Document:

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                                                                   EXHIBIT 10(9)

                              EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of ______________, 1999, by and between CNA
SURETY CORPORATION a Delaware corporation ("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 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 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 of residence
from, the Chicago metropolitan area.

3. COMPENSATION.

a. BASE SALARY. During the Employment Period, the Company shall pay Executive a
base salary of $375,000 for the year ending December 31, 2000 and $400,000 for
the year ending December 31, 2001. 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 it 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 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% of the Executive's Base Salary based
upon the performance targets determined by the Compensation Committee of the
Board. The actual

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bonus, if 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 50% to 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, 1998 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.

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     (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
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

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     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

     (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

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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 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

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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 an
     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 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

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     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 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

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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 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 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.

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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. 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):

                  If to the Company:

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

<PAGE>   13
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                  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.

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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:
            -------------------------------      -------------------------------
                  Thomas A. Pottle                     John S. Heneghan
                  Chief Operating Officer              Chief Financial Officer

            -------------------------------
                  Mark C. Vonnahme<PAGE>   1
                                                                  EXHIBIT 10(10)

                              EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT, dated as of ______________, 1999, by and between CNA
SURETY CORPORATION a Delaware corporation ("the Company"), and Robert E. Ayo
("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
           Senior Vice President, Contract Surety 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.

<PAGE>   2

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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 $250,000 per year, payable in
           bi-weekly installments. 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 it
           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 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 80% of the Executive's Base
           Salary based upon the performance

<PAGE>   3
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           targets determined by the Compensation Committee of the Board. The
           actual bonus, if 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 with
           a 40% 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 Compensation Committee of the Board.
           Long-term Incentive Compensation shall be determined by the
           Compensation Committee of the Board 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

<PAGE>   4
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           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.

     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

<PAGE>   5
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                    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 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,

<PAGE>   6
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           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.

     "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).

<PAGE>   7
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     "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 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

<PAGE>   8
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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 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

<PAGE>   9
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           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 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

<PAGE>   10
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           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.

        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

<PAGE>   11
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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 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

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           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.

<PAGE>   13
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        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):

        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.

<PAGE>   14
CNA Surety Corporation
Employment Agreement -
Page -14-

        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.

 CNA SURETY CORPORATION                   EXECUTIVE

 By:
    -----------------------------         -----------------------------
          Mark C. Vonnahme                        Robert E. Ayo

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