<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CNA FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-6169860
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
CNA PLAZA
CHICAGO, ILLINOIS 60685
(312) 822-5698
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DONALD M. LOWRY
SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
CNA FINANCIAL CORPORATION
CNA PLAZA
CHICAGO, ILLINOIS 60685
(312) 822-5698
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
PHILIP J. NIEHOFF
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 782-0600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED
OFFERING PRICE MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debt Securities....................... (2) 100% (2) --
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Preferred Stock, without par value.... (2) 100% (2) --
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Total............................. $1,000,000,000(3) 100% $1,000,000,000(3) $227,272.73(3)
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</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) In no event will the aggregate initial price of debt securities and
preferred stock registered under this registration statement exceed
$1,250,000,000 or the equivalent thereof in one or more foreign currencies
or composite currencies including European Currency Units.
(3) Of the $1,000,000,000 of securities registered hereby, $250,000,000
aggregate principal amount and/or liquidation preference of such
securities was registered pursuant to Registration Statement No. 33-50753
and are unissued as of the date hereof. A registration fee of $78,125 was
previously paid with respect to such securities and is not included in the
amount stated above.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus filed as part of this Registration Statement relates to the
securities registered hereby, including the remaining unsold $250,000,000
principal amount of debt securities and preferred stock previously registered
by the Registrant under its Registration Statement on Form S-3 (File No. 33-
50753). Such Registration Statement is amended to reflect the information
contained herein.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 18, 1997
PROSPECTUS
$1,000,000,000
CNA FINANCIAL CORPORATION
DEBT SECURITIES
CNA Financial Corporation (the "Company") may offer from time to time its
debt securities consisting of debentures, notes and/or other evidences of
senior unsecured indebtedness (the "Senior Debt Securities"), subordinated
unsecured debt securities ("Subordinated Debt Securities," and together with
the Senior Debt Securities, the "Debt Securities"), or shares of preferred
stock ("Preferred Stock," and together with the Debt Securities, the
"Securities"). The Debt Securities and shares of Preferred Stock may be offered
as separate series in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (a
"Prospectus Supplement"). The Debt Securities may be offered in one or more
series with the same or various maturities, at par or with an original issue
discount and may be denominated either in U.S. dollars or foreign currencies,
including the European Currency Units ("ECU"). The Securities will be sold
directly, through agents designated from time to time or through one or more
underwriters or dealers, or a group of underwriters. see "Plan of
Distribution."
Certain terms of the Securities in respect of which this Prospectus is being
delivered (the "Offered Securities"), such as (i) in the case of the Debt
Securities, the specific designation, currency in which the debt Securities are
denominated, aggregate principal amount, denominations, maturity (which may be
fixed or extendible), interest rate or rates (which may be fixed or variable),
if any, and time of payment of interest, if any, terms for redemption at the
option of the Company or the holder, terms for exchange at the option of the
Company or the holder into common stock of the Company, terms for sinking or
purchase fund payment, and the application, if any, of restrictive covenants or
events of default that are in addition to or different from those described
herein, (ii) in the case of the Preferred Stock, the specific title, number of
shares or fractional interests therein, any dividend, liquidation, redemption,
exchange, voting and other rights, preferences and privileges, and (iii) in the
case of any Security, the public offering price, the names of any underwriters
or agents, the amounts to be purchased by underwriters and the compensation of
such underwriters or agents, and the other terms in connection with the
offering and sale of the Offered Securities, in each case, will be set forth in
the accompanying Prospectus Supplement. See "Description of Securities." The
Prospectus Supplement will also contain information, where applicable, about
certain United States federal income tax considerations relating to Offered
Securities covered by the Prospectus Supplement. All or a portion of the
Securities may be issued in permanent or temporary global form (each a "Global
Security").
The Debt Securities will be effectively subordinated to all existing and
future obligations of the Company's subsidiaries, including claims of
policyholders of the Company's insurance subsidiaries. The Company's
subsidiaries had approximately $791.1 million aggregate principal amount of
total indebtedness for borrowed money outstanding as of June 30, 1997. In
addition, as of June 30, 1997, approximately $1,724.4 million aggregate
principal amount of existing indebtedness for borrowed money of the Company
would rank pari passu with the Senior Debt Securities and senior to the
Subordinated Debt Securities. As of June 30, 1997, the Company had $247.1
million in aggregate principal amount of existing indebtedness for borrowed
money that would rank pari passu with the Subordinated Debt Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATIONS TO THE CON-
TRARY IS A CRIMINAL OFFENSE.
-----------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
-----------
The date of this Prospectus is August , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Public Reference Room of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the public reference
facilities maintained by the Commission at Seven World Trade Center, 13th
Floor, New York, New York 10048, and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained
at prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 or from the Commission's worldwide
web site at http://www.sec.gov. Documents filed by the Company can also be
inspected at the offices of the New York Stock Exchange, Inc. (the "New York
Stock Exchange"), 20 Broad Street, New York, New York 10005, the Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605 and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
Securities offered hereby. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits thereto for further information
with respect to the Company and the Securities offered hereby. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and in each instance reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (file no.
1-5823) are incorporated in this Prospectus by reference and hereby made a
part hereof:
1. The Company's Current Reports on Form 8-K dated August 5, 1997;
2. The Company's Annual Report on Form 10-K for the year ended December
31, 1996; and
3. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 31, 1997 and June 30, 1997.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of the offering of the Securities, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by
reference, other than exhibits to such documents (except for exhibits that are
specifically incorporated by reference herein). Requests for such copies
should be directed to the Company's principal executive offices located at CNA
Plaza, 43S, Chicago, Illinois 60685, Attention: Secretary (telephone (312)
822-5000).
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS OR IN THE PROSPECTUS SUPPLEMENT, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AND THE
PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
2
<PAGE>
THE COMPANY
CNA Financial Corporation ("CNA") was incorporated in 1967 as the parent
company of Continental Casualty Company ("CCC"), incorporated in 1897, and
Continental Assurance Company ("CAC"), incorporated in 1911. In 1975, CAC
became a wholly-owned subsidiary of CCC. On May 10, 1995, CNA acquired all the
outstanding common stock of The Continental Corporation ("Continental") and it
became a wholly-owned subsidiary of CNA. The Continental Corporation, a New
York corporation incorporated in 1968, is an insurance holding company. Its
principal subsidiary, The Continental Insurance Company ("CIC") was organized
in 1853. The principal business of Continental is the ownership of a group of
property and casualty insurance companies.
CNA's property and casualty insurance operations are conducted by CCC and
its property and casualty insurance affiliates and CIC and its property and
casualty insurance affiliates. Life insurance operations are conducted by CAC
and its life insurance affiliates. CNA's principal business is insurance
conducted through its insurance subsidiaries. As multiple-line insurers, the
insurance companies underwrite property, casualty, life and accident and
health coverages, as well as pension products and annuities. Their principal
market for insurance products is the United States.
USE OF PROCEEDS
Unless otherwise specified in the accompanying Prospectus Supplement, a
portion of the net proceeds will be used to pay down borrowings outstanding
under the Company's revolving credit facility and/or commercial paper program.
The revolving credit facility matures in May 2001, and bears interest at the
rate of LIBOR plus .25% (5.89% as of July 31, 1997). The remaining proceeds
will be added to the Company's general funds and used for general corporate
purposes, which may include, but are not limited to, prepayment of other debt,
and capital contributions to the Company's subsidiaries to strengthen such
subsidiaries' continuing operations.
DESCRIPTION OF SENIOR DEBT SECURITIES
The Senior Debt Securities will be issued under an Indenture, dated March 1,
1991, between the Company and The First National Bank of Chicago, a national
banking association, as trustee (referred to herein under the caption
"Description of Senior Debt Securities" as the "Trustee"), as supplemented by
a supplemental indenture, dated as of October 15, 1993 (as so supplemented,
the "Senior Indenture"), copies of which are incorporated by reference as or
filed as exhibits to the Registration Statement. The Company believes that the
following summary of certain provisions of the Senior Indenture is a complete
discussion of all material terms necessary to understand the Senior Indenture.
Capitalized terms not otherwise defined under the heading "Description of
Senior Debt Securities" have the meaning given to them in the Senior
Indenture. As used in this section "Description of Senior Debt Securities,"
unless the context indicates otherwise, the term "Company" means CNA Financial
Corporation and does not include any of its subsidiaries.
GENERAL
The Senior Debt Securities will rank equally with all other unsecured and
unsubordinated indebtedness of the Company. As of June 30, 1997, approximately
$1,724.4 million aggregate principal amount of indebtedness for borrowed money
of the Company would rank pari passu with the Senior Debt Securities. The
Senior Indenture does not limit the amount of debt, either secured or
unsecured, that may be issued by the Company under the Senior Indenture or
otherwise. The Senior Debt Securities may be issued in one or more series with
the same or various maturities and may be sold at par, a premium or an
original issue discount. Senior Debt Securities sold at an original issue
discount may bear no interest or interest at a rate that is below market
rates.
Because the Company is a holding company, the right of the Company, and
hence the rights of creditors and shareholders of the Company, to participate
in any distribution of assets of any subsidiary upon its
3
<PAGE>
liquidation or reorganization or otherwise is accordingly subject to prior
claims of creditors of the subsidiary and (in the case of an insurance
subsidiary) its policyholders, except to the extent that claims of the Company
itself as a creditor of the subsidiary may be recognized. The subsidiaries are
separate and distinct legal entities and have no obligations, contingent or
otherwise, to pay any amounts due pursuant to the Senior Debt Securities or to
make any funds available therefor, whether by dividends, loans or other
payments. The payment of dividends or the making of loans and advances to the
Company by its subsidiaries may be subject to statutory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to insurance
regulations and various business considerations.
Reference is made to the Prospectus Supplement for the following terms of the
offered Senior Debt Securities (to the extent such terms are applicable to such
Senior Debt Securities): (i) the title of such Senior Debt Securities or the
particular series thereof; (ii) any limit on the aggregate principal amount of
such Senior Debt Securities; (iii) whether such Senior Debt Securities are to
be issuable as Registered Securities or Bearer Securities or both, whether any
of such Senior Debt Securities are to be issuable initially in temporary global
form and whether any of such Senior Debt Securities are to be issuable in
permanent global form; (iv) the price or prices (generally expressed as a
percentage of the aggregate principal amount thereof) at which such Senior Debt
Securities will be issued; (v) the date or dates on which such Senior Debt
Securities will mature; (vi) the rate or rates per annum, or the formula by
which such rate or rates shall be determined, at which such Senior Debt
Securities will bear interest, if any, the dates from which any such interest
will accrue and the circumstances, if any, under which such interest rate or
interest rate formula may be reset at the option of the Company; (vii) the
Interest Payment Dates on which any such interest on such Senior Debt
Securities will be payable, the Regular Record Date for any interest payable on
such Senior Debt Securities that are Registered Securities on any Interest
Payment Date, and the extent to which, or the manner in which any interest
payable on a Global Security on an Interest Payment Date will be paid if other
than in the manner described below under "Global Securities;" (viii) the person
to whom any Registered Security of such series will be payable, if other than
the person in whose name such Senior Debt Security (or one or more predecessor
Senior Debt Securities) is registered at the close of business on the Regular
Record Date for such interest, and the manner in which, or the person to whom,
any interest on any Bearer Security of such series will be payable, if
otherwise than upon presentation and surrender of the coupons thereto; (ix) if
other than the principal amount of such Senior Debt Securities, the portion of
the principal amount of such Senior Debt Securities which shall be payable upon
declaration of acceleration of the maturity thereof or provable in bankruptcy;
(x) any mandatory or optional sinking fund or analogous provisions; (xi) each
office or agency where, subject to the terms of the Senior Indenture as
described below under "Payments and Paying Agents," the principal of and any
interest on such Senior Debt Securities will be payable and each office or
agency where, subject to the terms of the Senior Indenture as described below
under "Denominations, Registration and Transfer," such Senior Debt Securities
may be presented for registration of transfer or exchange; (xii) the date, if
any, after which and the price or prices at which such Senior Debt Securities
may, pursuant to any optional or mandatory redemption provisions, be redeemed,
in whole or in part, and the other detailed terms and provisions of any such
optional or mandatory redemption provisions; (xiii) the denominations in which
such Senior Debt Securities which are Registered Securities will be issuable,
if other than denominations of U.S. $1,000 and any integral multiple thereof,
and the denomination in which such Senior Debt Securities which are Bearer
Securities will be issuable, if other than denominations of U.S. $5,000; (xiv)
the currency or currencies of payment of principal of and any premium and
interest on such Senior Debt Securities; (xv) any index used to determine the
amount of payments of principal of and any interest on such Senior Debt
Securities; (xvi) the application, if any, of any restrictive covenants or
events of default that are in addition to or different from those described
herein; (xvii) the form of such Senior Debt Security; and (xviii) any other
terms and provisions of such Senior Debt Securities not inconsistent with the
terms and provisions of the Senior Indenture. Any such Prospectus Supplement
will also describe any special provisions for the payment of additional amounts
with respect to such Senior Debt Securities. Senior Debt Securities of any
series may be issued in one or more tranches as described in the applicable
Prospectus Supplement.
If the purchase price of any of the offered Senior Debt Securities is
denominated in a foreign currency or currencies or foreign currency unit or
units or if the principal of and any premium and interest on any series of
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<PAGE>
Senior Debt Securities is payable in a foreign currency or currencies or
foreign currency unit or units, the restrictions, elections, general tax
considerations, specific terms and other information with respect to such issue
of Senior Debt Securities and such foreign currency or currencies or foreign
currency unit or units will be set forth in the applicable Prospectus
Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Senior Debt Securities will be issuable as Registered Securities, Bearer
Securities or both. Senior Debt Securities may be issuable in the form of one
or more Global Securities, as described below under "Global Securities." Unless
otherwise provided in the applicable Prospectus Supplement, Registered
Securities denominated in U.S. dollars will be issued only in denominations of
$1,000 or any integral multiple thereof and Bearer Securities denominated in
U.S. dollars will be issued only in denominations of $5,000 with coupons
attached. A Global Security will be issued in a denomination equal to the
aggregate principal amount of outstanding Senior Debt Securities represented by
such Global Security. The Prospectus Supplement relating to Senior Debt
Securities denominated in a foreign or composite currency will specify the
denominations thereof.
In connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States (as defined below
under "Limitations on Issuance of Bearer Security") and a Bearer Security may
be delivered in connection with its original issuance only if the person
entitled to receive such Bearer Security furnishes written certification, in
the form required by the Senior Indenture, to the effect that such Bearer
Security is not being acquired by or on behalf of a United States person (as
defined below under "Limitations on Issuance of Bearer Securities"), or, if a
beneficial interest in such Bearer Security is being acquired by or on behalf
of a United States person, that such United States person is a financial
institution (as defined in Treasury Regulation Section 1.165-12(c)(1)(v)) that
is purchasing for its own account or for the account of a customer and which
agrees to comply with the requirements of Section 165(j)(3)(A), (B) or (C) of
the United States Internal Revenue Code of 1986, as amended (the "Code"), and
the regulations thereunder. See "Global Securities" and "Limitations on
Issuance of Bearer Securities" below.
Registered Securities of any series will be exchangeable for other Registered
Securities of the same series and of a like aggregate principal amount and
tenor of different authorized denominations. In addition, if Senior Debt
Securities of any series are issuable as both Registered Securities and as
Bearer Securities, at the option of the holder upon request confirmed in
writing, and subject to the terms of the Senior Indenture, Bearer Securities
(with all unmatured coupons, except as provided below, and all matured coupons
in default attached) of such series will be exchangeable for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any Bearer Security surrendered in exchange
for a Registered Security between a record date and the relevant date for
payment of interest shall be surrendered without the coupon relating to such
date for payment of interest attached and interest will not be payable in
respect of the Registered Security issued in exchange for such Bearer Security,
but will be payable only to the holder of such coupon when due in accordance
with the terms of the Senior Indenture. Except as provided in an applicable
Prospectus Supplement, Bearer Securities will not be issued in exchange for
Registered Securities.
Senior Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer duly executed), at the
office of the security registrar designated by the Company or at the office of
any transfer agent designated by the Company for such purpose with respect to
any series of Senior Debt Securities and referred to in an applicable
Prospectus Supplement, without service charge and upon payment of any taxes and
other governmental charges as described in the Senior Indenture. Such transfer
or exchange will be effected upon the security registrar or such transfer
agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request. The Company has initially appointed
the Trustee as the security registrar under the Senior Indenture. If a
Prospectus Supplement refers to any transfer agent (in addition to the security
registrar) initially designated by the Company with respect to any series of
Senior Debt Securities, the Company may at any time rescind the designation of
any such transfer agent or approve a change in the location
5
<PAGE>
through which any such transfer agent acts, except that, if Senior Debt
Securities of a series are issuable only as Registered Securities, the Company
will be required to maintain a transfer agent in each Place of Payment for such
series and, if Senior Debt Securities of a series are issuable as Bearer
Securities, the Company will be required to maintain (in addition to the
security registrar) a transfer agent in a Place of Payment for such series
located outside the United States. The Company may at any time designate
additional transfer agents with respect to any series of Senior Debt
Securities.
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Senior Debt Securities of any
series during a period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption of Senior Debt Securities of that
series selected to be redeemed and ending at the close of business on (a) if
Senior Debt Securities of the series are issuable only as Registered
Securities, the day of mailing of the relevant notice of redemption, and (b) if
Senior Debt Securities of the series are issuable as Bearer Securities, the day
of the first publication of the relevant notice of redemption or, if Senior
Debt Securities of that series are also issuable as Registered Securities and
there is no publication, the mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Registered Security, or portion
thereof, called for redemption, except the unredeemed portion of any Registered
Security being redeemed in part; or (iii) exchange any Bearer Security called
for redemption, except to exchange such Bearer Security for a Registered
Security of that series and like tenor which is immediately surrendered for
redemption.
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and any interest on Registered Securities (other than a Global
Security) will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that, at the option of the
Company, payment of any interest may be made by check mailed to the address of
the payee entitled thereto as such address shall appear in the Security
Register. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made to
the person in whose name such Registered Security is registered at the close of
business on the Regular Record Date for such interest payment.
Unless otherwise indicated in an applicable Prospectus Supplement, payment of
principal of and any premium and interest on Bearer Securities will be payable
(subject to applicable laws and regulations) at the offices of such Paying
Agent or Paying Agents outside the United States as the Company may designate
from time to time, except that, at the option of the Company, payment of any
interest may be made by check or by wire transfer to an account maintained by
the payee outside the United States. Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on Bearer Securities on
any Interest Payment Date will be made only against surrender of the coupon
relating to such Interest Payment Date. No payment with respect to any Bearer
Security will be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by wire
transfer to an account maintained in the United States. Payments will not be
made in respect of Bearer Securities or coupons appertaining thereto pursuant
to presentation to the Company or its Paying Agents within the United States.
Notwithstanding the foregoing, payment of principal of and any interest on
Bearer Securities denominated and payable in U.S. dollars will be made at the
office of the Company's Paying Agent in the United States if, and only if,
payment of the full amount thereof in U.S. dollars at all offices or agencies
outside the United States is illegal or effectively precluded by exchange
controls or other similar restrictions and the Company has delivered to the
Trustee an opinion of counsel to that effect.
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in The City of New York will be designated as
the Company's sole Paying Agent for payments with respect to Senior Debt
Securities which are issuable solely as Registered Securities. Any Paying Agent
outside the United States and any other Paying Agent in the United States
initially designated by the Company for the Senior Debt Securities will be
named in the applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts,
except that, if Senior Debt Securities of a series are issuable only as
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Registered Securities, the Company will be required to maintain a Paying Agent
in each Place of Payment for such series and, if Senior Debt Securities of a
series are issuable as Bearer Securities, the Company will be required to
maintain (i) a Paying Agent in each Place of Payment for such series in the
United States for payments with respect to any Registered Securities of such
series (and for payments with respect to Bearer Securities of such series in
the circumstances described above, but not otherwise), (ii) a Paying Agent in
each Place of Payment located outside the United States where Senior Debt
Securities of such series and any coupons appertaining thereto may be presented
and surrendered for payment; provided that if the Senior Debt Securities of
such series are listed on The International Stock Exchange, London or the
Luxembourg Stock Exchange or any other stock exchange located outside the
United States and such stock exchange shall so require, the Company will
maintain a Paying Agent in London or Luxembourg City or any other required city
located outside the United States, as the case may be, for Senior Debt
Securities of such series, and (iii) a Paying Agent in each Place of Payment
located outside the United States where (subject to applicable laws and
regulations) Registered Securities of such series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company may be served.
All monies paid by the Company to a Paying Agent for the payment of principal
of and any interest on any Senior Debt Security that remains unclaimed at the
end of two years after such principal, premium or interest shall have become
due and payable will be repaid to the Company and thereafter the holder of such
Senior Debt Security or any coupon appertaining thereto will look only to the
Company for payment thereof.
GLOBAL SECURITIES
The Senior Debt Securities of a series may be issued in whole or in part in
the form of one or more Global Securities that will be deposited with, or on
behalf of, a depository (the "Depository") identified in the Prospectus
Supplement relating to such series. Global Securities may be issued only in
fully registered
form and may be issued in either temporary or permanent form. Unless and until
it is exchanged in whole or in part for the individual Senior Debt Securities
represented thereby, a Global Security may not be transferred except as a whole
by the Depository for such Global Security to a nominee of such Depository or
by a nominee of such Depository to such Depository or another nominee of such
Depository or by the Depository or any nominee of such Depository to a
successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series of
Senior Debt Securities will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
generally apply to depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Senior Debt
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depository ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Senior
Debt Securities or by the Company if such Senior Debt Securities are offered
and sold directly by the Company. Ownership of beneficial interests in a Global
Security will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable Depository or its nominee (with
respect to interests of Participants) and records of Participants (with respect
to interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, pledge or transfer beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Senior Debt
Securities represented by such Global Security for all purposes under the
Senior Indenture. Except as provided below, owners of beneficial interests in a
Global Security will not be entitled to have any of the individual Senior Debt
Securities of the series represented by such Global Security registered in
their names,
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will not receive or be entitled to receive physical delivery of any such Senior
Debt Securities of such series in definitive form and will not be considered
the owners or holders thereof under the Securities Indenture.
Payments of principal of and any premium and any interest on individual
Senior Debt Securities represented by a Global Security registered in the name
of a Depository or its nominee will be made to the Depository or its nominee,
as the case may be, as the registered owner of the Global Security representing
such Senior Debt Securities. None of the Company, the Trustee, any Paying Agent
or the Security Registrar for such Senior Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Senior Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Senior Debt
Securities or its nominee, upon receipt of any payment of principal, premium or
interest in respect of a permanent Global Security representing any of such
Senior Debt Securities, immediately will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Security for such Senior Debt Securities as
shown on the records of such Depository or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests in such
Global Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
If a Depository for a series of Senior Debt Securities is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the Company within 90 days, the Company will
issue individual Senior Debt Securities of such series in exchange for the
Global Security representing such series of Senior Debt Securities. In
addition, the Company may, at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement relating to such Senior
Debt Securities, determine not to have any Senior Debt Securities of such
series represented by one or more Global Securities and, in such event, will
issue individual Senior Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Senior Debt
Securities. Individual Senior Debt Securities of such series so issued will be
issued in denominations, unless otherwise specified by the Company, of $1,000
and integral multiples thereof.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to United States persons (each
as defined below) other than to a Qualifying Branch of a United States
Financial Institution (as defined below), and any underwriters, agents and
dealers participating in the offering of Senior Debt Securities must agree that
they will not offer any Bearer Securities for sale or resale in the United
States or to United States persons (other than a Qualifying Branch of a United
States Financial Institution) nor deliver Bearer Securities within the United
States. In addition, any such underwriters, agents and dealers must agree to
send confirmations to each purchaser of a Bearer Security confirming that such
purchaser represents that it is not a United States person or is a Qualifying
Branch of a United States Financial Institution and, if such person is a
dealer, that it will send similar confirmations to purchasers from it. The term
"Qualifying Foreign Branch of a United States Financial Institution" means a
branch located outside the United States of a United States securities clearing
organization, bank or other financial institution listed under Treasury
Regulation Section 1.165-12(c)(1)(v) that agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the
regulations thereunder.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code, holders
that are United States persons, with certain exceptions, will not be entitled
to deduct any loss on Bearer Securities and must treat as ordinary income any
gain realized on the sale or other disposition (including the receipt of
principal) of Bearer Securities.
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The term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof, an
estate or, for taxable years beginning before January 1, 1997, a trust the
income of which is subject to United States federal income taxation regardless
of its source or, for taxable years beginning after December 31, 1996, a trust
if a U.S. court is able to exercise primary supervision over the administration
of the trust and one or more U.S. fiduciaries have the authority to control all
substantial decisions of the trust, and the term "United States" means the
United States of America (including the states and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction
(including the Commonwealth of Puerto Rico).
DEFEASANCE
The Senior Indenture provides that the Company will be discharged from any
and all obligations in respect of the Senior Debt Securities of any series
(except for certain obligations to register the transfer or exchange of Senior
Debt Securities of such series, to replace stolen, lost or mutilated Senior
Debt Securities of such series, to maintain paying agencies and to hold monies
for payment in trust) upon the deposit with the Trustee for such series of
Senior Debt Securities in trust of money and/or U.S. Government Obligations (as
defined below) which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of and each installment of interest, if any, on
the Senior Debt Securities of such series on the maturity of such payments in
accordance with the terms of the Senior Indenture and the Senior Debt
Securities of such series. Such a trust may only be established if, among other
things, the Company has delivered to such Trustee an Opinion of Counsel (who
may be counsel for the Company) to the effect that (i) holders of the Senior
Debt Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amounts and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred, and (ii) the Senior Debt
Securities of such series, if then listed on The New York Stock Exchange, will
not be delisted as a result of such deposit, defeasance and discharge.
The Senior Indenture provides that, if applicable, the Company may omit to
comply with any additional restrictive covenants imposed on the Company in
connection with the establishment of any series of Senior Debt Securities and
that clause (d) under "Events of Default" with respect to such restrictive
covenants and clause (e) under "Events of Default" shall not be deemed to be an
Event of Default under the Senior Indenture and the Senior Debt Securities of
any series, upon the deposit with the Trustee under the Senior Indenture, in
trust of money and/or U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of, and each
installment of interest, if any, on the Senior Debt Securities of such series
on the maturity of such payments in accordance with the terms of the Senior
Indenture and the Senior Debt Securities of such series. The obligations of the
Company under the Senior Indenture and Senior Debt Securities of such series
other than with
respect to the covenants referred to above and the Events of Default other than
the Events of Default referred to above shall remain in full force and effect.
Such a trust may only be established if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel (who may be counsel for the
Company) to the effect that (i) the holders of the Senior Debt Securities of
such series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain covenants and
Events of Default and will be subject to federal income tax on the same amounts
and in the same manner and at the same times, as would have been the case if
such deposit and defeasance had not occurred, and (ii) the Senior Debt
Securities of such series, if then listed on The New York Stock Exchange, will
not be delisted as a result of such deposit and defeasance.
In the event the Company exercises its option to omit compliance with certain
covenants of the Senior Indenture with respect to the Senior Debt Securities of
any series as described above and the Senior Debt Securities of such series are
declared due and payable because of the occurrence of any Event of Default
other
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than an Event of Default described in clauses (d) or (e) under "Events of
Default," the amount of money and U.S. Government Obligations on deposit with
the Trustee will be sufficient to pay amounts due on the Senior Debt
Securities of such series at the time of their stated maturity but may not be
sufficient to pay amounts due on the Senior Debt Securities of such series at
the time of the acceleration resulting from such Event of Default. However,
the Company will remain liable for such payments.
The term "U.S. Government Obligation" means direct noncallable obligations
of, or noncallable obligations guaranteed by, the United States or an agency
thereof for the payment of which guarantee or obligation, the full faith and
credit of the United States is pledged.
MODIFICATION OF THE SENIOR INDENTURE
The Senior Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority of the principal amount
of the Senior Debt Securities of each series then outstanding, to execute
supplemental indentures adding any provisions to or changing or eliminating
any of the provisions of the Senior Indenture or modifying the rights of the
holders of the Senior Debt Securities of such series, except that no such
supplemental indenture may, among other things, (i) extend the final maturity
of any Senior Debt Securities, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof, impair
the right to institute suit for payment thereof or reduce any amount payable
upon any redemption thereof without the consent of the holder of the Senior
Debt Security so affected, or (ii) reduce the aforesaid percentage of Senior
Debt Securities, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all outstanding
Senior Debt Securities. The Board of Directors of the Company does not have
the power to waive any of the covenants of the Senior Indenture including
those relating to consolidation, merger or sale of assets.
EVENTS OF DEFAULT
An Event of Default with respect to any series of Senior Debt Securities is
defined in the Senior Indenture as being: (a) default by the Company for 30
days in the payment of any installment of interest on the Senior Debt
Securities of such series; (b) default by the Company in the payment of any
principal on the Senior Debt Securities of such series; (c) default by the
Company in the payment of any sinking fund installment with respect to such
series of Senior Debt Securities; (d) default by the Company in the
performance of any of the agreements in the Indenture contained therein for
the benefit of the Senior Debt Securities of such series which shall not have
been remedied within a period of 60 days after receipt of written notice by
the Company from the Trustee for such series of Senior Debt Securities or by
the Company and such Trustee from the holders of not less than 25% in
principal amount of the Senior Debt Securities of such series then
outstanding; (e) with respect to any series of Senior Debt Securities (unless
otherwise specified in the accompanying Prospectus Supplement), the
acceleration, or failure to pay at maturity, of any indebtedness for money
borrowed of the Company exceeding $20,000,000 in principal amount, which
acceleration is not rescinded or annulled or indebtedness paid within 15 days
after the date on which written notice thereof shall have first been given to
the Company as provided in the Senior Indenture; (f) certain events of
bankruptcy, insolvency or reorganization of the Company; or (g) any other
Event of Default established in accordance with the Senior Indenture with
respect to any series of Senior Debt Securities. No Event of Default (other
than an Event of Default under clause (f)) described above with respect to a
particular series of Senior Debt Securities necessarily constitutes an Event
of Default with respect to any other series of Senior Debt Securities.
The Senior Indenture provides that if an Event of Default with respect to
any series of Senior Debt Securities shall have occurred and be continuing,
either the Trustee with respect to the Senior Debt Securities of that series
or the holders of at least 25% in aggregate principal amount of Senior Debt
Securities of that series then outstanding may declare the principal amount
(or, if the Senior Debt Securities of that series were sold at an original
issue discount, such portion of the principal amount as may be specified in
the terms of that series) of all the Senior Debt Securities of that series and
interest, if any, accrued thereon to be due and payable immediately, but upon
certain conditions such declaration may be annulled and past defaults (except,
unless
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theretofore cured, a default in payment of principal of or interest on Senior
Debt Securities of that series) may be waived by the holders of a majority in
principal amount of the Senior Debt Securities of that series then
outstanding.
The Senior Indenture contains a provision entitling the Trustee with respect
to any series of Senior Debt Securities, subject to the duty of the Trustee
during default to act with the required standard of care, to be indemnified by
the holders of Senior Debt Securities of such series before proceeding to
exercise any right or power under the Senior Indenture at the request of the
holders of such Senior Debt Securities. The Senior Indenture also provides
that the holders of a majority in principal amount of the outstanding Senior
Debt Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee for such
series of Senior Debt Securities, or exercising any trust or power conferred
on such Trustee, with respect to the Senior Debt Securities of such series.
The Senior Indenture contains a covenant that the Company will file annually
with the Trustee a certificate as to the absence of any default or specifying
any default that exists.
No holder of any Senior Debt Security of any series will have any right to
institute any proceeding with respect to the Senior Indenture or for any
remedy thereunder, unless such holder shall have previously given the Trustee
for such series of Senior Debt Securities written notice of an Event of
Default with respect to Senior Debt Securities of that series and unless also
the holders of at least 25% in aggregate principal amount of the outstanding
Senior Debt Securities of that series shall have made written request, and
offered reasonable indemnity, to such Trustee to institute such proceeding as
trustee, and such Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Senior Debt
Securities of that series a direction inconsistent with such request and shall
have failed to institute such proceeding within 60 days. However, any right of
a holder of any Senior Debt Security to receive payment of the principal of
and any interest on such Senior Debt Security on or after the due dates
expressed in such Senior Debt Security and to institute suit for the
enforcement of any such payment on or after such dates shall not be impaired
or affected without the consent of such holder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company covenants that it will not merge or consolidate with any other
corporation or sell or convey all or substantially all of its assets to any
Person, unless (i) either the Company shall be the continuing corporation, or
the successor corporation or the Person which acquires by sale or conveyance
substantially all of the assets of the Company (if other than the Company)
shall be a corporation organized under the laws of the United States or any
state thereof and shall expressly assume the due and punctual payment of the
principal of and interest on all the Senior Debt Securities, according to
their tenor, and the due and punctual performance and observance of all of the
covenants and conditions of the Senior Indenture to be performed or observed
by the Company, by supplemental indenture satisfactory to the Trustee,
executed and delivered to the Trustee by such corporation, and (ii) the
Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any such covenants or condition.
Other than the covenants described above, or as set forth in any
accompanying Prospectus Supplement, the Senior Indenture and the Senior Debt
Securities do not contain any covenants or other provisions designed to afford
holders of the Senior Debt Securities protection in the event of a takeover,
recapitalization or highly leveraged transaction involving the Company.
NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Senior Debt Securities or the Senior
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of Debt Securities by accepting
such Senior Debt Security waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Senior Debt
Securities.
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THE TRUSTEE
The Trustee in its individual or any other capacity may become the owner or
pledgee of Senior Debt Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not the Trustee
provided it complies with the terms of the Senior Indenture.
DESCRIPTION OF SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be issued under an Indenture (the
"Subordinated Indenture"), between the Company and The First National Bank of
Chicago, a national banking association, as trustee (referred to herein under
"Description of Subordinated Debt Securities" as the "Trustee"), a copy of the
form of which is filed as an exhibit to the Registration Statement. The
Company believes that the following summary of certain provisions of the
Subordinated Indenture is a complete discussion of all material terms
necessary to understand the Subordinated Indenture. Capitalized terms not
otherwise defined under the heading "Description of Subordinated Debt
Securities" have the meaning given to them in the Indenture. As used in this
section "Description of Subordinated Debt Securities," unless the context
indicates otherwise, the term "Company" means CNA Financial Corporation and
does not include any of its subsidiaries.
GENERAL
The Subordinated Debt Securities will rank equally with all other unsecured
and subordinated indebtedness for borrowed money of the Company. As of June
30, 1997, approximately $1,724.4 million aggregate principal amount of
indebtedness for borrowed money of the Company would rank senior to the
Subordinated Debt Securities. As of June 30, 1997, the Company had $247.1
million in aggregate principal amount of existing indebtedness for borrowed
money that would rank pari passu with the Subordinated Debt Securities. The
Subordinated Indenture does not limit the amount of debt, either secured or
unsecured, that may be issued by the Company which would be senior to the
Subordinated Debt Securities or that may be issued under the Subordinated
Indenture or otherwise. The Subordinated Debt Securities may be issued in one
or more series with the same or various maturities and may be sold at par, a
premium or an original issue discount. Subordinated Debt Securities sold at an
original issue discount may bear no interest or interest at a rate that is
below market rates.
Because the Company is a holding company, the right of the Company, and
hence the rights of creditors and shareholders of the Company, to participate
in any distribution of assets of any subsidiary upon its liquidation or
reorganization or otherwise is accordingly subject to prior claims of
creditors of the subsidiary and (in the case of an insurance subsidiary) its
policyholders, except to the extent that claims of the Company itself as a
creditor of the subsidiary may be reorganized. The subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise,
to pay any amounts due pursuant to the Subordinated Debt Securities or to make
any funds available therefor, whether by dividends, loans or other payments.
The payment of dividends or the making of loans and advances to the Company by
its subsidiaries may be subject to statutory or regulatory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to
insurance regulation and various business considerations.
Reference is made to the Prospectus Supplement for the following terms of
the offered Subordinated Debt Securities (to the extent such terms are
applicable to such Subordinated Debt Securities): (i) the title of such
Subordinated Debt Securities or the particular series thereof; (ii) any limit
on the aggregate principal amount of such Subordinated Debt Securities; (iii)
whether such Subordinated Debt Securities are to be issuable as Registered
Securities or Bearer Securities or both, whether any of such Subordinated Debt
Securities are to be issuable initially in temporary global form and whether
any of such Subordinated Debt Securities are to be issuable in permanent
global form; (iv) the price or prices (generally expressed as a percentage of
the aggregate principal amount thereof) at which such Subordinated Debt
Securities will be issued; (v) the date or dates on which such Subordinated
Debt Securities will mature; (vi) the rate or rates per annum, or the formula
by which such rate or rates shall be determined, at which such Subordinated
Debt Securities will bear interest, if any, the
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date from which any such interest will accrue and the circumstances, if any,
under which such interest rate or interest rate formula may be reset at the
option of the Company; (vii) the Interest Payment Dates on which any such
interest on such Subordinated Debt Securities will be payable, the Regular
Record Date for any interest payable on such Subordinated Debt Securities that
are Registered Securities on any Interest Payment Date, and the extent to
which, or the manner in which any interest payable on a Global Security on an
Interest Payment Date will be paid if other than in the manner described below
under "Global Securities;" (viii) the person to whom any Registered Security
of such series will be payable, if other than the person in whose name such
Subordinated Debt Security (or one or more predecessor Subordinated Debt
Securities) is registered at the close of business on the Regular Record Date
of such interest, and the manner in which, or the person to whom, any interest
on any Bearer Security of such series will be payable, if otherwise than upon
presentation and surrender of the coupons thereto; (ix) if other than the
principal amount of such Subordinated Debt Securities, the portion of the
principal amount of such Subordinated Debt Securities which shall be payable
upon declaration of acceleration of the maturity thereof or provable in
bankruptcy; (x) any mandatory or optional sinking fund or analogous
provisions; (xi) each office or agency where, subject to the terms of the
Subordinated Indenture as described below under "Payments and Paying Agents,"
the principal of and any interest on such Subordinated Debt Securities will be
payable and each office or agency where, subject to the terms of the
Subordinated Indenture as described below under "Denominations, Registration
and Transfer," such Subordinated Debt Securities may be presented for
registration of transfer or exchange; (xii) the date, if any, after which and
the price or prices at which such Subordinated Debt Securities may, pursuant
to any optional or mandatory redemption provisions, be redeemed, in whole or
in part, and the other detailed terms and provisions of any such optional or
mandatory redemption provisions; (xiii) the denominations in which such
Subordinated Debt Securities which are Registered Securities will be issuable,
if other than denominations of U.S. $1,000 and any integral multiple thereof,
and the denomination in which such Subordinated Debt Securities which are
Bearer Securities will be issuable, if other than denominations of U.S.
$5,000; (xiv) the currency or currencies of payment of principal of and any
premium and interest on such Subordinated Debt Securities; (xv) any index used
to determine the amount of payments of principal of and any interest on such
Subordinated Debt Securities; (xvi) the application, if any, of any
restrictive covenants or events of default that are in addition to or
different from those described herein; (xvii) the form of such Subordinated
Debt Security; and (xviii) any other terms and provisions of such Subordinated
Debt Securities not inconsistent with the terms and provisions of the
Subordinated Indenture. Any such Prospectus Supplement will also describe any
special provisions for the payment of additional amounts with respect to such
Subordinated Debt Securities. Subordinated Debt Securities of any series may
be issued in one or more tranches as described in the applicable Prospectus
Supplement.
If the purchase price of any of the offered Subordinated Debt Securities is
denominated in a foreign currency or currencies or foreign currency unit or
units or if the principal of and any premium and interest on any series of
Subordinated Debt Securities is payable in a foreign currency or currencies or
foreign currency unit or units, the restrictions, elections, general tax
considerations, specific terms and other information with respect to such
issue of Subordinated Debt Securities and such foreign currency or currencies
or foreign currency unit or units will be set forth in the applicable
Prospectus Supplement.
SUBORDINATION
Indebtedness evidenced by the Subordinated Debt Securities will be
subordinated in right of payment, as set forth in the Subordinated Indenture,
to the prior payment in full of all existing and future Senior Indebtedness of
the Company. Senior Indebtedness is defined in the Subordinated Indenture as
the principal of and interest on (including any interest that accrues after or
would have accrued but for the filing of a petition initiating any proceeding
pursuant to any Bankruptcy Law, regardless of whether such interest is allowed
or permitted to the holder of such Debt against the bankruptcy or any other
insolvency estate of the Company in such proceeding) and other amounts due on
or in connection with any Debt incurred, assumed or guaranteed by the Company,
whether outstanding on the date of the Subordinated Indenture or thereafter
incurred, assumed or guaranteed, and all renewals, extensions and refundings
of any such Debt. Amounts outstanding under any Senior Debt Securities will be
included in Senior Indebtedness. Excluded from the definition of Senior
Indebtedness are the
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following: (a) any Debt which expressly provides (i) that such Debt shall not
be senior in right of payment to the Subordinated Debt Securities, or (ii)
that such Debt shall be subordinated to any other Debt of the Company, unless
such Debt expressly provides that such Debt shall be senior in right of
payment to the Subordinated Debt Securities; and (b) any Debt of the Company
in respect of the Subordinated Debt Securities.
By reason of such subordination, in the event of dissolution, insolvency,
bankruptcy or other similar proceedings, upon any distribution of assets, (i)
the holders of Subordinated Debt Securities will be required to pay over their
share of such distribution to the holders of Senior Indebtedness until such
Senior Indebtedness is paid in full; and (ii) creditors of the Company who are
not holders of Subordinated Debt Securities or holders of Senior Indebtedness
may recover less, ratably, than holders of Senior Indebtedness and may recover
more, ratably, than the holders of Subordinated Debt Securities.
In the event that the Subordinated Debt Securities are declared due and
payable prior to their Stated Maturity by reason of the occurrence of an Event
of Default, then the Company is obligated to notify promptly holders of Senior
Indebtedness of such acceleration. The Company may not pay the Subordinated
Debt Securities until 179 days have passed after such acceleration occurs and
may thereafter pay the Subordinated Debt Securities if the terms of the
Subordinated Indenture otherwise permit payment at that time.
No payment of the principal, issue price plus accrued original issue
discount (if any), redemption price, interest, if any, or any other amount
payable with respect to any Subordinated Debt Security may be made, nor may
the Company acquire any Subordinated Debt Securities except as set forth in
the Subordinated Indenture, if any default with respect to Senior Indebtedness
occurs and is continuing that permits the acceleration of the maturity thereof
and either such default is the subject of judicial proceedings or the Company
receives notice of the default, unless (a) 179 days pass after notice of the
default is given and such default is not then the subject of judicial
proceedings or the default with respect to the Senior Indebtedness is cured or
waived and (b) the terms of the Subordinated Indenture otherwise permit the
payment or acquisition of the Subordinated Debt Securities at that time.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Subordinated Debt Securities will be issuable as Registered Securities,
Bearer Securities or both. Subordinated Debt Securities may be issuable in the
form of one or more Global Securities, as described below under "Global
Securities." Unless otherwise provided in the applicable Prospectus
Supplement, Registered Securities denominated in U.S. dollars will be issued
only in denominations of $1,000 or any integral multiple thereof and Bearer
Securities denominated in U.S. dollars will be issued only in denominations of
$5,000 with coupons attached. A Global Security will be issued in a
denomination equal to the aggregate principal amount of outstanding
Subordinated Debt Securities represented by such Global Security. The
Prospectus Supplement relating to Subordinated Debt Securities denominated in
a foreign or composite currency will specify the denominations thereof.
In connection with its original issuance, no Bearer Security shall be mailed
or otherwise delivered to any location in the United States (as defined below
under "Limitations on Issuance of Bearer Security") and a Bearer Security may
be delivered in connection with its original issuance only if the person
entitled to receive such Bearer Security furnishes written certification, in
the form required by the Subordinated Indenture, to the effect that such
Bearer Security is not being acquired by or on behalf of a United States
person (as defined below under "Limitations on Issuance of Bearer
Securities"), or, if a beneficial interest in such Bearer Security is being
acquired by or on behalf of a United States person, that such United States
person is a financial institution (as defined in Treasury Regulation Section
1.165-12(c)(1)(v)) that is purchasing for its own account or for the account
of a customer and which agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code, and the regulations thereunder. See
"Global Securities" and "Limitations on Issuance of Bearer Securities" below.
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations. In addition, if
Subordinated Debt Securities of any series are issuable as both Registered
Securities and as Bearer Securities, at
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the option of the holder upon request confirmed in writing, and subject to the
terms of the Subordinated Indenture, Bearer Securities (with all unmatured
coupons, except as provided below, and all matured coupons in default
attached) of such series will be exchangeable for Registered Securities of the
same series of any authorized denominations and of a like aggregate principal
amount and tenor. Unless otherwise indicated in an applicable Prospectus
Supplement, any Bearer Security surrendered in exchange for a Registered
Security between a record date and the relevant date for payment of interest
shall be surrendered without the coupon relating to such date for payment of
interest attached and interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the holder of such coupon when due in accordance with the
terms of the Subordinated Indenture. Except as provided in an applicable
Prospectus Supplement, Bearer Securities will not be issued in exchange for
Registered Securities.
Subordinated Debt Securities may be presented for exchange as provided
above, and Registered Securities (other than a Global Security) may be
presented for registration of transfer (with the form of transfer duly
executed), at the office of the security registrar designated by the Company
or at the office of any transfer agent designated by the Company for such
purpose with respect to any series of Subordinated Debt Securities and
referred to in an applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Subordinated Indenture. Such transfer or exchange will be effected upon the
security registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request. The
Company has initially appointed the Trustee as the security registrar under
the Subordinated Indenture. If a Prospectus Supplement refers to any transfer
agent (in addition to the security registrar) initially designated by the
Company with respect to any series of Subordinated Debt Securities, the
Company may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that, if Subordinated Debt Securities of a series are issuable only as
Registered Securities, the Company will be required to maintain a transfer
agent in each Place of Payment for such series and, if Subordinated Debt
Securities of a series are issuable as Bearer Securities, the Company will be
required to maintain (in addition to the security registrar) a transfer agent
in a Place of Payment for such series located outside the United States. The
Company may at any time designate additional transfer agents with respect to
any series of Subordinated Debt Securities.
In the event of any redemption in part, the Company shall not be required to
(i) issue, register the transfer of or exchange Subordinated Debt Securities
of any series during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Subordinated Debt
Securities of that series selected to be redeemed and ending at the close of
business on (a) if Subordinated Debt Securities of the series are issuable
only as Registered Securities, the day of mailing of the relevant notice of
redemption, and (b) if Subordinated Debt Securities of the series are issuable
as Bearer Securities, the day of the first publication of the relevant notice
of redemption or, if Subordinated Debt Securities of that series are also
issuable as Registered Securities and there is no publication, the mailing of
the relevant notice of redemption; (ii) register the transfer of or exchange
any Registered Security, or portion thereof, called for redemption, except the
unredeemed portion of any Registered Security being redeemed in part; or (iii)
exchange any Bearer Security called for redemption, except to exchange such
Bearer Security for a Registered Security of that series and like tenor which
is immediately surrendered for redemption.
PAYMENTS AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any interest on Registered Securities (other than a Global
Security) will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time, except that, at the option of the
Company, payment of any interest may be made by check mailed to the address of
the payee entitled thereto as such address shall appear in the Security
Register. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on Registered Securities will be made
to the person in whose name such Registered Security is registered at the
close of business on the Record Date for such interest payment.
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Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Bearer Securities will be
payable (subject to applicable laws and regulations) at the offices of such
Paying Agent or Paying Agents outside the United States as the Company may
designate from time to time, except that, at the option of the Company,
payment of any interest may be made by check or by wire transfer to an account
maintained by the payee outside the United States. Unless otherwise indicated
in an applicable Prospectus Supplement, payment of interest on Bearer
Securities on any Interest Payment Date will be made only against surrender of
the coupon relating to such Interest Payment Date. No payment with respect to
any Bearer Security will be made at any office or agency of the Company in the
United States or by check mailed to any address in the United States or by
wire transfer to an account maintained in the United States. Payments will not
be made in respect of Bearer Securities or coupons appertaining thereto
pursuant to presentation to the Company or its Paying Agents within the United
States. Notwithstanding the foregoing, payment of principal of and any
interest on Bearer Securities denominated and payable in U.S. dollars will be
made at the office of the Company's Paying Agent in the United States if, and
only if, payment of the full amount thereof in U.S. dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions and the Company has delivered
to the Trustee and opinion of counsel to that effect.
Unless otherwise indicated in an applicable Prospectus Supplement, the
principal office of the Trustee in The City of New York will be designated as
the Company's sole Paying Agent for payments with respect to Subordinated Debt
Securities which are issuable solely as Registered Securities. Any Paying
Agent outside the United States and any other Paying Agent in the United
States initially designated by the Company for the Subordinated Debt
Securities will be named in the applicable Prospectus Supplement. The Company
may at any time designate additional Paying Agents or rescind the designation
of any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that, if Subordinated Debt Securities of a series are
issuable only as Registered Securities, the Company will be required to
maintain a Paying Agent in each Place of Payment for such series and, if
Subordinated Debt Securities of a series are issuable as Bearer Securities,
the Company will be required to maintain (i) a Paying Agent in each Place of
Payment for such series in the United States for payments with respect to any
Registered Securities of such series (and for payments with respect to Bearer
Securities of such series in the circumstances described above, but not
otherwise), (ii) a Paying Agent in each Place of Payment located outside the
United States where Subordinated Debt Securities of such series and any
coupons appertaining thereto may be presented and surrendered for payment;
provided that if the Subordinated Debt Securities of such series are listed on
The International Stock Exchange, London or the Luxembourg Stock Exchange or
any other stock exchange located outside the United States and such stock
exchange shall so require, the Company will maintain a Paying Agent in London
or Luxembourg City or any other required city located outside the United
States, as the case may be, for Subordinated Debt Securities of such series,
and (iii) a Paying Agent in each Place of Payment located outside the United
States where (subject to applicable laws and regulations) Registered
Securities of such series may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company may be served
All monies paid by the Company to a Paying Agent for the payment of
principal of and any interest on any Subordinated Debt Security that remains
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and thereafter
the holder of such Subordinated Debt Security or any coupon appertaining
thereto will look only to the Company for payment thereof.
GLOBAL SECURITIES
The Subordinated Debt Securities of a series may be issued in whole or in
part in the form of one or more Global Securities that will be deposited with,
or on behalf of, a depository (the "Depository") identified in the Prospectus
Supplement relating to such series. Global Securities may be issued only in
fully registered form and may be issued in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual
Subordinated Debt Securities represented thereby, a Global Security may not be
transferred except
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as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee of such
Depository to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series of
Subordinated Debt Securities will be described in the Prospectus Supplement
relating to such series. The Company anticipates that the following provisions
will generally apply to depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and
transfer system the respective principal amounts of the individual
Subordinated Debt Securities represented by such Global Security to the
accounts of persons that have accounts with such Depository ("Participants").
Such accounts shall be designated by the underwriters, dealers or agents with
respect to such Subordinated Debt Securities or by the Company if such
Subordinated Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Security will be limited to
Participants or persons that may hold interest through Participants. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of that ownership will be effected only through, records maintained
by the applicable Depository or its nominee (with respect to interests of
Participants) and records of Participants (with respect to interests of person
who hold through Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
pledge or transfer beneficial interest in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the
Subordinated Debt Securities represented by such Global Security for all
purposes under the Subordinated Indenture. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Subordinated Debt Securities of the series represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Subordinated Debt Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the Subordinated Indenture.
Payments of principal of and any premium and any interest on individual
Subordinated Debt Securities represented by a Global Security registered in
the name of a Depository or its nominee will be made to the Depository or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Subordinated Debt Securities. None of the Company, the
Trustee, any Paying Agent or the Security Registrar for such Subordinated Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interest in Global Security for such Subordinated Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depository for a series of Subordinated Debt
Securities or its nominee, upon receipt of any payment of principal, premium
or interest in respect of a permanent Global Security representing any of such
Subordinated Debt Securities, immediately will credit Participants' accounts
with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security for such
Subordinated Debt Securities as shown on the records of such Depository or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name." Such payments will be the responsibility of such
Participants.
If a Depository for a series of Subordinated Debt Securities is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the Company within 90 days, the Company will
issue individual Subordinated Debt Securities of such series in exchange for
the Global Security representing
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such series of Subordinated Debt Securities. In addition, the Company may, at
any time and in its sole discretion, subject to any limitations described in
the Prospectus Supplement relating to such Subordinated Debt Securities,
determine not to have any Subordinated Debt Securities of such series
represented by one or more Global Securities and, in such event, will issue
individual Subordinated Debt Securities of such series in exchange for the
Global Security or Securities representing such series of Subordinated Debt
Securities. Individual Subordinated Debt Securities of such series so issued
will be issued in denominations, unless otherwise specified by the Company, of
$1,000 and integral multiples thereof.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Securities may not be offered, sold, resold or delivered in connection with
their original issuance in the United States or to United States persons (each
as defined below) other than to a Qualifying Branch of a United States
Financial Institution (as defined below), and any underwriters, agents and
dealers participating in the offering of Subordinated Debt Securities must
agree that they will not offer any Bearer Securities for sale or resale in the
United States or to United States persons (other than a Qualifying Branch of a
United States Financial Institution) nor deliver Bearer Securities within the
United States. In addition, any such underwriters, agents and dealers must
agree to send confirmations to each purchaser of a Bearer Security confirming
that such purchaser represents that it is not a United States person or is a
Qualifying Branch of a United States Financial Institution and, if such person
is a dealer, that it will send similar confirmations to purchasers from it.
The term "Qualifying Foreign Branch of a United States Financial Institution"
means a branch located outside the United States of a United States securities
clearing organization, bank or other financial institution listed under
Treasury Regulation Section 1.165-12(c)(1)(v) that agrees to comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Code and the
regulations thereunder.
Bearer Securities and any coupons appertaining thereto will bear a legend
substantially to the following effect: "Any United States person who holds
this obligation will be subject to limitations under the United States income
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of
the Internal Revenue Code." Under Sections 165(j) and 1287(a) of the Code,
holders that are United States persons, with certain exceptions, will not be
entitled to deduct any loss on Bearer Securities and must treat as ordinary
income any gain realized on the sale or other disposition (including the
receipt of principal) of Bearer Securities.
The term "United States person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or of any political subdivision thereof,
an estate or, for taxable years beginning before January 1, 1997, a trust the
income of which is subject to United States federal income taxation regardless
of its source or, for taxable years beginning after December 31, 1996, a trust
if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more U.S. fiduciaries have the
authority to control all substantial decisions of the trust, and the term
"United States" means the United States of America (including the states and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction (including the Commonwealth of Puerto Rico).
DEFEASANCE
The Subordinated Indenture provides that the Company will be discharged from
any and all obligations in respect of the Subordinated Debt Securities of any
series (except for certain obligations to register the transfer or exchange of
Subordinated Debt Securities of such series, to replace stolen, lost or
mutilated Subordinated Debt Securities of such series, to maintain paying
agencies and to hold monies for payment in trust) upon the deposit with the
Trustee for such series of Subordinated Debt Securities in trust of money
and/or U.S. Government Obligations (as defined below) which through the
payment of interest and principal in respect thereof in accordance with their
terms will provide money in an amount sufficient to pay the principal of and
each installment of interest, if any, on the Subordinated Debt Securities of
such series on the maturity of such payments in accordance with the terms of
the Indenture and the Subordinated Debt Securities of such series. Such a
trust may only be established if, among other things, the Company has
delivered to such Trustee an Opinion of Counsel (who may be counsel for the
Company) of the effect that (i) holders of the Subordinated Debt Securities of
such series will not recognize income, gain or loss for federal income tax
purposes as a result
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of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amounts and in the same manner and at the same times,
as would has been the case if such deposit, defeasance and discharge had not
occurred, and (ii) the Subordinated Debt Securities of such series, if then
listed on The New York Stock Exchange, will not be delisted as a result of
such deposit, defeasance and discharge.
The Subordinated Indenture provides that, if applicable, the Company may
omit to comply with any additional restrictive covenants imposed on the
Company in connection with the establishment of any series of Subordinated
Debt Securities and that clause (d) under "Events of Default" with respect to
such restrictive covenants and clause (e) under "Events of Default" shall not
be deemed to be an Event of Default under the Subordinated Indenture and the
Subordinated Debt Securities of any series, upon the deposit with the Trustee
under the Subordinated Indenture, in trust of money and/or U.S. Government
Obligations which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal of, and each installment of interest, if any,
on the Subordinated Debt Securities of such series on the maturity of such
payments in accordance with the terms of the Subordinated Indenture and the
Subordinated Debt Securities of such series. The obligations of the Company
under the Subordinated Indenture and the Subordinated Debt Securities of such
series other than with respect to the covenants referred to above and the
Events of Default other than the Events of Default referred to above shall
remain in full force and effect. Such a trust may only be established if,
among other things, the Company has delivered to the Trustee an Opinion of
Counsel (who may be counsel for the Company) to the effect that (i) the
holders of the Subordinated Debt Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit and defeasance of certain covenants and Events of Default and will be
subject to federal income tax on the same amounts and in the same manner and
at the same times, as would have been the case if such deposit and defeasance
had not occurred, and (ii) the Subordinated Debt Securities of such series, if
then listed on The New York Stock Exchange, will not be delisted as a result
of such deposit and defeasance.
In the event the Company exercises its option to omit compliance with
certain covenants of the Subordinated Indenture with respect to the
Subordinated Debt Securities of any series as described above and the
Subordinated Debt Securities of such series are declared due and payable
because of the occurrence of any Event of Default other than an Event of
Default described in clauses (d) or (e) under "Events of Default," the amount
of money and U.S. Government Obligations on deposit with the Trustee will be
sufficient to pay amounts due on the Subordinated Debt Securities of such
series at the time of their stated maturity but may not be sufficient to pay
amounts due on the Subordinated Debt Securities of such series at the time of
the acceleration resulting from such Event of Default. However, the Company
will remain liable for such payments.
The term "U.S. Government Obligation" means direct noncallable obligations
of, or noncallable obligations guaranteed by, the United States or an agency
thereof for the payment of which guarantee or obligation, the full faith and
credit of the United States is pledged.
MODIFICATION OF THE SUBORDINATED INDENTURE
The Subordinated Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of a majority of the principal
amount of the Subordinated Debt Securities of each series then outstanding, to
execute supplemental indentures adding any provisions to or changing or
eliminating any of the provisions of the Subordinated Indenture or modifying
the rights of the holders of the Subordinated Debt Securities of such series,
except that no such supplemental indenture may, among other things, (i) extend
the final maturity of any Subordinated Debt Securities, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof, impair the right to institute suit for payment thereof or reduce any
amount payable upon any redemption thereof without the consent of the holder
of the Subordinated Debt Security so affected, or (ii) reduce the aforesaid
percentage of Subordinated Debt Securities, the consent of the holders of
which is required for any such supplemental indenture, without the consent of
the holders of all outstanding Subordinated Debt Securities. The Board of
Directors of the Company does not have the power to waive any of the covenants
of the Subordinated Indenture including those relating to consolidation,
merger or sale of assets.
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EVENTS OF DEFAULT
An Event of Default with respect to any series of Subordinated Debt
Securities is defined in the Subordinated Indenture as being: (a) default by
the Company for 30 days in the payment of any installment of interest on the
Subordinated Debt Securities of such series; (b) default by the Company in the
payment of any principal on the Subordinated Debt Securities of such series;
(c) default by the Company in the payment of any sinking fund installment with
respect to such series of Subordinated Debt Securities; (d) default by the
Company in the performance of any of the agreements in the Subordinated
Indenture contained therein for the benefit of the Debt Securities of such
series which shall not have been remedied within a period of 60 days after
receipt of written notice by the Company from the Trustee for such series of
Subordinated Debt Securities or by the Company and such Trustee from the
holders of not less than 25% in principal amount of the Subordinated Debt
Securities of such series then outstanding; (e) with respect to any series of
Subordinated Debt Securities (unless otherwise specified in the accompanying
Prospectus Supplement), the acceleration, or failure to pay at maturity, of
any indebtedness for money borrowed of the Company exceeding $20,000,000 in
principal amount, which acceleration is not rescinded or annulled or
indebtedness paid within 15 days after the date on which written notice
thereof shall have first been given to the Company as provided in the
Subordinated Indenture; (f) certain events of bankruptcy, insolvency or
reorganization of the Company; or (g) any other Event of Default established
in accordance with the Subordinated Indenture with respect to any series of
Subordinated Debt Securities. No Event of Default (other than an Event of
Default under clause (f)) described above with respect to a particular series
of Subordinated Debt Securities necessarily constitutes an Event of Default
with respect to any other series of Subordinated Debt Securities.
The Subordinated Indenture provides that if an Event of Default with respect
to any series of Subordinated Debt Securities shall have occurred and be
continuing, either the Trustee with respect to the Subordinated Debt
Securities of that series or the holders of at least 25% in aggregate
principal amount of Subordinated Debt Securities of that series then
outstanding may declare the principal amount (or, if the Subordinated Debt
Securities of that series were sold at an original issue discount, such
portion of the principal amount as may be specified in the terms of that
series) of all the Subordinated Debt Securities of that series and interest,
if any, accrued thereon to be due and payable immediately, but upon certain
conditions such declaration may be annulled and past defaults (except, unless
theretofore cured, a default in payment of principal of or interest on
Subordinated Debt Securities of that series) may be waived by the holders of a
majority in principal amount of the Subordinated Debt Securities of that
series then outstanding.
The Subordinated Indenture contains a provision entitling the Trustee with
respect to any series of Subordinated Debt Securities, subject to the duty of
the Trustee during default to act with the required standard of care, to be
indemnified by the holders of Subordinated Debt Securities of such series
before proceeding to exercise any right or power under the Subordinated
Indenture at the request of the holders of such Subordinated Debt Securities.
The Subordinated Indenture also provides that the holders of a majority in
principal amount of the outstanding Subordinated Debt Securities of any series
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee for such series of Subordinated Debt
Securities, or exercising any trust or power conferred on such Trustee, with
respect to the Subordinated Debt Securities of such series. The Subordinated
Indenture contains a covenant that the Company will file annually with the
Trustee a certificate as to the absence of any default or specifying any
default that exists.
No holder of any Subordinated Debt Security of any series will have any
right to institute any proceeding with respect to the Subordinated Indenture
or for any remedy thereunder, unless such holder shall have previously given
the Trustee for such series of Subordinated Debt Securities written notice of
an Event of Default with respect to Subordinated Debt Securities of that
series and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Subordinated Debt Securities of that series shall
have made written request, and offered reasonable indemnity, to such Trustee
to institute such proceeding as trustee, and such Trustee shall not have
received from the holders of a majority in aggregate principal amount of the
outstanding Subordinated Debt Securities of that series a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, any right of a holder of any Subordinated
Debt Security to receive payment
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of the principal of and any interest on such Subordinated Debt Security on or
after the due dates expressed in such Subordinated Debt Security and to
institute suit for the enforcement of any such payment on or after such dates
shall not be impaired or affected without the consent of such holder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company covenants that it will not merge or consolidate with any other
corporation or sell or convey all or substantially all of its assets to any
Person, unless (i) either the Company shall be the continuing corporation, or
the successor corporation or the Person which acquires by sale or conveyance
substantially all of the assets of the Company (if other than the Company)
shall be a corporation organized under the laws of the United States or any
state thereof and shall expressly assume the due and punctual payment of the
principal of and interest on all the Subordinated Debt Securities, according
to their tenor, and the due and punctual performance and observance of all of
the covenants and conditions of the Subordinated Indenture to be performed or
observed by the Company, by supplemental indenture satisfactory to the
Trustee, executed and delivered to the Trustee by such corporation, and (ii)
the Company or such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale or conveyance, be
in default in the performance of any such covenants or condition.
Other than the covenants described above, or as set forth in any
accompanying Prospectus Supplement, the Subordinated Indenture and the
Subordinated Debt Securities do not contain any covenants or other provisions
designed to afford holders of the Subordinated Debt Securities protection in
the event of a takeover, recapitalization or highly leveraged transaction
involving the Company.
NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Subordinated Debt Securities or the
Subordinated Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each holder of Debt Securities by
accepting such Subordinated Debt Security waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Debt Securities.
THE TRUSTEE
The Trustee in its individual or any other capacity may become the owner or
pledgee of Subordinated Debt Securities and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
the Trustee provided it complies with the terms of the Subordinated Indenture.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue up to 12,500,000 shares of Preferred
Stock, without par value, in one or more series. All shares of Preferred
Stock, irrespective of series, constitute one and the same class. The
following description of the terms of the Preferred Stock sets forth certain
general terms and provisions of the Preferred Stock. Certain terms of any
series of Preferred Stock offered by the Prospectus Supplement will be
described in the Prospectus Supplement relating to such series of Preferred
Stock. If so indicated in the Prospectus Supplement, the terms of any such
series may differ from the terms set forth below. The Company has outstanding
750 shares each of Money Market Cumulative PreferredTM Stock, Series E and
Series F with a liquidation preference of $100,000 per share.
21
<PAGE>
GENERAL
The Board of Directors is authorized to establish and designate series and
to fix the number of shares and the relative rights, preferences and
limitations of the respective series of Preferred Stock including: (1) the
designation and number of shares comprising such series, which may be
increased or decreased from time to time by the Board of Directors; (2) the
dividend rate or rates on the shares of such series and the relation which
such dividends bear to the dividends payable on any other class or classes or
of any other series of capital stock, the terms and conditions upon which and
the periods in respect of which dividends shall be payable, whether and upon
what conditions such dividends shall be cumulative and, if cumulative the
dates from which dividends shall accumulate; (3) whether the shares of such
series shall be redeemable, the limitations and restrictions with respect to
such redemption, the time or times when, the price or prices at which and the
manner in which such shares shall be redeemable, including the manner of
selecting shares of such series for redemption if less than all shares are to
be redeemed; (4) the rights to which the holders of shares of such series
shall be entitled, and the preferences, if any, over any other series (or of
any other series over such series), upon the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of the Company,
which rights may vary depending on whether such liquidation, dissolution,
distribution or winding-up is voluntary or involuntary, and, if voluntary, may
vary at different dates; (5) whether the shares of such series shall be
subject to the operation of a purchase, retirement or sinking fund, and, if
so, whether and upon what conditions such purchase, retirement or sinking fund
shall be cumulative or noncumulative, the extent to which and the manner in
which such fund shall be applied to the purchase or redemption of the shares
of such series for retirement or to other corporate purposes and the terms and
provisions relative to the operation thereof; (6) whether the shares of such
series shall be convertible into or exchangeable for shares of any other class
or classes or of any other series of any class or classes of capital stock of
the Company, and, if so convertible or exchangeable, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of such conversion or
exchange; (7) the voting powers, full and/or limited, if any, of the shares of
such series; and whether and under what conditions the shares of such series
(alone or together with the shares of one or more other series having similar
provisions) shall be entitled to vote separately as a single class, for the
election of one or more additional directors of the Company in case of
dividend arrearages or other specified events, or upon other matters; (8)
whether the issuance of any additional shares of such series, or of any shares
of any other series, shall be subject to restrictions as to issuance, or as to
the powers, preferences or rights of any such other series; and (9) any other
preferences, privileges and powers, and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions of such
series, as the Board of Directors may deem advisable. Unless otherwise
specifically set forth in the Prospectus Supplement relating to a series of
Preferred Stock, all shares of Preferred Stock shall be equal rank, preference
and priority as to dividends; when the stated dividends are not paid in full,
the shares of all series of the Preferred Stock shall share ratably in any
payment thereof; and upon liquidation, dissolution or winding up, if assets
are insufficient to pay in full all Preferred Stock, then such assets shall be
distributed among the holders ratably.
Because the Company is a holding company, the right of the Company, and
hence the rights of creditors and shareholders of the Company, to participate
in any distribution of assets of any subsidiary upon its liquidation or
reorganization or otherwise is accordingly subject to prior claims of
creditors of the subsidiary and (in the case of an insurance subsidiary) its
policyholders, except to the extent that claims of the Company itself as a
creditor of the subsidiary may be recognized. The subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise,
to pay dividends on the Preferred Stock or to make any funds available
therefor, whether by dividends, loans or other payments. The payment of
dividends or the making of loans and advances to the Company by its
subsidiaries may be subject to statutory or regulatory restrictions, are
contingent upon the earnings of those subsidiaries and are subject to
insurance regulation and various business considerations.
The description of certain provisions of the Preferred Stock set forth below
does not purport to be complete and is subject to and qualified in its
entirety by reference to the Restated Certificate of Incorporation and the
Certificate of Designations that relates to a particular series of Preferred
Stock which will be filed with the Commission at or prior to the time of the
sale of the related Preferred Stock.
22
<PAGE>
DIVIDEND RIGHTS
Except as may be set forth in the Prospectus Supplement relating to a series
of Preferred Stock, the holders of Preferred Stock shall be entitled to
receive, but only when and as declared by the Board of Directors out of funds
legally available for that purpose, cash dividends at the rates and on the
dates set forth in the Prospectus Supplement relating to a particular series
of Preferred Stock. Such rate may be fixed or variable. Each such dividend
will be payable to the holders of record as they appear on the stock books of
the Company on such record dates as will be fixed by the Board of Directors of
the Company or a duly authorized committee thereof. Dividends payable on the
Preferred Stock for any period less than a full dividend period (being the
period between such dividend payment dates) will be computed on the bases of
the actual number of days elapsed over a 360 day year and for a period of a
full dividend period, will be computed on the basis of a 360 day year
consisting of twelve 30 day months. Except as may be set forth in the
Prospectus Supplement relating to a series of Preferred Stock, such dividends
shall be payable from, and shall be cumulative from, the date of original
issue of each share, so that if in any dividend period dividends at the rate
or rates as described in the Prospectus Supplement relating to such series of
Preferred Stock shall not have been declared and paid or set apart for payment
on all outstanding shares of Preferred Stock for such dividend period and all
preceding dividend periods from and after the first day from which dividends
are cumulative, then the aggregate deficiency shall be declared and fully paid
or set apart for payment, but without interest, before any dividends shall be
declared or paid or set apart for payment on the Common Stock by the Company.
After payment in full of all dividend arrearages on the Preferred Stock,
dividends on the Common Stock may be declared and paid out of funds legally
available for that purpose as the Board of Directors may determine.
REDEMPTION
The Company will have such rights, if any, to redeem shares of Preferred
Stock, and the holders of Preferred Stock will have such rights, if any, to
cause the Company to redeem shares of Preferred Stock, as may be set forth in
the Prospectus Supplement relating to a series of Preferred Stock.
CONVERSION OR EXCHANGE
The holders of Preferred Stock will have such rights, if any, to convert
such shares into or to exchange such shares for, shares of any other class or
classes, or of any other series of any class, of the capital stock of the
Company and/or other property or cash, as may be set forth in the Prospectus
Supplement relating to a series of Preferred Stock.
VOTING RIGHTS
The holders of Preferred Stock will have such voting rights, if any, as may
be set forth in the Prospectus Supplement relating to a series of Preferred
Stock. Unless and except to the extent required by law or provided by the
Board of Directors, holders of Preferred Stock shall have no voting power with
respect to any matter. In no event shall the Preferred Stock be entitled to
more than one vote per share in respect of each share of stock.
The holders of the outstanding shares of a series of Preferred Stock shall
be entitled to vote as a class upon a proposed amendment, whether or not
entitled to vote thereon by the Restated Certificate of Incorporation if the
amendment would increase or decrease the aggregate number of authorized shares
of such series of Preferred Stock, increase or decrease the par value of the
shares of such series of Preferred Stock, or alter or change the powers,
preferences, or special rights of the shares of such series of Preferred Stock
so as to affect them adversely. If any proposed amendment would alter or
change the powers, preferences, or special rights of oneor more series of
Preferred Stock so as to affect them adversely, but shall not so affect the
entire series, then only the shares of the series so affected by the amendment
shall be considered a separate series for purposes of this paragraph. The
number of authorized shares of any such series of Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the stock
of the Company entitled to vote irrespective of the previous two sentences, if
so provided
23
<PAGE>
in the Restated Certificate of Incorporation, in any amendment thereto which
created such series of Preferred Stock or which was adopted prior to the
issuance of any shares of any such series of Preferred Stock, or in any
amendment thereto which was authorized by a resolution or resolutions adopted
by the affirmative vote of the holders of a majority of such series of
Preferred Stock. This paragraph reflects legal requirements under current
Delaware law and is subject to any amendments to such law.
The foregoing voting provisions will not apply if, in connection with the
matters specified, provision is made for the redemption or retirement of all
outstanding Preferred Stock.
LIQUIDATION RIGHTS
Upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, holders of Preferred Stock will have such
preferences and priorities, if any, with respect to distribution of the assets
of the Company or the proceeds thereof as may be set forth in the Prospectus
Supplement relating to a series of Preferred Stock.
MISCELLANEOUS
The transfer agent, dividend disbursing agent and registrar for the
Preferred Stock issued in connection with the Prospectus will be as set forth
in the Prospectus Supplement. The holder of Preferred Stock, including any
Preferred Stock issued in connection with this Prospectus, will not have any
preemptive rights to purchase or subscribe for any shares of any class or
other securities of any type of the Company. When issued, the Preferred Stock
will be fully paid and nonassessable. The Certificate of Designations setting
forth the provisions of each series of Preferred Stock will become effective
after the date of this Prospectus but on or before issuance of the related
series of Preferred Stock.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities: (i) through underwriters or
dealers; (ii) through agents; (iii) directly to one or more purchasers; or
(iv) through a combination of any such method of sale. The Prospectus
Supplement with respect to the Offered Securities will set forth the terms of
the offering of such Offered Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of such Offered Securities
and the proceeds to the Company from such sale, any underwriter discounts and
other items constituting compensation to underwriters, dealers or agents, any
initial public offering price, any discounts or concessions allowed or
reallowed or paid by underwriters or dealers to other dealers and any
securities exchanges on which such Offered Securities may be listed.
If underwriters or dealers are used in the sale, the Offered Securities will
be acquired by the underwriters or dealers for their own accounts and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price, which may be changed, or at
varying prices determined at the time of sale. The Offered Securities may be
offered to the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more of such firms.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase such Offered Securities will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all of such Offered Securities if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers, or agents to solicit offers by certain specified
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for
24
<PAGE>
solicitation of such contracts. The underwriters and other persons soliciting
such contracts will have no responsibility for the validity of any such
contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution by the Company to payments they may be required to make in
respect thereof. Underwriters, dealers and agents may be customers of, engage
in transactions with, or perform services for the Company in the ordinary
course of business.
There is currently no market for the Securities. If the Securities are
traded after the initial issuance, they may trade at a discount from their
initial offering price, depending upon prevailing interest rates, the market
for similar securities and other factors. While it is possible that an
underwriter could inform the Company that it intended to make a market in the
Securities, such underwriter would not be obligated to do so, and any such
market making could be discontinued at any time without notice. Therefore, no
assurance can be given as to whether an active trading market will develop for
the Securities. Unless otherwise indicated in the applicable Prospectus
Supplement, the Company does not intend to apply for listing of the Securities
on any securities exchange or on the National Association of Securities
Dealers, Inc. automated quotation system.
LEGAL MATTERS
The validity of the issuance of the Securities and certain other legal
matters in connection with the securities offered hereby will be passed upon
for the Company by Donald M. Lowry, Senior Vice President, Secretary and
General Counsel of the Company and by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedules incorporated by reference in this Prospectus from the
Company's Annual Report on Form 10-K have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports which have been
incorporated herein by reference and have been so incorporated in reliance
upon the reports of such firm given on their authority as experts in
accounting and auditing.
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
Securities being registered, other than underwriting discounts and
commissions, are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $227,273
Legal fees and expenses......................................... 25,000
Accounting fees and expenses.................................... 30,000
Printing and engraving expenses................................. 45,000
Trustees' fees and expenses..................................... 2,500
Rating agencies fees............................................ 175,000
Miscellaneous expenses.......................................... 45,227
--------
Total....................................................... $550,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL") provides
in relevant part that "a corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful."
With respect to derivative actions, Section 145(b) of the DGCL provides in
relevant part that "[a] corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor . . . [by reason of the person's service in
one of the capacities specified in the preceding sentence] against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper."
Article Fourteenth of the Company's Certificate of Incorporation contains
provisions similar to Section 145 of the DGCL. See also the undertakings set
out in response to Item 17 herein.
ITEM 16. EXHIBITS.
A list of exhibits filed herewith precedes such exhibits and is incorporated
herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
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<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1993, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) That, for purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(6) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be in the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant, pursuant to the provisions referred to in Item 15, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such idemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for idemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
II-2
<PAGE>
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such idemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE CITY OF CHICAGO, STATE OF ILLINOIS, ON AUGUST 15, 1997.
CNA FINANCIAL CORPORATION
/s/ Donald M. Lowry
By: _________________________________
Donald M. Lowry
Senior Vice President, Secretary
and General Counsel
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
hereby constitutes and appoints Donald M. Lowry and Patricia L. Kubera and each
of them, the true and lawful attorneys-in-fact and agents of the undersigned,
with full power of substitution and resubstitution, for and in the name, place
and stead of the undersigned, in any and all capabilities, to sign any and all
amendments (including post-effective amendments, and other documents in
connection therewith) with the Securities and Exchange Commission and other
regulatory authority, and hereby grants to such attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done, as fully to all intents and
purposes as the undersigned might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes, may lawfully do or cause to be done by virtue hereof. This
Power of Attorney may be signed in one or more counterparts.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON THE 15TH DAY OF AUGUST, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Laurence A. Tisch Chief Executive Officer and Director
___________________________________________
Laurence A. Tisch
/s/ Patricia L. Kubera Group Vice President and Controller
___________________________________________ (Principal Accounting Officer and Acting
Patricia L. Kubera Chief Financial Officer)
/s/ Antoinette Cook Bush Director
___________________________________________
Antoinette Cook Bush
/s/ Dennis H. Chookaszian Director
___________________________________________
Dennis H. Chookaszian
/s/ Philip L. Engel Director
___________________________________________
Philip L. Engel
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Robert P. Gwinn Director
___________________________________________
Robert P. Gwinn
/s/ Walter F. Mondale Director
___________________________________________
Walter F. Mondale
/s/ Edward J. Noha Director
___________________________________________
Edward J. Noha
/s/ Joseph Rosenberg Director
___________________________________________
Joseph Rosenberg
/s/ Richard L. Thomas Director
___________________________________________
Richard L. Thomas
/s/ James S. Tisch Director
___________________________________________
James S. Tisch
/s/ Preston Robert Tisch Director
___________________________________________
Preston Robert Tisch
/s/ Marvin Zonis Director
___________________________________________
Marvin Zonis
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
------- ----------- ----
<C> <S> <C>
4.1 Senior Debt Indenture between the Company and The First
National Bank of Chicago, a national banking association, as
Trustee (incorporated by reference to Exhibit 4.1 of the
Company's registration statement on Form S-3 (File No. 33-
35250))
4.2 Form of First Supplemental Indenture to the Senior Indenture
between the Company and The First National Bank of Chicago, a
national banking association, as Trustee (incorporated by
reference to Exhibit 4.2 of the Company's registration
statement on Form S-3 (File No. 33-50753))
4.3 Form of Subordinated Indenture between the Company and The
First National Bank of Chicago, a national banking
association, as Trustee (incorporated by reference to Exhibit
4.3 of the Company's registration statement on Form S-3 (File
No. 33-50753))
4.4 Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1987)
4.5 By-Laws of the Company (incorporated herein by reference to
Exhibit 3.2 of the Company's Annual Report on Form 10-K for
the year ended December 31, 1996)
5.1 Opinion and consent of Donald M. Lowry, Senior Vice President,
Secretary and General Counsel of the Company..................
23.1 Consent of Deloitte & Touche LLP...............................
23.2 Consent of Donald M. Lowry, Senior Vice President, Secretary
and General Counsel of the Company (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page to the
Registration Statement)
25.1 Statement of Eligibility on Form T-1 of The First National Bank
of Chicago, a national banking association, to act as Trustee
under the Senior Indenture....................................
25.2 Statement of Eligibility on Form T-1 of The First National Bank
of Chicago, a national banking association, to act as Trustee
under the Subordinated Indenture..............................
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD CNA FINANCIAL CORPORATION]
CNA Financial Corporation
CNA Plaza
Chicago, Illinois 60685
Re: Validity of Certain Debt Securities and Preferred Stock
Gentlemen:
I am providing this opinion as Senior Vice President, Secretary and General
Counsel of CNA Financial Corporation, a Delaware corporation (the "Company"), in
connection with the preparation and filing of a Registration Statement on
Form S-3 with the Securities and Exchange Commission on August , 1997 (the
"Registration Statement") under the Securities Act of 1933, as amended, relating
to the issuance and sale of up to $1,000,000,000 of one or more series of the
Company's unsecured debt securities (the "Debt Securities") or shares of
preferred stock ("Preferred Stock," and together with the Debt Securities, the
"Securities"). The Debt Securities may evidence either senior indebtedness (the
"Senior Debt Securities") or subordinated indebtedness (the "Subordinated Debt
Securities"). The Senior Debt Securities, the Subordinated Debt Securities and
the Preferred Stock may be offered as separate series in amounts, at prices and
on terms to be determined at the time of sale. The Debt Securities maybe offered
in one or more series with the same or various maturities, at par or with an
original issue discount and may be denominated either in U.S. dollars or foreign
currencies, including European Currency Units.
In connection with the foregoing, I have examined the minute books and stock
records of the Company; the Certificate of Incorporation and By-Laws of the
Company; the Registration Statement; resolutions duly adopted by the Board of
Directors of the Company relating to the authorization and proposed issuance of
the Senior Debt Securities, the Subordinated Debt Securities and the Preferred
Stock; the Indenture, dated March 1, 1991, the First Supplemental Indenture
between the Company and The First National Bank of Chicago (the "Bank"), as
trustee, dated as of October 15, 1993, and the Subordinated Indenture between
the Company and the Bank. The Senior Indenture and the Subordinated Indenture
are sometimes referred to collectively as the "Indentures" and individually as
an applicable Indenture. Capitalized terms not otherwise defined in this
opinion are used with the same meaning as when used in the Registration
Statement.
In addition, I have reviewed such other documents and instruments and have
conferred with officers and directors of the Company and have ascertained or
verified to my satisfaction such additional facts with respect to the Company as
I have deemed necessary or appropriate for the purposes of rendering this
opinion.
[CNA LETTERHEAD]
<PAGE>
I am a member of the Bar of the States of Illinois and Wisconsin and do not
express any opinion as to any matters governed by any laws other than the laws
of Illinois, the General Corporation Law of the State of Delaware and the
federal law of the United States.
Based upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; and
2. When (a) the Registration Statement shall have become effective under the
Securities Act of 1933, as amended (the "Act"), and the Senior Debt
Securities, the Subordinated Debt Securities and Preferred Stock have been
registered under the Act, (b) the applicable Indenture to which a series of
Debt Securities are to be issued has been qualified under the Trust
Indenture Act of 1939, as amended, and duly executed and delivered by the
Company and the Bank, (c) all actions specified in the applicable Indenture
for the establishment of such series of Debt Securities and of the terms of
each Debt Security of such series have been taken and (d) the Debt
Securities of such series have been duly executed by the Company,
authenticated by the Trustee under the applicable Indenture and issued and
delivered in the manner set forth in the Prospectus and any Prospectus
Supplement relating to such series of Debt Securities against payment
therefor, (i) the Debt Securities will constitute duly authorized, validly
issued and binding obligations of the Company enforceable in accordance with
their terms and entitled to the benefits provided by the applicable
Indenture, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally and subject to general principles of equity, and (ii) any
Preferred Stock issued and delivered in accordance with the Registration
Statement, the Prospectus and any applicable Prospectus Supplement will
constitute duly authorized, validly issued, fully paid and nonassessable
shares of Preferred Stock of the Company.
I hereby consent to the filing of this opinion by the Company as an Exhibit to
the Registration Statement and to the reference to my name under the caption
"Legal Matter" in the Prospectus constituting a part thereof, as originally
filed or as subsequently amended or supplemented. This consent is not to be
construed as an admission that I am a person whose consent is required to be
filed with the Registration Statement under the Securities Act of 1933, as
amended.
Very truly yours,
/s/ Donald M. Lowry
Donald M. Lowry
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
CNA Financial Corporation and subsidiaries on Form S-3 of our reports dated
February 12, 1997, appearing in or incorporated by reference in the Annual
Report on Form 10-K of CNA Financial Corporation and subsidiaries for the year
ended December 31, 1996 and to the reference to us under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Chicago, Illinois
August 15, 1997
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
-----------------------------------
CNA Financial Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-6169860
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
CNA Plaza
Chicago, Illinois 60685
(Address of principal executive offices) (Zip Code)
Senior Debentures
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
2
<PAGE>
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this Statement of Eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of Chicago
and the State of Illinois, on this 15th day of August, 1997.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
Richard D. Manella
Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica, Inc., filed with the Securities and Exchange Commission on October
25, 1996 (Registration No. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
August 15, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between CNA Financial
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
Very truly yours,
The First National Bank of Chicago
By /s/ Richard D. Manella
Richard D. Manella
Vice President
4
<PAGE>
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C400
Dollar Amounts in ------------
Thousands RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................. 0081 3,871,170 1.a.
b. Interest-bearing balances(2)........................................... 0071 6,498,314 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A).............. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........... 1773 3,901,208 2.b.
3. Federal funds sold and securities purchased under agreements to resell.... 1350 4,612,975 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C).......... RCFD 2122 23,345,201 4.a.
b. LESS: Allowance for loan and lease losses.............................. RCFD 3123 420,963 4.b.
c. LESS: Allocated transfer risk reserve.................................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and reserve (item
4.a minus 4.b and 4.c)................................................. 2125 22,924,238 4.d.
5. Trading assets (from Schedule RD-D)....................................... 3545 8,792,158 5.
6. Premises and fixed assets (including capitalized leases).................. 2145 706,928 6.
7. Other real estate owned (from Schedule RC-M).............................. 2150 6,563 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)............................................................ 2130 61,551 8.
9. Customers' liability to this bank on acceptances outstanding.............. 2155 488,866 9.
10. Intangible assets (from Schedule RC-M).................................... 2143 291,569 10.
11. Other assets (from Schedule RC-F)......................................... 2160 1,775,283 11.
12. Total assets (sum of items 1 through 11).................................. 2170 53,930,823 12.
</TABLE>
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
Schedule RC-Continued
Dollar Amounts in
Thousands Bil Mil Thou
-------------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)................................. RCON 2200 21,550,056 13.a.
(1) Noninterest-bearing(1................................... RCON 6631 8,895,137 13.a.1
(2) Interest-bearing........................................ RCON 6636 12,654,919 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II).......................... RCFN 2200 12,364,650 13.b.
(1) Noninterest bearing..................................... RCFN 6631 287,496 13.b.1
(2) Interest-bearing........................................ RCFN 6636 12,077,154 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase:................................................. RCFD 2800 3,817,421 14
15. a. Demand notes issued to the U.S. Treasury.................... RCON 2840 63,621 15.a.
b. Trading Liabilities (from Schedule RC-D).................... RCFD 3548 5,872,831 15b.
16. Other borrowed money:
a. With original maturity of one year or less.................. RCFD 2332 2,607,549 16.a.
b. With original maturity of more than one year................ RCFD 2333 322,414 16b.
17. Not applicable
18. Bank's liability on acceptance executed and outstanding........ RCFD 2920 488,866 18.
19. Subordinated notes and debentures.............................. RCFD 3200 1,550,000 19.
20. Other liabilities (from Schedule RC-G)......................... RCFD 2930 1,196,229 20.
21. Total liabilities (sum of items 13 through 20)................. RCFD 2948 49,833,637 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................. RCFD 3838 0 23.
24. Common stock................................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)....... RCFD 3839 2,944,244 25.
26. a. Undivided profits and capital reserves...................... RCFD 3632 954,885 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................. RCFD 8434 (1,089) 26.b.
27. Cumulative foreign currency translation adjustments............ RCFD 3284 (1,712) 27.
28. Total equity capital (sum of items 23 through 27).............. RCFD 3210 4,097,186 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28).......................... RCFD 3300 53,930,823 29.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that Number
best describes the most comprehensive level of auditing work performed ---------------
for the bank by independent external auditors as of any date during 1996 ........ RCFD 6724 .... | 2 | M.1.
---------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4. = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- --------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
<PAGE>
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
-----------------------------------
CNA Financial Corporation
(Exact name of obligor as specified in its charter)
Delaware 36-6169860
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
CNA Plaza
Chicago, Illinois 60685
(Address of principal executive offices) (Zip Code)
Subordinated Debentures
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance
Corporation, Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
2
<PAGE>
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and the State
of Illinois, on this 15th day of August, 1997.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
Richard D. Manella
Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica, Inc., filed with the Securities and Exchange Commission on October
25, 1996 (Registration No. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
August 15, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between CNA Financial
Corporation and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
Very truly yours,
The First National Bank of Chicago
By /s/ Richard D. Manella
Richard D. Manella
Vice President
4
<PAGE>
EXHIBIT 7
Page RC-1
Legal Title of Bank: The First National Bank of Chicago
Address: One First National Plaza, Ste 0303
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Call Date: 03/31/97
ST-BK: 17-1630 FFIEC 031
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C400
Dollar Amounts in ------------
Thousands RCFD BIL MIL THOU
-------------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository
institutions (from Schedule RC-A):
a. Noninterest-bearing balances and
currency and coin(1)................ 0081 3,871,170 1.a.
b. Interest-bearing balances(2)........ 0071 6,498,314 1.b.
2. Securities
a. Held-to-maturity securities (from
Schedule RC-B, column A)............ 1754 0 2.a.
b. Available-for-sale securities (from
Schedule RC-B, column D)............ 1773 3,901,208 2.b.
3. Federal funds sold and securities
purchased under agreements to resell... 1350 4,612,975 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned
income (from Schedule RC-C)......... RCFD 2122 23,345,201 4.a.
b. LESS: Allowance for loan and lease
losses.............................. RCFD 3123 420,963 4.b.
c. LESS: Allocated transfer risk
reserve............................. RCFD 3128 0 4.c.
d. Loans and leases, net of unearned
income, allowance, and reserve
(item 4.a minus 4.b and 4.c)........ 2125 22,924,238 4.d.
5. Trading assets (from Schedule RD-D).... 3545 8,792,158 5.
6. Premises and fixed assets (including
capitalized leases).................... 2145 706,928 6.
7. Other real estate owned (from
Schedule RC-M)......................... 2150 6,563 7.
8. Investments in unconsolidated
subsidiaries and associated companies
(from Schedule RC-M)................... 2130 61,551 8.
9. Customers' liability to this bank on
acceptances outstanding................ 2155 488,866 9.
10. Intangible assets (from Schedule RC-M). 2143 291,569 10.
11. Other assets (from Schedule RC-F)...... 2160 1,775,283 11.
12. Total assets (sum of items 1 through
11).................................... 2170 53,930,823 12.
</TABLE>
- ------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Page RC-2
Address: One First National Plaza, Ste 0303
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Call Date: 03/31/97
ST-BK: 17-1630 FFIEC 031
Schedule RC-Continued
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands Bil Mil Thou
---------------------- ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and
C from Schedule RC-E, part 1)............................ RCON 2200 21,550,056 13.a.
(1) Noninterest-bearing(1)............................... RCON 6631 8,895,137 13.a.1
(2) Interest-bearing..................................... RCON 6636 12,654,919 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II)................... RCFN 2200 12,364,650 13.b.
(1) Noninterest bearing.................................. RCFN 6631 287,496 13.b.1
(2) Interest-bearing..................................... RCFN 6636 12,077,154 13.b.2
14. Federal funds purchased and securities sold under
agreements to repurchase:.................................... RCFD 2800 3,817,421 14
15. a. Demand notes issued to the U.S. Treasury................. RCON 2840 63,621 15.a.
b. Trading Liabilities (from Schedule RC-D)........................... RCFD 3548 5,872,831 15b.
16. Other borrowed money:
a. With original maturity of one year or less............... RCFD 2332 2,607,549 16.a.
b. With original maturity of more than one year............. RCFD 2333 322,414 16b.
17. Not applicable
18. Bank's liability on acceptance executed and outstanding...... RCFD 2920 488,866 18.
19. Subordinated notes and debentures............................ RCFD 3200 1,550,000 19.
20. Other liabilities (from Schedule RC-G)....................... RCFD 2930 1,196,229 20.
21. Total liabilities (sum of items 13 through 20)............... RCFD 2948 49,833,637 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................ RCFD 3838 0 23.
24. Common stock................................................. RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)..... RCFD 3839 2,944,244 25.
26. a. Undivided profits and capital reserves................... RCFD 3632 954,885 26.a.
b. Net unrealized holding gains (losses) on available-
for-sale securities...................................... RCFD 8434 (1,089) 26.b.
27. Cumulative foreign currency translation adjustments.......... RCFD 3284 (1,712) 27.
28. Total equity capital (sum of items 23 through 27)............ RCFD 3210 4,097,186 28.
29. Total liabilities, limited-life preferred stock, and
equity capital (sum of items 21, 22, and 28)................. RCFD 3300 53,930,823 29.
</TABLE>
<TABLE>
<S> <C> <C> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that Number
best describes the most comprehensive level of auditing work performed ---------------
for the bank by independent external auditors as of any date during 1996 ........ RCFD 6724 .... | 2 | M.1.
---------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
