Amendment to Employment Agreement



 



EMPLOYMENT AGREEMENT



     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the 10th day of
June, 2003 (the “Effective Date”), by and between CNA Financial Corporation, a
Delaware corporation (the “Company”), and Robert L. McGinnis (“Executive”);


WITNESSETH:


     WHEREAS, Executive currently serves as Executive Vice President and Chief
Operating Officer, Group, with senior management level responsibility for group
operations for the principal business units and subsidiaries of the Company
(hereinafter the “CNA insurance companies”): and


     WHEREAS, The Company wishes to employ Executive as President and Chief
Executive Officer of the Life and Group operations of the CNA insurance
companies


     WHEREAS, the Company and the Executive wish to enter into a 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 a President and Chief Executive
Officer of the CNA insurance companies for the period commencing on June 10,
2003 (“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, and 14
shall survive the employment term of this Agreement.


     2.     Duties of Executive.


     (a)  Executive shall assume the duties and responsibilities of a President
and Chief Executive Officer of the Life and Group Operations [or successor
title] of the CNA insurance companies as defined and directed by the Company’s
Chief Executive Officer (hereinafter “CEO”). Executive shall report to the CEO.
Executive may be elected to and shall serve as a


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member of the Board of Directors of one or more of the CNA insurance
companies, and if so elected Executive agrees to serve on such boards in such
capacity without additional compensation; provided that nothing in this
Agreement shall require that the shareholders of any company elect Executive to
its board of directors.


     (b)  Executive shall diligently and to the best of his abilities assume,
perform, and discharge the duties and responsibilities of President and Chief
Executive Officer, Life and Group Operations, as well as such other specific
duties and responsibilities as the CEO shall assign or designate to Executive
from time to time not inconsistent with Executive’s status. Executive shall
devote substantially all of his working time to the performance of his duties
as set forth herein and shall not, without the prior written consent of the
CEO, 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 Company or the CNA insurance 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, provided that, in the judgment of the CEO, such
activities do not materially interfere with his performance of his duties and
responsibilities hereunder.


     3.     Compensation.


     (a)  The Company shall pay to Executive for the period he is employed by
the Company hereunder, an annual base salary at no less than $525,000.00
payable not less frequently than monthly (the “Base Compensation”). At the
discretion of the CEO and/or the Incentive Compensation Committee of the
Company’s Board of Directors (“Committee”) such salary rate may be increased
annually as of each March occurring during the term of the Agreement, beginning
with March 2004, based on market considerations, responsibilities and
performance. In no event shall Executive’s salary rate be reduced to an amount
that is less than the amount specified in this paragraph (a), or to an amount
that is less than the amount that he was previously receiving without
Executive’s written consent.


     (b)  The Executive shall be eligible for an annual incentive cash award
(“Bonus”) pursuant to the CNA Financial Corporation 2000 Incentive Compensation
Plan (the “Incentive


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Compensation Plan”). Subject to the approval of Committee, the Executive’s
target Bonus thereunder shall not be less than the rate of one hundred percent
(100%) of his Base Compensation for each twelve month bonus period. In no event
shall the target Bonus be reduced without the Executive’s written consent. The
amount of the award shall be based on the CEO’s assessment of Executive’s
performance, and shall be determined and payable in accordance with the terms
of the Incentive Compensation Plan as set forth in the Incentive Compensation
Plan documents; however, if Executive is a proxy-named officer, the amount of
the award shall be based on the Committee’s assessment of Executive’s
performance, and shall be determined and payable in accordance with the terms
of the Incentive Compensation Plan, as set forth in the Incentive Compensation
Plan documents.


     (c)  Subject to Committee approval, Executive shall be eligible to receive
a long-term Incentive Cash Award, in accordance with the terms of the Incentive
Compensation Plan, as may be in effect during the term of this Agreement or
such other long term incentive plan as the Company may from time to time adopt
for its senior officers. The Executive’s target long-term incentive cash award
shall be no less than the 20 percent (20%) of each year’s annual base
compensation during the bonus period. In no event shall the target award be
reduced without the Executive’s written consent.


     (d)  Subject to the approval of the Committee, Executive shall be awarded a
minimum stock option grant of 10,000 shares of CNA Financial Corporation stock
annually at each May Incentive Compensation Committee meeting during his
employment with the Company. Such annual grant may be increased at the
recommendation of the CEO and upon approval of the Committee, subject to share
availability. In addition, Executive shall be awarded a special promotional
stock option grant of 10,000 shares of CNA Financial Corporation stock as of
August 6, 2003. Executive’s rights with respect to shares awarded hereunder
shall be subject to the terms of the Incentive Compensation Plan.


     (e)  For avoidance of doubt respecting awards to Executive under Section
3(b), 3(c) and 3(d) hereof, the Committee shall retain such discretion as may
be provided under the 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


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deferred compensation will be credited to the Executive’s SES-CAP account
and shall be subject to the terms thereof.


     (f)  Executive’s 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.


     (g)  All payments due under this Agreement shall be subject to withholding
as required by law.


     4.     Other Benefits. Executive shall be entitled to continue to participate
in the various benefit plans, programs or arrangements established and
maintained by the Company from time to time and applicable to senior executives
of the Company such as, but not by way of limitation, health and major medical
insurance, dental insurance, life insurance, long-term disability insurance,
both qualified and supplemental savings plans, and to receive all fringe
benefits made available to senior executives of the Company, including club
membership ($10,000.00 annually), tax return preparation and paid parking.
Executive’s entitlement to participate in any such plan, program or arrangement
shall, in each case, be subject to the terms and conditions thereof. In the
event of termination of employment, Executive’s severance shall be determined
solely in accordance with Paragraph 6 hereof.


     5.     Expense Reimbursement. Executive shall continue to 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, in accordance with the general reimbursement policies adopted by the
Company from time to time. 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.


     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 the 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


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Executive’s employment during or at the end of 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 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 savings, benefit, incentive or other plans of any nature
shall be governed by their terms.


     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 has not already
terminated, Executive’s employment shall terminate; provided, however, that:


     (a)  The Company shall pay to Executive or his personal representatives,
heirs or beneficiaries as the case may be, an amount equal to his: (i) unpaid
base salary and current year’s target Bonus and CNA long-term incentive cash
award prorated to the date of termination; (ii) any previous year’s earned but
not paid Bonus; and (iii) unpaid cash entitlements earned by Executive or
payable to his beneficiaries as of the date of termination which, pursuant to
the terms of the applicable Company plan or program, accrued prior to the date
of termination.


     (b)  For purposes of this Agreement, the term “Permanent Disability” means
a physical or mental condition of Executive which, as determined by the CEO, in
his sole discretion based on all available medical information, is expected to
continue beyond 26 weeks and which renders Executive incapable of performing
any substantial portion of the services contemplated hereunder with or without
reasonable accommodation.


     6.2     Termination for Cause by the Company. In the event that Executive
shall engage in any conduct which the CEO in his sole discretion shall
determine to be Cause, he shall be subject to termination forthwith. For
purposes of this Agreement, Cause shall mean engaging in or committing: (i) any
act which would constitute a felony or other act involving fraud, dishonesty,
moral turpitude, unlawful conduct or breach of fiduciary duty; (ii) any conduct
which is inconsistent with the dignity and character of an executive of the
Company; (iii) a substantial breach of any material provision of this
Agreement; (iv) a willful or reckless material misconduct in the performance of
the Executive’s duties; or (v) the habitual neglect of duties; provided,


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however, that 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).
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.


     Upon terminating the Executive for cause, other than paying the Executive
within 30 days of such termination his: (i) unpaid base salary; (ii) any
previous year’s earned but not paid Bonus; and (iii) unpaid cash entitlements
earned and accrued pursuant to the terms of the applicable Company plan or
program prior to the date of the date of termination, the Company shall have no
further obligations under this Agreement. In the event of termination for
Cause, Executive agrees to be bound by the covenants set forth herein at
Sections 7, 8, and 10 though 13, effective as of the termination date.


     6.3     Termination by the Company Without Cause or For Convenience /
Termination by Executive for Good Reason. In the event Executive’s employment
is terminated by the Company Without Cause or For Convenience as defined
herein, or in the event Executive terminates his employment for Good Reason, as
defined herein,


     (a) The Company shall pay to Executive severance consisting of an amount
equal to the sum of the Executive’s Base Compensation and Bonus at target,
prorated based on the total number of months from the date of termination
through December 31, 2005; however, in no event shall the period of time for
which such severance is calculated be less than 12 months. The severance shall
be paid in equal monthly installments following such termination. The Company
shall also pay the Executive within 30 days of his termination his: (i) unpaid
base salary and current year’s target Bonus and CNA long term cash award
prorated to the date of termination; (ii) any previous year’s earned but not
paid Bonus; and (iii) unpaid cash entitlements earned and accrued pursuant to
the terms of the applicable Company plan or program prior to the date of the
date of termination. Executive agrees to be bound by the covenants set forth
herein as of the termination date. In addition, Executive shall continue to
participate in such health insurance plans in which he is enrolled throughout
the term of the payments set forth in this Section 6.3(a), up to a maximum of
18 months, with said period of participation to run concurrently with any
period of COBRA coverage to which Executive may be entitled. The Company shall
have no further obligations under this Agreement.


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     (b)  Good Reason as set forth herein is defined as a reduction in the rate
of Executive’s base salary, annual incentive target or long-term incentive cash
target compensation, a required relocation of his personal residence to another
geographical area without Executive’s consent, or a reporting relationship to
any person other than either the CEO or the President & Chief Executive
Officer, Property and Casualty Operations, or a material diminution in
Executive’s duties and responsibilities without Executive’s consent.


     ( c ) Without Cause or For Convenience as set forth herein is defined as a
termination of the Executive by the Company for any reason not described in
subsections 6.1 and 6.2.


     6.4     Voluntary Resignation by Executive. In the event that Executive’s
employment is terminated by Executive other than pursuant to subsection 6.3 or
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: (i) unpaid base salary; (ii) any previous year’s earned but
not paid Bonus; and (iii) unpaid cash entitlements earned and accrued pursuant
to the terms of the applicable Company plan or program prior to the date of the
date of termination, the Company shall have no further obligations under this
Agreement upon a termination under this Section 6.4. 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 which case Paragraph 6.2
(relating to termination for cause) shall apply, or if the Company and
Executive, after good faith negotiations 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. Upon the termination of
Executive’s employment pursuant to this section, the Company shall pay
Executive severance consisting of: (i) Executive’s then current annual base
compensation; and (ii) Executive’s then current annual target Bonus. The
severance shall be paid in 12 equal monthly installments following such
termination. The Company shall also pay Executive within 30 days of his
termination his (i) unpaid base salary and current year’s target Bonus and
long-term incentive cash award, prorated to the date of termination; (ii) any
previous year’s earned but not paid Bonus; and (iii) unpaid cash entitlements
earned and accrued pursuant to the terms of the applicable Company


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plan or program prior to the date of termination. Executive shall be bound
by the covenants set forth herein effective as of the termination date. In
addition, Executive shall continue to participate in such health insurance
plans in which he is enrolled throughout the term of the payments set forth in
this Section 6.5(a), as if he were still employed by the Company, said
participation to run concurrently with any period of COBRA coverage to which
Executive may be entitled.


     (b)  Notwithstanding the foregoing, if Executive’s employment with the
Company terminates following Executive’s rejection of an offer by the Company
to extend the period of the Agreement or to enter into a new Agreement on
substantially the same terms as prior to termination, with compensation that is
not less than Executive’s yearly compensation prior to the termination or if
Executive voluntarily resigns, then his employment shall be treated as having
been terminated in accordance with Paragraph 6.4 (relating to voluntary
resignation), and the payments to which he may be entitled after such
termination shall be solely governed by said Paragraph.


     (c)  During such period as the Executive shall continue to be employed by
the Company between January 1, 2006 and April 1, 2006, he shall be paid under
the same terms and at the same rate as was in effect on December 31, 2005.


     (d)  Executive shall continue to be eligible to participate in the
Company’s health insurance plans on the same basis as he was participating
until April 1, 2006 in the event of any termination or expiration under this
Section 6.5.


     6.6     Change in Control.


     (a)  In the event that the Company eliminates both its Life and Group
Operations, whether by sale, spin-off, run-off or other business transaction,
Executive’s employment with the Company shall terminate and Executive shall
receive the severance benefits set forth in Section 6.3(a). The payment of said
severance benefits shall be subject to the provisions of subsection 6.6(b), and
shall be subject to the further condition that Executive must (i) remain in
the employment of, and cooperate with, the Company for a period of 120 days
after the date the Company publicly announces it is eliminating both its Life
and Group Operations, in the event said Life and Group Operations are not
continued by any successor or purchaser, or (ii) in the event of a continuation
of said Life and Group Operations by any successor or purchaser as


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a result of a business transaction, remain in the employment of, and
cooperate with, said successor or purchaser for a period of 120 days after the
date of the closing of said business transaction. Executive agrees to be bound
by the covenants set forth herein effective as of the termination date of his
employment with the Company and further agrees that, in the event that the
Company’s Life and Group Operations are continued by any successor or
purchaser, the covenants set forth in Sections 10 and 11 shall apply equally
to, and run to the benefit of, the Company and said successor or purchaser. The
Company shall have no further obligations under this agreement.


     (b)  In the event that the Company eliminates both its Life and Group
Operations pursuant to subsection 6.6(a) and makes Executive an offer to retain
Executive in the Company’s employment in an executive capacity reporting to
either the CEO or the President & Chief Executive Officer, Property and
Casualty Operations, with no reduction in the rate of Executive’s base salary,
annual incentive target or long-term incentive compensation and no requirement
that Executive relocate his personal residence to another geographic area
without Executive’s consent, and Executive declines said offer of continued
employment, Executive’s employment with the Company shall terminate pursuant to
Section 6.4 of this Agreement, and Executive shall receive only the payments
set forth in Section 6.4. Executive agrees to be bound by the covenants set
forth herein effective as of the termination date, and the Company shall have
no further obligations under this Agreement.


     6.7     Other Benefits. In the event that Executive’s employment is terminated
pursuant to subsections 6.1, 6.2 or 6.4, Executive’s coverage under the
Company’s short-term disability plan, shall end on the date of termination of
employment; Executive’s coverage under the Company’s long-term disability plan
shall end on the last day of the month in which termination of employment
occurs; and Executive’s coverage under the Company’s non-contributory and
contributory life, dependent life and accidental death and dismemberment plans
shall end on the last day of the month in which termination occurs. In the
event that Executive’s employment is terminated pursuant to subsection 6.3, 6.5
or 6.6, the foregoing shall also apply, except that Executive’s coverage under
the Company’s contributory life, dependent life and contributory accidental
death and dismemberment plans shall continue through the end of the severance
period.


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     6.8     Release. Executive acknowledges that the severance plan set forth in
Section 6 hereof provides significant additional benefits as compared to those
available to the Company’s employees in general. As a condition precedent to
receiving any benefits pursuant to Section 6, Executive agrees to sign a full
and complete release acceptable to the Company releasing the Company, its
subsidiaries and affiliates and their directors, officers and employees of any
and all claims, both known and unknown as of the date of Executive’s
termination. In the absence of Executive’s executing such a release, the
Company shall have no obligation to make the payments hereunder.


     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 and any
copies thereof to the Company, whether it exists in written, electronic,
computerized or other form.


     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
Paragraph 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 12 months following the date of his termination of
employment with the Company for any reason except a termination for cause
pursuant to Section 6.2 or a termination pursuant to Section 6.6(a)(ii) in
which the Company’s Life and Group


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Operations are continued by any successor or purchaser, he will not,
directly or indirectly, without the prior written approval of the CEO, 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 at any relevant time is engaged in the business
of insurance (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
CEO will determine whether a business or other entity constitutes a
“Competitor” for purposes of this Section 9; provided that the CEO may require
Executive to provide such information as the CEO 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 CEO may determine.


     10.     Solicitation. Executive agrees that while he is employed by the
Company, and for a period of 24 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 or any Subsidiary or
Affiliate of the Company or any successor or purchaser of any portion thereof,
nor will he assist any other person or entity in soliciting for employment or
consultation 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 or any
successor or purchaser of any portion thereof.


     11.     Non-interference. Executive agrees that while he is employed by the
Company, and for a period of 24 months following his termination of employment
with the Company for any reason, he will not disturb or attempt to disturb any
business relationship or agreement between either the Company or any Subsidiary
or Affiliate of the Company or any successor or purchaser of any portion
thereof, 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 60 months from the date
of termination) thereafter, he will be available, on a reasonable basis, to
assist the Company and its subsidiaries and affiliates in the prosecution 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.


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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. For the period following the 24-month anniversary
of the date of Executive’s termination of employment with the Company, the
Company agrees to provide reasonable compensation 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: (a) as a senior executive of the
Company he had access to confidential information concerning not only the
business segments for which he may have been responsible (an outline summary of
which appears in the Company’s Form 10K filed with the Securities and Exchange
Commission) but the entire range of businesses in which the Company was
engaged; (b) that the businesses segments for which he may have been
responsible and the Company’s businesses are conducted nation-wide; and (c)
that the Company’s confidential information, if disclosed or utilized without
its authorization would irreparably harm the Company in: (i) obtaining renewals
of existing customers; (ii) selling new business; (iii) maintaining and
establishing existing and new relationships with employees, agents, brokers,
vendors; and (iv) other ways arising out of the conduct of the businesses in
which the Company 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


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that: (a) the scope of this agreement be nation-wide; (b) its breadth
include the entire life and group industry, and where indicated in this
Agreement, the entire insurance industry; and (c) 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 Paragraphs 7 through 13
above would cause the Company irreparable harm 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, if need only be in a
nominal amount and that he shall reimburse the Company for all costs of any
such suit, including the Company’s reasonable attorneys’ fees. 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, a copy of which is attached hereto and
incorporated by reference herein.


     (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.     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


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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.


     17.     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.


     18.     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 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.


     19.     Controlling Law; Jurisdiction. This Agreement shall be governed by,
interpreted and construed according to the laws of the State of Illinois
(without regard to choice of law or conflict of laws principles).


     20.     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, and may only be amended by an agreement in writing signed by
the parties thereto.


     21.     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.


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


     23.     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.


     24.     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.


     25.     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.


     26.     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.


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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:


Robert L. McGinnis

2340 Woodpath Lane

Highland Park, IL 60035-2046


or to such other address as either party shall furnish to the other party in
writing in accordance with the provisions of this Section 26.


     27.     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.


     28.     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 28, the
arbitration shall be conducted in accordance with the rules 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 third arbitrator shall be
appointed by the Association. This Section 28 shall not be applicable with
respect to any matter or controversy subject to Sections 7 though 14 of this
Agreement.


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



	 	 	 	 	 
	
CNA FINANCIAL CORPORATION	 	 
	 	 	 	 	 
	By:	 	
/s/ Stephen W. Lilienthal	 	 
	 	 	

	 	 
	 	 	 	 	 
	Title:	 	
Chairman and Chief Executive Officer	 	 
	 	 	

	 	 
	 	 	 	 	 
	
/s/ Robert L. McGinnis	 	 
	

	 	 
	
Robert L. McGinnis	 	 




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