CNA SUPPLEMENTAL EXECUTIVE SAVINGS
AND CAPITAL ACCUMULATION PLAN
Restated as of January 1, 2003
CNA SUPPLEMENTAL EXECUTIVE SAVINGS
AND CAPITAL ACCUMULATION PLAN
TABLE OF CONTENTS
ARTICLE I GENERAL PROVISIONS
|1.3||Company and Employers||1|
|1.5||Definitions and Rules of Construction||1|
ARTICLE II ELIGIBILITY AND BENEFITS
|2.6||Time and Form of Payment||7|
ARTICLE III PAYMENT OF BENEFITS
|3.1||Source of Payment||8|
|3.2||Establishment of Trust||8|
|3.3||Withdrawals for Financial Emergency||8|
|3.4||Withholding and Payroll Taxes||9|
|3.5||Payment on Behalf of Disabled or Incompetent Persons||9|
|3.6||Missing Participants or Beneficiaries||9|
ARTICLE IV ADMINISTRATION
|4.3||Binding Effect of Rulings||11|
ARTICLE V AMENDMENT AND TERMINATION OF PLAN
ARTICLE VI MISCELLANEOUS
|6.1||Status of Plan||15|
|6.3||No Contract of Employment||15|
|6.5||Participant and Beneficiary Duties||16|
CNA SUPPLEMENTAL EXECUTIVE SAVINGS
AND CAPITAL ACCUMULATION PLAN
1.1 Purpose. The purpose of this CNA Supplemental Executive Savings and CapitalAccumulation Plan (the Plan) is to enable selected Employees and former senior Employees of CNAFinancial Corporation (the Company) or its subsidiaries (the Employers) to elect to deferadditional compensation, and receive additional matching and other employer contributions, tocompensate them for the limitations imposed upon their benefits under the CNA Savings and CapitalAccumulation Plan in order to comply with the requirements of the Internal Revenue Code (theCode), and also to permit the Employers to provide additional amounts of deferred compensationfor other key Employees and former Employees. The Plan was originally adopted jointly by theCompany and Continental Casualty Corporation, one of the Employers, effective as of January 1,1987, under the name of the CNA Employees Supplemental Savings Plan, and has been amended fromtime to time.
1.2 Effective Date. The Plan was originally effective as of January 1, 1987. Thisamendment and restatement of the Plan shall be effective as of January 1, 2003. Except asotherwise explicitly provided below, the rights of a Participant whose employment terminated, orwho otherwise became entitled to receive benefits, under the Plan prior to January 1, 2003, shallbe determined under the terms of the Plan as in effect at such time.
1.3 Company and Employers. The Plan is adopted for the benefit of selected Employeesand former Employees of the Company and the Employers. As of the effective date of thisrestatement, Continental Casualty Company is the only Employers other than the Companyparticipating in the Plan. The Administrator may permit any other company that is an affiliate orsubsidiary of the Company to participate in the Plan in such manner as the Administrator maydetermine. Each Employer is liable for the payment of benefits to a Participant that is or was anEmployee of such Employer. The Company is the sponsor of the Plan for purposes of ERISA and theissuer of all interests in the Plan for securities laws purposes.
1.4 Plan Year. The Plan Year of the Plan shall coincide with the calendar year,except as the Administrator shall otherwise determine.
1.5 Definitions and Rules of Construction. As used in this Plan, certain capitalizedterms shall have the meanings set forth below. Capitalized terms not defined herein shall have themeaning set forth in the S-CAP, if applicable. Nouns and pronouns which are of one gender shall beconstrued to include all genders, and the singular shall include the plural and vice-versa, exceptas the context otherwise clearly requires. Article and Section headings are for ease of referenceonly and shall have no substantive meaning.
(a) Account means the separate bookkeeping account maintained on the books of aParticipants Employer to reflect the amount owed to him pursuant to this Plan. Each Account shallbe divided into the following subaccounts:
|(i)||The Deferred Account shall include the amounts deferred bythe Participant pursuant to Section 2.2 and the income attributable thereto.|
|(ii)||The Matching Account shall include any amounts credited tothe Participant pursuant to Section 2.3(a) or (b) and the income attributablethereto.|
|(iii)||The Employer Account shall include any amounts credited tothe Participant pursuant to Section 2.3(c) and the income attributablethereto.|
The Administrator may establish additional subaccounts within a Participants Account, or maycombine two or more subaccounts. The term Account, when not otherwise specified, shall refercollectively to all of the subaccounts comprising a Participants Account. If a Participantparticipates in the Plan both as an Employee and subsequently as a former Employee, he shall havetwo separate Accounts, and any election made by him with respect to one Account shall have noeffect on the other Account.
(b) Administrator means the Company or such other person as the Company shall designatepursuant to Section 4.1.
(c) Beneficiary means the person or persons designated to receive the Participants Accountin the event of his death pursuant to Section 2.7.
(d) Board means the Board of Directors of the Company.
(e) Choice 2 Participant means a Participant who is treated as a Choice 2 Participantunder the S-CAP.
(f) Code means the Internal Revenue Code of 1986, and any treasury regulations, rulings orother authoritative administrative pronouncements interpreting the Code. If any provision of theCode specifically referred to herein is amended or replaced, the reference shall be deemed to be tothe provision as so amended, or to the new provision, if such reference is consistent with thepurposes of the Plan.
(g) Company means CNA Financial Corporation, and any successor thereto that assumes theobligations of the Company under this Plan.
(h) Compensation means Compensation as defined in Section 2.1(j) of the S-CAP for purposesof determining a Participants Before-Tax, After-Tax and Matching Contributions, but without regardto any limits on includable compensation imposed by the Tax Limits.
(i) Deferral Agreement means an agreement between an Active Participant and his Employerspecifying that a portion of his Compensation shall be withheld and credited to his Account in thePlan pursuant to Section 2.2, or providing that additional amounts will be credited to his Accountpursuant to Section 2.3, or both, and any amendment thereto. To the extent determined by theAdministrator, a Deferral Agreement may take the form of an election made by the Participant eitherin writing or through electronic communications. The term
Deferral Agreement may also refer toany provision of an employment, consulting, severance, or other agreement for the performance ofservices that makes specific reference to this Plan and provides for deferred compensation.
(j) Employee means any person employed by any Employer and classified as an Employee by suchEmployer. Except as otherwise provided in Section 2.1(c), the term Employee shall not include aperson who is retained to provide services for an Employer as an independent contractor, or whoprovides services for an Employer pursuant to an agreement or understanding, written or unwritten,with a third party that such person shall be treated as an employee of the third party, but who issubsequently determined to be an employee at common law, for purposes of any federal or state taxor employment law, or for any other purpose.
(k) Employer means the Company and any subsidiary of the Company that adopts the Plan and isthe employer or former employer of a Participant.
(l) ERISA means the Employee Retirement Income Security Act of 1974, and any LaborDepartment regulations, rulings or other authoritative administrative pronouncements interpretingERISA. If any provision of ERISA specifically referred to herein is amended or replaced, thereference shall be deemed to be to the provision as so amended, or to the new provision, if suchreference is consistent with the purposes of the Plan.
(m) Participant means an Employee or former key Employee designated to participate in thePlan pursuant to Section 2.1, while he has the right to any benefits under the Plan. Participantsare divided in Active Participants and Inactive Participants, as described in Section 2.1, and theterm Participant, when not modified, shall refer to both Active and Inactive Participants, unlessclearly inconsistent with the context.
(n) Plan means this CNA Supplemental Executive Savings and Capital Accumulation Plan, asamended from time to time.
(o) Retirement Plan Compensation means Retirement Plan Compensation as defined in the S-CAPfor purposes of determining a Choice 2 Participants Basic and Performance Contributions, butwithout regard to any limits on includible compensation imposed by the Tax Limits.
(p) S-CAP means the CNA Savings and Capital Accumulation Plan, as amended from time to time,and, if appropriate, any new plan adopted by the Companyto replace the S-CAP. In the case of a Participant who participates in a plan maintained byhis Employer other than the CNA Savings and Capital Accumulation Plan, which plan is qualifiedunder §401(a) of the Code and includes a cash or deferred feature qualified under §401(k) of theCode, the term S-CAP with respect to such Participant shall mean such other plan.
(q) Tax Limits means the limitations imposed on a Participants benefits under the Plan tosatisfy the requirements of §401(a)(17), §402(g), or §415 of the Code.
ELIGIBILITY AND BENEFITS
(a) Only selected management and highly compensated Employees and former Employees who aredesignated as provided herein shall be eligible to participate in the Plan. The Employees andformer Employees who are so designated to participate in the Plan shall be referred to herein asActive Participants for so long as they have the right to have additional amounts credited totheir Accounts pursuant to Section 2.2 or 2.3. A person who is no longer an Active Participant,but who still has an undistributed Account in the Plan, shall be referred to as an InactiveParticipant.
(b) For years prior to 2003, all Employees who had elected to participate in the S-CAP, andwhose benefits under the S-CAP were restricted by the Tax Limits, were automatically eligible toparticipate in the Plan. Commencing with 2003, only those Employees described in the precedingsentence whose Compensation for the Plan Year exceeds (or, as determined by the Plan Administrator,is expected to exceed) the limitation of Code §401(a)(17) shall automatically be eligible toparticipate. Notwithstanding the foregoing, the Administrator may, in its sole discretion,determine at any time that any Employee or group of Employees described in the preceding sentencesshall no longer be eligible to participate.
(c) Any Employer, with the consent of the Administrator, may enter into a Deferral Agreementwith a person not described in paragraphs (a) or (b), who may be either an Employee, a formerEmployee, or a consultant or independent contractor, and such person shall thereby become an ActiveParticipant. To the extent necessary or appropriate, any reference in this Plan to employmentshall be modified and interpreted in the case of a former Employee or independent consultant in amanner consistent with the intent of the Plan.
2.2 Elective Deferrals.
(a) Each Active Participant may, for any Plan Year in which he is also a participant in theS-CAP, elect in his Deferral Agreement to accept a reduction in his Compensation from his Employerequal to a whole percentage (not to exceed the maximum percentage described below) of his or herCompensation. For purposes of the preceding sentence, the maximum percentage is the highestpercentage of Compensation that a participant in the S-CAP would be permitted to defer asBefore-Tax Contributions if he were not a Highly Compensated Employee under the provisions of theS-CAP applicable to him for the Plan Year. An Active Participant who does not make a contraryelection will be deemed to have elected the same combined Before-Tax and After-Tax Contributionpercentage that he has elected (or been deemed to elect) under the S-CAP. For each payroll periodthat begins while an election is in effect, there shall be withheld from the portion of the ActiveParticipants Compensation that exceeds the Tax Limit (determined on a year to date basis) andcredited to his Deferral Account an amount equal to the applicable percentage of the Compensationfor such payroll period. In addition, there shall also be withheld from the Active Participants Compensation andcredited to his Deferral Account an amount equal to any Before-Tax or After-
Tax Contribution thatwas elected under the S-CAP, but cannot be credited to his S-CAP account without exceeding the TaxLimits.
(b) Any Employer, with the consent of the Administrator, may enter into a Deferral Agreementwith an Active Participant (including but not limited to a person described in Section 2.1(b))which provides for Compensation to be withheld and credited to the Active Participants DeferralAccount on a basis different from that described in paragraph (a). Such a Deferral Agreement mayprovide for the deferral of forms or amounts of compensation different from those defined asCompensation in Section 1.5(h), including payments to a former Employee or independent contractor,in which event such compensation shall be considered Compensation for all purposes of this Plan.
(c) All deferral elections shall be made, modified and revoked in accordance with rulesestablished by the Administrator. Amounts deferred pursuant to either paragraph (a) or (b) shallbe credited to the Active Participants Deferral Account as of the date on which the deferredCompensation would otherwise have been paid. No election, and no provision of any DeferralAgreement, shall permit a Participant to defer Compensation already earned when the election ismade.
2.3 Employer Contributions.
(a) For each payroll period, the Employer of an Active Participant shall credit to the ActiveParticipants Matching Account an amount equal to the amount deferred by the Active Participant forsuch payroll period under Section 2.2 multiplied by the Fixed Matching Contribution percentageapplicable to such Active Participant under the S-CAP. The Company shall also credit to theMatching Account of an Active Participant any Fixed Matching Contribution that relates to aBefore-Tax or After-Tax Contribution made under the S-CAP, but which Basic Matching Contributioncannot be allocated to such Active Participants S-CAP account without exceeding the Tax Limits.The total amount of Basic Matching Contributions credited to an Active Participants MatchingAccount under this Section 2.3 for each Plan Year shall not exceed the excess of 6% the ActiveParticipants total Compensation for the Plan Year reduced by all Basic Matching Contributionsallocated to his account in the S-CAP for the same Plan Year.
(b) In addition to the amounts set forth above, at the end of each Plan Year the Employer ofan Active Participant who is a Choice 2 Participant shall credit to the Active ParticipantsMatching Account an amount equal to the amount deferred by the Active Participant for the Plan Yearpursuant to Section 2.2, multiplied by the Variable Matching Contribution percentage applicable tosuch Active Participant under the S-CAP. The Company shall also credit to the Matching Account ofan Active Participant any Variable Matching Contribution that relates to a Before-Tax or After-TaxContribution made under the S-CAP, but which Basic Matching Contribution cannot be allocated tosuch Active Participants S-CAP account without exceeding the Tax Limits.
(c) In addition to the amounts set forth above, at the end of each Plan Year or pay period, asapplicable, the Employer of an Active Participant who is a Choice 2 Participant
shall credit to theActive Participants Employer Contribution Account an amount equal to the portion of the ActiveParticipants Retirement Plan Compensation that exceeds the Tax Limits multiplied by the applicableBasic and Performance Contribution percentages applicable to such Active Participant under theS-CAP. The Company shall also credit to the Employer Contribution Account of an Active Participantany Basic or Performance Contribution that cannot be allocated to such Active Participants S-CAPaccount without exceeding the Tax Limits.
(d) Anything else contained herein to the contrary notwithstanding, the amount credited to anActive Participants Matching Account or Employer Contribution Account pursuant to paragraph (a),(b) or (c) for any Plan Year shall not exceed the amount of additional Fixed Matching, VariableMatching, Basic or Performance Contributions, as the case may be, that would have been allocated tothe Active Participants S-CAP account for the same Plan Year if the Tax Limits did not apply.
(e) Any Employer, with the consent of the Administrator, may enter into a employmentagreement, or adopt employment policies, with or applicable to an Active Participant (including butnot limited to a person described in Section 2.1(b)) which provides for amounts to be credited tothe Active Participants Matching or Employer Account on a basis different from that described inparagraph (a), (b) or (c). Such an agreement or policy shall specify the basis upon which theamount to be so credited shall be determined, and may also specify a vesting schedule differentthan that specified in Section 2.5.
(a) Except as otherwise provided in paragraph (b), earnings shall be credited to eachParticipants Account at the projected rate of return on the Fixed Income Fund established underthe S-CAP. In the event that the Fixed Income Fund is no longer offered as an investmentalternative under the S-CAP, the Administrator shall designate a reasonably equivalent investmentoption under the S-CAP to be used to measure the rate at which earnings shall be credited.
(b) At any time after the effective date of this restatement, the Administrator may designateselected mutual funds or other investment media (funds), and each Participant shall have theright to have earnings (including realized and unrealized gains and losses) on his or her Accountcomputed as if it had been invested in such funds in such proportions as the Participant shallelect. The funds may be the same as the Investment Funds designated under the S-CAP, or mayexclude some or all of such Investment Funds or include other funds as the Administrator maydetermine. The portion of each Participants Account that is deemed to be invested in each fundshall be a whole percentage, and elections may be changed at such intervals and in such manner asthe Administrator may determine. The Administrator shall have the authority to select anddiscontinue funds at any time, to establish a rate at which interest shall be credited on Accountswith respect to which no fund election is in effect, and otherwise to establishrules and procedures with respect to the calculation and crediting of earnings, includingchanging the intervals at which fund elections may be made or at which earnings are posted, andestablishing a minimum or maximum percentage that may be deemed invested in any fund.
(c) Anything else contained herein to the contrary, in no event shall any Participant beallowed to elect a rate of return on his Account retroactively, and in all cases earnings shall becomputed in such a manner that they shall not be considered additional deferred compensation forpurposes of FICA withholding under §3121(v) of the Code.
2.5 Vesting. The balance in a Participants Deferral Account shall be fully vestedand nonforfeitable at all times. The balance in a Participants Matching Account or EmployerAccount (or any subaccount thereof) shall be vested at the same times and to the same extent as theParticipants analogous account in the S-CAP; except as otherwise provided in a Deferral Agreementwith respect to amounts credited pursuant to Section 2.3(b). To the extent a Participants Accountis not vested at the time of his termination of employment for any reason, the non-vested portionshall be forfeited, and neither the Company nor any Employer shall have any further obligation tohim whatsoever with respect to the forfeited portion.
2.6 Time and Form of Payment. The vested balance in a Participants Account shall bepaid to the Participant in accordance with the terms of his Deferral Agreement.
2.7 Death Benefits.
(a) If a Participant dies while still employed, his Account shall be fully vested and shall bepaid to his Beneficiary in a single lump sum. If a Participant dies after his employment has beenterminated but before his Account has been paid in full, the remaining balance in his Account shallbe paid to his Beneficiary in a single lump sum.
(b) A Participants Beneficiary shall be the person or persons designated by the Participantin his Deferral Agreement. A Participant may change his Beneficiary from time to time without theconsent of the Beneficiary. Subject to rules, procedures, and limitations established by theAdministrator, a Beneficiary may be a entity (including a trust or nonprofit organization), and theParticipant may designate multiple or contingent Beneficiaries and specify the manner in which hisAccount will be divided among them. All designations of Beneficiaries, and revocations or changesin designations, shall be made in accordance with rules, procedures and limitations prescribed bythe Administrator. No designation of a Beneficiary, and no revocation or change in a designation,shall be effective until actually received by the Administrator in writing, and the Administratorsdetermination of a Participants Beneficiary, if made in good faith, shall be final and conclusiveon all parties.
(c) The determination of the Participants Beneficiary shall be made at the time of his deathor, if the Participant has elected payment in installments, on each date on which an installment isto be paid. If there is no designated Beneficiary living at the time of the Participants death,his Beneficiary shall be the person designated as his beneficiary under the S-CAP, or any similarretirement plan which permits the Participant to designate a beneficiary, as determined by theAdministrator in its sole discretion (regardless of whether such designation is invalid solely byreason of §401(a)(11) of the Code or §205 of ERISA by reason of the failure of the Participantsspouse to consent) or, if no beneficiary is designated under the S-CAP or any such other plan, hisestate. If the Participant has designated more than one Beneficiary and notspecified the mannerin which his Account shall be divided, it shall be divided among all living Beneficiaries at thetime of his death, per stirpes.
PAYMENT OF BENEFITS
3.1 Source of Payment. All payment of benefits under the Plan shall be made directlyfrom the general funds of the Participants Employer. Each Employer shall establish separatebookkeeping accounts to reflect its liability under the Plan and may, but shall not be obligatedto, invest in insurance or annuity contracts or other assets to assure a source of funds for thepayment of benefits, but any such bookkeeping account, insurance or annuity contracts, or otherinvestment shall constitute assets solely of such Employer, and Participants shall have no right,title or interest therein prior to payment of their benefits hereunder. The right of anyParticipant or other person to receive benefit payments under the provisions of this Plan shall beno greater than the right of any unsecured general creditor of the Participants Employer. ThisPlan shall not create nor be construed to create a trust or fiduciary relationship in favor of anyperson whatsoever.
3.2 Establishment of Trust. The Company may, but shall in no event be required to,establish one or more trusts and contribute, or cause Employers to contribute, amounts to suchtrusts to be used for the payment of benefits under this Plan. Any such trust shall be of the typecommonly referred to as a rabbi trust, and the Company or Employer shall be treated as the ownerof the assets of such trust for tax purposes in accordance with §671-§678 of the Code. The assetsof any such trust shall remain subject to the claims of creditors of the Company or the Employercontributing such assets, and no Participant or any other person shall have any beneficial interestin or other claim to the assets of any such trust beyond that of a general creditor as provided inSection 3.1. Any payments made to or on behalf of a Participant or Beneficiary from any such trustshall fully discharge the liability of the Company or Employer to such Participant or Beneficiaryunder the Plan to the extent of the amount so paid. The Administrator shall have the right toselect, remove, and replace the trustee thereof at any time in its sole discretion, and shall enterinto one or more agreements governing such trust containing such terms as it determines, and maymodify, amend or revoke any such agreements, all in its sole discretion.
3.3 Withdrawals for Financial Emergency. A Participant may withdraw part or all ofthe vested portion of his Account if the amount withdrawn is reasonably necessary to satisfy anunforeseeable financial emergency. Any such withdrawals shall be subject to such rules, proceduresand limitations as the Administrator may, in its sole discretion, determine. For purposes of thisSection 3.3, an unforeseeable financial emergency means a severe financial hardship to theParticipant resulting from a sudden and unexpected illness or accident of the Participant or one ofhis dependents (as defined in §152(a) of the Code), loss of the Participants property due tocasualty, or other similar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the control of the Participant. A financial hardship that is foreseeable or withinthe Participants control, such as the need or desire to purchase a residence or to send a child tocollege, shall not be considered an unforeseeable financial emergency. The determination ofwhether a Participants need for funds constitutes an unforeseeable financial emergency shall bemade in accordance with the requirements of§457 of the Code. The amount withdrawn may not exceed the amount necessary to satisfy thefinancial hardship (taking into account any tax payable on the withdrawal), determined after takinginto account other sources of
funds available to the Participant, including but not limited toreimbursement or compensation by insurance or otherwise, and the liquidation of other assets to theextent that such liquidation would not itself cause severe financial hardship.
3.4 Withholding and Payroll Taxes. The Administrator shall withhold, or shall directthe person making any payment to withhold, from payments made hereunder any taxes required to bewithheld from a Participants wages for the federal or any state or local government. To theextent that benefits hereunder are subject to tax under the Federal Insurance Contributions Act orany other law prior to the time that they become payable, the Administrator may withhold, or directthe Participants Employer to withhold, the amount of such taxes from any other compensation orother amounts payable to the Participant. The Administrators determination of the amount to be sowithheld shall be final and binding on all parties.
3.5 Payment on Behalf of Disabled or Incompetent Persons. If a Plan benefit ispayable to a minor or a person declared incompetent or to a person whom the Administrator, in itssole discretion, determines to be incapable of handling the disposition of property, theAdministrator may direct payment of such Plan benefit to the guardian, legal representative orperson having the care and custody of such minor or incompetent person, or to any other person,including any family member, whom the Administrator determines in its sole discretion to be bestsuited to receive and apply the payment for the benefit of such person. The Administrator mayrequire proof of incompetency, minority, incapacity or guardianship as it may deem appropriateprior to distribution of the Plan benefit. Such distribution shall completely discharge theCompany and the Participants Employer from all liability with respect to such benefit.
3.6 Missing Participants or Beneficiaries. If the Administrator is unable to locateany Participant, Beneficiary or other person entitled to benefits under this Plan, theAdministrator may, in its sole discretion, either cause all or a portion of such payment to beforfeited and to reduce its obligations under this Plan, or may pay all or a portion of suchbenefit to members of the missing persons family or such other person as it may determine in itssole discretion to be fair and equitable. Any payment made pursuant to this Section 3.6 shallfully discharge the obligation of the Company and all Employers under this Plan with respect to theamount so paid.
4.1 Plan Administrator. This Plan shall be administered by the Company, which shallbe the administrator for purposes of §3(16)(A) of the Employee Retirement Income Security Act of1974. The Company may designate one or more persons who may be officers or Employees of anyEmployer, to exercise any of its authority or carry out any of its duties under the Plan, but suchperson shall not be considered the administrator unless specifically so designated in aresolution of the Board. In the absence of any other designation, the Executive VicePresident-Human Resources and Corporate Services of Continental Casualty Company, or persons actingunder her supervision, shall be so designated. In addition, the Company has established anOperations Committee to oversee the operation of various retirement plans, and the OperationsCommittee shall have the authority on behalf of the Administrator to adopt rules, regulations andprocedures, to hear all appeals from denied claims under Section 4.4, and to consider all otherissues related to the administration of the Plan referred to it by the Executive VicePresident-Human Resources and Corporate Services and his delegates.
4.2 Administrators Powers. The Administrator shall have such powers as may benecessary to discharge its duties hereunder, including, but not by way of limitation, the followingpowers, rights and duties:
(a) Interpretation of Plan. The Administrator shall have the power,right and duty to construe and interpret the Plan provisions and to determine allquestions arising under the Plan including questions of Plan participation,eligibility for Plan benefits and the rights of Employees, Participants,Beneficiaries and other persons to benefits under the Plan and to determine theamount, manner and time of payment of any benefits hereunder.
(b) Plan Procedures. The Administrator shall have the power, rightand duty to adopt procedures, rules, regulations and forms to be followed byEmployees, Participants, Beneficiaries and other persons or to be otherwiseutilized in the efficient administration of the Plan and as are consistent with thePlan.
(c) Benefit Determinations. The Administrator shall have the power,right and duty to make determinations as to the rights of Employees, Participants,Beneficiaries and other persons to benefits under the Plan and to afford anyParticipant or Beneficiary dissatisfied with such determination with rightspursuant to a claims procedure adopted by the Administrator in accordance withSection 4.4.
(d) Enforcement of the Plan. The Administrator shall have the power,right and duty to enforce the Plan in accordance with the terms of the Plan and toenforce its procedures, rules or regulations.
(e) Maintenance of Plan Records. The Administrator shall beresponsible for preparing and maintaining records necessary to determine the rightsand benefits of Employees, Participants and Beneficiaries or other persons underthe Plan.
(f) Allocation of Duties. The Administrator shall be empowered toallocate fiduciary responsibilities and the right to employ agents (who may also beEmployees of the Company) and to delegate to them any of the administrative dutiesimposed upon the Administrator.
(g) Correction of Errors. To correct any errors made in thecomputation of benefits under the Plan, and, if a trust has been established, torecover any contributions made to such trust by mistake of fact or law.
4.3 Binding Effect of Rulings. Any ruling, regulation, procedure or decision of theAdministrator, including any interpretation of the Plan, which is made in good faith shall beconclusive and binding upon all persons affected by it. There shall be no appeal from any rulingby Administrator, except as provided in Section 4.4 below. When making a determination or acalculation, the Administrator shall be entitled to rely on information supplied by investmentmanagers, insurance institutions, accountants and other professionals including legal counsel forthe Administrator. Any rule or procedure established by the Administrator may alter any provisionof this Plan that is ministerial or procedural in nature without the necessity for a formalamendment of the Plan.
4.4 Claims Procedure.
(a) Any Participant or Beneficiary, or any other person asserting the right to receive abenefit under this Plan by virtue of his relationship to a Participant or Beneficiary (theClaimant), who believes that he has the right to a benefit that has not been paid, must file awritten claim for such benefit in accordance with the procedures established by the Administrator.All such claims shall be filed not more than one year after the Claimant knows, or with theexercise of reasonable diligence would have known, of the basis for such claim. The precedingsentence shall not be construed to require a Participant or Beneficiary to file a formal claim forthe payment of undisputed benefits in the normal course, but any claim that relates to the amountof any benefit shall in any event be filed not more than one year after payment of such benefitcommences. The Administrator may retain third party administrators and recordkeepers for thepurpose of processing routine matters relating to the payment of benefits, but correspondencebetween a Participant, Beneficiary or other person and such third parties shall not be consideredclaims for purposes of this Section, and a person shall not be considered a Claimant until he hasfiled a written claim for benefits with the Administrator.
(b) All claims for benefits shall be processed by the Administrator, and the Administratorshall furnish the Claimant within 90 days after receipt of such claim a written notice thatspecifies the reason for the denial, refers to the pertinent provisions of the Plan on which thedenial is based, describes any additional material orinformation necessary for properly completing the claim and explains why such material orinformation is necessary, and explains
the claim review procedures of this Section 4.4, and theClaimants right to bring an action under §502 of ERISA, subject to the restrictions of paragraph(e) if the request for review is unsuccessful. The 90 day period may be extended by up to anadditional 90 days if the Administrator so notifies the Claimant prior to the end of the initial 90day period, which notice shall include an explanation of the reason for the extension and anestimate of when the processing of the claim will be complete. If the Administrator determinesthat additional information is necessary to process the claim, the Claimant shall be given a periodnot less than 45 days to furnish the information, and the time for responding to the claim shall betolled during the period of time beginning on the date on which the Claimant is notified of theneed for the additional information and the day on which the information is furnished (or ifearlier the end of the period for furnishing the information).
(c) If the claim is denied in whole or in part, or if the decision on the claim is otherwiseadverse, the Claimant may, within 60 days after receipt of such notice, request a review of thedecision in writing. If the claimant requests a review, the Operations Committee (or such otherfiduciary as the Administrator may appoint for such purpose) shall review such decision. TheOperations Committees decision on review shall be in writing and furnished not more than five daysafter the meeting at which the review is completed, and shall include specific reasons for thedecision, written in a manner calculated to be understood by the Claimant, shall include specificreferences to the pertinent provisions of the Plan on which the decision is based, and shall advisethe Claimant of his right to bring an action under §502 of ERISA, subject to the limitations ofparagraph (e).
(d) The Operations Committee shall complete its review of the claim not later than its firstmeeting that is held at least 30 days after the request for review is received. If specialcircumstances require, such as the need to hold a hearing, require, the decision may be made by theOperations Committee not later than its third meeting held after the request for review isreceived, in which event the Claimant shall be notified of the reason for the delay not later thanfive days after the meeting at which the review would otherwise have been completed, which noticeshall explain the reason for the delay and include an estimate of the time at which the review willbe complete. Notwithstanding the foregoing, if at any time the Operations Committee (or any otherfiduciary designated to review appeals) is not scheduled to meet at least quarterly, the decisionon review shall be delivered to the Claimant not more than 60 days after the request for review isreceived, which may be extended to not more than 120 days if special circumstances require and thenotice of extension described above is furnished by the end of the initial 60 day period.
(e) As additional consideration for receipt of benefits hereunder, each Participant agrees andcovenants, on behalf of himself, his Beneficiaries, and all persons claiming through him, not toinitiate any action before any court, under §502 of ERISA or otherwise, or before anyadministrative agency or quasi-judicial tribunal, for any benefit under the Plan, without havingfirst filed a claim for such benefit and requested review of any adverse decision on such claim inaccordance with this Section and theprocedures established by the Administrator pursuant to this Section, and in any event notmore than 180 days after receipt of the decision on review of the adverse claim decision.
(f) The provisions of this Section are intended to comply with ERISA §503 and the Departmentof Labor regulations issued pursuant thereto, and shall be so construed and applied. Consistentwith such regulations, each Claimant shall have the right to have an authorized representative acton his behalf, to submit arguments and information in support of his claim, and to receive, uponwritten request and without charge, copies of all documents, records, or other information thateither (i) were relied upon in determining his benefit under the Plan, (ii) were submitted,considered, or generated in the course of making the benefit determination, even if not reliedupon, or (iii) demonstrate compliance with the administrative processes and safeguards of the claimand review procedure.
4.5 Indemnity. To the extent permitted by applicable law and to the extent that theyare not indemnified or saved harmless under any liability insurance contracts, any present orformer officers, Employees or directors of the Company, and each of them shall be indemnified andsaved harmless by the Company from and against any and all liabilities or allegations of liabilityto which they may be subjected by reason of any act done or omitted to be done in good faith in theadministration of the Plan, including all expenses reasonably incurred in their defense in theevent that the Company fails to provide such defense after having been requested in writing to doso.
AMENDMENT AND TERMINATION OF PLAN
5.1 Amendment. The Company may amend the Plan at any time by action of the Board, orany person to whom the Board may delegate such authority, except that no amendment shall decreasethe vested Account balance of any Participant as of the effective date of the amendment. The Boardhas delegated the authority to amend the Plan, with certain exceptions, to the Executive VicePresident-Human Resources and Corporate Services of Continental Casualty Company, and any amendmentexecuted by such officer shall be binding on all parties. In addition, the Administrator isauthorized pursuant to Section 4.3 to adopt rules and procedures that have the effect of amendmenttechnical, administrative or ministerial provisions of the Plan. By their execution of thisamendment and restatement of the Plan, each Employer ratifies and accepts all prior amendments tothe Plan, and agrees that in the future the Plan may be amended by action of the Company withoutconsent of the other Employers.
5.2 Termination. The Company may at any time terminate the Plan by action of theBoard. Upon termination, no further allocations shall be made to Accounts, but Accounts shallcontinue to be credited with earnings and shall be paid in accordance with the provisions of thePlan; provided, however, that upon termination, the Company may, but shall not be obligated to,provided that the Account balances of some or all Participants shall be fully vested and paid tosuch Participants in a lump sum, which shall fully discharge all obligations owed to suchParticipants under the Plan. Any Employer may at any time withdraw from the Plan by written noticeto the Administrator, in which event the Plan shall be considered terminated with respect to theParticipants employed by such Employer (or who were so employed at the time of their termination ofemployment), and the provisions of this Section 5.2 shall apply to such Participants only.
6.1 Status of Plan. This Plan is intended to be an unfunded plan maintained primarilyto provide retirement benefits for a select group of management Employees or highly compensatedEmployees within the meaning of §201(1), §301(a)(3), and §401(a)(1) of ERISA and Department ofLabor Regulations 29 C.F.R. §2520.104-23, and shall be so construed.
6.2 Nonassignability. Neither a Participant nor any other person shall have any rightto commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or anypart thereof, which are, and all rights to which are, expressly declared to be nonassignable andnontransferable. No part of the amounts payable shall, prior to actual payment, be subject togarnishment, seizure or sequestration for the payment of any debts owed by a Participant or anyother person, nor be transferable by operation of law in the event of a Participants or any otherpersons bankruptcy or insolvency. Notwithstanding the foregoing, the Company shall have the rightto offset any amount owed to it or the Participants Employer against the amount payable to aParticipant or his Beneficiary, or to defer payment until any dispute with respect to any amountowed has been resolved.
6.3 No Contract of Employment. The terms and conditions of this Plan shall not bedeemed to constitute a contract of employment between the Company or any Employer and theParticipant, and neither the Participant nor the Participants Beneficiary shall have any rightsagainst the Company or any Employer except as may otherwise be specifically provided herein.Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained inthe service of the Company or any Employer or to interfere with the right of the Company and eachEmployer to discipline or discharge him at any time.
6.4 Participant Litigation. In any action or proceeding regarding the Plan,Participants, Employees or former Employees of the Company or an Employer, their Beneficiaries orany other persons having or claiming to have an interest in this Plan shall not be necessaryparties and shall not be entitled to any notice or process. Any final judgment which is notappealed or appealable and may be entered in any such action or proceeding shall be binding andconclusive on the parties hereto and all persons having or claiming to have any interest in thisPlan. To the extent permitted by law, if a legal action is begun against the Company, an Employer,the Administrator, the trustee of any trust established hereunder, or any person acting on thebehalf or under the direction of any of the foregoing persons, by or on behalf of any person andsuch action results adversely to such person or if a legal action arises because of conflictingclaims to a Participants or other persons benefits, the costs to any such person of defending theaction will be charged to the amounts, if any, which were involved in the action or were payable tothe Participant or other person concerned. To the extent permitted by applicable law, acceptanceof participation in this Plan shall constitute a release of the Company, each Employer, theAdministrator and such trustee and their respective agentsfrom any and all liability and obligation not involving willful misconduct or gross neglect.
6.5 Participant and Beneficiary Duties. Persons entitled to benefits under the Planshall file with the Administrator from time to time such persons post office address and eachchange of post office address. Each such person entitled to benefits under the Plan also shallfurnish the Administrator with all appropriate documents, evidence, data or information which thecommittee considers necessary or desirable in administering the Plan.
6.6 Governing Law. The provisions of this Plan shall be construed and interpretedaccording to the laws of the State of Illinois to the extent not pre-empted by the laws of theUnited States.
6.7 Validity. In case any provision of this Plan shall be held illegal or invalid forany reason, such illegality or invalidity shall not affect the remaining parts hereof, but thisPlan shall be construed and enforced as if such illegal and invalid provision had never beeninserted herein.
6.8 Notices. Any notice or filing required or permitted to be given to theAdministrator or the Company under the Plan shall be sufficient if in writing and hand delivered,or sent by registered or certified mail to the Company at its principal executive offices, or toCompanys statutory agent. Notices shall be deemed given as of the date of delivery or, ifdelivery is made by mail, as of the date shown on the postmark on the receipt for registration orcertification. Any notice required or permitted to be given to a Participant shall be sufficientif in writing and hand delivered or sent by first class mail to the Participant at the last addresslisted on the records of the Company or such Participants Employer.
6.9 Successors. The provisions of this Plan shall bind and inure to the benefit ofeach Employer and its respective successors and assigns. The term successors as used herein shallinclude any corporate or other business entity which shall, whether by merger, consolidation,purchase or otherwise acquire all or substantially all of the business and assets of an Employer,and successors of any such corporation or other business entity.
IN WITNESS WHEREOF, the Company, and each Employer that was participating in the Plan on theeffective date of this Amendment, have caused this amendment and restatement of the Plan to beexecuted on July 1, 2003.
CNA FINANCIAL CORPORATION
|CONTINENTAL CASUALTY COMPANY|
By: /s/ Thomas Pontarelli
|By: /s/ Thomas Pontarelli|
Thomas Pontarelli, Executive Vice President –
|Thomas Pontarelli, Executive Vice President –|
Human Resources and Corporate Services
|Human Resources and Corporate Services|
of Continental Casualty Company