EX-10.1






EMPLOYMENT AGREEMENT




(dated as of July 9, 2007)




AGREEMENT, made and entered into as of the date first above written, by and between, XL
Capital Ltd, a Cayman Islands corporation (the “Company”), X.L. Global Services, Inc. (“XLGS”), and
BRIAN W. NOCCO (the “Executive”).



WHEREAS, the Company and Executive each desire Executive become employed by the Company and
XLGS 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, XLGS, the Guarantors (as hereinafter defined)
and the Executive (the “Parties”) agree as follows:



1. EMPLOYMENT.



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.



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 Executive Vice President of the Company
effective July 23, 2007, and shall be appointed, effective August 10, 2007, the Chief Financial
Officer of 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. Such duties shall include responsibility for managing the
finance organization on a global basis, overseeing the corporate finance functions, controllership,
treasury, capital management, taxation, business segment finance functions, finance shared
services, investor relations, rating agency management, and financial reporting and controls. In
carrying out his duties and responsibilities, the Executive shall report to the Company’s Chief
Executive Officer (the “CEO”) or his designee. During the term of this Agreement, the Executive
shall devote his full business time to the business and affairs of the Company, provided that the
Executive may manage his personal and family passive investments, be involved with and serve on
boards and advisory committees of charitable, professional, trade and civic organization, and with
the consent of the CEO, serve on for profit boards and advisory committees provided that the
foregoing activities in the aggregate do not materially interfere with Executive’s performance of
his duties.



(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 Executive’s principal place of business shall be located in
Bermuda. Executive acknowledges that certain services may be required to 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.



4. BASE SALARY.



The Executive shall be paid a Base Salary by the Company of no less than $550,000, 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 (but not decreased) at the discretion of the Compensation Committee of the Board
of Directors of the Company (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 target of at least 125% of his or her Base Salary. For
fiscal year 2007, provided Executive remains otherwise eligible to receive a bonus, such bonus
shall be no less than the target award. 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 after the end of
the calendar year for which the annual bonus is paid and no later than March 15 following such
calendar year, unless deferred at the Executive’s option in accordance with the provisions of any
applicable deferred compensation plan of the Company or it subsidiaries 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. 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.



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 him, 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
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, to be paid at the time such bonus would otherwise be due under
Section 5 above, and reimbursement of business expenses incurred prior to death in
accordance with Section 7 above,




(ii) within 45 days after the date of death, 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 any payment made by the Company in respect of any taxes imposed with respect
to such benefits shall be paid to the Executive’s dependents, or to the applicable taxing
authority on their behalf, no later than the due date of such taxes), 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.



(b) TERMINATION DUE TO DISABILITY. In the event the Executive’s employment hereunder is
terminated due to his disability, which shall mean that Executive has been unable to perform his
material duties due to illness or injury for a continuous twenty-six (26) week period, as
determined under the Company’s long-term disability plan, the Executive shall be entitled to,
subject to Subsection 25 hereof:




(i) a cash lump sum payment made within 45 days after the date of termination in an
amount equal to the Base Salary as provided in Section 4, above, that would have been paid
to the Executive had he remained employed 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, to be paid at the time such bonus would otherwise be due under
Section 5 above, and reimbursement of business expenses incurred prior to termination of
employment in accordance with Section 7 above,




(iii) within 45 days after the date of termination, 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 (and any payment made by the Company in respect of any
taxes imposed with respect to such benefits shall be paid to the Executive, or to the
applicable taxing authority on his behalf, no later than the due date of such taxes);
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.



(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 his duties for the Company under this Agreement, has
been guilty of (1) willful misconduct of a material nature 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 he
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 he reasonably
believed his 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
his termination of employment for Cause, through the date on which termination for Cause
occurs, to be paid in accordance with the Company’s regular payroll practices,




(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 under 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 his
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). For the avoidance of doubt, if a notice of non-renewal of this Agreement pursuant to
Section 2 is issued by the Company, the termination of the Executive’s employment at the end of the
Term shall be considered a termination by the Company without Cause hereunder.



(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
his termination of employment without Cause, through the date on which termination without
Cause occurs, to be paid in accordance with the Company’s regular payroll practices,




(B) provided the Executive executes and does not revoke a general release of claims
against the Company and its affiliates in substantially the form of Exhibit C hereto, a cash
lump sum payment made within 30 days after termination of employment 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 payable by the Company 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, to be paid at the time such bonus would otherwise be due under
Section 5 above, and reimbursement of business expenses incurred prior to termination of
employment in accordance with Section 7 above,




(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 because of
underwriting or plan provisions or if such participation would cause the Executive to be
taxed on the benefits under Section 105(h) of the Internal Revenue Code of 1986, as amended
(the “Code”), the Company shall otherwise provide such benefits on substantially the same
after-tax basis as if continued participation had been permitted (and any payment made by
the Company in respect of any taxes imposed with respect to such benefits shall be paid to
the Executive, or to the applicable taxing authority on his behalf, no later than the due
date of such taxes); 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,




(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 his employment for “Good Reason” (as
defined in Exhibit B hereto) during the Post-Change Period, the Executive shall be entitled to the
following, paid in the case of amounts set forth in (A), (B), (C), (D) and (G) below, subject to
Section 25 below, within 30 days after termination of employment:




(A) Base Salary as provided in Section 4, above, at the rate in effect at the time of
his 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, or 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 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 because of
underwriting or plan provisions or, if such participation would cause the Executive to be
taxed in the benefits under Section 105(h) of the Code, the Company shall otherwise provide
such benefits on substantially the same after-tax basis as if continued participation had
been permitted (and any payment made by the Company in respect of any taxes imposed with
respect to such benefits shall be paid to the Executive, or to the applicable taxing
authority on his behalf, no later than the due date of such taxes); 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 the present value of economically equivalent benefits, determined using
reasonable assumptions and on an after tax basis to the Executive, shall be paid in a cash
lump sum to the Executive.



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 by the Company (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 in excess of those otherwise payable
to the Executive under Section 8(d)(ii) above will be payable hereunder only following the Change
in Control (and, subject to Section 25 below, within 10 days thereafter).



(iv) If, in situations where Section 8(d)(iii) does not apply, at any time during the term of
the Executive’s employment hereunder and without the Executive’s written consent, duties are
assigned to the Executive that are materially inconsistent with his position as described in
Section 3 herein, or the Company does not cure any material breach by it of any provision of
Sections 3 through 7 of this Agreement within 30 calendar days following written notice of same by
the Executive (which written notice must be given within 30 calendar days after such breach), the
Executive shall have the right to terminate his employment within 30 calendar days of the Company’s
failure to rescind such assignment in accordance with the proviso below 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 that are materially inconsistent with those set for in Section 3, the Executive
shall have given the Company written notice of such assignment within 30 calendar days of such
assignment 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 his
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 accelerated vesting or
exercisability of any award) by the Company, any acquirer or any party related to the Company or
the acquirer, 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 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 l5 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 he has substantial authority not to
report any Excise Tax on his Federal income tax return. Any determination by the Accounting Firm
meeting the requirements of 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 he 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
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. Payments required under this Section 9 shall be paid within the time
periods required by Treasury Regulation Section 1.409A-3(i)(1)(v).



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 with respect to Executive’s requirement to accept the medical, dental and other
welfare benefits offered by a prospective employer, there shall be no offset against amounts due
the Executive under this Agreement on account of any remuneration attributable to any subsequent
employment that he may obtain.



11. NONCOMPETITION AND NONSOLICITATION.



The Executive hereby represents and warrants to the Company that (a) the execution, delivery
and performance of this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which he is bound, (b) except for agreements provided to the
Company by the Executive, the Executive is not a party to or bound by any employment agreement,
noncompetition agreement, confidentiality agreement or similar agreement with any other person, and
(c) upon the execution and delivery of this Agreement by the Company, this Agreement will be the
valid and binding obligation of the Executive, enforceable in accordance with its terms. 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 his 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 (or any individual who was
within the prior twelve (12) 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; provided, however, that
nothing in this subsection shall prevent Executive from providing a personal reference on
behalf of any officer or employee of the Company to a third party, appearing or being
involved in a general advertisement for employment not specifically tailored to entice only
officers or employees of the Company;




(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 primary property, casualty, specialty insurance and/or reinsurance customer or client of
the Company and its Affiliates, on the other hand, (including any insured or reinsured
party) with regard to such area of insurance and /or reinsurance 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 with regard to the insurance and/or reinsurance areas who during the
period of twenty-four months immediately preceding such termination shall have supplied
services to any such person, with regard to the insurance and/or reinsurance areas 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), without the written consent of the Company
through the Chief Executive Officer, after receipt of specific notice by Executive of the
potential competitive situation (such consent not to be unreasonably withheld) engage in any
activities in Bermuda or the United States if such activities are competitive with the
primary or reinsurance property, casualty, specialty insurance and/or reinsurance 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 pay
the Executive, in addition to any of the Executive’s rights under Section 8(d)(iii), a lump sum
payment equal to the sum of (x) six months of his Base Salary and (y) one half of the Executive’s
average annual bonus payable by the Company or its subsidiaries for the three years (or shorter
period of employment by any of such entities) immediately preceding the year of termination, and
such lump sum payment shall, subject to Section 25 below, be made within 10 days following
termination of employment.



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 at the Executive’s specific intentional
direction.



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 he 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 in good faith believed to be desirable to the performance by the
Executive of his 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 his 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
he 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 Executive 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 he 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.
In case of the failure of the Company to punctually pay any of the amounts necessary to satisfy the
obligations, the Guarantor shall cause such amounts to be paid punctually when and as the same
shall become due and payable as if such payment were made by the Company. This is a guaranty of
payment and not collection. The obligations of the Guarantor under this Guaranty shall not be
affected or impaired by reason of the happening from time to time of any of the following with
respect to the Agreement or the Company, although without notice to or the consent of the
Guarantor: (i) the waiver by the Executive or the Company of the performance or the observance of
any provision of the Agreement; (ii) the modification or amendment (whether material or otherwise)
of any of the obligations of the Company or the Executive under the Agreement; (iii) any failure,
omission or delay on the part of the Executive to enforce, assert or exercise any right conferred
on him in the Agreement or otherwise; or (iv) any bankruptcy, insolvency or reorganization of, any
arrangement or assignment for benefit of creditors by, or any trusteeship with respect to, the
Company or any of its assets or any liquidation or sale of the Company or its assets. The
resolution of any arbitration under Section 18 hereof shall be binding on the Guarantor.



(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, his 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 his employment.



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 his right to compensation and
benefits hereunder, which may be transferred only 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, he 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.



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 his obligations
under Section 11 or 12. Accordingly, Executive agrees that the 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 his 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 his residence or his 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 his obligations under Section 11 or 12 he will forfeit any and all bonus
and rights to any payments to which he 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 within ten (10) days
following written demand therefor by the Executive (which written demand shall be made no later
than six (6) months following the end of the year in which such costs were incurred).



(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 within ten (10) days following written
demand therefor by the Executive which is made within sixty (60) days following the proceeding and
is supported by documentation of such costs.



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. Except as set forth in Section
8(d)(iv) or Exhibit B, 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




One Bermudiana Road




Hamilton HM11, Bermuda




Att’n: General Counsel



If to the Executive:




Mr. Brian Nocco




7880 Palmer Court




Dublin, OH 43017



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 his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his
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. SECTION 409A.



(a) It is intended that this Agreement will comply with Section 409A of the Code (and any
regulations and guidelines issued thereunder) to the extent the Agreement is subject thereto, and
the Agreement shall be interpreted on a basis consistent with such intent. If an amendment of the
Agreement is necessary in order for it to comply with Section 409A, the parties hereto will
negotiate in good faith to amend the Agreement in a manner that preserves the original intent of
the parties to the extent reasonably possible. No action or failure to act, pursuant to this
Section 25 shall subject the Company to any claim, liability, or expense, and the Company shall not
have any obligation to indemnify or otherwise protect the Executive from the obligation to pay any
taxes pursuant to Section 409A of the Code.



(b) Notwithstanding any provision to the contrary in this Agreement, if the Executive is
deemed on the date of termination of his employment to be a “specified employee” within the meaning
of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment or the
provision of any benefit that is required to be delayed pursuant to Section 409A(a)(2)(B) of the
Code, such payment or benefit shall not be made or provided prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of his “separation from service” (as
such term is defined in Treasury Regulations issued under Code Section 409A), or (ii) the date of
his death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits
delayed pursuant to this Section 25 (whether they would have otherwise been payable in a single sum
or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a
lump sum, and any remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them herein. In no case will
compliance with this Section by the Company constitute a breach of the Company’s or the Guarantors’
obligations under this Agreement.



26. 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.



27. COUNTERPARTS.



This Agreement may be executed in one or more counterparts.



1



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




XL CAPITAL LTD




By: /s/ Kirstin R. Gould 




	 	 	                                  






XL GLOBAL SERVICES, INC.




By: /s/ Celia R. Brown




	 	 	GUARANTORS:






XL INSURANCE LTD




By: /s/ Kirstin R. Gould




	 	 	XL RE LTD






By: /s/ Kirstin R. Gould



READ, ACCEPTED & AGREED



/s/ Brian W. Nocco



2




EXHIBIT A




CHANGE IN CONTROL




A “Change in Control” shall be deemed to have occurred:




(i) 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) execution 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.



3




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;




(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 his
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 him under the Company’s pension,
life insurance, medical, health and accident, disability, deferred compensation or savings
plans in which he 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.



Notwithstanding any provision in this Agreement to the contrary, the Executive must give written
notice of his intention to terminate his employment for Good Reason within sixty (60) days after
the act or omission which constitutes Good Reason, and any failure to give such written notice
within such period will result in a waiver by the Executive of his right to terminate for Good
Reason as a result of such act or omission.



4



EXHIBIT C




Form of General Release and Covenant Not to Sue





	1.	 	General Release of Claims. In consideration for the payments and benefits paid to
you under Section 8 of the Agreement, you hereby release and forever discharge the Company, XL
Global Services, Inc. and any and all of their respective affiliates, predecessors,
successors, assigns, and their respective officers, directors, administrators and employees of
and from all actions, claims, liabilities, demands and causes of action, known or unknown,
fixed or contingent, in law or equity, included but not limited to those arising under the
Civil Rights Act of 1964, the Reconstruction Era Civil Rights Act, the Age Discrimination in
Employment Act of 1967 (“ADEA”), the Employee Retirement Income Security Act of 1974, The
Americans with Disabilities Act, The Family and Medical Leave Act of 1993, The New York State
Human Rights Law Section 196 et seq., the New York City Administrative Code, as
amended, actions under the Connecticut Wage and Hour Laws; the Connecticut Fair Employment
Practices Act, C.G.S. Section 46a-60, as amended; the Connecticut Family Medical Leave Act,
C.G.S. Section 31-51 pp; and the Connecticut Workers Compensation Act, C.G.S. Section 31-290a
and any and all other federal, state, and local laws, rules and regulations prohibiting,
without limitation, discrimination in employment, tortious or wrongful discharge, breach of an
express or implied contract, breach of a covenant of good faith and fair dealing, negligent or
intentional infliction of emotional distress, defamation, misrepresentation or fraud, which
you ever had, now have or hereafter can, shall or may have for, upon or by reason of any
matter, cause or thing, up to and including the day on which you sign this Agreement;
provided, however, that you are not waiving any right to claim benefits under the XL America,
Inc. Employee Savings Plan, any right of indemnification, any rights to directors and
officers’ liability insurance or any amounts due to you on termination under your employment
agreement with the Company.






	2.	 	Effect of General Release; Limitations on General Release. You understand that by
signing this General Release you are prevented from filing, commencing or maintaining any
action, complaint, or proceeding with regard to any of the claims released hereby. However,
nothing in the General Release of claims above precludes you from filing a charge with an
administrative agency or from participating in an agency investigation. You are, however,
waiving your right to recover money in connection with any such charge or investigation. You
are also waiving your right to recover money in connection with a charge filed by any other
individual or by the Equal Employment Opportunity Commission or any other federal or state
agency.






	3.	 	Covenant Not to Sue. In addition to waiving and releasing the claims and rights
covered by the General Release of Claims above, you promise not to sue the Company or any
other Released Party in any forum for any reason, including but not limited to claims, laws or
theories covered by the General Release of Claims. This covenant by you not to sue is
different from the General Release of Claims, which will provide the Company a defense in the
event you violate the General Release. If you violate this Covenant Not to Sue by suing a
Released Party, you may be liable to that party for monetary damages. More specifically, if
you sue a Released Party in violation of this Covenant Not to Sue, you will be required to
either: (1) pay that Released Party’s attorneys’ fees and other costs incurred as a result of
having to defend against your suit; or (2) alternatively, at the Released Party’s option,
return to the Company all of the severance pay provided to you under Section 8 of the
Agreement, except for one-hundred dollars ($100.00). In the event of such violation, the
Company will also be excused from providing you any remaining severance payments under
Section 8 of the Agreement. However, nothing in this Covenant Not to Sue or in any other part
of this Agreement prevents you from challenging the validity of this Agreement under the ADEA.






	4.	 	Knowing and Voluntary Decision to Sign. You further agree that no statements,
representations, promises, threats or suggestions have been made by the Company or its
representatives, officers, or employees to influence you to sign this General Release except
such statements as are expressly set forth herein. You have signed this General Release upon
reaching the considered conclusion that it is best for you, and of your own free will, relying
entirely upon your own judgment, and the judgment of such lawyers and other personal advisors
who you have chosen to consult. You further acknowledge that you are under no disability or
impairment, which affects your decision to sign this General Release.






	5.	 	Time to Consider the Agreement. You have actually read this General Release, and
have had adequate time of at least 21 days to consider its terms and effect, and to ask any
questions that you may have of the legal or other personal advisors of your own choosing.






	6.	 	Subsequent Facts. No fact, evidence, event or transaction currently unknown to you
but which may hereafter become known to you shall affect in any way or manner the final and
unconditional nature of this General Release.





READ, ACCEPTED & AGREED



     



     



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