Document:

Exhibit 10.4

 

SANCHEZ ENERGY CORPORATION

 

SECOND AMENDED AND RESTATED 2011 LONG TERM INCENTIVE PLAN

 

PERFORMANCE ACCELERATED PHANTOM STOCK AGREEMENT

 

Participant:

 

Address:

 

Number of Phantom Shares:

 

Date of Grant:

 

Vesting of Phantom Shares:

 

	
 
    	
 
    	
Vesting Date
    	
 
    	
Vested %
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
Total: 100
    	
%
    

 

Sanchez Energy Corporation, a Delaware corporation (the “Company”), hereby grants to the Participant, pursuant to the provisions of the Sanchez Energy Corporation Second Amended and Restated 2011 Long Term Incentive Plan, as amended from time to time in accordance with its terms (the “Plan”), an award (this “Award”) pursuant to Section 6(b) of the Plan of shares of Phantom Stock (the “Phantom Shares”), effective as of the “Date of Grant” as set forth above, upon and subject to the terms and conditions set forth in this Phantom Stock Agreement (this “Agreement”) and in the Plan, which are incorporated herein by reference.  Each Phantom Share subject to this Award represents a notional share granted under the Plan that upon vesting and settlement would entitle the Participant to receive an amount of cash equal to the Fair Market Value of one Common Share as of the Vesting Date (as defined below). The Phantom Shares will be credited to a separate account maintained for the Participant on the books of the Company (the “Account”) and will vest and be settled in accordance with Section 3 below.  Unless otherwise defined in this Agreement, capitalized terms used in this Agreement shall have the meanings assigned to them in the Plan.

 

1.                                      EFFECT OF THE PLAN. The Phantom Shares granted to Participant are subject to all of the provisions of the Plan and this Agreement, together with all rules and determinations from time to time issued by the Committee and by the Board pursuant to the Plan. The Company hereby reserves the right to amend, modify, restate, supplement or terminate the Plan without the consent of Participant, so long as such amendment, modification, restatement or supplement shall not materially reduce the rights and benefits available to Participant hereunder, and this Award shall be subject, without further action by the Company or Participant, to such amendment, modification, restatement or supplement unless provided otherwise therein.

 

2.                                      VESTING SCHEDULE; SERVICE REQUIREMENT. Except as otherwise accelerated by the Committee or provided below in this Section 2, the Phantom Shares shall vest during Participant’s continued service with the Company or an Affiliate (including Participant’s services for the Company pursuant to the Services Agreement, dated as of December 19, 2011, by and between Sanchez Oil & Gas Corporation and the Company) (“Continuous Service”) on the “Vesting Date” set forth above (the “Vesting Date”) on the first page of this Agreement under the heading “Vesting of Phantom Shares,” as follows: one hundred percent (100%) of the Phantom Shares will vest on the fifth anniversary of the Date of Grant.  Notwithstanding the foregoing, (i) fifty percent (50%) of the Phantom Shares will vest on the first date that the Fair Market Value of one Common Share for each day in the prior fifteen (15) trading day period equals or exceeds $4.52 and (ii) one hundred percent (100%) of the Phantom Shares will vest on the first date that the Fair Market Value of one Common Share for each day in the prior fifteen (15) trading day period equals or exceeds $6.02, in each case, subject to the Participant’s Continuous Service through such date; provided, that if such date referenced in clause (i) or clause (ii) occurs prior to the first anniversary of the Date of Grant, the Phantom Shares will instead vest on the first anniversary of the Date of Grant pursuant to clause (i) or clause (ii), as applicable. For purposes of clarity, the date on which any of the Phantom Shares become Vested Phantom Shares pursuant to clause (i) or clause (ii) shall be deemed to be the Vesting Date with respect to such Phantom Shares.

 

 

Phantom Shares that have vested pursuant to this Agreement are referred to herein as “Vested Phantom Shares” and Phantom Shares that have not yet vested pursuant to this Agreement are referred to herein as “Unvested Phantom Shares.” Notwithstanding the foregoing, upon the occurrence of a Change of Control, a Qualifying Termination (as defined below), a Constructive Termination (as defined below), Participant’s death or Disability, any Unvested Phantom Shares shall become Vested Phantom Shares. If an installment of the vesting would result in a fractional Vested Phantom Share, such installment will be rounded to the next lower Phantom Share except the final installment, which will be for the balance of the Phantom Shares.

 

For purposes of this Agreement, “Qualifying Termination” shall mean a termination of Participant’s Continuous Service by the Company other than due to Participant’s (i) commission of, conviction for, plea of guilty or nolo contendere to a felony, or other material act or omission involving dishonesty or fraud or (ii) gross negligence or willful malfeasance.

 

For purposes of this Agreement, “Constructive Termination” shall mean (i) the assignment of a duty or duties to Participant by the Board that are not commensurate with the position of [Chief Executive Officer] or the Board’s material reduction in Participant’s duties; provided, that, the foregoing occurs without Participant’s consent, and provided, further, that, Participant has provided notice to an executive officer of the Company (other than the Participant), with a copy to the Board, within thirty (30) days after the initial occurrence of the event set forth in clause (i) of Participant’s intention to terminate Participant’s Continuous Service due to a Constructive Termination, and the Company has failed to cure such event to the reasonable satisfaction of Participant within thirty (30) days after receipt of notice thereof, or (ii) any reduction in Participant’s title or position as [Chief Executive Officer] without Participant’s consent, provided, further, that, Participant has provided notice to an executive officer of the Company (other than the Participant), with a copy to the Board, within thirty (30) days after such reduction of Participant’s intention to terminate Participant’s Continuous Service due to a Constructive Termination, and the Company has failed to cure such reduction to the reasonable satisfaction of Participant within thirty (30) days after receipt of notice thereof. For the avoidance of doubt, grounds for Participant to terminate Continuous Service due to a Constructive Termination shall not exist if the events in (i) or (ii) above occur while Participant controls, directly or indirectly, the Board or such events are initiated at the direction of Participant (in which case consent shall be deemed to have been given by Participant).

 

3.                                      SETTLEMENT.  Subject to Section 2 above and Section 9 below, with respect to the Vested Phantom Shares that become vested as of a given Vesting Date, the Company shall pay to the Participant an amount of cash equal to (x) the Fair Market Value of one Common Share as of the Vesting Date multiplied by (y) the aggregate number of the Phantom Shares that become vested on the applicable Vesting Date on the thirtieth (30th) day following the applicable Vesting Date (such date, the “Settlement Date”) and upon settlement, such Vested Phantom Shares will cease to be credited to the Account.

 

4.                                      CONDITIONS OF FORFEITURE. Except as set forth in Section 2 above, upon any termination of Participant’s Continuous Service (the “Termination Date”) for any or no reason, including but not limited to Participant’s voluntary resignation or termination by the Company with or without cause, before all of the Phantom Shares become Vested Phantom Shares, all Unvested Phantom Shares as of the Termination Date shall, without further action of any kind by the Company or Participant, be forfeited.

 

5.                                      NON-TRANSFERABILITY. Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise encumber or dispose of any of the Phantom Shares, or any right or interest therein, by operation of law or otherwise, except only with respect to a transfer of title effected pursuant to Participant’s will or the laws of descent and distribution following Participant’s death. References to Participant, to the extent relevant in the context, shall include references to authorized transferees. Any transfer in violation of this Section 5 shall be void and of no force or effect, and shall result in the immediate forfeiture of all Phantom Shares.

 

6.                                      DIVIDEND EQUIVALENTS AND VOTING RIGHTS. The Participant shall not be deemed for any purpose to be the owner of the Common Shares underlying the Phantom Shares subject to the Award, other than with respect to the Participant’s right to receive payment upon vesting and settlement of the Phantom Shares pursuant to Section 3 above.  The Participant acknowledges and agrees that, with respect to each Phantom Share credited to the Account, the Participant has no voting rights with respect to the Company.  If the Company pays a

 

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cash dividend on its outstanding Common Shares for which the Record Date (for purposes of this Agreement, the “Record Date” is the date on which shareholders of record are determined for purposes of paying the cash dividend on Common Shares) occurs after the Date of Grant and prior to the Settlement Date, the Participant shall receive a lump sum cash payment on the applicable Settlement Date equal to the aggregate amount of the ordinary cash dividends paid by the Company on a single Common Share multiplied by the number of Phantom Shares awarded under this Agreement that are both (x) unvested and unpaid as of each applicable Record Date and (y) settled upon such Settlement Date.

 

7.                                      CAPITAL ADJUSTMENTS AND CORPORATE EVENTS. If, from time to time during the term of this Agreement, there is any capital adjustment affecting the outstanding Common Shares as a class without the Company’s receipt of consideration, the Unvested Phantom Shares shall be adjusted in accordance with the provisions of Section 4(c) of the Plan. Any and all new, substituted or additional securities that become subject to the Award hereunder because of a capital adjustment shall be immediately subject to the forfeiture provisions of this Agreement and included thereafter as “Unvested Phantom Shares” for purposes of this Agreement.

 

8.                                      GENERAL ASSETS.  All amounts credited to the Participant’s Account under this Agreement shall continue for all purposes to be part of the general assets of the Company.  The Participant’s interest in the Account shall make the Participant only a general, unsecured creditor of the Company.

 

9.                                      TAX MATTERS.

 

(a)                                 The Company’s obligation to pay amounts to Participant upon the vesting and settlement of the Phantom Shares shall be subject to the satisfaction of any and all applicable federal, state and local income and/or employment tax withholding requirements (the “Required Withholding”) and the Company shall withhold from any payment due to the Participant such amount necessary to satisfy Participant’s Required Withholding.

 

(b)                                 Participant acknowledges that the tax consequences associated with this Award are complex and that the Company has urged Participant to review with Participant’s own tax advisors the federal, state, and local tax consequences of this Award. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Participant understands that Participant (and not the Company) shall be responsible for Participant’s own tax liability that may arise as a result of the Award.

 

10.                               ENTIRE AGREEMENT; GOVERNING LAW. The Plan and this Agreement constitute the entire agreement of the Company and Participant (collectively, the “Parties”) with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Parties with respect to the subject matter hereof. If there is any inconsistency between the provisions of this Agreement and of the Plan, the provisions of the Plan shall govern. Nothing in the Plan and this Agreement (except as expressly provided therein or herein) is intended to confer any rights or remedies on any person other than the Parties. The Plan and this Agreement are to be construed in accordance with and governed by the internal laws of the State of Delaware, without giving effect to any choice-of-law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the Parties. Should any provision of the Plan or this Agreement relating to the subject matter hereof be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.

 

11.                               INTERPRETIVE MATTERS. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine, or neuter, and the singular shall include the plural, and vice versa. The term “include” or “including” does not denote or imply any limitation. The captions and headings used in this Agreement are inserted for convenience and shall not be deemed a part of this Award or this Agreement for construction or interpretation.

 

12.                               NATURE OF PAYMENTS. Any and all payments in respect of Phantom Shares hereunder shall constitute special incentive payments to Participant and shall not be taken into account in computing the amount of salary or compensation of Participant for the purpose of determining any retirement, death or other benefits under (a) any retirement, bonus, life insurance or other employee benefit plan of the Company, or (b) any agreement between the Company and Participant, except as such plan or agreement shall otherwise expressly provide.

 

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13.                               AMENDMENT; WAIVER. This Agreement may be amended or modified only by means of a written document or documents signed by the Company and Participant. Any provision for the benefit of the Company contained in this Agreement may be waived, either generally or in any particular instance, by the Board or by the Committee. A waiver on one occasion shall not be deemed to be a waiver of the same or any other breach on a future occasion.

 

14.                               NOTICE. Any notice or other communication required or permitted hereunder shall be given in writing and shall be deemed given, effective, and received upon prepaid delivery in person or by courier or upon the earlier of delivery or the third business day after deposit in the United States mail if sent by certified mail, with postage and fees prepaid, addressed to the other Party at its address as shown beneath its signature in this Agreement, or to such other address as such Party may designate in writing from time to time by notice to the other Party in accordance with this Section 14.

 

15.                               SECTION 409A.  Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and applied so that the payments set forth herein either shall either be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or shall comply with the requirements of Section 409A of the Code, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance with Section 409A of the Code.  Notwithstanding the foregoing, none of the Company, its Affiliates, officers, directors, employees, or agents guarantees that this Agreement complies with, or is exempt from, the requirements of Section 409A of the Code and none of the foregoing shall have any liability for the failure of this Agreement to comply with, or be exempt from, such requirements.

 

[signature page follows]

 

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SANCHEZ   ENERGY CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    

 

PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE PHANTOM SHARES SUBJECT TO THIS AWARD SHALL VEST AND BECOME SETTLED, IF AT ALL, ONLY DURING THE PERIOD OF PARTICIPANT’S CONTINUOUS SERVICE OR AS OTHERWISE PROVIDED IN THIS AGREEMENT (NOT THROUGH THE ACT OF BEING GRANTED THIS AWARD). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT OR THE PLAN SHALL CONFER UPON PARTICIPANT ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF PARTICIPANT’S CONTINUOUS SERVICE. Participant acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all of the terms and provisions hereof and thereof. Participant has reviewed this Agreement and the Plan in their entirety, has had an opportunity to obtain the advice of tax and legal counsel prior to executing this Agreement, and fully understands all provisions of this Agreement and the Plan. Participant hereby agrees that all disputes arising out of or relating to this Agreement and the Plan shall be resolved in accordance with the Plan. Participant further agrees to notify the Company upon any change in the address for notice indicated in this Agreement.

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
DATED:
    	
 
    	
 
    	
SIGNED:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
PARTICIPANT
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Address:Exhibit 4.1

 

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (the “Depository”), to the Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of the Depository (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depository), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

 

	
REGISTERED
    	
 
    	
REGISTERED
    
	
 
    	
 
    	
 
    
	
 
    	
CNA FINANCIAL   CORPORATION
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
4.500% NOTE DUE 2026
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CUSIP 126117 AT7
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
ISIN US126117AT75
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Common Code 132280762
    
	
 
    	
 
    	
 
    
	
No. 001
    	
 
    	
US$400,000,000
    

 

CNA FINANCIAL CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the “Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assignees, the principal sum of Four Hundred Million Dollars ($400,000,000) on March 1, 2026, and to pay interest thereon from and including February 24, 2016, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 of each year, commencing September 1, 2016, at the rate of 4.500% per annum, until the principal hereof becomes due and payable, and at such rate on any overdue principal and (to the extent that the payment of such interest shall be legally enforceable) on any overdue installment of interest.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest payment, which shall be the February 15 or August 15 (whether or not a Business Day), as the case may be, prior to the applicable Interest Payment Date.  Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered Holder on such Regular Record Date by virtue of his having been such Holder, and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Series Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture.

 

Payment of the principal of (and premium, if any) and interest on this Security will be in immediately available funds, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Unless the certificate of authentication herein has been duly executed by the Series Trustee referred to herein by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

This security is one of a duly authorized issue of securities of the Company (the “Securities”), issued or to be issued in one or more series under an indenture, dated as of March 1, 1991, as amended and supplemented by a first supplemental indenture, dated as of October 15, 1993, a second supplemental indenture, dated as of December 15, 2004, between the Company and The Bank of New York Mellon Trust Company, N.A., as successor in interest to J. P. Morgan Trust Company, National Association (formerly known as The First National Bank of Chicago), a national banking association, as trustee (the “Original Trustee”) and a third supplemental indenture, dated as of February 24, 2016, between the Company, the Original Trustee and U.S. Bank National Association, as trustee (the “Series Trustee”) (as so supplemented, the “Indenture”), to which Indenture and all indentures supplemental thereto

 

 

reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Series Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.  This Security is one of the series designated “4.500% Notes due 2026”, and is limited, subject to the provisions of the Indenture, initially in aggregate principal amount to $400,000,000.  The Company may, from time to time, without the consent of the Holders of the Securities of this series, reopen this series and issue additional Securities.

 

The Securities of this series will be redeemable, in whole or in part, at the Company’s option at any time prior to December 1, 2025 (the date that is three months prior to March 1, 2026), at a redemption price (the “Redemption Price”) equal to the greater of (i) 100% of the principal amount of the Securities of this series and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Securities of this series (exclusive of interest accrued to the date of redemption (the “Redemption Date”)) discounted to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 45 basis points, plus accrued and unpaid interest thereon to, but not including, the Redemption Date.

 

The notes will be redeemable, in whole or in part, at our option at any time on or after December 1, 2025 (the date that is three months prior to March 1, 2026), at a redemption price equal to 100% of the principal amount of such notes plus accrued and unpaid interest thereon to, but not including, the date of redemption.

 

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.  The Treasury Rate shall be calculated on the third business day preceding the Redemption Date.

 

“Comparable Treasury Issue” means, with respect to the Securities of this series, the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of the Securities of this series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such Securities.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.

 

“Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Independent Investment Banker is given fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by us, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to us by such Reference Treasury Dealer at 3:30 p.m. New York time on the third business day preceding such Redemption Date.

 

“Reference Treasury Dealer” means each of (i) Citigroup Global Markets Inc., J.P. Morgan Securities LLC and a Primary Treasury Dealer (as defined below) selected by U.S. Bancorp Investments, Inc., and their respective successors and (ii) one other Primary Treasury Dealer selected by the Company; provided, however, that if any of the foregoing or their affiliates shall cease to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.

 

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities of this series to be redeemed.

 

 

Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date interest will cease to accrue on the Securities of this series or portions thereof called for redemption.

 

If an Event of Default with respect to the Securities of this series shall have occurred and be continuing, the principal of all the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.

 

In addition to the covenants contained in the Indenture, the Company hereby covenants and agrees that it will not, and will not permit any Subsidiary to, create, assume, incur or permit to exist any indebtedness for borrowed money (including any guarantee of indebtedness for borrowed money) that is secured by a pledge, lien or other encumbrance on:

 

(a)          the voting securities of The Continental Corporation, Continental Casualty Company and Western Surety Company, or any Subsidiary succeeding to any substantial part of the business now conducted by any of those corporations (collectively, the “Principal Subsidiaries”), or

 

(b)          the voting securities of a Subsidiary that owns, directly or indirectly, the voting securities of any of the Principal Subsidiaries,

 

without making effective provision so that the Outstanding Securities of this series shall be secured equally and ratably with the indebtedness so secured so long as such other indebtedness shall be secured.  This covenant and agreement by the Company constitutes an agreement of the Company in respect of the Securities of this series within the meaning of Section 5.1(d) of the Indenture.

 

For purposes of the preceding paragraph, “Subsidiary” means any corporation, partnership or other entity of which at the time of determination the Company or one or more other Subsidiaries own directly or indirectly more than 50% of the outstanding shares of the Voting Stock or equivalent interest, and “Voting Stock” means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities to be affected under the Indenture at any time by the Company and the Series Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Securities to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of any series at the time Outstanding, on behalf of the Holders of all the Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

 

Holders of Securities may not enforce their rights pursuant to the Indenture or the Securities except as provided in the Indenture.  No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

 

The Securities of this series are issuable in registered form without coupons in minimum denominations of $2,000 and any integral multiple of $1,000.  As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series of different authorized denominations, as requested by the Holder surrendering the same.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable on the Security Register of the Company, upon surrender of this Security for registration of transfer at

 

 

the office or agency of the Company in the Borough of Manhattan, the City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company, the Security Registrar and the Series Trustee and duly executed by the Holder hereof or his attorney duly authorized in writing, thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees.

 

This Security is in the form of a Global Security as provided in the Indenture.  If at any time the Depository notifies the Company that it is unwilling or unable to continue as Depository for this Security or if at any time the Depository for this Security shall no longer be eligible or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation, the Company shall appoint a successor Depository with respect to this Security.  If a successor Depository for this Security is not appointed by the Company within 90 days after the Company receives notice or becomes aware of such ineligibility, the Company will execute, and the Series Trustee or its agent, upon receipt of a Company Request for the authentication and delivery of certificates representing Securities of this series in exchange for this Security, will authenticate and deliver, certificates representing Securities of this series of like tenor and terms in an aggregate principal amount equal to the principal amount of this Security in exchange for this Security.

 

The Company may at any time and in its sole discretion determine that this Security or portion hereof shall no longer be represented in the form of a Global Security.  In such event the Company will execute, and the Series Trustee, upon receipt of a Company Request for the authentication and delivery of certificates representing Securities of this series in exchange in whole or in part for this Security, will authenticate and deliver certificates representing Securities of this series of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of this Security or portion hereof in exchange for this Security.

 

If specified by the Company pursuant to the Indenture with respect to this Security, the Depository may surrender this Security in exchange in whole or in part for certificates representing Securities of this series of like tenor and terms in definitive form on such terms as are acceptable to the Company and the Depository.  Thereupon the Company shall execute, and the Series Trustee or its agent shall authenticate and deliver, without a service charge, (1) to each Holder specified by the Security Registrar or the Depository a certificate or certificates representing Securities of this series of like tenor and terms and of any authorized denomination as requested by such person in an aggregate principal amount equal to and in exchange for such Holder’s beneficial interest as specified by the Security Registrar or the Depository in this Security; and (2) to the Depository a new Global Security of like tenor and terms and in an authorized denomination equal to the difference, if any, between the principal amount of the surrendered Security and the aggregate principal amount of certificates representing Securities delivered to Holders thereof.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Security for registration or transfer, the Company, the Series Trustee and any agent of the Company or the Series Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Series Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse shall be had for the payment of the principal of or interest on this Security, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liabilities being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

 

The Securities of this series are subject to defeasance at the option of the Company as provided in the Indenture.

 

All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

	
Dated:   February 24, 2016
    	
CNA   FINANCIAL CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
D.   Craig Mense
    
	
 
    	
Title:
    	
Executive   Vice President and
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
[SEAL]
    	
 
    
	
 
    	
Attest:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
Kathleen   Sulikowski
    
	
 
    	
Title:
    	
Assistant   Secretary
    
				

 

This is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.

 

	
Dated:   February 24, 2016
    	
U.S.   BANK NATIONAL ASSOCIATION, as Series 

Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized   Officer
    

 

[Signature Page to Global Note]

 

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM - as tenants in common

TEN ENT - as tenants by the entireties

JT TEN  - as joint tenants with right of survivorship and not as tenants in common

 

	
UNIF   GIFT MIN ACT -
    	
Custodian
    	
 
    
	
 
    	
(Cust)
    	
(Minor)
    	
 
    
	
 
    	
Under Uniform Gifts to Minors Act
    	
 
    
	
 
    	
                            
    	
 
    
	
 
    	
(State)
    	
 
    
				

Additional abbreviations may also be used though not in the above list.

 

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

PLEASE INSERT SOCIAL SECURITY OR  OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

 

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

 

 

the within Security and all rights thereunder, hereby irrevocably constituting and appointing                            attorney to transfer said Security on the books of the Company, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signature
    	
 
    

 

NOTICE:  THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN INSTRUMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

 

THE SIGNATURE(S) MUST BE GUARANTEED BY AN “ELIGIBLE GUARANTOR INSTITUTION” THAT IS A MEMBER OR PARTICIPANT IN A “SIGNATURE GUARANTEE PROGRAM” (E.G., THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM, THE STOCK EXCHANGE MEDALLION PROGRAM OR THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM).

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