**Exhibit 10.22****EMPLOYMENT AGREEMENT**     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 26th day of October,2005 (the “Signing Date”), by and between CNA Financial Corporation, a Delaware corporation (the“Company”), and Stephen W. Lilienthal (“Executive”);WITNESSETH:     **WHEREAS**, the Company wishes to continue to employ Executive as Chief Executive Officer of theCompany and as Chairman and Chief Executive Officer of the wholly-owned insurance subsidiaries ofthe Company (“CNA Insurance Companies”) (collectively, the Company and the CNA Insurance Companiesare referred to as the “CNA Companies”); and Executive wishes to accept and agree to continue suchemployment under the terms and conditions set forth hereinbelow.     **NOW, THEREFORE,**in consideration of the foregoing premises and the promises and covenantsherein, the parties hereto agree as follows:     **1. Employment Term**. The Company and Executive agree that the Company shall employ Executiveto perform the duties of Chief Executive Officer of the Company and as Chairman and Chief ExecutiveOfficer of the CNA Insurance Companies for the period commencing on January 1, 2006 (“EffectiveDate”) and ending on December 31, 2008, or such earlier date as of which Executive’s employment maybe terminated in accordance with Section 6 hereof (said period the “Term”). The covenants setforth in Sections 7, 8, 9, 10, 11, 12, 13, 14 through 16 shall survive the Term of this Agreement.     **2. Duties of Executive**.          (a) Executive shall serve as the Chief Executive Officer of the Company and as the Chairmanand Chief Executive Officer of the CNA Insurance Companies and such other subsidiaries of theCompany as may be determined by the Board of Directors of the Company (“Board”), and shall continueas a member of the Board. As Chief Executive Officer of the Company, Executive shall haveresponsibility for the day to day operations of the CNA Insurance Companies and for development andimplementation of the CNA Insurance Companies’ business plans and strategies. Executive shallreport to the Board. Executive shall be elected and shall serve as a member and chairman of theboard of directors of the CNA Insurance Companies, and of such of the other subsidiaries of theCompany as may be determined by the Board, and if so elected, Executive agrees to serve on suchboards in such capacity without additional compensation. Executive further agrees to resign anysuch positions on such Boards and his position(s) on the Board upon termination of his employmentwith the Company for any reason.          (b) Executive shall diligently and to the best of his abilities assume, perform, and dischargethe duties and responsibilities of Chief Executive Officer of the Company, and Chairman and ChiefExecutive Officer of the CNA Insurance Companies, as well as such other specific duties andresponsibilities not inconsistent with Executive’s such titles, offices, status andresponsibilities as the Board shall assign or
 

 
designate to Executive from time to time. Executive shall devote substantially all of hisworking time to the performance of his duties as set forth herein and shall not during the term ofhis employment, without the prior written consent of the Board, accept other employment or renderor perform other services, nor shall he have any direct or indirect ownership interest in any otherbusiness which is in competition directly or indirectly with the business of the CNA Companies,other than in the form of publicly traded securities constituting less than five percent (5%) ofthe outstanding securities of a corporation (determined by vote or value) or limited partnershipinterests constituting less than five percent (5%) of the value of any such partnership. Theforegoing shall not preclude Executive from engaging in charitable, professional, and personalinvestment activities provided that, in the judgment of the Board, such activities do not interferewith 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 $950,000.00 (the “Base Compensation”). The BaseCompensation shall be payable not less frequently than in monthly increments. At the discretion ofthe Board, such annual base salary rate may be increased annually during the Term of the Agreement,beginning in 2006, based on market considerations and Executive’s responsibilities and performance.In no event shall Executive’s annual base salary rate be reduced to an amount that is less thanthe amount specified in this Section 3(a) without Executive’s written consent, or to an amount thatis less than the most recently increased amount that he was previously receiving, withoutExecutive’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 Board and the Incentive Compensation Committee (“Committee”) of the Board, theExecutive’s target Bonus thereunder shall be not less than the $1,450,000 and his maximum Bonusshall be not more than $2,900,000 for each twelve month bonus period. In no event shall the targetBonus be reduced without Executive’s written consent. The amount of Executive’s annual Bonusshall be based on performance criteria (the “Performance Criteria”) established by the Committeepursuant to the Plan for each of the years included in the term of this Agreement, and payment ofExecutive’s annual Bonus shall otherwise be in accordance with the provisions of the Plan,including the requirement of annual review and approval by the Committee of awards thereunder;provided, that satisfaction of the Performance Criteria shall be based on Net Operating Income asdefined in the Plan and as approved by the Committee; and provided further, that the Committee mayexercise 100% negative discretion under the Plan to decrease or eliminate any portion ofExecutive’s Bonus in excess of the target Bonus payout of $1,450,000 up to the maximum Bonus payoutof $2,900,000.          (c) Subject to the approval of the Committee and the Board, Executive shall be eligible toreceive a long-term incentive cash award, in accordance with the terms of the Plan, as may be ineffect during the Term or such other long term incentive plan as the Company may from time to timeadopt for its senior officers. The Executive’s target long-term incentive cash award target shallbe 25 percent (25%) of
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his Base Compensation during the three-year performance period as determined by the Committee.In no event shall the target award be reduced without Executive’s written consent. Actual payoutof the long-term incentive cash award may range from 0% to 200% of target, based on the Company’soverall business results and performance as determined by the Committee in their sole discretion.          (d) Subject to the approval of the Committee and the Board, Executive shall be a awarded aannual target option grant of 75,000 shares or equivalent (stock appreciation rights (“SARs”) paidin stock) of the Company’s common stock beginning with the 2006 performance year, during the termof Executive’s employment under this Agreement. Such annual grant may be increased at therecommendation and approval of the Committee and the Board, subject to share availability.Executive’s rights with respect to shares awarded hereunder shall be subject to the terms of thePlan, share availability and approval by the Committee and the Board.          (e) For avoidance of doubt, respecting awards to Executive under Section 3(b), 3(c) and 3(d)hereof, the Committee shall retain such discretion as may be provided under the Plan to satisfySection 162(m) of the Internal Revenue Code of 1986 (“Code”) or any successor provision. TheCompany may in its discretion defer the payment of all compensation to which Executive is entitledhereunder or otherwise to enable it to comply with Section 162(m) of the Code or any successorprovision with respect to deductibility of executive compensation. Subject to Section 162(m) ofthe Code and any other applicable laws or regulations as interpreted by the Company, all suchdeferred compensation will be credited to the Executive’s SES-CAP account and shall be subject tothe terms thereof.          (f) Executive’s compensation and pensionable earnings under the CNA Retirement Plan, the CNASupplemental Executive Retirement Plan (“SERP”), the CNA Savings & Capital Accumulation Plan(“S-CAP”) and the CNA Supplemental Savings & Capital Accumulation Plan (“SES-CAP”) will becalculated and payable as specified in the respective documents applicable to each such plan, asamended from time to time, and also subject to the requirements of any other applicable laws orregulations as interpreted by the Company; provided, however, such compensation and pensionableearnings, as the case may be, shall for purposes of such plans include the sum of Executive’s BaseCompensation, annual Bonus and all other cash incentive awards payable to Executive for each year,in an aggregate amount not to exceed the sum of $1,900,000 per year, with such amounts to beincludible at the time they would otherwise be paid to Executive in the absence of any electivedeferral by Executive or pursuant to Section 3(f) hereof.          (g) All payments due under this Agreement shall be subject to withholding as required by lawas interpreted by the Company.          (h) To the extent that any of the payments under this Agreement, including without limitationunder Section 6 hereof, are governed by Section 409A of the Internal Revenue Code of 1986, asamended, the parties will work together in good faith to amend any provisions (including, withoutlimitation, a minimum postponement of payment) as may be necessary for compliance in a manner thatmaintains the basic financial provisions of this Agreement.
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     **4. Other Benefits**. During the period of his employment with the Company hereunder, Executiveshall be entitled to continue to participate in the various benefit plans, programs or arrangementsestablished and maintained by the Company from time to time and applicable to senior executives ofthe Company such as, but not by way of limitation, medical benefits, dental benefits, lifeinsurance, long-term disability insurance, both qualified and supplemental defined contributionplans, and to receive all fringe benefits made available to senior executives of the Company,including but not necessarily limited to club memberships ($8,000 annually and a $8,000 one-timeinitiation fee) and tax return preparation. Executive’s entitlement to participate in any suchplan, program or arrangement shall, in each case, be subject to the terms and conditions of thepolicies of the CNA Companies with regard to such plans, programs or arrangements as adjusted bythe CNA Companies from time to time in their sole discretion. Executive shall not be eligible forpaid time off (“PTO”) under the Company’s PTO policy. In the event of termination of employment,Executive’s severance shall be determined solely in accordance with Section 6 hereof.     **5. Expense Reimbursement**. Executive shall be entitled to reimbursement by the Company for allreasonable and customary travel and other business expenses incurred by Executive in carrying outhis duties under this Agreement, in accordance with the general travel and business reimbursementpolicies adopted by the Company as adjusted from time to time for its senior executives. Executiveshall report all such expenditures not less frequently than monthly accompanied by adequate recordsand such other documentary evidence as required by the Company or by Federal or state tax statutesor regulations governing the substantiation of such expenditures. The Company shall promptlyreimburse Executive for all reasonable professional expenses he incurs in connection with thenegotiation and preparation of this Agreement.     **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 Executive’s compensation and benefits hereunder. Either party may terminate Executive’semployment with the Company during the term of this Agreement by written notice to the other partyeffective as of the date specified in such notice and Executive’s employment shall automaticallyterminate in the event of Executive’s death. Upon termination of Executive’s employment during orat the end of the Term of this Agreement, the rights of the parties under this Agreement shall bedetermined pursuant to this Section 6. In the event of Executive’s termination during the Term ofthis Agreement, unless otherwise specified in this Agreement, Executive’s rights, if any, under anyof the Company’s defined contribution, benefit, incentive or other 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 had not already terminated, Executive’s employment shall terminate. Uponsuch termination:          (a) The Company shall make payment to Executive, or his personal representatives, heirs orbeneficiaries, as the case may be as follows:
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     (i) Within 30 days after such termination:     (1) Unpaid Base Compensation at the rate in effect at the time ofnotice of termination and current year’s target Bonus prorated to the dateof termination; (2) any previous year’s earned but unpaid Bonus and otherearned and unpaid incentive cash compensation; and (3) unpaid expensereimbursements and other unpaid cash entitlements earned by Executive orpayable to his beneficiaries as of the date of termination pursuant to theterms of the applicable plan or program accrued prior to the date of thedate of termination(ii) Termination payments in the aggregate amount equal to three multipliedby the sum of (x) the annual rate of Executive’s Base Compensation as ineffect immediately prior to his date of termination plus (y) two times theminimum annual target Bonus amount set forth in Section 3(b) hereinabove,with such termination payments to be made in substantially equalinstallments, not less frequently than monthly, for a period of thirty-six(36) months following such termination; provided, however that, in the eventof Permanent Disability, the gross monthly installment of a terminationpayment, as described in this subsection 6.1(a)(ii) will be reduced by thegross amount of any actual long-term disability benefit payments paid toExecutive or his personal representatives, heirs or beneficiaries, as thecase may be, under Executive’s Company-sponsored long-term disability planor insurance contract for such month, such reduction not to exceed $33,333per month for each whole month of the aforesaid thirty-six (36) monthpayment period for which such disability insurance payments are payable toExecutive.(iii) A target Bonus for the Performance Period (as defined under theIncentive Compensation Plan) in which the termination occurs prorated to thedate of termination and to be paid within 30 days of such termination.Executive shall not be entitled to any Bonus for the period followingtermination, it being the intent of the parties that the terminationpayments described in subsection 6.1(a)(ii) that exceeds his BaseCompensation shall be in lieu of such Bonus; and(iv) A payment equal to the cash equivalent of all stock options orequivalent (SARs paid in stock) which he would have received if hisemployment had continued until December 31, 2008, and if the target numberof stock options or equivalent (SARs paid in stock) described in subsection3(d) had been granted for each remaining Performance Period between the lastPerformance Period for which an award was made (or for which the Committeeaffirmatively determined to make no award) prior to the date of terminationand December 31, 2008. The cash equivalent of a future stock option
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grant to which the Executive is entitled hereunder or equivalent (SARs paidin stock) grant shall be equal to 48% of the fair market value of the numberof shares of stock to be covered by the future stock option grant orequivalent (SARs paid in stock), determined by the Company based on the fairmarket value of the stock on the date of termination, and then discounted bythe Company from January 1 of the year for which the stock option orequivalent (SARs paid in stock) would have been granted to the date oftermination using an interest rate equal to the prime rate for the date oftermination as reported in The Wall Street Journal (Midwest Edition). Fairmarket value of the stock shall be determined by taking the average of thehighest and lowest sales prices of the stock on the date of termination, asreported as the New York Stock Exchange-Composite Transactions for such day,or if the stock was not traded on the New York Stock Exchange on such daythen on the next preceding day on which the stock was traded, all asreported by The Wall Street Journal (Midwest Edition) under the heading NewYork Stock Exchange-Composite Transactions, or, if the stock ceases to belisted on such exchange, as reported on the principal national securitiesexchange or national automated stock quotation system on which the stock istraded or quoted, but in no event shall the price be less than the par valueof the stock. Payment pursuant to this subsection 6.1(a)(iv) shall be madeas soon as practicable after the date of Executive’s termination.          (b) Any unexercised stock option or equivalent (SARs paid in stock) held by Executive upontermination of his employment shall be fully vested on the date of termination and may be exercisedby Executive or his personal representatives, heirs or beneficiaries, as the case may be, at anytime up to the first anniversary of Executive’s date of termination (but in no event later than thedate on which such stock option or equivalent (SARs paid in stock) would expire if Executive hadremained employed by the Company). The provisions of this subsection 6.1(b) shall applynotwithstanding any contrary provision in any agreement with the Executive governing any stockoption or equivalent (SARs paid in stock).          (c) For purposes of this Agreement, the term “Permanent Disability” means a physical or mentalcondition of Executive which, as determined by an independent physician selected by the Companyafter consultation with Executive (or, if Executive is incapable of consulting with the Company,with Executive’s personal physician), based on all available medical information, is expected tocontinue beyond 26 weeks and which renders Executive incapable of performing any substantialportion of the services contemplated hereunder with reasonable accommodation compatible with thefulfillment of his duties as described in Section 2 hereinabove.     **6.2 Termination for Cause by the Company**.          (a) In the event that Executive shall engage in any conduct that the Board shall determineconstitutes Cause, as defined herein, the Board shall have the right to terminate Executive’semployment with the Company by written notice to
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Executive effective as of the date of such notice. For purposes of this Agreement, “Cause”shall mean conduct: (i) which would constitute a felony or other act involving fraud, dishonesty,moral turpitude, unlawful conduct or breach of fiduciary duty, other than due to Limited VicariousLiability, (ii) which is inconsistent with the dignity and character of an executive of theCompany, (iii) which is a substantial breach of any material provision of this Agreement, (iv)constituting willful or reckless material misconduct in the performance of the Executive’s duties,or (v) constituting the habitual neglect of duties; provided, however: (x) that the Board in goodfaith determines that such conduct has had a material adverse effect on the business or prospectsof the CNA Companies; (y) for purposes of clauses (iv) and (v), 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 bythe Executive to gain, directly or indirectly, a profit to which he was not legally entitled); and(z) “Limited Vicarious Liability” shall mean any liability which is (1) based on acts of theCompany for which Executive is responsible solely as a result of his office(s) with the Companyand/or the CNA Companies and (2) provided that (A) he was not directly involved in such acts andeither had no prior knowledge of such intended actions or promptly acted reasonably and in goodfaith to attempt to prevent the acts causing such liability or (B) he did not have a reasonablebasis to believe that a law or regulation was being violated by such acts. If the Executive agreesto resign from his employment with the Company in lieu of being terminated for Cause, he may bedeemed to have been terminated for Cause for purposes of this Agreement.          (b) Upon terminating the Executive for Cause, other than paying the Executive within 30 daysof 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 award or other award under the Plan) prior to the date of the dateof termination, the Company shall have no further obligations whatsoever to Executive under thisAgreement, In the event of termination for Cause, executive agrees to continue to be bound by thecovenants set forth herein in Sections 7 through 13, subsequent to the date of such termination forsuch periods of time as provided for in said Sections respectively. Any term or provision hereinto the contrary notwithstanding, the timing and other conditions of any severance or other paymentsto be made under this Agreement shall be subject to the requirements of all applicable laws andregulations, whether or not they are in existence or in effect when this Agreement is executed bythe parties hereto.     **6.3 Termination by the Company Without Cause / Termination by Executive for Good Reason**. Inthe event Executive’s employment is terminated by the Company for any reason not described insubsections 6.1 and 6.2, or in the event Executive terminates his employment for Good Reason, asdefined herein,          (a) The Company shall pay to Executive:     (i) Within 30 days after such termination, (1) unpaid Base Compensation at therate in effect at the time of notice of termination and
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current year’s target Bonus prorated to the date of termination; (2) anyprevious year’s earned but unpaid Bonus and other earned and unpaid incentive cashcompensation; and (3) unpaid expense reimbursements and other unpaid cashentitlements earned by Executive or payable to his beneficiaries as of the date oftermination pursuant to the terms of the applicable plan or program accrued prior tothe date of the date of termination;     (ii) Termination payments in the aggregate amount equal to three multiplied bythe sum of (x) the annual rate of Executive’s Base Compensation as in effectimmediately prior to his date of termination plus (y) two times the minimum annualtarget Bonus amount set forth in Section 3(b) hereinabove (disregarding anyreduction in Base Compensation constituting Good Reason for such termination), withsuch termination payments to be made in substantially equal installments, not lessfrequently than monthly, for a period of thirty-six (36) months following suchtermination;     (iii) A target Bonus for the Performance Period (as defined under the IncentiveCompensation Plan) in which the termination occurs prorated to the date oftermination and to be paid within 30 days of such termination. Executive shall notbe entitled to any Bonus for the period following termination, it being the intentof the parties that the termination payments described in subsection 6.3(a)(ii)shall be in lieu of such Bonus; and     (iv) A payment equal to the cash equivalent of all stock options or equivalent(SARs paid in stock) which he would have received if his employment had continueduntil December 31, 2008, and if the target number of stock options or equivalent(SARs paid in stock) described in subsection 3(d) had been granted for eachremaining Performance Period between the last Performance Period for which an awardwas made (or for which the Committee affirmatively determined to make no award)prior to the date of termination and December 31, 2008. The cash equivalent of afuture stock option grant to which the Executive is entitled hereunder or equivalent(SARs paid in stock) grant shall be equal to 48% of the fair market value of thenumber of shares of stock to be covered by the future stock option grant orequivalent (SARs paid in stock), determined by the Company based on the on the fairmarket value of the stock on the date of termination, and then discounted by theCompany from January 1 of the year for which the stock option or equivalent (SARspaid in stock) would have been granted to the date of termination using an interestrate equal to the prime rate for the date of termination as reported in The WallStreet Journal (Midwest Edition). Fair market value of the stock shall bedetermined by taking the average of the highest and lowest sales prices of the stockon the date of termination, as reported as the New York Stock Exchange-CompositeTransactions for such day, or if the stock was not traded on the New York StockExchange on such day then on the next
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preceding day on which the stock was traded, all as reported by The Wall StreetJournal (Midwest Edition) under the heading New York Stock Exchange-CompositeTransactions, or, if the stock ceases to be listed on such exchange, as reported onthe principal national securities exchange or national automated stock quotationsystem on which the stock is traded or quoted, but in no event shall the price beless than the par value of the stock. Payment pursuant to this subsection6.3(a)(iv) shall be made as soon as practicable after the date of Executive’stermination.          (b) Any unexercised stock option or equivalent (SARs paid in stock) held by Executive upontermination of his employment shall be fully vested on the date of termination and may be exercisedby Executive at any time up to the first anniversary of Executive’s date of termination (but in noevent later than the date on which such stock option or equivalent (SARs paid in stock) wouldexpire if Executive had remained employed by the Company). The provisions of this subsection6.3(b) shall apply notwithstanding any contrary provision in any agreement with the Executivegoverning any stock option or equivalent (SARs paid in stock).          (c) In addition, Executive shall continue to participate in such medical benefits, dentalbenefits, life insurance, and long-term disability plans in which he is enrolled throughout the36-month term of the payments set forth in subsection 6.3(a)(ii), as if he were still employed bythe Company, said period of participation to run concurrently with any period of COBRA coverage towhich Executive may be entitled; provided, to the extent that the Company cannot arrange forExecutive to participate in the Company’s medical or dental benefit plans beyond the termination ofthe COBRA benefit continuation period, Executive shall be entitled to substantially equivalentmedical and dental benefits as are then provided to senior executives of the Company under theCompany’s benefit plans.          (d) In the event that Executive dies before all payments pursuant to this Section 6.3 havebeen paid, all remaining payments shall be made to the beneficiary specifically designated by theExecutive in writing prior to his death, or, if no such beneficiary was designated (or the Companyis unable in good faith to determine the beneficiary designated), to his personal representative orestate.          (e) “Good Reason” as set forth herein is defined as, without the Executive’s consent: (i) areduction in the rate of Executive’s Base Compensation below that which is provided for in Section3(a) above or a reduction of Executive’s annual target Bonus or maximum Bonus below that which isprovided for in Section 3(b) above (other than an exercise by the Committee of negative discretionto the extent permitted by subsection 3(b) and, for the avoidance of doubt, a stock option grant orequivalent (SARs paid in stock) for an amount less than the target amount set forth in Section 3(d)above shall not, alone, constitute “Good Reason”); (ii) the assignment to Executive of any dutiesinconsistent with his position (including status, offices, titles and reporting relationships),authority, duties or responsibilities, all as in effect on the Signing Date, or any other action bythe Company which results in a substantial diminution in such position, authority, duties orresponsibilities; (iii) any reduction in any benefits provided under Section 4 or a materialdiminution under the expense reimbursement policies of the Company provided under Section 5 of thisAgreement that is not generally
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applicable to other senior executives of the Company; (iv) a substantial breach of anymaterial provision of this Agreement by the Company; (v) the Company’s requirement of the Executiveto be based at any office or location that is more than 35 miles from his office or location inChicago, Illinois; (vi) the failure to reelect or otherwise maintain Executive as a director ofthe Board; or (vii) the failure of the Company to obtain the assumption in writing of itsobligation to perform this Agreement by any successor to all or substantially all of the assets ofthe Company within fifteen (15) calendar days after a merger, consolidation, sale or similartransaction; provided, however, that for purposes of clauses (i), (ii) and (iii) of this Section6.3(e), the Company shall have ten (10) calendar days after the date that written notice has beengiven to the Company by Executive of such Good Reason in which to cure such conduct not engaged inby the Company in bad faith.          (f) “Without Cause” as set forth herein is defined as a termination of the Executive’semployment by the Company prior to the end of the Term for any reason not described or referencedin subsections 6.1 and 6.2.          (g) 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 through 13subsequent to the date of such termination for such periods of time as provided for in saidSections respectively. Any term or provision herein to the contrary notwithstanding, the timing andother conditions of any severance or other payments to be made under this Agreement shall besubject to the requirements of all applicable laws and regulations, whether or not they are inexistence or in effect when this Agreement is executed by the parties hereto.     **6.4 Voluntary Resignation by Executive**. Executive may terminate his employment with theCompany, by written notice, on January 1, 2007, or at any time thereafter, effective 6 months fromthe date of such written notice. In the event that Executive terminates employment on January 1,2007 or any time thereafter as described in this Section 6.4, Executive shall receive the samepayments and other benefits that he would have received had the Company terminated his employmentpursuant to Section 6.3 of this Agreement (Termination by the Company without Cause) prior toJanuary 1, 2007, and as described in paragraphs (a), (b), (c) and (d) of said Section 6.3, exceptthat, with respect to the payment described in subparagraph 6.3(a)(iv): (A) such payment will bebased only upon the cash equivalent of the target number of stock options or equivalent (SARs paidin stock) Executive would have received in the year of termination if his employment had continuedthrough the end of such year; and (B) such payment will be prorated based on the number of days inthe year of termination occurring through said termination’s effective date. With regard to thepayment based upon the cash equivalent of stock options or equivalent (SARs paid in stock)referenced in the immediately foregoing sentence, in no event will Executive receive any cashequivalent payment for any stock options or equivalent (SARs paid in stock) which Executivereceives as stock or stock options in the year of termination. In the event that the Executive’semployment is terminated by Executive under this Section 6.4 prior to January 1, 2007, other thanpursuant to Good Reason under Section 6.3 or other than as a direct result of his death orPermanent Disability (as described in subsection 6.1), then: (i) the Company shall have no furtherobligations under this
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Agreement except the payment, within 30 days of such termination, of: (1) unpaid BaseCompensation at the rate in effect at the time of notice of termination and current year’s targetBonus prorated to the date of termination; (2) any previous year’s earned but unpaid Bonus andother earned and unpaid incentive cash compensation; and (3) unpaid expense reimbursements andother unpaid cash entitlements earned by Executive or payable to his beneficiaries as of the dateof termination pursuant to the terms of the applicable plan or program accrued prior to the date ofthe date of termination; and (ii) all rights or options with regard to stock options or equivalent(SARs paid in stock) as provided in this Agreement shall thereupon expire.In the event of any termination of employment as described in this Section 6.4, Executive agrees tocontinue to be bound by the covenants set forth herein at Sections 7 through 13 subsequent to thedate of such termination for such periods of time as provided for in said Sections respectively.Any term or provision herein to the contrary notwithstanding, the timing and other conditions ofany severance or other payments to be made under this Agreement shall be subject to therequirements of all applicable laws and regulations, whether or not they are in existence or ineffect when this Agreement is executed by the parties hereto     **6.5 Failure to Extend Agreement**.If prior to December 31, 2008 the Company offers to Executive in writing an extension of the periodof Executive’s employment under this Agreement or a new agreement in principle with Executive toapply to a term commencing January 1, 2009 but the Company and Executive have not mutually agreedto the terms of or entered into a new employment agreement by March 31, 2009, then: (a) Executive’semployment shall terminate on April 1, 2009 and the Company’s obligations to Executive for anyperiod thereafter shall be the same as they would have been, and Executive shall receive the samepayments and other benefits that he would have received, had the Company terminated his employmentpursuant to Section 6.3 (but not including any additional payment with respect to stock options orequivalent (SARs paid in stock) pursuant to subsection 6.3(a)(iv)); and (b) Executive’s employmentfrom the period after December 31, 2008 and until March 31, 2009 shall constitute an employment atwill from month to month, and during said period Executive shall receive: (i) a base salary duringsuch period of employment at the annual rate of 400% of his annual Base Compensation hereunder asof December 31, 2008; (ii) the terms of this Agreement that governed Executive’s other benefits andperquisites prior to January 1, 2009 will continue to apply, and will be additional to Executive’ssalary as specified in subset (i) above; and (iii) Executive shall be entitled to payment withrespect to the annual Bonus for calendar year 2008, and stock option or equivalent (SARs paid instock) awards for the performance period ending December 31, 2008 to the extent provided by thisAgreement, but Executive will not be entitled to an annual Bonus, or stock option or equivalent(SARs paid in stock) awards or any other incentive compensation award for performance periodsbeginning after December 31, 2008.If the Company does not make such written offer to Executive on or before December 31, 2008, thenExecutive’s employment shall terminate on December 31, 2008 and Executive shall receive all amountsand benefits set forth in Section 6.3.
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     **6.6 No Offset, No Mitigation.**The Company’s obligation to make the payments provided for inthis Agreement and otherwise to perform its obligations hereunder shall not be affected by anycircumstances, including without limitation any set-off, counterclaim, recoupment, defense or otherright which the Company may have against Executive or others. In no event shall Executive beobligated to seek other employment or take any other action by way of mitigation of the amountspayable to the Executive under any of the provisions of this Agreement, and such amounts shall notbe reduced whether or not the Executive obtains other employment, so long as such employment isconsistent with the provisions of this Agreement.     **6.7 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 isconfidential as defined in this Agreement and learned during the course of or as a result of hisemployment which relates to (a) the CNA Companies and/or any other business or entity in which theCompany during the course of the Executive’s employment has directly or indirectly held a greaterthan a 10% equity interest whether voting or non-voting; (b) the CNA Companies’ customers,employees, agents, brokers and vendors. The Executive acknowledges that all such confidentialinformation is commercially valuable and is the property of the CNA Companies. Upon thetermination of his employment Executive shall return all confidential information to the Company,whether it exists in written, electronic, computerized or other form. Notwithstanding theforegoing provisions of this Section 7, the Executive may disclose or use any such information (i)as such disclosure or use may be required in the course of his employment with the Company in orderto perform Executive’s duties hereunder; (ii) when required by a court of law, by any governmentalagency having supervisory authority over the business of the Company or by any administrative orlegislative body (including a committee thereof) with apparent jurisdiction, provided that in theevent Executive believes he is so required to make such disclosure or use he will notify theCompany in writing of the basis for that belief before actually making such disclosure or use inorder to permit the Company to take steps to protect the Company’s interests and will cooperatewith the Company in all reasonable respects to permit the Company to oppose such disclosure or use;or (iii) with the prior written consent of the Company.     **7. “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 and technical information of the Company and its subsidiaries and affiliates. Suchinformation may include, without limitation, information relating to data, finances, marketing,pricing, profit margins, underwriting, claims, loss control, marketing and business plans,renewals, software, processing, vendors, administrators, customers or prospective customers,products, brokers, agents and employees.     **8. Competition**. Executive hereby agrees that, while he is employed by the Company, and for aperiod of 24 months following the date of his termination of his employment with the Company forany reason (the “Restriction Period”), he will not, directly or indirectly, without the priorwritten approval of the Board, enter into any
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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 with theCompany or any of its affiliates (a “Competitor”); provided, however, that such prohibited activityshall not include the ownership of less than 5% of the outstanding securities of any publiclytraded corporation (determined by vote or value) regardless of the business of such corporation.Upon the written request of Executive, the Board will reasonably determine whether a business orother entity constitutes a “Competitor” for purposes of this Section 9; provided that the Board mayrequire Executive to provide such information as the Board determines to be necessary to make suchdetermination; and further provided that the current and continuing effectiveness of suchdetermination may be conditioned upon the accuracy of such information, and upon such other factorsas the Board may determine.     **9. Solicitation**. Executive agrees that while he is employed by the Company, and for a periodof 36 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.     **10. Non-interference**. Executive agrees that while he is employed by the Company, and for aperiod of 36 months following his termination of employment with the Company for any reason, hewill not disturb, attempt to disturb, or cause any one else to disturb any business relationship oragreement between either the Company, or any subsidiary or affiliate of the Company or anysuccessor or purchaser of any portion thereof, and any other person or entity.     **11. Assistance with Claims**. Executive agrees that, while he is employed by the Company, andfor a reasonable period (not less than 36 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 (collectively “Claims”) that may be made or threatenedby or against the Company or any of its subsidiaries or affiliates. Executive agrees, unlessprecluded by law, to promptly inform the Company if he is requested (i) to testify or otherwisebecome involved in connection with any Claim against the interests of the Company or any subsidiaryor affiliate or (ii) to assist or participate in any investigation (whether governmental orprivate) of the Company or any subsidiary or affiliate or any of their actions, whether or not alawsuit has been filed against the Company or any of its subsidiaries or affiliates relatingthereto. The Company agrees to provide payment for any reasonable expenses incurred by Executive,including without limitation, transportation (and, for this purpose, Executive shall be permittedto travel via Company aircraft if it is available, at no charge to Executive), lodging, mealexpenses, and
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reasonable attorney’s fees. Nothing in this Section 11 is intended or shall be construed toprevent Executive from cooperating fully with any government investigation or review as required byapplicable law or regulation.     **12. 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 whatever reason, immediatelyreturn and surrender to the Company all originals and all copies, regardless of medium, of propertybelonging to the Company created or obtained by Executive as a result of or in the course of or inconnection with his employment with the Company regardless of whether such items constituteproprietary information, provided that Executive shall be under no obligation to return writtenmaterials acquired from third parties which are generally available to the public. Executiveacknowledges that all such materials are, and will remain, the exclusive property of the Company.     **13. Scope of Covenants**.          (a) The Executive acknowledges that: (i) as a senior executive of the Company he had access toconfidential information concerning the entire range of businesses in which the CNA Companies wasand are engaged; (ii) that the CNA Companies’ businesses are conducted nation-wide; and (iii) thatthe CNA Companies’ confidential information, if disclosed or utilized without its authorizationwould irreparably harm the CNA Companies in: (1) obtaining renewals of existing customers; (2)selling new business; (3) maintaining and establishing existing and new relationships withemployees, agents, brokers, vendors; and (4) other ways arising out of the conduct of thebusinesses in which the CNA Companies are engaged.          (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: (i)the scope of this agreement be nation-wide; (ii) its breadth include those segments of the entireinsurance industry in which the CNA Companies conduct business; and (iii) the duration of therestrictions upon the Executive be as indicated therein.          (c) The Executive acknowledges that the CNA Companies’ customer, employee and businessrelationships are long-standing, indeed, near permanent and therefore are of great value to the CNACompanies. The Executive agrees that neither any of the provisions in this Agreement nor theCompany’s enforcement of it alters or will alter his ability to earn a livelihood for himself andhis family and further that both are reasonably necessary to protect the CNA Companies’ legitimatebusiness and property interests and relationships, especially those which he was responsible fordeveloping or maintaining. The Executive agrees that his actual or threatened breach of thecovenants set forth in Sections 7 through 13 above would cause the CNA Companies irreparable harmand that the Company is entitled to an injunction, in addition to whatever other remedies may beavailable, to restrain such actual or threatened breach. The Executive agrees that if bond isrequired in order for the Company to obtain such relief, it need only be in a nominal amount. TheExecutive consents to the filing of any such suit against him in the state or federal courtslocated in Illinois or any state in which he resides. He further agrees that in the event of suchsuit or any other action
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arising out of or relating to this Agreement, the parties shall be bound by and the courtshall apply the internal laws of the State of Illinois and irrespective of rules regarding choiceof law or conflicts of laws.          (d) Executive agrees to continue to be bound by and to execute the Company’s Confidentiality,Computer Responsibility and Professional Certification Agreement, if he has not already done so.          (e) For purposes of Sections 7 through 14 hereof, the “Company” shall include the “CNAInsurance Companies”, as well.     **14. 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.     **15. Indemnification**. Except as otherwise required by law, the Company agrees that Executiveshall continue to be entitled to indemnification as previously and hereafter provided for, andpursuant to the terms of, Article X of its Corporate by-laws in effect on the date hereof, or asmay be amended hereafter, provided such amendment is not materially less favorable to Executivethan the by-laws in effect on the date hereof or previously in effect for conduct occurring priorto the Signing Date.     **16. Revision**. The parties hereto expressly agree that in the event that any of theprovisions, covenants, warranties or agreements in this Agreement are held to be in any respect anunreasonable restriction upon Executive or are otherwise invalid, for whatsoever cause, then thecourt or arbitrator so holding is hereby authorized to (a) reduce the territory to which saidcovenant, warranty or agreement pertains, the period of time in which said covenant, warranty oragreement operates or the scope of activity to which said covenant, warranty or agreement pertainsor (b) effect any other change to the extent necessary to render any of the restrictions containedin this Agreement enforceable.     **17. Severability**. Each of the terms and provisions of this Agreement is to be deemedseverable in whole or in part and, if any term or provision of the application thereof in anycircumstances should be invalid, illegal or unenforceable, the remaining terms and provisions orthe application thereof to circumstances other than those as to which it is held invalid, illegalor 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 heretoand their respective heirs, successors, personal representatives and assigns. The Company shallhave the right to assign this Agreement to any successor in interest to the business, or anymajority part thereof, of the Company or any joint venture or partnership to which the Company is ajoint venturer or general partner which conducts substantially all of the Company’s business.Executive shall not assign any of his obligations or duties hereunder and any such attemptedassignment shall be null and void.
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     **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 as otherwise expressly set forth herein, this Agreement containsthe entire agreement of the parties with regard to the subject matter hereof, supersedes all prioragreements and understandings, written or oral, and may only be amended by an agreement in writingsigned by the parties thereto.     **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 thepurposes hereof.     **22. Incorporation**. The introductory recitals hereof are incorporated in this Agreement andare binding 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 any party withrespect to any breach of any provision hereunder by any 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 set forth herein, the obligations contained inthis Agreement shall survive the termination for any reason of Executive’s employment with theCompany.     **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;          (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 suchcommunications be deemed to be given later than the date they are actually received.Communications that are to be delivered by
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the U.S. mail or by overnight service or two-day delivery service are to be delivered to theaddresses set forth below:If to the Company:CNA Financial Corporation