in any such Award
that any evaluation of performance may include or exclude any of the following
events that occurs during a Performance Period: (a) asset write-downs, (b)
litigation or claim judgments or settlements, (c) the effect of changes in tax
laws, accounting principles, or other laws or provisions affecting reported
results, (d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management's discussion and analysis of financial condition and
results of operations appearing in the Company's annual report to shareholders
for the applicable year, (f) acquisitions or divestitures, and (g) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

                                       18

     11.5 Adjustment of Performance-Based Compensation. Awards intended to
qualify as Performance-Based Compensation may not be adjusted upward. The
Committee shall retain the discretion to adjust such Awards downward, either on
a formula or discretionary basis or any combination, as the Committee
determines.

     11.6 Committee Discretion. In the event that applicable tax and/or
securities laws change to permit Committee discretion to alter the governing
Performance Measures without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval. In addition, in the event that the Committee determines
that it is advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures
other than those set forth in Section 11.1.

ARTICLE 12 NONEMPLOYEE DIRECTOR AWARDS

     All Awards to Nonemployee Directors shall be determined by the Board. The
terms and conditions of any grant to any such Nonemployee Director shall be set
forth in an Award Agreement.

ARTICLE 13 DIVIDEND EQUIVALENTS

     Any Participant selected by the Committee may be granted dividend
equivalents based on the dividends declared on Shares that are subject to any
Award, to be credited as of dividend payment dates, during the period between
the date the Award is granted and the date the Award is exercised, vests or
expires, as determined by the Committee. Such dividend equivalents shall be
converted to cash or additional Shares by such formula and at such time and
subject to such limitations as may be determined by the Committee (but subject
to the provisions of Section 409A of the Code, if applicable).

ARTICLE 14 BENEFICIARY DESIGNATION

     Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his death before he
receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.

ARTICLE 15 RIGHTS OF PARTICIPANTS

     15.1 Employment. Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company, its Affiliates, and/or its
Subsidiaries, to terminate any Participant's employment or service on the Board
or to the Company at any time or for any reason not prohibited by law, nor
confer upon any Participant any right to continue his

                                       19

employment or service as a Director or Third Party Service Provider for any
specified period of time.

     Neither an Award nor any benefits arising under this Plan shall constitute
an employment contract with the Company, its Affiliates, and/or its Subsidiaries
and, accordingly, subject to Articles 3 and 17, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of
the Committee without giving rise to any liability on the part of the Company,
its Affiliates, and/or its Subsidiaries.

     15.2 Participation. No individual shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.

     15.3 Rights as a Shareholder. Except as otherwise provided herein, a
Participant shall have none of the rights of a shareholder with respect to
Shares covered by any Award until the Participant becomes the record holder of
such Shares.

ARTICLE 16 CHANGE OF CONTROL

     In addition to the terms and conditions of this Plan, one or more Awards
may be subject to the terms and conditions set forth in a written agreement
between the Company and a Participant providing for different terms or
provisions with respect to such Awards upon a "Change of Control" of the Company
(as that term may be defined in such written agreement), including but not
limited to acceleration of benefits, lapsing of restrictions, vesting of
benefits and such other terms, conditions or provisions as may be contained in
such written agreement; provided however, that such written agreement may not
increase the maximum amount of such Awards.

ARTICLE 17 AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION

     17.1 Amendment, Modification, Suspension, and Termination. Subject to
Section 17.3, the Committee may, at any time and from time to time, alter,
amend, modify, suspend, or terminate the Plan and any Award Agreement in whole
or in part; provided, however, that, without the prior approval of the Company's
shareholders and except as provided in Section 4.4, Options or SARs issued under
the Plan will not be repriced, replaced, or regranted through cancellation, or
by lowering the Option Price of a previously granted Option or the Grant Price
of a previously granted SAR. Further, no amendment of the Plan shall be made
without shareholder approval if shareholder approval is required by law,
regulation, or stock exchange rule.

     17.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee may make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4.4 hereof) affecting the Company or the financial statements of the
Company or of changes in applicable laws, regulations, or accounting principles,
whenever the Committee determines that such adjustments are appropriate in order
to prevent unintended dilution or enlargement of the benefits or potential
benefits intended to be

                                       20

made available under the Plan. The determination of the Committee as to the
foregoing adjustments, if any, shall be conclusive and binding on Participants
under the Plan.

     17.3 Awards Previously Granted. Notwithstanding any other provision of the
Plan to the contrary, and except to the extent necessary to avoid the imposition
of additional tax and/or interest under Section 409A of the Code with respect to
Awards that are treated as nonqualified deferred compensation, no termination,
amendment, suspension, or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously granted under the
Plan, without the written consent of the Participant holding such Award.

ARTICLE 18 WITHHOLDING

     The Company shall have the right to withhold from a Participant (or a
permitted assignee thereof), or otherwise require such Participant or assignee
to pay, any Withholding Taxes arising as a result of the grant of any Award,
exercise of an Option or SAR, lapse of restrictions with respect to Restricted
Shares or Restricted Share Units, or any other taxable event occurring pursuant
to this Plan or any Award Agreement. If the Participant (or a permitted assignee
thereof) shall fail to make such tax payments as are required, the Company (or
its Affiliates or Subsidiaries) shall, to the extent permitted by law, have the
right to deduct any such Withholding Taxes from any payment of any kind
otherwise due to such Participant or to take such other action as may be
necessary to satisfy such Withholding Taxes. In satisfaction of the requirement
to pay Withholding Taxes, the Participant (or permitted assignee) may make a
written election which may be accepted or rejected in the discretion of the
Committee, (i) to have withheld a portion of any Shares or other payments then
issuable to the Participant (or permitted assignee) pursuant to any Award, or
(ii) to tender other Shares to the Company (either by actual delivery or
attestation, in the sole discretion of the Committee, provided that, except as
otherwise determined by the Committee, the Shares that are tendered must have
been held by the Participant for at least six months prior to their tender to
satisfy the Option Price or have been purchased on the open market), in either
case having an aggregate Fair Market Value equal to the Withholding Taxes.

ARTICLE 19 SUCCESSORS

     All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

ARTICLE 20 GENERAL PROVISIONS

     20.1 Forfeiture Events.

          (a) The Committee may specify in an Award Agreement that the
Participant's rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events

                                       21

may include, but shall not be limited to, termination of employment for cause,
termination of the Participant's provision of services to the Company,
Affiliate, and/or Subsidiary, violation of material Company, Affiliate, and/or
Subsidiary policies, breach of noncompetition, confidentiality, or other
restrictive covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company,
its Affiliates, and/or its Subsidiaries.

          (b) If the Company is required to prepare an accounting restatement
due to the material noncompliance of the Company, as a result of misconduct,
with any financial reporting requirement under the securities laws, if the
Participant knowingly or grossly negligently engaged in the misconduct, or
knowingly or grossly negligently failed to prevent the misconduct, or if the
Participant is one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002, the Participant shall reimburse
the Company the amount of any payment in settlement of an Award earned or
accrued during the twelve-month period following the first public issuance or
filing with the United States Securities and Exchange Commission (whichever just
occurred) of the financial document embodying such financial reporting
requirement.

     20.2 Legend. The certificates for Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer of such
Shares.

     20.3 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

     20.4 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

     20.5 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

     20.6 Delivery of Title. The Company shall have no obligation to issue or
deliver evidence of title for Shares issued under the Plan prior to:

          (a) Obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and

          (b) Completion of any registration or other qualification of the
Shares under any applicable national or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable.

     20.7 Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the

                                       22

Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

     20.8 Investment Representations. The Committee may require any individual
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the individual is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.

     20.9 Employees Based Outside of the United States. Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company, its Affiliates, and/or its Subsidiaries operate
or have Employees, Directors, or Third Party Service Providers, the Committee,
in its sole discretion, shall have the power and authority to:

          (a) Determine which Affiliates and Subsidiaries shall be covered by
the Plan;

          (b) Determine which Employees, Directors, or Third Party Service
Providers outside the United States are eligible to participate in the Plan;

          (c) Modify the terms and conditions of any Award granted to Employees,
Directors, or Third Party Service Providers outside the United States to comply
with applicable foreign laws;

          (d) Establish subplans and modify exercise procedures and other terms
and procedures, to the extent such actions may be necessary or advisable. Any
subplans and modifications to Plan terms and procedures established under this
Section 20.9 by the Committee shall be attached to this Plan document as
appendices; and

          (e) Take any action, before or after an Award is made, that it deems
advisable to obtain approval or comply with any necessary local government
regulatory exemptions or approvals.

     Notwithstanding the above, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate applicable law.

     20.10 Uncertificated Shares. To the extent that the Plan provides for
issuance of certificates to reflect the transfer of Shares, the transfer of such
Shares may be effected on a noncertificated basis, to the extent not prohibited
by applicable law or the rules of any stock exchange.

     20.11 Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, its Subsidiaries, and/or
its Affiliates may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal
representative, or any other individual. To the extent that any individual
acquires a right to receive payments from the

                                       23

Company, its Subsidiaries, and/or its Affiliates under the Plan, such right
shall be no greater than the right of an unsecured general creditor of the
Company, a Subsidiary, or an Affiliate, as the case may be. All payments to be
made hereunder shall be paid from the general funds of the Company, a
Subsidiary, or an Affiliate, as the case may be and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan.

     20.12 No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, Awards, or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.

     20.13 Retirement and Welfare Plans. Neither Awards made under the Plan nor
Shares or cash paid pursuant to such Awards may be included as "compensation"
for purposes of computing the benefits payable to any Participant under the
Company's or any Subsidiary's or Affiliate's retirement plans (both qualified
and non-qualified) or welfare benefit plans unless such other plan expressly
provides that such compensation shall be taken into account in computing a
Participant's benefit.

     20.14 Nonexclusivity of the Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Board or Committee to
adopt such other compensation arrangements as it may deem desirable for any
Participant.

     20.15 No Constraint on Corporate Action. Nothing in this Plan shall be
construed to: (i) limit, impair, or otherwise affect the Company's or a
Subsidiary's or an Affiliate's right or power to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer
all or any part of its business or assets; or, (ii) limit the right or power of
the Company or a Subsidiary or an Affiliate to take any action which such entity
deems to be necessary or appropriate.

     20.16 Governing Law. The Plan and each Award Agreement shall be governed by
the laws of the State of New York, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of the
Plan to the substantive law of another jurisdiction. Unless otherwise provided
in the Award Agreement, recipients of an Award under the Plan are deemed to
submit to the exclusive jurisdiction and venue of the federal or state courts of
New York, to resolve any and all issues that may arise out of or relate to the
Plan or any related Award Agreement.

     20.17 Indemnification. Each individual who is or shall have been a member
of the Board, or a committee appointed by the Board, or an officer of the
Company to whom authority was delegated in accordance with Article 3, shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him in
connection with or resulting from any claim, action, suit, or proceeding to
which he may be a party or in which he may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all amounts
paid by him in settlement thereof, with the Company's approval, or paid by him
in satisfaction of any judgement

                                       24

in any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf, unless such loss, cost,
liability, or expense is a result of his own willful misconduct or except as
expressly provided by statute.

     The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such individuals may be entitled under the
Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

     20.18 Amendment to Comply with Applicable Law. It is intended that no Award
granted under this Plan shall be subject to any interest or additional tax under
Section 409A of the Code. In the event Code Section 409A is amended after the
date hereof, or regulations or other guidance is promulgated after the date
hereof that would make an Award under the Plan subject to the provisions of Code
Section 409A, then the terms and conditions of this Plan shall be interpreted
and applied, to the extent possible, in a manner to avoid the imposition of the
provisions of Code Section 409A.

                                       25EMPLOYMENT AGREEMENT

         THIS AGREEMENT dated and effective as of November 15, 2002, between
James River Group, Inc., a Delaware corporation ("Company") and J. Adam Abram
("Executive").

                                   WITNESSETH:

         WHEREAS, the Board of Directors of the Company has employed the
Executive as President and Chief Executive Officer effective as of November 15,
2002 ("Effective Date") and the Executive has agreed to be so employed; and

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

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

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

         2. COMPENSATION. Executive shall be paid a base salary of not less than
three hundred fifty thousand dollars ($350,000) per year, payable in periodic
installments in accordance with the Company's regular payroll practices.
Executive shall be eligible to receive such discretionary bonuses as the Board
of Directors of the Company ("Board"), in its discretion, may determine. Within
one hundred eighty (180) days after the close of each fiscal year of the Company
during the Term, the Board shall review Executive's performance during such
fiscal year and decide whether to increase Executive's base salary and award any
discretionary bonus to Executive. Executive shall also be entitled, during the
Term to participate in all retirement, disability, pension, savings, health,
medical, dental, insurance and other fringe benefits or plans of the Company
generally available to executive employees including specifically the following
at the Company's expense:

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

                           (b) coverage under the Company's current health care
         insurance plans, including coverage for Executive's dependents, on the
         same terms and

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

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

         3. DUTIES. Executive shall perform all duties normally associated with
the position of President and Chief Executive Officer, and such other reasonable
duties as may be assigned to him by the Board. Executive will devote sufficient
time and effort to discharge his duties. Executive may perform duties for and
receive compensation from business ventures in addition to the Company, but in
no event may Executive perform duties for and receive compensation from any
Competitive Business as defined hereafter. Executive shall not engage in full
time employment or full time consulting for any business entity other than the
Company.

         4. PRIVILEGED INFORMATION.

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

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

                           (ii) reveal, divulge or make known to any person,
firm or corporation, or use for his personal benefit or the benefit of others
(except the Company), directly or indirectly, the name or names of any customers
of the Company or any of its Affiliates, nor will he reveal, divulge or make
known to any person, firm or corporation, or use for his personal benefit or the
benefit of others (except the Company), directly or indirectly, any trade
secrets or any knowledge or information, or any fact concerning any

                                       2

business methods or operational procedures engaged in by the Company or its
Affiliates (collectively, "Privileged Information"); provided, however, the
restrictions set forth in this Section 4(a)(ii) shall not apply to Executive
following the termination of his employment with the Company or its Affiliates
with respect to any Privileged Information known or made generally available to
the general public or within the industry.

         5.  NONCOMPETITION.

                  (a) Executive acknowledges and agrees that as the Company's
President and Chief Executive Officer (i) he is responsible for and directly
involved in developing customer goodwill and relationships for the benefit of
the Company, including personal contact with customers and supervising others
who contact customers and develop customer goodwill and relationships, (ii) he
has knowledge of the Company's most Confidential and Privileged Information, and
has been and will be compensated for the development, and supervising the
development, of the same, and (iii) he has unique insight into and knowledge of
the skills, talents and capabilities of the Company's key employees. Executive
also acknowledges and agrees that at the inception of his employment with the
Company it was agreed that he would be bound by noncompetition restrictions, and
furthermore, execution of this Agreement provides changes in the terms and
conditions of his employment favorable to Executive that constitute sufficient
consideration for Executive's agreement to the noncompetition restrictions set
forth in this Section.

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

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

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

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

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

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

                                       3

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

                           (ii) "Competitive Business" shall mean the business
of acquiring, holding and/or operating excess and surplus line insurance
companies, and any other material business that the Company or any of its
Affiliates is engaged in as of the date of this Agreement and as the business of
the Company and its Affiliates evolves during its Term; provided, however, that
if a court with jurisdiction determines that such definition is overbroad or
unenforceable, it shall be further limited to the business of the Company and
its Affiliates regarding which Executive had Confidential or Privileged
Information during the last year of the Term, and if this narrowed definition is
still deemed by such court to be overbroad or unenforceable, it shall be further
limited to business of the Company under Executive's management and control
during the last year of the Term;

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

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

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

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

                                       4

6.  TERMINATION.

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

                  (a) Termination for Cause. With the assent of seventy five
percent (75%) the entire Board of Directors, excluding Executive, who will be
excused from voting, the Company may terminate the employment of Executive for
cause at any time upon written notice to Executive specifying the cause of the
termination. For the purposes of this Section, "for cause" shall include only
discharge resulting from a determination by the Company that: (i) Executive has
willfully violated Section 4 or 5 of this Agreement; (ii) Executive has grossly
neglected his duties hereunder; (iii) Executive has been convicted of a felony
or a crime involving moral turpitude (meaning a crime that includes the
commission of an act of depravity, dishonesty or bad morals); or (iv) Executive
has committed an act of dishonesty, fraud or embezzlement against the Company.

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

                  (b) Termination for Performance. The Board of Directors
expects Executive to deliver financial results for the Company that are equal to
or greater than its peers. With the assent of seventy-five per cent (75%) of the
entire Board of Directors, excluding Executive, who will be excused from voting,
the Company may at its discretion terminate Executive for performance if the
Company's operating results as measured by either revenue or earning, are fifty
percent (50%) or less than the Company's approved budget targets.

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

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

                                       5

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

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

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

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

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

Executive shall not participate in any vote by the Board of Directors of the
Company relating to his employment.

7.  COMPENSATION AND BENEFITS UPON TERMINATION.

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

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

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

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

                                       6

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

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

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

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

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

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

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

                  d. All compensation and benefits made pursuant to this Section
shall cease if Executive violates any of the terms of Sections 4 or 5 during the
twelve (12) months following his last day of employment. In addition to this
remedy, the Company shall have all other remedies provided by this Agreement and
by law for the breach of Section 4 or Section 5 hereof.

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

         9. FURTHER ACKNOWLEDGEMENTS. Executive further acknowledges and agrees
that the restrictions contained in Sections 4 and 5 are reasonable and necessary
to protect the legitimate interest of the Company, in view of, among other
things, the short duration of the restrictions, the narrow scope of the
restrictions, the Company's interests in protecting its confidential,
proprietary, trade secret and Privileged Information (which

                                       7

Executive agrees has a useful life of more than one (1) year) and its customer
relationships and goodwill, Executive's background and capabilities which will
allow him to seek and accept employment without violation of the restrictions,
Executive's substantial equity interest in the Company, and Executive's
entitlements under this Agreement. If any provision contained in Section 4 or 5
is adjudged unreasonable in any proceeding, then such provision shall be deemed
modified by reducing the period of time during which such provision is
applicable and/or, if applicable, the geographic area to which such provision
applies, to the extent necessary for such provision to be adjudged reasonable
and enforceable.

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

To Executive:              J. Adam Abram
                           James River Group, Inc.
                           1414 Raleigh Road
                           Suite 415
                           Chapel Hill, NC 27517

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

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

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

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

                                       8

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

         15. DISPUTE RESOLUTION.

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

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

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

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

                                    * * * * *

                                       9

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

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

                                       JAMES RIVER GROUP, INC.

                                       By: /s/ Richard W. Wright
                                          --------------------------------------
                                          Richard W. Wright

                                           /s/ J. Adam Abram
                                          --------------------------------------
                                          J. Adam Abram

                                       10

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