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                                                                  EXHIBIT 10(12)


                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT, dated as of ______________, 2000 by and between CNA
SURETY CORPORATION a Delaware corporation ("the Company"), and John S. Heneghan
("the Executive").

                                   WITNESSETH:

     WHEREAS, the Company wishes to continue to employ the Executive and the
Company and the Executive desires to enter into an agreement embodying the terms
of such employment (the "Agreement'); and

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:

     1.   EMPLOYMENT.

          a.   AGREEMENT TO EMPLOY. Upon the terms and subject to the conditions
               of this Agreement, the Company hereby agrees to continue to
               employ Executive and Executive hereby agrees to employment by the
               Company.

          b.   TERM OF EMPLOYMENT. Except as provided in Paragraph 5(a), the
               Company shall employ Executive for the period commencing on
               January 1, 2000 (the "Commencement Date") and ending on December
               31, 2001. The period during which Executive is employed pursuant
               to this Agreement and any extensions set forth in Paragraph 1(c)
               of this Agreement shall be referred to as the "Employment
               Period."

          c.   RENEWAL. Upon expiration of the original term of this Agreement
               set forth in Paragraph 1(b) of this Agreement, this Agreement
               shall renew automatically for one (1) additional one (1) year
               term unless the Company or the Executive provides the other
               thirty days written notice that the Agreement will not be
               renewed.

     2.   POSITION AND DUTIES.

          a.   POSITION. During the Employment Period, Executive shall serve as
               Vice President and Chief Financial Officer of the Company or in
               such other position or positions in the Company and/or in any of
               its subsidiaries as he and the Company shall mutually agree. In
               addition, Executive shall serve in such other position or
               positions with the Company and its subsidiaries commensurate with
               his position and experience as the Board of Directors of the
               Company (the "Board") shall from time to time specify.


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          b.   DUTIES. During the Employment Period, Executive shall have the
               duties, responsibilities, and obligations as the Board shall from
               time to time specify. Executive shall devote his full time to the
               services required of him hereunder, except for vacation time and
               reasonable periods of absence due to sickness, personal injury or
               other disability, and shall use his best efforts, judgment, skill
               and energy to perform such services in a manner consonant with
               the duties of his position and to improve and advance the
               business and interests of the Company and its subsidiaries.
               Nothing contained herein shall preclude Executive from (i)
               serving on the board of directors of any business corporation
               with the consent of the Board or (ii) serving on the Board of, or
               working for, any charitable or community organization.

          c.   LOCATION. Subject to normal business travel, Executive shall
               perform his service hereunder in, and shall not be required to
               change his place of residence from, the Chicago metropolitan
               area.

     3.   COMPENSATION.

          a.   BASE SALARY. During the Employment Period, the Company shall pay
               Executive an annual base salary of $180,000 per year, payable in
               bi-weekly installments. The President shall annually review
               Executive's base salary in light of competitive practices and the
               performance of Executive and the Company, and may, in his
               discretion, increase such base salary by an amount he determines
               to be appropriate. Any such increase shall not reduce or limit
               any other obligation of the Company hereunder. Executive's base
               salary as set forth above or as may be increased from time to
               time and shall not be reduced without the mutual written consent
               of the Company and the Executive. Executive's base salary as
               defined in this paragraph may be referred to hereinafter as "Base
               Salary."

          b.   ANNUAL BONUS. For each calendar year ending during the Employment
               Period, Executive may earn an annual bonus based on the
               achievement of target levels of performance achieved during the
               calendar year. During the first quarter of each year during the
               term of this Agreement, the President in his sole discretion
               shall determine the targets and the bonus percentage ("Bonus
               Target") for which the Executive shall be eligible, which bonus
               percentages shall range from 0% to 70% of the Executive's Base
               Salary based upon the performance targets determined by the
               President. The actual bonus, if any, payable for any such year
               shall be determined solely by


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               the President based upon the performance of the Company and/or
               Executive against the targets with a 35% target for "good
               performance."

          c.   LONG-TERM INCENTIVE COMPENSATION. During the term of the
               Employment Period, Executive shall participate in all of the
               Company's existing and future long-term incentive compensation
               programs for key executives at a level commensurate with his
               position at the Company and consistent with the Company's then
               current policies and practices, as determined by the President.
               Long-term Incentive Compensation shall be determined by the
               President in accordance with the terms of the Company's Long-Term
               Incentive Compensation Plan.

          d.   STOCK OPTIONS. The Executive shall be eligible for additional
               grants of stock options under the terms and conditions of the
               Stock Option Plan dated February 24, 1997.

     4.   BENEFITS, PERQUISITES AND EXPENSES.

          a.   BENEFITS. During the Employment Period, to the extent he is
               eligible to participate in any welfare or retirement plans now
               existing or established hereafter under their generally
               applicable provisions, Executive may participate in (i) each
               welfare benefit plan which may be sponsored or maintained by the
               Company, including, without limitation, each group life,
               hospitalization, medical, dental, health, accident or disability
               insurance or similar plan or program of the Company, and (ii)
               each retirement, profit sharing, deferred compensation or savings
               plan which may be sponsored or maintained by the Company. Nothing
               in this Paragraph 4(a) shall limit the Company's right to amend
               or terminate any such plan. Notwithstanding any plan language to
               the contrary, Executive shall be eligible for four (4) weeks'
               paid vacation, for the year commencing January 1, 2000 and each
               subsequent year of the Employment Period.

          b.   BUSINESS EXPENSES. During the Employment Period, the Company
               shall pay or reimburse Executive for all reasonable expenses
               incurred or paid by Executive in the performance of Executive's
               duties hereunder, upon presentation of expense statements or
               vouchers and such other information as the Company may require
               and in accordance with the generally applicable policies and
               procedures of the Company as may be amended by it from time to
               time.


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          c.   ADDITIONAL BENEFITS. In addition to the foregoing, during the
               Employment Period, the Executive shall be entitled to
               reimbursement from the Corporation for (1) professional tax
               advice and services and (2) up to $5,000 per year for financial
               planning advice and services.

     5.   TERMINATION OF EMPLOYMENT OR NON RENEWAL OF AGREEMENT.

          a.   EARLY TERMINATION OF THE EMPLOYMENT PERIOD. Notwithstanding
               Paragraph 1(b), the Employment Period shall end upon the earliest
               to occur of (i) a termination of Executive's employment on
               account of Executive's death or Disability, (ii) a Termination
               for Cause, (iii) a Termination Without Cause, (iv) a Termination
               for Good Reason or (v) Termination for Change in Control.

          b.   BENEFITS PAYABLE UPON TERMINATION OR NONRENEWAL. Following the
               early termination of the Employment Period pursuant to Paragraph
               5(a) or Nonrenewal of this Agreement pursuant to Paragraph 1(c),
               Executive (or, in the event of his death, his surviving spouse,
               if any, his estate, or such other beneficiary as the Executive
               may designate by written notice to the Company) shall be paid
               compensation in accordance with the following provisions:

               (i)   Should the Executive's employment with the Company
                     terminate for any reason, his Earned Salary and accrued
                     vacation shall be paid through his last day of employment
                     at the end of the Company's next regular pay period and
                     Vested Benefits shall be payable in accordance with their
                     terms. In addition:

               (ii)  Should the Executive's employment with the Company
                     terminate for Cause or should the Executive terminate this
                     Agreement without Good Reason, other than the payments set
                     forth in Paragraph 5(b)(i) above and any entitlement to any
                     Vested Benefits, the Company shall have no further
                     obligations to the Executive;

               (iii) Should the Executive's employment with the Company
                     terminate Without Cause, for Good Reason, for Change of
                     Control or because of the non-renewal of this Agreement,
                     he shall be paid the Severance Benefit, Additional
                     Benefits, Vested Benefits and Incentive Compensation.
                     Notwithstanding anything to the contrary


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                     in this Agreement, no Severance Benefit or Incentive
                     Compensation shall be payable if the Executive violates the
                     terms and covenants of section 6 of this Agreement.
                     Moreover, Executive agrees that if he violates section 6 of
                     this Agreement he shall repay forthwith the Company any
                     amount of the Severance Benefit or Incentive Compensation
                     previously paid pursuant to this Paragraph 5(b)(i). In
                     addition, should the Executive's employment with the
                     Company terminate due to a Termination for Change in
                     Control, any stock options Executive shall have received
                     which are unvested at the time of such termination shall
                     immediately accelerate and become fully vested and the
                     exercise period for such options shall be extended to
                     permit the Executive to exercise such options during the
                     two year period immediately following the Executive's
                     termination.

               (iv)  Should the Executive's employment with Company terminate
                     due to death or Disability, the Company shall pay the
                     Executive an amount equal to a pro-rated amount equal to
                     the product of the Bonus Target for the year in which
                     termination occurs and a fraction the numerator of which is
                     equal to the number of days in the calendar year of the
                     Executive's termination of employment which have elapsed as
                     of the date of such termination and the denominator of
                     which is 365; plus any long-term cash Incentive
                     Compensation awards held by the Executive at the date of
                     his termination, which shall be payable, if at all, based
                     upon actual Company performance results (but without regard
                     to any individual performance criteria) for the applicable
                     pro rata portion of performance period.

          c.   TIMING OF PAYMENTS. The payments referred to in Paragraph 5(b)
               shall be made as follows: Earned Salary shall be paid in cash in
               a single lump sum as soon as practicable, but in no event more
               than ten business days, following the end of the Employment
               Period. Severance Benefits shall be paid in equal biweekly
               installments during the two year period immediately following the
               Executive's termination. Incentive Compensation shall be payable
               at the same time as similar awards are paid to other executives
               still actively employed by the Company and participating in the
               plans under which the awards are payable. Vested Benefits shall
               be payable in accordance with the terms of the plan (including,
               without limitation, the extension of the exercise period of
               options under any stock option plan) under which such benefits
               have been awarded or accrued. Additional


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               Benefits shall be provided or made available at the times
               specified below as to each such Additional Benefit.

          d.   DEFINITIONS. For purposes of sections 5 and 6, capitalized terms
               have the following meanings:

     "ADDITIONAL BENEFITS" consists of the following rights and benefits:

     except as otherwise provided below, Executive (and, to the extent
     applicable, his dependents) will be entitled to continue participation in
     all of the Company's health benefit plans (the "Health Plans"), until the
     second anniversary of Executive's termination of employment (the "End
     Date"); provided that Executive's participation in the Company's Health
     Plans shall cease on any earlier date that Executive becomes eligible for
     comparable benefits from a subsequent employer. To the extent any such
     benefits cannot be provided under the terms of the applicable plan, policy
     or program, the Company shall provide a comparable benefit under another
     plan or from the Company's general assets. Executive's participation in the
     Health Plans will be on the same terms and conditions that would have
     applied had Executive continued to be employed by the Company through the
     End Date. The Company shall deduct the Executive's cost of the foregoing
     benefits from the Executive's Severance Benefit payments at the same
     intervals as they were deducted from his Base Salary during the Employment
     Period.

     "DISABILITY" means "disability" as defined in the Company's Long Term
Disability Plan.

     "EARNED SALARY" means any Base Salary earned, but unpaid, for services
rendered to the Company on or prior to the date on which the Employment Period
ends pursuant to Paragraph 5(a) or because of the Nonrenewal of this Agreement
pursuant to Paragraph 1(c).

     "INCENTIVE COMPENSATION" consists of the sum of:

          (i)  a pro-rated amount equal to the product of the average of the
               actual performance bonuses paid to the Executive by the Company
               during the two calendar years prior to the year in which
               termination occurs ("Prior Bonus") and a fraction the numerator
               of which is equal to the number of days in the calendar year of
               Executive's termination of employment which have elapsed as of
               the date of such termination and the denominator of which is 365;
               plus

          (ii) an amount equal to twice the amount of the Prior Bonus; plus


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          (iii)  any long-term cash incentive compensation awards held by
                 Executive at the date of his termination, which shall be
                 payable, if at all, based upon actual Company performance
                 results (but without regard to any individual performance
                 criteria) for the applicable pro rata portion of performance
                 period.

     "SEVERANCE BENEFIT" means two years Base Salary based upon the Executive's
Base Salary on the date the Executive's employment terminates.

     "TERMINATION FOR CHANGE IN CONTROL" means a termination of Executive's
employment by the Company for any reason other than a Termination for Cause at
the sole discretion of the Company within one year following the date upon which
(i) Continental Casualty Company and any affiliates no longer are able
collectively to elect a majority of the Board, (ii) a sale of all or
substantially all of the assets of the Company is consummated or (iii) a merger,
consolidation or other business combination involving the Company and an
unaffiliated third party is consummated in which the Company is not the
surviving corporation.

     "TERMINATION FOR CAUSE" means a termination of the Executive's employment
by the Company (A) due to conduct of the Executive, which is determined by the
Board, in its sole discretion, to be to: (i) a willful and continued failure to
perform the material duties of his position, (ii) a fraud against the Company or
(iii) a material breach of any provision of this Agreement which has had (or is
expected to have) a material adverse effect on the business of the Company or
its subsidiaries; or (B) due to the Executive's conviction of a felony.

     "TERMINATION FOR GOOD REASON" means a termination of Executive's employment
by Executive within 90 days following (i) a material diminution in Executive's
positions, duties and responsibilities from those described in Paragraph 2
hereof, (ii) the removal of Executive from, or the failure to re-elect Executive
as a member of, the Board, (iii) a reduction in Executive's annual Base Salary,
(iv) a material reduction in the aggregate value of the retirement, profit
sharing and welfare benefits provided to Executive from those in effect as of
the Commencement Date (other than a reduction which is proportionate to the
reductions applicable to other senior executives pursuant to a cost-saving plan
that includes all senior executives). Notwithstanding the foregoing, a
termination shall not be treated as a Termination for Good Reason (i) if
Executive shall have consented in writing to the occurrence of the event giving
rise to the claim of Termination for Good Reason or (ii) unless Executive first
shall have delivered a written notice to the Company within 30 days of his
having actual knowledge of the occurrence of one of such events stating that he
intends to terminate his employment for Good Reason and specifying the factual
basis for such termination, and such event, if capable of being cured, shall not
have been cured within 30 days of the receipt of such notice.


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     "TERMINATION WITHOUT CAUSE" means any termination of Executive's employment
by the Company other than a Termination for Cause.

     "VESTED BENEFITS" means amounts which are vested or which Executive is
otherwise entitled to receive under the terms of or in accordance with any plan
maintained by the Company at or subsequent to the date of his termination
without regard to the performance by Executive of further services or the
resolution of a contingency.

          e.   FULL DISCHARGE OF COMPANY OBLIGATIONS. In consideration of
               receiving any payments or benefits under Section 5 of this
               Agreement, the Executive agrees to sign a release in the form
               attached to this Agreement as Exhibit A, as a condition precedent
               to receiving them. The amounts payable to Executive pursuant to
               this Section 5 following termination of his employment (including
               amounts payable with respect to Vested Benefits) shall be in full
               and complete satisfaction of Executive's rights under this
               Agreement and any other claims he may have in respect of his
               employment by the Company or any of its subsidiaries. Such
               amounts shall constitute liquidated damages with respect to any
               and all such rights and claims and, upon Executive's receipt of
               such amounts, the Company shall be released and discharged from
               any and all liability to Executive in connection with this
               Agreement or otherwise in connection with Executive's employment
               with the Company and its subsidiaries. Nothing in this Paragraph
               5(e) shall be construed to release the Company from any
               obligation to indemnify Executive and hold Executive harmless
               from and against any claim, loss or cause of action arising from
               or out of Executive's performance as an officer, director or
               employee of the Company or any of its subsidiaries or in any
               other capacity, including any fiduciary capacity, in which
               Executive served at the request of the Company to the maximum
               extent permitted by applicable law and the certificate of
               incorporation and by-laws of the Company.

     6.   NONCOMPETITION AND CONFIDENTIALITY.
By and in consideration of the salary, benefits and other consideration,
contained in this Agreement, the adequacy and receipt of which is hereby
acknowledged, the Executive agrees that:

          a.   NONCOMPETITION. During the Employment Period and during the two
               year period (the "Restriction Period") following any termination
               or Nonrenewal of the Executive's employment, the Executive shall
               not whether as a principal, partner, employee, agent, consultant,
               shareholder (other than as a holder, or a member of a group which
               is a holder, of not in excess of 1% of the


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               outstanding voting shares of any publicly traded company) or in
               any other relationship or capacity: (i) become associated with
               any entity that is actively engaged or takes any steps to plan to
               be engaged in any geographic area in the surety business or in
               any other business which is in competition with the business in
               which the Company is engaged or to the Executive's knowledge is
               actively considering becoming engaged, (ii) contact, call upon,
               solicit business from, sell, or render services to, any customer
               or licensed agent of the Company with respect to any service or
               product identical or similar to any services or products provided
               or sold by the Company, including but not limited to current
               products or those under development, distribution strategy,
               development of computer software and administrative systems for
               administration.

          b.   CONFIDENTIALITY. The Executive acknowledges and agrees that all
               records (whether written or recorded electronically) including
               but not limited to agent and client lists, files, reports, notes,
               internal memoranda and manuals relating to the Company's
               business; business plans, business processing techniques, systems
               and methods; sales processes, sales and training manuals;
               underwriting procedures and manuals; budgets; financial
               statements; compilations; or summaries of the foregoing, by
               whomever prepared, and copies or reproductions of the foregoing,
               relating to the Company's operations or activities, or to the
               operations or activities of any of the Company's customers,
               agents, suppliers, vendors, or subsidiary companies thereof, made
               or received by the Executive during the course of his employment
               with the Company have been, are and shall remain the sole and
               exclusive property of the Company and were held by the Executive
               during his employment only as a trustee for the Company which, at
               all times, retained ownership and control of said records.

          c.   NON-SOLICITATION OF EMPLOYEES. During the Employment Period and
               the one year period following any termination or Nonrenewal of
               Executive's employment, Executive shall not directly or
               indirectly solicit, nor shall any entity with which the Executive
               is associated encourage or induce any employee of the Company or
               any of its subsidiaries to terminate employment with it, and
               shall not directly or indirectly, either individually or as
               owner, agent, employee, consultant or otherwise, employ or offer
               employment to any person who is or was employed by the Company or
               a subsidiary thereof unless such person shall have ceased to be
               employed by it for a period of at least six months.


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          d.   COMPANY PROPERTY. Except as expressly provided herein, promptly
               following Executive's termination of employment, Executive shall
               return to the Company all property of the Company, and all copies
               thereof in Executive's possession or under his control.

          e.   INJUNCTIVE RELIEF AND OTHER REMEDIES WITH RESPECT TO COVENANTS.
               Executive acknowledges and agrees that the covenants and
               obligations of Executive with respect to noncompetition,
               nonsolicitation, confidentiality and Company property, relate to
               special, unique and extraordinary matters and that a violation of
               any of the terms of such covenants and obligations will cause the
               Company irreparable injury for which adequate remedies are not
               available at law. Executive acknowledges and agrees that the
               geographic scope of his employment with the Company is national,
               and that the national geographic and the two year restrictions
               placed upon him in Paragraph 6 of this Agreement are reasonable
               and necessary to the preservation and vitality of the Company's
               business, reputation, and good will due to the nature of the
               Company's business, and given his knowledge and expertise within
               the insurance industry and the consideration provided in this
               Agreement, that he will be able to earn a satisfactory livelihood
               or otherwise provide for his financial security without violating
               such restrictions.

     Therefore, Executive agrees that the Company shall (i) be entitled to, on
both an interim and final basis, an injunction, restraining order or such other
equitable relief (without the requirement to post bond) restraining Executive
from committing any violation of the covenants and obligations contained in this
section 6 and (ii) have no further obligation to make any payments to Executive
hereunder following any material violation of the covenants and obligations
contained in this section 6. These remedies are cumulative and are in addition
to any other rights and remedies the Company may have at law or in equity. In
connection with the foregoing provisions of this section 6, Executive represents
that his economic means and circumstances are such that such provisions will not
prevent him from providing for himself and his family on a basis satisfactory to
him.

     The Executive and Company agree that section 6 of this Agreement is not
subject to the provisions of Paragraph 7(b). The Executive agrees that in the
event he violates said section 6 he will pay all costs and expenses with respect
to the prosecution or defense of any claim or suit brought by or against the
Company including, but not limited to, reasonable attorneys' fees. The Executive
further agrees that in the event he in any way violates the provisions set forth
in section 6, the Company would suffer irreparable harm for which both
preliminary and final injunctive relief would be an appropriate remedy in
addition to such other relief to which the Company may also be entitled.


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          f.   For purposes of Section 6 of this agreement "the Company" shall
               include its subsidiaries.

          g.   Notwithstanding anything herein to the contrary, should the
               Executive terminate the employment period without Good Reason or
               should the Company terminate it for Cause, the two year period
               referred to at various points in this Section 6 shall be reduced
               to one year.

     7.   MISCELLANEOUS.

          a.   SURVIVAL. Paragraphs 5 (relating to early termination), 6
               (relating to noncompetition, nonsolicitation and confidentiality,
               7(b) (relating to arbitration), 7(c) (relating to legal fees) and
               7(o) (relating to governing law) shall survive the termination
               hereof.

          b.   ARBITRATION. Except for disputes arising out of or relating to
               the provisions of Section 6, any dispute arising out of or
               relating to this Agreement, including each and every aspect of
               the relationship of the Executive and the Company, shall be
               resolved by binding arbitration. The arbitrator shall be a
               retired federal judge. If the parties cannot agree on an
               acceptable arbitrator, the dispute shall be heard by a panel of
               three retired judges, one appointed by each of the parties and
               the third appointed by the other two arbitrators. The arbitrator
               shall hear and decide the dispute not by compromise but according
               to law as if sitting in court applying the rules of evidence. The
               arbitrator's decision shall be in writing and shall set forth the
               facts and law supporting such decision. The arbitration shall be
               held in Chicago, Illinois and except as otherwise provided in
               this Paragraph, shall be conducted in accordance with the
               Voluntary Labor Arbitration Rules of the American Arbitration
               Association then in effect at the time of the arbitration.

          c.   BINDING EFFECT. This Agreement shall be binding on, and shall
               inure to the benefit of, the Company and any person or entity
               that succeeds to the interest of the Company (regardless of
               whether such succession does or does not occur by operation of
               law) by reason of the sale of all or a portion of the Company's
               stock, a merger, consolidation or reorganization involving the
               Company or, unless the Company otherwise elects in writing, a
               sale of the assets of the business of the Company (or portion
               thereof) in which Executive performs a majority of his services.
               This Agreement shall also inure to the Benefit of Executive's
               heirs, executors, administrators and legal representatives.


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          d.   ASSIGNMENT. Except as provided under Paragraph 7(c), neither this
               Agreement nor any of the rights or obligations hereunder shall be
               assigned or delegated by any party hereto without the prior
               written consent of the other party.

          e.   ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
               between the parties hereto with respect to the matters referred
               to herein. No other agreement relating to the terms of
               Executive's employment by the Company, oral or otherwise, shall
               be binding between the parties unless it is in writing and signed
               by the party against whom enforcement is sought. There are no
               promises, representations, inducements, or statements between the
               parties other than those that are expressly contained herein.
               Executive acknowledges that he is entering into this Agreement of
               his own free will and accord, and with no duress, that he has
               read this Agreement and that he understands it and its legal
               consequences.

          f.   SEVERABILITY; REFORMATION. In the event that one or more of the
               provisions of this Agreement shall become invalid, illegal or
               unenforceable in any respect, the validity, legality and
               enforceability of the remaining provisions contained herein shall
               not be affected thereby. In the event that any of the provisions
               of any of Paragraphs 6(a), (b) or (c) is not enforceable in
               accordance with its terms, Executive and the Company agree that
               such Paragraph shall be reformed to make such Paragraph
               enforceable in a manner which provides the Company the maximum
               rights permitted at law.

          g.   WAIVER. Waiver by any party hereto of any breach or default by
               the other party of any of the terms of this Agreement shall not
               operate as a waiver of any other breach or default, whether
               similar to or different from the breach or default waived. No
               waiver of any provision of this Agreement shall be implied from
               any course of dealing between the parties hereto or from any
               failure by either party hereto to assert its or his rights
               hereunder on any occasion or series of occasions.

          h.   NOTICES. Any notice required or desired to be delivered under
               this Agreement shall be in writing and shall be delivered
               personally, by courier service, by registered mail, return
               receipt requested, or by telecopy and shall be effective upon
               actual receipt by the party to which such notice shall be
               directed, and shall be addressed as follows (or to such other
               address as the party entitled to notice shall hereafter designate
               in accordance with the terms hereof):


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          If to the Company:

               CNA Surety Corporation
               CNA Plaza
               Chicago, Illinois 60685
               Attention: General Counsel


          If to Executive:

          The home address of Executive noted on the records of the Company.

          i.   AMENDMENTS. This Agreement may not be altered, modified or
               amended except by a written instrument signed by an authorized
               representative of the Company and by the Executive.

          j.   HEADINGS. Headings to Paragraphs in this Agreement are for the
               convenience of the parties only and are not intended to be part
               of or to affect the meaning or interpretation hereof.

          k.   COUNTERPARTS. This Agreement may be executed in counterparts,
               each of which shall be deemed an original but all of which
               together shall constitute one and the same instrument.

          l.   WITHHOLDING. Any payments provided for herein shall subject to
               withholding pursuant to applicable Federal, State, and local law
               then in effect.

          m.   GOVERNING LAW. This Agreement shall be governed by the laws of
               the State of Delaware, without reference to principles of
               conflicts or choice of law under which the law of any other
               jurisdiction would apply.

          n.   SOURCE OF PAYMENT. The payments and benefits provided for herein
               other than stock options may, at the option of the Company, be
               provided by one or more of its subsidiaries, rather than the
               Company, itself.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has hereunto set his hand as of
the day and year first above written.


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CNA Surety Corporation
Employment Agreement -
Page -14-



 CNA SURETY CORPORATION                      EXECUTIVE




 By:
    ---------------------------              ---------------------------
          Mark C. Vonnahme                          John Heneghan