EXHIBIT 10.3



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                              EMPLOYMENT AGREEMENT
                           dated as of January 1, 2005


              AGREEMENT, made and entered into as of the date first above
written, by and between, XL Capital Ltd, a Cayman Islands corporation (the
"Company"), and Fiona E. Luck (the "Executive").

              WHEREAS, the Executive has been in the employ of the Company and
certain of its subsidiaries;

              WHEREAS, the Company and Executive desire to continue such
employment and to memorialize the terms and conditions of such employment by a
written agreement;

              NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
Company, the Guarantors (as hereinafter defined) and the Executive (the
"Parties") agree as follows:

              1.     EMPLOYMENT.

              Subject to Section 3(d) below, the Company hereby employs the
Executive, and the Executive hereby accepts employment with the Company, for the
term of this Agreement as set forth in Section 2, below, in the position and
with duties and responsibilities set forth in Section 3, below, and upon such
other terms and conditions as are hereinafter stated.

              2.     TERM OF EMPLOYMENT.

              Subject to Section 3(d) below, the stated term of employment under
this Agreement shall commence on the date first above written (the "Date of the
Agreement") and shall continue through the close of business on the first
anniversary of the Date of the Agreement, subject to earlier termination as
provided in Section 8, below, and extension as provided in the next succeeding
sentence. On the first anniversary of the Date of the Agreement and on each
anniversary thereafter, the stated term of employment shall be automatically
extended for an additional one year unless the Company gives notice in writing
to the Executive or the Executive gives notice in writing to the Company at
least six months prior to such anniversary that the term is not to be so
extended.

              3.     POSITIONS, DUTIES AND RESPONSIBILITIES.

              (a)    GENERAL. The Executive shall be employed as the Executive
Vice President, Group Operations for the Company. In such position, the
Executive shall have the duties, responsibilities and authority normally
associated with the office, position and titles of such an officer of an
insurance, reinsurance and financial services company, or holding company, whose
shares are publicly traded in the United States. In carrying out her duties


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and responsibilities, the Executive shall report to the Chief Executive Officer
of XL Capital Ltd. During the term of this Agreement, the Executive shall devote
her full business time to the business and affairs of the Company, and shall use
her best efforts, skills and abilities to promote the Company's interests.

              (b)    PERFORMANCE OF SERVICES. The Executive's services under
this Agreement, which are global in nature, shall be performed at the location
or locations reasonably requested by the Company; PROVIDED, HOWEVER, that such
services will be performed outside the United States and in accordance with the
guidelines established by the Company from time to time for the location of the
performance of services on behalf of the Company and its subsidiaries. The
Executive acknowledges that the Company may require the Executive to travel to
the extent such travel is reasonably necessary to perform the services hereunder
and that such travel may be extensive. To the extent reasonably requested by the
Company, the Executive shall allocate greater business time to a location other
than her principal business location, and if reasonably requested by the
Company, the Executive shall relocate to such other locations. Any such
relocation will not be considered to be a breach of this Agreement.

              (c)    WORK PERMITS. The employment of the Executive by the
Company shall be contingent upon the issuance to the Executive of a suitable
(for the purposes of the Executive's contemplated employment by the Company)
work permit by the Bermuda government authorities and any other permits required
by any Bermuda government authority. Both the Company and the Executive shall
use their respective best efforts to obtain, maintain and renew said permit(s)
so as to allow the Executive to be employed under the terms hereof. The Company
shall be responsible for permit fees. If at any time said permit(s), having been
obtained, expire and are not renewed or cease to be valid and such renewal or
validation is necessary in order for the Executive to be employed by the Company
as contemplated by this Agreement and the non-renewal or invalidation is beyond
the control of both the Company and the Executive, employment under this
Agreement shall terminate immediately upon the expiration of said permit(s) or
upon said permit(s) ceasing to be valid unless the Executive can discharge her
duties and responsibilities effectively from another location not requiring said
permit(s) that is reasonably acceptable to the Executive and non-prejudicial to
the interests of the Company. In the event of such termination, the provisions
of Section 8(d) shall apply to such termination of the Executive's employment
(or, if within (i) the one-year period prior to the date of a Change in Control,
as hereinafter defined, provided the conditions set forth in the last paragraph
of Section 8(d)(iii) are satisfied, or (ii) the Post-Change Period, as
hereinafter defined, such termination shall be considered a termination by the
employee for "Good Reason") provided that non-renewal of said permit(s) or
invalidation thereof are not a direct result of any material action or omission
of the Executive that would reasonably cause such permit(s) not to be renewed or
validated.

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              4.     BASE SALARY.

              The Executive shall be paid a Base Salary by the Company equal to
US$550,000.00, payable in accordance with the Company's regular pay practices.
Such Base Salary shall be subject to annual review in accordance with the
Company's practices for executives as in effect from time to time and may be
increased at the discretion of the Compensation Committee of the Company Board
(the "Compensation Committee").

              5.     BONUSES.

              In addition to the Base Salary provided for in Section 4, above,
the Executive shall be eligible for an annual cash bonus under the Company's
Annual Incentive Compensation Plan as in effect from time to time, with a bonus
opportunity which is substantially similar to that of similarly situated
executives. The Executive may be awarded such annual bonuses thereunder as may
be approved by the Compensation Committee based on corporate, individual and
business unit performance measures, as appropriate, established or approved from
time to time, by the Compensation Committee. Any annual bonus shall be paid in
cash in a lump sum promptly following approval thereof or, at Executive's
option, deferred in accordance with any bonus deferral plans of the Company in
effect from time to time. Nothing in this Section 5 shall confer upon the
Executive any right to a minimum annual bonus.

              6.     EMPLOYEE BENEFIT PROGRAMS.

              During the term of the Executive's employment under this
Agreement, the Executive shall be entitled to participate in all employee
benefit programs of the Company as are in effect from time to time and in which
similarly situated senior executives of the Company are eligible to participate.

              7.     BUSINESS EXPENSE REIMBURSEMENT, FRINGE BENEFITS AND
RELOCATION EXPENSES.

              (a)    EXPENSE REIMBURSEMENT AND FRINGE BENEFITS. During the term
of the Executive's employment under this Agreement, the Executive shall be
entitled to participate in the Company's travel and entertainment expense
reimbursement programs and its executive fringe benefit plans and arrangements,
all in accordance with the terms and conditions of such programs, plans and
arrangements as in effect from time to time as applied to the Company's
similarly situated executives.

              (b)    RELOCATION EXPENSES. The Company shall pay directly or
reimburse the Executive, in either case on an after-tax basis to the Executive,
for reasonable moving expenses in relocating the Executive and her immediate
family from Bermuda to a location in the United Kingdom designated by the
Executive (or the Executive's estate or

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other legal representative in the event of her death) following termination of
the Executive's employment with the Company for any reason other than Cause (as
hereinafter defined).

              8.     TERMINATION OF EMPLOYMENT.

              (a)    TERMINATION DUE TO DEATH. In the event the Executive dies
during the term of employment hereunder, the Executive's spouse, if the spouse
survives the Executive, (or, if the Executive's spouse does not survive her, the
estate or other legal representative of the Executive) shall be entitled to
receive the Base Salary as provided in Section 4, above, at the rate in effect
at the time of Executive's death, to be paid in accordance with the Company's
regular payroll practices or in a lump sum, at the Company's option, through the
end of the sixth month after the month in which the Executive dies. In addition
to the above, the estate or other legal representative of the Executive shall be
entitled to:

                     (i)    any annual bonus awarded in accordance with the
       Company's bonus program but not yet paid under Section 5, above, and
       reimbursement of business expenses incurred prior to death in accordance
       with Section 7(a) above,

                     (ii)   a pro rata bonus for the year of death in an amount
       determined by the Compensation Committee, but in no event less than a pro
       rata portion of the Executive's average annual bonus for the immediately
       preceding three years (or the period of the Executive's employment with
       the Company, if less),

                     (iii)  the rights under any options to purchase equity
       securities of the Company or other rights with respect to equity
       securities of the Company, including any restricted stock or other
       securities, held by the Executive determined in accordance with the terms
       thereof,

                     (iv)   for a period of six months following the Executive's
       death, continued medical benefit plan coverage (including dental and
       vision benefits if provided under the applicable plans) for the
       Executive's dependents, if any, under the Company's medical benefit plans
       upon substantially the same terms and conditions (including cost of
       coverage to the dependents) as is then in existence for other executives
       during the coverage period; PROVIDED, THAT, if the Executive's dependents
       cannot continue to participate in the Company plans providing such
       benefits, the Company shall otherwise provide such benefits on
       substantially the same after-tax basis as if continued participation had
       been permitted, and

                     (v)    the vested accrued benefits, if any, under the
       employee benefit programs of the Company, as provided in Section 6,
       above, determined in accordance with the applicable terms and provisions
       of such programs.

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              (b)    TERMINATION DUE TO DISABILITY. In the event the Executive's
employment hereunder is terminated due to her disability, as determined under
the Company's long-term disability plan, the Executive shall be entitled to:

                     (i)    the Base Salary as provided in Section 4, above,
       through the end of the sixth month after the month in which the
       Executive's employment terminates due to disability,

                     (ii)   any annual bonus awarded in accordance with the
       Company's bonus program but not yet paid under Section 5, and
       reimbursement of business expenses incurred prior to termination of
       employment in accordance with Section 7(a) above,

                     (iii)  a pro rata bonus for the year of termination in an
       amount determined by the Compensation Committee, but in no event less
       than a pro rata portion of the Executive's average annual bonus for the
       immediately preceding three years (or the period of the Executive's
       employment with the Company, if less),

                     (iv)   the rights under any options to purchase equity
       securities of the Company or other rights with respect to equity
       securities of the Company, including any restricted stock or other
       securities, held by the Executive, determined in accordance with the
       terms thereof,

                     (v)    for a period of six months following the termination
       of the Executive's employment, continued medical benefit plan coverage
       (including dental and vision benefits if provided under the applicable
       plans) for the Executive (and the Executive's dependents, if any) under
       the Company's medical benefit plans upon substantially the same terms and
       conditions (including cost of coverage to the Executive) as is then in
       existence for other executives during the coverage period; PROVIDED,
       THAT, if the Executive cannot continue to participate in the Company
       plans providing such benefits, the Company shall otherwise provide such
       benefits on substantially the same after-tax basis as if continued
       participation had been permitted; PROVIDED FURTHER, HOWEVER, that, in the
       event the Executive becomes reemployed with another employer and becomes
       eligible to receive medical benefits from such employer, the medical
       benefits described herein shall immediately cease, and

                     (vi)   the vested accrued benefits, if any, under the
       employee benefit programs of the Company, as provided in Section 6 above,
       determined in accordance with the applicable terms and provisions of such
       programs.

              (c)    TERMINATION FOR CAUSE.

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                     (i)    The employment of the Executive under this Agreement
       may be terminated by the Company for Cause, such termination to be
       effective upon the Company giving the Executive written notice of
       termination in accordance with the provisions of this Agreement. For this
       purpose, "Cause" shall mean:

                            (A)    conviction of the Executive of a felony
                     involving moral turpitude, dishonesty or laws to which the
                     Company or its Affiliates are subject in connection with
                     the conduct of its or their business;

                            (B)    the Executive, in carrying out her duties for
                     the Company under this Agreement, has been guilty of (1)
                     willful misconduct or (2) substantial and continual refusal
                     by the Executive to perform the duties assigned to the
                     Executive pursuant to the terms hereof; provided, HOWEVER,
                     that any act or failure to act by the Executive shall not
                     constitute Cause for purposes of this Section 8(c)(i)(B) if
                     such act or failure to act was committed, or omitted, by
                     the Executive in good faith and in a manner she reasonably
                     believed to be in the overall best interests of the
                     Company, as the case may be. The determination of whether
                     the Executive acted in good faith and that she reasonably
                     believed her action to be in the Company's overall best
                     interest, as the case may be, will be in the reasonable
                     judgment of the General Counsel of the Company or, if the
                     General Counsel shall have an actual or potential conflict
                     of interest, the Compensation Committee; or

                            (C)    the Executive's continued willful refusal to
                     obey any lawful policy or requirement duly adopted by the
                     Company Board and the continuance of such refusal after
                     receipt of written notice.

                     (ii)   In the event of a termination for Cause under
       Section 8(c)(i), above, the Executive shall be entitled only to:

                            (A)    Base Salary as provided in Section 4, above,
                     at the rate in effect at the time of her termination of
                     employment for Cause, through the date on which termination
                     for Cause occurs,

                            (B)    the rights under any options to purchase
                     equity securities of the Company or other rights with
                     respect to equity securities of the Company, including any
                     restricted stock or other securities, held by the
                     Executive, determined in accordance with the terms thereof,
                     and

                            (C)    the vested accrued benefits, if any, under
                     employee benefit programs of the Company, as provided in
                     Section 6, above, and reimbursement of properly incurred
                     unreimbursed business expenses un-

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                     der the business expense reimbursement program as described
                     in Section 7, above, determined in accordance with the
                     applicable terms and provisions of such employee benefit
                     and expense reimbursement programs; PROVIDED that the
                     Executive shall not be entitled to any such benefits unless
                     the terms and provisions of such programs expressly state
                     that the Executive shall be entitled thereto in the event
                     her employment is terminated for Cause (as defined in this
                     Agreement or otherwise).

              (d)    TERMINATION WITHOUT CAUSE.

                     (i)    Anything in this Agreement to the contrary
       notwithstanding, the Executive's employment may be terminated by the
       Company without Cause as provided in this Section 8(d). A termination due
       to death or disability, as described in Section 8(a) or (b), above, or a
       termination for Cause, as described in Section 8(c), above, shall not be
       deemed a termination without Cause under this Section 8(d).

                     (ii)   In the event the Executive's employment is
       terminated by the Company without Cause (x) prior to a Change in Control
       (other than as provided in the last paragraph of Section 8(d)(iii), in
       which case the provisions of Section 8(d)(iii) shall apply in lieu of
       this Section 8(d)(ii)) or (y) following the Post-Change Period (as
       hereinafter defined), the Executive shall be entitled to:

                            (A)    Base Salary as provided in Section 4, above,
                     at the rate in effect at the time of her termination of
                     employment without Cause, through the date on which
                     termination without Cause occurs,

                            (B)    provided the Executive executes and does not
                     revoke a general release of claims against the Company and
                     its affiliates in form and substance satisfactory to the
                     Company, a cash lump sum payment equal to (x) two times the
                     Executive's annual Base Salary, at the annual rate in
                     effect in accordance with Section 4, above, immediately
                     prior to such termination and (y) one times the higher of
                     the targeted annual bonus for the year of such termination,
                     if any, or the average of the Executive's annual bonus for
                     the three years immediately preceding the year of
                     termination (or such shorter period during which the
                     Executive has been employed by the Company),

                            (C)    any annual bonus awarded in accordance with
                     the Company's bonus program but not yet paid under Section
                     5, above, and reimbursement of business expenses incurred
                     prior to termination of employment in accordance with
                     Section 7(a) above,

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                            (D)    the rights under any options to purchase
                     equity securities of the Company or other rights with
                     respect to equity securities of the Company, including any
                     restricted stock or other securities, held by the
                     Executive, determined in accordance with the terms thereof,

                            (E)    for a period of twenty-four months following
                     the termination of the Executive's employment, continued
                     medical benefit plan coverage (including dental and vision
                     benefits if provided under the applicable plans) for the
                     Executive (and the Executive's dependents, if any) under
                     the Company's medical benefit plans upon substantially the
                     same terms and conditions (including cost of coverage to
                     the Executive) as is then in existence for other executives
                     during the coverage period; PROVIDED, THAT, if the
                     Executive cannot continue to participate in the Company
                     plans providing such benefits, the Company shall otherwise
                     provide such benefits on substantially the same after-tax
                     basis as if continued participation had been permitted;
                     PROVIDED, HOWEVER, that, in the event the Executive becomes
                     reemployed with another employer and becomes eligible to
                     receive medical benefits from such employer, the medical
                     benefits described herein shall immediately cease, and

                            (F)    the vested accrued benefits, if any, under
                     the employee benefit programs of the Company, as provided
                     in Section 6 above, determined in accordance with the
                     applicable terms and provisions of such programs.

                     (iii)  In the event the Executive's employment is
       terminated by (x) the Company without Cause within the twenty-four month
       period following a Change in Control (as defined in Exhibit A hereto)
       (the "Post-Change Period") or (y) the Executive terminates her employment
       for "Good Reason" (as defined in Exhibit B hereto) during the Post-Change
       Period, the Executive shall be entitled to:

                            (A)    Base Salary as provided in Section 4, above,
                     at the rate in effect at the time of her termination of
                     employment, through the date on which termination occurs,

                            (B)    a cash lump sum payment equal to two times
                     the Executive's annual Base Salary, at the rate in effect
                     in accordance with Section 4, above, immediately prior to
                     such termination or Change in Control, whichever is
                     greater,

                            (C)    a cash lump sum payment equal to two times
                     the average annual bonus awarded to the Executive by the
                     Company in the three years prior to the year in which the
                     Change in Control occurs (or

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                     shorter period during which the Executive had been employed
                     by the Company); PROVIDED such bonuses shall be at least
                     equal to the targeted annual bonus, if any, for the year of
                     such termination,

                            (D)    an amount equal to (i) the higher of (x) the
                     bonus actually awarded to the Executive by the Company for
                     the year immediately preceding the year in which the Change
                     in Control occurs or (y) the targeted amount of bonus, if
                     any, that would have been awarded to the Executive in
                     respect of the year in which the termination of employment
                     occurs, multiplied by (ii) a fraction, the numerator of
                     which is the number of months or fraction thereof in which
                     the Executive was employed by the Company in the year of
                     termination of employment, and the denominator of which is
                     12,

                            (E)    options to purchase equity securities of the
                     Company or other rights with respect to equity securities
                     of the Company held by the Executive shall immediately vest
                     in full and shall continue to be exercisable for three
                     years from the date of termination of employment,
                     notwithstanding the Executive's termination of employment,
                     or the original full term of the option or other right, if
                     shorter,

                            (F)    for a period of twenty-four months following
                     the termination of the Executive's employment, continued
                     medical benefit plan coverage (including dental and vision
                     benefits if provided under the applicable plans) for the
                     Executive (and the Executive's dependents, if any) under
                     the Company's medical benefit plans upon substantially the
                     same terms and conditions (including cost of coverage to
                     the Executive) as is then in existence for other executives
                     during the coverage period; PROVIDED, THAT, if the
                     Executive cannot continue to participate in the Company
                     plans providing such benefits, the Company shall otherwise
                     provide such benefits on substantially the same after-tax
                     basis as if continued participation had been permitted;
                     PROVIDED, HOWEVER, that, in the event the Executive becomes
                     reemployed with another employer and becomes eligible to
                     receive medical benefits from such employer, the medical
                     benefits described herein shall immediately cease, and

                            (G)    full and immediate vesting under the
                     Company's retirement plans as of the date of termination,
                     to the extent permitted by applicable law; PROVIDED,
                     HOWEVER, that if such full and immediate vesting cannot be
                     provided under a retirement plan under applicable law, then
                     economically equivalent benefits, determined on an after
                     tax basis to

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                     the Executive, shall be provided through arrangements
                     outside the applicable retirement plan.

              Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled to the benefits described in (A)-(G) above, if the
Executive's employment with the Company is terminated (other than for Cause)
within one year prior to the date on which a Change in Control occurs, and it is
reasonably demonstrated that such termination (i) was at the request of a third
party who has taken steps reasonably calculated or intended to effect the Change
in Control or (ii) otherwise arose in connection with or anticipation of the
Change in Control; PROVIDED, HOWEVER, that in such event, amounts will be
payable hereunder only following the Change in Control.

                     (iv)   If, in situations where Section 8(d)(iii) does not
       apply, at any time during the term of the Executive's employment
       hereunder, duties are assigned to the Executive that are materially
       inconsistent with her position, or the Company does not cure any material
       breach by it of any provision of Sections 4 through 7 of this Agreement
       within 30 calendar days following written notice of same by the
       Executive, the Executive shall have the right to terminate her employment
       within 30 calendar days of such assignment or of such failure to cure a
       breach, as the case may be, and such termination shall be deemed a
       termination by the Company without Cause under Section 8(d)(ii), above,
       PROVIDED, in the case of assignment of inconsistent duties, the Executive
       shall have given the Company written notice of her decision and shall
       not, within 30 calendar days thereafter, have had the assignment of
       inconsistent duties rescinded.

              (e)    VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
voluntarily terminate her employment prior to the expiration of the term of this
Agreement upon at least three months' prior written notice to the Company. Such
termination shall constitute a voluntary termination and, except as provided in
Section 8(d)(iii) or Section 8(d)(iv), above, in such event the Executive shall
be limited to the same rights and benefits as applicable to a termination by the
Company for Cause as provided in Section 8(c), above. A voluntary termination in
accordance with this Section 8(e) shall not be deemed a breach of this
Agreement. A termination of the Executive's employment due to disability or
death as described in Section 8(b) or 8(a), above, a termination by the
Executive which the Executive is entitled to treat as a termination by the
Company pursuant to Section 8(d), above, or a termination by the Executive under
Section 8(d)(iv), above, shall not be deemed a voluntary termination within the
meaning of this Section 8(e).

              9.     EXCISE TAX PAYMENTS.

              (a)    Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that (i) any payment or distribution made,
or benefit provided (including, without limitation, the acceleration of any
payment, distribution or benefit or

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accelerated vesting or exercisability of any award) by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the United States Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision or similar excise tax), or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), (ii) the aggregate amount of the Executive's
Parachute Payments (as defined in Section 280G(b)(2)(A) of the Code) is less
than 3.25 times the Executive's Base Amount (as defined in Section 280G(b)(3)(A)
of the Code), and (iii) no such Payment would be subject to the Excise Tax if
the payments set forth in Section 8(d)(iii)(B) and (C) hereof were each reduced
by up to 20 percent, then the payments set forth in Section 8(d)(iii)(B) and (C)
will each be reduced to the smallest extent possible (and in no event by more
than 20 percent in the aggregate) such that no Payment is subject to the Excise
Tax.

              (b)    Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that (i) the aggregate amount of the
Executive's Parachute Payments equals or exceeds 3.25 times the Executive's Base
Amount, (ii) the aggregate amount of the Executive's Parachute Payments is less
than 3.25 times the Base Amount but one or more Payments would be subject to the
Excise Tax even if the payments set forth in Section 8(d)(iii)(B) and (C) hereof
were each reduced by 20 percent, or (iii) notwithstanding a reduction in
payments pursuant to Section 9(a) above, an Excise Tax is payable by the
Executive on one or more Payments, then, in any such case, Payments shall not be
reduced and the Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any income or Excise Tax) imposed upon the Gross-Up Payment and
any interest or penalties imposed with respect to such taxes, the Executive
retains from the Gross-Up Payment an amount equal to the Excise Tax imposed upon
the Payments.

              (c)    Subject to the provisions of Section 9(d), all
determinations required to be made under this Section 9, including determination
of whether a Gross-Up Payment is required and of the amount of any such Gross-Up
Payment, shall be made by a nationally recognized public accounting firm
selected by the Company (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the date of termination of the Executive's employment, if applicable, or
such earlier time as is reasonably requested. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(c), shall be paid to the Executive
within five business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that she has
substantial authority not to report any Excise Tax on her Federal income tax
return. Any determination by the Accounting Firm meeting the requirements of

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this Section 9(c) shall be binding upon the Company and the Executive, subject
only to payments pursuant to the following sentence based on a determination
that additional Gross-Up Payments should have been made, consistent with the
calculations required to be made hereunder (the amount of such additional
payments are referred to herein as the "Gross-Up Underpayment"). In the event
that the Company exhausts its remedies pursuant to Section 9(d) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Gross-Up Underpayment that has
occurred and any such Gross-Up Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. The fees and disbursements of
the Accounting Firm shall be paid by the Company.

              (d)    The Executive shall notify the Company in writing of any
claim by the United States Internal Revenue Service that, if successful, would
require the payment by the Executive of any Excise Tax and, therefore, the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as soon as practicable but not later than 30 business days after the Executive
receives written notice of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Executive shall not pay such claim prior to the expiration of the 30-day
period following the date on which she gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires, in good faith, to contest such claim
(which notice shall set forth the bases for such contest) and that it will bear
the costs and provide the indemnification as required by this sentence, the
Executive shall, in good faith:

                     (i)    give the Company any information reasonably
       requested by the Company relating to such claim,

                     (ii)   take such action in connection with contesting such
       claim as the Company shall, in good faith, reasonably request in writing
       from time to time, including, without limitation, accepting legal
       representation with respect to such claim by an attorney selected by the
       Company and reasonably acceptable to the Executive,

                     (iii)  cooperate with the Company in good faith in order
       effectively to contest such claim, and

                     (iv)   permit the Company to participate, in good faith, in
       any proceedings relating to such claim;

PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis to the Executive, for any

<PAGE>

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                                      -13-


Excise Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of all costs and
expenses.

              Without limitation on the foregoing provisions of this Section
9(d), the Company shall, exercising good faith, control all proceedings taken in
connection with such contest and, at its sole option (but in good faith), may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option (but in good faith), either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; PROVIDED, HOWEVER, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis to the Executive, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; AND FURTHER
PROVIDED that any extension of the statute of limitations relating to the
payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(d), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 9(d)) promptly pay to the Company, as
the case may be, the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 9(d), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then any obligation of the Executive to
repay such advance shall be forgiven and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.

              Notwithstanding any provision herein to the contrary, the
Executive's failure to strictly comply with the notice provisions set forth in
this Section 9, so long as such failure does not prevent the Company from
contesting an excise tax claim, shall not adversely affect the Executive's
rights under this Section 9.

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                                      -14-


              10.    NO MITIGATION; NO OFFSET.

              In the event of any termination of employment under Section 8,
above, the Executive shall be under no obligation to mitigate damages or seek
other employment, and, except as expressly set forth herein, there shall be no
offset against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that she may obtain.

              11.    NONCOMPETITION AND NONSOLICITATION.

              The Executive represents and warrants that, to the best of her
knowledge, she is not using the confidential or proprietary information of any
other person in violation of any agreement or rights of others known to her. The
Executive agrees that the products of the Company and its Affiliates shall
constitute the exclusive property of the Company and its Affiliates.

              For the avoidance of doubt, all trademarks, policy language or
forms, products or services (including products and services under development),
trade names, trade secrets, service marks, designs, computer programs and
software, utility models, copyrights, know-how and confidential information,
applications for registration of any of the foregoing and the right to apply for
them in any part of the world (whether any of the foregoing shall be registered
or unregistered) created or discovered or participated in by the Executive
during the course of her employment (whether or not pursuant to the terms of
this Agreement) or under the instructions of the Company or its Affiliates are
and shall be the absolute property of the Company and its Affiliates, as
appropriate. Without limiting the foregoing, the Executive hereby assigns to the
Company any and all of the Executive's right, title and interest, if any,
pertaining to the insurance and reinsurance (including, without limitation,
finite insurance and reinsurance), risk assumption, risk management, brokerage,
financial and other products or services developed or improved upon by the
Executive (including, without limitation, any related "know-how") while employed
by the Company or its Affiliates, including any patent, trademark, trade name,
copyright, ownership or other right that may pertain thereto.

              Since Executive has obtained and is likely to obtain in the course
of Executive's employment with the Company and its Affiliates knowledge of trade
names, trade secrets, know-how, products and services (including products and
services under development), techniques, methods, lists, computer programs and
software and other confidential information relating to the Company and its
Affiliates, and their employees, clients, business or business opportunities,
Executive hereby undertakes that:

                     (i)    Executive will not (either alone or jointly with or
       on behalf of others and whether directly or indirectly) encourage,
       entice, solicit or endeavor to encourage, entice or solicit away from
       employment with the Company or its Affiliates, or hire or cause to be
       hired, any officer or employee of the Company or its Affiliates

<PAGE>

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                                      -15-


       (or any individual who was within the prior twelve months an officer or
       employee of the Company or its Affiliates), or encourage, entice, solicit
       or endeavor to encourage, entice or solicit any individual to violate the
       terms of any employment agreement or arrangement between such individual
       and the Company or any of its Affiliates;

                     (ii)   Executive will not (either alone or jointly with or
       on behalf of others and whether directly or indirectly) interfere with or
       disrupt or seek to interfere with or disrupt (A) the relationships
       between the Company and its Affiliates, on the one hand, and any customer
       or client of the Company and its Affiliates, on the other hand,
       (including any insured or reinsured party) who during the period of
       twenty-four months immediately preceding such termination shall have been
       such a customer or client, or (B) the supply to the Company and its
       Affiliates of any services by any supplier or agent or broker who during
       the period of twenty-four months immediately preceding such termination
       shall have supplied services to any such person, nor will Executive
       interfere or seek to interfere with the terms on which such supply or
       agency or brokering services during such period as aforesaid have been
       made or provided; and

                     (iii)  Executive will not (either alone or jointly with or
       on behalf of others and whether directly or indirectly) whether as an
       employee, consultant, partner, principal, agent, distributor,
       representative or stockholder (except solely as a less than one percent
       stockholder of a publicly traded company), engage in any activities in
       Bermuda, the United Kingdom or the United States if such activities are
       competitive with the businesses that (i) are then being conducted by the
       Company or its Affiliates and (ii) during the period of the Executive's
       employment were either being conducted by the Company or its Affiliates
       or actively being developed by the Company or its Affiliates.

              The provisions of the immediately preceding sentence shall
continue as long as the Executive is employed by the Company or its Affiliates
and such provisions shall continue in effect after such employment is terminated
for any reason until the first anniversary of such termination, provided that if
such employment is terminated by the Company under Section 8(d)(iii) or by the
Executive under Section 8(d)(iii), the provisions of clauses (ii) and (iii)
shall automatically terminate upon such termination of employment, unless the
Company elects, in writing, upon such termination to continue the provisions of
clauses (ii) and (iii) in effect through the six-month anniversary of such
termination of employment in which case the Company shall be obligated to
continue (through such six-month anniversary of termination) to pay the
Executive, in addition to any of the Executive's rights under Section 8(d)(iii),
her Base Salary and the pro rata portion of the Executive's average annual bonus
for the three years (or shorter period of employment by the Company) immediately
preceding the year of termination, and such pro rated average annual bonus shall
be payable at the times annual bonuses for such year are payable to other
executives.

<PAGE>

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                                      -16-


              For purposes of this Agreement, an "Affiliate" of the Company
includes any person, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with the Company, and such
term shall specifically include, without limitation, the Company's
majority-owned subsidiaries.

              The limitations on the Executive set forth in this Section shall
also apply to any agent or other representative acting on behalf of Executive.

              While the restrictions aforesaid are considered by both parties to
be reasonable in all the circumstances it is recognized that restrictions of the
nature in question may fail for reasons unforeseen and accordingly it is hereby
declared and agreed that if any of such restrictions or the geographic or other
scope thereof shall be adjudged to be void as going beyond what is reasonable in
the circumstances for the protection of the interests of the Company and its
Affiliates but would be valid if part of the wording thereof were deleted and/or
the periods (if any) thereof reduced and/or geographic or other area dealt with
thereby reduced in scope then said restrictions shall apply with such
modifications as may be necessary to make them valid and effective.

              Nothing contained in this Section 11 shall limit in any manner any
additional obligations to which Executive may be bound pursuant to any other
agreement or any applicable law, rule or regulation and Section 11 shall apply,
subject to its terms, after employment has terminated for any reason.

              12.    CONFIDENTIAL INFORMATION.

              The Executive covenants that she shall not, without the prior
written consent of the Company, use for the Executive's own benefit or the
benefit of any other person or entity other than the Company and its Affiliates
or disclose to any person, other than an employee of the Company or other person
to whom disclosure is necessary to the performance by the Executive of her
duties in the employ of the Company, any confidential, proprietary, secret, or
privileged information about the Company or its Affiliates or their business or
operations, including, but not limited to, information concerning trade secrets,
know-how, software, data processing systems, policy language and forms,
inventions, designs, processes, formulae, notations, improvements, financial
information, business plans, prospects, referral sources, lists of suppliers and
customers, legal advice and other information with respect to the affairs,
business, clients, customers, agents or other business relationships of the
Company or its Affiliates. Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret, confidential proprietary or privileged
information or data relating to the Company or any of its Affiliates or
predecessor companies, and their respective businesses, which shall have been
obtained by Executive during her employment, unless and until such information
has become known to the public generally (other than as a result of unauthorized
disclosure by the Executive) or unless she is required to disclose such
information by a court or by a governmental body with apparent authority to
require such disclosure. The foregoing covenant by the Ex-

<PAGE>

[XL CAPITAL LOGO]


                                      -17-


ecutive shall be without limitation as to time and geographic application and
this Section 12 shall apply in accordance with its terms after employment has
terminated for any reason. The Executive acknowledges and agrees that she shall
have no authority to waive any attorney-client or other privilege without the
express prior written consent of the Compensation Committee as evidenced by the
signature of the Company's General Counsel.

              13.    WITHHOLDING.

              Anything in this Agreement to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Executive shall be
subject to withholding of such amounts relating to taxes as the Company may
reasonably determine should be withheld pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept other provision for payment of taxes
as required by law, provided it is satisfied that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.

              14.    GUARANTY AND AFFILIATE SERVICES.

              (a)    LIABILITY. Each of XL Insurance Ltd and XL Re Ltd
(together, the "Guarantors") hereby agrees to be jointly and severally liable
together with the Company, for the performance of all obligations and duties,
and the payment of all amounts, due to the Executive under this Agreement.

              (b)    RESPONSIBILITY. All of the other terms and provisions of
this Agreement relating to the Executive's employment by the Company shall
likewise apply mutatis mutandis to the Executive's employment by any of its
Affiliates, it being understood that if the Executive's employment with the
Company is terminated, her employment with its Affiliates shall also be
terminated and the Executive shall be required to resign immediately from all
directorships and other positions held by the Executive in the Company and its
Affiliates or in any other entities in respect of which the Executive was acting
as a representative or designee of the Company or its Affiliates in connection
with her employment.

<PAGE>

[XL CAPITAL LOGO]


                                      -18-


              15.    ENTIRE AGREEMENT.

              This Agreement, together with the Exhibits, contains the entire
agreement between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the Company and the Executive
with respect thereto.

              16.    ASSIGNABILITY; BINDING NATURE.

              This Agreement shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs and assigns. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive other than her right to compensation and benefits hereunder,
which may be transferred by will or operation of law subject to the limitations
of this Agreement. No rights or obligations of the Company under this Agreement
may be assigned or transferred by the Company except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
or amalgamation or scheme of arrangement in which the Company is not the
continuing entity, or the sale or liquidation of all or substantially all of the
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company and such assignee or
transferee assumes by operation of law or in writing duly executed by the
assignee or transferee all of the liabilities, obligations and duties of the
Company, as contained in this Agreement, either contractually or as a matter of
law.

              17.    INDEMNIFICATION.

              The Executive shall be provided indemnification by the Company to
the maximum extent permitted by applicable law and its charter documents. In
addition, she shall be covered by a directors' and officers' liability policy
with coverage for all directors and officers of the Company in an amount equal
to at least US$75,000,000. Such directors' and officers' liability insurance
shall be maintained in effect for a period of six years following termination of
the Executive's employment for any reason other than pursuant to Section 8(c) or
Section 8(e) hereof.

              18.    SETTLEMENT OF DISPUTES.

              (a)    Any dispute between the Parties arising from or relating to
the terms of this Agreement or the Executive's employment with the Company or
its Affiliates shall, except as provided in Section 18(b) or Section 18(c), be
resolved by binding arbitration held in New York City in accordance with the
rules of the American Arbitration Association.

              (b)    Executive acknowledges that the Company and its Affiliates
will suffer irreparable injury, not readily susceptible of valuation in monetary
damages, if Executive breaches her obligations under Section 11 or 12.
Accordingly, Executive agrees that the

<PAGE>

[XL CAPITAL LOGO]


                                      -19-


Company and its Affiliates will be entitled, in addition to any other available
remedies, to obtain injunctive relief against any breach or prospective breach
by Executive of her obligations under Section 11 or 12 in any Federal or state
court sitting in the City and State of New York or court sitting in Bermuda or
the United Kingdom, or, at the Company's or any Affiliate's election, in any
other jurisdiction in which Executive maintains her residence or her principal
place of business. Executive hereby submits to the non-exclusive jurisdiction of
all those courts for the purposes of any actions or proceedings instituted by
the Company or its Affiliates to obtain such injunctive relief, and Executive
agrees that process in any or all of those actions or proceedings may be served
by registered mail or delivery, addressed to the last address of Executive known
to the Company or its Affiliates, or in any other manner authorized by law.
Executive further agrees that, in addition to any other remedies available to
the Company or its Affiliates by operation of law or otherwise, because of any
breach by Executive of her obligations under Section 11 or 12 she will forfeit
any and all bonus and rights to any payments to which she might otherwise then
be entitled by virtue hereof and such payments may be suspended so long as any
good faith dispute with respect thereto is continuing; PROVIDED, HOWEVER, that
payments, benefits and other rights and privileges of the Executive under this
Agreement following termination of the Executive's employment during a Post
Change Period shall not be forfeited, suspended, offset, diminished or otherwise
altered in any way on account of any breach or prospective breach of Section 11,
Section 12 or any other provision of this Agreement alleged by the Company.

              (c)    Notwithstanding any other provision of this Agreement, the
Executive may elect to resolve any dispute involving a breach or alleged breach
of this Agreement following termination of the Executive's employment during a
Post-Change Period in any Federal or State court sitting in the City and State
of New York or court sitting in Bermuda or the United Kingdom. The Company and
the Guarantors hereby submit to the non-exclusive jurisdiction of all those
courts for the purposes of any such actions or proceedings instituted by the
Executive, and the Company and the Guarantors agree that process in any or all
of such actions or proceedings may be served by registered mail or delivery,
addressed to the Company as set forth in Section 20, or in any other manner
authorized by law. The Company and the Guarantors shall pay all costs associated
with any court proceeding under this Section 18(c) without regard to the outcome
of such proceeding, including all legal fees and expenses of the Executive, who
shall be reimbursed for all such costs promptly upon written demand therefor by
the Executive.

              (d)    Each Party shall bear its own costs incurred in connection
with any proceeding under Sections 18(a) or 18(b) hereof, including all legal
fees and expenses; PROVIDED, HOWEVER, that the Company shall bear all such costs
of the Executive (to the extent such costs are reasonable) if the Executive
substantially prevails in the proceeding. The Executive shall be reimbursed by
the Company for all such reasonable costs promptly upon written demand therefor
by the Executive which is made within a reasonable time following the proceeding
and is supported by documentation of such costs.

<PAGE>

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                                      -20-


              19.    AMENDMENT OR WAIVER.

              No provision in this Agreement may be amended unless such
amendment is agreed to in writing, signed by the Executive and by a duly
authorized officer of the Company and the Guarantors. No waiver by any Party of
any breach by the other Party of any condition or provision of this Agreement to
be performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by the Executive or a duly authorized
officer of the Company and the Guarantors, as the case may be.

              20.    NOTICES.

              Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally or sent by courier, or by certified or registered mail, postage
prepaid, return receipt requested, duly addressed to the Party concerned at the
address indicated below or to such changed address as such Party may
subsequently by similar process give notice of:

              If to the Company:

                     XL Capital Ltd
                     XL House
                     One Bermudiana Road
                     Hamilton HM JX
                     Bermuda

                     Att'n: General Counsel

              If to the Executive:

                     Fiona Luck
                     Sea Breeze
                     4 McGalls Bay Drive
                     Smiths Parish FL 05
                     Bermuda

<PAGE>

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                                      -21-


              21.    SEVERABILITY.

              In the event that any provision or portion of this Agreement shall
be determined to be invalid or unenforceable for any reason, in whole or in
part, the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.

              22.    SURVIVORSHIP.

              The respective rights and obligations of the Parties shall survive
any termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

              23.    REFERENCE.

              In the event of the Executive's death or a judicial determination
of her incompetence, reference in this Agreement to the Executive shall be
deemed, where appropriate, to refer to her estate or other legal representative.

              24.    GOVERNING LAW.

              This Agreement shall be governed by and construed and interpreted
in accordance with the laws of the State of New York without reference to the
principles of conflict of laws.

              25.    HEADINGS.

              The heading of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.

              26.    COUNTERPARTS.

              This Agreement may be executed in one or more counterparts.

<PAGE>

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                                      -22-


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

                                       XL CAPITAL LTD


                                       By: /S/ KIRSTIN R. GOULD
                                          ------------------------------------




                                       FIONA E. LUCK


                                       By: /S/ FIONA E. LUCK
                                          ------------------------------------





                                       GUARANTORS:

                                       XL INSURANCE (BERMUDA) LTD


                                       By: /S/ KIRSTIN R. GOULD
                                          ------------------------------------




                                       XL RE LTD


                                       By: /S/ KIRSTIN R. GOULD
                                          ------------------------------------

<PAGE>


                                       -2-


                                                                       EXHIBIT A


                                CHANGE IN CONTROL


       A "Change in Control" shall be deemed to have occurred:

              (i)    if any person (which, for all purposes hereof, shall
include, without limitation, an individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated
organization, trust, body corporate and a trustee, executor, administrator or
other legal representative)(a "Person") or any group, as defined in Sections
13(d) or 14(d) of the United States Securities Exchange Act of 1934 (other than
a group of which the Executive is a member or which has been organized by the
Executive), becomes the beneficial owner, directly or indirectly, of securities
of the Company representing, or acquires the right to control or direct, or to
acquire through the conversion of securities or the exercise of warrants or
other rights to acquire securities, 30% or more of either (I) the outstanding
Ordinary Shares of the Company, (II) the outstanding securities of the Company
having a right to vote in the election of directors, or (III) the combined
voting power of the outstanding securities of the Company having a right to vote
in the election of directors; or

              (ii)   if there shall be elected or appointed to the Board of
Directors of the Company (the "Board") any director or directors whose
appointment or election by the Board or nomination for election by the Company's
shareholders was not approved by a vote of at least a majority of the directors
then still in office who were either directors on the date of execution of this
Agreement or whose election or appointment or nomination for election was
previously so approved; or

              (iii)  upon consummation of a reorganization, scheme of
arrangement, merger, consolidation, combination, amalgamation, corporate
restructuring, liquidation, winding up, exchange of securities, or similar
transaction (each, an "Event"), in each case, in respect of which the beneficial
owners of the outstanding Company Ordinary Shares immediately prior to such
Event do not, following such Event, beneficially own, directly or indirectly,
more than 60% of each of the outstanding equity share capital, and the combined
voting power of the then outstanding voting securities entitled to vote in the
election of the directors, of the Company and any resulting entity, in
substantially the same proportions as their ownership, immediately prior to such
Event, of the Ordinary Shares and voting power of the Company; or

              (iv)   if there occurs an Event involving the Company as a result
of which 25% of more of the members of the Board of the Company are not persons
who were members of the Board immediately prior to the earlier of (x) the Event,
(y) exe-

<PAGE>
                                      -2-


cution of an agreement, the consummation of which would result in the Event, or
(z) announcement by the Company of an intention to effect the Event; or

              (v)    if the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Change in Control has occurred.

<PAGE>


                                                                       EXHIBIT B


                                   GOOD REASON

              For purposes of this Agreement, "Good Reason" shall mean any of
the following, unless done with the prior express written consent of the
Executive:

                     (i)    (A) The assignment to Executive of duties
              inconsistent with Executive's position (including duties,
              responsibilities, status, titles or offices as set forth in
              Section 3 hereof); or (B) any elimination, diminution or reduction
              of Executive's duties or responsibilities except in connection
              with the termination of Executive's employment for Cause,
              disability or as a result of Executive's death or by Executive
              other than for Good Reason; and for purposes for this clause (i),
              the determination of whether there has been a reduction of duties
              or responsibilities or an assignment of duties inconsistent with
              the Executive's position shall take into account the Executive's
              duties, responsibilities and position with the ultimate parent of
              the parent/subsidiary group as a whole which includes the Company;

                     (ii)   The (A) reduction in Executive's Base Salary from
              the level in effect immediately prior to the Change in Control, or
              (B) payment of an annual bonus in an amount less than the lesser
              of (x) the most recent annual bonus paid prior to the Change in
              Control or (y) the greater of (I) the most recent target bonus, if
              any, established prior to the Change in Control or (II) the annual
              average bonus paid for the preceding three complete years prior to
              the Change in Control (or such lesser number of complete years as
              the Executive shall have been employed by the Company);

                     (iii)  The failure by the Company or the Guarantors to
              obtain the specific written assumption of this Agreement by any
              successor or assign of the Company or the Guarantors or any person
              acquiring substantially all of the Company's or the Guarantors'
              assets;

                     (iv)   Any breach by the Company or the Guarantors of any
              provision of this Agreement or any agreements entered into
              pursuant thereto that remains uncured for 20 calendar days
              following written notice of same by the Executive;

                     (v)    Notwithstanding the provisions of Section 3(b) of
              this Agreement, requiring the Executive to be based at any office
              or location that is greater than 35 miles from the office or
              location at which the Executive was principally located
              immediately prior to the Change in Control;


<PAGE>
                                      -2-


                     (vi)   During the Post Change Period, (A) the failure to
              continue in effect any compensation or incentive plan in which
              Executive participates immediately prior to the time of the Change
              in Control unless an equitable arrangement (embodied in an ongoing
              substitute or alternative plan providing Executive with at least
              the same aggregate economic opportunity on an after-tax basis
              available to the Executive immediately prior to the Change in
              Control) has been made with respect to such plan in connection
              with the Change in Control, or the failure to continue Executive's
              participation therein on substantially the same basis both in
              terms of the amount of benefits provided and the level of her
              participation relative to other participants, as existed at the
              time of the Change in Control; or (B) the failure to continue to
              provide Executive with benefits and coverage at least as favorable
              in the aggregate as those enjoyed by her under the Company's
              pension, life insurance, medical, health and accident, disability,
              deferred compensation or savings plans in which she was
              participating at the time of the Change in Control; or

                     (vii)  The failure by the Company to pay within 7 calendar
              days of the due date any amounts due under any benefit or
              compensation plan, including any deferred compensation plan.