insurance companies elect Executive to its board of directors. Executive may also be electedas an executive officer of CNA Financial Corporation (“CNAF”), a publicly-traded company that isthe indirect parent of the Company, and if so elected Executive agrees to serve in such capacityfor the term of this Agreement or any portion thereof without additional compensation; provided,however, that nothing in this Agreement shall require that CNAF elect or maintain Executive in anysuch position.          (b) Executive shall diligently and to the best of his abilities assume, perform, and dischargethe duties and responsibilities of Executive Vice President and Chief Actuary , as well as suchother specific duties and responsibilities as the CEO shall assign or designate to Executive fromtime to time not inconsistent with Executive’s status. Executive shall devote substantially all ofhis working time to the performance of his duties as set forth herein and shall not, without theprior written consent of the CEO, accept other employment or render or perform other services, norshall he have any direct or indirect ownership interest in any other business which is incompetition with the business of the Company, the CNA insurance companies or CNAF, other than inthe form of publicly-traded securities constituting less than five percent (5%) of the outstandingsecurities of a corporation (determined by vote or value) or limited partnership interestsconstituting less than five percent (5%) of the value of any such partnership. The foregoing shallnot preclude Executive from engaging in charitable, professional, and personal investmentactivities, provided that, in the judgment of the CEO, such activities do not materially interferewith the performance of his duties and responsibilities hereunder.          3. **Compensation**.          (a) During the Term, the Company shall pay to Executive for the period he is employed by theCompany hereunder, an annual base salary of $500,000.00 (the “Base Compensation”). The BaseCompensation shall be payable not less frequently than in monthly increments. At the discretion ofthe CEO and/or the Compensation Committee (the “Committee”) of CNAF’s Board of Directors, suchsalary rate may be increased annually during the term of the Agreement, beginning in 2009, based onmarket considerations, responsibilities and performance. In no event shall Executive’s BaseCompensation be reduced to an amount that is less than the amount specified in this Section 3 (a)without Executive’s written consent, or to an amount that
2

 
is less than the amount of Base Compensation that he was previously receiving under thisAgreement without Executive’s written consent.          (b) The Executive shall be eligible for an annual incentive cash award (“Bonus”) pursuant tothe CNA Financial Corporation 2000 Incentive Compensation Plan (the “Plan”). Subject to theapproval of the Committee, the Executive’s target Bonus opportunity thereunder shall not be lessthan the rate of one-hundred percent (100%) of his Base Compensation for each twelve month bonusperiod. In no event shall the target Bonus opportunity be reduced without the Executive’s writtenconsent. The amount of the Bonus shall be based on the assessment by the CEO and/or the Committeeof Executive’s performance, and shall be determined and payable in accordance with the terms of thePlan as set forth in the Plan documents; however, if Executive is a proxy-named officer, the amountof the Bonus shall be based on the Committee’s assessment in its sole discretion of Executive’sperformance and the net operating income goals (or other applicable measures ) set annually by theCommittee, and shall be determined and payable in accordance with the terms of the Plan, as setforth in the Plan documents. The Committee shall also have unlimited negative discretion under thePlan and this Agreement to decrease the amount of Executive’s Bonus for any year.          (c) Subject to the approval of the Committee, Executive shall be eligible to receive along-term Incentive cash award, in accordance with the terms of the Plan, as may be in effectduring the Term or such other long term incentive plan as the Company may from time to time adoptfor its senior officers. The Executive’s target long-term incentive cash award shall be twentypercent (20%) of his Base Compensation during any applicable three year performance period asdetermined by the Company and/or the Committee, beginning with the 2008 performance year andprorated for time of participation for that 2008 performance year; that is, (a) effective for the2008 performance year of the 2006-2008 cycle, (b) effective for the 2008 and 2009 performance yearsof the 2007-2009 cycle and (c) effective for all covered years in each subsequent performancecycle. In no event shall the target award be reduced without the Executive’s written consent.Actual payout of the long-term incentive cash award may range from 0% to 200% of target, based onthe Company’s overall business results and performance as determined by the Committee in its solediscretion.          (d) Subject to the approval of the Committee, Executive shall be awarded a minimum grant of10,000 stock appreciation rights paid in stock (“SARs”) of CNA Financial Corporation
3

 
(“CNAF”) common stock or equivalent stock options annually, beginning with the 2009performance year (awarded in February of 2009), during the term of Executive’s employment underthis Agreement. Such annual grant may be increased at the recommendation of the CEO and uponapproval of the Committee, subject to share availability. Executive’s rights with respect to sharesawarded hereunder shall be subject to the terms of the Plan, share availability and approval by theCommittee.          (e) Executive shall be awarded a Signing Bonus (the “Signing Bonus”) in the amount of$400,000, less applicable withholding taxes, payable within first 45 days of the Effective Date.Executive shall also be awarded a special grant of 15,000 SARs of CNAF common stock on the later tooccur of the first day of employment or the first date when both Executive and the Company havesigned this Agreement, subject to Committee approval, and pursuant to the terms and conditions setforth in the attached Addendum (the “Addendum”), which is incorporated by reference into thisAgreement. The Signing Bonus shall be subject to the terms and provisions of that certain New HireBonus Payback Agreement (“Payback Agreement”) of even date herewith between Executive and theCompany.          (f) For avoidance of doubt respecting awards to Executive under Section 3 (b), 3 (c), 3 (d), 3(e) and 3 (f) hereof, the Committee shall retain such discretion as may be provided under the Planto satisfy Section 162(m) of the Internal Revenue Code of 1986 (“Code”) or any successor provision.The Company will defer until the first tax year in which it reasonably anticipates, or shouldreasonably anticipate, that deductibility is not limited by said Section 162(m) the payment of allcompensation to which Executive is entitled under this Agreement which the Company reasonablyanticipates would be non-deductible under said Section 162(m) or any successor provision withrespect to deductibility of executive compensation if paid in the tax year in which it wouldotherwise be payable. Subject to Section 162(m) of the Code and any other applicable laws orregulations as interpreted by the Company, deferred compensation may be credited to the Executive’sSES-CAP account and, if so credited, shall be subject to the terms thereof and of the Company’sSES-CAP Plan.          (g) Executive’s pensionable earnings under the Savings & Capital Accumulation Plan (“S-CAP”)and the CNA Supplemental Savings & Capital Accumulation Plan (“SES-CAP”) will be calculated andpayable as specified in the respective plan documents, as amended from time to time, and alsosubject to the requirements of any other applicable laws or regulations as
4

 
interpreted by the Company. Any deferral elections available to Executive with respect to suchpensionable earnings shall be made prior to the beginning of the year in which any amounts subjectto such elections are earned.          (h) All payments due under this Agreement shall be subject to withholding as required by law.          4. **Other Benefits**. Executive shall be entitled to continue to participate in the variousbenefit plans, programs or arrangements established and maintained by the Company from time to timeand applicable to senior executives of the Company such as, but not by way of limitation, medicalbenefits, dental benefits, life insurance, long-term disability insurance, both qualified andsupplemental defined contribution plans, and to receive all fringe benefits made available tosenior executives of the Company, including relocation assistance, club membership, and tax returnpreparation. Executive’s entitlement to participate in any such plan, program or arrangement shallin each case be subject to the terms and conditions of the Company’s policies with regard to suchplans, programs or arrangements, as adjusted by the Company from time to time in its solediscretion. Executive shall not be eligible for paid time off (“PTO”) under the Company’s PTOpolicy. In the event of termination of employment, Executive’s available severance benefits shallbe determined solely in accordance with Section 6 hereof.          5. **Expense Reimbursement**. Executive shall continue to be entitled to reimbursement by theCompany for all reasonable and customary travel and other business expenses incurred by Executivein carrying out his duties under this Agreement, in accordance with the general travel and businessreimbursement policies adopted by the Company as adjusted from time to time. Executive shall reportall such expenditures not less frequently than monthly accompanied by adequate records and suchother documentary evidence as required by the Company or by Federal or state tax statutes orregulations governing the substantiation of such expenditures.          6. **Termination of Employment**. If Executive’s employment with the Company shall terminateduring the term of this Agreement, the following conditions set forth herein shall apply withrespect to the Executive’s compensation and benefits hereunder. Either party may terminateExecutive’s employment with the Company during the term of this Agreement by written notice to theother party, effective as of the date specified in such notice and Executive’s employment shallautomatically terminate in the event of Executive’s death. Upon termination of
5

 
Executive’s employment during or at the end of the term of this Agreement, the rights of theparties under this Agreement shall be determined pursuant to this Section 6. All payments to bemade hereunder shall be made either to Executive or to his personal representatives, heirs orbeneficiaries, as the case may be. In the event of Executive’s termination during the term of thisAgreement, unless otherwise specified in this Agreement Executive’s rights, if any, under any ofthe Company’s defined contribution, incentive or other benefit plans of any nature shall begoverned by the respective terms of such plans.          6.1 **Death and Disability**. In the event of the death of Executive or, at the Company’selection, in the event of his Permanent Disability (as defined below) during the term of thisAgreement, provided it has not already terminated, Executive’s employment shall terminate;provided, however, that:          (a) The Company shall pay to Executive or his personal representatives, heirs or beneficiariesas the case may be, an amount equal to his: (i) unpaid Base Compensation and current year’s targetBonus prorated to the date of termination; (ii) any previous year’s unpaid Bonus based upon actualor discretionary payouts, if any; and (iii) unpaid cash entitlements, if any, earned by Executiveor payable to his beneficiaries as of the date of termination which, pursuant to the terms of anyapplicable Company plan or program (which unpaid cash entitlements shall not include any unpaidBonus or any unpaid long-term incentive cash awards or other awards under the IncentiveCompensation Plan), accrued prior to the date of termination.          (b) For purposes of this Agreement, the term “Permanent Disability” means a physical or mentalcondition of Executive which, as determined by the CEO based on and consistent with availablemedical information, is expected to continue beyond 26 weeks and which renders Executive incapableof performing any substantial portion of the services contemplated hereunder, with reasonableaccommodation compatible with the fulfillment of his duties as described in Section 2 hereinabove.          6.2 **Termination for Cause by the Company**. In the event that Executive shall engage in anyconduct which the CEO in his sole discretion shall determine to be “**Cause**,” as defined herein, heshall be subject to termination forthwith. For purposes of this Agreement, Cause shall meanengaging in or committing: (i) any act which would constitute a felony or other act
6

 
involving fraud, dishonesty, moral turpitude, unlawful conduct or breach of fiduciary duty;(ii) a substantial breach of any provision of this Agreement; (iii) willful or reckless materialmisconduct in the performance of the Executive’s duties; or (iv) the habitual neglect of duties;provided however, that, for purposes of clauses (iii) and (iv), Cause shall not include any one ormore of the following: bad judgment, negligence or any act or omission believed by the Executive ingood faith to have been in or not opposed to the interest of the Company (without any intent by theExecutive to gain, directly or indirectly, a profit to which he was not legally entitled). If theExecutive agrees to resign from his employment with the Company in lieu of being terminated forCause, he may be deemed to have been terminated for Cause for purposes of this Agreement.          Upon terminating the Executive for Cause, other than paying the Executive within 30 days ofsuch termination his: (i) unpaid Base Compensation prorated to the date of termination and (ii)unpaid cash entitlements, if any, earned and accrued pursuant to the terms of any applicableCompany plan or program (which unpaid cash entitlements shall not include any unpaid Bonus or anyunpaid long-term incentive cash awards or other awards under the Incentive Compensation Plan) priorto the date of the date of termination, the Company shall have no further obligations whatsoever toExecutive under this Agreement. In the event of termination for Cause, Executive agrees to continueto be bound by the covenants set forth herein at Sections 7 through 14 subsequent to the date ofsuch termination, for such periods of time as provided for in said Sections respectively.          6.3 **Termination by the Company Without Cause/ Termination by Executive for Good Reason**. In theevent Executive’s employment is terminated by the Company “**Without Cause”**(as that term is definedhereinbelow), or in the event Executive terminates his employment for “**Good Reason**” (as that termis defined hereinbelow):          (a) The Company shall pay to Executive severance consisting of an amount equal to the 12months of the Executive’s Base Compensation and one (1) times Executive’s target Bonus, or theaggregate amount of unpaid Base Compensation due to Executive under this Agreement, whichever isgreater, in effect at the time of termination. The severance shall be paid not less frequently thanin equal monthly installments following such termination. The Company shall also pay the Executive(i) unpaid Base Compensation, prorated to the date of termination; (ii) current year’s Bonus,prorated to the date of termination, and payable following the end of the performance year basedupon the Committee’s assessment of Executive’s performance; (ii) any
7

 
previous year’s unpaid Bonus based upon actual or discretionary payouts, if any; and (iii)within 30 days of his termination, unpaid cash entitlements, if any, earned and accrued pursuant tothe terms of any applicable Company plan or program prior to the date of the date of termination(which unpaid cash entitlements under this Section 6.3 (a) (ii) shall not include any unpaid Bonusor any unpaid long-term incentive cash awards or other awards under the Plan). Executive agrees tobe bound by the covenants set forth herein prior to, as of and subsequent to the termination date.In addition, Executive shall continue to participate, at the active employee rates, in such healthbenefits plans in which he is enrolled throughout the term of the payments set forth in thisSection 6.3 (a), up to a maximum of 12 months, with said period of participation to runconcurrently with any period of COBRA coverage to which Executive may be entitled. To the extentsuch health benefit coverage extends beyond the aforesaid period of COBRA coverage, the differencebetween the premium paid by Executive for participation in such health benefit plans and thepremium that would be payable by an employee receiving COBRA coverage shall constitute taxableincome to Executive, and deferred compensation, subject to Section 409A of the Code, and Executiveshall not receive any payment or other benefit in lieu of such coverage. Other than as set forth inthis Section 6.3 (a), the Company shall have no further obligations to Executive under thisAgreement in the event of a termination of Executive’s employment by the Company Without Cause orany termination of Executive’s employment by Executive.          (b) “Good Reason” as set forth herein is defined as a reduction in the rate of Executive’sBase Compensation, annual incentive opportunity or long-term incentive cash target compensation, arequired relocation of his personal residence to another geographical area outside of thegeographical area where the Company’s home office is located without Executive’s consent, a changein Executive’s direct reporting relationship to the CEO or other involuntary loss of position asdescribed herein (other than as a result of a termination by the Company for Cause) or asubstantial diminution in Executive’s duties and responsibilities without Executive’s consent.          (c) “Without Cause” as set forth herein is defined as a termination of the Executive’semployment by the Company for any reason not described in subsections 6.1 and 6.2.          In the event of any termination of employment as described in this Section 6.3, Executiveagrees to continue to be bound by the covenants set forth herein at Sections 7
8

 
through 14 subsequent to the date of such termination for such periods of time as provided forin said Sections respectively. Any term or provision herein to the contrary notwithstanding, thetiming and other conditions of any severance or other payments to be made under this Agreementshall be subject to the requirements of all applicable laws and regulations, whether or not theyare in existence or in effect when this Agreement is executed by the parties hereto.          6.4 **Voluntary Resignation by Executive**. In the event that Executive’s employment isvoluntarily terminated by Executive other than pursuant to subsection 6.3 or as a direct result ofhis death or Permanent Disability (as described in subsection 6.1), the Company shall have nofurther obligations to Executive under this Agreement other than paying the Executive within 30days of such termination his: (i) unpaid Base Compensation prorated to the date of termination and(ii) unpaid cash entitlements, if any, earned and accrued pursuant to the terms of any applicableCompany plan or program (which unpaid cash entitlements shall not include any unpaid Bonus or anyunpaid long-term incentive cash awards or other awards under the Plan) prior to the date oftermination. In the event of termination of employment as described in this Section 6.4, Executiveagrees to continue to be bound by the covenants set forth herein at Sections 7 through 14subsequent to the date of such termination for such periods of time as provided for in saidSections respectively.          6.5 **Expiration of Agreement**. Following April 30, 2011, if the Company and Executive have notmutually agreed to the terms of, and entered into a new agreement, Executive’s employment shall beone of employment at will, which may be terminated by either the Company or the Executive at anytime. Such continued employment after April 30, 2011 shall be subject to the Company’s normalpolicies and procedures in effect during said period of continued employment.          6.6 **Other Benefits**. In the event that Executive’s employment is terminated pursuant toSections 6.1, 6.2 or 6.4 (a), Executive’s coverage under the Company’s short-term disability planshall end on the date of termination of employment; (b) Executive’s coverage under the Company’slong-term disability plan shall end on the last day of the month in which termination of employmentoccurs; and (c) Executive’s coverage under the Company’s non-contributory and contributory life,dependent life and accidental death and dismemberment plans shall end on the last day of the monthin which termination occurs. In the event that Executive’s employment is terminated pursuant toSection 6.3, the foregoing provisions of this Section 6.6 shall also apply,
9

 
except that in such event Executive’s coverage under the Company’s contributory life,dependent life and contributory accidental death and dismemberment plans shall continue through theend of any applicable severance period upon payment of the applicable premium.          6.7 **Release.**Executive acknowledges that the severance benefits set forth in Section 6 hereofprovides significant additional benefits as compared to those available to the Company’s employeesin general. As a condition precedent to receiving any payments or other benefits pursuant toSection 6 of this Agreement, Executive agrees to sign a full and complete release acceptable to theCompany releasing the Company, its subsidiaries and affiliates and their directors, officers andemployees of any and all claims, both known and unknown as of the date of Executive’s terminationof employment with the Company. In the absence of Executive’s executing such a release in a formsatisfactory to the Company, the Company shall have no obligation to Executive to make any paymentsor provide any other benefits as provided in said Section 6 or otherwise upon termination ofExecutive’s employment by the Company.          6.8 **Involuntary Termination Rule.**Any term or provision of this Section 6 or elsewhere in theAgreement to the contrary, the following provisions shall apply to any payments to be made toExecutive pursuant to Section 6.1 on termination by reason of Permanent Disability, Section 6.3 orSection 6.5(a) (collectively the “Payments”):          (a) Each Payment to be made on a separate date shall be treated as a separate Payment forpurposes of §409A of the Code.          (b) The aggregate amount of all Payments, if any, payable after March 15 of the year followingthe year that includes the date of such involuntary termination (the “Termination Date”) but beforethe date that is six months after the Termination Date (increased by any other amounts of taxablecompensation paid to the Executive during such period that would not have been paid but for suchtermination) shall not exceed two times the lesser of (i) Executive’s Base Compensation on the lastday of the year immediately prior to the year that includes the Termination Date or (ii) the limitin effect under §401(a)(17) of the Code during the year that includes the Termination Date, asdetermined by the Company.          (c) To the extent the Payments payable during the period described in subparagraph (b) abovewould otherwise exceed the limit of subparagraph (b), such Payments shall be reduced to the extentnecessary to satisfy the requirement of subparagraph (b) as determined by the
10

 
Company, and the amount by which the Payments are reduced will be paid to Executive in a lumpsum, without interest, on the first business day that is six months after the Termination Date asdetermined by the Company. However, if Executive dies during such period, the limits ofsubparagraph (b) shall not apply to Payments to the Executive’s beneficiaries or estate.          7. **Confidentiality**. Executive agrees that while he is employed by the Company, and at alltimes thereafter, Executive shall not reveal or utilize information, knowledge or data which is“confidential information” (as that term is defined hereinbelow) and learned during the course ofor as a result of his employment which relates to: (a) the Company and/or any other business orentity in which the Company during the course of the Executive’s employment has directly orindirectly held a greater than a 10% equity interest, whether voting or non-voting; and (b) theCompany’s customers, employees, agents, brokers and vendors. The Executive acknowledges that allsuch confidential information is commercially valuable and is the property of the Company. Upon thetermination of his employment Executive shall return all confidential information and any copiesthereof to the Company, whether it exists in written, electronic, computerized or other form.          8. **“Confidential Information” Defined**. For purposes of this Agreement, “confidentialinformation” includes all information, knowledge or data (whether or not a trade secret orprotected by laws pertaining to intellectual property) not generally known outside the Company(unless as a result of a breach of any of the obligations imposed by this Agreement) concerning thebusiness operations, performance and other information of the Company or other affiliated entitiesas described in Section 7 above. Such information may without limitation include informationrelating to data, finances, marketing, pricing, profit margins, underwriting, claims, loss control,marketing and business plans, renewals, software, processing, vendors, administrators, customers orprospective customers, products, brokers, agents and employees.          9. **Competition**. Executive hereby agrees that, while he is employed by the Company, and for aperiod of 6 months following the date of his termination of employment with the Company for anyreason, he will not, directly or indirectly, without the prior written approval of the CEO, enterinto any business relationship (either as principal, agent, board member, officer, consultant,stockholder, employee or in any other capacity) with any business or other entity that at anyrelevant time is engaged in the business of insurance in direct or indirect competition
11

 
with the Company or any of its affiliates (a “Competitor”); provided, however, that suchprohibited activity shall not include the ownership of less than 5% of the outstanding securitiesof any publicly-traded corporation (determined by vote or value) regardless of the business of suchcorporation. Upon the written request of Executive, the CEO will determine whether a business orother entity constitutes a “Competitor” for purposes of this Section 9; provided that the CEO mayrequire Executive to provide such information as the CEO determines to be necessary to make suchdetermination, and further provided that the current and continuing effectiveness of suchdetermination may be conditioned on the accuracy of such information, and on such other factors asthe CEO may determine.          10. **Solicitation**. Executive agrees that while he is employed by the Company, and for a periodof 24 months following his termination of employment with the Company for any reason, he will notemploy, offer to employ, engage as a consultant, or form an association with any person who isthen, or who during the preceding one year was, an employee of the Company or any subsidiary oraffiliate of the Company or any successor or purchaser of any portion thereof, nor will he assistany other person or entity in soliciting for employment or consultation any person who is then, orwho during the preceding one year was, an employee of the Company or any subsidiary or affiliate ofthe Company or any successor or purchaser of any portion thereof.          11. **Non-interference**. Executive agrees that while he is employed by the Company, and for aperiod of 24 months following his termination of employment with the Company for any reason, hewill not disturb or attempt to disturb any business relationship or agreement between either theCompany or any subsidiary or affiliate of the Company or any successor or purchaser of any portionthereof, and any other person or entity.          12. **Assistance with Claims**. Executive agrees that, while he is employed by the Company, andfor a reasonable period (not less than 60 months from the date of termination) thereafter, he willbe available, on a reasonable basis, to assist the Company and its subsidiaries and affiliates inthe prosecution or defense of any claims, suits, litigation, arbitrations, investigations, or otherproceedings, whether pending or threatened (“Claims”) that may be made or threatened by or againstthe Company or any of its subsidiaries or affiliates. Executive agrees, unless precluded by law, topromptly inform the Company if he is requested (i) to testify or otherwise become involved inconnection with any Claim against the Company or any subsidiary or affiliate or (ii) to assist orparticipate in any investigation (whether
12

 
governmental or private) of the Company or any subsidiary or affiliate or any of theiractions, whether or not a lawsuit has been filed against the Company or any of its subsidiaries oraffiliates relating thereto. The Company agrees to provide reasonable compensation, includingreasonable attorney’s fees, to Executive for such assistance provided during such period. Nothingin this Section 12 is intended or shall be construed to prevent Executive from cooperating fullywith any governmental investigation or review as required by applicable law or regulation.          13. **Return of Materials**. Executive shall, at any time upon the request of the Company, and inany event upon the termination of his employment with the Company for any reason, immediatelyreturn and surrender to the Company all originals and all copies, regardless of medium, of anyproperty belonging to the Company created or obtained by Executive as a result of or in the courseof or in connection with his employment with the Company, regardless of whether such materialsconstitute proprietary information, provided that Executive shall be under no obligation to returnwritten materials acquired from third parties which are generally available to the public.Executive acknowledges that all such materials are, and will remain, the exclusive property of theCompany.          14. **Scope of Covenants**.          (a) The Executive acknowledges that: (a) as a senior executive of the Company he has and willhave access to confidential information concerning not only the business segments for which he mayhave been responsible (a non-exhaustive summary of which appears in the Company’s reports on Forms10-K and 10-Q filed with the Securities and Exchange Commission), but the entire range ofbusinesses in which the Company was engaged; (b) that the businesses segments for which he may havebeen responsible and the Company’s businesses are conducted nation-wide; and (c) that the Company’sconfidential information, if disclosed or utilized without its authorization would irreparably harmthe Company in: (i) obtaining renewals of existing customers; (ii) selling new business; (iii)maintaining and establishing existing and new relationships with employees, agents, brokers,vendors; and (iv) other ways arising out of the conduct of the businesses in which the Company andits affiliates are engaged.
13

 
          (b) To protect such information and such existing and prospective relationships, and for othersignificant business reasons, the Executive agrees that it is reasonable and necessary that: (a)the scope of this Agreement be national and international; (b) its breadth include the entireinsurance industry; and (c) the duration of the restrictions upon the Executive be as indicatedtherein.          (c) The Executive acknowledges that the Company’s customer, employee and businessrelationships are long-standing, near permanent and therefore are of critical value to the Company.The Executive agrees that neither any of the provisions in this Agreement nor any enforcement of itby the Company alters or will alter his ability to earn a livelihood for himself and his family,and further that both said provisions and said enforcement are reasonably necessary to protect theCompany’s legitimate business and property interests and relationships, especially those which hewas responsible for developing or maintaining. The Executive agrees that his actual or threatenedbreach of the covenants set forth in Sections 7 through 13 above would cause the Companyirreparable harm and that the Company would be entitled to an injunction, in addition to whateverother remedies may be available, to restrain such actual or threatened breach. The Executive agreesthat if bond is required in order for the Company to obtain such relief, such bond need only be ina nominal amount and that he shall reimburse the Company for all costs of any such suit, includingthe Company’s reasonable attorneys’ fees. The Executive consents to the filing of any such suitagainst him in any of the state or federal courts located in Illinois or any state in whichExecutive resides. He further agrees that in the event of such suit or any other action arising outof or relating to this Agreement, the parties shall be bound by and the court shall apply theinternal laws of the State of Illinois, irrespective of rules regarding choice of law or conflictsof laws.          (d) If he has not already done so, Executive agrees to be bound by and to execute theCompany’s Confidentiality, Computer Responsibility and Professional Certification Agreement, a copyof which is attached hereto and incorporated by reference herein.          (e) For purposes of Sections 7 through 14 hereof, the “Company” shall include all subsidiariesand affiliates of the Company and CNAF, as well as the Company.
14

 
          15. **Effect of Covenants**. Nothing in Sections 7 through 14 shall be construed to limit orotherwise adversely affect any rights, remedies or options that the Company would possess in theabsence of the provisions of such Sections.          16. **Revision**. The parties hereto expressly agree that in the event that any of the provisions,covenants, warranties or agreements in this Agreement are held to be in any respect an unreasonablerestriction upon Executive or are otherwise invalid, for whatsoever cause, then the court orarbitrator so holding is hereby authorized to (a) reduce the territory to which said covenant,warranty or agreement pertains, the period of time in which said covenant, warranty or agreementoperates or the scope of activity to which said covenant, warranty or agreement pertains or (b)effect any other change to the extent necessary to render any of the restrictions contained in thisAgreement enforceable.          17. **Severability**. Each of the terms and provisions of this Agreement is to be deemed severablein whole or in part and, if any term or provision of the application thereof in any circumstancesshould be invalid, illegal or unenforceable, the remaining terms and provisions or the applicationthereof to circumstances other than those as to which it is held invalid, illegal or unenforceable,shall not be affected thereby and shall remain in full force and effect.          18. **Binding Agreement; Assignment**. This Agreement shall be binding upon the parties hereto andtheir respective heirs, successors, personal representatives and assigns. The Company shall havethe right to assign this Agreement to any successor in interest to the business, or any majoritypart thereof, of the Company or any joint venture or partnership to which the Company is a jointventurer or general partner which conducts substantially all of the Company’s business. Executiveshall not assign any of his obligations or duties hereunder, and any such attempted assignmentshall be null and void.          19. **Controlling Law; Jurisdiction**. This Agreement shall be governed by, interpreted andconstrued according to the laws of the State of Illinois (without regard to choice of law orconflict of laws principles).          20. **Entire Agreement**. Except for the Payback Agreement or as otherwise expressly set forthherein, this Agreement contains the entire agreement of the parties with regard to the
15

 
subject matter hereof, supersedes all prior agreements and understandings, written or oral,and may only be amended by an agreement in writing signed by the parties hereto.          21. **Additional Documents**. Each party hereto shall, from time to time, upon request of theother party, execute any additional documents which shall reasonably be required to effectuate theintent and purposes of this Agreement.          22. **Incorporation**. The introductory recitals hereof are incorporated in this Agreement and arebinding upon the parties hereto.          23. **Failure to Enforce**. The failure to enforce any of the provisions of this Agreement shallnot be construed as a waiver of such provisions. Further, any express waiver by either party withrespect to any breach of any provision hereunder by the other party shall not constitute a waiverof such party’s right to thereafter fully enforce each and every provision of this Agreement.          24. **Survival**. Except as otherwise expressly provided herein, the obligations set forth in thisAgreement shall survive the termination, for any reason whatsoever, of Executive’s employment withthe Company, including without limitation Sections 7 through 13 of this Agreement.          25. **Headings**. All numbers and headings contained herein are for reference only and are notintended to qualify, limit or otherwise affect the meaning or interpretation of any provisioncontained herein.          26. **Notices**. Notices and all other communications provided for in this Agreement shall be inwriting and shall be delivered personally or sent by registered or certified mail, return receiptrequested, postage prepaid (provided that international mail shall be sent via overnight or two-daydelivery), or sent by facsimile or prepaid overnight courier to the parties at the addresses setforth below (or such other addresses as shall be specified by the parties by like notice). Suchnotices, demands, claims and other communications shall be deemed given:          (a) in the case of delivery by overnight service with guaranteed next day delivery, the nextday or the day designated for delivery;
16

 
          (b) in the case of certified or registered U.S. mail, five days after deposit in the U.S.mail; or          (c) in the case of facsimile, the date upon which the transmitting party received confirmationof receipt by facsimile, telephone or otherwise;provided, however, that in no event shall any such communications be deemed to be given later thanthe date they are actually received. Communications that are to be delivered by the U.S. mail or byovernight service or two-day delivery service are to be delivered to the addresses set forth below:If to the Company:CONTINENTAL CASUALTY COMPANY