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Exhibit 10.10

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT
AGREEMENT (the Agreement) is made as of the 25th day of
July, 2002 (the Signing Date), by and between CNA Financial Corporation, a
Delaware corporation (the Company), and Stephen W.
Lilienthal (Executive);

WITNESSETH:

WHEREAS,the Executive currently serves as the President and Chief
Executive Officer, Property and Casualty Operations and a member of the Board
of Directors of the Company, pursuant to an employment agreement dated as of
July 23, 2001 (Prior Employment Agreement);

WHEREAS, the Company wishes to employ Executive as Chief Executive Officer
of the Company and as Chairman and Chief Executive Officer of the CNA Insurance
Companies (collectively, the Company and the CNA Insurance Companies are
referred to as the CNA Companies); and

WHEREAS,the Company and the Executive wish to terminate the Prior
Employment Agreement and to enter into a new written agreement setting forth
the terms of their future employment relationship as set forth below.

NOW, THEREFORE,in consideration of the foregoing premises and the
promises and covenants herein, the parties hereto agree as follows:

1.     Employment Term. The Company and Executive agree that the Company
shall employ Executive to perform the duties of Chief Executive Officer of the
Company and as Chairman and Chief Executive Officer of the CNA Insurance
Companies for the period commencing on August 26, 2002 (Effective Date) and
ending on December 31, 2005, or such earlier date as of which Executives
employment is terminated in accordance with Section 6 hereof. The covenants
set forth in Sections 7, 8, 9, 10, 11, 12, 13, 14 through 16 shall survive the
term of Executives employment.

2.     Duties of Executive.

(a) Executive shall serve as the Chief Executive Officer of the Company
and as the Chairman and Chief Executive Officer of the CNA Insurance Companies
and such other subsidiaries of the Company as may be determined by the Board of
Directors of the Company (Board), and shall continue as a member of the
Board. As Chief Executive Officer of the Company, Executive shall have
responsibility for the day to day operations of the CNA Companies and for
development and implementation of the CNA Companies business plans and
strategies. Executive shall report to the Board. Executive shall be elected
and shall serve as a member and chairman of the board of directors of the CNA
Insurance Companies, and of such of the other CNA Companies as may be
determined by the Board, and if so elected, Executive agrees to serve on such
boards in such capacity without additional compensation.

(b) Executive shall diligently and to the best of his abilities assume,
perform, and discharge the duties and responsibilities of Chief Executive
Officer of the Company, and





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Chairman and Chief Executive Officer of the CNA Insurance Companies, as
well as such other specific duties and responsibilities not inconsistent with
Executives such titles, offices, status and responsibilities as the Board
shall assign or designate to Executive from time to time. Executive shall
devote substantially all of his working time to the performance of his duties
as set forth herein and shall not during the term of his employment, without
the prior written consent of the Board, accept other employment or render or
perform other services, nor shall he have any direct or indirect ownership
interest in any other business which is in competition with the business of the
CNA Companies, other than in the form of publicly traded securities
constituting less than five percent (5%) of the outstanding securities of a
corporation (determined by vote or value) or limited partnership interests
constituting less than five percent (5%) of the value of any such partnership.
The foregoing shall not preclude Executive from engaging in charitable,
professional, and personal investment activities, and Executive shall be
permitted to continue to engage in such charitable and professional activities
engaged in by Executive during the term of his Prior Employment Agreement,
provided in any case that, in the reasonable judgment of the Board, such
activities do not materially interfere with his performance of his duties and
responsibilities hereunder.

3.     Compensation.

(a) Base
Compensation. The Company or its subsidiaries shall pay to
Executive for the period he is employed by the Company hereunder, an annual
base salary at a rate of no less than $950,000.00, payable not less frequently
than monthly (the Base Compensation). Such Base Compensation shall be
reviewed by the Board not less frequently than annually, as of each March,
during the term of the Agreement commencing, with a view to making such
positive adjustments as the Board deems equitable and appropriate, beginning
with March of 2003, based on market considerations, Executives
responsibilities and performance, and the increased amount shall thereafter be
considered Executives Base Compensation for all purposes under this Agreement.
In no event shall Executives salary rate be reduced to an amount that is less
than $950,000.00, or after any increase in Base Compensation hereafter to an
amount that is less than such increased amount that he was previously
receiving, without Executives written consent.

(b) Annual
Incentive Cash Award. The Executive shall be entitled to an
annual cash award (Bonus) pursuant to the CNA Financial Corporation 2000
Incentive Compensation Plan (the Incentive Compensation Plan). The
Executives target Bonus thereunder shall be not less than the rate of one
hundred percent (100%) of his Base Compensation and his maximum Bonus shall be
not more than the rate of two hundred percent (200%) of his Base Compensation;
provided, subject to Incentive Compensation Committee (Committee) approval,
Executives 2002 Bonus shall be not less than the sum of: (i) the full-year
cash award due to Executive under the Prior Employment Agreement (determined
without regard for the termination of his Prior Employment Agreement
hereunder), plus (ii) not less than $400,000, upon achievement of a goal of
$2,600,000,000 net written property casualty premium for the CNA Companies for
the last two fiscal quarters of 2002, offset by one-third (1/3) of the amount
payable pursuant to clause (i). The amount of Executives annual Bonus shall
be based on performance criteria (the Performance Criteria) established by
the Committee pursuant to the Incentive Compensation Plan for each of the years
included in the term of this Agreement, and payment of Executives annual Bonus
shall otherwise be in accordance with the provisions

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of the Incentive Compensation Plan, including the requirement of annual
review and certification by the Committee of the awards; provided, that
satisfaction of the Performance Criteria shall be based on Net Operating Income
as defined in the Incentive Compensation Plan; and provided further, that the
Committee shall not exercise its negative discretion under the Incentive
Compensation Plan to decrease the amount of Executives Bonus for any year by
more than 10 percent.

(c) Special
Long-Term Incentive Award. Executive shall be awarded a
special stock option grant of 15,000 shares of CNA Financial Corporation stock
as of August 8, 2002, pursuant to the terms and conditions set forth in the
attached Addendum (the Addendum), which is incorporated by reference into
this Agreement.

(d) Long-Term
Incentive Awards. Subject to the approval of the Committee
(as provided in Section 3 of the attached Addendum), Executive shall
additionally be awarded a targeted stock option grant of 55,000 shares of CNA
Financial Corporation stock annually pursuant to the terms and provisions set
forth in the Addendum that are comparable to such awards to senior executives
of the Company,and such other awards under the Incentive Compensation Plan as
the Committee shall in its sole discretion from time to time grant to
Executive. Such stock option, restricted stock and other equity incentive
awards, and all other stock option, restricted stock and other equity incentive
awards granted to Executive pursuant to subsection 3(c) and this subsection
3(d) are referred as Stock Options hereunder.

(e) Prior
Incentive Awards. All stock option, restricted stock and other
equity incentive awards granted to Executive prior to the Effective Date shall
continue in accordance with the terms thereof (except that December 31, 2005
shall be substituted for March 1, 2004 as the latest Offer Date to
constitute a Triggering Termination thereunder).

(f) Section 162(m)
Compliance; Deferral. For avoidance of doubt,
respecting awards to Executive under Section 3(b) or 3(d) hereof, the Committee
shall retain such discretion as may be provided under the Incentive
Compensation Plan to satisfy Section 162(m) of the Internal Revenue Code of
1986 (Code) or any successor provision. The Company may defer the payment of
all compensation to which Executive is entitled hereunder or otherwise to
enable it to comply with Section 162(m) of the Code or any successor provision
with respect to deductibility of executive compensation. All such deferred
compensation will be credited to the Executives SES-CAP account and shall be
subject to the terms thereof.

(g) S-CAP/SES-CAP
Earnings. Executives compensation and pensionable
earnings under the CNA Savings & Capital Accumulation Plan
(S-CAP) and the
CNA Supplemental Savings & Capital Accumulation Plan
(SES-CAP) will be
calculated as specified in the plan documents; provided, such compensation and
earnings, as the case may be, shall include the sum of Executives Base
Compensation, annual Bonus and all other cash incentive awards payable to
Executive for each year, not to exceed a sum of $1,900,000 per year, with such
amounts to be includible at the time they would otherwise be paid to Executive
in the absence of any elective deferral by Executive or pursuant to Section
3(f) hereof.

4.     Other Benefits. Executive shall be entitled to participate in the
various benefit plans, programs or arrangements established and maintained by
the Company from time to time

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and applicable to senior executives of the Company such as, but not by way
of limitation, vacation pay, health and major medical insurance, dental
insurance, life insurance, long-term disability insurance, both qualified and
supplemental savings plans, and long-term incentive compensation plans, and to
receive all fringe benefits and perquisites made available to Band 660
employees of the Company, including but not limited to club memberships
($10,000 annually and a $10,000 one-time initiation fee). Executives
entitlement to participate in any such plan, program or arrangement shall, in
each case, be subject to the terms and conditions thereof; however,
notwithstanding the foregoing, in the event of termination of employment,
Executives severance entitlement shall be determined solely in accordance with
Section 6 hereof.

5.     Expense Reimbursement. Executive shall be entitled to reimbursement by
the Company for all reasonable and customary travel and other business expenses
incurred by Executive in carrying out his duties under this Agreement (and any
outstanding reimbursable expenses under the Prior Employment Agreement), in
accordance with the general reimbursement policies adopted by the Company from
time to time for its senior executives. Executive shall report all such
expenditures not less frequently than monthly accompanied by adequate records
and such other documentary evidence as required by the Company or by Federal or
state tax statutes or regulations governing the substantiation of such
expenditures. The Company shall promptly reimburse Executive for all
reasonable professional expenses incurred in connection with the negotiation
and preparation of this Agreement.

6.     Termination of Employment. If Executives employment with the Company
shall terminate during the term of this Agreement, the following conditions set
forth herein shall apply with respect to Executives compensation and benefits
hereunder. Either party may terminate Executives employment with the Company
during the term of this Agreement by written notice to the other party
effective as of the date specified in such notice and Executives employment
shall automatically terminate in the event of Executives death. Upon
termination of Executives employment during the term of this Agreement, the
rights of the parties under this Agreement shall be determined pursuant to this
Section 6. All payments made hereunder shall be subject to applicable
withholding required by federal, state or local law and shall be made either to
Executive or to his personal representatives, heirs or beneficiaries as the
case may be. In the event of Executives termination during the term of this
Agreement, unless otherwise specified in this Agreement, Executives rights, if
any, under any of the Companys retirement, savings, benefit, pension,
incentive or other plans of any nature shall be governed by the terms of such
plans.

6.1 Death and Disability. In the event of the death of Executive or, at
the Companys election, in the event of his Permanent Disability (as defined
below) during the term of this Agreement, provided it had not already
terminated, Executives employment shall terminate. Upon such termination:

(a) The Company shall pay to Executive, or his personal representatives,
heirs or beneficiaries, as the case may be:



| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) within 30 days after such termination, his (Accrued
Obligations): (1) unpaid Base Compensation at the rate in effect
at the time of notice of

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | termination and current years target Bonus prorated to the
date of termination; (2) any previous years earned but unpaid
Bonus and other earned and unpaid incentive cash compensation; and
(3) unused vacation time, unpaid expense reimbursements and other
unpaid cash entitlements earned by Executive or payable to his
beneficiaries as of the date of termination pursuant to the terms
of the applicable Company plan or program accrued prior to the date
of the date of termination;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (ii) In the event that the termination occurs during a
Performance Period (as defined under the Incentive Compensation
Plan) with respect to which the Committee has not yet made an award
of Stock Options (or affirmatively determined not to make an award)
pursuant to subsection 3(d), an amount equal to the cash equivalent
(determined under the methodology described in subsection
6.3(a)(iv)), as of the date of termination and without any present
value discount) of the target amount referred to in subsection 3(d)
for such Performance Period multiplied by a fraction, the numerator
of which is the number of days in such Performance Period through
and including the date of termination and the denominator of which
is the total number of days in such Performance Period; and                                                                                                                                                                                                                                                                                                          
|
| | (iii) Any unexercised Stock Option held by Executive upon
termination of employment may be exercised by Executive (or his
heirs or personal representative) following such termination to the
extent of the sum of the number of shares with respect to which the
Stock Option was vested but unexercised immediately prior to such
termination, plus an additional number of shares determined by
multiplying the unvested portion of the Stock Option by the
fraction described in subsection 6.1(a)(ii), and rounded to the
next higher number of whole shares. Such portion of the Stock
Options may be exercised through the one-year anniversary of such
date of termination, but in no event later than the date on which
such option would expire if Executive had remained employed by the
Company. Other options held by Executive may be exercised during
the same period, but only to the extent vested under the terms of
such options. The provisions of this subsection 6.1(a)(iii) shall
apply notwithstanding any contrary provision in any agreement
governing any Stock Option or other option.

(b) For
purposes of this Agreement, the term Permanent Disability means
a physical or mental condition of Executive which, as determined by an
independent physician selected by the Company after 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 to
continue indefinitely and which renders Executive incapable of performing any
substantial portion of the services contemplated hereunder.

6.2 Termination for Cause by the Company.

(a) In the event that Executive shall engage in any conduct that the Board
shall determine constitutes Cause, as defined in the following sentence, the
Board shall have the right to terminate Executives employment with the Company
by written notice to Executive

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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 Vicarious Liability, (ii) which is
inconsistent with the dignity and character of an executive of the Company,
(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 good faith determines that
such conduct has had a material adverse effect on the business or prospects of
the Company; (y) for purposes of clauses (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 in good 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 profit to which he was not legally entitled); and (z)
Limited Vicarious Liability shall mean any liability which is (1) based on
acts of the Company for which Executive is responsible solely as a result of
his office(s) with the Company and (2) provided that (A) he was not directly
involved in such acts and either had no prior knowledge of such intended
actions or promptly acted reasonably and in good faith to attempt to prevent
the acts causing such liability or (B) he did not have a reasonable basis to
believe that a law was being violated by such acts. If the Executive agrees to
resign from his employment with the Company in lieu of being terminated for
Cause, he may be deemed 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 days of such termination his Accrued Obligations, the
Company shall have no further obligations under this Agreement, and all rights
or options with regard to Stock Options as provided in this Agreement and the
Addendum hereto shall thereupon expire.

6.3 Termination by the Company Without Cause / Termination by Executive
for Good Reason. In the event Executives employment is terminated by the
Company for any reason not described in subsections 6.1 and 6.2, or in the
event Executive terminates his employment for Good Reason, as defined herein,

(a) The Company shall pay to Executive:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Within 30 days after such termination, his Accrued
Obligations;                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (ii) Termination payments at the annual rate equal to three
hundred percent (300%) of Executives annual rate of Base
Compensation as in effect immediately prior to his date of
termination (disregarding any reduction in Base Compensation
constituting Good Reason for such termination) with such
termination payments to be made in substantially equal
installments, not less frequently than monthly, for a period of
thirty-six (36) months following such termination;
|
| | (iii) A target Bonus for the Performance Period in which the
termination occurs prorated to the date of termination. Executive
shall not be entitled to any Bonus for the period following
termination, it being the intent of the parties that the portion of
the termination payments described in                                                                                                                                                                            

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | subsection 6.3(a)(ii) that exceeds his Base Compensation shall
be in lieu of such Bonus; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (iv) A payment equal to the cash equivalent of all Stock
Options which he would have received if his employment had
continued until December 31, 2005, and if the target number of
Stock Options described in subsection 3(d) had been granted for
each remaining Performance Period between the last Performance
Period for which an award was made (or for which the Committee
affirmatively determined to make no award) prior to the date of
termination and December 31, 2005. The cash equivalent of a future
Stock Option grant shall be equal to 48% of the fair market value
of the number of shares of stock to be covered by the Stock Option,
determined based on the on the fair market value of the stock on
the date of termination, and then discounted from January 1 of the
year for which the Stock Option would have been granted to the date
of termination using an interest rate equal to the prime rate for
the date of termination as reported in The Wall Street Journal
(Midwest Edition). Fair market value of the stock shall be
determined by taking the average of the highest and lowest sales
prices of the stock on the date of termination, as reported 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 day
then on the next preceding day on which the stock was traded, all
as reported by The Wall Street Journal (Midwest Edition) under the
heading New York Stock Exchange-Composite Transactions, or, if the
stock ceases to be listed on such exchange, as reported on the
principal national securities exchange or national automated stock
quotation system on which the stock is traded or quoted, but in no
event shall the price be less than the par value of the stock.
Payment pursuant to this subsection 6.3(a)(iv) shall be made as
soon as practicable after the date of Executives termination.

(b) Any unexercised Stock Option held by Executive upon termination of his
employment shall be fully vested on the date of termination and may be
exercised by Executive at any time up to the first anniversary of Executives
date of termination (but not later than the date on which such Stock Option
would expire if Executive had remained employed by the Company). Subject to
the provisions of Section 3(e), any options other than Stock Options may be
exercised during the same period but only to the extent vested under the terms
of such option. The provisions of this subsection 6.3(b) shall apply
notwithstanding any contrary provision in any agreement governing any Stock
Option or other option.

(c) In addition, Executive shall continue to participate in such health,
dental, vision, life, and disability plans in which he is enrolled throughout
the 36-month term of the payments set forth in subsection 6.3(a)(ii), as if he
were still employed by the Company, said period of participation to run
concurrently with any period of COBRA coverage to which Executive may be
entitled; provided, to the extent that Executive cannot participate in the
Companys health, dental and vision plans beyond the termination of the COBRA
benefit continuation period, Executive shall be entitled to equivalent such
health, dental and vision benefits as are provided to senior executives of the
Company under the Companys benefit plans.

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(d) In the event that Executive dies before all payments pursuant to this
Section 6.3 have been paid, all remaining payments shall be made to the
beneficiary specifically designated by the Executive in writing prior to his
death, or, if no such beneficiary was designated (or the Company is unable in
good faith to determine the beneficiary designated), to his personal
representative or estate.

(e)
Good Reason as set forth herein is defined as, without the
Executives consent: (i) a reduction in the rate of Executives Base
Compensation below that which is provided for in Section 3(a) above or a
reduction of Executives annual target Bonus or maximum Bonus below that which
is provided for in Section 3(b) above (other than an exercise by the Committee
of negative discretion to the extent permitted by subsection 3(b) and, further
provided for the avoidance of doubt, a stock option grant 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 duties
inconsistent 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 by the Company which results in a diminution
in any respect in such position, authority, duties or responsibilities; (iii)
any reduction in any benefits provided under Section 4 or a material diminution
under the expense reimbursement policies of the Company provided under Section
5 of this Agreement, that is not generally applicable to all similarly situated
executives of the Company; (iv) a substantial breach of any material provision
of this Agreement by the Company; (v) the Companys requiring Executive to be
based at any office or location that is more than 35 miles from his office or
location in Chicago, Illinois, as of the Signing Date; (vi) the failure to
reelect or otherwise maintain Executive as a director of the CNA Financial
Corporation Board of Directors; or (vii) the failure of the Company to obtain
the assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company within
fifteen (15) calendar days after a merger, consolidation, sale or similar
transaction; provided, however, that for purposes of clauses (i), (ii) and
(iii), the Company shall have ten (10) calendar days after the date that
written notice has been given to the Company by Executive of such Good Reason
in which to cure such conduct not engaged in by the Company in bad faith.

6.4 Voluntary Resignation by Executive. In the event that Executives
employment is terminated by Executive other than pursuant to Good Reason under
subsection 6.3 or other than as a direct result of his death or Permanent
Disability (as described in subsection 6.1), other than paying the Executive
within 30 days of such termination his Accrued Obligations, the Company shall
have no further obligations under this Agreement, and all rights or options
with regard to Stock Options as provided in this Agreement and the Addendum
hereto shall thereupon expire. Executive agrees to be bound by the covenants
set forth herein effective as of the termination date.

6.5 Failure to Extend Agreement.

(a) Following December 31, 2005, if the Company terminates Executives
employment for any reason other than for Cause (in the case of a termination
for Cause, subsection 6.2 shall apply), or if the Company and Executive have
not mutually agreed to the terms of, and entered into a new agreement prior to
March 31, 2006, Executives employment shall terminate on April 1, 2006 and the
Companys obligations shall be the same as they would

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have been, and Executive shall receive the same payments and other
benefits that he would have received, had the Company terminated his employment
pursuant to subsection 6.3 (but not including any additional payment with
respect to Stock Options pursuant to subsection 6.3(a)(iv)).

(b) On or before December 31, 2005, the Company may offer to Executive in
writing an extension of the period of Executives employment under this
Agreement or a new Agreement in principle with Executive, in either case having
a term of employment commencing January 1, 2006. If the Company does not make
such written offer to Executive on or before December 31, 2005, then
Executives employment shall terminate on December 31, 2005 and Executive shall
receive all amounts and benefits set forth in subsection 6.5(a). If the
Company makes such an offer by December 31, 2005, then Executives employment
after December 31, 2005 shall constitute an employment at will from month to
month and, during the period from January 1, 2006 to March 31, 2006, Executive
shall receive: (i) a salary during such employment at the annual rate of 400%
of his annual Base Compensation as of December 31, 2005; (ii) the terms of this
Agreement that governed Executives benefits and perquisites prior to January
1, 2006 will continue to apply, and will be in addition to Executives salary
specified in clause (i) above; and (iii) Executive shall be entitled to payment
with respect to the annual Bonus for calendar year 2005, and Stock Option
awards for the performance period ending December 31, 2005 to the extent
provided by this Agreement and the Addendum, but Executive will not be entitled
to an annual Bonus, or Stock Option awards or any other incentive compensation
award for performance periods beginning after December 31, 2005.

6.6 No Offset, No Mitigation.The Companys obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including
without limitation any set-off, counterclaim, recoupment, defense or other
right which the Company may have against Executive or others. In no event
shall Executive be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not the Executive obtains other employment.

7.     Confidentiality. Executive agrees that while he is employed by the
Company, and at all times thereafter, Executive shall not reveal or utilize
information, knowledge or data which is confidential as defined in this
Agreement and learned during the course of or as a result of his employment
which relates to (a) the Company and/or any other business or entity in which
the Company during the course of the Executives employment has directly or
indirectly held a greater than a 10% equity interest whether voting or
non-voting; (b) the Companys customers, employees, agents, brokers and
vendors. The Executive acknowledges that all such confidential information is
commercially valuable and is the property of the Company. Upon the termination
of his employment Executive shall return all confidential information to the
Company, whether it exists in written, electronic, computerized or other form.
Notwithstanding the foregoing provisions of this Section 7, the Executive may
disclose or use any such information (i) as such disclosure or use may be
required or appropriate in the course of his employment with the Company, (ii)
when required by a court of law, by any governmental agency having supervisory
authority over the business of the Company or by any administrative or
legislative body (including a committee thereof) with apparent jurisdiction,
provided that in the event Executive

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believes he is so required to make such disclosure or use he will notify
the Company in writing of the basis for that belief before actually making such
disclosure or use in order to permit the Company to take steps to protect the
Companys interests and will cooperate with 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.

8.     Confidential Information Defined. For purposes of this Agreement
confidential information includes all information, knowledge or data (whether
or 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 any
of the obligations imposed by this Agreement) concerning the business and
technical information of the Company or other entities as described in Section
7 above. Such information may without limitation include 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.

9.     Competition. Executive hereby agrees that, while he is employed by the
Company, and for a period of 24 months following the date of his termination of
his employment with the Company for any reason (the
Restriction Period), he
will not, directly or indirectly, without the prior written approval of the
Board, enter into 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 for the duration of the Restriction
Period is engaged in any of the principal businesses of the Company (a
Competitor); provided, however, that such prohibited activity shall not
include the ownership of less than 5% of the outstanding securities of any
publicly traded 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 or other entity constitutes a
Competitor for purposes of this Section 9; provided that the Board may
require Executive to provide such information as the Board determines to be
necessary to make such determination; and further provided that the current and
continuing effectiveness of such determination may be conditioned on the
accuracy of such information, and on such other factors as the Board may
determine.

10.     Solicitation. Executive agrees that while he is employed by the
Company, and for a period of 36 months following his termination of employment
with the Company for any reason, he will not employ, offer to employ, engage as
a consultant, or form an association with any person who is then, or who during
the preceding one year was, an employee of the Company, nor will he assist any
other person in soliciting for employment or consultation any person who is
then, or who during the preceding one year was, an employee of the Company.

11.     Non-interference. Executive agrees that while he is employed by the
Company, and for a period of 36 months following his termination of employment
for any reason, he will not disturb or attempt to disturb any business
relationship or agreement between either the Company or an Affiliate and any
other person or entity.

12.     Assistance with Claims. Executive agrees that, while he is employed
by the Company, and for a reasonable period (not less than 36 months)
thereafter, he will be available, on a reasonable basis, to assist the Company
and its subsidiaries and affiliates in the prosecution

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or defense of any claims, suits, litigation, arbitrations, investigations,
or other proceedings, whether pending or threatened (Claims) that may be made
or threatened by or against the Company or any of its subsidiaries or
affiliates. Executive agrees, unless precluded by law, to promptly inform the
Company if he is requested (i) to testify or otherwise become involved in
connection with any Claim against the Company or any subsidiary or affiliate or
(ii) to assist or participate in any investigation (whether governmental or
private) of the Company or any subsidiary or affiliate or any of their actions,
whether or not a lawsuit has been filed against the Company or any of its
subsidiaries or affiliates relating thereto. The Company agrees to provide
reasonable compensation, in advance, including, without limitation,
transportation, lodging and meals expenses, and a reasonable stipend for his
time of not less than $3,653 per day to Executive for such assistance.

13.     Return of Materials. Executive shall, at any time upon the request of
the Company, and in any event upon the termination of his employment with the
Company, for whatever reason, immediately return and surrender to the Company
all originals and all copies, regardless of medium, of property belonging to
the Company created or obtained by Executive as a result of or in the course of
or in connection with his employment with the Company regardless of whether
such items constitute proprietary information, provided that Executive shall be
under no obligation to return written 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 the Company.

14.     Scope of Covenants.

(a) The Executive acknowledges that: (i) as a senior executive of the
Company he had access to confidential information concerning the entire range
of businesses in which the Company was engaged; (ii) that the Companys
businesses are conducted nation-wide; and (iii) that the Companys confidential
information, if disclosed or utilized without its authorization would
irreparably harm the Company in: (1) obtaining renewals of existing customers;
(2) selling new business; (3) maintaining and establishing existing and new
relationships with employees, agents, brokers, vendors; and (4) other ways
arising out of the conduct of the businesses in which the Company is engaged.

(b) To protect such information and such existing and prospective
relationships, and for other significant 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 entire insurance
industry in which the Company conducts business; and (iii) the duration of the
restrictions upon the Executive be as indicated therein.

(c) The Executive acknowledges that the Companys customer, employee and
business relationships are long-standing, indeed, near permanent and therefore
are of great value to the Company. The Executive agrees that neither any of
the provisions in this Agreement nor the Companys enforcement of it alters or
will alter his ability to earn a livelihood for himself and his family and
further that both are reasonably necessary to protect the Companys legitimate
business and property interests and relationships, especially those which he
was responsible for developing or maintaining. The Executive agrees that his
actual or threatened breach of the covenants set forth in Sections 7 through 13
above would cause the Company irreparable harm

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and that the Company is entitled to an injunction, in addition to whatever
other remedies may be available, to restrain such actual or threatened breach.
The Executive agrees that if bond is required in order for the Company to
obtain such relief, it need only be in a nominal amount. The Executive
consents to the filing of any such suit against him in the state or federal
courts located in Illinois or any state in which he resides. He further agrees
that in the event of such suit or any other action arising out of or relating
to this Agreement, the parties shall be bound by and the court shall apply the
internal laws of the State of Illinois and irrespective of rules regarding
choice of law or conflicts of laws.

(d) If he has not already done so Executive agrees to continue to be bound
by and to execute the Companys Confidentiality, Computer Responsibility and
Professional Certification Agreement.

(e) For
purposes of Sections 7 through 14 hereof, the Company shall
include the CNA Insurance Companies, as well.

15.     Effect of Covenants. Nothing in Sections 7 through 14 shall be
construed to adversely affect the rights that the Company would possess in the
absence of the provisions of such Sections.

16.     Indemnification. Except as otherwise required by law, the Company
agrees that Executive shall be entitled to indemnification as provided for, and
pursuant to the terms of, Article X of its Corporate by-laws in effect on the
date hereof, or as may be amended hereafter provided such amendment is not less
favorable to Executive than the by-laws in effect on the date hereof. Except
as otherwise required by law, the indemnification of Executive under the Prior
Employment Agreement shall survive the termination of the Prior Employment
Agreement hereunder.

17.     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 unreasonable restriction upon Executive or are
otherwise invalid, for whatsoever cause, then the court or arbitrator 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 agreement operates 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 this Agreement
enforceable.

18.     Severability. Each of the terms and provisions of this Agreement is
to be deemed severable in whole or in part and, if any term or provision of the
application thereof in any circumstances should be invalid, illegal or
unenforceable, the remaining terms and provisions or the application thereof 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.

19.     Binding Agreement; Assignment. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors, personal
representatives and assigns. The Company shall have the right to assign this
Agreement to any successor in interest to the business, or any majority part
thereof, of the Company or any joint venture or partnership to

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which the Company is a joint 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 attempted assignment shall be
null and void.

20.     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).

21.     Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement contains the entire agreement of the parties with regard to the
subject matter hereof, supersedes all prior agreements and understandings,
written or oral, including the Prior Employment Agreement, and may only be
amended by an agreement in writing signed by the parties thereto.
Notwithstanding the foregoing or any other term or provision of this Agreement,
that certain Addendum to Employment Agreement between the Company and
Executive, made as of July 23rd, 2001, remains in full force and effect except
as modified pursuant to Section 3(e) of this Agreement. In the case of any
conflict between the terms of this Agreement (the Terms) and the provisions
of any plan, policy, or practice of the Company, or agreement or award
thereunder, as in effect from time to time (the Provisions), Executives
rights or the Companys obligations shall be established by whichever of the
Terms or Provisions would be more beneficial to Executive, with the reservation
that resolution of any such conflict must be consistent with the terms and
provisions of the Incentive Compensation Plan, the Companys Securities
Compliance Policy and applicable law and regulation thereunder. If the choice
between the Terms or the Provisions is unclear at the time such choice must be
made, the Executive may, in his sole discretion, but subject to the foregoing
reservation, choose to be treated under either the Terms or the Provisions.

22.     Additional Documents. Each party hereto shall, from time to time,
upon request of the other party, execute any additional documents which shall
reasonably be required to effectuate the purposes hereof.

23.     Incorporation. The introductory recitals hereof are incorporated in
this Agreement and are binding upon the parties hereto.

24.     Failure to Enforce. The failure to enforce any of the provisions of
this 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 provision
hereunder by any other party shall not constitute a waiver of such partys
right to thereafter fully enforce each and every provision of this Agreement.

25.     Survival. Except as otherwise set forth herein, the obligations
contained in this Agreement shall survive the termination, for any reason
whatsoever, of Executives employment with the Company.

26.     Headings. All numbers and headings contained herein are for reference
only and are not intended to qualify, limit or otherwise affect the meaning or
interpretation of any provision contained herein.

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27.     Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties at
the addresses set forth below (or such other addresses as shall be specified by
the parties by like notice). Such notices, demands, claims and other
communications shall be deemed given:

(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day 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 confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that
are to be delivered by the U.S. mail or by overnight service or two-day
delivery service are to be delivered to the addresses set forth below:

If to the Company:

CNA Financial Corporation     CNA
Plaza     Chicago,
IL 60685     Attn:
Corporate Secretary

If to Executive:

Stephen W. Lilienthal     CNA
Financial Corporation     CNA
Plaza     Chicago,
IL 60685

or to such other address as either party shall furnished to the other party in
writing in accordance with the provisions of this Section 27.

28.     Gender. The masculine, feminine or neuter pronouns used herein shall
be interpreted without regard to gender, and the use of the singular or plural
shall be deemed to include the other whenever the context so requires.

29.     Arbitration of All Disputes. Any controversy or claim arising out of
or relating to this Agreement (or the breach thereof) shall be settled by
final, binding and non-appealable arbitration in Chicago, Illinois by three
arbitrators. Except as otherwise expressly provided in this Section 29, the
arbitration shall be conducted in accordance with the rules for resolution of
employment disputes of the American Arbitration Association (the
Association)
then in effect. One of the arbitrators shall be appointed by the Company, one
shall be appointed by Executive, and the third shall be appointed by the first
two arbitrators. If the first two arbitrators cannot agree on the third
arbitrator within 30 days of the appointment of the second arbitrator, then the

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third arbitrator shall be appointed by the Association. This Section 29
shall not be construed to limit the Companys right to obtain relief under
Section 14 with respect to any matter or controversy subject to Section 14 and,
pending a final determination by the arbitrator with respect to any such matter
or controversy, the Company shall be entitled to obtain any such relief by
direct application to state, federal or other applicable court, without being
required to first arbitrate such matter or controversy.

30.     Section 280G Gross-Up. If Executive becomes entitled to any payments
or benefits (collectively, Payments) whether pursuant to the terms of or by
reason of this Agreement or any other plan, arrangement, agreement, policy or
program with the Company, any successor to the Company or to all or a part of
the business or assets of the Company (whether direct or indirect, by purchase,
merger, consolidation, spin off, or otherwise and regardless of whether such
payment is made by or on behalf of the Company or such successor) which
Payments are subject to the tax imposed by Section 4999 or any successor
provision of the Internal Revenue Code of 1986, as amended, or any similar
state or local tax, or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the
Excise Tax),
the Company shall pay Executive an additional amount
(Gross-Up Payment) such
that the net amount retained by Executive, after deduction or payment of (i)
any Excise Tax on the Payments, (ii) any federal, state and local income or
employment tax and Excise Tax upon the Payment, and (iii) any additional
interest and penalties imposed because the Excise Tax is not paid when due,
shall be equal to the full amount of the Payments.

31.     Counterparts.This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Signing Date.

| |  |                           |  |                                                        
| |  | ------------------------- |  | -------------------------------------------------------
| |  | CNA FINANCIAL CORPORATION
| |  |                           |  |                                                        
| |  | By:                       |  | /s/ Jonathan D. Kantor                                 
| |  |                           |  |                                                        
| |  | Title:                    |  | Executive Vice President,
General Counsel and Secretary
| |  |                           |  |                                                        
| |  |                           |  |                                                        
| |  | /s/ Stephen W. Lilienthal
| |  |                          
| |  | Stephen W. Lilienthal    

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ADDENDUM TO
EMPLOYMENT AGREEMENT
GRANT OF OPTION RIGHTS

THIS ADDENDUM TO
EMPLOYMENT AGREEMENT (the Addendum) is made as of even
date with the Employment Agreement to which it is attached and into which it is
incorporated (the Agreement), by and between CNA Financial Corporation, a
Delaware corporation (the Company), and Stephen W. Lilienthal (the
Executive);

WITNESSETH:

WHEREAS,the Company and the Executive wish to enter into a written
agreement setting forth the terms and conditions for the granting of certain
option rights as set forth below.

NOW, THEREFORE,in consideration of the foregoing premises and the
promises and covenants in the Agreement and in this Addendum, the parties
hereto agree as follows:

1.     Option
To Purchase Stock.Upon execution of the Agreement and this
Addendum by both parties, the Executive shall be granted the option to purchase
15,000 shares (the Option Stock) of the common stock of CNA Financial
Corporation (the Option). The Executives exercise of all Option rights shall
be effected in accordance with the terms of the CNA Financial Corporation 2000
Incentive Compensation Plan (the Plan). For all purposes of this Agreement
and Addendum, the Grant Date shall be August 8, 2002. The Executives right to
purchase the Option Stock pursuant to this provision shall accrue as described
in the vesting period provision set forth in Section 2 below (the Vesting
Period). The Executive may exercise such Option at any time prior to the tenth
anniversary of the effective date of the Agreement and this Addendum. The price
at which the Option shall be exercisable by the Executive shall be 100% of the
Fair Market Value (as that term is defined in the Plan) of the Option Stock on
the Grant Date, determined by the Company and agreed by Executive to be
Twenty-five dollars and fifty-five cents ($25.55) per share. Executives rights
with respect to all shares that are the subject of this provision shall be
governed by the terms of the Plan.

2.     Vesting
Period. (a)With respect to all shares of Option Stock which
are the subject of the rights and/or Option(s) described in the provisions set
forth above, the Vesting Period shall begin on the Grant Date. The Vesting
Period with respect to each installment shown on the schedule shall end on the
Vesting Date applicable to such installment:



|INSTALLMENT   | VESTING DATE
APPLICABLE TOINSTALLMENT
|------------- | -------------------------------------
|3,750 Options | August 8, 2003                       
|3,750 Options | August 8, 2004                       
|3,750 Options | August 8, 2005                       
|3,750 Options | August 8, 2006                       

(b). In the event of any expiration or termination of Executives
employment by the Company and all of its subsidiaries, Executives rights and
options with respect to any unvested





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Option Stock shall be exercisable only as provided for in Section 6 of the
Agreement. All Option Stock shall be subject to any restrictions imposed by the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, or
the rules thereto.

3.     Additional
Options to Purchase Stock.Beginning on a date in 2003
to be determined by the Company and subject to vesting requirements to be
determined by the Company for its senior executives and the approval of said
Incentive Compensation Committee, Executive shall, for so long as he is
employed pursuant to the Agreement, be awarded an annual targeted stock option
grant (the Annual Grant) of 55,000 shares of the Companys common stock. The
Annual Grant shall, if feasible, be submitted for consideration to said
Incentive Compensation Committee during or prior to its May meeting each such
year. Subject to share availability, the Annual Grant may be increased at the
discretion of said Incentive Compensation Committee. Any Annual Grant or
portion of Annual Grant that has not vested on the effective date of any
termination of Executives employment with the Company and all of its
subsidiaries shall be exercisable only in accordance with the provisions of
Section 6 of the Agreement. All rights of Executive with respect to the Annual
Grant shall be subject to the terms of the Plan and any restrictions imposed by
the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended,
or the rules thereto.

4.     Effective
Date.Any term or provision contained in this Addendum to
the contrary herein notwithstanding, the terms and provisions of this Addendum
and all rights and/or options granted herein shall be subject to the provisions
of the Plan and to the prior review and approval of the Incentive Compensation
Committee of the Companys Board of Directors.

5.     Application
of IRC Section 162(m).In the event the Executive is or
becomes a proxy-named executive or the Company in relation to the Executive is
otherwise subject to the provisions of Section 162(m) of the Internal Revenue
Code, the Company may defer the payment of all compensation to which Executive
is entitled pursuant to this Addendum or otherwise take all measures, the
Company reasonably deems necessary or advisable to comply with said Section
162(m) of the Internal Revenue Code or any successor provision with respect to
deductibility of executive compensation. All deferred compensation will be
credited to the Executives SES-CAP account and shall be subject to the terms
thereof.

6.     Entire
Agreement.Subject to the Employment Agreement to which this
Addendum is attached as an addendum thereunder, this addendum, in conjunction
with the Agreement in its entirety, contains the entire agreement of the
parties with regard to the subject matter hereof, supersedes all prior
agreements and understandings, regarding such subject matter, whether written
or oral, and may only be amended by an agreement in writing signed by the
parties thereto. Notwithstanding the foregoing or any other term or provision
of this Addendum or the Agreement, that certain Addendum to Employment
Agreement made as of July 23rd, 2001 remains in full force and effect, except
as modified pursuant to Section 3(e) of the Agreement.

7.     No
Effect on Agreement.Except as otherwise specifically set forth
in this Addendum, all terms and conditions contained in the Agreement of which
this Addendum is made part are and shall remain unmodified hereby. In the event
of any conflict or inconsistency between the provisions of this Addendum and
the provisions of the Agreement, this Addendum shall be controlling.

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8.     Counterparts.This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.

IN WITNESS WHEREOF,the parties hereto have executed this Addendum as of
the date set forth hereinabove.

|       |  |                                                         |  |                          
|------ |  | ------------------------------------------------------- |  | -------------------------
|       |  | CNA FINANCIAL CORPORATION                               |  | STEPHEN W. LILIENTHAL    
|       |  |                                                         |  |                          
|By:    |  | /s/ Jonathan D. Kantor                                  |  | /s/ Stephen W. Lilienthal
|       |  |                                                         |  |                          
|       |  |                                                         |  |                          
|Title: |  | Executive Vice President,
General Counsel and Secretary |  |                          
|       |  |                                                         |  |                          

3