$549,000,000
CNA FINANCIAL CORPORATION
5.85% NOTES DUE 2014
UNDERWRITING AGREEMENT
December 8, 2004
December 8, 2004
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
4 World Financial Center
New York, New York 10080
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
CNA Financial Corporation, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") $549,000,000 principal amount of its 5.85% Notes due
December 15, 2014 (the "SECURITIES") to be issued pursuant to the provisions of
an Indenture dated as of March 1, 1991, between the Company and X. X. Xxxxxx
Trust Company, National Association (formerly known as The First National Bank
of Chicago), as Trustee (the "TRUSTEE"), which was supplemented by the first
supplemental indenture dated as of October 15, 1993 (as so supplemented, the
"BASE INDENTURE"), as supplemented by the second supplemental indenture to be
dated as of December 15, 2004 between the Company and the Trustee (the
"SUPPLEMENTAL INDENTURE" and together with the Base Indenture, the "INDENTURE").
1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-3 with respect to
various securities of the Company (collectively, the "SHELF
SECURITIES"), has (i) been prepared by the Company in conformity in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. The
registration statement includes a prospectus relating to the Shelf
Securities. In addition, the Company has filed, or will file within the
applicable time period set forth in the Rules and Regulations, with the
Commission, a prospectus supplement specifically relating to the
Securities pursuant to Rule 424 of the Rules and Regulations. The term
"REGISTRATION STATEMENT" means the registration statement as amended to
the date of this Agreement. The term "BASIC PROSPECTUS" means the
prospectus included in the Registration Statement. The term
"PROSPECTUS" means the Basic Prospectus together with the prospectus
supplement (other than a preliminary prospectus supplement)
specifically relating to the Securities (the "PROSPECTUS SUPPLEMENT"),
in the form first used to confirm sales of the Securities. The term
"PRELIMINARY PROSPECTUS" means a preliminary prospectus supplement
specifically relating to the Securities, together with the Basic
Prospectus. As used herein, the terms "REGISTRATION STATEMENT", "BASIC
PROSPECTUS", "PROSPECTUS" and "PRELIMINARY PROSPECTUS" shall include,
in each case, the material, if any, incorporated or deemed to be
incorporated by reference therein; "EFFECTIVE TIME" means the date and
time as of which the Registration Statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time; and
the terms "SUPPLEMENT", "AMEND" and "AMENDMENT", as used in this
Agreement with respect to the Registration Statement or the Prospectus,
shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), that are deemed to be incorporated by reference
in the Prospectus. If the Company has filed an abbreviated registration
statement to register additional Securities pursuant to Rule 462(b)
under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then
any reference herein to the term "REGISTRATION STATEMENT" shall be
deemed to include such Rule 462 Registration Statement. The Commission
has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) As of the date hereof, when the Prospectus is first filed
pursuant to Rule 424 under the Securities Act, when, prior to the
Closing Date (as hereinafter defined), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement)
(unless the term "Basic Prospectus," "Preliminary Prospectus" or
"Prospectus", as the case may be, refers to a "Basic Prospectus",
"Preliminary Prospectus" or "Prospectus", as the case may be, which has
been provided to the Underwriters by the Company for use in connection
with the offering of the Securities and which differs from the
prospectus on file at the Commission at the time the Registration
Statement becomes effective, in which case at the time it is first
provided to the Underwriters for such use), when any supplement to the
Prospectus is filed with the Commission and at the Closing Date, (i)
the Registration Statement, as amended as of any such time, and the
Prospectus, as amended or supplemented as of any such time, complied
and will comply in all material respects with the applicable
requirements of the Securities Act, and the Exchange Act and the
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respective Rules and Regulations thereunder and (ii) neither the
Registration Statement, as amended as of any such time, nor the
Prospectus, as amended or supplemented as of any such time, contained
or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that the Company makes no representations or warranties as to
(i) that part of the Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE Act"), of the Trustee or (ii)
the information contained in or omitted from the Registration Statement
or the Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing
to the Company by or on behalf of any Underwriter through you
specifically for use in connection with the preparation of the
Registration Statement and the Prospectus.
(c) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the date
hereof and the Closing Date, complied and will comply in all material
respects with the requirements of the Exchange Act and the Rules and
Regulations thereunder; and any documents deemed to be incorporated by
reference in the Prospectus, at the date hereof and the Closing Date,
complied and will comply in all respects with the requirements of the
Exchange Act and the Rules and Regulations thereunder.
(d) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(e) Each subsidiary of the Company set forth on Schedule II
hereto (each, a "DESIGNATED SUBSIDIARY" and, collectively, the
"DESIGNATED SUBSIDIARIES") has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; all
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of the issued shares of capital stock of each Designated Subsidiary
owned directly or indirectly by the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; for purposes of this Agreement,
Schedule II hereto includes each subsidiary of the Company that is a
"significant subsidiary" (as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the Commission).
(f) The authorized capital stock of the Company conforms as to
legal matters in all material respects to the description thereof
contained in the Prospectus.
(g) This Agreement has been duly authorized, executed and
delivered by the Company.
(h) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), and has
been duly authorized, executed and delivered by the Company and is a
valid and binding agreement of the Company, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general
principles of equity. The Base Indenture conforms, and the
Supplemental Indenture, when executed and delivered, will conform, in
all material respects to the description thereof in the Registration
Statement and Prospectus.
(i) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity. The Securities, when
issued, authenticated and delivered, will conform in all material
respects to the description thereof in the Registration Statement and
Prospectus.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any
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governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as have
been obtained under the Securities Act and such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Securities.
(k) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (i) there has been no material adverse change
in the condition (financial or other), earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, and (ii)
there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries,
taken as a whole.
(l) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened, against or affecting
the Company or any of its subsidiaries, which is required to be
disclosed in the Registration Statement or the Prospectus (other than
as disclosed therein), or which might, singly or in the aggregate,
materially and adversely affect the properties or assets thereof or
which is reasonably likely to materially and adversely affect the
consummation of the transactions contemplated by this Agreement.
(m) Each prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
(n) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(o) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Prospectus will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(p) The Company and its subsidiaries possess all licenses,
certificates, authorities or permits issued by the appropriate
governmental or regulatory agencies or bodies necessary to own, lease
and operate their respective properties and to carry on their
respective businesses as
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presently conducted and which are material to the Company and its
subsidiaries considered as one enterprise.
(q) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company or to
require the Company to include such securities with the Securities
registered pursuant to the Registration Statement.
(r) The Company and its Designated Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases except such as are
described in the Prospectus or would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(s) The Company and its Designated Subsidiaries own or
possess, or can acquire on reasonable terms, all material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names currently employed by them in connection with the
business now operated by them, except where the failure to so own,
possess or be able to acquire on reasonable terms would not, singly or
in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing
which, singly or in the aggregate, would have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
(t) No labor dispute with the employees of the Company or any
of its subsidiaries exists, except as described in the Prospectus, or,
to the knowledge of the Company, is imminent, except where such
dispute would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(u) Each Designated Subsidiary of the Company that is engaged
in the business of insurance or reinsurance (each an "INSURANCE
SUBSIDIARY", collectively the "INSURANCE SUBSIDIARIES") is licensed or
6
authorized to conduct an insurance or reinsurance business, as the
case may be, under the insurance statutes of each jurisdiction in
which the conduct of its business requires such licensing or
authorization, except for such jurisdictions in which the failure of
the Insurance Subsidiary to be so licensed or authorized would not,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole. The Company and the
Insurance Subsidiaries have made all required filings under applicable
insurance statutes in each jurisdiction where such filings are
required, except for such filings the failure of which to make would
not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole. Each of the Insurance
Subsidiaries has all other necessary authorizations, approvals,
orders, consents, certificates, permits, registrations and
qualifications ("AUTHORIZATIONS"), of and from all insurance
regulatory authorities necessary to conduct their respective existing
businesses as described in the Prospectus, except where the failure to
have such Authorizations would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as
a whole, and no Insurance Subsidiary has received any notification
from any insurance regulatory authority to the effect that any
additional Authorizations are needed to be obtained by any Insurance
Subsidiary in any case where it could reasonably be expected that the
failure to obtain such additional Authorizations or the limiting of
the writing of such business would have a material adverse effect on
the Company and its subsidiaries, taken as a whole, and, except as
described in the Prospectus, no insurance regulatory authority having
jurisdiction over any Insurance Subsidiary has issued any order or
decree impairing, restricting or prohibiting (i) the payment of
dividends by any Insurance Subsidiary to its parent, other than those
restrictions applicable to insurance or reinsurance companies under
such jurisdiction generally or imposed in connection with the
Reorganization and contemplated in the Prospectus, or (ii) the
continuation of the business of the Company or any of the Insurance
Subsidiaries in all material respects as presently conducted, in each
case except where such orders or decrees would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(v) Except as described in the Prospectus, (i) all ceded
reinsurance and retrocessional treaties, contracts, agreements and
arrangements ("REINSURANCE Contracts") to which the Company or any
Insurance Subsidiary is a party and as to which any of them reported
recoverables, premiums due or other amounts in its most recent
statutory financial statements are in full force and effect, except
where the failure of such Reinsurance Contracts to be in full force
and effect would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and (ii) neither the Company nor any
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Reinsurance Subsidiary has received any notice from any other party to
any Reinsurance Contract that such other party intends not to perform
such Reinsurance Contract in any material respect, and the Company has
no knowledge that any of the other parties to such Reinsurance
Contracts will be unable to perform its obligations thereunder in any
material respect, except where (A) the Company or the Insurance
Subsidiary has established reserves in its financial statements which
it deems adequate for potential uncollectible reinsurance or (B) such
nonperformance would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(w) Except as described in the Prospectus, the Company has no
knowledge of any threatened or pending downgrading of the Company's or
any of its subsidiaries' claims-paying ability rating or financial
strength rating by A.M. Best Company, Inc., Standard & Poor's Rating
Group, Xxxxx'x Investor Service, Inc., Fitch Ratings, Ltd. or any
other "nationally recognized statistical rating organizations," as
such term is defined for purposes of Rule 436(g)(2) under the
Securities Act, which currently has publicly released a rating of the
claims-paying ability or financial strength of the Company or any
subsidiary.
(x) The Company and each of its Designated Subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
(y) The statements set forth in the Basic Prospectus under
the caption "Description of the Debt Securities" and set forth in the
Prospectus Supplement under the caption "Description of Notes", insofar
as they purport to constitute a summary of the terms of the Securities,
in each case insofar as they purport to describe the provisions of the
laws and documents referred to therein, fairly summarize in all
material respects the matters described therein.
(z) Deloitte & Touche LLP, whose report is included in the
Prospectus, is an independent certified public accountant with respect
to the Company and its combined subsidiaries within the meaning of the
Securities Act and the rules and regulations adopted by the Commission
thereunder. The financial statements of the Company and its combined
subsidiaries (including the related notes and supporting schedules)
8
included in the Registration Statement and the Prospectus present
fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown
thereby at the dates and for the periods indicated and have been
prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis throughout the
periods indicated and conform in all material respects with the Rules
and Regulations under the Securities Act; and the supporting schedules
included in the Registration Statement present fairly in all materials
respects the information required to be stated therein.
(aa) The statutory financial statements of the Insurance
Subsidiaries, from which certain ratios and other statistical data
included or incorporated by reference in the Registration Statement
have been derived have for each relevant period been prepared in
conformity with statutory accounting practices required or permitted by
the insurance laws of their respective states of domicile, and the
rules and regulations promulgated thereunder, and such statutory
accounting practices have been applied on a consistent basis throughout
the periods involved, except as may otherwise be indicated therein or
in the notes thereto.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Securities set forth in Schedule I
hereto opposite its name at 99.325% of their principal amount plus accrued
interest, if any, from December 15, 2004 to the date of payment and delivery.
During the period beginning on the date hereof and continuing to and
including the Closing Date, the Company hereby agrees not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company or
warrants to purchase or otherwise acquire debt securities of the Company
substantially similar to the Securities (other than the Securities and
commercial paper issued in the ordinary course of business), without your prior
written consent on behalf of the Underwriters.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Securities as soon after the effective date of this Agreement as in your
judgment is advisable. The Company is further advised by you that the Securities
are to be offered to the public initially at 99.925% of their principal amount
(the "PUBLIC OFFERING PRICE") plus accrued interest, if any, from December 15,
2004 to the date of payment and delivery and to certain dealers selected by you
at a price that represents a concession not in excess of 0.35% of their
principal amount, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in
9
excess of 0.25% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of the Securities for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on December 15, 2004, or at such
other time on the same or such other date, not later than December 17, 2004, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE." Securities shall be registered in
such names and in such denominations as you shall request in writing not less
than two full business days prior to the Closing Date, with any transfer taxes
payable in connection with the transfer of the Securities to the Underwriters
duly paid.
5. Conditions to the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Underwriters' Securities shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and as
of the Closing Date, to the accuracy of the statements of the Company made in
any certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been instituted
or threatened; and the Prospectus shall have been filed with the
Commission pursuant to Rule 424 not later than 5:30 p.m., New York City
time, on the business day following the date hereof.
(b) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities or
the Company's financial strength or claims paying ability by
A.M. Best Company, Inc., Standard & Poor's Rating Group,
Xxxxx'x Investor Service, Inc., Fitch Ratings, Ltd. or any
other "nationally recognized statistical rating organization,"
as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act; and
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(ii)there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
properties of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of
any amendments or supplements thereto subsequent to the date
of this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner
contemplated in the Prospectus.
(c) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(b)(i) above and
to the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing
Date and that the Company has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(d) The Underwriters shall have received on the Closing Date
an opinion of Xxxxxxxx X. Xxxxxx, Executive Vice President, General
Counsel and Secretary for the Company, dated the Closing Date, to the
effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as
a whole;
(ii) each Designated Subsidiary has been duly
incorporated and is validly existing as an insurance company
(other than The Continental Corporation, which is validly
existing as a New York business corporation) and is authorized
to transact its appropriate business under the insurance code
of its domiciliary state, with full corporate power and
authority to own its properties and conduct its business as
described in the Final
11
Prospectus, and is duly licensed to do business as a foreign
insurer and is authorized to transact its appropriate business
under the laws of each jurisdiction which requires such
licensure wherein it owns or leases material properties or
conducts material business where the failure to be so licensed
would materially and adversely affect the business or
properties of the Company and its subsidiaries taken as a
whole;
(iii) all the outstanding shares of capital stock of
each Designated Subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable,
and, except as otherwise set forth in the Final Prospectus,
all outstanding shares of capital stock of the Designated
Subsidiaries are owned by the Company either directly or
through wholly owned subsidiaries (except for CNA Surety
Corporation, of which the Company owns 64%) free and clear of
any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interests,
claims, liens or encumbrances;
(iv) this Agreement has been duly authorized,
executed and delivered by the Company;
(v) the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this
Agreement will not contravene any provision of applicable law
or the certificate of incorporation or by-laws of the Company
or, to the best of such counsel's knowledge, any agreement or
other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except
such as have been obtained under the Securities Act and such
as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the
Securities and such other approvals as have been obtained;
(vi) there is no pending or, to the best knowledge of
such counsel, threatened, action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries,
of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus,
and there is no franchise,
12
contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to
be filed as an exhibit, which is not described or filed as
required; and the statements included or incorporated in the
Prospectus describing any legal proceedings or material
contracts or agreements relating to the Company or any of its
subsidiaries fairly summarize such matters in all material
respects;
(vii) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement;
(viii) the Company is not, and after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus will not
be, required to register as an "investment company" as such
term is defined in the Investment Company Act of 1940, as
amended;
(ix) the Registration Statement and any amendments
thereto have become effective under the Securities Act; to the
best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued,
no proceedings for that purpose have been instituted or
threatened, and the Registration Statement, the Prospectus and
each amendment thereof or supplement thereto as of their
respective effective or issue dates (other than the financial
statements and other financial information contained therein
and in the Form T-1, as to which such counsel need express no
opinion) complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange
Act and the respective rules and regulations thereunder; and
(x) (A) in the opinion of such counsel, (1) each
document filed pursuant to the Exchange Act and incorporated
by reference in the Registration Statement and the Prospectus
(except for the financial statements and financial schedules
and other financial data included therein and in the Form T-1,
as to which such counsel need not express any opinion) appears
on its face to be appropriately responsive in all material
respects with the requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder,
and (2) the Registration Statement or the Prospectus (except
for the financial statements and financial schedules and other
financial data included therein and in the Form T-1, as to
which such counsel need not express any opinion) appear on
their face to be appropriately responsive in all material
respects with the
13
requirements of the Securities Act and the applicable rules
and regulations of the Commission thereunder, and (B) nothing
has come to the attention of such counsel that causes such
counsel to believe that (1) the Registration Statement or the
prospectus included therein (except for the financial
statements and financial schedules and other financial data
included therein and in the Form T-1, as to which such counsel
need not express any opinion) at the time the Registration
Statement became effective contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or (2) the Prospectus (except for the financial
statements and financial schedules and other financial data
included therein and in the Form T-1, as to which such counsel
need not express any opinion) as of its date or as of the
Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
With respect to Section 5(d)(x) above, Xxxxxxxx X. Xxxxxx may state
that his beliefs are based upon his participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and documents incorporated therein by reference and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified.
(e) The Underwriters shall have received on the Closing Date
an opinion of Xxxxx, Xxxxx, Xxxx & Maw LLP, outside counsel for the
Company, dated the Closing Date, to the effect that:
(i) the Company has been duly incorporated, is
validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation;
(ii) the authorized capital stock of the Company
conforms as to legal matters in all material respects to the
description thereof contained in the Prospectus;
(iii) the Securities and the Indenture conform in all
material respects to the descriptions thereof contained in the
Prospectus;
(iv) the Indenture has been duly authorized, executed
and delivered, has been duly qualified under the Trust
Indenture Act, and constitutes a legal, valid and binding
agreement of the Company, enforceable against the Company in
accordance with
14
its terms (except that, (A) the enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws, now or hereafter in effect, relating to
creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be
brought);
(v) the Securities have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by
the Underwriters pursuant to this Agreement will constitute
legal, valid and binding obligations of the Company entitled
to the benefits of the Indenture (except that, (A) the
enforceability thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws,
now or hereafter in effect, relating to creditors' rights
generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought);
(vi)this Agreement has been duly authorized, executed
and delivered by the Company;
(vii) the execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the
Company, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is
required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities;
(viii) the statements relating to legal matters,
documents or proceedings included in the Basic Prospectus
under the caption "Description of the Debt Securities," and in
the Prospectus Supplement under the caption "Description of
Notes," in each case fairly summarize in all material respects
such matters, documents or proceedings;
(ix) the Company is not, and after giving effect to
the offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus will not
be,
15
required to register as an "investment company" as such term
is defined in the Investment Company Act of 1940, as amended;
(x) the Registration Statement and any
amendments thereto have become effective under the Securities
Act; to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement,
as amended, has been issued, no proceedings for that purpose
have been instituted or threatened, and the Registration
Statement, the Prospectus and each amendment thereof or
supplement thereto as of their respective effective or issue
dates (other than the financial statements and other
financial information contained therein and in the Form T-1,
as to which such counsel need express no opinion) complied as
to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and
the respective rules and regulations thereunder; and
(xi)(A) in the opinion of such counsel, the
Registration Statement or the Prospectus (except for the
financial statements and financial schedules and other
financial data included therein and in the Form T-1, as to
which such counsel need not express any opinion) appear on
their face to be appropriately responsive in all material
respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission
thereunder, and (B) nothing has come to the attention of such
counsel that causes such counsel to believe that (1) the
Registration Statement or the prospectus included therein
(except for the financial statements and financial schedules
and other financial data included therein and in the Form
T-1, as to which such counsel need not express any opinion)
at the time the Registration Statement became effective
contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(2) the Prospectus (except for the financial statements and
financial schedules and other financial data included
therein, as to which such counsel need not express any
opinion) as of its date or as of the Closing Date contained
or contains an untrue statement of a material fact or omitted
or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading.
With respect to Section 5(e)(xi) above, Xxxxx, Xxxxx, Xxxx &
Maw LLP may state that their beliefs are based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto (other than the documents
16
incorporated by reference) and upon review and discussion of the
contents thereof (including documents incorporated by reference), but
are without independent check or verification, except as specified.
The opinion of Xxxxx, Xxxxx, Xxxx & Maw LLP shall be rendered
to the Underwriters at the request of the Company and shall so state
therein.
(f) The Underwriters shall have received on the Closing
Date an opinion of Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters,
dated the Closing Date, in form and substance reasonably satisfactory
to the Underwriters.
(g) The Underwriters shall have received, on each of the
date hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Deloitte & Touche LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in or incorporated by reference into the
Registration Statement and the Prospectus; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, one conformed copy
of the Registration Statement (including exhibits thereto) and for
delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York
City, without charge, prior to 10:00 a.m. New York City time on the
second business day next succeeding the date of this Agreement and
during the period mentioned in Section 6(c) below, as many copies of
the Prospectus and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Until the earlier of (X) the termination of the
offering of the Securities, and (Y) six months from the date of this
Agreement, the Company will not file any amendment (other than
amendments resulting from the filing of the documents incorporated by
reference pursuant to Item 12 of Form S-3 under the Securities Act) of
the Registration Statement or supplement (including the Prospectus) to
the Basic Prospectus unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed
amendment or
17
supplement to which you reasonably object in writing. Subject to the
foregoing sentence, the Company will cause the Prospectus to be filed
with the Commission pursuant to Rule 424. The Company will promptly
advise you (A) when the Prospectus shall have been filed with the
Commission pursuant to Rule 424, (B) when any amendment to the
Registration Statement relating to the Securities shall have become
effective, (C) of any request by the Commission for any amendment of
the Registration Statement or amendment of or supplement to the
Prospectus or for any additional information, (D) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order and, if
issued, to obtain as soon as possible the withdrawal thereof.
(c) If, during such period after the first date of the
public offering of the Securities as in the reasonable opinion of
counsel for the Underwriters the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if, in the
reasonable opinion of counsel for the Underwriters, it is necessary to
amend or supplement the Prospectus to comply with applicable law,
forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Securities may have
been sold by you on behalf of the Underwriters and to any other dealers
upon request, either amendments or supplements to the Prospectus so
that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(d) To endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request; provided, however, the Company shall not be
obligated to file any general consent to service of process under the
laws of any such jurisdiction, subject itself to taxation as doing
business in any such jurisdiction, or qualify to do business as a
foreign corporation in any such jurisdiction. The Company will pay all
expenses (including fees and disbursements of counsel) in connection
with such qualification (such expenses, fees and disbursements not to
exceed in the aggregate $5,000).
18
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earning statement covering
the twelve-month period ending December 31, 2005 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the
Securities under the Securities Act and all other fees or expenses in
connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments
and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof
to the Underwriters and dealers, in the quantities hereinabove
specified, (ii) all costs and expenses related to the transfer and
delivery of the Securities to the Underwriters, including any transfer
or other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Securities under state securities laws and all
expenses in connection with the qualification of the Securities for
offer and sale under state securities laws as provided in Section 6(d)
hereof, including filing fees and the reasonable fees and disbursements
of counsel for the Underwriters in connection with such qualification
and in connection with the Blue Sky or Legal Investment memorandum (not
to exceed $5,000), (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Securities by
the National Association of Securities Dealers, Inc., (v) the cost of
printing certificates representing the Securities, (vi) the costs and
charges of any transfer agent, registrar or depositary, (vii) the costs
and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering
of the Securities, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses
of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and
any such consultants, and the Company's proportionate share of the cost
of any aircraft chartered in connection with the road show, (viii) the
expenses associated with printing this Agreement and (ix) all other
costs and expenses incident to the performance of the obligations of
the Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
19
Section, Section 7 entitled "Indemnity and Contribution", and the last
paragraph of Section 9 below, the Underwriters will pay all of their
costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Securities by them
and any advertising expenses connected with any offers they may make.
7. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of any Underwriter within the
meaning of Rule 405 under the Securities Act and each of its officers,
directors, employees, agents and representatives from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein; provided, however, that, in connection with any loss,
claim, damage or liability arising from any untrue statement or omission or
alleged untrue statement or omission contained in any Preliminary Prospectus,
this indemnity agreement shall not inure to the benefit of any Underwriter with
respect to the sale of the Securities to any person by that Underwriter if that
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or omission or alleged untrue statement
or omission contained in such Preliminary Prospectus was eliminated or corrected
in the final Prospectus.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
20
sought pursuant to Section 7(a) or 7(b), such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by you, in the case of parties indemnified pursuant to
Section 7(a), and by the Company, in the case of parties indemnified pursuant to
Section 7(b). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) To the extent the indemnification provided for in Section 7(a) or
7(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder,
21
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the
Securities or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number of
Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 7(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this
22
Section 7 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
7 and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter, any person controlling any Underwriter or
any affiliate of any Underwriter or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Securities.
8. Termination. The Underwriters may terminate this Agreement by notice
given by you to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the
terms and in the manner contemplated in the Prospectus.
9. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Underwriters shall fail
or refuse to purchase Securities that it has or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Securities to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the principal
amount of Securities set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Securities that any Underwriter has agreed to purchase
pursuant to this Agreement be increased
23
pursuant to this Section by an amount in excess of one-ninth of such principal
amount of Securities without the written consent of such Underwriter. If, on the
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase
Securities and the aggregate principal amount of Securities with respect to
which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the reasonable fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder.
10. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
12. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
24
Very truly yours,
CNA FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
Accepted as of the date hereof
Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated
Xxxxxx Xxxxxxx & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule I hereto.
By: Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx &
Xxxxx Incorporated
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Signatory
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Executive Director
SCHEDULE I
PRINCIPAL AMOUNT OF
SECURITIES TO BE
UNDERWRITER PURCHASED
------------------------------------------------------- --------------------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx $ 219,600,000
Incorporated...............................
Xxxxxx Xxxxxxx & Co. Incorporated.............................. 219,600,000
Xxxxxx Brothers Inc............................................ 54,900,000
UBS Securities LLC............................................. 54,900,000
Total:................................................ $ 549,000,000
=============
SCHEDULE II
LIST OF DESIGNATED SUBSIDIARIES
JURISDICTION OF
DESIGNATED SUBSIDIARY INCORPORATION
------------------------------------------------- ---------------
American Casualty Company of Reading, Pennsylvania Pennsylvania
CNA Insurance Company (Europe) Ltd. United Kingdom
CNA Surety Corporation Delaware
Continental Assurance Company Illinois
Continental Casualty Company Illinois
Continental Insurance Company of Newark, New Jersey New Jersey
Firemen's Insurance Company of Newark, New Jersey New Jersey
National Fire Insurance Company of Hartford Connecticut
The Buckeye Union Insurance Company Ohio
The Continental Insurance Company South Carolina
The Continental Corporation New York
The Glens Falls Insurance Company Delaware
Transcontinental Insurance Company New York
