1
Registration No. 333-______
As filed with the Securities and Exchange Commission on December 24, 1998
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August 15, 2005
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CNA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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 | | 6331 | | 36-6169860 |
(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. | | (Primary standard industrial
classification code number) | | (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)
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CNA Center
Chicago, Illinois 60685
(312) 822-5000
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
SEE TABLE OF ADDITIONAL REGISTRANTS
Jonathan D. Kantor Esq.
Senior
Executive Vice President, Secretary and General Counsel and Secretary
CNA Financial Corporation
CNA Plaza
Center
Chicago, Illinois 60685
(312) 822-5000
(Name,
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies
Copy to:
Mitchell L. Hollins, Esq. Edward F. Petroskey
Michael D. Rosenthal, Esq.
Philip J. Niehoff
Mayer, Brown, Rowe & Wood L.L.P.
Sonnenschein Nath & Rosenthal One World Trade Center
8000 Sears Tower 58th Floor
Maw LLP
190 South LaSalle Street
Chicago, Illinois 60606 New York, New York 10048
60603
(312) 876-8000 (212) 839-5300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE
TO THE PUBLIC:701-7843
Approximate date of commencement of proposed sale to the public: From time to time after the effective
date of this Registration Statement.
---------------------------registration statement becomes effective.
If the only securities being registered on this Formform are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / /box: o
If any of the securities being registered on this Formform 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/box: þ
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. / /offering: o
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 Securities Act registration statement number of the earlier effective registration statement for the same offering. / /offering: o
If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / /
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box: o
CALCULATION OF REGISTRATION FEE
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | Proposed Maximum | | | Proposed Maximum | | | Amount of |
| Title of Each Class of | | | Amount to be | | | Offering | | | Aggregate | | | Registration |
| Securities to be Registered | | | Registered(1)(2) | | | Price per Unit(3) | | | Offering Price | | | Fee |
| | | | | | | | | | | | | |
| Securities of CNA Financial Corporation: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Senior debt securities | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Subordinated debt securities | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Subordinated junior debt securities | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| 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 | | | $1,500,000,000 | | | 100% | | | $1,500,000,000 | | | $176,550 |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
===================================================================================================================================
Proposed Proposed
maximum maximum Amount | |
| (1) | Such indeterminate number or 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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Securitiesdebt securities, preferred stock, depositary shares, common stock, warrants, stock purchase contracts and stock purchase units 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 SecuritiesCorporation 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 (4)......................... -----------------------------------------------------------------------------
Total......................................... $ 600,000,000 100% $ 600,000,000 $ 166,800
===================================================================================================================================
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(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.
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 $1,500,000,000. In addition, this registration statement includes such presently indeterminate number of securities as may be issuable from time to time upon conversion or exchange of the securities being registered hereunder. |
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| (3) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended, and exclusive of accrued interest and dividends, if any. |
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| (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 amended
("the Securities Act")and Exchange Commission, acting pursuant to said Section 8(a), and exclusivemay determine.
CNA Financial Corporation
Table of accrued interest and dividends, if
any.
(4)Additional Registrants
| | | | | | | | | | | | |
| | State of | | | Primary Standard | | | |
| | Incorporation/ | | | Industrial Classification | | | IRS Employer | |
| Name | | Formation | | | Code Number | | | Identification No. | |
| | | | | | | | | |
CNA Financial Capital I | | | Delaware | | | | 6331 | | | | To be applied for. | |
CNA Financial Capital II | | | Delaware | | | | 6331 | | | | To be applied for. | |
CNA Financial Capital III | | | Delaware | | | | 6331 | | | | To be applied for. | |
The address, including zip code, of the principal offices of the additional registrants listed above is: c/o CNA Financial Corporation,
CNA Center, Chicago, Illinois 60685 and the telephone number, including area code, of such additional registrants at that address 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.
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(312) 822-5000.
The information in this preliminary prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 24, 1998
AUGUST 15, 2005
PROSPECTUS
$600,000,000
$1,500,000,000
CNA FINANCIAL CORPORATION
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
Our 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.”
CNA FINANCIAL CAPITALFinancial Capital I
CNA FINANCIAL CAPITALFinancial Capital II
CNA FINANCIAL CAPITALFinancial Capital III
Preferred Securities fully and unconditionally
guaranteed, as described herein, by
CNA FINANCIAL CORPORATION
----------------Financial Corporation
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.
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
Prospectusprospectus is
December 24, 1998.
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.
TABLE OF CONTENTS
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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") utilizingusing a "shelf"“shelf” registration process. Under this shelf process, we may over the next two years, sell any
combinationfrom time to time up to $1,500,000,000 of the securities described in this prospectus, in one or more
offerings up to a total dollar amount of $600,000,000.any combination. This prospectus provides
you with a general description of the securities that we may offer. Each time we selloffer any of the types of securities described herein, we will provideprepare and distribute a prospectus supplement that will contain a description of the specific information about the terms of thatthe securities being offered and of the offering. The prospectus supplement may also add, update or changesupplement the information contained in this prospectus. You should read both this prospectus and anythe applicable prospectus supplement, together with the additional information described under the heading WHERE YOU CAN FIND MORE
INFORMATION.
In“Where You Can Find More Information,” before purchasing any securities.
You should rely only on the information contained or incorporated by reference in this prospectus and any prospectus supplement. “Incorporated by reference” means that we refer to:
- CNA Financial Corporation as "CNAF";
- CNAFcan disclose important information to you by referring you to another document filed separately with the Securities and its subsidiaries asExchange Commission. We have not authorized any other person to provide you with different information. If anyone provides you with different information, you should not rely on it. We are not making, nor will we make, an offer to sell securities in any jurisdiction where 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 byoffer or sale is not permitted. You should assume that information appearing in this prospectus and any supplement to this prospectus is current only as of the "Offered
Securities".
dates on their covers. Our business, financial condition, results of operations and prospects may have changed since that date.
Unless otherwise indicated or unless the context requires otherwise, all references in this prospectus to:
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| • | “CNAF,” “we,” “us,” “our” and similar references mean CNA Financial Corporation; |
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| • | the “CNA Companies” and the “Company” mean CNA Financial Corporation and its subsidiaries; and |
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| • | the “CNA Capital Trusts” mean CNA Financial Capital I, CNA Financial Capital II and CNA Financial Capital III. |
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC.Securities and Exchange Commission. Our SECSecurities and Exchange Commission filings are available to the public over the Internet at the SEC'sSecurities and Exchange Commission’s web site at http://www.sec.gov. You may also read and copy any document we file at the SEC'sSecurities and Exchange Commission’s public reference roomsroom 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 60661.20549. You can call the SECSecurities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms.
CNAF'sroom.
Our 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 SECour Securities and Exchange Commission filings at the offices of these stock exchanges at the addresses listed below:
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| • | New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005; |
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| • | Chicago Stock Exchange, Inc., 440 South LaSalle Street, Chicago, Illinois 60603; and |
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| • | Pacific Exchange, Inc., 301 Pine Street, San Francisco, California 94104. |
The Securities and 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 SECCommission allows us to "incorporate by reference" the information we file
with them, which means that we can disclose importantcertain information to you in this prospectus by referring you to those documents.documents previously filed with the Securities and Exchange Commission that includes such information. This process is generally referred to as “incorporating by reference.” The information incorporated by reference is an important part of this prospectus, and information that we file later with the SECSecurities and Exchange Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SECSecurities and 3
Exchange Commission 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").this offering is terminated.
| | |
| • | Our annual report on Form 10-K/ A for the year ended December 31, 2004; |
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| • | Our quarterly report on Form 10-Q for the quarter ended March 31, 2005; |
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| • | Our quarterly report on Form 10-Q for the quarter ended June 30, 2005; |
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| • | Our current reports on Form 8-K dated February 9, 2005 (filed on February 14, 2005), dated April 27, 2005 (filed on May 3, 2005), dated April 29, 2005 (filed on May 2, 2005), dated May 17, 2005 (filed on May 20, 2005) and dated July 28, 2005 (filed on July 28, 2005); and |
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| • | The description of our common stock contained in the registration statement on Form S-3 (File No. 33-35250) filed on June 6, 1990. |
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
Center
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. Allus. We will own all of the votingcommon securities of the CNA Capital Trusts and we will be owned by CNAF (or one of the other CNA Companies)
andfully guarantee all of the obligations of the CNA Capital Trusts will be fully guaranteed by
CNAF.Trusts. 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.securities offered pursuant to this prospectus.
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
or additional information. We are not making an offer of these securities in any
statejurisdiction where the offer
or sale 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
We are a holding company whose subsidiaries consist primarily of
property/casualtyglobal insurance organization serving businesses and life insurance companies. The CNA Companies collectively
are among the largest writersindividuals with a broad range of commercial property/property and casualty insurance products and oneinsurance-related services. We are primarily focused on small and mid-size businesses, and architects, engineers, lawyers, healthcare professionals, financial intermediaries and corporate directors and officers. In 2004, we wrote approximately $8 billion of annual net premiums. In 2003, we wrote more than $9 billion of annual net premiums, making our company the tencountry’s seventh largest commercial insurance organizations inwriter and 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's14th largest property casualty company. Our common stock is listed on the New York Stock Exchange, the Chicago Stock Exchange and the Pacific Exchange and also tradedtrades on the Philadelphia Stock Exchange. The trading symbol for the Common
Stockour common stock is "CNA".“CNA.” As of November 30, 1998,December 31, 2004, Loews Corporation ("Loews") owned approximately 85%91% of CNAF'sour outstanding common stock and 100% of our Series H preferred stock.
CNAF was incorporated as a Delaware corporation in 1967. CNAF'sOur principal subsidiaries are The Continental Corporation, incorporated in 1968, which is the holding company of Continental Casualty Company, ("CCC"), incorporated in 1897,1897. Principal subsidiaries of Continental Casualty Company are 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, CICContinental Casualty Company, The Continental Insurance Company and each of their property and casualty insurance affiliates generally conduct
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the property and casualty insurance operations of the CNA Companies.
CACOur life and
Valley
Forge Life Insurance Company (a wholly owned subsidiary of CAC) generally
conduct the lifegroup insurance operations,
of the CNA Companies.which have either been sold or are being managed as a run-off operation, are conducted by Continental Casualty Company and Continental Assurance Company. 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,us, as sponsor of the CNA Capital Trust, and a Delaware 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 behas been amended and restated in its entirety, (each, as so amended and restated, a "Trust
Agreement") substantially in the formis filed as an exhibit to the Registration
Statement.registration statement of which this prospectus forms a part. Each Trust Agreement will betrust agreement has been qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").1939. 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,junior debt securities that we issue, and (iii) engaging in other related activities.
All
We will own all of the common securities of each CNA Capital Trust ("Common
Securities") will be owned by CNAF.Trust. 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 Agreementtrust agreement resulting from an event of default under the indenture with respect to the Junior Debt Securities (a "Junior Debt Related Eventjunior debt securities, hereafter referred to as a “junior debt related event of Default"), thedefault,” our rights of CNAF as holder of the Common Securitiescommon 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 Securitiespreferred securities of such CNA Capital Trust. See "Description of Preferred Securities - Subordination
of Common Securities." CNAFWe will acquire Common Securitiescommon 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'sTrust’s business and affairs are conducted by its trustees, each appointed by CNAFus, as holder of the Common Securities.common securities. Unless otherwise specified in the applicable prospectus supplement, the trustees for each CNA Capital Trust will be The FirstJ. P. Morgan Trust Company, National Bank of Chicago,Association, as the property trustee, (the "Property Trustee"),
First Chicago Delaware, Inc.,Chase Bank USA, National Association, as the Delaware Trustee,trustee, and two individual trustees, (the "Administrative Trustees")as the administrative trustees, who are employees or officers of or affiliated with the CNA Companies (collectively,Companies. The property trustee, the "Issuer Trustees"). The
FirstDelaware trustee and the administrative trustees are collectively referred to in this prospectus as the “issuer trustees.” J. P. Morgan Trust Company, National Bank of Chicago,Association, as Property Trustee,property trustee, will act as sole indenture trustee under each Trust Agreementtrust agreement for purposes of compliance with the Trust Indenture Act. The First National BankAct of Chicago1939. J. P. Morgan Trust Company will also act as trustee under the Guaranteesguarantees and the Subordinated Indenture (as defined herein). See
"Description of Guarantees" and "Description of Junior Debt."junior debt indenture. The holder of the Common Securitiescommon securities of a CNA Capital Trust, or the holders of a majority in liquidation preferenceamount of the related Preferred Securitiespreferred securities if a Junior Debt
Related Eventan event of Default underdefault in respect of the Trust Agreementtrust agreement for such CNA Capital Trust has occurred and is continuing, will be entitled to appoint, remove or replace the Property Trusteeproperty trustee and/or the Delaware Trusteetrustee for such CNA Capital Trust. In no event will the holders of the Preferred Securitiespreferred securities have the right to vote to appoint, remove or replace the Administrative Trustees;administrative trustees; such voting rights are vested exclusively in the holder of the Common Securities.common securities. The duties and obligations of each Issuer Trusteeissuer trustee are governed by the applicable Trust
Agreement. CNAFtrust agreement. We will pay all fees and expenses related to each CNA Capital Trust and the offering of the Preferred Securitiespreferred 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,Center, 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 Securitiessecurities offered pursuant to this prospectus will be added to
CNAF'sour 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'sour subsidiaries to support such
subsidiaries' continuingsubsidiaries’ operations. Each CNA Capital Trust will use all proceeds received from the sale of its
Preferred
Securitiespreferred securities to purchase
CNAF's Junior Debt Securities.
-6-
8
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges.
NINE
MONTHS ENDED FISCAL YEAR ENDED
SEPTEMBER 30 DECEMBER 31
-------------------- -----------------------------------------------
1998 1997 1997 1996 1995(a) 1994 1993
---- ---- ------- ------- ------- ------- --------
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
- ------------------
(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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9
junior debt securities.SECURITIES TO BE OFFERED
SECURITIES TO BE OFFERED BY
Securities to be offered by CNAF
CNAF
We 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
| |
| (1) our unsecured senior debt securities; |
|
| (2) our unsecured subordinated debt securities, which together with the senior debt securities are collectively referred to in this prospectus as the “debt securities;” |
|
| (3) our junior debt securities; |
|
| (4) shares of our common stock, par value $2.50 per share; |
|
| (5) shares of our preferred stock, no par value, which may be represented by depositary shares; |
|
| (6) warrants to purchase our debt securities, junior debt securities, common stock, preferred stock or depositary shares; |
|
| (7) purchase contracts to purchase any of our debt securities, junior debt securities, common stock, preferred stock, depositary shares, warrants or preferred securities of the CNA Capital Trusts, which are collectively referred to in this prospectus as the “purchase contract securities;” and |
|
| (8) purchase units, each representing ownership of a purchase contract and any of (x) our 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. |
We may offer to sell any of the Offered Securitiessecurities 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 Securitiessale and set forth in a prospectus supplement. The securities offered pursuant to this prospectus may be sold for U.S. dollars, foreign denominated currency or currency units. Similarly, the amounts payable by CNAFus as dividends, interest, principal or other distributions also may be payable in U.S. dollars, foreign denominated currency or currency units. Debt Securitiessecurities and Junior Debt Securitiesjunior debt securities may consist of debentures, notes or other evidences of indebtedness. CNAFWe will describe all of these terms in the prospectus supplement relating to the offer.
SECURITIES TO BE OFFERED BY THEapplicable offering.
Securities to be offered by the CNA CAPITAL TRUSTSCapital Trusts
Each of the CNA Capital Trusts may offer and sell, from time to time, its
Preferred Securities. CNAFpreferred securities. We 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."preferred securities. EACH GUARANTEE WILL BE AN IRREVOCABLE GUARANTEE
BY US ON A SUBORDINATED BASIS
OFTHAT THE RELATED CNA CAPITAL
TRUST'STRUST WILL PAY ITS OBLIGATIONS UNDER
THEITS 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.COLLECTION FROM US. The guarantee is subordinate to all
our indebtedness
of
CNAF (including any
Debt Securitiesdebt securities which may be
issued)issued pursuant to this prospectus),
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10 except for (i) our indebtedness of CNAF that is expressly made junior to or equal with the guarantees,such guarantee, (ii) non-recourse indebtedness, (iii) our indebtedness of CNAF to any of the other CNA Companies or to any of itsour employees, (iv) CNAF'sour liabilities for taxes, (v) trade debt incurred in6
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 injunior debt securities. In connection with the investment of the proceeds from the offering of Trust Preferred Securities.preferred securities, CNA Capital Trusts will purchase junior debt securities that we issue in one or more series. The Junior Debt Securitiesjunior debt securities purchased by a CNA Capital Trust may be subsequently distributed pro rata to the holder of Trust Preferred Securitiespreferred securities and common securities of that CNA Capital Trust under certain circumstances.
You should read the summaries below of the Offered Securities below,securities offered pursuant to this prospectus, as well as the description of the Offered Securitiesparticular securities in theany applicable prospectus supplement. For a further description of CNAF's Common Stock,our common stock, you should refer to the Common Stock Descriptiondescription of our common stock that is incorporated by reference in this prospectus from CNAF'sour registration statement on Form S-3 (File No. 33-35250) filed on June 6, 1990.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securitiesdebt securities will consist of notes, debentures or other evidences of indebtedness. Debt Securitiessecurities may be issued from time to time in one or more series. The Senior Debt Securitiessenior debt securities will be issued under an Indenture,indenture, dated March 1, 1991, between CNAFus and J. P. Morgan Trust Company, National Association (formerly known as The First National Bank of Chicago,Chicago), a national banking association, as trustee, as supplemented by a first supplemental indenture, dated as of October 15, 1993, (as soand by a second supplemental indenture, dated as of December 15, 2004. The indenture, as supplemented, governing the "Senior Indenture").senior debt securities is referred to in this prospectus as the “senior indenture.” The Subordinated Debt Securitiessubordinated debt securities will be issued under an Indentureindenture between CNAFus and the FirstJ. P. Morgan Trust Company, National Bank of Chicago,Association, a national banking association, as trustee (the "Subordinated Indenture").trustee. The Senior
Indentureindenture governing the senior subordinated debt is referred to in this prospectus as the “subordinated indenture,” and the Subordinated Indenturesenior indenture and the subordinated indenture are sometimes referred to collectively as the "Indentures"“indentures” and individually as the "Indenture". The First“indenture.” J. P. Morgan Trust Company, National Bank
of Chicago,Association, in its capacity as trustee under either or both of the Indenturesindentures is referred to hereinafter as the "Trustee".“trustee.”
Each of the Indenturesindentures has been qualified under the Trust Indenture Act of 1939 as amended (the "Trust Indenture Act") and is subject to that act.Act. Copies of the Senior Indenturesenior indenture and the form of the Subordinated Indenturesubordinated indenture are included as exhibits to the Registration Statement.registration statement of which this prospectus forms a part. The following description summarizes the material terms of the Indenturesindentures and the Debt Securities.debt securities. Because it is only a summary, it does not contain all of the details found in the full text of the Debt Securitiesdebt securities and the Indentures,indentures, including the definitions of certain terms used in the description of the Debt Securitiesdebt securities in this prospectus, and other terms that are made a part of the Indenturesindentures by the Trust Indenture Act.Act of 1939.
The Indenturesindentures are substantially identical except for provisions relating to subordination. Any Debt Securitiesdebt securities offered by this prospectus and any accompanying prospectus supplement are referred to herein as the "Offered
Debt Securities."
GENERAL“offered debt securities.”
General
The
Indenturesindentures do not limit the aggregate principal amount of
Debt
Securitiesdebt securities that may be issued thereunder and provide that
Debt Securitiesdebt 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.
CNAFWe may sell
Offered Debt Securitiesoffered debt securities at par, a premium or an original issue discount. Offered
Debt Securitiesdebt 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 Securitiesoffered debt securities will be established in or pursuant to a resolution of
CNAF's Boardour board of
Directorsdirectors and/or in one or more supplemental indentures. Pursuant to the
Indentures, CNAFindentures, we can establish different rights with respect to each series of
Debt Securitiesdebt securities issued under the
Indentures.
-9-
11indentures. The applicable prospectus supplement will provide information for the following terms of the
Offered Debt Securities (tooffered 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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12
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.
offered debt securities: | | |
| • | the title of such offered debt securities and the particular series thereof; |
|
| • | any limit on the aggregate principal amount of such offered debt securities; |
7
| | |
| • | whether such offered debt securities are to be issuable in registered form, referred to in this prospectus as “registered securities,” or bearer form, referred to in this prospectus as “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 we may reset such interest rate or interest rate formula; |
|
| • | 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 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 |
8
| | |
| • | 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 us 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.
Offered Debt Securitiesdebt 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 Securitiesoffered 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 Securitiesdebt 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 Securitiesdebt securities and such foreign currency or currencies or foreign currency unit or units will be described in the applicable prospectus supplement.
RANKING AND SUBORDINATION
Ranking and Subordination
The Senior Debt Securitiessenior debt securities will rank equally with all of CNAF'sour other unsecured and unsubordinated indebtedness. As of September 30, 1998, CNAFDecember 31, 2004, we had approximately $2.276$2.0 billion aggregate principal amount of indebtedness for borrowed money which would rankpari passuwith the Senior Debt Securities.senior debt securities. The Senior Indenturesenior indenture does not limit the amount of debt, either secured or unsecured, that we may be issued by CNAFissue under the Senior Indenturesenior indenture or otherwise. In addition, CNAF'sour subsidiaries had approximately $691$228.7 million of indebtedness outstanding.
| |
| Subordinated Debt Securities. |
Indebtedness evidenced by the
Subordinated Debt Securitiessubordinated debt securities will be subordinated in right of payment, as set forth in the
Subordinated Indenture,subordinated indenture, to the prior payment in full of all
CNAF'sour existing and future
senior indebtedness. Senior
Indebtedness.
Senior Indebtednessindebtedness is defined in the
Subordinated Indenturesubordinated 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
-11-
13
permitted to the holder of such debt against theour 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,us, whether outstanding on the date of the Subordinated Indenturesubordinated indenture or thereafter incurred, assumed or guaranteed, and all renewals, extensions and refundingsrefunds of any such debt. Amounts outstanding under any Senior Debt Securitiessenior debt securities will be included in Senior Indebtedness.senior indebtedness. Excluded from the definition of Senior Indebtednesssenior 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,subordinated debt securities, or (ii) that such debt shall be subordinated to any of our other debt, of CNAF, unless such debt expressly provides that such debt shall be senior in right of payment to the Subordinated Debt Securities;subordinated debt securities; and (b) any of CNAF'sour debt in respect of the Subordinated Debt Securities.subordinated debt securities. As of September 30, 1998, CNAFDecember 31, 2004, we had approximately $2.276$2.0 billion aggregate principal amount of indebtedness for borrowed money which would rank senior to the Subordinated Debt Securitiessubordinated debt securities and no borrowings which would rank junior or equal with the Subordinate Debt Securities.subordinated debt securities. By reason of such subordination, in the event of dissolution, insolvency, bankruptcy or other similar proceedings, upon any distribution of assets, (i) the holders of Subordinated Debt Securitiessubordinated debt securities will be required to pay over their share of such distribution to the holders of Senior Indebtednesssenior indebtedness until such Senior Indebtednesssenior indebtedness is paid in full; and (ii) our creditors of CNAF who are not holders of Subordinated Debt Securitiessubordinated debt securities or holders of Senior
Indebtednesssenior indebtedness may recover less, ratably, than holders of Senior Indebtednesssenior indebtedness and may recover more, ratably, than the holders of Subordinated Debt Securities.subordinated debt securities.
In the event that the Subordinated Debt Securitiessubordinated debt securities are declared due and payable prior to their stated maturity by reason of the occurrence of an event of default, then CNAF iswe are obligated to notify holders of Senior Indebtednesssenior indebtedness promptly of such acceleration. CNAFWe may not pay the Subordinated Debt Securitiessubordinated debt securities until 179 days
9
have passed after such acceleration occurs and may thereafter pay the Subordinated Debt Securitiessubordinated debt securities if the terms of the Subordinated Indenturesubordinated 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 Securitysubordinated debt security may be made, nor may CNAFwe acquire any Subordinated Debt Securitiessubordinated debt securities except as described in the Subordinated
Indenture,subordinated indenture, if any default with respect to Senior Indebtednesssenior indebtedness occurs and is continuing that permits the acceleration of the maturity of the Senior
Indebtednesssenior indebtedness and either such default is the subject of judicial proceedings or CNAF receiveswe receive 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 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 TRANSFERTransfer
The
Offered Debt Securitiesoffered debt securities will be issuable as
Registered Securities,
Bearer Securitiesregistered securities, bearer securities or both. Offered
Debt Securitiesdebt securities may be issuable in the form of one or more
Global Securities,global securities, as described below under
"Global“Global Securities.
"” Unless otherwise provided in the applicable prospectus supplement,
Registered
Securitiesregistered securities denominated in U.S. dollars will be issued only in denominations of $1,000 or any integral multiple thereof and
Bearer Securitiesbearer securities denominated in U.S. dollars will be issued only in denominations of $5,000 with coupons attached. A
Global Securityglobal security will be issued in a denomination equal to the aggregate principal amount of outstanding
Offered Debt Securitiesoffered debt securities represented by such
Global Security.global security. The prospectus supplement relating to
Offered Debt
Securitiesoffered debt securities denominated in a foreign or composite currency will specify the denominations for these
Offered Debt Securities.
-12-
14offered debt securities. In connection with its original issuance, no Bearer Securitybearer security shall be mailed or otherwise delivered to any location in the United States (as defined below under "Limitations“Limitations on Issuance of Bearer Security"Securities”) and a Bearer Securitybearer security may be delivered in connection with its original issuance only if the person entitled to receive such Bearer Securitybearer security furnishes written certification, in the form required by the applicable Indenture,indenture, to the effect that such Bearer
Securitybearer security is not being acquired by or on behalf of a United States person (as defined below under "Limitations“Limitations on Issuance of Bearer Securities"Securities”), or, if a beneficial interest in such Bearer Securitybearer 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 Securitiessecurities of any series will be exchangeable for other Registered Securitiesregistered securities of the same series and of a like aggregate principal amount and tenor of different authorized denominations. In addition, if Offered
Debt Securitiesoffered debt securities of any series are issuable as both Registered Securitiesregistered securities and as Bearer Securities,bearer securities, at the option of the holder upon request confirmed in writing, and subject to the terms of the applicable Indenture, Bearer Securitiesindenture, 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
Securitiesregistered 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 Securitybearer security surrendered in exchange for a Registered Securityregistered 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 Securityregistered security issued in exchange for such Bearer Security,bearer security, but will be payable only to the holder of such coupon when due in accordance with the terms of the applicable Indenture.indenture. Except as provided in an applicable prospectus supplement, Bearer Securitiesbearer securities will not be issued in exchange for Registered Securities.registered securities.
Offered Debt Securitiesdebt securities may be presented for exchange as provided above, and Registered Securitiesregistered securities (other than a Global Security)global security) may be presented for registration of transfer (with the form of transfer duly executed),
10
at the office of the security registrar designated by CNAFwe designate or at the office of any transfer agent designated by CNAFwe designate for such purpose with respect to any series of Offered Debt Securitiesoffered 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.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 hasWe have initially appointed the Trusteetrustee as the security registrar under the Indentures.indentures. If a prospectus supplement refers to any transfer agent, (inin addition to the security registrar)registrar, we initially designated by CNAFdesignate with respect to any series of Offered Debt Securities, CNAFoffered debt securities, we 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 Securitiesoffered debt securities of a series are issuable only as Registered Securities. CNAFregistered securities. We will be required to maintain a transfer agent in each place of payment for such series. Similarly, if Offered Debt Securitiesoffered debt securities of a series are issuable as Bearer Securities,bearer securities, then CNAFwe will be required to maintain, (inin addition to the security registrar)registrar, a transfer agent in a place of payment for such series located outside the United States. CNAFWe may at any time designate additional transfer agents with respect to any series of Offered Debt
Securities.offered debt securities.
In the event of any redemption,
in part, CNAFneither we nor the trustee shall
not be required to (i) issue, register the transfer of or exchange
Offered Debt Securitiesoffered 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 Securitiesoffered debt securities of that series selected to be redeemed and ending at the close of business (a) if
Offered Debt Securitiesoffered debt securities of the series are issuable only as
Registered
Securities,registered securities, the day of mailing of the relevant notice of redemption, and (b) if
Offered Debt Securitiesoffered debt securities of the series are issuable as
Bearer Securities,bearer securities, the day of the first publication of the relevant notice
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15
of redemption or, if Offered Debt Securitiesoffered debt securities of that series are also issuable as Registered Securitiesregistered securities and there is no publication, the mailing of the relevant notice of redemption; (ii) register the transfer of or exchange any Registered
Securityregistered security or portion thereof, called for redemption, except the unredeemed portion of any Registered Securityregistered security being redeemed in part; or (iii) exchange any Bearer Securitybearer security called for redemption, except to exchange such Bearer Securitybearer security for a Registered Securityregistered security of that series and like tenor which is immediately surrendered for redemption.
PAYMENTS AND PAYING AGENTSPayments and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement, payment of principal of and any interest on Registered Securitiesregistered securities (other than a Global Security)global security) will be made at the office of such paying agent or paying agents (each a "Paying Agent") as CNAFwe 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'sour 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.security register. Unless otherwise indicated in an applicable prospectus supplement, payment of any installment of interest on Registered Securitiesregistered securities will be made to the person in whose name such Registered Securityregistered 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 Securitiesbearer securities will be payable (subject to applicable laws and regulations) at the offices of such Paying Agentpaying agent or Paying Agents outside the United Statespaying agents as CNAFwe may designate from time to time, except that, at CNAF'sour 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 we may designate from time to time, except that, at our 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 Securitiesbearer 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 Securitybearer security will be made at any of CNAF'sour offices or agencies in the United States or by check mailed to any address
11
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 Securitiesbearer securities or coupons relating to those Bearer Securitiesbearer securities pursuant to presentation to CNAFus or its Paying Agentsour paying agents within the United States. Notwithstanding the foregoing, payment of principal of and any interest on Bearer Securitiesbearer securities denominated and payable in U.S. Dollarsdollars will be made at the office of CNAF's Paying Agentour 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 haswe have delivered to the Trusteetrustee an opinion of counsel to that effect.
Unless otherwise indicated in an applicable prospectus supplement, the principal office of the
Trusteetrustee in
theThe City of New York will be designated as
CNAF'sour sole
Paying Agentpaying agent for payments with respect to
Offered Debt Securitiesoffered debt securities which are issuable solely as
Registered Securities.registered securities. Any
Paying Agentpaying agent outside the United States and any other
Paying Agentpaying agent in the United States
that we initially
designated by CNAFdesignate for the
Offered Debt Securitiesoffered debt securities will be named in the applicable prospectus supplement.
CNAFWe may at any time designate additional
Paying Agentspaying agents or rescind the designation of any
Paying Agentpaying agent or approve a change in the office
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through which any Paying Agentpaying agent acts, except that, if Offered Debt Securitiesoffered debt securities of a series are issuable only as Registered Securities, CNAFregistered securities, we will be required to maintain a Paying Agentpaying agent in each place of payment of such series and, if Offered
Debt Securitiesoffered debt securities of a series are issuable as Bearer Securities, CNAFbearer securities, we will be required to maintain (i) a Paying Agentpaying agent in each place of payment for such series in the United States for payments with respect to any Registered Securitiesregistered securities of such series (and for payments with respect to Bearer Securitiesbearer securities of such series in the circumstances described above, but not otherwise), (ii) a Paying Agentpaying agent in each place of payment located outside the United States where Offered Debt
Securitiesoffered debt securities of such series and any coupons belonging thereto may be presented and surrendered for payment; provided that if the Offered Debt Securitiesoffered 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, CNAFwe will maintain a Paying Agentpaying agent in London or Luxembourg City or any other required city located outside the United States, as the case may be, for Offered Debt Securitiesoffered debt securities of such series, and (iii) a Paying Agentpaying agent in each place of payment located outside the United States where (subject to applicable laws and regulations) Registered
Securitiesregistered securities of such series may be surrendered for registration of transfer or exchange and where notices and demands to or upon CNAFus may be served. All monies paid by CNAFwe pay to a Paying Agentpaying agent for the payment of principal of and any interest on any Offered Debt Securitiesoffered debt securities that remains unclaimed for at least two years after such principal, premium, if any, or interest has become due and the payable will be repaid, at theour request, of CNAF to CNAF.us. After this repayment, the holder of such Offered Debt Securityoffered debt security or any coupon relating thereto will look only to CNAFus for payment thereof.
GLOBAL SECURITIES
Global Securities
The Offered Debt Securitiesoffered debt securities of a series may be issued in whole or in part in the form of one or more Global Securitiesglobal securities that will be deposited with, or on behalf of, a depository (the "Depository")depositary identified in the prospectus supplement relating to such series. Global Securitiessecurities 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 Securitiesoffered debt securities represented thereby, a Global Securityglobal security may not be transferred except as a whole by the Depositorydepositary for such Global Securityglobal security to a nominee of such Depositorydepositary or by a nominee of such Depositorydepositary to such Depositorydepositary or another nominee of such Depositorydepositary or by the Depositorydepositary or any nominee of such Depositorydepositary to a successor Depositorydepositary or any nominee of such successor.
The specific terms of the depositorydepositary arrangement with respect to a series of Offered Debt Securitiesoffered debt securities will be described in the prospectus supplement relating to such series. CNAF anticipatesWe anticipate that the following provisions will generally apply to depositorydepositary arrangements.
Upon the issuance of a Global Security,global security, the Depositorydepositary for such Global
Securityglobal security or its nominee will credit on its book-entry registration and transfer system the respective principal amounts of the individual Offered Debt
Securitiesoffered debt securities represented by such Global Securityglobal security to the accounts of persons that have accounts with such Depository ("Participants").depositary, who are referred to as “participants.” Such accounts shall be designated by the underwriters, dealers or agents with respect to such Offered
Debt Securitiesoffered debt securities or by CNAFus if such Offered Debt Securitiesoffered debt securities are offered
12
and sold directly by
CNAF.us. Ownership of beneficial interests in a
Global Securityglobal security will be limited to
Participantsparticipants or persons that may hold interests through
Participants.participants. Ownership of beneficial interests in such
Global Securityglobal security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable
Depositorydepositary or its nominee (with respect to interests of
Participants)participants) and records of
Participantsparticipants (with respect to interests of persons who hold through
Participants)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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17global security. So long as the Depositorydepositary for a Global Securityglobal security or its nominee is the registered owner of such Global Security,global security, such Depositorydepositary or such nominee, as the case may be, will be considered the sole owner or holder of the Offered Debt
Securitiesoffered debt securities represented by such Global Securityglobal security for all purposes under the applicable Indenture.indenture. Except as provided below, owners of beneficial interests in a Global Securityglobal security will not be entitled to have any of the individual Offered
Debt Securitiesoffered debt securities of the series represented by such Global Security Registeredglobal security registered in their names, will not receive or be entitled to receive physical delivery of any such Offered Debt Securitiesoffered debt securities of such series in definitive form and will not be considered the owners or holders thereof under the applicable Indenture.indenture.
Payments of principal of and any premium and any interest on individual Offered Debt Securitiesoffered debt securities represented by a Global Securityglobal security registered in the name of a Depositorydepositary or its nominee will be made to the Depositorydepositary or its nominee, as the case may be, as the registered owner of the Global Securityglobal security representing such Offered Debt Securities.offered debt securities. None of CNAF,us, the Trustee,trustee, any Paying Agentpaying agent or the Security Registrarsecurity registrar for such Offered Debt Securitiesoffered 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 Securityglobal security for such Offered Debt Securitiesoffered debt securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
CNAF expects
We expect that the Depositorydepositary for a series of Offered Debt
Securitiesoffered debt securities or its nominee, upon receipt of any payment of principal, premium or interest in respect of a permanent Global Securityglobal security representing any of such Offered Debt Securities,offered debt securities, immediately will credit Participants'participants’ accounts with payments in amounts proportionate to their respective beneficial interest in the principal amount of such Global Securityglobal security for such Offered Debt Securitiesoffered debt securities as shown on the records of such Depositorydepositary or its nominee. CNAFWe also expectsexpect that payments by Participantsparticipants to owners of beneficial interests in such Global
Securityglobal security held through such Participantsparticipants 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“street name."” Such payments will be the responsibility of such Participants.participants.
If a Depositorydepositary for a series of Offered Debt Securitiesoffered debt securities is at any time unwilling, unable or ineligible to continue as depositorydepositary and we do not appoint a successor depository is not appointed by CNAFdepositary within 90 days, CNAFwe will issue individual Offered Debt Securitiesoffered debt securities of such series in exchange for the Global Securityglobal security representing such series of Offered Debt Securities.offered debt securities. In addition, CNAFwe may, at any time and in itsour sole discretion, subject to any limitations described in the prospectus supplement relating to such Offered Debt Securities,offered debt securities, determine not to have any Offered Debt Securitiesoffered debt securities of such series represented by one or more Global Securitiesglobal securities and, in such event, will issue individual Offered Debt
Securitiesoffered debt securities of such series in exchange for the Global Securityglobal security or Securities representing such series of Offered Debt Securities.offered debt securities. Individual Offered Debt
Securitiesoffered debt securities of such series so issued will be issued in denominations, unless we otherwise specified by CNAF,specify, of $1,000 and integral multiples thereof.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Limitations on Issuance of Bearer Securities
In compliance with United States federal tax laws and regulations,
Bearer Securitiesbearer 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 Branchqualifying foreign branch of a United States
Financial Institution (as defined below),financial institution, and any underwriters, agents and dealers participating in the offering of
Offered Debt Securitiesoffered debt securities must agree that they will not offer any
Bearer Securitiesbearer securities for sale or resale in the United States or to United States persons (other than a
Qualifying Branchqualifying foreign branch of a United States
Financial Institution)financial institution) or deliver
Bearer Securitiesbearer securities within the United States. In addition, any such underwriters, agents and dealers must agree to send confirmations to each purchaser of a
Bearer Securitybearer security confirming that such purchaser represents that it is not a United States person or is a
Qualifying
Branchqualifying foreign branch of a United States
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Financial Institution financial institution13
and, if such person is a dealer, that it will send similar confirmations to purchasers from it. The term "Qualifying Foreign Branch“qualifying foreign branch of a United States Financial Institution"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 Internal Revenue Code and the regulations thereunder.
Bearer Securitiessecurities and any coupons relating thereto will bear a legend substantially to the following effect: "Any“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 Internal Revenue Code, holders that are United States persons, with certain exceptions, will not be entitled to deduct any loss on Bearer Securitiesbearer securities and must treat as ordinary income, any gain realized on the sale or other disposition (including the receipt of principal) of Bearer Securities.bearer securities.
The term "United“United States person"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"“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
Defeasance
The Indenturesindentures provide that CNAFwe will be discharged from any and all obligations in respect of the Debt Securitiesdebt securities of any series (except for certain obligations to register the transfer or exchange of Debt Securitiesdebt securities of such series, to replace stolen, lost or mutilated Debt Securitiesdebt securities of such series, to maintain paying agencies and to hold monies for payment in trust) upon the deposit with the Trusteetrustee for such series of Debt Securitiesdebt securities in trust of money and/or U.S. Government Obligations (as defined below)government obligations in an amount sufficient to pay the principal of and each installment of interest, if any, on the Debt
Securitiesdebt securities of such series on the maturity of such payments in accordance with the terms of the applicable Indentureindenture and the Debt Securitiesdebt securities of such series. Such a trust may only be established if, among other things, CNAF haswe have delivered to such Trusteetrustee an Opinionopinion of Counselcounsel (who may be CNAF'sour counsel) to the effect that (i) holders of the Debt Securitiesdebt 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 Securitiesdebt 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
Indenturesindentures provide that, if applicable,
CNAFwe may omit to comply with any additional restrictive covenants imposed on
CNAFus in connection with the establishment of any series of
Debt Securitiesdebt securities and that clause (d) under
"Events“Events of
Default"Default” with respect to such restrictive covenants and clause (e) under
"Events“Events of
Default"Default” shall not be deemed to be an
Eventevent of
Defaultdefault under the applicable
Indentureindenture and the
Debt Securitiesdebt securities of any series, upon the deposit with the
Trusteetrustee under the applicable
Indenture,indenture, in trust of money and/or U.S.
Government Obligationsgovernment 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 Securitiesdebt securities of such series on the maturity of such payments in
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accordance with the terms of the applicable Indentureindenture and the Debt Securitiesdebt securities of such series. TheOur obligations of CNAF under the applicable Indentureindenture and Debt
Securitiesdebt securities of such series other than with respect to the covenants referred to above and the Eventsevents of Defaultdefault other than the Eventsevents of Defaultdefault referred to above shall remain in full force and effect. Such a trust may only be established if, among other things, CNAF haswe have delivered to the Trusteetrustee an Opinionopinion of Counselcounsel (who may be counsel for CNAF)our counsel) to the effect that (i) the holders of the Debt Securitiesdebt securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit14
and defeasance of certain covenants and Eventsevents of Defaultdefault 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 Securitiesdebt 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 itswe exercise our option to omit compliance with certain covenants of an Indentureindenture with respect to the Debt Securitiesdebt securities of any series as described above and the Debt Securitiesdebt securities of such series are declared due and payable because of the occurrence of any Eventevent of Defaultdefault other than an Eventevent of Defaultdefault described in clauses (d) or (e) under "Events“Events of Default,"” the amount of money and U.S. Government Obligationsgovernment obligations on deposit with the Trusteetrustee will be sufficient to pay amounts due on the Debt Securitiesdebt securities of such series at the time of the acceleration resulting from such Eventevent of Default.default. However, CNAFwe will remain liable for such payments.
The term "U.S. Government Obligation"“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
Modification of the Indentures
The Indenturesindentures contain provisions permitting CNAFus and the Trustee,trustee, with the consent of the holders of a majority of the principal amount of the Debt
Securitiesdebt securities of each series then outstanding under such Indenture,indenture, to execute supplemental indentures adding any provisions to or changing or eliminating any of the provisions of the applicable Indentureindenture or modifying the rights of the holders of the Debt Securitiesdebt securities of such series, except that no such supplemental indenture may, among other things, (i) extend the final maturity of any Debt
Securities,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 Securitydebt security so affected, or (ii) reduce the aforesaid percentage of Debt Securities,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 Boarddebt securities. Our board of directors does not have the power to waive any of the covenants of the Indenturesindentures including those relating to consolidation, merger or sale of assets.
EVENTS OF DEFAULT
Events of Default
An Eventevent of Defaultdefault with respect to any series of Debt Securitiesdebt securities is defined in the Indenturesindentures as being:
-
| | |
| • | a default by us for thirty (30) days in the payment of any installment of interest on the debt securities of such series; |
|
| • | a default by us in the payment of any principal on the debt securities of such series when due; |
|
| • | a default by us in the payment of any sinking fund installment with respect to such series of debt securities; |
|
| • | a default by us 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 us from the trustee for such series of debt securities or by us 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 our indebtedness for money borrowed exceeding $100,000,000 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 us as provided in the applicable indenture; |
|
| • | certain events with respect to our bankruptcy, insolvency or reorganization, with the occurrence of any such event being referred to in this prospectus as a “bankruptcy default;” or |
15
| | |
| • | any other event of default established in accordance with the applicable indenture with respect to any series of debt securities. |
No event of 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)bankruptcy default) with respect to a particular series of Debt Securitiesdebt securities necessarily constitutes an Eventevent of Defaultdefault with respect to any other series of Debt Securities.debt securities. The Indenturesindentures provide that if an Eventevent of Defaultdefault with respect to any series of Debt Securitiesdebt securities shall have occurred and beis continuing, either the Trusteetrustee with respect to the Debt Securitiesdebt securities of that series or the holders of at least 25% in aggregate principal amount of Debt Securitiesdebt securities of that series then outstanding may declare the principal amount (or, if the Debt Securitiesdebt 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
Securitiesdebt 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 Securitiesdebt securities of that series) may be waived by the holders of a majority in principal amount of the Debt Securitiesdebt securities of that series then outstanding.
The Indenturesindentures each contain a provision entitling the Trusteetrustee with respect to any series of Debt Securities,debt securities, subject to the duty of the Trusteetrustee during default to act with the required standard of care, to be indemnified by the holders of Debt Securitiesdebt securities of such series before proceeding to exercise any right or power under the applicable Indentureindenture at the request of the holders of such Debt Securities.debt securities. The Indenturesindentures also provide that the holders of a majority in principal amount of the outstanding Debt Securitiesdebt securities of any series may direct the time, method and place of conducting any proceeding for any remedy available to the Trusteetrustee for such series of Debt Securities,debt securities, or exercising any trust or power conferred on such Trustee,trustee, with respect to the Debt Securitiesdebt securities of such series. The Indenturesindentures each contain a covenant that CNAFwe will file annually with the Trusteetrustee a certificate as to the absence of any default or specifying any default that exists.
No holder of any
Debt Securitydebt security of any series will have any right to institute any proceeding with respect to the applicable
Indentureindenture or for any remedy under such
Indenture,indenture, unless (i) such holder previously shall have given the
Trusteetrustee for such series of
Debt Securitiesdebt securities written notice of an
Eventevent of
Defaultdefault with respect to
Debt Securitiesdebt securities of that series and (ii) the holders of at least 25% in aggregate principal amount of
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the outstanding Debt Securitiesdebt securities of that series shall have made written request, and offered reasonable indemnity, to such Trusteetrustee to institute such proceeding as trustee, and such Trusteetrustee shall not have received from the holders of a majority in aggregate principal amount of the outstanding Debt Securitiesdebt 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 Securitydebt security to receive payment of the principal of and any interest on such Debt Securitydebt security on or after the due dates expressed in such CNAF Debt Securitydebt 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 covenantsConsolidation, Merger and Sale of Assets
We covenant that itwe will not merge or consolidate with any other corporation or sell or convey all or substantially all of itsour assets to any Person,person, unless (i) either CNAFwe shall be the continuing corporation, or the successor corporation or the Personperson which acquires by sale or conveyance substantially all of theour assets of CNAF (if other than CNAF)us) 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,debt securities, according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of the applicable Indentureindenture to be performed or observed by CNAF,us, by supplemental indenture satisfactory to the Trustee,trustee, executed and delivered to the Trusteetrustee by such corporation, and (ii) CNAFwe 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 Indenturesindentures and the Debt Securitiesdebt securities do not contain any covenants or other provisions designed to afford holders of the Debt Securitiesdebt securities protection in the event of a takeover, recapitalization or highly leveraged transaction involving CNAF.
NO PERSONAL LIABILITYin which we are involved.
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No Personal Liability
No past, present or future director, officer, employee or stockholder, as such, of CNAFours or any successor thereofof ours shall have any liability for any obligations of CNAFour obligations under the Debt Securitiesdebt securities or the Indenturesindentures or for any claimclaims based on, in respect of, or by reason of, such obligations or their creation. Each holder of Debt Securitiesdebt securities by accepting such Debt Securitydebt 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
debt securities.
The Trustee
The trustee in its individual or any other capacity may become the owner or pledgee of Debt Securitiesdebt securities and may otherwise deal with CNAFus or its
Affiliatesour affiliates with the same rights it would have if it were not the Trusteetrustee provided it complies with the terms of the applicable Indenture.indenture. The CNA Companies and the Trusteetrustee may engage in normal and customary banking transactions from time to time.
DESCRIPTION OF JUNIOR DEBT SECURITIES
The
Junior Debt Securitiesjunior debt securities may be issued in one or more series under a
Junior Subordinated Indenture (the "Junior Indenture"),junior subordinated indenture, between
CNAFus and
J. P. Morgan Trust Company, National Association, as trustee. The
Firstjunior subordinated indenture is referred to in this prospectus as the “junior indenture” and J. P. Morgan Trust Company, National
Bank of Chicago,Association, in its capacity as trustee
(the "Junior Indenture Trustee").under the junior indenture, is referred to in this prospectus as the “junior indenture trustee.” The
Junior Indenturejunior indenture has been qualified under the Trust Indenture Act
of 1939 and is
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22 subject to that act. The form of the Junior Indenturejunior indenture is included as an exhibit to the Registration Statement.registration statement of which this prospectus forms a part. The following description summarizes the material terms of the Junior Indenturejunior indenture and the Junior Debt Securities.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 Securitiesjunior debt securities and the Junior Indenture,junior indenture, including the definitions of certain terms used in the description of the Junior Debt Securitiesjunior debt securities in this prospectus, and those terms made a part of the Junior Indenturejunior indenture by the Trust Indenture Act.
GENERALAct of 1939.General
The Junior Indenturejunior indenture does not limit the aggregate principal amount of Junior Debt Securitiesjunior debt securities that may be issued thereunder and provideprovides that Junior
Debt Securitiesjunior 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. CNAFWe may sell Junior Debt Securitiesjunior debt securities at par, a premium or an original issuea discount. As of September 30, 1998, CNAFDecember 31, 2004, we had approximately $2.276$2.0 billion aggregate principal amount of indebtedness for borrowed money which would rank senior to the Junior Debt Securities,junior debt securities, and no such indebtedness which is equal or junior to the Junior Debt Securities.junior debt securities.
The Junior Debt Securitiesjunior debt securities will be issuable in one or more series pursuant to an indenture supplemental to the Junior Indenturejunior indenture or a resolution of CNAF's Boardour board of Directorsdirectors 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.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, referred to in this prospectus as 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, our right, if any, 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; |
17
| | |
| • | 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 us in respect of the junior debt securities and the junior indenture may be made, referred to in this prospectus as the “place of payment;” |
|
| • | our obligation or right, if any, to redeem, purchase or repay the junior debt securities and the period or periods within which, the price or prices at 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 which the junior debt securities shall be denominated; |
|
| • | any additions, modifications or deletions in our events of default or covenants 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 Securities Exchange Act of 1934; |
|
| • | the appointment of any paying agent or paying agents; |
|
| • | the terms and conditions of any obligation or right of ours or a holder to convert or exchange the junior debt securities into other 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 our other series of such junior debt securities or our other indebtedness 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 Securitiesjunior debt securities is payable in a foreign currency or currencies or foreign currency unit or units or if the principal, of andpremium, if any, premium and interest if any, on any Junior Debt Securitiesjunior debt securities are payable in a foreign currency or currencies or currency unit or units, the restrictions, elections, general tax
18
considerations, specific terms and other information with respect to such issue of
Junior Debt Securitiesjunior 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 TRANSFERDenominations, Registration and Transfer
Unless otherwise specified in the applicable prospectus supplement, the Junior Debt Securitiesjunior debt securities will be issuable only in registered form without coupons in denominations of $1,000$25 and any integral multiple thereof. Junior Debt
Securitiesdebt securities of any series will be exchangeable for other Junior Debt Securitiesjunior 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.terms.
Junior Debt Securitiesdebt 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 Registrarsecurities registrar or at the office of any transfer agent designated by CNAFwe designate for such purpose with respect to any series of Junior Debt Securitiesjunior 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. CNAFjunior indenture. We will appoint the Trusteejunior indenture trustee as Securities Registrarsecurities registrar under the Junior Indenture.junior indenture. If the applicable prospectus supplement refers to any transfer agents (in addition to the Securities Registrar)securities registrar) we initially designated by CNAFdesignate with respect to any series of Junior Debt Securities, CNAFjunior debt securities, we 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 maintainswe maintain a transfer agent in each Placeplace of Paymentpayment for such series. CNAFWe may at any time designate additional transfer agents with respect to any series of Junior Debt Securities.junior debt securities.
In the event of any redemption, neither CNAFwe nor the Junior Indenture
Trusteejunior indenture trustee shall be required to (i) issue, register the transfer of or exchange Junior Debt Securitiesjunior 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
Securitiesjunior 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 Securitiesjunior debt securities so selected for redemption, except, in the case of any Junior Debt Securitiesjunior debt securities being redeemed in part, any portion thereof not to be redeemed.
PAYMENT AND PAYING AGENTS
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
Securitiesjunior debt securities will be made at the office of the Junior Indenture Trusteejunior indenture trustee in theThe City of New York or at the office of such Paying Agentpaying agent or Paying Agentspaying agents as CNAFwe may designate from time to time in the applicable prospectus supplement, except that at theour option of CNAF payment of any interest may be made (i), except in the case of Global Junior Debt Securities,global junior debt securities, by check mailed to the address of the Personperson entitled thereto as such address shall appear in the Securities Registersecurities register or (ii) by transfer to an account maintained by the Personperson entitled thereto as specified in the Securities Register,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
Securitiesjunior debt securities will be made to the Personperson in whose name such Junior Debt Securityjunior debt security is registered at the close of business on the Regular Record Date for such interest, except in the case of defaulted interest. CNAFWe may at any time designate additional Paying Agentspaying agents or rescind the designation of any Paying
Agent;paying agent; however CNAFwe will at all times be required to maintain a Paying Agentpaying agent in each Placeplace of Paymentpayment for each series of Junior Debt Securities.junior debt securities.
All monies
paid by CNAFwe pay to the
Junior Indenture Trusteejunior indenture trustee or any
Paying
Agent,paying agent, or then held by
CNAFus in trust, for the payment of the principal,
of
(premium)premium, if any, or interest on any
Junior Debt Security remainjunior debt security that remains unclaimed for two years after such principal,
(and premium, if
any)any, or interest has become due and payable, at
theour request,
of CNAF, will be repaid to
CNAF andus. After this repayment, the holder of such
Junior Debt Securityjunior debt security will look only to
CNAFus for payment thereof.
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GLOBAL JUNIOR DEBT SECURITIES
TheGlobal 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 Securitiesglobal junior debt securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the prospectus
19
supplement relating to such series. Global Junior Debt Securitiesglobal 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 Securitiesjunior debt securities represented thereby, a Global Junior Debt Securityglobal junior debt security may not be transferred except as a whole by the Depositarydepositary for such Global Junior
Debt Securityglobal junior debt security to a nominee of such Depositarydepositary or by a nominee of such Depositarydepositary to such Depositarydepositary or another nominee of such Depositarydepositary or by the Depositarydepositary or any nominee to a successor Depositarydepositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series of Junior Debt Securitiesjunior debt securities will be described in the prospectus supplement relating to such series. CNAF anticipatesWe anticipate that the provisions described above under the heading "Description“Description of Debt Securities-Global Securities"Securities” will generally apply to depositary arrangements with respect to the Junior Debt
Securities,junior debt securities, as if the Junior Debt Securitiesjunior debt securities were "Debt Securities"“debt securities” as discussed in that section.
OPTION TO EXTEND INTEREST PAYMENT DATE
Option to Extend Interest Payment Date
If provided in the applicable prospectus supplement, CNAFwe shall have the right at any time and from time to time during the term of any series of Junior Debt Securitiesjunior 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,each such period referred to in this prospectus as an "Extension Period"),“extension period,” subject to the terms, conditions and covenants, if any, specified in such prospectus supplement,supplement; provided that such Extension Periodextension period may not extend beyond the Stated Maturitystated maturity of such series of Junior Debt Securities.
REDEMPTIONjunior debt securities.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, Junior Debt Securitiesjunior debt securities will not be subject to any sinking fund.
Unless otherwise indicated in the applicable prospectus supplement, CNAFwe may, at itsour option, redeem the Junior Debt Securitiesjunior 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 Securityjunior 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 Eventtax event (as defined below) or an investment company event (as defined below) in respect of a series of
Junior Debt Securitiesjunior debt securities shall occur and be continuing,
CNAFwe may, at
itsour option, redeem such series of
Junior Debt Securitiesjunior debt securities in whole (but not in part) at any time within 90 days of the occurrence of such
Junior Debt Security Tax Event,tax event, or investment company event, at a
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Securitiesjunior debt securities then outstanding plus accrued and unpaid interest to the date fixed for redemption.
"Junior Debt Security Tax Event" “Tax event” means, thewith respect to a CNA Capital Trust, our and that CNA Capital Trust’s 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, such determination or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement, determination or decision is announced on or after the date of original issuance of the applicable series of Junior Debt Securitiesjunior debt securities under the Junior Indenture,junior indenture, there is more than an insubstantial risk that (i) that such CNA Capital Trust is, or will be within 90 days of the date of the opinion of counsel, subject to United States federal income tax with respect to income received or accrued on the applicable junior debt securities, (ii) interest payable by CNAFus on such series of Junior Debt Securitiesjunior debt securities is not, or within 90 days of the date of such opinion will not be, deductible by CNAF,us, in whole or in part, for United States federal income tax purposes.purposes, or (iii) such CNA Capital Trust is, or will be within 90 days of the date of such opinion, subject to more than the minimal amount of the taxes, duties or other government charges.
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“Investment company event” means our and a CNA Capital Trust’s receipt 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, that such CNA Capital Trust is or will be considered an “investment company” that is required to be registered under the Investment Company Act of 1940, which change becomes effective on or after the date of original issuance of the applicable series of junior debt securities.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holderholder of Junior Debt Securitiesjunior debt securities to be redeemed at its registered address. Unless CNAF defaultswe default in payment of the redemption price, on and after the redemption date interest ceases to accrue on such Junior Debt Securitiesjunior debt securities or portions thereof called for redemption.
MODIFICATION OF JUNIOR INDENTURE
Modification of Junior Indenture
From time to time CNAFwe and the Junior Indenture Trusteejunior indenture trustee may, without the consent of the holders of any series of Junior Debt Securities,junior debt securities, amend, waive or supplement the Junior Indenturejunior 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 Securitiesjunior debt securities or, in the case of Corresponding Junior
Debt Securities,junior debt securities issued to a CNA Capital Trust, referred to in this prospectus as “corresponding junior debt securities,” the holders of the Related Preferred Securitiespreferred securities issued by such CNA Trust, referred to in this prospectus as “related preferred securities,” so long as they remain outstanding) and qualifying, or maintaining the qualification of, the Junior Indenturejunior indenture under the Trust Indenture Act.Act of 1939. The Junior Indenturejunior indenture contains provisions permitting CNAFus and the Junior Indenture Trustee,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 Securitiesjunior debt securities affected, to modify the Junior Indenturejunior indenture in a manner affecting the rights of the holders of such series of the Junior Debt
Securities;junior debt securities; provided, that no such modification may, without the consent of the holder of each outstanding Junior Debt Securityjunior debt security so affected, (i) change the Stated Maturitystated maturity of any series of Junior Debt Securities,junior debt securities, or reduce the principal amount thereof, or reduce the rate (or change the manner of calculation of the rate) or extend the time of payment of interest thereon (except such extension as is contemplated hereby), (ii) change any of the redemption, conversion or (ii)exchange terms, (iii) reduce the percentage of principal amount of Junior Debt Securitiesjunior debt securities of any series, the holders of which are required to consent to any such modification of the Junior
Indenture,junior indenture, (iv) modify the provisions relating to modifications, waivers of covenants or waivers of past default except under certain limited circumstances or (v) change any of the subordination provisions provided that, in the case of Corresponding Junior Debt Securities,corresponding junior debt securities, so long as any of the Related Preferred Securitiesrelated preferred securities remain outstanding, no such modification may be made that adversely affectswithout the holdersprior consent of a majority in liquidation amount of such Preferred
Securitiesrelated preferred securities, or, in any material respect,the case of the preceding provision, each holder of the related preferred securities, and no termination of the Junior Indenturejunior indenture may occur, and no waiver of any Junior Debt Security Eventjunior debt related event of Defaultdefault or compliance with any covenant under the Junior Indenturejunior indenture may be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation preferenceamount of such Related Preferred Securitiesrelated preferred securities unless and until the principal of the Corresponding Junior Debt Securitiescorresponding junior debt securities and all accrued and unpaid interest thereon have been paid in full and certain other conditions are satisfied.
In addition, CNAFwe and the Junior Indenture Trusteejunior indenture trustee may execute, without the consent of any holder of Junior Debt Securities,junior debt securities, any supplemental Junior
Indenturejunior indenture for the purpose of creating any new series of junior debt securities.
Junior Debt Securities.
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JUNIOR DEBT RELATED EVENTS OF DEFAULTRelated Events of Default The Junior Indenturejunior indenture provides that any one or more of the following described events with respect to a series of Junior Debt Securitiesjunior debt securities that has occurred and is continuing constitutes a "Junior Debt Related Event“junior debt related event of Default"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.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 |
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| | |
| • | failure to pay any principal or premium 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 us 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 with respect to our bankruptcy, insolvency or reorganization. |
The holders of a majority in aggregate outstanding principal amount of such series of Junior Debt Securitiesjunior 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.junior indenture trustee. The Junior Indenture Trusteejunior indenture trustee or the holders of not less than 25% in aggregate outstanding principal amount of such series of Junior Debt
Securitiesjunior debt securities may declare the principal due and payable immediately upon a Junior
Debt Related Eventjunior debt related event of Default, and, indefault. 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"),corresponding junior debt securities, should the Junior Indenture Trustee or such holders of
such Corresponding Junior Debt Securitiesjunior indenture trustee fail to make such declaration, the holders of at least 25% in aggregate liquidation preferenceamount of the Related
Preferred Securitiesrelated preferred securities shall have such right. The holders of a majority in aggregate outstanding principal amount of such series of Junior Debt Securitiesjunior 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 Securitiesjunior 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.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,corresponding junior debt securities, the holders of a majority in aggregate liquidation preferenceamount of the Related Preferred Securitiesrelated preferred securities shall have such right.
The holders of a majority in aggregate outstanding principal amount of the Junior Debt Securitiesjunior debt securities affected thereby may, on behalf of the holders of all the Junior Debt Securities,junior debt securities, waive any past default, except a default in the payment of principal, premium, if any, 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)junior indenture trustee) or a default in respect of a covenant or provision which under the Junior Indenturejunior indenture cannot be modified or amended without the consent of the holder of each outstanding Junior Subordinated Debt Security.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,corresponding junior debt securities, the holders of a majority in aggregate liquidation preferenceamount of the Related
Preferred Securitiesrelated preferred securities shall have such right. CNAF isWe are required to file annually with the Junior Indenture Trusteejunior indenture trustee a certificate as to whether or not CNAF iswe are in compliance with all the conditions and covenants applicable to itus under the Junior Indenture.junior indenture.
In case a
Junior Debt Related Eventjunior debt related event of
Defaultdefault shall occur and be continuing as to a series of
Corresponding Junior Debt Securities,corresponding junior debt securities, the
Property
Trusteeproperty trustee will have the right to declare the principal of and the interest on such
Corresponding Junior Debt Securities,corresponding junior debt securities, and any other amounts payable under the
Junior Indenture,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 SECURITIEScorresponding junior debt securities.Enforcement of Certain Rights by Holders of Preferred Securities
If a Junior Debt Related Eventjunior debt related event of Defaultdefault has occurred and is continuing and such event is attributable to theour failure of CNAF to pay interest or principal on the related Junior Debt Securitiesjunior debt securities on the date such interest or principal is otherwise payable, a holder of Preferred Securitiesrelated preferred securities may institute a legal proceeding directly against CNAFus for enforcement of payment to such holder of the principal and premium, if any, of or interest on such related Junior Debt Securitiesjunior debt securities having a principal amount equal to the aggregate liquidation amount of the Related
Preferred Securitiesrelated preferred securities of such holder (a "Direct Action"). CNAFholder. Any such legal proceeding is referred to in this prospectus as a “direct action.” We may not amend the Junior Indenturejunior indenture to remove the foregoingthis right to bring a Direct Actiondirect action without the prior written consent of theall holders of all of the Preferred Securities.related preferred securities. If thesuch 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. CNAF1934. We shall have the right under the Junior Indenturejunior indenture to set-off any payment madewe make to such holder of Preferred Securities by CNAFpreferred securities 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.direct action.
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The holders of the Preferred Securitiespreferred 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 Securitiesjunior debt securities unless there shall have been an Eventevent of Defaultdefault under the Trust Agreement. See "Descriptiontrust agreement.
Consolidation, Merger, Sale of Preferred Securities - Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONSAssets and Other Transactions
The Junior Indenturejunior indenture provides that CNAFwe shall not consolidate with or merge into any other Personperson or convey, transfer or lease our properties and assets as an entirety or substantially as an entirety to any person, and no person shall consolidate with or merge into us or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to us, unless (i) in case we consolidate with or merge into another person or convey, transfer or lease our properties and assets as an entirety or 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,person, the successor Personperson is organized under the laws of the United States or any state or the District of Columbia, and such successor Personperson expressly assumes CNAF'sour obligations on the Junior Debt Securitiesjunior debt securities issued under the Junior Indenture;junior indenture; (ii) immediately after giving effect thereto, no Junior Debt Related Eventjunior debt related event of Default,default, and no event which, after notice or lapse of time or both, would become a Junior Debt Related Eventjunior debt related event of Default,default, shall have happened and be continuing; (iii) in the case of Corresponding Junior Debt Securities,corresponding junior debt securities, such transaction is permitted under the related Trust Agreement or Guaranteetrust agreement and guarantee and does not give rise to any breach or violation of the related Trust Agreement and Guarantee,trust agreement or guarantee; and (iv) certain other conditions as prescribed indelivery of appropriate officers certificates and opinions of counsel go to the Junior Indenture are met.satisfaction of the above listed conditions.
Other than the covenants described above, or as set forth in any accompanying prospectus supplement, the
Junior Indenturejunior indenture and the
Junior Debt
Securitiesjunior debt securities do not contain any covenants or other provisions designed to afford holders of the
Junior Debt Securitiesjunior debt securities protection in the event of a takeover, recapitalization or highly leveraged transaction
involving CNAF.
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SATISFACTION AND DISCHARGEin which we are involved.Satisfaction and Discharge
The Junior Indenturejunior indenture provides that when, among other things, all Junior
Debt Securitiesjunior debt securities not previously delivered to the Junior Indenture Trusteejunior indenture trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Stated Maturitystated maturity within one year or (iii) are to be called for redemption within one year, and CNAF depositswe deposit or causescause to be deposited with the Junior Indenture Trusteejunior indenture trustee trust funds, in trust, for the purpose and in an amount in the currency or currencies in which the Junior Debt
Securitiesjunior debt securities are payable sufficient to pay and discharge the entire indebtedness on the Junior Debt Securitiesjunior debt securities not previously delivered to the Junior Indenture
Trusteejunior indenture trustee for cancellation, for the principal, (and premium, if any)any, and interest, if any, to the date of the deposit or to the Stated Maturity,stated maturity, as the case may be, then the Junior Indenturejunior indenture will cease to be of further effect (except as to CNAF'sour obligations to pay all other sums due pursuant to the Junior Indenturejunior indenture and to provide the officers'officers’ certificates and opinions of counsel described therein), and CNAFwe will be deemed to have satisfied and discharged the Junior Indenture.
CONVERSION OR EXCHANGEjunior indenture.
Conversion or Exchange
If and to the extent indicated in the applicable prospectus supplement, the Junior Debt Securitiesjunior debt securities of any series may be convertible or exchangeable into Preferred Securitiespreferred securities or other securities. The specific terms on which Junior
Debt Securitiesjunior 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 theour option, of CNAF, in which case the number of shares of Preferred Securitiespreferred securities or other securities to be received by the Holdersholders of Junior Debt Securitiesjunior debt securities would be calculated as of a time and in the manner stated in the applicable prospectus supplement.
SUBORDINATION
Subordination
In the Junior Indenture, CNAF hasjunior indenture, we have agreed that any Junior Debt
Securitiesjunior debt securities issued thereunder will be subordinate and junior in right of payment to all Senior Debtsenior debt (as defined below) to the extent provided in the Junior Indenture.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,
23
insolvency, debt restructuring or similar proceedings in connection with any proceedings with respect to our insolvency or bankruptcy, proceeding of CNAF, the holders of Senior Debt (as defined below)senior debt will first be entitled to receive payment in full of principal of, (andand premium, if any)any, and interest, if any, on such Senior Debtsenior debt before the holders of Junior
Debt Securitiesjunior debt securities or, in the case of Corresponding Junior Debt Securities,corresponding junior debt securities, the Property Trusteeproperty trustee on behalf of the holders, will be entitled to receive or retain any payment in respect of the principal of, (andand premium, if any)any, or interest, if any, on the Junior Debt Securities.junior debt securities.
In the event of the acceleration of the maturity of any Junior Debt
Securities,junior debt securities, the holders of all Senior Debtsenior 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 Securitiesjunior debt securities will be entitled to receive or retain any payment in respect of the principal of, (oror premium, if any)any, or interest, if any, on the Junior Debt Securities.junior debt securities.
No payments on account of principal, (oror premium, if any)any, or interest, if any, in respect of the Junior Debt Securitiesjunior debt securities may be made if there shall have occurred and be continuing a default in any payment with respect to Senior Debt,senior debt, or an event of default with respect to any Senior Debtsenior debt resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default.
"Debt"
“Debt” means with respect to any
Person,person, whether recourse is to all or a portion of the assets of such
Personperson 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" | | |
| • | 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; |
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| • | 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); |
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| • | every capital lease obligation of such person; |
|
| • | all our indebtedness, whether incurred on or prior to the date of the junior indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, futures contracts, options and swaps and similar arrangements; 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, (includingincluding interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to CNAFus, whether or not such claim for post-petition interest is allowed in such proceeding),proceeding, on Debt,debt, whether incurred on or prior to the date of the Junior Indenturejunior indenture or thereafter incurred (including, without limitation, Debtdebt incurred pursuant to the Senior
Indenturesenior indenture and the Subordinated Indenture)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
Securitiesjunior debt securities or to other Debtdebt which ispari passuwith, or subordinated to, the Junior Debt Securities;junior debt securities; provided, however, that Senior Debtsenior 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.
| | |
| • | any of our debt which, when incurred and without respect to any election under Section 1111(b) of the Bankruptcy Code, was without recourse to us; |
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| • | any of our debt to any of our subsidiaries; |
|
| • | debt to any of our employees; |
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| • | any liability for taxes; |
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| | |
| • | indebtedness or monetary obligations to trade creditors or assumed by us or any of our subsidiaries in the ordinary course of business in connection with the obtaining of goods, materials or services; and |
|
| • | any other junior debt securities. |
The Junior Indenturejunior indenture provides that the foregoing subordination provisions, insofar as they relate to any particular issue of Junior Debt
Securities,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,
Information concerning the Junior Indenture Trustee
The junior indenture trustee, other than during the continuance of a junior debt related event of default, undertakes to perform only such duties as are specifically set forth in the junior indenture, and in the event an event of default has occurred and is continuing, exercise the same degree of care and skill in the exercise of its rights and powers as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. The junior indenture trustee is under no obligation to exercise any of the powers vested in it by the
Junior Indenturejunior indenture at the request of any holder of
Junior Debt Securities,junior debt securities, unless offered reasonable indemnity by such holder against the costs, expenses and liabilities which might be incurred thereby. The
Junior Indenture Trusteejunior 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 Trusteejunior indenture trustee reasonably believes that repayment or adequate indemnity is not reasonably assured to it.
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CORRESPONDING JUNIOR DEBT SECURITIES
The junior indenture trustee in its individual or any other capacity may become the owner or pledgee of junior debt securities or related preferred securities and may otherwise deal with us or our affiliates with the same rights it would have if it were not the junior indenture trustee provided it complies with the terms of the junior indenture. The CNA Companies and the junior indenture trustee may engage in normal and customary banking transactions from time to time. Corresponding Junior Debt Securities
The corresponding junior debt securities may be issued in one or more series of Junior Debt Securitiesjunior debt securities under the Junior Subordinated Indenturejunior indenture with terms corresponding to the terms of a series of Related Preferred Securities.related preferred securities. In that event, concurrently with the issuance of eachthe applicable CNA Capital Trust's Preferred
Securities,Trust’s preferred securities, such CNA Capital Trust will invest the proceeds thereof and the consideration paid by CNAFus for the Common Securitiescommon securities in a series of Corresponding Junior Debt Securities issued by CNAFcorresponding junior debt securities we issue to such CNA Capital Trust. Each series of Corresponding Junior Debt Securitiescorresponding junior debt securities will be in the principal amount equal to the aggregate stated Liquidation Amountliquidation amount of the Related Preferred
Securitiesrelated preferred securities and the Common Securitiescommon securities of such CNA Capital Trust and will rankpari passu with all other series of Junior Debt Securities.junior debt securities. Holders of the Related Preferred Securitiesrelated preferred securities for a series of Corresponding Junior Debt
Securitiescorresponding junior debt securities will have the rights in connection with modifications to the Junior
Indenturejunior indenture or upon occurrence of junior debt security events of default described under “— Modification of Junior Indenture” and “— 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.
CNAFrelated preferred securities.
We will covenant in the
Junior Indenturejunior indenture as to each series of
Corresponding Junior Debt Securities,corresponding junior debt securities, that if and so long as (i) the CNA Capital Trust of the related series of
Trust Securitiestrust securities is the holder of all such
Corresponding Junior Debt Securities,corresponding junior debt securities and (ii) a
Tax Eventtax 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, CNAFwe will pay to such CNA Capital Trust
such Additional Sums. CNAFthe applicable additional sums (as defined under “Description of Preferred Securities — Redemption or Exchange”). We 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 LIABILITYcorresponding 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 our ownership of the common securities; |
|
| • | not to voluntarily terminate, wind-up or liquidate any CNA Capital Trust, except in connection with (a) a distribution of corresponding junior debt securities to the holders of the preferred securities in liquidation of such CNA Capital Trust, (b) the redemption of preferred securities or (c) certain |
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| | |
| | mergers, consolidations or amalgamations, in each case as permitted by the related trust agreement; and |
|
| • | to use its reasonable efforts, consistent with the terms and provisions of the related trust agreement, to cause (a) 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 or (b) each holder of preferred securities to be treated as owning an undivided beneficial interest in the Securities. |
No Personal Liability
No past, present or future director, officer, employee or stockholder, as such, of CNAFours or any successor thereofof ours shall have any liability for any obligations of CNAFour obligations under the Junior Debt Securitiesjunior debt securities or the Junior Indenturejunior indenture or for any claims based on, in respect of, or by reason of, such obligations or their creation. Each holder of Junior Debt Securitiesjunior debt securities by accepting such Junior
Debt Securityjunior 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.
junior debt securities.
DESCRIPTION OF COMMON STOCK
CNAF is
We are authorized to issue 200500 million shares of Common Stock.common stock. As of November 30, 1998, 185,525,907December 31, 2004, 258.2 million shares of Common Stockcommon stock were issued and 183,889,569256.0 million shares were outstanding. The Common Stockcommon stock has a par value of $2.50 per share. As of November 30, 1998,December 31, 2004, Loews Corporation owned approximately 85%91% of CNAF'sour outstanding Common Stock.common stock.
The following summary description of the terms of the
Common Stockcommon stock sets forth certain general terms and provisions of the
Common Stock.common stock. This description is qualified in its entirety by reference to (i)
CNAF's Certificateour certificate of
Incorporation and By-Laws, copiesincorporation, a copy of which
areis filed as
exhibitsan exhibit to
CNAF's
Annual Reportour registration statement on Form S-8 (File No. 333-65493), (ii) an amendment to our certificate of incorporation, a copy of which is filed as an exhibit to our annual report on Form 10-K for the
fiscal year ended December 31,
19971999, (iii) our by-laws, a copy of which is filed as an exhibit to our annual report on Form 10-K for the year ended December 31, 2004, and
to
the Registration Statement and (ii)(iv) the description of
the Common Stockour common stock set forth in
CNAF'sour registration statement on Form S-3 (File No. 33-35250) filed on June 6, 1990,
all of which
isare incorporated herein by reference.
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DIVIDENDSDividends
Subject to the rights of the holders of Preferred Stock,preferred stock, holders of Common Stockcommon stock are entitled to receive dividends and other distributions in cash, stock or CNAF'sour property, when, as and if declared by CNAF's Boardour board of Directorsdirectors out of our 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
Voting Rights
At every meeting of stockholders, every holder of Common Stockcommon stock is entitled to one vote per share. Subject to any voting rights of the holders of Preferred Stockpreferred 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 Certificatecertificate of Incorporation,incorporation, (ii) most mergers and consolidations of CNAF and (iii) sale of all or substantially all of CNAF'sour assets.
LIQUIDATION RIGHTS
Liquidation Rights
In the event of anyour liquidation, dissolution or winding-up, of CNAF, whether voluntary or involuntary, the holders of Common Stockcommon 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 Stockpreferred stock then outstanding.
MISCELLANEOUS
26
Miscellaneous
The holders of Common Stockcommon stock have no preemptive rights, cumulative voting rights, subscription rights, or conversion rights and the Common Stockcommon stock is not subject to redemption.
The transfer agent and registrar with respect to the Common Stockour common stock is First ChicagoEquiserve Trust Company, of New York. The Common StockN.A. Our 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 Stockour common stock is "CNA".
“CNA.”
DESCRIPTION OF PREFERRED STOCK
CNAF is
We are authorized to issue up to 12,500,00012.5 million shares of Preferred Stock,preferred stock, without par value, in one or more series. As of December 31, 2004, 7,500 shares of our Series H preferred stock were outstanding, with a stated value of $100,000. All shares of Preferred Stock,preferred stock, irrespective of series, constitute one and the same class. The following description of the terms of the Preferred Stockpreferred stock sets forth certain general terms and provisions of the Preferred Stock.preferred stock. Certain terms of any series of Preferred
Stockpreferred stock offered by the prospectus supplement will be described in the prospectus supplement relating to such series of Preferred Stock.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 eachAs of Money Market Cumulative
Preferred(TM) Stock,December 31, 2004, Loews Corporation owns 100% of our Series E andH preferred stock. The Series F with a liquidation preferenceH preferred stock accrues cumulative dividends at an initial rate of $100,0008% per share and 2,000 shares of its Series G Cumulative Exchangeable
Preferred Stock with a liquidation preference of $100,000 per share.year, compounded annually.
The following summary description of the terms of the
Preferred Stockpreferred stock sets forth certain general terms and provisions of the
Preferred Stock.preferred stock. This description is qualified in its entirety by reference to
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CNAF's Certificateour certificate of Incorporationincorporation and By-Laws,by-laws, copies of which are filed as exhibits to CNAF'sour registration statement on Form S-8 (File No. 333-65493) and to the Registration Statement.
GENERAL
The Boardregistration statement of Directorswhich this prospectus forms a part.General
Our 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 Stockpreferred 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.
| | |
| • | the designation and number of shares comprising such series, which may be increased or decreased from time to time by our 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 our voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, 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; |
27
| | |
| • | 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 our capital stock, 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 |
|
| • | any other preferences, privileges and powers, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such series, as our board of directors may deem advisable. |
Unless otherwise specifically described in the applicable prospectus supplement for a series of Preferred Stock,preferred stock, all shares of Preferred Stockpreferred 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 Stockpreferred 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,preferred stock, then such assets shall be distributed among the holders ratably.
The description of certain provisions of the Preferred Stockpreferred stock described below is only a summary and is subject to and qualified in its entirety by reference to the Certificateour certificate of Incorporationincorporation and the Certificatecertificate of Designationsdesignations 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 RIGHTSpreferred stock.
Dividend Rights
Except as may be set forth in an applicable prospectus supplement relating to a series of Preferred Stock,preferred stock, the holders of Preferred Stockpreferred stock shall be entitled to receive, but only when and as declared by the Boardour board of Directorsdirectors 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.preferred stock. Such rate may be fixed or variable. Each such dividend will be payable to the holders of record as they appear on theour stock books of CNAFregister on such record dates as will be fixed by the Boardour board of Directors of CNAFdirectors or a duly authorized committee thereof. Dividends payable on the Preferred Stockpreferred 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,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 Stockpreferred stock shall not have been declared and paid or set apart for payment on all outstanding shares of Preferred Stockpreferred 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 Stockcommon stock by CNAF.us. After payment in full of all dividend arrearages on the Preferred Stock,preferred stock, dividends on the Common Stockcommon stock may be declared and paid out of funds legally available for that purpose as the Boardour board of Directorsdirectors may determine.
REDEMPTION
Redemption
The prospectus supplement will describe whether and under what circumstances (i) any shares of Preferred Stockpreferred stock may be redeemed by CNAFus and (ii) the holders of Preferred Sharespreferred stock may require CNAFus to redeem any or all of such shares.
CONVERSION OR EXCHANGE
28
Conversion or Exchange
The holders of
Preferred Stockpreferred 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
theour capital stock
of
CNAF and/or other property or cash, as described in the applicable prospectus supplement.
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VOTING RIGHTSVoting Rights
The holders of Preferred Stockpreferred stock will have such voting rights, if any, as described in the applicable prospectus supplement relating to a series of Preferred Stock.preferred stock. Unless and except to the extent required by the law or provided by the Boardour board of Directors,directors, holders of Preferred Stockpreferred stock shall have no voting power with respect to any matter. In no event shall the Preferred Stockpreferred 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 Stockpreferred stock shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the Certificateour certificate of Incorporation if the
amendment, whether or not entitled to vote thereon by the Certificate
of Incorporationincorporation, if the amendment would increase or decrease the aggregate number of authorized shares of such series of Preferred Stock,preferred stock, increase or decrease the par value of the shares of such series of Preferred Stock,preferred stock, or alter or change the powers, preferences, or special rights of the shares of such series of Preferred Stockpreferred 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 Stockpreferred 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 Stockpreferred 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 theour stock
of CNAF entitled to vote irrespective of the previous two sentences, if so provided in the Certificateour certificate of Incorporation,incorporation, in any amendment thereto which created such series of Preferred Stock,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.preferred stock. This paragraph
reflects legal requirements under current Delaware law and is subject to any amendments to such law.Delaware law regarding these matters.
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 RIGHTSpreferred stock.
Liquidation Rights
Upon anyour liquidation, dissolution or winding up, of CNAF, whether voluntary or involuntary, holders of Preferred Stockpreferred stock will have such preferences and priorities, if any, with respect to distribution of theour assets of CNAF or the proceeds thereof as may be set forth in the applicable prospectus supplement relating to a series of Preferred Stock.
MISCELLANEOUSpreferred stock.
Miscellaneous
The transfer agent, dividend disbursing agent and registrar for the
Preferred Stockpreferred stock issued in connection with this prospectus will be as described in the applicable prospectus supplement. The holders of
Preferred Stock,preferred stock, including any
Preferred Stockpreferred 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.ours. When issued, the
Preferred Stockpreferred stock will be fully paid and nonassessable. The
Certificatecertificate of
Designationsdesignations setting forth the provisions of each series of
Preferred Stockpreferred 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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preferred stock.DESCRIPTION OF DEPOSITARY SHARES
The description set forth below and in any prospectus supplement of certain provisions of the Deposit Agreement (as defined below)deposit agreement and of the Depositary Sharesdepositary shares and Depositary Receiptsdepositary receipts summarizes the material terms of the Deposit Agreementdeposit agreement and of the Depositary Sharesdepositary shares and Depositary Receipts,depositary receipts, and is qualified in its entirety by reference to, the form of Deposit Agreementdeposit agreement and form of Depositary Receiptsdepositary receipts relating to each series of the Preferred Stock.
GENERAL
CNAFpreferred stock.
29
General
We may, at itsour option, elect to have shares of Preferred Stockpreferred stock be represented by Depositary Shares.depositary shares. The shares of any series of the Preferred
Stockpreferred stock underlying the Depositary Sharesdepositary shares will be deposited under a separate deposit agreement (the "Deposit Agreement") between CNAFus and a bank or trust company selected by CNAF (the "Preferred Stock Depositary").we select, such bank or trust company is referred to in this prospectus as the “preferred stock depositary.” The prospectus supplement relating to a series of Depositary Sharesdepositary shares will set forth the name and address of the Preferred Stock Depositary.preferred stock depositary. Subject to the terms of the Deposit
Agreement,deposit agreement, each owner of a Depositary Sharedepositary share will be entitled, proportionately, to all the rights, preferences and privileges of the Preferred Stockpreferred stock represented thereby (including dividend, voting, redemption, conversion, exchange and liquidation rights).
The Depositary Sharesdepositary shares will be evidenced by Depositary Receiptsdepositary receipts issued pursuant to the Deposit Agreement,deposit agreement, each of which will represent the applicable interest in a number of shares of a particular series of the Preferred Stockpreferred stock described in the applicable prospectus supplement.
A holder of Depositary Sharesdepositary shares will be entitled to receive the shares of Preferred Stockpreferred stock (but only in whole shares of Preferred Stock)preferred stock) underlying such Depositary Shares.depositary shares. If the Depositary Receiptsdepositary receipts delivered by the holder evidence a number of Depositary Sharesdepositary shares in excess of the whole number of shares of Preferred
Stockpreferred stock to be withdrawn, the Depositarydepositary will deliver to such holder at the same time a new Depositary Receiptdepositary receipt evidencing such excess number of Depositary
Shares.
DIVIDENDS AND OTHER DISTRIBUTIONSdepositary shares.
Dividends and Other Distributions
The Preferred Stock Depositarypreferred stock depositary will distribute all cash dividends or other cash distributions in respect to the Preferred Stockpreferred stock to the record holders of Depositary Receiptsdepositary receipts in proportion, insofar as possible, to the number of Depositary Sharesdepositary shares owned by such holders.
In the event of a distribution other than in cash in respect to the Preferred Stock,preferred stock, the Preferred Stock Depositarypreferred stock depositary will distribute property received by it to the record holders of Depositary Receiptsdepositary receipts in proportion, insofar as possible, to the number of Depositary Sharesdepositary shares owned by such holders, unless the Preferred Stock Depositarypreferred stock depositary determines that it is not feasible to make such distribution, in which case the Preferred Stock Depositarypreferred stock depositary may, with theour 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 CNAFus or the Preferred Stock Depositarypreferred stock depositary on account of taxes.
CONVERSION AND EXCHANGE
Conversion and Exchange
If any
Preferred Stockpreferred stock underlying the
Depositary Sharesdepositary 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 Sharesdepositary shares will have the right or obligation to convert or exchange such Depositary Sharesdepositary shares pursuant to the terms thereof.
REDEMPTION OF DEPOSITARY SHARESRedemption of Depositary Shares
If Preferred Stockpreferred stock underlying the Depositary Sharesdepositary shares is subject to redemption, the Depositary Sharesdepositary shares will be redeemed from the proceeds received by the Preferred Stock Depositarypreferred stock depositary resulting from the redemption, in whole or in part, of the Preferred Stockpreferred stock held by the Preferred Stock Depositary.preferred stock depositary. The redemption price per Depositary Sharedepositary share will be equal to the aggregate redemption price payable with respect to the number of shares of Preferred Stockpreferred stock underlying the Depositary Shares.depositary shares. Whenever CNAF redeems Preferred Stockwe redeem preferred stock from the Preferred
Stock Depositary,preferred stock depositary, the Preferred Stock Depositarypreferred stock depositary will redeem as of the same redemption date a proportionate number of Depositary Sharesdepositary shares representing the shares of Preferred Stockpreferred stock that were redeemed. If less than all the Depositary
Sharesdepositary shares are to be redeemed, the Depositary Sharesdepositary shares to be redeemed will be selected by lot or pro rata as we may be determined by CNAF.determine.
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After the date fixed for redemption, the Depositary Sharesdepositary shares so called for redemption will no longer be deemed to be outstanding and all rights of the holders of the Depositary Sharesdepositary shares will cease, except the right to receive the redemption price upon such redemption. Any funds deposited by CNAFwe deposit with the Preferred Stock Depositarypreferred stock depositary for any Depositary Sharesdepositary shares which the holders thereof fail to redeem shall be returned to CNAFus after a period of two years from the date such funds are so deposited.
VOTING
Voting
Upon receipt of notice of any meeting at which the holders of any shares of Preferred Stockpreferred stock underlying the Depositary Sharesdepositary shares are entitled to vote, the Preferred Stock Depositarypreferred stock depositary will mail the information contained in such notice to the record holders of the Depositary Receipts.depositary receipts. Each record holder of such Depositary Receiptsdepositary receipts on the record date (which will be the same date as the record date for the Preferred Stock)preferred stock) will be entitled to instruct the Preferred
Stock Depositarypreferred stock depositary as to the exercise of the voting rights pertaining to the number of shares of Preferred Stockpreferred stock underlying such holder's Depositary Shares.holder’s depositary shares. The Preferred Stock Depositarypreferred stock depositary will endeavor, insofar as practicable, to vote the number of shares of Preferred Stockpreferred stock underlying such Depositary Sharesdepositary shares in accordance with such instructions, and CNAFwe will agree to take all reasonable action which may be deemed necessary by the Preferred Stock Depositarypreferred stock depositary to enable the Preferred Stock Depositarypreferred stock depositary to do so. The Preferred Stock Depositarypreferred stock depositary will abstain from voting the Preferred Stockpreferred stock to the extent it does not receive specific written instructions from holders of Depositary Receiptsdepositary receipts representing such Preferred Stock.
RECORD DATEpreferred 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,preferred stock, or (ii) the Preferred Stock Depositarypreferred stock depositary shall receive notice of any meeting at which holders of Preferred Stockpreferred stock are entitled to vote or of which holders of Preferred Stockpreferred stock are entitled to notice, or of the mandatory conversion of or any election on theour part of CNAF to call for the redemption of any Preferred Stock,preferred stock, the Preferred Stock Depositarypreferred stock depositary shall, in each such instance, fix a record date (which shall be the same as the record date for the Preferred Stock)preferred stock) for the determination of the holders of Depositary Receipts (x)depositary receipts (y) who shall be entitled to receive such dividend, distribution, rights, preferences or privileges or the net proceeds of the sale thereof or (y)(z) 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.
Amendment and Termination of the Deposit Agreement.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENTAgreement The form of Depositary Receiptdepositary receipt and any provision of the Deposit
Agreementdeposit agreement may at any time be amended by agreement between CNAFus and the Preferred
Stock Depositary.preferred stock depositary. However, any amendment which imposes or increases any fees, taxes or other charges payable by the holders of Depositary Receiptsdepositary receipts (other than taxes and other governmental charges, fees and other expenses payable by such holders as stated under "Charges“Charges of Preferred Stock Depositary"Depositary”), or which otherwise prejudices any substantial existing right of holders of Depositary
Receipts,depositary receipts, will not take effect as to outstanding Depositary Receiptsdepositary receipts until the expiration of 90 days after notice of such amendment has been mailed to the record holders of outstanding Depositary Receipts.depositary receipts.
Whenever we so directed by CNAF,direct, the Preferred Stock Depositarypreferred stock depositary will terminate the Deposit Agreementdeposit agreement by mailing notice of such termination to the record holders of all Depositary Receiptsdepositary receipts then outstanding at least 30 days prior to the date fixed in such notice for such termination. The Preferred Stock
Depositarypreferred stock depositary may likewise terminate the Deposit Agreementdeposit agreement if at any time 45 days shall have expired after the Preferred Stock Depositarypreferred stock depositary shall have delivered to CNAFus a written notice of its election to resign and a successor depositary shall not have been appointed and accepted its appointment. If any Depositary Receiptsdepositary receipts remain outstanding after the date of termination, the Preferred Stock Depositarypreferred stock depositary thereafter will discontinue the transfer of Depositary Receipts,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 Agreementdeposit agreement except as provided below and except that the Preferred Stock Depositarypreferred stock depositary will continue (i) to collect dividends on the Preferred Stockpreferred stock and any other distributions with respect thereto and (ii) to deliver the Preferred Stockpreferred stock together with such dividends and distributions and the net proceeds of any sales of rights, preferences, privileges or other property, without
31
liability for interest thereon, in exchange for Depositary
Receiptsdepositary receipts surrendered. At any time after the expiration of two years from the date of termination, the Preferred Stock Depositarypreferred stock depositary may sell the Preferred Stockpreferred 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 Receiptsdepositary receipts which have not been surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
CNAF
Charges of Preferred Stock Depositary
We will pay all charges of the Preferred Stock Depositarypreferred stock depositary including charges in connection with the initial deposit of the Preferred Stock,preferred stock, the initial issuance of the Depositary Receipts,depositary receipts, the distribution of information to the holders of Depositary Receiptsdepositary receipts with respect to matters on which Preferred
Stockpreferred stock is entitled to vote, withdrawals of the Preferred Stockpreferred stock by the holders of Depositary Receiptsdepositary receipts or redemption or conversion of the Preferred Stock,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 Agreementdeposit agreement to be at the expense of holders of Depositary Receiptsdepositary receipts or persons depositing Preferred
Stock.
MISCELLANEOUSpreferred stock.
Miscellaneous
The Preferred Stock Depositarypreferred stock depositary will make available for inspection by holders of Depositary Receiptsdepositary receipts at its corporate office and its New York office all reports and communications from CNAFus which are delivered to the Preferred
Stock Depositarypreferred stock depositary as the holder of Preferred Stock.preferred stock.
Neither
we nor the
Preferred Stock Depositary nor CNAFpreferred stock depositary 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.deposit agreement. The obligations of the
Preferred
Stock Depositarypreferred stock depositary under the
Deposit Agreementdeposit agreement are limited to performing its duties thereunder without negligence or bad faith.
TheOur obligations
of CNAF under the
Deposit Agreement
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40deposit agreement are limited to performing itsour duties thereunder in good faith. Neither CNAFwe nor the Preferred Stock Depositarypreferred stock depositary is obligated to prosecute or defend any legal proceeding in respect of any Depositary Sharesdepositary shares or Preferred Stockpreferred stock unless satisfactory indemnity is furnished. CNAFWe and the Preferred Stock Depositarypreferred 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 Depositarypreferred stock depositary may resign at any time or be removed by CNAF,us, effective upon the acceptance by its successor of its appointment; provided, that if a successor Preferred Stock Depositarypreferred stock depositary has not been appointed or accepted such appointment within 45 days after the Preferred Stock Depositarypreferred stock depositary has delivered a notice of election to resign to CNAF,us, the Preferred Stock
Depositarypreferred stock depositary may terminate the Deposit Agreement. See "Amendment and Termination
of Deposit Agreement" above.
deposit agreement.
DESCRIPTION OF WARRANTS
GENERAL
CNAF
General
We may issue Warrantswarrants to purchase Debt Securities, Junior Debt
Securities, Preferred Stockdebt securities, junior debt securities, preferred stock (or Depositary Sharesdepositary shares representing Preferred Stock)preferred stock) or Common Stock (collectively,common stock, referred to collectively in this prospectus as the "Underlying Warrant Securities"),“underlying warrant securities,” and such Warrantswarrants may be issued independently or together with any such Underlying
Warrant Securitiesunderlying warrant securities and may be attached to or separate from such Underlying
Warrant Securities.underlying warrant securities. Each series of Warrantswarrants will be issued under a separate warrant agreement (each a "Warrant Agreement") to be entered into between CNAFus and a warrant agent ("Warrant Agent").agent. The Warrant Agentwarrant agent will act solely as anour agent of CNAF in connection with the Warrantswarrants of such series and will not assume any obligation or relationship of agency for or with holders or beneficial owners of Warrants.warrants. The following describes certain general terms and provisions of the offered Warrantswarrants hereby. Further terms of the Warrantswarrants and the applicable Warrant Agreementwarrant agreement will be described in the applicable prospectus supplement.
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The applicable prospectus supplement will describe the specific terms of any
Warrantswarrants for which this
Prospectusprospectus 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.
| | |
| • | 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; |
|
| • | 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 Agreementtrust agreement for each CNA Capital Trust, the Issuer Trusteeissuer trustee, on behalf of such CNA Capital Trust, will issue the Preferred Securitiespreferred securities and the Common Securities (collectively, "Trust
Securities").common securities, referred to collectively in this prospectus as the “trust securities.” The Preferred Securitiespreferred 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 Securitiescommon securities of such CNA Capital Trust in certain circumstances with respect to Distributionsdistributions and amounts payable on redemption or liquidation over the Common Securitiescommon securities of such CNA Capital Trust, as well as other benefits as described in the corresponding Trust
Agreement.trust agreement. Because the description below is only a summary, it does not contain the detailed information contained in each Trust Agreement,trust agreement, including certain of the definitions used in this prospectus or in the Trust Indenture Act.Act of 1939. The form of the Trust Agreementtrust agreement has been filed as an exhibit to the Registration
Statementregistration statement of which this Prospectusprospectus 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
General
The Preferred Securitiespreferred securities of a CNA Capital Trust will rank equal with, and payments will be made thereon in proportion with, the Common Securitiescommon securities of that CNA Capital Trust except as described under "--Subordination“— Subordination of Common Securities."” Legal title to the Corresponding Junior Debt Securitiescorresponding junior debt securities will be held by the Property Trusteeproperty trustee in trust for the benefit of the holders of the related Preferred Securitiespreferred securities and Common Securities.common securities. Each Guarantee Agreementguarantee agreement executed by CNAFus for the benefit of the holders of a CNA Capital Trust's
Preferred Securities (the "Guarantee" for such Preferred Securities)Trust’s
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preferred securities will be a guarantee on a subordinated basis with respect to the related Preferred
Securitiespreferred securities but will not guarantee payment of Distributionsdistributions or amounts payable on redemption or liquidation of such Preferred Securitiespreferred 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
thea CNA Capital
TrustsTrust available for distribution to holders of
Preferred Securitiespreferred securities will be limited to payments under the
related
Junior Debt Securitiescorresponding junior debt securities which such CNA Capital Trust purchased with the proceeds from the sale of its
Common Securitiescommon securities and
Preferred Securities.preferred securities. If
CNAF failswe fail to make a required payment in respect of such
Junior Debt Securities,junior debt securities, the applicable CNA Capital Trust will not have sufficient funds to make the related payments, including distributions
forin respect of its
Preferred Securities.
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DISTRIBUTIONSpreferred securities.Distributions
Distributions on the Preferred Securitiespreferred 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 Distributionsdistributions are payable on the Preferred Securitiespreferred securities is not a Business
Day (as defined below),business day, unless otherwise specified in the applicable prospectus supplement, payment of the Distributiondistribution payable on such date will be made on the next succeeding day that is a Business Daybusiness day (and without any interest or other payment in respect to any such delay) except that, if such Business Daybusiness day is in the next succeeding calendar year, payment of such Distributiondistribution shall be made on the immediately preceding Business Day,business day, in each case with the same force and effect as if made on such date (eachdate. Each date on which Distributionsdistributions are payable in accordance with the foregoing is referred to in this prospectus as a "Distribution Date").“distribution date.” A "Business Day"“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.closed.
Each CNA Capital Trust's Preferred SecuritiesTrust’s preferred securities represent preferred beneficial interests in the applicable CNA Capital Trust, and the Distributionsdistributions on each Preferred Securitypreferred security will be payable at a rate specified in the prospectus supplement for such Preferred Securities.preferred securities. The amount of Distributionsdistributions 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. Distributionsdistributions to which holders of Preferred Securitiespreferred securities are entitled will accumulate additional Distributionsdistributions at the rate per annum if and as specified in the applicable prospectus supplement. The term "Distributions"“distributions” as used herein includes any such additional Distributionsdistributions unless otherwise stated.
If provided in the applicable prospectus supplement, CNAF haswe have the right under the Indenture,indenture, pursuant to which it will issue the Corresponding Junior
Debt Securities,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 Securitiescorresponding junior debt securities for aan extension period which will be specified in such prospectus supplement relating to such series, (each, an "Extension Period"), provided that no Extension Periodextension period may extend beyond the stated maturity of the Corresponding Junior Debt Securities.corresponding junior debt securities. Because of any such extension, Distributionsdistributions on the corresponding Preferred Securitiespreferred securities would be deferred (but would continue to accumulate additional Distributionsdistributions thereon at the rate per annum described in the prospectus supplement for such Preferred Securities)preferred securities) by the CNA Capital Trust which issued such Preferred
Securitiespreferred securities during any such Extension Period.extension period. During such Extension Period CNAFextension period we may not, and may not permit any subsidiary of CNAFour subsidiaries 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'sour capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of CNAFour indebtedness that rankpari passuwith or junior in interest to the Corresponding Junior Debt Securitiescorresponding junior debt securities or (iii) make any guarantee payments with respect to any guarantee by CNAFus of debt securitiesindebtedness of any subsidiary of CNAFour subsidiaries if such guarantee rankspari passuwith or junior in interest to the Corresponding Junior Debt Securitiescorresponding junior debt securities (other than (a) dividends or distributions in our common stock, of CNAF, (b) payments under any Guaranteeguarantee and (c) purchases of common stock related to the issuance of common stock under any of CNAF'sour benefit plans for its directors, officers or employees).
The revenue of each CNA Capital Trust available for distribution to holders of its Preferred Securitiespreferred securities will be limited to payments under the Corresponding Junior Debt Securitiescorresponding 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."trust securities. If CNAF doeswe do not make interest payments on such Corresponding Junior Debt
Securities,corresponding junior debt securities, the Property Trusteeproperty trustee will not have funds available to pay Distributions distributions
34
on the
Related Preferred Securities. Therelated preferred securities. We guarantee the payment of
Distributionsdistributions (if and to the extent the CNA Capital Trust
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has funds legally available for the payment of such Distributionsdistributions and cash sufficient to make such payments) is guaranteed by CNAF on a limited basis asto the extent set forth herein under "Description“Description of Guarantees."” Distributions on the Preferred Securitiespreferred 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 Securitiespreferred securities remain in book-entry form, will be one Business Daybusiness day prior to the relevant distribution date. If any Preferred Securitiespreferred securities are not in book-entry form, the relevant record date for such Preferred Securitiespreferred securities shall be the date at least 15 days prior to the relevant Distribution Date,distribution date, as specified in the applicable prospectus supplement.
REDEMPTION OR EXCHANGE
Redemption or Exchange
Upon the repayment or redemption, in whole or in part, of any Corresponding Junior Debt Securities,corresponding junior debt securities, whether at maturity or upon earlier redemption as provided in the Junior Indenture,junior indenture, the proceeds from such repayment or redemption shall be applied by the Property Trusteeproperty trustee to redeem a Like Amountlike amount (as defined below) of the Common Securitiescommon securities and Preferred Securitiespreferred securities of the CNA Capital Trust, upon not less than 30 nor more than 60 days'days’ notice, at a redemption price (the "Redemption Price") equal to the aggregate' Liquidation
Amountaggregate liquidation amount of such Common Securitiescommon securities and Preferred Securitiespreferred securities plus accumulated but unpaid Distributionsdistributions thereon to the date of redemption (the "Redemption Date") and the related amount of the premium, if any, paid by CNAFwe pay upon the concurrent redemption of such Corresponding Junior Debt Securities. See "Description of
Junior Debt--Securities Redemption."corresponding junior debt securities. If less than all of any series of Corresponding Junior Debt Securitiescorresponding junior debt securities are to be repaid or redeemed on a Redemption Date,redemption date, then unless there is a junior debt related event of default then continuing, the proceeds from such repayment or redemption shall be allocated to the redemption pro rata of the related Preferred Securitiespreferred securities and the Common Securities.common securities. The amount of premium, if any, paid by CNAFwe pay upon the redemption of all or any part of any series of any Corresponding Junior Debt
Securitiescorresponding junior debt securities to be repaid or redeemed on a Redemption Dateredemption date shall be allocated to the redemption pro rata of the related Preferred Securitiespreferred securities and the Common
Securities.
CNAF will have the right to redeem any seriescommon securities unless there is a junior debt related event 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.
default then continuing.
| |
| Special Event Redemption or Distribution of Corresponding Junior Debt Securities. |
If a Special Eventspecial event in respect of a series of Preferred Securitiespreferred securities and Common Securitiescommon securities shall occur and be continuing, CNAF haswe have the right to redeem the Corresponding Junior Debt Securitiescorresponding junior debt securities in whole (but not in part) and thereby cause a mandatory redemption of such Preferred Securitiespreferred securities and Common Securitiescommon securities in whole (but not in part) at the Redemption Priceredemption price within 90 days following the occurrence of such Special Event.special event. At any time CNAF has(so long as it would not be a taxable event to the holders of preferred securities under federal law), we have 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 Securitiescorresponding junior debt securities to be distributed to the holders of such Preferred Securitiespreferred securities and Common Securitiescommon securities in liquidation of the CNA Capital Trust. If CNAF doeswe do not elect either option described above, the applicable series of Preferred Securitiespreferred securities will remain outstanding and, in the event a Tax
Eventtax event has occurred and is continuing, Additional Sumsadditional sums (as defined below) may be payable on the Corresponding Junior Debt Securities.
corresponding junior debt securities.
| |
| Extension of Maturity of Corresponding Junior Debt Securities. |
If provided in the applicable prospectus supplement,
CNAFwe shall have the right to extend or shorten the maturity of any series of
Corresponding
Junior Debt Securitiescorresponding junior debt securities at the time that
CNAF exercises itswe exercise our right to elect to terminate the related CNA Capital Trust and cause such
Corresponding Junior Debt
Securitiescorresponding junior debt securities to be distributed to the
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holders of such Preferred Securitiespreferred securities and Common Securitiescommon securities in liquidation of the CNA Capital Trust, provided that itwe 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" “Additional sums” means the additional amounts as may be necessary so that the amount of Distributionsdistributions then due and payable by a CNA Capital Trust on the outstanding Preferred Securitiespreferred securities and Common Securitiescommon 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"tax event.
35
“Like amount” means (i) with respect to a redemption of any series of Common Securitiescommon securities or Preferred Securities, Securitiespreferred securities, securities of such series having a Liquidation Amount (as defined below)liquidation amount equal to that portion of the principal amount of Corresponding Junior Debt Securitiescorresponding junior debt securities to be contemporaneously redeemed in accordance with the Junior Indenture,junior indenture, allocated to the Common Securitiescommon securities and to the Preferred Securitiespreferred securities based upon the relative Liquidation Amountsliquidation amounts of such classes and the proceeds of which will be used to pay the Redemption Priceredemption price of such Trust Securities,trust securities, and (ii) with respect to a distribution of Corresponding
Junior Debt Securitiescorresponding junior debt securities to holders of any series of Trust Securitiestrust securities in connection with a dissolution or liquidation of the related CNA Capital Trust, Corresponding Junior Debt Securitiescorresponding junior debt securities having a principal amount equal to the Liquidation Amountliquidation amount of the Trust Securitiestrust securities of the holder to whom such Corresponding Junior Debt Securitiescorresponding 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 Securitiescorresponding junior debt securities for any series of
Preferred Securitiespreferred securities (i) such series of
Preferred Securitiespreferred securities will no longer be deemed to be outstanding, (ii) The Depository Trust Company,
("DTC")or “DTC,” or its nominee,
asif the record holder of
suchany series of
Preferred Securities,preferred securities, will receive a registered global certificate or certificates representing the
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45
Corresponding Junior Debt Securitiescorresponding junior debt securities to be delivered upon such distribution and (iii) any certificates representing such series of Preferred Securitiespreferred securities not held by DTC or its nominee will be deemed to represent the Corresponding Junior Debt
Securitiescorresponding junior debt securities having a principal amount equal to the stated liquidation preferenceamount of such series of Preferred Securities,preferred securities, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributionsdistributions on such series of Preferred Securitiespreferred securities until such certificates are presented to the Administrative
Trusteesadministrative trustees or their agent for transfer or reissuance. There can be no assurance as to the market prices for the Preferred
Securitiespreferred securities or the Corresponding Junior Debt Securitiescorresponding junior debt securities that may be distributed in exchange for Preferred Securitiespreferred securities if a dissolution and liquidation of a CNA Capital Trust were to occur. Accordingly, the Preferred Securitiespreferred securities that an investor may purchase, or the Corresponding Junior Debt Securitiescorresponding junior debt securities that the investor may receive on dissolution and liquidation of a CNA Capital Trust, may trade at a different price from yourthe purchase price for those Preferred
Securities.
REDEMPTION PROCEDURESpreferred securities.
Redemption Procedures
Preferred Securities redeemed on each Redemption Dateredemption date shall be redeemed at the Redemption Priceredemption price with the applicable proceeds from the contemporaneous redemption of the Corresponding Junior Debt Securities.corresponding junior debt securities. Redemptions of the Preferred Securitiespreferred securities shall be made and the Redemption Priceredemption price shall be payable on each Redemption Dateredemption 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."redemption price.
If a CNA Capital Trust gives a notice of redemption in respect of its Preferred Securities,preferred securities, then, by 12:00 noon, New York City time, on the Redemption
Date,redemption date, to the extent funds are legally available, with respect to Preferred
Securitiesany preferred securities held by DTC or its nominee, the Property Trusteeproperty trustee will deposit irrevocably with DTC funds sufficient to pay the applicable Redemption Priceredemption price and will give DTC irrevocable instructions and authority to pay the Redemption Priceredemption price to the holders of such Preferred Securities.preferred securities. If such Preferred Securitiespreferred securities are not in book-entry form, the Property Trustee,property trustee, to the extent funds are legally available, will irrevocably deposit with the paying agent for such Preferred
Securitiespreferred securities funds sufficient to pay the applicable Redemption Priceredemption price and will give such paying agent irrevocable instructions and authority to pay the Redemption
Priceredemption price to the holders thereof upon surrender of their certificates evidencing such Preferred Securities.preferred securities. Notwithstanding the foregoing, Distributionsdistributions payable on or prior to the Redemption Dateredemption date for any Preferred Securitiespreferred securities called for redemption shall be payable to the holders of such Preferred Securitiespreferred securities on the relevant record dates for the related Distribution Dates.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 Securitiespreferred securities so called for redemption will cease, except the right of the holders of such Preferred Securitiespreferred securities to receive the Redemption Price,redemption price, but without interest on such Redemption Price,redemption price, and such Preferred Securitiespreferred securities will cease to be outstanding. In the event that any date fixed for redemption of Preferred
Securitiespreferred securities is not a Business Day,business day, then payment of the Redemption Priceredemption price payable on such date will be made on the next succeeding day which is a Business Daybusiness day (and without any interest or other payment in respect of any such delay), except that, if such Business Daybusiness day falls in the next calendar year, such payment will be made on the immediately preceding Business Day.business day. In the event that payment of the Redemption Priceredemption price in respect of Preferred Securitiespreferred securities called for redemption
36
is improperly withheld or refused and not paid either by the CNA Capital Trust or by CNAF pursuant to the
Guaranteeguarantee as described under
"Description“Description of
Guarantees", DistributionsGuarantees,” distributions on such
Preferred Securitiespreferred securities will continue to accrue at the then applicable rate, from the
Redemption Dateredemption date originally established by the CNA Capital Trust for such
Preferred Securitiespreferred securities to the date such
Redemption
Priceredemption 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.
-44-
46redemption price. Subject to applicable law (including, without limitation, United States federal securities law), CNAFwe or itsour subsidiaries may at any time and from time to time purchase outstanding Preferred Securitiespreferred 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 Securitiespreferred securities and Common Securitiescommon securities issued by an issuera CNA Capital Trust are to be redeemed on a Redemption Date,redemption date, then the aggregate
Liquidation Amounta like amount of such Preferred Securitiespreferred securities and Common Securities to be
redeemedcommon securities shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes.redeemed. The particular Preferred Securitiespreferred securities to be redeemed shall be selected on a pro rata basis not more than 60 days prior to the Redemption Dateredemption date by the Property Trusteeproperty trustee from the outstanding Preferred Securitiespreferred securities not previously called for redemption, by such method as the Property Trusteeproperty trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $25the minimum liquidation amount or an integral multiple of $25 in excess thereof) of the Liquidation Amountliquidation amount of Preferred Securitiespreferred securities of a denomination larger than $25.denomination. The Property Trusteeproperty trustee shall promptly notify the trust registrar in writing of the Preferred Securitiespreferred securities selected for redemption and, in the case of any Preferred Securitiespreferred securities selected for partial redemption, the Liquidation Amountliquidation amount thereof to be redeemed. For all purposes of each Trust Agreement,trust agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securitiespreferred securities shall relate, in the case of any Preferred Securitiespreferred securities redeemed or to be redeemed only in part, to the portion of the aggregate Liquidation Amountliquidation amount of Preferred Securitiespreferred 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 Dateredemption date to each Holderholder of Trust Securitiestrust securities to be redeemed at its registered address. Unless CNAF defaults in payment
Subordination of the
Redemption PriceCommon Securities
Payment of distributions 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
Paymentredemption price of,
Distributions on, and the
Redemption Price of,liquidation distribution (as defined below) applicable to, each CNA Capital
Trust's Preferred SecuritiesTrust’s preferred securities and
Common Securities,common securities, as applicable, shall be made proportionately based on the
Liquidation Amountliquidation amount of such
Preferred
Securitiespreferred securities and
Common Securities;common securities; provided, however, that if on any
Distribution
Datedistribution date, redemption date or
Redemption Dateliquidation date a
Subordinated Debt Security Eventjunior debt related event of
Defaultdefault shall have occurred and be continuing, no payment of any
Distributiondistribution on,
redemption price of, or
Redemption
Price of,liquidation distribution applicable to any of the CNA Capital
Trust's Common Securities,Trust’s common securities, and no other payment on account of the redemption, liquidation or other acquisition of such
Common
Securities,common securities, shall be made unless payment in full in cash of all accumulated and unpaid
Distributionsdistributions on all of the CNA Capital
Trust'sTrust’s outstanding
Preferred
Securitiespreferred securities for all
Distributiondistribution periods terminating on or prior thereto, or in the case of payment of the
Redemption Priceredemption price or liquidation distribution the full amount of such
Redemption
Price onpayment in respect of all of the CNA Capital
Trust'sTrust’s outstanding
Preferred Securities then
called for redemption,preferred securities, shall have been made or provided for, and all funds available to the
Property Trusteeproperty trustee shall first be applied to the payment in full in cash of all
Distributionsdistributions on,
redemption price of, or
Redemption Price of,liquidation distribution applicable to the CNA Capital
Trust's
Preferred SecuritiesTrust’s preferred securities then due and payable.
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47 In the case of any Eventa junior debt related event of Default resulting from a Junior Debt
Related Event of Default, CNAFdefault, we, as holder of such CNA Capital Trust's Common
SecuritiesTrust’s common securities, will be deemed to have waived any right to act with respect to any such Eventjunior debt related event of Defaultdefault under the applicable Trust Agreementtrust agreement until the effect of all such Eventsjunior debt related events of Defaultdefault with respect to such Preferred Securitiespreferred securities have been cured, waived or otherwise eliminated. Until any such Eventsevents of Defaultdefault under the applicable Trust Agreementtrust agreement with respect to the Preferred Securitiespreferred securities have been so cured, waived or otherwise eliminated, the Property Trusteeproperty trustee shall act solely on behalf of the holders of such Preferred Securitiespreferred securities and not on behalf of CNAFus as holder of the CNA Capital Trust's Common Securities,Trust’s common securities, and only the holders of such Preferred Securitiespreferred securities will have the right to direct the Property
Trusteeproperty trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
37
Liquidation Distribution upon Termination
Pursuant to each Trust Agreement,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").
| | |
| • | certain events relating to our bankruptcy, dissolution or liquidation, with the occurrence of any such event being referred to in this prospectus as a “bankruptcy event;” |
|
| • | the distribution of a like amount of the corresponding junior debt securities to the holders of its trust securities, if we, as depositor, have given written direction to the property trustee to terminate such CNA Capital Trust (which direction is optional and wholly within our discretion, as depositor) and such distribution would not result in a federal taxable event to holders of the preferred securities, with such distribution being referred to in this prospectus as 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, with the entry of such order being referred to in this prospectus as a “dissolution event.” |
If an early termination occurs from a
Bankruptcy Event,bankruptcy event, a
Distribution
Eventdistribution event or a
Dissolution Event,dissolution event, the CNA Capital Trust shall be liquidated by the
Issuer Trusteesissuer trustees as expeditiously as the
Issuer Trusteesissuer 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
Securitiestrust securities a
Like Amountlike amount of the
Corresponding Junior Debt Securities,corresponding junior debt securities, unless such distribution is determined by the
Property Trusteeproperty 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,preferred securities, the aggregate of the
Liquidation Amountliquidation amount plus accrued and unpaid
Distributionsdistributions thereon to the date of payment,
(suchwith such amount
beingreferred to in this prospectus as the
"Liquidation
Distribution").“liquidation distribution.” If such
Liquidation Distributionliquidation distribution can be paid only in part because such CNA Capital Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution,liquidation distribution, then the amounts payable directly by such CNA Capital Trust on its
Preferred Securitiespreferred securities shall be paid on a pro rata basis. The holder(s) of such CNA Capital
Trust's Common SecuritiesTrust’s common securities will be entitled to receive distributions upon any such liquidation pro rata with the holders of its
Preferred Securities,preferred securities, except that if a
Junior Debt Security Eventjunior debt related event of
Defaultdefault has occurred and is continuing, the
Preferred Securitiespreferred securities shall have a priority over the
Common Securities.common securities. A supplemental
Indentureindenture may provide that if an early termination occurs as described in the fifth bullet point above, the
Corresponding Junior Debt Securitiescorresponding junior debt securities may be subject to optional redemption in whole,
(butbut not in
part).
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48
EVENTS OF DEFAULT; NOTICE
Any onepart.Events of Default; Notice
A junior debt related event of default under the following events constitutes a "Trust Related Eventjunior indenture will constitute an event of Default" under each Trust Agreement (a "Trust Related Event of Default")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.preferred securities.
Within five Business Daysbusiness days after the occurrence of any Trust Related
Eventjunior debt related event of Defaultdefault actually known to the Property Trustee,property trustee, the Property Trusteeproperty trustee shall transmit notice of such Eventevent of Defaultdefault to the holders of such CNA Capital Trust's Preferred Securities,Trust’s preferred securities, the Administrative Trusteesadministrative trustees and CNAF,us, as Depositor,depositor, unless such Eventevent of Defaultdefault shall have been cured or waived. CNAF,We, as Depositor,depositor, and the Administrative Trusteesadministrative trustees are required to file annually with the Property Trusteeproperty 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.trust agreement.
If a Junior Debt Related Eventjunior debt related event of Defaultdefault has occurred and is continuing, the Preferred Securitiespreferred securities shall have a preference over the Common
Securities upon termination of each CNA Capital Trustcommon securities as described above. See
"Liquidation Distributionabove under “— Subordination of Common Securities.”
Upon Termination." The existencecertain junior debt related events of a Trust Related
Event of Default does not entitledefault, the holders of Preferred Securitiespreferred securities may have the right to accelerate the maturity thereof.
REMOVAL OF ISSUER TRUSTEESbring a direct action.
38
Removal of Issuer Trustees
Unless a
Junior Debt Related Eventjunior debt related event of
Defaultdefault shall have occurred and be continuing, any
Issuer Trusteeissuer trustee may be removed at any time by the holder of the
Common Securities.common securities. If a
Junior Debt Related Eventjunior debt related event of
Defaultdefault has occurred and is continuing, the
Property Trusteeproperty trustee and the Delaware
Trusteetrustee may be removed at such time by the holders of a majority in
Liquidation Amountliquidation amount of the outstanding
Preferred Securities.preferred securities. In no event will the holders of the
Preferred
Securitiespreferred securities have the right to vote to appoint, remove or replace the
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49
Administrative Trustees,administrative trustees, which voting rights are vested exclusively in CNAFus as the holder of the Common Securities.common securities. No resignation or removal of an Issuer
Trusteeissuer 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 TRUSTEEtrust agreement.Co-Trustees and Separate Property Trustee
Unless a Trust Related Eventtrust related event of Defaultdefault shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act of 1939 or of any jurisdiction in which any part of the Trust Propertytrust property may at the time be located, CNAF,we, as the holder of the Common Securities,common securities, and the Administrative Trusteesadministrative trustees shall have power to appoint one or more persons either to act as a co-trustee, jointly with the Property
Trustee,property trustee, of all or any part of such Trust Property,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.trust agreement. In case a Junior
Debt Related Eventjunior debt related event of Defaultdefault has occurred and is continuing, the Property
Trusteeproperty trustee alone shall have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Merger or Consolidation of Issuer Trustees
Any corporation into which the Property Trustee,property trustee, the Delaware Trusteetrustee or any Administrative Trusteeadministrative 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 Trusteetrustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of such Trustee,trustee, shall be the successor of such Trusteetrustee under each Trust Agreement,trust agreement, provided such corporation shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
Mergers, Consolidations, Amalgamations or Replacements of the CNA CAPITAL TRUSTSCapital 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
as an entirety or substantially as an entirety to any corporation or other
Person,person, except as described below. A CNA Capital Trust may, at
theour request,
of CNAF, with the consent of the
Administrative Trusteesadministrative trustees and without the consent of the holders of the
Preferred Securities,preferred securities, merge with or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets
as an entirety or 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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50
- 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. | | |
| • | 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, referred to in this prospectus as 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; |
|
| • | we expressly appoint 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; |
|
| • | 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; |
39
| | |
| • | 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, we have 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, (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 of 1940 and (c) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the CNA Capital Trust, or any successor entity, will continue to be classified as a grantor trust for United States federal income tax purposes; and |
|
| • | we 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 Amountliquidation amount of the Preferred Securities,preferred securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets as an entirety or 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
Voting Rights; Amendment of each Trust Agreement
Except as provided below and under "Description“Description of Guarantees-AmendmentsGuarantees — Amendments and Assignment"Assignment” and as otherwise required by law and the applicable Trust Agreement,trust agreement, the holders of the Preferred Securitiespreferred securities will have no voting rights.
Each
Trust Agreementtrust agreement may be amended from time to time by
CNAF,us, the
Property Trusteeproperty trustee and the
Administrative Trustees,administrative trustees, without the consent of the holders of the
Preferred Securitiespreferred securities (i) to cure any ambiguity, correct or supplement any provisions in such
Trust Agreementtrust 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,trust agreement, which shall not be inconsistent with the other provisions of such
Trust Agreement,trust agreement, or (ii) to modify, eliminate or add to any provisions of such
Trust Agreementtrust 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 Securitiestrust securities are outstanding or to ensure that the CNA Capital Trust will not be required to register as an
"investment company"“investment company” under the Investment Company
Act;Act of 1940; 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,trust securities, and any amendments of such
Trust Agreementtrust agreement shall become effective when notice thereof is given to the holders of
Trust Securities.trust securities. Each
Trust Agreementtrust agreement may be amended by the
Issuer Trusteesissuer trustees and
CNAFus with (i) the consent of holders representing
not less than a
-49-
51 majority (based upon Liquidation Amounts)liquidation amounts) of the outstanding Trust Securities,preferred securities, and (ii) receipt by the Issuer Trusteesissuer trustees of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the Issuer Trusteesissuer trustees in accordance with such amendment will not affect the CNA Capital Trust'sTrust’s status as a grantor trust for United States federal income tax purposes or the CNA Capital Trust'sTrust’s exemption from status as an "investment company"“investment company” under the Investment Company Act of 1940, provided that without the consent of each holder of Trust Securities,trust securities, such Trust Agreementtrust agreement may not be amended to (i) change the amount or timing of any Distributiondistribution on the Trust Securitiestrust securities or otherwise adversely affect the amount of any Distributiondistribution required to be made in respect of the Trust Securitiestrust securities as of a specified date, (ii) change any redemption, conversion or (ii)exchange provisions of the trust securities, (iii) restrict the right of40
a holder of Trust Securitiestrust securities to institute suit for the enforcement of any such payment on or after such date.date, (iv) change the purpose of the CNA Capital Trust, (v) authorize or issue any beneficial interest in the CNA Capital Trust other than the contemplated trust securities, (vi) change the conditions precedent for us to elect to dissolve the CNA Capital Trust and distribute the corresponding junior debt securities or (vii) affect the limited liability of any holder of preferred securities.
So long as any Corresponding Junior Debt Securitiescorresponding junior debt securities are held by the Property Trustee,property trustee, the Issuer Trusteesissuer trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Junior
Indenture Trustee,junior indenture trustee, or executing any trust or power conferred on the Property
Trusteeproperty trustee with respect to such Corresponding Junior Debt Securities,corresponding junior debt securities, (ii) waive any past default that is waivable under Section 513 of the Junior Indenture,junior indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Junior Debt Securitiesjunior debt securities shall be due and payable or (iv) consent to any amendment, modification or termination of the Junior Indenturejunior indenture or such Corresponding Junior Debt Securities,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 Amountliquidation amount of all outstanding Preferred Securities;preferred securities; provided, however, that where a consent under the Junior Indenturejunior indenture would require the consent of each holder of Corresponding Junior Debt Securitiescorresponding junior debt securities affected thereby, no such consent shall be given by the Property Trusteeproperty trustee without the prior consent of each holder of the corresponding Preferred Securities.related preferred securities. The Issuer Trusteesissuer trustees shall not revoke any action previously authorized or approved by a vote of the holders of the Preferred Securitiespreferred securities except by subsequent vote of the holders of the Preferred Securities.preferred securities. The Property Trusteeproperty trustee shall notify each holder of Preferred Securitiespreferred securities of any notice of default with respect to the Corresponding Junior Debt Securities.corresponding junior debt securities. In addition to obtaining the foregoing approvals of the holders of the Preferred Securities,preferred securities, prior to taking any of the foregoing actions, the Issuer Trusteesissuer trustees shall obtain an opinion of counsel experienced in such matters to the effect that the CNA Capital Trust will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securitiespreferred securities may be given at a meeting of holders of Preferred Securitiespreferred securities convened for such purpose or pursuant to written consent. The Property Trusteeproperty trustee will cause a notice of any meeting at which holders of Preferred Securitiespreferred 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 Securitiespreferred securities in the manner set forth in each Trust Agreement.trust agreement.
No vote or consent of the holders of Preferred Securitiespreferred securities will be required for a CNA Capital Trust to redeem and cancel its Preferred Securitiespreferred securities in accordance with the applicable Trust Agreement.trust agreement.
Notwithstanding that holders of Preferred Securitiespreferred securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securitiespreferred securities that are owned by CNAF,us, the Issuer Trusteesissuer trustees or any affiliate of CNAFour affiliates or any Issuer Trusteesissuer trustees shall, for purposes of such vote or consent, be treated as if they were not outstanding.
GLOBAL PREFERRED SECURITIES
Global Preferred Securities
The
Preferred Securitiespreferred securities of a series may be issued in whole or in part in the form of one or more
Global Preferred Securitiesglobal preferred securities that will be deposited with, or on behalf of, the
Depositarydepositary identified in the applicable prospectus supplement. Unless otherwise indicated in the prospectus supplement for such series, the
Depositarydepositary will be DTC.
Global Preferred Securitiesglobal preferred securities may be issued only in fully registered form and in
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52 either temporary or permanent form. Unless and until it is exchanged in whole or in part for the individual Preferred Securitiespreferred securities represented thereby, a Global
Preferred Securityglobal preferred security may not be transferred except as a whole by the Depositarydepositary for such Global Preferred Securityglobal preferred security to a nominee of such Depositarydepositary or by a nominee of such Depositarydepositary to such Depositarydepositary or another nominee of such Depositarydepositary or by the Depositarydepositary or any nominee to a successor Depositarydepositary or any nominee of such successor. The specific terms of the depositary arrangement with respect to a series of Preferred Securitiespreferred securities will be described in the applicable prospectus supplement. CNAF anticipatesWe anticipate that the following provisions will generally apply to depositary arrangements.
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Upon the issuance of a Global Preferred Security,global preferred security, and the deposit of such Global Preferred Securityglobal preferred security with or on behalf of the Depositary,depositary, the Depositarydepositary for such Global Preferred Securityglobal preferred security or its nominee will credit, on its book-entry registration and transfer system, the respective aggregate Liquidation Amountsliquidation amounts of the individual Preferred Securitiespreferred securities represented by such Global Preferred Securitiesglobal preferred securities to the accounts of Participants.participants. Such accounts shall be designated by the dealers, underwriters or agents with respect to such Preferred Securitiespreferred securities or by CNAFus if such Preferred Securitiespreferred securities are offered and sold directly by CNAF.us. Ownership of beneficial interests in a Global Preferred
Securityglobal preferred security will be limited to Participantsparticipants or persons that may hold interests through Participants.participants. Ownership of beneficial interests in such Global Preferred
Securityglobal preferred security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the applicable Depositarydepositary or its nominee (with respect to interests of Participants)participants) and the records of Participantsparticipants (with respect to interests of persons who hold through Participants)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.global preferred security.
So long as the Depositarydepositary for a Global Preferred Security,global preferred security, or its nominee, is the registered owner of such Global Preferred Security,global preferred security, such Depositarydepositary or such nominee, as the case may be, will be considered the sole owner or holder of the Preferred Securitiespreferred securities represented by such Global Preferred
Securityglobal preferred security for all purposes under the Indentureindenture governing such Preferred
Securities.preferred securities. Except as provided below, owners of beneficial interests in a Global
Preferred Securityglobal preferred security will not be entitled to have any of the individual Preferred
Securitiespreferred securities of the series represented by such Global Preferred Securityglobal preferred security registered in their names, will not receive or be entitled to receive physical delivery of any such Preferred Securitiespreferred securities of such series in definitive form and will not be considered the owners or holders thereof under the Indenture.indenture.
Payments of principaldistributions, redemption price and liquidation distributions in respect of (and premium, if any) and interest on
individual Preferred Securitiespreferred securities represented by a Global Preferred Securityglobal preferred security registered in the name of a Depositarydepositary or its nominee will be made to the Depositarydepositary or its nominee, as the case may be, as the registered owner of the Global Preferred Securityglobal preferred security representing such Preferred Securities.preferred securities. None of CNAF,us, the Property Trustee,property trustee, any Paying Agent,paying agent, or the Securities Registrarsecurities registrar for such Preferred Securitiespreferred 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 Securityglobal preferred security representing such Preferred
Securitiespreferred securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
CNAF expects
We expect that the
Depositarydepositary for a series of
Preferred Securitiespreferred securities or its nominee, upon receipt of any payment of
Liquidation Amount, premium or
Distributionsdistributions, redemption price and liquidation distributions in respect of a permanent
Global Preferred Securityglobal preferred security representing any of such
Preferred Securities,preferred securities, immediately will credit
Participants'participants’ accounts with payments in amounts proportionate to their respective beneficial interest in the aggregate
Liquidation Amountliquidation amount of such
Global Preferred Securityglobal preferred security for such
Preferred Securitiespreferred securities as shown on the records of such
Depositarydepositary or its nominee.
CNAFWe also
expectsexpect that payments by
Participantsparticipants to owners of beneficial interests in such
Global Preferred Securityglobal preferred security held through such
Participantsparticipants will be governed by standing instructions and
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53 customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street“street name."” Such payments will be the responsibility of such Participants.participants. Unless otherwise specified in the applicable prospectus supplement, if a Depositarydepositary for a series of Preferred Securitiespreferred securities is at any time unwilling, unable or ineligible to continue as depositary and we do not appoint a successor depositary is not
appointed by CNAF within 90 days, CNAFwe will issue individual Preferred
Securitiespreferred securities of such series in exchange for the Global Preferred Securityglobal preferred security representing such series of Preferred Securities.preferred securities. In addition, CNAFwe may at any time and in itsour sole discretion, subject to any limitations described in the prospectus supplement relating to such Preferred Securities,preferred securities, determine not to have any Preferred Securitiespreferred securities of such series represented by one or more Global
Preferred Securitiesglobal preferred securities and, in such event, will issue individual Preferred
Securitiespreferred securities of such series in exchange for the Global Preferred Securityglobal preferred security or Securitiessecurities representing such series of Preferred Securities.preferred securities. Further, if CNAFwe so specifiesspecify with respect to the Preferred Securitiespreferred securities of a series, an owner of a beneficial interest in a Global Preferred Securityglobal preferred security representing Preferred
Securitiespreferred securities of such series may, on terms acceptable to CNAF,us, the Property Trusteeproperty trustee and the Depositarydepositary for such Global Preferred Security,global preferred security, receive individual Preferred Securitiespreferred securities of such series in exchange for such beneficial interests, subject to any limitations described in the prospectus supplement relating to such Preferred Securities.preferred securities. In any such instance, an owner of a beneficial interest in a Global Preferred Security
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global preferred security will be entitled to physical delivery of individual Preferred Securitiespreferred securities of the series represented by such Global
Preferred Securityglobal preferred security equal in principal amount to such beneficial interest and to have such Preferred Securitiespreferred 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
Payment and integral multiples thereof.
PAYMENT AND PAYING AGENCYPaying Agency
Payments in respect of the Preferred Securitiespreferred securities shall be made to the Depositary,depositary, which shall credit the relevant accounts at the Depositarydepositary on the applicable Distribution Datesdistribution dates or, if any CNA Capital Trust's Preferred
SecuritiesTrust’s preferred securities are not held by the Depositary,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.register. Unless otherwise specified in the applicable prospectus supplement, the paying agent (the "Paying Agent") shall initially be the Property Trusteeproperty trustee and any co-paying agent chosen by the Property Trusteeproperty trustee and acceptable to the Administrative Trusteesadministrative trustees and CNAF.us. The Paying Agentpaying agent shall be permitted to resign as Paying Agentpaying agent upon 30 days'days’ written notice to the Property
Trusteeproperty trustee and CNAF.us. In the event that the Property Trusteeproperty trustee shall no longer be the Paying Agent,paying agent, the Administrative Trusteesadministrative trustees shall appoint a successor (which shall be a bank or trust company acceptable to the Administrative Trusteesadministrative trustees and CNAF)us) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENTpaying agent.
Registrar and Transfer Agent
Unless otherwise specified in the applicable prospectus supplement, the Property Trusteeproperty trustee will act as registrar and transfer agent for the Preferred
Securities.preferred securities.
Registration of transfers of Preferred Securitiespreferred 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 Securitiespreferred securities after such Preferred Securitiespreferred securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
Information concerning the Property Trustee
The
Property Trustee,property trustee, other than during the occurrence and continuance of a
Trust Related Eventtrust related event of
Default,default, undertakes to perform only such duties as are specifically set forth in each
Trust Agreementtrust agreement and, after such
Trust Related
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54
Eventjunior debt related event of Default,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 Trusteeproperty trustee is under no obligation to exercise any of the powers vested in it by the applicable Trust Agreementtrust agreement at the request of any holder of Preferred Securitiespreferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. If no Trust Related Eventjunior debt related event of Defaultdefault has occurred and is continuing and the Property Trusteeproperty trustee is required to decide between alternative causes of action, construe ambiguous provisions in the applicable Trust Agreementtrust agreement or is unsure of the application of any provision of the applicable Trust Agreement,trust agreement, and the matter is not one on which holders of Preferred Securitiespreferred securities are entitled under such Trust Agreementtrust agreement to vote, then the Property Trusteeproperty trustee shall take such action as is directed by CNAFwe direct 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 SecuritiesTrust’s common securities and Preferred Securitiespreferred securities and will have no liability except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUSMiscellaneous
The Administrative Trusteesadministrative 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"“investment company” required to be registered under the Investment Company Act of 1940 or classified as an association taxable as a corporation for United States federal income tax purposes and so that the Corresponding Subordinated Debt Securitiescorresponding junior debt securities will be treated as our indebtedness of CNAF for United States federal income tax purposes. In this connection, CNAFwe and the Administrative Trusteesadministrative 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,trust agreement, that CNAFwe and the Administrative
Trustees
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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.preferred securities.
Holders of the Preferred Securitiespreferred 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 Guaranteeguarantee will be executed and delivered by CNAFus concurrently with the issuance by each CNA Capital Trust of its Preferred Securitiespreferred securities for the benefit of the holders from time to time of such Preferred Securities. The Firstpreferred securities. J. P. Morgan Trust Company, National Bank of ChicagoAssociation will act as indenture trustee ("Guarantee Trustee")
under each Guaranteeguarantee for the purposes of compliance with the Trust Indenture Act of 1939 and each Guaranteeguarantee will be qualified as an indenture under the Trust Indenture Act.Act of 1939. J. P. Morgan Trust Company, National Association, in its capacity as indenture trustee under each guarantee is referred to in this prospectus as the “guarantee trustee.” The form of the Guaranteeguarantee has been included as an exhibit to the Registration Statement.registration statement of which this prospectus forms a part.
The following description summarizes the material terms of the Guarantees.guarantees. This summary is qualified in its entirety by reference to the detailed provisions of the Guarantees,guarantees, including the definitions of certain terms used in the description of the Guaranteesguarantees in this prospectus, and those terms made a part of each of the Guaranteesguarantees by the Trust Indenture Act.Act of 1939. Reference in this summary to Preferred Securitiespreferred securities means that CNA Capital Trust's
Preferred SecuritiesTrust’s preferred securities to which a Guaranteeguarantee relates. The Guarantee Trusteeguarantee trustee will hold each Guaranteeguarantee for the benefit of the holders of the related CNA Capital Trust's Preferred Securities.
GENERAL
CNAFTrust’s preferred securities.
General
We will irrevocably agree to pay in full on a subordinated basis, to the extent set forth herein, the
Guarantee Paymentsguarantee payments (as defined below) to the holders of the
Preferred Securities,preferred securities, as and when due,
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55 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,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:guarantee: (i) any accumulated and unpaid Distributionsdistributions required to be paid on such Preferred Securities,preferred securities, to the extent that such CNA Capital Trust has funds on hand available therefor at such time, (ii) the Redemption Priceredemption price with respect to any Preferred Securitiespreferred 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 Securitiescorresponding junior debt securities are distributed to holders of such Preferred
Securities)preferred securities), the lesser of (a) the Liquidation Distributionliquidation distribution and (b) the amount of assets of such CNA Capital Trust remaining available for distribution to holders of Preferred Securities. CNAF'spreferred securities after satisfaction of liabilities to creditors of such CNA Capital Trust as required by applicable law. All such payments are referred to in this prospectus as the “guarantee payments.” Our obligation to make a Guarantee Paymentguarantee payment may be satisfied by our direct payment of the required amounts by CNAF to the holders of the applicable Preferred Securitiespreferred securities or by causing the CNA Capital Trust to pay such amounts to such holders. Each Guaranteeguarantee will be an irrevocable guarantee on a subordinated basis of the related CNA Capital Trust'sTrust’s obligations under the Preferred Securities,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 doeswe do not make interestrequired payments on the Corresponding Junior
Debt Securitiescorresponding 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.related amounts in respect of the preferred securities. Each Guaranteeguarantee will rank subordinate and junior in right of payment to all Senior Debt of CNAF. See "- Status of the Guarantees."our senior debt. Except as otherwise provided in the applicable prospectus supplement, the Guaranteesguarantees do not limit the incurrence or issuance of other of our secured or unsecured debt, of CNAF,
whether under the Indenture,indentures, the junior indenture, any other indenture that CNAFwe may enter into in the future or otherwise. See the prospectus supplement relating to any offering of Preferred Securities.
CNAF'spreferred securities.
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Our obligations described herein and in any accompanying prospectus supplement, through the applicable Guarantee,guarantee, the applicable Trust Agreement,trust agreement, the Junior Debt Securities,junior debt securities, the Junior Indenturejunior indenture and any supplemental indentures thereto, and the Expense Agreement,expense agreement, taken together, constitute aour full, irrevocable and unconditional guarantee by CNAF of payments due on the Preferred
Securities.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'sTrust’s obligations under the Preferred Securities. See "The CNA Capital Trusts," "Descriptionpreferred securities.
Status of Preferred Securities," and "Description of Subordinated Debt Securities."
STATUS OF THE GUARANTEESthe Guarantees
Each Guaranteeguarantee will constitute anour unsecured obligation of CNAF and will rank subordinate and junior in right of payment to all Senior Debt.of our senior debt.
Each
Guaranteeguarantee will rank equally with all other
Guaranteesguarantees issued by
CNAF.us. Each
Guaranteeguarantee will constitute a guarantee of payment and not of collection (i.e., the guaranteed party may institute a legal proceeding directly against the
Guarantorguarantor to enforce its rights under the
Guaranteeguarantee without first instituting a legal proceeding against any other person or entity). Each
Guaranteeguarantee will be held for the benefit of the holders of the related
Preferred
Securities.preferred securities. Each
Guaranteeguarantee will not be discharged except by payment of the
Guarantee Paymentsguarantee payments in full to the extent not paid by the CNA Capital Trust or upon distribution to the holders of the
Preferred Securitiespreferred securities of the
Corresponding Subordinated Debt Securities.corresponding junior debt securities. None of the
Guaranteesguarantees places a limitation on the amount of additional
Senior Debtsenior debt that
we may
be incurred by CNAF.
CNAF expectsincur. We expect from time to time to incur additional indebtedness constituting
Senior Debt.
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AMENDMENTS AND ASSIGNMENTsenior debt.Amendments and Assignment
Except with respect to any changes which do not materially adversely affect the rights of holders of the related Preferred Securitiespreferred securities (in which case no vote will be required), no Guaranteeguarantee may be amended without the prior approval of the holders of not less than a majority of the aggregate Liquidation
Amountliquidation amount of such outstanding Preferred Securities.preferred securities. The manner of obtaining any such approval will be as set forth under "Description“Description of the Preferred Securities-VotingSecurities — Voting Rights; Amendment of Each Trust Agreement."trust agreement.” All guarantees and agreements contained in each Guaranteeguarantee shall bind the our successors, assigns, receivers, trustees and representatives of CNAF and shall inure to the benefit of the holders of the related Preferred Securitiespreferred securities then outstanding.
EVENTS OF DEFAULT
Events of Default
An event of default under each Guaranteeguarantee will occur upon theour failure of
CNAF to perform any of itsour payment or other obligations thereunder. The holders of not less than a majority in aggregate Liquidation Amountliquidation amount of the related
Preferred Securitiespreferred securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trusteeguarantee trustee in respect of such Guaranteeguarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trusteeguarantee trustee under such Guarantee.guarantee.
Any holder of the Preferred Securitiespreferred securities may institute a legal proceeding directly against CNAFus to enforce its rights under such Guaranteeguarantee without first instituting a legal proceeding against the CNA Capital Trust, the Guarantee
Trusteeguarantee trustee or any other person or entity.
CNAF,
We, as guarantor, isare required to file annually with the Guarantee
Trusteeguarantee trustee a certificate as to whether or not CNAF iswe are in compliance with all the conditions and covenants applicable to itus under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEEguarantee.
Information concerning the Guarantee Trustee
The Guarantee Trustee,guarantee trustee, other than during the occurrence and continuance of a default by CNAFus in performance of any Guarantee,guarantee, undertakes to perform only such duties as are specifically set forth in each Guaranteeguarantee and, after default with respect to any Guarantee,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 Trusteeguarantee trustee is under no obligation to exercise any of the powers vested in it by any Guaranteeguarantee at the request of any holder of any Preferred Securitiespreferred securities unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEES
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Termination of the Guarantees
Each Guaranteeguarantee will terminate and be of no further force and effect upon full payment of the Redemption Priceredemption price of the related Preferred Securities,preferred securities, upon full payment of the amounts payable upon liquidation of the related CNA Capital Trust or upon distribution of Corresponding Junior Debt Securitiescorresponding junior debt securities to the holders of the related Preferred Securities.preferred securities. Each Guaranteeguarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of the related Preferred Securitiespreferred securities must restore payment of any sums paid under such Preferred Securitiespreferred securities or such Guarantee.
THE EXPENSE AGREEMENTguarantee.
The Expense Agreement
Pursuant to the
Expense Agreementexpense agreement entered into by
CNAFus under each
Trust
Agreement (the "Expense Agreement"), CNAFtrust agreement, we will irrevocably and unconditionally guarantee to each person or entity to
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57 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 Securitiespreferred securities or other similar interests in the CNA Capital Trust of the amounts due such holders pursuant to the terms of the Preferred Securitiespreferred securities or such other similar interests, as the case may be.DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
CNAF
We and/or the CNA Capital Trusts may issue Stock Purchase Contracts,purchase contracts, representing contracts obligating holders to purchase from CNAF,us and/or the applicable CNA Capital Trust, and CNAFwe and/or the applicable CNA Capital Trust to sell to the holders, a specified numberquantity of debt securities, junior debt securities, common stock, preferred stock, depositary shares, of Common Stockwarrants or preferred securities at a future date or dates. The price per share of Common Stockthe securities subject to a purchase contract may be fixed at the time the Stock Purchase Contractspurchase contracts are issued or may be determined by reference to a specific formula set forth in the Stock Purchase Contracts.purchase contracts. The Stock Purchase Contractspurchase contracts may be issued separately or as a part of units, ("Stock Purchase Units")referred to in this prospectus as “purchase units,” consisting of a Stock
Purchase Contractpurchase contract and either (x) Debt Securitiesdebt securities or Junior Debt Securities,junior debt securities, (y) debt obligations of third parties, including U.S. Treasury securities, or (z) Preferred Securitiespreferred securities of a CNA Capital Trust, securing the holder'sholder’s obligations to purchase the Common Stockapplicable securities under the Stock Purchase Contracts.purchase contracts. The Stock
Purchase Contractspurchase contracts may require CNAFus to make periodic payments to the holders of the Stock Purchase Unitspurchase units or vice versa, and such payments may be unsecured or prefunded on some basis. The Stock Purchase Contractspurchase contracts may require holders to secure their obligations thereunder in a specified manner and in certain circumstances CNAFwe may deliver newly issued prepaid stock purchase contracts, ("Prepaid Securities")referred to in this prospectus as “prepaid securities,” upon release to a holder of any collateral securing such holder'sholder’s obligations under the original Stock Purchase Contract.purchase contract.
The applicable prospectus supplement will describe the terms of any Stock Purchase Contractspurchase contracts or Stock Purchase Unitspurchase units and, if applicable, Prepaid
Securities.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,purchase contracts, the collateral arrangements and depositary arrangements, if applicable, relating to such Stock Purchase Contractspurchase contracts or Stock Purchase Unitspurchase units and, if applicable, the Prepaid Securitiesprepaid securities and the document pursuant to which such Prepaid Securitiesprepaid securities will be issued.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE CORRESPONDING
JUNIOR DEBT SECURITIES AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Full and Unconditional Guarantee
Payments of Distributionsdistributions and other amounts due on the Preferred
Securitiespreferred securities (to the extent the CNA Capital Trust has funds available for the payment of such Distributions)distributions) are irrevocably guaranteed by CNAFus as and to the extent set forth under "Description“Description of Guarantees."” Taken together, CNAF'sour obligations under each series of Junior Debt Securities,junior debt securities, the Junior
Indenture,junior indenture, the related Trust Agreement,trust agreement, the related Expense Agreement,expense agreement, and the related Guaranteeguarantee 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.preferred securities. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes
46
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'sTrust’s obligations under the
Preferred Securities.preferred securities. If and to the extent that
CNAF doeswe do not make payments on any series of
Corresponding Junior
Debt Securities,corresponding junior debt securities, such CNA Capital Trust will not pay
Distributionsdistributions or other amounts due on its
Preferred Securities.preferred securities. The
Guaranteesguarantees do not cover
any payment
of
Distributions when the related CNA Capital Trust does not have sufficient funds
to pay such Distributions.therefor. In such event, the remedy of a holder of a
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58
series of Preferred Securitiespreferred securities is to institute a legal proceeding directly against CNAFus for enforcement of payment of such Distributionspayment to such holder. TheOur obligations of CNAF under each Guaranteeguarantee are subordinate and junior in right of payment to all Senior Debt of CNAF.
SUFFICIENCY OF PAYMENTSour senior debt.Sufficiency of Payments
As long as payments of interest and other payments are made when due on each series of Corresponding Junior Debt Securities,corresponding junior debt securities, such payments will be sufficient to cover Distributionsdistributions and other payments due on the related Preferred Securities,preferred securities, primarily because (i) the aggregate principal amount of each series of Corresponding Junior Debt Securitiescorresponding junior debt securities will be equal to the sum of the aggregate stated Liquidation Amountliquidation amount of the Related Preferred Securitiesrelated preferred securities and related Common Securities;common securities; (ii) the interest rate and interest and other payment dates on each series of Corresponding Junior Debt Securitiescorresponding junior debt securities will match the Distributiondistribution rate and Distributiondistribution and other payment dates for the related Preferred Securities;preferred securities; (iii) CNAFwe shall pay for all and any costs, expenses and liabilities of such CNA Capital Trust except the CNA Capital Trust'sTrust’s obligations to holders of its Preferred Securitiespreferred securities under such Preferred Securities;preferred securities; and (iv) each Trust Agreementtrust 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
hasjunior indenture, we have the right to set-off any payment it iswe are otherwise required to make thereunder with and to the extent CNAF haswe have theretofore made, or is concurrently on the date of such payment making, a payment under the related Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIESguarantee.
Enforcement Rights of Holders of Preferred Securities
A holder of any related Preferred Securitypreferred security may institute a legal proceeding directly against CNAFus to enforce its rights under the related Guaranteeguarantee without first instituting a legal proceeding against the Guarantee
Trustee,guarantee trustee, the related CNA Capital Trust or any other person or entity.
A default or event of default under any Senior Debt of CNAFour senior debt would not constitute a default or Eventevent of Default.default. However, in the event of payment defaults under, or acceleration of, Senior Debt of CNAF,our senior debt, the subordination provisions of the Junior Indenturejunior indenture provide that no payments may be made in respect of the Corresponding Junior Debt Securitiescorresponding junior debt securities until such Senior Debtsenior 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
Securitiescorresponding junior debt securities would constitute an Eventa junior debt related event of Default.
LIMITED PURPOSE OFdefault and permit direct actions by the holders of preferred securities against us to collect upon the corresponding junior debt securities.
Limited Purpose of CNA CAPITAL TRUSTSCapital Trusts
Each CNA Capital
Trust's Preferred SecuritiesTrust’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 Securitiespreferred securities and
Common Securitiescommon securities and investing the proceeds thereof in
Corresponding Junior Debt Securities.corresponding junior debt securities. A principal difference between the rights of a holder of a
Preferred Securitypreferred security and a holder of a
Corresponding Junior Debt Securitycorresponding junior debt security is that a holder of a
Corresponding Junior Debt Securitycorresponding junior debt security is entitled to receive from
CNAFus the principal amount of and interest accrued on
Corresponding Junior Debt Securitiescorresponding junior debt securities held, while a holder of
Preferred Securitiespreferred securities is entitled to receive
Distributionspayment of distributions and the redemption price from such CNA Capital Trust (or from
CNAFus under the applicable
Guarantee)guarantee) if and to the extent such CNA Capital Trust has funds available for
the payment of such
Distributions.
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59
RIGHTS UPON TERMINATIONpayment.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,corresponding junior debt securities, the holders of the related Preferred
Securitiespreferred securities will be entitled to receive, out of assets held by such CNA Capital Trust, the Liquidation Distribution liquidation distribution
47
in cash. See "Description of Preferred
Securities - Liquidation Distribution Upon Termination." Upon anyour voluntary or involuntary liquidation or bankruptcy, of CNAF, the Property Trustee,property trustee, as holder of the Corresponding Junior Debt Securities,corresponding junior debt securities, would be a subordinated creditor of CNAF,ours, subordinated in right of payment to all Senior Debt,senior debt, but entitled to receive payment in full of principal and interest, before any stockholders of CNAFour stockholders receive payments or distributions. Since CNAF iswe are the guarantor under each Guaranteeguarantee and hashave agreed to pay for all costs, expenses and liabilities of each CNA Capital Trust (other than the CNA Capital Trust'sTrust’s obligations to the holders of its Preferred Securities)preferred securities), the positions of a holder of such Preferred
Securitiespreferred securities and a holder of such Corresponding Junior Debt Securitiescorresponding junior debt securities relative to other creditors and to our stockholders of CNAF in the event of our liquidation or bankruptcy of CNAF are expected to be substantially the same.
PLAN OF DISTRIBUTION
CNAF
We and/or any CNA Capital Trust may sell any of the Offered
Securitiessecurities offered pursuant to this prospectus 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 Securitiessecurities offered pursuant to this prospectus will set forth the terms of the offering of the Offered Securities,securities, including the name or names of any underwriters, dealers or agents; the purchase price of the Offered Securitiessecurities and the proceeds to CNAFus and/or a CNA Capital Trust from such sale; any underwriting discounts and commissions or agency fees and other items constituting underwriters'underwriters’ or agents'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 Securitiessecurities 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 Securitiessecurities offered pursuant to this prospectus 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 Securitiessecurities may be solicited by agents designated by CNAFwe designate from time to time. Any such agent involved in the offer or sale of the Offered Securitiessecurities in respect of which this prospectus is delivered will be named, and any commissions payable by CNAFus 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 1933, of the Offered Securitiessecurities so offered and sold.
If
Offered Securitiessecurities are sold by means of an underwritten offering,
CNAFwe 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 Securitiessecurities in respect of which this prospectus is delivered to the public. If underwriters are used in the sale of the
Offered Securitiessecurities in respect
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60 of which this prospectus is delivered, the Offered Securitiessecurities 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,securities offered pursuant to this prospectus, 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 Securitiessecurities will be obligated to purchase all such Offered Securitiessecurities of a series if any are purchased. If a dealer is used in the sales of the Offered Securitiessecurities in respect of which this prospectus is delivered, CNAFwe and/or the applicable CNA Capital Trust will sell such Offered Securitiessecurities to the dealer as principal. The dealer may then resell such Offered Securitiessecurities 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 1933, of the
Offered Securities
48
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
We and/or the applicable CNA Capital Trust may solicit directly offers to purchase securities and the sale thereof may be made by CNAFwe and/or the applicable CNA Capital Trust may make the sale thereof directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act of 1933 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 CNAFus and/or the applicable CNA Capital Trust against certain liabilities, including liabilities under the Securities Act.Act of 1933.
Agents, underwriters and dealers may be customers of, engage in transactions with or perform services for CNAFus and itsour subsidiaries in the ordinary course of business.
Offered
Securities offered pursuant to this prospectus 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"),referred to as “remarketing firms,” acting as principals for their own accounts or as agents for CNAFus 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 of 1933, in connection with the Offered Securitiessecurities remarketed thereby. Remarketing firms may be entitled under agreements which may be entered into with CNAFus and/or the applicable CNA Capital Trust to indemnification or contribution by CNAFus and/or the applicable CNA Capital Trust against certain civil liabilities, including liabilities under the Securities Act of 1933, and may be customers of, engage in transactions with or perform services for CNAFus and itsour subsidiaries in the ordinary course of business.
If so indicated in the applicable prospectus supplement,
CNAFwe and/or the applicable CNA Capital Trust may authorize agents, underwriters or dealers to solicit offers by certain types of institutions to purchase
Offered
Securitiessecurities offered pursuant to this prospectus from
CNAFus 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 Securitiessecurities pursuant to any such delayed delivery contracts accepted by
CNAFus and/or the applicable CNA Capital Trust.
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61
VALIDITY OF SECURITIES
Unless otherwise indicated in the applicable prospectus supplement, certain legal matters will be passed upon (i) for CNAFus by Jonathan D. Kantor, Esq., Seniorour Executive 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.
Secretary.
EXPERTS
The consolidated financial statements,
and the related consolidated financial statement schedules,
and Management’s Report on Internal Control Over Financial Reporting (as revised), incorporated
by reference in this prospectus
by reference from
CNAF'sthe Company’s Annual Report on Form
10-K10-K/ A for the year ended December 31,
19972004 have been audited by Deloitte & Touche LLP,
an independent
auditors,registered public accounting firm, as stated in their reports
(which reports (1) expressed an unqualified opinion on the consolidated financial statements and consolidated financial statement schedules and included explanatory paragraphs relating to the restatement described in Note T and relating to the change in method of accounting for certain separate account products in 2004, (2) expressed an unqualified opinion on management’s assessment of the effectiveness of the Company’s internal control over financial reporting, and (3) expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting), which
have beenare incorporated herein by reference and have been so incorporated in reliance upon the reports of such firm given
onupon their authority as experts in accounting and auditing.
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62
49
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
| |
| 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 Offeringoffering 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.statement.
| | | | | | |
| Securities and Exchange Commission registration fee | | $ | 176,550 | |
| Accounting fees and expenses | | | 323,000 | |
| Printing and duplicating expenses | | | 60,000 | |
| Rating agency fees | | | 1,875,000 | |
| Legal fees and expenses | | | 350,000 | |
| Indenture trustee’s fees and expenses | | | 60,000 | |
| | | | |
| | Total | | $ | 2,844,550 | |
| | | | |
The foregoing items, except for the Securities and Exchange Commission registration fee, are estimated. All expenses will be borne by CNAF, except as otherwise indicated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
| |
| Item 15. | Indemnification of directors and officers. |
Section 145(a) of the Delaware General Corporation Law (the "DGCL"“DGCL”) provides in relevant part that "a“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'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'sperson’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'sperson’s service in one of the capacities specified in the preceding paragraph] against expenses (including
attorneys'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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63
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'sCNAF’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.1933. 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
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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'directors’ and officers'officers’ liability insurance, with an
annual aggregate limit of [$___________] for the current policy period, subject to a [$___________] deductibleappreciable deductibles at the corporate level, for each wrongful act where corporate reimbursement is available to any director or officer.
Under each Trust Agreement,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,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,trust agreements.
See the Exhibit Index which is hereby incorporated herein 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 andreference.
(1) 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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64
undersigned registrants hereby undertake:
4(d) * Form of Junior Subordinated Indenture between CNA Financial
Corporation and The First National Bank of Chicago, | |
| a. To file, during any period in which offers or sales are being made, 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 aspost-effective amendment to legalitythis registration statement: |
| |
| i. To include any prospectus required by Section 10(a)(3) of the Preferred Securities to be issued by CNA
Financial Capital I, CNA Financial Capital II and CNA
Financial Capital III.
23(a) ConsentAct of Deloitte & Touche, LLP.
23(b) * Consent of Sonnenschein Nath & Rosenthal (to be included1933; |
|
| ii. To reflect 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 25.1prospectus 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 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
|
| iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| |
| provided, however, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply if the registration statement is on Form S-3, (File No. 333-33821).
25(b) Form T-1 StatementS-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of Eligibilitythe Securities Exchange Act of The First National
Bank of Chicago to act as trustee under the Subordinated
Indenture is1934 that are incorporated by reference in the registration statement. |
| |
| b. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to Exhibit 25.2be 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 initialbona fideoffering thereof. |
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| |
| c. To remove from registration by means of a post-effective amendment any 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 undersecurities being registered which remain unsold at 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 benefittermination of the holders
of Preferred Securities of CNA Financial Capital I.
offering. |
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65
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.
- -------------------------------------
* 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'sregistrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statementregistration statement shall be
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66 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 initialbona fide offering thereof.
(c) (3) 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)
(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors,trustees, officers and controlling persons of the registrant, pursuant to the foregoing provisions referred to in Item 15, 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 Securities Act of 1933 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,trustee, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director,trustee, 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 Securities Act of 1933 and will be governed by the final adjudication of such issue.
(e)
(5) 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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67
| |
| a. 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 of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective. |
|
| b. 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 initialbona fideoffering thereof. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrantregistrant 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.
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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
Statementregistration 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,August 15, 2005. | |
| CNA FINANCIAL CORPORATION |
| | |
| By: | /s/ Stephen W. Lilienthal |
| |
| |
| Stephen W. Lilienthal |
| Chairman of the Board and Chief Executive Officer |
Each of the undersigned does hereby constitute and appoint Jonathan D. Kantor and Robert M. Mann, and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubmission to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that the attorney may deem necessary or advisable under the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission in connection with this registration statement registration, including specifically, but without limiting the generality of the foregoing, the power and authority to sign his or her name, in his or her respective capacity as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice Presidenta member of the board of directors or officer of the registrant, the registration statement and/or any other form or forms as may be appropriate to be filed with the Securities and Chief
Financial Officer
---------------------------------------
CNA FINANCIAL CAPITAL II
By: CNA Financial Corporation,Exchange Commission as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice Presidentany of them may deem appropriate in connection therewith, to any and Chief
Financial Officer
---------------------------------------
CNA FINANCIAL CAPITAL III
By: CNA Financial Corporation,all amendments thereto, including post-effective amendments, to such registration statement, to any related Rule 462(b) registration statement and to any other documents filed with the Securities and Exchange Commission, as Depositor
By: /s/ W. James MacGinnitie
---------------------------------------
Name: W. James MacGinnitie
---------------------------------------
Title: Senior Vice Presidentfully for all intents and Chief
Financial Officer
---------------------------------------
purposes as he or she might or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue of this prospectus.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | | | |
| Name | | Title | | Date |
| | | | |
|
/s/ Stephen W. Lilienthal
Stephen W. Lilienthal | | Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer) | | August 15, 2005 |
|
/s/ D. Craig Mense
D. Craig Mense | | Chief Financial Officer
(Principal Financial Officer) | | August 15, 2005 |
|
/s/ Lawrence J. Boysen
Lawrence J. Boysen | | Senior Vice President and Controller
(Principal Accounting Officer) | | August 15, 2005 |
|
/s/ Brenda J. Gaines
Brenda J. Gaines | | Director | | August 15, 2005 |
|
/s/ Paul J. Liska
Paul J. Liska | | Director | | August 15, 2005 |
II-4
| | | | | | |
| Name | | Title | | Date |
| | | | |
|
/s/ Don M. Randel
Don M. Randel | | Director | | August 15, 2005 |
|
/s/ Joseph Rosenberg
Joseph Rosenberg | | Director | | August 15, 2005 |
|
/s/ James S. Tisch
James S. Tisch | | Director | | August 15, 2005 |
|
/s/ Preston R. Tisch
Preston R. Tisch | | Director | | August 15, 2005 |
|
/s/ Marvin Zonis
Marvin Zonis | | Director | | August 15, 2005 |
II-5
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois on August 15, 2005.
| | |
| By: | CNA Financial Corporation, as Depositor |
|
| By: | /s/ Robert M. Mann |
| |
| |
| Robert M. Mann |
| Senior Vice President |
| | |
| By: | /s/ Lawrence J. Boysen |
| |
| |
| Lawrence J. Boysen |
| Senior Vice President and Corporate Controller |
II-6
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois on August 15, 2005.
| | |
| By: | CNA Financial Corporation, as Depositor |
|
| By: | /s/ Robert M. Mann |
| |
| |
| Robert M. Mann |
| Senior Vice President |
| | |
| By: | /s/ Lawrence J. Boysen |
| |
| |
| Lawrence J. Boysen |
| Senior Vice President and Corporate Controller |
II-7