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Registration No. 333-______
As filed with the Securities and Exchange Commission on December 24, 1998
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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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<S> <C>
CNA Financial Corporation CNA Financial Capital I
(Exact name of registrant as specified in its charter) CNA Financial Capital II
CNA Financial Capital III
(Exact name of each registrant as
specified in its Trust Agreement)
Delaware
Delaware (State or other jurisdiction of
(State or other jurisdiction of Incorporation or organization of each registrant)
incorporation or organization) Each to be Applied for
36-6169860 (I.R.S. Employer
(I.R.S. Employer Identification No.)
Identification Number) c/o CNA Financial Corporation
CNA Plaza CNA Plaza
Chicago, Illinois 60685 Chicago, Illinois 60685
(312) 822-5000 (312) 822-5000
(Address, including zip code, and telephone number, including (Address, including zip code, and
area code, of registrant's principal executive offices) telephone number, including area code, of each
registrant's principal executive offices)
</TABLE>
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Jonathan D. Kantor, Esq.
Senior Vice President, Secretary and General Counsel
CNA Financial Corporation
CNA Plaza
Chicago, Illinois 60685
(312) 822-5000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies to:
Mitchell L. Hollins, Esq. Edward F. Petroskey
Michael D. Rosenthal, Esq. Brown & Wood L.L.P.
Sonnenschein Nath & Rosenthal One World Trade Center
8000 Sears Tower 58th Floor
Chicago, Illinois 60606 New York, New York 10048
(312) 876-8000 (212) 839-5300
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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 to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. / /
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Proposed Proposed
maximum maximum Amount of
Title of each class of Securities to be Amount to be offering price aggregate registration
registered registered(1)(2) per unit(3) offering price fee
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<S> <C> <C> <C> <C>
Securities of CNA Financial Corporation:
Senior Debt Securities ........................
Subordinated Debt Securities...................
Subordinated Junior Debt Securities ...........
Subordination Preferred Stock, no par value....
Depositary Shares..............................
Common Stock, $2.50 par value per share........
Warrants.......................................
Stock Purchase Contracts.......................
Stock Purchase Units...........................
Preferred Securities of CNA Financial
Capital I.........................................
Preferred Securities of CNA Financial
Capital II........................................
Preferred Securities of CNA Financial
Capital III.......................................
Guarantees of Preferred Securities of CNA
Financial Capital I, CNA Financial Capital
II, and CNA Financial Capital III by CNA
Financial Corporation (4)......................... -----------------------------------------------------------------------------
Total......................................... $ 600,000,000 100% $ 600,000,000 $ 166,800
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</TABLE>
(1) Such indeterminate number or amount of Debt Securities, Preferred Stock,
Depositary Shares, Common Stock, Warrants, Stock Purchase Contracts and
Stock Purchase Units of CNA Financial Corporation and Preferred Securities
of CNA Financial Capital I, CNA Financial Capital II and CNA Financial
Capital III as may from time to time be issued at indeterminate prices.
Junior Debt Securities may be issued by CNA Financial Corporation and sold
to CNA Financial Capital I, CNA Financial Capital II and CNA Financial
Capital III, in which event such Junior Debt Securities may later be
distributed to the holders of Preferred Securities upon a dissolution of
CNA Financial Capital I, CNA Financial Capital II, and CNA Financial
Capital III and the distribution of the assets thereof.
(2) Such amount in U.S. dollars or the equivalent thereof in foreign
currencies as shall result in an aggregate initial offering price for all
securities of $600,000,000. In addition, this Registration Statement
includes such presently indeterminate number of Offered Securities (as
defined herein) as may be issuable from time to time upon conversion or
exchange of the Offered Securities being registered hereunder.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended
("Securities Act"), and exclusive of accrued interest and dividends, if
any.
(4) CNA Financial Corporation is also registering under this registration
statement all other obligations that it may have with respect to Preferred
Securities issued by CNA Financial Capital I, CNA Financial Capital II,
and CNA Financial Capital III. No separate consideration will be received
for any Guarantee or any other such obligations.
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.
<PAGE> 2
SUBJECT TO COMPLETION, DATED DECEMBER 24, 1998
PROSPECTUS
$600,000,000
CNA FINANCIAL CORPORATION
Senior Debt Securities
Subordinated Debt Securities
Subordinated Junior Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
Stock Purchase Contracts
Stock Purchase Units
CNA Financial Corporation's Common Stock is listed on the New York Stock
Exchange, the Chicago Stock Exchange and the Pacific Exchange, and traded on
the Philadelphia Stock Exchange, under the trading symbol "CNA".
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CNA FINANCIAL CAPITAL I
CNA FINANCIAL CAPITAL II
CNA FINANCIAL CAPITAL III
Preferred Securities fully and unconditionally
guaranteed, as described herein, by
CNA FINANCIAL CORPORATION
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We will provide specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest. This prospectus may not be used to sell these securities
without a supplement.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is December 24, 1998.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement (including any
amendments and exhibits, the "Registration Statement") that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration
process. Under this shelf process, we may, over the next two years, sell any
combination of the securities described in this prospectus in one or more
offerings up to a total dollar amount of $600,000,000. This prospectus provides
you with a general description of the securities that we may offer. Each time we
sell securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described under the heading WHERE YOU CAN FIND MORE
INFORMATION.
In this prospectus, we refer to:
- CNA Financial Corporation as "CNAF";
- CNAF and its subsidiaries as the "CNA Companies";
- CNA Financial Capital I, CNA Financial Capital II and CNA
Financial Capital III as the "CNA Capital Trusts"; and
- the securities offered by this prospectus as the "Offered
Securities".
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms at the following
addresses:
- 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549;
- 7 World Trade Center, 13th Floor, Suite 1300, New York, New
York 10048; and
- Suite 1400, Citicorp Center, 14th Floor, 500 West Madison,
Chicago, Illinois 60661.
You can call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
CNAF's common stock ("Common Stock") is listed on the New York Stock
Exchange, the Chicago Stock Exchange and the Pacific Exchange. You also can find
copies of CNAF's SEC filings at the offices of these stock exchanges at the
addresses listed below:
- New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005;
- Chicago Stock Exchange, Inc., 440 South LaSalle Street,
Chicago, Illinois 60603; and
- Pacific Exchange, Inc., 301 Pine Street, San Francisco,
California 94104.
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The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until we sell all of the Offered Securities.
- Annual Report on Form 10-K for the year ended December 31,
1997;
- Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
- Current Reports on Form 8-K, filed February 6, 1998, April 17,
1998, August 6, 1998 and December 3, 1998; and
- The description of the Common Stock contained in the
registration statement on Form S-3 (File No. 33-35250) filed
on June 6, 1990 (the "Common Stock Description").
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Office of the General Counsel
CNA Financial Corporation
CNA Plaza
Chicago, Illinois 60685
(312) 822-5000
We have not included, or incorporated by reference, separate financial
statements of any of the CNA Capital Trusts. The CNA Capital Trusts are newly
formed and have no operating history or independent operations. The sole
purposes of the CNA Capital Trusts will be to issue common and preferred
securities and to use the proceeds to purchase junior subordinated debt
securities ("Junior Debt Securities") from CNAF. All of the voting securities of
the CNA Capital Trusts will be owned by CNAF (or one of the other CNA Companies)
and all of the obligations of the CNA Capital Trusts will be fully guaranteed by
CNAF. Because of these factors, we do not believe that separate financial
statements for the CNA Capital Trusts would be helpful to you in considering an
investment in any of the Offered Securities.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
FORWARD-LOOKING STATEMENTS
This prospectus includes a number of statements which relate to
anticipated future events (forward-looking statements) rather than actual
present conditions or historical events. You can identify forward-looking
statements because generally they include words such as "believes", "expects",
"intends", "anticipates", "estimates", and similar expressions. Forward-looking
statements, by their nature, are subject to a variety of risks and uncertainties
that could cause actual results to differ materially from the results expected
in the
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forward-looking statement. Many of these risks and uncertainties cannot be
controlled by the CNA Companies. Some examples of these risks and uncertainties
are:
- general economic and business conditions;
- competition;
- changes in financial markets such as fluctuations in interest rates, credit
conditions and currency, commodity and stock prices;
- changes in foreign, political, social and economic conditions; and
- regulatory initiatives and compliance with governmental regulations,
judicial decisions and rulings.
Any forward-looking statements made in this prospectus are made by the
CNA Companies as of the date of this prospectus. The CNA Companies do not have
any obligation to update or revise any forward-looking statement contained in
this prospectus, even if the expectations of the CNA Companies or any related
facts or circumstances change.
THE CNA COMPANIES
CNAF is a holding company whose subsidiaries consist primarily of
property/casualty and life insurance companies. The CNA Companies collectively
are among the largest writers of commercial property/casualty insurance and one
of the ten largest insurance organizations in the United States. CNAF had assets
of approximately $62.57 billion and stockholders' equity of approximately $8.97
billion as of September 30, 1998. CNAF's common stock is listed on the New York
Stock Exchange, the Chicago Stock Exchange and the Pacific Exchange and also
traded on the Philadelphia Stock Exchange. The trading symbol for the Common
Stock is "CNA". As of November 30, 1998, Loews Corporation ("Loews") owned
approximately 85% of CNAF's outstanding common stock.
CNAF was incorporated as a Delaware corporation in 1967. CNAF's
principal subsidiaries are Continental Casualty Company ("CCC"), incorporated in
1897, Continental Assurance Company ("CAC"), incorporated in 1911, and The
Continental Corporation ("Continental"), which is the holding company of The
Continental Insurance Company ("CIC"), incorporated in 1853.
The principal business of the CNA Companies is insurance. CCC, CIC and
each of their property and casualty insurance affiliates generally conduct the
property and casualty insurance operations of the CNA Companies. CAC and Valley
Forge Life Insurance Company (a wholly owned subsidiary of CAC) generally
conduct the life insurance operations of the CNA Companies. The principal market
for insurance products offered by the CNA Companies is the United States.
AS A HOLDING COMPANY, CNAF RECEIVES ITS OPERATING INCOME AND OPERATING
CASH FLOW FROM ITS SUBSIDIARIES. CNAF RELIES UPON DISTRIBUTIONS FROM ITS
SUBSIDIARIES AS WELL AS RETURNS ON ITS CASH AND INVESTED ASSETS TO GENERATE THE
FUNDS NECESSARY TO MEET ITS OBLIGATIONS, INCLUDING ITS PAYMENT OF PRINCIPAL AND
INTEREST ON ITS DEBT AND DIVIDENDS ON ITS CAPITAL STOCK. THE ABILITY OF CNAF'S
SUBSIDIARIES TO MAKE SUCH PAYMENTS IS SUBJECT TO MANY FACTORS, INCLUDING
APPLICABLE STATE LAWS AND ANY RESTRICTIONS THAT MAY BE CONTAINED IN CREDIT
AGREEMENTS OR OTHER FINANCING ARRANGEMENTS ENTERED INTO BY SUCH SUBSIDIARIES.
CREDITORS OF CNAF'S SUBSIDIARIES GENERALLY WILL HAVE PRIORITY AS TO THE ASSETS
OF SUCH SUBSIDIARIES OVER THE CLAIMS OF CNAF AND THE HOLDERS OF CNAF'S
INDEBTEDNESS AND CAPITAL STOCK, INCLUDING THE OFFERED SECURITIES.
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THE CNA CAPITAL TRUSTS
Each CNA Capital Trust is a statutory business trust formed under
Delaware law pursuant to (i) a trust agreement executed by one of the CNA
Companies, as sponsor of the CNA Capital Trust, and a trustee for that CNA
Capital Trust (the "Delaware Trustee") and (ii) the filing of a certificate of
trust with the Delaware Secretary of State. Each trust agreement will be amended
and restated in its entirety (each, as so amended and restated, a "Trust
Agreement") substantially in the form filed as an exhibit to the Registration
Statement. Each Trust Agreement will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each CNA
Capital Trust exists for the exclusive purposes of (i) issuing and selling its
common and preferred securities, (ii) using the proceeds from the sale of its
securities to acquire a series of Junior Debt Securities issued by CNAF, and
(iii) engaging in other related activities.
All of the common securities of each CNA Capital Trust ("Common
Securities") will be owned by CNAF. The common securities of a CNA Capital Trust
will rank equal to, and payments will be made thereon in the same proportion as
the preferred securities ("Preferred Securities") of such CNA Capital Trust,
except that upon the occurrence and continuance of an event of default under a
Trust Agreement resulting from an event of default under the indenture with
respect to the Junior Debt Securities (a "Junior Debt Related Event of
Default"), the rights of CNAF as holder of the Common Securities to payment in
respect of distributions and payments upon liquidation, redemption or otherwise
will be subordinated to the rights of the holders of the Preferred Securities of
such CNA Capital Trust. See "Description of Preferred Securities - Subordination
of Common Securities." CNAF will acquire Common Securities in an aggregate
liquidation amount equal to not less than 3% of the total capital of each CNA
Capital Trust.
Unless otherwise specified in the applicable prospectus supplement,
each CNA Capital Trust has a term of approximately 55 years, but may terminate
earlier as provided in the applicable Trust Agreement. Each CNA Capital Trust's
business and affairs are conducted by its trustees, each appointed by CNAF as
holder of the Common Securities. Unless otherwise specified in the applicable
prospectus supplement, the trustees for each CNA Capital Trust will be The First
National Bank of Chicago, as the property trustee (the "Property Trustee"),
First Chicago Delaware, Inc., as the Delaware Trustee, and two individual
trustees (the "Administrative Trustees") who are employees or officers of or
affiliated with the CNA Companies (collectively, the "Issuer Trustees"). The
First National Bank of Chicago, as Property Trustee, will act as sole indenture
trustee under each Trust Agreement for purposes of compliance with the Trust
Indenture Act. The First National Bank of Chicago will also act as trustee under
the Guarantees and the Subordinated Indenture (as defined herein). See
"Description of Guarantees" and "Description of Junior Debt." The holder of the
Common Securities of a CNA Capital Trust, or the holders of a majority in
liquidation preference of the related Preferred Securities if a Junior Debt
Related Event of Default under the Trust Agreement for such CNA Capital Trust
has occurred and is continuing, will be entitled to appoint, remove or replace
the Property Trustee and/or the Delaware Trustee for such CNA Capital Trust. In
no event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees; such voting rights are
vested exclusively in the holder of the Common Securities. The duties and
obligations of each Issuer Trustee are governed by the applicable Trust
Agreement. CNAF will pay all fees and expenses related to each CNA Capital Trust
and the offering of the Preferred Securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each CNA Capital
Trust.
The principal executive office of each CNA Capital Trust is CNA Plaza,
Chicago, Illinois 60685 and its telephone number is (312) 822-5000.
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USE OF PROCEEDS
Except as otherwise described in the applicable prospectus supplement,
the net proceeds from the sale of the Offered Securities will be added to CNAF'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
CNAF's subsidiaries to support such subsidiaries' continuing operations. Each
CNA Capital Trust will use all proceeds received from the sale of its Preferred
Securities to purchase CNAF's Junior Debt Securities.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges.
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NINE
MONTHS ENDED FISCAL YEAR ENDED
SEPTEMBER 30 DECEMBER 31
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1998 1997 1997 1996 1995(a) 1994 1993
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Ratios:
Earnings to fixed charges(b).................... 3.9 6.4 6.8 6.8 5.6 (c) 2.7
Earnings to fixed charges and preferred
dividends(d).................................. 3.8 6.2 6.6 6.5 5.4 (e) 2.6
Net income, as adjusted to fixed charges
and preferred dividends(f).................... 4.1 6.9 7.1 7.4 5.8 1.5 7.6
</TABLE>
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(a) Includes the results of Continental from May 10, 1995, as a result of a
merger consummated on May 10, 1995.
(b) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest and
that portion of operating lease rental expense which is deemed to be an
interest factor for such rentals.
(c) Earnings were insufficient to cover fixed charges for the year ended
December 31, 1994 by $134 million primarily due to capital losses of $246
million which exceeded operating income of $101 million.
(d) For purposes of computing this ratio, earnings consist of income before
income taxes plus fixed charges. Fixed charges consist of interest and that
portion of operating lease rental expense which is deemed to be an interest
factor for such rentals. Fixed charges were increased by the preferred
stock dividend amounts that would be required to meet such dividend
payments.
(e) Earnings, as adjusted for interest expense and interest element of
operating leases, were insufficient to cover fixed charges for the year
ended December 31, 1994 by $39 million primarily due to capital losses of
$246 million which exceeded operating income of $101 million.
(f) For purposes of computing this ratio, net income has been adjusted to
include fixed charges after tax. Fixed charges consist of interest and that
portion of operating lease rental expense which is deemed to be an
interest factor for such rentals. Fixed charges were increased by the
preferred stock dividend amounts that would be required to meet such
dividend payments.
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SECURITIES TO BE OFFERED
SECURITIES TO BE OFFERED BY CNAF
CNAF may offer and sell from time to time under this prospectus:
(1) its unsecured senior debt securities ("Senior Debt Securities");
(2) its unsecured subordinated debt securities ("Subordinated Debt
Securities", and collectively with Senior Debt Securities, "Debt
Securities");
(3) Junior Debt Securities;
(4) shares of its common stock, par value $2.50 per share ("Common
Stock");
(5) shares of its preferred stock, no par value ("Preferred Stock"),
which may be represented by depositary shares ("Depositary Shares");
(6) warrants ("Warrants") to purchase Debt Securities, Junior Debt
Securities, Common Stock, Preferred Stock or Depositary Shares;
(7) purchase contracts ("Purchase Contracts") to purchase any of Debt
Securities, Junior Debt Securities, Common Stock, Preferred Stock,
Depositary Shares, Warrants and preferred securities ("Trust Preferred
Securities") of the CNA Capital Trusts (collectively the "Purchase
Contract Securities");
(8) purchase units ("Purchase Units"), each representing ownership of
a Purchase Contract and any of (x) Debt Securities or Junior Debt
Securities, (y) debt obligations of third parties, including treasury
bonds and similar obligations of the United States and/or (z) Trust
Preferred Securities, securing the holder's obligations to purchase
the applicable Purchase Contract Securities under the Purchase
Contract.
CNAF may offer to sell the Offered Securities in one or more separate
classes or series, in amounts, at prices and on terms to be determined by market
conditions at the time of sale. Offered Securities may be sold for U.S. dollars,
foreign denominated currency or currency units. Similarly, the amounts payable
by CNAF as dividends, interest, principal or other distributions also may be
payable in U.S. dollars, foreign denominated currency or currency units. Debt
Securities and Junior Debt Securities may consist of debentures, notes or other
evidences of indebtedness. CNAF will describe all of these terms in the
prospectus supplement relating to the offer.
SECURITIES TO BE OFFERED BY THE CNA CAPITAL TRUSTS
Each of the CNA Capital Trusts may offer and sell, from time to time,
its Preferred Securities. CNAF will guarantee the obligation of the CNA Capital
Trusts to pay (i) periodic cash distributions, (ii) liquidation amounts and
(iii) redemption payments with respect to the Preferred Securities. See
"Description of Guarantees." EACH GUARANTEE WILL BE AN IRREVOCABLE GUARANTEE ON
A SUBORDINATED BASIS OF THE RELATED CNA CAPITAL TRUST'S OBLIGATIONS UNDER THE
PREFERRED SECURITIES, BUT WILL APPLY ONLY TO THE EXTENT THAT SUCH RELATED CNA
CAPITAL TRUST HAS SUFFICIENT FUNDS TO MAKE SUCH PAYMENTS. THE GUARANTEE IS NOT
A GUARANTEE OF COLLECTION. The guarantee is subordinate to all indebtedness of
CNAF (including any Debt Securities which may be issued),
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except for (i) indebtedness of CNAF that is expressly made junior to or equal
with the guarantees, (ii) non-recourse indebtedness, (iii) indebtedness of CNAF
to any of the other CNA Companies or to any of its employees, (iv) CNAF's
liabilities for taxes, (v) trade debt incurred in the ordinary course of
business and (vi) Junior Debt Securities. CNAF may sell Junior Debt Securities
in one or more series from time to time to CNA Capital Trust or a trustee of a
CNA Capital Trust in connection with the investment of the proceeds from the
offering of Trust Preferred Securities. The Junior Debt Securities purchased by
a CNA Capital Trust may be subsequently distributed pro rata to the holder of
Trust Preferred Securities and common securities of that CNA Capital Trust under
certain circumstances.
You should read the summaries of the Offered Securities below, as well
as the description of the Offered Securities in the applicable prospectus
supplement. For a further description of CNAF's Common Stock, you should refer
to the Common Stock Description that is incorporated by reference in this
prospectus from CNAF's registration statement on Form S-3 (File No. 33-35250)
filed on June 6, 1990.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities will consist of notes, debentures or other
evidences of indebtedness. Debt Securities may be issued from time to time in
one or more series. The Senior Debt Securities will be issued under an
Indenture, dated March 1, 1991, between CNAF and The First National Bank of
Chicago, a national banking association, as trustee, as supplemented by a
supplemental indenture, dated as of October 15, 1993 (as so supplemented, the
"Senior Indenture"). The Subordinated Debt Securities will be issued under an
Indenture between CNAF and the First National Bank of Chicago, a national
banking association, as trustee (the "Subordinated Indenture"). The Senior
Indenture and the Subordinated Indenture are sometimes referred to collectively
as the "Indentures" and individually as the "Indenture". The First National Bank
of Chicago, in its capacity as trustee under either or both of the Indentures is
referred to hereinafter as the "Trustee".
Each of the Indentures has been qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act") and is subject to that act.
Copies of the Senior Indenture and the form of the Subordinated Indenture are
included as exhibits to the Registration Statement. The following description
summarizes the material terms of the Indentures and the Debt Securities. Because
it is only a summary, it does not contain all of the details found in the full
text of the Debt Securities and the Indentures, including the definitions of
certain terms used in the description of the Debt Securities in this prospectus,
and other terms that are made a part of the Indentures by the Trust Indenture
Act.
The Indentures are substantially identical except for provisions
relating to subordination. Any Debt Securities offered by this prospectus and
any accompanying prospectus supplement are referred to herein as the "Offered
Debt Securities."
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may be
issued from time to time in one or more series and may be denominated and
payable in U.S. dollars, foreign currencies or units based on or related to
foreign currencies. CNAF may sell Offered Debt Securities at par, a premium or
an original issue discount. Offered Debt Securities sold at an original issue
discount may bear no interest or interest at a below market rate. The specific
terms of a series of Offered Debt Securities will be established in or pursuant
to a resolution of CNAF's Board of Directors and/or in one or more supplemental
indentures. Pursuant to the Indentures, CNAF can establish different rights with
respect to each series of Debt Securities issued under the Indentures.
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The applicable prospectus supplement will provide information for the
following terms of the Offered Debt Securities (to the extent such terms are
applicable to such Offered Debt Securities):
- the title of such Offered Debt Securities or the particular
series thereof;
- any limit on the aggregate principal amount of such Offered
Debt Securities;
- whether such Offered Debt Securities are to be issuable in
registered form ("Registered Securities") or bearer form
("Bearer Securities") or both, whether any of such Offered
Debt Securities are to be issuable initially in temporary
global form and whether any of such Offered Debt Securities
are to be issuable in permanent global form;
- the price or prices (generally expressed as a percentage of
the aggregate principal amount thereof) at which such Offered
Debt Securities will be issued;
- the date or dates on which such Offered Debt Securities will
mature;
- the interest rate or rates per annum for the Offered Debt
Securities, or the formula by which such interest rate or
rates shall be determined for the Offered Debt Securities, the
dates from which any such interest on the Offered Debt
Securities will accrue and the circumstances, if any, under
which such interest rate or interest rate formula may be reset
at the option of CNAF;
- the interest payment dates on which any such interest on such
Offered Debt Securities will be payable, the regular record
date for any interest payable on such Offered 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;"
- the person to whom interest on any Registered Security of such
series will be payable, if other than the person in whose name
such Offered Debt Security (or one or more predecessor Offered
Debt Securities) is registered at the close of business on the
regular record date for such payment, 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;
- if other than the principal amount of such Offered Debt
Securities, the portion of the principal amount of such
Offered Debt Securities which shall be payable upon
declaration of acceleration of the maturity thereof or
provable in bankruptcy;
- any mandatory or optional sinking fund or analogous
provisions;
- each office or agency where, subject to the terms of the
applicable Indenture as described below under "Payments and
Paying Agents," the principal of any interest on such Offered
Debt Securities will be payable and each office or agency
where, subject to the terms of the applicable Indenture as
described below under "Denominations, Registration and
Transfer," such Offered Debt Securities may be presented for
registration of transfer or exchange;
- the date, if any, after which and the price or prices at
which, such Offered Debt Securities may be redeemed, pursuant
to any optional or mandatory redemption provisions, in whole
or
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in part, and the other detailed terms and provisions of any
such optional or mandatory redemption provisions;
- the denominations in which such Offered 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 Offered Debt
Securities which are Bearer Securities will be issuable, if
other than denominations of U.S. $5,000;
- the currency or currencies of payment of principal of and any
premium and interest on such Offered Debt Securities;
- any index used to determine the amount of payments of
principal or any interest on such Debt Securities different
from those described herein;
- the application, if any, of any restrictive covenants or
events of default that are in addition to or different from
those described herein;
- the form of such Offered Debt Security; and
- any other terms and provisions of such Offered Debt Securities
not inconsistent with the terms and provisions of the
applicable Indenture, including without limitations any
restrictive covenants which may be applicable to CNAF for the
benefit of the holders of such Offered Debt Securities.
Any such prospectus supplement will also describe any special provisions for the
payment of additional amounts with respect to such Offered Debt Securities.
Offered 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 Debt Securities is payable
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 Debt Securities are
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 Debt Securities and such foreign
currency or currencies or foreign currency unit or units will be described in
the applicable prospectus supplement.
RANKING AND SUBORDINATION
Senior Debt Securities.
The Senior Debt Securities will rank equally with all of CNAF's other
unsecured and unsubordinated indebtedness. As of September 30, 1998, CNAF had
approximately $2.276 billion aggregate principal amount of indebtedness for
borrowed money which 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 CNAF under the Senior Indenture or otherwise. In addition,
CNAF's subsidiaries had approximately $691 million of indebtedness outstanding.
Subordinated Debt Securities.
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 CNAF's existing and future Senior Indebtedness.
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
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permitted to the holder of such debt against the bankruptcy or any other
insolvency estate of CNAF in such proceeding) and other amounts due on or in
connection with any debt incurred, assumed or guaranteed by CNAF, 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
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 CNAF, unless such debt
expressly provides that such debt shall be senior in right of payment to the
Subordinated Debt Securities; and (b) any of CNAF's debt in respect of the
Subordinated Debt Securities. As of September 30, 1998, CNAF had approximately
$2.276 billion aggregate principal amount of indebtedness for borrowed money
which would rank senior to the Subordinated Debt Securities and no borrowings
which would rank junior or equal with the Subordinate 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 CNAF 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 CNAF is obligated to notify holders of Senior Indebtedness
promptly of such acceleration. CNAF 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 CNAF
acquire any Subordinated Debt Securities except as described in the Subordinated
Indenture, if any default with respect to Senior Indebtedness occurs and is
continuing that permits the acceleration of the maturity of the Senior
Indebtedness and either such default is the subject of judicial proceedings or
CNAF receives notice of the default, unless
- 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
- 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 Offered Debt Securities will be issuable as Registered Securities,
Bearer Securities or both. Offered 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 Offered Debt Securities represented by
such Global Security. The prospectus supplement relating to Offered Debt
Securities denominated in a foreign or composite currency will specify the
denominations for these Offered Debt Securities.
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<PAGE> 14
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 applicable 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 Offered
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 applicable 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 applicable Indenture. Except as provided in an applicable
prospectus supplement, Bearer Securities will not be issued in exchange for
Registered Securities.
Offered 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 CNAF or at the office of any
transfer agent designated by CNAF for such purpose with respect to any series of
Offered 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 applicable Indenture. Such transfer or exchange will
be made when the security registrar or such transfer agent, as the case may be,
is satisfied with the documents of title and identity of the person making the
request. CNAF has initially appointed the Trustee as the security registrar
under the Indentures. If a prospectus supplement refers to any transfer agent
(in addition to the security registrar) initially designated by CNAF with
respect to any series of Offered Debt Securities, CNAF 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. Exceptions to the prior sentence
will occur if Offered Debt Securities of a series are issuable only as
Registered Securities. CNAF will be required to maintain a transfer agent in
each place of payment for such series. Similarly, if Offered Debt Securities of
a series are issuable as Bearer Securities, then CNAF 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. CNAF may at any time
designate additional transfer agents with respect to any series of Offered Debt
Securities.
In the event of any redemption in part, CNAF shall not be required to
(i) issue, register the transfer of or exchange Offered 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 Offered Debt Securities of that
series selected to be redeemed and ending at the close of business (a) if
Offered Debt Securities of the series are issuable only as Registered
Securities, the day of mailing of the relevant notice of redemption, and (b) if
Offered Debt Securities of the series are issuable as Bearer Securities, the day
of the first publication of the relevant notice
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<PAGE> 15
of redemption or, if Offered 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 (each a "Paying Agent") as CNAF may designate from time to time, except
that, at the option of CNAF, payment of any interest may be made by check mailed
to the address 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 as CNAF may designate from time to time, except
that, at CNAF's option, 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 CNAF may designate
from time to time, except that, at CNAF's option 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
of CNAF's offices or agencies 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 relating to those Bearer Securities pursuant to presentation to CNAF 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 CNAF'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
CNAF 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
CNAF's sole Paying Agent for payments with respect to Offered 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 CNAF for the Offered Debt Securities will be named in the
applicable prospectus supplement. CNAF may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office
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<PAGE> 16
through which any Paying Agent acts, except that, if Offered Debt Securities of
a series are issuable only as Registered Securities, CNAF will be required to
maintain a Paying Agent in each place of payment of such series and, if Offered
Debt Securities of a series are issuable as Bearer Securities, CNAF 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 Offered Debt
Securities of such series and any coupons belonging thereto may be presented and
surrendered for payment; provided that if the Offered Debt Securities of such
series are listed on The International Stock Exchange, the London Stock Exchange
or the Luxembourg Stock Exchange or any other stock exchange located outside the
United States and such stock exchange shall so require, CNAF 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 Offered 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 CNAF may be served.
All monies paid by CNAF to a Paying Agent for the payment of principal
of and any interest on any Offered Debt Securities that remains unclaimed for at
least two years after such principal, premium or interest has become due and the
payable will be repaid, at the request of CNAF to CNAF. After this repayment,
the holder of such Offered Debt Security or any coupon relating thereto will
look only to CNAF for payment thereof.
GLOBAL SECURITIES
The Offered 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 Offered
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 Offered Debt Securities will be described in the prospectus supplement
relating to such series. CNAF 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 Offered 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 Offered
Debt Securities or by CNAF if such Offered Debt Securities are offered and sold
directly by CNAF. 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.
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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 Offered Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below, owners of beneficial interests
in a Global Security will not be entitled to have any of the individual Offered
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 Offered Debt Securities of such series in definitive form and will not be
considered the owners or holders thereof under the applicable Indenture.
Payments of principal of and any premium and any interest on individual
Offered 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 Offered Debt Securities. None of CNAF, the Trustee, any Paying Agent or the
Security Registrar for such Offered 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
Offered Debt Securities or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
CNAF expects that the Depository for a series of Offered 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
Offered Debt Securities, immediately will credit Participants' accounts with
payments in amounts proportionate to their respective beneficial interest in the
principal amount of such Global Security for such Offered Debt Securities as
shown on the records of such Depository or its nominee. CNAF 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 in bearer form or registered in "street name." Such payments
will be the responsibility of such Participants.
If a Depository for a series of Offered Debt Securities is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by CNAF within 90 days, CNAF will issue individual
Offered Debt Securities of such series in exchange for the Global Security
representing such series of Offered Debt Securities. In addition, CNAF may, at
any time and in its sole discretion, subject to any limitations described in the
prospectus supplement relating to such Offered Debt Securities, determine not to
have any Offered Debt Securities of such series represented by one or more
Global Securities and, in such event, will issue individual Offered Debt
Securities of such series in exchange for the Global Security or Securities
representing such series of Offered Debt Securities. Individual Offered Debt
Securities of such series so issued will be issued in denominations, unless
otherwise specified by CNAF, 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 Offered 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) or 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
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<PAGE> 18
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 relating 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. 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 Indentures provide that CNAF will be discharged from any and all
obligations in respect of the Debt Securities of any series (except for certain
obligations to register the transfer or exchange of Debt Securities of such
series, to replace stolen, lost or mutilated 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 Debt Securities in trust of money
and/or U.S. Government Obligations (as defined below) in an amount sufficient to
pay the principal of and each installment of interest, if any, on the Debt
Securities of such series on the maturity of such payments in accordance with
the terms of the applicable Indenture and the Debt Securities of such series.
Such a trust may only be established if, among other things, CNAF has delivered
to such Trustee an Opinion of Counsel (who may be CNAF's counsel) to the effect
that (i) holders of the 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 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 Indentures provide that, if applicable, CNAF may omit to comply
with any additional restrictive covenants imposed on CNAF in connection with the
establishment of any series of 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
applicable Indenture and the Debt Securities of any series, upon the deposit
with the Trustee under the applicable 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 Debt Securities of such series on the maturity of such payments in
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accordance with the terms of the applicable Indenture and the Debt Securities of
such series. The obligations of CNAF under the applicable Indenture and 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, CNAF has delivered to the Trustee an Opinion
of Counsel (who may be counsel for CNAF) to the effect that (i) the holders of
the 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
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 CNAF exercises its option to omit compliance with certain
covenants of an Indenture with respect to the Debt Securities of any series as
described above and the 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 Debt Securities of such series at the time
of the acceleration resulting from such Event of Default. However, CNAF 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 INDENTURES
The Indentures contain provisions permitting CNAF and the Trustee, with
the consent of the holders of a majority of the principal amount of the Debt
Securities of each series then outstanding under such Indenture, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the applicable Indenture or modifying the rights of the
holders of the Debt Securities of such series, except that no such supplemental
indenture may, among other things, (i) extend the final maturity of any 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 Debt Security so affected, or
(ii) reduce the aforesaid percentage of 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 Debt Securities. CNAF's Board does not
have the power to waive any of the covenants of the Indentures including those
relating to consolidation, merger or sale of assets.
EVENTS OF DEFAULT
An Event of Default with respect to any series of Debt Securities is
defined in the Indentures as being:
- default by CNAF for thirty (30) days in the payment of any
installment of interest on the Debt Securities of such series;
- default by CNAF in the payment of any principal on the Debt
Securities of such series when due;
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- default by CNAF in the payment of any sinking fund installment
with respect to such series of Debt Securities;
- default by CNAF in the performance of any of the agreements in
the applicable 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 CNAF from the Trustee for such series of Debt
Securities or by CNAF and such Trustee from the holders of not
less than 25% in principal amount of the Offered Debt
Securities of such series then outstanding;
- with respect to any series of Offered Debt Securities (unless
otherwise specified in the accompanying prospectus
supplement), the acceleration, or failure to pay at maturity,
of any of CNAF's indebtedness for money borrowed 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 CNAF as provided in the applicable
Indenture;
- certain events of bankruptcy, insolvency or reorganization of
CNAF (a "Bankruptcy Default"); or
- any other Event of Default established in accordance with the
applicable Indenture with respect to any series of Debt
Securities.
No Event of Default (other than a Bankruptcy Default) with respect to a
particular series of Debt Securities necessarily constitutes an Event of Default
with respect to any other series of Debt Securities.
The Indentures provide that if an Event of Default with respect to any
series of Debt Securities shall have occurred and be continuing, either the
Trustee with respect to the Debt Securities of that series or the holders of at
least 25% in aggregate principal amount of Debt Securities of that series then
outstanding may declare the principal amount (or, if the 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 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 Debt Securities of that series) may be
waived by the holders of a majority in principal amount of the Debt Securities
of that series then outstanding.
The Indentures each contain a provision entitling the Trustee with
respect to any series of 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 Debt Securities of such series before proceeding to exercise any
right or power under the applicable Indenture at the request of the holders of
such Debt Securities. The Indentures also provide that the holders of a majority
in principal amount of the outstanding 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 Debt Securities, or exercising any trust or
power conferred on such Trustee, with respect to the Debt Securities of such
series. The Indentures each contain a covenant that CNAF 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 Debt Security of any series will have any right to
institute any proceeding with respect to the applicable Indenture or for any
remedy under such Indenture, unless (i) such holder previously shall have given
the Trustee for such series of Debt Securities written notice of an Event of
Default with respect to Debt Securities of that series and (ii) the holders of
at least 25% in aggregate principal amount of
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the outstanding 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 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
Debt Security to receive payment of the principal of and any interest on such
Debt Security on or after the due dates expressed in such CNAF 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 consent of such holder.
CONSOLIDATION, MERGER AND SALE OF ASSETS
CNAF 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 CNAF shall be the continuing corporation, or the
successor corporation or the Person which acquires by sale or conveyance
substantially all of the assets of CNAF (if other than CNAF) 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 Debt Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
the applicable Indenture to be performed or observed by CNAF, by supplemental
indenture satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, and (ii) CNAF 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 Indentures and the Debt Securities do
not contain any covenants or other provisions designed to afford holders of the
Debt Securities protection in the event of a takeover, recapitalization or
highly leveraged transaction involving CNAF.
NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder,
as such, of CNAF or any successor thereof shall have any liability for any
obligations of CNAF under the Debt Securities or the Indentures 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 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 Debt Securities and may otherwise deal with CNAF or its
Affiliates with the same rights it would have if it were not the Trustee
provided it complies with the terms of the applicable Indenture. The CNA
Companies and the Trustee may engage in normal and customary banking
transactions from time to time.
DESCRIPTION OF JUNIOR DEBT SECURITIES
The Junior Debt Securities may be issued in one or more series under a
Junior Subordinated Indenture (the "Junior Indenture"), between CNAF and The
First National Bank of Chicago, as trustee (the "Junior Indenture Trustee"). The
Junior Indenture has been qualified under the Trust Indenture Act and is
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subject to that act. The form of the Junior Indenture is included as an exhibit
to the Registration Statement. The following description summarizes the material
terms of the Junior Indenture and the Junior Debt Securities. Because it is only
a summary, it does not contain all of the details found in the full text of the
Junior Debt Securities and the Junior Indenture, including the definitions of
certain terms used in the description of the Junior Debt Securities in this
prospectus, and those terms made a part of the Junior Indenture by the Trust
Indenture Act.
GENERAL
The Junior Indenture does not limit the aggregate principal amount of
Junior Debt Securities that may be issued thereunder and provide that Junior
Debt Securities may be issued from time to time in one or more series and may be
denominated and payable in U.S. dollars, foreign currencies or units based on or
related to foreign currencies. CNAF may sell Junior Debt Securities at par, a
premium or an original issue discount. As of September 30, 1998, CNAF had
approximately $2.276 billion aggregate principal amount of indebtedness for
borrowed money which would rank senior to the Junior Debt Securities, and no
such indebtedness which is equal or junior to the Junior Debt Securities.
The Junior Debt Securities will be issuable in one or more series
pursuant to an indenture supplemental to the Junior Indenture or a resolution of
CNAF's Board of Directors or a committee thereof.
The applicable prospectus supplement will provide information for the
following terms of the Junior Debt Securities:
- the title of the Junior Debt Securities or series thereof;
- any limit upon the aggregate principal amount of the Junior
Debt Securities;
- the date or dates on which the principal of the Junior Debt
Securities is payable (the "Stated Maturity") or the method of
determination thereof;
- the interest rate or rates, if any, for the Junior Debt
Securities, the dates on which any such interest shall be
payable, the right, if any, of CNAF to defer or extend an
interest payment date, and the regular record date for any
interest payable on any interest payment date or the method by
which any of the foregoing shall be determined;
- the place or places where, subject to the terms of the Junior
Indenture as described below under "Payment and Paying
Agents," the principal of and premium, if any, and interest on
the Junior Debt Securities will be payable and where, subject
to the terms of the Junior Indenture as described below under
"--Denominations, Registration and Transfer," the Junior Debt
Securities may be presented for registration of transfer or
exchange and the place or places where notices and demands to
or upon CNAF in respect of the Junior Debt Securities and the
Junior Indentures may be made ("Place of Payment");
- any period or periods within or date or dates on which, the
price or prices at which and the terms and conditions upon
which Junior Debt Securities may be redeemed, in whole or in
part, at the option of CNAF or a holder thereof;
- the obligation or the right, if any, of CNAF or a holder
thereof to redeem, purchase or repay the Junior Debt
Securities and the period or periods within which, the price
or prices at
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which, the currency or currencies (including currency unit or
units) in which and the other terms and conditions upon which
the Junior Debt Securities shall be redeemed, repaid or
purchased, in whole or in part, pursuant to such obligation;
- the denominations in which any Junior Debt Securities shall be
issuable if other than denominations of $25 and any integral
multiple thereof;
- if other than in U.S. Dollars, the currency or currencies
(including currency unit or units) in which the principal of
(and premium, if any) and interest, if any, on the Junior Debt
Securities shall be payable, or in which the Junior Debt
Securities shall be denominated;
- any additions, modifications or deletions in the Events of
Default or covenants of CNAF specified in the Junior
Indenture with respect to the Junior Debt Securities;
- if other than the principal amount thereof, the portion of the
principal amount of Junior Debt Securities that shall be
payable upon declaration of acceleration of the maturity
thereof;
- any additions or changes to the Junior Indenture with respect
to a series of Junior Debt Securities as shall be necessary to
permit or facilitate the issuance of such series in bearer
form, registrable or not registrable as to principal, and with
or without interest coupons;
- any index or indices used to determine the amount of payments
of principal of and premium, if any, on the Junior Debt
Securities and the manner in which such amounts will be
determined;
- the terms and conditions relating to the issuance of a
temporary Global Security representing all of the Junior Debt
Securities of such series and the exchange of such temporary
Global Security for definitive Junior Debt Securities of such
series;
- subject to the terms described under "--Global Junior Debt
Securities," whether the Junior Debt Securities of the series
shall be issued in whole or in part in the form of one or more
Global Securities and, in such case, the Depositary for such
Global Securities, which Depositary shall be a clearing agency
registered under the Exchange Act;
- the appointment of any Paying Agent or Agents;
- the terms and conditions of any obligation or right of CNAF or
a holder to convert or exchange the Junior Debt Securities
into Preferred Securities;
- the form of the Trust Agreement and Guarantee Agreement, if
applicable;
- the relative degree, if any, to which such Junior Debt
Securities of the series shall be senior to or be subordinated
to other series of such Junior Debt Securities or other
indebtedness of CNAF in right of payment, whether such other
series of Junior Debt Securities or other indebtedness are
outstanding or not; and
- any other terms of the Junior Debt Securities not inconsistent
with the provisions of the Junior Indenture.
If the purchase price of any of the Junior Debt Securities is payable
in a foreign currency or currencies or foreign currency unit or units or if the
principal of and any premium and interest, if any, on any Junior Debt Securities
are payable in a foreign currency or currencies or currency unit or units, the
restrictions, elections, general tax considerations, specific terms and other
information with respect to such issue of Junior Debt Securities and such
foreign currency or currency units will be set forth in the applicable
prospectus supplement.
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DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable prospectus supplement, the
Junior Debt Securities will be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof. Junior Debt
Securities of any series will be exchangeable for other Junior Debt Securities
of the same issue and series, of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and bearing the same interest rate.
Junior Debt Securities may be presented for exchange as provided above,
and may be presented for registration of transfer (with the form of transfer
endorsed thereon, or a satisfactory written instrument of transfer, duly
executed), at the office of the appropriate Securities Registrar or at the
office of any transfer agent designated by CNAF for such purpose with respect to
any series of Junior Debt Securities and referred to in the applicable
prospectus supplement, without service charge and upon payment of any taxes and
other governmental charges as described in the Junior Indenture. CNAF will
appoint the Trustee as Securities Registrar under the Junior Indenture. If the
applicable prospectus supplement refers to any transfer agents (in addition to
the Securities Registrar) initially designated by CNAF with respect to any
series of Junior Debt Securities, CNAF 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, provided that CNAF maintains a transfer agent in each
Place of Payment for such series. CNAF may at any time designate additional
transfer agents with respect to any series of Junior Debt Securities.
In the event of any redemption, neither CNAF nor the Junior Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Debt Securities of any series during a period beginning at the opening of
business 15 days before the day of selection for redemption of Junior Debt
Securities of that series and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) transfer or exchange any
Junior Debt Securities so selected for redemption, except, in the case of any
Junior Debt Securities being redeemed in part, any portion thereof not to be
redeemed.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement,
payment of principal of (and premium, if any) and any interest on Junior Debt
Securities will be made at the office of the Junior Indenture Trustee in the
City of New York or at the office of such Paying Agent or Paying Agents as CNAF
may designate from time to time in the applicable prospectus supplement, except
that at the option of CNAF payment of any interest may be made (i), except in
the case of Global Junior Debt Securities, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Securities Register
or (ii) by transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer instructions
have been received by the regular record date. Unless otherwise indicated in the
applicable prospectus supplement, payment of any interest on Junior Debt
Securities will be made to the Person in whose name such Junior Debt Security is
registered at the close of business on the Regular Record Date for such
interest, except in the case of defaulted interest. CNAF may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent; however CNAF will at all times be required to maintain a Paying Agent in
each Place of Payment for each series of Junior Debt Securities.
All monies paid by CNAF to the Junior Indenture Trustee or any Paying
Agent, or then held by CNAF in trust, for the payment of the principal of
(premium) or interest on any Junior Debt Security remain unclaimed for two years
after such principal (and premium, if any) or interest has become due and
payable, at the request of CNAF, will be repaid to CNAF and the holder of such
Junior Debt Security will look only to CNAF for payment thereof.
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GLOBAL JUNIOR DEBT SECURITIES
The Junior Debt Securities of a series may be issued in whole or in
part in the form of one or more Global Junior Debt Securities that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the prospectus supplement relating to such series. Global Junior Debt Securities
may be issued only in fully registered form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for the individual
Junior Debt Securities represented thereby, a Global Junior Debt Security may
not be transferred except as a whole by the Depositary for such Global Junior
Debt Security to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by the Depositary or
any nominee to a successor Depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Junior Debt Securities will be described in the prospectus supplement
relating to such series. CNAF anticipates that the provisions described above
under the heading "Description of Debt Securities-Global Securities" will
generally apply to depositary arrangements with respect to the Junior Debt
Securities, as if the Junior Debt Securities were "Debt Securities" as discussed
in that section.
OPTION TO EXTEND INTEREST PAYMENT DATE
If provided in the applicable prospectus supplement, CNAF shall have
the right at any time and from time to time during the term of any series of
Junior Debt Securities to defer payment of interest for such number of
consecutive interest payment periods as may be specified in the applicable
prospectus supplement (each, an "Extension Period"), subject to the terms,
conditions and covenants, if any, specified in such prospectus supplement,
provided that such Extension Period may not extend beyond the Stated Maturity of
such series of Junior Debt Securities.
REDEMPTION
Unless otherwise indicated in the applicable prospectus supplement,
Junior Debt Securities will not be subject to any sinking fund.
Unless otherwise indicated in the applicable prospectus supplement,
CNAF may, at its option, redeem the Junior Debt Securities of any series in
whole at any time or in part from time to time. Junior Debt Securities in]
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000. Except as otherwise specified in the applicable prospectus
supplement, the redemption price for any Junior Debt Security so redeemed shall
equal any accrued and unpaid interest thereon to the redemption date, plus the
principal amount thereof.
Except as otherwise specified in the applicable prospectus supplement,
if a Junior Debt Security Tax Event (as defined below) in respect of a series of
Junior Debt Securities shall occur and be continuing, CNAF may, at its option,
redeem such series of Junior Debt Securities in whole (but not in part) at any
time within 90 days of the occurrence of such Junior Debt Security Tax Event, at
a
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redemption price equal to 100% of the principal amount of such Junior Debt
Securities then outstanding plus accrued and unpaid interest to the date fixed
for redemption.
"Junior Debt Security Tax Event" means the receipt by CNAF of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the applicable series of Junior Debt Securities under the Junior Indenture,
there is more than an insubstantial risk that interest payable by CNAF on such
series of Junior Debt Securities is not, or within 90 days of the date of such
opinion will not be, deductible by CNAF, in whole or in part, for United States
federal income tax purposes.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Junior Debt Securities
to be redeemed at its registered address. Unless CNAF defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue on
such Junior Debt Securities or portions thereof called for redemption.
MODIFICATION OF JUNIOR INDENTURE
From time to time CNAF and the Junior Indenture Trustee may, without
the consent of the holders of any series of Junior Debt Securities, amend, waive
or supplement the Junior Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies (provided that any
such action does not materially adversely affect the interest of the holders of
any series of Junior Debt Securities or, in the case of Corresponding Junior
Debt Securities, the holders of the Related Preferred Securities so long as they
remain outstanding) and qualifying, or maintaining the qualification of, the
Junior Indenture under the Trust Indenture Act. The Junior Indenture contains
provisions permitting CNAF and the Junior Indenture Trustee, with the consent of
the holders of not less than a majority in principal amount of each outstanding
series of Junior Debt Securities affected, to modify the Junior Indenture in a
manner affecting the rights of the holders of such series of the Junior Debt
Securities; provided, that no such modification may, without the consent of the
holder of each outstanding Junior Debt Security so affected, (i) change the
Stated Maturity of any series of Junior Debt Securities, or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon (except such extension as is contemplated hereby) or (ii) reduce the
percentage of principal amount of Junior Debt Securities of any series, the
holders of which are required to consent to any such modification of the Junior
Indenture, provided that, in the case of Corresponding Junior Debt Securities,
so long as any of the Related Preferred Securities remain outstanding, no such
modification may be made that adversely affects the holders of such Preferred
Securities in any material respect, and no termination of the Junior Indenture
may occur, and no waiver of any Junior Debt Security Event of Default or
compliance with any covenant under the Junior Indenture may be effective,
without the prior consent of the holders of at least a majority of the aggregate
liquidation preference of such Related Preferred Securities unless and until the
principal of the Corresponding Junior Debt Securities and all accrued and unpaid
interest thereon have been paid in full and certain other conditions are
satisfied.
In addition, CNAF and the Junior Indenture Trustee may execute, without
the consent of any holder of Junior Debt Securities, any supplemental Junior
Indenture for the purpose of creating any new series of Junior Debt Securities.
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JUNIOR DEBT RELATED EVENTS OF DEFAULT
The Junior Indenture provides that any one or more of the following
described events with respect to a series of Junior Debt Securities that has
occurred and is continuing constitutes a "Junior Debt Related Event of Default"
with respect to such series of Junior Debt Securities:
- failure for 30 days to pay any interest on such series of the
Junior Debt Securities, when due (subject to the deferral of
any due date in the case of an Extension Period); or
- failure to pay any principal or premium, if any, on such
series of Junior Debt Securities when due whether at maturity,
upon redemption by declaration or otherwise; or
- failure to observe or perform in any material respect certain
other covenants contained in the Junior Indenture for 90 days
after written notice to CNAF from the Junior Indenture Trustee
or the holders of at least 25% in aggregate outstanding
principal amount of such series of outstanding Junior Debt
Securities; or
- certain events in bankruptcy, insolvency or reorganization of
CNAF.
The holders of a majority in aggregate outstanding principal amount of
such series of Junior Debt Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Junior
Indenture Trustee. The Junior Indenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of such series of Junior Debt
Securities may declare the principal due and payable immediately upon a Junior
Debt Related Event of Default, and, in the case of Junior Debt Securities issued
to a CNA Capital Trust ("Corresponding Junior Debt Securities") in connection
with the issuance of Preferred Securities by such CNA Capital Trust ("Related
Preferred Securities"), should the Junior Indenture Trustee or such holders of
such Corresponding Junior Debt Securities fail to make such declaration, the
holders of at least 25% in aggregate liquidation preference of the Related
Preferred Securities shall have such right. The holders of a majority in
aggregate outstanding principal amount of such series of Junior Debt Securities
may annul such declaration and waive the default if the default (other than the
non-payment of the principal of such series of Junior Debt Securities which has
become due solely by such acceleration) has been cured and a sum sufficient to
pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Junior Indenture Trustee. In the case
of Corresponding Junior Debt Securities, should the holders of such
Corresponding Junior Debt Securities fail to annul such declaration and waive
such default, the holders of a majority in aggregate liquidation preference of
the Related Preferred Securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of
the Junior Debt Securities affected thereby may, on behalf of the holders of all
the Junior Debt Securities, waive any past default, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Junior Indenture
Trustee) or a default in respect of a covenant or provision which under the
Junior Indenture cannot be modified or amended without the consent of the holder
of each outstanding Junior Subordinated Debt Security. In the case of
Corresponding Junior Debt Securities, should the holders of such Corresponding
Junior Debt Securities fail to annul such declaration and waive such default,
the holders of a majority in aggregate liquidation preference of the Related
Preferred Securities shall have such right. CNAF is required to file annually
with the Junior Indenture Trustee a certificate as to whether or not CNAF is in
compliance with all the conditions and covenants applicable to it under the
Junior Indenture.
In case a Junior Debt Related Event of Default shall occur and be
continuing as to a series of Corresponding Junior Debt Securities, the Property
Trustee will have the right to declare the principal of and the interest on such
Corresponding Junior Debt Securities, and any other amounts payable under the
Junior Indenture, to be immediately due and payable and to enforce its other
rights as a creditor with respect to such Corresponding Junior Debt Securities.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Junior Debt Related Event of Default has occurred and is
continuing and such event is attributable to the failure of CNAF to pay interest
or principal on the related Junior Debt Securities on the date such interest or
principal is otherwise payable, a holder of Preferred Securities may institute a
legal proceeding directly against CNAF for enforcement of payment to such holder
of the principal of or interest on such related Junior Debt Securities having a
principal amount equal to the aggregate liquidation amount of the Related
Preferred Securities of such holder (a "Direct Action"). CNAF may not amend the
Junior Indenture to remove the foregoing right to bring a Direct Action without
the prior written consent of the holders of all of the Preferred Securities. If
the right to bring a Direct Action is removed, the applicable Issue may become
subject to the reporting obligations under the Securities Exchange Act of 1934,
as amended. CNAF shall have the right under the Junior Indenture to set-off any
payment made to such holder of Preferred Securities by CNAF in connection with a
Direct Action. The holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the related Junior Debt
Securities.
The holders of the Preferred Securities would not be able to exercise
directly any remedies other than those described in the preceding paragraph
available to the holders of the Junior Debt Securities unless there shall have
been an Event of Default under the Trust Agreement. See "Description of
Preferred Securities - Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Indenture provides that CNAF shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into CNAF or convey, transfer or lease its properties
and assets substantially as an entirety to CNAF, unless (i) in case CNAF
consolidates with or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any state or the
District of Columbia, and such successor Person expressly assumes CNAF's
obligations on the Junior Debt Securities issued under the Junior Indenture;
(ii) immediately after giving effect thereto, no Junior Debt Related Event of
Default, and no event which, after notice or lapse of time or both, would become
a Junior Debt Related Event of Default, shall have happened and be continuing;
(iii) in the case of Corresponding Junior Debt Securities, such transaction is
permitted under the related Trust Agreement or Guarantee and does not give rise
to any breach or violation of the related Trust Agreement and Guarantee, and
(iv) certain other conditions as prescribed in the Junior Indenture are met.
Other than the covenants described above, or as set forth in any
accompanying prospectus supplement, the Junior Indenture and the Junior Debt
Securities do not contain any covenants or other provisions designed to afford
holders of the Junior Debt Securities protection in the event of a takeover,
recapitalization or highly leveraged transaction involving CNAF.
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SATISFACTION AND DISCHARGE
The Junior Indenture provides that when, among other things, all Junior
Debt Securities not previously delivered to the Junior Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and CNAF deposits or causes to be
deposited with the Junior Indenture Trustee trust funds, in trust, for the
purpose and in an amount in the currency or currencies in which the Junior Debt
Securities are payable sufficient to pay and discharge the entire indebtedness
on the Junior Debt Securities not previously delivered to the Junior Indenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Junior Indenture will cease to be of further effect (except as to CNAF's
obligations to pay all other sums due pursuant to the Junior Indenture and to
provide the officers' certificates and opinions of counsel described therein),
and CNAF will be deemed to have satisfied and discharged the Junior Indenture.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable prospectus supplement,
the Junior Debt Securities of any series may be convertible or exchangeable into
Preferred Securities or other securities. The specific terms on which Junior
Debt Securities of any series may be so converted or exchanged will be set forth
in the applicable prospectus supplement. Such terms may include provisions for
conversion or exchange, either mandatory, at the option of the holder, or at the
option of CNAF, in which case the number of shares of Preferred Securities or
other securities to be received by the Holders of Junior Debt Securities would
be calculated as of a time and in the manner stated in the applicable prospectus
supplement.
SUBORDINATION
In the Junior Indenture, CNAF has agreed that any Junior Debt
Securities issued thereunder will be subordinate and junior in right of payment
to all Senior Debt to the extent provided in the Junior Indenture. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of CNAF, the holders of Senior Debt (as defined below)
will first be entitled to receive payment in full of principal of (and premium,
if any) and interest, if any, on such Senior Debt before the holders of Junior
Debt Securities or, in the case of Corresponding Junior Debt Securities, the
Property Trustee on behalf of the holders, will be entitled to receive or retain
any payment in respect of the principal of (and premium, if any) or interest, if
any, on the Junior Debt Securities.
In the event of the acceleration of the maturity of any Junior Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon (including any amounts due upon acceleration) before the holders of
Junior Debt Securities will be entitled to receive or retain any payment in
respect of the principal of (or premium, if any) or interest, if any, on the
Junior Debt Securities.
No payments on account of principal (or premium, if any) or interest,
if any, in respect of the Junior Debt Securities may be made if there shall have
occurred and be continuing a default in any payment with respect to Senior Debt,
or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent:
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- every obligation of such Person for money borrowed;
- every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of
property, assets or businesses;
- every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person;
- every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the
ordinary course of business);
- every capital lease obligation of such Person; and
- every obligation of the type referred to in the preceding
bullet points of another Person and all dividends of another
Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to CNAF whether or not
such claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Junior Indenture or thereafter
incurred (including, without limitation, Debt incurred pursuant to the Senior
Indenture and the Subordinated Indenture), unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Junior Debt
Securities or to other Debt which is pari passu with, or subordinated to, the
Junior Debt Securities; provided, however, that Senior Debt shall not be deemed
to include:
- any Debt of CNAF which when incurred and without respect to
any election under Section 1111(b) of the Bankruptcy Code, was
without recourse to CNAF;
- any Debt of CNAF to any of its subsidiaries;
- Debt to any employee of CNAF;
- any liability for taxes;
- indebtedness or monetary obligations to trade creditors or
assumed by CNAF or any of its subsidiaries in the ordinary
course of business in connection with the obtaining of
materials or services; and
- any other debt securities issued pursuant to the Junior
Indenture.
The Junior Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Junior Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the applicable prospectus supplement.
INFORMATION CONCERNING THE JUNIOR INDENTURE TRUSTEE
The Junior Indenture Trustee shall have and be subject to all the
duties and responsibilities specified with respect to an indenture trustee under
the Trust Indenture Act. Subject to such provisions, the Junior Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Junior Indenture at the request of any holder of Junior Debt Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Junior Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Junior Indenture Trustee
reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
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CORRESPONDING JUNIOR DEBT SECURITIES
The Corresponding Junior Debt Securities may be issued in one or more
series of Junior Debt Securities under the Junior Subordinated Indenture with
terms corresponding to the terms of a series of Related Preferred Securities. In
that event, concurrently with the issuance of each CNA Capital Trust's Preferred
Securities, such CNA Capital Trust will invest the proceeds thereof and the
consideration paid by CNAF for the Common Securities in a series of
Corresponding Junior Debt Securities issued by CNAF to such CNA Capital Trust.
Each series of Corresponding Junior Debt Securities will be in the principal
amount equal to the aggregate stated Liquidation Amount of the Related Preferred
Securities and the Common Securities of such CNA Capital Trust and will rank
pari passu with all other series of Junior Debt Securities. Holders of the
Related Preferred Securities for a series of Corresponding Junior Debt
Securities will have the rights in connection with modifications to the Junior
Indenture or upon occurrence of Junior Debt Security Events of Default described
under "--Modification of Junior Indenture" and "--Junior Debt Security Events of
Default", unless provided otherwise in the prospectus supplement for such
Related Preferred Securities.
If a Special Event in respect of a CNA Capital Trust of Related
Preferred Securities shall occur and be continuing (as defined under
"Description of Preferred Securities - Redemption or Exchange"), CNAF may, at
its option, redeem the Corresponding Junior Debt Securities at any time within
90 days of the occurrence of such Special Event, in whole but not in part,
subject to the provisions of the Junior Indenture. The redemption price for any
Corresponding Junior Debt Securities shall be equal to 100% of the principal
amount of such Corresponding Junior Debt Securities then outstanding plus
accrued and unpaid interest to the date fixed for redemption. For so long as the
applicable CNA Capital Trust is the holder of all the outstanding series of
Corresponding Junior Debt Securities, the proceeds of any such redemption will
be used by the CNA Capital Trust to redeem the corresponding Trust Securities in
accordance with their terms. CNAF may not redeem a series of Corresponding
Junior Debt Securities in part unless all accrued and unpaid interest has been
paid in full on all outstanding Corresponding Junior Debt Securities of such
series for all interest periods terminating on or prior to the Redemption Date.
CNAF will covenant in the Junior Indenture as to each series of
Corresponding Junior Debt Securities, that if and so long as (i) the CNA Capital
Trust of the related series of Trust Securities is the holder of all such
Corresponding Junior Debt Securities, (ii) a Tax Event in respect of such CNA
Capital Trust has occurred and is continuing and (iii) CNAF has elected, and has
not revoked such election, to pay Additional Sums (as defined under "Description
of Preferred Securities--Redemption or Exchange") in respect of such Trust
Securities, CNAF will pay to such CNA Capital Trust such Additional Sums. CNAF
will also agree, as to each series of Corresponding Junior Debt Securities:
- to maintain directly or indirectly 100% ownership of the
Common Securities of the CNA Capital Trust to which
Corresponding Junior Debt Securities have been issued,
provided that certain successors which are permitted pursuant
to the Junior Indenture may succeed to CNAF's ownership of the
Common Securities
- not to voluntarily terminate, wind-up or liquidate any CNA
Capital Trust, except (a) in connection with a distribution of
Corresponding Junior Debt Securities to the holders of the
Preferred Securities in liquidation of such CNA Capital Trust,
or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the related Trust Agreement; and
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- to use its reasonable efforts, consistent with the terms and
provisions of the related Trust Agreement, to cause such CNA
Capital Trust to remain classified as a grantor trust and not
as an association taxable as a corporation for United States
Federal income tax purposes.
NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder,
as such, of CNAF or any successor thereof shall have any liability for any
obligations of CNAF under the Junior Debt Securities or the Junior Indenture or
for any claims based on, in respect of, or by reason of, such obligations or
their creation. Each holder of Junior Debt Securities by accepting such Junior
Debt Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Junior Debt Securities.
DESCRIPTION OF COMMON STOCK
CNAF is authorized to issue 200 million shares of Common Stock. As of
November 30, 1998, 185,525,907 shares of Common Stock were issued and
183,889,569 were outstanding. The Common Stock has a par value of $2.50 per
share. As of November 30, 1998, Loews Corporation owned approximately 85% of
CNAF's outstanding Common Stock.
The following summary description of the terms of the Common Stock sets
forth certain general terms and provisions of the Common Stock. This description
is qualified in its entirety by reference to (i) CNAF's Certificate of
Incorporation and By-Laws, copies of which are filed as exhibits to CNAF's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and to
the Registration Statement and (ii) the description of the Common Stock set
forth in CNAF's registration statement on Form S-3 (File No. 33-35250) filed on
June 6, 1990, which is incorporated herein by reference.
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DIVIDENDS
Subject to the rights of the holders of Preferred Stock, holders of
Common Stock are entitled to receive dividends and other distributions in cash,
stock or CNAF's property, when, as and if declared by CNAF's Board of Directors
out of assets or funds of CNAF legally available therefor and shall share
equally on a per share basis in all such dividends and distributions.
VOTING RIGHTS
At every meeting of stockholders, every holder of Common Stock is
entitled to one vote per share. Subject to any voting rights of the holders of
Preferred Stock and as otherwise required by Delaware law, any action submitted
to stockholders (other than the election of directors) is approved if approved
by a majority of the stock having voting power present at a meeting at which
there is a quorum. A quorum generally requires the presence, in person or proxy,
of the holders of a majority of the stock issued and outstanding. Delaware law
requires that the holders of a majority of the issued and outstanding shares of
stock, eligible to vote thereon, approve (i) amendments to the Certificate of
Incorporation, (ii) most mergers and consolidations of CNAF and (iii) sale of
all or substantially all of CNAF's assets.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding-up of CNAF,
whether voluntary or involuntary, the holders of Common Stock are entitled to
share equally in the assets available for distribution after payment of all
liabilities and provision for the liquidation preference of any shares of
Preferred Stock then outstanding.
MISCELLANEOUS
The holders of Common Stock have no preemptive rights, cumulative
voting rights, subscription rights, or conversion rights and the Common Stock is
not subject to redemption.
The transfer agent and registrar with respect to the Common Stock is
First Chicago Trust Company of New York. The Common Stock is listed on the New
York Stock Exchange, the Chicago Stock Exchange and the Pacific Exchange, and
also is traded on the Philadelphia Stock Exchange. The trading symbol for the
Common Stock is "CNA".
DESCRIPTION OF PREFERRED STOCK
CNAF 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. CNAF has outstanding 750 shares each of Money Market Cumulative
Preferred(TM) Stock, Series E and Series F with a liquidation preference of
$100,000 per share and 2,000 shares of its Series G Cumulative Exchangeable
Preferred Stock with a liquidation preference of $100,000 per share.
The following summary description of the terms of the Preferred Stock
sets forth certain general terms and provisions of the Preferred Stock. This
description is qualified in its entirety by reference to
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CNAF's Certificate of Incorporation and By-Laws, copies of which are filed as
exhibits to CNAF's registration statement on Form S-8 (File No. 333-65493) and
to the Registration Statement.
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:
- the designation and number of shares comprising such series,
which may be increased or decreased from time to time by the
Board of Directors;
- 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;
- 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;
- 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 CNAF, 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;
- 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;
- 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
CNAF, 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;
- 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 matters;
- 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
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- 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 described in the applicable prospectus supplement
for a series of Preferred Stock, all shares of Preferred Stock shall be of 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.
The description of certain provisions of the Preferred Stock described
below is only a summary and is subject to and qualified in its entirety by
reference to the 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.
DIVIDEND RIGHTS
Except as may be set forth in an applicable 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 applicable 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 CNAF on such record dates as will be fixed by the Board of
Directors of CNAF 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 basis of the
actual number of days elapsed over a 360 day year. For a full dividend period,
the amount of dividends payable 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 applicable 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 CNAF. 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 prospectus supplement will describe whether and under what
circumstances (i) any shares of Preferred Stock may be redeemed by CNAF and (ii)
the holders of Preferred Shares may require CNAF to redeem any or all of
such shares.
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
CNAF and/or other property or cash, as described in the applicable prospectus
supplement.
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VOTING RIGHTS
The holders of Preferred Stock will have such voting rights, if any, as
described in the applicable prospectus supplement relating to a series of
Preferred Stock. Unless and except to the extent required by the 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 Certificate of Incorporation if the
amendment, whether or not entitled to vote thereon by the 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
one or 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 CNAF entitled to vote irrespective of the previous two sentences, if so
provided in the Certificate of Incorporation, in any amendment thereto
which created 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 CNAF, whether
voluntary or involuntary, holders of Preferred Stock will have such preferences
and priorities, if any, with respect to distribution of the assets of CNAF or
the proceeds thereof as may be set forth in the applicable 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 this prospectus will be as described
in the applicable prospectus supplement. The holders 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 CNAF. 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.
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DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any prospectus supplement of
certain provisions of the Deposit Agreement (as defined below) and of the
Depositary Shares and Depositary Receipts summarizes the material terms of the
Deposit Agreement and of the Depositary Shares and Depositary Receipts, and is
qualified in its entirety by reference to, the form of Deposit Agreement and
form of Depositary Receipts relating to each series of the Preferred Stock.
GENERAL
CNAF may, at its option, elect to have shares of Preferred Stock be
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") between CNAF and a bank or trust
company selected by CNAF (the "Preferred Stock Depositary"). The prospectus
supplement relating to a series of Depositary Shares will set forth the name and
address of the Preferred Stock Depositary. Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share will be entitled, proportionately,
to all the rights, preferences and privileges of the Preferred Stock represented
thereby (including dividend, voting, redemption, conversion, exchange and
liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable prospectus supplement.
A holder of Depositary Shares will be entitled to receive the shares of
Preferred Stock (but only in whole shares of Preferred Stock) underlying such
Depositary Shares. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the whole number of shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or
other cash distributions in respect to the Preferred Stock to the record holders
of Depositary Receipts in proportion, insofar as possible, to the number of
Depositary Shares owned by such holders.
In the event of a distribution other than in cash in respect to the
Preferred Stock, the Preferred Stock Depositary will distribute property
received by it to the record holders of Depositary Receipts in proportion,
insofar as possible, to the number of Depositary Shares owned by such holders,
unless the Preferred Stock Depositary determines that it is not feasible to make
such distribution, in which case the Preferred Stock Depositary may, with the
approval of CNAF, adopt such method as it deems equitable and practicable for
the purpose of effecting such distribution, including sale (at public or private
sale) of such property and distribution of the net proceeds from such sale to
such holders.
The amount so distributed in any of the foregoing cases will be reduced
by any amount required to be withheld by CNAF or the Preferred Stock Depositary
on account of taxes.
CONVERSION AND EXCHANGE
If any Preferred Stock underlying the Depositary Shares is subject to
provisions relating to its conversion or exchange as set forth in the prospectus
supplement relating thereto, each record holder of
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Depositary Shares will have the right or obligation to convert or exchange such
Depositary Shares pursuant to the terms thereof.
REDEMPTION OF DEPOSITARY SHARES
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of the Preferred Stock held by the Preferred Stock Depositary. The
redemption price per Depositary Share will be equal to the aggregate redemption
price payable with respect to the number of shares of Preferred Stock underlying
the Depositary Shares. Whenever CNAF redeems Preferred Stock from the Preferred
Stock Depositary, the Preferred Stock Depositary will redeem as of the same
redemption date a proportionate number of Depositary Shares representing the
shares of Preferred Stock that were redeemed. If less than all the Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed will be selected
by lot or pro rata as may be determined by CNAF.
After the date fixed for redemption, the Depositary Shares so called
for redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by CNAF with the
Preferred Stock Depositary for any Depositary Shares which the holders thereof
fail to redeem shall be returned to CNAF after a period of two years from the
date such funds are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of any
shares of Preferred Stock underlying the Depositary Shares are entitled to vote,
the Preferred Stock Depositary will mail the information contained in such
notice to the record holders of the Depositary Receipts. Each record holder of
such Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and CNAF will agree to take all reasonable
action which may be deemed necessary by the Preferred Stock Depositary to enable
the Preferred Stock Depositary to do so. The Preferred Stock Depositary will
abstain from voting the Preferred Stock to the extent it does not receive
specific written instructions from holders of Depositary Receipts representing
such Preferred Stock.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of or any
election on the part of CNAF to call for the redemption of any Preferred Stock,
the Preferred Stock Depositary shall in each such instance fix a record date
(which shall be the same as the record date for the Preferred Stock) for the
determination of the holders of Depositary Receipts (x) who shall be entitled to
receive such dividend, distribution, rights, preferences or privileges or the
net proceeds of the sale thereof or (y) who shall be entitled to give
instructions for the exercise of voting rights at any such meeting or to receive
notice of such meeting or of such redemption or conversion, subject to the
provisions of the Deposit Agreement.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt and any provision of the Deposit
Agreement may at any time be amended by agreement between CNAF and the Preferred
Stock Depositary. However, any amendment which imposes or increases any fees,
taxes or other charges payable by the holders of Depositary Receipts (other than
taxes and other governmental charges, fees and other expenses payable by such
holders as stated under "Charges of Preferred Stock Depositary"), or which
otherwise prejudices any substantial existing right of holders of Depositary
Receipts, will not take effect as to outstanding Depositary Receipts until the
expiration of 90 days after notice of such amendment has been mailed to the
record holders of outstanding Depositary Receipts.
Whenever so directed by CNAF, the Preferred Stock Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
CNAF a written notice of its election to resign and a successor depositary shall
not have been appointed and accepted its appointment. If any Depositary Receipts
remain outstanding after the date of termination, the Preferred Stock Depositary
thereafter will discontinue the transfer of Depositary Receipts, will suspend
the distribution of dividends to the holders thereof, and will not give any
further notices (other than notice of such termination) or perform any further
acts under the Deposit Agreement except as provided below and except that the
Preferred Stock Depositary will continue (i) to collect dividends on the
Preferred Stock and any other distributions with respect thereto and (ii) to
deliver the Preferred Stock together with such dividends and distributions and
the net proceeds of any sales of rights, preferences, privileges or other
property, without liability for interest thereon, in exchange for Depositary
Receipts surrendered. At any time after the expiration of two years from the
date of termination, the Preferred Stock Depositary may sell the Preferred Stock
then held by it at public or private sales, at such place or places and upon
such terms as it deems proper and may thereafter hold the net proceeds of any
such sale, together with any money and other property then held by it, without
liability for interest thereon, for the pro rata benefit of the holders of
Depositary Receipts which have not been surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
CNAF will pay all charges of the Preferred Stock Depositary including
charges in connection with the initial deposit of the Preferred Stock, the
initial issuance of the Depositary Receipts, the distribution of information to
the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
MISCELLANEOUS
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts at its corporate office and its New York office
all reports and communications from CNAF which are delivered to the Preferred
Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor CNAF will be liable if it is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the Deposit Agreement. The obligations of the Preferred
Stock Depositary under the Deposit Agreement are limited to performing its
duties thereunder without negligence or bad faith. The obligations of CNAF under
the Deposit Agreement
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are limited to performing its duties thereunder in good faith. Neither CNAF nor
the Preferred Stock Depositary is obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. CNAF and the Preferred Stock Depositary are
entitled to rely upon advice of or information from counsel, accountants or
other persons believed to be competent and on documents believed to be genuine.
The Preferred Stock Depositary may resign at any time or be removed by
CNAF, effective upon the acceptance by its successor of its appointment;
provided, that if a successor Preferred Stock Depositary has not been appointed
or accepted such appointment within 45 days after the Preferred Stock Depositary
has delivered a notice of election to resign to CNAF, the Preferred Stock
Depositary may terminate the Deposit Agreement. See "Amendment and Termination
of Deposit Agreement" above.
DESCRIPTION OF WARRANTS
GENERAL
CNAF may issue Warrants to purchase Debt Securities, Junior Debt
Securities, Preferred Stock (or Depositary Shares representing Preferred Stock)
or Common Stock (collectively, the "Underlying Warrant Securities"), and such
Warrants may be issued independently or together with any such Underlying
Warrant Securities and may be attached to or separate from such Underlying
Warrant Securities. Each series of Warrants will be issued under a separate
warrant agreement (each a "Warrant Agreement") to be entered into between CNAF
and a warrant agent ("Warrant Agent"). The Warrant Agent will act solely as an
agent of CNAF in connection with the Warrants of such series and will not assume
any obligation or relationship of agency for or with holders or beneficial
owners of Warrants. The following describes certain general terms and provisions
of the offered Warrants hereby. Further terms of the Warrants and the applicable
Warrant Agreement will be described in the applicable prospectus supplement.
The applicable prospectus supplement will describe the specific terms
of any Warrants for which this Prospectus is being delivered, including the
following:
- the title of such Warrants;
- the aggregate number of such Warrants;
- the issue price or prices of the Warrants;
- the currency or currencies, including composite currencies, in
which the price of such Warrants may be payable;
- the designation and terms of the Underlying Warrant Securities
purchasable upon exercise of such Warrants;
- the price at which and the currency or currencies, including
composite currencies, in which the Underlying Warrant
Securities purchasable upon exercise of such Warrants may be
purchased;
- the exercise date and expiration date for such Warrants;
- whether such Warrants will be issued in registered form or
bearer form;
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- if applicable, the minimum or maximum amount of such Warrants
which may be exercised at any one time;
- if applicable, the designation and terms of the Underlying
Warrant Securities with which such Warrants are issued and the
number of such Warrants issued with each such Underlying
Warrant Security;
- if applicable, the date on and after which such Warrants and
the related Underlying Warrant Securities will be traded
separately;
- information with respect to book-entry procedures, if any;
- if applicable, a discussion of certain United States federal
income tax considerations; and
- any other terms of such Warrants, including terms, procedures
and limitations relating to the exchange and exercise of such
Warrants.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for each CNA Capital
Trust, the Issuer Trustee on behalf of such CNA Capital Trust will issue the
Preferred Securities and the Common Securities (collectively, "Trust
Securities"). The Preferred Securities of a particular issue will represent
preferred beneficial interests in the CNA Capital Trust and the holders thereof
will be entitled to a preference over the Common Securities of such CNA Capital
Trust in certain circumstances with respect to Distributions and amounts payable
on redemption or liquidation over the Common Securities of such CNA Capital
Trust, as well as other benefits as described in the corresponding Trust
Agreement. Because the description below is only a summary, it does not contain
the detailed information contained in each Trust Agreement, including certain of
the definitions used in this prospectus or in the Trust Indenture Act. The form
of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Each of the CNA Capital Trusts
is a legally separate entity and the assets of one are not available to satisfy
the obligations of any of the others.
GENERAL
The Preferred Securities of a CNA Capital Trust will rank equal with,
and payments will be made thereon in proportion with, the Common Securities of
that CNA Capital Trust except as described under "--Subordination of Common
Securities." Legal title to the Corresponding Junior Debt Securities will be
held by the Property Trustee in trust for the benefit of the holders of the
related Preferred Securities and Common Securities. Each Guarantee Agreement
executed by CNAF for the benefit of the holders of a CNA Capital Trust's
Preferred Securities (the "Guarantee" for such Preferred Securities) will be a
guarantee on a subordinated basis with respect to the related Preferred
Securities but will not guarantee payment of Distributions or amounts payable on
redemption or liquidation of such Preferred Securities when the related CNA
Capital Trust does not have funds on hand available to make such payments. See
"Description of Guarantees."
The revenue of the CNA Capital Trusts available for distribution to
holders of Preferred Securities will be limited to payments under the related
Junior Debt Securities which such CNA Capital Trust purchased with the proceeds
from the sale of its Common Securities and Preferred Securities. If CNAF fails
to make a required payment in respect of such Junior Debt Securities, the
applicable CNA Capital Trust will not have sufficient funds to make the related
payments, including distributions for of its Preferred Securities.
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DISTRIBUTIONS
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable prospectus supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect to any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Subordinated Indenture Trustee (as defined herein)
is closed for business.
Each CNA Capital Trust's Preferred Securities represent preferred
beneficial interests in the applicable CNA Capital Trust, and the Distributions
on each Preferred Security will be payable at a rate specified in the prospectus
supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months unless otherwise specified in the applicable prospectus supplement.
Distributions to which holders of Preferred Securities are entitled will
accumulate additional Distributions at the rate per annum if and as specified in
the applicable prospectus supplement. The term "Distributions" as used herein
includes any such additional Distributions unless otherwise stated.
If provided in the applicable prospectus supplement, CNAF has the right
under the Indenture, pursuant to which it will issue the Corresponding Junior
Debt Securities, to defer the payment of interest at any time or from time to
time on any series of the Corresponding Junior Debt Securities for a period
which will be specified in such prospectus supplement relating to such series
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the stated maturity of the Corresponding Junior Debt Securities. Because
of any such extension, Distributions on the corresponding Preferred Securities
would be deferred (but would continue to accumulate additional Distributions
thereon at the rate per annum described in the prospectus supplement for such
Preferred Securities) by the CNA Capital Trust which issued such Preferred
Securities during any such Extension Period. During such Extension Period CNAF
may not, and may not permit any subsidiary of CNAF to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of CNAF's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of CNAF that rank pari passu with or junior in
interest to the Corresponding Junior Debt Securities or make any guarantee
payments with respect to any guarantee by CNAF of debt securities of any
subsidiary of CNAF if such guarantee ranks pari passu or junior in interest to
the Corresponding Junior Debt Securities (other than (a) dividends or
distributions in common stock of CNAF, (b) payments under any Guarantee and (c)
purchases of common stock related to the issuance of common stock under any of
CNAF's benefit plans for its directors, officers or employees).
The revenue of each CNA Capital Trust available for distribution to
holders of its Preferred Securities will be limited to payments under the
Corresponding Junior Debt Securities in which the CNA Capital Trust will invest
the proceeds from the issuance and sale of its Trust Securities. See
"Description of Junior Debt Securities--Corresponding Junior Debt Securities."
If CNAF does not make interest payments on such Corresponding Junior Debt
Securities, the Property Trustee will not have funds available to pay
Distributions on the Related Preferred Securities. The payment of Distributions
(if and to the extent the CNA Capital Trust
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has funds legally available for the payment of such Distributions and cash
sufficient to make such payments) is guaranteed by CNAF on a limited basis as
set forth herein under "Description of Guarantees."
Distributions on the Preferred Securities will be payable to the
holders thereof as they appear on the register of such CNA Capital Trust on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry form, will be one Business Day prior to the relevant distribution
date. If any Preferred Securities are not in book-entry form, the relevant
record date for such Preferred Securities shall be the date at least 15 days
prior to the relevant Distribution Date, as specified in the applicable
prospectus supplement.
REDEMPTION OR EXCHANGE
Mandatory Redemption.
Upon the repayment or redemption, in whole or in part, of any
Corresponding Junior Debt Securities, whether at maturity or upon earlier
redemption as provided in the Junior Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Common Securities and Preferred Securities of the CNA
Capital Trust, upon not less than 30 nor more than 60 days' notice, at a
redemption price (the "Redemption Price") equal to the aggregate' Liquidation
Amount of such Common Securities and Preferred Securities plus accumulated but
unpaid Distributions thereon to the date of redemption (the "Redemption Date")
and the related amount of the premium, if any, paid by CNAF upon the concurrent
redemption of such Corresponding Junior Debt Securities. See "Description of
Junior Debt--Securities Redemption." If less than all of any series of
Corresponding Junior Debt Securities are to be repaid or redeemed on a
Redemption Date, then the proceeds from such repayment or redemption shall be
allocated to the redemption pro rata of the related Preferred Securities and the
Common Securities. The amount of premium, if any, paid by CNAF upon the
redemption of all or any part of any series of any Corresponding Junior Debt
Securities to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the related Preferred Securities and the Common
Securities.
CNAF will have the right to redeem any series of Corresponding Junior
Debt Securities (i) in whole at any time or in part from time to time, subject
to the conditions described under "Description of Junior Debt
Securities-Redemption," (ii) at any time, in whole (but not in part), upon the
occurrence of a Tax Event or an Investment Company Event (each as defined below,
a "Special Event") and subject to the further conditions described under
"Description of Junior Debt Securities-Redemption," or (iii) as may be otherwise
specified in the applicable prospectus supplement.
Special Event Redemption or Distribution of Corresponding Junior Debt
Securities.
If a Special Event in respect of a series of Preferred Securities and
Common Securities shall occur and be continuing, CNAF has the right to redeem
the Corresponding Junior Debt Securities in whole (but not in part) and thereby
cause a mandatory redemption of such Preferred Securities and Common Securities
in whole (but not in part) at the Redemption Price within 90 days following the
occurrence of such Special Event. At any time, CNAF has the right to terminate
the related CNA Capital Trust and, after satisfaction of the liabilities of
creditors of such CNA Capital Trust as provided by applicable law, cause such
Corresponding Junior Debt Securities to be distributed to the holders of such
Preferred Securities and Common Securities in liquidation of the CNA Capital
Trust. If CNAF does not elect either option described above, the applicable
series of Preferred Securities will remain outstanding and, in the event a Tax
Event has occurred and is continuing, Additional Sums (as defined below) may be
payable on the Corresponding Junior Debt Securities.
Extension of Maturity of Corresponding Junior Debt Securities.
If provided in the applicable prospectus supplement, CNAF shall have
the right to extend or shorten the maturity of any series of Corresponding
Junior Debt Securities at the time that CNAF exercises its right to elect to
terminate the related CNA Capital Trust and cause such Corresponding Junior Debt
Securities to be distributed to the
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holders of such Preferred Securities and Common Securities in liquidation of the
CNA Capital Trust, provided that it can extend the maturity only if certain
conditions specified in the applicable prospectus supplement are met at the time
such election is made and at the time of such extension.
"Additional Sums" means the additional amounts as may be necessary so
that the amount of Distributions then due and payable by a CNA Capital Trust on
the outstanding Preferred Securities and Common Securities of the CNA Capital
Trust shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which such CNA Capital Trust has become subject as a
result of a Tax Event.
"Investment Company Event" means the receipt by the applicable CNA
Capital Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
the applicable CNA Capital Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the series of
Preferred Securities issued by the CNA Capital Trust.
"Like Amount" means (i) with respect to a redemption of any series of
Common Securities or Preferred Securities, Securities of such series having a
Liquidation Amount (as defined below) equal to that portion of the principal
amount of Corresponding Junior Debt Securities to be contemporaneously redeemed
in accordance with the Junior Indenture, allocated to the Common Securities and
to the Preferred Securities based upon the relative Liquidation Amounts of such
classes and the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, and (ii) with respect to a distribution of Corresponding
Junior Debt Securities to holders of any series of Trust Securities in
connection with a dissolution or liquidation of the related CNA Capital Trust,
Corresponding Junior Debt Securities having a principal amount equal to the
Liquidation Amount of the Trust Securities of the holder to whom such
Corresponding Junior Debt Securities are distributed.
"Liquidation Amount" means the stated amount of $25 per Common Security
or Preferred Security.
"Tax Event" means the receipt by the applicable CNA Capital Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the CNA Capital Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the corresponding series of
Corresponding Junior Debt Securities, (ii) interest payable by CNAF on such
series of Corresponding Junior Debt Securities is not, or within 90 days of the
date of such opinion, will not be, deductible by CNAF, in whole or in part, for
United States federal income tax purposes, or (iii) the applicable CNA Capital
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
After the liquidation date fixed for any distribution of Corresponding
Junior Debt Securities for any series of Preferred Securities (i) such series of
Preferred Securities will no longer be deemed to be outstanding, (ii) The
Depository Trust Company ("DTC") or its nominee, as the record holder of such
series of Preferred Securities, will receive a registered global certificate or
certificates representing the
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Corresponding Junior Debt Securities to be delivered upon such distribution and
(iii) any certificates representing such series of Preferred Securities not held
by DTC or its nominee will be deemed to represent the Corresponding Junior Debt
Securities having a principal amount equal to the stated liquidation preference
of such series of Preferred Securities, and bearing accrued and unpaid interest
in an amount equal to the accrued and unpaid Distributions on such series of
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Debt Securities that may be distributed
in exchange for Preferred Securities if a dissolution and liquidation of a CNA
Capital Trust were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Corresponding Junior Debt Securities that the
investor may receive on dissolution and liquidation of a CNA Capital Trust, may
trade at a different price from your purchase price for those Preferred
Securities.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Debt Securities. Redemptions of the
Preferred Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the related CNA Capital Trust has
funds on hand available for the payment of such Redemption Price. See also
"Subordination of Common Securities."
If a CNA Capital Trust gives a notice of redemption in respect of its
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are legally available, with respect to Preferred
Securities held by DTC or its nominee, the Property Trustee will deposit
irrevocably with DTC funds sufficient to pay the applicable Redemption Price and
will give DTC irrevocable instructions and authority to pay the Redemption Price
to the holders of such Preferred Securities. If such Preferred Securities are
not in book-entry form, the Property Trustee, to the extent funds are legally
available, will irrevocably deposit with the paying agent for such Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing
such Preferred Securities. Notwithstanding the foregoing, Distributions payable
on or prior to the Redemption Date for any Preferred Securities called for
redemption shall be payable to the holders of such Preferred Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of the holders of such Preferred Securities so
called for redemption will cease, except the right of the holders of such
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price, and such Preferred Securities will cease to be
outstanding. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the CNA Capital Trust or
by CNAF pursuant to the Guarantee as described under "Description of
Guarantees", Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
the CNA Capital Trust for such Preferred Securities to the date such Redemption
Price is actually paid, in which case the actual payment date will be the date
fixed for redemption for purposes of calculating the Redemption Price.
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Subject to applicable law (including, without limitation, United States
federal securities law), CNAF or its subsidiaries may at any time and from time
to time purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Debt Securities to holders of Preferred
Securities shall be made to the applicable recordholders thereof as they appear
on the register for such Preferred Securities on the relevant record date, which
shall be one Business Day prior to the relevant Redemption Date or liquidation
date, as applicable; provided, however, that in the event that any Preferred
Securities are not in book-entry form, the relevant record date for such
Preferred Securities shall be a date at least 15 days prior to the Redemption
Date or liquidation date, as applicable, as specified in the applicable
prospectus supplement.
If less than all of the Preferred Securities and Common Securities
issued by an issuer are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected on a pro rata
basis not more than 60 days prior to the Redemption Date by the Property Trustee
from the outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the trust registrar in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of each Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the aggregate Liquidation Amount of Preferred Securities which
has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at its registered address. Unless CNAF defaults in payment of the
Redemption Price on the Corresponding Subordinated Debt Securities, on and after
the Redemption Date interest ceases to accrue on such Subordinated Debt
Securities or portions thereof (and distributions cease to accrue on the Related
Preferred Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each CNA
Capital Trust's Preferred Securities and Common Securities, as applicable, shall
be made proportionately based on the Liquidation Amount of such Preferred
Securities and Common Securities; provided, however, that if on any Distribution
Date or Redemption Date a Subordinated Debt Security Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or Redemption
Price of, any of the CNA Capital Trust's Common Securities, and no other payment
on account of the redemption, liquidation or other acquisition of such Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all of the CNA Capital Trust's outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the CNA Capital Trust's outstanding Preferred Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the CNA Capital Trust's
Preferred Securities then due and payable.
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In the case of any Event of Default resulting from a Junior Debt
Related Event of Default, CNAF as holder of such CNA Capital Trust's Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default under the applicable Trust Agreement until the effect of
all such Events of Default with respect to such Preferred Securities have been
cured, waived or otherwise eliminated. Until any such Events of Default under
the applicable Trust Agreement with respect to the Preferred Securities have
been so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of such Preferred Securities and not on behalf
of CNAF as holder of the CNA Capital Trust's Common Securities, and only the
holders of such Preferred Securities will have the right to direct the Property
Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each CNA Capital Trust shall
automatically terminate upon expiration of its term and shall terminate on the
first to occur of:
- certain events of bankruptcy, dissolution or liquidation of CNAF
(a "Bankruptcy Event");
- the distribution of a Like Amount of the Corresponding Junior
Debt Securities to the holders of its Trust Securities, if CNAF,
as Depositor, has given written direction to the Property Trustee
to terminate such CNA Capital Trust (which direction is optional
and wholly within the discretion of CNAF, as Depositor) (a
"Distribution Event");
- the redemption of all of the CNA Capital Trust's Trust Securities
following a Special Event;
- redemption of all of the CNA Capital Trust's Preferred Securities
as described under "Description of Preferred Securities -
Redemption or Exchange - Mandatory Redemption"; and
- the entry of an order for the dissolution of the CNA Capital
Trust by a court of competent jurisdiction (a "Dissolution
Event").
If an early termination occurs from a Bankruptcy Event, a Distribution
Event or a Dissolution Event, the CNA Capital Trust shall be liquidated by the
Issuer Trustees as expeditiously as the Issuer Trustees determine to be possible
by distributing, after satisfaction of liabilities to creditors of such CNA
Capital Trust as provided by applicable law, to the holders of such Trust
Securities a Like Amount of the Corresponding Junior Debt Securities, unless
such distribution is determined by the Property Trustee not to be practical, in
which event such holders will be entitled to receive out of the assets of the
CNA Capital Trust available for distribution to holders, after satisfaction of
liabilities to creditors of such CNA Capital Trust as provided by applicable
law, an amount equal to, in the case of holders of Preferred Securities, the
aggregate of the Liquidation Amount plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because such CNA Capital Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by
such CNA Capital Trust on its Preferred Securities shall be paid on a pro rata
basis. The holder(s) of such CNA Capital Trust's Common Securities will be
entitled to receive distributions upon any such liquidation pro rata with the
holders of its Preferred Securities, except that if a Junior Debt Security Event
of Default has occurred and is continuing, the Preferred Securities shall have a
priority over the Common Securities. A supplemental Indenture may provide that
if an early termination occurs as described in the fifth bullet point above, the
Corresponding Junior Debt Securities may be subject to optional redemption in
whole (but not in part).
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EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes a "Trust Related Event of
Default" under each Trust Agreement (a "Trust Related Event of Default") with
respect to the Preferred Securities issued thereunder (whatever the reason for
such Trust Related Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
- the occurrence of a Junior Debt Related Event of Default under
the Junior Indenture (see "Description of Junior Debt
Securities - Junior Debt Related Events of Default"); or
- default by the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of
such default for a period of 30 days; or
- default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
- default in the performance, or breach, in any material respect,
of any covenant or warranty of the Issuer Trustees in such Trust
Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in the
two immediately preceding bullet points), and continuation of
such default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the defaulting
Issuer Trustee or Trustees by the holders of at least 25% in
aggregate liquidation preference of the outstanding Preferred
Securities of the applicable CNA Capital Trust, a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under such
Trust Agreement; or
- the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by CNAF to
appoint a successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Trust Related
Event of Default actually known to the Property Trustee, the Property Trustee
shall transmit notice of such Event of Default to the holders of such CNA
Capital Trust's Preferred Securities, the Administrative Trustees and CNAF, as
Depositor, unless such Event of Default shall have been cured or waived. CNAF,
as Depositor, and the Administrative Trustees are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under each Trust
Agreement.
If a Junior Debt Related Event of Default has occurred and is
continuing, the Preferred Securities shall have a preference over the Common
Securities upon termination of each CNA Capital Trust as described above. See
"Liquidation Distribution Upon Termination." The existence of a Trust Related
Event of Default does not entitle the holders of Preferred Securities to
accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEES
Unless a Junior Debt Related Event of Default shall have occurred and
be continuing, any Issuer Trustee may be removed at any time by the holder of
the Common Securities. If a Junior Debt Related Event of Default has occurred
and is continuing, the Property Trustee and the Delaware Trustee may be removed
at such time by the holders of a majority in Liquidation Amount of the
outstanding Preferred Securities. In no event will the holders of the Preferred
Securities have the right to vote to appoint, remove or replace the
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Administrative Trustees, which voting rights are vested exclusively in CNAF as
the holder of the Common Securities. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless a Trust Related Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, CNAF, as the holder of the
Common Securities, and the Administrative Trustees shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable Trust Agreement. In case a Junior
Debt Related Event of Default has occurred and is continuing, the Property
Trustee alone shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee
or any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Trustee, shall be the successor of such Trustee under
each Trust Agreement, provided such corporation shall be otherwise qualified and
eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE CNA CAPITAL TRUSTS
A CNA Capital Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other Person, except
as described below. A CNA Capital Trust may, at the request of CNAF, with the
consent of the Administrative Trustees and without the consent of the holders of
the Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to a trust organized as such under the laws of any state;
provided, that:
- such successor entity either (a) expressly assumes all of the
obligations of such CNA Capital Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms
as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred
Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise;
- CNAF expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as
the holder of the Corresponding Junior Debt Securities;
- the Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred
Securities are then listed, if any;
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- such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded
by any nationally recognized statistical rating organization;
- such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any
material respect;
- such successor entity has a purpose identical to that of the CNA
Capital Trust;
- prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, CNAF has received an opinion from
independent counsel to the CNA Capital Trust experienced in such
matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the
holders of the Preferred Securities (including any Successor
Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the CNA Capital Trust nor such
successor entity will be required to register as an investment
company under the Investment Company Act; and
- CNAF or any permitted successor or assignee owns all of the
Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, a CNA Capital Trust shall not,
except with the consent of holders of 100% in Liquidation Amount
of the Preferred Securities, consolidate, amalgamate, merge with
or into, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease
would cause the CNA Capital Trust or the successor entity to be
classified as other than a grantor trust for United States
federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
Except as provided below and under "Description of
Guarantees-Amendments and Assignment" and as otherwise required by law and the
applicable Trust Agreement, the holders of the Preferred Securities will have no
voting rights.
Each Trust Agreement may be amended from time to time by CNAF, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in such Trust Agreement that may be inconsistent with
any other provision, or to make any other provisions with respect to matters or
questions arising under such Trust Agreement, which shall not be inconsistent
with the other provisions of such Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of such Trust Agreement to such extent as shall be
necessary to ensure that the CNA Capital Trust will be classified for United
States federal income tax purposes as a grantor trust at all times that any
Trust Securities are outstanding or to ensure that the CNA Capital Trust will
not be required to register as an "investment company" under the Investment
Company Act; provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests of any holder
of Trust Securities, and any amendments of such Trust Agreement shall become
effective when notice thereof is given to the holders of Trust Securities. Each
Trust Agreement may be amended by the Issuer Trustees and CNAF with (i) the
consent of holders representing not less than a
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majority (based upon Liquidation Amounts) of the outstanding Trust Securities,
and (ii) receipt by the Issuer Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the Issuer Trustees
in accordance with such amendment will not affect the CNA Capital Trust's status
as a grantor trust for United States federal income tax purposes or the CNA
Capital Trust's exemption from status as an "investment company" under the
Investment Company Act, provided that without the consent of each holder of
Trust Securities, such Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Corresponding Junior Debt Securities are held by the
Property Trustee, the Issuer Trustees shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the Junior
Indenture Trustee, or executing any trust or power conferred on the Property
Trustee with respect to such Corresponding Junior Debt Securities, (ii) waive
any past default that is waivable under Section 513 of the Junior Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Junior Debt Securities shall be due and payable or (iv) consent to any
amendment, modification or termination of the Junior Indenture or such
Corresponding Junior Debt Securities, where such consent shall be required,
without, in each case, obtaining the prior approval of the holders of a majority
in aggregate Liquidation Amount of all outstanding Preferred Securities;
provided, however, that where a consent under the Junior Indenture would
require the consent of each holder of Corresponding Junior Debt Securities
affected thereby, no such consent shall be given by the Property Trustee without
the prior consent of each holder of the corresponding Preferred Securities. The
Issuer Trustees shall not revoke any action previously authorized or approved by
a vote of the holders of the Preferred Securities except by subsequent vote of
the holders of the Preferred Securities. The Property Trustee shall notify each
holder of Preferred Securities of any notice of default with respect to the
Corresponding Junior Debt Securities. In addition to obtaining the foregoing
approvals of the holders of the Preferred Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the CNA Capital Trust will not be
classified as a corporation for United States federal income tax purposes on
account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of Preferred Securities in the manner set
forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for a CNA Capital Trust to redeem and cancel its Preferred Securities
in accordance with the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by CNAF, the Issuer Trustees or any
affiliate of CNAF or any Issuer Trustees shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of a series may be issued in whole or in part
in the form of one or more Global Preferred Securities that will be deposited
with, or on behalf of, the Depositary identified in the applicable prospectus
supplement. Unless otherwise indicated in the prospectus supplement for such
series, the Depositary will be DTC. Global Preferred Securities may be issued
only in fully registered form and in
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either temporary or permanent form. Unless and until it is exchanged in whole or
in part for the individual Preferred Securities represented thereby, a Global
Preferred Security may not be transferred except as a whole by the Depositary
for such Global Preferred Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a
series of Preferred Securities will be described in the applicable prospectus
supplement. CNAF anticipates that the following provisions will generally apply
to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of
such Global Preferred Security with or on behalf of the Depositary, the
Depositary for such Global Preferred Security or its nominee will credit, on its
book-entry registration and transfer system, the respective aggregate
Liquidation Amounts of the individual Preferred Securities represented by such
Global Preferred Securities to the accounts of Participants. Such accounts shall
be designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by CNAF if such Preferred Securities are offered and
sold directly by CNAF. Ownership of beneficial interests in a Global Preferred
Security will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Preferred
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the 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 transfer beneficial interests in a Global Preferred
Security.
So long as the Depositary for a Global Preferred Security, or its
nominee, is the registered owner of such Global Preferred Security, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such Global Preferred
Security for all purposes under the Indenture governing such Preferred
Securities. Except as provided below, owners of beneficial interests in a Global
Preferred Security will not be entitled to have any of the individual Preferred
Securities of the series represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on
individual Preferred Securities represented by a Global Preferred Security
registered in the name of a Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Preferred Security representing such Preferred Securities. None of CNAF,
the Property Trustee, any Paying Agent, or the Securities Registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
CNAF expects that the Depositary for a series of Preferred Securities
or its nominee, upon receipt of any payment of Liquidation Amount, premium or
Distributions in respect of a permanent Global Preferred Security representing
any of such Preferred Securities, immediately will credit Participants' accounts
with payments in amounts proportionate to their respective beneficial interest
in the aggregate Liquidation Amount of such Global Preferred Security for such
Preferred Securities as shown on the records of such Depositary or its nominee.
CNAF also expects that payments by Participants to owners of beneficial
interests in such Global Preferred Security held through such Participants will
be governed by standing instructions and
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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.
Unless otherwise specified in the applicable prospectus supplement, if
a Depositary for a series of Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by CNAF within 90 days, CNAF will issue individual Preferred
Securities of such series in exchange for the Global Preferred Security
representing such series of Preferred Securities. In addition, CNAF may at any
time and in its sole discretion, subject to any limitations described in the
prospectus supplement relating to such Preferred Securities, determine not to
have any Preferred Securities of such series represented by one or more Global
Preferred Securities and, in such event, will issue individual Preferred
Securities of such series in exchange for the Global Preferred Security or
Securities representing such series of Preferred Securities. Further, if CNAF so
specifies with respect to the Preferred Securities of a series, an owner of a
beneficial interest in a Global Preferred Security representing Preferred
Securities of such series may, on terms acceptable to CNAF, the Property Trustee
and the Depositary for such Global Preferred Security, receive individual
Preferred Securities of such series in exchange for such beneficial interests,
subject to any limitations described in the prospectus supplement relating to
such Preferred Securities. In any such instance, an owner of a beneficial
interest in a Global Preferred Security will be entitled to physical delivery of
individual Preferred Securities of the series represented by such Global
Preferred Security equal in principal amount to such beneficial interest and to
have such Preferred Securities registered in its name. Individual Preferred
Securities of such series so issued will be issued in denominations, unless
otherwise specified by CNAF, of $25 and integral multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any CNA Capital Trust's Preferred
Securities are not held by the Depositary, such payments shall be made by check
mailed to the address of the holder entitled thereto as such address shall
appear on the Register. Unless otherwise specified in the applicable prospectus
supplement, the paying agent (the "Paying Agent") shall initially be the
Property Trustee and any co-paying agent chosen by the Property Trustee and
acceptable to the Administrative Trustees and CNAF. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Property
Trustee and CNAF. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which shall
be a bank or trust company acceptable to the Administrative Trustees and CNAF)
to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of each CNA Capital Trust, but upon payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The CNA Capital Trusts will not be required to register or
cause to be registered the transfer of their Preferred Securities after such
Preferred Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance
of a Trust Related Event of Default, undertakes to perform only such duties as
are specifically set forth in each Trust Agreement and, after such Trust Related
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Event of Default, must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, the Property Trustee is under no obligation to exercise any
of the powers vested in it by the applicable Trust Agreement at the request of
any holder of Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby. If
no Trust Related Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the applicable Trust Agreement or is unsure of
the application of any provision of the applicable Trust Agreement, and the
matter is not one on which holders of Preferred Securities are entitled under
such Trust Agreement to vote, then the Property Trustee shall take such action
as is directed by CNAF and if not so directed, shall take such action as it
deems advisable and in the best interests of the holders of the CNA Capital
Trust's Common Securities and Preferred Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the CNA Capital Trusts in such a way that no CNA
Capital Trust will be deemed to be an "investment company" required to be
registered under the Investment Company Act or classified as an association
taxable as a corporation for United States federal income tax purposes and so
that the Corresponding Subordinated Debt Securities will be treated as
indebtedness of CNAF for United States federal income tax purposes. In this
connection, CNAF and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of each
CNA Capital Trust or each Trust Agreement, that CNAF and the Administrative
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially adversely affect the
interests of the holders of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
No CNA Capital Trust may borrow money or issue debt or mortgage or
pledge any of its assets.
DESCRIPTION OF GUARANTEES
A Guarantee will be executed and delivered by CNAF concurrently with
the issuance by each CNA Capital Trust of its Preferred Securities for the
benefit of the holders from time to time of such Preferred Securities. The First
National Bank of Chicago will act as indenture trustee ("Guarantee Trustee")
under each Guarantee for the purposes of compliance with the Trust Indenture Act
and each Guarantee will be qualified as an indenture under the Trust Indenture
Act. The form of the Guarantee has been included as an exhibit to the
Registration Statement.
The following description summarizes the material terms of the
Guarantees. This summary is qualified in its entirety by reference to the
detailed provisions of the Guarantees, including the definitions of certain
terms used in the description of the Guarantees in this prospectus, and those
terms made a part of each of the Guarantees by the Trust Indenture Act.
Reference in this summary to Preferred Securities means that CNA Capital Trust's
Preferred Securities to which a Guarantee relates. The Guarantee Trustee will
hold each Guarantee for the benefit of the holders of the related CNA Capital
Trust's Preferred Securities.
GENERAL
CNAF will irrevocably agree to pay in full on a subordinated basis, to
the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Preferred Securities, as and when due,
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regardless of any defense, right of set-off or counterclaim that such CNA
Capital Trust may have or assert other than the defense of payment. The
following payments with respect to the Preferred Securities, to the extent not
paid by or on behalf of the related CNA Capital Trust (the "Guarantee
Payments"), will be subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on such Preferred Securities, to the extent
that such CNA Capital Trust has funds on hand available therefor at such time,
(ii) the Redemption Price with respect to any Preferred Securities called for
redemption to the extent that such CNA Capital Trust has funds on hand available
therefor at such time, or (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of such CNA Capital Trust (unless the Corresponding
Subordinated Debt Securities are distributed to holders of such Preferred
Securities), the lesser of (a) the Liquidation Distribution and (b) the amount
of assets of such CNA Capital Trust remaining available for distribution to
holders of Preferred Securities. CNAF's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by CNAF to the
holders of the applicable Preferred Securities or by causing the CNA Capital
Trust to pay such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis
of the related CNA Capital Trust's obligations under the Preferred Securities,
but will apply only to the extent that such related CNA Capital Trust has funds
sufficient to make such payments, and is not a guarantee of collection.
If CNAF does not make interest payments on the Corresponding Junior
Debt Securities held by the CNA Capital Trust, the CNA Capital Trust will not
have funds legally available and will not be able to pay Distributions on the
Preferred Securities. Each Guarantee will rank subordinate and junior in right
of payment to all Senior Debt of CNAF. See "- Status of the Guarantees." Except
as otherwise provided in the applicable prospectus supplement, the Guarantees do
not limit the incurrence or issuance of other secured or unsecured debt of CNAF,
whether under the Indenture, any other indenture that CNAF may enter into in the
future or otherwise. See the prospectus supplement relating to any offering of
Preferred Securities.
CNAF's obligations described herein and in any accompanying prospectus
supplement, through the applicable Guarantee, the applicable Trust Agreement,
the Junior Debt Securities, the Junior Indenture and any supplemental indentures
thereto, and the Expense Agreement, taken together, constitute a full,
irrevocable and unconditional guarantee by CNAF of payments due on the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the CNA Capital Trust's obligations
under the Preferred Securities. See "The CNA Capital Trusts," "Description of
Preferred Securities," and "Description of Subordinated Debt Securities."
STATUS OF THE GUARANTEES
Each Guarantee will constitute an unsecured obligation of CNAF and will
rank subordinate and junior in right of payment to all Senior Debt.
Each Guarantee will rank equally with all other Guarantees issued by
CNAF. Each Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Preferred
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the CNA Capital Trust or
upon distribution to the holders of the Preferred Securities of the
Corresponding Subordinated Debt Securities. None of the Guarantees places a
limitation on the amount of additional Senior Debt that may be incurred by CNAF.
CNAF expects from time to time to incur additional indebtedness constituting
Senior Debt.
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AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely
affect the rights of holders of the related Preferred Securities (in which case
no vote will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of such outstanding Preferred Securities. The manner of obtaining any
such approval will be as set forth under "Description of the Preferred
Securities-Voting Rights; Amendment of Each Trust Agreement." All guarantees and
agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of CNAF and shall inure to the benefit
of the holders of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of
CNAF to perform any of its payment or other obligations thereunder. The holders
of not less than a majority in aggregate Liquidation Amount of the related
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the Preferred Securities may institute a legal proceeding
directly against CNAF to enforce its rights under such Guarantee without first
instituting a legal proceeding against the CNA Capital Trust, the Guarantee
Trustee or any other person or entity.
CNAF, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not CNAF is in compliance with all the
conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of a default by CNAF in performance of any Guarantee, undertakes to perform only
such duties as are specifically set forth in each Guarantee and, after default
with respect to any Guarantee, must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee is under no obligation
to exercise any of the powers vested in it by any Guarantee at the request of
any holder of any Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
Each Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the related Preferred Securities,
upon full payment of the amounts payable upon liquidation of the related CNA
Capital Trust or upon distribution of Corresponding Junior Debt Securities
to the holders of the related Preferred Securities. Each Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of the related Preferred Securities must restore payment of any sums paid
under such Preferred Securities or such Guarantee.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by CNAF under each Trust
Agreement (the "Expense Agreement"), CNAF will irrevocably and unconditionally
guarantee to each person or entity to
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whom the CNA Capital Trust becomes indebted or liable, the full payment of any
costs, expenses or liabilities of the CNA Capital Trust, other than obligations
of the CNA Capital Trust to pay to the holders of any Preferred Securities or
other similar interests in the CNA Capital Trust of the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
CNAF may issue Stock Purchase Contracts, representing contracts
obligating holders to purchase from CNAF, and CNAF to sell to the holders, a
specified number of shares of Common Stock at a future date or dates. The price
per share of Common Stock may be fixed at the time the Stock Purchase Contracts
are issued or may be determined by reference to a specific formula set forth in
the Stock Purchase Contracts. The Stock Purchase Contracts may be issued
separately or as a part of units ("Stock Purchase Units") consisting of a Stock
Purchase Contract and either (x) Debt Securities or Junior Debt Securities, (y)
debt obligations of third parties, including U.S. Treasury securities, or (z)
Preferred Securities of a CNA Capital Trust, securing the holder's obligations
to purchase the Common Stock under the Stock Purchase Contracts. The Stock
Purchase Contracts may require CNAF to make periodic payments to the holders of
the Stock Purchase Units or vice versa, and such payments may be unsecured or
prefunded on some basis. The Stock Purchase Contracts may require holders to
secure their obligations thereunder in a specified manner and in certain
circumstances CNAF may deliver newly issued prepaid stock purchase contracts
("Prepaid Securities") upon release to a holder of any collateral securing such
holder's obligations under the original Stock Purchase Contract.
The applicable prospectus supplement will describe the terms of any
Stock Purchase Contracts or Stock Purchase Units and, if applicable, Prepaid
Securities. The description in the prospectus supplement will not purport to be
complete and will be qualified in its entirety by reference to the Stock
Purchase Contracts, the collateral arrangements and depositary arrangements, if
applicable, relating to such Stock Purchase Contracts or Stock Purchase Units
and, if applicable, the Prepaid Securities and the document pursuant to which
such Prepaid Securities will be issued.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR DEBT SECURITIES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the CNA Capital Trust has funds available for the
payment of such Distributions) are irrevocably guaranteed by CNAF as and to the
extent set forth under "Description of Guarantees." Taken together, CNAF's
obligations under each series of Junior Debt Securities, the Junior
Indenture, the related Trust Agreement, the related Expense Agreement, and the
related Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the related series of Preferred Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
CNA Capital Trust's obligations under the Preferred Securities. If and to the
extent that CNAF does not make payments on any series of Corresponding Junior
Debt Securities, such CNA Capital Trust will not pay Distributions or other
amounts due on its Preferred Securities. The Guarantees do not cover payment of
Distributions when the related CNA Capital Trust does not have sufficient funds
to pay such Distributions. In such event, the remedy of a holder of a
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series of Preferred Securities is to institute a legal proceeding directly
against CNAF for enforcement of payment of such Distributions to such holder.
The obligations of CNAF under each Guarantee are subordinate and junior in right
of payment to all Senior Debt of CNAF.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Debt Securities, such payments will be
sufficient to cover Distributions and other payments due on the related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Debt Securities will be equal to the sum of
the aggregate stated Liquidation Amount of the Related Preferred Securities and
related Common Securities; (ii) the interest rate and interest and other payment
dates on each series of Corresponding Junior Debt Securities will match the
Distribution rate and Distribution and other payment dates for the related
Preferred Securities; (iii) CNAF shall pay for all and any costs, expenses and
liabilities of such CNA Capital Trust except the CNA Capital Trust's obligations
to holders of its Preferred Securities under such Preferred Securities; and (iv)
each Trust Agreement further provides that the CNA Capital Trust will not engage
in any activity that is not consistent with the limited purposes of such CNA
Capital Trust.
Notwithstanding anything to the contrary in the Junior Indenture, CNAF
has the right to set-off any payment it is otherwise required to make thereunder
with and to the extent CNAF has theretofore made, or is concurrently on the date
of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any related Preferred Security may institute a legal
proceeding directly against CNAF to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related CNA Capital Trust or any other person or entity.
A default or event of default under any Senior Debt of CNAF would not
constitute a default or Event of Default. However, in the event of payment
defaults under, or acceleration of, Senior Debt of CNAF, the subordination
provisions of the Junior Indenture provide that no payments may be made in
respect of the Corresponding Junior Debt Securities until such Senior Debt has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on any series of Corresponding Junior Debt
Securities would constitute an Event of Default.
LIMITED PURPOSE OF CNA CAPITAL TRUSTS
Each CNA Capital Trust's Preferred Securities evidence a beneficial
interest in such CNA Capital Trust, and each CNA Capital Trust exists for the
sole purpose of issuing its Preferred Securities and Common Securities and
investing the proceeds thereof in Corresponding Junior Debt Securities. A
principal difference between the rights of a holder of a Preferred Security and
a holder of a Corresponding Junior Debt Security is that a holder of a
Corresponding Junior Debt Security is entitled to receive from CNAF the
principal amount of and interest accrued on Corresponding Junior Debt Securities
held, while a holder of Preferred Securities is entitled to receive
Distributions from such CNA Capital Trust (or from CNAF under the applicable
Guarantee) if and to the extent such CNA Capital Trust has funds available for
the payment of such Distributions.
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RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of any CNA Capital Trust involving the liquidation of the
Corresponding Junior Debt Securities, the holders of the related Preferred
Securities will be entitled to receive, out of assets held by such CNA Capital
Trust, the Liquidation Distribution in cash. See "Description of Preferred
Securities - Liquidation Distribution Upon Termination." Upon any voluntary or
involuntary liquidation or bankruptcy of CNAF, the Property Trustee, as holder
of the Corresponding Junior Debt Securities, would be a subordinated creditor of
CNAF, subordinated in right of payment to all Senior Debt, but entitled to
receive payment in full of principal and interest, before any stockholders of
CNAF receive payments or distributions. Since CNAF is the guarantor under each
Guarantee and has agreed to pay for all costs, expenses and liabilities of each
CNA Capital Trust (other than the CNA Capital Trust's obligations to the holders
of its Preferred Securities), the positions of a holder of such Preferred
Securities and a holder of such Corresponding Junior Debt Securities relative to
other creditors and to stockholders of CNAF in the event of liquidation or
bankruptcy of CNAF are expected to be substantially the same.
PLAN OF DISTRIBUTION
CNAF and/or any CNA Capital Trust may sell any of the Offered
Securities in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; or (iv)
directly to purchasers.
The prospectus supplement with respect to the Offered Securities will
set forth the terms of the offering of the Offered Securities, including the
name or names of any underwriters, dealers or agents; the purchase price of the
Offered Securities and the proceeds to CNAF and/or a CNA Capital Trust from such
sale; any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation; any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
and any securities exchange on which such Offered Securities may be listed. Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The distribution of the Offered Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
Offers to purchase Offered Securities may be solicited by agents
designated by CNAF from time to time. Any such agent involved in the offer or
sale of the Offered Securities in respect of which this prospectus is delivered
will be named, and any commissions payable by CNAF and/or the applicable CNA
Capital Trust to such agent will be described, in the applicable prospectus
supplement. Unless otherwise indicated in such prospectus supplement, any such
agent will be acting on a reasonable best efforts basis for the period of its
appointment. Any such agent may be deemed to be an underwriter, as that term is
defined in the Securities Act, of the Offered Securities so offered and sold.
If Offered Securities are sold by means of an underwritten offering,
CNAF and/or the applicable CNA Capital Trust will execute an underwriting
agreement with an underwriter or underwriters at the time an agreement for such
sale is reached, and the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transaction, including commissions, discounts and any other compensation of the
underwriters and dealers, if any, will be set forth in the prospectus supplement
which will be used by the underwriters to make resales of the Offered Securities
in respect of which this prospectus is delivered to the public. If underwriters
are used in the sale of the Offered Securities in respect
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of which this prospectus is delivered, the Offered Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices determined by the underwriter at the time
of sale. Offered Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by the
managing underwriters. If any underwriter or underwriters are used in the
sale of the Offered Securities, unless otherwise indicated in the prospectus
supplement, the underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters with respect to a sale of Offered Securities will be obligated to
purchase all such Offered Securities of a series if any are purchased.
If a dealer is used in the sales of the Offered Securities in respect
of which this prospectus is delivered, CNAF and/or the applicable CNA Capital
Trust will sell such Offered Securities to the dealer as principal. The dealer
may then resell such Offered Securities to the public at varying prices to be
determined by such dealer at the time of resale. Any such dealer may be deemed
to be an underwriter, as such term is defined in the Securities Act, of the
Offered Securities so offered and sold. The name of the dealer and the terms of
the transaction will be set forth in the prospectus supplement relating thereto.
Offers to purchase Offered Securities may be solicited directly by CNAF
and/or the applicable CNA Capital Trust and the sale thereof may be made by CNAF
and/or the applicable CNA Capital Trust directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale thereof. The terms of any such sales
will be described in the prospectus supplement relating thereto.
Agents, underwriters and dealers may be entitled under relevant
agreements to indemnification or contribution by CNAF and/or the applicable CNA
Capital Trust against certain liabilities, including liabilities under the
Securities Act.
Agents, underwriters and dealers may be customers of, engage in
transactions with or perform services for CNAF and its subsidiaries in the
ordinary course of business.
Offered Securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for CNAF and/or the applicable CNA Capital
Trust. Any remarketing firm will be identified and the terms of its agreement,
if any, with its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters, as such term is
defined in the Securities Act, in connection with the Offered Securities
remarketed thereby. Remarketing firms may be entitled under agreements which may
be entered into with CNAF and/or the applicable CNA Capital Trust to
indemnification or contribution by CNAF and/or the applicable CNA Capital Trust
against certain civil liabilities, including liabilities under the Securities
Act, and may be customers of, engage in transactions with or perform services
for CNAF and its subsidiaries in the ordinary course of business.
If so indicated in the applicable prospectus supplement, CNAF and/or
the applicable CNA Capital Trust may authorize agents, underwriters or dealers
to solicit offers by certain types of institutions to purchase Offered
Securities from CNAF and/or the applicable CNA Capital Trust at the public
offering prices set forth in the applicable prospectus supplement pursuant to
delayed delivery contracts providing for payment and delivery on a specified
date or dates in the future. A commission indicated in the applicable prospectus
supplement will be paid to underwriters, dealers and agents soliciting purchases
of Offered Securities pursuant to any such delayed delivery contracts accepted
by CNAF and/or the applicable CNA Capital Trust.
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VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable prospectus supplement,
certain legal matters will be passed upon (i) for CNAF by Jonathan D. Kantor,
Esq., Senior Vice President, Secretary and General Counsel of CNAF and
Sonnenschein Nath & Rosenthal, Chicago, Illinois, counsel to CNAF; (ii) for the
CNA Capital Trusts by Young, Conaway, Stargatt & Taylor special Delaware
counsel to the CNA Capital Trusts; and (iii) for any underwriters, dealers or
agents by Brown & Wood LLP, New York, New York.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules incorporated by reference in this prospectus from
CNAF's Annual Report on Form 10-K for the year ended December 31, 1997 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
Offering described in this Registration Statement.
Securities and Exchange Commission registration fee............. $166,800
Accounting Fees and Expenses.................................... *
Printing and Engraving Expenses................................. *
Legal Fees and Expenses......................................... *
Blue Sky Fees and Expenses...................................... *
Indenture trustee's fees and expenses .......................... *
Miscellaneous................................................... *
--------
Total.................................................. $ *
========
- ---------
* To be completed by amendment.
The foregoing items, except for the Securities and Exchange Commission fee, are
estimated. All expenses will be borne by CNAF except as otherwise indicated.
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 the person's conduct was
unlawful."
With respect to derivative actions, Section 145(b) of the DGCL provides
in relevant part that "[a] corporation shall have the 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 paragraph] against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit 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 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
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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 other court shall deem proper."
Article X of CNAF's By-Laws contains provisions similar to Section 145
of the DGCL, although providing mandatory indemnification in certain of the
circumstances covered by Section 145(a) of the DGCL.
Such indemnification may apply to claims arising under the Securities
Act of 1933, as amended. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted for directors, officers or
persons controlling CNAF pursuant to the foregoing provisions, CNAF has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by CNAF of expenses incurred or paid by a
director, officer or controlling person of CNAF in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, CNAF 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
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
CNAF maintains directors' and officers' liability insurance with an
annual aggregate limit of [$___________] for the current policy period, subject
to a [$___________] deductible at the corporate level, for each wrongful act
where corporate reimbursement is available to any director or officer.
Under each Trust Agreement, CNAF will agree to indemnify each of the
Trustees of the CNA Capital Trust or any predecessor Trustee for the CNA Capital
Trust, and to hold the Trustee harmless against, any loss, damage, claims,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Trust Agreements, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
its powers or duties under the Trust Agreements.
ITEM 16. EXHIBITS
EXHIBIT NO.
3(a) Certificate of Incorporation of CNA Financial Corporation,
as amended May 6, 1987 and May 6, 1998, is incorporated by
reference to Exhibit 3.1 of CNAF's registration statement
on Form S-8 (File No. 333-65493).
3(b) By-laws of CNA Financial Corporation, as amended February
12, 1997 and May 6, 1998, are incorporated by reference to
Exhibit 3.2 of CNAF's registration statement on Form S-8
(File No. 333-65493).
4(a) Senior Debt Indenture between CNA Financial Corporation and
The First National Bank of Chicago, a national banking
association, as Trustee, is incorporated by reference to
Exhibit 4.1 of CNAF's registration statement on Form S-3
(File No. 33-35250).
4(b) Form of First Supplemental Indenture of the Senior
Indenture between CNA Financial Corporation and The First
National Bank of Chicago, a national banking association,
as Trustee, is incorporated by reference to Exhibit 4.2 of
CNAF's registration statement on Form S-3 (File No.
33-50753).
4(c) Form of Subordinated Indenture between CNA Financial
Corporation and The First National Bank of Chicago, a
national banking association, as Trustee, is incorporated
by reference to Exhibit 4.3 of CNAF's registration
statement on Form S-3 (File No. 33-50753).
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<TABLE>
<S> <C>
4(d) * Form of Junior Subordinated Indenture between CNA Financial
Corporation and The First National Bank of Chicago, a
national banking association, as Trustee.
4(e) * Certificate of Trust of CNA Financial Capital I.
4(f) * Trust Agreement of CNA Financial Capital I.
4(g) * Certificate of Trust of CNA Financial Capital II.
4(h) * Trust Agreement of CNA Financial Capital II.
4(i) * Certificate of Trust of CNA Financial Capital III.
4(j) * Trust Agreement of CNA Financial Capital III.
4(k) * Form of Guarantee Agreement for CNA Financial Capital I.
4(l) * Form of Guarantee Agreement for CNA Financial Capital II.
4(m) * Form of Guarantee Agreement for CNA Financial Capital III.
5(a) * Opinion of Jonathan D. Kantor, Esq.
5(b) * Opinion of Sonnenschein Nath & Rosenthal.
5(c) * Opinion of Young, Conaway, Stargatt & Taylor as to
legality of the Preferred Securities to be issued by CNA
Financial Capital I, CNA Financial Capital II and CNA
Financial Capital III.
23(a) Consent of Deloitte & Touche, LLP.
23(b) * Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5(a)).
23(c) * Consent of Young, Conaway, Stargatt & Taylor (to be included in Exhibit 5(b)).
24 Powers of Attorney.
25(a) Form T-1 Statement of Eligibility of The First National Bank of Chicago to act as
trustee under the Senior Indenture is incorporated by reference to Exhibit 25.1 of the
registration statement on Form S-3 (File No. 333-33821).
25(b) Form T-1 Statement of Eligibility of The First National
Bank of Chicago to act as trustee under the Subordinated
Indenture is incorporated by reference to Exhibit 25.2 of
the registration statement on Form S-3 (File No. 333-33821).
25(c) * Form T-1 Statement of Eligibility of The First National
Bank of Chicago to act as trustee under the Junior Subordinated
Indenture.
25(d) * Form T-1 Statement of Eligibility of The First National Bank
of Chicago to act as trustee under the Trust Agreement of
CNA Financial Capital I.
25(e) * Form T-1 Statement of Eligibility of The First National Bank
of Chicago to act as trustee under the Trust Agreement of CNA
Financial Capital II.
25(f) * Form T-1 Statement of Eligibility of The First National Bank
of Chicago to act as trustee under the Trust Agreement of
CNA Financial Capital III.
25(g) * Form T-1 Statement of Eligibility of The First National Bank
of Chicago under the Guarantee for the benefit of the holders
of Preferred Securities of CNA Financial Capital I.
</TABLE>
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<TABLE>
<S> <C>
25(h) * Form T-1 Statement of Eligibility of The First National Bank of
Chicago under the Guarantee for the benefit of the holders of
Preferred Securities of CNA Financial Capital II.
25(i) * Form T-1 Statement of Eligibility of The First National Bank of
Chicago under the Guarantee for the benefit of the holders of
Preferred Securities of CNA Financial Capital III.
</TABLE>
- -------------------------------------
* To be filed by amendment
ITEM 17. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers and 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% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(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 (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 and the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 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 the 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.
(b) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be
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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.
(c) If the securities to be registered are to be offered at competitive
bidding, the undersigned registrants hereby undertake: (1) to use its best
efforts to distribute prior to the opening of bids, to prospective bidders,
underwriters, and dealers, a reasonable number of copies of a prospectus which
at that time meets the requirements of Section 10(a) of the Act, and relating to
the securities offered at competitive bidding, as contained in the Registration
Statement, together with any supplements thereto, and (2) to file an amendment
to the Registration Statement reflecting the results of bidding, the terms of
the reoffering and related matters to the extent required by the applicable
form, not later than the first use, authorized by the issuer after the opening
of bids, of a prospectus relating to the securities offered at competitive
bidding, unless no further public offering of such securities by the issuer and
no reoffering of such securities by the purchasers is proposed to be made.
(d) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
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 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 indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(e) The undersigned registrants hereby undertake that:
(1) 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.
(2) 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
the initial bona fide offering thereof.
(f) The undersigned registrants hereby undertake to file, if necessary, an
application for the purpose of determining the eligibility of the Trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act of 1939, as
amended, in accordance with the rules and regulations prescribed by the
Securities and Exchange Commission under Section 305(b)(2) of such Act.
(g) The undersigned registrants hereby undertake to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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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 Chicago, Illinois on December 24, 1998.
CNA FINANCIAL CORPORATION
By: /s/ W. James MacGinnitie
-----------------------------
W. James MacGinnitie
Senior Vice President and
Chief Financial Officer
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THEIR RESPECTIVE
CAPACITIES ON THE 24th DAY OF DECEMBER, 1998.
SIGNATURE TITLE
--------- -----
/s/ Laurence A. Tisch*
- ----------------------------- Chief Executive Officer and Director
Laurence A. Tisch
/s/ W. James MacGinnitie*
- ----------------------------- Senior Vice President and Chief Financial
W. James MacGinnitie Officer (Principal Financial and Accounting
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
/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/ Perston Robert Tisch*
- ----------------------------- Director
Preston Robert Tisch
/s/ Marvin Zonis*
- ----------------------------- Director
Marvin Zonis
* By: /s/W. James MacGinnitie
------------------------
W. JAMES MACGINNITIE
/s/ W. James MacGinnitie, as Attorney-in-Fact Pursuant to Power of Attorney
included on signature page filed electronically with Form S-3 on December 24,
1998.
II-6
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CNA Financial
Capital I, CNA Financial Capital II, and CNA Financial Capital III, each
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 December 24, 1998.
CNA FINANCIAL CAPITAL I
By: CNA Financial Corporation, as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice President and Chief
Financial Officer
---------------------------------------
CNA FINANCIAL CAPITAL II
By: CNA Financial Corporation, as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice President and Chief
Financial Officer
---------------------------------------
CNA FINANCIAL CAPITAL III
By: CNA Financial Corporation, as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice President and Chief
Financial Officer
---------------------------------------
II-7
<PAGE> 1
EXHIBIT 23(a)
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
CNA Financial Corporation on Form S-3 of our reports, dated February 18, 1998,
appearing in the Annual Report to Shareholders and in Form 10-K of CNA Financial
Corporation for the year ended December 31, 1997 and to the reference to
Deloitte & Touche LLP under the heading "Experts" in the Prospectus dated
December 24, 1998, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Chicago, Illinois
December 24, 1998
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
hereby constitutes and appoints Jonathan D. Kantor and W. James MacGinnitie 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
a registration statement pursuant to Rule 462(b) relating to the Securities
offered pursuant to that certain Registration Statement on Form S-3 filed with
the Securities and Exchange Commission, Registration No. 333-33821 and any and
all amendments thereto (including post-effective amendments) and (ii) a
registration statement on Form S-3 to be filed by CNA Financial Corporation (the
"Company") with respect to up to $600,000,000 of securities to be issued by the
Company and/or its subsidiaries and any and all amendments thereto (including
post-effective amendments and additional registration statements relating
thereto pursuant to Rule 462(b), and other documents in connection therewith) to
be filed with the Securities and Exchange Commission and other regulatory
authorities, 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.
THIS POWER OF ATTORNEY IS MADE AS OF THIS 17th DAY OF DECEMBER, 1998.
Signature Title
-------- -----
/s/ Laurence A. Tisch Chief Executive Officer and
- ---------------------------- Director
Laurence A. Tisch
/s/ W. James MacGinnitie Senior Vice President and Chief
- ---------------------------- Financial Officer
W. James MacGinnitie
/s/ Antoinette Cook Bush Director
- ----------------------------
Antoinette Cook Bush
/s/ Dennis H. Chookaszian Director
- ----------------------------
Dennis H. Chookaszian
/s/ Phillip L. Engel Director
- ----------------------------
Phillip L. Engel
/s/ Robert P. Gwinn
- ---------------------------- Director
Robert P. Gwinn
<PAGE> 2
Signatures Title
---------- -----
/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
