EX-10.1






Exhibit 10.1




 





Investment Agreement




Dated October 17, 2008




between




The Hartford Financial Services Group, Inc.




and




Allianz SE




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	Article I Purchase; Closing
	 	 	2	 
	1.1 Investment
	 	 	2	 
	1.2 Closing
	 	 	2	 
	1.3 Interpretation
	 	 	4	 
	Article II Representations and Warranties
	 	 	5	 
	2.1 Representations and Warranties of the Company
	 	 	5	 
	2.2 Representations and Warranties of the Investor
	 	 	5	 
	Article III Covenants
	 	 	5	 
	3.1 Filings; Other Actions
	 	 	5	 
	3.2 Stockholder Approval
	 	 	6	 
	3.3 Expenses
	 	 	8	 
	3.4 Sufficiency of Authorized Common Stock and Preferred Stock
	 	 	8	 
	3.5 Certain Notifications until Closing
	 	 	8	 
	3.6 Conduct of the Business
	 	 	8	 
	Article IV Additional Agreements
	 	 	9	 
	4.1 Standstill
	 	 	9	 
	4.2 Transfer Restrictions
	 	 	11	 
	4.3 Purchase for Investment
	 	 	14	 
	4.4 Legend
	 	 	14	 
	4.5 Information Rights and Confidentiality
	 	 	15	 
	4.6 Indemnity
	 	 	15	 
	4.7 Exchange Listing
	 	 	18	 
	4.8 Issuance of Securities
	 	 	18	 
	4.9 Rating Agencies
	 	 	18	 
	4.10 Certain Restrictions
	 	 	18	 
	4.11 Regulatory Treatment
	 	 	18	 
	4.12 Non-Solicitation
	 	 	19	 
	4.13 Public Announcements
	 	 	19	 
	4.14 Additional Covenants with respect to Debentures
	 	 	19	 
	4.15 Preemptive Rights
	 	 	21	 
	Article V Termination
	 	 	21	 
	5.1 Termination
	 	 	21	 






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	 	 	Page	 
	Article VI Miscellaneous
	 	 	22	 
	6.1 Amendment
	 	 	22	 
	6.2 Waiver of Conditions
	 	 	22	 
	6.3 Counterparts and Facsimile
	 	 	22	 
	6.4 Specific Performance
	 	 	22	 
	6.5
Governing Law; Submission to Jurisdiction, Etc.
	 	 	23	 
	6.6 Notices
	 	 	24	 
	6.7 Entire
Agreement, Etc.
	 	 	24	 
	6.8 Definition of “Affiliate”
	 	 	24	 
	6.9 Assignment
	 	 	25	 
	6.10 Severability
	 	 	25	 
	6.11 No Third Party Beneficiaries
	 	 	25	 
	6.12 Cooperation
	 	 	25	 
	6.13 Remarketing
	 	 	25	 
	6.14 Payments for Certain Transactions
	 	 	30	 
	6.15 Survival
	 	 	30	 






ii









 






List of Annexes




	 	 	 
	ANNEX A-1:

	 	SERIES D FORM OF CERTIFICATE OF DESIGNATION
	 
	 	 
	ANNEX A-2:

	 	SERIES B FORM OF CERTIFICATE OF DESIGNATION
	 
	 	 
	ANNEX A-3:

	 	SERIES C FORM OF CERTIFICATE OF DESIGNATION
	 
	 	 
	ANNEX B:

	 	FORM OF DEBENTURE AND SECOND SUPPLEMENTAL INDENTURE
	 
	 	 
	ANNEX C-1:

	 	FORM OF B WARRANT
	 
	 	 
	ANNEX C-2:

	 	FORM OF C WARRANT
	 
	 	 
	ANNEX D:

	 	FORM OF REGISTRATION RIGHTS AGREEMENT
	 
	 	 
	ANNEX E:

	 	FORM OF REPLACEMENT CAPITAL COVENANT
	 
	 	 
	ANNEX F:

	 	SCHEDULE OF DEFINITIONS AND REPRESENTATIONS AND WARRANTIES
	 
	 	 
	ANNEX G:

	 	DEBENTURE PURCHASERS






iii









 






INDEX OF DEFINED TERMS




	 	 	 
	Term	 	Location of Definition
	Affiliate
	 	6.8
	Agreement
	 	Recitals
	B Warrant
	 	Recitals C
	Bankruptcy Exceptions
	 	Annex F
	Beneficial Ownership; Beneficial Owner; Beneficially Own
	 	4.1(a)
	Board of Directors
	 	3.6
	business day
	 	1.3
	C Warrant
	 	Recitals C
	Certificate of Designation
	 	Annex F
	Certificate of Incorporation
	 	Annex F
	Change of Control
	 	4.1(c)
	CIC Debentures
	 	6.13(j)
	CIC Event
	 	6.13(i)
	CIC Fail Date
	 	6.13(i)
	Closing
	 	1.2(a)
	Closing Date
	 	1.2(a)
	Commission
	 	Annex F
	Common Stock
	 	Recitals B
	Company
	 	Recitals
	Company Approvals
	 	Annex F
	Company Financial Statements
	 	Annex F
	Company Indemnified Parties
	 	4.6(b)
	Company Reports
	 	Annex F
	Confidentiality Agreement
	 	4.5(b)
	Debenture; Debentures
	 	Recitals C
	Debenture Documentation
	 	Recitals C
	Debenture Purchasers
	 	Recitals C
	Eligible Recipients
	 	4.14(b)
	Emerging CIC Settlement Date
	 	6.13(i)
	Equivalent Securities
	 	4.8
	Exchange Act
	 	4.1(a)
	Existing CIC Settlement Date
	 	6.13(j)
	GAAP
	 	Annex F
	Fail Date
	 	6.13(e)
	Failed Remarketing
	 	6.13(e)
	Failed Remarketing Election Notice
	 	6.13(f)
	Governmental Authorities
	 	1.2(e)
	Indemnified Party
	 	4.6(c)
	Indemnifying Party
	 	4.6(c)
	Indenture
	 	Annex F
	Information
	 	4.5(b)
	Initial Stockholder Meeting
	 	3.2(a)






iv









 






	 	 	 
	Term	 	Location of Definition
	In-Kind Exercise
	 	6.13(a)
	Investor
	 	Recitals
	Investor Holder
	 	6.13(a)
	Investor Indemnified Parties
	 	4.6(a)
	Investor Material Adverse Effect
	 	Annex F
	Launch Date
	 	6.13(b)
	Listing Prospectus
	 	4.7
	Liens
	 	Annex F
	Losses
	 	4.6(a)
	Material Adverse Effect
	 	Annex F
	NYSE
	 	3.4
	Permitted Assignees
	 	4.14(b)
	Permitted Interest
	 	4.1(a)
	Permitted Transferee
	 	6.9
	Person
	 	Annex F
	Pre-Closing Period
	 	3.6
	Preferred Stock
	 	Recitals B
	Previously Disclosed
	 	Annex F
	Pro Rata Share
	 	4.15
	Purchase Price
	 	1.1
	Purchased Common Shares
	 	Recitals C
	Purchased Securities
	 	Recitals C
	Purchased Shares
	 	Recitals C
	Put Right
	 	6.13(h)
	Qualifying Auction
	 	4.2(c)
	Registration Rights Agreement
	 	1.2(c)(vii); Annex F
	Remarketed Debentures
	 	6.13(b)
	Remarketing
	 	6.13(b)
	Remarketing Agent
	 	6.13(d)(i)
	Remarketing Agreement
	 	6.13(d)(i)
	Remarketing Notice
	 	6.13(b)
	Remarketing Period
	 	6.13(f)
	Remarketing Value
	 	6.13(d)(i)
	Remarketing Window
	 	6.13(b)
	Resale Date
	 	6.13(e)
	Reset Rate
	 	6.13(g)
	ROFR Election
	 	4.2(c)(ii)
	SEC
	 	Annex F
	SEC Reports
	 	Annex F
	Second Supplemental Indenture
	 	Recitals C
	Securities
	 	4.2(e)
	Securities Act
	 	4.2(e)
	Series B Preferred Shares
	 	Recitals C
	Series C Preferred Shares
	 	Recitals C
	Series D Preferred Shares
	 	Recitals C
	Settlement
	 	6.13(k)
	Settlement Date
	 	6.13(f)






v









 






	 	 	 
	Term	 	Location of Definition
	Significant Subsidiary; Significant Subsidiaries
	 	Annex F
	Standstill Period
	 	4.1(a)
	Statutory Statements
	 	Annex F
	Stockholder Proposal
	 	Annex F
	Subsequent Stockholder Meeting
	 	3.2(a)
	Subsidiary
	 	Annex F
	Success Date
	 	6.13(e)
	Success Notice
	 	6.13(d)(i)
	Successful Remarketing
	 	6.13(e)
	Tax Gross-Up
	 	4.14(b)
	Tax Trigger
	 	4.14(c)
	Threshold Amount
	 	4.6(d)
	Trading Day
	 	4.2(c)
	Tranche
	 	6.13(g)
	Transaction Agreement
	 	Recitals A
	Transaction Documents
	 	Annex F
	Transaction; Transactions
	 	Annex F
	Transfer
	 	4.2(a)
	Transfer Notice
	 	4.2(c)(i)
	Transferor
	 	4.2(c)(i)
	Transferred Shares
	 	4.2(c)(i)
	Treaty
	 	4.14(b)
	Voting Debt
	 	Annex F
	Warrants
	 	Recitals C
	Warrant B Common Shares
	 	Recitals C
	Warrant B Shares
	 	Recitals C
	Warrant C Common Shares
	 	Recitals C
	Warrant Common Shares
	 	Annex F
	Warrant C Shares
	 	Recitals C
	Warrant Preferred Shares
	 	Annex F
	Warrant Shares
	 	Recitals C
	Withholding Tax Event
	 	4.14(c)






vi









 





          Investment Agreement, dated October 17, 2008 (this “Agreement”), between The Hartford
Financial Services Group, Inc., a Delaware corporation (the “Company”), and Allianz SE, a European
Company incorporated in the Federal Republic of Germany and organized under the laws of the Federal
Republic of Germany and the European Union (the “Investor”). Capitalized terms used herein that
are not otherwise defined herein shall have the meanings ascribed to such terms in Part I of Annex
F hereto.




Recitals:




          A. The Transaction Agreement. The Company and the Investor entered into a binding and
enforceable transaction agreement dated October 6, 2008 (the “Transaction Agreement”), pursuant to
which the Investor agreed to purchase from the Company, and the Company agreed to sell to the
Investor, the Purchased Securities and the parties hereto agreed to enter into this Agreement and
execute the other Transaction Documents to which they are contemplated to be a party.




          B. The Company. As of the date hereof, the Company has 750,000,000 authorized shares
of Common Stock, $0.01 par value per share (“Common Stock”), of which 300,354,288 shares were
outstanding as of September 30, 2008 and 50,000,000 authorized shares of preferred stock, par value
$0.01 per share (“Preferred Stock”) of which no shares are outstanding.




          C. The Issuance. The Company intends to issue to the Investor (and/or its Permitted
Transferees, or with respect to the Debentures, the persons listed in Annex G hereto (the
“Debenture Purchasers”)), and the Investor (and/or its Permitted Transferees, or with respect to
the Debentures, the Debenture Purchasers) intends to purchase from the Company, (i) 6,048,387
shares of Series D non-voting contingent convertible Preferred Stock (the “Series D Preferred
Shares”) at a price of $124 per share, convertible into 24,193,548 shares of Common Stock (the
“Purchased Common Shares” and, together with the Series D Preferred Shares, the “Purchased
Shares”), having the terms (including with respect to conversion) set forth in the Certificate of
Designation in the form attached hereto as Annex A-1; (ii) $1,750,000,000 aggregate
principal amount of its 10% Fixed-to-Floating Rate Junior Subordinated Debentures due 2068, having
the terms set forth in the Second Supplemental Indenture (the “Second Supplemental Indenture”) and
the Debentures (the “Debentures”), in each case in the form attached hereto as Annex B
(collectively, the “Debenture Documentation”); (iii) a warrant having the terms provided in
Annex C-1 (the “B Warrant”) to purchase 34,806,452 shares of Common Stock (the “Warrant B
Common Shares”) and/or, as set forth in such warrant, 8,701,613 shares of Series B non-voting
contingent convertible Preferred Stock (the “Series B Preferred Shares”) convertible into
34,806,452 shares of Common Stock, having the terms (including with respect to conversion) set
forth in the Certificate of Designation in the form attached hereto as Annex A-2 (the
Warrant B Common Shares and the Series B Preferred Shares, together the “Warrant B Shares”); and
(iv) a warrant having the terms provided in Annex C-2 (the “C Warrant”, and together with the B
Warrant, the “Warrants”) to purchase 34,308,872 shares of Common Stock (the “Warrant C Common
Shares”) and/or, as
set forth in such warrant, 8,577,218 shares of Series C non-voting contingent




1









 




convertible
Preferred Stock (the “Series C Preferred Shares”) convertible into 34,308,872 shares of Common
Stock, having the terms (including with respect to conversion) set forth in the Certificate of
Designation in the form attached hereto as Annex A-3, (the Warrant C Common Shares and the
Series C Preferred Shares, together the “Warrant C Shares”). (The B Warrant, the C Warrant, the
Series D Preferred Shares and the Debentures, the “Purchased Securities”, and the Warrant B Shares
and Warrant C Shares, the “Warrant Shares”). When issued, the Series B Preferred Shares, the
Series C Preferred Shares and the Series D Preferred Shares will be evidenced by a share
certificate incorporating the terms set forth in the respective Certificates of Designation made a
part of the Company’s Amended and Restated Certificate of Incorporation by the filing of such
Certificates of Designation with the Secretary of State of the State of Delaware.




          D. Remarketing. As set forth in Section 6.13 hereof, the Company may engage in a
Remarketing of the Debentures in connection with the exercise of the Warrants. The Company
currently intends to use the direct or indirect proceeds from any Successful Remarketing to repay
other outstanding debt as soon as practicable following settlement, and does not intend to use such
proceeds to repurchase any Common Stock.




          NOW, THEREFORE, in consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:




Article I




Purchase; Closing




          1.1 Investment. On the terms and subject to the conditions set forth in this
Agreement, at the Closing (as hereinafter defined), the Investor (and/or its Permitted Transferees
(as hereinafter defined), or with respect to the Debentures, the Debenture Purchasers) will
purchase from the Company, and the Company will issue in a private placement and sell to the
Investor and/or its Permitted Transferees or the Debenture Purchasers, the Purchased Securities for
an aggregate purchase price of $2,500,000,000 (the “Purchase Price”).




          1.2 Closing.




          (a) Subject to satisfaction or waiver of the conditions set forth in this Agreement, the
closing of the Transactions (the “Closing”) will take place at the offices of Cleary Gottlieb Steen
& Hamilton LLP, One Liberty Plaza, New York, NY, 10006, or at such other location as the parties
may agree, at 9:00 a.m., New York time, on October 17, 2008; provided that, if such
conditions have not been satisfied or waived on such date, the Closing shall occur on the first
business day after the date on which all of such conditions (excluding those conditions which by
their nature are to be satisfied as part of the Closing) are satisfied (or, to the extent
permitted, waived) and; provided, further, that the parties shall employ their
reasonable best efforts to cause all the conditions to Closing to be satisfied on October 17, 2008
or as promptly as practicable thereafter. The date on which the
Closing occurs is referred to in this Agreement as the “Closing Date.”




2









 





          (b) Subject to the fulfillment or waiver of the conditions to the Closing in this Section 1.2,
at the Closing, the Company will deliver the Purchased Securities, in each case as evidenced by one
or more certificates dated the Closing Date and bearing appropriate legends as set forth in the
Transaction Documents, in exchange for payment in full of the Purchase Price by wire transfer of
immediately available United States funds to a bank account that has been designated by the Company
at least two (2) business days prior to the Closing Date.




          (c) The obligation of the Investor (and/or its Permitted Transferees or the Debenture
Purchasers) to consummate the Closing is subject to the fulfillment (or waiver by the Investor) at
or prior to the Closing of each of the following conditions:





     (i) the representations and warranties of the Company made in Section 2.1 of this
Agreement shall be true and correct as though made on and as of the Closing Date (other
than representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct only as of such date);




     (ii) the Company shall have complied in all material respects with its obligations
required to be performed by it under this Agreement at or prior to the Closing;




     (iii) the Company shall have provided to the Investor a certificate delivered by its
Chief Executive Officer and Chief Financial Officer, acting in their official capacities on
behalf of the Company, that the conditions in clauses (c)(i) and (c)(ii) above have been
satisfied;




     (iv) the Company shall have delivered at the Closing the Series D Preferred Shares to
the Investor or its Permitted Transferee(s);




     (v) the Company shall have duly executed the Second Supplemental Indenture and duly
executed and delivered at the Closing the Debentures to the Debenture Purchasers;




     (vi) the Company shall have duly executed and delivered at the Closing the Warrants to
the Investor or its Permitted Transferee(s);




     (vii) the Company shall have duly executed and delivered the Registration Rights
Agreement to the Investor (the “Registration Rights Agreement”) in the form attached hereto
as Annex D, with such changes as the Investor may approve in writing;




     (viii) the Company shall have duly executed the Replacement Capital Covenant in the
form attached hereto as Annex E, with such changes as the Investor may approve in
writing;




     (ix) the Company shall have filed with the Secretary of State of the State of Delaware
the Certificates of Designation; and



3









 






     (x) the Company shall have provided to the Investor legal opinions, in the forms
agreed prior to the date hereof and customary closing documents as may reasonably be
requested by the Investor. 



          (d) The obligation of the Company to consummate the Closing is subject to the fulfillment (or
waiver by the Company) at or prior to the Closing of each of the following conditions:





     (i) the representations and warranties of the Investor made in Section 2.2 of this
Agreement shall be true and correct as though made on and as of the Closing Date (other
than representations and warranties that by their terms speak as of another date, which
representations and warranties shall be true and correct only as of such date);




     (ii) the Investor shall have complied in all material respects with its obligations
required to be performed by it under this Agreement at or prior to the Closing;




     (iii) the Investor shall have provided to the Company a certificate delivered by an
appropriate executive officer of the Investor, acting in his or her official capacity on
behalf of the Investor, that the conditions in clauses (d)(i) and (d)(ii) above have been
satisfied;




     (iv) the Investor (and/or its Permitted Transferees or the Debenture Purchasers) shall
have delivered the payment in full of the Purchase Price in accordance with Section 1.2(a);
and




     (v) the Investor shall have provided the Company all legal opinions, in the forms
agreed prior to the date hereof and customary closing documents as may reasonably be
requested by the Company.



          (e) The obligation of the Company and the Investor to consummate the Closing is also subject
to the receipt at or prior to the Closing of any material regulatory approvals of any United States
and other governmental or regulatory authorities (collectively, “Governmental Authorities”)
necessary for the Closing to occur (it being understood that neither the Company nor the Investor
currently anticipates that any such approval is necessary).




          1.3 Interpretation. When a reference is made in this Agreement to “Recitals,”
“Articles,” “Sections,” or “Annexes,” such reference shall be to a Recital, Article or Section of,
or Annex to, this Agreement unless otherwise indicated. Annex F is hereby incorporated in its
entirety in, and forms part of, this Agreement. The terms defined in the singular have a comparable
meaning when used in the plural, and vice versa. References to “herein,” “hereof,” “hereunder” and
the like refer to this Agreement (including Annex F) as a whole and not to any particular section
or provision, unless the context requires otherwise. The table of contents and headings contained
in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the
words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.” No rule of construction against the draftsperson shall be applied in connection with
the interpretation or enforcement of this Agreement, as




4









 




this Agreement is the product of
negotiation between sophisticated parties advised by counsel. All references to “$” or “dollars”
mean the lawful currency of the United States of America. Except as expressly stated in this
Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation
as amended, modified, supplemented or replaced from time to time (and, in the case of statutes,
include any rules and regulations promulgated under the statute) and to any section of any statute,
rule or regulation include any successor to the section. References to a “business day” shall mean
a day on which banking institutions in the City of New York are not authorized or obligated by law
to be closed for banking business.




Article II




Representations and Warranties




          2.1 Representations and Warranties of the Company. The Company makes for the benefit
of the Investor, as of the date of this Agreement and as of the Closing Date (except to the extent
made only as of a specified date in which case as of such date), the representations and warranties
set forth in Part II of Annex F.




          2.2 Representations and Warranties of the Investor. The Investor makes for the
benefit of the Company, as of the date of this Agreement and as of the Closing Date (except to the
extent made only as of a specified date in which case as of such date), the representations and
warranties set forth in Part III of Annex F.




Article III




Covenants




          3.1 Filings; Other Actions. (a) The Investor, on the one hand, and the Company, on
the other hand, will cooperate and consult with the other and use reasonable best efforts to
prepare and file all necessary documentation, to effect all necessary applications, notices,
petitions, filings and other documents, and to obtain all material permits, consents, orders,
approvals and authorizations of, or any exemption by, all third parties and Governmental
Authorities, and the expiration or termination of any applicable waiting period, necessary or
advisable to consummate the Transactions (it being understood that no such action is necessary for
the Closing to occur) and to perform the covenants contemplated by this Agreement, on the terms and
subject to the conditions set forth herein. Each party shall execute and deliver both before and
after the Closing such further certificates and other documents and take such other actions as the
other party may reasonably request to consummate or implement the Transactions (it being understood
that no such action is necessary for the Closing to occur) or to evidence such events or matters.
Without limiting the foregoing, the Investor will use its reasonable best efforts to promptly
obtain or submit, and the Company will cooperate as may reasonably be requested by the Investor to
help the Investor
obtain or submit, as the case may be, as promptly as practicable, the approvals and
authorizations of, filings and registrations with, and notifications to, or expiration or
termination of any applicable waiting period, under the HSR Act or applicable




5









 




competition or merger
control laws of other jurisdictions (if any), all notices to and, to the extent required by
applicable law or regulation, consents, approvals or exemptions from insurance regulatory
authorities, for the Transactions (it being understood that no such action is necessary for the
Closing to occur). At the Company’s prior written request, prior to making any filing with the
insurance regulatory authorities, the Investor shall cause an appropriate representative of the
Investor to meet, in person, with the insurance regulatory authorities of the State of Connecticut
and the Company’s other principal insurance regulators to describe the Transactions. Without
limiting the foregoing, the Investor and the Company shall prepare and file a Notification and
Report Form pursuant to the HSR Act in connection with the Transactions as promptly as practicable
after the date of this Agreement. The Investor and the Company will have the right to review in
advance, and to the extent practicable each will consult with the other, in each case subject to
applicable laws relating to the exchange of information, all the information relating to such other
party, and any of their respective Affiliates, which appears in any filing made with, or written
materials submitted to, any third party or any Governmental Authority in connection with the
Transactions; for the avoidance of doubt nothing contained in this Section 3.1 shall require either
party to share information contained in Item 4, Item 5 or Item 6 on the HSR Notification and Report
Form, or any documents submitted as part of such party’s response to Item 4. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees to keep the other party apprised of the status of matters
referred to in this Section 3.1. The Investor shall promptly furnish the Company, and the Company
shall promptly furnish the Investor, to the extent permitted by applicable law, with copies of
written communications received by it or its subsidiaries from, or delivered by any of the
foregoing to, any Governmental Authority in respect of the Transactions.




          3.2 Stockholder Approval.




          (a) Unless this Agreement has been terminated pursuant to Section 5.1, the Company shall call
a special meeting of its stockholders promptly following the Closing but in any event not later
than 180 days following the Closing (such meeting, the “Initial Stockholder Meeting”), to submit
the Stockholder Proposal to its stockholders for approval. In the event that the Stockholder
Proposal is not approved by the Company’s stockholders at the Initial Stockholder Meeting, the
Company shall call another meeting of its stockholders (which may be a special meeting or Company’s
2009 annual meeting) by not later than the first anniversary of the Closing Date to submit the
Stockholder Proposal to its stockholders for approval (the “Subsequent Stockholder Meeting”). The
Board of Directors has unanimously adopted a resolution to recommend to the Company’s stockholders
that such stockholders vote in favor of the Stockholder Proposal. In connection with both the
Initial Stockholder Meeting and the Subsequent Stockholder Meeting, if any, the Company shall
timely prepare (and the Investor will reasonably cooperate with the Company to prepare) and file
with the SEC a preliminary proxy statement, shall use its reasonable best efforts to respond to any
comments of the SEC or its staff and to cause a definitive proxy statement related to such
stockholders’ meeting to be mailed to the Company’s stockholders in a timely
manner after clearance thereof by the SEC, and shall use its reasonable best efforts to
solicit proxies for such stockholder approval. The Company shall notify the Investor promptly of
the receipt of any comments from the SEC or its staff with




6









 




respect to the proxy statement and of
any request by the SEC or its staff for amendments or supplements to such proxy statement or for
additional information and will supply the Investor with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to such proxy statement. If at any time prior to such stockholders’ meeting
there shall occur any event that is required to be set forth in an amendment or supplement to the
proxy statement, the Company shall as promptly as practicable prepare and mail to its stockholders
such an amendment or supplement. Each of the Investor and the Company agrees promptly to correct
any information provided by it or on its behalf for use in the proxy statement if and to the extent
that such information shall have become false or misleading in any material respect, and the
Company shall as promptly as practicable prepare and mail to its stockholders an amendment or
supplement to correct such information to the extent required by applicable laws and regulations.
The Company shall consult with the Investor prior to filing such proxy statement, or any amendment
or supplement thereto, and provide the Investor with a reasonable opportunity to comment thereon;
provided, however, that the Company shall retain the right to determine the final
content of such proxy statement and any amendment or supplement thereto. The Investor agrees to
promptly furnish the Company all information concerning itself, its Affiliates, directors,
officers, partners and stockholders and such other matters as may be reasonably necessary or
advisable in connection with the proxy statement in connection with any such stockholders’ meeting.
Unless this Agreement has been terminated pursuant to Section 5.1, the Investor hereby agrees that
at any meeting of the stockholders of the Company held to vote on the Stockholder Proposal, however
called, the Investor shall vote, or cause to be voted, all of the shares of Common Stock
Beneficially Owned by Investor and its Affiliates in favor of the Stockholder Proposal.




          (b) If the Stockholder Proposal is not approved by the Company’s stockholders at the Initial
Stockholder Meeting, the Company shall pay to the Investor $75,000,000 and, if the Stockholder
Proposal is not approved by the Company’s stockholders at the Subsequent Stockholder Meeting or if
the Company fails to hold the Subsequent Stockholder Meeting by the first anniversary of the
Closing Date, the Company shall pay to the Investor an additional $50,000,000. Any payments under
this paragraph (b) shall be made following the date of the applicable stockholder meeting on the
second business day following the receipt by the Company of a notice from the Investor designating
an account to which such payment should be made, by wire transfer of immediately available funds to
such account.




          (c) In addition, in the event that the Stockholder Proposal is not approved by the Company’s
stockholders at either the Initial Stockholder Meeting or the Subsequent Stockholder Meeting, in
addition to the payments provided for in Section 3.2(b), at the request of the Investor, the
Company shall use its reasonable best efforts to obtain the listing of the Series C Preferred
Shares on The New York Stock Exchange Inc. or other national securities exchange where the Common
Stock is listed or, if such a listing is not possible after reasonable best efforts, on
any other national securities exchange identified by the Investor, in each case, by the third
anniversary of the Closing Date or as promptly as practicable thereafter.




7









 





          3.3 Expenses. Each of the parties hereto will bear and pay all costs and expenses
incurred by it or on its behalf in connection with the Transactions, including fees and expenses of
its own financial or other consultants, investment bankers, accountants and counsel, except as
otherwise agreed in any Transaction Document by the party bearing such cost or expense.




          3.4 Sufficiency of Authorized Common Stock and Preferred Stock. During the period
from the Closing Date until the earlier of (a) the date on which the Warrants have been fully
exercised for Warrant Preferred Shares or (b) the date on which the Warrants may be exercised for
such Warrant Common Shares in accordance with its terms, the Company shall at all times have
reserved for issuance, free of preemptive or similar rights, a sufficient number of shares of
authorized and unissued Preferred Stock to effectuate exercise of the Warrants for Warrant
Preferred Shares, after taking into account all other commitments and contingent covenants of the
Company to issue Preferred Stock to third parties. During the period from the Closing Date until
the date on which the Warrants have been fully exercised and no Warrant Preferred Shares or Series
D Preferred Shares remain outstanding, the Company shall at all times have reserved for issuance,
free of preemptive or similar rights, a sufficient number of shares of authorized and unissued
Common Stock to effectuate such exercise or the conversion of such shares, as the case may be,
after taking into account all other commitments and contingent covenants of the Company to issue
Common Stock to third parties. Nothing in this Section 3.4 shall preclude the Company from
satisfying its obligations in respect of the exercise of either Warrant or the conversion of
Warrant Preferred Shares or Series D Preferred Shares by delivery of shares of Common Stock, which
are held in the treasury of the Company. As soon as practicable following the Closing, the Company
shall, at its expense, cause the Common Stock into which the Series D Preferred Shares will be
convertible and, following receipt of the requisite approvals to permit each Warrant to be
exercisable for, and the Warrant Preferred Shares to be convertible into, Common Stock, the Warrant
Common Shares to be listed on the New York Stock Exchange (“NYSE”) at the time they become freely
transferable in the public market under the Securities Act, subject to official notice of issuance,
and shall maintain such listing on the NYSE for so long as any Common Stock is listed on the NYSE.




          3.5 Certain Notifications until Closing. From the date of this Agreement until the
Closing, each party shall promptly notify the other party of any fact, event or circumstance of
which it is aware and which would be reasonably likely to cause any representation or warranty of
such party contained in this Agreement to be untrue or inaccurate in any material respect or to
cause any covenant or agreement of such party contained in this Agreement not to be complied with
or satisfied in any material respect; provided, however, that the delivery of any
notice pursuant to this Section 3.5 shall not limit or affect any rights of or remedies available
to the other party.




          3.6 Conduct of the Business. Prior to the earlier of the Closing Date and the
termination of this Agreement pursuant to Section 5.1 (the “Pre-Closing Period”), the Company
shall, and shall cause each of the Company’s
Significant Subsidiaries to, use commercially reasonable efforts to carry on its business in
all material respects in the ordinary course of business and use reasonable best efforts to
maintain and preserve in all material respects its and




8









 




such Significant Subsidiary’s business
(including its organization, assets, properties, goodwill and insurance coverage) and its business
relationships with customers, strategic partners, suppliers, distributors and others having
business dealings with it; provided that nothing in this sentence shall (i) limit any
actions that the board of directors of the Company (the “Board of Directors”) may, in good faith,
determine to be consistent with, or (ii) require any actions that the Board of Directors may, in
good faith, determine to be inconsistent with, its duties or the Company’s obligations under
applicable law or imposed by any Governmental Authority. During the Pre-Closing Period, (i) the
Company shall not declare or pay any dividend or distribution on the Common Stock, except for
regular quarterly cash dividends paid by the Company on the Common Stock in the ordinary course,
with usual record and payment dates and in accordance with the Company’s current dividend policy
announced prior to the date hereof and (ii) if the Company takes any action that would require any
antidilution adjustment to be made under the Warrants or the Series D Preferred Shares as if issued
on the date of this Agreement, the Company shall make appropriate adjustments such that the
Investor will receive the benefit of such transaction as if the securities to be purchased by the
Investor at the Closing had been outstanding as of the date of such action.




Article IV




Additional Agreements




          4.1 Standstill.




          (a) Subject to (i) the accuracy of the representations and warranties of the Company made in
Article II of this Agreement in all material respects as of the date hereof (or, with respect to
representations and warranties that by their terms speak as of another date, as of such other
date), and to the extent made as of the Closing, as of the Closing and (ii) compliance by the
Company in all material respects with its obligations under the Transaction Documents, the Investor
agrees that, until October 6, 2018 (the “Standstill Period”), it will not, and will not cause any
of its Affiliates and will not permit any of its Subsidiaries or Permitted Transferees, acting
alone or as part of any “group” (as such term is used under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”),) to take or propose (whether publicly or otherwise) to take any of
the following actions: (i) acquisition of Beneficial Ownership (as defined hereinafter) of any
Common Stock or other securities or rights convertible into or exchangeable for Common Stock, (ii)
acquisition of material assets of the Company, (iii) conduct of any tender offer or exchange offer
involving any shares of Common Stock (other than shares held by the Investor and its subsidiaries),
(iv) any merger, other business combination, recapitalization restructuring, liquidation,
dissolution or other extraordinary transaction with respect to the Company, or (v) any
“solicitation” of “proxies” (as such terms are used under the Exchange Act) or consents with
respect to any voting securities of the Company; provided, however, that this
Section 4.1(a) shall not prevent the Investor and its Subsidiaries from acquiring Beneficial
Ownership of any Common Stock or other securities or rights convertible into or exchangeable
for Common Stock if, after giving effect to such acquisition, the aggregate amount of all
Common Stock Beneficially Owned by the Investor, its Subsidiaries, Affiliates, and its Permitted
Transferees constitutes less than 25% (the “Permitted Interest”) of




9









 




the issued and outstanding
Common Stock on a fully-diluted basis. In addition, the Investor also agrees not to request during
the Standstill Period that the Company (or its directors, officers, employees or agents) amend or
waive any provision of this Section 4.1(a) (including this sentence) and provided
further, that the Investor will not be deemed to be in violation of this Section 4.1(a) if
its Beneficial Ownership of Common Stock exceeds the Permitted Interest as a result of (i)
anti-dilution adjustments in accordance with the terms of the Warrant, (ii) a decrease in the
number of shares of Common Stock outstanding on a fully diluted basis at any time. For purposes of
this Agreement, “Beneficial Ownership” shall be determined in accordance with Rules 13d-3 and 13d-5
under the Exchange Act, including the provision that any member of a “group” shall be deemed to
have Beneficial Ownership of all securities Beneficially Owned by other members of the group.
“Beneficial Owner” and “Beneficially Own” shall have conforming definitions. For the avoidance of
doubt, securities held by an Affiliate of Investor in its capacity as an investment advisor or
investment manager in the ordinary course of its business and for the account of a client (other
than the Investor or an Affiliate of the Investor) shall not be “Beneficially Owned” by the
Investor and its Affiliates for purposes of this Section 4.1 so long as there is no agreement,
arrangement or understanding between the Affiliate investment advisor or investment manager, on the
one hand, and the Investor or any other Affiliate of the Investor, on the other hand, with respect
to the holding, acquisition, disposition or voting of such securities or the exercise of influence
over the affairs of the Company.




          (b) The Investor’s obligations set forth in Section 4.1(a) above shall terminate in the event
that (i) a Change of Control (as defined hereinafter) occurs, (ii) the Company publicly announces
its intent to enter into any transaction that, if consummated, would constitute a Change of
Control, (iii) a third party publicly announces its interest in or intention to pursue a
transaction that, if consummated, would constitute a Change of Control, unless within thirty (30)
days after such third party announcement, the Company publicly announces that it does not intend to
enter into any such transaction involving such third party, or (iv) the Investor, its Subsidiaries
and its Permitted Transferees have ceased for a period of two years to Beneficially Own Common
Stock or securities or rights convertible into or exchangeable for Common Stock (other than
investments made in the ordinary course of business and solely for passive investment purposes
constituting less than 5% of any outstanding series of securities).




          (c) For the purposes of this Agreement, “Change of Control” means any event or series of
events by which (i) any “person” or “group” (as such terms are used under the Exchange Act), other
than the Company (acting solely for its own account and not as a member of any “group”) or the
Investor, its Subsidiaries and its Permitted Transferees, shall have acquired Beneficial Ownership
of thirty-five percent (35%) or more of the outstanding shares of Common Stock on a fully-diluted
basis, (ii) all or substantially all of the consolidated assets of the Company are, directly or
indirectly, sold, leased, exchanged or transferred (including without limitation through the
acquisition of derivative ownership interests or bulk reinsurance arrangements with respect to any
material line or block of insurance business), (iii) the Company is consolidated, merged,
amalgamated, reorganized or
otherwise enters into a similar transaction in which it is combined with another person other
than the Investor or any of its Subsidiaries or its Permitted Transferees, unless the persons who
Beneficially Own the outstanding Common




10









 




Stock immediately before consummation of the transaction
Beneficially Own a majority of the outstanding common stock of the combined or surviving entity
immediately thereafter and in substantially the same proportions as they did prior to the
transaction and directors of the Company make up a majority of the board of directors (or similar
governing entity) of the combined or surviving entity immediately after such transaction, (iv) the
majority of the seats (other than vacant seats) on the board of directors (or similar governing
body) of the Company or such combined or surviving entity ceases to be occupied by persons who
either (a) were members of the Board of Directors on the date hereof or (b) were elected or
nominated for election by the Board of Directors (a majority of whom were directors on the date
hereof or whose election or nomination for election was previously approved by a majority of such
directors), (v) the Company and its subsidiaries cease to be principally engaged in the insurance
business, (vi) any bankruptcy, rehabilitation or similar event relating to the Company or any of
its Significant Subsidiaries that is a regulated insurer or reinsurer occurs, or (vii) the holders
of capital stock of the Company approve of any plan or proposal for the liquidation or dissolution
of the Company or of any of its Significant Subsidiaries that is a regulated insurer or reinsurer.




          (d) Prior to the expiration of the Standstill Period (but only so long as the Investor and its
Subsidiaries Beneficially Own Common Stock or Warrants representing at least ten percent (10%) of
the outstanding Common Stock on a fully-diluted basis), the Company shall not enter into any
binding agreement to effect a merger or other business combination transaction with a third party
referred to in clause (iii) of the definition of “Change of Control” in Section 4.1(c) above (or
agree to pay a break-up fee or similar compensation to the third party with respect to any such
potential transaction), unless the Company has permitted the Investor a reasonable period of time
(not less than ten business days plus any additional time that may be necessary to conduct a
reasonable due diligence investigation to the extent such third party had such opportunity) to make
a bona fide competing proposal to the Company.




          4.2 Transfer Restrictions.




          (a) Until the third anniversary of the Closing Date, the Investor shall not, and shall cause
its Permitted Transferees not to, directly or indirectly, (i) transfer, sell or otherwise dispose
of (“Transfer”) any of the Warrants or the Warrant Shares, (ii) lend, hypothecate or permit any
custodian to lend or hypothecate any of the Warrants or the Warrant Shares, or (iii) engage in any
hedging transaction with respect to any of the Warrants or the Warrant Shares that constitutes the
economic equivalent of a disposition, whether settled in cash or physical securities, in each case
without the prior written consent of the Company. Exercises of the Warrants for Warrant Shares in
accordance with the terms of the Warrants shall not be deemed Transfers. Notwithstanding the
foregoing, Section 4.2(a) shall not prevent the Investor or its Permitted Transferees from
Transferring any or all of Warrants or Warrant Shares, at any time, to any Affiliate of the
Investor, who agrees to be bound by Sections 4.1, 4.2, 4.3 and 4.4 in accordance with the terms of
Section 6.9.




          (b) In addition, until the third anniversary of the Closing Date, without the prior written
consent of the Company, the Investor shall not, and shall




11









 




cause its Permitted Transferees not to,
Transfer any of the Purchased Shares, except (i) in the public markets pursuant to a firm
commitment underwritten offering on customary terms and conditions and (ii) in broker’s
transactions over a stock exchange in compliance with the securities laws or in a private
transaction or series of private transactions in which a person or “group” (as defined under the
Exchange Act), other than the Investor and its Affiliates, acquires Beneficial Ownership of the
Purchased Shares constituting (A) less than 5% of the then outstanding Common Stock or (B) 5% or
more of the then outstanding Common Stock, subject, in the case of letter (B) only, to compliance
with the right of first refusal described in Section 4.2(c). Notwithstanding the foregoing, this
Section 4.2(b) shall not prevent the Investor Permitted Transferees from Transferring any or all of
the Purchased Shares, at any time, to any Affiliate of the Investor, who agrees to be bound by
Sections 4.1, 4.2, 4.3 and 4.4 in accordance with the terms of Section 6.9.




          (c) (i) The Investor or its applicable Affiliate (a “Transferor”) may not Transfer any
securities subject to the right of first refusal referred to in clause (b) above unless the
Transferor has notified the Company in writing that it has received a bona fide offer or is a
conducting a Qualifying Auction (as defined below) for, and intends to Transfer, such securities (a
“Transfer Notice”). The Transfer Notice shall include the name(s) of the proposed Transferee(s),
the number of shares to be Transferred (the “Transferred Shares”) and shall specify the proposed
purchase price or, if a purchase price has not been fixed, the proposed pricing formula
(e.g., a percentage discount or premium of market price on reference date or dates),
proposed timing for closing or settlement of the Transfer, and other material terms and conditions
of the proposed Transfer, provided that in the case of a Qualifying Auction the Transfer Notice may
identify up to five potential transferees and describe auction procedures consistent with clause
(iv) below in lieu of a fixed purchase price or pricing formula or a fixed date for closing and
settlement.





     (ii) The Company shall have until 10:00 a.m. New York time on the tenth Trading Day
following receipt of the Transfer Notice to make a binding offer (the “ROFR Election”) to
purchase all (but not part) of the Transferred Shares on the terms and conditions
(including price and closing or settlement date) described in the Transfer Notice or, in
the case of a Qualifying Auction, to participate in the Qualifying Auction.




     (iii) In the event that the Company delivers a ROFR Election to the Investor in
accordance with (c)(ii), the closing and settlement of the purchase and sale of the
Transferred Shares by the Company shall occur on a date not later than the date provided
for in the Transfer Notice or, in the case of a Qualifying Auction, pursuant to the auction
procedures described in the Transfer Notice. In the event that the Company does not submit
a ROFR Election within ten Trading Days following receipt of the Transfer Notice, the
Transferor shall be permitted for a period of 90 days thereafter to Transfer the
Transferred Shares to the counterparty identified in the Transfer Notice, on terms and
conditions (including price and timing of closing or settlement) that are not less
favorable to the Transferor than the terms proposed in the
Transfer Notice. In the event that such Transfer is not consummated within




12











 






such 90
day period, the provisions of this Section 4.2(c) shall again apply to any proposed
Transfer of such shares.




     (iv) For purposes of the foregoing, a “Trading Day” shall mean a day on which banks
are generally open for normal banking business in New York, New York and Frankfurt,
Germany.




     (v) For the purposes of the foregoing, a “Qualifying Auction” shall mean the sale of
Transferred Shares on any Trading Day not more than 10 Trading Days after the Company’s
ROFR election (A) to either the Company or one or more internationally-recognized
investment banking firms or other institutional investors in the global equity markets
(other than insurers) that regularly participate in the block purchases of publicly-listed
equity securities (it being understood that there shall be no more than five participants
in any Qualifying Auction other than the Company), (B) pursuant to reasonable and customary
procedures for the disposition by the Investor and its Affiliates of large blocks of
publicly-listed equity securities in private transactions and (C) in a manner that provides
the Company with the opportunity to participate in the auction, transparency into the
bidding procedure, prompt disclosure of the winning bid (if the winning bid is not the
Company’s), and the opportunity on a real-time basis to match the winning bid with a
‘last-look’ and acquire the Transferred Shares being sold on customary settlement terms.



          (d) The limitations set forth in Section 4.2(a), 4.2(b) and 4.2(c) above (i) shall terminate,
and the Purchased Shares, the Warrants and the Warrant Shares shall be freely transferable (subject
to Section 4.2(e) below), upon a Change of Control or the Company publicly announcing its intent to
enter into a transaction that, if consummated, would constitute a Change of Control, and (ii) shall
not prohibit the sale of Purchased Shares or Warrant Shares into a public tender offer.




          (e) The Purchased Securities are, and the Warrant Shares and the Purchased Common Shares (the
“Securities”) will be when issued, restricted securities under the Securities Act of 1933, as
amended (the “Securities Act”), and may not be offered or sold except pursuant to an effective
registration statement or an available exemption from registration under the Securities Act.
Accordingly, without prejudice to the rights of the Investor under the Registration Rights
Agreement and the Debenture Documentation, the Investor shall not, directly or through others,
offer or sell any Securities except pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 or another exemption from registration under the Securities
Act, if available. Prior to any Transfer of Securities other than pursuant to an effective
registration statement, the Investor shall notify the Company of such Transfer and the Company may
require the Investor to provide, prior to such Transfer, such evidence that the Transfer will
comply with the Securities Act (including written representations and an opinion of counsel) as the
Company may reasonably request. The Company may impose stop-transfer instructions with respect to
any securities that are to be Transferred in contravention of this Agreement.




13









 








     4.3 Purchase for Investment. The Investor acknowledges that the Purchased Securities
have not been registered under the Securities Act or under any state securities laws. The Investor
(i) is acquiring the Purchased Securities pursuant to an exemption from registration under the
Securities Act solely for investment with no present intention to distribute them to any person in
violation of the Securities Act or any applicable U.S. state securities laws, (ii) will not sell or
otherwise dispose of any of the Purchased Securities, except in compliance with the registration
requirements of or exemptions from the Securities Act and any applicable U.S. state securities
laws, (iii) has such knowledge, skill and experience in financial and business matters and in
investments of this type that it is capable of evaluating the merits and risks of the Transactions
and of making an informed investment decision, and has conducted a review of the business and
affairs of the Company that it considers sufficient and reasonable for purposes of making the
investment, (iv) is able to bear the economic risk of the investment and at the present time is
able to afford a complete loss of such investment and (v) is an “accredited investor” (as that term
is defined by Rule 501 under the Securities Act).



     4.4 Legend. The Investor agrees that all certificates or other instruments
representing Purchased Securities will bear a legend substantially to the following effect (except
for the Debentures, which will bear the legend set forth in the form of Debenture):




“THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE INVESTMENT AGREEMENT, DATED OCTOBER 17, 2008, BETWEEN THE COMPANY AND ALLIANZ
SE, A COPY OF WHICH IS ON FILE WITH THE COMPANY. THE SECURITIES REPRESENTED BY
THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH
SAID AGREEMENT. ANY SALE OR OTHER TRANSFER MADE IN VIOLATION OF SUCH RESTRICTIONS
SHALL BE NULL AND VOID FOR ALL PURPOSES AB INITIO.




THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OR EXERCISE OF SUCH SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR SUCH LAWS.”



          In the event that (i) any Purchased Securities are transferred pursuant to an effective
registration statement under the Securities Act or (ii) Warrant Shares are eligible to be
transferred without restriction in accordance with Rule 144 under the Securities Act, the Company
shall (subject to the receipt of any evidence required under Section 4.2(e)) issue new certificates
or other instruments


14









 







          representing such securities, which shall not contain such portion of the above legend that is
no longer applicable; provided that the Investor surrenders to the Company the previously
issued certificates or other instruments.




          4.5 Information Rights and Confidentiality.




          (a) So long as the Investor Beneficially Owns 20% or more of the issued and outstanding Common
Stock (or securities convertible into Common Stock), the Company will use its commercially
reasonable efforts to provide the Investor, at the Investor’s own expense, with such financial and
other information as the Investor reasonably requires to prepare its financial reports in
compliance with U.S. GAAP and IFRS or to respond to reasonable inquiries of the Investor’s
accounting staff and auditors in connection therewith. The Company, which prepares its financial
statements in accordance with U.S. GAAP, shall not be required to provide information to the
Investor pursuant to this Section 4.5(a) to the extent (i) such information can be obtained with
reasonable efforts from any other source, (ii) providing such information would interfere with the
conduct of the business of the Company, including its ordinary course financial reporting
activities, (iii) such information is not prepared by the Company in the course of its financial
reporting, (iv) providing such information to the Investor is inconsistent with applicable laws or
regulations or prudent corporate policies or would cause a risk of a loss of privilege to the
Company or any of the Company’s subsidiaries or (viii) the Company reasonably believes that such
information is competitively sensitive proprietary information or that such disclosure would
reasonably be expected to cause a violation of any agreement to which the Company or any of the
Company subsidiaries is party or otherwise would be detrimental to the Company.




          (b) Each party to this Agreement will hold, and will cause its respective Affiliates and their
directors, officers, employees, agents, consultants and advisors to hold, in strict confidence,
unless disclosure to a regulatory authority is necessary or appropriate in connection with any
necessary regulatory approval or unless disclosure is required by judicial or administrative
process or, in the written opinion of its counsel, by other requirement of law or the applicable
requirements of any regulatory agency or relevant stock exchange, all non-public records, books,
contracts, instruments, computer data and other data and information (collectively, “Information”)
concerning the other party hereto furnished to it by such other party or its representatives
pursuant to this Agreement or, with respect to Information furnished by the Company to the
Investor, the Confidentiality Agreement dated October 4, 2008 (the “Confidentiality Agreement”),
between the Company and the Investor except to the extent that such information can be shown to
have been (1) previously known by such party on a non-confidential basis, (2) in the public domain
through no fault of such party or (3) later lawfully acquired from other sources by the party to
which it was furnished), and neither party hereto shall release or disclose such Information to any
other person, except its auditors, attorneys, financial advisors, other consultants and advisors.




          4.6 Indemnity.




          (a) From and after the Closing, the Company agrees to indemnify and hold harmless each of the
Investor and its Affiliates and each of their respective officers, directors, employees and agents
(the “Investor Indemnified Parties”), to the


15









 







fullest extent lawful, from and against any and all actions, suits, claims, proceedings,
losses, damages, costs, expenses (including reasonable attorneys’ fees and disbursements),
liabilities and obligations, including losses resulting from the diminution of value of any
Purchased Securities (collectively, “Losses”) arising from (1) any material breach of the Company’s
representations or warranties in this Agreement or (2) the Company’s material breach of agreements
or covenants made by the Company in this Agreement.




          (b) From and after the Closing, the Investor agrees to indemnify and hold harmless each of the
Company and its Affiliates and each of their respective officers, directors, employees and agents
(the “Company Indemnified Parties”) to the fullest extent lawful, from and against any and all
Losses arising from (1) any material inaccuracy in or breach of the Investor’s representations or
warranties in this Agreement (or of any Permitted Transferee or Debenture Purchaser in any
certificate given pursuant to this Agreement) or (2) the Investor’s material breach of agreements
or covenants made by the Investor in this Agreement (or by any Permitted Transferee in the
undertaking contemplated by Section 6.9).




          (c) A party entitled to indemnification hereunder (each, an “Indemnified Party”) shall give
written notice to the party indemnifying it (the “Indemnifying Party”) of any claim with respect to
which it seeks indemnification promptly after the discovery by such Indemnified Party of any
matters giving rise to a claim for indemnification; provided that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 4.6 unless and to the extent that the Indemnifying Party shall have
been actually prejudiced by the failure of such Indemnified Party to so notify such party. Such
notice shall describe in reasonable detail such claim. In case any such action, suit, claim or
proceeding is brought against an Indemnified Party, the Indemnified Party shall be entitled to
hire, at its own expense, separate counsel and participate in the defense thereof;
provided, however, that the Indemnifying Party shall be entitled to assume and
conduct the defense thereof, unless the counsel to the Indemnified Party advises such Indemnifying
Party in writing that such claim involves a conflict of interest (other than one of a monetary
nature) that would reasonably be expected to make it inappropriate for the same counsel to
represent both the Indemnifying Party and the Indemnified Party, in which case the Indemnified
Party shall be entitled to retain its own counsel at the cost and expense of the Indemnifying Party
(except that the Indemnifying Party shall only be liable for the legal fees and expenses of one law
firm for all Indemnified Parties, taken together with respect to any single action or group of
related actions). If the Indemnifying Party assumes the defense of any claim, all Indemnified
Parties shall thereafter deliver to the Indemnifying Party copies of all notices and documents
(including court papers) received by the Indemnified Party relating to the claim, and each
Indemnified Party shall cooperate in the defense or prosecution of such claim. Such cooperation
shall include the retention and (upon the Indemnifying Party’s request) the provision to the
Indemnifying Party of records and information that are reasonably relevant to such claim, and
making employees available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Indemnifying Party shall not be liable for any
settlement of any action, suit, claim or proceeding effected without its written consent;
provided, however, that the Indemnifying Party shall not unreasonably withhold or
delay its consent. The Indemnifying Party further agrees


16









 







that it will not, without the Indemnified Party’s prior written consent (which shall not be
unreasonably withheld or delayed), settle or compromise any claim or consent to entry of any
judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in
respect of which indemnification has been sought hereunder unless such settlement or compromise
includes an unconditional release of such Indemnified Party from all liability arising out of such
action, suit, claim or proceeding.




          (d) The Company shall not be required to indemnify the Investor Indemnified Parties pursuant
to Section 4.6(a)(1), unless and until the aggregate amount of all Losses incurred by the Investor
Indemnified Parties with respect to all claims pursuant to Section 4.6(a)(1) exceeds $200,000,000
(the “Threshold Amount”), in which event the Company shall be responsible for the entire amount of
such Losses (from the first dollar). The Investor shall not be required to indemnify the Company
Indemnified Parties pursuant to Section 4.6(b)(1), unless and until the aggregate amount of all
Losses incurred by the Company Indemnified Parties with respect to all claims pursuant to Section
4.6(b)(1) exceeds the Threshold Amount, in which event the Investor shall be responsible for the
entire amount of such Losses (from the first dollar). For the avoidance of doubt, the Threshold
Amount shall not apply to indemnification pursuant to Section 4.6(a)(2). The cumulative
indemnification obligation of (1) the Company to the Investor and the Investor Indemnified Parties
or (2) the Investor to the Company and the Company Indemnified Parties, shall in no event exceed
the Purchase Price.




          (e) Any claim for indemnification pursuant to this Section 4.6 for breach of any
representation or warranty other than the Company’s representations and warranties in paragraphs
(d), (e) and (f) contained in Part II of Annex F, which will survive indefinitely, can only be
brought on or prior to the second anniversary of the Closing Date; provided that if notice
of a claim for indemnification pursuant to this Section 4.6 for breach of any such representation
or warranty is brought prior to the end of such period, then the obligation to indemnify in respect
of such breach shall survive as to such claim, until such claim has been finally resolved.




          (f) The indemnity provided for in this Section 4.6 shall be the sole and exclusive monetary
remedy of each Investor Indemnified Party and each Company Indemnified Party after the Closing for
any Losses arising from (1) any breach of the Company’s or the Investor’s respective
representations or warranties in this Agreement or (2) the Company’s or the Investor’s breach of
their respective agreements or covenants in this Agreement prior to the Closing Date, as the case
may be; provided, that nothing herein shall limit in any way any party’s remedies in
respect of fraud by any other party in connection with the transactions contemplated hereby. For
the avoidance of doubt, this clause shall in no way limit any indemnity obligation set forth in any
of the other Transaction Documents or the right to equitable relief pursuant to Section 6.4.




          (g) Without prejudice to the qualification of certain of the Company’s representations and
warranties by certain information that was “Previously Disclosed” to the Investor as provided in
Part II of Annex F, no investigation of the Company by the Investor, or by the Company of the
Investor, whether prior to or after the date hereof shall limit any Indemnified Party’s exercise of
any right under this Section 4.6 or be deemed to be a waiver of any such right.




17









 








          (h) Any indemnification payments pursuant to this Section 4.6 shall be treated as an
adjustment to the Purchase Price for the Purchased Securities for U.S. federal income and
applicable state and local tax purposes, unless a different treatment is required by applicable
law.




          4.7 Exchange Listing. The Company shall use reasonable efforts to cause the
Debentures to be approved for listing, at the Closing or as promptly as practicable thereafter, on
a “regulated market” for purposes of applicable European Union directives, including Directive
2003/71/EC and to maintain a listing on a regulated market for as long as the Debentures shall
remain outstanding. The Company shall prepare a listing prospectus (the “Listing Prospectus”) as
soon as practicable in furtherance of the foregoing. The Company shall ensure that the Listing
Prospectus complies with the applicable securities laws and regulations regarding disclosure in the
relevant regulated market. Neither the Company nor any person acting on its behalf will take any
action which would subject the offering, issuance or sale of any of the Purchased Securities to the
Investor pursuant to this Agreement to the registration requirements of the Securities Act.




          4.8 Issuance of Securities. So long as Warrants representing at least 1% of the
outstanding Common Stock are outstanding, the Company may not, without the prior written consent of
the Investor (which shall not be unreasonably withheld), issue equity securities other than Common
Stock and securities distributed pro rata (i) to the holders of Common Stock and securities issued
in connection with the Company’s employee benefit plans, employee stock options and grants under
employment agreements and (ii) securities with terms equivalent to the Series D Preferred Shares
and Warrant Preferred Shares (“Equivalent Securities”), provided that any such issuance of
Equivalent Securities shall be deemed an issuance of the underlying shares of Common Stock into
which such securities are convertible for purposes of the adjustment provisions of the Warrant.




          4.9 Rating Agencies. The Company shall use reasonable best efforts to (a) obtain a
rating from Standard and Poor’s and from Moody’s for the Debentures at the Closing Date or as soon
as practicable thereafter and (b) keep the Investor informed of any material developments in its
discussions with such rating agencies concerning the Debentures until ratings for the Debentures
have been obtained. The parties currently expect the ratings for the Debentures to be at least
BBB+ from Standard & Poor’s and A3 from Moody’s, it being understood that the receipt of such
ratings is not a condition to any of the parties’ obligations hereunder.




          4.10 Certain Restrictions. The Company shall not agree to any restrictions that would
limit the ability of the Company to accept surrender of Debentures in payment of all or a portion
of the exercise price of the Warrant for so long as and to the extent the Investor and its
Affiliates are permitted to do so in accordance with the Transaction Documents.




          4.11 Regulatory Treatment. The Company shall use its reasonable best efforts to
qualify the Debentures as investments that qualify for the coverage of insurance technical
provisions for European life and non-life insurance companies; provided, however,
that (i) the Company shall not be required to modify the terms and conditions of the Debenture
Documentation and (ii) no changes may


18









 







be made to the Debentures to the extent inconsistent with the treatment of the Debentures as
indebtedness for U.S. federal income tax purposes.




          4.12 Non-Solicitation. During the period from the date hereof until the Closing, the
Company shall not, and shall not permit any of its subsidiaries or any of its or their officers,
directors, employees, investment bankers, attorneys, consultants or other agents or advisors to,
directly or indirectly, take any action to solicit, initiate or encourage (or enter into
discussions with any person concerning) any transaction involving the Company or its Significant
Subsidiaries that is outside of the ordinary course of business and involves the acquisition by any
person or group (as such term is defined under the Exchange Act) of any material interest in the
securities or assets of the Company or any of its Significant Subsidiaries.




          4.13 Public Announcements. Subject to each party’s disclosure obligations imposed by
law, each of the parties will cooperate with each other in the development and distribution of all
news releases and other public disclosures with respect to the Transactions, this Agreement, the
other Transaction Documents and neither party will make any such news release or public disclosure
(a) without first consulting with the other party hereto or (b) that is inconsistent with the
Company’s press release, dated October 6, 2008, announcing the Transactions.




          4.14 Additional Covenants with respect to Debentures.




          (a) At any time when a majority in principal amount of the Debentures is still held by the
Investor and its Affiliates, if the Investor delivers to the Company, or the Company delivers to
Investor, a written opinion of nationally recognized counsel that, on the basis of the then current
terms of the Debentures and because of a Tax Trigger (as defined below) there is a meaningful and
substantial possibility that the Debentures would not be treated as indebtedness for U.S. federal
income tax purposes, then the Company will reasonably cooperate with Investor (and Investor will
reasonably cooperate with the Company) to modify (including by supplemental indenture) the terms of
the Debenture, the related Indenture (including the Second Supplemental Indenture) or the
Replacement Capital Covenant, as requested by Investor or the Company to make such other changes as
may be reasonably requested by Investor or the Company to enhance the likelihood that the
Debentures will be treated as indebtedness for U.S. income tax purposes; provided,
however, that the Company shall not be required to make any such modification if it would,
in the reasonable judgment of the Company, cause the level of equity credit attributable to the
Debentures by the rating agencies or the U.S. federal income tax consequences of the Debentures to
the Company to be adversely affected; provided further, nothing in this Section 4.14(a) limits the
Company’s ability to exercise its right to redeem the Debentures as provided in Section 4.14(c).




          (b) If any U.S. federal income taxes are required to be withheld from any payment of interest
to Investor on the Debentures, the Company will pay additional amounts to the Investor such that
the net amount received by the Investor after such withholding is equal to the amount that it would
have received had no such withholding been required (the “Tax Gross-Up”). The Tax Gross-Up shall
apply exclusively to the Investor and its direct or indirect wholly owned


19









 







subsidiaries (“Permitted Assignees,” and together with the Investor, “Eligible Recipients,”)
and will not apply to any assignee, transferee or participant of the Investor other than a
Permitted Assignee. The Tax Gross-Up will only apply if the Eligible Recipient has provided a
completed and correct IRS Form W-8BEN in which it certifies that it is (i) eligible to claim
German-U.S. Income Tax Treaty or other applicable treaty (the “Treaty”) benefits, (ii) a qualified
resident under the Treaty and (iii) not subject to the “limitation on benefits” provision under the
Treaty (including all required portions of Part II of the IRS Form W-8BEN). The Tax-Gross Up will
not apply to the extent that (a) any U.S. federal income taxes are imposed on or measured by net
income (including branch profits) of the Eligible Recipient or by reason of any connection between
the Eligible Recipient and the United States other than by holding the Debentures and receiving
payments on the Debentures or (b) the Tax Gross-Up that would be payable to a Permitted Assignee is
in excess of the Tax Gross-Up that would have been payable to the Investor. If the Company makes a
payment under the Tax Gross-Up to the Eligible Recipient and the Eligible Recipient obtains a
credit or deduction for the U.S. federal income tax that reduces its German income tax liability
(or other foreign income tax liability, as applicable), when such German or other foreign income
tax credit or deduction is actually realized (after first taking into account all other German or
foreign income tax benefits) the Eligible Recipient will, within 60 days of receiving the benefit
of the credit or deduction (which shall be defined as either the reduction of current-year German
or other foreign income tax liability appearing on an income tax return or the receipt of a German
or other foreign income tax refund, after taking into account all other German or other foreign
income tax benefits) reimburse an amount equal to the lesser of (x) the Tax Gross-Up payment made
by the Company or (y) the actual cash value of the benefit of the credit or deduction, to the
Company with interest at a rate of one-month LIBOR starting from the 30th day after
receiving the benefit of the credit or deduction. The Eligible Recipients agree to complete and
deliver to the Company from time to time, so long as each is eligible to do so, any successor or
additional form required by the IRS or reasonably requested by the Company in order to secure an
exemption from, or reduction in the rate of, U.S. federal income tax.




          (c) If the Company delivers to the Investor a written opinion of nationally recognized counsel
that, on the basis of the then current terms of the Debentures and based on (a) a clarification of
existing law or a change in law from that which was in effect on the date of the Closing Date, (b)
an official administrative pronouncement or judicial decision or administrative action or other
official pronouncement by any court, government agency or regulator, or (c) a threatened challenge
asserted in connection with an audit of the Company, or a threatened challenge asserted in writing
against any taxpayer that has raised capital through the issuance of securities that are
substantially similar to the Debentures (clauses (a) through (c) referred to as a “Tax Trigger”)
that there is a meaningful and substantial possibility that it will be required to make any
payments to an Eligible Recipient under the Tax Gross-Up (a “Withholding Tax Event”), the
Debentures shall be redeemable in accordance with this Agreement in whole (or in part, as
applicable) solely with respect to the Debentures held by the Eligible Recipient within 180 days
after the occurrence of the Withholding Tax Event. The redemption price on the Withholding Tax
Event shall equal 100% of the principal amount of the Debentures being redeemed plus accrued and
unpaid interest.




20









 








          (d) The Company agrees that, without the prior written consent of the Investor, it shall not
redeem Existing Parity Debentures (as such term is defined in the Debenture Documentation) and
other pari passu securities without also redeeming Debentures on a pro rata basis; provided,
however, that if the Company shall elect to redeem all or any portion of the Existing Parity
Debentures on or after June 15, 2018 and before October 15, 2018, the Company shall not be required
to redeem a pro rata amount of Debentures until October 15, 2018.




          4.15 Preemptive Rights. If the Company on or prior to the seventh anniversary of the
Closing Date proposes to issue any shares of Common Stock, rights or options to acquire Common
Stock or securities convertible or exchangeable into Common Stock (other than any issuance (i) as
consideration in any merger, acquisition of a business or a similar transaction with a third party,
(ii) to a financial institution in connection with any borrowing and (iii) that is Qualifying
Employee Stock, as defined in the Warrant), the Company shall provide prompt written notice to the
Investor, and the Investor (or its designated Subsidiary) shall have the right to participate in
the such issuance and to purchase from the Company an amount up to the Investor’s Pro Rata Share
(as defined below) of each class or series of shares, rights, options or securities so issued at a
price and on terms no less favorable to the Investor than those provided to any other Person
purchasing in the issuance. For the purposes of this paragraph, the “Pro Rata Share” of the
Investor shall be equal to the aggregate percentage of the Company’s Common Stock (other than
Qualifying Employee Stock) Beneficially Owned by the Investor and its Subsidiaries, in the
aggregate, on a Fully Diluted Basis (as defined in the Warrant) before giving effect to the
applicable issuance. Any shares, rights, options or securities issued pursuant to this paragraph
(or upon exercise of any right or option or conversion or exchange of any security issued under
this paragraph) shall be subject to the Registration Rights Agreement so long as such Common Stock
remains a Registrable Security (as defined therein). For the avoidance of doubt, in the case of a
firm underwritten offering of securities, the Investor shall not be entitled to any underwriting
discount or commission.




Article V




Termination




          5.1 Termination. (a) This Agreement may be terminated at any time prior to the
Closing by either the Investor or the Company, upon written notice to the other party, if the
Closing shall not have occurred on or before November 15, 2008; provided, however,
that the right to terminate this Agreement under this Section 5.1(a) shall not be available to any
party who is in material breach of any representation or warranty or covenant under this Agreement.




          (b) In the event of termination of this Agreement as provided in this Section 5.1, other than
with respect to Section 4.5(b) and Article VI (other than Sections 6.12 and 6.13) hereof, which
shall remain in full force and effect, the parties shall have no further obligations hereunder and
there shall be no liability on the part of either party hereto, except that nothing herein shall
relieve either party from liability for any breach of this Agreement prior to such termination.




21









 








Article VI




Miscellaneous




          6.1 Amendment. No amendment of any provision of this Agreement will be effective
unless made in writing and signed by a duly authorized officer (or, in the case of the Investor,
officers) of each party.




          6.2 Waiver of Conditions. The conditions to each party’s obligation to consummate the
Transactions are for the sole benefit of such party and may be waived by such party in whole or in
part to the extent permitted by applicable law. No waiver will be effective unless it is in a
writing signed by a duly authorized officer (or, in the case of the Investor, officers) of the
waiving party that makes express reference to the provision or provisions subject to such waiver.




          6.3 Counterparts and Facsimile. For the convenience of the parties hereto, this
Agreement may be executed in any number of separate counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts will together constitute the same
agreement. Executed signature pages to this Agreement may be delivered by means of an electronic
medium and such delivery will be deemed as sufficient as if actual signature pages had been
delivered.




          6.4 Specific Performance. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that, in addition to any other
applicable remedies, the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.




          6.5 Governing Law; Submission to Jurisdiction, Etc. 




          (a) This Agreement and the respective rights and obligations of the parties with respect to
the Transactions will be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed entirely within such State. Except as may
otherwise be provided with respect to the Debentures under the terms thereof, the parties agree
(a) to submit, to the fullest extent permitted by applicable law, any dispute between the parties
in respect of the Transactions or the Transaction Documents to the United States District Court for
the Southern District of New York or, in the event federal jurisdiction is not available, the
Supreme Court of the State of New York, New York County, (b) to submit to the exclusive
jurisdiction of such courts and agree to waive any claims of improper venue or forum non conveniens
and (c) that notice may be served upon such party at the address and in the manner set forth for
such party in Sections 6.5 and 6.6. To the extent permitted by applicable law, each of the parties
hereto hereby unconditionally waives trial by jury in any legal action or proceeding relating to
the Transactions or the Transaction Documents.




          (b) The Investor irrevocably appoints CT Corporation System, currently located at 111 Eighth
Avenue, 13th Floor, New York, NY 10011, to act as its agent for service of process and
any other documents in proceedings in the State





22












 




of New York or any other proceedings in connection with the Transaction Documents and the
Confidentiality Agreement. The Investor may replace its agent for service of process with another
agent reasonably satisfactory to the Company.




     6.6 Notices. Any notice, request, instruction, claim, demand, waiver or other
communications to be given hereunder by any party to the other will be in writing and will be
deemed to have been duly given (a) by facsimile, upon confirmation of receipt, or (b) on the date
of delivery when delivered by hand or overnight courier service. All notices hereunder shall be
delivered as set forth below, or to such other address or facsimile number as either party may from
time to time designate in a written notice given in a like manner.



     (A) If to the Company:


The Hartford Financial Services Group Inc.

One Hartford Plaza

Hartford, CT 06155



U.S.A.

Attention: Alan J. Kreczko

Facsimile: +1 860 547 4721




          with a copy (which copy alone shall not constitute notice) to:



Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

U.S.A.

Attention: Victor I. Lewkow

Facsimile: +1 212 225 3999




     (B) If to the Investor:


Allianz SE

Group Legal Services

Koeniginstr. 28

80802 Muenchen

Germany

Attention: Dr. Peter Hemeling

Facsimile: +49 89 38 00 2152




          with a copy (which copy alone shall not constitute notice) to:



Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004-2498



U.S.A.

Attention: Andrew Dietderich

Facsimile: +1-212-558-3588





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     6.7 Entire Agreement, Etc. This Agreement (including the Annexes hereto), the
Confidentiality Agreement (subject to the succeeding sentence) and the other Transaction Documents
constitute the entire agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties, with respect to the
subject matter hereof. In particular, this Agreement supersedes the Transaction Agreement between
the parties, dated October 6, 2008, and the Transaction Agreement shall be of no further force and
effect. As of the Closing, the provisions under paragraphs 7 and 8 of the Confidentiality
Agreement shall be superseded by Section 4.1 of this Agreement, but the Confidentiality Agreement
shall otherwise remain in full force and effect in accordance with its terms.



     6.8 Definition of “Affiliate”. The term “Affiliate” means, with respect to any
person, any person directly or indirectly controlling, controlled by or under common control with,
such other person. For purposes of this definition, “control” when used with respect to any
person, means the possession, directly or indirectly, of the power to cause the direction of
management and/or policies of such person, whether through the ownership of voting securities by
contract or otherwise.



     6.9 Assignment. Neither this Agreement nor any right, remedy, obligation nor
liability arising hereunder or by reason hereof shall be assignable by any party hereto without the
prior written consent of the other party, and any attempt to assign any right, remedy, obligation
or liability hereunder without such consent shall be void, except (i) an assignment, in the case of
a merger or consolidation where such party is not the surviving entity, or a sale of substantially
all of its assets, to the entity which is the survivor of such merger or consolidation or the
purchaser in such sale or (ii) an assignment by the Investor, upon five business days’ notice to
the Company, of any or all of its rights hereunder or under any other Transaction Document to one
or more of its Affiliates; provided that such assignment shall become effective only upon
delivery to the Company by such Affiliate of a written undertaking to be bound by Sections 4.1,
4.2, 4.3 and 4.4 to the same extent as the Investor; and provided, further, that no
such assignment shall relieve the Investor of any of its obligations hereunder. The actions of the
Investor and/or any Affiliate to which it actually assigns any rights hereunder in accordance with
the preceding sentence (a “Permitted Transferee”) shall be aggregated for purposes of all
thresholds and limitations herein to the extent (i) the Investor transfers any or all of its rights
hereunder to any Permitted Transferee prior to the Closing and/or (ii) the Investor or any
Permitted Transferee transfers any Purchased Securities to any Permitted Transferee following the
Closing. For the avoidance of doubt, prior to the date hereof, the Investor has assigned its
rights to (i) purchase the Series D Preferred Shares and the Warrants to Allianz Finance II
Luxembourg S.a.r.l. (“Allianz Finance”), and (ii) purchase the Debentures to the Debenture
Purchasers, for the respective initial principal amounts of Debentures set forth next to the
relevant Debenture Purchaser’s name. Allianz Finance shall be a Permitted Transferee for purposes
of this Agreement, but none of the Debenture Purchasers shall be deemed a Permitted Transferee as a
result of the foregoing assignment.



24









 





     6.10 Severability. If any provision of this Agreement or a Transaction Document, or
the application thereof to any person (including the officers and directors of the Company and the
Investor) or circumstance, is determined by a court of competent jurisdiction to be invalid, void
or unenforceable, the remaining provisions hereof, or the application of such provision to persons
or circumstances other than those as to which it has been held invalid or unenforceable, will
remain in full force and effect and shall in no way be affected, impaired or invalidated thereby,
so long as the economic or legal substance of the Transactions is not affected in any manner
materially adverse to any party. Upon such determination, the parties shall negotiate in good faith
in an effort to agree upon a suitable and equitable substitute provision to effect the original
intent of the parties.



     6.11 No Third Party Beneficiaries. Nothing contained in this Agreement, expressed or
implied, is intended to confer upon any person or entity other than the Company and the Investor
(and any subsidiary of the Investor or Affiliate to which an assignment is made in accordance with
this Agreement and the Indemnified Parties as contemplated by Section 4.6), any benefits, rights,
or remedies.



     6.12 Cooperation. The parties agree that until the Closing, at the request of either
party, they will use commercially reasonable efforts to optimize the transaction structure to
confirm appropriate characterization for U.S. Federal tax purposes so long as no modifications are
made to the terms and conditions described herein that are economically adverse to either party.



     6.13 Remarketing.



     (a) In-Kind Exercise of Warrant by Investor and its Subsidiaries. At any time when a
Warrant is held by the Investor or a Subsidiary of the Investor, the Investor or such Subsidiary,
in its capacity as a Holder of the Warrant (an “Investor Holder”) may deliver an Exercise Notice
(as defined in the Warrant) for all or part of the Warrant and elect to purchase the Shares
represented by such Warrant in the manner set forth in Section 6.13(b)-(i) or Section 6.13(j), as
applicable (the “In-Kind Exercise”), in lieu of the provisions of Section 3 of the Warrant.
Capitalized terms used in this Section 6.13 but not defined in this Agreement have the meanings
specified in the Warrant.



     (b) In-Kind Exercise and Remarketing. The Investor Holder may specify in any Exercise
Notice delivered pursuant to Section 3 of the Warrant that the Investor Holder also is delivering
at the same time a notice to the Company (a “Remarketing Notice”) that the Investor Holder intends
to pay all or a portion of the Exercise Price specified in the Exercise Notice from the proceeds of
the remarketing of (i) all of the Debentures held beneficially by the Investor Holder or (ii) if
less than all of the Debentures held beneficially by the Investor Holder, a principal amount of the
Debentures in excess of $250 million which the Investor Holder is simultaneously requesting the
Company to designate as a Tranche (as defined below) (the “Remarketed Debentures”). Except as
provided in Section 6.13(f)(i), a Remarketing Notice shall (x) be irrevocable and (y) include the
consent of the Investor, on its own behalf and on behalf of any Subsidiary, to the extent such
consent does not violate the terms of the Debentures and applicable law, to the



25









 







amendment by the Company of the Remarketed Debentures as contemplated in Section 6.13(g),
effective upon the Success Date (as defined below), and conditioned upon delivery to the Investor
Holder of the securities, cash, and any other property due to the Investor Holder at Settlement (as
defined below) of a Successful Remarketing (as defined below). For the avoidance of doubt, no such
consent shall be effective with respect to any amendment of Remarketed Debentures if the related
Remarketing Notice shall have been revoked by the Investor Holder in accordance with Section
6.13(f)(i) following a Failed Remarketing (as defined below). A Remarketing Notice will require
the Company to use commercially reasonable efforts to effect one or more remarketings
(individually, a “Remarketing”) of all, but not less than all, of the Remarketed Debentures on the
terms and conditions described below and to use the proceeds of a Successful Remarketing (as
defined below) in satisfaction of the Exercise Price. The Remarketing shall take place during a
period (the “Remarketing Window”) beginning on the date (the “Launch Date”) on which the Investor
Holder shall have both (A) delivered the Remarketing Notice and (B) performed its obligations under
Section 6.13(c) and ending on the earlier of (i) the Success Date and (ii) the 90th day
following the Launch Date. No more than one Remarketing Window may be underway at any time. If
the Investor Holder exercises its Warrant pursuant to this Section 6.13(b), notwithstanding any
contrary provision of the Warrant, the Investor Holder shall be deemed to own and have all of the
rights associated with any Shares or other securities or property to which it is entitled pursuant
to the Warrant on the Settlement Date (and not earlier), and the Warrant surrendered by the
Investor Holder shall be held in escrow for the benefit of the Investor Holder until the earlier of
the Settlement Date and revocation of the Exercise Notice in the circumstances contemplated by
Section 6.13(f)(i) below. For the avoidance of doubt, the Investor Holder may deliver an Exercise
Notice pursuant to this Section 6.13 simultaneously with one or more Exercise Notices with respect
to exercise in cash or a Net Settlement.



     (c) Delivery of Remarketed Debentures; Interest Pending Settlement or Remarketing.
Simultaneously with delivery of a Remarketing Notice, the Investor Holder shall deliver, or cause
to be delivered, the applicable Remarketed Debentures to an account, in the name of the Investor
Holder, designated by the Company to be held in escrow until the Settlement Date for a Successful
Remarketing or the revocation of the Remarketing Notice by the Investor in the circumstances
contemplated by Section 6.13(f)(i) below. Interest shall continue to accrue and be payable on the
Remarketed Debentures as set forth in such Remarketed Debentures for the account of the Investor
Holder. Upon any revocation of a Remarketing Notice as provided by Section 6.13(f)(i) below, the
Company shall take such action as is necessary or desirable to cause the return of such Remarketed
Debentures to the Investor Holder.



     (d) Remarketing. (i) As promptly as practicable following the Launch Date, the
Company shall enter into a remarketing agreement (“Remarketing Agreement”) with a nationally
recognized investment or commercial bank, as remarketing agent (the “Remarketing Agent”), whereby
the Remarketing Agent shall agree to use its commercially reasonable efforts as Remarketing Agent
to sell the Remarketed Debentures during the Remarketing Period (as defined below) for a price that
results in proceeds to the Investor Holder, net of any remarketing fee payable to the Remarketing
Agent and the expenses of such Remarketing, of at least 100% of the principal amount of the
Remarketed Debentures, plus accrued



26









 







and unpaid interest thereon to, but excluding, the Settlement Date for a Successful
Remarketing (the “Remarketing Value”). In accordance with the Remarketing Agreement, the
Remarketing Agent shall be obligated to deliver to the Company and the Investor Holder, within 5
(five) business days following the occurrence of a Success Date (as defined below), written notice
(each, a “Success Notice”) of the occurrence of the Success Date.



     (ii) If, in the judgment of counsel to the Company, a registration statement is required to
effect any Remarketing, the Company shall (x) use its commercially reasonable efforts to ensure
that a registration statement covering the Remarketing Value is effective during the Remarketing
Period in a form that enables the Remarketing Agent to rely on it in connection with such
Remarketing or (y) effect such Remarketing pursuant to Rule 144A under the Securities Act, if
available, or any other available exemption from applicable registration requirements under the
Securities Act.



          (e) Successful and Failed Remarketings. A “Successful Remarketing” shall be deemed to
have occurred on the date (the “Success Date”) that the Remarketing Agent shall have received
binding commitments to purchase Remarketed Debentures for proceeds that, upon distribution on the
Settlement Date, will be at least equal to the Remarketing Value. A “Failed Remarketing” shall be
deemed to occur (i) on the business day after the 90th day following the Launch Date
(the “Fail Date”) if the Remarketing Agent shall not have delivered a Success Notice prior to the
Fail Date or (ii) in the circumstances set forth in Section 6.13(i).




          (f) Remarketing Periods. Pursuant to the terms of the Remarketing Agreement, the
Remarketing Agent shall make one or more attempts to achieve a Successful Remarketing with respect
to any Remarketed Debentures. The Remarketing Agent shall conduct a Remarketing during a period of
5 (five) consecutive business days (each such five-day period, a “Remarketing Period”), all of
which Remarketing Periods shall have concluded no later than 90 days after the Launch Date. If the
Remarketing is a Successful Remarketing, the proceeds thereof shall be applied in satisfaction of
the Exercise Price on the Settlement Date (as defined below) in accordance with Section 6.13(k).
If such Remarketing is a Failed Remarketing, the Investor Holder shall, not later than the third
business day after the Fail Date, deliver written notice to the Company (a “Failed Remarketing
Election Notice”) electing to (i) revoke its Exercise Notice and Remarketing Notice and withdraw
the related Remarketed Debentures from escrow, in which case the Exercise Notice shall be void ab
initio, (ii) pay the Exercise Price in cash, revoke its Remarketing Notice and withdraw the related
Remarketed Debentures from escrow, or (iii) exercise its Put Right in accordance with Section
6.13(h). If no timely election is made by the Investor Holder, the Investor Holder shall be deemed
to have elected to exercise its Put Right. The Company shall, on the fifth business day following
the Success Date or Fail Date, as applicable (the “Settlement Date”), carry out the Settlement in
accordance with Section 6.13(k).




          (g) Amended Terms of Remarketed Debentures. In connection with a Remarketing, the
Company shall determine the interest rate (the “Reset Rate”) of the Remarketed Debentures such that
the proceeds from the Remarketing, net of any remarketing fee and expenses of such Remarketing, are
at least equal to 100% of the Remarketing Value; provided that in no event shall the Reset Rate



27









 






exceed the maximum interest rate permitted by applicable law. In connection with any
Remarketing, the Company may elect, in its sole discretion, to amend the terms of the Remarketed
Debentures to provide for such amendments as it may deem desirable in its sole discretion,
including (i) one or more additional Remarketings to be effected on a periodic or other basis after
October 15, 2015 and (ii) an amendment to the ranking of the Remarketed Debentures such that the
Remarketed Debentures could be remarketed as senior unsecured notes ranking pari passu with the
Company’s existing senior notes. At the written request of the Investor Holder to the Company, the
Company will amend the Debentures into separate tranches, and a minimum principal amount of not
less than $250,000,000 may be subject to a Remarketing (a “Tranche”).




          (h) Put Right. In the event the Remarketing is a Failed Remarketing, the Investor
shall have the right (the “Put Right”), exerciseable pursuant to Section 6.13(f), to require the
Company to purchase the applicable Remarketed Debentures on the Settlement Date for a purchase
price equal to the principal amount of such Debentures, plus accrued but unpaid interest to, but
excluding, the Settlement Date. The Settlement of the Put Right shall take place on the Settlement
Date by applying the portion of the purchase price equal to the principal amount of such Debentures
to payment of the Exercise Price due pursuant to the Exercise Notice in full satisfaction thereof
and otherwise in accordance with Section 6.13(k).




          (i) CIC Event after In-Kind Exercise. Notwithstanding the foregoing provisions in
this Section 6.13, if a Remarketing Notice is in effect and (i) the Company subsequently makes a
public announcement concerning a potential Change of Control requiring Company shareholder approval
or (ii) any third party tender offer for 35% or more of the outstanding Common Stock is
subsequently commenced (each of (i) and (ii) a “CIC Event”), the Company will use its commercially
reasonable efforts to accelerate the Remarketing Period. If a Settlement Date has not occurred on
the 10th business day prior to the related record date (the “CIC Fail Date”), the Remarketing shall
be deemed to be a Failed Remarketing with a Fail Date as of the CIC Fail Date, the Investor Holder
shall be deemed to have exercised its Put Right, the Settlement Date shall be deemed to have
occurred the business day following the CIC Fail Date (the “Emerging CIC Settlement Date”) and the
Company shall carry out the Settlement on the Emerging CIC Settlement Date as contemplated in
Section 6.13(k).




          (j) CIC Event on or prior to In-Kind Exercise Date. If a CIC Event has occurred at
the time of delivery on the Exercise Notice, the Investor Holder may specify in any Exercise Notice
delivered pursuant to Section 3 of the Warrant that the Investor Holder has elected to pay all or
any portion of the Exercise Price specified in the Exercise Notice by delivering to the Company
Debentures in an aggregate principal amount equal to such portion of the Exercise Price (“CIC
Debentures”). If the Investor Holder elects to pay the Exercise Price by delivery of Debentures
pursuant to this Section 6.13(j), (i) the number of Shares, cash, securities or other property to
which the Investor Holder is entitled upon exercise of the Warrant shall be determined as of the
Exercise Date, (ii) the Investor Holder shall surrender the Warrants and the CIC Debentures to the
Company on the Exercise Date, (iii) the Investor Holder shall be deemed to own and have all of the
rights associated with any Shares or other securities or property to which it is



28









 






entitled pursuant to the Warrant on the Exercise Date and (iv) on a date within a reasonable
time, not to exceed three business days after the Exercise Date (the “Existing CIC Settlement
Date”), the Company shall carry out the Settlement in accordance with Section 6.13(k) and the
delivery of the CIC Debentures shall satisfy in full the obligation to pay the Exercise Price to
the extent of the principal amount of the CIC Debentures delivered.




          (k) Investor Holder’s Rights and Settlement. If the Investor Holder exercises its
Warrant pursuant to this Section 6.13, notwithstanding any contrary provision of the Warrant, the
number of Shares, cash, securities or other property to which the Investor Holder is entitled upon
exercise of the Warrant shall be determined as of the Exercise Date pursuant to the terms of the
Warrant notwithstanding the delay in payment of the Exercise Price until the Settlement Date. On
the Settlement Date, Emerging CIC Settlement Date or Existing CIC Settlement Date, as applicable,
(1) the Company shall (A) transfer to the Investor Holder appropriate evidence of ownership of any
Shares or other securities or property to which the Investor Holder is entitled, registered or
otherwise placed in, or payable to the order of, such name or names as may be directed in writing
by the Investor Holder in settlement of the related In- Kind Exercise or cash exercise, and shall
deliver such evidence of ownership and any other securities or property to the Person entitled to
receive the same, together with an amount in cash in lieu of any fraction of a share as provided in
Section 6 of the Warrant, and (B) pay to the Investor in cash in immediately available funds at
such account as it may direct an amount equal to accrued and unpaid interest on any Debentures
delivered in satisfaction of the Exercise Price to, but excluding, the Settlement Date against (2)
delivery of (A) the proceeds of the Successful Remarketing, (B) the Remarketed Debentures (in the
case of the exercise of the Put Right) or the CIC Debentures (in the case of an Existing CIC
Settlement Date) or (C) cash in the amount of the Exercise Price (collectively, the “Settlement”).




          (l) Indemnification. The Company agrees that any Remarketing is solely at the
Company’s risk and expense. The Company agrees to indemnify and hold harmless the Investor and its
Subsidiaries from and against any third-party actions, claims, losses, liabilities, costs and
expenses (including the fees and expenses of legal counsel) arising out of or relating to any
Remarketing of Remarketed Debentures, including without limitation any liability arising out of or
relating to any consent given by the Investor or its Subsidiaries, as applicable, to any amendment
to the terms of any Remarketed Debenture, or any liability arising out of or relating to any
allegation that any information provided by or on behalf of the Company to purchasers and potential
purchasers of Remarketed Debentures contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in light of the circumstances
under which they were made, not misleading. To the extent that any information concerning the
Investor or its Subsidiaries is proposed to be included in any materials prepared in connection
with a Remarketing and distributed to potential purchasers of Remarketed Debentures, such
information shall not be so included without the prior written consent of the Investor, not to be
unreasonably withheld, it being expressly understood that the foregoing agreement of the Company to
indemnify and hold harmless the Investor and its Subsidiaries shall not apply to any such
information furnished by the Investor or its Subsidiaries.




29









 








          (m) Miscellaneous. The provisions of this Section 6.13 are deemed to be terms of the
Debentures as of the Closing Date solely to the extent such Debentures are Remarketed Debentures.
The provisions of this Section 6.13 are solely for the benefit of the Investor and its Subsidiaries
which are Investor Holders of the Warrants or the Debentures from time to time, and not for the
benefit of any other Person. The Company acknowledges that the right of the Investor and its
Subsidiaries to pay the Exercise Price through remarketing of the Debentures pursuant to this
Section 6.13 is a term for which fair value was paid at the time of the Investor’s investment in
the Company and which has been taken into account by the parties hereto in agreeing on the amount
of the initial Exercise Price and the other terms and conditions of the transactions contemplated
by this Investment Agreement.




     6.14 Payments for Certain Transactions. If on or prior the first anniversary of the
Closing Date the Company effects or agrees to effect any transaction or series of transactions
pursuant to which a “person” or “group” (as such terms are used in Section 13 of the Exchange Act)
is issued shares of Common Stock, rights or options to acquire Common Stock or securities
convertible or exchangeable into Common Stock (other than in each case Qualifying Employee Stock)
constituting more than five percent of the Common Stock on a Fully Diluted Basis, for an Effective
Price (calculated on a weighted average price basis for any series of transactions) that is less
than $25.32 per share of Common Stock, the Company shall pay to the Investor no later than the 30th
business day following the occurrence of such event, in cash in immediately available funds to such
account as the Investor may designate, an amount determined pursuant to the following table. As
used in this Section 6.14, the terms “Fully Diluted Basis”, “Qualifying Employee Stock”, and
“Effective Price” have the meanings ascribed thereto in the Warrants.



	 	 	 	 	 
	Effective Price	 	 
	(weighted average price	 	 
	basis)	 	Required Cash Payment
	$25.31 to 23.00
	 	$  50 million
	$22.99 to 20.00
	 	$150 million
	$19.99 to 15.00
	 	$200 million
	$14.99 or less
	 	$300 million






     6.15 Survival. Each of the representations and warranties set forth in this Agreement
shall survive the Closing under this Agreement but only for a period of two years following the
Closing Date (or until final resolution of any claim or action arising from the breach of any such
representation and warranty, if notice of such breach was provided prior to the end of such period)
and thereafter shall expire and have no further force and effect, including in respect of Section
4.6, except for the Company’s representations and warranties set forth in paragraphs (d), (e), (f),
(g) and (h) in part II of Annex F, which will survive indefinitely. Except as otherwise provided
herein, all covenants and agreements contained herein, other than those which by their terms are to
be performed in whole or in part after the Closing Date, shall terminate as of the Closing Date.



30









 





* * *




31









 








In Witness Whereof, this Agreement has been duly executed and delivered by the duly
authorized officers of the parties hereto as of the date first herein above written.



	 	 	 	 	 
	 	The Hartford Financial Services Group Inc.

 	 
	 	By:  	/s/  Ramani Ayer	 
	 	 	Name:  	Ramani Ayer	 
	 	 	Title:  	Chairman and CEO	 
	 
	 	Allianz SE

 	 
	 	By:  	/s/  Achleitner	 
	 	 	Name:  	Achleitner	 
	 	 	Title:  	Member of the Board of Management	 
	 
	 	 	 
	 	By:  	/s/  Perlet	 
	 	 	Name:  	Perlet	 
	 	 	Title:  	Member of the Board of Management	 



32









 





Annex A-1 to Investment Agreement




ANNEX A-1
CERTIFICATE OF DESIGNATIONS, VOTING POWERS,

PREFERENCES AND RELATIVE, PARTICIPATING,

OPTIONAL AND OTHER SPECIAL RIGHTS AND

QUALIFICATIONS, LIMITATIONS OR

RESTRICTIONS OF SERIES D NON-VOTING CONTINGENT CONVERTIBLE PREFERRED STOCK

OF

THE HARTFORD FINANCIAL SERVICES GROUP, INC.




 






Pursuant to Section 151 of the

General Corporation Law of the State of Delaware




 






          The Hartford Financial Services Group, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the “Company”), in accordance with the
provisions of Section 151 thereof, DOES HEREBY CERTIFY:




          The Special Committee (the “Committee”) of the board of directors of the Company (the
“Board”), in accordance with the resolutions of the Board dated October 15, 2008, the
provisions of the Amended and Restated Certificate of Incorporation and Section 151(g) of the
General Corporation Law of the State of Delaware, by unanimous written consent dated October 16,
2008, adopted the following resolution fixing the powers, preferences and relative, participating,
optional or other rights and the qualifications, limitations and restrictions of 6,300,000 shares
of Series D Non-Voting Contingent Convertible Preferred Stock of the Company.





RESOLVED, that pursuant to the authority vested in the Committee in
accordance with the resolutions of the Board dated October 15, 2008
and in accordance with the provisions of the Amended and Restated
Certificate of Incorporation, a series of Preferred Stock, par value
$0.01 per share, of the Company be and hereby is created, and that
the designation and number of shares thereof and the voting and
other powers, preferences and relative, participating, optional or
other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:



     1. Designation and Number of Shares. The designation of the series of preferred stock
is the “Series D Non-Voting Contingent Convertible Preferred Stock” (the “Series D Preferred
Stock”), having a par value of $0.01 per share and a liquidation preference of $0.02 per share.
The number of shares constituting such series is 6,300,000.



1









 





     2. Definitions. As used herein the following terms shall have the following meanings,
whether used in the singular or the plural:



          (a) “Affiliate” of any specified person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified person.
For the purposes of this definition, “control” when used with respect to any specified
person means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.




          (b) “Board of Directors” means the Board of Directors of the Company or any duly
authorized committee thereof.




          (c) “Initial Holder” means Allianz SE, any Affiliate of Allianz SE that is an initial
purchaser of the Series D Preferred Stock or an Affiliate of Allianz SE to whom Allianz SE (or such
initial purchaser) has transferred, directly or indirectly, the Series D Preferred Stock in
accordance with the terms of the Investment Agreement, acting individually or as a group, as the
context may require.




          (d) “Investment Agreement” means the Investment Agreement dated October 17, 2008
between the Company and Allianz SE, as it may be amended from time to time.




          (e) “Regulatory Approvals” with respect to a holder, means, to the extent applicable
and required to permit the holder to convert such holder’s shares of Series D Preferred Stock into
Common Stock and to own such Common Stock without the holder being in violation of applicable law,
rule or regulation, the receipt of any necessary approvals and authorizations, filings and
registrations with, and notifications to, relevant any United States and other governmental or
regulatory authorities, including insurance regulatory authorities and the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.




          (f) “Shareholder Approval” means the approval by the stockholders of the Company for
the issuance of Common Stock upon conversion of the Series D Preferred Shares into Common Stock for
purposes of Section 312.03 of the NYSE Listed Company Manual (or any successor provision).




     3. Ranking. The Series D Preferred Stock shall rank pari passu with the Company’s
Series B Non-Voting Contingent Convertible Preferred Stock, the Company’s Series C Non-Voting
Contingent Convertible Preferred Stock, the common stock, par value $0.01 per share, of the Company
(the “Common Stock”) and the Company’s Series A Participating Cumulative Preferred Stock
(except, with respect to the Common Stock and the Series A Participating Cumulative Preferred
Stock, for the liquidation preference). Subject to the preceding sentence, the Series D Non-Voting
Contingent Convertible Stock shall rank junior to each other series of the preferred stock of the
Company, unless the Board of Directors shall specifically determine otherwise in fixing the
designations, powers, preferences and relative, participating, optional and



 









 







other special rights of the shares of such series and the qualifications, limitations or
restrictions thereof.



     4. Dividends.



          (a) So long as any shares of the Series D Preferred Stock remain outstanding, if the Company
declares any dividend or distribution of cash, securities (including rights, warrants, options or
evidences of indebtedness) or properties or assets other than shares of Common Stock to be paid
from time to time out of any assets legally available for such payment (to the extent dividends or
distributions consist of shares of Common Stock an adjustment will be made pursuant to Section 7(a)
hereof), then the Company shall simultaneously declare a dividend or distribution on shares of
Series D Preferred Stock in the amount of dividends or distributions that would be made with
respect to shares of Series D Preferred Stock if such shares were converted into shares of Common
Stock on the record date for such dividend or distribution (regardless of whether or not actual
conversion at such time would be permissible under Section 5 hereof). No dividend or distribution
shall be payable to holders of shares of Common Stock unless the full dividends or distributions
contemplated by this Section are paid at the same time in respect of the Series D Preferred Stock.




          (b) Each dividend or distribution shall be payable to holders of the Series D Preferred Stock
as they appear in the records of the Company at the close of business on the same record date as
the record date for the payment of the corresponding dividend or distribution to the holders of
shares of Common Stock.




          (c) Dividends on the Series D Preferred Stock are non-cumulative. If the Company does not
declare a dividend on the Common Stock or the Series D Preferred Stock in respect of any period,
the holders of the Series D Preferred Stock shall have no right to receive any dividend for such
dividend period, and the Company shall have no obligation to pay a dividend for such dividend
period, whether or not dividends are declared and paid for any future dividend period with respect
to the Series D Preferred Stock or the Common Stock or any other series of the Company’s preferred
stock.




          (d) If the Conversion Date (as defined below) with respect to any of the shares of Series D
Preferred Stock occurs prior to the record date for the payment of any dividend or distribution on
the Common Stock, the holder of such shares of Series D Preferred Stock to be converted shall not
have the right to receive any corresponding dividends or distributions on the Series D Preferred
Stock. If the Conversion Date with respect to the shares of Series D Preferred Stock occurs after
the record date for any declared dividend or distribution and prior to the payment date for that
dividend or distribution, the holder thereof shall receive that dividend or distribution on the
relevant payment date if such holder of Common Stock was the holder of record of shares of Series D
Preferred Stock on the record date for that dividend or distribution.




     5. Conversion.



          (a) The Company shall at all times maintain an agent for the purpose of the conversion of
shares of Series D Preferred Stock (the “Conversion Agent”), which may be an officer or
agent of the Company.




 









 








          (b) Upon delivery to the Company, from time to time, of one or more certifications by an
Initial Holder to the Company that it has determined that it (or any of its Affiliates that
comprise the Initial Holders) has obtained such Regulatory Approval as is required in order for
such Initial Holder (and, if applicable, such Affiliates) to hold a specified number of shares of
Common Stock issuable upon conversion of the Series D Preferred Stock, the number of shares of
Series D Preferred Stock with respect to which such certification has been delivered shall be
automatically converted into Common Stock at the Conversion Rate (as defined herein). Each
certification shall specify the number of shares of Series D Preferred Stock to be converted upon
delivery of such certification. The Initial Holder’s election to convert, evidenced by the
delivery of a certification, is irrevocable. In the event that fewer than all the shares of Series
D Preferred Stock are to be converted upon receipt of any certification described herein and such
shares are held by multiple Initial Holders, the shares of Series D Preferred Stock shall be
converted into Common Stock in proportion to the percentage of the Series D Preferred Stock held by
each such Initial Holder.




          (c) Any share of Series D Preferred Stock that is sold or transferred by an Initial Holder to
a person that is not also an Initial Holder in compliance with the transfer restrictions set forth
in the Investment Agreement shall be automatically converted, without further action by any person,
into the number of shares of Common Stock into which each share of Series D Preferred Stock was
convertible immediately prior to such sale or transfer.




          (d) Each share of Series D Preferred Stock to be converted in accordance with this Section
shall be converted into four shares of Common Stock, subject to adjustment from time to time as
described herein (the “Conversion Rate”).




          (e) Any certification from an Initial Holder provided pursuant to this Section shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request, provided that such certification may provide that no person other than
the Company and the Conversion Agent shall be entitled to rely on any such certification.




     6. Conversion Procedures.



          (a) In the event of an automatic conversion of the Series D Preferred Stock pursuant to
Section 5, the outstanding shares of Series D Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent, and provided further
that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates formerly evidencing such shares of
Series D Preferred Stock are either delivered to the Company or its transfer agent, or the holder
notifies the Company or its transfer agent that such certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection with such certificates. The Company shall, as soon as
practicable after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series D Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which such holder shall be
entitled as aforesaid and a check payable to the holder in the



 









 






amount of any cash amounts payable as the result of a conversion into fractional shares of
Common Stock as provided in subsection (f) below; provided, however, that
notwithstanding the foregoing, upon such delivery of certificates formerly representing the Series
D Preferred Stock or of agreement and indemnification in the case of a lost certificate, the
Company may determine that the shares of Common Stock issued upon the conversion of the Series D
Preferred Stock shall be uncertificated, in which case the Company or its transfer agent will make
the appropriate entries into the records of the Company and the Company shall not be obligated to
issue a stock certificate for such shares of Common Stock.




          (b) Effective immediately upon conversion of any share of Series D Preferred Stock, dividends
shall no longer be declared on any such converted share of Series D Preferred Stock and such share
of Series D Preferred Stock shall cease to be outstanding, in each case, subject to the right of
the holder of Series D Preferred Stock to receive any declared and unpaid dividends on such share
to the extent provided herein and any other payments to which such holder is otherwise entitled
hereunder.




          (c) No allowance or adjustment, except as expressly provided herein, shall be made in respect
of dividends payable to holders of the Common Stock of record as of any date prior to the close of
business on the date any share of Series D Preferred Stock is converted (the “Conversion
Date”) with respect to any share of Series D Preferred Stock. Prior to the close of business
on the Conversion Date with respect to any share of Series D Preferred Stock, shares of Common
Stock issuable upon conversion thereof shall not be deemed outstanding for any purpose, and the
holder of such share of Series D Preferred Stock shall have no rights with respect to the Common
Stock issuable upon conversion (including voting rights, rights to respond to tender offers for the
Common Stock or other securities issuable upon conversion and rights to receive any dividends or
other distributions on the Common Stock or other securities issuable upon conversion) by virtue of
holding such share of Series D Preferred Stock.




          (d) Upon the conversion of any Series D Preferred Stock that is converted in part, the Company
shall issue or cause to be issued to the holder a new certificate representing shares of Series D
Preferred Stock equal in number to the unconverted portion of the shares of Series D Preferred
Stock represented by the certificate so surrendered.




          (e) The person or persons entitled to receive the Common Stock upon conversion of Series D
Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common
Stock and/or securities as of the close of business on the Conversion Date with respect thereto.
In the event that a holder shall not by written notice designate the name in which shares of Common
Stock and/or cash, securities or other property (including payments of cash in lieu of fractional
shares) to be issued or paid upon conversion of shares of Series D Preferred Stock should be
registered or paid or the manner in which such shares should be delivered, the Company shall be
entitled to register and deliver such shares, and make such payment, in the name of the holder and
in the manner shown on the records of the Company.





      (f) (i) No fractional shares or scrip representing fractional shares of Common Stock
shall be issued upon the conversion of any shares of Series D Preferred Stock. Instead of
any fractional interest in a share of Common Stock which would otherwise be deliverable upon
the conversion of a share of Series D Preferred Stock, the



 









 







Company shall pay to the holder of such share of Series D Preferred Stock an amount in
cash (computed to the nearest cent) equal to the product of (A) such fraction and (B) the
current market price (as defined below) of a share of Common Stock on the second trading day
immediately preceding the day of conversion. If more than one share of Series D Preferred
Stock shall be surrendered for conversion at one time by the same holder, the number of full
 shares of Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series D Preferred Stock so surrendered.




          (ii) The “current market price” per share of Common Stock at any date shall be
deemed to be the average of the daily closing prices for the five consecutive trading days
immediately prior to the date in question. The closing price for each day shall be the
closing price per share of Common Stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on that day as reported in composite transactions
for the principal national securities exchange on which the Common Stock is listed for
trading. The closing price shall be determined without reference to after-hours or extended
market trading. If the Common Stock is not listed for trading on a national securities
exchange on the relevant date, the “closing price” of the Common Stock shall be the last
quoted bid price for the Common Stock in the over-the-counter market on the relevant date as
reported by the Pink OTC Markets, Inc. or similar organization. If the Common Stock is not
so quoted, the “closing price” of the Common Stock shall be determined by a U.S. nationally
recognized independent investment banking firm selected by the Company for this purpose.



          (g) The Company shall pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on the conversion of shares
of Series D Preferred Stock pursuant to Section 5 and this Section; provided,
however, that the Company shall not be required to pay any tax which may be payable in
respect of any registration or transfer involved in the issue or delivery of Common Stock in a name
other than that of the registered holder of Series D Preferred Stock converted or to be converted,
and no such issue or delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid.




     7. Adjustments.



          (a) If the Company shall (i) pay a dividend or make any other distribution with respect to its
Common Stock which consists in whole or in part of shares of its Common Stock, (ii) subdivide or
reclassify its Common Stock into a greater number of shares or (iii) combine or reclassify its
Common Stock into a lesser number of shares, then in each of clause (i), (ii) and (iii), the
Conversion Rate shall be adjusted (regardless of whether or not actual conversion at such time
would be permissible under Section 5 hereof) so that a holder of any shares of Series D Preferred
Stock thereafter converted shall be entitled to receive the number and kind of other securities
that such holder of Series D Preferred Stock would have owned or been entitled to receive after the
happening of such dividend, subdivision, combination, or other reclassification had such shares of
Series D Preferred Stock been converted immediately prior to



 









 






the happening of such reclassification or any record date with respect thereto. An
adjustment made pursuant to this Section shall become effective on the date of the dividend
payment, subdivision, combination or issuance and shall be applied from the record date with
respect thereto, if any, for such event. Such adjustment shall be made successively.




          (b) If the Company shall be a party to any transaction, including a merger, consolidation,
sale of all or substantially all of the Company’s assets, reorganization, liquidation or
recapitalization of the Common Stock (each of the foregoing being referred to as a
“Transaction”), in each case as a result of which shares of Common Stock shall be converted
into the right to receive stock, securities or other property (including cash or any combination
thereof), then, in connection with such Transaction, the Company shall make provision for the
Series D Preferred Stock to be converted into the amount of shares of stock and other securities
and the right to receive the property receivable (including cash) by a holder of that number of
shares of Common Stock into which one share of Series D Preferred Stock was convertible immediately
prior to such Transaction (regardless of whether or not actual conversion into Common Stock at such
time would be permissible under Section 5 hereof) and upon consummation of the Transaction the
Series D Preferred Stock shall be automatically converted into such amount of stock and other
securities and the right to receive property at the same time and in the same manner as the Common
Stock is so converted (or as promptly as practicable thereafter). Any shares of stock and other
securities and property shall be payable to the holder upon surrender of the shares of Series D
Preferred Stock or as otherwise provided for as if such delivery were of Common Stock and cash
pursuant to Section 6(a). The Company shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this Section.




          (c) Notwithstanding the foregoing, in any case in which this Section provides that an
adjustment shall become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (A) issuing to the holder of any shares of Series D
Preferred Stock converted after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion before giving effect to such
adjustment and (B) paying to such holder any amount in cash in lieu of any fraction as provided
herein.




          (d) If the Company shall take any action affecting the shares of Common Stock, other than any
action described in this Section, which in the reasonable opinion of the Board of Directors would
adversely affect the conversion rights of the holders of Series D Preferred Stock, then the number
of shares of Common Stock that a share of Series D Preferred Stock is convertible into immediately
before such action shall be adjusted, to the extent permitted by applicable law or regulation, in
such manner and at such time as the Board of Directors may determine in good faith to be equitable
in the circumstances. Any such determinations shall be memorialized in writing and shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request.




          (e) Whenever the number of shares of Common Stock into which one share of Series D Preferred
Stock is convertible is adjusted as herein provided, the chief financial officer of the Company or
his or her designee(s) shall compute the required adjustment in accordance



 









 






with the foregoing provisions and shall prepare a certificate setting forth such adjustment
and showing in reasonable detail the facts upon which such adjustment is based. A copy of such
certificate shall be filed promptly with the Conversion Agent and mailed to each holder of shares
of Series D Preferred Stock at such holder’s last address as shown on the stock books of the
Company.




          (f) The Company shall not, without the consent of a majority of the shares of the outstanding
Series D Preferred Stock, voting separately as a class, make a publicly-announced tender offer for
its Common Stock unless the Company provides to all holders of the Series D Preferred Stock the
right to participate in the tender offer on the same terms and conditions as holders of Common
Stock, provided that any Series D Preferred Shares tendered shall receive, upon surrender of the
Series D Preferred Stock to the Company, the consideration payable with respect to the number of
shares of Common Stock into which the Series D Preferred Stock so tendered would be convertible at
the time immediately prior to the consummation of the tender offer (regardless of whether or not
actual conversion at such time would be permissible under Section 5 hereof). 




     8. Reservation of Common Stock.



          (a) The Company shall at all times reserve and keep available, free from all liens, charges
and security interests and not subject to any preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its
treasury, or both, solely for the purpose of effecting the conversion of Series D Preferred Stock,
the full number of shares of Common Stock then deliverable upon the conversion of all outstanding
shares of Series D Preferred Stock.




          (b) Notwithstanding the foregoing, the Company shall be entitled to deliver upon conversion of
shares of Series D Preferred Stock, as herein provided, shares of Common Stock acquired by the
Company (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any
such acquired shares are free and clear of all liens, charges, security interests or encumbrances
(other than liens, charges, security interests and other encumbrances created by the holders of the
Series D Preferred Stock).




          (c) All shares of Common Stock delivered upon conversion of the Series D Preferred Stock shall
be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens,
claims, security interests and other encumbrances and not subject to any preemptive rights (other
than liens, charges, security interests and other encumbrances created by the holders the Series D
Preferred Stock).




          (d) The Company hereby covenants and agrees that, if at any time the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange or automated
quotation system, the Company shall, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, all the Common Stock issuable upon conversion of the Series
D Preferred Stock; provided, however, that if the rules of such exchange or
automated quotation system permit the Company to defer the listing of such Common Stock until the
first conversion of Series D Preferred Stock into Common Stock in accordance with the provisions
hereof, the Company covenants to list such Common Stock



 









 






issuable upon conversion of the Series D Preferred Stock in accordance with the requirements
of such exchange or automated quotation system at such time.




     9. Liquidation, Dissolution and Winding Up.



          (a) Upon any liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Series D Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are stated capital or
surplus of any nature, an amount on such date equal to $0.02 per share of Series D Preferred Stock,
plus the amount of any declared but unpaid dividends thereon to and including the date of such
liquidation, out of assets legally available for distribution to the Company’s stockholders before
any distribution of assets is made to the holders of Common Stock. After payment to the holders of
the Series D Preferred Stock of the amounts set forth in preceding sentence, the entire remaining
assets and funds of the Company legally available for distribution, if any, shall be distributed
among the holders of the Common Stock and the Series D Preferred Stock in proportion to the shares
of Common Stock then held by them and the shares of Common Stock which they then have the right to
acquire upon conversion of the shares of Series D Preferred Stock then held by them (regardless of
whether or not actual conversion at such time would be permissible under Section 5 hereof).




          (b) In the event the assets of the Company available for distribution to stockholders upon any
liquidation, dissolution or winding-up of the affairs of the Company, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with respect to all
outstanding shares of the Series D Preferred Stock, holders of the Series D Preferred Stock shall
share ratably in any distribution of assets of the Company in proportion to the full respective
liquidating distributions to which they would otherwise be respectively entitled.




          (c) The Company’s consolidation or merger with or into any other entity, the consolidation or
merger of any other entity with or into the Company, or the sale of all or substantially all of the
Company’s property or business shall not constitute its liquidation, dissolution or winding up.




     10. Maturity. The Series D Preferred Stock shall be perpetual unless converted in
accordance with this Certificate of Designation.



     11. No Redemption; No Sinking Fund.



          (a) The shares of Series D Preferred Stock shall not be subject to redemption by the Company
or at the option of any holder of Series D Preferred Stock; provided, however, that
the Company may purchase or otherwise acquire outstanding shares of Series D Preferred Stock by
offer to any holder or holders thereof.




          (b) The shares of Series D Preferred Stock shall not be subject to or entitled to the
operation of a retirement or sinking fund.




 









 








     12. Voting Rights.



          (a) Except as expressly provided in this Section and in Section 7(g) or as otherwise required
by applicable law or regulation, holders of the Series D Preferred Stock shall have no voting
rights.




          (b) So long as any shares of the Series D Preferred Stock are outstanding, the Company shall
not, without the consent or vote of the holders of a majority of the outstanding shares of the
Series D Preferred Stock, voting separately as a class, amend, alter or repeal or otherwise change
(including in connection with any merger or consolidation or otherwise) any provision of the
Certificate of Incorporation of the Company or this Certificate of Designation, if such amendment
would increase the authorized shares of the Series D Preferred Stock or alter or change the powers,
preferences or special rights of the shares of the Series D Preferred Stock so as to affect the
Series D Preferred Stock adversely.




     13. Exclusion of Other Rights. Except as may otherwise be required by law or
specifically set forth in this Certificate of Designation and the Certificate of Incorporation, as
they may be amended from time to time, the Series D Preferred Stock shall not have any other
powers, preferences and relative, participating, optional or other special rights.



     14. Severability of Provisions. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series D Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this Certificate of Designation
are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy,
all other voting powers, preferences and relative, participating, optional and other special rights
of the Series D Preferred Stock and qualifications, limitations and restrictions thereof set forth
in this Certificate of Designation that can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional or other special
rights of the Series D Preferred Stock and qualifications, limitations and restrictions thereof
shall, nevertheless, remain in full force and effect, and no voting powers, preferences and
relative, participating, optional or other special rights of the Series D Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such voting powers, preferences and relative, participating, optional or other
special rights of the Series D Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.



     15. Reissuance of Series D Preferred Stock. Shares of Series D Preferred Stock that
have been duly converted into Common Stock or otherwise reacquired in any manner, including shares
purchased by the Company or exchanged or converted, shall not be reissued as Series D Preferred
Stock and shall upon compliance with any applicable provisions of the laws of the State of Delaware
have the status of authorized but unissued shares of preferred stock of the Company undesignated as
to series. The Company may from time to time take such appropriate action as may be necessary to
reduce the authorized number of shares of Series D Preferred Stock.



     16. Mutilated or Missing Series D Preferred Stock Certificates. If any certificate
representing any shares of the Series D Preferred Stock shall be mutilated, lost, stolen or



 









 







destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated certificate, or in lieu of and substitution for such certificate, a new
certificate of like tenor and representing an equivalent amount of shares of Series D Preferred
Stock of the same class, but only upon receipt of evidence of such loss, theft or destruction of
such certificate and indemnity, if requested, satisfactory to the Company and the transfer agent
(if other than the Company).



     17. Fractional Shares. The Series D Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional shares, to receive
dividends, participate in dividends and distributions and to have the benefit of all other rights
of holders of the Series D Preferred Stock, including the conversion provisions provided in Section
5.



 









 





     IN WITNESS WHEREOF, this Certificate of Designation has been executed on behalf of the Company
by Ricardo A. Anzaldúa, its duly authorized Senior Vice President and Corporate Secretary.



	 	 	 	 	 
	 	THE HARTFORD FINANCIAL SERVICES 

GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Ricardo A. Anzaldúa 	 
	 	 	Senior Vice President and Corporate Secretary 	 
	 




 











 





Annex A-2 to Investment Agreement




ANNEX A-2
CERTIFICATE OF DESIGNATIONS, VOTING POWERS,

PREFERENCES AND RELATIVE, PARTICIPATING,

OPTIONAL AND OTHER SPECIAL RIGHTS AND

QUALIFICATIONS, LIMITATIONS OR

RESTRICTIONS OF SERIES B NON-VOTING CONTINGENT CONVERTIBLE PREFERRED STOCK

OF

THE HARTFORD FINANCIAL SERVICES GROUP, INC.




 






Pursuant to Section 151 of the

General Corporation Law of the State of Delaware




 






          The Hartford Financial Services Group, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the “Company”), in accordance with the
provisions of Section 151 thereof, DOES HEREBY CERTIFY:




          The Special Committee (the “Committee”) of the board of directors of the Company (the
“Board”), in accordance with the resolutions of the Board dated October 15, 2008, the
provisions of the Amended and Restated Certificate of Incorporation and Section 151(g) of the
General Corporation Law of the State of Delaware, by unanimous written consent dated October 16,
2008, adopted the following resolution fixing the powers, preferences and relative, participating,
optional or other rights and the qualifications, limitations and restrictions of 8,800,000 shares
of Series B Non-Voting Contingent Convertible Preferred Stock of the Company.





RESOLVED, that pursuant to the authority vested in the Committee in
accordance with the resolutions of the Board dated October 15, 2008
and in accordance with the provisions of the Amended and Restated
Certificate of Incorporation, a series of Preferred Stock, par value
$0.01 per share, of the Company be and hereby is created, and that
the designation and number of shares thereof and the voting and
other powers, preferences and relative, participating, optional or
other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:



     1. Designation and Number of Shares. The designation of the series of preferred stock
is the “Series B Non-Voting Contingent Convertible Preferred Stock” (the “Series B Preferred
Stock”), having a par value of $0.01 per share and a liquidation preference of $0.02 per share.
The number of shares constituting such series is 8,800,000.



1









 





     2. Definitions. As used herein the following terms shall have the following meanings,
whether used in the singular or the plural:



          (a) “Affiliate” of any specified person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified person.
For the purposes of this definition, “control” when used with respect to any specified
person means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.




          (b) “Board of Directors” means the Board of Directors of the Company or any duly
authorized committee thereof.




          (c) “Initial Holder” means Allianz SE, any Affiliate of Allianz SE that is an initial
purchaser of the Series B Preferred Stock or an Affiliate of Allianz SE to whom Allianz SE (or such
initial purchaser) has transferred, directly or indirectly, the Series B Preferred Stock in
accordance with the terms of the Investment Agreement, acting individually or as a group, as the
context may require.




          (d) “Investment Agreement” means the Investment Agreement dated October 17, 2008
between the Company and Allianz SE, as it may be amended from time to time.




          (e) “Regulatory Approvals” with respect to a holder, means, to the extent applicable
and required to permit the holder to convert such holder’s shares of Series B Preferred Stock into
Common Stock and to own such Common Stock without the holder being in violation of applicable law,
rule or regulation, the receipt of any necessary approvals and authorizations, filings and
registrations with, and notifications to, relevant any United States and other governmental or
regulatory authorities, including insurance regulatory authorities and the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.




          (f) “Shareholder Approval” means the approval by the stockholders of the Company for
the issuance of Common Stock upon conversion of the Series B Preferred Shares for purposes of
Section 312.03 of the NYSE Listed Company Manual (or any successor provision).




     3. Ranking. The Series B Preferred Stock shall rank pari passu with the Company’s
Series C Non-Voting Contingent Convertible Preferred Stock, the Company’s Series D Non-Voting
Contingent Convertible Preferred Stock, the common stock, par value $0.01 per share, of the Company
(the “Common Stock”) and the Company’s Series A Participating Cumulative Preferred Stock
(except, with respect to the Common Stock and the Series A Participating Cumulative Preferred
Stock, for the liquidation preference). Subject to the preceding sentence, the Series B Non-Voting
Contingent Convertible Stock shall rank junior to each other series of the preferred stock of the
Company, unless the Board of Directors shall specifically determine otherwise in fixing the
designations, powers, preferences and relative, participating, optional and



 









 







other special rights of the shares of such series and the qualifications, limitations or
restrictions thereof.



     4. Dividends.



          (a) So long as any shares of the Series B Preferred Stock remain outstanding, if the Company
declares any dividend or distribution of cash, securities (including rights, warrants, options or
evidences of indebtedness) or properties or assets other than shares of Common Stock to be paid
from time to time out of any assets legally available for such payment (to the extent dividends or
distributions consist of shares of Common Stock an adjustment will be made pursuant to Section 7(a)
hereof), then the Company shall simultaneously declare a dividend or distribution on shares of
Series B Preferred Stock in the amount of dividends or distributions that would be made with
respect to shares of Series B Preferred Stock if such shares were converted into shares of Common
Stock on the record date for such dividend or distribution (regardless of whether or not actual
conversion at such time would be permissible under Section 5 hereof). No dividend or distribution
shall be payable to holders of shares of Common Stock unless the full dividends or distributions
contemplated by this Section are paid at the same time in respect of the Series B Preferred Stock.




          (b) Each dividend or distribution shall be payable to holders of the Series B Preferred Stock
as they appear in the records of the Company at the close of business on the same record date as
the record date for the payment of the corresponding dividend or distribution to the holders of
shares of Common Stock.




          (c) Dividends on the Series B Preferred Stock are non-cumulative. If the Company does not
declare a dividend on the Common Stock or the Series B Preferred Stock in respect of any period,
the holders of the Series B Preferred Stock shall have no right to receive any dividend for such
dividend period, and the Company shall have no obligation to pay a dividend for such dividend
period, whether or not dividends are declared and paid for any future dividend period with respect
to the Series B Preferred Stock or the Common Stock or any other series of the Company’s preferred
stock.




          (d) If the Conversion Date (as defined below) with respect to any of the shares of Series B
Preferred Stock occurs prior to the record date for the payment of any dividend or distribution on
the Common Stock, the holder of such shares of Series B Preferred Stock to be converted shall not
have the right to receive any corresponding dividends or distributions on the Series B Preferred
Stock. If the Conversion Date with respect to the shares of Series B Preferred Stock occurs after
the record date for any declared dividend or distribution and prior to the payment date for that
dividend or distribution, the holder thereof shall receive that dividend or distribution on the
relevant payment date if such holder of Common Stock was the holder of record of shares of Series B
Preferred Stock on the record date for that dividend or distribution.




     5. Conversion.



          (a) The Company shall at all times maintain an agent for the purpose of the conversion of
shares of Series B Preferred Stock (the “Conversion Agent”), which may be an officer or
agent of the Company.




 









 








          (b) Upon delivery to the Company, from time to time, of one or more certifications by an
Initial Holder to the Company that it has determined that it (or any of its Affiliates that
comprise the Initial Holders) has obtained such Regulatory Approval as is required in order for
such Initial Holder (and, if applicable, such Affiliates) to hold a specified number of shares of
Common Stock issuable upon conversion of the Series B Preferred Stock, the number of shares of
Series B Preferred Stock with respect to which such certification has been delivered shall be
automatically converted into Common Stock at the Conversion Rate (as defined herein). Each
certification shall specify the number of shares of Series B Preferred Stock to be converted upon
delivery of such certification. The Initial Holder’s election to convert, evidenced by the
delivery of a certification, is irrevocable. In the event that fewer than all the shares of Series
B Preferred Stock are to be converted upon receipt of any certification described herein and such
shares are held by multiple Initial Holders, the shares of Series B Preferred Stock shall be
converted into Common Stock in proportion to the percentage of the Series B Preferred Stock held by
each such Initial Holder.




          (c) Any share of Series B Preferred Stock that is sold or transferred by an Initial Holder to
a person that is not also an Initial Holder in compliance with the transfer restrictions set forth
in the Investment Agreement shall be automatically converted, without further action by any person,
into the number of shares of Common Stock into which each share of Series B Preferred Stock was
convertible immediately prior to such sale or transfer.




          (d) Each share of Series B Preferred Stock to be converted in accordance with this Section
shall be converted into four shares of Common Stock, subject to adjustment from time to time as
described herein (the “Conversion Rate”).




          (e) Any certification from an Initial Holder provided pursuant to this Section shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request, provided that such certification may provide that no person other than
the Company and the Conversion Agent shall be entitled to rely on any such certification.




     6. Conversion Procedures.



          (a) In the event of an automatic conversion of the Series B Preferred Stock pursuant to
Section 5, the outstanding shares of Series B Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent, and provided further
that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates formerly evidencing such shares of
Series B Preferred Stock are either delivered to the Company or its transfer agent, or the holder
notifies the Company or its transfer agent that such certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection with such certificates. The Company shall, as soon as
practicable after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series B Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which such holder shall be
entitled as aforesaid and a check payable to the holder in the



 









 






amount of any cash amounts payable as the result of a conversion into fractional shares of
Common Stock as provided in subsection (f) below; provided, however, that
notwithstanding the foregoing, upon such delivery of certificates formerly representing the Series
B Preferred Stock or of agreement and indemnification in the case of a lost certificate, the
Company may determine that the shares of Common Stock issued upon the conversion of the Series B
Preferred Stock shall be uncertificated, in which case the Company or its transfer agent will make
the appropriate entries into the records of the Company and the Company shall not be obligated to
issue a stock certificate for such shares of Common Stock.




          (b) Effective immediately upon conversion of any share of Series B Preferred Stock, dividends
shall no longer be declared on any such converted share of Series B Preferred Stock and such share
of Series B Preferred Stock shall cease to be outstanding, in each case, subject to the right of
the holder of Series B Preferred Stock to receive any declared and unpaid dividends on such share
to the extent provided herein and any other payments to which such holder is otherwise entitled
hereunder.




          (c) No allowance or adjustment, except as expressly provided herein, shall be made in respect
of dividends payable to holders of the Common Stock of record as of any date prior to the close of
business on the date any share of Series B Preferred Stock is converted (the “Conversion
Date”) with respect to any share of Series B Preferred Stock. Prior to the close of business
on the Conversion Date with respect to any share of Series B Preferred Stock, shares of Common
Stock issuable upon conversion thereof shall not be deemed outstanding for any purpose, and the
holder of such share of Series B Preferred Stock shall have no rights with respect to the Common
Stock issuable upon conversion (including voting rights, rights to respond to tender offers for the
Common Stock or other securities issuable upon conversion and rights to receive any dividends or
other distributions on the Common Stock or other securities issuable upon conversion) by virtue of
holding such share of Series B Preferred Stock.




          (d) Upon the conversion of any Series B Preferred Stock that is converted in part, the Company
shall issue or cause to be issued to the holder a new certificate representing shares of Series B
Preferred Stock equal in number to the unconverted portion of the shares of Series B Preferred
Stock represented by the certificate so surrendered.




          (e) The person or persons entitled to receive the Common Stock upon conversion of Series B
Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common
Stock and/or securities as of the close of business on the Conversion Date with respect thereto.
In the event that a holder shall not by written notice designate the name in which shares of Common
Stock and/or cash, securities or other property (including payments of cash in lieu of fractional
shares) to be issued or paid upon conversion of shares of Series B Preferred Stock should be
registered or paid or the manner in which such shares should be delivered, the Company shall be
entitled to register and deliver such shares, and make such payment, in the name of the holder and
in the manner shown on the records of the Company.





     (f) (i) No fractional shares or scrip representing fractional shares of Common Stock
shall be issued upon the conversion of any shares of Series B Preferred Stock. Instead of
any fractional interest in a share of Common Stock which would otherwise be deliverable upon
the conversion of a share of Series B Preferred Stock, the



 









 







Company shall pay to the holder of such share of Series B Preferred Stock an amount in
cash (computed to the nearest cent) equal to the product of (A) such fraction and (B) the
current market price (as defined below) of a share of Common Stock on the second trading day
immediately preceding the day of conversion. If more than one share of Series B Preferred
Stock shall be surrendered for conversion at one time by the same holder, the number of full
 shares of Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series B Preferred Stock so surrendered.




          (ii) The “current market price” per share of Common Stock at any date shall be
deemed to be the average of the daily closing prices for the five consecutive trading days
immediately prior to the date in question. The closing price for each day shall be the
closing price per share of Common Stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on that day as reported in composite transactions
for the principal national securities exchange on which the Common Stock is listed for
trading. The closing price shall be determined without reference to after-hours or extended
market trading. If the Common Stock is not listed for trading on a national securities
exchange on the relevant date, the “closing price” of the Common Stock shall be the last
quoted bid price for the Common Stock in the over-the-counter market on the relevant date as
reported by the Pink OTC Markets, Inc. or similar organization. If the Common Stock is not
so quoted, the “closing price” of the Common Stock shall be determined by a U.S. nationally
recognized independent investment banking firm selected by the Company for this purpose.



          (g) The Company shall pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on the conversion of shares
of Series B Preferred Stock pursuant to Section 5 and this Section; provided,
however, that the Company shall not be required to pay any tax which may be payable in
respect of any registration or transfer involved in the issue or delivery of Common Stock in a name
other than that of the registered holder of Series B Preferred Stock converted or to be converted,
and no such issue or delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax or has established, to the satisfaction of the
Company, that such tax has been paid.




     7. Adjustments.



          (a) If the Company shall (i) pay a dividend or make any other distribution with respect to its
Common Stock which consists in whole or in part of shares of its Common Stock, (ii) subdivide or
reclassify its Common Stock into a greater number of shares or (iii) combine or reclassify its
Common Stock into a lesser number of shares, then in each of clause (i), (ii) and (iii), the
Conversion Rate shall be adjusted (regardless of whether or not actual conversion at such time
would be permissible under Section 5 hereof) so that a holder of any shares of Series B Preferred
Stock thereafter converted shall be entitled to receive the number and kind of other securities
that such holder of Series B Preferred Stock would have owned or been entitled to receive after the
happening of such dividend, subdivision, combination, or other reclassification had such shares of
Series B Preferred Stock been converted immediately prior to



 









 






the happening of such reclassification or any record date with respect thereto. An
adjustment made pursuant to this Section shall become effective on the date of the dividend
payment, subdivision, combination or issuance and shall be applied from the record date with
respect thereto, if any, for such event. Such adjustment shall be made successively.




          (b) If the Company shall be a party to any transaction, including a merger, consolidation,
sale of all or substantially all of the Company’s assets, reorganization, liquidation or
recapitalization of the Common Stock (each of the foregoing being referred to as a
“Transaction”), in each case as a result of which shares of Common Stock shall be converted
into the right to receive stock, securities or other property (including cash or any combination
thereof), then, in connection with such Transaction, the Company shall make provision for the
Series B Preferred Stock to be converted into the amount of shares of stock and other securities
and the right to receive the property receivable (including cash) by a holder of that number of
shares of Common Stock into which one share of Series B Preferred Stock was convertible immediately
prior to such Transaction (regardless of whether or not actual conversion into Common Stock at such
time would be permissible under Section 5 hereof) and upon consummation of the Transaction the
Series B Preferred Stock shall be automatically converted into such amount of stock and other
securities and the right to receive property at the same time and in the same manner as the Common
Stock is so converted (or as promptly as practicable thereafter). Any shares of stock and other
securities and property shall be payable to the holder upon surrender of the shares of Series B
Preferred Stock or as otherwise provided for as if such delivery were of Common Stock and cash
pursuant to Section 6(a). The Company shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this Section.




          (c) Notwithstanding the foregoing, in any case in which this Section provides that an
adjustment shall become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (A) issuing to the holder of any shares of Series B
Preferred Stock converted after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion before giving effect to such
adjustment and (B) paying to such holder any amount in cash in lieu of any fraction as provided
herein.




          (d) If the Company shall take any action affecting the shares of Common Stock, other than any
action described in this Section, which in the reasonable opinion of the Board of Directors would
adversely affect the conversion rights of the holders of Series B Preferred Stock, then the number
of shares of Common Stock that a share of Series B Preferred Stock is convertible into immediately
before such action shall be adjusted, to the extent permitted by applicable law or regulation, in
such manner and at such time as the Board of Directors may determine in good faith to be equitable
in the circumstances. Any such determinations shall be memorialized in writing and shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request.




          (e) Whenever the number of shares of Common Stock into which one share of Series B Preferred
Stock is convertible is adjusted as herein provided, the chief financial officer of the Company or
his or her designee(s) shall compute the required adjustment in accordance




 









 





with the foregoing provisions and shall prepare a certificate setting forth such adjustment
and showing in reasonable detail the facts upon which such adjustment is based. A copy of such
certificate shall be filed promptly with the Conversion Agent and mailed to each holder of shares
of Series B Preferred Stock at such holder’s last address as shown on the stock books of the
Company.




          (f) The Company shall not, without the consent of a majority of the shares of the outstanding
Series B Preferred Stock, voting separately as a class, make a publicly-announced tender offer for
its Common Stock unless the Company provides to all holders of the Series B Preferred Stock the
right to participate in the tender offer on the same terms and conditions as holders of Common
Stock, provided that any Series B Preferred Shares tendered shall receive, upon surrender of the
Series B Preferred Stock to the Company, the consideration payable with respect to the number of
shares of Common Stock into which the Series B Preferred Stock so tendered would be convertible at
the time immediately prior to the consummation of the tender offer (regardless of whether or not
actual conversion at such time would be permissible under Section 5 hereof).




     8. Reservation of Common Stock.



          (a) The Company shall at all times reserve and keep available, free from all liens, charges
and security interests and not subject to any preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its
treasury, or both, solely for the purpose of effecting the conversion of Series B Preferred Stock,
the full number of shares of Common Stock then deliverable upon the conversion of all outstanding
shares of Series B Preferred Stock.




          (b) Notwithstanding the foregoing, the Company shall be entitled to deliver upon conversion of
shares of Series B Preferred Stock, as herein provided, shares of Common Stock acquired by the
Company (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any
such acquired shares are free and clear of all liens, charges, security interests or encumbrances
(other than liens, charges, security interests and other encumbrances created by the holders of the
Series B Preferred Stock).




          (c) All shares of Common Stock delivered upon conversion of the Series B Preferred Stock shall
be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens,
claims, security interests and other encumbrances and not subject to any preemptive rights (other
than liens, charges, security interests and other encumbrances created by the holders the Series B
Preferred Stock).




          (d) The Company hereby covenants and agrees that, if at any time the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange or automated
quotation system, the Company shall, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, all the Common Stock issuable upon conversion of the Series
B Preferred Stock; provided, however, that if the rules of such exchange or
automated quotation system permit the Company to defer the listing of such Common Stock until the
first conversion of Series B Preferred Stock into Common Stock in accordance with the provisions
hereof, the Company covenants to list such Common Stock




 









 





issuable upon conversion of the Series B Preferred Stock in accordance with the requirements
of such exchange or automated quotation system at such time.




     9. Liquidation, Dissolution and Winding Up.



          (a) Upon any liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Series B Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are stated capital or
surplus of any nature, an amount on such date equal to $0.02 per share of Series B Preferred Stock,
plus the amount of any declared but unpaid dividends thereon to and including the date of such
liquidation, out of assets legally available for distribution to the Company’s stockholders before
any distribution of assets is made to the holders of Common Stock. After payment to the holders of
the Series B Preferred Stock of the amounts set forth in preceding sentence, the entire remaining
assets and funds of the Company legally available for distribution, if any, shall be distributed
among the holders of the Common Stock and the Series B Preferred Stock in proportion to the shares
of Common Stock then held by them and the shares of Common Stock which they then have the right to
acquire upon conversion of the shares of Series B Preferred Stock then held by them (regardless of
whether or not actual conversion at such time would be permissible under Section 5 hereof).




          (b) In the event the assets of the Company available for distribution to stockholders upon any
liquidation, dissolution or winding-up of the affairs of the Company, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with respect to all
outstanding shares of the Series B Preferred Stock, holders of the Series B Preferred Stock shall
share ratably in any distribution of assets of the Company in proportion to the full respective
liquidating distributions to which they would otherwise be respectively entitled.




          (c) The Company’s consolidation or merger with or into any other entity, the consolidation or
merger of any other entity with or into the Company, or the sale of all or substantially all of the
Company’s property or business shall not constitute its liquidation, dissolution or winding up.




     10. Maturity. The Series B Preferred Stock shall be perpetual unless converted in
accordance with this Certificate of Designation.



     11. No Redemption; No Sinking Fund.



          (a) The shares of Series B Preferred Stock shall not be subject to redemption by the Company
or at the option of any holder of Series B Preferred Stock; provided, however, that
the Company may purchase or otherwise acquire outstanding shares of Series B Preferred Stock by
offer to any holder or holders thereof.




          (b) The shares of Series B Preferred Stock shall not be subject to or entitled to the
operation of a retirement or sinking fund.




 









 





     12. Voting Rights.



          (a) Except as expressly provided in this Section and in Section 7(g) or as otherwise required
by applicable law or regulation, holders of the Series B Preferred Stock shall have no voting
rights.




          (b) So long as any shares of the Series B Preferred Stock are outstanding, the Company shall
not, without the consent or vote of the holders of a majority of the outstanding shares of the
Series B Preferred Stock, voting separately as a class, amend, alter or repeal or otherwise change
(including in connection with any merger or consolidation or otherwise) any provision of the
Certificate of Incorporation of the Company or this Certificate of Designation, if such amendment
would increase the authorized shares of the Series B Preferred Stock or alter or change the powers,
preferences or special rights of the shares of the Series B Preferred Stock so as to affect the
Series B Preferred Stock adversely.




     13. Exclusion of Other Rights. Except as may otherwise be required by law or
specifically set forth in this Certificate of Designation and the Certificate of Incorporation, as
they may be amended from time to time, the Series B Preferred Stock shall not have any other
powers, preferences and relative, participating, optional or other special rights.



     14. Severability of Provisions. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series B Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this Certificate of Designation
are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy,
all other voting powers, preferences and relative, participating, optional and other special rights
of the Series B Preferred Stock and qualifications, limitations and restrictions thereof set forth
in this Certificate of Designation that can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional or other special
rights of the Series B Preferred Stock and qualifications, limitations and restrictions thereof
shall, nevertheless, remain in full force and effect, and no voting powers, preferences and
relative, participating, optional or other special rights of the Series B Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such voting powers, preferences and relative, participating, optional or other
special rights of the Series B Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.



     15. Reissuance of Series B Preferred Stock. Shares of Series B Preferred Stock that
have been duly converted into Common Stock or otherwise reacquired in any manner, including shares
purchased by the Company or exchanged or converted, shall not be reissued as Series B Preferred
Stock and shall upon compliance with any applicable provisions of the laws of the State of Delaware
have the status of authorized but unissued shares of preferred stock of the Company undesignated as
to series. The Company may from time to time take such appropriate action as may be necessary to
reduce the authorized number of shares of Series B Preferred Stock.



     16. Mutilated or Missing Series B Preferred Stock Certificates. If any certificate
representing any shares of the Series B Preferred Stock shall be mutilated, lost, stolen or



 









 







destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated certificate, or in lieu of and substitution for such certificate, a new
certificate of like tenor and representing an equivalent amount of shares of Series B Preferred
Stock of the same class, but only upon receipt of evidence of such loss, theft or destruction of
such certificate and indemnity, if requested, satisfactory to the Company and the transfer agent
(if other than the Company).



     17. Fractional Shares. The Series B Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional shares, to receive
dividends, participate in dividends and distributions and to have the benefit of all other rights
of holders of the Series B Preferred Stock, including the conversion provisions provided in Section
5.



 









 





     IN WITNESS WHEREOF, this Certificate of Designation has been executed on behalf of the Company
by Ricardo A. Anzaldúa, its duly authorized Senior Vice President and Corporate Secretary.




	 	 	 	 	 
	 	THE HARTFORD FINANCIAL SERVICES 

GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Ricardo A. Anzaldúa 	 
	 	 	Senior Vice President and Corporate Secretary 	 
	 




 











 





Annex A-3 to Investment Agreement




ANNEX A-3
CERTIFICATE OF DESIGNATIONS, VOTING POWERS,

PREFERENCES AND RELATIVE, PARTICIPATING,

OPTIONAL AND OTHER SPECIAL RIGHTS AND

QUALIFICATIONS, LIMITATIONS OR

RESTRICTIONS OF SERIES C NON-VOTING CONTINGENT CONVERTIBLE PREFERRED STOCK

OF

THE HARTFORD FINANCIAL SERVICES GROUP, INC.




 






Pursuant to Section 151 of the

General Corporation Law of the State of Delaware




 






          The Hartford Financial Services Group, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the “Company”), in accordance with the
provisions of Section 151 thereof, DOES HEREBY CERTIFY:




          The Special Committee (the “Committee”) of the board of directors of the Company (the
“Board”), in accordance with the resolutions of the Board dated October 15, 2008, the
provisions of the Amended and Restated Certificate of Incorporation and Section 151(g) of the
General Corporation Law of the State of Delaware, by unanimous written consent dated October 16,
2008, adopted the following resolution fixing the powers, preferences and relative, participating,
optional or other rights and the qualifications, limitations and restrictions of 8,900,000 shares
of Series C Non-Voting Contingent Convertible Preferred Stock of the Company.





RESOLVED, that pursuant to the authority vested in the Committee in
accordance with the resolutions of the Board dated October 15, 2008
and in accordance with the provisions of the Amended and Restated
Certificate of Incorporation, a series of Preferred Stock, par value
$0.01 per share, of the Company be and hereby is created, and that
the designation and number of shares thereof and the voting and
other powers, preferences and relative, participating, optional or
other rights of the shares of such series and the qualifications,
limitations and restrictions thereof are as follows:



     1. Designation and Number of Shares. The designation of the series of preferred stock
is the “Series C Non-Voting Contingent Convertible Preferred Stock” (the “Series C Preferred
Stock”), having a par value of $0.01 per share and a liquidation preference of $0.02 per share.
The number of shares constituting such series is 8,900,000.



1









 





     2. Definitions. As used herein the following terms shall have the following meanings,
whether used in the singular or the plural:



          (a) “Affiliate” of any specified person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified person.
For the purposes of this definition, “control” when used with respect to any specified
person means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.




          (b) “Board of Directors” means the Board of Directors of the Company or any duly
authorized committee thereof.




          (c) “Initial Holder” means Allianz SE, any Affiliate of Allianz SE that is an initial
purchaser of the Series C Preferred Stock or an Affiliate of Allianz SE to whom Allianz SE (or such
initial purchaser) has transferred, directly or indirectly, the Series C Preferred Stock in
accordance with the terms of the Investment Agreement, acting individually or as a group, as the
context may require.




          (d) “Investment Agreement” means the Investment Agreement dated October 17, 2008
between the Company and Allianz SE, as it may be amended from time to time.




          (e) “Regulatory Approvals” with respect to a holder, means, to the extent applicable
and required to permit the holder to convert such holder’s shares of Series C Preferred Stock into
Common Stock and to own such Common Stock without the holder being in violation of applicable law,
rule or regulation, the receipt of any necessary approvals and authorizations, filings and
registrations with, and notifications to, relevant any United States and other governmental or
regulatory authorities, including insurance regulatory authorities and the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.




          (f) “Shareholder Approval” means the approval by the stockholders of the Company for
the issuance of Common Stock upon conversion of the Series C Preferred Shares into Common Stock for
purposes of Section 312.03 of the NYSE Listed Company Manual (or any successor provision).




     3. Ranking. The Series C Preferred Stock shall rank pari passu with the Company’s
Series B Non-Voting Contingent Convertible Preferred Stock, the Company’s Series D Non-Voting
Contingent Convertible Preferred Stock, the common stock, par value $0.01 per share, of the Company
(the “Common Stock”) and the Company’s Series A Participating Cumulative Preferred Stock
(except, with respect to the Common Stock and the Series A Participating Cumulative Preferred
Stock, for the liquidation preference). Subject to the preceding sentence, the Series C Non-Voting
Contingent Convertible Stock shall rank junior to each other series of the preferred stock of the
Company, unless the Board of Directors shall specifically determine otherwise in fixing the
designations, powers, preferences and relative, participating, optional and



 









 




other special rights of the shares of such series and the qualifications, limitations or
restrictions thereof.




     4. Dividends.



          (a) So long as any shares of the Series C Preferred Stock remain outstanding, if the Company
declares any dividend or distribution of cash, securities (including rights, warrants, options or
evidences of indebtedness) or properties or assets other than shares of Common Stock to be paid
from time to time out of any assets legally available for such payment (to the extent dividends or
distributions consist of shares of Common Stock an adjustment will be made pursuant to Section 7(a)
hereof), then the Company shall simultaneously declare a dividend or distribution on shares of
Series C Preferred Stock in the amount of dividends or distributions that would be made with
respect to shares of Series C Preferred Stock if such shares were converted into shares of Common
Stock on the record date for such dividend or distribution (regardless of whether or not actual
conversion at such time would be permissible under Section 5 hereof). No dividend or distribution
shall be payable to holders of shares of Common Stock unless the full dividends or distributions
contemplated by this Section are paid at the same time in respect of the Series C Preferred Stock.




          (b) Each dividend or distribution shall be payable to holders of the Series C Preferred Stock
as they appear in the records of the Company at the close of business on the same record date as
the record date for the payment of the corresponding dividend or distribution to the holders of
shares of Common Stock.




          (c) Dividends on the Series C Preferred Stock are non-cumulative. If the Company does not
declare a dividend on the Common Stock or the Series C Preferred Stock in respect of any period,
the holders of the Series C Preferred Stock shall have no right to receive any dividend for such
dividend period, and the Company shall have no obligation to pay a dividend for such dividend
period, whether or not dividends are declared and paid for any future dividend period with respect
to the Series C Preferred Stock or the Common Stock or any other series of the Company’s preferred
stock.




          (d) If the Conversion Date (as defined below) with respect to any of the shares of Series C
Preferred Stock occurs prior to the record date for the payment of any dividend or distribution on
the Common Stock, the holder of such shares of Series C Preferred Stock to be converted shall not
have the right to receive any corresponding dividends or distributions on the Series C Preferred
Stock. If the Conversion Date with respect to the shares of Series C Preferred Stock occurs after
the record date for any declared dividend or distribution and prior to the payment date for that
dividend or distribution, the holder thereof shall receive that dividend or distribution on the
relevant payment date if such holder of Common Stock was the holder of record of shares of Series C
Preferred Stock on the record date for that dividend or distribution.




     5. Conversion.



          (a) The Company shall at all times maintain an agent for the purpose of the conversion of
shares of Series C Preferred Stock (the “Conversion Agent”), which may be an officer or
agent of the Company.




 









 








          (b) Unless and until Shareholder Approval has been obtained, no conversion of the Series C
Preferred Stock into Common Stock shall occur or be permitted hereunder. The Company shall notify
the Initial Holders of the receipt of Shareholder Approval, on the day of receipt thereof (or as
promptly as practicable thereafter) (the “Shareholder Approval Notice”). If the Initial
Holder delivers a certification providing that all required Regulatory Approvals provided for in
subsection (c) below have been received and that the Initial Holder (or any of its Affiliates that
comprise the Initial Holders) may hold the number of shares of Common Stock issuable upon
conversion of all the shares of Series C Preferred Stock, then, provided Shareholder Approval has
previously been obtained, the Company shall instruct the Conversion Agent to convert into Common
Stock, without further action by any person, all then outstanding shares of Series C Preferred
Stock held by the Initial Holders. Nothing in the foregoing sentence shall limit any partial
conversions as contemplated by subsection (c) below.




          (c) Subject to subsection (b) above, upon delivery to the Company, from time to time, of one
or more certifications by an Initial Holder to the Company that it has determined that it (or any
of its Affiliates that comprise the Initial Holder) has obtained such Regulatory Approval as is
required in order for such Initial Holder (and, if applicable, such Affiliates) to hold a specified
number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock, the
number of shares of Series C Preferred Stock with respect to which such certification has been
delivered shall be automatically converted into Common Stock at the Conversion Rate (as defined
herein). Each certification shall specify the number of shares of Series C Preferred Stock to be
converted upon delivery of such certification. The Initial Holder’s election to convert, evidenced
by the delivery of a certification, is irrevocable. In the event that fewer than all the shares of
Series C Preferred Stock are to be converted upon receipt of any certification described herein and
such shares are held by multiple Initial Holders, the shares of Series C Preferred Stock shall be
converted into Common Stock in proportion to the percentage of the Series C Preferred Stock held by
each such Initial Holder.




          (d) Subject to subsection (b) above, any share of Series C Preferred Stock that is sold or
transferred by an Initial Holder to a person that is not also an Initial Holder (an
“Unaffiliated Holder”) in compliance with the transfer restrictions set forth in the
Investment Agreement shall be automatically converted, without further action by any person, into
the number of shares of Common Stock into which each share of Series C Preferred Stock was
convertible immediately prior to such sale or transfer. In the event any such sale or transfer to
an Unaffiliated Holder occurs prior to the receipt of Shareholder Approval and following such sale
or transfer Shareholder Approval is obtained, each share of the Series C Preferred Stock that has
been sold or transferred shall be automatically converted, without further action by any person,
into the number of shares of Common Stock into which each share of Series C Preferred Stock was
convertible immediately prior to such sale or transfer.




          (e) Each share of Series C Preferred Stock to be converted in accordance with this Section
shall be converted into four shares of Common Stock, subject to adjustment from time to time as
described herein (the “Conversion Rate”).




          (f) Any certification from an Initial Holder provided pursuant to this Section shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request, provided that such certification may provide that no




 









 







person other than the Company and the Conversion Agent shall be entitled to rely on any such
certification.




     6. Conversion Procedures.



          (a) In the event of an automatic conversion of the Series C Preferred Stock pursuant to
Section 5, the outstanding shares of Series C Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent, and provided further
that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates formerly evidencing such shares of
Series C Preferred Stock are either delivered to the Company or its transfer agent, or the holder
notifies the Company or its transfer agent that such certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection with such certificates. The Company shall, as soon as
practicable after such delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series C Preferred Stock, a
certificate or certificates for the number of shares of Common Stock to which such holder shall be
entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable
as the result of a conversion into fractional shares of Common Stock as provided in subsection (f)
below; provided, however, that notwithstanding the foregoing, upon such delivery of
certificates formerly representing the Series C Preferred Stock or of agreement and indemnification
in the case of a lost certificate, the Company may determine that the shares of Common Stock issued
upon the conversion of the Series C Preferred Stock shall be uncertificated, in which case the
Company or its transfer agent will make the appropriate entries into the records of the Company and
the Company shall not be obligated to issue a stock certificate for such shares of Common Stock.




          (b) Effective immediately upon conversion of any share of Series C Preferred Stock, dividends
shall no longer be declared on any such converted share of Series C Preferred Stock and such share
of Series C Preferred Stock shall cease to be outstanding, in each case, subject to the right of
the holder of Series C Preferred Stock to receive any declared and unpaid dividends on such share
to the extent provided herein and any other payments to which such holder is otherwise entitled
hereunder.




          (c) No allowance or adjustment, except as expressly provided herein, shall be made in respect
of dividends payable to holders of the Common Stock of record as of any date prior to the close of
business on the date any share of Series C Preferred Stock is converted (the “Conversion
Date”) with respect to any share of Series C Preferred Stock. Prior to the close of business
on the Conversion Date with respect to any share of Series C Preferred Stock, shares of Common
Stock issuable upon conversion thereof shall not be deemed outstanding for any purpose, and the
holder of such share of Series C Preferred Stock shall have no rights with respect to the Common
Stock issuable upon conversion (including voting rights, rights to respond to tender offers for the
Common Stock or other securities issuable upon conversion and rights to receive any dividends or
other distributions on the Common Stock or other securities issuable upon conversion) by virtue of
holding such share of Series C Preferred Stock.




 









 








          (d) Upon the conversion of any Series C Preferred Stock that is converted in part, the Company
shall issue or cause to be issued to the holder a new certificate representing shares of Series C
Preferred Stock equal in number to the unconverted portion of the shares of Series C Preferred
Stock represented by the certificate so surrendered.




          (e) The person or persons entitled to receive the Common Stock upon conversion of Series C
Preferred Stock shall be treated for all purposes as the record holder(s) of such shares of Common
Stock and/or securities as of the close of business on the Conversion Date with respect thereto.
In the event that a holder shall not by written notice designate the name in which shares of Common
Stock and/or cash, securities or other property (including payments of cash in lieu of fractional
shares) to be issued or paid upon conversion of shares of Series C Preferred Stock should be
registered or paid or the manner in which such shares should be delivered, the Company shall be
entitled to register and deliver such shares, and make such payment, in the name of the holder and
in the manner shown on the records of the Company.





     (f) (i) No fractional shares or scrip representing fractional shares of Common Stock
shall be issued upon the conversion of any shares of Series C Preferred Stock. Instead of
any fractional interest in a share of Common Stock which would otherwise be deliverable upon
the conversion of a share of Series C Preferred Stock, the Company shall pay to the holder
of such share of Series C Preferred Stock an amount in cash (computed to the nearest cent)
equal to the product of (A) such fraction and (B) the current market price (as defined
below) of a share of Common Stock on the second trading day immediately preceding the day of
conversion. If more than one share of Series C Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate number of
shares of Series C Preferred Stock so surrendered.




          (ii) The “current market price” per share of Common Stock at any date shall be
deemed to be the average of the daily closing prices for the five consecutive trading days
immediately prior to the date in question. The closing price for each day shall be the
closing price per share of Common Stock (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on that day as reported in composite transactions
for the principal national securities exchange on which the Common Stock is listed for
trading. The closing price shall be determined without reference to after-hours or extended
market trading. If the Common Stock is not listed for trading on a national securities
exchange on the relevant date, the “closing price” of the Common Stock shall be the last
quoted bid price for the Common Stock in the over-the-counter market on the relevant date as
reported by the Pink OTC Markets, Inc. or similar organization. If the Common Stock is not
so quoted, the “closing price” of the Common Stock shall be determined by a U.S. nationally
recognized independent investment banking firm selected by the Company for this purpose.



          (g) The Company shall pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on the conversion of shares
of Series C Preferred Stock pursuant to Section 5 and this Section;



 









 




provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any registration or transfer involved in the issue or delivery of
Common Stock in a name other than that of the registered holder of Series C Preferred Stock
converted or to be converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid.




     7. Adjustments.



          (a) If the Company shall (i) pay a dividend or make any other distribution with respect to its
Common Stock which consists in whole or in part of shares of its Common Stock, (ii) subdivide or
reclassify its Common Stock into a greater number of shares or (iii) combine or reclassify its
Common Stock into a lesser number of shares, then in each of clause (i), (ii) and (iii), the
Conversion Rate shall be adjusted (regardless of whether or not actual conversion at such time
would be permissible under Section 5 hereof) so that a holder of any shares of Series C Preferred
Stock thereafter converted shall be entitled to receive the number and kind of other securities
that such holder of Series C Preferred Stock would have owned or been entitled to receive after the
happening of such dividend, subdivision, combination, or other reclassification had such shares of
Series C Preferred Stock been converted immediately prior to the happening of such reclassification
or any record date with respect thereto. An adjustment made pursuant to this Section shall become
effective on the date of the dividend payment, subdivision, combination or issuance and shall be
applied from the record date with respect thereto, if any, for such event. Such adjustment shall
be made successively.




          (b) If the Company shall be a party to any transaction, including a merger, consolidation,
sale of all or substantially all of the Company’s assets, reorganization, liquidation or
recapitalization of the Common Stock (each of the foregoing being referred to as a
“Transaction”), in each case as a result of which shares of Common Stock shall be converted
into the right to receive stock, securities or other property (including cash or any combination
thereof), then, in connection with such Transaction, the Company shall make provision for the
Series C Preferred Stock to be converted into the amount of shares of stock and other securities
and the right to receive the property receivable (including cash) by a holder of that number of
shares of Common Stock into which one share of Series C Preferred Stock was convertible immediately
prior to such Transaction (regardless of whether or not actual conversion into Common Stock at such
time would be permissible under Section 5 hereof) and upon consummation of the Transaction the
Series C Preferred Stock shall be automatically converted into such amount of stock and other
securities and the right to receive property at the same time and in the same manner as the Common
Stock is so converted (or as promptly as practicable thereafter). Any shares of stock and other
securities and property shall be payable to the holder upon surrender of the shares of Series C
Preferred Stock or as otherwise provided for as if such delivery were of Common Stock and cash
pursuant to Section 6(a). The Company shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this Section.




          (c) Notwithstanding the foregoing, in any case in which this Section provides that an
adjustment shall become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (A) issuing to the holder of any shares of




 









 







Series C Preferred Stock converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount in cash in lieu of any fraction as
provided herein.




          (d) If the Company shall take any action affecting the shares of Common Stock, other than any
action described in this Section, which in the reasonable opinion of the Board of Directors would
adversely affect the conversion rights of the holders of Series C Preferred Stock, then the number
of shares of Common Stock that a share of Series C Preferred Stock is convertible into immediately
before such action shall be adjusted, to the extent permitted by applicable law or regulation, in
such manner and at such time as the Board of Directors may determine in good faith to be equitable
in the circumstances. Any such determinations shall be memorialized in writing and shall be
maintained on file at the Company’s principal executive office and shall be made available to any
stockholder upon request.




          (e) Whenever the number of shares of Common Stock into which one share of Series C Preferred
Stock is convertible is adjusted as herein provided, the chief financial officer of the Company or
his or her designee(s) shall compute the required adjustment in accordance with the foregoing
provisions and shall prepare a certificate setting forth such adjustment and showing in reasonable
detail the facts upon which such adjustment is based. A copy of such certificate shall be filed
promptly with the Conversion Agent and mailed to each holder of shares of Series C Preferred Stock
at such holder’s last address as shown on the stock books of the Company.




          (f) The Company shall not, without the consent of a majority of the shares of the outstanding
Series C Preferred Stock, voting separately as a class, make a publicly-announced tender offer for
its Common Stock unless the Company provides to all holders of the Series C Preferred Stock the
right to participate in the tender offer on the same terms and conditions as holders of Common
Stock, provided that any Series C Preferred Shares tendered shall receive, upon surrender of the
Series C Preferred Stock to the Company, the consideration payable with respect to the number of
shares of Common Stock into which the Series C Preferred Stock so tendered would be convertible at
the time immediately prior to the consummation of the tender offer (regardless of whether or not
actual conversion at such time would be permissible under Section 5 hereof). 




     8. Reservation of Common Stock.



          (a) The Company shall at all times reserve and keep available, free from all liens, charges
and security interests and not subject to any preemptive rights, out of the aggregate of its
authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its
treasury, or both, solely for the purpose of effecting the conversion of Series C Preferred Stock,
the full number of shares of Common Stock then deliverable upon the conversion of all outstanding
shares of Series C Preferred Stock.




          (b) Notwithstanding the foregoing, the Company shall be entitled to deliver upon conversion of
shares of Series C Preferred Stock, as herein provided, shares of Common




 









 







Stock acquired by the Company (in lieu of the issuance of authorized and unissued shares of
Common Stock), so long as any such acquired shares are free and clear of all liens, charges,
security interests or encumbrances (other than liens, charges, security interests and other
encumbrances created by the holders of the Series C Preferred Stock).




          (c) All shares of Common Stock delivered upon conversion of the Series C Preferred Stock shall
be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens,
claims, security interests and other encumbrances and not subject to any preemptive rights (other
than liens, charges, security interests and other encumbrances created by the holders the Series C
Preferred Stock).




          (d) The Company hereby covenants and agrees that, if at any time the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange or automated
quotation system, the Company shall, if permitted by the rules of such exchange or automated
quotation system, list and keep listed, all the Common Stock issuable upon conversion of the Series
C Preferred Stock; provided, however, that if the rules of such exchange or
automated quotation system permit the Company to defer the listing of such Common Stock until the
first conversion of Series C Preferred Stock into Common Stock in accordance with the provisions
hereof, the Company covenants to list such Common Stock issuable upon conversion of the Series C
Preferred Stock in accordance with the requirements of such exchange or automated quotation system
at such time.




     9. Liquidation, Dissolution and Winding Up.



          (a) Upon any liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Series C Preferred Stock then outstanding shall be entitled to
receive out of the available assets of the Company, whether such assets are stated capital or
surplus of any nature, an amount on such date equal to $0.02 per share of Series C Preferred Stock,
plus the amount of any declared but unpaid dividends thereon to and including the date of such
liquidation, out of assets legally available for distribution to the Company’s stockholders before
any distribution of assets is made to the holders of Common Stock. After payment to the holders of
the Series C Preferred Stock of the amounts set forth in preceding sentence, the entire remaining
assets and funds of the Company legally available for distribution, if any, shall be distributed
among the holders of the Common Stock and the Series C Preferred Stock in proportion to the shares
of Common Stock then held by them and the shares of Common Stock which they then have the right to
acquire upon conversion of the shares of Series C Preferred Stock then held by them (regardless of
whether or not actual conversion at such time would be permissible under Section 5 hereof).




          (b) In the event the assets of the Company available for distribution to stockholders upon any
liquidation, dissolution or winding-up of the affairs of the Company, whether voluntary or
involuntary, shall be insufficient to pay in full the amounts payable with respect to all
outstanding shares of the Series C Preferred Stock, holders of the Series C Preferred Stock shall
share ratably in any distribution of assets of the Company in proportion to the full respective
liquidating distributions to which they would otherwise be respectively entitled.




 









 








          (c) The Company’s consolidation or merger with or into any other entity, the consolidation or
merger of any other entity with or into the Company, or the sale of all or substantially all of the
Company’s property or business shall not constitute its liquidation, dissolution or winding up.




     10. Maturity. The Series C Preferred Stock shall be perpetual unless converted in
accordance with this Certificate of Designation.



     11. No Redemption; No Sinking Fund.



          (a) The shares of Series C Preferred Stock shall not be subject to redemption by the Company
or at the option of any holder of Series C Preferred Stock; provided, however, that
the Company may purchase or otherwise acquire outstanding shares of Series C Preferred Stock by
offer to any holder or holders thereof.




          (b) The shares of Series C Preferred Stock shall not be subject to or entitled to the
operation of a retirement or sinking fund.




     12. Voting Rights.



          (a) Except as expressly provided in this Section and in Section 7(g) or as otherwise required
by applicable law or regulation, holders of the Series C Preferred Stock shall have no voting
rights.




          (b) So long as any shares of the Series C Preferred Stock are outstanding, the Company shall
not, without the consent or vote of the holders of a majority of the outstanding shares of the
Series C Preferred Stock, voting separately as a class, amend, alter or repeal or otherwise change
(including in connection with any merger or consolidation or otherwise) any provision of the
Certificate of Incorporation of the Company or this Certificate of Designation, if such amendment
would increase the authorized shares of the Series C Preferred Stock or alter or change the powers,
preferences or special rights of the shares of the Series C Preferred Stock so as to affect the
Series C Preferred Stock adversely.




     13. Exclusion of Other Rights. Except as may otherwise be required by law or
specifically set forth in this Certificate of Designation and the Certificate of Incorporation, as
they may be amended from time to time, the Series C Preferred Stock shall not have any other
powers, preferences and relative, participating, optional or other special rights.



     14. Severability of Provisions. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series C Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this Certificate of Designation
are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy,
all other voting powers, preferences and relative, participating, optional and other special rights
of the Series C Preferred Stock and qualifications, limitations and restrictions thereof set forth
in this Certificate of Designation that can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional or other special
rights of the Series C Preferred Stock and qualifications, limitations and restrictions thereof
shall, nevertheless, remain in full force and effect, and no voting powers, preferences and
relative,



 









 




participating, optional or other special rights of the Series C Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be deemed dependent
upon any other such voting powers, preferences and relative, participating, optional or other
special rights of the Series C Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.




     15. Reissuance of Series C Preferred Stock. Shares of Series C Preferred Stock that
have been duly converted into Common Stock or otherwise reacquired in any manner, including shares
purchased by the Company or exchanged or converted, shall not be reissued as Series C Preferred
Stock and shall upon compliance with any applicable provisions of the laws of the State of Delaware
have the status of authorized but unissued shares of preferred stock of the Company undesignated as
to series. The Company may from time to time take such appropriate action as may be necessary to
reduce the authorized number of shares of Series C Preferred Stock.



     16. Mutilated or Missing Series C Preferred Stock Certificates. If any certificate
representing any shares of the Series C Preferred Stock shall be mutilated, lost, stolen or
destroyed, the Company shall issue, in exchange and in substitution for and upon cancellation of
the mutilated certificate, or in lieu of and substitution for such certificate, a new certificate
of like tenor and representing an equivalent amount of shares of Series C Preferred Stock of the
same class, but only upon receipt of evidence of such loss, theft or destruction of such
certificate and indemnity, if requested, satisfactory to the Company and the transfer agent (if
other than the Company).



     17. Fractional Shares. The Series C Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such holder’s fractional shares, to receive
dividends, participate in dividends and distributions and to have the benefit of all other rights
of holders of the Series C Preferred Stock, including the conversion provisions provided in Section
5.



 









 





     IN WITNESS WHEREOF, this Certificate of Designation has been executed on behalf of the Company
by Ricardo A. Anzaldúa, its duly authorized Senior Vice President and Corporate Secretary.



	 	 	 	 	 
	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

 	 
	 	By:  	
 	 
	 	 	Ricardo A. Anzaldúa 	 
	 	 	Senior Vice President and Corporate Secretary 	 
	 




 











 





Annex B to Investment Agreement




Execution Copy



ANNEX B




      




10% Fixed-To-Floating Rate Junior Subordinated Debentures

due 2068




SECOND SUPPLEMENTAL INDENTURE




between




THE HARTFORD FINANCIAL SERVICES GROUP, INC.




and




THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.




as Trustee




Supplemental to Junior Subordinated Indenture




Dated as of October 17, 2008




      














 





Table of Contents






	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I

	 
	 	 	 	 	 	 
	DEFINITIONS

	 

	Section 1.01.

	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II

	 
	 	 	 	 	 	 
	GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

	 
	 	 	 	 	 	 
	Section 2.01.

	 	Designation, Principal Amount and Authorized Denominations
	 	 	15	 
	Section 2.02.

	 	Repayment
	 	 	16	 
	Section 2.03.

	 	Form, Legend, Transfer and Exchange
	 	 	18	 
	Section 2.04.

	 	Rate of Interest; Interest Payment Date
	 	 	20	 
	Section 2.05.

	 	Interest Deferral
	 	 	21	 
	Section 2.06.

	 	Alternative Payment Mechanism
	 	 	22	 
	Section 2.07.

	 	Events of Default
	 	 	24	 
	Section 2.08.

	 	Securities Registrar; Paying Agent; Delegation of Trustee Duties
	 	 	24	 
	Section 2.09.

	 	Limitation on Claims in the Event of Bankruptcy, Insolvency or Receivership
	 	 	25	 
	Section 2.10.

	 	Subordination
	 	 	25	 
	Section 2.11.

	 	Satisfaction and Discharge
	 	 	25	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 
	 	 	 	 	 	 
	COVENANTS

	 

	Section 3.01.

	 	Dividend and Other Payment Stoppages
	 	 	25	 
	Section 3.02.

	 	Additional Limitation on Deferral Over One Year
	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 	 	 
	REDEMPTION OF THE DEBENTURES

	 

	Section 4.01.

	 	Redemption
	 	 	26	 
	Section 4.02.

	 	Redemption Price
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE V

	 
	 	 	 	 	 	 
	REPAYMENT OF DEBENTURES

	 
	 	 	 	 	 	 
	Section 5.01.

	 	Repayments
	 	 	27	 
	Section 5.02.

	 	Selection of the Debentures to be Repaid
	 	 	27	 
	Section 5.03.

	 	Notice of Repayment
	 	 	27	 
	Section 5.04.

	 	Deposit of Repayment Amount
	 	 	28	 
	Section 5.05.

	 	Repayment of Debentures
	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE VI

	 
	 	 	 	 	 	 
	ORIGINAL ISSUE DISCOUNT

	 
	 	 	 	 	 	 
	Section 6.01.

	 	Calculation of Original Issue Discount
	 	 	28	 
	 
	 	 	 	 	 	 
	ARTICLE VII

	 
	 	 	 	 	 	 
	SUPPLEMENTAL INDENTURES

	 
	 	 	 	 	 	 
	Section 7.01.

	 	Supplemental Indentures Without Consent of Holders
	 	 	29	 
	 
	 	 	 	 	 	 
	ARTICLE VIII

	 
	 	 	 	 	 	 
	MISCELLANEOUS

	 
	 	 	 	 	 	 
	Section 8.01.

	 	Effectiveness
	 	 	29	 






i









 





Table of Contents



(continued)



	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 8.02.

	 	Notice
	 	 	30	 
	Section 8.03.

	 	Effect of Recitals
	 	 	30	 
	Section 8.04.

	 	Ratification of Indenture
	 	 	30	 
	Section 8.05.

	 	Tax Treatment; Withholding
	 	 	30	 
	Section 8.06.

	 	Governing Law
	 	 	30	 
	Section 8.07.

	 	Severability
	 	 	30	 
	 
	 	 	 	 	 	 
	Exhibit A Specimen Debenture	 	 	A-1	 
	Exhibit B Form of Certificate for Transfer to QIB	 	 	B-1	 
	Exhibit C Form of Certificate for Transfer Pursuant to Regulation S	 	 	C-1	 
	Exhibit D Form of Certificate for Transfer Pursuant to Rule 144	 	 	D-1	 







ii









 








     SECOND SUPPLEMENTAL INDENTURE, dated as of October 17, 2008 (the “Second Supplemental
Indenture”), between THE HARTFORD FINANCIAL SERVICES GROUP, INC., a Delaware corporation (the
“Company”), having its principal office at One Hartford Plaza, Hartford, Connecticut 06155,
and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. (formerly known as The Bank of New York Trust
Company, N.A.), a national banking association incorporated and existing under the laws of the
United States of America, as Trustee (hereinafter called the “Trustee”).



RECITALS OF THE COMPANY




     The Company and the Trustee entered into a Junior Subordinated Indenture, dated as of June 6,
2008 (as it may from time to time be supplemented or amended, the “Indenture”). Section
901 of the Indenture provides that the Company and the Trustee may, without the consent of any
Holder, enter into a supplemental indenture to provide for the issuance of and establish the form
and terms of the Securities of any series as provided in Section 201 or 301 thereof.



     Pursuant to Sections 201 and 301 of the Indenture, the Company desires to provide for the
issuance and establishment of a series of Securities under the Indenture, and the form and terms
thereof, as hereinafter set forth.



     The Company has requested that the Trustee execute and deliver this Second Supplemental
Indenture. The Company has delivered to the Trustee an Opinion of Counsel and an Officers’
Certificate pursuant to Sections 102 and 903 of the Indenture to the effect, among other things,
that all conditions precedent provided for in the Indenture to the Trustee’s execution and delivery
of this Second Supplemental Indenture have been complied with. All acts and things necessary have
been done and performed to make this Second Supplemental Indenture enforceable in accordance with
its terms, and the execution and delivery of this Second Supplemental Indenture has been duly
authorized in all respects.



     NOW, THEREFORE: For and in consideration of the premises and the purchase of the Debentures
(as herein defined) by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debentures, as follows:



ARTICLE I




DEFINITIONS




     Section 1.01. Definitions. For all purposes of this Second Supplemental Indenture,
except as otherwise expressly provided or unless the context otherwise requires:



          (a) The terms defined in the Indenture have the same meaning when used in this Second
Supplemental Indenture unless otherwise defined herein.




          (b) The terms defined in this Article have the meanings assigned to them in this Article, and
include the plural as well as the singular.




          (c) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Second Supplemental Indenture as a whole and not to any particular Article, Section or other
subdivision, and any reference to an Article, Section or other subdivision refers to an Article,
Section or other subdivision of this Second Supplemental Indenture.




          (d) Any reference herein to “interest” shall include any Additional Interest.




     In addition, the following terms used in this Second Supplemental Indenture have the following
respective meanings:



1









 





     “Additional Interest” means the interest, if any, that shall accrue on any interest on
the Debentures the payment of which has not been made on the applicable Interest Payment Date.



     “Alternative Payment Mechanism” means, with respect to any securities or combination
of securities (together in this definition, “securities”), provisions in the related
transaction documents requiring the Company to issue (or use Commercially Reasonable Efforts to
issue) one or more types of APM Qualifying Securities for the purpose of raising eligible proceeds
at least equal to the deferred and unpaid Distributions on such securities and apply the net
proceeds to pay such Distributions on such securities, commencing on the earlier of (x) the first
Distribution Date after commencement of a deferral period on which the Company pays current
Distributions on such securities and (y) the fifth anniversary of the commencement of such deferral
period if on such date such deferral period has not ended, and that:



     (a) define “eligible proceeds” to mean, for purposes of such Alternative Payment
Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or
discounts and other expenses relating to the issuance or sale of the relevant securities, and
including the fair market value of property received by the Company or any of its Subsidiaries as
consideration for such securities) that the Company or any of its Subsidiaries shall have received
during the 180 days prior to the relevant Distribution Date from the sale of APM Qualifying
Securities, provided that in the case of APM Qualifying Securities that are Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock the amount of net proceeds included in
eligible proceeds shall not exceed the Preferred Cap;



     (b) permit the Company to pay current Distributions on any Distribution Date out of any source
of funds but (i) require the Company to pay deferred Distributions only out of eligible proceeds
and (ii) prohibit the Company from paying deferred Distributions out of any source of funds other
than eligible proceeds unless an event of default with respect to such securities has occurred;



     (c) if deferral of Distributions continues for more than one year (or such shorter period as
provided for in the terms of such securities), require the Company and its Subsidiaries not to
repay, redeem or purchase any of its securities ranking junior to or equally with any APM
Qualifying Securities on the liquidation, dissolution or winding-up of the Company, the proceeds of
which were used to pay deferred interest during the relevant deferral period until at least one
year after all deferred Distributions have been paid (“Repurchase Restriction”), other than
the following (none of which shall be restricted or prohibited by a Repurchase Restriction):




     (i) purchases, redemptions or other acquisitions of Common Stock in connection with any
employment contract, benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;




     (ii) purchases of Common Stock pursuant to a contractually binding requirement to buy
Common Stock entered into prior to the beginning of the related deferral period, including
under a contractually binding stock repurchase plan;




     (iii) as a result of any exchange, redemption or conversion of any class or series of
the Company’s capital stock (or any capital stock of one of the Company’s Subsidiaries) for
any class or series of the Company’s capital stock or of any class or series of the
Company’s indebtedness for any class or series of the Company’s capital stock;




     (iv) the purchase of or payment of cash in lieu of fractional interests in the
Company’s capital stock in accordance with the conversion or exchange provisions of such
capital stock or the security being converted or exchanged; or




     (v) the redemption or repurchase of rights in accordance with any stockholders’ rights
plan;



     (d) limit the obligation of the Company to issue (or to use Commercially Reasonable Efforts to
issue) APM Qualifying Securities that are Common Stock or Qualifying Warrants, prior to the fifth
anniversary of any deferral period, to the extent that the number of shares of Common Stock issued
or issuable upon the exercise of



2









 







such Qualifying Warrants plus the number of shares of Common Stock previously issued or
issuable on the exercise of Qualifying Warrants previously issued during the applicable deferral
period would exceed 2% of the total number of issued and outstanding shares of Common Stock set
forth in the Company’s most recent publicly available financial statements (the “Common
Cap”);



     (e) limit the right of the Company to issue APM Qualifying Securities that are Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock, to the extent that the net proceeds of
any issuance of such Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock applied,
together with the net proceeds of all prior issuances of Qualifying Preferred Stock and any
still-outstanding Mandatorily Convertible Preferred Stock applied during the current and all prior
deferral periods, to pay deferred Distributions on the securities would exceed 25% of the
liquidation or principal amount of the securities that are the subject of the related Alternative
Payment Mechanism (the “Preferred Cap”);



     (f) notwithstanding the Common Cap and the Preferred Cap, permit the Company, at its option,
to impose a limitation on the Company’s obligation to issue APM Qualifying Securities consisting of
Common Stock and Qualifying Warrants to a maximum issuance cap to be set at the Company’s
discretion and otherwise substantially similar to the Share Cap, provided that such
limitation will be subject to the Company’s agreement to use Commercially Reasonable Efforts (i) to
increase such limitation when reached to enable the Company to simultaneously satisfy its future
fixed or contingent obligations under such securities and other securities and derivative
instruments that provide for settlement or payment in shares of Common Stock or (ii) if the Company
cannot increase such limitation as contemplated in the preceding clause, by requesting its Board of
Directors to adopt a resolution for a stockholder vote at the next annual meeting of stockholders
of the Company to increase the number of shares of the Company’s authorized Common Stock for
purposes of satisfying the Company’s obligations to pay deferred Distributions;



     (g) in the case of securities other than Qualifying Preferred Stock, include a Bankruptcy
Claim Limitation Provision; and



     (h) permit the Company, at its option, to provide that if the Company is involved in a merger,
consolidation, amalgamation, binding share exchange or conveyance, business combination,
recapitalization, transfer or lease of assets substantially as an entirety to any other Person or a
similar transaction (a “Business Combination”) where immediately after the consummation of
the Business Combination more than 50% of the voting stock of the surviving or resulting entity or
the Person to whom all or substantially all of the Company’s property or assets are conveyed,
transferred or leased in such Business Combination is owned by the stockholders of the other party
to the Business Combination or Person to whom all or substantially all of the Company’s property or
assets are conveyed, transferred or leased, then clauses (a), (b) and (c) above will not apply to
any deferral period that is terminated on the next Distribution Date following the date of
consummation of the Business Combination;


provided (and it being understood) that:





     (1) the Company shall not be obligated to issue (or to use Commercially Reasonable
Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has
occurred and is continuing;




     (2) if, due to a Market Disruption Event or otherwise, the eligible proceeds are not
sufficient to pay all deferred Distributions on any Distribution Date, the Company will
apply the eligible proceeds to pay accrued and unpaid deferred Distributions on such
Distribution Date in chronological order, subject to the Common Cap, Preferred Cap and Share
Cap, as applicable; and




     (3) if the Company has outstanding more than one class or series of securities under
which it is obligated to sell a type of APM Qualifying Securities and apply some part of the
proceeds to the payment of deferred Distributions, then on any date and for any period the
amount of net proceeds received by the Company from those sales and available for payment of
deferred Distributions on such securities (in accordance with clauses (d) and (e) of this
definition) shall be applied to such securities on a pro rata basis in proportion to the
total amounts that are due on such securities.



3









 





     “APM Period” means, with respect to any Deferral Period, the period commencing on the
earlier of (i) the first Interest Payment Date during such Deferral Period on which the Company
pays any current interest on the Debentures or (ii) the fifth anniversary of the commencement of
such Deferral Period, if on such date such Deferral Period has not ended, and ending on the next
Interest Payment Date on which the Company shall have paid the aggregate amount of accrued and
unpaid deferred interest, including Additional Interest, that shall have accrued during such
Deferral Period on the Debentures out of Eligible Proceeds.



     “APM Qualifying Securities” means Common Stock, Qualifying Preferred Stock, Qualifying
Warrants, and/or Mandatorily Convertible Preferred Stock.



     “Applicable Procedures” means, with respect to the transfer or exchange of or for, or
any tender or surrender of, beneficial interests in any Global Security, the rules and procedures
of DTC, Euroclear and Clearstream Luxembourg that apply to such transfer, exchange, tender or
surrender.



     “Authorized Denomination” means the Minimum Authorized Denomination or integral
multiples of $1,000 thereafter.



     “Bankruptcy Claim Limitation Provision” means, with respect to any securities or
combination of securities that have an Alternative Payment Mechanism or a Mandatory Trigger
Provision (together in this definition, “securities”), provisions in the terms thereof or
of the related transaction agreements that, upon any liquidation, dissolution, winding-up or
reorganization or in connection with any insolvency, receivership or proceeding under any
bankruptcy law with respect to the issuer, limit the claim of the holders of such securities to
Distributions that accumulate during (i) any deferral period, in the case of securities that have
an Alternative Payment Mechanism but no Mandatory Trigger provision or (ii) any period in which the
issuer fails to satisfy one or more financial tests set forth in the terms of such securities or
related transaction agreements, in the case of securities that have a Mandatory Trigger Provision,
to:



     (a) in the case of securities having an Alternative Payment Mechanism or Mandatory Trigger
Provision with respect to which the APM Qualifying Securities do not include Qualifying Preferred
Stock or Mandatorily Convertible Preferred Stock, 25% of the stated or principal amount of such
securities then outstanding; and



     (b) in the case of any other securities, the amount of accumulated and deferred Distributions
(including compounded amounts) that relate to the earliest two years of the portion of the deferral
period for which Distributions have not been paid.



     “Business Combination” has the meaning specified in clause (h) of the definition of
Alternative Payment Mechanism.



     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which
banking institutions in New York City are authorized or required by law or executive order to
remain closed, (iii) a day on which the Corporate Trust Office of the Trustee is closed for
business, (iv) a day on which banking institutions in the relevant jurisdiction in which any
Relevant Exchange is located are closed for business, or (iv) on or after October 15, 2018, a day
that is not a London Banking Day.



     “Calculation Agent” means, with respect to the Debentures, The Bank of New York Mellon
Trust Company, N.A., or any other successor, acting as calculation agent in respect of the
Debentures.



     “Clearstream Luxembourg” means Clearstream Banking, société anonyme, or the successor
to its securities clearance and settlement operations.



     “Commercially Reasonable Efforts” means for purposes of issuing APM Qualifying
Securities or Qualifying Replacement Securities, commercially reasonable efforts to complete the
offer and sale of APM Qualifying Securities or Qualifying Replacement Securities, as the case may
be, to third parties that are not Subsidiaries of the Company in public offerings or private
placements. The Company shall not be considered to



4









 







have made Commercially Reasonable Efforts to issue APM Qualifying Securities or Qualifying
Replacement Securities, as the case may be, if it determines not to pursue or complete such
issuance solely due to pricing, coupon, dividend rate or dilution considerations.



     “Common Cap” has the meaning specified in clause (d) of the definition of Alternative
Payment Mechanism.



     “Common Stock” means the common stock of the Company (including treasury shares of
common stock), common stock issued pursuant to any dividend reinvestment plan or any of the
Company’s employee benefit plans, any security of the Company that ranks upon the liquidation,
dissolution or winding-up of the Company junior to Qualifying Preferred Stock and equally with the
Company’s common stock and that tracks the performance of, or relates to the results of, a
business, unit or division of the Company, and any shares of common stock or equivalent equity
interests of the surviving or resulting entity issued in exchange therefor in connection with a
Business Combination.



     “Common Stock Issuance Cap” has the meaning specified in Section 2.06(a).



     “Company” has the meaning specified in the Recitals.



     “Debentures” has the meaning specified in Section 2.01.



     “Debt Exchangeable for Common Equity” means a security or combination of securities
(together in this definition, “securities”) that:



     (a) gives the holder a beneficial interest in (i) debt securities of the Company that are not
redeemable prior to the settlement date of the stock purchase contract referred to in subclause
(ii) hereof and (ii) a fractional interest in a stock purchase contract obligating the holder to
purchase Common Stock that will be settled in three years or less, with the number of shares of
Common Stock purchasable pursuant to such stock purchase contract to be within a range established
at the time of issuance of such debt securities and subject to customary anti-dilution adjustments;



     (b) provides that the holders directly or indirectly grant to the Company a security interest
in such debt securities and their proceeds (including any substitute collateral permitted under the
transaction documents) to secure the holders’ direct or indirect obligation to purchase Common
Stock pursuant to the stock purchase contract referred to in subclause (a)(ii) hereof;



     (c) includes a remarketing feature pursuant to which such debt securities of the Company are
remarketed to new investors not later than the settlement date of the stock purchase contract
referred to in subclause (a)(ii) hereof; and



     (d) provides for the proceeds raised in the remarketing to be used to purchase shares of
Common Stock under the stock purchase contract referred to in subclause (a)(ii) hereof and, if
there has not been a successful remarketing by the settlement date of such stock purchase contract,
provides that such stock purchase contract will be settled by the Company exercising its remedies
as a secured party with respect to the debt securities or other collateral directly or indirectly
pledged by holders of the Debt Exchangeable for Common Equity.



     “Deferral Period” means the period commencing on an Interest Payment Date with respect
to which the Company elects or is deemed to elect to defer interest pursuant to Section 2.05 and
ending on the earlier of (i) the tenth anniversary of that Interest Payment Date and (ii) the next
Interest Payment Date on which the Company has paid all deferred and unpaid amounts (including
Additional Interest) and all other accrued interest on the Debentures.



     “Distribution Compliance Period” means, in respect of any Regulation S Global Security
(or any certificated Debenture issued in respect thereof pursuant to Section 2.03), the 40
consecutive days beginning on and including the later of (a) the day on which any Debentures
represented thereby are offered to Persons other than



5









 







distributors (as defined in Regulation S under the Securities Act) pursuant to Regulation S
and (b) the issue date for such Debentures.



     “Distribution Date” means, as to any securities or combination of securities, the
date(s) on which Distributions on such securities are scheduled to be made.



     “Distribution Period” means, as to any securities or combination of securities, each
period from and including a Distribution Date for such securities to but not including the next
succeeding Distribution Date for such securities.



     “Distributions” means, as to a security or combination of securities, dividends,
interest or other income distributions to the holders or beneficial owners thereof that are not
Subsidiaries of the Company.



     “DTC” means the Depository Trust Company, a New York corporation.



     “Eligible Proceeds” means, with respect to any Interest Payment Date, the net proceeds
(after underwriters’ or placement agents’ fees, commissions or discounts and other expenses
relating to the issuance or sale) the Company shall have received since the preceding Interest
Payment Date from the sale of APM Qualifying Securities to Persons that are not the Company’s
Subsidiaries, provided that, in the case of APM Qualifying Securities that are Mandatorily
Convertible Preferred Stock or Qualifying Preferred Stock, the amount of net proceeds included in
Eligible Proceeds shall not exceed the Preferred Stock Issuance Cap.



     “Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System, or
its successor in such capacity.



     “Event of Default” has the meaning specified in Section 2.07.



     “Final Maturity Date” has the meaning specified in Section 2.02(b).



     “Floating Rate” has the meaning specified in Section 2.04(a).



     “Floating Rate Interest Period” the period beginning on and including October 15, 2018
and ending on but excluding the next Interest Payment Date and each successive period beginning on
and including an Interest Payment Date and ending on but excluding the next Interest Payment Date.



     “Indenture” has the meaning specified in the Recitals.



     “Intent-Based Replacement Disclosure” means, as to any security or combination of
securities, that the issuer has publicly stated its intention, either in the prospectus or other
offering document under which such securities have been initially offered for sale or in filings
with the Commission made by the issuer under the Exchange Act prior to or contemporaneously with
the issuance of such securities, that the issuer and its subsidiaries, to the extent such
securities provide the issuer with NRSRO equity credit, will redeem, repurchase or defease such
securities only with the proceeds of Replacement Capital Securities that have terms and provisions
at the time of redemption, repurchase or defeasance that are as or more equity-like than the
securities then being redeemed, repurchased or defeased, and which proceeds were raised within 180
days prior to the applicable redemption, purchase or defeasance date.



     “Interest Payment Date” shall have the meaning specified in Section 2.04(b).



     “Interest Period” means a Semi-Annual Interest Period or a Floating Rate Interest
Period, as the case may be.



     “LIBOR Determination Date” means, with respect to any Floating Rate Interest Period,
the second London Banking Day immediately preceding the first day of such Floating Rate Interest
Period.



6









 





     “London Banking Day” means any day on which commercial banks are open for general
business (including dealings in deposits in U.S. dollars) in London.



     “Make-Whole Redemption Amount” means, with respect to the principal amount of any
Debentures to be redeemed, the sum, as determined by the Premium Calculation Agent, of the present
value of (i) the outstanding principal (discounted from October 15, 2018 to but excluding the
Redemption Date) and (ii) remaining scheduled payments of interest that would have been payable
from the Redemption Date to and including October 15, 2018 on the Debentures to be redeemed (not
including any portion of such payments of interest accrued and unpaid to but excluding the
Redemption Date), discounted from their respective Interest Payment Dates to but excluding the
Redemption Date (assuming a 360-day year consisting of twelve 30-day months) at a discount rate
equal to the Treasury Rate (as determined and provided to the Premium Calculation Agent by the
Treasury Dealer) plus a spread of 1.00%.



     “Mandatorily Convertible Preferred Stock” means preferred stock with (a) no prepayment
obligation on the part of the issuer thereof, whether at the election of the holders or otherwise,
and (b) a requirement that the preferred stock converts into common stock of the issuer within
three years from the date of its issuance at a conversion ratio within a range established at the
time of issuance of the preferred stock, subject to customary anti-dilution adjustments.



     “Mandatory Trigger Provision” means, as to any security or combination of securities,
provisions in the terms thereof or of the related transaction agreements that:



     (a) if the issuer of such securities fails to satisfy one or more financial tests set forth in
the terms of such securities or related transaction agreements and for so long as such failure
continues, prohibits the issuer from making payments of Distributions on such securities from any
source other than from the issuance and sale of APM Qualifying Securities and require the issuer,
or in the case of Qualifying Preferred Stock, at the option of the issuer, permit the issuer, of
such securities (in this definition, the “issuer”) to make payment of Distributions on such
securities, within a two year period beginning on the date of such failure, only pursuant to the
issuance and sale of APM Qualifying Securities, in an amount such that the net proceeds of such
sale are at least equal to the amount of deferred and unpaid Distributions (including without
limitation all deferred and accumulated amounts) on such securities or, in the case of Qualifying
Preferred Stock, current Distributions, and in either case require the application of the net
proceeds of such sale to pay such deferred and unpaid Distributions, or in the case of Qualifying
Preferred Stock, permit the application of the net proceeds of such sale to pay current
Distributions, on those securities, provided that (i) if the Mandatory Trigger Provision
does not require such issuance and sale within one year of such failure, the amount of Common Stock
or Qualifying Warrants the net proceeds of which the issuer must apply to pay such Distributions
pursuant to such provision may not exceed the Common Cap, and (ii) the amount of Qualifying
Preferred Stock and then still-outstanding Mandatorily Convertible Preferred Stock the net proceeds
of which the issuer may apply to pay such Distributions pursuant to such provision may not exceed
the Preferred Cap;



     (b) if the provisions described in clause (a) immediately above do not require such issuance
and sale within one year of such failure, include a Repurchase Restriction;



     (c) other than in the case of Qualifying Preferred Stock, prohibit the issuer of such
securities from redeeming or purchasing any of its securities ranking junior to or equally with any
APM Qualifying Securities upon the liquidation, dissolution or winding-up of the Company, the
proceeds of which were used to pay deferred Distributions during the relevant deferral period prior
to the date six months after the issuer applies the net proceeds of the sales described in clause
(a) immediately above to pay such deferred Distributions in full; and



     (d) other than in the case of Qualifying Preferred Stock, include a Bankruptcy Claim
Limitation Provision;



     provided (and it being understood) that:



7









 






     (i) the issuer will not be obligated to issue (or to use Commercially Reasonable
Efforts to issue) APM Qualifying Securities for so long as a Market Disruption Event has
occurred and is continuing;




     (ii) if, due to a Market Disruption Event or otherwise, the issuer is able to raise and
apply some, but not all, of the eligible proceeds necessary to pay all deferred
Distributions on any Distribution Date, the issuer will apply any available eligible
proceeds to pay accrued and unpaid Distributions on the applicable Distribution Date in
chronological order subject to the Common Cap, Preferred Cap and Share Cap, as applicable;
and




     (iii) if the issuer has outstanding more than one class or series of securities under
which it is obligated to sell a type of APM Qualifying Securities and applies some part of
the proceeds to the payment of deferred Distributions, then on any date and for any period
the amount of net proceeds received by the issuer from those sales and available for payment
of deferred Distributions on such securities (in accordance with the Alternative Payment
Mechanism) shall be applied to such securities on a pro rata basis in proportion to the
total amounts that are due on such securities.



     No remedy other than Permitted Remedies shall arise by the terms of such securities or related
transaction agreements in favor of the holders of such securities as a result of the issuer’s
failure to pay Distributions because of the Mandatory Trigger Provision until Distributions have
been deferred for one or more Distribution Periods that total together at least 10 years.



     “Market Disruption Event” means the occurrence or existence of any of the following
events or sets of circumstances:



     (a) trading in securities generally, or the securities of the Company specifically, on the New
York Stock Exchange or any other national securities exchange or over-the-counter market on which
the Common Stock is listed or traded, shall have been suspended or materially disrupted or minimum
prices shall have been established on any such exchange or market by the Commission, the relevant
exchange or any other regulatory body or governmental authority having jurisdiction, and the
establishment of such minimum prices materially disrupts or otherwise has a material adverse effect
on trading in, or the issuance and sale of, the Common Stock;



     (b) the Company would be required to obtain the consent or approval of its stockholders or a
regulatory body (including, without limitation, any securities exchange) or governmental authority
to issue or sell APM Qualifying Securities or Qualifying Replacement Securities, as the case may
be, and such consent or approval has not yet been obtained notwithstanding that the Company has
used commercially reasonable efforts to obtain the required consent or approval;



     (c) an event occurs and is continuing as a result of which the offering document for the offer
and sale of APM Qualifying Securities or Qualifying Replacement Securities, as the case may be,
would, in the reasonable judgment of the Company, contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements in that offering document,
in the light of the circumstances under which they were made, not misleading and either (i) the
disclosure of that event at such time, in the reasonable judgment of the Company, is not otherwise
required by law and would have a material adverse effect on the business of the Company or (ii) the
disclosure relates to a previously undisclosed proposed or pending material business transaction,
and the Company has a bona fide reason for keeping such transaction confidential or disclosure of
such transaction would impede the ability of the Company to consummate such transaction;
provided that no single suspension period resulting from the an event described in this
clause (c) shall exceed 90 consecutive days and multiple suspension periods resulting from one or
more Market Disruption Events described in this clause (c) shall not exceed an aggregate of 180
days in any 360-day period;



     (d) the Company reasonably believes that the offering document for the offer and sale of APM
Qualifying Securities or Qualifying Replacement Securities, as the case may be, would not be in
compliance with a rule or regulation of the Commission (for reasons other than those described in
clause (c) above), and the Company determines that it is unable to comply with such rule or
regulation or such compliance is impracticable, provided that no single suspension period
resulting from an event described in this clause (d) shall exceed 90 consecutive days and



8









 







multiple suspension periods resulting from one or more Market Disruption Events described in
this clause (d) shall not exceed an aggregate of 180 days in any 360-day period;



     (e) there shall have occurred a material adverse change in general domestic or international
economic, political or financial conditions, including without limitation as a result of terrorist
activities, or the effect of international conditions on the financial markets in the United States
shall be, such that the issuance of or market trading in the APM Qualifying Securities or
Qualifying Replacement Securities, as the case may be, has been materially disrupted or has ceased;



     (f) there shall have been an escalation in hostilities involving the United States, there
shall have been a declaration of a national emergency or war by the United States or there shall
have occurred any other national or international calamity or crisis such that the issuance of or
market trading in the APM Qualifying Securities or Qualifying Replacement Securities, as the case
may be, has been materially disrupted or has ceased;



     (g) a material disruption shall have occurred in commercial banking or securities settlement
or clearing services in the United States such that market trading in the APM Qualifying Securities
or Qualifying Replacement Securities, as the case may be, has been materially disrupted or has
ceased; or



     (h) a banking moratorium shall have been declared by federal or state authorities of the
United States such that market trading in the APM Qualifying Securities or Qualifying Replacement
Securities, as the case may be, has been materially disrupted or has ceased.



     “Market Value” means, on any date, the closing sale price per share of Common Stock
(or if no closing sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the Common Stock is not
then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange
on which the Common Stock is listed; if the Common Stock is not listed on any U.S. securities
exchange on the relevant date, the market price will be the average of the mid-point of the bid and
ask prices for the Common Stock on the relevant date submitted by at least three nationally
recognized independent investment banking firms selected by the Company for this purpose.



     “Minimum Authorized Denomination” means $100,000.



     “No Payment Provision” means a provision or provisions in the transaction documents
for securities (referred to in this definition as “such securities”) that:



     (a) include an Alternative Payment Mechanism; and



     (b) permit the issuer of such securities, in its sole discretion, to defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods of up
to five years or, if a Market Disruption Event has occurred and is continuing, 10 years, without
any remedy other than Permitted Remedies.



     “Non-Cumulative” means, with respect to any securities, that the issuer may elect not
to make any number of periodic Distributions without any remedy arising under the terms of the
securities or related agreements in favor of the holders, other than one or more Permitted
Remedies.



     “NRSRO” means a nationally recognized statistical rating organization within the
meaning of Section 3(a)(62) of the Exchange Act.



     “Optional Deferral Provision” means, as to any securities, provisions in the terms
thereof or of the related transaction agreements to the effect of either (a) or (b) below:



     (a) (i) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods up to
five years or, if a Market Disruption Event has occurred and is continuing, 10 years, without any
remedy other than Permitted Remedies and




9











 




(ii) such securities are subject to an Alternative Payment Mechanism (provided that
such Alternative Payment Mechanism need not apply during the first five years of any deferral
period and need not include a Common Cap, Preferred Cap, Share Cap, Bankruptcy Claim Limitation or
Repurchase Restrictions); or




     (b) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods up to
10 years, without any remedy other than Permitted Remedies.



     “Parity Securities” shall have the meaning specified in Section 3.01(b).



     “Participant” means, with respect to DTC, Euroclear or Clearstream Luxembourg, a
Person who has an account with DTC, Euroclear or Clearstream Luxembourg, respectively (and, with
respect to DTC, shall include Euroclear and Clearstream Luxembourg).



     “Particular Parity Security” shall have the meaning specified in Section 2.06(c)(ii).



     “Paying Agent” shall have the meaning specified in Section 2.08.



     “Permitted Remedies” means, with respect to any securities, one or more of the
following remedies:



     (a) rights in favor of the holders of such securities permitting such holders to elect one or
more directors of the issuer (including any such rights required by the listing requirements of any
stock or securities exchange on which such securities may be listed or traded); and



     (b) complete or partial prohibitions on the issuer paying Distributions on or purchasing
common stock or other securities that rank equally with or junior as to Distributions to such
securities for so long as Distributions on such securities, including deferred Distributions,
remain unpaid.



     “Preferred Cap” has the meaning specified in clause (e) of the definition of
Alternative Payment Mechanism.



     “Preferred Stock Issuance Cap” has the meaning specified in Section 2.06(a).



     “Premium Calculation Agent” means Goldman, Sachs & Co. or, if that firm is unwilling
or unable to calculate the Make-Whole Redemption Amount, an investment banking institution of
national standing, appointed by the Company.



     “Private Placement Legend” has the meaning specified in Section 2.03.



     “Qualifying Preferred Stock” means Non-Cumulative perpetual preferred stock issued by
the Company that (a) ranks equally with or junior to all other outstanding preferred stock of the
issuer, other than a preferred stock that is issued or issuable pursuant to a stockholders’ rights
plan or similar plan or arrangement, and (b) contains no remedies other than Permitted Remedies and
either (i) is subject to Intent-Based Replacement Disclosure and has a provision that prohibits the
issuer from making any Distributions thereon upon the Company’s failure to satisfy one or more
financial tests set forth therein or (ii) is subject to a Qualifying Replacement Capital Covenant;
provided, however, that if such Qualifying Preferred Stock includes Intent-Based
Replacement Disclosure and are structured at the time of issuance with a distribution rate step-up
of more than 25 basis points prior to the 25th anniversary of such issuance, then such Qualifying
Preferred Stock shall, in lieu of Intent-Based Replacement Disclosure, be subject to a replacement
capital covenant that will remain in effect until at least the Scheduled Maturity Date and that is
substantially similar to the Replacement Capital Covenant.



     “Qualifying Replacement Capital Covenant” means (a) a replacement capital covenant
that is substantially similar to the Replacement Capital Covenant applicable to the Debentures or
(b) a replacement capital covenant, as identified by the Company’s Board of Directors, or a duly
authorized committee thereof, acting in good faith and in its reasonable discretion and reasonably
construing the definitions and other terms of the Replacement Capital



10









 







Covenant, (i) entered into by a company that at the time it enters into such replacement
capital covenant is a reporting company under the Exchange Act and (ii) that restricts the related
issuer and its subsidiaries from repaying, redeeming or purchasing identified securities except out
of the proceeds from the sale of specified Replacement Capital Securities that have terms and
provisions at the time of repayment, redemption or purchase that are as or more equity-like than
the securities then being repaid, redeemed or purchased, raised within 180 days prior to the
applicable repayment, redemption or purchase date; provided that the term of such
Qualifying Replacement Capital Covenant shall be determined at the time of issuance of the related
Replacement Capital Securities taking into account the other characteristics of such securities.



     “Qualifying Replacement Securities” means securities or a combination of securities
(other than Common Stock, rights to acquire Common Stock, Mandatorily Convertible Preferred Stock
or Debt Exchangeable for Common Equity) that, in the determination of the Company’s Board of
Directors (or a duly authorized committee thereof) reasonably construing the definitions and other
terms of this Second Supplemental Indenture, meet one of the following criteria:



     (a) in connection with any repayment, redemption, defeasance or purchase of Debentures prior
to October 15, 2018:




     (i) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon the liquidation, dissolution or winding-up of the
Company, (2) have no maturity or a maturity of at least 60 years and (3)(A) are
Non-Cumulative and are subject to a Qualifying Replacement Capital Covenant or have a No
Payment Provision and are subject to a Qualifying Replacement Capital Covenant or (B) have a
Mandatory Trigger Provision and have either an Optional Deferral Provision or a No Payment
Provision and are subject to Intent-Based Replacement Disclosure; or




     (ii) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon the liquidation, dissolution or winding-up of the
Company, (2) have no maturity or a maturity of at least 40 years, (3) are subject to a
Qualifying Replacement Capital Covenant and (4) have a Mandatory Trigger Provision and an
Optional Deferral Provision; or




     (iii) shares of preferred stock issued by the Company or any of its Subsidiaries that
are (1) Non-Cumulative, (2) have no prepayment obligation on the part of the issuer thereof,
whether at the election of the Holders or otherwise, (3) have no maturity or a maturity of
at least 60 years and either (A) are subject to a Qualifying Replacement Capital Covenant or
(B) have a Mandatory Trigger Provision and are subject to Intent-Based Replacement
Disclosure; or



     (b) in connection with any repayment, redemption, defeasance or purchase of Debentures on or
after October 15, 2018 and prior to October 15, 2038:




     (i) any securities described under clause (a) of this definition that would be
Qualifying Replacement Securities prior to October 15, 2018;




     (ii) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon the liquidation, dissolution or winding-up of the
Company, (2) have no maturity or a maturity of at least 60 years, (3) are subject to a
Qualifying Replacement Capital Covenant and (4) have an Optional Deferral Provision;




     (iii) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon a liquidation, dissolution or winding-up of the
Company, (2) are Non-Cumulative or have a No Payment Provision, (3) have no maturity or a
maturity of at least 60 years and (4) are subject to Intent-Based Replacement Disclosure;




     (iv) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon the liquidation, dissolution or winding-up of the
Company, (2) have no maturity or a maturity of at least 40 years and (3) (A) are
Non-Cumulative, or have a No Payment



11









 




Provision, and subject to a Qualifying Replacement Capital Covenant or (B) have a
Mandatory Trigger Provision and an Optional Deferral Provision and are subject to
Intent-Based Replacement Disclosure;





     (v) securities issued by the Company or any of its Subsidiaries that (1) upon the
liquidation, dissolution or winding-up of the Company, rank junior to all of the senior and
subordinated debt of the Company other than the Debentures and securities that rank equally
with the Debentures upon the liquidation, dissolution or winding-up of the Company, (2) have
a Mandatory Trigger Provision and an Optional Deferral Provision and are subject to
Intent-Based Replacement Disclosure and (3) have no maturity or a maturity of at least 60
years;




     (vi) cumulative preferred stock issued by the Company or any of its Subsidiaries that
(1) has no prepayment obligation on the part of the issuer thereof, whether at the election
of the holders or otherwise, (2) has no maturity or a maturity of at least 60 years and (3)
is subject to a Qualifying Replacement Capital Covenant; or




     (vii) other securities issued by the Company or any of its Subsidiaries that (1) rank
upon the liquidation, dissolution or winding-up of the Company equally with or junior to the
Debentures and (2) have no maturity or a maturity of at least 30 years, are subject to a
Qualifying Replacement Capital Covenant and have a Mandatory Trigger Provision and an
Optional Deferral Provision; or



     (c) in connection with any repayment, redemption, defeasance or purchase of Debentures at any
time after October 15, 2038:




     (i) any securities described under clause (b) of this definition that would be
Qualifying Replacement Securities prior October 15, 2038;




     (ii) securities issued by the Company or any of its Subsidiaries that (1) rank equally
with or junior to the Debentures upon the liquidation, dissolution or winding-up of the
Company, (2) either (A) have no maturity or a maturity of at least 60 years and are subject
to Intent-Based Replacement Disclosure or (B) have no maturity or a maturity of at least 40
years and are subject to a Qualifying Replacement Capital Covenant and (C) have an Optional
Deferral Provision;




     (iii) securities issued by the Company or any of its Subsidiaries that (1) rank junior
to all of the senior and subordinated debt of the Company other than the Debentures and any
other securities that rank equally with the Debentures upon the liquidation, dissolution or
winding-up of the Company, (2) have a Mandatory Trigger Provision, an Optional Deferral
Provision and are subject to Intent-Based Replacement Disclosure and (3) have no maturity or
a maturity of at least 40 years; or




     (iv) preferred stock issued by the Company or any of its Subsidiaries that either (1)
has no maturity or a maturity of at least 60 years and is subject to Intent-Based
Replacement Disclosure or (2) has a maturity of at least 40 years and is subject to a
Qualifying Replacement Capital Covenant,


provided, however, that if any of the securities described in the foregoing clauses
(a), (b) and (c) is structured at the time of issuance with a distribution rate step-up (whether
interest or dividend) of more than 25 basis points prior to the 25th anniversary of such issuance,
then such security shall be subject to a Qualifying Replacement Capital Covenant that will remain
in effect until at least the Scheduled Maturity Date.




     “Qualifying Warrants” means any net share settled warrants to purchase the Common
Stock that (a) have an exercise price greater than the Market Value of the Common Stock on the date
of sale, (b) the Company is not entitled to redeem for cash and (c) the holders of which are not
entitled to require the Company to repurchase for cash in any circumstances.



     “Quarterly Interest Payment Date” shall have the meaning specified in Section 2.04.



12









 





     “Regular Record Date” means, (i) with respect to a Semi-Annual Interest Payment Date,
the April 1 or October 1, as the case may be, next preceding such Interest Payment Date, and (ii)
with respect to a Quarterly Interest Payment Date, the January 1, April 1, July 1 or October 1, as
the case may be, next preceding such Interest Payment Date, in each case whether or not a Business
Day.



     “Regulation S” means Regulation S under the Securities Act or any successor
regulation, as it may be amended from time to time.



     “Regulation S Global Security” means Debentures originally offered and sold outside
the United States of America in reliance on Regulation S and issued in the form of one or more
permanent Global Securities.



     “Relevant Exchange” means any securities exchange located in the European Economic
Area on which the Debentures may be listed from time to time, which exchange must be a “regulated
market” for the purposes of applicable E.U. directives, including Directive 2003/71/EC.



     “Remaining Shares” means the number of the Company’s authorized and unissued shares of
Common Stock less the maximum number of shares of the Company’s authorized and unissued Common
Stock that could be issued under options, warrants, convertible securities, any equity-linked
contracts and other agreements, in each case existing at the time of determination, that require
the Company to issue a determinable number of shares of its Common Stock.



     “Repayment Date” means the Scheduled Maturity Date and each Quarterly Interest Payment
Date thereafter until the Company shall have repaid or redeemed all of the Debentures.



     “Replacement Capital Covenant” means the Replacement Capital Covenant, dated as of
October 17, 2008, by the Company, as the same may be amended or supplemented from time to time in
accordance with the provisions thereof and Section 2.02(a)(vii) hereof.



     “Replacement Capital Securities” means



     (a) Common Stock and rights to acquire Common Stock;



     (b) Mandatorily Convertible Preferred Stock;



     (c) Debt Exchangeable for Common Equity; and



     (d) Qualifying Replacement Securities.



     “Repurchase Restrictions” has the meaning specified in clause (c) of the definition of
“Alternative Payment Mechanism.”



     “Restricted Security” means any Debentures (or beneficial interest therein) not
originally issued and sold pursuant to an effective registration statement under the Securities
Act, until such time as the Private Placement Legend therefor has been removed pursuant to Section
2.03 or in the case of a beneficial interest in a Global Security, such beneficial interest has
been exchanged for an interest in a Global Security not bearing a Private Placement Legend.



     “Reuters Page LIBOR01” means the display so designated on the Reuters 3000 Xtra (or
such other page as may replace that page on that service, or such other service as may be nominated
by the Company as the information vendor, for the purpose of displaying rates or prices comparable
to the London Interbank Offered rate for U.S. dollar deposits).



     “Rule 144” means Rule 144 under the Securities Act (or any successor rule), as such
Rule may be amended from time to time.



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     “Rule 144A” means Rule 144A under the Securities Act (or any successor rule), as such
Rule may be amended from time to time.



     “Rule 144A Global Security” means Debentures originally offered and sold to a
“qualified institution buyer” as defined in Rule 144A in reliance on Rule 144A and issued in the
form of one or more permanent Global Securities.



     “Scheduled Maturity Date” has the meaning specified in Section 2.02(a)(i).



     “Second Supplemental Indenture” means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more agreements supplemental hereto.



     “Securities Act” means the Securities Act of 1933, as amended.



     “Securities Registrar” means, with respect to the Debentures, The Bank of New York
Mellon Trust Company, N.A., or any other firm appointed by the Company, acting as securities
registrar for the Debentures.



     “Securities Registrar Office” means the office of the applicable Securities Registrar
at which at any particular time its corporate agency business shall principally be administered,
which office at the date hereof in the case of The Bank of New York Mellon Trust Company, N.A., in
its capacity as Securities Registrar under the Indenture, is located at 2 North Lasalle Street,
Suite 1020, Global Corporate Trust, Chicago, Illinois 60602.



     “Semi-Annual Interest Payment Date” shall have the meaning specified in Section 2.04.



     “Semi-Annual Interest Period” means the period beginning on and including the date
hereof, and ending on but excluding the first Interest Payment Date and each successive period
beginning on and including an Interest Payment Date and ending on but excluding the next Interest
Payment Date until October 15, 2018.



     “Share Cap” has the meaning specified in Section 2.06(a)(iii).



     “Shares Available for Issuance” means the number of Remaining Shares allocated by the
Company on a pro rata basis or such other basis as the Company determines is appropriate to the
payment of deferred interest on the Debentures in accordance with Section 2.06 and not so allocated
to any other similar commitment that is of an indeterminate nature and under which the Company is
required at the time of such allocation to issue shares of its Common Stock.



     “Subsidiary” means, at any time, any Person the shares of stock or other ownership
interests of which ordinarily have voting power to elect a majority of the board of directors or
other managers of such Person are at the time owned or the management and policies of which are
otherwise at the time controlled, directly or indirectly through one or more intermediaries
(including other Subsidiaries) or both, by another Person.



     “Three-Month LIBOR” means, with respect to any Floating Rate Interest Period, the rate
(expressed as a percentage per annum) for deposits in U.S. dollars for a three-month period
commencing on the first day of such Floating Rate Interest Period that appears on Reuters Page
LIBOR01 as of 11:00 a.m., London time, on the LIBOR Determination Date for that Floating Rate
Interest Period. If such rate does not appear on Reuters Page LIBOR01, Three-Month LIBOR will be
determined on the basis of the rates at which deposits in U.S. dollars for a three-month period
commencing on the first day of that Floating Rate Interest Period and in a principal amount of not
less than $1,000,000 are offered to prime banks in the London interbank market by four major banks
in the London interbank market selected by the Calculation Agent (after consultation with the
Company) at approximately 11:00 a.m., London time, on the LIBOR Determination Date for that
Floating Rate Interest Period. The Calculation Agent will request the principal London office of
each of these banks to provide a quotation of such bank’s rate. If at least two such quotations
are provided, Three-Month LIBOR with respect to that Floating Rate Interest Period will be the
arithmetic mean (rounded upward if necessary to the nearest whole multiple of 0.00001%) of such
quotations. If fewer than two quotations are provided, Three-Month LIBOR with respect to that
Floating Rate Interest Period will be the arithmetic mean (rounded upward if necessary to the
nearest whole multiple of 0.00001%) of the rates quoted



14









 







by three major banks in New York City selected by the Calculation Agent (after consultation
with the Company) at approximately 11:00 a.m., New York City time, on the first day of that
Floating Rate Interest Period for loans in U.S. dollars to leading European banks for a three-month
period commencing on the first day of that Floating Rate Interest Period and in a principal amount
of not less than $1,000,000. However, if fewer than three banks selected by the Calculation Agent
to provide quotations are quoting as described above, Three-Month LIBOR for that Floating Rate
Interest Period will be the same as Three-Month LIBOR as determined for the previous Floating Rate
Interest Period or, in the case of the Floating Rate Interest Period beginning on October 15, 2018,
4.28875%. The establishment of Three-Month LIBOR for each Floating Rate Interest Period by the
Calculation Agent shall (in the absence of manifest error) be final and binding.



     “Trading Day” means a day on which the Common Stock is traded on the New York Stock
Exchange, or if not then listed on the New York Stock Exchange, a day on which the Common Stock is
traded or quoted on the principal U.S. securities exchange on which it is listed or quoted, or if
not then listed or quoted on a U.S. securities exchange, a day on which the Common Stock is quoted
in the over-the-counter market.



     “Treasury Dealer” means Goldman, Sachs & Co. (or its successor) or, if Goldman, Sachs
& Co. (or its successor) refuses to act as Treasury Dealer for the purpose of determining the
Make-Whole Redemption Amount or ceases to be a primary U.S. Government securities dealer, another
nationally recognized investment banking firm that is a primary U.S. Government securities dealer
specified by the Company for these purposes.



     “Treasury Price” means, with respect to a Redemption Date of the Debentures, the
bid-side price for the Treasury Security as of the third Trading Day preceding such Redemption
Date, as set forth in the daily statistical release (or any successor release) published by The
Wall Street Journal on that Trading Day and designated “Treasury Bonds, Notes and Bills,” as
determined by the Treasury Dealer, except that: (i) if that release (or any successor release) is
not published or does not contain that price information on that Trading Day, or (ii) if the
Treasury Dealer determines that the price information is not reasonably reflective of the actual
bid-side price of the Treasury Security prevailing at 3:30 p.m., New York City time, on that
Trading Day, then “Treasury Price” will instead mean the bid-side price for the Treasury Security
at or around 3:30 p.m., New York City time, on that Trading Day (expressed on a next Trading Day
settlement basis) as determined by the Treasury Dealer through such alternative means as the
Treasury Dealer considers to be appropriate under the circumstances.



     “Treasury Rate” means, with respect to a Redemption Date of the Debentures, the
semi-annual equivalent yield to maturity of the Treasury Security that corresponds to the Treasury
Price (calculated by the Treasury Dealer in accordance with standard market practice and computed
as of the second Trading Day preceding such Redemption Date).



     “Treasury Security” means the United States Treasury security that the Treasury Dealer
determines would be appropriate to use, at the time of determination and in accordance with
standard market practice, in pricing the Debentures being redeemed in a tender offer based on a
spread to United States Treasury yields.



ARTICLE II




GENERAL TERMS AND CONDITIONS OF THE DEBENTURES




     Section 2.01. Designation, Principal Amount and Authorized Denominations.



          (a) Designation. Pursuant to Sections 201 and 301 of the Indenture, there is hereby
established a series of Securities of the Company designated as the 10% Fixed-to-Floating Rate
Junior Subordinated Debentures due 2068 (the “Debentures”), the principal amount of which
to be issued shall be in accordance with Section 2.01(b) hereof and as set forth in any Company
Order for the authentication and delivery of Debentures pursuant to the Indenture, and the form and
terms of which shall be as set forth hereinafter.




15









 








          (b) Principal Amount. Debentures in an initial aggregate principal amount of
$1,750,000,000 shall, upon execution of this Second Supplemental Indenture, be executed by the
Company and delivered to the Trustee or an Authenticating Agent for authentication, and the Trustee
or an Authenticating Agent shall thereupon authenticate and deliver said Debentures in accordance
with a Company Order. Additional Debentures may be issued from time to time pursuant to this
Second Supplemental Indenture on the same terms and conditions as the Debentures issued under this
Second Supplemental Indenture in all respects, except for any difference in the issue date, issue
price and, if applicable, the first payment of interest thereon and the initial interest accrual
date. Additional Debentures issued pursuant to this Second Supplemental Indenture will be
consolidated with, and will form a single series with, the previously outstanding Debentures issued
pursuant to this Second Supplemental Indenture unless such additional Debentures will not be
treated as fungible for U.S. tax purposes with the Debentures issued as of the date of this Second
Supplemental Indenture. Any additional Debentures issued under this Second Supplemental Indenture
will rank equally and ratably in right of payment with the Debentures originally issued under this
Second Supplemental Indenture.




          (c) Authorized Denominations. The denominations in which Debentures shall be issuable
and transferable is a minimum of $100,000 principal amount and integral multiples of $1,000
thereafter.




     Section 2.02. Repayment.



          (a) Scheduled Maturity Date.





     (i) The principal amount of, and all accrued and unpaid interest on, the Debentures
shall be payable in full on October 15, 2038 or, if such day is not a Business Day, the
following Business Day and interest will continue to accrue during such postponement (the
“Scheduled Maturity Date”); provided, however, that in the event the
Company has delivered an Officers’ Certificate to the Trustee pursuant to clause (v) of this
Section 2.02(a) in connection with the Scheduled Maturity Date, (x) the principal amount of
Debentures payable on the Scheduled Maturity Date, if any, shall be the principal amount set
forth in the notice of repayment, if any, accompanying such Officers’ Certificate, (y) such
principal amount of Debentures shall be repaid on the Scheduled Maturity Date pursuant to
Article 5 hereof, and (z) subject to clause (ii) of this Section 2.02(a), the remaining
Debentures shall remain Outstanding and shall be payable on the immediately succeeding
Quarterly Interest Payment Date or such earlier date on which they are redeemed pursuant to
Article 4 hereof, become due and payable pursuant to Section 502 of the Indenture or on the
Final Maturity Date; and provided further, that any deferred interest on the
Debentures (including Additional Interest) shall be paid in accordance with Section 2.06.




     (ii) In the event the Company has delivered an Officers’ Certificate to the Trustee
pursuant to clause (v) of this Section 2.02(a) in connection with any Quarterly Interest
Payment Date, the principal amount of the Debentures repayable on such Quarterly Interest
Payment Date shall be the principal amount set forth in the notice of repayment, if any,
accompanying such Officers’ Certificate, and shall be repaid on such Quarterly Interest
Payment Date pursuant to Article 5 hereof, and the remaining Debentures shall remain
Outstanding and shall be payable on the immediately succeeding Quarterly Interest Payment
Date or such earlier date on which they are redeemed pursuant to Article 4 hereof, become
due and payable pursuant to Section 502 of the Indenture or on the Final Maturity Date.




     (iii) The obligation of the Company to repay the Debentures pursuant to this Section
2.02(a) on any date prior to the Final Maturity Date shall be subject to its obligations
under Article Twelve of the Indenture to the holders of Senior Indebtedness.




     (iv) Until the Debentures are paid in full:




     (A) the Company shall use Commercially Reasonable Efforts, subject to the
occurrence and continuance of a Market Disruption Event, to raise sufficient net
cash proceeds from the issuance of Qualifying Replacement Securities during a
180-day period ending on the date on which the Company delivers the Officers’
Certificate required by the first sentence of clause (v) of this Section 2.02(a)
and/or Section 5.01 (not more than 15 and not less than 10 Business Days prior to
the Scheduled Maturity Date) to permit repayment in full of the



16









 







outstanding principal amount of and accrued and unpaid interest (other than any
deferred interest (including Additional Interest), which shall be paid only in
accordance with Section 2.06) on the Debentures on the Scheduled Maturity Date
pursuant to clause (i) of this Section 2.02(a); and




     (B) if the Company is unable for any reason to raise sufficient net cash
proceeds from the issuance of Qualifying Replacement Securities to permit repayment
in full of the Debentures on the Scheduled Maturity Date or any subsequent Quarterly
Interest Payment Date, the Company shall use Commercially Reasonable Efforts,
subject to the occurrence and continuance of a Market Disruption Event, to raise
sufficient net cash proceeds from the issuance of Qualifying Replacement Securities
during a 90-day period ending on the date on which the Company delivers the
Officers’ Certificate required by the first sentence of clause (v) of this Section
2.02(a) and/or Section 5.01 (not more than 15 and not less than 10 Business Days
prior to the following Quarterly Interest Payment Date) to permit repayment in full
of the outstanding principal amount of and accrued and unpaid interest (other than
any deferred interest (including Additional Interest), which shall be paid only in
accordance with Section 2.06) on the Debentures in full on such following Quarterly
Interest Payment Date pursuant to clause (i)(z) of this Section 2.02(a); and




     (C) the Company shall apply any net cash proceeds from the issuance of
Qualifying Replacement Securities to the repayment of the Debentures as provided in
clause (vi) of this Section 2.02(a).




     (v) The Company shall, if it has not received sufficient net cash proceeds from the
issuance of Qualifying Replacement Securities pursuant to clause (iv) above in connection
with any Repayment Date, deliver an Officers’ Certificate to the Trustee no more than 15 and
no less than 10 Business Days in advance of such Repayment Date stating the amount of net
cash proceeds, if any, received pursuant to clause (iv) above in connection with such
Repayment Date. The Company shall be excused from its obligation to sell Qualifying
Replacement Securities pursuant to clause (iv) above if it delivers an Officers’ Certificate
to the Trustee no more than 15 and no less than 10 Business Days in advance of such
Repayment Date certifying that: (A) a Market Disruption Event was existing and continuing
during the entire 180-day period preceding the date of such Officers’ Certificate or, in the
case of any Repayment Date after the Scheduled Maturity Date, the entire 90-day period
preceding the date of such Officers’ Certificate; or (B) the Company was unable after
Commercially Reasonable Efforts to raise sufficient net proceeds during such 180-day period
or 90-day period preceding the date of such Officers’ Certificate to permit repayment of the
Debentures in full. Each Officers’ Certificate delivered pursuant to the first sentence of
this clause (v), unless no principal amount of Debentures is to be repaid on the applicable
Repayment Date, shall be accompanied by a notice of repayment pursuant to Section 5.01
(which shall be the notice of repayment required to be given to the Holders of the
Debentures under Section 5.03) setting forth the principal amount of the Debentures to be
repaid on such Repayment Date, if any, which amount shall be determined after giving effect
to clause (vi) of this Section 2.02(a).




     (vi) Net cash proceeds of the issuance of any Qualifying Replacement Securities shall
be applied to repayment of the Debentures on any Repayment Date in the following order of
priority: first, to pay deferred interest (including Additional Interest) to the extent of
Eligible Proceeds received pursuant to Section 2.06; second, to pay current interest to the
extent not paid from other sources and; third, to repay the Outstanding principal of the
Debentures; provided that if the Company is obligated to sell Qualifying Replacement
Securities and apply the net proceeds to payments of principal of or interest on any
outstanding securities other than the Debentures then (i) on any date and for any period the
amount of net proceeds received by the Company from those sales and available for such
payments shall be applied to the Debentures and such other outstanding securities having the
same scheduled maturity date as the Debentures, pro rata in accordance with their respective
Outstanding principal amounts and (ii) none of such net proceeds shall be applied to any
other securities having a later scheduled maturity date than the Debentures until the
principal of the Debentures shall have been paid in full. If the Company raises less than
$5 million (or, if less than $5 million principal amount of Debentures remains Outstanding,
an amount less than the remaining principal amount of such remaining Outstanding Debentures)
of net proceeds from the sale of Qualifying Replacement Securities during the relevant
180-day or 90-day period, the Company



17









 







will not be required to repay any Debentures on the Scheduled Maturity Date or the next
Quarterly Interest Payment Date, as applicable, but must use those net proceeds to repay the
Debentures on the next Quarterly Interest Payment Date to the extent the Company has raised
at least $5 million (or, if less than $5 million principal amount of Debentures remains
Outstanding, an amount equal to the remaining Outstanding Debentures) of net proceeds. If
the net proceeds allocable to repay the principal of the Debentures shall not be divisible
by the authorized denominations of the Debentures into a whole number, the net proceeds so
allocable shall be deemed to be equal to the next lower amount divisible by such authorized
denominations into a whole number. The Company shall deliver to the Trustee, no later than
one Business Day prior to a Repayment Date with respect to which the Company has received
net cash proceeds of the issuance of Qualifying Replacement Securities, an Officers’
Certificate setting forth the manner in which such net cash proceeds are to be applied in
accordance with this Section 2.02(a)(vi).




     (vii) The Company shall not amend the Replacement Capital Covenant to impose additional
restrictions on the type or amount of Qualifying Replacement Securities that the Company may
include for purposes of determining whether or to what extent repayment, redemption or
purchase of the Debentures is permitted, except with the consent of Holders of at least a
majority in aggregate Outstanding principal amount of the Debentures. Except as aforesaid,
the Company may amend or supplement the Replacement Capital Covenant in accordance with its
terms and without the consent of the Holders of the Debentures.



          (b) Final Maturity Date. The principal of, and all accrued and unpaid interest on,
all Outstanding Debentures shall be due and payable on October 15, 2068 or, if such date is not a
Business Day, the following Business Day (the “Final Maturity Date”), from any source of
available funds and regardless of the amount of Qualifying Replacement Securities the Company may
have issued and sold by that time.




     Section 2.03. Form, Legend, Transfer and Exchange.



          (a) Form. The Debentures shall be substantially in the form of Exhibit A attached
hereto and shall be issued in fully registered definitive form without interest coupons.
Debentures offered and sold to a qualified institutional buyer in reliance on Rule 144A shall be
issued initially in the form of one or more Rule 144A Global Securities and numbered from 1 upward
with the prefix “RA” and Debentures offered and sold in reliance on Regulation S shall be issued
initially in the form of one or more Regulation S Global Securities and numbered from 1 upward with
the prefix “RS”, and shall in each case be deposited with the Trustee, as custodian for DTC, and
registered in the name of DTC or a nominee of DTC, for credit by DTC to the respective accounts of
beneficial owners of the Debentures represented thereby (or such other accounts as they may direct
consistent with the terms hereof), duly executed by the Company and authenticated by the Trustee as
provided in the Indenture. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the Trustee and DTC or its
nominee as hereinafter provided. Principal of and interest on the Debentures issued in definitive
form will be payable, the transfer of such Debentures will be registrable and such Debentures will
be exchangeable for Debentures bearing identical terms and provisions and notices and demands to or
upon the Company in respect of the Debentures and the Indenture may be served at the Corporate
Trust Office of the Trustee, and the Company appoints the Trustee as its agent for the foregoing
purposes, provided that payment of interest may be made at the option of the Company by
check mailed to the Holders at such address as shall appear in the Security Register or by wire
transfer in immediately available funds to the bank account number of the Holders specified in
writing by the Holders not less than 10 days before the relevant Interest Payment Date and entered
in the Security Register by the Securities Registrar. The Debentures may be presented for
registration of transfer or exchange at the Securities Registrar Office. The Debentures are
initially solely issuable as Global Securities. The Depository Trust Company is hereby designated
as Depositary. Registered Debentures shall be physically transferred to all beneficial owners in
definitive form in exchange for their beneficial interests in a Global Security if the Depositary
with respect to such Global Securities notifies the Company that it is unwilling or unable to
continue as Depositary for such Global Security or the Depositary ceases to be a clearing agency
registered under the Exchange Act, as the case may be, and a successor Depositary is not appointed
by the Company within 90 days of such notice.




     In addition, beneficial interests in the Global Securities may be exchanged for definitive
certificated Debentures upon request by or on behalf of the Depositary in accordance with customary
procedures following the
request of a beneficial owner seeking to exercise or enforce its rights under such Debentures
in connection with an 


18









 







Event of Default. If the Company determines at any time that the Debentures
shall no longer be represented by a Global Security, the Company shall inform the Depositary of
such determination which will, in turn, notify participants of their right to withdraw their
beneficial interest from the Global Security. If such participants then elect to withdraw their
beneficial interests, the Company shall issue certificates in definitive form in exchange for such
beneficial interests in the Global Security. Any Global Security, or portion thereof, that is
exchangeable pursuant to this Section 2.03 shall be exchangeable for Debenture certificates
registered in the names directed by the Depositary.



     (b) Legends.




     (i) Each Global Security shall bear the legend specified therefor in Exhibit A
on the face thereof.




     (ii) Each Restricted Security shall bear the private placement legend specified
therefor in Exhibit A on the face thereof (the “Private Placement Legend”).



     (c) Transfer and Exchange.




     (i) Regulation S Global Security to Rule 144A Global Security. If the owner of
a beneficial interest in a Regulation S Global Security wishes at any time to transfer such
interest to a Person who wishes to acquire the same in the form of a beneficial interest in
a Rule 144A Global Security, such transfer may be effected only in accordance with this
Section 2.03 and subject to the Applicable Procedures. Upon receipt by the Securities
Registrar, of (A) an order given by the Participant directing DTC or its authorized
representative that a beneficial interest in the Rule 144A Global Security in a specified
principal amount be credited to a specified Participant’s account and that a beneficial
interest in the Regulation S Global Security in an equal principal amount be debited from
another specified Participant’s account and (B) if such transfer is to occur for so long as
it is a Restricted Security, a certificate in the form of Exhibit B hereto,
satisfactory to the Trustee and duly executed by the owner of such beneficial interest in
the Regulation S Global Security or its attorney duly authorized in writing, then the
Securities Registrar, shall reduce the principal amount of the Regulation S Global Security
and increase the principal amount of the Rule 144A Global Security by such principal amount.




     (ii) Rule 144A Global Security to Regulation S Global Security. If the owner
of a beneficial interest in a Rule 144A Global Security wishes at any time to transfer such
interest to a Person who wishes to acquire the same in the form of a beneficial interest in
a Regulation S Global Security, such transfer may be effected only in accordance with this
Section 2.03 and subject to the Applicable Procedures. Upon receipt by the Securities
Registrar, of (A) an order given by the Participant directing DTC or its authorized
representative that a beneficial interest in the Regulation S Global Security in a specified
principal amount be credited to a specified Participant’s account and that a beneficial
interest in the Rule 144A Global Security in an equal principal amount be debited from
another specified Participant’s account and (B) a certificate in the form of Exhibit
C hereto, satisfactory to the Trustee and duly executed by the owner of such beneficial
interest in the Rule 144A Global Security or its attorney duly authorized in writing, then
the Securities Registrar, shall reduce the principal amount of the Rule 144A Global Security
and increase the principal amount of the Regulation S Global Security by such principal
amount.



     (d) Use and Removal of Private Placement Legends.




     (i) Upon the transfer, exchange or replacement of Debentures (or beneficial interests
in a Global Security) not bearing (or not required to bear upon such transfer, exchange or
replacement) a Private Placement Legend, the Securities Registrar shall exchange such
Debentures (or beneficial interests in a Global Security) for beneficial interests in a
Global Security (or certificated Securities if they have been issued pursuant to this
Section 2.03) that does not bear a Private Placement Legend.



19









 






     (ii) Upon the transfer, exchange or replacement of Debentures (or beneficial interests
in a Global Security) bearing a Private Placement Legend, the Securities Registrar shall
deliver only Debentures that bear (or beneficial interests in a Global Security that bears)
a Private Placement Legend unless:




   (A) such Debentures (or beneficial interests) are transferred pursuant to Rule 144
upon delivery to the Securities Registrar of a certificate of the transferor in the form
of Exhibit D and an Opinion of Counsel reasonably satisfactory to the Company to
the effect that neither such Private Placement Legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act; or




   (B) in connection with such transfer, exchange or replacement the Company and the
Trustee shall have received an Opinion of Counsel, certificates and such other evidence
reasonably satisfactory to the Company to the effect that neither such Private Placement
Legend nor the related restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act.




     (iii) The Holder of a Global Security that bears a Private Placement Legend may
exchange an interest therein for an equivalent interest in a Global Security not bearing a
Private Placement Legend upon transfer of such interest pursuant to this Section 2.03(d).



     (e) Reports.




     (i) At any time the Company is not subject to Section 13 or 15(d) of the Exchange Act,
the Company shall, so long as any of the Debentures shall, at such time, constitute
“restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, upon
written request, provide to any Holder, beneficial owner or prospective purchaser of such
Debentures, the information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act to facilitate the resale of such Debentures pursuant to Rule 144A under the
Securities Act.




     (ii) For so long as the Debentures are listed on a Relevant Exchange and the rules of
such exchange so require, the Company will provide the reports required to be provided to
the Holders of the Debentures to the Paying Agent located in the relevant jurisdiction in
which such exchange is located.



     (f) Trustee and Security Registrar.



     The Trustee and the Security Registrar shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under this Second
Supplemental Indenture or under applicable law with respect to any transfer of any interest in any
Debenture (including any transfers between or among DTC Participants, members or beneficial owners
in any Global Security) other than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when expressly required by, the terms
of this Second Supplemental Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.



     Section 2.04. Rate of Interest; Interest Payment Date.



          (a) Rate of Interest. The Debentures shall bear interest from and including the date
hereof to but excluding October 15, 2018 or earlier Redemption Date of the Debentures, at the rate
of 10% per annum, payable as set forth in clause (b) below computed on the basis of a 360-day year
comprised of twelve 30-day months. Commencing on October 15, 2018, the Debentures shall bear
interest at a floating annual rate, reset quarterly on the first day of each Floating Rate Interest
Period by the Calculation Agent, equal to Three-Month LIBOR, determined for each Floating Rate
Interest Period as set forth herein plus 6.824% (the “Floating Rate”), payable as set forth
in clause (b) below. The amount of Floating Rate interest payable on the Debentures for any
Floating Rate Interest Period will be computed on the basis of a 360-day year and the actual number
of days elapsed in the 360-day year. Interest scheduled for payment but not paid upon any Interest
Payment Date, including interest not required to be paid due to deferral under the terms of this
Second Supplemental Indenture, shall bear Additional
Interest from the originally scheduled payment date therefor at the rate borne by the
Debentures; provided that (i) if



20









 




 a scheduled Semi-Annual Interest Payment Date is not a
Business Day, interest payable on such Semi-Annual Interest Payment Date shall be paid on the next
succeeding day that is a Business Day, and no interest will accrue as a result of any such
postponement, and (ii) if a scheduled Quarterly Interest Payment Date is not a Business Day, the
Quarterly Interest Payment Date shall be postponed to the next succeeding day that is a Business
Day, and interest will continue to accrue during such postponement. Interest will accrue from and
including the last Interest Payment Date in respect of which interest has been paid or duly
provided for to but excluding the following Interest Payment Date with respect to which the
interest has been paid or duly provided for.




          (b) Interest Payment Dates. Subject to the other provisions hereof, interest on the
Debentures shall be payable (i) semi-annually in arrears on April 15 and October 15 of each year,
commencing on April 15, 2009, until and including October 15, 2018 (each such date, a
“Semi-Annual Interest Payment Date”) and (ii) thereafter, quarterly in arrears on January
15, April 15, July 15 and October 15 of each year, commencing on January 15, 2019 (each such date,
a “Quarterly Interest Payment Date” and, together with Semi-Annual Interest Payment Dates,
each, an “Interest Payment Date”).




     Section 2.05. Interest Deferral.




     (a) Option to Defer Interest Payments.




     (i) So long as no Event of Default with respect to the Debentures has occurred and is
continuing, the Company shall have the right on one or more occasions, to defer the payment
of interest on the Debentures for one or more Interest Periods up to 10 consecutive years,
provided that no Deferral Period shall extend beyond the Final Maturity Date, the
earlier accelerated maturity date of the Debentures or other repayment or redemption in full
of the Debentures. If the Company shall fail to pay interest on the Debentures on any
Interest Payment Date, the Company shall be deemed to elect to defer payment of such
interest on such Interest Payment Date, unless the Company shall pay such interest in full
within five Business Days after any such Interest Payment Date. If the Company shall have
paid all deferred interest (including Additional Interest) on the Debentures, the Company
shall have the right to elect to begin a new Deferral Period pursuant to this Section 2.05.




     (ii) During a Deferral Period, interest (including Additional Interest) will continue
to accrue on the Debentures at the then applicable interest rate, compounded semi-annually
or quarterly, as applicable, as of each Interest Payment Date to the extent permitted by
applicable law.




     (iii) The Company shall pay all deferred interest, including Additional Interest, in
accordance with the provisions of Section 307 of the Indenture applicable to Defaulted
Interest.



          (b) Payment of Deferred Interest. The Company will not pay any deferred interest
(including Additional Interest) on the Debentures except in accordance with Section 2.06 prior to
the Final Maturity Date, except at any time that the principal amount of the Debentures shall have
been accelerated and such acceleration has not been rescinded or in the case of a Business
Combination to the extent provided below in Section 2.05(c). On the Final Maturity Date or if the
principal amount of the Debentures shall have been accelerated and such acceleration has not been
rescinded, the Company shall pay all accrued and unpaid interest, including deferred interest
(including Additional Interest), from any available funds. Notwithstanding the foregoing, on any
Interest Payment Date the Company may pay the current interest accrued during the immediately
preceding Interest Period from any available funds.




          (c) Business Combination Exception. If the Company is involved in a Business
Combination where immediately after its consummation more than 50% of the voting stock of the
Person that is the surviving entity of such Business Combination, or the Person to whom all or
substantially all of the Company’s property or assets are conveyed, transferred or leased in such
Business Combination, is owned by the stockholders of the other party to such Business Combination,
then Section 2.05(b) and Section 2.06 shall not apply to any payment of interest for a Deferral
Period that is terminated on the next Interest Payment Date following the date of consummation of
such Business Combination.




21









 








          (d) Notice of Deferral. The Company shall provide written notice to the Trustee and
the Holders of the Debentures of its election to commence or continue any Deferral Period at least
one Business Day and not more than sixty Business Days prior to the applicable Interest Payment
Date. Notice of the Company’s election of a Deferral Period shall be given to the Trustee and each
Holder of Debentures at such Holder’s address appearing in the Security Register by first-class
mail, postage prepaid. Notwithstanding the foregoing, the failure of the Company to provide notice
in accordance with this Section 2.05(d) of its election to commence or continue any Deferral
Period, including any deemed election as provided in Section 2.05(a)(i), shall not affect the
validity of such deferral hereunder.




     Section 2.06. Alternative Payment Mechanism.



          (a) Obligation to Issue APM Qualifying Securities. During the APM Period, the Company
shall, subject to the limitations set forth in clauses (i), (ii) and (iii) below, the occurrence
and continuation of a Market Disruption Event as provided in Section 2.06(b), and Section 2.05(b)
and Section 2.06(c), sell APM Qualifying Securities until the Company has raised an amount of
Eligible Proceeds at least equal to the aggregate amount of accrued and unpaid deferred interest on
the Debentures, including Additional Interest, and apply such Eligible Proceeds as promptly as
practicable following receipt thereof to the payment of all accrued and unpaid deferred interest
(including Additional Interest) on the Debentures until all such deferred interest (including
Additional Interest) has been paid in full. Subject to the limitations set forth in this Section
2.06(a), during an APM Period, the Company may in its discretion select the types of APM Qualifying
Securities to sell to satisfy its obligations under this Section 2.06(a):





     (i) Prior to the fifth anniversary of the commencement of a Deferral Period the Company
shall not be obligated to issue Common Stock or Qualifying Warrants to the extent that the
number of shares of Common Stock issued or issuable upon the exercise of such Qualifying
Warrants plus the number of shares of Common Stock previously issued or issuable upon the
exercise of Qualifying Warrants previously issued during such Deferral Period would exceed
an amount equal to 2% of the total number of issued and outstanding shares of Common Stock
as of the date of the Company’s then most recent publicly available consolidated financial
statements immediately prior to the date of such issuance (the “Common Stock Issuance
Cap”). If the Company shall have issued Common Stock or Qualifying Warrants during any
Deferral Period such that the Common Stock Issuance Cap shall have been reached,
notwithstanding any subsequent increase in the number of outstanding shares of Common Stock
in accordance with clause (iii) below or otherwise, the Common Stock Issuance Cap applicable
during such Deferral Period shall not be increased. On and after the fifth anniversary of
the commencement of any Deferral Period, the Common Stock Issuance Cap shall cease to apply
and the Company shall pay any deferred interest, regardless of the time at which it was
deferred, as provided in this Section 2.06(a) without regard to the Common Stock Issuance
Cap, but subject to the other limitations set forth herein. Upon the termination of any
Deferral Period, if the Company shall thereafter start a new Deferral Period, the Common
Stock Issuance Cap shall apply without regard to the shares of Common Stock and Qualifying
Warrants issued in any prior Deferral Period. Notwithstanding the Common Stock Issuance
Cap, the Company shall have the right, in its sole discretion, to issue Common Stock or
Qualifying Warrants in excess of the Common Stock Issuance Cap for the purpose of paying
deferred interest (including Additional Interest) on the Debentures or for any other
purpose;




     (ii) The Company shall not issue Qualifying Preferred Stock or Mandatorily Convertible
Preferred Stock to the extent that the net proceeds of any issuance of Qualifying Preferred
Stock or Mandatorily Convertible Preferred Stock applied, together with the net proceeds of
all prior issuances of Qualifying Preferred Stock and any still-outstanding Mandatorily
Convertible Preferred Stock applied during the current and all prior Deferral Periods, to
pay deferred interest on the Debentures pursuant to this Section 2.06, would exceed 25% of
the aggregate principal amount of the Debentures (the “Preferred Stock Issuance
Cap”);




     (iii) Notwithstanding the Common Stock Issuance Cap and the Preferred Stock Issuance
Cap, so long as any Debentures shall remain Outstanding, the Company shall not sell Common
Stock, Qualifying Warrants, or Mandatorily Convertible Preferred Stock for the purpose of
paying deferred
interest (including Additional Interest) on the Debentures in an amount such that the
Common Stock to be


22









 







  issued (or which would be issuable upon exercise or conversion thereof)
would exceed the Shares Available for Issuance (the “Share Cap”). The Company shall
use its commercially reasonable efforts to seek stockholder approval to increase the number
of authorized shares of the Common Stock if at any date the Shares Available for Issuance
falls below the greater of:




     (A) 201 million shares (or 402 million shares if the Company has amended the
Definition of APM Qualifying Securities to eliminate Common Stock) (as adjusted for
any stock split, stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction); and




     (B) the number of shares that the Company would be required to issue to raise
sufficient Eligible Proceeds (assuming a price per share equal to the average
trading price of a share of Common Stock during the 10-Trading Day period preceding
the date of determination) equal to the lesser of (a) the sum of (1) three times the
amount of the then outstanding deferred interest (including Additional Interest) on
the Debentures plus (2) the amount of interest (including Additional Interest) that
would accumulate on the Debentures during the next twelve months assuming no
payments of interest thereon are made, and (b) the amount of interest (including
Additional Interest) that would accumulate on the Debentures during the 10 year
period beginning on the commencement of the then current Deferral Period. For
purposes of determining the amounts accruing subsequent to October 15, 2018,
interest will be computed by reference to Three-Month LIBOR for the then current
Interest Period plus 6.824%.



     If the Company issues additional Debentures, the number of shares referred to in (A) above
will be increased proportionately to the principal amount of such additional Debentures.



          (b) Market Disruption Event. Section 2.06(a) shall not apply, with respect to any
Interest Payment Date, if not less than 10 Business Days prior to such Interest Payment Date the
Company shall have provided to the Trustee an Officers’ Certificate (which the Trustee will
promptly forward upon receipt to each Holder of Debentures) stating that a Market Disruption Event
has occurred and is continuing and identifying the type of Market Disruption Event that has
occurred and the date(s) on which that Market Disruption Event occurred or existed. The obligation
of the Company to sell APM Qualifying Securities to pay deferred interest (including Additional
Interest) on the Debentures shall resume at such time as no Market Disruption Event exists or is
continuing.





     (c) Partial Payment of Deferred Interest.




     (i) If the Eligible Proceeds received by the Company from one or more sales of APM
Qualifying Securities are not sufficient to satisfy the full amount of accrued and unpaid
deferred interest, including Additional Interest, on the Debentures (together with the full
amount of deferred interest on Parity Securities in the circumstances described in clause
(ii) below) on any Interest Payment Date, such Eligible Proceeds shall be allocated to pay
accrued and unpaid deferred interest to Holders of the Debentures (and Parity Securities, if
applicable) on a pro rata basis based on the total amount of accrued and unpaid deferred
interest then due. Not less than 10 Business Days prior to any Interest Payment Date with
respect to which insufficient Eligible Proceeds have been received by the Company, the
Company shall deliver to the Trustee an Officers’ Certificate stating that such insufficient
proceeds have been received and stating the amount of such proceeds allocable to pay accrued
and unpaid deferred interest on the Debentures in accordance with this clause (i).




     (ii) If on any date or for any period the Company pays interest on any class of Parity
Securities in an amount that is less than the full amount of accrued but unpaid interest
payable on such class of Parity Securities, including pursuant to an obligation to pay to
the holders of such Parity Securities the proceeds of a sale of APM Qualifying Securities,
the Company will make payments on all outstanding classes of Parity Securities on the same
date or for the same corresponding period as on the Debentures on a pro rata basis based on
the total amounts then due, except and to the extent the terms of any such Parity

Securities (each a “Particular Parity Security”) would prohibit the Company
from making such payments on such Particular Parity Security.


23









 








     Section 2.07. Events of Default.



     Solely for purposes of the Debentures, Section 501 of the Indenture shall be deleted and
replaced by the following:



          Section 5.01. Events of Default.




     “Event of Default”, wherever used herein with respect to the Debentures, means any one
of the following events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative or governmental body):




     (1) default in the payment of interest, including Additional Interest, in full on any
Debenture for a period of 30 days after the conclusion of a 10-year period following the
commencement of any Deferral Period, or on the Final Maturity Date; or




     (2) default in the payment of principal of, or premium, if any, on any Debenture on the
Final Maturity Date or upon redemption; or




     (3) the entry of a decree or order by a court having jurisdiction in the premises
adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect of the
Company in an involuntary case under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or of any substantial part
of its property or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of 90
consecutive days; or




     (4) the institution by the Company of proceedings to be adjudicated a bankrupt or
insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or consent seeking reorganization or
relief under any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or of any substantial part of its property and such official is not discharged
within 60 days, or the making by it of a general assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts generally as they become
due.



     The Trustee shall have no right or obligation under the Indenture or otherwise to exercise any
remedies on behalf of the Holders of the Debentures in connection with any failure by the Company
to comply with any covenant or warranty of the Company contained in the Indenture (other than any
covenant referred to in Section 501(1) or (2)), unless the Trustee is directed to exercise such
remedies pursuant to and subject to the provisions of Section 512 of the Indenture. In connection
with any such exercise of remedies, the Trustee shall be entitled to the same immunities and
protections and remedial rights (other than acceleration) as if such failure to comply were an
Event of Default. The Trustee shall not be charged with knowledge or notice of any such failure to
comply unless and until it shall have received the foregoing direction under Section 512 of the
Indenture.



     Section 2.08. Securities Registrar; Paying Agent; Delegation of Trustee Duties.



     The Company initially appoints The Bank of New York Mellon Trust Company, N.A., as Security
Registrar and principal paying agent with respect to the Debentures. In addition, for so long as
the Debentures are listed on a Relevant Exchange and the rules of the Relevant Exchange so require,
the Company shall maintain an office or agency in the relevant jurisdiction in which such exchange
is located, where the Debentures may be
presented for payment (together with the paying agent appointed in the preceding sentence, the
“Paying Agent”) and notices and demands to or upon the Company in respect of the Debentures
and this Second Supplemental Indenture may be served. The term “Paying Agent” includes any
additional paying agent. The Company may change the Paying Agent and the Security Registrar
without notice to Holders.



24









 





     Section 2.09. Limitation on Claims in the Event of Bankruptcy, Insolvency or
Receivership. Each Holder, by such Holder’s acceptance of the Debentures, agrees that in the
event of the Company’s bankruptcy, insolvency or receivership prior to the redemption or repayment
of such Debentures, whether voluntary or not, such Holder of Debentures shall have no claim under
the Debentures for, and no right to receive, any deferred and unpaid interest (including Additional
Interest) pursuant to Section 2.05 that has not been paid pursuant to Section 2.05 and Section 2.06
to the extent the amount of such deferred interest exceeds the amount of deferred interest
(including Additional Interest) that relates to the earliest two years of the portion of the
Deferral Period for which interest has not been paid.



     Section 2.10. Subordination. The subordination provisions of Article Twelve of the
Indenture shall apply to the Debentures, provided that, for purposes of such Article
Twelve, Senior Indebtedness will not include (a) indebtedness incurred for the purchase of goods,
materials or property, or for services obtained in the ordinary course of business or for other
liabilities arising in the ordinary course of business (i.e., trade accounts payable), (b) any
indebtedness which by its terms expressly provides that it is not senior to the Debentures, (c) any
of the Company’s indebtedness owed to a Person who is a Subsidiary or employee of the Company, (d)
the Income Capital Obligation Notes due 2067 of the Company issuable pursuant to the Junior
Subordinated Indenture, dated as of February 12, 2007, between the Company and LaSalle Bank Nation
Association, a national banking association incorporated and existing under the laws of the United
States of America, as Trustee, or (e) the 8.125% Fixed-to-Floating Rate Junior Subordinated
Debentures due 2068 of the Company issued pursuant to the Indenture, as supplemented by the First
Supplemental Indenture dated as of June 6, 2008 between the Company and The Bank of New York Mellon
Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A.), as Trustee, or
(f) any other indebtedness of the Company that by its terms ranks pari passu with the Debentures,
and, in each case, the Debentures shall be pari passu with such
indebtedness.1



     Section 2.11. Satisfaction and Discharge. The provisions of Section 401 and Article
13 of the Indenture shall apply to the Debentures.



ARTICLE III




COVENANTS




     Section 3.01. Dividend and Other Payment Stoppages. So long as any Debentures remain
Outstanding, if the Company shall have given notice of its election to defer interest payments on
the Debentures but the related Deferral Period has not yet commenced or a Deferral Period is
continuing, the Company shall not, and shall not permit any Subsidiary of the Company to:



          (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of capital stock of the Company other than:





     (i) any purchase, redemption or other acquisition of shares of Common Stock in
connection with any employment contract, benefit plan or other similar arrangement with or
for the benefit of employees, officers, directors or consultants;




     (ii) purchases of shares of Common Stock pursuant to a contractually binding
requirement to buy Common Stock entered into prior to the beginning of such Deferral Period,
including under a contractually binding stock repurchase plan;




     (iii) as a result of any exchange, redemption or conversion of any class or series of
the Company’s capital stock, or the capital stock of one of its Subsidiaries, for any class
or series of the





 




			
	1	 	Update as needed.





25









 






Company’s capital stock, or of any class or series of the Company’s
indebtedness for any class or series of the Company’s capital stock;




     (iv) any purchase of, or payment of cash in lieu of, fractional interests in shares of
the Company’s capital stock in accordance with the conversion or exchange provisions of such
capital stock or the security being converted or exchanged;




     (v) the redemption or repurchase of rights in accordance with any stockholders’ rights
plan; or



          (b) make any payment of principal of, or interest or premium, if any, on or repay, repurchase
or redeem any of the Company’s debt securities or guaranties that rank equally with the Debentures
(“Parity Securities”) or junior to the Debentures other than (i) any payment of current or
deferred interest on Parity Securities made pro rata to the amounts due on such Parity Securities
(including the Debentures) provided that such payments are made in accordance with Section
2.06(c) to the extent applicable, and any payments of deferred interest on Parity Securities that,
if not made, would cause the Company to breach the terms of the instrument governing such Parity
Securities; or (ii) any payment of principal on Parity Securities necessary to avoid a breach of
the instrument governing such Parity Securities.




     Section 3.02. Additional Limitation on Deferral Over One Year.



          (a) Subject to the exceptions specified in Section 3.01 above, if any Deferral Period lasts
longer than one year, the Company shall not, and shall not permit any Subsidiary of the Company to,
redeem or repurchase any of the Company’s APM Qualifying Securities, the proceeds from the sale of
which were used to pay deferred interest on the Debentures during the relevant Deferral Period, or
any securities of the Company that rank equally with or junior to such APM Qualifying Securities
until the first anniversary of the date on which all deferred interest on the Debentures shall have
been paid pursuant to Section 2.06 above.




          (b) If the Company is involved in a Business Combination where immediately after its
consummation more than 50% of the voting stock of the Person that is the surviving entity of such
Business Combination, or the Person to whom all or substantially all of the Company’s property or
assets are conveyed, transferred or leased in such Business Combination, is owned by the
stockholders of the other party to the Business Combination, then Section 3.02(a) shall not apply
to any redemption or repurchase of the Company’s APM Qualifying Securities if the Deferral Period
is terminated on or prior to the next Interest Payment Date following the date of consummation of
such Business Combination.




ARTICLE IV




REDEMPTION OF THE DEBENTURES




     Section 4.01. Redemption. Subject to the Replacement Capital Covenant, the Debentures
shall be redeemable in accordance with Article Eleven of the Indenture, except to the extent
otherwise provided in this Second Supplemental Indenture, in whole at any time or in part from time
to time after the date of this Second Supplemental Indenture; provided that no partial
redemption pursuant to this Section 4.01 shall be effected (x) unless at least $25 million
aggregate principal amount of the Debentures shall remain Outstanding after giving effect to such
redemption and (y) if the principal amount of the Debentures shall have been accelerated and such
acceleration has not been rescinded or unless all accrued and unpaid interest, including deferred
interest (including Additional Interest), shall have been paid in full on all Outstanding
Debentures for all Interest Periods terminating on or before the Redemption Date; provided,
further, that no Holder of Debentures (or owner of a beneficial interest in a Global
Security evidencing such Debentures) shall be eligible to have such Debentures redeemed in part if,
following such redemption such Holder or owner would hold or have a beneficial interest in a Global
Security in an



26









 







aggregate principal amount that is not an Authorized Denomination; provided, that,
the Trustee shall not be responsible for determining compliance with the foregoing proviso with
respect to the owner of a beneficial interest in a Global Security.



     Section 4.02. Redemption Price. The Redemption Price for any redemption pursuant to
Section 4.01 will be equal to (1) in the case of any redemption prior to October 15, 2018, the
greater of (i) 100% of the principal amount of the Debentures being redeemed, and (ii) the
Make-Whole Redemption Amount, in each case plus accrued and unpaid interest to but excluding the
Redemption Date, or (2) in the case of any redemption on or after October 15, 2018, 100% of the
principal amount of the Debentures being redeemed plus accrued and unpaid interest to but excluding
the Redemption Date. The Company shall give the Trustee prompt notice of the determination of any
Redemption Price provided for in this Section and the Trustee shall have no responsibility for
determining such Redemption Price.



ARTICLE V




REPAYMENT OF DEBENTURES




     Section 5.01. Repayments. The Company shall, not more than 15 nor less than 10
Business Days prior to each Repayment Date (unless a shorter notice shall be satisfactory to the
Trustee), deliver to the Trustee an Officers’ Certificate notifying it of the principal amount of
Debentures to be repaid on such date pursuant to Section 2.02(a).



     Section 5.02. Selection of the Debentures to be Repaid. If less than all the
Debentures are to be repaid on any Repayment Date (unless such repayment affects only a single
Debenture), the particular Debentures to be repaid shall be selected by the Trustee promptly
following receipt of the notice specified in Section 5.01, from the Outstanding Debentures not
previously repaid or called for redemption by such method as the Trustee in its sole discretion
shall deem fair and appropriate and which may provide for the selection for repayment of a portion
of the principal amount of any Debenture, provided that the portion of the principal amount
of any Debenture not repaid shall be in an Authorized Denomination (which shall not be less than
the Minimum Authorized Denomination) for such Debenture. If less than all the Debentures and of a
specified tenor are to be repaid (unless such redemption affects only a single Debenture), the
particular Debentures to be repaid shall be selected by the Trustee promptly following receipt of
the notice specified in Section 5.01, from the Outstanding Debentures and specified tenor not
previously called for repayment in accordance with the preceding sentence.



     The Trustee shall promptly notify the Company in writing of the Debentures selected for
partial repayment and the principal amount thereof to be repaid. For all purposes hereof, unless
the context otherwise requires, all provisions relating to the repayment of Debentures shall
relate, in the case of any Debentures repaid or to be repaid only in part, to the portion of the
principal amount of such Debentures which has been or is to be repaid.



     Section 5.03. Notice of Repayment. Notice of repayment shall be given by first-class
mail, postage prepaid, mailed not earlier than the 15th Business Day, and not later than the fifth
Business Day, prior to the Repayment Date, to each Holder of Debentures to be repaid, at the
address of such Holder as it appears in the Security Register.



     Each notice of repayment shall identify the Debentures to be repaid (including the Debentures’
CUSIP number, if a CUSIP number has been assigned to the Debentures) and shall state:



          (a) the Repayment Date;



          (b) if less than all Outstanding Debentures are to be repaid, the identification (and, in the
case of partial repayment, the respective principal amounts) of the particular Debentures to be
repaid;





27












 





          (c) that on the Repayment Date, the principal amount of the Debentures to be repaid will
become due and payable upon each such Debenture or portion thereof, and that interest thereon, if
any, shall cease to accrue on and after said date; and




          (d) the place or places where such Debentures are to be surrendered for payment of the
principal amount thereof.




     Notice of repayment shall be given by the Company or, if the Company timely notifies the
Trustee, at the Company’s request, by the Trustee in the name and at the expense of the Company and
shall be irrevocable. The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holders receive such notice. In any case, a
failure to give such notice by mail or any defect in the notice to any Holder of any Debentures
designated for repayment as a whole or in part shall not affect the validity of the proceedings for
the repayment of any other Debentures.



     Section 5.04. Deposit of Repayment Amount. Prior to the Repayment Date specified in
the notice of repayment given as provided in Section 5.03, the Company will deposit with the
Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the
Company will segregate and hold in trust as provided in Section 1003 of the Indenture) an amount of
money, in immediately available funds, sufficient to pay the principal amount of, and any accrued
interest on, all the Debentures which are to be repaid on that date.



     Section 5.05. Repayment of Debentures. If any notice of repayment has been given as
provided in Section 5.03, the Debentures or portion of the Debentures with respect to which such
notice has been given shall become due and payable on the date and at the place or places stated in
such notice. On presentation and surrender of such Debentures at a Place of Payment in said notice
specified, the said Debentures or the specified portions thereof shall be paid by the Company at
their principal amount, together with accrued interest to but excluding the Repayment Date, and any
deferred interest (including Additional Interest) shall be paid in accordance with Section 2.06;
provided that, except in the case of a repayment in full of all Outstanding Debentures,
installments of interest whose Stated Maturity is on or prior to the Repayment Date will be payable
to the Holders of such Debentures, registered as such at the close of business on the relevant
Regular Record Dates according to their terms and the provisions of Section 1101 of the Indenture.
Upon presentation of any Debentures repaid in part only, the Company shall execute and the Trustee
shall authenticate and make available for delivery to the Holders thereof, at the expense of the
Company, a new Debenture, of authorized denominations, in aggregate principal amount equal to the
portion of the Debentures not repaid and so presented and having the same Scheduled Maturity Date
and other terms. If a Global Security is so surrendered, such new Debentures will also be a new
Global Security.



     If any Debentures required to be repaid shall not be so repaid upon surrender thereof, the
principal of such Debentures shall, until paid, bear interest from the applicable Repayment Date at
the rate prescribed therefor in the Debentures.



ARTICLE VI




ORIGINAL ISSUE DISCOUNT




     Section 6.01. Calculation of Original Issue Discount. If during any calendar year any
original issue discount shall have accrued on the Debentures, the Company shall file with each
Paying Agent (including the Trustee if it is a Paying Agent) by January 15 of the following
calendar year (a) a written notice specifying the amount of original issue discount (including
daily rates and accrual periods) accrued on Outstanding Debentures as of the end of such year and
(b) such other specific information relating to such original issue discount as may then be
relevant under the Internal Revenue Code of 1986, as amended from time to time.



28









 





ARTICLE VII




SUPPLEMENTAL INDENTURES




     Section 7.01. Supplemental Indentures Without Consent of Holders. Notwithstanding
Section 901 and Section 902 of the Indenture, without the consent of any Holders of Debentures, the
Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time
may amend this Second Supplemental Indenture for any of the following purposes:




     (1) to modify the definition of “Shares Available for Issuance” contained in Section
1.01 and the related provisions of this Second Supplemental Indenture, provided that
(a) the Company shall have determined in good faith that such modification is not materially
adverse to the Holders of the Debentures, (b) the rating agencies then rating the Debentures
shall have confirmed the then current ratings of the Debentures after taking into account
such modification, and (c) the number of Shares Available for Issuance, after giving effect
to such modification, will not fall below the threshold set forth in the second sentence of
Section 2.06(a)(iii);




     (2) to modify the definition of “APM Qualifying Securities” contained in Section 1.01
to eliminate (a) one, but not both, of Common Stock or Qualifying Warrants, and (b) any
other security if, after the date hereof, an accounting standard or interpretive guidance of
an existing accounting standard issued by an organization or regulator that has
responsibility for establishing or interpreting accounting standards used to prepare the
Company’s financial statements filed with the Commission, becomes effective, which, as a
result, causes the Company to believe there is more than an insubstantial risk that failure
to so modify the definition of “APM Qualifying Securities” would result in a reduction in
the earnings per share of the Company, as calculated for financial reporting purposes; or




     (3) at the written request of Allianz SE or any of its Subsidiaries, to amend this
Second Supplemental Indenture to divide the Debentures then beneficially owned by any such Person
into two tranches (including, if appropriate, by designating such tranches as independent
classes of this series capable of having as a result of a remarketing different voting
rights and other terms), both of which shall have terms
initially identical to the terms of the Debentures, but each of which shall be
separately identifiable, whether by CUSIP or other comparable identification methodology,
and at least one of which shall be in a minimum principal amount of not less than
$250,000,000, it being understood that (a) the right of such Person to request action by the
Company pursuant to this clause (3) shall be exercisable for so long as any such Person
beneficially owns any of the Debentures; and (b) such Person shall have no right to instruct
the Company to amend the terms of the tranches created pursuant to this clause (3).



ARTICLE VIII




MISCELLANEOUS




     Section 8.01. Effectiveness. This Second Supplemental Indenture will become effective
upon its execution and delivery.



29









 





     Section 8.02. Notice. Notices regarding the Debentures shall, for so long as the
Debentures are listed on a Relevant Exchange, and the rules of the Relevant Exchange so require, be
published in the relevant jurisdiction in which such exchange is located, publication to be not
later than the latest date, and not earlier than the earliest date, prescribed hereunder for the
giving of such notice, and mailed by first class postage or overnight delivery to each registered
Holder of Debentures at such Holder’s address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed hereunder for the giving
of such notice. Copies of any such communication or notice to a Holder shall also be mailed to the
Trustee, the Security Registrar and each Paying Agent at the same time.



     Section 8.03. Effect of Recitals. The recitals contained herein and in the
Debentures, except the Trustee’s certificates of authentication, shall be taken as the statements
of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for
their correctness. The Trustee makes no representations as to the validity or sufficiency of this
Second Supplemental Indenture or of the Debentures. Neither the Trustee nor any Authenticating
Agent shall be accountable for the use or application by the Company of the Debentures or the
proceeds thereof.



     Section 8.04. Ratification of Indenture. The Indenture as supplemented by this Second
Supplemental Indenture, is in all respects ratified and confirmed, and this Second Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein
provided.



     Section 8.05. Tax Treatment; Withholding. The Company agrees, and by acceptance of a
Debenture or a beneficial interest in a Debenture each Holder of a Debenture and any Person
acquiring a beneficial interest in a Debenture agrees, to treat the Debentures as indebtedness for
United States federal income tax purposes. Prior to the date hereof, the Trustee will provide to
the Company an accurate, complete and original signed Internal Revenue Service Form W-9. The
Company (or its agent or any intermediary) is permitted to withhold on any payments under this
Second Supplemental Indenture any present or future taxes, duties, assessments, fees or other
governmental charges as required by law. If any such withholding is required, each recipient shall
be treated for all purposes of this Second Supplemental Indenture as if it had received the entire
payment without such withholding.



     Section 8.06. Governing Law. This Second Supplemental Indenture, the Indenture as
supplemented hereby and the Debentures shall be governed by and construed in accordance with the
laws of the State of New York.



     Section 8.07. Severability. In case any provision in this Second Supplemental
Indenture, the Indenture as supplemented hereby or in the Debentures shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.



* * *




     This instrument may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute but one and the
same instrument.



30









 





     IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be
duly executed as of the day and year first above written.



	 	 	 	 	 
	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

 	 
	 	By:  	



 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE BANK OF NEW YORK MELLON TRUST 

       COMPANY, N.A. as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Second Supplemental Indenture




 









 








Exhibit A




FORM OF DEBENTURE




[Include the following legend for Global Securities only:]





     UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), 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.



     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF DTC OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART
MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR SUCH NOMINEE, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.



[Include the following Private Placement Legend on all Debentures that are Rule 144A Restricted
Securities:]




     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND THIS SECURITY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS
SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.



     THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE
OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN THE UNITED STATES TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QUALIFIED
INSTITUTIONAL BUYERS IN A TRANSACTION MEETING THE REQUIRMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER OR ANY SUCCESSOR PROVISION THERETO (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER JURISDICTIONS, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.



[Include the following Private Placement Legend on all Regulation S Restricted Securities:]




     THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND MAY NOT BE
TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT
PURSUANT TO AN AVAILABLE



A-1









 







EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE
SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE
SECURITIES ACT.



A-2









 





	 	 	 
	No.

	 	Principal Amount:
	Issue Date:

	 	CUSIP:






THE HARTFORD FINANCIAL SERVICES GROUP, INC.




10% FIXED-TO-FLOATING RATE

JUNIOR SUBORDINATED DEBENTURE DUE 2068




     THE HARTFORD FINANCIAL SERVICES GROUP, INC., a corporation organized and existing under the
laws of Delaware (hereinafter called the “Company”, which term includes any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to [Cede &
Co.]1, or registered assigns, the principal sum of                      Dollars
($                    ) [or such greater or lesser amount as is indicated on the Schedule of Exchanges of
Interests in the Global Security attached hereto]1, and all accrued and unpaid interest
thereon on October 15, 2038 (the “Scheduled Maturity Date”), subject to and in accordance
with the provisions of Section 2.02 of the Second Supplemental Indenture. If that amount is not
paid in full on the Scheduled Maturity Date or any subsequent Interest Payment Date, the remaining
amount, together with accrued and unpaid interest thereon, will be due and payable on the Final
Maturity Date. The Final Maturity Date will be October 15, 2068.



     The Company further promises to pay interest on said principal sum from and including October
17, 2008, or from and including the most recent Interest Payment Date on which interest has been
paid or duly provided for (subject to the Company’s right to defer payment of interest as set forth
herein and in the Indenture), semi-annually in arrears on April 15 and October 15 of each year,
commencing on April 15, 2009 and ending on October 15, 2018, at the rate of 10% per annum, on the
basis of a 360-day year consisting of twelve 30 day months, and thereafter to pay interest on said
outstanding principal sum quarterly in arrears on January 15, April 15, July 15, and October 15 of
each year, commencing on January 15, 2019 at a floating annual rate equal to Three-Month LIBOR plus
6.824%, computed on the basis of a 360-day year and the actual number of days elapsed in the 360
day year, until the principal hereof is paid or duly provided for or made available for payment.
Interest scheduled for payment but not paid upon any Interest Payment Date, including interest not
required to be paid due to the Company having exercised its right to defer payment of interest set
forth herein and in the Indenture, shall bear Additional Interest from the originally scheduled
payment date therefor at the rate then applicable to this Security, as provided in the Indenture.



     Except as provided in Section 5.05 of the Second Supplemental Indenture, the interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided
in the 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.
Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date 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 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.



     The indebtedness evidenced by this Security is, to the extent provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full of all Senior
Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on its behalf to take such actions as may
be necessary or appropriate to effectuate the subordination so provided and (c) appoints the
Trustee its attorney-in-fact for any and all such purposes. Each Holder hereof, by its acceptance
hereof, waives all notice of the acceptance of the subordination provisions contained herein and in
the Indenture by each holder of Senior





 




			
	1	 	Insert in Global Securities.




A-3









 









Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.




     As provided in the Indenture, so long as no Event of Default has occurred and is continuing,
the Company shall have the right on one or more occasions, to defer the payment of interest for one
or more Interest Periods up to 10 consecutive years, provided that no Deferral Period shall
extend beyond the Final Maturity Date, the earlier accelerated maturity date hereof or other
repayment or redemption in full hereof. If the Company shall fail to pay interest hereon on any
Interest Payment Date, the Company shall be deemed to elect to defer payment of such interest on
such Interest Payment Date, unless the Company shall pay such interest in full within five Business
Days after any such Interest Payment Date. If the Company shall have paid all deferred interest
(including Additional Interest) hereon, the Company shall have the right to elect to begin a new
Deferral Period as provided in the Indenture.



     Payment of the principal of (and premium, if any) and any interest on this Security will be
made at the office or agency of the Company maintained for that purpose in The City of New York, 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; provided, however, that at the option of the
Company payment of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.



     For so long as this Security is listed on a Relevant Exchange and the rules of the Relevant
Exchange so require, the Company shall maintain an office or agency in the relevant jurisdiction in
which such exchange is located where this Security may be presented for payment and notices and
demands to or upon the Company in respect of this Security and the Second Supplemental Indenture
referred to on the reverse hereof may be served. The Company may change the Paying Agent and the
Security Registrar without notice to Holders.



     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



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



     Any additional Securities issued under the same CUSIP and ISIN as this Security shall be
fungible with this Security for U.S. federal income tax purposes.



*      *      *




A-4









 







IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.




Dated:




	 	 	 	 	 
	 	THE HARTFORD FINANCIAL 

     SERVICES GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Certificate of Authentication

 	 
	 	 	 
	 	 	 
	 	 	 
	 


This is one of the Securities referred to in the within-mentioned Indenture.




Dated:




	 	 	 	 	 
	 	The Bank of New York Mellon Trust Company, 

      N.A., as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 
	 




A-5









 





REVERSE OF SECURITY




     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under a Junior
Subordinated Indenture, dated as of June 6, 2008 (herein called the “Base Indenture”),
between the Company and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank
of New York Trust Company, N.A.), as Trustee (herein called the “Trustee”, which term
includes any successor trustee under the Indenture), as supplemented and amended by the Second
Supplemental Indenture, dated as of October 17, 2008, between the Company and the Trustee (the
“Second Supplemental Indenture”, and together with the Base Indenture, 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 Trustee, the Company and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered. The terms of the Securities
include those stated in the Indenture, and the Securities are subject to all such terms. This
Security is one of the series designated on the face hereof, initially limited in aggregate
principal amount to $1,750,000,000.



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



     This Security shall be redeemable at the option of the Company in accordance with the terms of
the Indenture. In particular, this Security is redeemable in whole at any time or in part from time
to time after the date of original issuance of this Security; provided that no such partial
redemption shall be effected (x) unless at least $25 million aggregate principal amount of
Securities of this series shall remain Outstanding after giving effect to such redemption and (y)
if the principal amount of the Securities of this series shall have been accelerated and such
acceleration has not been rescinded or unless all accrued and unpaid interest, including deferred
interest (including Additional Interest), shall have been paid in full on all Outstanding
Securities of this series for all Interest Periods terminating on or before the Redemption Date;
provided, further, that no Holder of Securities of this series (or owner of a
beneficial interest in a Global Security evidencing such Securities) shall be eligible to have such
Securities redeemed in part if, following such redemption, such Holder or owner would hold or have
a beneficial interest in a Global Security in an aggregate principal amount that is not an
Authorized Denomination.



     Notice of redemption shall be mailed at least 30 but not more than 60 days before the
Redemption Date to each Holder of Securities of this series to be redeemed at its registered
address. The notice of redemption for such Securities shall state, among other things, the amount
of Securities of this series to be redeemed, the Redemption Date, if not then ascertainable, the
manner in which the Redemption Price shall be calculated and the place or places that payment shall
be made upon presentation and surrender of such Securities to be redeemed. Unless the Company
defaults in the payment of the Redemption Price together with accrued interest, interest will cease
to accrue on any Securities of this series that have been called for redemption on the Redemption
Date.



     In the event of redemption of this Security in part only, a new Security or Securities of this
series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.



     Installments of accrued and unpaid interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of the Securities of this series, or one or more
Predecessor Securities, registered as such at the close of business on the relevant Regular Record
Dates according to their terms.



     The Indenture contains provisions for satisfaction, discharge and defeasance of the entire
indebtedness on this Security, upon compliance by the Company with certain conditions set forth
therein.



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



     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 of each



A-6









 







series to be affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at the time Outstanding
of each series to be affected. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at the time Outstanding,
on behalf of the Holders of all 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.



     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.



     As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Company in any place where the
principal of (and premium, if any) and interest on this Security are payable duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and 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.



     The Securities of this series are issuable only in registered form without coupons in
denominations of $100,000 and any integral multiples of $1,000 thereafter. 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 a different
authorized denomination, as requested by the Holder surrendering the same.



     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.



     The Company, the Trustee and any agent of the Company or the 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 Trustee nor any such agent shall be affected by
notice to the contrary.



     THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.



A-7









 





ASSIGNMENT




     FOR VALUE RECEIVED, the undersigned assigns and transfers this Security to:



      




      




      




(Insert assignee’s social security or tax identification number)




 





 





(Insert address and zip code of assignee)




agent to transfer this Security on the books of the Security Registrar. The agent may substitute
another to act for him or her.



	 	 	 	 	 
	Dated:

	 	Signature:	 	 
	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	Signature Guarantee:	 	 
	 
	 
	 	 	 	 
	 

	 	 

	 	 






     (Sign exactly as your name appears on the other side of this Security)



     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements
of the Securities Registrar, which requirements include membership or participation in the Security
Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Securities Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.



A-8









 





Schedule
of Exchanges of Interests in the Global Security2




     The following exchanges of a part of this Global Security for an interest in another Global
Security or exchanges of a part of another Global Security for an interest in this Global Security
have been made:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Principal Amount	 	 
	 	 	Amount of decrease in	 	Amount of increase in	 	of this Global Security	 	 
	 	 	Principal Amount	 	Principal Amount	 	following such	 	Signature of authorized
	 	 	of	 	of	 	decrease	 	officer of Trustee or
	Date of Exchange	 	this Global Security	 	this Global Security	 	(or increase)	 	Custodian







 




			
	2	 	Insert in Global Securities




A-9









 










EXHIBIT B




FORM OF CERTIFICATE FOR TRANSFER TO QIB




[Date]




The Bank of New York Mellon Trust Company, N.A.

2 North Lasalle Street, Suite 1020

Global Corporate Trust

Chicago, Illinois 60602




	 	 	 	 	 
	 

	 	Re:
	 	10% Fixed-to-Floating Rate Junior Subordinated Debenture due 2068 (the “Debenture”)
	 

	 	 	 	of The Hartford Financial Services Group, Inc. (the “Company”)






Ladies and Gentlemen:



          Reference is hereby made to the Indenture dated as of June 6, 2008 and the Second Supplemental
Indenture, dated as of October 17, 2008 (as each of which may be amended or supplemented from time
to time, the “Indenture”), among the Company and The Bank of New York Mellon Trust Company, N.A.,
as Trustee. Capitalized terms used but not defined herein shall have the meanings given them in
the Indenture.




          This letter relates to $                     aggregate principal amount of Debentures which represents
an interest in a Regulation S Global Security beneficially owned by the undersigned (the
“Transferor”) and the transfer of such Debentures in exchange for an equivalent beneficial interest
in the Rule 144A Global Security.




          In connection with such request, and with respect to such Debentures, the Transferor does
hereby certify that such Debentures are being transferred in accordance with Rule 144A under the
Securities Act of 1933, as amended (“Rule 144A”), to a transferee that the Transferor reasonably
believes is purchasing the Debentures for its own account or an account with respect to which the
transferee exercises sole investment discretion, and the transferee, as well as any such account,
is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable securities laws of any state of the
United States or any other jurisdiction.




          You and the Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.




	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[Name of Transferor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Authorized Signature	 	 







B-1









 








EXHIBIT C




FORM OF CERTIFICATE FOR TRANSFER

PURSUANT TO REGULATION S




[Date]




The Bank of New York Mellon Trust Company, N.A.

2 North Lasalle Street, Suite 1020

Global Corporate Trust

Chicago, Illinois 60602




	 	 	 	 	 
	 

	 	Re:
	 	10% Fixed-to-Floating Rate Junior Subordinated Debenture due 2068 (the “Debenture”)
	 

	 	 	 	of The Hartford Financial Services Group, Inc. (the “Company”)






Ladies and Gentlemen:



          Reference is hereby made to the Indenture, dated as of June 6, 2008 and the Second
Supplemental Indenture, dated as of October 17, 2008 (as each of which may be amended or
supplemented from time to time, the “Indenture”), between the Company and The Bank of New York
Mellon Trust Company, N.A., as Trustee. Capitalized terms used but not defined herein shall have
the meanings given them in the Indenture.




          In
connection with our proposed sale of $___ aggregate principal amount of the Debentures
which represent an interest in a Rule 144A Global Security beneficially owned by the undersigned
(“Transferor”), we confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly,
we represent that:





     (a) the offer of the Debentures was not made to or for the account or benefit of a
U.S. person;




     (b) either (i) at the time the buy order was originated, the transferee was outside
the United States or we and any person acting on our behalf reasonably believed that the
transferee was outside the United States or (ii) the transaction was executed in, on or
through the facilities of a designated off-shore securities market and neither we nor any
person acting on our behalf knows that the transaction has been pre-arranged with a buyer in
the United States;




     (c) no directed selling efforts have been made in the United States in contravention
of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable;




     (d) the transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; and




     (e) we are the beneficial owner of the principal amount of Debentures being
transferred.



          In addition, if the sale is made during a Distribution Compliance Period and the provisions of
Rule 903(b)(2), 904(b)(1) or Rule 904(b)(2) of Regulation S are applicable thereto, we confirm that
such sale has been made in accordance with such applicable provisions, as the case may be.




          You and the Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby. Terms used in this
letter have the meanings set forth in Regulation S.




          Very truly yours,




C-1









 





	 	 	 	 	 	 	 
	 	 	[Name of Transferor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Authorized Signature
	 	 







C-2









 








EXHIBIT D




FORM OF CERTIFICATE FOR TRANSFER 

PURSUANT TO RULE 144 




[Date]




The Bank of New York Mellon Trust Company, N.A.

2 North Lasalle Street, Suite 1020

Global Corporate Trust

Chicago, Illinois 60602




	 	 	 	 	 
	 

	 	Re:
	 	10% Fixed-to-Floating Rate Junior Subordinated Debenture due 2068 (the “Debenture”)
	 

	 	 	 	of The Hartford Financial Services Group, Inc. (the “Company”)






Ladies and Gentlemen:




          Reference is hereby made to the Indenture, dated as of June 6, 2008 and the Second
Supplemental Indenture, dated as of October 17, 2008 (as each of which may be amended or
supplemented from time to time, the “Indenture”), between the Company and The Bank of New York
Mellon Trust Company, N.A., as Trustee. Capitalized terms used but not defined herein shall have
the meanings given them in the Indenture.




          In connection with our proposed sale of $                     aggregate principal amount of the
Debentures, which represent an interest in a Rule 144A Global Security beneficially owned by the
undersigned (“Transferor”), we confirm that such sale has been effected pursuant to and in
accordance with Rule 144 under the Securities Act.




          You and the Company are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any administrative or legal
proceedings or official inquiry with respect to the matters covered hereby.




	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	[Name of Transferor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Authorized Signature
	 	 







D-1











 





Annex C-1 to Investment Agreement


ANNEX C-1



THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE INVESTMENT AGREEMENT, DATED OCTOBER
17, 2008, BETWEEN THE COMPANY AND ALLIANZ SE, A COPY OF WHICH IS ON FILE WITH THE COMPANY. THE
SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER MADE IN VIOLATION OF SUCH RESTRICTIONS
SHALL BE NULL AND VOID FOR ALL PURPOSES AB INITIO.



THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OR EXCHANGE OF SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO
IS IN EFFECT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR SUCH LAWS.




CUSIP:           416518124

ISIN: US4165181243




WARRANT NO. B-1




TO PURCHASE




34,806,452




SHARES OF COMMON STOCK




THE HARTFORD FINANCIAL SERVICES GROUP, INC.

A DELAWARE CORPORATION




Issue Date: October 17, 2008




          1. Definitions. Unless the context otherwise requires, when used herein the following
terms shall have the meanings indicated.




          “Affiliate” has the meaning ascribed to it in the Investment Agreement.




          “Beneficial Ownership” and “Beneficially Own” shall have the meaning ascribed thereto in
Section 4.1(a) of the Investment Agreement.




          “Board of Directors” or “Board” means the board of directors of the Company.




          “business day” has the meaning ascribed to it in Section 1.3 of the Investment Agreement.




- 1 -









 





          “Capital Stock” means (A) with respect to any Person that is a corporation or company, any and
all shares, interests, participations or other equivalents (however designated) of capital or
capital stock of such Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests in such Person.




          “Cash Redemption Value” has the meaning set forth in Section 15.




          “Change of Control Event” means any event or series of events by which (a) any Person or
“group” (as such term is defined in Section 13 of the Exchange Act), other than the Company (acting
solely for its own account and not as a member of any group) or Investor, its Subsidiaries and its
Permitted Transferees, shall have acquired Beneficial Ownership of thirty-five percent (35%) or
more of the outstanding shares of Common Stock on a Fully-Diluted Basis, (b) all or substantially
all of the consolidated assets of the Company are, directly or indirectly, sold, leased, exchanged
or transferred (including without limitation through the acquisition of derivative ownership
interests or bulk reinsurance arrangements with respect to any material line or block of insurance
business), except in the case of a sale of insurance assets representing less than two-thirds
(2/3s) of both (i) the Company’s consolidated revenue and (ii) the Company’s allocated equity
(excluding accumulated other comprehensive income, or “AOCI”) for two of the preceding three fiscal
years, after giving effect to which, after the application of the proceeds thereof, the Company
continues to be primarily engaged in the insurance business and has a pro forma market
capitalization in excess of $2,000,000,000, (c) the Company is consolidated, merged, amalgamated,
reorganized or otherwise enters into a similar transaction in which it is combined with another
person other than the Investor or any of its Subsidiaries or its Permitted Transferees, unless the
persons who Beneficially Own the outstanding Common Stock immediately before consummation of the
transaction Beneficially Own a majority of the outstanding common stock of the combined or
surviving entity immediately thereafter and in substantially the same proportion as they did prior
to the transaction and directors of the Company make up a majority of the board of directors (or
similar governing entity) of the combined or surviving entity immediately after such transaction,
(d) the majority of the seats (other than vacant seats) on the board of directors (or similar
governing body) of the Company or such combined or surviving entity ceases to be occupied by
persons who either (i) were members of the Board of Directors on the date hereof or (ii) were
elected or were nominated for election by the Board of Directors of the Company (a majority of whom
were directors on the date hereof or whose election or nomination for election was previously
approved by a majority of such directors), (e) any bankruptcy, rehabilitation or similar event
relating to the Company occurs or (f) the holders of Capital Stock of the Company approve of any
plan or proposal for the liquidation or dissolution of the Company.




          “Closing Date” means October 17, 2008.




          “Common Shares” has the meaning set forth in Section 2.




2









 





          “Common Share Equivalents” at any time means the number of (a) outstanding Common Shares plus
(b) in the case of any outstanding Convertible Preferred Stock or other equity securities that
generally are entitled to participate in dividends and distributions on a pro rata basis with
Common Shares (after adjusting for a conversion or similar factor), the number of Common Shares
that constitute the equivalent of such Convertible Preferred Stock or other equity securities for
purposes of the payment of such dividends or distributions.




          “Common Stock” means the Company’s common stock, $0.01 par value per share.




          “Company” means The Hartford Financial Services Group, Inc., a Delaware corporation.




          “Debentures Documentation” shall have the meaning ascribed thereto in Recital C of the
Investment Agreement.




          “Discounted Issuance” has the meaning set forth in Section 14(E).




          “Delisting Event ” means the Underlying Common Stock ceases to be listed on the New York Stock
Exchange (or any other national securities exchanges).




          “Effective Price” means:





     (i) with respect to Common Stock acquired for cash, the per share amount of the net
cash proceeds received by the Company for such Common Stock;




     (ii) with respect to Common Stock acquired for other consideration, the per share Fair
Market Value of the net consideration;




     (iii) with respect to any option, warrant or other right to acquire Common Stock,
whether direct or indirect and whether or not conditional or contingent, the sum of (a) the
Fair Market Value of the aggregate consideration, if any, received by the Company for such
option, warrant or right divided by the number of shares of Common Stock into which such
option, warrant or right is exercisable at time of issuance, plus (b) the per share amount
of the exercise price to the extent paid in cash and per share Fair Market Value of the
exercise price if paid in other consideration;




     (iv) with respect to securities convertible or exchangeable into Common Stock, (x) the
net consideration per security paid for such securities (to the extent paid in cash) or the
net Fair Market Value of the consideration per security paid for such securities if the
price for such securities is paid in other consideration, as of the date of their issuance
divided by (y) by the number of shares of Common Stock for which such securities are
convertible or exchangeable.



3









 





          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.




          “Exchange Property” has the meaning ascribed to it in Section 14(F).




          “ex-date” has the meaning set forth in Section 14(B).




          “Exercise Date” has the meaning set forth in Section 3.




          “Exercise Notice” means a notice in the form attached hereto as Annex A delivered by the
holder of the Warrant to the Company in accordance with Section 22 to exercise the Warrant.




          “Exercise Period” has the meaning set forth in Section 3.




          “Exercise Price” means $25.32 subject to any adjustment or adjustments in accordance with
Section 14 hereof.




          “Fair Market Value” means:




          (i) in the case of shares of stock where, at least four months prior to the issuance thereof,
other shares of the same class had already been listed on the NYSE or NASDAQ (or any successor
national securities exchange), the average of the daily volume-weighted average prices of such
stock for the five consecutive trading days immediately preceding the day as of which Fair Market
Value is being determined.




          (ii) in the case of securities not covered by (i) above, the Fair Market Value of such
securities shall be determined by the Financial Expert, using one or more valuation methods that
the Financial Expert in its best professional judgment determines to be most appropriate, assuming
such securities are fully distributed and are to be sold in an arm’s-length transaction and there
was no compulsion on the part of any party to such sale to buy or sell and taking into account all
relevant factors.




          (iii) in the case of cash, the amount thereof.




          (iv) in the case of other property, the Fair Market Value of such property shall be determined
by the Financial Expert, using one or more valuation methods that the Financial Expert in its best
professional judgment determines to be most appropriate, assuming such property is to be sold in an
arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy
or sell and taking into account all relevant factors.




          “Financial Expert” means a nationally recognized investment banking firm mutually agreed by
the Company and the Majority Holders, which firm does not have a material financial interest in the
Company or the Investor. If the Company and the Majority Holders are unable to agree on a
Financial Expert, each of them shall




4









 







choose promptly a separate Financial Expert and these two
Financial Experts shall choose promptly a third Financial Expert to make the relevant
determination.




          “Fully Diluted Basis” means the Voting Securities that would be outstanding after giving
effect to the conversion, exchange or exercise of all the Warrants and all other outstanding
securities of the Company that are convertible or exchangeable into Voting Securities, whether or
not presently convertible, exchangeable or exercisable. For the avoidance of doubt, for purposes of
determining the Fully Diluted Basis, in the case of the Company, the then outstanding Series C
Preferred Shares shall be deemed to be convertible into Common Stock even if such shares are not
actually convertible including as a result of a failure to obtain Stockholder Approval.




          “Investment Agreement” means the Investment Agreement, dated as of October 17, 2008, as
amended from time to time, between the Company and the Investor, including all schedules and
exhibits thereto.




          “Investor” means Allianz SE.




          “Majority Holders” means, at any time, Warrantholders holding a majority of the Warrants measured by
the number of Shares into which the Warrants are exercisable at such time.




          “Notice Date” has the meaning ascribed to it in Section 15.




          “Ordinary Cash Dividend” means regular quarterly cash dividends paid by the Company on Common
Stock in the ordinary course, with usual record and resale dates.




          “Permitted Transferee” has the meaning ascribed to it in the Investment Agreement.




          “Person” has the meaning ascribed to it in Annex F to the Investment Agreement.




          “Preferred Shares” means Series B Preferred Shares or Series C Preferred Shares, as the case
may be.




          “Qualifying Employee Stock” means any Common Stock and any options, warrants or other rights
relating to Common Stock issued to any employee, former employee, director or consultant of the
Company or any of its Affiliates pursuant to any plan, program, arrangement or agreement of the
Company that is a compensatory stock ownership, stock purchase, stock option, stock appreciation
right, restricted stock, restricted stock unit, phantom stock or other or equity or equity-based
compensation plan, program, arrangement or agreement or a bonus, pension, severance, change of
control, deferred compensation, incentive compensation, profit sharing or savings plan, program,
arrangement or agreement, including without limitation pursuant to any conversion, split,
subdivision or consolidation of Common Stock or rights issued pursuant to any such plan, program,
arrangement or agreement




5









 







in each case adopted, or entered into, in the ordinary course of business
(including in respect of new hires).




          “Regulatory Approvals” means, to the extent applicable and required to permit the Warrantholder to
exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder
being in violation of applicable law, rule or regulation, including any applicable insurance
regulation or law, the receipt of any necessary approvals and authorizations, filings and
registrations with, and notifications to, relevant Governmental Entities (as defined in the
Investment Agreement) and the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder.




          “Reorganization” means any consolidation, merger, statutory share exchange or similar
transaction, or any recapitalization or reclassification of the Common Stock (other than
reclassifications as described in Section 14(A)). A Reorganization may or may not involve a Change
of Control Event.




          “SEC” means the U.S. Securities and Exchange Commission.




          “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.




          “Series B Preferred Shares” means the non-voting contingent convertible preferred stock of the
Company, each share of which is initially convertible into 4 shares of Common Stock, and having the
terms (including with respect to conversion) set forth in the Series B Certificate of Designation
(as such term is defined in the Investment Agreement).




          “Series C Preferred Shares” means the non-voting contingent convertible preferred stock of the
Company, each share of which is initially convertible into 4 shares of Common Stock, and having the
terms (including with respect to conversion) set forth in the Series C Certificate of Designation
(as such term is defined in the Investment Agreement).




          “Shares” shall have the meaning ascribed to it in Section 2.




          “Stockholder Approval” means the approval by the stockholders of the Company for the issuance
of Common Stock upon (i) the conversion of the Series C Preferred Shares or (ii) the exercise of
the C Warrant for purposes of Section 312.03 of the NYSE Listed Company Manual (or any successor
provision).




          “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture,
limited liability company or other entity (x) of which such person or a subsidiary of such person
is a general partner or (y) of which a majority of the voting securities or other voting interests,
or a majority of the securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or persons performing similar functions with
respect to such




6









 







entity, is directly or indirectly owned by such person and/or one or more
subsidiaries thereof.




          “Tender Amount” has the meaning set forth in Section 14(C).




          “Underlying Common Stock” means the Common Shares issuable or issued upon the exercise of the
Warrant (assuming the receipt of all required Regulatory Approvals and Stockholder Approval).




          “Voting Securities” means the common stock and any other securities of a Person of any kind or
class having power generally to vote in the election of directors.




          “Warrantholder” has the meaning set forth in Section 2.




          “Warrant” means this Warrant, issued pursuant to the Investment Agreement and any additional
Warrant issued in accordance with the terms hereof.




          2. Number of Shares; Exercise Price. This certifies that, for value received, Allianz
Finance II Luxembourg S.a.r.l. and/or its permitted successors or assigns (to whom all or part of
the Warrant has been transferred in compliance with the transfer restrictions set forth on the
first page of this Warrant) (the “Warrantholder”) is entitled, upon the terms and subject to the
conditions hereinafter set forth, to acquire from the Company, in whole or in part, after the
receipt of Regulatory Approvals, up to an aggregate of 34,806,452 fully paid and nonassessable
shares of Common Stock (subject to adjustment as provided herein) (the “Common Shares”), at a
purchase price per Common Share equal to the Exercise Price. The number of Common Shares (the
“Shares”) and the Exercise Price are subject to adjustment as provided herein, and all references
to “Common Stock” and “Exercise Price” herein shall be deemed to include any such adjustment or
series of adjustments. All references to the number of Common Shares issuable upon exercise of the
Warrant shall include all Common Shares issuable assuming applicable Regulatory Approvals and
Stockholder Approval have been obtained prior to the time of exercise.




          3. Exercise of Warrant; Term. Subject to Section 2, to the extent permitted by
applicable laws and regulations (including Regulatory Approval), the right to purchase the Shares
represented by this Warrant is exercisable, in whole or in part by the Warrantholder, at any time
or from time to time during the Exercise Period by (A) the surrender of this Warrant and the
Exercise Notice annexed hereto, duly completed and executed on behalf of the Warrantholder, at the
principal executive office of the Company located at Hartford, Connecticut (or such other office or
agency of the Company in the United States as it may designate by notice in writing to the
Warrantholder at the address of the Warrantholder appearing on the books of the Company), and (B)
payment of the Exercise Price for the Shares thereby purchased at the election of the Warrantholder
by tendering in cash, by certified or cashier’s check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the Company. The “Exercise
Period” shall commence upon the Closing Date (as defined in the Investment Agreement) and shall




7









 








continue up to and including the seventh anniversary of such date. The “Exercise Date” shall be
the date on which a Warrantholder surrenders the Warrant, delivers an Exercise Notice and makes payment of
the Exercise Price in conformity with the foregoing provisions.




          Upon surrender of the Warrant and delivery of an Exercise Notice in conformity with the
foregoing provisions, the Company shall transfer to the Warrantholder appropriate evidence of
ownership of any Shares or other securities or property to which the Warrantholder is entitled,
registered or otherwise placed in, or payable to the order of, such name or names as may be
directed in writing by the Warrantholder, and shall deliver such evidence of ownership and any
other securities or property to the Person entitled to receive the same, together with an amount in
cash in lieu of any fraction of a share as provided in Section 6, within a reasonable time, not to
exceed three business days after the Exercise Date. A Warrantholder shall be deemed to own and
have all of the rights associated with any Shares or other securities or property to which it is
entitled pursuant to this Agreement upon the exercise of the Warrant in accordance with this
Section 3.




          If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be
entitled to receive from the Company within a reasonable time, and in any event not exceeding three
business days after the Exercise Date, a new warrant in substantially identical form for the
purchase of that number of Shares equal to the difference between the number of Shares subject to
this Warrant and the aggregate number of Shares as to which this Warrant has been previously
exercised.




          4. Net Settlement. Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising (all or a portion of) the Warrant by paying
the Exercise Price pursuant to Section 3, the Warrantholder may elect on the Exercise Date to
receive shares of Common Stock equal to the value (as determined below) of the Warrant (or the
portion thereof being exercised) by surrender of this Warrant and the Exercise Notice annexed
hereto and stating in the Exercise Notice that the Warrantholder is electing “Net Settlement” with
respect to all or any part of the Warrant surrendered, in which event the Company shall promptly
issue to such Warrantholder a number of Shares computed using the following formula:




	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	X =
	 	Y (A – B)	 	 
	 

	 	 	A	 	 







Where:




X = the number of Shares issuable to the Warrantholder




Y = the number of Shares issuable under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant being exercised (as of the
Exercise Date)



8









 






A = the Fair Market Value of one share of the Common Stock (as of the Exercise Date)




B = the Exercise Price (as of the Exercise Date)


For the
avoidance of doubt, if the Warrantholder elects “Net Settlement”, the provisions of Section 16
apply. All calculations under this Section 4 shall be made as if shares of Common Stock are
issuable.




          5. Authorization; Listing. The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will be
duly and validly authorized and issued, fully paid and nonassessable. The Company agrees that the
Shares so issued will be deemed to have been issued to the Warrantholder as of the close of
business on the Exercise Date, notwithstanding that the stock transfer books of the Company may
then be closed or certificates representing such Shares may not be actually delivered on such date.
The Company will at all times reserve and keep available, out of its authorized but unissued
Common Stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate
number of shares of Common Stock issuable upon exercise of this Warrant. The Company will procure,
at its sole expense, the listing of the Common Shares issuable upon exercise of this Warrant,
subject to issuance or notice of issuance, on all principal stock exchanges on which the Common
Stock is then listed or traded and (B) maintain such listings of such Common Shares after issuance.
The Company will use its reasonable best efforts to ensure that the Common Shares may be issued
without violation of any law or regulation applicable to the Company or of any requirement of any
securities exchange applicable to the Company on which the Shares are listed or traded.




          6. No Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
to receive a cash payment equal to the Fair Market Value of the Common Stock on the last trading
day preceding the Exercise Date less the Exercise Price for such fractional share.




          7. No Rights as Stockholders; Transfer Books. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the Company prior to
Exercise Date. The Company will at no time close its transfer books against transfer of this
Warrant in any manner which interferes with the timely transfer and exercise of this Warrant.




          8. Charges, Taxes and Expenses. Issuance of certificates for Shares (or other
securities) to the Warrantholder upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by the Company.




9









 








          9. Transfer/Assignment. (A) Subject to compliance with clauses (B) and (C) of this
Section 9, this Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the registered holder hereof in person or by duly authorized attorney, and
a new warrant shall be made and delivered by the Company, of the same tenor and date as this
Warrant but registered in the name of one or more transferees, upon surrender of this Warrant, duly
endorsed, to the office or agency of the Company described in Section 3. All expenses (other than
stock transfer taxes) and other charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 9 shall be paid by the Company.




          (B) Notwithstanding the foregoing, this Warrant and any rights hereunder, and any Shares
issued upon exercise of this Warrant, shall be subject to the applicable restrictions as set forth
in Section 4.2 of the Investment Agreement.




          (C) If and for so long as required by the Investment Agreement, this Warrant shall contain a
legend as set forth in Section 4.4 of the Investment Agreement.




          10. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
surrender hereof by the Warrantholder to the Company, for a new warrant or warrants of like tenor
and representing the right to purchase the same aggregate number of Shares. The Company shall
maintain a registry showing the name and address of the Warrantholder as the registered holder of
this Warrant and in which the Company shall record all exchanges, exercises and transfers of
Warrants. This Warrant may be surrendered for exchange or exercise, in accordance with its terms,
at the office of the Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.




          11. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity
or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such lost, stolen,
destroyed or mutilated Warrant.




          12. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then such action may be taken or such right may be exercised on the next succeeding day that is a
business day.




          13. Rule 144 Information. The Company covenants that it will use its reasonable best
efforts to timely file all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC thereunder
(or, if the Company is not required to




10









 







file such reports, upon the request of any Warrantholder, to
make publicly available such information as necessary to permit sales pursuant to Rule 144 or
Regulation S under the Securities Act), and it will use reasonable best efforts to take such
further action as any Warrantholder may reasonably request, in each case to the extent required
from time to time to enable such holder to, if permitted by the terms of this Warrant and the
Investment Agreement, sell this Warrant without registration under the Securities Act within the
limitation of the exemptions provided by (A) Rule 144 or Regulation S under the Securities Act, as
such rules may be amended from time to time, or (B) any successor rule or regulation hereafter
adopted by the SEC. Upon the written request of any Warrantholder, the Company will deliver to
such Warrantholder a written statement that it has complied with such requirements.




          14. Adjustments and Other Rights. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall be subject to adjustment from time to time as follows;
provided, that no single event shall be subject to adjustment under more than one
subsection of this Section 14 (other than in the case of a dividend or distribution of different
types of property, in which case Section 14(A), 14(B) or 14(C) shall apply to the appropriate parts
of each such dividend or distribution); and provided, further that any issuance of Common
Stock upon exercise of this Warrant (in whole or in part) shall not itself give rise to any
adjustment under this Section 14. For the purposes of convenience, adjustments are expressed in
terms of the number of shares of Common Stock issuable upon exercise of this Warrant, without
prejudice to Section 16.




          (A) Adjustments upon Certain Transactions. The Exercise Price and the number of
shares of Common Stock issuable upon exercise of the Warrant shall be adjusted in the event the
Company (i) pays a dividend or makes any other distribution with respect to its Common Stock solely
in shares of its Common Stock, (ii) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares or (iii) combines or reclassifies its outstanding shares of
Common Stock into a smaller number of shares. In such event, the number of shares of Common Stock
issuable upon exercise of the Warrant immediately prior to the record date for such dividend or
distribution or the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Warrantholder shall thereafter be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned or have been entitled to
receive after the happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or any record date with respect thereto. In such
event, the Exercise Price shall be adjusted so that it shall equal the product of the Exercise
Price immediately prior to such adjustment multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock issuable upon the exercise of the Warrant immediately prior
to such adjustment, and the denominator of which shall be the number of shares of Common Stock so
issuable immediately thereafter. Such adjustment shall become effective immediately after the
effective date of such event. For avoidance of doubt, the adjustment contemplated by this section
can be expressed by formula as follows:




11









 







	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Ua =      Ub x
	 	Oa	 	 
	 

	 	 	Ob	 	 






	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Pa =      Pb x
	 	Ob	 	 
	 

	 	 	Oa	 	 








Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




Ob = shares outstanding before the transaction in question




Oa = shares outstanding after the transaction in question



          (B) Cash Dividends and Distributions. If the Company shall fix a record date for the
payment of a dividend or the making of a distribution with respect to the Common Stock in cash
(other than an Ordinary Cash Dividend or a dividend or distribution covered by Section 14(A) or
Section 14(C)), the Exercise Price to be in effect after the record date for such dividend or
distribution shall be determined by multiplying (x) the Exercise Price in effect immediately prior
to such record date by (y) a fraction, the numerator of which shall be the Fair Market Value per
share of Common Stock as of the last trading day preceding the first date (the “ex-date”) on which
the Common Stock first trades without the right to receive such dividend or distribution less the
Fair Market Value of the cash paid per share in such dividend or distribution, and the denominator
of which shall be the Fair Market Value per share of Common Stock as of the last trading day before
the ex-date. Upon any adjustment of the Exercise Price pursuant to this Section 14(B), the total
number of shares of Common Stock issuable upon the exercise of the Warrant shall be such number of
shares issuable immediately prior to such adjustment multiplied by a fraction, the numerator of
which shall be the Exercise Price in effect immediately before such adjustment and the denominator
of which shall be the Exercise Price in effect immediately after such adjustment. In the case of
an adjustment for a cash dividend that is, or is coincident with, a regular quarterly dividend, the
“Fair Market Value” of such dividend as paid per share would be reduced by the per share amount of
the cash dividend that would constitute an Ordinary Cash Dividend. For avoidance of doubt, the
adjustments contemplated by this section can be expressed by formula as follows:




	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Ua =      Ub x
	 	M	 	 
	 

	 	 	M-D	 	 







12









 






	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Pa =      Pb x
	 	M-D	 	 
	 

	 	 	M	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




M = Fair Market Value immediately before ex-date




D = Fair Market Value of the dividend or distribution made per share of Common Stock



          (C) Non-Cash Dividends and Distributions. If the Company shall fix a record date for
the payment of a dividend or the making of a distribution with respect to the Common Stock (other
than an Ordinary Cash Dividend or a dividend or distribution covered by Section 14(A) or Section
14(B)), the Company shall distribute (for no additional consideration) such securities or property
other than cash to the Warrantholder as such Warrantholder would have received had it held as of
the applicable record date a number of shares of Common Stock equal to the number of shares of
Common Stock that were issuable under the Warrant as of such record date simultaneously with and on
the same terms and conditions as such securities or other property are distributed to holders of
Common Stock. For the avoidance of doubt, in connection with the payment of any dividend or
distribution under this Section 14(C), the total number of shares issuable upon exercise of the
Warrant and the Exercise Price for the Warrant shall not be adjusted.




          (D) Tender Offers. If a publicly-announced tender offer made by the Company or any of
its Subsidiaries for the Common Stock shall be consummated, then the Exercise Price to be in effect
after the tender offer is consummated shall be determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by a fraction, the numerator of which shall be the
product of (x) the number of shares of Common Share Equivalents outstanding immediately before
giving effect to the tender offer and (y) the Fair Market Value per share of the Common Stock as of
the sixth trading day following the date on which such tender offer is consummated and the
denominator of which shall be the sum of (i) the product of (x) the number of shares of Common
Share Equivalents outstanding after giving effect to the tender offer and (y) the Fair Market Value
per share of Common Stock as of the sixth trading day following the date on which such tender offer
is consummated, and (ii) the aggregate Fair Market Value of all cash and any other consideration
paid or payable for Common Share Equivalents (the “Tender Amount”). Upon any adjustment




13









 







of the
Exercise Price pursuant to this Section 14(D), the total number of shares of Common Stock issuable
upon the exercise of the Warrant shall be such number of shares issuable immediately prior to such
adjustment multiplied by a fraction, the numerator of which shall be the Exercise Price in effect
immediately before such adjustment and the denominator of which shall be the Exercise Price in
effect immediately after such adjustment. For avoidance of doubt, the adjustment contemplated by
this section can be expressed by formula as follows, provided that the Exercise Price shall not be
increased (and the number of shares of Common Stock issuable upon exercise of the Warrant shall not
be decreased) as a result of this paragraph 14(D).




	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Ua =      Ub x
	 	(Oa x M) + E	 	 
	 

	 	 	Ob x M	 	 






	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Pa =      Pb x
	 	Ob x M	 	 
	 

	 	 	(Oa x M) + E	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the tender offer




Pa = exercise price per share after the tender offer




M = Fair Market Value on the sixth trading day immediately following the date on
which the tender offer is consummated




E = Tender Amount (the aggregate amount paid in the tender offer)




Ob = Shares equivalents outstanding before giving effect to tender offer




Oa = Shares equivalents outstanding after giving effect to tender offer



          (E) Discounted Issuances. Except to the extent an adjustment in respect of such
transaction is made in accordance with Section 14(F) below, in case of (a) any transaction in which
the Company issues any shares of Common Stock, rights or options to acquire Common Stock or
securities convertible or exchangeable into Common Stock (other than Qualifying Employee Stock), or
(b) the amendment to or change in the number of shares of Common Stock deliverable upon the
exercise, conversion or exchange of the securities described under (a) above, in each case for an
Effective Price that is lower than the Fair Market Value of a share of Common Stock on the business
day immediately prior to the date of pricing of such transaction (each, a




14









 







“Discounted Issuance”),
the Exercise Price effective immediately following such Discounted Issuance shall be determined by
multiplying the Exercise Price then in effect by a fraction, the numerator of which is the sum of
(x) the number of shares of Common Share Equivalents outstanding on the business day immediately
prior to the date of pricing of the Discounted Issuance plus (y) the total number of Common Shares
that the aggregate Effective Price would purchase at the Fair Market Value of a share of Common
Stock on such business day, and the denominator of which is the sum of (x) the number of Common
Share Equivalents outstanding on the business day immediately prior to the date of pricing of the
Discounted Issuance plus (y) the total number of additional Common Shares offered for subscription
or purchase or into which such convertible securities could be converted pursuant to the Discounted
Issuance. Upon any adjustment of the Exercise Price pursuant to this Section 14(E), the total
number of shares of Common Stock issuable upon the exercise of the Warrant shall be such number of
shares issuable immediately prior to such adjustment multiplied by a fraction, the numerator of
which shall be the Exercise Price in effect immediately before such adjustment and the denominator
of which shall be the Exercise Price in effect immediately after such adjustment. For the
avoidance of doubt, the adjustment contemplated by this section can be expressed by formula as
follows:




	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Ua =      Ub x
	 	Ob + I	 	 
	 

	 	 	Ob + F	 	 








	 	 	 	 	 	 	 
	 

	 	 	 	 	 
	 

	 	Pa =      Pb x
	 	Ob + F	 	 
	 

	 	 	Ob + I	 	 





Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




F = shares that Effective Price could purchase at fair market value




I = number of shares issued or deemed issued




Ob = share equivalents outstanding on a fully-diluted basis after giving effect to
the issuance



          (F) Reorganizations. In the case of any Reorganization in which any Common Stock is
converted into or exchanged for or becomes the right to receive cash,




15









 







securities or other property
(“Exchange Property”), then, as a condition of such Reorganization:





     (a) to the extent the Exchange Property consists of cash, securities or other property
(other than Voting Securities), the Warrantholder’s right to receive Shares upon exercise of
this Warrant shall be converted into the right to exercise this Warrant to acquire the
amount of Exchange Property (other than Voting Securities) which the Shares issuable upon
exercise of this Warrant (at the effective time of such Reorganization and after giving
effect to any adjustments pursuant to this Section 14) would have been entitled to receive
in such Reorganization; and




     (b) to the extent the Exchange Property consists of Voting Securities, the
Warrantholder shall be issued a new Warrant on terms and conditions substantially identical
to this Warrant to purchase a number of such Voting Securities for an Exercise Price per
share calculated by (x) first, multiplying the initially adjusted number of Shares times the
number of Voting Securities into which each share of Common Stock of the Company shall be
converted in the Reorganization to arrive at the final adjusted number of Voting Securities
of the other company issuable upon exercise of the Warrant and (y) second, dividing the
initially adjusted Exercise Price per share by the number of Voting Securities into which
each share of Common Stock of the Company shall be converted in the Reorganization to arrive
at the final adjusted Exercise Price per Voting Security.


In the case of any Reorganization in which holders of Common Stock may make an election as between
different types of Exchange Property, the Warrantholder shall be deemed to have elected to receive
(unless Majority Holders otherwise notify the Company), first, Voting Securities, second, cash, and
third other securities or property. The Company shall not affect any Reorganization unless the
Company first shall have made appropriate provision to ensure that applicable provisions of this
Agreement (including, without limitation, the provisions of this Article 14 and Article 15) and, if
the Exchange Property includes any Registrable Securities, the Registration Rights Agreement shall
immediately after giving effect to such Reorganization be assumed by and binding on the other party
to the Reorganization (or the successor, parent company and/or issuer of such securities, as
appropriate) and applicable to any Exchange Property deliverable upon the exercise of Warrants,
pursuant to a customary assumption agreement in form and substance reasonably satisfactory to
Majority Holders. The Company shall notify the Warrantholder of any such proposed Reorganization
Event reasonably prior to the consummation thereof so as to provide the Warrantholder with a
reasonable opportunity to confirm compliance with the terms hereof and, if they elect, to exercise
the Warrant in accordance with the terms and conditions hereof prior to consummation of the
Reorganization; provided, however, that in the case of a transaction which requires notice to be
given to the holders of Common Stock of the Company, the Warrantholder shall be provided the same
notice given to the holders of Common Stock of the Company.





16









 








          (G) Certain Other Events. If the Company takes any action affecting the Common
Stock, other than actions described in this Section 14, and in the opinion of the Board of
Directors, in its sole discretion, such action would materially adversely affect the exercise
rights of the Warrantholder, then the Exercise Price for the Warrant and/or the number of Shares
received upon exercise of the Warrant shall be adjusted, to the extent permitted by law, in such a
manner and at such time as the Board of Directors may determine in good faith to be equitable in
the circumstances.




          (H) Rounding of Calculations; Minimum Adjustments. All calculations under
this Section 14 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 14 to the
contrary notwithstanding, no adjustment in the Exercise Price or the number of shares of Common
Stock into which this Warrant is exercisable shall be made if the amount of such adjustment would
be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, or more.




          (I) Notice of Adjustment. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of the Warrant or the Exercise Price is adjusted, as
herein provided, the Company shall give notice to the Warrantholder of such adjustment or
adjustments and shall deliver to the Warrantholder a statement setting forth the number of shares
of Common Stock or other stock or property issuable upon the exercise of the Warrant and the
Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.




          (J) Adjustment Rules.





     (i) If an adjustment in Exercise Price made hereunder would reduce the Exercise
Price to an amount below $0.01 then such adjustment in Exercise Price made hereunder
shall reduce the Exercise Price to $0.01 and not lower.




     (ii) Notwithstanding the provisions of Section 16(B), to the extent, and only
to the extent, that any adjustment increases the number of Shares issuable upon
exercise of this Warrant, then prior to the receipt of Stockholder Approval, any
such increased number (the “Excess Amount”) shall be issuable only as Series C
Preferred Shares (in accordance with Section 16(D) below).



          15. Mandatory Redemption upon a Change of Control or Delisting. Upon the occurrence
of (i) a Delisting Event or (ii) a Change of Control Event under clauses (a), (b), (d), (e) or (f)
of the definition thereof, in each case, the occurrence of which is within the control of the
Company, then, at the election of the Warrantholder in its sole discretion exercised by written
notice to the Company on or prior to the 10th 




17









 







business day following written notice by
the Company to the Warrantholder of the occurrence of the Delisting Event or the Change of Control
Event which notice shall be provided no later than the 2nd business day following the
Delisting Event or the Change of Control Event (the “Notice Date”), the Company shall pay to the
Warrantholder not later than the 30th business day following the Notice Date an amount
in cash in immediately available funds equal to the Cash Redemption Value (as defined below) for
this Warrant plus interest, if any, on such amount from the 15th business day following
the Notice Date to (but not including) the date of payment at a rate of 5% per annum. For purposes
of this Section 15, the “Cash Redemption Value” for the Warrant shall be determined to be equal
to (x) the difference between the Fair Market Value of a share of Common Stock minus the Exercise
Price per share of Common Stock multiplied by (y) the number of Exercise Shares underlying the
Warrant, in each of cases (x) and (y) determined as of the date of the Change of Control Event or
Delisting Event. To the extent that the Warrantholder does not exercise the right provided by this
section with respect to the entire Warrant, the applicable portion of the Warrant will remain
outstanding as adjusted pursuant to the provisions of Article 14 hereof.




          16. Purchase of Series B Preferred Shares in lieu of Common Stock.




          (A) If the Warrantholder is an Initial Holder and at the time of delivery of an Exercise
Notice the Warrantholder does not deliver to the Company a certification from the Warrantholder
that it (or any of its Affiliates that comprise the Initial Holders) has obtained such Regulatory
Approval as is required in order for such Warrantholder (and, if applicable, its Affiliates) to
hold a specified number of shares of Common Stock issuable upon exercise of the Warrant, the number
of Common Shares with respect to which such certification has not been delivered (the “Regulatory
Subject Shares”) shall be exercisable, subject to Section 14(J)(ii)), only for Series B Preferred
Shares in accordance with Section 16(B).




          (B) If the Company is required to issue shares of Series B Preferred Shares in accordance with
subsection (A), the shares of Series B Preferred Shares so issuable shall entitle the Warrantholder
to receive upon conversion of such Series B Preferred Shares (subject to adjustment provisions
therein) a number of Underlying Common Shares which shall equal the number of Regulatory Subject
Shares.




          (C) For purposes of this Section 16, “Initial Holder” means the Investor, the initial
Warrantholder and any Affiliate of the Investor to whom the initial Warrantholder has transferred,
directly or indirectly, the Warrant in accordance with the terms of the Investment Agreement,
acting individually or as a group, as the context may require.




          (D) If Series C Preferred Shares are required to be issued pursuant to Section 16(J)(ii), the
Series C Preferred Shares so issuable shall entitle the Warrantholder to receive upon conversion of
such Series C Preferred Shares (subject to adjustment provisions therein) a number of Underlying
Common Shares for which such portion of the Warrant equal to the Excess Amount would have been
exercisable had the Stockholder Approval been obtained.




18









 








          (E) Certificates for Preferred Shares issuable upon exercise of this Warrant in accordance
with this Section 16 will be issued in such name or names as the Warrantholder may designate and
will be delivered to such named Person or Persons within a reasonable time, not to exceed three
business days after the date on which this Warrant has been duly exercised in accordance with the
terms of this Warrant. The Company agrees that the Preferred Shares so issued will be deemed to
have been issued to the Warrantholder as of the close of business on the date on which this Warrant
and payment of the Exercise Price are delivered to the Company in accordance with the terms of this
Warrant, notwithstanding that the stock transfer books of the Company may then be closed or
certificates representing such Preferred Shares may not be actually delivered on such date. The
Company will at all times reserve and keep available, out of its authorized but unissued preferred
stock, solely for the purpose of providing for the exercise of this Warrant, the aggregate number
of Preferred Shares issuable upon exercise of this Warrant. In addition, the Company will at all
times reserve and keep available, out of its authorized but unissued Common Stock, the aggregate
number of shares of Common Stock issuable upon conversion, transfer or sale of the Preferred Shares
(the “Convertible Underlying Shares”). The Company will procure, at its sole expense, the listing
of the Convertible Underlying Shares, subject to issuance or notice of issuance, on all principal
stock exchanges on which the Common Stock is then listed or traded and maintain such listings of
such Convertible Underlying Shares at all times after issuance. The Company will ensure that the
Convertible Underlying Shares may be issued without violation of any applicable law or regulation
or of any requirement of any securities exchange on which the Common Stock is listed or traded.




          17. Notice of Dividends and Distributions. At any time when the Company declares any
dividend or other distribution on its Common Stock and the Company’s Common Stock is not listed on
a national securities exchange, it shall give notice to the Warrantholder of all the then
outstanding Warrants of any such declaration not less than 15 days prior to the related record date
for payment of the dividend or distribution so declared.




          18. Removal of Legends. The Warrantholder may surrender its Warrant certificates or
certificates evidencing Underlying Common Stock (or Convertible Underlying Shares) to the Company
who shall exchange such certificates for certificates without the legend included on this Warrant;
provided that each of the Articles of Incorporation, including the Certificate of
Designation for the Series B Preferred Shares, and the Investment Agreement no longer require such
legend and the Warrantholder has delivered an officer’s certificate and an opinion of nationally
recognized counsel reasonably acceptable to the Company to the effect that Warrants or Underlying
Common Stock (or Convertible Underlying Shares), as the case may be, represented by such
certificates are freely transferable under the Securities Act, as the case may be.




          19. Governing Law; Submission to Jurisdiction. This Warrant will be governed by and
construed in accordance with the laws of the State of New York applicable to contracts made and to
be performed entirely within such State. To the fullest extent permitted by law, the Company and
the Warrantholder agree (a) that




19









 







any dispute between them shall be brought in the United States District
Court for the Southern District of New York or, in the event federal jurisdiction is not available,
in the Supreme Court of the State of New York, New York County, (b) to submit to the exclusive
jurisdiction of such courts and agree to waive any claims of improper venue or forum non conveniens
and (c) that notice may be served upon such party at the address and in the manner set forth for
such party in Section 22. To the extent permitted by applicable law, each of the Company and the
Warrantholder hereby unconditionally waives trial by jury in any legal action or proceeding relating to
this Warrant.




          20. Binding Effect. This Warrant shall be binding upon any successors or assigns of
the Company.




          21. Amendments. This Warrant may be amended and the observance of any term of this
Warrant may be waived only with the written consent of the Company and the Warrantholder.




          22. Notices. Any notice, request, instruction, claim, demand, waiver or other
document or communication to be given hereunder by the Company or the Warrantholder to the other
will be in writing and will be deemed to have been duly given (a) on the date of delivery when
delivered by hand or overnight courier service or (b) upon confirmation of receipt when delivered
by facsimile. All notices hereunder shall be delivered as set forth below, or to such other
address or facsimile number as either party may from time to time designate in a written notice
given in a like manner.




          (A) If to the Company:



The Hartford Financial Services Group Inc.

One Hartford Plaza

Hartford, CT 06155

U.S.A.

Attention: Alan J. Kreczko

Facsimile: +1 860 547 4721





   with a copy (which copy alone shall not constitute notice) to:


Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

U.S.A.

Attention: Victor I. Lewkow

Facsimile: +1 212 225 3999




20









 








          (B) If to the Initial Warrantholder:



Allianz SE (on behalf of Allianz Finance II 

Luxembourg S.a.r.l.)

Group Legal Services

Koeniginstr. 28

80802 Muenchen

Germany

Attention: Dr. Peter Hemeling

Facsimile: +49 89 38 00 2152





   with a copy (which copy alone shall not constitute notice) to:


Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004-2498

U.S.A.

Attention: Andrew Dietderich

Facsimile: +1-212-558-3588




          23. Entire Agreement. This Warrant and the forms attached hereto, and the Investment
Agreement (and the other documents referenced in Section 6.7 of the Investment Agreement), contain
the entire agreement between the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or undertakings with respect thereto.




21









 








          IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly
authorized officer.




Dated: October 17, 2008




	 	 	 	 	 
	 	The Hartford Financial Services Group, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	Attest:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGE TO WARRANT]





 









 








ANNEX A




[FORM OF EXERCISE NOTICE]




DATE:                     




TO: [•]




RE: Election to Purchase Common Stock / Series B Preferred Shares




          The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees
to subscribe for and purchase the number of shares of the [Common Stock] [Series B Preferred
Shares] set forth below covered by such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price for such shares of [Common Stock]
[Series B Preferred Shares]. A new warrant evidencing the remaining shares of Common Stock covered
by such Warrant, but not yet subscribed for and purchased, if any, should be issued in the name set
forth below.




Number of Shares of [Common Stock][ Series B Preferred Shares]:                    




Aggregate Exercise Price:                                                             




The Warrantholder hereby certifies that Regulatory Approvals in respect of [all shares to which this
Exercise Notice relates] [

    
    
          shares of Underlying Co
mmon Stock] have been
obtained




Election of Net Settlement:




Number of Shares of Underlying Common Stock:                                                            




	 	 	 	 	 	 	 
	 

	 	Warrantholder:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






23











 





Annex C-2 to Investment Agreement


ANNEX C-2



THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE INVESTMENT AGREEMENT, DATED OCTOBER
17, 2008, BETWEEN THE COMPANY AND ALLIANZ SE, A COPY OF WHICH IS ON FILE WITH THE COMPANY. THE
SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER MADE IN VIOLATION OF SUCH RESTRICTIONS
SHALL BE NULL AND VOID FOR ALL PURPOSES AB INITIO.



THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OR EXCHANGE OF SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO
IS IN EFFECT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR SUCH LAWS.




CUSIP:                 416518 132

ISIN: US4165181326




WARRANT NO. C-1




TO PURCHASE




34,308,872




SHARES OF COMMON STOCK




THE HARTFORD FINANCIAL SERVICES GROUP, INC.

A DELAWARE CORPORATION




Issue Date: October 17, 2008




          1. Definitions. Unless the context otherwise requires, when used herein the following
terms shall have the meanings indicated.




          “Affiliate” has the meaning ascribed to it in the Investment Agreement.




          “Beneficial Ownership” and “Beneficially Own” shall have the meaning ascribed thereto in
Section 4.1(a) of the Investment Agreement.




          “Board of Directors” or “Board” means the board of directors of the Company.




- 1 -









 








          “business day” has the meaning ascribed to it in Section 1.3 of the Investment Agreement.




          “Capital Stock” means (A) with respect to any Person that is a corporation or company, any and
all shares, interests, participations or other equivalents (however designated) of capital or
capital stock of such Person and (B) with respect to any Person that is not a corporation or
company, any and all partnership or other equity interests in such Person.




          “Cash Redemption Value” has the meaning set forth in Section 15.




          “Change of Control Event” means any event or series of events by which (a) any Person or
“group” (as such term is defined in Section 13 of the Exchange Act), other than the Company (acting
solely for its own account and not as a member of any group) or Investor, its Subsidiaries and its
Permitted Transferees, shall have acquired Beneficial Ownership of thirty-five percent (35%) or
more of the outstanding shares of Common Stock on a Fully-Diluted Basis, (b) all or substantially
all of the consolidated assets of the Company are, directly or indirectly, sold, leased, exchanged
or transferred (including without limitation through the acquisition of derivative ownership
interests or bulk reinsurance arrangements with respect to any material line or block of insurance
business), except in the case of a sale of insurance assets representing less than two-thirds
(2/3s) of both (i) the Company’s consolidated revenue and (ii) the Company’s allocated equity
(excluding accumulated other comprehensive income, or “AOCI”) for two of the preceding three fiscal
years, after giving effect to which, after the application of the proceeds thereof, the Company
continues to be primarily engaged in the insurance business and has a pro forma market
capitalization in excess of $2,000,000,000, (c) the Company is consolidated, merged, amalgamated,
reorganized or otherwise enters into a similar transaction in which it is combined with another
person other than the Investor or any of its Subsidiaries or its Permitted Transferees, unless the
persons who Beneficially Own the outstanding Common Stock immediately before consummation of the
transaction Beneficially Own a majority of the outstanding common stock of the combined or
surviving entity immediately thereafter and in substantially the same proportion as they did prior
to the transaction and directors of the Company make up a majority of the board of directors (or
similar governing entity) of the combined or surviving entity immediately after such transaction,
(d) the majority of the seats (other than vacant seats) on the board of directors (or similar
governing body) of the Company or such combined or surviving entity ceases to be occupied by
persons who either (i) were members of the Board of Directors on the date hereof or (ii) were
elected or were nominated for election by the Board of Directors of the Company (a majority of whom
were directors on the date hereof or whose election or nomination for election was previously
approved by a majority of such directors), (e) any bankruptcy, rehabilitation or similar event
relating to the Company occurs or (f) the holders of Capital Stock of the Company approve of any
plan or proposal for the liquidation or dissolution of the Company.




          “Closing Date” means October 17, 2008.




2









 





          “Common Shares” has the meaning set forth in Section 2.




          “Common Share Equivalents” at any time means the number of (a) outstanding Common Shares plus
(b) in the case of any outstanding Convertible Preferred Stock or other equity securities that
generally are entitled to participate in dividends and distributions on a pro rata basis with
Common Shares (after adjusting for a conversion or similar factor), the number of Common Shares
that constitute the equivalent of such Convertible Preferred Stock or other equity securities for
purposes of the payment of such dividends or distributions.




          “Common Stock” means the Company’s common stock, $0.01 par value per share.




          “Company” means The Hartford Financial Services Group, Inc., a Delaware corporation.




          “Debentures Documentation” shall have the meaning ascribed thereto in Recital C of the
Investment Agreement.




          “Discounted Issuance” has the meaning set forth in Section 14(E).




          “Delisting Event ” means the Underlying Common Stock ceases to be listed on the New York Stock
Exchange (or any other national securities exchanges).




          “Effective Price” means:





     (i) with respect to Common Stock acquired for cash, the per share amount of the net
cash proceeds received by the Company for such Common Stock;




     (ii) with respect to Common Stock acquired for other consideration, the per share Fair
Market Value of the net consideration;




     (iii) with respect to any option, warrant or other right to acquire Common Stock,
whether direct or indirect and whether or not conditional or contingent, the sum of (a) the
Fair Market Value of the aggregate consideration, if any, received by the Company for such
option, warrant or right divided by the number of shares of Common Stock into which such
option, warrant or right is exercisable at time of issuance, plus (b) the per share amount
of the exercise price to the extent paid in cash and per share Fair Market Value of the
exercise price if paid in other consideration;




     (iv) with respect to securities convertible or exchangeable into Common Stock, (x) the
net consideration per security paid for such securities (to the extent paid in cash) or the
net Fair Market Value of the consideration per security paid for such securities if the
price for such securities is paid in other consideration, as of the date of their issuance
divided by (y) by the number of shares of Common Stock for which such securities are
convertible or exchangeable.



3









 





          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.




          “Exchange Property” has the meaning ascribed to it in Section 14(F).




          “ex-date” has the meaning set forth in Section 14(B).




          “Exercise Date” has the meaning set forth in Section 3.




          “Exercise Notice” means a notice in the form attached hereto as Annex A delivered by the
holder of the Warrant to the Company in accordance with Section 22 to exercise the Warrant.




          “Exercise Period” has the meaning set forth in Section 3.




          “Exercise Price” means $25.32 subject to any adjustment or adjustments in accordance with
Section 14 hereof.




          “Fair Market Value” means:




          (i) in the case of shares of stock where, at least four months prior to the issuance thereof,
other shares of the same class had already been listed on the NYSE or NASDAQ (or any successor
national securities exchange), the average of the daily volume-weighted average prices of such
stock for the five consecutive trading days immediately preceding the day as of which Fair Market
Value is being determined.




          (ii) in the case of securities not covered by (i) above, the Fair Market Value of such
securities shall be determined by the Financial Expert, using one or more valuation methods that
the Financial Expert in its best professional judgment determines to be most appropriate, assuming
such securities are fully distributed and are to be sold in an arm’s-length transaction and there
was no compulsion on the part of any party to such sale to buy or sell and taking into account all
relevant factors.




          (iii) in the case of cash, the amount thereof.




          (iv) in the case of other property, the Fair Market Value of such property shall be determined
by the Financial Expert, using one or more valuation methods that the Financial Expert in its best
professional judgment determines to be most appropriate, assuming such property is to be sold in an
arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy
or sell and taking into account all relevant factors.




          “Financial Expert” means a nationally recognized investment banking firm mutually agreed by
the Company and the Majority Holders, which firm does not have a material financial interest in the
Company or the Investor. If the Company and the Majority Holders are unable to agree on a
Financial Expert, each of them shall



4









 






choose promptly a separate Financial Expert and these two Financial Experts shall choose
promptly a third Financial Expert to make the relevant determination.




          “Fully Diluted Basis” means the Voting Securities that would be outstanding after giving
effect to the conversion, exchange or exercise of all the Warrants and all other outstanding
securities of the Company that are convertible or exchangeable into Voting Securities, whether or
not presently convertible, exchangeable or exercisable. For the avoidance of doubt, for purposes of
determining the Fully Diluted Basis, in the case of the Company, the then outstanding Series C
Preferred Shares shall be deemed to be convertible into Common Stock even if such shares are not
actually convertible including as a result of a failure to obtain Stockholder Approval.




          “Investment Agreement” means the Investment Agreement, dated as of October 17, 2008, as
amended from time to time, between the Company and the Investor, including all schedules and
exhibits thereto.




          “Investor” means Allianz SE.




          “Majority Holders” means, at any time, Warrantholders holding a majority of the Warrants measured by
the number of Shares into which the Warrants are exercisable at such time.




          “Notice Date” has the meaning ascribed to it in Section 15.




          “Ordinary Cash Dividend” means regular quarterly cash dividends paid by the Company on Common
Stock in the ordinary course, with usual record and resale dates.




          “Permitted Transferee” has the meaning ascribed to it in the Investment Agreement.




          “Person” has the meaning ascribed to it in Annex F to the Investment Agreement.




          “Preferred Shares” means Series B Preferred Shares or Series C Preferred Shares, as the case
may be.




          “Qualifying Employee Stock” means any Common Stock and any options, warrants or other rights
relating to Common Stock issued to any employee, former employee, director or consultant of the
Company or any of its Affiliates pursuant to any plan, program, arrangement or agreement of the
Company that is a compensatory stock ownership, stock purchase, stock option, stock appreciation
right, restricted stock, restricted stock unit, phantom stock or other or equity or equity-based
compensation plan, program, arrangement or agreement or a bonus, pension, severance, change of
control, deferred compensation, incentive compensation, profit sharing or savings plan, program,
arrangement or agreement, including without limitation pursuant to any conversion, split,
subdivision or consolidation of Common Stock or rights issued pursuant to any such plan, program,
arrangement or agreement




5









 







in each case adopted, or entered into, in the ordinary course of business (including in
respect of new hires).




          “Regulatory
Approvals” means, to the extent applicable and required to
permit the Warrantholder to
exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder
being in violation of applicable law, rule or regulation, including any applicable insurance
regulation or law, the receipt of any necessary approvals and authorizations, filings and
registrations with, and notifications to, relevant Governmental Entities (as defined in the
Investment Agreement) and the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder.




          “Reorganization” means any consolidation, merger, statutory share exchange or similar
transaction, or any recapitalization or reclassification of the Common Stock (other than
reclassifications as described in Section 14(A)). A Reorganization may or may not involve a Change
of Control Event.




          “SEC” means the U.S. Securities and Exchange Commission.




          “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and
the rules and regulations promulgated thereunder.




          “Series B Preferred Shares” means the non-voting contingent convertible preferred stock of the
Company, each share of which is initially convertible into 4 shares of Common Stock, and having the
terms (including with respect to conversion) set forth in the Series B Certificate of Designation
(as such term is defined in the Investment Agreement).




          “Series C Preferred Shares” means the non-voting contingent convertible preferred stock of the
Company, each share of which is initially convertible into 4 shares of Common Stock, and having the
terms (including with respect to conversion) set forth in the Series C Certificate of Designation
(as such term is defined in the Investment Agreement).




          “Shares” shall have the meaning ascribed to it in Section 2.




          “Stockholder Approval” means the approval by the stockholders of the Company of the issuance
of Common Stock upon (i) the conversion of the Series C Preferred Shares or (ii) the exercise of
the C Warrant for purposes of Section 312.03 of the NYSE Listed Company Manual (or any successor
provision).




          “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture,
limited liability company or other entity (x) of which such person or a subsidiary of such person
is a general partner or (y) of which a majority of the voting securities or other voting interests,
or a majority of the securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or persons performing similar functions with
respect to such




6









 







entity, is directly or indirectly owned by such person and/or one or more subsidiaries
thereof.




          “Tender Amount” has the meaning set forth in Section 14(C).




          “Underlying Common Stock” means the Common Shares issuable or issued upon the exercise of the
Warrant (assuming the receipt of all required Regulatory Approvals and Stockholder Approval).




          “Voting Securities” means the common stock and any other securities of a Person of any kind or
class having power generally to vote in the election of directors.




          “Warrantholder” has the meaning set forth in Section 2.




          “Warrant” means this Warrant, issued pursuant to the Investment Agreement and any additional
Warrant issued in accordance with the terms hereof.




          2. Number of Shares; Exercise Price. This certifies that, for value received, Allianz
Finance II Luxembourg S.a.r.l. and/or its permitted successors or assigns (to whom all or part of
the Warrant has been transferred in compliance with the transfer restrictions set forth on the
first page of this Warrant) (the “Warrantholder”) is entitled, upon the terms and subject to the
conditions hereinafter set forth, to acquire from the Company, in whole or in part, after the
receipt of Regulatory Approvals, up to an aggregate of 34,308,872 fully paid and nonassessable
shares of Common Stock (subject to adjustment as provided herein) (the “Common Shares”), at a
purchase price per Common Share equal to the Exercise Price. The number of Common Shares (the
“Shares”) and the Exercise Price are subject to adjustment as provided herein, and all references
to “Common Stock” and “Exercise Price” herein shall be deemed to include any such adjustment or
series of adjustments. All references to the number of Common Shares issuable upon exercise of the
Warrant shall include all Common Shares issuable assuming applicable Regulatory Approvals and
Stockholder Approval have been obtained prior to the time of exercise.




          3. Exercise of Warrant; Term. Subject to Section 2, to the extent permitted by
applicable laws and regulations (including Regulatory Approval), the right to purchase the Shares
represented by this Warrant is exercisable, in whole or in part by the Warrantholder, at any time
or from time to time during the Exercise Period by (A) the surrender of this Warrant and the
Exercise Notice annexed hereto, duly completed and executed on behalf of the Warrantholder, at the
principal executive office of the Company located at Hartford, Connecticut (or such other office or
agency of the Company in the United States as it may designate by notice in writing to the
Warrantholder at the address of the Warrantholder appearing on the books of the Company), and (B)
payment of the Exercise Price for the Shares thereby purchased at the election of the Warrantholder
by tendering in cash, by certified or cashier’s check payable to the order of the Company, or by
wire transfer of immediately available funds to an account designated by the Company. The “Exercise
Period” shall commence upon the Closing Date (as defined in the Investment Agreement) and shall




7









 







continue up to and including the seventh anniversary of such date. The “Exercise Date” shall
be the date on which a Warrantholder surrenders the Warrant, delivers an Exercise Notice and makes payment
of the Exercise Price in conformity with the foregoing provisions.




          Upon surrender of the Warrant and delivery of an Exercise Notice in conformity with the
foregoing provisions, the Company shall transfer to the Warrantholder appropriate evidence of
ownership of any Shares or other securities or property to which the Warrantholder is entitled,
registered or otherwise placed in, or payable to the order of, such name or names as may be
directed in writing by the Warrantholder, and shall deliver such evidence of ownership and any
other securities or property to the Person entitled to receive the same, together with an amount in
cash in lieu of any fraction of a share as provided in Section 6, within a reasonable time, not to
exceed three business days after the Exercise Date. A Warrantholder shall be deemed to own and
have all of the rights associated with any Shares or other securities or property to which it is
entitled pursuant to this Agreement upon the exercise of the Warrant in accordance with this
Section 3.




          If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be
entitled to receive from the Company within a reasonable time, and in any event not exceeding three
business days after the Exercise Date, a new warrant in substantially identical form for the
purchase of that number of Shares equal to the difference between the number of Shares subject to
this Warrant and the aggregate number of Shares as to which this Warrant has been previously
exercised.




          4. Net Settlement. Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising (all or a portion of) the Warrant by paying
the Exercise Price pursuant to Section 3, the Warrantholder may elect on the Exercise Date to
receive shares of Common Stock equal to the value (as determined below) of the Warrant (or the
portion thereof being exercised) by surrender of this Warrant and the Exercise Notice annexed
hereto and stating in the Exercise Notice that the Warrantholder is electing “Net Settlement” with
respect to all or any part of the Warrant surrendered, in which event the Company shall promptly
issue to such Warrantholder a number of Shares computed using the following formula:




	 	 	 	 	 
	X =

	 	Y (A – B)	 	 
	 	A
	 
	 	 






          Where:





X = the number of Shares issuable to the Warrantholder




Y = the number of Shares issuable under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant being exercised (as of the
Exercise Date)



8









 







A = the Fair Market Value of one share of the Common Stock (as of the Exercise Date)




B = the Exercise Price (as of the Exercise Date)



For the
avoidance of doubt, if the Warrantholder elects “Net Settlement”, the provisions of Section 16
apply. All calculations under this Section 4 shall be made as if shares of Common Stock are
issuable.




          5. Authorization; Listing. The Company hereby represents and warrants that any Shares
issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will upon
receipt of Stockholder Approval be duly and validly authorized and issued, fully paid and
nonassessable. The Company agrees that the Shares so issued will be deemed to have been issued to
the Warrantholder as of the close of business on the Exercise Date, notwithstanding that the stock
transfer books of the Company may then be closed or certificates representing such Shares may not
be actually delivered on such date. The Company will at all times reserve and keep available, out
of its authorized but unissued Common Stock, solely for the purpose of providing for the exercise
of this Warrant, the aggregate number of shares of Common Stock issuable upon exercise of this
Warrant. The Company will procure, at its sole expense, the listing of the Common Shares issuable
upon exercise of this Warrant, subject to issuance or notice of issuance, on all principal stock
exchanges on which the Common Stock is then listed or traded and (B) maintain such listings of such
Common Shares after issuance. The Company will use its reasonable best efforts to ensure that the
Common Shares may be issued without violation of any law or regulation applicable to the Company or
of any requirement of any securities exchange applicable to the Company on which the Shares are
listed or traded.




          6. No Fractional Shares or Scrip. No fractional Shares or scrip representing
fractional Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional
Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled
to receive a cash payment equal to the Fair Market Value of the Common Stock on the last trading
day preceding the Exercise Date less the Exercise Price for such fractional share.




          7. No Rights as Stockholders; Transfer Books. This Warrant does not entitle the
Warrantholder to any voting rights or other rights as a stockholder of the Company prior to
Exercise Date. The Company will at no time close its transfer books against transfer of this
Warrant in any manner which interferes with the timely transfer and exercise of this Warrant.




          8. Charges, Taxes and Expenses. Issuance of certificates for Shares (or other
securities) to the Warrantholder upon the exercise of this Warrant shall be made without charge to
the Warrantholder for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid by the Company.




9









 








          9. Transfer/Assignment. (A) Subject to compliance with clauses (B) and (C) of this
Section 9, this Warrant and all rights hereunder are transferable, in whole or in part, upon the
books of the Company by the registered holder hereof in person or by duly authorized attorney, and
a new warrant shall be made and delivered by the Company, of the same tenor and date as this
Warrant but registered in the name of one or more transferees, upon surrender of this Warrant, duly
endorsed, to the office or agency of the Company described in Section 3. All expenses (other than
stock transfer taxes) and other charges payable in connection with the preparation, execution and
delivery of the new warrants pursuant to this Section 9 shall be paid by the Company.




          (B) Notwithstanding the foregoing, this Warrant and any rights hereunder, and any Shares
issued upon exercise of this Warrant, shall be subject to the applicable restrictions as set forth
in Section 4.2 of the Investment Agreement.




          (C) If and for so long as required by the Investment Agreement, this Warrant shall contain a
legend as set forth in Section 4.4 of the Investment Agreement.




          10. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
surrender hereof by the Warrantholder to the Company, for a new warrant or warrants of like tenor
and representing the right to purchase the same aggregate number of Shares. The Company shall
maintain a registry showing the name and address of the Warrantholder as the registered holder of
this Warrant and in which the Company shall record all exchanges, exercises and transfers of
Warrants. This Warrant may be surrendered for exchange or exercise, in accordance with its terms,
at the office of the Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.




          11. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity
or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Shares as provided for in such lost, stolen,
destroyed or mutilated Warrant.




          12. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then such action may be taken or such right may be exercised on the next succeeding day that is a
business day.




          13. Rule 144 Information. The Company covenants that it will use its reasonable best
efforts to timely file all reports and other documents required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC thereunder
(or, if the Company is not required to


10









 







file such reports, upon the request of any Warrantholder, to make publicly available such
information as necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities
Act), and it will use reasonable best efforts to take such further action as any Warrantholder may
reasonably request, in each case to the extent required from time to time to enable such holder to,
if permitted by the terms of this Warrant and the Investment Agreement, sell this Warrant without
registration under the Securities Act within the limitation of the exemptions provided by
(A) Rule 144 or Regulation S under the Securities Act, as such rules may be amended from time to
time, or (B) any successor rule or regulation hereafter adopted by the SEC. Upon the written
request of any Warrantholder, the Company will deliver to such Warrantholder a written statement
that it has complied with such requirements.




          14. Adjustments and Other Rights. The Exercise Price and the number of Shares
issuable upon exercise of this Warrant shall be subject to adjustment from time to time as follows;
provided, that no single event shall be subject to adjustment under more than one
subsection of this Section 14 (other than in the case of a dividend or distribution of different
types of property, in which case Section 14(A), 14(B) or 14(C) shall apply to the appropriate parts
of each such dividend or distribution); and provided, further that any issuance of Common
Stock upon exercise of this Warrant (in whole or in part) shall not itself give rise to any
adjustment under this Section 14. For the purposes of convenience, adjustments are expressed in
terms of the number of shares of Common Stock issuable upon exercise of this Warrant, without
prejudice to Section 16.




          (A) Adjustments upon Certain Transactions. The Exercise Price and the number of
shares of Common Stock issuable upon exercise of the Warrant shall be adjusted in the event the
Company (i) pays a dividend or makes any other distribution with respect to its Common Stock solely
in shares of its Common Stock, (ii) subdivides or reclassifies its outstanding shares of Common
Stock into a greater number of shares or (iii) combines or reclassifies its outstanding shares of
Common Stock into a smaller number of shares. In such event, the number of shares of Common Stock
issuable upon exercise of the Warrant immediately prior to the record date for such dividend or
distribution or the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Warrantholder shall thereafter be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned or have been entitled to
receive after the happening of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or any record date with respect thereto. In such
event, the Exercise Price shall be adjusted so that it shall equal the product of the Exercise
Price immediately prior to such adjustment multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock issuable upon the exercise of the Warrant immediately prior
to such adjustment, and the denominator of which shall be the number of shares of Common Stock so
issuable immediately thereafter. Such adjustment shall become effective immediately after the
effective date of such event. For avoidance of doubt, the adjustment contemplated by this section
can be expressed by formula as follows:





11









 








	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 		 	 
	Ua =

	 	Ub
	 	x
	 	Oa

	 	 
	 

	 	 	 	 	 	Ob	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 		 	 
	Pa =

	 	Pb
	 	x
	 	Ob
	 	 
	 

	 	 	 	 	 	Oa	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




Ob = shares outstanding before the transaction in question




Oa = shares outstanding after the transaction in question



          (B) Cash Dividends and Distributions. If the Company shall fix a record date for the
payment of a dividend or the making of a distribution with respect to the Common Stock in cash
(other than an Ordinary Cash Dividend or a dividend or distribution covered by Section 14(A) or
Section 14(C)), the Exercise Price to be in effect after the record date for such dividend or
distribution shall be determined by multiplying (x) the Exercise Price in effect immediately prior
to such record date by (y) a fraction, the numerator of which shall be the Fair Market Value per
share of Common Stock as of the last trading day preceding the first date (the “ex-date”) on which
the Common Stock first trades without the right to receive such dividend or distribution less the
Fair Market Value of the cash paid per share in such dividend or distribution, and the denominator
of which shall be the Fair Market Value per share of Common Stock as of the last trading day before
the ex-date. Upon any adjustment of the Exercise Price pursuant to this Section 14(B), the total
number of shares of Common Stock issuable upon the exercise of the Warrant shall be such number of
shares issuable immediately prior to such adjustment multiplied by a fraction, the numerator of
which shall be the Exercise Price in effect immediately before such adjustment and the denominator
of which shall be the Exercise Price in effect immediately after such adjustment. In the case of
an adjustment for a cash dividend that is, or is coincident with, a regular quarterly dividend, the
“Fair Market Value” of such dividend as paid per share would be reduced by the per share amount of
the cash dividend that would constitute an Ordinary Cash Dividend. For avoidance of doubt, the
adjustments contemplated by this section can be expressed by formula as follows:




	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 		 	 
	Ua =

	 	Ub
	 	x
	 	M
	 	 
	 

	 	 	 	 	 	M-D	 	 






12









 






	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 		 	 
	Pa =

	 	Pb
	 	x
	 	M-D
	 	 
	 

	 	 	 	 	 	M	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




M = Fair Market Value immediately before ex-date




D = Fair Market Value of the dividend or distribution made per share of Common Stock



          (C) Non-Cash Dividends and Distributions. If the Company shall fix a record date for
the payment of a dividend or the making of a distribution with respect to the Common Stock (other
than an Ordinary Cash Dividend or a dividend or distribution covered by Section 14(A) or Section
14(B)), the Company shall distribute (for no additional consideration) such securities or property
other than cash to the Warrantholder as such Warrantholder would have received had it held as of
the applicable record date a number of shares of Common Stock equal to the number of shares of
Common Stock that were issuable under the Warrant as of such record date simultaneously with and on
the same terms and conditions as such securities or other property are distributed to holders of
Common Stock. For the avoidance of doubt, in connection with the payment of any dividend or
distribution under this Section 14(C), the total number of shares issuable upon exercise of the
Warrant and the Exercise Price for the Warrant shall not be adjusted.




          (D) Tender Offers. If a publicly-announced tender offer made by the Company or any of
its Subsidiaries for the Common Stock shall be consummated, then the Exercise Price to be in effect
after the tender offer is consummated shall be determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by a fraction, the numerator of which shall be the
product of (x) the number of shares of Common Share Equivalents outstanding immediately before
giving effect to the tender offer and (y) the Fair Market Value per share of the Common Stock as of
the sixth trading day following the date on which such tender offer is consummated and the
denominator of which shall be the sum of (i) the product of (x) the number of shares of Common
Share Equivalents outstanding after giving effect to the tender offer and (y) the Fair Market Value
per share of Common Stock as of the sixth trading day following the date on which such tender offer
is consummated, and (ii) the aggregate Fair Market Value of all cash and any other consideration
paid or payable for Common Share Equivalents (the “Tender Amount”). Upon any adjustment


13









 







of the Exercise Price pursuant to this Section 14(D), the total number of shares of Common
Stock issuable upon the exercise of the Warrant shall be such number of shares issuable immediately
prior to such adjustment multiplied by a fraction, the numerator of which shall be the Exercise
Price in effect immediately before such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment. For avoidance of doubt, the adjustment
contemplated by this section can be expressed by formula as follows, provided that the Exercise
Price shall not be increased (and the number of shares of Common Stock issuable upon exercise of
the Warrant shall not be decreased) as a result of this paragraph 14(D).




	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 		 	 
	Ua =

	 	Ub
	 	x
	 	(Oa x M) + E
	 	 
	 

	 	 	 	 	 	Ob x M	 	 
	 
	 	 	 	 	 	 	 	 
	Pa =

	 	Pb
	 	x
	 	Ob x M	 	 
	 

	 	 	 	 	 	(Oa x M) + E	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the tender offer




Pa = exercise price per share after the tender offer




M = Fair Market Value on the sixth trading day immediately following the date on
which the tender offer is consummated




E = Tender Amount (the aggregate amount paid in the tender offer)




Ob = Shares equivalents outstanding before giving effect to tender offer




Oa = Shares equivalents outstanding after giving effect to tender offer



          (E) Discounted Issuances. Except to the extent an adjustment in respect of such
transaction is made in accordance with Section 14(F) below, in case of (a) any transaction in which
the Company issues any shares of Common Stock, rights or options to acquire Common Stock or
securities convertible or exchangeable into Common Stock (other than Qualifying Employee Stock), or
(b) the amendment to or change in the number of shares of Common Stock deliverable upon the
exercise, conversion or exchange of the securities described under (a) above, in each case for an
Effective Price that is lower than the Fair Market Value of a share of Common Stock on the business
day immediately prior to the date of pricing of such transaction (each, a




14









 








“Discounted Issuance”), the Exercise Price effective immediately following such Discounted
Issuance shall be determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which is the sum of (x) the number of shares of Common Share Equivalents outstanding
on the business day immediately prior to the date of pricing of the Discounted Issuance plus (y)
the total number of Common Shares that the aggregate Effective Price would purchase at the Fair
Market Value of a share of Common Stock on such business day, and the denominator of which is the
sum of (x) the number of Common Share Equivalents outstanding on the business day immediately prior
to the date of pricing of the Discounted Issuance plus (y) the total number of additional Common
Shares offered for subscription or purchase or into which such convertible securities could be
converted pursuant to the Discounted Issuance. Upon any adjustment of the Exercise Price pursuant
to this Section 14(E), the total number of shares of Common Stock issuable upon the exercise of the
Warrant shall be such number of shares issuable immediately prior to such adjustment multiplied by
a fraction, the numerator of which shall be the Exercise Price in effect immediately before such
adjustment and the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. For the avoidance of doubt, the adjustment contemplated by this section can be
expressed by formula as follows:




	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 		 	 
	Ua =

	 	Ub
	 	x
	 	Ob + I
	 	 
	 

	 	 	 	 	 	Ob + F	 	 
	 
	 

	 	 	 	 	 	 	 	 
	 
	Pa =

	 	Pb
	 	x
	 	Ob + F
	 	 
	 

	 	 	 	 	 	Ob + I	 	 







Where:




Ub = shares underlying the Warrant before the adjustment




Ua = shares underlying the Warrant after the adjustment




Pb = exercise price per share before the adjustment




Pa = exercise price per share after the adjustment




F = shares that Effective Price could purchase at fair market value




I = number of shares issued or deemed issued




Ob = share equivalents outstanding on a fully-diluted basis after giving effect to
the issuance



          (F) Reorganizations. In the case of any Reorganization in which any Common Stock is
converted into or exchanged for or becomes the right to receive cash,


15









 







securities or other property (“Exchange Property”), then, as a condition of such
Reorganization:





     (a) to the extent the Exchange Property consists of cash, securities or other property
(other than Voting Securities), the Warrantholder’s right to receive Shares upon exercise of
this Warrant shall be converted into the right to exercise this Warrant to acquire the
amount of Exchange Property (other than Voting Securities) which the Shares issuable upon
exercise of this Warrant (at the effective time of such Reorganization and after giving
effect to any adjustments pursuant to this Section 14) would have been entitled to receive
in such Reorganization; and




     (b) to the extent the Exchange Property consists of Voting Securities, the
Warrantholder shall be issued a new Warrant on terms and conditions substantially identical
to this Warrant to purchase a number of such Voting Securities for an Exercise Price per
share calculated by (x) first, multiplying the initially adjusted number of Shares times the
number of Voting Securities into which each share of Common Stock of the Company shall be
converted in the Reorganization to arrive at the final adjusted number of Voting Securities
of the other company issuable upon exercise of the Warrant and (y) second, dividing the
initially adjusted Exercise Price per share by the number of Voting Securities into which
each share of Common Stock of the Company shall be converted in the Reorganization to arrive
at the final adjusted Exercise Price per Voting Security.


In the case of any Reorganization in which holders of Common Stock may make an election as between
different types of Exchange Property, the Warrantholder shall be deemed to have elected to receive
(unless Majority Holders otherwise notify the Company), first, Voting Securities, second, cash, and
third other securities or property. The Company shall not affect any Reorganization unless the
Company first shall have made appropriate provision to ensure that applicable provisions of this
Agreement (including, without limitation, the provisions of this Article 14 and Article 15) and, if
the Exchange Property includes any Registrable Securities, the Registration Rights Agreement shall
immediately after giving effect to such Reorganization be assumed by and binding on the other party
to the Reorganization (or the successor, parent company and/or issuer of such securities, as
appropriate) and applicable to any Exchange Property deliverable upon the exercise of Warrants,
pursuant to a customary assumption agreement in form and substance reasonably satisfactory to
Majority Holders. The Company shall notify the Warrantholder of any such proposed Reorganization
Event reasonably prior to the consummation thereof so as to provide the Warrantholder with a
reasonable opportunity to confirm compliance with the terms hereof and, if they elect, to exercise
the Warrant in accordance with the terms and conditions hereof prior to consummation of the
Reorganization; provided, however, that in the case of a transaction which requires notice to be
given to the holders of Common Stock of the Company, the Warrantholder shall be provided the same
notice given to the holders of Common Stock of the Company.




16









 








          (G) Certain Other Events. If the Company takes any action affecting the Common
Stock, other than actions described in this Section 14, and in the opinion of the Board of
Directors, in its sole discretion, such action would materially adversely affect the exercise
rights of the Warrantholder, then the Exercise Price for the Warrant and/or the number of Shares
received upon exercise of the Warrant shall be adjusted, to the extent permitted by law, in such a
manner and at such time as the Board of Directors may determine in good faith to be equitable in
the circumstances.




          (H) Rounding of Calculations; Minimum Adjustments. All calculations under
this Section 14 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 14 to the
contrary notwithstanding, no adjustment in the Exercise Price or the number of shares of Common
Stock into which this Warrant is exercisable shall be made if the amount of such adjustment would
be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, or more.




          (I) Notice of Adjustment. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of the Warrant or the Exercise Price is adjusted, as
herein provided, the Company shall give notice to the Warrantholder of such adjustment or
adjustments and shall deliver to the Warrantholder a statement setting forth the number of shares
of Common Stock or other stock or property issuable upon the exercise of the Warrant and the
Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.




          (J) Adjustment Rules. If an adjustment in Exercise Price made hereunder would reduce
the Exercise Price to an amount below $0.01 then such adjustment in Exercise Price made hereunder
shall reduce the Exercise Price to $0.01 and not lower.




          15. Mandatory Redemption upon a Change of Control or Delisting. Upon the occurrence
of (i) a Delisting Event or (ii) a Change of Control Event under clauses (a), (b), (d), (e) or (f)
of the definition thereof, in each case, the occurrence of which is within the control of the
Company, then, at the election of the Warrantholder in its sole discretion exercised by written
notice to the Company on or prior to the 10th business day following written notice by
the Company to the Warrantholder of the occurrence of the Delisting Event or the Change of Control
Event which notice shall be provided no later than the 2nd business day following the
Delisting Event or the Change of Control Event (the “Notice Date”), the Company shall pay to the
Warrantholder not later than the 30th business day following the Notice Date an amount
in cash in immediately available funds equal to the Cash Redemption Value (as defined below) for
this Warrant plus interest, if any, on such amount from the 15th business day following
the Notice Date to (but not including) the date of payment at a rate of 5% per annum. For purposes
of this Section 15, the “Cash Redemption Value”


17









 







for the Warrant shall be determined to be equal to (x) the difference between the Fair Market
Value of a share of Common Stock minus the Exercise Price per share of Common Stock multiplied by
(y) the number of Exercise Shares underlying the Warrant, in each of cases (x) and (y) determined
as of the date of the Change of Control Event or Delisting Event. To
the extent that the Warrantholder
does not exercise the right provided by this section with respect to the entire Warrant, the
applicable portion of the Warrant will remain outstanding as adjusted pursuant to the provisions of
Article 14 hereof.




          16. Purchase of Series C Preferred Shares in lieu of Common Stock.




          (A) Subject to Section 16(D) below, if the Warrantholder is an Initial Holder and at the time
of delivery of an Exercise Notice the Warrantholder does not deliver to the Company a certification
from the Warrantholder that it (or any of its Affiliates that comprise the Initial Holders) has
obtained such Regulatory Approval as is required in order for such Warrantholder (and, if
applicable, its Affiliates) to hold a specified number of shares of Common Stock issuable upon
exercise of the Warrant, the number of Common Shares with respect to which such certification has
not been delivered (the “Regulatory Subject Shares”) shall be exercisable only for Series C
Preferred Shares in accordance with Section 16(B).




          (B) If the Company is required to issue shares of Series C Preferred Shares in accordance with
subsection (A), the shares of Series C Preferred Shares so issuable shall entitle the Warrantholder
to receive upon conversion of such Series C Preferred Shares (subject to adjustment provisions
therein) a number of Underlying Common Shares which shall equal the number of Regulatory Subject
Shares.




          (C) For purposes of this Section 16, “Initial Holder” means the Investor, the initial
Warrantholder and any Affiliate of the Investor to whom the initial Warrantholder has transferred,
directly or indirectly, the Warrant in accordance with the terms of the Investment Agreement,
acting individually or as a group, as the context may require.




          (D) Notwithstanding Section 16(A) above, if at the time of delivery of an Exercise Notice,
Stockholder Approval has not been obtained, the Warrant shall be exercisable only for Series C
Preferred Shares and the Series C Preferred Shares so issuable shall entitle the Warrantholder to
receive upon conversion of such Series C Preferred Shares (subject to adjustment provisions
therein) a number of Underlying Common Shares for which the Warrant would have been exercisable had
the Stockholder Approval been obtained.




          (E) Certificates for Preferred Shares issuable upon exercise of this Warrant in accordance
with this Section 16 will be issued in such name or names as the Warrantholder may designate and
will be delivered to such named Person or Persons within a reasonable time, not to exceed three
business days after the date on which this Warrant has been duly exercised in accordance with the
terms of this Warrant. The Company agrees that the Preferred Shares so issued will be deemed to
have been issued to the Warrantholder as of the close of business on the date on


18









 







which this Warrant and payment of the Exercise Price are delivered to the Company in
accordance with the terms of this Warrant, notwithstanding that the stock transfer books of the
Company may then be closed or certificates representing such Preferred Shares may not be actually
delivered on such date. The Company will at all times reserve and keep available, out of its
authorized but unissued preferred stock, solely for the purpose of providing for the exercise of
this Warrant, the aggregate number of Preferred Shares issuable upon exercise of this Warrant. In
addition, the Company will at all times reserve and keep available, out of its authorized but
unissued Common Stock, the aggregate number of shares of Common Stock issuable upon conversion,
transfer or sale of the Preferred Shares (the “Convertible Underlying Shares”). The Company will
procure, at its sole expense, the listing of the Convertible Underlying Shares, subject to issuance
or notice of issuance, on all principal stock exchanges on which the Common Stock is then listed or
traded and maintain such listings of such Convertible Underlying Shares at all times after
issuance. The Company will ensure that the Convertible Underlying Shares may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange on
which the Common Stock is listed or traded.




          17. Notice of Dividends and Distributions. At any time when the Company declares any
dividend or other distribution on its Common Stock and the Company’s Common Stock is not listed on
a national securities exchange, it shall give notice to the Warrantholder of all the then
outstanding Warrants of any such declaration not less than 15 days prior to the related record date
for payment of the dividend or distribution so declared.




          18. Removal of Legends. The Warrantholder may surrender its Warrant certificates or
certificates evidencing Underlying Common Stock (or Convertible Underlying Shares) to the Company
who shall exchange such certificates for certificates without the legend included on this Warrant;
provided that each of the Articles of Incorporation, including the Certificate of
Designation for the Series C Preferred Shares, and the Investment Agreement no longer require such
legend and the Warrantholder has delivered an officer’s certificate and an opinion of nationally
recognized counsel reasonably acceptable to the Company to the effect that Warrants or Underlying
Common Stock (or Convertible Underlying Shares), as the case may be, represented by such
certificates are freely transferable under the Securities Act, as the case may be.




          19. Governing Law; Submission to Jurisdiction. This Warrant will be governed by and
construed in accordance with the laws of the State of New York applicable to contracts made and to
be performed entirely within such State. To the fullest extent permitted by law, the Company and
the Warrantholder agree (a) that any dispute between them shall be brought in the United States District
Court for the Southern District of New York or, in the event federal jurisdiction is not available,
in the Supreme Court of the State of New York, New York County, (b) to submit to the exclusive
jurisdiction of such courts and agree to waive any claims of improper venue or forum non conveniens
and (c) that notice may be served upon such party at the address and in the manner set forth for
such party in Section 22. To the extent permitted by applicable law, each of the Company


19









 







and the Warrantholder hereby unconditionally waives trial by jury in any legal action or proceeding
relating to this Warrant.




          20. Binding Effect. This Warrant shall be binding upon any successors or assigns of
the Company.




          21. Amendments. This Warrant may be amended and the observance of any term of this
Warrant may be waived only with the written consent of the Company and the Warrantholder.




          22. Notices. Any notice, request, instruction, claim, demand, waiver or other
document or communication to be given hereunder by the Company or the Warrantholder to the other
will be in writing and will be deemed to have been duly given (a) on the date of delivery when
delivered by hand or overnight courier service or (b) upon confirmation of receipt when delivered
by facsimile. All notices hereunder shall be delivered as set forth below, or to such other
address or facsimile number as either party may from time to time designate in a written notice
given in a like manner.



          (A) If to the Company:



The Hartford Financial Services Group Inc.

One Hartford Plaza

Hartford, CT 06155

U.S.A.

Attention: Alan J. Kreczko

Facsimile: +1 860 547 4721





          with a copy (which copy alone shall not constitute notice) to:


Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

U.S.A.

Attention: Victor I. Lewkow

Facsimile: +1 212 225 3999




20









 







     (B) If to the Initial Warrantholder:



Allianz SE (on behalf of Allianz Finance II 

Luxembourg S.a.r.l.)

Group Legal Services

Koeniginstr. 28

80802 Muenchen

Germany

Attention: Dr. Peter Hemeling

Facsimile: +49 89 38 00 2152





with a copy (which copy alone shall not constitute notice) to:


Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004-2498

U.S.A.

Attention: Andrew Dietderich

Facsimile: +1-212-558-3588




          23. Entire Agreement. This Warrant and the forms attached hereto, and the Investment
Agreement (and the other documents referenced in Section 6.7 of the Investment Agreement), contain
the entire agreement between the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or undertakings with respect thereto.




21









 





          IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly
authorized officer.




Dated: October 17, 2008




	 	 	 	 	 
	 	The Hartford Financial Services Group, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Attest:

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



[SIGNATURE PAGE TO WARRANT]




22









 








ANNEX A




[FORM OF EXERCISE NOTICE]




DATE:                     




TO:
[•]




RE: Election to Purchase Common Stock / Series C Preferred Shares




          The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees
to subscribe for and purchase the number of shares of the [Common Stock] [Series C Preferred
Shares] set forth below covered by such Warrant. The undersigned, in accordance with Section 3 of
the Warrant, hereby agrees to pay the aggregate Exercise Price for such shares of [Common Stock]
[Series C Preferred Shares]. A new warrant evidencing the remaining shares of Common Stock covered
by such Warrant, but not yet subscribed for and purchased, if any, should be issued in the name set
forth below.



Number of Shares of [Common Stock][ Series C Preferred Shares]:                    



Aggregate Exercise Price:                                                             



The Holder hereby certifies that Regulatory Approvals in respect of [all shares to which this
Exercise Notice relates]
[                                                             shares of Underlying Co
mmon Stock] have been
obtained




Election of Net Settlement:



Number of Shares of Underlying Common Stock:                                                            




	 	 	 	 	 	 	 
	 

	 	Holder:	 	 	 	 
	 

	 	By:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






23











 





Annex D to Investment Agreement




[EXECUTION VERSION]




Annex D

FORM OF REGISTRATION

RIGHTS AGREEMENT



ANNEX D


 





REGISTRATION RIGHTS AGREEMENT




by and between




The Hartford Financial Services Group, Inc.




and




Allianz SE




 






Dated as of October 17, 2008




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.
	 	Certain Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	Registration	 	 	5	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Piggyback Registrations	 	 	7	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Suspension Periods 	 	 	9	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Holdback Agreements	 	 	9	 
	 
	 	 	 	 	 	 
	Section 6.
	 	Registration Procedures	 	 	10	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Registration Expenses	 	 	14	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Indemnification	 	 	15	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Securities Act Restrictions	 	 	17	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Transfers of Rights	 	 	18	 
	 
	 	 	 	 	 	 
	Section 11.
	 	Miscellaneous	 	 	18	 






-i-









 






     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), is made and entered into as of
October 17, 2008, by and between The Hartford Financial Services Group, Inc., a Delaware
corporation (the “Company”), and Allianz SE, a European Company incorporated in the Federal
Republic of Germany and organized under the laws of the Federal Republic of Germany and the
European Union (the “Investor”).



     WHEREAS, the Company and the Investor are parties to an Investment Agreement, dated October
17, 2008 (the “Investment Agreement”) pursuant to which the Investor is purchasing from the
Company, the Purchased Securities.



     WHEREAS, in connection with the consummation of the transactions contemplated by the
Investment Agreement, the parties desire to enter into this Agreement in order to create certain
registration rights for the Investor as set forth below;



     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties to this Agreement hereby agree as follows:



     Section 1. Certain Definitions.



     In addition to the terms defined elsewhere in this Agreement, the following terms shall have
the following meanings:



     “Affiliate” of any Person means (a) any other Person which directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control with,
such Person. The term “control” (including the terms “controlling,” “controlled” and “under common
control with”) as used with respect to any Person means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.



     “Agreement” means this Registration Rights Agreement, including all amendments,
modifications and supplements and any exhibits or schedules to any of the foregoing, and shall
refer to this Registration Rights Agreement as the same may be in effect at the time such reference
becomes operative.



     “beneficially own” means, with respect to any Person, securities of which such Person
or any of such Person’s Affiliates, directly or indirectly, has “beneficial ownership” as
determined pursuant to Rule 13d-3 and Rule 13d-5 of the Exchange Act, including securities
beneficially owned by others with whom such Person or any of its Affiliates has agreed to act
together for the purpose of acquiring, holding, voting or disposing of such securities; provided
that a Person shall not be deemed to “beneficially own” (i) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person’s Affiliates until such tendered
securities are accepted for payment, purchase or exchange, (ii) any security as a result of an oral
or written agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (a) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act, and (b) is not also



-1-









 







then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report).



     “Closing Date” has the meaning ascribed thereto in the Investment Agreement.



     “Common Stock” has the ascribed thereto in the Investment Agreement.



     “Company” has the meaning set forth in the introductory paragraph.



     “Convertible Preferred Stock” means, collectively, the Series B Preferred Shares, the
Series C Preferred Shares and the Series D Preferred Shares (as each such term is defined in the
Investment Agreement).



     “Exchange Act” means the Securities Exchange Act of 1934.



     “Exercise Shares” means the shares of Common Stock acquired by the Investor upon
exercise of the Warrant or upon the conversion of the Convertible Preferred Stock.



     “Form S-3” means a registration statement on Form S-3 under the Securities Act or such
successor forms thereto permitting registration of securities under the Securities Act.



     “Governmental Entity” means any national, federal, state, municipal, local,
territorial, foreign or other government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral
body or public or private tribunal.



     “Holdback Agreement” has the meaning set forth in Section 5.



     “Holdback Period” has the meaning set forth in Section 5.



     “Investment Agreement” means the agreement specified in the first Recital hereto, as
such agreement may be amended, supplemented or otherwise modified from time to time.



     “Investor” means the Person named as such in the first paragraph of this Agreement.
References herein to the Investor shall apply to Permitted Transferees who become Investors
pursuant to Section 10, provided that (a) all obligations of the Investor and its Permitted
Transferees hereunder shall be several, and not joint and several, and (b) for purposes of all
thresholds and limitations herein, the actions of the Permitted Transferees shall be aggregated.



     “Minimum Amount” means $100,000,000.



     “Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association, corporation, institution,
public benefit corporation, Governmental Entity or any other entity.



-2-









 





     “Permitted Transferee” means any Person to whom Registrable Securities are transferred
in accordance with the transfer restrictions set forth in the Investment Agreement.



     “Piggyback Registration” has the meaning set forth in Section 3(a).



     “Prospectus” means the prospectus or prospectuses (whether preliminary or final)
included in any Registration Statement and relating to Registrable Securities, as amended or
supplemented and including all material incorporated by reference in such prospectus or
prospectuses.



     “Purchased Securities” has the meaning ascribed thereto in Investment Agreement.



     “Registrable Securities” means, at any time, (i) the Warrants and the Exercise Shares,
(ii) if no Stockholder Approval is obtained prior to the third anniversary of the Closing Date, the
Series C Preferred Shares, and (iii) any securities issued by the Company after the date hereof in
respect of any of the foregoing by way of a share dividend or share split or in connection with a
combination of shares, recapitalization, merger, consolidation or other reorganization (or as a
result of any other adjustment under the Warrants or the Convertible Preferred Stock), but
excluding (iv) any and all securities referred to in clauses (i), (ii) and (iii) that at any time
after the date hereof (a) have been sold pursuant to an effective registration statement or Rule
144 under the Securities Act, (b) have been sold in a transaction where a subsequent public
distribution of such securities would not require registration under the Securities Act, (c) are
eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on
volume or manner of sale, (d) are not outstanding or (e) have been transferred in violation of the
provisions of the Investment Agreement. It is understood and agreed that, once a security of the
kind described in clause (i), (ii) or (iii) above becomes a security of the kind described in
clause (iv) above, such security shall cease to be a Registrable Security for all purposes of this
Agreement and the Company’s obligations regarding Registrable Securities hereunder shall cease to
apply with respect to such security.



     “Registration” has the meaning set forth in Section 2(a).



     “Registration Expenses” has the meaning set forth in Section 8(a).



     “Registration Statement” means any registration statement of the Company which covers
any of the Registrable Securities pursuant to the provisions of this Agreement whether or not
pursuant to a request of the Investor, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and all documents
incorporated by reference in such Registration Statement.



     “S-3 Shelf Registration” means the filing by the Company of an S-3 Shelf Registration
Statement (or an amendment or supplement to an existing registration statement on Form S-3) for a
public offering of all or such portion of the Registrable Securities designated by the Investor
pursuant to Rule 415 promulgated under the Securities Act or otherwise.



-3-









 





     “S-3 Shelf Registration Statement” means a Registration Statement (including any
amendment or supplement thereto) on Form S-3.



     “SEC” means the Securities and Exchange Commission or any successor agency.



     “Securities Act” means the Securities Act of 1933.



     “Shares” means any shares of Common Stock. If at any time Registrable Securities
include securities of the Company other than Common Stock, then, when referring to Shares other
than Registrable Securities, “Shares” shall include the class or classes of such other securities
of the Company.



     “Stockholder Approval” means the approval by the stockholders of the Company for the
issuance of Common Stock upon (i) the conversion of the Series C Preferred Shares or (ii) the
exercise of the C Warrant (as defined in the Investment Agreement) for purposes of Section 312.03
of the NYSE Listed Company Manual (or any successor provision).



     “Suspension Period” has the meaning set forth in Section 4.



     “Termination Date” means the first date on which there are no Registrable Securities
or there is no Investor.



     “Third Party Holdback Period” means any Holdback Period imposed on the Investor
pursuant to Section 5 in respect of an underwritten offering of Shares in which (i) the Investor
elected not to participate or (ii) the Investor’s participation was reduced or eliminated pursuant
to Section 3(b) or 3(c).



     “underwritten offering” means a registered offering in which securities of the Company
are sold to one or more underwriters on a firm-commitment basis for reoffering to the public.



     “Warrants” has the meaning ascribed thereto in Investment Agreement.



     In addition to the above definitions, unless the context requires otherwise:




     (i) any reference to any statute, regulation, rule or form as of any time shall mean
such statute, regulation, rule or form as amended or modified and shall also include any
successor statute, regulation, rule or form from time to time;




     (ii) “including” shall be construed as inclusive without limitation, in each case
notwithstanding the absence of any express statement to such effect, or the presence of such
express statement in some contexts and not in others;




     (iii) references to “Section” are references to Sections of this Agreement;



-4-









 






     (iv) words such as “herein”, “hereof”, “hereinafter” and “hereby” when used in this
Agreement refer to this Agreement as a whole;




     (v) references to “business day” mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of New York
generally are authorized or required by law or other governmental action to close; and




     (vi) references to “dollars” and “$” mean U.S. dollars.



     Section 2. Registration.



     (a) Right to Request Registration. Subject to the provisions hereof, until the
Termination Date the Investor may request, at any time when an S-3 Shelf Registration Statement
registering the relevant Registrable Securities (and permitting the public resale thereof by the
Investor) is not in effect, registration for resale under the Securities Act of all or part of the
Registrable Securities (a “Registration”); provided, however, that (based on the
then-current market prices) the number of Registrable Securities included in the Registration
would, if fully sold, yield gross proceeds to the Investor of at least the Minimum Amount. Upon
such request, and subject to the last sentence of this Section 2(a) and Sections 4 and 6, the
Company shall use reasonable best efforts (i) to, at any time when the Company is eligible to use
Form S-3, file an S-3 Shelf Registration Statement (or any amendment or supplement thereto)
covering the number of Registrable Securities specified in such request under the Securities Act
for public sale in accordance with the method of disposition specified in such request within 30
days after the Investor’s written request therefor, (ii) if the Company is not eligible to file an
S-3 Shelf Registration Statement, to file a Registration Statement (other than an S-3 Shelf
Registration Statement) registering for resale such number of Registrable Securities as requested
to be so registered pursuant to this Section 2(a) within 45 days after the Investor’s request
therefor and (iii) if necessary, to cause such Registration Statement to be declared effective by
the SEC as soon as practical thereafter. If permitted under the Securities Act, such Registration
Statement shall be one that is automatically effective upon filing. The Investor shall not be
entitled to request a Registration more than once in any period of 180 days provided, however, that
the Investor shall not be entitled to request a Registration within six months after the Investor
has sold Shares in a Piggyback Registration, but only if all Registrable Securities the Investor
requested to be included in such Piggyback Registration were sold pursuant thereto.



     (b) Underwritten Offerings. The Investor shall be entitled to request that a sale of
Registrable Securities whether pursuant to a Registration or an existing S-3 Shelf Registration
Statement, shall be an underwritten offering; provided, however, that (based on the then-current
market prices) the number of Registrable Securities included in such offering would reasonably be
expected to yield gross proceeds to the Investor of at least the Minimum Amount, and provided
further that the Investor shall not be entitled to request any underwritten offering within six
months after the Investor has sold Shares in an underwritten offering effected pursuant to a
Registration Statement.



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     (c) Selection of Underwriters. If any of the Registrable Securities are to be sold in
an underwritten offering initiated by the Investor, the Company and the Investor shall mutually and
reasonably select the managing underwriter or underwriters to lead the offering.



     (d) Priority. The Company may include Shares other than Registrable Securities in a
Registration for any accounts (including for the account of the Company) on the terms provided
below. For any underwritten offering the Company may include Shares other than Registrable
Securities for any accounts (including for the account of the Company), but only with the consent
of the managing underwriters of such offering. If the managing underwriters of the requested
offering advise the Company and the Investor requesting such offering that in their opinion the
number of Shares proposed to be included in the offering exceeds the number of Shares which can be
sold in such underwritten offering without materially delaying or jeopardizing the success of the
offering (including the price per share of the Shares proposed to be sold in such underwritten
offering), the Company shall include in such offering (i) first, the number of Registrable
Securities that the Investor proposes to sell, and (ii) second, the number of Shares proposed to be
included therein by any other Persons (including Shares to be sold for the account of the Company)
allocated among such Persons in such manner as the Company may determine. If the number of Shares
which can be sold is less than the number of Shares proposed to be registered pursuant to clause
(i) above by the Investor, the amount of Shares to be sold shall be allocated to the Investor.



     (e) Right to Effect Sales. The Investor shall be entitled, at any time and from time
to time when an S-3 Shelf Registration Statement is effective and until the Termination Date, to
offer and sell such Registrable Securities as are then registered pursuant to such Registration
Statement, but only upon not less than five business days’ prior written notice to the Company (if
such sale is to be underwritten), or such longer period as may be reasonably necessary for the
Company to comply with the covenants contained in Section 6(a), in each case to the extent relevant
to such offering. The Investor shall give the Company prompt written notice of the consummation of
each such sale (whether or not underwritten).



     (f) Effective Period of Registration Statements.




     (i) With respect to any Registration Statement which is an S-3 Shelf Registration
Statement, the Company shall use reasonable best efforts to keep such Registration Statement
effective for a period of 180 days after the effective date of such registration statement
or such shorter period which shall terminate when all of the Registrable Securities covered
by such Registration have been sold by the Investor, provided that such 180-day period shall
be extended by the number of days in any Suspension Period commenced pursuant to Section 4
during such period (as it may be so extended) and by the number of days in any Third Party
Holdback period commenced during such period (as it may be so extended).




     (ii) With respect to any Registration Statement which is not an S-3 Shelf Registration
Statement, the Company shall use reasonable efforts to keep



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such registration statement effective for a period equal to 60 days from such date or
such shorter period which shall terminate when all of the Registrable Securities covered by
such Registration have been sold by the Investor. If the Company shall withdraw any such
Registration pursuant to Section 4 before such 60 days end and before all of the Registrable
Securities covered by such Registration have been sold pursuant thereto, the Investor shall
be entitled to a replacement Registration (without regard to the 180-day limit in the last
sentence of Section 2(a)) which shall be subject to all of the provisions of this Agreement.




     (iii) A Registration shall not count against the restrictions on Registration set forth
in the last sentence of Section 2(a) if (i) after the applicable Registration Statement has
become effective, such Registration Statement or the related offer, sale or distribution of
Registrable Securities thereunder becomes the subject of any stop order, injunction or other
order or restriction imposed by the SEC or any other governmental agency or court for any
reason not attributable to the Investor or its Affiliates (other than the Company and its
controlled Affiliates) and such interference is not thereafter eliminated so as to permit
the completion of the contemplated distribution of Registrable Securities or (ii) in the
case of an underwritten offering, the conditions specified in the related underwriting
agreement, if any, are not satisfied or waived for any reason not attributable to the
Investor or its Affiliates (other than the Company and its controlled Affiliates).



     (g) Investment Agreement Restrictions. Nothing in this Agreement shall affect the restrictions
on transfers of Shares and other provisions of the Investment Agreement, which shall apply
independently hereof in accordance with the terms thereof.



     Section 3. Piggyback Registrations.



     (a) Right to Piggyback.



     Whenever prior to the Termination Date the Company proposes to register any Shares under the
Securities Act (other than on a registration statement on Form S-8, F-8, S-4 or F-4), whether for
its own account or for the account of one or more holders of Shares (other than the Investor), and
the form of registration statement to be used may be used for any registration of Registrable
Securities (a “Piggyback Registration”), the Company shall give written notice to the
Investor of its intention to effect such a registration and, subject to Sections 3(b) and 3(c),
shall include in such registration statement and in any offering of Shares to be made pursuant to
that registration statement all Registrable Securities with respect to which the Company has
received a written request for inclusion therein from the Investor within 10 days after the
Investor’s receipt of the Company’s notice or, in the case of a primary offering, such shorter time
as is reasonably specified by the Company in light of the circumstances (provided that only
Registrable Securities of the same class or classes as the Shares being registered may be
included). The Company shall have no obligation to proceed with any Piggyback Registration and may
abandon, terminate and/or withdraw such registration for any reason at any time prior to the
pricing thereof. If the Company or



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any other Person other than the Investor proposes to sell Shares in an underwritten offering
pursuant to a registration statement on Form S-3 under the Securities Act, such offering shall be
treated as a primary or secondary underwritten offering pursuant to a Piggyback Registration.



     (b) Priority on Primary Piggyback Registrations. If a Piggyback Registration is
initiated as a primary underwritten offering on behalf of the Company and the managing underwriters
advise the Company and the Investor (if the Investor has elected to include Registrable Securities
in such Piggyback Registration) that in their opinion the number of Shares proposed to be included
in such offering exceeds the number of Shares (of any class) which can be sold in such offering
without materially delaying or jeopardizing the success of the offering (including the price per
share of the Shares proposed to be sold in such offering), the Company shall include in such
registration and offering (i) first, the number of Shares that the Company proposes to sell, and
(ii) second, the number of Shares requested to be included therein by holders of Shares, including
the Investor (if the Investor has elected to include Registrable Securities in such Piggyback
Registration), pro rata among all such holders on the basis of the number of Shares requested to be
included therein by all such holders or as such holders and the Company may otherwise agree (with
allocations among different classes of Shares, if more than one are involved, to be determined by
the Company).



     (c) Priority on Secondary Piggyback Registrations. If a Piggyback Registration is
initiated as an underwritten registration on behalf of a holder of Shares other than the Investor,
and the managing underwriters advise the Company that in their opinion the number of Shares
proposed to be included in such registration exceeds the number of Shares (of any class) which can
be sold in such offering without materially delaying or jeopardizing the success of the offering
(including the price per share of the Shares to be sold in such offering), then the Company shall
include in such registration (i) first, the number of Shares requested to be included therein by
the holder(s) requesting such registration, (ii) second, the number of Shares requested to be
included therein by other holders of Shares including the Investor (if the Investor has elected to
include Registrable Securities in such Piggyback Registration) , pro rata among such holders on the
basis of the number of Shares requested to be included therein by such holders or as such holders
and the Company may otherwise agree (with allocations among different classes of Shares, if more
than one are involved, to be determined by the Company and (iii) third, the number of Shares that
the Company proposes to sell.



     (d) Selection of Underwriters. If any Piggyback Registration is a primary or
secondary underwritten offering, the Company shall have the right to select the managing
underwriter or underwriters to administer any such offering.



     (e) Basis of Participations. The Investor may not sell Registrable Securities in any
offering pursuant to a Piggyback Registration unless it (a) agrees to sell such Shares on the same
basis provided in the underwriting or other distribution arrangements approved by the Company and
that apply to the Company and/or any other holders involved in such Piggyback Registration and (b)
completes and executes




-8-











 




all questionnaires, powers of attorney, indemnities, underwriting agreements, lockups and
other documents required under the terms of such arrangements.




     Section 4. Suspension Periods.



     (a) Suspension Periods. The Company may (i) delay the filing or effectiveness of a
Registration Statement in conjunction with a Registration or (ii) prior to the pricing of any
underwritten offering or other offering of Registrable Securities pursuant to a Registration, delay
such underwritten or other offering (and, if it so chooses, withdraw any registration statement
that has been filed), but in each case described in clauses (i) and (ii) only if the Company
determines in its sole discretion (x) that proceeding with such an offering would require the
Company to disclose material information that would not otherwise be required to be disclosed at
that time and that the disclosure of such information at that time would not be in the Company’s
best interests, or (y) that the registration or offering to be delayed would, if not delayed,
materially adversely affect the Company and its subsidiaries taken as a whole or materially
interfere with, or jeopardize the success of, any pending or proposed material transaction,
including any debt or equity financing, any acquisition or disposition, any recapitalization or
reorganization or any other material transaction, whether due to commercial reasons, a desire to
avoid premature disclosure of information or any other reason. Any period during which the Company
has delayed a filing, an effective date or an offering pursuant to this Section 4 is herein called
a “Suspension Period”. If pursuant to this Section 4 the Company delays or withdraws a
Registration requested by the Investor, the Investor shall be entitled to withdraw such request
and, if it does so, such request shall not count against the restrictions on Registrations set
forth in the last sentence of Section 2(a). The Company shall provide prompt written notice to the
Investor of the commencement and termination of any Suspension Period (and any withdrawal of a
registration statement pursuant to this Section 4) but shall not be obligated under this Agreement
to disclose the reasons therefor. The Investor shall keep the existence of each Suspension Period
confidential and refrain from making offers and sales of Registrable Securities (and direct any
other Persons making such offers and sales to refrain from doing so) during each Suspension Period.
In no event (i) may the Company deliver notice of a Suspension Period to the Investor more than
two times in any calendar year and (ii) shall a Suspension Period or Suspension Periods be in
effect for an aggregate of 180 days or more in any calendar year.



     Section 5. Holdback Agreements.



     The restrictions in this Section 5 shall apply for as long as the Investor is the beneficial
owner of any Registrable Securities. If the Company sells Shares or other securities convertible
into or exchangeable for (or otherwise representing a right to acquire) Shares in a primary
underwritten offering pursuant to any registration statement under the Securities Act (but only if
the Investor is provided its piggyback rights, if any, in accordance with Sections 3(a) and 3(b)),
or if any other Person sells Shares in a secondary underwritten offering pursuant to a Piggyback
Registration in accordance with Sections 3(a) and 3(b), and if the managing underwriters for such
offering advise the Company (in which case the Company promptly shall notify the Investor) that a
public sale or distribution of Shares outside such offering would



-9-









 







materially adversely affect such offering, then, if requested by the Company, the Investor
shall agree, as contemplated in this Section 5, not to (and to cause its majority owned Affiliates
not to) sell, or request the registration of, any Registrable Securities (or any securities of any
Person that are convertible into or exchangeable for, or otherwise represent a right to acquire,
any Registrable Securities) for a period (each such period, a “Holdback Period”) beginning
on the 10th day before the pricing date for the underwritten offering and extending
through the earlier of (i) the 90th day after such pricing date (subject to customary
automatic extension in the event of the release of earnings results of or material news relating to
the Company) and (ii) such earlier day (if any) as may be designated for this purpose by the
managing underwriters for such offering (each such agreement of the Investor, a “Holdback
Agreement”). Each Holdback Agreement shall be in writing in form and substance satisfactory to
the Company and the managing underwriters. Notwithstanding the foregoing, the Investor shall not
be obligated to make a Holdback Agreement unless the Company and each selling shareholder in such
offering also execute agreements substantially similar to such Holdback Agreement. A Holdback
Agreement shall not apply to (i) the exercise of any warrants or options to purchase shares of the
Company or the issuance of Common Stock upon conversion of Convertible Preferred Stock (provided
that such restrictions shall apply with respect to the securities issuable upon such exercise or
conversion) or (ii) any Shares included in the underwritten offering giving rise to the application
of this Section 5.



     Section 6. Registration Procedures.



     (a) Whenever the Investor requests that any Registrable Securities be registered pursuant to
this Agreement, the Company shall use reasonable best efforts to effect, as soon as practical as
provided herein, the registration and the sale of such Registrable Securities in accordance with
the intended methods of disposition thereof, and, pursuant thereto, the Company shall, as soon as
practical as provided herein:




     (i) subject to the other provisions of this Agreement, use reasonable best efforts to
prepare and file with the SEC a Registration Statement with respect to such Registrable
Securities and cause such Registration Statement to become effective (unless it is
automatically effective upon filing);




     (ii) use reasonable best efforts to prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection therewith
as may be necessary to comply with the applicable requirements of the Securities Act and to
keep such Registration Statement effective for the relevant period required hereunder, but
no longer than is necessary to complete the distribution of the Shares covered by such
Registration Statement, and to comply with the applicable requirements of the Securities Act
with respect to the disposition of all the Shares covered by such Registration Statement
during such period in accordance with the intended methods of disposition set forth in such
Registration Statement;




     (iii) use reasonable best efforts to obtain the withdrawal of any order suspending the
effectiveness of any Registration Statement, or the lifting of any



-10-









 







suspension of the qualification or exemption from qualification of any Registrable
Securities for sale in any jurisdiction in the United States;




     (iv) deliver, without charge, such number of copies of the preliminary and final
Prospectus and any supplement thereto as the Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities of the Investor covered by such
Registration Statement in conformity with the requirements of the Securities Act;




     (v) use reasonable best efforts to register or qualify such Registrable Securities
under such other securities or blue sky laws of such U.S. jurisdictions as the Investor
reasonably requests and continue such registration or qualification in effect in such
jurisdictions for as long as the applicable Registration Statement may be required to be
kept effective under this Agreement (provided that the Company will not be required to
(I) qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph (v), (II) subject itself to taxation in any
such jurisdiction or (III) consent to general service of process in any such jurisdiction);




     (vi) notify the Investor and each distributor of such Registrable Securities identified
by the Investor, at any time when a Prospectus relating thereto would be required under the
Securities Act to be delivered by such distributor, of the occurrence of any event as a
result of which the Prospectus included in such Registration Statement contains an untrue
statement of a material fact or omits a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, and, at
the request of the Investor, the Company shall use reasonable best efforts to prepare, as
soon as practical, a supplement or amendment to such Prospectus so that, as thereafter
delivered to any prospective purchasers of such Registrable Securities, such Prospectus
shall not contain an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading;




     (vii) in the case of an underwritten offering in which the Investor participates
pursuant to a Registration or a Piggyback Registration, enter into an underwriting agreement
in substantially the form used by the Company at that time for underwritten offerings of
that kind, with appropriate modification, containing such provisions (including provisions
for indemnification, lockups, opinions of counsel and comfort letters), and take all such
other customary and reasonable actions as the managing underwriters of such offering may
request in order to facilitate the disposition of such Registrable Securities (including,
making members of senior management of the Company available at reasonable times and places
to participate in “road-shows” that the managing underwriter determines are necessary to
effect the offering);




     (viii) in the case of an underwritten offering in which the Investor participates
pursuant to a Registration or a Piggyback Registration, and to the



-11-









 







extent not prohibited by applicable law, (A) make reasonably available, for inspection
by the managing underwriters of such offering and one attorney and accountant acting for
such managing underwriters, pertinent corporate documents and financial and other records of
the Company and its subsidiaries and controlled Affiliates, (B) cause the Company’s officers
and employees to supply information reasonably requested by such managing underwriters or
attorney in connection with such offering, (C) make the Company’s independent accountants
available for any such managing underwriters’ due diligence and have them provide customary
comfort letters to such underwriters in connection therewith; and (D) cause the Company’s
counsel to furnish customary legal opinions to such underwriters in connection therewith;
provided, however, that such records and other information shall be subject to such
confidential treatment as is customary for underwriters’ due diligence reviews;




     (ix) use reasonable best efforts to cause all such Registrable Securities to be listed
on the New York Stock Exchange or any successor primary securities exchange (if any) on
which Common Stock of the Company is then listed; provided, however, that (i) with respect
to any Warrants, the Company shall have no obligation to obtain a listing before the date
that is three years following the Closing Date and thereafter only upon the request of the
Investor and (ii) with respect to any shares of Series C Preferred Shares, the Company shall
have no obligation to obtain a listing before the date which is three years following the
Closing Date;




     (x) provide a transfer agent and registrar for all such Registrable Securities not
later than the effective date of such Registration Statement and, a reasonable time before
any proposed sale of Registrable Securities pursuant to a Registration Statement, provide
the transfer agent with printed certificates for the Registrable Securities to be sold,
subject to the provisions of Section 10;




     (xi) make generally available to its shareholders a consolidated earnings statement
(which need not be audited) for a period of 12 months beginning after the effective date of
the Registration Statement as soon as reasonably practicable after the end of such period,
which earnings statement shall satisfy the requirements of an earning statement under
Section 11(a) of the Securities Act and Rule 158 thereunder; and




     (xii) promptly notify the Investor and the managing underwriters of any underwritten
offering, if any:




     (1) when the Registration Statement, any pre-effective amendment, the
Prospectus or any Prospectus supplement or any post-effective amendment to the
Registration Statement has been filed and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective;



-12-









 






     (2) of any request by the SEC for amendments or supplements to the Registration
Statement or the Prospectus or for any additional information regarding the
Investor;




     (3) of the notification to the Company by the SEC of its initiation of any
proceeding with respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and




     (4) of the receipt by the Company of any notification with respect to the
suspension of the qualification of any Registrable Securities for sale under the
applicable securities or blue sky laws of any jurisdiction.



     For the avoidance of doubt, the provisions of clauses (vii), (viii), (xi) and (xii) of this
Section 6(a) shall apply only in respect of an underwritten offering and only if (based on market
prices at the time the offering is requested by the Investor) the number of Registrable Securities
to be sold in the offering would reasonably be expected to yield gross proceeds to the Investor of
at least the Minimum Amount.



     (b) No Registration Statement (including any amendments thereto) shall contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading, and no Prospectus (including any
supplements thereto) shall contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading, in each case, except for any untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material fact made in reliance on
and in conformity with written information furnished to the Company by or on behalf of the Investor
or any underwriter or other distributor specifically for use therein.



     (c) At all times after the Company has filed a registration statement with the SEC pursuant to
the requirements of the Securities Act and until the Termination Date, the Company shall use
reasonable best efforts to continuously maintain in effect the registration statement of Common
Stock under Section 12 of the Exchange Act and to use reasonable best efforts to file all reports
required to be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, all to the extent required to enable the Investor to be
eligible to sell Registrable Securities (if any) pursuant to Rule 144 under the Securities Act.



     (d) The Company may require the Investor and each distributor of Registrable Securities as to
which any registration is being effected to furnish to the Company information regarding such
Person and the distribution of such securities as the Company may from time to time reasonably
request in connection with such registration.



     (e) The Investor agrees by having its Common Stock treated as Registrable Securities hereunder
that, upon being advised in writing by the Company of the occurrence of an event pursuant to
Section 6(a)(vi), the Investor will immediately



-13-









 







discontinue (and direct any other Persons making offers and sales of Registrable Securities to
immediately discontinue) offers and sales of Registrable Securities pursuant to any Registration
Statement (other than those pursuant to a plan that is in effect prior to such time and that
complies with Rule 10b5-1 of the Exchange Act) until it is advised in writing by the Company that
the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus
as contemplated by Section 6(a)(vi), and, if so directed by the Company, the Investor will deliver
to the Company all copies, other than permanent file copies then in the Investor’s possession, of
the Prospectus covering such Registrable Securities current at the time of receipt of such notice.



     (f) The Company may prepare and deliver an issuer free-writing prospectus (as such term is
defined in Rule 405 under the Securities Act) in lieu of any supplement to a prospectus, and
references herein to any “supplement” to a Prospectus shall include any such issuer free-writing
prospectus. Neither the Investor nor any other seller of Registrable Securities may use a
free-writing prospectus to offer or sell any such shares without the Company’s prior written
consent.



     (g) It is understood and agreed that any failure of the Company to file a registration
statement or any amendment or supplement thereto or to cause any such document to become or remain
effective or usable within or for any particular period of time as provided in Section 2, or 6 or
otherwise in this Agreement, due to reasons that are not reasonably within its control, or due to
any refusal of the SEC to permit a registration statement or prospectus to become or remain
effective or to be used because of unresolved SEC comments thereon (or on any documents
incorporated therein by reference) despite the Company’s good faith and reasonable best efforts to
resolve those comments, shall not be a breach of this Agreement.



     (h) It is further understood and agreed that the Company shall not have any obligations under
this Section 6 at any time on or after the Termination Date, unless an underwritten offering in
which the Investor participates has been priced but not completed prior to the Termination Date, in
which event the Company’s obligations under this Section 6 shall continue with respect to such
offering until it is so completed (but not more than 60 days after the commencement of the
offering).



     (i) Notwithstanding anything to the contrary in this Agreement, the Company shall not be
required to file a Registration Statement or include Registrable Securities in a Registration
Statement unless it has received from the Investor, at least five days prior to the anticipated
filing date of the Registration Statement, requested information required to be provided by the
Investor for inclusion therein.



     Section 7. Registration Expenses.



     (a) All expenses incident to the Company’s performance of or compliance with this Agreement,
including all registration and filing fees, fees and expenses of compliance with securities or blue
sky laws, FINRA fees, listing application fees, printing expenses, transfer agent’s and registrar’s
fees, cost of distributing Prospectuses in preliminary and final form as well as any supplements
thereto, and fees and disbursements of counsel for the Company and all independent certified



-14-









 







public accountants and other Persons retained by the Company (all such expenses being herein
called “Registration Expenses”) but not including any underwriting discounts or commissions
attributable to the sale of Registrable Securities or fees and expenses of counsel and any other
advisor representing any underwriters or other distributors), shall be borne by the Company. The
Investor shall bear the cost of all underwriting discounts and commissions associated with any sale
of Registrable Securities and shall pay all of its own costs and expenses, including all fees and
expenses of any counsel (and any other advisers) representing the Investor and any stock transfer
taxes.



     (b) The obligation of the Company to bear the expenses described in Section 7(a) shall apply
irrespective of whether a registration, once properly demanded or requested becomes effective or is
withdrawn or suspended; provided, however, that Registration Expenses for any Registration
Statement withdrawn solely at the request of the Investor (unless withdrawn following commencement
of a Suspension Period pursuant to Section 5) shall be borne by the Investor.



     Section 8. Indemnification.



     (a) The Company shall indemnify, to the fullest extent permitted by law, the Investor and each
Person who controls the Investor (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities, judgments, costs (including reasonable costs of investigation) and
expenses (including reasonable attorneys’ fees) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement or Prospectus or any
amendment thereof or supplement thereto or arising out of or based upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are made in reliance and in conformity with
information furnished in writing to the Company by the Investor expressly for use therein. In
connection with an underwritten offering in which the Investor participates conducted pursuant to a
registration effected hereunder, the Company shall indemnify each participating underwriter and
each Person who controls such underwriter (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of the Investor.



     (b) In connection with any Registration Statement in which the Investor is participating, the
Investor shall furnish to the Company in writing such information as the Company reasonably
requests for use in connection with any such Registration Statement or Prospectus, or amendment or
supplement thereto, and shall indemnify, to the fullest extent permitted by law, the Company, its
officers and directors and each Person who controls the Company (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities, judgments, costs (including
reasonable costs of investigation) and expenses (including reasonable attorneys’ fees) arising out
of or based upon any untrue or alleged untrue statement of material fact contained in the
Registration Statement or Prospectus, or any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent that the same are
made in reliance and in



-15-









 







conformity with information furnished in writing to the Company by or on behalf of the
Investor expressly for use therein.



     (c) Any party entitled to indemnification hereunder (an “Indemnified Party”) shall
give written notice to the party indemnifying it (the “Indemnifying Party”) of any claim
with respect to which it seeks indemnification promptly after discovery by such Indemnified Party
of any matters giving rise to a claim for indemnification. Such notice shall describe such claim
in reasonable detail. Failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to an Indemnified Party except to the extent
that the Indemnifying Party is actually prejudiced thereby. The Indemnified Party shall permit
such Indemnifying Party to assume the defense of such claim with counsel reasonably satisfactory to
the Indemnified Party. An Indemnifying Party who is entitled to, and elects to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one counsel (in
addition to one local counsel) for Parties indemnified (hereunder or otherwise) by such
Indemnifying Party with respect to such claim (and all other claims arising out of the same
circumstances), unless in the reasonable judgment of any Indemnified Party there may be one or more
legal or equitable defenses available to such indemnified Party which are in addition to or may
conflict with those available to another Indemnified Party with respect to such claim, in which
case such maximum number of counsel for all Indemnified Parties shall be two rather than one). If
any Indemnifying Party is entitled to, and elects to, assume the defense of a claim, the
Indemnified Party shall continue to be entitled to participate in the defense thereof, with counsel
of its own choice, but, except as set forth above, the Indemnifying Party shall not be obligated to
reimburse the Indemnified Party for the costs thereof. If the Indemnifying Party assumes the
defense of any claim, all Indemnified Parties shall deliver to the Indemnifying Party copies of all
notices and documents (including court papers) received by the Indemnifying Party related to the
claim, and each Indemnified Party shall cooperate in the defense or prosecution of such claim.
Such cooperation shall include the retention and (upon the Indemnifying Party’s request) the
provision to the Indemnifying Party of records and information that are reasonably relevant to such
claim, and making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Indemnifying Party shall not
be subject to any liability for any settlement made by the Indemnified Party without its written
consent (but such consent will not be unreasonably withheld). The Indemnifying Party shall not
consent to the entry of any judgment or enter into or agree to any settlement relating to a claim
or action for which any Indemnified Party would be entitled to indemnification by any indemnified
Party hereunder unless such judgment or settlement imposes no ongoing obligations on any such
Indemnified Party and includes as an unconditional term the giving, by all relevant claimants and
plaintiffs to such Indemnified Party, a release, satisfactory in form and substance to such
Indemnified Party, from all liabilities in respect of such claim or action for which such
Indemnified Party would be entitled to such indemnification. The Indemnifying Party shall not be
liable hereunder for any amount paid or payable or incurred pursuant to or in connection with any
judgment entered or settlement effected with the consent of an Indemnified Party unless the
Indemnifying Party has also consented to such judgment or settlement.



-16-









 





     (d) The indemnification provided for under this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified Person or any
officer, director or controlling Person of such indemnified Person and shall survive the transfer
of securities and the Termination Date but only with respect to offers and sales of Registrable
Securities made before the Termination Date or during the period following the Termination Date
referred to in Section 6(h).



     (e) If the indemnification provided for in or pursuant to this Section 8 is due in accordance
with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then each applicable
indemnifying Person, in lieu of indemnifying such indemnified Person, shall contribute to the
amount paid or payable by such indemnified Person as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the
indemnifying Person on the one hand and of the indemnified Person on the other in connection with
the statements or omissions which result in such losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The relative fault of the indemnifying
Person on the one hand and of the indemnified Person on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the
indemnifying Person or by the indemnified Person, and by such Person’s relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission. In no
event shall the liability of the indemnifying Person be greater in amount than the amount for which
such indemnifying Person would have been obligated to pay by way of indemnification if the
indemnification provided for under Section 8(a) or 8(b) hereof had been available under the
circumstances.



     Section 9. Securities Act Restrictions.



     The Registrable Securities are restricted securities under the Securities Act and may not be
offered or sold except pursuant to an effective registration statement or an available exemption
from registration under the Securities Act. Accordingly, the Investor shall not, directly or
through others, offer or sell any Registrable Securities except pursuant to a Registration
Statement as contemplated herein or pursuant to Rule 144 or another exemption from registration
under the Securities Act, if available. Prior to any transfer of Registrable Securities other than
pursuant to an effective registration statement, the Investor shall notify the Company of such
transfer and the Company may require the Investor to provide, prior to such transfer, such evidence
that the transfer will comply with the Securities Act (including written representations or an
opinion of counsel) as the Company may reasonably request. The Company may impose stop-transfer
instructions with respect to any Registrable Securities that are to be transferred in contravention
of this Agreement. Any certificates representing the Registrable Securities may bear a legend (and
the Company’s share registry may bear a notation) referencing the restrictions on transfer
contained in this Agreement (and the Investment Agreement), until such time as such securities have
ceased to be (or are to be transferred in a manner that results in their ceasing to be) Registrable
Securities. Subject to the provisions of this Section 9, the Company will replace any such
legended certificates with unlegended certificates promptly upon surrender of the



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legended certificates to the Company or its designee, in order to facilitate a lawful transfer
or at any time after such shares cease to be Registrable Securities.



     Section 10. Transfers of Rights.



     (a) If the Investor transfers any Registrable Securities to a Permitted Transferee in
accordance with the Investment Agreement, such Permitted Transferee shall, together with all other
such Permitted Transferees and the Investor, also have the rights of the Investor under this
Agreement with respect to such Registrable Securities, but only if the Permitted Transferee signs
and delivers to the Company a written acknowledgment (in form and substance satisfactory to the
Company) that it has joined with the Investor and the other Permitted Transferees as a party to
this Agreement and has assumed, severally but not jointly, the rights and obligations of the
Investor hereunder with respect to the Registrable Securities transferred to it by the Investor.
Each such transfer shall be effective when (but only when) the Permitted Transferee has signed and
delivered the written acknowledgment to the Company. Upon any such effective transfer, the
Permitted Transferee shall automatically have the rights so transferred, and the Investor’s
obligations under this Agreement, and the rights with respect to the Registrable Securities not so
transferred, shall continue. Notwithstanding any other provision of this Agreement, no Person
who acquires securities transferred in violation of this Agreement or the Investment Agreement, or
who acquires securities that are not or upon acquisition cease to be Registrable Securities, shall
have any rights under this Agreement with respect to such securities, and such securities shall not
have the benefits afforded hereunder to Registrable Securities.



     Section 11. Miscellaneous.



     (a) Notices. Any notice, request, instruction, claim, demand, waiver and other
communications to be given hereunder by any party to the other will be in writing and will be
deemed to have been duly given (a) by facsimile, upon confirmation of receipt, or (b) on the date
of delivery when delivered by hand or overnight courier service. All notices hereunder shall be
delivered as set forth below, or to such other address, facsimile number or e-mail address as
either party may from time to time, designate in a written notice given in a like manner.



     (A) If to the Company:


The Hartford Financial Services Group Inc.

One Hartford Plaza

Hartford, CT 06155

U.S.A.

Attention: Alan J. Kreczko

Facsimile: +1 860 547 4721




     with a copy to:


Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

U.S.A.

Attention: Victor I. Lewkow

Facsimile: +1 212 225 3999




-18-









 








     (B) If to the Investor:


Allianz SE

Group Legal Services

Koeniginstr. 28

80802 Muenchen

Germany

Attention: Dr. Peter Hemeling

Facsimile: +49 89 38 00 2152




     with a copy to:


Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004-2498

U.S.A.

Attention: Andrew Dietderich

Facsimile: +1-212-558-3588




     (b) No Waivers. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.



     (c) Assignment. Neither this Agreement nor any right, remedy, obligation nor
liability arising hereunder or by reason hereof shall be assignable by any party hereto without the
prior written consent of the other parties, and any attempt to assign any right, remedy, obligation
or liability hereunder without such consent shall be void, except (i) an assignment, in the case of
a merger or consolidation where such party is not the surviving entity, or a sale of substantially
all of its assets, to the entity which is the survivor of such merger or consolidation or the
purchaser in such sale or (ii) an assignment by Investor to a Permitted Transferee in accordance
with the terms hereof.



     (d) No Third-Party Beneficiaries. Nothing contained in this Agreement, expressed or
implied, is intended to confer upon any person or entity other than the Company and the Investor
(and any Permitted Transferee to which an assignment is made in accordance with this Agreement),
any benefits, rights, or remedies (except as specified in Section 8 hereof).



     (e) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial, Etc. This
Agreement will be governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State. The parties agree (a)
to submit, to the fullest extent permitted by applicable law, any dispute between the parties in
respect of this



-19-









 







Agreement and the transactions contemplated hereby to the United States District Court for the
Southern District of New York or, in the event federal jurisdiction is not available, the Supreme
Court of the State of New York, New York County, (b) to submit to the exclusive jurisdiction of
such courts and agree to waive any claims of improper venue or forum non conveniens and (c) that
notice may be served upon such party at the address and in the manner set forth for such party in
Section 11. To the extent permitted by applicable law, each of the parties hereto hereby
unconditionally waives trial by jury in any legal action or proceeding relating to this Agreement
or the transactions contemplated hereby.



     (f) Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by e-mail or facsimile) and by different parties hereto in separate
counterparts, with the same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall constitute one and
the same instrument. This Agreement shall become effective when each party hereto shall have
received counterparts hereof signed by all of the other parties hereto.



     (g) Entire Agreement. This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes and replaces all other
prior agreements, written or oral, among the parties hereto with respect to the subject matter
hereof.



     (h) Captions. The headings and other captions in this Agreement are for convenience
and reference only and shall not be used in interpreting, construing or enforcing any provision of
this Agreement.



     (i) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.



     (j) Amendments. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given without the prior written consent of the Company and the
Investor.



[Execution Page Follows]




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     IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties hereto as of
the date first written above.



	 	 	 	 	 
	 	The Hartford Financial Services Group, 

Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	 	Allianz SE

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
















 




Annex E to Investment Agreement




Execution Copy


ANNEX E




     REPLACEMENT CAPITAL COVENANT, dated as of October 17, 2008 (this “Replacement Capital
Covenant”), by The Hartford Financial Services Group, Inc., a Delaware corporation (together
with its successors and assigns, the “Corporation”), in favor of and for the benefit of
each Covered Debtholder (as defined below).



RECITALS




     A. On the date hereof, the Corporation is issuing $1,750,000,000 aggregate principal amount of
its 10% Junior Subordinated Debentures due 2068 (together with any other 10% Junior Subordinated
Debentures due 2068 issued after the date of this Replacement Capital Covenant pursuant to the
related indenture, the “Debentures”).



     B. The Corporation is entering into and disclosing the content of this Replacement Capital
Covenant in the manner provided below with the intent that the covenants provided for in this
Replacement Capital Covenant be enforceable by each Covered Debtholder and that the Corporation be
estopped from disregarding the covenants in this Replacement Capital Covenant, in each case to the
fullest extent permitted by applicable law.



     C. The Corporation acknowledges that reliance by each Covered Debtholder upon the covenants in
this Replacement Capital Covenant is reasonable and foreseeable by the Corporation and that, were
the Corporation to disregard its covenants in this Replacement Capital Covenant, each Covered
Debtholder would have sustained an injury as a result of its reliance on such covenants.



     NOW, THEREFORE, the Corporation hereby covenants and agrees as follows in favor of and for the
benefit of each Covered Debtholder.



          SECTION 1. Definitions. Capitalized terms used in this Replacement Capital Covenant
(including the Recitals) have the meanings set forth in Annex I hereto.



          SECTION 2. Limitations on Redemption and Purchase of Debentures. The Corporation
hereby promises and covenants to and for the benefit of each Covered Debtholder that the
Corporation shall not repay, redeem, defease or repurchase, and shall cause each Subsidiary of the
Corporation not to purchase, all or any part of the Debentures prior to October 15, 2048, except to
the extent that the principal amount repaid or defeased or the applicable redemption or purchase
price does not exceed the sum of the Applicable Percentages of the following amounts:




   (i) the aggregate amount of (a) the net cash proceeds the Corporation and its
Subsidiaries shall have received from the sale of Common Stock and rights to acquire Common
Stock to Persons other than the Corporation and its Subsidiaries and (b) the Market Value of
any Common Stock (determined as of the date of delivery) that the Corporation and its
Subsidiaries shall have delivered to Persons other than the Corporation and its Subsidiaries
in connection with the conversion of any convertible or exchangeable securities, other than
securities for which the Corporation or any of its Subsidiaries shall have received equity
credit from any NRSRO, in each case during the relevant Measurement Period (without double
counting proceeds received in any prior Measurement Period); plus



1









 






   (ii) the aggregate amount of net cash proceeds the Corporation and its Subsidiaries
shall have received during the relevant Measurement Period (without double counting proceeds
received in any prior Measurement Period) from the sale of Qualifying Replacement
Securities, Mandatorily Convertible Preferred Stock and Debt Exchangeable for Common Equity
to Persons other than the Corporation and its Subsidiaries,


provided that the limitations in this Section 2 shall not restrict (i) the repayment,
redemption or other purchase of any Debentures that the Corporation shall have previously defeased
in accordance with this Replacement Capital Covenant or (ii) the exchange or purchase of the
Debentures for consideration that consists solely of Common Stock or (iii) the exchange or purchase
of the Debentures for consideration that consists solely of an aggregate principal amount or
liquidation preference of Replacement Capital Securities other than Common Stock not to exceed 100%
of the aggregate principal amount of Debentures that are exchanged plus an amount in cash equal to
accrued but unpaid Distributions on the Debentures, other than any deferred Distributions.
Notwithstanding anything to the contrary in this Replacement Capital Covenant, Debentures shall no
longer be subject to this Replacement Capital Covenant if such Debentures have been remarketed by
the Company pursuant to arrangements between any Holder of such Debentures and the Company, and the
net proceeds of such remarketing have been used by such Holder to acquire Common Stock, either
directly, through the exercise of warrants or otherwise.




          SECTION 3. Covered Debt. (a) The Corporation represents and warrants that the Initial
Covered Debt is Eligible Debt.



          (b) On or during the 30-day period immediately preceding any Redesignation Date with respect
to the Covered Debt, the Corporation shall identify the series of Eligible Debt that will become
the Covered Debt on and after such Redesignation Date in accordance with the following procedures:




   (i) the Corporation shall identify each series of its then outstanding long-term
indebtedness for money borrowed that is Eligible Debt;




   (ii) if only one series of the Corporation’s then outstanding long-term indebtedness
for money borrowed is Eligible Debt, such series shall become the Covered Debt commencing on
the related Redesignation Date;




   (iii) if the Corporation has more than one outstanding series of long-term indebtedness
for money borrowed that is Eligible Debt, then the Corporation shall identify the series
that has the latest stated final maturity date as of the date the Corporation is applying
the procedures in this Section 3(b) and such series shall become the Covered Debt on the
related Redesignation Date;




   (iv) the series of outstanding long-term indebtedness for money borrowed that is
determined to be Covered Debt pursuant to clause (ii) or (iii) above shall be the Covered
Debt for purposes of this Replacement Capital Covenant for the period commencing on



2









 







the related Redesignation Date and continuing to but not including the Redesignation
Date as of which a new series of outstanding long-term indebtedness is next determined to be
the Covered Debt pursuant to the procedures set forth in this Section 3(b); and




   (v) in connection with such identification of a new series of Covered Debt, the
Corporation shall, as provided for in Section 3(c), give a notice and file with the
Commission a Current Report on Form 8-K (or any successor form) under the Securities
Exchange Act including or incorporating by reference this Replacement Capital Covenant as an
exhibit within the time frame provided for in such section.



          (c) Notice. In order to give effect to the intent of the Corporation described in
Recital B, the Corporation covenants that (i) simultaneously with the execution of this Replacement
Capital Covenant or as soon as practicable after the date hereof, it shall (x) give notice to the
Holders of the Initial Covered Debt, in the manner provided in the indenture relating to the
Initial Covered Debt, of its entry into this Replacement Capital Covenant and the rights granted to
such Holders hereunder and (y) file a copy of this Replacement Capital Covenant with the Commission
as an exhibit to a Current Report on Form 8-K (or any successor form) under the Securities Exchange
Act, (ii) so long as the Corporation is a reporting company under the Securities Exchange Act, the
Corporation shall include in each Annual Report on Form 10-K (or any successor form) filed with the
Commission under the Securities Exchange Act a description of the covenant set forth in Section 2
and identify the Covered Debt as of the date such Form 10-K (or any successor form) is filed with
the Commission, (iii) if a series of the Corporation’s long-term indebtedness for money borrowed
(1) becomes Covered Debt or (2) ceases to be Covered Debt, the Corporation shall give notice of
such occurrence within 30 days to the holders of such long-term indebtedness for money borrowed in
the manner provided for in the indenture, fiscal agency agreement or other instrument under which
such long-term indebtedness for money borrowed was issued and report such change in a Current
Report on Form 8-K (or any successor form), which must include or incorporate by reference this
Replacement Capital Covenant, and in the Corporation’s next quarterly report on Form 10-Q (or any
successor form) or Annual Report on Form 10-K (or any successor form), as applicable, (iv) if, and
only if, the Corporation ceases to be a reporting company under the Securities Exchange Act, the
Corporation shall (A) post on its website (or any other similar electronic platform generally
available to the public) the information otherwise required to be included in Securities Exchange
Act filings pursuant to clauses (ii) and (iii) of this Section 3(c) and (B) cause a notice of the
execution of this Replacement Capital Covenant to be posted on the Bloomberg screen for the Covered
Debt and each similar third-party vendor’s screen the Corporation reasonably believes is
appropriate (each an “Investor Screen”) and cause a hyperlink to a definitive copy of this
Replacement Capital Covenant to be included on the Investor Screen for the Covered Debt, in each
case to the extent permitted by Bloomberg or such similar third-party vendor, as the case may be,
and (v) promptly upon request by any Holder of Covered Debt, the Corporation shall provide such
Holder with a copy of this Replacement Capital Covenant as executed.



          (d) The Corporation agrees that, if at any time the Covered Debt is held by a trust (for
example, where the Covered Debt is part of an issuance of trust preferred securities), a holder of
the securities issued by such trust may enforce (including by instituting legal proceedings) this
Replacement Capital Covenant directly against the Corporation as though such



3









 







holder owned Covered Debt directly, and such holder shall be deemed to be a holder of
“Covered Debt” for purposes of this Replacement Capital Covenant for so long as the
indebtedness held by such trust remains Covered Debt hereunder.



          SECTION 4. Termination, Amendment and Waiver. (a) The obligations of the Corporation
pursuant to this Replacement Capital Covenant shall remain in full force and effect until the
earliest date (the “Termination Date”) to occur of (i) October 15, 2048, or, if earlier,
the date on which the Debentures are otherwise repaid, redeemed, defeased, remarketed, satisfied
and discharged or purchased in full (in compliance with the terms of this Replacement Capital
Covenant), (ii) the date, if any, on which the Holders of at least a majority of the then
outstanding principal amount of the Covered Debt consent or agree in writing to the termination of
this Replacement Capital Covenant and the obligations of the Corporation hereunder, (iii) the date
on which the Corporation ceases to have any series of outstanding Eligible Senior Debt or Eligible
Subordinated Debt (in each case without giving effect to the rating requirement in clause (b) of
the definition of each such term) and (iv) the date on which the Debentures become accelerated due
to the occurrence of an event of default. From and after the Termination Date, the obligations of
the Corporation pursuant to this Replacement Capital Covenant shall be of no further force and
effect.



          (b) This Replacement Capital Covenant may be amended or supplemented from time to time by a
written instrument signed by the Corporation with the consent of the Holders of at least a majority
of the then outstanding principal amount of the Covered Debt, provided that this Replacement
Capital Covenant may be amended or supplemented from time to time by a written instrument signed
only by the Corporation (and without the consent of the Holders of the Covered Debt) if any of the
following apply (it being understood that any such amendment or supplement may fall into one or
more of the following): (i) the effect of such amendment or supplement is solely to impose
additional restrictions on, or to eliminate certain of, the types of securities qualifying as
Replacement Capital Securities and an officer of the Corporation has delivered to the trustee or
agent for such Covered Debt in the manner provided for in the indenture, fiscal agency agreement or
other instrument with respect to such Covered Debt a written certificate to that effect, (ii) such
amendment or supplement is not adverse to the rights of the Covered Debtholders hereunder and an
officer of the Corporation has delivered to the trustee or agent for such Covered Debt in the
manner provided for in the indenture, fiscal agency agreement or other instrument with respect to
such Covered Debt a written certificate stating that, in his or her determination, such amendment
or supplement is not adverse to the Covered Debtholders, or (iii) such amendment or supplement
eliminates Common Stock, rights to acquire Common Stock, Debt Exchangeable for Common Equity and/or
Mandatorily Convertible Preferred Stock as Replacement Capital Securities if, in the case of this
clause (iii), an accounting standard or interpretive guidance of an existing accounting standard
issued by an organization or regulator that has responsibility for establishing or interpreting
accounting standards used to prepare the Corporation’s financial statements becomes effective,
which, as a result, causes the Corporation to believe that there is more than an insubstantial risk
that the failure to eliminate Common Stock, rights to acquire Common Stock, Debt Exchangeable for
Common Equity and/or Mandatorily Convertible Preferred Stock as Replacement Capital Securities
would result in a reduction in the Corporation’s earnings per share as calculated for financial
reporting purposes. For the purpose of clause (ii) in the preceding sentence, an



4









 







amendment or supplement that adds new types of securities qualifying as Replacement Capital
Securities or modifies the requirements of securities qualifying as Replacement Capital Securities
will not be deemed materially adverse to the Covered Debtholders if, following such amendment or
supplement, the replacement capital covenant would constitute a Qualifying Replacement Capital
Covenant.



          (c) For purposes of Sections 4(a) and 4(b), the Holders whose consent or agreement is required
to terminate, amend or supplement the obligations of the Corporation under this Replacement Capital
Covenant shall be the Holders of the Covered Debt as of a record date established by the
Corporation that is not more than 30 days prior to the date on which the Corporation proposes that
such termination, amendment or supplement becomes effective.



          SECTION 5. Miscellaneous. (a) This Replacement Capital Covenant shall be governed by
and construed in accordance with the laws of the State of New York.



          (b) This Replacement Capital Covenant shall be binding upon the Corporation and its successors
and assigns and shall inure to the benefit of the Covered Debtholders as they exist from
time-to-time (it being understood and agreed by the Corporation that any Person who is a Covered
Debtholder shall retain its status as a Covered Debtholder for so long as the series of long-term
indebtedness for borrowed money owned by such Person is Covered Debt and, if such Person initiates
an action, claim or proceeding to enforce its rights under this Replacement Capital Covenant after
the Corporation has violated its covenants in Section 2 and before the series of long-term
indebtedness for money borrowed held by such Person is no longer Covered Debt, such Person’s rights
under this Replacement Capital Covenant shall not terminate by reason of such series of long-term
indebtedness for money borrowed no longer being Covered Debt). Other than the Covered Debtholders
as provided in the previous sentence, no other Person shall have any rights under this Replacement
Capital Covenant or be deemed a third party beneficiary of this Replacement Capital Covenant.



          (c) All demands, notices, requests and other communications to the Corporation under this
Replacement Capital Covenant shall be deemed to have been duly given and made if in writing and (i)
if served by personal delivery upon the Corporation, on the day so delivered (or, if such day is
not a Business Day, the next succeeding Business Day) or (ii) if delivered by registered post or
certified mail, return receipt requested, or sent to the Corporation by a national or international
courier service, on the date of receipt by the Corporation (or, if such date of receipt is not a
Business Day, the next succeeding Business Day), and in each case to the Corporation at the address
set forth below, or at such other address as the Corporation may thereafter notify to Covered
Debtholders or post on its website (or any other similar electronic platform generally available to
the public) as the address for notices under this Replacement Capital Covenant:


The Hartford Financial Services Group, Inc.

One Hartford Plaza

Hartford, Connecticut 06155

Attention: General Counsel




5









 





     IN WITNESS WHEREOF, the Corporation has caused this Replacement Capital Covenant to be
executed by its duly authorized officer, as of the day and year first above written.



	 	 	 	 	 
	 	THE HARTFORD FINANCIAL 

      SERVICES GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Replacement Capital Covenant




6









 








Annex I




DEFINITIONS





     “Alternative Payment Mechanism” means, with respect to any securities or combination
of securities (together in this definition, “securities”), provisions in the related
transaction documents requiring the Corporation to issue (or use Commercially Reasonable Efforts to
issue) one or more types of APM Qualifying Securities for the purpose of raising eligible proceeds
at least equal to the deferred and unpaid Distributions on such securities and apply the net
proceeds to pay such Distributions on such securities, commencing on the earlier of (x) the first
Distribution Date after commencement of a deferral period on which the Corporation pays current
Distributions (which the Corporation may pay from any source of funds) on such securities and (y)
the fifth anniversary of the commencement of such deferral period if on such date such deferral
period has not ended, and that:



          (a) define “eligible proceeds” to mean, for purposes of such Alternative Payment
Mechanism, the net proceeds (after underwriters’ or placement agents’ fees, commissions or
discounts and other expenses relating to the issuance or sale of the relevant securities, and
including the fair market value of property received by the Corporation or any of its Subsidiaries
as consideration for such securities) that the Corporation or any of its Subsidiaries shall have
received during the 180 days prior to the relevant Distribution Date from the sale of APM
Qualifying Securities, provided that in the case of APM Qualifying Securities that are Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock the amount of net proceeds included in
eligible proceeds shall not exceed the Preferred Cap;



          (b) permit the Corporation to pay current Distributions on any Distribution Date out of any
source of funds but (i) require the Corporation to pay deferred Distributions only out of eligible
proceeds and (ii) prohibit the Corporation from paying deferred Distributions out of any source of
funds other than eligible proceeds unless an event of default with respect to such securities has
occurred;



          (c) if deferral of Distributions continues for more than one year (or such shorter period as
provided for in the terms of such securities), require the Corporation and its Subsidiaries not to
repay, redeem or purchase any of its securities ranking junior to or equally with any APM
Qualifying Securities on the liquidation, dissolution or winding-up of the Corporation, the
proceeds of which were used to pay deferred interest during the relevant deferral period until at
least one year after all deferred Distributions have been paid (“Repurchase Restriction”), other
than the following (none of which shall be restricted or prohibited by a Repurchase Restriction):




   (i) purchases, redemptions or other acquisitions of Common Stock in connection with any
employment contract, benefit plan or other similar arrangement with or for the benefit of
employees, officers, directors or consultants;




   (ii) purchases of Common Stock pursuant to a contractually binding requirement to buy
Common Stock entered into prior to the beginning of the related deferral period, including
under a contractually binding stock repurchase plan;



7









 






   (iii) as a result of any exchange, redemption or conversion of any class or series of
the Corporation’s capital stock (or any capital stock of one of the Corporation’s
Subsidiaries) for any class or series of the Corporation’s capital stock or of any class or
series of the Corporation’s indebtedness for any class or series of the Corporation’s
capital stock;




   (iv) the purchase of or payment of cash in lieu of fractional interests in the
Corporation’s capital stock in accordance with the conversion or exchange provisions of such
capital stock or the security being converted or exchanged; or




   (v) the redemption or repurchase of rights in accordance with any stockholders’ rights
plan;



          (d) limit the obligation of the Corporation to issue (or to use Commercially Reasonable
Efforts to issue) APM Qualifying Securities that are Common Stock or Qualifying Warrants, prior to
the fifth anniversary of any deferral period, to the extent that the number of shares of Common
Stock issued or issuable upon the exercise of such Qualifying Warrants plus the number of shares of
Common Stock previously issued or issuable on the exercise of Qualifying Warrants previously issued
during the applicable deferral period would exceed 2% of the total number of issued and outstanding
shares of Common Stock set forth in the Corporation’s most recent publicly available financial
statements (the “Common Cap”);



          (e) limit the right of the Corporation to issue APM Qualifying Securities that are Qualifying
Preferred Stock or Mandatorily Convertible Preferred Stock, to the extent that the net proceeds of
any issuance of such Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock applied,
together with the net proceeds of all prior issuances of Qualifying Preferred Stock and any
still-outstanding Mandatorily Convertible Preferred Stock applied during the current and all prior
deferral periods, to pay deferred Distributions on the securities would exceed 25% of the
liquidation or principal amount of the securities that are the subject of the related Alternative
Payment Mechanism (the “Preferred Cap”);



          (f) notwithstanding the Common Cap and the Preferred Cap, permit the Corporation, at its
option, to impose a limitation on the Corporation’s obligation to issue APM Qualifying Securities
consisting of Common Stock and Qualifying Warrants to a maximum issuance cap to be set at the
Corporation’s discretion and otherwise substantially similar to the Share Cap, provided that such
limitation will be subject to the Corporation’s agreement to use Commercially Reasonable Efforts
(i) to increase such limitation when reached to enable the Corporation to simultaneously satisfy
its future fixed or contingent obligations under such securities and other securities and
derivative instruments that provide for settlement or payment in shares of Common Stock or (ii) if
the Corporation cannot increase such limitation as contemplated in the preceding clause, by
requesting its board of directors to adopt a resolution for a stockholder vote at the next annual
meeting of stockholders of the Corporation to increase the number of shares of the Corporation’s
authorized Common Stock for purposes of satisfying the Corporation’s obligations to pay deferred
Distributions;



8









 





          (g) in the case of securities other than Qualifying Preferred Stock, include a Bankruptcy
Claim Limitation Provision; and



          (h) permit the Corporation, at its option, to provide that if the Corporation is involved in a
merger, consolidation, amalgamation, binding share exchange or conveyance, business combination,
recapitalization, transfer or lease of assets substantially as an entirety to any other Person or a
similar transaction (a “Business Combination”) where immediately after the consummation of
the Business Combination more than 50% of the voting stock of the surviving or resulting entity or
the Person to whom all or substantially all of the Corporation’s property or assets are conveyed,
transferred or leased in such Business Combination is owned by the stockholders of the other party
to the Business Combination or Person to whom all or substantially all of the Corporation’s
property or assets are conveyed, transferred or leased, then clauses (a), (b) and (c) above will
not apply to any deferral period that is terminated on the next Distribution Date following the
date of consummation of the Business Combination;


provided (and it being understood) that:




     (1) the Corporation shall not be obligated to issue (or to use Commercially Reasonable Efforts
to issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is
continuing;



     (2) if, due to a Market Disruption Event or otherwise, the eligible proceeds are not
sufficient to pay all deferred Distributions on any Distribution Date, the Corporation will apply
the eligible proceeds to pay accrued and unpaid deferred Distributions on such Distribution Date in
chronological order, subject to the Common Cap, Preferred Cap and Share Cap, as applicable; and



     (3) if the Corporation has outstanding more than one class or series of securities under which
it is obligated to sell a type of APM Qualifying Securities and apply some part of the proceeds to
the payment of deferred Distributions, then on any date and for any period the amount of net
proceeds received by the Corporation from those sales and available for payment of deferred
Distributions on such securities (in accordance with clauses (d) and (e) of this definition) shall
be applied to such securities on a pro rata basis in proportion to the total amounts that are due
on such securities.



     “APM Qualifying Securities” means, with respect to an Alternative Payment Mechanism or
a Mandatory Trigger Provision, one or more of the following (as designated in the transaction
documents for the securities that include an Alternative Payment Mechanism or a Mandatory Trigger
Provision, as applicable):



     (a) Common Stock;



     (b) Qualifying Warrants;



     (c) Qualifying Preferred Stock; and/or



     (d) Mandatorily Convertible Preferred Stock,



9









 




provided (and it being understood) that (i) if the APM Qualifying Securities for any
Alternative Payment Mechanism or Mandatory Trigger Provision include both Common Stock and
Qualifying Warrants, such Alternative Payment Mechanism or Mandatory Trigger Provision may permit,
but need not require, the Corporation to issue Qualifying Warrants, (ii) such Alternative Payment
Mechanism or Mandatory Trigger Provision may permit, but need not require, the Corporation to issue
Mandatorily Convertible Preferred Stock and (iii) the Corporation may, without the consent of the
holders of the Qualifying Replacement Securities, amend the definition of APM Qualifying Securities
to eliminate Common Stock or Qualifying Warrants, but not both, and any other security from the
definition if an accounting standard or interpretive guidance of an existing standard issued by an
organization or regulator that has responsibility for establishing or interpreting accounting
standards used to prepare the Corporation’s financial statements filed with the Securities and
Exchange Commission becomes effective, which, as a result, causes the Corporation to believe there
is more than an insubstantial risk that the failure to do so would result in a reduction in the
Corporation’s earnings per share as calculated for financial reporting purposes.




     “Applicable Percentage” means:



          (a) in the case of any shares of the Corporation’s Common Stock or rights to acquire Common
Stock, (i) 133% with respect to any repayment, redemption, defeasance or purchase prior to October
15, 2018, (ii) 200% with respect to any repayment, redemption, defeasance or purchase on or after
October 15, 2018 and prior to October 15, 2038 and (iii) 400% with respect to any repayment,
redemption, defeasance or purchase on or after October 15, 2038.



          (b) in the case of any Mandatorily Convertible Preferred Stock, Debt Exchangeable for Common
Equity and any Qualifying Replacement Securities described in clause (a) of the definition of such
term, (i) 100% with respect to any repayment, redemption, defeasance or purchase prior to October
15, 2038 and (ii) 300% with respect to any repayment, redemption, defeasance or purchase on or
after October 15, 2038;



          (c) in the case of any Qualifying Replacement Securities described in clause (b) of the
definition of such term, (i) 100% with respect to any repayment, redemption, defeasance or purchase
prior to October 15, 2038 and (ii) 200% with respect to any repayment, redemption, defeasance or
purchase on or after October 15, 2038; and



          (d) in the case of any Qualifying Replacement Securities described in clause (c) of the
definition of such term, 100%.



     “Bankruptcy Claim Limitation Provision” means, with respect to any securities or
combination of securities that have an Alternative Payment Mechanism or a Mandatory Trigger
Provision (together in this definition, “securities”), provisions in the terms thereof or of the
related transaction agreements that, upon any liquidation, dissolution, winding-up or
reorganization or in connection with any insolvency, receivership or proceeding under any
bankruptcy law with respect to the issuer, limit the claim of the holders of such securities to
Distributions that accumulate during (a) any deferral period, in the case of securities that have
an




10












 




Alternative Payment Mechanism but no Mandatory Trigger Provision or (b) any period in which
the issuer fails to satisfy one or more financial tests set forth in the terms of such securities
or related transaction agreements, in the case of securities that have a Mandatory Trigger
Provision, to:





   (i) in the case of securities having an Alternative Payment Mechanism or Mandatory
Trigger Provision with respect to which the APM Qualifying Securities do not include
Qualifying Preferred Stock or Mandatorily Convertible Preferred Stock, 25% of the stated or
principal amount of such securities then outstanding; and




   (ii) in the case of any other securities, the amount of accumulated and deferred
Distributions (including compounded amounts) that relate to the earliest two years of the
portion of the deferral period for which Distributions have not been paid.



     “Business Combination” has the meaning specified in clause (h) of the definition of
Alternative Payment Mechanism.



     “Business Day” means each day other than (a) a Saturday or Sunday or (b) a day on
which banking institutions in The City of New York, New York are authorized or required by law or
executive order to remain closed.



     “Commercially Reasonable Efforts” means, for purposes of issuing APM Qualifying
Securities, commercially reasonable efforts to complete the offer and sale of APM Qualifying
Securities to third parties that are not Subsidiaries of the Corporation in public offerings or
private placements. The Corporation shall not be considered to have made Commercially Reasonable
Efforts to issue APM Qualifying Securities if it determines not to pursue or complete such issuance
solely due to pricing, coupon, dividend rate or dilution considerations.



     “Commission” means the United States Securities and Exchange Commission or any
successor agency.



     “Common Cap” has the meaning specified in clause (d) of the definition of Alternative
Payment Mechanism.



     “Common Stock” means the common stock of the Corporation (including treasury shares of
common stock), common stock issued pursuant to any dividend reinvestment plan or any of the
Corporation’s employee benefit plans, any security of the Corporation that ranks upon the
liquidation, dissolution or winding-up of the Corporation junior to the Qualifying Preferred Stock
and equally with the Corporation’s common stock and that tracks the performance of, or relates to
the results of, a business, unit or division of the Corporation, and any shares of common stock or
equivalent equity interests of the surviving or resulting entity issued in exchange therefor in
connection with a Business Combination.



     “Corporation” has the meaning specified in the introduction to this Replacement
Capital Covenant.



11









 





     “Covered Debt” means (a) at the date of this Replacement Capital Covenant and
continuing to but not including the first Redesignation Date, the Initial Covered Debt and (b)
thereafter, commencing with each Redesignation Date and continuing to but not including the next
succeeding Redesignation Date, the Eligible Debt identified pursuant to Section 3(b) as the Covered
Debt for such period.



     “Covered Debtholder” means each Person (whether as a Holder or a beneficial owner
holding through a participant in a clearing agency) to the extent that Person holds Covered Debt,
provided that, except as provided in Section 5(b), a Person who has sold all of its right,
title and interest in Covered Debt shall cease to be a Covered Debtholder at the time of such sale
if, at such time, the Corporation has not breached or repudiated, or threatened to breach or
repudiate, its obligations hereunder.



     “Debentures” has the meaning specified in Recital A.



     “Debt Exchangeable for Common Equity” means a security or combination of securities
(together in this definition, “securities”) that:



          (a) gives the holder a beneficial interest in (i) debt securities of the Corporation that are
not redeemable prior to the settlement date of the stock purchase contract referred to in subclause
(ii) hereof and (ii) a fractional interest in a stock purchase contract obligating the holder to
purchase Common Stock of the Corporation that will be settled in three years or less, with the
number of shares of Common Stock purchasable pursuant to such stock purchase contract to be within
a range established at the time of issuance of such debt securities and subject to customary
anti-dilution adjustments;




          (b) provides that the holders directly or indirectly grant to the Corporation a security
interest in such debt securities and their proceeds (including any substitute collateral permitted
under the transaction documents) to secure the holders’ direct or indirect obligation to purchase
Common Stock of the Corporation pursuant to the stock purchase contract referred to in subclause
(a)(ii) hereof;




          (c) includes a remarketing feature pursuant to which such debt securities of the Corporation
are remarketed to new investors not later than the settlement date of the stock purchase contract
referred to in subclause (a)(ii) hereof; and




          (d) provides for the proceeds raised in the remarketing to be used to purchase shares of
Common Stock of the Corporation under the stock purchase contract referred to in subclause (a)(ii)
hereof and, if there has not been a successful remarketing by the settlement date of such stock
purchase contract, provides that such stock purchase contract will be settled by the Corporation
exercising its remedies as a secured party with respect to the debt securities or other collateral
directly or indirectly pledged by holders of the Debt Exchangeable for Common Equity.




     “Distribution Date” means, as to any securities or combination of securities, the
date(s) on which Distributions on such securities are scheduled to be made.



12









 





     “Distribution Period” means, as to any securities or combination of securities, each
period from and including a Distribution Date for such securities to but not including the next
succeeding Distribution Date for such securities.



     “Distributions” means, as to a security or combination of securities, dividends,
interest or other income distributions to the holders or beneficial owners thereof that are not
Subsidiaries of the Corporation.



     “Eligible Debt” means, at any time, Eligible Subordinated Debt or, if no Eligible
Subordinated Debt is then outstanding, Eligible Senior Debt.



     “Eligible Senior Debt” means, at any time in respect of any issuer, each series of
outstanding unsecured long-term indebtedness for money borrowed of such issuer that ranks senior to
the Debentures and (a) upon a bankruptcy, liquidation, dissolution or winding-up of the issuer,
ranks most senior among the issuer’s then outstanding classes of unsecured indebtedness for money
borrowed, (b) is then assigned a rating by at least one NRSRO (provided that this clause
(b) shall apply on a Redesignation Date only if on such date the issuer has outstanding senior
long-term indebtedness for money borrowed that satisfies the requirements of clauses (a), (c) and
(d) that is then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount
of not less than $100,000,000, and (d) was issued through or with the assistance of a commercial or
investment banking firm or firms acting as underwriters, initial purchasers or placement or
distribution agents. For purposes of this definition as applied to securities with a CUSIP number,
each issuance of long-term indebtedness for money borrowed that has (or, if such indebtedness is
held by a trust or other intermediate entity established directly or indirectly by the issuer, the
securities of such intermediate entity that have) a separate CUSIP number shall be deemed to be a
series of the issuer’s long-term indebtedness for money borrowed that is separate from each other
series of such indebtedness.



     “Eligible Subordinated Debt” means, at any time in respect of any issuer, each series
of the issuer’s then-outstanding unsecured long-term indebtedness for money borrowed that that
ranks senior to the Debentures and (a) upon a bankruptcy, liquidation, dissolution or winding-up of
the issuer, ranks subordinate to the issuer’s then outstanding series of unsecured indebtedness for
money borrowed that ranks most senior upon the issuer’s liquidation, dissolution or winding-up, (b)
is then assigned a rating by at least one NRSRO (provided that this clause (b) shall apply on a
Redesignation Date only if on such date the issuer has outstanding subordinated long-term
indebtedness for money borrowed that satisfies the requirements in clauses (a), (c) and (d) that is
then assigned a rating by at least one NRSRO), (c) has an outstanding principal amount of not less
than $100,000,000, and (d) was issued through or with the assistance of a commercial or investment
banking firm or firms acting as underwriters, initial purchasers or placement or distribution
agents.



     For purposes of this definition as applied to securities with a CUSIP number, each issuance of
long-term indebtedness for money borrowed that has (or, if such indebtedness is held by a trust or
other intermediate entity established directly or indirectly by the issuer, the securities of such
intermediate entity that have) a separate CUSIP number shall be deemed to be



13









 







a series of the issuer’s long-term indebtedness for money borrowed that is separate from each
other series of such indebtedness.



     “Holder” means, as to the Covered Debt then in effect, each holder of such Covered
Debt as reflected on the securities register maintained by or on behalf of the Corporation with
respect to such Covered Debt and each beneficial owner holding through a participant in a clearing
agency.



     “Initial Covered Debt” means the Corporation’s 6.1% senior notes due 2041 (CUSIP No.
416515AP9).



     “Intent-Based Replacement Disclosure” means, as to any security or combination of
securities, that the issuer has publicly stated its intention, either in the prospectus or other
offering document under which such securities were initially offered for sale or in filings with
the Commission made by the issuer under the Securities Exchange Act prior to or contemporaneously
with the issuance of such securities, that the issuer and its subsidiaries, to the extent such
securities provide the issuer with NRSRO equity credit, will redeem, repurchase or defease such
securities only with the proceeds of replacement capital securities that have terms and provisions
at the time of redemption, repurchase or defeasance that are as or more equity-like than the
securities then being redeemed, repurchased or defeased, and which proceeds were raised within 180
days prior to the applicable redemption, purchase or defeasance date.



     “Mandatorily Convertible Preferred Stock” means preferred stock with (a) no prepayment
obligation on the part of the issuer thereof, whether at the election of the holders or otherwise,
and (b) a requirement that the preferred stock converts into common stock of the Corporation within
three years from the date of its issuance at a conversion ratio within a range established at the
time of issuance of the preferred stock, subject to customary anti-dilution adjustments.



     “Mandatory Trigger Provision” means, as to any security or combination of securities,
provisions in the terms thereof or of the related transaction agreements that:



          (a) if the issuer of such securities fails to satisfy one or more financial tests set forth in
the terms of such securities or related transaction agreements and for so long as such failure
continues, prohibits the issuer from making payments of Distributions on such securities from any
source other than from the issuance and sale of APM Qualifying Securities and require the issuer,
or in the case of Qualifying Preferred Stock, at the option of the issuer, permit the issuer, of
such securities (in this definition, the “issuer”) to make payment of Distributions on such
securities, within a two year period beginning on the date of such failure, only pursuant to the
issuance and sale of APM Qualifying Securities, in an amount such that the net proceeds of such
sale are at least equal to the amount of deferred and unpaid Distributions (including without
limitation all deferred and accumulated amounts) on such securities or, in the case of Qualifying
Preferred Stock, current Distributions, and in either case require the application of the net
proceeds of such sale to pay such deferred and unpaid Distributions, or in the case of Qualifying
Preferred Stock, permit the application of the net proceeds of such sale to pay current
Distributions, on those securities, provided that (i) if the Mandatory Trigger Provision
does not require such issuance and sale within one year of such failure, the amount of Common Stock
or



14









 






Qualifying Warrants the net proceeds of which the issuer must apply to pay such Distributions
pursuant to such provision may not exceed the Common Cap, and (ii) the amount of Qualifying
Preferred Stock and then still-outstanding Mandatorily Convertible Preferred Stock the net proceeds
of which the issuer may apply to pay such Distributions pursuant to such provision may not exceed
the Preferred Cap;




          (b) if the provisions described in clause (a) immediately above do not require such issuance
and sale within one year of such failure, include a Repurchase Restriction;




          (c) other than in the case of Qualifying Preferred Stock, prohibit the issuer of such
securities from redeeming or purchasing any of its securities ranking junior to or equally with any
APM Qualifying Securities upon the liquidation, dissolution or winding-up of the Corporation, the
proceeds of which were used to pay deferred Distributions during the relevant deferral period prior
to the date six months after the issuer applies the net proceeds of the sales described in clause
(a) immediately above to pay such deferred Distributions in full; and




          (d) other than in the case of Qualifying Preferred Stock, include a Bankruptcy Claim
Limitation Provision;



provided (and it being understood) that:




     (1) the issuer will not be obligated to issue (or to use Commercially Reasonable Efforts to
issue) APM Qualifying Securities for so long as a Market Disruption Event has occurred and is
continuing;



     (2) if, due to a Market Disruption Event or otherwise, the issuer is able to raise and apply
some, but not all, of the eligible proceeds necessary to pay all deferred Distributions on any
Distribution Date, the issuer will apply any available eligible proceeds to pay accrued and unpaid
Distributions on the applicable Distribution Date in chronological order subject to the Common Cap,
Preferred Cap and Share Cap, as applicable; and



     (3) if the issuer has outstanding more than one class or series of securities under which it
is obligated to sell a type of APM Qualifying Securities and applies some part of the proceeds to
the payment of deferred Distributions, then on any date and for any period the amount of net
proceeds received by the issuer from those sales and available for payment of deferred
Distributions on such securities (in accordance with the Alternative Payment Mechanism) shall be
applied to such securities on a pro rata basis in proportion to the total amounts that are due on
such securities.



     No remedy other than Permitted Remedies shall arise by the terms of such securities or related
transaction agreements in favor of the holders of such securities as a result of the issuer’s
failure to pay Distributions because of the Mandatory Trigger Provision until Distributions have
been deferred for one or more Distribution Periods that total together at least ten years.



     “Market Disruption Events” means the occurrence or existence of any of the following
events or sets of circumstances:



15









 





          (a) trading in securities generally, or the securities of the Corporation specifically, on the
New York Stock Exchange or any other national securities exchange or over-the-counter market on
which the Corporation’s Common Stock is listed or traded, shall have been suspended or materially
disrupted or minimum prices shall have been established on any such exchange or market by the
Commission, the relevant exchange or any other regulatory body or governmental authority having
jurisdiction, and the establishment of such minimum prices materially disrupts or otherwise has a
material adverse effect on trading in, or the issuance and sale of, the Corporation’s Common Stock;




          (b) the Corporation would be required to obtain the consent or approval of its stockholders or
a regulatory body (including, without limitation, any securities exchange) or governmental
authority to issue or sell APM Qualifying Securities pursuant to the Alternative Payment Mechanism
and such consent or approval has not yet been obtained notwithstanding that the Corporation has
used commercially reasonable efforts to obtain the required consent or approval;




          (c) an event occurs and is continuing as a result of which the offering document for the offer
and sale of APM Qualifying Securities would, in the reasonable judgment of the Corporation, contain
an untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements in that offering document, in the light of the circumstances under which they were
made, not misleading and either (i) the disclosure of that event at such time, in the reasonable
judgment of the Corporation, is not otherwise required by law and would have a material adverse
effect on the business of the Corporation or (ii) the disclosure relates to a previously
undisclosed proposed or pending material business transaction, and the Corporation has a bona fide
reason for keeping such transaction confidential or disclosure of such transaction would impede the
ability of the Corporation to consummate such transaction; provided that no single suspension
period resulting from an event described in this clause (c) shall exceed 90 consecutive days and
multiple suspension periods resulting from one or more market disruption events described in this
clause (c) shall not exceed an aggregate of 180 days in any 360-day period;




          (d) the Corporation reasonably believes that the offering document for the offer and sale of
APM Qualifying Securities would not be in compliance with a rule or regulation of the Commission
(for reasons other than those described in clause (c) above), and the Corporation determines that
it is unable to comply with such rule or regulation or such compliance is impractical, provided
that no single suspension period resulting from an event described in this clause (d) shall exceed
90 consecutive days and multiple suspension periods resulting from one or more market disruption
events described in this clause (d) shall not exceed an aggregate of 180 days in any 360-day
period;




          (e) there shall have occurred a material adverse change in general domestic or international
economic, political or financial conditions, including without limitation as a result of terrorist
activities, or the effect of international conditions on the financial markets in the United States
shall be, such that the issuance of or market trading in the APM Qualifying Securities has been
materially disrupted or has ceased;





16











 





          (f) there shall have been an escalation in hostilities involving the United States, there
shall have been a declaration of a national emergency or war by the United States or there shall
have occurred any other national or international calamity or crisis such that the issuance of or
market trading in the APM Qualifying Securities has been materially disrupted or has ceased;




          (g) a material disruption shall have occurred in commercial banking or securities settlement
or clearing services in the United States such that market trading in the APM Qualifying Securities
has been materially disrupted or has ceased; or




          (h) a banking moratorium shall have been declared by federal or state authorities of the
United States such that market trading in the APM Qualifying Securities has been materially
disrupted or has ceased.




     “Market Value” means, on any date, the closing sale price per share of Common Stock
(or if no closing sale price is reported, the average of the bid and ask prices or, if more than
one in either case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the Common Stock is not
then listed on the New York Stock Exchange, as reported by the principal U.S. securities exchange
on which the Common Stock is listed; if the Common Stock is not listed on any U.S. securities
exchange on the relevant date, the market price will be the average of the mid-point of the bid and
ask prices for the Common Stock on the relevant date submitted by at least three nationally
recognized independent investment banking firms selected by the Corporation for this purpose.



     “Measurement Date” means, with respect to any repayment, redemption, defeasance or
purchase of the Debentures (a) on or prior to the Scheduled Maturity Date, the date that is 180
days prior to delivery of notice of such repayment, defeasance or redemption or the date of such
purchase and (b) after the Scheduled Maturity Date, the date that is 90 days prior to the delivery
of notice of such repayment, redemption or defeasance or the date of such purchase, except that, if
during the 90 day (or any shorter) period preceding such date, proceeds were received by the
Corporation or any of its Subsidiaries from the sale of Replacement Capital Securities to Persons
other than the Corporation and its Subsidiaries but no repayment, redemption, defeasance or
purchase of the Debentures was made in connection therewith, the measurement date shall be the date
upon which such preceding 90-day (or shorter) period began.



     “Measurement Period” with respect to any notice date or purchase date means the period
(i) beginning on the Measurement Date with respect to such notice date or purchase date and (ii)
ending on such notice date or purchase date, as applicable. Measurement Periods cannot run
concurrently.



     “No Payment Provision” means a provision or provisions in the transaction documents
for securities (referred to in this definition as “such securities”) that:



          (a) include an Alternative Payment Mechanism; and




17









 





          (b) permit the issuer of such securities, in its sole discretion, to defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution
Periods of up to five years or, if a Market Disruption Event has occurred and is continuing,
ten years, without any remedy other than Permitted Remedies.




     “Non-Cumulative” means, with respect to any securities, that the issuer may elect not
to make any number of periodic Distributions without any remedy arising under the terms of the
securities or related agreements in favor of the holders, other than one or more Permitted
Remedies.



     “NRSRO” means a nationally recognized statistical rating organization within the
meaning of Section 3(a)(62) of the Securities Exchange Act.



     “Optional Deferral Provision” means, as to any securities, provisions in the terms
thereof or of the related transaction agreements to the effect of either (a) or (b) below:



          (a) (i) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods up to
five years or, if a Market Disruption Event has occurred and is continuing, ten years, without any
remedy other than Permitted Remedies and (ii) such securities are subject to an Alternative Payment
Mechanism (provided that such Alternative Payment Mechanism need not apply during the first five
years of any deferral period and need not include a Common Cap, Preferred Cap, Share Cap,
Bankruptcy Claim Limitation or Repurchase Restrictions); or




          (b) the issuer of such securities may, in its sole discretion, defer in whole or in part
payment of Distributions on such securities for one or more consecutive Distribution Periods up to
ten years, without any remedy other than Permitted Remedies.




     “Permitted Remedies” means, with respect to any securities, one or more of the
following remedies:



          (a) rights in favor of the holders of such securities permitting such holders to elect one or
more directors of the issuer (including any such rights required by the listing requirements of any
stock or securities exchange on which such securities may be listed or traded); and




          (b) complete or partial prohibitions on the issuer paying Distributions on or purchasing
common stock or other securities that rank equally with or junior as to Distributions to such
securities for so long as Distributions on such securities, including deferred Distributions,
remain unpaid.




     “Person” means any individual, corporation, partnership, joint venture, trust, limited
liability company, corporation or other entity, unincorporated organization or government or any
agency or political subdivision thereof.



     “Preferred Cap” has the meaning specified in the definition of Alternative Payment
Mechanism.



18









 





     “Qualifying Preferred Stock” means Non-Cumulative perpetual preferred stock issued by
the Corporation that (a) ranks equally with or junior to all other outstanding preferred stock of
the issuer, other than a preferred stock that is issued or issuable pursuant to a
stockholders’ rights plan or similar plan or arrangement, and (b) contains no remedies other than
Permitted Remedies and either (i) is subject to Intent-Based Replacement Disclosure and has a
provision that prohibits the issuer from making any Distributions thereon upon the Corporation’s
failure to satisfy one or more financial tests set forth therein or (ii) is subject to a Qualifying
Replacement Capital Covenant; provided, however, that if such Qualifying Preferred
Stock includes Intent-Based Replacement Disclosure and is structured at the time of issuance with a
distribution rate step-up of more than 25 basis points prior to the 25th anniversary of such
issuance, then such Qualifying Preferred Stock shall, in lieu of Intent-Based Replacement
Disclosure, be subject to a replacement capital covenant that will remain in effect until at least
the Scheduled Maturity Date and that is substantially similar to this Replacement Capital Covenant.



     “Qualifying Replacement Capital Covenant” means (a) a replacement capital covenant
that is substantially similar to this Replacement Capital Covenant applicable to the Debentures or
(b) a replacement capital covenant, as identified by the Corporation’s Board of Directors, or a
duly authorized committee thereof, acting in good faith and in its reasonable discretion and
reasonably construing the definitions and other terms of this Replacement Capital Covenant, (i)
entered into by a company that at the time it enters into such replacement capital covenant is a
reporting company under the Securities Exchange Act and (ii) that restricts the related issuer and
its subsidiaries from repaying, redeeming or purchasing identified securities except out of the
proceeds from the sale of specified Replacement Capital Securities that have terms and provisions
at the time of repayment, redemption or purchase that are as or more equity-like than the
securities then being repaid, redeemed or purchased, raised within 180 days prior to the applicable
repayment, redemption or purchase date; provided that the term of such Qualifying Replacement
Capital Covenant shall be determined at the time of issuance of the related Replacement Capital
Securities taking into account the other characteristics of such securities.



     “Qualifying Replacement Securities” means securities or a combination of securities
(other than Common Stock, rights to acquire Common Stock, Mandatorily Convertible Preferred Stock
or Debt Exchangeable for Common Equity) that, in the determination of the Corporation’s Board of
Directors (or a duly authorized committee thereof) reasonably construing the definitions and other
terms of this Replacement Capital Covenant, meet one of the following criteria:



          (a) in connection with any repayment, redemption, defeasance or purchase of Debentures prior
to October 15, 2018:





   (i) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon the liquidation, dissolution or winding-up of
the Corporation, (2) have no maturity or a maturity of at least 60 years and (3)(A) are
Non-Cumulative and are subject to a Qualifying Replacement Capital Covenant or have a No
Payment Provision and are subject to a Qualifying Replacement Capital Covenant or (B) have a
Mandatory Trigger Provision and have either an Optional Deferral Provision or a No Payment
Provision and are subject to Intent-Based Replacement Disclosure; or



19









 






   (ii) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon the liquidation, dissolution or winding-up
of the Corporation, (2) have no maturity or a maturity of at least 40 years, (3) are
subject to a Qualifying Replacement Capital Covenant and (4) have a Mandatory Trigger
Provision and an Optional Deferral Provision; or




   (iii) shares of preferred stock issued by the Corporation or any of its Subsidiaries
that are (1) Non-Cumulative, (2) have no prepayment obligation on the part of the issuer
thereof, whether at the election of the Holders or otherwise, (3) have no maturity or a
maturity of at least 60 years and either (A) are subject to a Qualifying Replacement Capital
Covenant or (B) have a Mandatory Trigger Provision and are subject to Intent-Based
Replacement Disclosure; or



          (b) in connection with any repayment, redemption, defeasance or purchase of Debentures on or
after October 15, 2018 and prior to October 15, 2038:





   (i) any securities described under clause (a) of this definition that would be
Qualifying Replacement Securities prior to October 15, 2018;




   (ii) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon the liquidation, dissolution or winding-up of
the Corporation, (2) have no maturity or a maturity of at least 60 years, (3) are subject to
a Qualifying Replacement Capital Covenant and (4) have an Optional Deferral Provision;




   (iii) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon a liquidation, dissolution or winding-up of
the Corporation, (2) are Non-Cumulative or have a No Payment Provision, (3) have no maturity
or a maturity of at least 60 years and (4) are subject to Intent-Based Replacement
Disclosure;




   (iv) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon the liquidation, dissolution or winding-up of
the Corporation, (2) have no maturity or a maturity of at least 40 years and (3) (A) are
Non-Cumulative, or have a No Payment Provision, and subject to a Qualifying Replacement
Capital Covenant or (B) have a Mandatory Trigger Provision and an Optional Deferral
Provision and are subject to Intent-Based Replacement Disclosure;




   (v) securities issued by the Corporation or any of its Subsidiaries that (1) upon the
liquidation, dissolution or winding-up of the Corporation, rank junior to all of the senior
and subordinated debt of the Corporation other than the Debentures and securities that rank
equally with the Debentures upon the liquidation, dissolution or winding up of the
Corporation, (2) have a Mandatory Trigger Provision and an Optional Deferral Provision and
are subject to Intent-Based Replacement Disclosure and (3) have no maturity or a maturity of
at least 60 years;



20









 






   (vi) cumulative preferred stock issued by the Corporation or any of its Subsidiaries
that (1) has no prepayment obligation on the part of the issuer thereof, whether at the
election of the holders or otherwise, (2) has no maturity or a maturity of at least 60 years
and (3) is subject to a Qualifying Replacement Capital Covenant; or




   (vii) other securities issued by the Corporation or any of its Subsidiaries that (1)
rank upon the liquidation, dissolution or winding-up of the Corporation equally with or
junior to the Debentures and (2) have no maturity or a maturity of at least 30 years, are
subject to a Qualifying Replacement Capital Covenant and have a Mandatory Trigger Provision
and an Optional Deferral Provision; or



          (c) in connection with any repayment, redemption, defeasance or purchase of Debentures at any
time after October 15, 2038:





   (i) any securities described under clause (b) of this definition that would be
Qualifying Replacement Securities prior to October 15, 2038;




   (ii) securities issued by the Corporation or any of its Subsidiaries that (1) rank
equally with or junior to the Debentures upon the liquidation, dissolution or winding-up of
the Corporation, (2) either (A) have no maturity or a maturity of at least 60 years and are
subject to Intent-Based Replacement Disclosure or (B) have no maturity or a maturity of at
least 40 years and are subject to a Qualifying Replacement Capital Covenant and (C) have an
Optional Deferral Provision;




   (iii) securities issued by the Corporation or any of its Subsidiaries that (1) rank
junior to all of the senior and subordinated debt of the Corporation other than the
Debentures and any other securities that rank equally with the Debentures upon the
liquidation, dissolution or winding-up of the Corporation, (2) have a Mandatory Trigger
Provision, an Optional Deferral Provision and are subject to Intent-Based Replacement
Disclosure and (3) have no maturity or a maturity of at least 40 years; or




   (iv) preferred stock issued by the Corporation or any of its Subsidiaries that either
(1) has no maturity or a maturity of at least 60 years and is subject to Intent-Based
Replacement Disclosure or (2) has a maturity of at least 40 years and is subject to a
Qualifying Replacement Capital Covenant,


provided, however, that if any of the securities described in the foregoing clauses
(a), (b) and (c) is structured at the time of issuance with a distribution rate step-up (whether
interest or dividend) of more than 25 basis points prior to the 25th anniversary of such issuance,
then such security shall be subject to a Qualifying Replacement Capital Covenant that will remain
in effect until at least the Scheduled Maturity Date.




     “Qualifying Warrants” means any net share settled warrants to purchase the Common
Stock of the Corporation that (a) have an exercise price greater than the Market Value of the
Common Stock of the Corporation on the date of sale, (b) the Corporation is not entitled to redeem
for cash and (c) the holders of which are not entitled to require the Corporation to repurchase for
cash in any circumstances.



21









 





     “Redesignation Date” means, as to the Covered Debt in effect at any time, the earliest
of (a) the date that is two years prior to the final maturity date of such Covered Debt, (b) if the
Corporation elects to redeem, or the Corporation or a Subsidiary of the Corporation elects to
purchase, such Covered Debt either in whole or in part with the consequence that after giving
effect to such redemption or purchase the outstanding principal amount of such Covered Debt is
less than $100,000,000, the applicable redemption or purchase date and (c) if such Covered
Debt is not Eligible Subordinated Debt of the Corporation, the date on which the Corporation issues
long-term indebtedness for money borrowed that is Eligible Subordinated Debt.



     “Replacement Capital Covenant” has the meaning specified in the introduction to this
instrument.



     “Replacement Capital Securities” means



          (a) Common Stock and rights to acquire Common Stock;




          (b) Mandatorily Convertible Preferred Stock;




          (c) Debt Exchangeable for Common Equity; and




          (d) Qualifying Replacement Securities.




     “Repurchase Restrictions” has the meaning specified in clause (c) of the definition of
“Alternative Payment Mechanism.”



     “Scheduled Maturity Date” means October 15, 2038.



     “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including any successor statute.



     “Share Cap” means, with respect to any securities or combination of securities, a
provision limiting the total number of shares of Common Stock, Qualifying Warrants and Mandatorily
Convertible Preferred Stock that may be issued by the Corporation pursuant to the Alternative
Payment Mechanism applicable to such securities such that the number of shares of Common Stock
issued or issuable on the exercise or conversion of all Qualifying Warrants and Mandatorily
Convertible Preferred Shares issued by the Corporation pursuant to such Alternative Payment
Mechanism shall not exceed a specified number of shares of Common Stock, provided that the
product of such Share Cap and the Market Value of the Common Shares as of the date of issuance of
such Qualifying Replacement Securities shall not represent a lower proportion of the aggregate
principal or liquidation amount, as applicable, of such securities than the product of the Share
Cap applicable to the Debentures and the Current Stock Market Price of the Common Stock as of the
date of issuance of such Debentures represents of the aggregate principal amount of such Debentures
at the time of issuance.



     “Subordinated Indenture” means the Junior Subordinated Debt Indenture, dated as of
June 6, 2008, between the Corporation and The Bank of New York Mellon Trust Company, N.A. (formerly
known as The Bank of New York Trust Company, N.A.), as trustee, as amended and



22









 







supplemented by the Supplemental Indenture and as further amended and supplemented from time to time in accordance with
its terms.



     “Supplemental Indenture” means the Second Supplemental Indenture, dated as of October
17, 2008, between the Corporation and The Bank of New York Mellon Trust Company,
N.A. (formerly known as The Bank of New York Trust Company, N.A.), as trustee, as amended and
supplemented from time to time in accordance with its terms.



     “Subsidiary” means, at any time, any Person the shares of stock or other ownership
interests of which ordinary have voting power to elect a majority of the board of directors or
other managers of such Person are at the time owned or the management and policies of which are
otherwise at the time controlled, directly or indirectly through one or more intermediaries
(including other Subsidiaries) or both, by another Person.



     “Termination Date” has the meaning specified in Section 4(a).




23












 






Annex F to Investment Agreement




ANNEX F




DEFINITIONS AND REPRESENTATIONS AND WARRANTIES




PART I. Definitions.




     “Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of
the Company, as it may be amended from time to time.



     “Certificates of Designation” means the certificates of designation for the Series B Preferred
Shares, the Series C Preferred Shares and the Series D Preferred Shares, in the form attached to
the Investment Agreement as Annex A-1, A-2 and A-3, respectively.



     “Commission” or “SEC” means the United States Securities and Exchange Commission.



     “Company Approvals” means, the approval of the stockholders of the Company under the New York
Stock Exchange rules; SEC registration pursuant to the Registration Rights Agreement; supplemental
listing approval on the New York Stock Exchange; listing approval on any European Economic Area
regulated exchange designated by Company; Department of Insurance approval or filings by Company
and, if applicable, Company subsidiaries; filings required by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; and current reports of the Company on Form 8-K regarding the Transactions
and its results of operations for the third quarter of 2008.



     “Indenture” means the Junior Subordinated Indenture, dated as of June 6, 2008, between the
Company and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York
Trust Company, N.A.), as Trustee, as amended and supplemented by the Second Supplemental Indenture
with respect to the Debentures.



     “Investor Material Adverse Effect” means a material adverse effect on the ability of the
Investor to consummate the Transactions.



     “Material Adverse Effect” means any circumstance, event, change, development or effect that,
individually or in the aggregate, (1) is material and adverse to the business, assets, results of
operations or financial condition of the Company and its consolidated subsidiaries taken as a whole
or (2) would materially impair the ability of the Company to perform its obligations under the
Agreement or the other Transaction Documents or to consummate the Transactions.



     “Person” means any individual, corporation, limited liability company, partnership, limited
liability partnership, trust, other unincorporated association, business, or other legal entity.



1









 





     “Previously Disclosed” means information set forth or incorporated in the SEC Reports or
otherwise delivered in writing (including as transmitted by email) to the Investor prior to the
execution of the Transaction Agreement.



     “Registration Rights Agreement” means the Registration Rights Agreement, to be dated as of the
Closing Date, between the Company and the Investor.



     “SEC Reports” means the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2007 and its other reports and forms filed with, or furnished to, the Commission under
Sections 13(a), 14(a) or 15(d) of the Exchange Act on or after December 1, 2007 and that are filed
with, or furnished to, the Commission prior to the execution and delivery of this Agreement.



     “Series B Certificate of Designation” means the certificate of designations for the Series B
Preferred Shares, as filed with the Secretary of State of the State of Delaware in the form
attached as Annex A-1.



     “Series C Certificate of Designation” means the certificate of designations for the Series C
Preferred Shares, as filed with the Secretary of State of the State of Delaware in the form
attached as Annex A-2.



     “Statutory Statements” means financial statements of any Significant Subsidiary that is
engaged in the insurance business for the fiscal year ended December 31, 2007, including the notes
thereto, in each case as filed with the insurance regulatory authority of its jurisdiction of
domicile.



     “Stockholder Proposal” means a proposal for approval by the stockholders of the Company of (a)
the conversion of any Series C Preferred Shares held by the Investor (or a Permitted Transferee of
Investor) as a result of its exercise (or partial exercise) of the C Warrant and (b) the exercise
of the C Warrant with respect to a portion of the Warrant C Common Shares for purposes of Section
312.03 of the NYSE Listed Company Manual.



     “Subsidiary” means, with respect to any person, any corporation, partnership, joint venture,
limited liability company or other entity (x) of which such person or a subsidiary of such person
is a general partner or (y) of which a majority of the voting securities or other voting interests,
or a majority of the securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or persons performing similar functions with
respect to such entity, is directly or indirectly owned by such person and/or one or more
subsidiaries thereof.



     “Transaction Documents” means collectively the Investment Agreement, the Warrants, the
Registration Rights Agreement, the Indenture, the Certificate of Designations, and any other
documents entered into in connection with the transactions contemplated thereby, in each case, as
amended, modified or supplemented from time to time in accordance with their respective terms.



2









 





     “Transactions” means the transactions contemplated by this Investment Agreement and the other
Transaction Documents, including the purchase and sale of the Purchased Securities.



     “Warrant Common Shares” means the Warrant B Common Shares and the Warrant C Common Shares.



     “Warrant Preferred Shares” means the Series B Preferred Shares and the Series C Preferred
Shares.



PART II. Representations and Warranties of the Company.




     (a) Organization, Authority and Significant Subsidiaries. (1) The Company is a
corporation duly organized and validly existing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so qualified and where failure
to be so qualified would have a Material Adverse Effect, and has the corporate power and authority
to own its properties and assets and to carry on its business as it is now being conducted.




     (2) Each Subsidiary of the Company that is a “significant subsidiary” within the
meaning of Rule 1-02(w) of Regulation S-X under the Securities Act (each, a
“Significant Subsidiary”) is duly organized and validly existing under the laws of
its jurisdiction of organization, is duly qualified to do business and is in good standing
in all jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified and where failure to be so qualified would have a
Material Adverse Effect, and has the corporate power and authority and governmental
authorizations to own its properties and assets and to carry on its business as it is being
conducted.



     (b) Capitalization. The Company’s authorized share capital consisted of 800,000,000
shares, consisting of 50,000,000 shares of Preferred Stock and 750,000,000 shares of Common Stock.
All of the issued and outstanding shares of Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. No shares of Preferred Stock are issued and outstanding. No
bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the
stockholders of the Company may vote (“Voting Debt”) are issued and outstanding. As of the
date of this Agreement, except as Previously Disclosed, the Company does not have and is not bound
by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of, or securities or rights convertible into or
exchangeable for, a material number of shares of Common Stock or of any other equity securities of
the Company or Voting Debt or any securities representing the right to purchase or otherwise
receive a material number of shares of capital stock of the Company (including any rights plan or
agreement).



     (c) Company’s Significant Subsidiaries. The Company owns, directly or indirectly, all
of the issued and outstanding shares of capital stock of or all other



3









 







equity interests in each of the Significant Subsidiaries, free and clear of any liens,
charges, adverse rights or claims, pledges, covenants, title defects, security interests and other
encumbrances of any kind (“Liens”), and all of such shares or equity interests are duly
authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with
no personal liability attaching to the ownership thereof, except as would not have a Material
Adverse Effect. No Significant Subsidiary has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock, any other equity security or any Voting Debt of such
subsidiary or any securities representing the right to purchase or otherwise receive any shares of
capital stock, any other equity security or Voting Debt of such subsidiary, except as would not
have a Material Adverse Effect.



     (d) Debentures. At the Closing, the Debentures will have been duly and validly
authorized, and, when the Debentures are issued and delivered against payment therefor as
contemplated hereby, such Debentures will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture. The Indenture will have been duly authorized and duly
qualified under the Trust Indenture Act.



     (e) B Warrant and Warrant B Common Shares. At the Closing, the B Warrant will have been duly
and validly authorized and, when executed and delivered against payment therefor as contemplated
hereby, will constitute a valid and legally binding obligation of the Company in accordance with
its terms. At the Closing, the Warrant B Common Shares will also have been duly and validly
authorized and reserved for issuance upon exercise of the B Warrant (or upon conversion of the
Series B Preferred Shares in accordance with their terms) and when so issued against payment of the
exercise price (or upon conversion of the Series B Preferred Shares), the Warrant B Common Shares
will be duly and validly issued and fully paid and non-assessable.



     (f) C Warrant and Warrant C Common Shares. At the Closing, the C Warrant will have been duly
and validly authorized and, when executed and delivered against payment therefor as contemplated
hereby, will constitute a valid and legally binding obligation of the Company in accordance with
its terms. The Warrant C Common Shares will, upon the approval by the Company’s stockholders of
the Stockholder Proposal, be duly and validly authorized and reserved for issuance upon exercise of
the C Warrant (or upon conversion of the Series C Preferred Shares in accordance with their terms)
and when so issued against payment of the exercise price (or upon conversion of the Series C
Preferred Shares), the Warrant C Common Shares will be duly and validly issued and fully paid and
non-assessable.



     (g) Purchased Common Shares. At the Closing, the Purchased Common Shares will have been duly
and validly authorized and reserved for issuance upon conversion of the Series D Preferred Shares
in accordance with their terms, and when so issued against payment of the exercise price (or upon
conversion of the




4











 




Series D Preferred Shares), the Purchased Common Shares will be duly and validly issued and fully
paid and non-assessable.




     (h) Series D Preferred Shares. At the Closing, the Series D Preferred Shares will have been
duly and validly authorized, and the Series D Preferred Shares, when issued and delivered against
payment therefor as contemplated hereby, will be duly and validly issued and fully paid and
non-assessable. 



     (i) Warrant Preferred Shares. At the Closing, the Warrant Preferred Shares will have
been duly and validly authorized and reserved for issuance upon exercise of the Warrant, and when
so issued against payment of the exercise price, will be validly issued, fully paid and
non-assessable.



     (j) Authorization, Enforceability. (1) The Company has the corporate power and
authority to execute and deliver this Agreement and the other Transaction Documents and to carry
out its obligations hereunder and thereunder (which includes the issuance and sale of the Purchased
Securities). The execution, delivery and performance by the Company of this Agreement is, and the
consummation of the Transactions and the execution, delivery and performance by the Company of the
other Transaction Documents to which it becomes a party, have been, duly authorized by all
necessary corporate action on the part of the Company, and no further corporate approval or
authorization is required on the part of the Company subject to, in the case of the authorization
and issuance of Common Stock upon the conversion of the Series C Preferred Shares or the exercise
by the Investor or one of its Affiliates of the C Warrant for Warrant C Common Shares, to receipt
of the approval by the Company’s stockholders of the Stockholder Proposal. If stockholder approval
is required as aforesaid, such approval by a majority of the votes cast on such Stockholder
Proposal is the only such vote of the stockholders of the Company required to approve the exercise
of the C Warrant for the Warrant C Common Shares or the conversion of the Series C Preferred Shares
for purposes of Section 312.03 of the NYSE Listed Company Manual, provided that the total vote cast
on the Stockholder Proposal represents over 50% in interest of all securities entitled to vote on
the Stockholder Proposal. The Agreement has been duly executed and delivered by the Company and
(assuming due authorization, execution and delivery by the Investor) is, and each other Transaction
Document, upon execution and delivery by the Company (assuming due authorization, execution and
delivery by the other parties thereto), will be, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and general equitable principles,
regardless of whether such enforceability is considered in a proceeding at law or in equity
(“Bankruptcy Exceptions”).




     (2) The execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents and the consummation of the Transactions and compliance by the
Company with any of the provisions hereof and thereof, will not (i) violate, conflict with,
or
result in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default)



5









 







under, or result in the
termination of, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of, any Lien upon any of the
properties or assets of the Company or any Significant Subsidiary under any of the terms,
conditions or provisions of (A) subject in the case of the authorization and issuance of
the Warrant C Common Shares upon the conversion of the Series C Preferred Shares or the
exercise by the Investor or an Affiliate of the Investor of the C Warrant for Warrant C
Common Shares, to receipt of the approval by the Company’s stockholders of the Stockholder
Proposal, its Certificate of Incorporation or bylaws (or similar governing documents) or
the certificate of incorporation, charter, bylaws or other governing instrument of any
Significant Subsidiary or (B) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any Significant
Subsidiary is a party or by which it or any Significant Subsidiary may be bound, or to
which the Company or any Significant Subsidiary or any of the properties or assets of the
Company or any Significant Subsidiary may be subject, or (ii) subject to obtaining the
Company Approvals (to the extent relevant), violate any statute, rule or regulation or any
judgment, ruling, order, writ, injunction or decree applicable to the Company or any
Significant Subsidiary or any of their respective properties or assets except, in the case
of clauses (i)(B) and (ii), for those occurrences that, individually or in the aggregate,
have not had and would not be reasonably likely to have a Material Adverse Effect.



     (k) Solvency. In the case of the Company and its Significant Subsidiaries (other than
Significant Subsidiaries licensed as insurers or reinsurers), (i) the present fair saleable value
of the assets of such Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured, (ii) such Person is able
to realize upon its assets and pay its debts and other liabilities, contingent obligations and
other commitments as they become due in the normal course of business, (iii) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay as such debts and liabilities mature, and (iv) such Person is not engaged in
business or a transaction, and is not about to engage in business or a transaction, for which such
Person’s property would constitute unreasonably small capital. In the case of any Significant
Subsidiaries that are licensed as insurers or reinsurers, such Significant Subsidiaries (A) are in
compliance with all applicable insurance regulatory minimum capital or surplus requirements; (B)
have not become subject to any “Company Action Level” pursuant to applicable risk-based capital
guidelines, and have not received notice of any pending action that would result in their becoming
so subject; (C) have not taken any steps towards commencing, and have not received notice any
actions taken by relevant regulatory authorities to commence, any rehabilitation, delinquency or
insolvency proceedings under applicable insurance laws in any state or foreign jurisdiction; (D)
their assets exceed their respective total reserves, all as computed in accordance with applicable
statutory accounting principles applied consistently with past practice; and (E) they have
sufficient financial resources to pay their policy liabilities and other obligations as the
foregoing become due in the ordinary course of business.



6









 





     (l) Government Consents. No notice to, filing with, exemption or review by, or
authorization, consent or approval of, any Governmental Authority is required to be made or
obtained by the Company in connection with the consummation by the Company of the Transactions
except for the Company Approvals and any such notices, filings, exemptions, reviews,
authorizations, consent and approvals the failure of which to make or obtain would not be
reasonably likely to have an Investor Material Adverse Effect.



     (m) Absence of Litigation and Other Proceedings. As of the date of the Transaction
Agreement and except as set forth in SEC Reports, there was no action, suit or proceeding pending,
nor to the knowledge of the executive officers of the Company, was there any action, suit or
proceeding threatened, which would reasonably be expected to result in a Material Adverse Effect.



     (n) Company Financial Statements. (1) The audited consolidated annual financial
statements and the unaudited consolidated interim financial statements included in the SEC Reports
(the “Company Financial Statements”) present fairly the financial position of the Company
and its consolidated subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and, except as otherwise disclosed in the SEC Reports, such financial
statements have been prepared in conformity with generally accepted accounting principles in the
United States applied on a consistent basis; any schedules included in the SEC Reports present
fairly the information required to be stated therein.




     (2) The Company and its consolidated subsidiaries maintain a system of internal
accounting controls including policies and procedures that (A) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (B) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles in the United States
(“GAAP”), and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (C) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company’s assets that could have a material effect on the
Company’s financial statements. Except as described in the SEC Reports, since the end of
the Company’s most recent audited fiscal year, there has been (i) no material weakness
identified by management, or by the Company’s auditors and communicated to management, in
the Company’s internal control over financial reporting (whether or not remediated) and
(ii) no change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.




     (3) The Company and its consolidated subsidiaries employ disclosure controls and other
procedures that are designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Commission’s
rules



7









 







and forms, and is accumulated and communicated to the Company’s management, including
its principal executive and principal financial officer or officers, as appropriate, to
allow timely decisions regarding disclosure.




     (4) With respect to any Significant Subsidiaries that are licensed as insurers or
reinsurers, the loss reserves and other actuarial amounts of the Significant Subsidiaries
that the Company contained in its Statutory Statements: (i) were determined in accordance
with generally accepted actuarial standards consistently applied (except as otherwise noted
in such financial statements), (ii) were fairly stated in accordance with sound actuarial
principles, (iii) satisfied all applicable laws and have been computed on the basis of
methodologies consistent with those used in computing the corresponding reserves in the
prior fiscal years, except as otherwise noted in the financial statements and notes thereto
included in such Statutory Statements and immaterial changes not required to be noted in
such financial statements and notes, and (iv) include provisions for all actuarial reserves
and related items which ought to be established in accordance with applicable Law and
regulations and in accordance with prudent insurance practices generally followed in the
insurance industry, except as would not, individually or in the aggregate, have a Material
Adverse Effect.




     (5) Neither the Company nor any of the Significant Subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent or otherwise) which are not
properly reflected or reserved against in the Company Financial Statements to the extent
required to be so reflected or reserved against in accordance with GAAP, except for (i)
liabilities that have arisen in the ordinary and usual course of business or in connection
with the Transactions, (ii) contractual liabilities under (other than liabilities arising
from any breach or violation of) agreements Previously Disclosed, and (iii) liabilities
that have not had and would not reasonably be expected to have a Material Adverse Effect.



     (o) Investment Company. The Company is not, and after giving effect to the issue and
sale of the Securities will not be, required to register as an “investment company” as such term is
defined under the Investment Company Act of 1940.



     (p) Absence of Certain Changes. Since December 31, 2007 until the date hereof, except
as Previously Disclosed, (1) the Company and the Significant Subsidiaries have conducted their
respective businesses in all material respects in the ordinary course, consistent with prior
practice, (2) except for ordinary dividends on the Common Stock, the Company has not made or
declared any distribution in cash or in kind to its stockholders or issued or repurchased any
shares of its capital stock or other equity interests (except pursuant to open market share
repurchases in an amount not exceeding $200 million and except for issuances under employee benefit
plans) and (3) at the time the Transaction Agreement was executed no event or events had occurred
that had or would reasonably be expected to have had a Material Adverse Effect at the time of the
Transaction Agreement.



8









 





     (q) Reports. Since January 1, 2006, the Company and each Significant
Subsidiary has timely filed all material reports, registrations, documents, filings, statements and
submissions, together with any amendments thereto, that it was required to file with any
Governmental Authority (the foregoing, including the SEC Reports, collectively, the “Company
Reports”). As of their respective dates of filing, the SEC Reports complied in all material
respects with all statutes and applicable rules and regulations of the Commission (except as set
forth in a subsequent SEC Report prior to the date of the Transaction Agreement). To the knowledge
of the executive officers of the Company, as of the date of the Transaction Agreement, there were
no outstanding comments from the Commission with respect to any SEC Report. In the case of each
such Company Report filed with or furnished to the Commission, such Company Report did not, as of
its date or if amended prior to the date of the Transaction Agreement, as of the date of such
amendment, contain an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading and complied as to form in all material
respects with the applicable requirements of the Securities Act and the Exchange Act. No executive
officer of the Company or any Significant Subsidiary has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.



     (r) Disclosure. As of the date of the Transaction Agreement, the Company was not
aware of any reason why its final results for the third quarter of 2008 would be materially
different than Previously Disclosed on such date.



     (s) Compliance with Laws. The Company and each Significant Subsidiary have all
permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings,
applications and registrations with, Governmental Authorities that are required in order to permit
them to own or lease their properties and assets and to carry on their business as presently
conducted, the failure of which to have would result in a Material Adverse Effect. As of the date
of the Transaction Agreement, the Company and each Significant Subsidiary had complied with and was
not in default or violation in any respect of, and none of them was, to the knowledge of the
executive officers of the Company, under investigation with respect to or, to the knowledge of the
executive officers of the Company, had been threatened to be charged with or given notice of any
violation of, any applicable domestic (federal, state or local) or foreign law, statute, ordinance,
license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment
of any Governmental Authority, other than such noncompliance, defaults or violations that would not
reasonably be expected to result in a Material Adverse Effect. Except for statutory or regulatory
restrictions of general application, as of the date of the Transaction Agreement, no Governmental
Authority had placed any material restriction on the business or properties of the Company or any
Significant Subsidiary.



     (t) Offering of Securities. Neither the Company nor any person acting on its behalf
has taken any action which would subject the offering, issuance or sale of any of the Securities to
the Investor pursuant to this Agreement to the registration requirements of the Securities Act.



9









 





     (u) Brokers. The Company has not engaged any broker or finder other than Goldman
Sachs in connection with this Agreement, the Transaction Agreement, the other Transaction Documents
or the Transactions as to give rise to any claim for any brokerage or finder’s commission, fee or
similar compensation.



     (v) Debentures. Upon issuance at the Closing, the Debentures will satisfy the
eligibility requirements of Rule 144A(d)(3) under the Securities Act.



PART III. Representations and Warranties of the Investor.




     (a) Organization and Authority. The Investor is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, is duly qualified to do
business and is in good standing in all jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified and where failure to be so qualified
would be reasonably expected to result in an Investor Material Adverse Effect. The Investor has the
corporate or other power and authority and governmental authorizations to own its properties and
assets and to carry on its business as it is now being conducted.



     (b) Authorization, Enforceability. (1) The Investor has the corporate or other power
and authority to enter into this Agreement and the other Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance by the Investor of
this Agreement and each other Transaction Document to which it is a party and the consummation of
the Transactions have been duly authorized by all necessary action on the part of the Investor, and
no further approval or authorization is required on the part of the Investor or any other party for
such authorization to be effective. The Agreement has been duly and validly executed and delivered
by the Investor and (assuming due authorization, execution and delivery by the Company) is, and
each other Transaction Document to which the Investor is a party upon the execution and delivery of
such Transaction Document by the Investor (assuming due authorization, execution and delivery by
the other parties thereto) will be, a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms (except as enforcement may be limited by the
Bankruptcy Exceptions).




     (2) Neither the execution, delivery and performance by the Investor of this Agreement,
any other Transaction Document nor the consummation of the Transactions, nor compliance by
the Investor with any of the provisions hereof or thereof, will (A) violate, conflict with,
or result in a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right of
termination or acceleration of, or result in the creation of any Lien upon any of the
properties or assets of the Investor under any of the terms, conditions or provisions of
(i) its organizational documents or (ii) any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the Investor is
a party or by which it may be bound, or to which the Investor or any of the properties or
assets of the Investor may be subject, or (B) subject to compliance with the statutes and



10









 







regulations referred to in the next paragraph, violate any law, statute, ordinance,
rule or regulation, permit, concession, grant, franchise or any judgment, ruling, order,
writ, injunction or decree applicable to the Investor or any of its properties or assets
except in the case of clauses (A)(ii) and (B) for such violations, conflicts and breaches
as would not reasonably be expected to have an Investor Material Adverse Effect.




     (3) No notice to, filing with, exemption or review by, or authorization, consent or
approval of, any Governmental Authority is required to be made or obtained by the Investor
in connection with the consummation by the Investor of the Transactions other than any
notices, filings, exemptions, reviews, authorizations, consent and approvals the failure of
which to make or obtain would not be reasonably likely to have an Investor Material Adverse
Effect.



     (c) Brokers. The Investor has not engaged any broker or finder in connection with
this Agreement, the Transaction Agreement, the other Transaction Documents or the Transactions as
to give rise to any claim for any brokerage or finder’s commission, fee or similar compensation.




11












 





Annex G Debenture Purchasers




	 	 	 	 	 
	 	 	Principal Amount	 
	 	 	of Debentures	 
	 	 	to Be Purchased	 
	Name of Debenture Purchaser	 	(USD)	 
	Allianz Lebensversicherungs-AG
	 	 	500,000,000	 
	Allianz Versicherungs-AG
	 	 	210,000,000	 
	Allianz Private Krankenversicherungs-AG
	 	 	50,000,000	 
	Allianz Elementar Lebensversicherungs-AG
	 	 	25,000,000	 
	Allianz Compania de Seguros y Reaseguros S.A.
	 	 	25,000,000	 
	Assurance Generales de France Vie S.A.
	 	 	286,000,000	 
	Allianz Belgium N.V.
	 	 	27,000,000	 
	Allianz Nederland Schadeverzekering NV
	 	 	13,500,000	 
	Allianz Nederland Levensverzekering NV
	 	 	13,500,000	 
	Allianz SpA
	 	 	210,000,000	 
	Allianz Suisse Versicherungs-Gesellschaft
	 	 	70,000,000	 
	Allianz Life Insurance Company of North America
	 	 	130,000,000	 
	Fireman’s Fund Insurance Company
	 	 	106,000,000	 
	American Automobile Insurance Company
	 	 	8,500,000	 
	Associated Indemnity Corporation
	 	 	4,000,000	 
	Chicago Insurance Company
	 	 	5,200,000	 
	Interstate Fire & Casualty
	 	 	10,700,000	 
	Interstate Indemnity Company
	 	 	3,600,000	 
	National Surety Corp.
	 	 	14,000,000	 
	The American Insurance Co
	 	 	38,000,000	 
	Total
	 	 	1,750,000,000