Document:

EX-10.3:

 

Exhibit 10.3

The Hartford Financial Services Group, Inc.

Annual Executive Bonus Program

The Hartford Financial Services Group, Inc. (the “Company”) has an annual executive bonus program
(the “Bonus Program”) that is intended to provide certain Company executives and key managers with
incentive compensation based upon the achievement of pre-established performance goals and
individual performance. The Bonus Program is intended to provide an incentive for profitable growth
and to motivate participating executives and key managers toward higher achievement and operating
results, to tie their goals and interests to those of the Company and its shareholders and to
enable the Company to attract and retain highly qualified executives and key managers.

United States tax laws generally do not allow publicly held companies to obtain tax deductions for
compensation of more than $1 million paid in any year to any of their five most highly compensated
executive officers unless such payments are “performance-based” as defined in the tax laws. Where
the performance criteria provide the Company a choice among different measures, one of the
requirements for compensation to be performance-based under those laws is that the Company must
obtain shareholder approval every five years of the material terms of the performance goals for
such compensation. In accordance with Internal Revenue Service rules under Section 162(m) of the
Internal Revenue Code (“Section 162(m)”), the material terms of the Bonus Program constitute the
framework within which the Compensation and Personnel Committee of the Board of Directors (the
“Committee”) would establish the actual performance goals.

The Committee generally takes reasonable measures to avoid the loss of a Company tax deduction due
to Section 162(m). However, amendments can be made to the Bonus Program that can increase its cost
to the Company and can alter the allocation of benefits among participating executive officers. In
addition, the Committee may in certain circumstances approve bonus or other payments outside of the
Bonus Program that do not meet the material terms of the Bonus Program described above and that may
not be deductible.

The Company’s shareholders approved the following material terms of the Bonus Program on May 18,
2005, at the Company’s Annual Meeting of Shareholders:

1. Class of Eligible Executives. The class of eligible executive shall include the five most
highly compensated executive officers of the Company and its subsidiaries for any given year.

2. Performance Criteria. Awards of bonuses pursuant to the Bonus Program must be stated for the
five most highly compensated executive officers in terms of an objective formula or standard as
required by Section 162(m), which may be based on any one or more of the following factors
(collectively, the “Performance Factors”): (i) earnings per share, (ii) return on equity, (iii)
cash flow, (iv) return on total capital, (v) return on assets, (vi) economic value added, (vii)
increase in surplus, (viii) reductions in operating expenses,

 

 

(ix) increases in operating margins, (x) earnings before income taxes and depreciation, (xi) total
shareholder return, (xii) return on invested capital, (xiii) cost reductions and savings, (xiv)
earnings before interest, taxes, depreciation and amortization, (xv) pre-tax operating income,
(xvi) net income, (xvii) after-tax operating income or (xviii) productivity improvements. The
objective formula or standard shall be:

	 	•  	determined solely by reference to any one or more of the Performance Factors of the
Company (or the Performance Factors of any subsidiary or affiliate of the Company, or any
division or unit thereof), or
	 
	 	•  	based on any one or more of the Performance Factors of the Company (or the Performance
Factors of any subsidiary or affiliate of the Company, or any division or unit thereof),
as compared with the Performance Factors of other companies or entities, or
	 
	 	•  	based on an executive’s attainment of personal objectives with respect to any one or
more of the Performance Factors of the Company (or the Performance Factors of any
subsidiary or affiliate of the Company, or any division or unit thereof), or with respect
to any one or more of the following: (i) growth and profitability, (ii) customer
satisfaction, (iii) leadership effectiveness, (iv) business development, (vi) negotiating
transactions and sales or (vii) developing long-term business goals.

3. Maximum Payable to any Executive for Any One Year. The maximum bonus that may be paid to any
of the five most highly compensated executive officers for any given year is the lesser of (a) 300%
of such executive’s annual bonus target in effect at the beginning of such year, as approved by the
Committee, or (b) $5,000,000.EX-10.4

 

Exhibit 10.4

The Hartford Financial Services Group, Inc.

2005-2006 Compensation for Non-Employee Directors

Standard Fees. Members of the Board of Directors (the “Board”) of The Hartford Financial Services
Group, Inc. (the “Company”) who are employees of the Company or its subsidiaries are not
compensated for service on the Board or any of its Committees. Compensation for non-employee
directors for the period beginning on May 18, 2005, the date of the 2005 Annual Meeting, and ending
on the date of the 2006 Annual Meeting, consists of the following:

	 	•  	an annual retainer fee of $100,000, payable solely in restricted shares of the
Company’s Common Stock (its “Common Stock”), granted pursuant to The Hartford Restricted
Stock Plan for Non-Employee Directors (the “Restricted Stock Plan”), as described below;
	 
	 	•  	an annual retainer of $45,000, payable in cash;
	 
	 	•  	a $1,500 fee for each meeting of the Board attended, payable in cash; and
	 
	 	•  	a $1,200 fee for each Committee meeting attended (whether or not a director is a member
of that particular Committee), payable in cash.

In addition, each non-employee Committee chairperson receives an annual retainer of $10,000.
Directors are reimbursed for travel and related expenses they incur in connection with their
serving on the Board and its Committees, and are provided with life insurance and accidental death
and dismemberment coverage, as described below.

Restricted Stock Plan for Non-Employee Directors. Under the Restricted Stock Plan, non-employee
directors receive grants of shares of restricted Common Stock as partial payment for their annual
retainer fee. Grants of restricted shares of Common Stock under the Restricted Stock Plan are made
on the date the Company makes its annual employee long-term incentive awards. The number of shares
of each award of restricted stock is determined by dividing $100,000 by the fair market value (as
defined in the Restricted Stock Plan) of the Common Stock as reported on the New York Stock
Exchange as of the date of the award.

Non-employee directors receiving shares of restricted Common Stock may not sell, assign or
otherwise dispose of the restricted shares until the restriction period ends. The restriction
period lapses on the third anniversary of the grant date. To the extent any of the following events
occur prior to the third anniversary of the grant date, and the Compensation and Personnel
Committee, in its sole discretion, consents to waive any remaining restrictions, the restriction
period shall end with respect to all of the restricted shares currently held by a non-employee
director: (i) the director’s retirement at age 72, (ii) a “change of control” (as defined in the
Restricted Stock Plan) of the Company, (iii) the director’s death, (iv) the director’s disability
(as defined in the Restricted Stock Plan), or (v) the director’s

 

 

resignation under certain circumstances. If a non-employee director resigns under circumstances
other than the above-described before the restriction period ends, he or she will forfeit his or
her restricted shares.

Deferred Compensation. Each non-employee director may elect to participate in The Hartford
Deferred Compensation Plan (the “Deferred Compensation Plan”). Participating non-employee directors
may defer receipt of all or a portion of any cash compensation otherwise payable by the Company for
service on the Board, including annual cash retainers for directors and Committee chairpersons and
meeting fees. Deferred amounts may be allocated among a selection of hypothetical investment funds
offered under the Deferred Compensation Plan, and are credited with hypothetical earnings generated
by such funds. Deferred amounts and their earnings become distributable on the date selected by the
non-employee director as permitted under the Deferred Compensation Plan.

In addition, non-employee directors may participate in The Hartford 2005 Incentive Stock Plan and
defer all or a portion of any cash compensation through an investment in Company Common Stock.

Insurance. The Company provides each non-employee director with $100,000 of group life insurance
coverage and $750,000 of accidental death and dismemberment and permanent total disability coverage
while he or she serves on the Board. Non-employee directors may purchase additional accidental
death and dismemberment and permanent total disability coverage under the Company’s voluntary
accidental death and dismemberment plan for non-employee directors and their dependents.

Stock Ownership Guidelines for Non-Employee Directors. The Board has established stock ownership
guidelines, effective May 18, 2005, the date of the Annual Meeting, for each non-employee director
to obtain, within three years, an ownership position in the Company’s Common Stock equal to five
times his or her annual cash retainer.<PAGE>

                                                                    EXHIBIT 10.1

                             SUBORDINATION AGREEMENT

TO:   LASALLE BUSINESS CREDIT, A DIVISION OF ABN AMRO BANK N.V.,
      CANADA BRANCH
      Maritime Life Tower, TD Centre,
      79 Wellington Street West, 15th Floor
      Toronto, Ontario, M5K 1G8

Dear Sirs/Mesdames:

RE:   STEELBANK TUBULAR INC. AND TARPON INDUSTRIES, INC.

This is to confirm our agreement concerning Steelbank Tubular Inc. ("Steelbank")
and Tarpon Industries, Inc. ("Tarpon"):

1.    For the purposes hereof, the following terms shall have the following
      meanings:

      (a)   "Companies" means, collectively, Steelbank Tubular Inc. and Tarpon
            Industries, Inc.;

      (b)   "Equitable Trust" means The Equitable Trust Company;

      (c)   "Other Equitable Trust Debt" means any and all indebtedness, direct
            or indirect, present and future, contingent or otherwise, of the
            Companies to Equitable Trust, other than the Existing Equitable
            Trust Debt;

      (d)   "Equitable Trust Security" means the security described on the
            attached Schedule "B" to secure the Existing Equitable Trust Debt
            and any other security held from time to time as security for the
            Other Equitable Trust Debt (excluding the Mortgage and the GAR);

      (e)   "Event of Default" has the same meaning ascribed to such term in the
            Loan Agreement;

      (f)   "Existing Equitable Trust Debt" means:

            (i)   the obligations of Steelbank Tubular Inc., pursuant to the
                  commitment letter dated as of May 12, 2005 between the
                  Companies and First National Financial Corporation, as may be
                  amended, and

            (ii)  the contingent obligations of Tarpon pursuant to the guarantee
                  and postponement of claim dated as of the date hereof executed
                  by Tarpon in favour of Equitable Trust (the "Guarantee"),

            and attached hereto at Schedule "A";

<PAGE>

                                       -2-

      (g)   "Equitable GSA" means the general security agreement executed by
            Steelbank in favour of Equitable Trust dated the date hereof;

      (h)   "Equitable GAR" means the general assignment of rents and leases
            executed by Steelbank in favour of Equitable Trust dated the date
            hereof

      (i)   "LaSalle" means LaSalle Business Credit, a division of ABN AMRO Bank
            N.V., Canada Branch;

      (j)   "LaSalle Assets" means all personal and moveable property, assets,
            rights and undertakings of the Companies of whatsoever nature and
            kind, now owned or hereafter acquired by or on behalf of the
            Companies and wherever located and does not include, for greater
            certainty, as at the date hereof, any of the Companies' real
            property including the Property;

      (k)   "LaSalle Debt" means any and all debts, liabilities and
            indebtedness, direct or indirect, present and future, of the
            Companies to LaSalle, whether arising from dealings between LaSalle
            and the Companies or from dealings with any third party by which
            LaSalle may be or become in any manner whatsoever a creditor of the
            Companies, including, without limitation, any and all indebtedness
            existing under or in connection with the Loan Agreement;

      (1)   "LaSalle Security" means the security from time to time held by or
            for the benefit of LaSalle on the LaSalle Assets to secure the
            LaSalle Debt;

      (m)   "Loan Agreement" means the loan agreement by and among LaSalle and
            Steelbank Tubular Inc. dated as of February 17, 2005, as the same
            may be amended, supplemented, revised, restated or replaced from
            time to time.

      (n)   "Mortgage" means the mortgage and charge given by Steelbank in
            favour of Equitable Trust registered the date hereof over the real
            (and not personal or moveable) property located at 2495 Haines Road,
            Toronto, Ontario (the "Property") being instrument
            no.____________________________;

2.    Insofar as may be necessary, Equitable Trust hereby acknowledges to the
      existence of the LaSalle Debt, the LaSalle Security and the LaSalle Charge
      and declares that the existence thereof will not constitute a default
      under the terms of the Existing Equitable Trust Debt, the Equitable Trust
      Security or the Mortgage. LaSalle hereby consents to the creation and
      existence of the Existing Equitable Trust Debt, the Mortgage, the
      Equitable Trust Security and the Guarantee and declares that same does not
      constitute an Event of Default under the terms of the LaSalle Security or
      the Loan Agreement.

3.    Unless and until the LaSalle Debt has been fully and finally repaid,
      Equitable Trust hereby agrees that all payments of or in respect of the
      Other Equitable Trust Debt, whether on account of principal or interest or
      otherwise shall be postponed and

<PAGE>

                                       -3-

      subordinated to full and final payment of the LaSalle Debt, and Equitable
      Trust shall not request or accept any payment or distribution of any kind
      on or in respect of the Other Equitable Trust Debt, including but not
      limited to principal, interest or other payments in respect of the Other
      Equitable Trust Debt.

4.    Equitable Trust hereby agrees that it will not be entitled to accelerate
      the maturity of the principal of the Other Equitable Trust Debt or enforce
      any rights or remedies under or in respect of the Other Equitable Trust
      Debt and the Equitable Trust Security or, for greater certainty, against
      any of the LaSalle Assets until such time as the LaSalle Debt has been
      fully and finally repaid; provided that Equitable Trust shall be entitled,
      at all times, enforce the Mortgage, the Equitable GAR and the Guarantee on
      a default thereunder; provided, however, that, Equitable Trust shall not
      pursue, commence or participate in any action or proceeding against Tarpon
      under or pursuant to any bankruptcy or insolvency laws of any
      jurisdiction.

5.    Without prejudice to the prohibitions in this Subordination Agreement:

      (a)   if Equitable Trust receives any payment in violation of this
            Subordination Agreement, Equitable Trust shall receive such payment
            in trust for LaSalle and shall remit it to LaSalle forthwith upon
            receipt. Equitable Trust shall be liable to LaSalle for the LaSalle
            Debt to the extent of an amount equivalent to any such sums received
            and not remitted to LaSalle; and

      (b)   if Equitable Trust takes possession or causes possession to be taken
            of the LaSalle Assets or otherwise enforces the Equitable Trust
            Security in violation of this Subordination Agreement, Equitable
            Trust shall yield or shall cause any party holding the security for
            its benefit to yield, on demand, possession thereof and any proceeds
            resulting from the realization thereupon to LaSalle or any party
            acting for LaSalle.

6.    In the event that any of the LaSalle Security shall become enforceable,
      LaSalle or any party acting for LaSalle or for its benefit will be
      entitled to take possession of the LaSalle Assets to the exclusion of
      Equitable Trust and parties acting for it or for its benefit.

7.    LaSalle will be entitled to receive proceeds resulting from the
      realization upon and collection of the LaSalle Assets in priority to
      Equitable Trust.

8.    In the event that any of the LaSalle Assets subject to the LaSalle
      Security are sold by LaSalle or for the benefit of LaSalle, such assets
      shall be sold free of any rights held by Equitable Trust under the
      Equitable Trust Security and the Mortgage. Provided that there is LaSalle
      Debt owing and outstanding, upon LaSalle's request, Equitable Trust shall
      so confirm to any prospective buyer of such assets and shall grant a
      discharge of its rights under the Equitable Trust Security and the
      Mortgage on such assets at the time of the sale.

<PAGE>

                                       -4-

9.    The priorities herein referred to shall apply notwithstanding any contrary
      priority or registration or filing of any personal property claim and
      without the necessity of any further documentation on the part of either
      LaSalle or Equitable Trust. However, it is understood that Equitable Trust
      shall at the expense of the Companies enter into any documentation which
      LaSalle may reasonably require in order to confirm or formalize the
      priorities herein referred to.

10.   The Companies may not set-off any amount the Companies are required to pay
      to Equitable Trust in respect of the Other Equitable Trust Debt against
      any amount payable by Equitable Trust to the Companies pursuant to or in
      connection with the Equitable Trust Security.

11.   This agreement will continue in force as long as the Companies are
      indebted or liable (either directly, indirectly or contingently) to
      LaSalle and Equitable Trust.

12.   This agreement will be governed by and construed in accordance with the
      laws of the Province of Ontario and the federal laws of Canada applicable
      therein.

13.   This agreement will enure to the benefit of and be binding upon the
      respective successors and assigns of the parties hereto.

14.   This Subordination Agreement may be executed in any number of and by
      different parties hereto, on separate counterparts, all of which when so
      executed, shall be deemed an original, but all such counterparts shall
      constitute one and the same agreement.

<PAGE>

      AT______________________________AS OF THIS_______________________DAY
OF_________________________________, 2005.

                                               THE EQUITABLE TRUST COMPANY

                                               Per: ____________________________
                                                    Name:
                                                    Title:

                                               Per: ____________________________
                                                    Name:
                                                    Title:

We hereby confirm and agree to the above.

      AT______________________________AS OF THIS_______________________DAY
OF_________________________________, 2005.

                                               LASALLE BUSINESS CREDIT, A
                                               DIVISION OF ABN AMRO BANK N.V.,
                                               CANADA BRANCH

                                               Per: ____________________________
                                                    Name:
                                                    Title:

                                               Per: ____________________________
                                                    Name:
                                                    Title:

<PAGE>

The undersigned acknowledges that:

1.    it has taken communication of the foregoing Subordination Agreement, is in
      agreement with the terms thereof to the extent that it is affected thereby
      and undertakes to cooperate with respect thereto;

2.    notwithstanding anything to the contrary in this Subordination Agreement
      until all LaSalle Debt has been fully and finally repaid, it shall not pay
      or prepay any of the Other Equitable Trust Debt;

3.    this Subordination Agreement is for the benefit of the parties thereto
      only as between themselves and in no manner diminishes, as between either
      of the parties and the undersigned, any security or rights now or
      hereafter existing; and

4.    no rights or commitments have been created or implied in favour of the
      undersigned by this Subordination Agreement, and the parties to this
      Subordination Agreement may, as between themselves, in their sole
      discretion, alter the terms thereof as they see fit, without reference to
      the undersigned.

      AT______________________________AS OF THIS_______________________DAY
OF________________________________, 2005.

                                               STEELBANK TUBULAR INC.

                                               Per: ____________________________
                                                    Name:
                                                    Title:

                                               Per: ____________________________
                                                    Name:
                                                    Title:

                                               TARPON INDUSTRIES, INC.

                                               Per: ____________________________
                                                    Name:
                                                    Title:

                                               Per: ____________________________
                                                    Name:
                                                    Title:

<PAGE>

                                  SCHEDULE "A"

                         EXISTING EQUITABLE TRUST DEBT

                                 (see attached)

<PAGE>

                                   SCHEDULE "B"

                                    SECURITY

1.    The Guarantee.

2.    The Equitable GSA.

3.    The GAR.

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