EXHIBIT 10.14
**EMPLOYMENT AGREEMENT**
     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 20th day ofMarch 2003 by and between CNA Financial Corporation, a Delaware corporation(the “Company”), and Jonathan Kantor (“Executive”).
W I T N E S S E T H:
     WHEREAS, the Company and the Executive wish to enter into a writtenagreement setting forth the terms of the Executive’s employment relationship asset forth below;
     NOW, THEREFORE, in consideration of the foregoing premises and thepromises and covenants herein, the parties hereto agree as follows:
     1.     EmploymentTerm. The Company and Executive agree that the Companyshall employ Executive to perform the duties set forth in Section 2 for theperiod (the “Term”) commencing on the date hereof and ending on March 31, 2005,or such earlier date as of which Executive’s employment is terminated inaccordance with Section 6 hereof. The covenants set forth in Sections 7, 8, 9,10, 11, 13 and 14 shall survive the term of Executive’s employment. Should theExecutive remain in the employ of the Company beyond the expiration of theTerm, in the absence of a written agreement extending the Term, the Executiveshall be deemed an “at will” employee and, except as otherwise agreed inwriting by the Executive and the Company, the provisions of Sections 2, 7, 8,9, 10, 11, 13 and 14shall continue to govern with respect to the duties andobligations of the parties.
     2.     Dutiesof Executive. Executive shall report to the Company’s ChiefExecutive Officer (“CEO”). Executive shall diligently and to the best of hisabilities assume, perform, and discharge the duties and responsibilities of asenior executive of the Company and such of its subsidiaries as the CEO shalldesignate, as well as such other specific duties and responsibilities notinconsistent with Executive’s status and responsibilities as the CEO shallassign or designate to Executive from time to time. Executive shall devotesubstantially all of his working time to the performance of his duties as setforth herein and shall not during the term of his employment,

 

without the priorwritten consent of the CEO, accept other employment or render or perform otherservices, nor shall he have any direct or indirect ownership interest in anyother business which is in competition with the business of the Company or itssubsidiaries, other than in the form of publicly traded securities constitutingless than five percent (5%) of the outstanding securities of a corporation(determined by vote or value) or limited partnership interests constitutingless than five percent (5%) of the value of any such partnership. The foregoingshall not preclude Executive from engaging in charitable, professional, andpersonal investment activities, provided that, in the reasonable judgment ofthe CEO, such activities do not materially interfere with his performance ofhis duties and responsibilities hereunder.
     3.       Compensation.
     (a)     Base Compensation. The Company or its subsidiaries shall pay toExecutive for the period he is employed by the Company hereunder, an annualbase salary at a rate of no less than $650,000.00, payable not less frequentlythan monthly (the “Base Compensation”). In no event shall Executive’s BaseCompensation be reduced to an amount that is less than $650,000.00 per annum.
     (b)     Deferred Signing Bonus. The Executive shall be paid an aggregatesigning bonus of $1,500,000 (the “Deferred Signing Bonus”) as follows: $750,000on March 15, 2004, provided the Executive is employed hereunder on such date;and $750,000 on March 15, 2005, provided the Executive is employed hereunder onsuch date. The deferred signing bonus balance will be credited with interestat the interest rates applicable to accounts maintained under the CNASupplemental Executive Savings and Capital Accumulation Plan (the “SES-CAP”)for the applicable period. All Deferred Signing Bonus payouts will beconsidered pensionable compensation under the CNA retirement plans.
     (c)     Annual Incentive Cash Compensation. Executive shall be entitled to anannual incentive cash compensation award, under the terms of the CNA FinancialCorporation 2000 Incentive Compensation Plan (the “IC Plan”), for the years2003 and 2004 in accordance with the following provisions: payouts shall besubject to award, annual review and certification by the Incentive CompensationCommittee (the “Committee”) based on consideration of various
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financialperformance measures, such as the Company’s Net Operating Income performancerelative to Plan, subject to the provisions of the IC Plan. The Committee shallhave the right to apply up to 100% negative discretion. In no event, however,shall the payout to the Executive under this subparagraph 3(c) for each year2003 or 2004 exceed $1,650,000.
     (d)     Long Term Incentive Cash Compensation. Executive shall be entitled toa long-term incentive cash compensation award, in accordance with the terms ofthe IC Plan, as may be in effect during the term of this Agreement. TheExecutive’s target long-term incentive cash award shall be no less than the 30percent of base compensation during the performance period. In no event shallthe target award be reduced without the Executive’s written consent. Allpayments of awards shall be subject to annual review and certification by theCommittee and shall be earned and payable in accordance with the terms of theIC Plan.
     (e)     Executive’s CNA Savings & Capital Accumulation Plan (“S-CAP”) and theCNA Supplemental Savings & Capital Accumulation Plan (“SES-CAP”) accounts willbe calculated as specified in the plan documents.
     (f)     Executive’s benefits in the CNA Retirement Plan and CNA SupplementalExecutive Retirement Plan (“SERP”) will be calculated as specified in the plandocuments.
     4.       Other Benefits. Executive shall be entitled to participate in theemployee benefit plans maintained by the Company from time to time as to whichExecutive shall be eligible, including severance, health and major medicalinsurance, dental insurance, life insurance, long-term disability insurance,and qualified and supplemental savings plans. Executive’s entitlement toparticipate in any such plan, program or arrangement shall, in each case, besubject to the terms and conditions thereof.
     5.       Expense Reimbursement. Executive shall be entitled to reimbursement bythe Company for all reasonable and customary travel and other business expensesincurred by Executive in carrying out his duties under this Agreement, inaccordance with the general reimbursement policies adopted by the Company fromtime to time for its senior executives.
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Executive shall report all suchexpenditures not less frequently than monthly accompanied by adequate recordsand such other documentary evidence as required by the Company or by Federal orstate tax statutes or regulations governing the substantiation of suchexpenditures.
     6.     Termination of Employment. If Executive’s employment with the Companyshall terminate during the term of this Agreement, the following conditions setforth herein shall apply with respect to the Executive’s compensation andbenefits hereunder. Either party may terminate Executive’s employment with theCompany during the term of this Agreement by written notice to the other partyeffective as of the date specified in such notice and Executive’s employmentshall automatically terminate in the event of Executive’s death. Upontermination of Executive’s employment during the term of this Agreement, therights of the parties under this Agreement shall be determined pursuant to thisSection 6. All payments made hereunder shall be subject to applicablewithholding required by federal, state or local law and shall be made either toExecutive or to his personal representatives, heirs or beneficiaries as thecase may be. In the event of Executive’s termination during the term of thisAgreement, unless otherwise specified in this Agreement, Executive’s rights, ifany, under any of the Company’s retirement, savings, benefit, pension,incentive or other plans of any nature shall be governed by the terms of suchplans.
     6.1     Death and Disability. In the event of the death of Executive or, atthe Company’s election, in the event of his Permanent Disability (as definedbelow) during the term of this Agreement, provided it had not alreadyterminated, Executive’s employment shall be terminated; provided, however,that:
     (a)     The Company shall pay to Executive or his personal representatives,heirs or beneficiaries as the case may be, his (“Accrued Obligations”): (i)unpaid Base Compensation at the rate in effect at the time of notice oftermination and current year’s annual incentive and long-term cash incentivetarget awards as provided in sections 3(c) and 3(d) respectively prorated tothe date of termination; (ii) any previous year’s earned but not paid annualincentive and long-term cash incentive awards under IC Plan as provided inSection 3(c) and 3(d) respectively; (iii) unpaid expense reimbursements andother unpaid cash entitlements earned by
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Executive or payable to hisbeneficiaries as of the date of termination pursuant to the terms of theapplicable Company plan or program accrued prior to the date of the date oftermination; and (iv) any unpaid Deferred Signing Bonus.
     (b)     For purposes of this Agreement, the term “Permanent Disability” meansa physical or mental condition of Executive which, as determined by anindependent physician selected by the Company after consultation with Executive(or, if Executive is incapable of consulting with the Company, with Executive’spersonal physician), based on all available medical information, is expected tocontinue indefinitely and which renders Executive incapable of performing anysubstantial portion of the services contemplated hereunder.
     6.2     Termination for Cause by the Company. In the event that Executiveshall engage in any conduct which the CEO shall determine to be Cause, he shallbe subject to termination forthwith. For purposes of this Agreement, “Cause”shall mean engaging in or committing: (i) any act which would constitute afelony or other act involving fraud, dishonesty, moral turpitude, unlawfulconduct or breach of fiduciary duty; (ii) any conduct which is inconsistentwith the dignity and character of an executive of the Company; (iii) asubstantial breach of any material provision of this Agreement; (iv) a willfulor reckless material misconduct in the performance of the Executive’s duties;or (v) the habitual neglect of duties; provided, however, that for purposes ofclauses (iv) and (v), Cause shall not include any one or more 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 the Executive to gain, directly or indirectly, a profitto which he was not legally entitled). If the Executive agrees to resign fromhis employment with the Company in lieu of being terminated for Cause, he maybe deemed to have been terminated for Cause for purposes of this Agreement.
     Upon terminating the Executive for Cause, other than paying the Executivewithin thirty (30) days of such termination his Accrued Obligations (but notincluding any unpaid Deferred Signing Bonus, current annual incentive andlong-term cash incentive awards, which shall not become payable), the Companyshall have no further obligations under this Agreement. In the
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event oftermination for Cause, Executive agrees to be bound by the covenants set forthherein effective as of the termination date.
     6.3     Voluntary Resignation by Executive. In the event that Executive’semployment is terminated by Executive other than as a direct result of hisdeath or Permanent Disability (as described in subsection 6.1), other thanpaying the Executive within thirty (30) days of such termination his AccruedObligations (but not including any unpaid Deferred Signing Bonus, currentannual incentive and long-term cash incentive awards, which shall not becomepayable), the Company shall have no further obligations under this Agreement.Executive agrees to be bound by the covenants set forth herein effective as ofthe termination date.
     6.4     Termination for Convenience by the Company. In the event thatExecutive’s employment is terminated by the Company for any reason notdescribed in subsections 6.1, 6.2, or 6.3 above, the obligations of the partieshereto shall be deemed discharged, provided, however, that:
     The Company shall pay to Executive or his personal representatives, heirsor beneficiaries as the case may be, his Accrued Obligations (i) unpaid BaseCompensation at the rate in effect at the time of notice of termination andcurrent year’s annual incentive and long-term cash incentive target awards asprovided in sections 3(c) and 3(d) respectively prorated to the date oftermination; (ii) any previous year’s earned but not paid annual incentive andlong-term cash incentive awards under IC Plan as provided in Section 3(c) and3(d) respectively; (iii) unpaid expense reimbursements and other unpaid cashentitlements earned by Executive or payable to his beneficiaries as of the dateof termination pursuant to the terms of the applicable Company plan or programaccrued prior to the date of the date of termination; and (iv) any unpaidDeferred Signing Bonus.
     6.5     No Offset, No Mitigation. Except as provided herein, the Company’sobligation to make the payments provided for in this Agreement and otherwise toperform its obligations hereunder shall not be affected by any circumstances,including without limitation any set-off, counterclaim, recoupment, defense orother right which the Company may have against
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Executive or others. In noevent shall Executive be obligated to seek other employment or take any otheraction by way of mitigation of the amounts payable to the Executive under anyof the provisions of this Agreement, and such amounts shall not be reducedwhether or not the Executive obtains other employment.
     7.     Confidentiality. Executive agrees that while he is employed by theCompany, and at all times thereafter, Executive shall not reveal or utilizeinformation, knowledge or data which is confidential as defined in thisAgreement and learned during the course of or as a result of his employmentwhich relates to (a) the Company and/or any other business or entity in whichthe Company during the course of the Executive’s employment has directly orindirectly held a greater than a 10% equity interest whether voting ornon-voting; (b) the Company’s customers, employees, agents, brokers andvendors. The Executive acknowledges that all such confidential information iscommercially valuable and is the property of the Company. Upon the terminationof his employment, Executive shall return all confidential information to theCompany, whether it exists in written, electronic, computerized or other form.Notwithstanding the foregoing provisions of this Section 7, the Executive maydisclose or use any such information (i) as such disclosure or use may berequired or appropriate in the course of his employment with the Company, (ii)when required by a court of law, by any governmental agency having supervisoryauthority over the business of the Company or by any administrative orlegislative body (including a committee thereof) with apparent jurisdiction,provided that in the event Executive believes he is so required to make suchdisclosure or use, he will notify the Company in writing of the basis for thatbelief before actually making such disclosure or use in order to permit theCompany to take steps to protect the Company’s interests and will cooperatewith the Company in all reasonable respects to permit the Company to opposesuch disclosure or use, or (iii) with the prior written consent of the Company.
     8.     “Confidential Information” Defined. For purposes of this Agreement“confidential information” includes all information, knowledge or data (whetheror not a trade secret or protected by laws pertaining to intellectual property)not generally known outside the Company (unless as a result of a breach of anyof the obligations imposed by this Agreement) concerning the business andtechnical information of the Company or other entities as described
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in Section7 above. Such information may without limitation include information relatingto data, finances, marketing, pricing, profit margins, underwriting, claimsreserves, loss control, marketing and business plans, renewals, software,processing, vendors, administrators, customers or prospective customers,products, brokers, agents and employees.
     9.       Solicitation. Executive agrees that while he is employed by theCompany, and for a period of 24 months following his termination of employmentwith the Company for the reasons set forth in subsections 6.2, 6.3 and 6.4, hewill not employ, offer to employ, engage as a consultant, or form anassociation with any person who is then, or who during the preceding one yearwas, an employee of the Company or any Subsidiary or Affiliate of the Company,nor will he assist any other person in soliciting for employment orconsultation any person who is then, or who during the preceding one year was,an employee of the Company or any Subsidiary or Affiliate of the Company.
     10.     Non-interference. Executive agrees that while he is employed by theCompany, and for a period of twenty-four (24) months following his terminationof employment with the Company for the reasons set forth in subsections 6.2,6.3 and 6.4, he will not disturb or attempt to disturb any businessrelationship or agreement between either tihe Company or an Affiliate and anyother person or entity.
     11.     Assistance with Claims. Executive agrees that for a reasonableperiod following termination of his employment with the Company (not less than60 months from the date of termination), he will be available, on a reasonablebasis, to assist the Company and its subsidiaries and affiliates in theprosecution or defense of any claims, suits, litigation, arbitrations,investigations, or other proceedings, whether pending or threatened (“Clams”)that may be made or threatened by or against the Company or any of itssubsidiaries or affiliates. Executive agrees, unless precluded by law, topromptly inform the Company if he is requested (i) to testify or otherwisebecome involved in connection with any Claim against the Company or anysubsidiary or affiliate or (ii) to assist or participate in any investigation(whether governmental or private) of the Company or any subsidiary or affiliateor any of their actions, whether or not a lawsuit has been filed against theCompany or any of its subsidiaries or
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affiliates relating thereto. The Companyagrees to provide reasonable compensation, in advance, including, withoutlimitation, transportation, lodging and meals expenses, and a reasonablestipend for his time of not less than $2,700 per day to Executive for suchassistance.
     12.     Return of Materials. Executive shall, at any time upon the request ofthe Company, and in any event upon the termination of his employment with theCompany, for whatever reason, immediately return and surrender to the Companyall originals and all copies, regardless of medium, of property belonging tothe Company created or obtained by Executive as a result of or in the course ofor in connection with his employment with the Company regardless of whethersuch items constitute proprietary information, provided that Executive shall beunder no obligation to return written materials acquired from third partieswhich are generally available to the public. Executive acknowledges that allsuch materials are, and will remain, the exclusive property of the Company.
     13.     Effect of Covenants. Nothing in Sections 7 through 11 shall beconstrued to adversely affect the rights that the Company would possess in theabsence of the provisions of such Sections.
     14.     Indemnification. The Company agrees Executive shall be entitled toindemnification as provided for, and pursuant to the terms of, Article X of itsCorporate by-laws, a copy of which is attached hereto.
     15.     Revision. The parties hereto expressly agree that in the event thatany of the provisions, covenants, warranties or agreements in this Agreementare held to be in any respect an unreasonable restriction upon Executive or areotherwise invalid, for whatsoever cause, then the court or arbitrator soholding is hereby authorized to (a) reduce the period of time in which saidcovenant, warranty or agreement operates or the scope of activity to which saidcovenant, warranty or agreement pertains or (b) effect any other change to theextent necessary to render any of the restrictions contained in this Agreementenforceable.
     16.     Severability. Each of the terms and provisions of this Agreement isto be deemed severable in whole or in part and, if any term or provision of theapplication thereof in any
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circumstances should be invalid, illegal orunenforceable, the remaining terms and provisions or the application thereof tocircumstances other than those as to which it is held invalid, illegal orunenforceable, shall not be affected thereby and shall remain in full force andeffect.
     17.     Binding Agreement; Assignment. This Agreement shall be binding uponthe parties hereto and their respective heirs, successors, personalrepresentatives and assigns. The Company shall have the right to assign thisAgreement to any successor in interest to the business, or any majority partthereof, of the Company or any joint venture or partnership to which theCompany is a joint venturer or general partner which conducts substantially allof the Company’s business. Executive shall not assign any of his obligationsor duties hereunder and any such attempted assignment shall be null and void.
     18.     Controlling Law; Jurisdiction. This Agreement shall be governed by,interpreted and construed according to the laws of the State of Illinois(without regard to conflict of laws principles).
     19.     Entire Agreement. Except as otherwise expressly set forth herein,this Agreements contains the entire agreement of the parties with regard to thesubject matter hereof, supersedes all prior agreements and understandings,written or oral, and may only be amended by an agreement in writing signed bythe parties thereto. In the case of any conflict between the terms of thisAgreement (the “Terms”) and the provisions of any plan, policy, or practice ofthe Company, or agreement or award thereunder, as in effect from time to time(the “Provisions”), Executive’s rights or the Company’s obligations shall beestablished by whichever of the Terms or Provisions would be more beneficial toExecutive. If the choice between the Terms or the provisions is unclear at thetime such choice must be made, the Executive may, in his sole discretion,choose to be treated under either the Terms or the Provisions.
     20.     Additional Documents. Each party hereto shall, from time to time,upon requires of the other party, execute any additional documents which shallreasonably be required to effectuate the purposes hereof.
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     21.     Failure to Enforce. The failure to enforce any of the provisions ofthis Agreement shall not be construed as a waiver of such provisions. Further,any express waiver by any party with respect to any breach of any provisionhereunder by any other party shall not constitute a waiver of such party’sright to thereafter fully enforce each and every provision of this Agreement.
     22.     Survival. Except as otherwise set forth herein, the obligationscontained in this Agreement shall survive the termination, for any reasonwhatsoever, of Executive’s employment with the Company.
     23.     Headings. All numbers and headings contained herein are for referenceonly and are not intended to qualify, limit or otherwise affect the meaning orinterpretation of any provision contained herein.
     24.     Notices. Notices and all other communications provided for in thisAgreement shall be in writing and shall be delivered personally or sent byregistered or certified mail, return receipt requested, 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 atthe addresses set forth below (or such other addresses as shall be specified bythe parties by like notice). Such notices, demands, claims and othercommunications shall be deemed given:
     (a)     in the case of delivery by overnight service with guaranteed net daydelivery, the next day or the day designated for delivery;
     (b)     in the case of certified or registered U.S. mail, five (5) days afterdeposit in the U.S. mail; or
     (c)     in the case of facsimile, the date upon which the transmitting partyreceived confirmation of receipt by facsimile, telephone other otherwise;provided, however, that in no event shall nay such communications be deemed tobe given later than the date they are actually received. Communications thatare to be delivered by the U.S. mail or by overnight service or two-daydelivery service are to be delivered to the addresses set forth below:
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      If to the Company:     CNA Financial Corporation  CNA Plaza  Chicago, IL 60685   If to the Executive:     Jonathan Kantor  CNA  CNA Plaza — 43S  Chicago, IL 60685
or to such other address as either party shall furnish to the other party inwriting in accordance with the provisions of this Section 24.
     25.     Arbitrationof All Disputes. Any controversy or claim arising out ofor relating to this Agreement (or the breach thereof) shall be settled byfinal, binding and non-appealable arbitration in Chicago, Illinois by threearbitrators. Except as otherwise expressly provided in this Section 25, thearbitration shall be conducted in accordance with the rules for resolution ofemployment disputes of the American Arbitration Association (the “Association”)then in effect. One of the arbitrators shall be appointed by the Company, oneshall be appointed by Executive, and the third shall be appointed by the firsttwo arbitrators. If the first two arbitrators cannot agree on the thirdarbitrator within thirty (30) days of the appointment of the second arbitrator,then the third arbitrator shall be appointed by the Association.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on thedate first above written.
CNA FINANCIAL CORPORATION
By:   /s/ Lawrence J. Boysen