Exhibit 10.3


CONSULTING AGREEMENT


                    CONSULTING
AGREEMENT, dated as of April 24, 2009, by and between XL Capital Ltd, a Cayman
Islands corporation (the “Company”), and Brian O’Hara (the “Consultant”),
an individual.


                    WHEREAS,
the Consultant was employed by the Company as its Chief Executive Officer and he was
Chairman of its Board of Directors; and


                    WHEREAS,
the Company desires to retain the services of the Consultant, and the Consultant desires to
be retained by the Company, subject to and in accordance with the terms and
conditions set forth herein; and


                    WHEREAS,
the Consultant and the Company have agreed to the noncompetition, nonsolicitation and
confidentiality provisions set forth herein.


                    NOW,
THEREFORE, in consideration of the conditions and covenants set forth herein, the parties
hereto hereby agree as follows:


                    1.
Agreement. The Company hereby
retains the Consultant as a consultant to the Company on and subject to the
terms and conditions set forth herein, and the Consultant hereby accepts such
consultancy, on and subject to such terms and conditions.


                    2.
Consulting Services.
During the Consulting Term (as defined below), the Consultant shall provide
such consulting services to the Company commensurate with his status and experience as the
former Chairman and Chief Executive Officer of the Company with respect to such
matters as shall be reasonably requested from time to time by the Chief
Executive Officer
of the Company. Such services shall include, but not be limited to, services in
connection
with the Company’s ongoing operations, including, without limitation, advising
on industry activities, government and public affairs matters and client
relationship matters, and in connection with the defense and/or investigation
of any third party claim or any investigation or proceeding relating to the
Company or its Affiliates (as defined below). The Consultant shall not, by virtue of the
consulting services provided hereunder, be considered an officer or employee of
the
Company, and he shall have no power or authority to contract in the name of or
bind the Company
or its Affiliates.


                    3.
Consulting
Fee.
During the Consulting Term, in consideration of the services to be provided by
the Consultant to the Company described herein and in consideration for the covenants of the
Consultant set forth herein, the Company shall pay the Consultant a fee in the amount of $800,000
per year, payable (i) $800,000 on May 1, 2009, (ii) $800,000 on January 4, 2010, and (iii)
$800,000 on December 31, 2010. The Consultant shall not be entitled to participate in any employee
benefit plans maintained by the Company or any of its Affiliates by reason of
this Agreement.


                    4.
Consulting
Term.
The period during which the Consultant will be retained by the Company to
provide the consulting services hereunder shall commence on April 25, 2009 and shall terminate on
the third anniversary thereof, unless sooner terminated as provided in this






Section 4 (the “Consulting
Term”). Notwithstanding the foregoing, the Consulting Term will end on the date of the Consultant’s death or
termination of service due to his Permanent Disability (as defined below), and
the Consulting Term may be terminated by the Company for Cause (as
defined below). For purposes of this Agreement, the term “Cause” shall
mean the Consultant’s (a) fraud or
dishonesty in connection with the performance or provision by the Consultant of
his services under this Agreement, (b) material breach of any of the terms of
this Agreement or (c) the
Consultant’s conviction of, or plea of nolo
contendere to, a felony. For purposes of this Agreement, the term “Permanent Disability”
means those circumstances where the Consultant has been unable to provide his
services as described in this Agreement for at least 60 continuous days
because of physical, mental or emotional incapacity resulting from injury,
sickness or disease, and will be unable to continue to provide his services as
described in this Agreement for a
total of six (6) months in any twelve (12) month period because of physical,
mental or emotional incapacity resulting from injury, sickness or
disease. Any questions as to the existence of a
Permanent Disability shall be determined by a qualified, independent physician
selected by the Company and approved
by the Consultant (which approval shall not be unreasonably withheld). The
determination of any such physician shall be final and conclusive for all
purposes of this Agreement.


                    5.
Reimbursement
of Expenses. The Company shall reimburse the Consultant for all reasonable expenses
incurred by him in the course of performing his services under this Agreement
(which expenses are consistent with the Company’s policies in effect from time to time with respect to travel and other
business expenses), subject to the Company’s requirements with respect to reporting and documentation of expenses.


                    6.
Noncompetition
and Nonsolicitation. Since the Consultant has obtained in the course of his
employment with the Company and his service as Chairman of the Board, and is
likely to obtain in the course of his service as a consultant hereunder,
knowledge of 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,
the Consultant hereby undertakes that, during the period beginning on the date
hereof and
ending on April 25, 2012:


	
 

	
 


	
 

	
     
      (a) the Consultant 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 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;


	
 

	
 


	
 

	
     
      (b)
 the
 Consultant 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 immedi-





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ately
 preceding the date of this Agreement 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 the date of this Agreement shall have supplied services
 to any such person, nor will the Consultant 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


	
 

	
 


	
 

	
     
      (c)
 the Consultant, without the express written consent of the Company (which shall not be unreasonably withheld),
 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, director or stockholder (except solely as a less than one percent stockholder of a
 publicly traded company), engage in any activities in Bermuda, the United States or greater London 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 Consultant’s employment or consultancy were either being conducted by the Company or its Affiliates or
 actively being developed by the Company or its Affiliates.





                    For
purposes of this Agreement, an “Affiliate” of the Company means 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 Consultant set forth in this Section 6 shall also apply to
any agent
or other representative acting on behalf of the Consultant.


                    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, duration 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 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.


                    7.
Confidential Information. The Consultant covenants that he shall not, without the prior
written consent of the Company, use for his 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 Consultant of his duties as a
consultant to 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


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or its Affiliates (the
“Confidential Information”). The Consultant 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 the Consultant during his
employment or consultancy, unless and
until such information has become known to the public generally (other than as a result of unauthorized
disclosure by the Consultant) 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 Consultant shall be
without limitation as to time and
geographic application. The Consultant 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 of the Company’s Board of Directors as evidenced by the
signature of the Company’s General Counsel.


                    8.
Return
of Company Property. The Consultant agrees that, upon the expiration or termination of
the Consulting Term, he will immediately return to the Company all materials containing or
reflecting the Confidential Information and all copies, reproductions and
summaries thereof, in his possession or under his control and shall erase all
Confidential Information from all media in his possession or under his control,
and, if the Company so requests, shall certify in writing that he has done so.
All Confidential Information is and shall remain the property of the Company or
its Affiliates, as the case may be.


                    9.
Indemnification. The Company shall indemnify the Consultant
against expenses incurred and damages paid
or payable by him with respect to claims based on actions or failures to act by
the Consultant in his capacity as a consultant under this Agreement, but not including expenses incurred or damages paid or
payable by the Consultant arising out of his gross negligence or willful misconduct.


                    10.
General
Provisions.


                    (a)
This
Agreement constitutes the entire understanding of the Company and the Consultant with
respect to the subject matter hereof and supersedes all prior understandings, written or oral, with
respect thereto. The terms of this Agreement may be changed, modified or
discharged only by an instrument in writing signed by the parties hereto. A
failure of the Company or the Consultant to insist on strict compliance with
any provision of this Agreement shall not be deemed a waiver of such provision or any other provision hereof.
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.


                    
(b) This
Agreement shall be construed, enforced and interpreted in accordance with and governed by
the laws of the State of New York, without regard to its conflict of laws provisions.


                    (c)
This
Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which counterparts, when so executed and delivered, shall be
deemed to be an original and all of which counterparts, taken together, shall constitute but one and
the same Agreement.


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                    (d) 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 Consultant:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
To
 the last address delivered to 


	
 

	
 

	
 

	
the
 Company by the Consultant in 


	
 

	
 

	
 

	
the
 manner set forth herein.





                    (e)
The
Consultant and the Company agree that the Consultant is acting as an independent contractor
to the Company for all purposes with regard to the performance of his services
hereunder during the Consulting Term, including, without limitation, for US
Federal (including social security and unemployment), state and local tax
purposes. The Consultant shall be solely responsible for fulfilling when due
all Federal, state and local income tax and self-employment tax obligations
arising in connection with his consultancy for the Company. Should the Company
be required to pay any such tax or payment, the Consultant shall promptly
reimburse the Company for such tax or payments, including any interest and
penalties with respect thereto. Should it be determined that any payment
hereunder is subject to withholding of tax under applicable law, all payments
to be made hereunder shall be net of applicable income, employment, social
security or other taxes required to be withheld therefrom.


                    (f)
Any
dispute between the parties hereto arising from or relating to the terms of this Agreement or the Consultant’s
services hereunder shall, except as otherwise provided in this Section 10(f), be resolved by arbitration held in New
York City, New York, in accordance with the rules of the American
Arbitration Association. The Consultant acknowledges that the Company and its Affiliates will suffer irreparable injury, not
readily susceptible of valuation in monetary damages, if the Consultant
breaches his obligations under Section 6 or 7 hereof. Accordingly, the Consultant 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 the Consultant of his obligations under Section 6 or 7 hereof 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 the Consultant maintains his
residence or his principal place of business. The Consultant 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 the Consultant
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 the Consultant
known to the Com-


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pany or
its Affiliates, or in any other manner authorized by law. The Consultant
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 the
Consultant of his obligations under Section 6 or 7 hereof he will forfeit any
and all rights to any payments to which he might otherwise then be entitled by
virtue of this Agreement and such payments may be suspended so long as any good
faith dispute with respect thereto is continuing.


                    (g)
This Agreement shall be binding upon and inure to the benefit of the successors and assigns of
the Company. No rights or obligations of the Consultant under this Agreement may be
assigned or transferred by him. 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.


                    (h)
It is intended that this Agreement will comply with Section 409A and Section 457A of the
Internal Revenue Code of 1986, as amended (the “Code”) 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 so comply, 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 10(h) shall subject the Company to any claim, liability, or expense, and the
Company shall not have any obligation to indemnify or otherwise protect the
Consultant from the obligation to pay any taxes pursuant to Section 409A or 457A of the
Code. With respect to any reimbursement arrangements of the Company and its Affiliates that
constitute deferred compensation for purposes of Section 409A, except as
otherwise permitted by Section 409A, the following conditions shall be applicable: (i) the
amount eligible for reimbursement under any such arrangement in one calendar
year may not affect the amount eligible for reimbursement under such
arrangement in any other calendar year, (ii) any reimbursement must be made on
or before the last day of the calendar year following the calendar year in
which the expense was incurred, and (iii) the right to reimbursement is not
subject to liquidation or exchange for another benefit. Whenever payments under
this Agreement are to be made in installments, each such installment shall be
deemed to be a separate payment for purposes of Section 409A.


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                    IN
WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized
representative and the Consultant has hereunto set his hand as of the day and year first above
written.


	
 

	
 

	
 


	
 

	
CONSULTANT


	
 

	
 

	
 


	
 

	
/s/ Brian
 O’Hara


	
 

	



	
 

	
Brian
 O’Hara 


	
 

	
 

	
 


	
 

	
XL CAPITAL
 LTD


	
 

	
 

	
 


	
 

	
By:

	
/s/ Kirstin Gould


	
 

	
 

	



	
 

	
 

	
Name: Kirstin Gould


	
 

	
 

	
Title: Executive Vice President


	
 

	
 

	
          General
 Counsel & Secretary





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