Exhibit 10.10
AWARD LETTER AND AWARD TERMS TO THOMAS F. MOTAMED FOR STOCK
APPRECIATION RIGHTS AND RESTRICTED STOCK UNITS
Appendix A — Award Letter for SARs
January 9, 2009

Private and Confidential

          To: Thomas Motamed   
 
 
 
 
 
       
 
Number of Stock SARs Granted
 
80,000
 
 
      Re: Grant of Stock Appreciation Rights Paid in Stock   
Exercise Price
 
$16.50
 
 
         
Grant Date
 
January 2, 2009
 
 
         
Expiration Date
 
January 2, 2019
 
 
       

In accordance with the terms of your Employment Agreement, dated May 22, 2008,
as amended October 24, 2008 and any other amendment subsequently agreed to by
you and CNA Financial Corporation (collectively, the “Employment Agreement”),
you have been granted 80,000 Stock Appreciation Rights (individually, a “Stock
SAR” and collectively, the “Stock SARs”) pursuant to the CNA Financial
Corporation 2000 Incentive Compensation Plan, as may be amended from time to
time (the “Plan”) paid in CNA Financial Corporation (“Company”) common stock
with an exercise price of $16.50 per share (the “Exercise Price”). Each Stock
SAR entitles the eligible person to receive, at the time of exercise, an amount
equal to the difference between the fair market value of a single share of the
Company’s common stock on the date of exercise and the Exercise Price, which may
not be less than the fair market value of a single share of the Company’s common
stock on the date the right was granted, paid in shares of the Company’s common
stock. This stock appreciation rights award was granted under the Plan on
January 2, 2009.
As described more fully in the attached Award Terms, the Stock SARs will become
exercisable in four equal annual installments on January 2, 2010, January 2,
2011, January 2, 2012, and January 2, 2013 so long as you are employed by the
Company on each such date. For example, one quarter of the Stock SARs granted
will be exercisable on January 2, 2010, if you are an employee on that date. In
most instances, after the Stock SARs become exercisable generally you may
exercise them any time prior to the expiration date shown above provided that
you are employed by the Company at the time of exercise. In addition, the Stock
SARs will vest and be exercisable for three years (or until the Expiration Date)
if your employment is terminated under certain circumstances and upon a Change
in Control (as defined in Section 16 of the Employment Agreement). After
exercising the Stock SARs, you can decide whether to hold or sell the shares of
Company common stock you have obtained, subject to CNA’s Securities Compliance
Policy and applicable insider trading restrictions.
Under the present tax laws, as a result of exercising the Stock SARs you will
potentially recognize taxable income at the time of exercise. When and if you
sell the shares of Company common stock acquired through the Stock SARs
exercise, any additional gain may be subject to further tax at capital gain
rates. The Company recommends that you consult with your own tax advisor to
determine the applicability of the tax rules to the awards granted to you in
your individual circumstances.
This Award Letter provides a summary of your Stock SARs, and the Award is
subject to the Award Terms enclosed with this Award Letter. (In the attached
Award Terms, you are referred to as the “Participant.”) This Award Letter shall
be subject to the Award Terms, and the Award Terms shall be subject to the
provisions of the Plan. If discrepancies arise between this Award Letter and the
Award Terms, the Award Terms will govern, and if discrepancies arise between the
Award Terms and the Plan document, the terms of the Plan document will govern.
Sincerely,
/s/ Thomas Pontarelli
 

 

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Appendix B — Award Terms for SARs
Award Terms
Stock Appreciation Rights Paid in Company Common Stock Terms for Grant Under the
CNA Financial Corporation 2000 Incentive Compensation Plan
     On January 2, 2009 (the “Grant Date”), CNA Financial Corporation (the
“Company”) granted to the Participant certain Stock Appreciation Rights
(individually, a “Stock SAR” and collectively, the “Stock SARs”) paid in Company
common stock. Each Stock SAR entitles the eligible person to receive, at the
time of exercise, an amount equal to the difference between the fair market
value of a single share of the Company’s common stock on the date of exercise
and the Exercise Price, which may not be less than the fair market value of a
single share of the Company’s common stock on the date the right was granted,
paid in shares of CNA Financial Corporation common stock. All Stock SAR grants
shall be subject to the following terms (sometimes referred to as the “Award
Terms”):
     1.  Stock SARs Award. For purposes of these Award Terms, the “Participant”
shall be the eligible person identified in the award letter included with these
Award Terms (the “Award Letter”) and reflecting the date of grant of the Stock
SARs that is the same as the Grant Date specified in these Award Terms. For
purposes of these Award Terms, the “Exercise Price” is the price per share for
such Stock SARs as specified in the Award Letter. The Stock SARs have been
granted under the CNA Financial Corporation 2000 Incentive Compensation Plan, as
may be amended from time to time (the “Plan”), which is incorporated into and
forms a part of these Award Terms. Certain words, terms and phrases used in
these Award Terms are defined in the Plan (rather than in these Award Terms or
the Award Letter), and except where the context clearly implies or indicates to
the contrary, and except as otherwise provided in these Award Terms, a word,
term, or phrase used or defined in the Plan is similarly used or defined in
these Award Terms and the Award Letter. Other words, terms or phrases used in
these Award Terms or the Award Letter are defined in Paragraph 11 of these Award
Terms or elsewhere in these Award Terms or the Award Letter.
     2. Date of Exercise. Subject to the limitations of the Plan and these Award
Terms, each Stock SARs installment shall be exercisable on and after the Date of
Exercisability for such installment as described in the following schedule (but
only if the Termination Date has not occurred before the Date of
Exercisability):

           
INSTALLMENT
 
DATE OF EXERCISABILITY APPLICABLE TO INSTALLMENT
     
First quarter of Stock SARs
 
January 2, 2010
     
Second quarter of Stock SARs
 
January 2, 2011
     
Third quarter of Stock SARs
 
January 2, 2012
     
Fourth quarter of Stock SARs
 
January 2, 2013
     

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Notwithstanding the foregoing, 100% of the Stock SARs shall be immediately
vested and exercisable (a) on the Termination Date, if the Participant’s
employment is terminated pursuant to Section 3(b) or 3(e) of these Award Terms;
provided that in the case of a termination pursuant to Section 3(e) the
Participant executes and does not revoke the Release described in the Employment
Agreement within the time period provided therein, or (b) upon a Change in
Control, as defined in Section 16 of the Employment Agreement.
     3. Expiration. The Stock SARs shall not be exercisable after the Company’s
close of business on the last business day that occurs prior to the Expiration
Date. The “Expiration Date” shall be earliest to occur of:

(a)   Ten Years. The ten-year anniversary of the Grant Date.   (b)   Death or
Disability. The lesser of three years following the Termination Date or the
remainder of the Stock SARs maximum stated term, if the Participant’s
termination of employment by the Company occurs by reason of the Participant’s
death or the Participant’s Permanent Disability.   (c)   Cause. The lesser of
ninety days following the Termination Date or the remainder of the Stock SARs
maximum stated term, if the Participant’s termination occurs by reason of Cause,
as defined in and determined under the Employment Agreement.   (d)   Voluntary
Resignation. The lesser of ninety days following the Termination Date or the
remainder of the Stock SARs maximum stated term, if the Participant’s
termination of employment by the Company occurs by reason of the Participant’s
voluntary resignation (and the termination is for reasons other than as
described in Paragraphs 3(b), (c) or (e) of these Award Terms).   (e)  
Termination without Cause/Resignation for Good Reason. The lesser of three years
following the Termination Date or the remainder of the Stock SARs maximum stated
term, if the Participant’s termination of employment by the Company occurs by
reason of termination of employment by the Participant’s employer for reasons
other than death, Permanent Disability or Cause, or the Participant resigns for
Good Reason, as such terms are defined in and determined under the Employment
Agreement (and the termination is for reasons other than as described in
Paragraphs 3(b), (c), or (d) of these Award Terms); provided, that the
Participant executes and does not revoke the Release described in the Employment
Agreement within the time period provided therein.

     4. Method of Exercise. The Stock SARs may be exercised in whole or in part
by sending a written notice to the Secretary of the Company at its corporate
headquarters before the Company’s close of business on the last business day
that occurs prior to the Expiration Date, or, if offered by the Company at the
Company’s discretion, by electing to exercise the Stock SARs through a
Company-arranged broker-dealer. Each exercise of the Stock SARs shall be subject
to the Award Letter, these Award Terms and the Plan, and also to the following
provisions:

(a)   Any notice of exercise shall specify the number of Stock SARs which the
Participant elects to exercise and the date(s) on which they were awarded and
vested.

(b)   Any gains realized upon exercise of Stock SARs will be paid in shares of
Company common stock. Except as otherwise provided by the Compensation Committee
of the Company’s Board of Directors (“Committee”), before the Stock SARs are
exercised the Participant will be required to remit to the Company a sufficient
portion of the proceeds to pay in either cash or shares acquired through the
exercise any tax withholding requirements resulting from such exercise.

(c)   No Stock SARs shall be exercisable if and to the extent the Company
determines in its sole discretion that such exercise would be in violation of
applicable state or federal securities laws or the rules or regulations of any
securities exchange on which the shares of stock are traded. If the Company
makes such a determination, it shall use reasonable efforts to obtain compliance
with such laws, rules or regulations. In making any determination hereunder, the
Company may rely on the opinion of counsel for the Company. Notwithstanding
anything elsewhere to the contrary,

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    if the Expiration Date occurs pursuant to Paragraphs 3(b), 3(d) or 3(e) of
these Award Terms, no Stock SARs shall expire until thirty (30) days after the
resolution of any impediment to exercise that arises under this Paragraph 4(c).

     5. Administration. The authority to manage and control the operation and
administration of these Award Terms shall be vested in the Committee, and the
Committee shall have all such powers with respect to these Award Terms as it has
with respect to the Plan. Any interpretations of these Award Terms by the
Committee and any decisions made by it with respect to these Award Terms are
final and binding on the Company and the Participant except to the extent
provided in Paragraph 8 of these Award Terms. These Award Terms may be modified
by the Company in the event subsequent regulatory, tax, or legal developments
require any such modification, provided that any such modification shall have
minimum economic effect on these Award Terms.
     6. Fractional Shares. Any gains realized upon exercise of Stock SARs will
be paid in shares of Company common stock, in whole or fractional shares, as
determined by the Company to be appropriate and as approved by the Committee.
     7. No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the Stock SARs issued unless and until a certificate
for such shares has been duly issued by the Company following exercise of the
Stock SARs as provided herein.
     8. Governing Documents. The Award Letter shall be subject to these Award
Terms, and these Award Terms shall be subject to the provisions of the Plan, a
copy of which may be obtained by the Participant from the office of the
Secretary of the Company. If discrepancies arise between these Award Terms and
the Plan, the terms of the Plan will govern. These Award Terms are subject to
all interpretations, amendments, rules, and regulations promulgated by the
Committee from time to time pursuant to the Plan. Notwithstanding anything in
these Award Terms to the contrary, in the event of any conflict between the
Award Letter, these Award Terms, or the Plan, on the one hand, and the
Employment Agreement, on the other hand, the Employment Agreement shall control:

(a)   unless the Participant otherwise agrees in a writing that expressly refers
to the provision of the Employment Agreement whose control he is waiving;

(b)   except as expressly provided in Section 3.2 (other than the provisions of
(x) Section 3.2(a) and (y) Section 3.2(c) to the extent that such provision
authorizes the Committee to determine whether the Termination of Affiliation is
for Cause or other reason, which determination shall continue to be governed by
the Employment Agreement), Section 4.2, Article 13 (to the extent any deferral
is required to insure deductibility under Section 162(m) of the Code (provided,
however, that no such deferral shall be required if it would violate
Section 409A of the Code)), Section 16.1, Article 17, Section 18.4 or
Section 18.5 of the Plan; or

(c)   except as expressly provided in Paragraphs 4(b), 4(c), 5, 8, 9 or 10 of
these Award Terms.

     9. Amendment. These Award Terms may be amended by written agreement of the
Participant and the Company, without the consent of any other person, except
that any such amendment shall be subject to the approval of the Committee.
     10. Arbitration/Beneficiaries/References. Any Claim, as such term is
defined in Section 11 of the Employment Agreement, arising out of or relating to
the Award Letter or these Award Terms shall be resolved by binding confidential
arbitration in accordance with Section 24 of the Employment Agreement. In the
event of the earliest to occur of (a) the Participant’s death, (b) a judicial
determination of the Participant’s incompetence, or (c) the Participant’s
Permanent Disability arising from a mental incapacity, references to the
Participant in the Award Letter, these Award Terms and the Plan shall be deemed,
where appropriate, to refer to his beneficiary, estate, or other legal
representative.
     11. Definitions. For purposes of these Award Terms, the following
definitions shall apply:

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(a)   Date of Exercisability. The Participant’s “Date of Exercisability” is the
date on which the specified amount of Stock SARs are first able to be exercised
as provided for in Paragraph 2 of these Award Terms.

(b)   Employment Agreement. The Employment Agreement shall mean that certain
Employment Agreement, dated May 22, 2008, between the Participant and the
Company, as amended by the First Amendment thereto, dated October 24, 2008, and
any other amendment subsequently agreed to by the Participant and the Company.

(c)   Permanent Disability. The term “Permanent Disability” shall mean that the
Participant has been unable, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under the Employment
Agreement for 180 days out of any 270 consecutive days.

(d)   Termination Date. The Participant’s “Termination Date” shall have the
meaning set forth in the Employment Agreement.  

 

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Appendix C —Award Letter for Time Vested RSUs
January 9, 2009

Private and Confidential
To: Thomas Motamed

           
 
         
Number of Restricted Stock Units Granted
 
130,464
 
 
      Re: Grant of Restricted Stock Units — Time Vested   
Grant Date
 
January 2, 2009
 
 
     

In accordance with the terms of your Employment Agreement, dated May 22, 2008,
as amended October 24, 2008, as such may be further amended from time to time
(collectively, the “Employment Agreement”), you have been granted 130,464
Restricted Stock Units (individually, an “RSU” and collectively, the “RSUs”) of
CNA Financial Corporation (“Company”), pursuant to the terms of the CNA
Financial Corporation 2000 Incentive Compensation Plan, as may be amended from
time to time (the “Plan”), each of which represents the right to receive one
share of Company common stock, subject to the terms set forth herein. This RSU
award was granted under the Plan on January 2, 2009.
As described more fully in the attached Award Terms, the RSUs will become vested
in four equal annual installments on each of the first four anniversaries of the
Grant Date so long as you are employed by the Company on each such date. For
example, one quarter of the RSUs granted will be vested on January 2, 2010 if
you are an employee on that date. In addition, the RSUs will vest if your
employment is terminated under certain circumstances and upon a Change in
Control (as defined in Section 16 of the Employment Agreement). After the RSUs
vest, one share of Company common stock will be transferred to you for each RSU
that is earned, and you can decide whether to hold or sell the shares of Company
common stock you have obtained, subject to CNA’s Securities Compliance Policy
and applicable insider trading restrictions.
Under the present tax laws, you will potentially recognize taxable income equal
to the value of the Company common stock at the time it is transferred to you,
even if you do not sell the stock. When and if you sell the shares of Company
common stock acquired through the RSUs, any additional gain may be subject to
further tax at capital gain rates. The Company recommends that you consult with
your own tax advisor to determine the applicability of the tax rules to the
awards granted to you in your individual circumstances.
This Award Letter provides a summary of your RSUs, and the Award is subject to
the Award Terms enclosed with this Award Letter. (In the attached Award Terms,
you are referred to as the “Participant.”) This Award Letter shall be subject to
the Award Terms, and the Award Terms shall be subject to the provisions of the
Plan. If discrepancies arise between this Award Letter and the Award Terms, the
Award Terms will govern, and if discrepancies arise between the Award Terms and
the Plan, the terms of the Plan will govern.
Sincerely,
/s/ Thomas Pontarelli
 

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Appendix D — Award Terms for Time Vested RSUs
Award Terms
Restricted Stock Unit Award Terms for Time-Vested Grant Under the
CNA Financial Corporation 2000 Incentive Compensation Plan
     On January 2, 2009 (the “Grant Date”), CNA Financial Corporation (the
“Company”) granted to the Participant certain Restricted Stock Units
(individually, an “RSU” and collectively, the “RSUs”) payable in shares of
Company common stock. Each RSU constitutes a contractual right that entitles the
eligible person to receive, at the time the right vests as hereinafter provided,
one share of the Company’s common stock. All RSU grants shall be subject to the
following terms (sometimes referred to as the “Award Terms”):
     1. RSUs Award. For purposes of these Award Terms, the “Participant” shall
be the eligible person identified in the award letter included with these Award
Terms (the “Award Letter”) and reflecting the date of grant of the RSUs that is
the same as the Grant Date specified in these Award Terms. The RSUs have been
granted under the CNA Financial Corporation 2000 Incentive Compensation Plan, as
may be amended from time to time (the “Plan”), which is incorporated into and
forms a part of these Award Terms, and shall constitute Deferred Shares, as
defined in Section 10.2 of the Plan. Certain words, terms and phrases used in
these Award Terms are defined in the Plan (rather than in these Award Terms or
Award Letter), and except where the context clearly implies or indicates the
contrary, and except as otherwise provided in these Award Terms, a word, term,
or phrase used or defined in the Plan is similarly used or defined in these
Award Terms and the Award Letter. Other words, terms or phrases used in these
Award Terms or the Award Letter are defined in Paragraph 12 of these Award Terms
or elsewhere in these Award Terms or the Award Letter.
     2. Vesting. Subject to the limitations of the Plan and these Award Terms,
each installment of the RSUs shall be vested, and no longer subject to
forfeiture if the Participant’s employment is terminated, on and after the
Vesting Date for such installment as described in the following schedule (but
only if the Termination Date has not occurred before the Vesting Date):

           
INSTALLMENT
 
VESTING DATE APPLICABLE TO INSTALLMENT
     
First quarter of RSUs
 
January 2, 2010
     
Second quarter of RSUs
 
January 2, 2011
     
Third quarter of RSUs
 
January 2, 2012
     
Fourth quarter of RSUs
 
January 2, 2013
     

     3. Termination of Employment. All of the RSUs that have not yet vested
shall expire and be forfeited, and the Participant shall have no further rights
with respect to such RSUs, if the Termination Date occurs prior to the Vesting
Date with respect to such RSUs, except as hereinafter provided. Notwithstanding
the foregoing, all outstanding RSUs that have not previously vested shall vest
if:

(a)   The Participant’s employment is terminated by reason of his death or
Permanent Disability, in which event the Termination Date shall be the Vesting
Date for purposes of Paragraph 2; or

(b)   The Participant is terminated by the Company without Cause, or resigns for
Good Reason, in each case as defined in and determined under the Employment
Agreement, in which event the Termination Date shall be the Vesting Date for
purposes of Paragraph 2, provided that the Participant executes and does not
revoke the Release described in the Employment Agreement within the time period
provided therein.

     4. Change in Control. All of the RSUs that have not previously vested shall
vest upon a Change in Control, as defined in Section 16 of the Employment
Agreement.

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     5. Transfer of Stock in Settlement of RSUs. As soon as practical, but in no
event more than thirty (30) days after each Vesting Date, whether such Vesting
Date occurs pursuant to Paragraphs 2, 3 or 4, one share of common stock of the
Company shall be transferred to the Participant in full settlement of the
Participant’s rights with respect to each RSU that vested on such Vesting Date.
     6. Dividend Equivalent Payments. In the event that the Company declares any
dividend payable in cash to the holders of its common stock before the Vesting
Date with respect to any of the RSUs (or after the Vesting Date but before
shares of stock have been transferred to the Participant in settlement of the
RSUs), the Participant shall be entitled to receive a payment of additional
compensation equal to the dividends he would have received if he had owned a
number of shares of common stock equal to the number of unvested or unsettled
RSUs. Such dividend equivalent payments shall be paid to the Participant,
without interest, at the same time that the applicable RSUs are transferred to
him pursuant to Paragraph 5, and if the RSUs expire without vesting the
Participant’s right to the dividend equivalent payments shall also be forfeited.
     7. Administration. The authority to manage and control the operation and
administration of these Award Terms shall be vested in the Compensation
Committee of the Company’s Board of Directors (“Committee”), and the Committee
shall have all such powers with respect to these Award Terms as it has with
respect to the Plan. Any interpretations of these Award Terms by the Committee
and any decisions made by it with respect to these Award Terms are final and
binding on the Company and the Participant except to the extent provided in
Paragraph 9 of these Award Terms. These Award Terms may be modified by the
Company in the event subsequent regulatory, tax, or legal developments require
any such modification, provided that any such modification shall have minimum
economic effect on these Award Terms.
     8. No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the RSUs issued unless and until a certificate for
the shares of common stock has been duly issued by the Company following vesting
of the RSUs as provided herein.
     9. Governing Documents. The Award Letter shall be subject to these Award
Terms, and these Award Terms shall be subject to the provisions of the Plan, a
copy of which may be obtained by the Participant from the office of the
Secretary of the Company. If discrepancies arise between these Award Terms and
the Plan, the terms of the Plan will govern. These Award Terms are subject to
all interpretations, amendments, rules, and regulations promulgated by the
Committee from time to time pursuant to the Plan. Notwithstanding anything in
these Award Terms to the contrary, in the event of any conflict between the
Award Letter, these Award Terms, or the Plan, on the one hand, and the
Employment Agreement, on the other hand, the Employment Agreement shall control:

(a)   unless the Participant otherwise agrees in a writing that expressly refers
to the provision of the Employment Agreement whose control he is waiving;

(b)   except as expressly provided in Section 3.2 (other than the provisions of
(x) Section 3.2(a) and (y) Section 3.2(c) to the extent that such provision
authorizes the Committee to determine whether the Termination of Affiliation is
for Cause or other reason, which determination shall continue to be governed by
the Employment Agreement), Section 4.2, Article 13 (to the extent any deferral
is required to insure deductibility under Section 162(m) of the Code (provided,
however, that no such deferral shall be required if it would violate
Section 409A of the Code)), Section 16.1, Article 17, Section 18.4 or
Section 18.5 of the Plan; or   (c)   except as expressly provided in Paragraphs
7, 9, 10 or 11 of these Award Terms.

     10. Amendment. These Award Terms may be amended by written agreement of the
Participant and the Company, without the consent of any other person, except
that any such amendment shall be subject to the approval of the Committee.
     11. Arbitration/Beneficiaries/References. Any Claim, as such term is
defined in Section 11 of the Employment Agreement, arising out of or relating to
the Award Letter or these Award Terms shall be

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resolved by binding confidential arbitration in accordance with Section 24 of
the Employment Agreement. In the event of the earliest to occur of (a) the
Participant’s death, (b) a judicial determination of the Participant’s
incompetence, or (c) the Participant’s Permanent Disability arising from a
mental incapacity, references to the Participant in the Award Letter, these
Award Terms and the Plan shall be deemed, where appropriate, to refer to his
beneficiary, estate, or other legal representative.
     12. Definitions. For purposes of these Award Terms, the following
definitions shall apply:

(a)   Employment Agreement. The Employment Agreement shall mean that certain
Employment Agreement, dated May 22, 2008, between the Participant and the
Company, as amended by the First Amendment thereto dated October 24, 2008, and
any other amendment subsequently agreed to by the Participant and the Company.

(b)   Vesting Date. The Participant’s “Vesting Date” is the date on which the
specified amount of RSUs are vested as provided for in Paragraphs 2, 3 or 4 of
these Award Terms.

(c)   Termination Date. The Participant’s “Termination Date” shall have the
meaning set forth in the Employment Agreement.

(d)   Permanent Disability. The term “Permanent Disability” shall mean that the
Participant has been unable, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under the Employment
Agreement for 180 days out of any 270 consecutive days.  

 

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Appendix E — Award Letter for Performance Based RSUs
February 19, 2009

Private and Confidential

To: Thomas Motamed

           
 
         
Number of Restricted Stock Units Granted
 
208,160
 
 
      Re: Grant of Restricted Stock Units — Performance Based   
Grant Date
 
February 4, 2009
 
 
     

In accordance with the terms of your Employment Agreement, dated May 22, 2008,
as amended October 24, 2008, as such may be further amended from time to time
(collectively, the “Employment Agreement”), you have been granted 208,160
Restricted Stock Units (individually, an “RSU” and collectively, the “RSUs”) of
CNA Financial Corporation (“Company”), pursuant to the terms of the CNA
Financial Corporation 2000 Incentive Compensation Plan, as may be amended from
time to time (the “Plan”), each of which represents the right to receive one
share of Company common stock, subject to the terms set forth herein. This RSU
award was granted under the Plan on February 4, 2009.
As described more fully in the attached Award Terms, the number of RSUs that are
earned will be based on the extent to which the Company achieves its budgeted
Net Operating Income (“NOI”) for the year, and the RSUs, to the extent earned,
will become vested in four equal annual installments on each of the first four
anniversaries of the Grant Date so long as you are employed by the Company on
each such date. For example, one quarter of the RSUs granted (to the extent
earned) will be vested on February 4, 2010 if you are an employee on that date.
In addition, the RSUs (to the extent earned) will vest if your employment is
terminated under certain circumstances and upon a Change in Control (as defined
in Section 16 of the Employment Agreement). After the RSUs vest, one share of
Company common stock will be transferred to you for each RSU that is earned, and
you can decide whether to hold or sell the shares of Company common stock you
have obtained, subject to CNA’s Securities Compliance Policy and applicable
insider trading restrictions.
Under the present tax laws, you will potentially recognize taxable income equal
to the value of the Company common stock at the time it is transferred to you,
even if you do not sell the stock. When and if you sell the shares of Company
common stock acquired through the RSUs, any additional gain may be subject to
further tax at capital gain rates. The Company recommends that you consult with
your own tax advisor to determine the applicability of the tax rules to the
awards granted to you in your individual circumstances.
This Award Letter provides a summary of your RSUs, and the Award is subject to
the Award Terms enclosed with this Award Letter. (In the attached Award Terms,
you are referred to as the “Participant.”) This Award Letter shall be subject to
the Award Terms, and the Award Terms shall be subject to the provisions of the
Plan. If discrepancies arise between this Award Letter and the Award Terms, the
Award Terms will govern, and if discrepancies arise between the Award Terms and
the Plan, the terms of the Plan will govern.
Sincerely,
/s/ Thomas Pontarelli

 

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Appendix F — Award Terms for Performance Based RSUs
Award Terms
Restricted Stock Unit Award Terms for Performance Based Grant Under the
CNA Financial Corporation 2000 Incentive Compensation Plan
     On February 4, 2009 (the “Grant Date”), CNA Financial Corporation (the
“Company”) granted to the Participant certain Restricted Stock Units
(individually, an “RSU” and collectively, the “RSUs”) payable in shares of
Company common stock. Each RSU constitutes a contractual right that entitles the
eligible person to receive, at the time the right vests as hereinafter provided,
one share of the Company’s common stock. All RSU grants shall be subject to the
following terms (sometimes referred to as the “Award Terms”):
     1. RSUs Award. For purposes of these Award Terms, the “Participant” shall
be the eligible person identified in the award letter included with these Award
Terms (the “Award Letter”) and reflecting the date of grant of the RSUs that is
the same as the Grant Date specified in these Award Terms. The RSUs have been
granted under the CNA Financial Corporation 2000 Incentive Compensation Plan, as
may be amended from time to time (the “Plan”), which is incorporated into and
forms a part of these Award Terms, and shall constitute Deferred Shares as
defined in Section 10.2 of the Plan. Certain words, terms and phrases used in
these Award Terms are defined in the Plan (rather than in these Award Terms or
Award Letter), and except where the context clearly implies or indicates the
contrary, and except as otherwise provided in these Award Terms, a word, term,
or phrase used or defined in the Plan is similarly used or defined in these
Award Terms and the Award Letter. Other words, terms or phrases used in these
Award Terms or the Award Letter are defined in Paragraph 12 of these Award Terms
or elsewhere in these Award Terms or the Award Letter.
     2. Satisfaction of Performance Criteria. The RSUs shall be earned if, and
only if, the Company’s NOI for the year that includes the Grant Date is at least
equal to 50% of the Budgeted NOI for such year. For purposes of these Award
Terms, “NOI” and “Budgeted NOI” shall have the meanings set forth in the
Employment Agreement. If the NOI is equal to at least 50%, but not more than
100%, of the Budgeted NOI for the year, 80% of the RSUs (and 80% of each
installment for purposes of Paragraph 3) shall be earned. If the NOI is greater
than 100% of the Budgeted NOI, 100% of the RSUs shall be earned (and 100% of
each installment for purposes of Paragraph 3). If fewer than 100% of the RSUs
are earned, the portion of the RSUs that are not earned shall be forfeited and
the Participant shall have no further rights with respect to such unearned RSUs,
and all provisions hereof that relate to the vesting and settlement of RSUs
shall apply only to the earned portion. The Compensation Committee of the
Company’s Board of Directors (“Committee”) shall determine the extent to which
the RSUs are earned in accordance with Article XI of the Plan as if the RSUs
were Performance Bonus Awards as defined therein, and the requirements of
Section 162(m) of the Internal Revenue Code, except that the Committee shall not
have the authority to use negative discretion to reduce the number of RSUs that
are earned.
     3. Vesting. Subject to the limitations of the Plan and these Award Terms,
each installment of RSUs, to the extent earned, shall be vested, and no longer
subject to forfeiture if the Participant’s employment is terminated, on and
after the Vesting Date for such installment as described in the following
schedule (but only if the Termination Date has not occurred before the Vesting
Date):

           
INSTALLMENT
 
VESTING DATE APPLICABLE TO INSTALLMENT
     
First quarter of earned RSUs
 
February 4, 2010
     
Second quarter of earned RSUs
 
February 4, 2011
     
Third quarter of earned RSUs
 
February 4, 2012
     
Fourth quarter of earned RSUs
 
February 4, 2013
     

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     4. Termination of Employment. All of the RSUs that have not yet vested
shall expire and be forfeited, and the Participant shall have no further rights
with respect to such RSUs, if the Termination Date occurs prior to the Vesting
Date with respect to such RSUs, except as hereinafter provided. Notwithstanding
the foregoing, all outstanding RSUs (to the extent earned) that have not
previously vested shall vest if:

(a)   The Participant’s employment is terminated, either during the year that
includes the Grant Date or the following year, by reason of his death or
Permanent Disability, in which event the Termination Date shall be the Vesting
Date for purposes of Paragraph 3;

(b)   The Participant is terminated by the Company without Cause, or resigns for
Good Reason, as both such terms are defined in and determined under the
Employment Agreement, in either case either during the year that includes the
Grant Date or the following year, in which event the Termination Date shall be
the Vesting Date for purposes of Paragraph 3, provided that the Participant
executes and does not revoke the Release described in the Employment Agreement
within the time period provided therein; or

(c)   There is a Change in Control, as defined in Section 16 of the Employment
Agreement, in which event the date on which the Change in Control occurs shall
be the Vesting Date for purposes of Paragraph 3.

     5. Transfer of Stock in Settlement of RSUs. As soon as practical, but in no
event more than thirty (30) days after each Vesting Date, whether such Vesting
Date occurs pursuant to Paragraph 3 or Paragraph 4, one share of common stock of
the Company shall be transferred to the Participant in full settlement of the
Participant’s rights with respect to each RSU that vested on such Vesting Date.
Notwithstanding the foregoing, if on the Vesting Date the Committee has not yet
determined the extent to which the RSUs have been earned, the shares, to the
extent earned, shall be transferred to the Participant not more than thirty
(30) days after the Committee makes its determination, but in no event later
than the last day of the year following the year that includes the Grant Date;
provided that if the Vesting Date occurs during the year that includes the Grant
Date by reason of a termination of employment pursuant to Paragraph 4(b), then
the transfer shall be deferred to the first business day that is at least six
months after the Participant has incurred a separation from service as defined
in Section 409A of the Internal Revenue Code.
     6. Dividend Equivalent Payments. In the event that the Company declares any
dividend payable in cash to the holders of its common stock before the Vesting
Date with respect to any of the RSUs (or after the Vesting Date but before
shares of stock have been transferred to the Participant in settlement of the
RSUs), the Participant shall be entitled to receive a payment of additional
compensation equal to the dividends he would have received if he had owned a
number of shares of common stock equal to the number of unvested or unsettled
RSUs. Such dividend equivalent payments shall be paid to the Participant,
without interest, at the same time that the applicable RSUs are transferred to
him pursuant to Paragraph 5, and if the RSUs expire without vesting the
Participant’s right to the dividend equivalent payments shall also be forfeited.
     7. Administration. The authority to manage and control the operation and
administration of these Award Terms shall be vested in the Committee, and the
Committee shall have all such powers with respect to these Award Terms as it has
with respect to the Plan. Any interpretations of these Award Terms by the
Committee and any decisions made by it with respect to these Award Terms are
final and binding on the Company and the Participant except to the extent
provided in Paragraph 9 of these Award Terms. These Award Terms may be modified
by the Company in the event subsequent regulatory, tax, or legal developments
require any such modification, provided that any such modification shall have
minimum economic effect on these Award Terms.
     8. No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the RSUs issued unless and until a certificate for
the shares of common stock has been duly issued by the Company following vesting
of the RSUs as provided herein.
     9. Governing Documents. The Award Letter shall be subject to these Award
Terms, and these Award Terms shall be subject to the provisions of the Plan, a
copy of which may be obtained by the

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Participant from the office of the Secretary of the Company. If discrepancies
arise between these Award Terms and the Plan, the terms of the Plan will govern.
These Award Terms are subject to all interpretations, amendments, rules, and
regulations promulgated by the Committee from time to time pursuant to the Plan.
Notwithstanding anything in these Award Terms to the contrary, in the event of
any conflict between the Award Letter, these Award Terms, or the Plan, on the
one hand, and the Employment Agreement, on the other hand, the Employment
Agreement shall control:

(a)   unless the Participant otherwise agrees in a writing that expressly refers
to the provision of the Employment Agreement whose control he is waiving;

(b)   except as expressly provided in Section 3.2 (other than the provisions of
(x) Section 3.2(a) and (y) Section 3.2(c) to the extent that such provision
authorizes the Committee to determine whether the Termination of Affiliation is
for Cause or other reason, which determination shall continue to be governed by
the Employment Agreement), Section 4.2, Article 13 (to the extent any deferral
is required to insure deductibility under Section 162(m) of the Code (provided,
however, that no such deferral shall be required if it would violate
Section 409A of the Code)), Section 16.1, Article 17, Section 18.4 or
Section 18.5 of the Plan; or

(c)   except as expressly provided in Paragraphs 7, 9, 10 or 11 of these Award
Terms.

     10. Amendment. These Award Terms may be amended by written agreement of the
Participant and the Company, without the consent of any other person, except
that any such amendment shall be subject to the approval of the Committee.
     11. Arbitration/Beneficiaries/References. Any Claim, as such term is
defined in Section 11 of the Employment Agreement, arising out of or relating to
the Award Letter or these Award Terms shall be resolved by binding confidential
arbitration in accordance with Section 24 of the Employment Agreement. In the
event of the earliest to occur of (a) the Participant’s death, (b) a judicial
determination of the Participant’s incompetence, or (c) the Participant’s
Permanent Disability arising from a mental incapacity, references to the
Participant in the Award Letter, these Award Terms and the Plan shall be deemed,
where appropriate, to refer to his beneficiary, estate, or other legal
representative.
     12. Definitions. For purposes of these Award Terms, the following
definitions shall apply:

(a)   Employment Agreement. The Employment Agreement shall mean that certain
Employment Agreement, dated May 22, 2008, between the Participant and the
Company, as amended by the First Amendment thereto dated October 24, 2008, and
any other amendment subsequently agreed to by the Participant and the Company.

(b)   Vesting Date. The Participant’s “Vesting Date” is the date on which the
specified amount of RSUs are vested as provided for in Paragraphs 3 or 4 of
these Award Terms.

(c)   Termination Date. The Participant’s “Termination Date” shall have the
meaning set forth in the Employment Agreement.

(d)   Permanent Disability. The term “Permanent Disability” shall mean that the
Participant has been unable, due to physical or mental incapacity, to
substantially perform his duties and responsibilities under the Employment
Agreement for 180 days out of any 270 consecutive days.

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