CNA FINANCIAL CORPORATION
STOCK PURCHASE AGREEMENT
August 23, 2001
LOEWS CORPORATION
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Dear Sirs and Madams:
CNA Financial Corporation, a Delaware corporation (the "Company"), proposes
to distribute, on or about August 27, 2001, to the holders of its Common
Stock, par value $2.50 per share (the "Common Stock"), of record as of the
close of business on August 23, 2001 (the "Record Date"), transferable rights
(the "Rights") to purchase an aggregate of approximately 40,327,500 shares of
Common Stock (the "Subscription Shares") at a price of $25 per share (the
"Subscription Price") by issuing to such holders of record rights certificates
(the "Rights Certificates") evidencing .22 (22/100) Rights for each share of
Common Stock held as of the Record Date rounded up to the nearest whole Right.
The Rights are issued pursuant to the Subscription Agent Agreement, dated as
of the date hereof, between the Company and EquiServe Trust Company, N.A. The
Company proposes to offer to sell the Subscription Shares on the basis of one
Subscription Share for each whole Right held (the "Rights Offering"). The
Rights will expire at 5:00 P.M., New York City time, on September 14, 2001
(the "Expiration Date"). Subscription Shares being issued to persons other
than Loews Corporation, a Delaware corporation ("Loews"), will be registered
on the Company's Registration Statement on Form S-3 (File No. 333-69741) (the
"Registration Statement"). Subject to the terms and conditions herein, Loews
desires to exercise all Rights distributed to it in full (including its
oversubscription privilege) to purchase all Subscription Shares offered in the
Rights Offering, subject to reduction as a result of pro ration (all shares
purchased by Loews are referred to herein as the "Securities").
The prospectus dated August 23, 2001, together with the Company's prospectus
supplement dated August 23, 2001 (including in each case all documents
incorporated by reference therein), in each case of the date hereof, is
hereinafter referred to as the "Prospectus."
Section 1. Purchase, Sale and Delivery of Securities.
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(a) Subject to the terms herein, the Company agrees to sell to
Loews and Loews agrees to purchase from the Company at a price per share equal
to the Subscription Price, all of the Securities at the closing of the Rights
Offering, subject to the Company's right to terminate the Rights Offering and
not sell any Subscription Shares. Loews agrees to exercise the basic
subscription privilege (as described in the Prospectus) with respect to any
Rights held by it prior to the expiration of the Rights Offering and to
exercise its oversubscription privilege (as
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described in the Prospectus) to purchase all Subscription Shares that are
being offered to the shareholders of the Company other than Loews, subject to
reduction as a result of pro ration (as described in the Prospectus).
(b) Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of Xxxxx, Xxxxx &
Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, XX 00000, or at such other place as
shall be agreed upon by Loews and the Company, at 10:00 A.M., Chicago time, on
the fourth business day after expiration of the Rights Offering, or such other
time and date as shall be agreed upon by Loews and the Company (such time and
date of payment and delivery being herein called the "Closing Time"). Each of
the parties hereto acknowledges and agrees that the offering of the Securities
to Loews has not been registered under the Securities Act of 1933, as amended
("1933 Act"), and accordingly that Loews's ability to resell the Securities
may be limited in accordance with Rule 144 under the 1933 Act and any other
limitations imposed by the U.S. Securities and Exchange Commission (the
"Commission").
Payment for any Securities shall be made to the Company in
immediately available funds to be delivered by wire transfer to the account of
the Company (which wire instructions shall be designated in writing by the
Company not later than two business days prior to the Closing Time), against
delivery to Loews of certificates for such Securities, with the following
legend affixed to the reverse thereof:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR UNLESS SOLD
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
Section 2. Company Representations and Warranties.
The Company hereby represents and warrants to Loews as follows:
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions set forth in
Section 1 hereof.
(b) The execution and delivery by the Company of this Agreement,
and the consummation by the Company of the transactions set forth in Section 1
hereof, have been duly authorized by all necessary corporate action on the
part of the Company.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally or general principles of
equity.
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(d) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby do not and will not (1) contravene, conflict with or result in any
violation or breach of any provision of the certificate of incorporation or
bylaws of the Company; (2) contravene, conflict with or result in a violation
or breach of any provision of any law, rule, regulation, judgment, injunction,
order or decree applicable to the Company or its subsidiaries, or require any
consent, approval or other action by, filing with or notice to any
governmental authority (including without limitation any regulatory
authority); (3) require any consent or other action by, filing with or notice
to any person under, constitute a default under (or an event that, with or
without notice or lapse of time or both, would constitute a default), or cause
or permit the termination, cancellation, acceleration, triggering or other
change of any right or obligation or the loss of any benefit to which the
Company or any of its subsidiaries is entitled under (A) any provision of any
agreement or other instrument binding upon the Company or any of its
subsidiaries or (B) any license, franchise, permit, certificate, approval or
other similar authorization held by, or affecting, or relating to, the assets
or business of the Company or any of its subsidiaries; or (4) result in the
creation or imposition of any lien or other encumbrance on any asset of the
Company or any of its subsidiaries, other than such exceptions in the case of
clauses (2), (3) and (4) as would not, individually or in the aggregate, be
reasonably expected to materially impair or delay the ability of the Company
to consummate the transactions contemplated by this Agreement or have a
material adverse effect on business, financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, taken as a
whole.
(e) The Securities, when issued, delivered and paid for at the
Closing Time, will be duly and validly issued and outstanding, fully paid and
nonassessable and free and clear of any liens or other encumbrance (other than
any liens or encumbrances that may be created as a result of Loews's ownership
of the Securities) and not subject to preemptive or other similar rights, and
will conform in all material respects to the description of the Securities
contained in the Prospectus.
(f) Neither the Company, nor to the knowledge of the Company any
person acting on its behalf, has taken or will take any action which might
subject the issuance of the Rights or the offering, issuance or sale of the
Securities (or any portion thereof) to Loews to the registration requirements
of Section 5 of the 1933 Act, and the Company has no reason to believe that
the issuance of the Rights, or the offering, issuance or sale of the
Securities (or any portion thereof), to Loews is or will become subject to the
registration requirements of Section 5 of the 1933 Act.
(g) As of the Closing Time, each of the Registration Statement and
any post-effective amendments thereto shall have become effective under the
1933 Act and no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment shall have been issued and remain in
effect under the 1933 Act and no proceedings for that purpose shall be pending
or, to the knowledge of the Company, shall be contemplated by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with.
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(h) At the respective times the Registration Statement and any
post-effective amendments thereto became or shall become effective, and at the
Closing Time, the Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the rules and regulations promulgated by the
Commission thereunder (the "1933 Act Regulations") and did not and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Neither the Prospectus nor any amendments or supplements
thereto (including any prospectus sticker or wrapper), at the time such
Prospectus and any amendments or supplements thereto were issued, and at the
Closing Time, included or will include an untrue statement of a material fact
or omitted or will omit 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.
(i) The prospectuses 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 1933 Act ("Rule 424"), complied when so filed in all
material respects with the 1933 Act and the 1933 Act Regulations and the
Prospectus delivered to Loews in connection with this offering was identical
in all material respects to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T promulgated by the Commission.
(j) The documents incorporated by reference in the Registration
Statement, the Prospectus, or any post-effective amendments or supplements
thereto, when they became effective or were filed with the Commission or were
otherwise issued, as the case may be, conformed in all material respects to
the requirements of the 1933 Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, and the rules and regulations of
the Commission thereunder, and none of such documents 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;
and any further documents so filed and incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such documents
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the 1933 Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(k) Since December 31, 2000, except as described in the Company's
Annual Report on Form 10-K for the fiscal year 2000, the Company's quarterly
reports on Form 10-Q, as amended through the date hereof, for the quarterly
periods ending March 31, 2001 and June 30, 2001 or the Prospectus, there have
not been any events or developments that, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the
business, financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole.
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Section 3. Loews Representations and Warranties
------------------------------------
Loews hereby represents and warrants to the Company as follows:
(a) Loews has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions set forth in Section 1
hereof.
(b) The execution and delivery by it of this Agreement, and the
consummation by Loews of the transactions set forth in Section 1 hereof, have
been duly authorized by all necessary corporate action on the part of Loews.
(c) This Agreement has been duly executed and delivered by Loews
and constitutes a valid and binding obligation of Loews enforceable against
Loews in accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally or general principles of equity.
(d) The Securities are being acquired for investment for Loews's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the federal or state
securities laws.
(e) Loews is an "accredited investor" within the meaning of
Regulation 501(a) under the 1933 Act, can bear the economic risk of its
investment and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the
investment in the Securities.
(f) Loews has had a reasonable opportunity to ask questions of and
receive answers from the Company concerning the Company's financial and
business affairs.
(g) Loews has received and reviewed the Prospectus.
Section 4. Covenants
---------
(a) Subject to the terms and conditions of this Agreement, each
party hereto will use its reasonable best efforts to take, or cause to be
taken, all actions, and do, or cause to be done, all things necessary, proper
or advisable under this Agreement and applicable laws and regulations to
consummate the transactions contemplated by this Agreement as soon as
practicable after the date hereof.
(b) The Company shall file with the Commission within the
applicable period specified in Rule 424 any prospectus required to be filed
pursuant to such Rule.
Section 5. Conditions to the Closing.
-------------------------
(a) The obligations of each of Loews, on the one hand, and the
Company, on the other hand, to consummate their respective obligations
pursuant to Section 1 hereof are subject to the Rights Offering closing in
conformity in all material respects with all of the
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requirements related thereto provided in the Prospectus simultaneously with
the closing of the transaction contemplated by this Agreement.
(b) The obligations of Loews hereunder shall be subject to the
following conditions:
(1) All representations and warranties and other statements of
the Company herein are, at the time made and at the Closing Time, true and
correct in all material respects.
(2) The Company shall have performed in all material respects
all of its obligations hereunder.
(3) The Company shall have furnished or caused to be furnished
to Loews at the Closing Time a certificate of the Company (signed by an
executive officer) as to the satisfaction of the conditions set forth in
this Section 5.
(4) (i) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 in the manner and within the applicable time period
required by Rule 424; (ii) no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and (iii) all requests for additional information on the part of
the Commission shall have been complied with by the Company to Loews's
reasonable satisfaction.
(5) Xxxxxxxx X. Xxxxxx, General Counsel of the Company, shall
have furnished to Loews his written opinion, dated the date of the Closing
Time, in form and substance reasonably satisfactory to Loews, that:
(a) The issuance of the Rights has been duly authorized, and
the Rights have been validly issued.
(b) The Securities have been duly and validly authorized and,
when issued and delivered against payment therefore as
provided herein, will be duly and validly issued and fully
paid and non-assessable, to such counsel's knowledge will
not be subject to the preemptive or other similar rights of
any securityholder of the Company and will conform as to
legal matters in all material respects to the description
of the Securities contained in the Prospectus.
(c) The Registration Statement has been declared effective
under the 1933 Act; any required filing pursuant to Rule
424 has been made in the manner and within the applicable
time period required by Rule 424; and, to such counsel's
knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued and remains in
effect under the 1933 Act and no
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proceedings for that purpose are pending or threatened by
the Commission.
(d) The Registration Statement, as of its effective date, and
the Prospectus, as of its date (other than, in each case,
the financial statements and supporting schedules included
therein or omitted therefrom, as to which such counsel need
express no opinion) and as of the Closing Time, complied as
to form in all material respects with the 1933 Act and the
1933 Act Regulations and the documents incorporated by
reference in the Prospectus as amended or supplemented
(other than, in each case, the financial statements and
supporting schedules included therein or omitted therefrom,
as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as
the case may be, and as of the Closing Time complied as to
form in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder.
(e) None of the issuance of the Rights or the offering,
issuance or sale of the Securities (or any portion thereof)
to Loews is subject to the registration requirements of
Section 5 of the 1933 Act, and such counsel has no reason
to believe that the issuance of the Rights or the offering,
issuance or sale of the Securities (or any portion thereof)
to Loews will become subject to the registration
requirements of Section 5 of the 1933 Act.
In addition, such counsel shall state that such counsel has examined
various documents and participated in conferences with, at various times,
some or all of representatives of the Company, its accountants, counsel for
the Company, Loews and others at which times the contents of the
Registration Statement and the Prospectus were discussed. In addition, such
counsel shall state that such counsel is an officer of the Company and the
General Counsel of the Company and therefore is familiar with the Company's
legal affairs as well as such other matters that may involve such counsel as
a member of management of the Company. Such counsel shall state that subject
to the foregoing, no facts have come to the attention of such counsel that
causes such counsel to believe that (a) the Registration Statement or any
further amendment thereto prior to the Closing Time (other than financial
statements and supporting schedules included therein or omitted therefrom,
as to which such counsel need express no belief), at the time it became
effective and at the Closing Time, 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, (b) the
Prospectus (other than financial statements and supporting schedules
included therein or omitted therefrom, as to which such counsel need express
no belief), as of its date and as of the Closing Time, contained an untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (c) the Registration Statement or the
Prospectus, as amended or
7
supplemented as of the Closing Time, contain an untrue statement of a
material fact or omit 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.
In rendering such opinions, such counsel may rely upon oral advice of the
staff of the Commission, and as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company
and certificates or other written statements of officials of jurisdictions
having custody of documents respecting the corporate existence or good
standing of the Company.
(6)(a) no later than the earlier to occur of (i) the mailing of
the Prospectus to the Company's shareholders of record on the Record Date
and (ii) the date of the first filing of the Prospectus that is required
under Rule 424 after the date hereof, (b) at 9:30 a.m., New York City time,
on the effective date of any post-effective amendment to the Registration
Statement and (c) at the Closing Time, Deloitte & Touche shall have
furnished to the Company a customary comfort letter or letters, dated the
respective dates of delivery thereof, in form and substance reasonably
satisfactory to Loews.
(7) Since December 31, 2000, except as described in the
Company's Annual Report on Form 10-K for the fiscal year 2000, the Company's
quarterly reports on Form 10-Q, as amended through the date hereof, for the
quarterly periods ending March 31, 2001 and June 30, 2001 or the Prospectus,
there have not been any events or developments that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on
in the business, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole.
(8) No law shall have been adopted or promulgated, and no
temporary restraining order, preliminary or permanent injunction or other
order issued by a court or other governmental authority of competent
jurisdiction shall be in effect, having the effect of making the
transactions contemplated hereby illegal or otherwise prohibiting
consummation of the transactions contemplated hereby.
Section 6. Notices. Any notice required to be given hereunder shall be
-------
sufficient if in writing, and sent by facsimile transmission, by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
If to the Company, to:
CNA Financial Corporation
XXX Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to Loews, to:
Loews Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Secretary
Telecopy: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
Section 7. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon Loews and the Company and their respective successors and any
affiliate of Loews (a) to whom rights hereunder are assigned by Loews and (b)
who assumes in writing the obligations of the assignor hereunder (a "Permitted
Assignee"). Loews shall not assign this Agreement to any person or entity
(other than an affiliate of Loews) without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than Loews and the Company and their
respective successors and Permitted Assignees and the controlling persons and
officers and directors and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of Loews, the
Company and their respective successors and Permitted Assignees and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from Loews shall be deemed to be a successor by
reason merely of such purchase.
Section 8. Governing Law and Time. This Agreement shall be governed by and
----------------------
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State, without giving effect to
choice of law principles thereof.
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Section 9. Termination. This Agreement may be terminated at any time prior
-----------
to the Closing Time by action taken or authorized by the Board of Directors of
the terminating party or parties, if the Closing Time shall have not occurred
on or before October 31, 2001.
Section 10. Expenses. Each party will pay all of their own costs and
--------
expenses, including the fees of their counsel.
Section 11. Prior Agreements. This Agreement and the other agreements and
----------------
instruments of the parties delivered in connection herewith constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter
hereof.
Section 12. Amendments/No Waivers. This Agreement may not be amended
---------------------
except by an instrument in writing signed on behalf of each of the parties
hereto. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver
of those rights.
Section 13. Counterparts/Effectiveness. This Agreement shall become
--------------------------
effective upon the execution and delivery hereof by the parties hereto. This
Agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
Section 14. Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 15. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms. It is
accordingly agreed that the parties hereto shall be entitled to specific
performance of the terms hereof, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 16. 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.
******************
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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement
between Loews and the Company in accordance with its terms.
Very truly yours,
CNA FINANCIAL CORPORATION
By: /s/Xxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxx X. Xxxxxx
Executive Vice President
Accepted as of the date
first above written:
LOEWS CORPORATION
By: /s/Xxxxx X. Xxxxxx
---------------------
Xxxxx X. Xxxxxx
Senior Vice President
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