Document:

Exhibit 10.10.7

                           RISK CAPITAL HOLDINGS, INC.

                            Director Option Agreement

     FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, Risk Capital Holdings, Inc. (the "Company"), a Delaware
corporation, hereby grants to Robert Works, a director of the Company on the
date hereof (the "Option Holder"), the option to purchase common stock, $.01 par
value per share, of the Company ("Shares"), upon the following terms:

     WHEREAS, the following terms reflect the Company's 1995 Long Term Incentive
and Share Award Plan, as amended by the First Amendment thereto (the "Plan");

     (a) Grant. The Option Holder is hereby granted an option (the "Option") to
purchase 300 Shares (the "Option Shares") pursuant to the Plan, the terms of
which are incorporated herein by reference. The Option is granted as of May 26,
1999 (the "Date of Grant") and such grant is subject to the terms and conditions
herein and the terms and conditions of the applicable provisions of the Plan.
Such Option shall not be treated as an incentive stock option under Section 422
of the Internal Revenue Code of 1986, as amended.

     (b) Status of Option Shares. The Option Shares shall upon issue rank
equally in all respects with the other Shares.

     (c) Option Price. The purchase price for the Option Shares shall be, except
as herein provided, $16.00 per Option Share, hereinafter sometimes referred to
as the "Option Price," payable immediately in full upon the exercise of the
Option.

     (d) Term of Option. The Option may be exercised only during the period (the
"Option Period") commencing in accordance with paragraph (f) below and shall
continue until May 26, 2009; thereafter the Option Holder shall cease to have
any rights in respect thereof. The right to exercise the Option may be subject
to sooner termination as provided in paragraph (j) below.

     (e) No Rights of Shareholder. The Option Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at law
or in equity.

     (f) Exercisability. The Option shall become exercisable in three equal
installments commencing on the Date of Grant and thereafter on the first and
second anniversary thereof, subject to paragraph (j) below; provided that such
Option, to the extent not already exercisable in full, shall become immediately
and fully exercisable (1) to the extent provided in paragraph (j) below and (2)
upon a Change in Control. Subject to paragraph (j) below, the Option may be
exercised at any time or from time to time during the Option Period in regard to
all or any portion of the Option which is then exercisable, as may be adjusted
pursuant to paragraph (g) below.

     "Change in Control" means and shall be deemed to have occurred if:

          a. any person (within the meaning of the Securities Exchange Act of
     1934, as amended (the "Exchange Act")), other than a Permitted Person or
     Initial Investor, is or becomes the "beneficial owner" (as defined in Rule
     13d-3 under the Exchange Act), directly or indirectly, of Voting Securities
     representing 35% or more of the total voting power of all the then
     outstanding Voting Securities; or

<PAGE>

          b. any Initial Investor is or becomes the "beneficial owner" (as
     defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
     Voting Securities representing 50% or more of the total voting power of all
     the then outstanding Voting Securities; or

          c. the individuals who, as of the Date of Grant, constitute the Board
     of Directors of the Company (the "Board") together with those who become
     directors subsequent to such date and whose recommendation, election or
     nomination for election to the Board was approved by a vote of at least a
     majority of the directors then still in office who either were directors as
     of such date or whose recommendation, election or nomination for election
     was previously so approved, cease for any reason to constitute a majority
     of the members of the Board; or

          d. the required stockholders of the Company approve a merger,
     consolidation, recapitalization, liquidation, sale or disposition by the
     Company of all or substantially all of the Company's assets, or
     reorganization of the Company (provided that all material regulatory
     approvals have been obtained), or consummation of any such transaction,
     other than any such transaction which would (x) result in at least 60% of
     the total voting power represented by the voting securities of the
     surviving entity outstanding immediately after such transaction being
     beneficially owned by the former stockholders of the Company and (y) not
     otherwise be deemed a Change in Control under subparagraphs a, b, c or e of
     this paragraph (f); or

          e. the Board adopts a resolution to the effect that, for purposes
     hereof, a Change in Control has occurred.

               (i) "Initial Investors" means (A) X.L. Insurance Company, Ltd.;
          (B) The Trident Partnership, L.P.; (C) Marsh & McLennan Risk Capital
          Holdings, Ltd.; or (D) any majority-owned subsidiary or parent (or
          equivalent in the case of a non-corporate entity) of the foregoing.

               (ii) "Permitted Persons" means (A) the Company; (B) any Related
          Party; or (C) any group (as defined in Rule 13d-3 under the Exchange
          Act) comprised of any or all of the foregoing.

               (iii)"Related Party" means (A) a majority-owned subsidiary of the
          Company; (B) a trustee or other fiduciary holding securities under an
          employee benefit plan of the Company or any majority-owned subsidiary
          of the Company; or (C) a corporation owned directly or indirectly by
          the stockholders of the Company in substantially the same proportion
          as their ownership of Voting Securities.

               (iv) "Voting Security" means any security of the Company which
          carries the right to vote generally in the election of directors.

     (g) Adjustments for Recapitalization and Dividends. In the event that,
prior to the expiration of the Option, any dividend in Shares, recapitalization,
Share split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other such change affects the
Shares such that they are increased or decreased or changed into or exchanged
for a different number or kind of shares, other securities of the Company or of
another corporation or other

                                       -2-
<PAGE>

consideration, then in order to maintain the proportionate interest of the
Option Holder and preserve the value of the Option, (i) there shall
automatically be substituted for each Share subject to the unexercised Option
the number and kind of shares, other securities or other consideration into
which each outstanding Share shall be changed or for which each such Share shall
be exchanged, and (ii) the exercise price shall be increased or decreased
proportionately so that the aggregate purchase price for the Shares subject to
the unexercised Option shall remain the same as immediately prior to such event.

     (h) Transferability. The Option may not be assigned or otherwise
transferred, disposed of or encumbered by the Option Holder, other than by will
or by the laws of descent and distribution. During the lifetime of the Option
Holder, the Option shall be exercisable only by the Option Holder or by his or
her guardian or legal representative. Notwithstanding the foregoing, the Option
may be transferred by the Option Holder to members of his or her "immediate
family" or to a trust established for the exclusive benefit of solely one or
more members of the Option Holder's "immediate family." Any Option held by the
transferee will continue to be subject to the same terms and conditions that
were applicable to the Option immediately prior to the transfer, except that the
Option will be transferable by the transferee only by will or the laws of
descent and distribution. For purposes hereof, "immediate family" means the
Option Holder's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half brothers and sisters), in-laws,
and relationships arising because of legal adoption.

     (i) Exercise of Option. In order to exercise the Option, the Option Holder
shall submit to the Company an instrument in writing signed by the Option
Holder, specifying the number of Option Shares in respect of which the Option is
being exercised, accompanied by payment of the Option Price for the Option
Shares for which the Option is being exercised in cash or Shares already owned
by the Option Holder (provided that the Option Holder has owned such Shares for
a minimum period of six months) and having a total Fair Market Value (as defined
below) equal to the exercise price, or in a combination of cash and such Shares.
Option Shares will be issued accordingly by the Company within 15 business days,
and a share certificate dispatched to the Option Holder within 30 days.

     The Company shall not be required to issue fractional Shares upon the
exercise of the Option. If any fractional interest in a Share would be
deliverable upon the exercise of the Option in whole or in part but for the
provisions of this paragraph, the Company, in lieu of delivering any such
fractional share therefor, shall pay a cash adjustment therefor in an amount
equal to their Fair Market Value (or if any Shares are not publicly traded, an
amount equal to the book value per share at the end of the most recent fiscal
quarter) multiplied by the fraction of the fractional share which would
otherwise have been issued hereunder. Anything to the contrary herein
notwithstanding, the Company shall not be obligated to issue any Option Shares
hereunder if the issuance of such Option Shares would violate the provision of
any applicable law, in which event the Company shall, as soon as practicable,
take whatever action it reasonably can so that such Option Shares may be issued
without resulting in such violations of law. For purposes hereof, Fair Market
Value shall mean the mean between the high and low selling prices per Share on
the immediately preceding date (or, if the Shares were not traded on that day,
the next preceding day that the Shares were traded) on the principal exchange on
which the Shares are traded, as such prices are officially quoted on such
exchange.

     (j) Termination of Service. In the event the Option Holder ceases to be a
director of the Company (i) due to retirement after attainment of age 65 or (ii)
due to death or disability, the Option, to the extent not already exercisable in
full, shall become immediately and fully exercisable at the time of such
termination of service, and the Option may be exercised at any time during the
Option Period. Subject to paragraph (f) above, if the Option Holder ceases to be
a director of the Company for any other reason, the portion of the Option which
is not then exercisable shall be cancelled on the date service

                                       -3-
<PAGE>

terminates, and the portion of the Option which is then exercisable may be
exercised at any time within six months after the date of such termination, but
not later than termination of the Option Period.

     (k) Obligations as to Capital. The Company agrees that it will at all times
maintain authorized and unissued share capital sufficient to fulfill all of its
obligations under the Option.

     (l) Transfer of Shares. The Option, the Option Shares, or any interest in
either, may be sold, assigned, pledged, hypothecated, encumbered, or transferred
or disposed of in any other manner, in whole or in part, only in compliance with
the terms, conditions and restrictions as set forth in the governing instruments
of the Company, applicable United States federal and state securities laws and
the terms and conditions hereof. Each certificate for Option Shares issued upon
exercise of the Option, unless at the time of exercise such Option Shares are
registered under the Securities Act of 1933, as amended, shall bear the
following legend or such other legend as the Company deems appropriate:

          "The securities evidenced hereby have not been registered under the
          Securities Act of 1933, as amended (the `Act'), and may not be
          offered, sold or otherwise transferred except (i) in compliance with
          the provisions of any applicable state securities or `Blue Sky' laws
          and (ii) (A) pursuant to an effective registration under the Act, (B)
          in compliance with Rule 144 under the Act, (C) inside the United
          States to a Qualified Institutional Buyer in compliance with Rule 144A
          under the Act, (D) outside the United States in compliance with Rule
          904 of Regulation S under the Act or (E) inside the United States to
          an institutional `accredited investor' as defined in Rule 501(a)(1),
          (2), (3) or (7) under the Act in a transaction which, in the opinion
          of counsel reasonably satisfactory to the Company, qualifies as an
          exempt transaction under the Act and the rules and regulations
          promulgated thereunder."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend or such other legend deemed appropriate by the
Company shall also bear such legend unless, in the opinion of counsel for the
Company, the securities represented thereby need no longer be subject to the
restrictions set forth therein. The provisions of this paragraph (l) shall be
binding upon all subsequent holders of certificates bearing the above legend and
all subsequent holders of the Option, if any.

     (m) Expenses of Issuance of Option Shares. The issuance of stock
certificates upon the exercise of the Option in whole or in part, shall be
without charge to the Option Holder. The Company shall pay, and indemnify the
Option Holder from and against any issuance, stamp or documentary taxes (other
than transfer taxes) or charges imposed by any governmental body, agency or
official (other than income taxes) by reason of the exercise of the Option in
whole or in part or the resulting issuance of the Option Shares.

     (n) Withholding. The Option Holder agrees to make appropriate arrangements
with the Company for satisfaction of any applicable tax withholding
requirements, or similar requirements, arising out of the Option.

     (o) References. References herein to rights and obligations of the Option
Holder shall apply, where appropriate, to the Option Holder's legal
representative or estate without regard to whether specific reference to such
legal representative or estate is contained in a particular provision of this
Option.

                                       -4-
<PAGE>

     (p) Settlement of Disputes. Any dispute between the parties arising from or
relating to the terms of this Option shall be resolved by arbitration held in
the State of Connecticut in accordance with the rules of the American
Arbitration Association. All costs associated with any arbitration, including
all legal expenses, for both parties shall be borne by the Company.

     (q) No Mitigation. To the extent that the vesting of the Option is
accelerated upon a Change in Control or upon a termination of service as
provided herein, neither the Option, nor any Option Shares nor any interest in
either, shall be reduced by any compensation received by the Option Holder in
connection with any other employment.

     (r) 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 by courier, or sent 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:

                  Risk Capital Holdings, Inc.
                  20 Horseneck Lane
                  Greenwich, CT  06830
                  Attn:  Secretary

           If to the Option Holder:

           [Insert address of Option Holder]

     (s) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflict of laws.

     (t) Entire Agreement. This agreement constitutes the entire agreement among
the parties relating to the subject matter hereof, and any previous agreement or
understanding among the parties with respect thereto is superseded by this
agreement.

     (u) Counterparts. This agreement may be executed in two counterparts, each
of which shall constitute one and the same instrument.

                                       -5-
<PAGE>

     IN WITNESS WHEREOF, the undersigned have duly executed this agreement as of
the Date of Grant.

                                 RISK CAPITAL HOLDINGS, INC.

                                 By:  /s/ Peter A. Appel
                                      ----------------------------------------
                                      Peter A. Appel
                                      Managing Director, General Counsel
                                        and Secretary

                                      /s/ Robert Works
                                      ----------------------------------------
                                      Robert Works

                                       -6-Exhibit 10.10.8

                STOCK OPTION AGREEMENTS -- NON-EMPLOYEE DIRECTORS
                              (2000 ANNUAL GRANTS)

     Each of the non-employee directors of Risk Capital Holdings, Inc. ("RCHI")
listed below has entered into Stock Option Agreements with RCHI that are
substantially identical in all material respects to the agreement, dated as of
January 1, 2000, between RCHI and Michael P. Esposito, Jr., a copy of which is
included as part of this Exhibit 10.10.8.

Robert Clements
Lewis L. Glucksman
Ian R. Heap
Thomas V. A. Kelsey
Robert F. Works
Philip L. Wroughton

                                     * * * *

<PAGE>

                           RISK CAPITAL HOLDINGS, INC.

                            Director Option Agreement

     FOR GOOD AND VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, Risk Capital Holdings, Inc. (the "Company"), a Delaware
corporation, hereby grants to Michael P. Esposito, Jr., a director of the
Company on the date hereof (the "Option Holder"), the option to purchase common
stock, $.01 par value per share, of the Company ("Shares"), upon the following
terms:

     WHEREAS, the following terms reflect the Company's 1999 Long Term Incentive
and Share Award Plan (the "Plan");

     Grant. The Option Holder is hereby granted an option (the "Option") to
purchase 1,500 Shares (the "Option Shares") pursuant to the Plan, the terms of
which are incorporated herein by reference. The Option is granted as of January
1, 2000 (the "Date of Grant") and such grant is subject to the terms and
conditions herein and the terms and conditions of the applicable provisions of
the Plan. Such Option shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.

     Status of Option Shares. The Option Shares shall upon issue rank equally in
all respects with the other Shares.

     Option Price. The purchase price for the Option Shares shall be, except as
herein provided, $12.657 per Option Share, hereinafter sometimes referred to as
the "Option Price," payable immediately in full upon the exercise of the Option.

     Term of Option. The Option may be exercised only during the period (the
"Option Period") commencing in accordance with paragraph (f) below and shall
continue until January 1, 2010; thereafter the Option Holder shall cease to have
any rights in respect thereof. The right to exercise the Option may be subject
to sooner termination as provided in paragraph (j) below.

     No Rights of Shareholder. The Option Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or in
equity.

     Exercisability. The Option shall become exercisable on January 1, 2001,
subject to paragraph (j) below; provided that such Option, to the extent not
already exercisable in full, shall become immediately and fully exercisable (1)
to the extent provided in paragraph (j) below and (2) upon a Change in Control.
Subject to paragraph (j) below, the Option may be exercised at any time or from
time to time during the Option Period in regard to all or any portion of the
Option which is then exercisable, as may be adjusted pursuant to paragraph (g)
below.

     "Change in Control" means and shall be deemed to have occurred if:

          a. any person (within the meaning of the Securities Exchange Act of
     1934, as amended (the "Exchange Act")), other than a Permitted Person or
     Initial Investor, is or becomes the "beneficial owner" (as defined in Rule
     13d-3 under the Exchange Act), directly or indirectly, of Voting Securities
     representing 35% or more of the total voting power of all the then
     outstanding Voting Securities; or

<PAGE>

          b. any Initial Investor is or becomes the "beneficial owner" (as
     defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
     Voting Securities representing 50% or more of the total voting power of all
     the then outstanding Voting Securities; or

          c. the individuals who, as of the Date of Grant, constitute the Board
     of Directors of the Company (the "Board") together with those who become
     directors subsequent to such date and whose recommendation, election or
     nomination for election to the Board was approved by a vote of at least a
     majority of the directors then still in office who either were directors as
     of such date or whose recommendation, election or nomination for election
     was previously so approved, cease for any reason to constitute a majority
     of the members of the Board; or

          d. the required stockholders of the Company approve a merger,
     consolidation, recapitalization, liquidation, sale or disposition by the
     Company of all or substantially all of the Company's assets, or
     reorganization of the Company (provided that all material regulatory
     approvals have been obtained), or consummation of any such transaction,
     other than any such transaction which would (x) result in at least 60% of
     the total voting power represented by the voting securities of the
     surviving entity outstanding immediately after such transaction being
     beneficially owned by the former stockholders of the Company and (y) not
     otherwise be deemed a Change in Control under subparagraphs a, b, c or e of
     this paragraph (f); or

          e. the Board adopts a resolution to the effect that, for purposes
     hereof, a Change in Control has occurred.

               (i) "Initial Investors" means (A) X.L. Insurance Company, Ltd.;
          (B) The Trident Partnership, L.P.; (C) Marsh & McLennan Risk Capital
          Holdings, Ltd.; or (D) any majority-owned subsidiary or parent (or
          equivalent in the case of a non-corporate entity) of the foregoing.

               (ii) "Permitted Persons" means (A) the Company; (B) any Related
          Party; or (C) any group (as defined in Rule 13d-3 under the Exchange
          Act) comprised of any or all of the foregoing.

               (iii) "Related Party" means (A) a majority-owned subsidiary of
          the Company; (B) a trustee or other fiduciary holding securities under
          an employee benefit plan of the Company or any majority-owned
          subsidiary of the Company; or (C) a corporation owned directly or
          indirectly by the stockholders of the Company in substantially the
          same proportion as their ownership of Voting Securities.

               (iv) "Voting Security" means any security of the Company which
          carries the right to vote generally in the election of directors.

     Adjustments for Recapitalization and Dividends. In the event that, prior to
the expiration of the Option, any dividend in Shares, recapitalization, Share
split, reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other such change affects the
Shares such that they are increased or decreased or changed into or exchanged
for

                                      -2-
<PAGE>

a different number or kind of shares, other securities of the Company or of
another corporation or other consideration, then in order to maintain the
proportionate interest of the Option Holder and preserve the value of the
Option, (i) there shall automatically be substituted for each Share subject to
the unexercised Option the number and kind of shares, other securities or other
consideration into which each outstanding Share shall be changed or for which
each such Share shall be exchanged, and (ii) the exercise price shall be
increased or decreased proportionately so that the aggregate purchase price for
the Shares subject to the unexercised Option shall remain the same as
immediately prior to such event.

     Transferability. The Option may not be assigned or otherwise transferred,
disposed of or encumbered by the Option Holder, other than by will or by the
laws of descent and distribution. During the lifetime of the Option Holder, the
Option shall be exercisable only by the Option Holder or by his or her guardian
or legal representative. Notwithstanding the foregoing, the Option may be
transferred by the Option Holder to members of his or her "immediate family" or
to a trust established for the exclusive benefit of solely one or more members
of the Option Holder's "immediate family." Any Option held by the transferee
will continue to be subject to the same terms and conditions that were
applicable to the Option immediately prior to the transfer, except that the
Option will be transferable by the transferee only by will or the laws of
descent and distribution. For purposes hereof, "immediate family" means the
Option Holder's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, siblings (including half brothers and sisters), in-laws,
and relationships arising because of legal adoption.

     Exercise of Option. In order to exercise the Option, the Option Holder
shall submit to the Company an instrument in writing signed by the Option
Holder, specifying the number of Option Shares in respect of which the Option is
being exercised, accompanied by payment of the Option Price for the Option
Shares for which the Option is being exercised in cash or Shares already owned
by the Option Holder (provided that the Option Holder has owned such Shares for
a minimum period of six months) and having a total Fair Market Value (as defined
below) equal to the exercise price, or in a combination of cash and such Shares.
Option Shares will be issued accordingly by the Company within 15 business days,
and a share certificate dispatched to the Option Holder within 30 days.

     The Company shall not be required to issue fractional Shares upon the
exercise of the Option. If any fractional interest in a Share would be
deliverable upon the exercise of the Option in whole or in part but for the
provisions of this paragraph, the Company, in lieu of delivering any such
fractional share therefor, shall pay a cash adjustment therefor in an amount
equal to their Fair Market Value (or if any Shares are not publicly traded, an
amount equal to the book value per share at the end of the most recent fiscal
quarter) multiplied by the fraction of the fractional share which would
otherwise have been issued hereunder. Anything to the contrary herein
notwithstanding, the Company shall not be obligated to issue any Option Shares
hereunder if the issuance of such Option Shares would violate the provision of
any applicable law, in which event the Company shall, as soon as practicable,
take whatever action it reasonably can so that such Option Shares may be issued
without resulting in such violations of law. For purposes hereof, Fair Market
Value shall mean the mean between the high and low selling prices per Share on
the immediately preceding date (or, if the Shares were not traded on that day,
the next preceding day that the Shares were traded) on the principal exchange on
which the Shares are traded, as such prices are officially quoted on such
exchange.

     Termination of Service. In the event the Option Holder ceases to be a
director of the Company (i) due to retirement after attainment of age 65 or (ii)
due to death or disability, the Option, to the extent not already exercisable in
full, shall become immediately and fully exercisable at the time of such
termination of service, and the Option may be exercised at any time during the
Option Period.

                                      -3-
<PAGE>

Subject to paragraph (f) above, if the Option Holder ceases to be a director of
the Company for any other reason, the portion of the Option which is not then
exercisable shall be cancelled on the date service terminates, and the portion
of the Option which is then exercisable may be exercised at any time within six
months after the date of such termination, but not later than termination of the
Option Period.

     Obligations as to Capital. The Company agrees that it will at all times
maintain authorized and unissued share capital sufficient to fulfill all of its
obligations under the Option.

     Transfer of Shares. The Option, the Option Shares, or any interest in
either, may be sold, assigned, pledged, hypothecated, encumbered, or transferred
or disposed of in any other manner, in whole or in part, only in compliance with
the terms, conditions and restrictions as set forth in the governing instruments
of the Company, applicable United States federal and state securities laws and
the terms and conditions hereof. Each certificate for Option Shares issued upon
exercise of the Option, unless at the time of exercise such Option Shares are
registered under the Securities Act of 1933, as amended, shall bear the
following legend or such other legend as the Company deems appropriate:

          "The securities evidenced hereby have not been registered under the
          Securities Act of 1933, as amended (the `Act'), and may not be
          offered, sold or otherwise transferred except (i) in compliance with
          the provisions of any applicable state securities or `Blue Sky' laws
          and (ii) (A) pursuant to an effective registration under the Act, (B)
          in compliance with Rule 144 under the Act, (C) inside the United
          States to a Qualified Institutional Buyer in compliance with Rule 144A
          under the Act, (D) outside the United States in compliance with Rule
          904 of Regulation S under the Act or (E) inside the United States to
          an institutional `accredited investor' as defined in Rule 501(a)(1),
          (2), (3) or (7) under the Act in a transaction which, in the opinion
          of counsel reasonably satisfactory to the Company, qualifies as an
          exempt transaction under the Act and the rules and regulations
          promulgated thereunder."

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend or such other legend deemed appropriate by the
Company shall also bear such legend unless, in the opinion of counsel for the
Company, the securities represented thereby need no longer be subject to the
restrictions set forth therein. The provisions of this paragraph (l) shall be
binding upon all subsequent holders of certificates bearing the above legend and
all subsequent holders of the Option, if any.

     Expenses of Issuance of Option Shares. The issuance of stock certificates
upon the exercise of the Option in whole or in part, shall be without charge to
the Option Holder. The Company shall pay, and indemnify the Option Holder from
and against any issuance, stamp or documentary taxes (other than transfer taxes)
or charges imposed by any governmental body, agency or official (other than
income taxes) by reason of the exercise of the Option in whole or in part or the
resulting issuance of the Option Shares.

     Withholding. The Option Holder agrees to make appropriate arrangements with
the Company for satisfaction of any applicable tax withholding requirements, or
similar requirements, arising out of the Option.

     (o) References. References herein to rights and obligations of the Option
Holder shall apply, where appropriate, to the Option Holder's legal
representative or estate without regard to

                                      -4-
<PAGE>

whether specific reference to such legal representative or estate is contained
in a particular provision of this Option.

     (p) Settlement of Disputes. Any dispute between the parties arising from or
relating to the terms of this Option shall be resolved by arbitration held in
the State of Connecticut in accordance with the rules of the American
Arbitration Association. All costs associated with any arbitration, including
all legal expenses, for both parties shall be borne by the Company.

     (q) No Mitigation. To the extent that the vesting of the Option is
accelerated upon a Change in Control or upon a termination of service as
provided herein, neither the Option, nor any Option Shares nor any interest in
either, shall be reduced by any compensation received by the Option Holder in
connection with any other employment.

     (r) 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 by courier, or sent 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:

                  Risk Capital Holdings, Inc.
                  20 Horseneck Lane
                  Greenwich, CT  06830
                  Attn:  Secretary

           If to the Option Holder:

                  [Insert address of Option Holder]

     (s) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
principles of conflict of laws.

     (t) Entire Agreement. This agreement constitutes the entire agreement among
the parties relating to the subject matter hereof, and any previous agreement or
understanding among the parties with respect thereto is superseded by this
agreement.

     (u) Counterparts. This agreement may be executed in two counterparts, each
of which shall constitute one and the same instrument.

                                      -5-
<PAGE>

     IN WITNESS WHEREOF, the undersigned have duly executed this agreement as of
the Date of Grant.

                                      RISK CAPITAL HOLDINGS, INC.

                                      By:  /s/ Peter A. Appel
                                           ------------------------------------
                                           Peter A. Appel
                                           Managing Director, General Counsel
                                             and Secretary

                                           /s/ Michael P. Esposito, Jr.
                                           ------------------------------------
                                           Michael P. Esposito, Jr.

                                      -6-

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