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                                                                   Exhibit 10(7)


                              EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT, dated as of JANUARY 1, 2002, by and between CNA Surety
Corporation a Delaware corporation or its subsidiaries ("the Company"), and MARK
C. VONNAHME ("the Executive").

                                   WITNESSETH:

WHEREAS, the Company wishes to continue to employ the Executive and the Company
and the Executive desire 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 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, 2002 (the
"Commencement Date") and ending on DECEMBER 31, 2003. 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 ninety days written notice that the Agreement will not be
renewed.

2.    POSITION AND DUTIES.

a.    POSITION. During the Employment Period, Executive shall serve as President
and Chief Executive 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.    COMPANY BOARD SERVICE. While the Executive and the Company recognize that
the right to elect directors is by law vested in the stockholders of the
Company, it is nevertheless mutually contemplated, subject to such right, that
during the term of Executive's employment under this Agreement the Executive
shall be elected and shall serve as, a member of the Boards of the Company and
its subsidiaries.

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

3.    COMPENSATION.

a.    BASE SALARY. During the Employment Period, the Company shall pay Executive
a base salary of $400,000 for the year ending December 31, 2002. The
Compensation Committee of the Board shall annually review Executive's base
salary in light of competitive practices and the performance of Executive and
the Company, and may, in its discretion, increase such base salary by an amount
they determine 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 Compensation Committee of the Board
in its 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 150%, with a target of 100% of the
Executive's Base Salary based upon the performance targets determined by the
Compensation Committee of the Board. The actual bonus, if
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any, payable for any such year shall be determined solely by the Compensation
Committee of the Board based upon the performance of the Company and/or
Executive against the targets.

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 Compensation Committee
of the Board. Long-term Incentive Compensation shall be targeted by the
Compensation Committee of the Board to provide to the Executive awards
equivalent to a target of 100% of the Executive's Base Salary.

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 five weeks paid vacation, for the year
commencing January 1, 2002 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.

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.
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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 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
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      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 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 PAYMENT. 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
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.
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"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

      (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
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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.

"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
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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.

f.    MAKE-WHOLE PAYMENTS.

      (i)   Notwithstanding any provisions to the contrary in this Agreement, if
            any payment made pursuant to this Section 5 which is in the nature
            of compensation payable to the Executive by the Company (or any
            affiliate thereof) under this Agreement or otherwise (a "Payment")
            would, if paid, constitute a "parachute payment" under Section 280G
            of the Internal Revenue Code of 1986, as amended ("the Code") or is
            subject to any tax under Section 4999 of the Code, or any similar
            federal, state, local, or other law (an "Excise Tax"), then the
            Company shall pay to the Executive and additional amount (the
            "Make-Whole Amount") which, after payment of all income, payroll,
            and excise taxes thereon is equal to the Excise Tax. For purposes of
            determining the Make-Whole Amount, the Executive shall be deemed to
            be taxed at the highest marginal rate under all applicable local,
            state, and federal income tax laws for the year in which the
            Make-Whole Amount is paid. The Make-Whole Amount payable with
            respect to an Excise Tax shall be paid by the Company coincident
            with the receipt by the Executive of the Payment with respect to
            which such Excise Tax relates.

      (ii)  All calculations under Section 5(f)(i) above shall be made initially
            by the Company and the Company shall provide prompt written notice
            thereof to the Executive to enable the Executive to timely file all
            applicable tax returns. Upon request of the Executive, the Company
            shall provide the Executive with sufficient tax and compensation
            data to enable the Executive or his tax advisor to independently
            make the calculations described in Section 5(f)(i) and the Company
            shall reimburse the Executive for reasonable fees and expenses
            incurred for any such verification. If the Executive gives written
            notice to the Company of any objection to the results of the
            Company's calculations within 60 days of the Executive's receipt of
            written notice thereof, the dispute shall be referred for
            determination to tax counsel selected by the independent auditors of
            the Company ("Tax Counsel"). The Company shall pay all fees and
            expenses of such Tax Counsel. Pending such determination by Tax
            Counsel, the Company shall pay the Executive the Make-Whole Amount
            as determined by it in good faith. The determination by Tax Counsel
            shall
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            be conclusive and binding upon all parties unless the Internal
            Revenue Service, a court of competent jurisdiction, or such other
            duly empowered governmental body or agency (a "Tax Authority")
            determines that the Executive owes a greater or lesser amount of
            Excise Tax with respect to any Payment than the amount determined by
            Tax Counsel. At the request of the Company, the Executive shall take
            all reasonable steps to appeal any adverse determination by a Tax
            Authority with respect to any Excise Tax; provided that the Company
            advances to the Executive all reasonable legal fees, costs, and
            other expenses incurred in such appeal. Should a Tax Authority
            finally determine that an additional Excise Tax is owed, then the
            Company shall pay an additional Make-Whole Amount to the Executive
            in a manner consistent with this Section 5(f) with respect to any
            additional Excise Tax and any assessed interest, fines or penalties.
            If any Excise Tax as calculated by the Company or Tax Counsel, as
            the case may be, is finally determined by a Tax Authority to exceed
            the amount required to be paid under applicable law, then the
            Executive shall repay such excess to the Company within 30 days of
            such determination: provided that such repayment shall be reduced by
            the amount of any taxes paid by the Executive on such excess which
            is not offset by the tax benefit resulting from the reduced Excess
            Tax.

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 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 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.
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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 manual; 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 this 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 two
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.

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 satisfactory livelihood
or otherwise provide for his financial security without violating such
restrictions.
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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.

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 paragraph shall be reduced to one year.

7.    MISCELLANEOUS.

a.    SURVIVAL. Paragraph 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(m) (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
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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.

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.
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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):

            If to the Company:

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

            If to the 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.
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CNA Surety Corporation
Employment Agreement -
Page -14-

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.

CNA SURETY CORPORATION



    By:                                      By:
       ---------------------------              ---------------------------
          Enid Tanenhaus                           John S. Heneghan
          Vice President & General Counsel         Chief Financial Officer



    By:
       ---------------------------
          Mark C. Vonnahme