Document:

Exhibit 10.3

 

BEIGENE, LTD.

 

AMENDED AND RESTATED 
 2016 SHARE OPTION AND INCENTIVE PLAN

 

SECTION 1.  GENERAL PURPOSE OF THE PLAN; DEFINITIONS

 

The name of the plan is the BeiGene, Ltd. 2016 Share Option and Incentive Plan (the “Plan”).  The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants of BeiGene, Ltd. (the “Company”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its businesses to acquire a proprietary interest in the Company.  It is anticipated that providing such persons with a direct stake in the Company will assure a closer identification of their interests with those of the Company and its shareholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.

 

The following terms shall be defined as set forth below:

 

“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

 

“Administrator” means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non-Employee Directors who are independent.

 

“ADSs” means American depositary shares.  Each ADS represents 13 Shares.

 

“ASC 718” means Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation.

 

“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include Non-Qualified Share Options, Share Appreciation Rights, Restricted Share Units, Restricted Share Awards, Unrestricted Share Awards and Dividend Equivalent Rights.

 

“Award Certificate” means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan.  Each Award Certificate is subject to the terms and conditions of the Plan.

 

“Board” means the Board of Directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

 

“Consultant” means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising

 

 

transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

“Dividend Equivalent Right” means an Award entitling the Grantee to receive credits based on cash dividends that would have been paid on the Shares specified in the Dividend Equivalent Right (or other award to which it relates) if such Shares had been issued to and held by the Grantee.

 

“Effective Date” means the date on which the Plan becomes effective as set forth in Section 17.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

“Fair Market Value” of the Shares on any given date means the fair market value of the Shares determined in good faith by the Administrator; provided, however, that if the ADSs are admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to market quotations.  If there are no market quotations for such date, the determination shall be made by reference to the last date preceding such date for which there are market quotations; provided further, however, that if the date for which Fair Market Value is determined is the first day when trading prices for the ADSs are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public” (or equivalent) for each ADR set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering, as converted to a per Share basis.

 

“Grantee” is a recipient of an Award under this Plan.

 

“Initial Public Offering” means the first underwritten, firm commitment public offering pursuant to an effective registration statement under the Act covering the offer and sale by the Company of its equity securities, or such other event as a result of or following which the ADSs shall be publicly held.

 

“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.

 

“Non-Qualified Share Option” means any Share Option that is not an incentive share option.

 

“Option” or “Share Option” means any option to purchase Shares granted pursuant to Section 5.

 

“Restricted Shares” means the Shares underlying a Restricted Share Award that remain subject to a risk of forfeiture or the Company’s right of repurchase.

 

“Restricted Share Award” means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.

 

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“Restricted Share Units” means an Award of share units subject to such restrictions and conditions as the Administrator may determine at the time of grant.

 

“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding Shares immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding Shares or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Shares of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

 

“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be received by the Company’s shareholders, per Share pursuant to a Sale Event.

 

“Shares” means the ordinary shares, par value US$0.0001 per share, of the Company, subject to adjustments pursuant to Section 3.

 

“Share Appreciation Right” means an Award entitling the recipient to receive Shares having a value equal to the excess of the Fair Market Value of the Shares on the date of exercise over the exercise price of the Share Appreciation Right multiplied by the number of Shares with respect to which the Share Appreciation Right shall have been exercised.

 

“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.

 

“Unrestricted Share Award” means an Award of Shares free of any restrictions.

 

SECTION 2.  ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)                                 Administration of Plan.  The Plan shall be administered by the Administrator.

 

(b)                                 Powers of Administrator.  The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:

 

(i)                                     to select the individuals to whom Awards may from time to time be granted;

 

(ii)                                  to determine the time or times of grant, and the extent, if any, of Non-Qualified Share Options, Share Appreciation Rights, Restricted Share Awards, Restricted Share Units, Unrestricted Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more Grantees;

 

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(iii)                               to determine the number of Shares to be covered by any Award;

 

(iv)                              to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and Grantees, and to approve the forms of Award Certificates;

 

(v)                                 to accelerate at any time the exercisability or vesting of all or any portion of any Award in circumstances involving the Grantee’s death, disability, retirement or termination of employment, or a change in control (including a Sale Event);

 

(vi)                              subject to the provisions of Section 5(c), to extend at any time the period in which Share Options may be exercised; and

 

(vii)                           at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

 

All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan Grantees.

 

To the extent required under the rules of any securities exchange or market system on which the Shares are listed,  amendments to the terms of Share Options granted under the Plan shall be subject to approval by the Company’ shareholders entitled to vote at a meeting of shareholders.

 

(c)                                  Delegation of Authority to Grant Awards.  Subject to applicable law, the Administrator, in its discretion, may delegate to the chairman of the Compensation Committee of the Board of Directors of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards.  Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer and/or Chief Financial Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards to individuals who are not subject to the reporting of Section 16 of the Exchange Act.  Any such delegation by the Administrator shall include a limitation as to the number of Shares underlying Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the criteria for exercisability or vesting.  The Administrator may revoke or amend the terms of a delegation at any time, but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan

 

(d)                                 Award Certificate.  Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.

 

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(e)                                  Indemnification.  Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles of association or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

 

(f)                                   Foreign Award Recipients.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to:  (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a); and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals.  Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Act or any other United States securities law, the Code, or any other United States governing statute or law.

 

SECTION 3.  SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

 

(a)                                 Shares Issuable.  The maximum number of Shares that have been reserved and available for issuance under the Plan shall be 121,598,798[1] Shares, of which 18,748,598 Shares are reserved and remain available for issuance as of August 8, 2018 (being the effective date of the approval of this amended and restated Plan by the Board (the “Amended Effective Date”)) (representing approximately 2.4% of the issued share capital of the Company as of the Amended Effective Date), plus the Shares available under the Company’s 2011 Option Plan (the “2011 Plan”) and not subject to outstanding options as of the Amended Effective Date. For purposes of this limitation, the Shares underlying any awards granted under this Plan or the 2011 Plan (including any grants made prior to the Amended Effective Date) that are forfeited, canceled, held back upon exercise of an Option or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Shares or otherwise terminated (other than by exercise) shall be added back to the Shares available for issuance under the Plan, provided that (i) the Shares reserved and available for issuance under the Plan, the Company’s 2018 Inducement Equity Plan (as amended and restated) and the Company’s 2018 Employee Share Purchase Plan (as amended and restated) shall not exceed 76,716,318 Shares as of the

 

(1) This is the maximum number of Shares reserved and available for issuance as authorized under the Plan pursuant to the terms of the Plan in effect (including the Shares available under the Company’s 2011 Option Plan) immediately prior to the Amended Effective Date.

 

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Amended Effective Date, being 10% of the issued share capital of the Company as of the Amended Effective Date, and (ii) where the Company cancels an Option and issues a new Option to the same Grantee, the issue of such new Option shall be made only to the extent that there are Shares reserved and available for issuance excluding the cancelled Option. In the event the Company repurchases Shares on the open market, such Shares shall not be added to the Shares available for issuance under the Plan.  Subject to such overall limitations, Shares may be issued up to such maximum number pursuant to any type or types of Award.  The Shares available for issuance under the Plan may be authorized but unissued Shares or Shares reacquired by the Company.

 

(b)                                 Maximum Awards to Non-Employee Directors.  Notwithstanding anything to the contrary in this Plan, the value of all Awards awarded under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any calendar year shall not exceed $500,000.  For the purpose of this limitation, the value of any Award shall be its grant date fair value, as determined in accordance with ASC 718 or successor provision but excluding the impact of estimated forfeitures related to service-based vesting provisions.

 

(c)                                  Maximum Individual Limit. Unless approved by the Company’s shareholders in general meeting, the total number of Shares issued and to be issued upon the exercise of Share Options granted and to be granted under the Plan and any other plan of the Company to a Grantee within any 12-month period shall not exceed 1% of the Shares in issue at the date of any grant.

 

(d)                                 Changes in Shares.  Subject to Section 3(d), if, as a result of any reorganization, recapitalization, reclassification, share dividend, share split, reverse share split or other similar change in the Company’s share capital, the outstanding Shares are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such Shares or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding Shares are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of Shares reserved for issuance under the Plan, (ii) the number and kind of Shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per Share subject to each outstanding Restricted Share Award, and (iv) the exercise price for each Share subject to any then outstanding Share Options and Share Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Share Options and Share Appreciation Rights) as to which such Share Options and Share Appreciation Rights remain exercisable.  The Administrator shall also make equitable or proportionate adjustments in the number of Shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event.  The adjustment by the Administrator shall be final, binding and conclusive.  No fractional Shares shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional Shares.

 

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(e)                                  Mergers and Other Transactions.  In the case of and subject to the consummation of a Sale Event, the parties may cause the assumption or continuation of Awards previously granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or its parent, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree.  To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted under this Plan shall terminate.  In such case, except as may be otherwise provided in the relevant Award Certificate, all Options and Share Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event, and all Awards with conditions and restrictions relating to the achievement of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator’s discretion or to the extent specified in the relevant Award Certificate.  In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the Grantees holding Options and Share Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of Shares subject to outstanding Options and Share Appreciation Rights (to the extent then exercisable  at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Share Appreciation Rights; or (ii) each Grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Share Appreciation Rights (to the extent then exercisable) held by such Grantee.  The Company shall also have the option (in its sole discretion) to make or provide for a payment, in cash or in kind, to the Grantees holding other Awards in an amount equal to the Sale Price multiplied by the number of vested Shares under such Awards.

 

SECTION 4.  ELIGIBILITY

 

Grantees under the Plan will be such full- or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.

 

SECTION 5.  SHARE OPTIONS

 

(a)                                 Award of Share Options.  The Administrator may grant Share Options under the Plan.  Any Share Option granted under the Plan shall be in such form as the Administrator may from time to time approve.  Share Options granted under the Plan are Non-Qualified Share Options.

 

Share Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable.  If the Administrator so determines, Share Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.

 

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(b)                                 Exercise Price.  The exercise price per Share covered by a Share Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than the higher of: (i) the Fair Market Value of a Share on the date of grant; and (ii) the average Fair Market Value of the Shares for the five business days immediately preceding the day of grant.

 

(c)                                  Option Term.  The term of each Share Option shall be fixed by the Administrator, but no Share Option shall be exercisable more than ten years after the date the Share Option is granted. Any Share Option granted but not exercised by the end of its option term will automatically lapse and be cancelled.

 

(d)                                 Exercisability; Rights of a Shareholder.  Share Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date.  The Administrators may determine at the time of grant any minimum period(s) for which a Share Option must be held and/or any minimum performance target(s) that must be achieved, before the Share Option can be exercised in whole or in part, and may include at the discretion of the Administrators such other terms either on a case by case basis or generally. The Administrator may at any time accelerate the exercisability of all or any portion of any Share Option.  An optionee shall have the rights of a shareholder only as to Shares acquired upon the exercise of a Share Option and not as to unexercised Share Options.  Accordingly, an optionee shall not have any voting rights, or rights to participate in any dividends or distributions (including those arising on a liquidation of the Company) declared or recommended or resolved to be paid to the shareholders on the register of members of the Company on a date prior to the name of such optionee being registered on such register.

 

(e)                                  Method of Exercise.  Share Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of Shares to be purchased.  Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the option award certificate:

 

(i)                                     In cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(ii)                                  Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe (“attestation method”)) of Shares that are not then subject to restrictions under any Company plan.  Such surrendered Shares shall be valued at Fair Market Value on the exercise date;

 

(iii)                               By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or

 

(iv)                              If permitted by the Administrator, by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issuable upon exercise by the

 

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largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.

 

Payment instruments will be received subject to collection.  The transfer to the optionee on the records of the Company or of the transfer agent of the Shares to be purchased pursuant to the exercise of a Share Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Share Option) by the Company of the full purchase price for such Shares and the fulfillment of any other requirements contained in the option award certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee).  In the event an optionee chooses to pay the purchase price by previously-owned Shares through the attestation method, the number of Shares transferred to the optionee upon the exercise of the Share Option shall be net of the number of attested Shares.  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Share Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Share Options may be permitted through the use of such an automated system.

 

SECTION 6.  SHARE APPRECIATION RIGHTS

 

(a)                                 Award of Share Appreciation Rights.  The Administrator may grant Share Appreciation Rights under the Plan.  A Share Appreciation Right is an Award entitling the recipient to receive Shares having a value equal to the excess of the Fair Market Value of a Share on the date of exercise over the exercise price of the Share Appreciation Right multiplied by the number of Shares with respect to which the Share Appreciation Right shall have been exercised.

 

(b)                                 Exercise Price of Share Appreciation Rights.  The exercise price of a Share Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Shares on the date of grant in the case of any grant to a Grantee who is subject to U.S. income tax.

 

(c)                                  Grant and Exercise of Share Appreciation Rights.  Share Appreciation Rights may be granted by the Administrator independently of any Share Option granted pursuant to Section 5 of the Plan.

 

(d)                                 Terms and Conditions of Share Appreciation Rights.  Share Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Administrator at the time of the grant.  Such terms and conditions may differ among individual Awards and Grantees.  The term of a Share Appreciation Right may not exceed ten years.

 

SECTION 7.  RESTRICTED SHARE AWARDS

 

(a)                                 Nature of Restricted Share Awards.  The Administrator may grant Restricted Share Awards under the Plan.  A Restricted Share Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.  Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.  The terms and conditions of

 

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each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and Grantees.

 

(b)                                 Rights as a Shareholder.  Upon the grant of a Restricted Share Award and payment of the purchase price, if any, subject to the restrictions and conditions set forth in the award certificate, a Grantee shall have all the rights of a shareholder with respect to Restricted Shares, including the voting of the Restricted Shares and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Share Award is tied to the achievement of performance goals, any dividends paid by the Company during the performance period shall accrue and not be paid to the Grantee except to the extent the performance goals are met with respect to the Restricted Share Award.  Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d), and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d), and the Grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

 

(c)                                  Restrictions.  Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Restricted Share Award Certificate.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, if a Grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such Grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such Grantee or such Grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and after the reacquisition shall cease to represent any ownership of the Company by the Grantee or rights of the Grantee as a shareholder.  Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a Grantee shall surrender such certificates to the Company upon request without consideration.

 

(d)                                 Vesting of Restricted Shares.  The Administrator at the time of grant shall specify the date or dates and/or the performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company’s right of repurchase or forfeiture shall lapse.  Subsequent to such date or dates and/or the achievement of such performance goals, objectives and other conditions, the shares as to which the Company’s right of repurchase or forfeiture has lapsed shall no longer be Restricted Shares and shall be deemed “vested.”

 

SECTION 8.  RESTRICTED SHARE UNITS

 

(a)                                 Nature of Restricted Share Units.  The Administrator may grant Restricted Share Units under the Plan.  A Restricted Share Unit is an Award of share units that may be settled in Shares upon the satisfaction of such restrictions and conditions at the time of grant.  Conditions may be based on continuing employment (or other service relationship) and/or in the case of a Grantee who is not a U.S. taxpayer, achievement of pre-established performance goals and

 

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objectives.  The terms and conditions of each such Award shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and Grantees.  At the end of the vesting period, the Restricted Share Units, to the extent vested, shall be settled in the form of Shares.

 

(b)                                 Rights as a Shareholder.  A Grantee shall have the rights as a shareholder only as to Shares acquired by the Grantee upon settlement of Restricted Share Units; provided, however, that the Grantee may be credited with Dividend Equivalent Rights with respect to the share units underlying his Restricted Share Units, subject to the provisions of Section 10 and such terms and conditions as the Administrator may determine.

 

(c)                                  Termination.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, a Grantee’s right in all Restricted Share Units that have not vested shall automatically terminate upon the Grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

SECTION 9.  UNRESTRICTED SHARE AWARDS

 

Grant or Sale of Unrestricted Shares.  The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Share Award under the Plan.  An Unrestricted Share Award is an Award pursuant to which the Grantee may receive Shares free of any restrictions under the Plan.  Unrestricted Share Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such Grantee.

 

SECTION 10.  DIVIDEND EQUIVALENT RIGHTS

 

(a)                                 Dividend Equivalent Rights.  The Administrator may grant Dividend Equivalent Rights under the Plan.  A Dividend Equivalent Right is an Award entitling the Grantee to receive credits based on cash dividends that would have been paid on the Shares specified in the Dividend Equivalent Right (or other Award to which it relates) if such Shares had been issued to the Grantee.  A Dividend Equivalent Right may be granted to any Grantee as a component of an award of Restricted Share Units or as a freestanding award.  The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate.  Dividend equivalents credited to the holder of a Dividend Equivalent Right shall be paid currently.  Dividend Equivalent Rights may be settled in cash or Shares or a combination of cash and Shares.  A Dividend Equivalent Right granted as a component of an Award of Restricted Share Units shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.

 

(b)                                 Termination.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 15, in writing after the Award is issued, a Grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the Grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

 

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SECTION 11.  TRANSFERABILITY OF AWARDS

 

(a)                                 Transferability.  Except as provided in Section 11(b), during a Grantee’s lifetime, his or her Awards shall be exercisable only by the Grantee, or by the grantee’s legal representative or guardian in the event of the Grantee’s incapacity.  No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a Grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order.  No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation of this Section 11(a) shall be null and void.

 

(b)                                 Administrator Action.  Notwithstanding Section 11(a), the Administrator, in its discretion, may permit either in the Award Certificate for a given Award or by subsequent written approval the Grantee  to transfer Non-Qualified Share Options to the Grantee’s immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award.  In no event may an Award be transferred by a Grantee for value.

 

(c)                                  Family Member.  For purposes of Section 11(b), “family member” shall mean a Grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the Grantee), a trust in which these persons (or the Grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than 50 percent of the voting interests.

 

(d)                                 Designation of Beneficiary.  To the extent permitted by the Company, each Grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the Grantee’s death.  Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator.  If no beneficiary has been designated by a deceased Grantee, or if the designated beneficiaries have predeceased the Grantee, the beneficiary shall be the Grantee’s estate.

 

(e)                                  Lockup Provisions in an Initial Public Offering.  If requested by the Company, a Grantee shall not sell or otherwise transfer or dispose of any Awards or Shares issued in respect to that Award (including, without limitation, pursuant to Rule 144 under the Securities Act) held by Grantee for such period following the effective date of the Initial Public Offering as the Company shall specify reasonably and in good faith.  If requested by the underwriter engaged by the Company for the Initial Public Offering, each Grantee shall execute a separate letter confirming  Grantee’s agreement to comply with this Section.

 

SECTION 12.  TAX WITHHOLDING

 

(a)                                 Payment by Grantee.  Each Grantee shall, no later than the date as of which the value of an Award or of any Shares or cash received under the Award first becomes includable in

 

12

 

the gross income of the Grantee for income, employment or other tax purposes, pay to the Company or a Subsidiary, or make arrangements satisfactory to the Administrator regarding payment of, any taxes of any kind required by law to be withheld by the Company or a Subsidiary with respect to such income.  The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Grantee.  The Company’s obligation to deliver evidence of book entry (or share certificates) to any Grantee is subject to and conditioned on tax withholding obligations being satisfied by the Grantee.

 

(b)                                 Payment in Shares.  Subject to approval by the Administrator, a Grantee may elect to have the Company’s or Subsidiary’s minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from Shares to be issued pursuant to any Award a number of Shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.  The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount.  For purposes of share withholding, the Fair Market Value of withheld Shares shall be determined in the same manner as the value of the Shares includible in income of the Grantees.

 

SECTION 13.  TERMINATION OF EMPLOYMENT, TRANSFER, LEAVE OF ABSENCE, ETC.

 

(a)                                 Termination of Employment.  If the Grantee’s employer ceases to be a Subsidiary, the Grantee shall be deemed to have terminated employment for purposes of the Plan.

 

(b)                                 For purposes of the Plan, the following events shall not be deemed a termination of employment:

 

(i)                                     a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

 

(ii)                                  an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

 

SECTION 14.  AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent.  Except as provided in Section 3(c) or 3(d), without prior shareholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Share Options or Share Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Share Options or Share Appreciation Rights in exchange for cash or other Awards.  To the extent required under the rules of any securities exchange or market system on which the Shares are listed, Plan

 

13

 

amendments shall be subject to approval by the Company shareholders entitled to vote at a meeting of shareholders.  Nothing in this Section 14 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).

 

In the event that the Plan is terminated while any Share Option remains outstanding and unexercised, the provisions of this Plan shall remain in full force to the extent necessary to give effect to the exercise of any such Share Option.

 

SECTION 15.  STATUS OF PLAN

 

With respect to the portion of any Award that has not been exercised and any payments in cash, Shares or other consideration not received by a Grantee, a Grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards.  In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Shares or make payments with respect to Awards, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

 

SECTION 16.  GENERAL PROVISIONS

 

(a)                                 No Distribution.  The Administrator may require each person acquiring Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to their distribution.

 

(b)                                 Delivery of Share Certificates.  Share certificates to Grantees under this Plan shall be deemed delivered for all purposes when the Company or a share transfer agent of the Company has mailed such certificates to the Grantee at the Grantee’s last known address on file with the Company.  Uncertificated Shares shall be deemed delivered for all purposes when the Company or a share transfer agent of the Company shall have given to the Grantee by electronic mail (with proof of receipt) or by mail to the Grantee at the Grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records).  Notwithstanding anything to the contrary in this Plan, the Company shall not be required to issue or deliver any certificates evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares or ADSs are listed, quoted or traded.  All share certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Shares or ADSs are listed, quoted or traded.  The Administrator may place legends on any share certificate to reference restrictions applicable to the Shares.  In addition to the terms and conditions of this Plan, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements.  The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or

 

14

 

exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

 

(c)                                  Shareholder Rights.  Until the name of the Grantee appears in the register of members of the Company, which is prima facie evidence that the Grantee is a shareholder of the Company, no right to vote or receive dividends or any other rights of a shareholder will exist with respect to Shares to be issued in connection with an Award, notwithstanding the exercise of a Share Option or any other action by the Grantee with respect to an Award.

 

(d)                                 Other Compensation Arrangements; No Employment Rights.  Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases.  The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.

 

(e)                                  Trading Policy Restrictions.  Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.

 

(f)                                   Clawback Policy.  Awards under the Plan shall be subject to the Company’s clawback policy, as in effect from time to time.

 

SECTION 17.  EFFECTIVE DATE OF PLAN

 

This Plan shall become effective immediately prior to the effectiveness of the Company’s Registration Statement relating to the Initial Public Offering, following shareholder approval in accordance with the law of the Cayman Islands and the Company’s articles of association.  No grants of Share Options and other Awards may be made under this Plan after the tenth anniversary of the Effective Date.

 

SECTION 18.  GOVERNING LAW

 

This Plan and all Awards and actions taken under them shall be governed by, and construed in accordance with, the laws of the Cayman Islands. In relation to any proceeding arising out of or in connection with this Plan, the Company and the Grantees irrevocably submit to the exclusive jurisdiction of the Cayman Islands courts.

 

DATE APPROVED BY BOARD OF DIRECTORS:  January 14, 2016

 

DATE APPROVED BY SHAREHOLDERS: January 14, 2016

 

DATE OF APPROVAL OF AMENDED AND RESTATED PLAN BY BOARD OF DIRECTORS: August 7, 2018

 

15EX-4.2

 Exhibit 4.2 
  

 
 PRUDENTIAL FINANCIAL, INC.

 TO 
 THE BANK
OF NEW YORK MELLON 
 Trustee 

Twelfth Supplemental Indenture 

Dated as of August 13, 2018 

5.625% Junior Subordinated Notes due 2058 
  

 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
			
	 ARTICLE ONE
	 	 DEFINITIONS
	  	 	1	 
			
	 Section 1.01.
	 	 Definitions
	  	 	1	 
			
	 ARTICLE TWO
	 	 GENERAL TERMS AND CONDITIONS OF THE NOTES
	  	 	5	 
			
	 Section 2.01.
	 	 Designation and Principal Amount
	  	 	5	 
	 Section 2.02.
	 	 Maturity
	  	 	5	 
	 Section 2.03.
	 	 Form
	  	 	5	 
	 Section 2.04.
	 	 Rate of Interest; Interest Payment Dates
	  	 	6	 
	 Section 2.05.
	 	 Deferral
	  	 	6	 
	 Section 2.06.
	 	 Events of Default
	  	 	7	 
	 Section 2.07.
	 	 Securities Registrar; Paying Agent; Place of Payment
	  	 	8	 
	 Section 2.08.
	 	 No Sinking Fund
	  	 	8	 
	 Section 2.09.
	 	 Subordination
	  	 	8	 
	 Section 2.10.
	 	 Senior Indebtedness
	  	 	8	 
	 Section 2.11.
	 	 Defeasance
	  	 	9	 
			
	 ARTICLE THREE
	 	 COVENANTS
	  	 	10	 
			
	 Section 3.01.
	 	 Dividend and Other Payment Stoppages
	  	 	10	 
			
	 ARTICLE FOUR
	 	 REDEMPTION OF THE NOTES
	  	 	11	 
			
	 Section 4.01.
	 	 Redemption
	  	 	11	 
			
	 ARTICLE FIVE
	 	 ORIGINAL ISSUE OF NOTES
	  	 	12	 
			
	 Section 5.01.
	 	 Calculation of Original Issue Discount
	  	 	12	 
			
	 ARTICLE SIX
	 	 SUPPLEMENTAL INDENTURES
	  	 	12	 
			
	 Section 6.01.
	 	 Supplemental Indentures without Consent of Holders
	  	 	12	 
	 Section 6.02.
	 	 Supplemental Indentures with Consent of Holders
	  	 	13	 
			
	 ARTICLE SEVEN
	 	 MISCELLANEOUS
	  	 	14	 
			
	 Section 7.01.
	 	 Effectiveness
	  	 	14	 
	 Section 7.02.
	 	 Successors and Assigns
	  	 	14	 
	 Section 7.03.
	 	 Effect of Recitals
	  	 	14	 
	 Section 7.04.
	 	 Ratification of Indenture
	  	 	14	 
	 Section 7.05.
	 	 Tax Treatment
	  	 	14	 
	 Section 7.06.
	 	 Governing Law
	  	 	14	 
	 Section 7.07.
	 	 Severability
	  	 	14	 
	 Section 7.08.
	 	 Consequential Damages, Force Majeure and FATCA
	  	 	15	 

  
 -i- 

 TWELFTH SUPPLEMENTAL INDENTURE 

Twelfth Supplemental Indenture, dated as of August 13, 2018 (the “Supplemental Indenture”), between Prudential
Financial, Inc., a New Jersey corporation (the “Company”), having its principal office at 751 Broad Street, Newark, New Jersey 07102, and The Bank of New York Mellon (formerly known as The Bank of New York), a New York
banking corporation, as trustee (hereinafter called the “Trustee”). 
 RECITALS OF THE COMPANY 

The Company and the Trustee executed and delivered an indenture, dated as of June 17, 2008 (the “Base Indenture”), to
the Trustee to provide for the future issuance of the Company’s subordinated debt securities, to be issued from time to time in one or more series as might be determined by the Company under the Base Indenture. 

Section 901 of the Base Indenture provides that the Company and the Trustee, without the consent of any Holder, may enter into a
supplemental indenture to establish the form or terms of Securities of any series as permitted by Sections 201 and 301 thereof. 
 Pursuant
to the terms of the Base Indenture, the Company desires to provide for the establishment, authentication and issuance of a new series of its Securities, and the form and terms thereof, as hereinafter set forth. 

The Company has requested that the Trustee execute and deliver this 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 Base Indenture to the effect, among other things, that all conditions precedent provided for in the Base Indenture to the Trustee’s execution and
delivery of this Supplemental Indenture have been complied with. All acts and things necessary have been done and performed to make this Supplemental Indenture enforceable in accordance with its terms, and the execution and delivery of this
Supplemental Indenture has been duly authorized in all respects. 
 NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: For and in
consideration of the premises and the purchase of the Notes (as herein defined) by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows: 

ARTICLE ONE 

Definitions 

Section 1.01. Definitions 

For all purposes of this Supplemental Indenture, except as otherwise expressly provided herein or unless the context otherwise requires: 

(a) the terms defined in the Base Indenture have the same meanings when used in this 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) any reference to an Article, Section, other subdivision or Exhibit refers to an
Article, Section or other subdivision of, or Exhibit to, this Supplemental Indenture; and 
 (d) the words “herein”,
“hereof” and “hereunder” and other words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision. 

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

“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The
City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office is closed for business. 

“Capital Regulator” means the Federal Reserve Board so long as the Federal Reserve Board has oversight of the Company’s
regulatory capital and such other governmental agency or instrumentality as may then have group-wide oversight of the Company’s regulatory capital. 

“Company” has the meaning specified in the Recitals. 

“Deferral Period” means the period commencing on an Interest Payment Date with respect to which the Company defers interest
pursuant to Section 2.05 and ending on the earlier of (i) the fifth 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 compounded
interest on such deferred amounts) and all other accrued interest on the Notes. 
 “Federal Reserve Board” means the Board
of Governors of the Federal Reserve System. 
 “Indenture” means the Base Indenture as supplemented by this Supplemental
Indenture, and as further supplemented from time to time with respect to the Notes. 
 “Interest Payment Date” has the
meaning specified in Section 2.04(b). 
 “Interest Period” means the period beginning on and including the date hereof
and ending on but excluding the first Interest Payment Date thereafter and each successive period beginning on and including an Interest Payment Date and ending on but excluding the next Interest Payment Date. 

“Maturity Date” has the meaning specified in Section 2.02. 

“Notes” has the meaning specified in Section 2.01(a). 

  
 2 

 “Pari Passu Securities” means (i) the Company’s
4.500% Fixed-to-Floating Rate Junior Subordinated Notes due 2047, (ii) the Company’s 5.375%
Fixed-to-Floating Rate Junior Subordinated Notes due 2045, (iii) the Company’s 5.875%
Fixed-to-Floating Rate Junior Subordinated Notes due 2042, (iv) the Company’s 5.625%
Fixed-to-Floating Rate Junior Subordinated Notes due 2043, (v) the Company’s 5.20%
Fixed-to-Floating Rate Junior Subordinated Notes due 2044, (vi) the Company’s 5.75% Junior Subordinated Notes due 2052 and (vii) the Company’s 5.70%
Junior Subordinated Notes due 2053. 
 “Parity Securities” means indebtedness of the Company that by its terms ranks in
right of payment upon liquidation of the Company on a parity with the Notes, and includes the Notes and the Pari Passu Securities. 

“Rating Agency Event” means that any nationally recognized statistical rating organization within the meaning of
Section 3(a)(62) of the Exchange Act that then publishes a rating for the Company (a “rating agency”) amends, clarifies or changes the criteria it uses to assign equity credit to securities such as the Notes, which amendment,
clarification or change results in: 
 (i) the shortening of the length of time the Notes are assigned a particular level of
equity credit by that rating agency as compared to the length of time they would have been assigned that level of equity credit by that rating agency or its predecessor on the date hereof, or 

(ii) the lowering of the equity credit (including up to a lesser amount) assigned to the Notes by that rating agency as
compared to the equity credit assigned by that rating agency or its predecessor on the date hereof. 
 “Regulatory Capital
Event” means the Company’s good faith determination that, as a result of: 
 (i) any amendment to, or change
in, the laws, rules or regulations of the United States or any political subdivision of or in the United States or any other governmental agency or instrumentality as may then have group-wide oversight of the Company’s regulatory capital
(including, for the avoidance of doubt, the Company’s Capital Regulator, which is currently the Federal Reserve Board) that is enacted or becomes effective after the date hereof; 

(ii) any proposed amendment to, or change in, those laws, rules or regulations that is announced or becomes effective after the
date hereof; or 
 (iii) any official administrative decision or judicial decision or administrative action or other official
pronouncement interpreting or applying those laws, rules or regulations that is announced after the date hereof, 
 there is more than an insubstantial risk
that the full principal amount of the Notes outstanding from time to time would not qualify as “Tier 2 Capital” (or a substantially similar concept) for purposes of the capital adequacy rules of any Capital Regulator to which the Company
is or will be subject; provided that the proposal or adoption of any criterion: 

  
 3 

 (i) that is substantially the same as the corresponding criterion in the
capital adequacy rules of the Federal Reserve Board applicable to bank holding companies as of the date hereof, or 
 (ii)
that would result in the full principal amount of the Notes outstanding from time to time not qualifying as “Tier 2 Capital” (or a substantially similar concept) for purposes of the capital adequacy rules of the Capital Regulator solely
because the Company may redeem the Notes at its option upon the occurrence of a Rating Agency Event 
 will not constitute a Regulatory Capital Event. 

“Supplemental Indenture” means this instrument as originally executed or as it from time to time may be supplemented or
amended by one or more agreements supplemental hereto. 
 “Tax Event” means the receipt by the Company of an opinion of
independent counsel experienced in such matters to the effect that, as a result of any: 
 (i) amendment to or change
(including any officially announced proposed change) in the laws or regulations of the United States or any political subdivision or taxing authority of or in the United States that is enacted or effective on or after the date hereof; 

(ii) official administrative decision or judicial decision or administrative action or other official pronouncement (including
a private letter ruling, technical advice memorandum or other similar pronouncement) by any court, government agency or regulatory authority that reflects an amendment to, or change in, the interpretation or application of those laws or regulations
that is announced on or after the date hereof; or 
 (iii) 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 Notes, which challenge is asserted against the Company or becomes publicly
known on or after the date hereof, 
 there is more than an insubstantial increase in the risk that interest payable by the Company on the Notes is not, or
within 90 days of the date of such opinion will not be, deductible by the Company, in whole or in part, for U.S. federal income tax purposes. 

  
 4 

 ARTICLE TWO 

General Terms and Conditions of the Notes 

Section 2.01. Designation and Principal Amount 

(a) Designation 

Pursuant to Section 301 of the Base Indenture, there is hereby established a series of Securities of the Company designated as the 5.625%
Junior Subordinated Notes due 2058 (the “Notes”), the principal amount of which to be issued shall be in accordance with Section 2.01(b) and as set forth in a Company Order for the authentication and delivery of Notes pursuant
to the Base Indenture, and the form and terms of which shall be as set forth hereinafter. 
 (b) Principal Amount;
Additional Notes 
 Notes in an initial aggregate principal amount of $500,000,000 upon execution of this Supplemental Indenture, shall
be executed by the Company and delivered to the Trustee, and the Trustee shall thereupon authenticate and deliver said Notes in accordance with a Company Order. The Company may execute and deliver to the Trustee, and the Trustee shall thereupon
authenticate and deliver said Notes in accordance with a Company Order, up to an additional $75,000,000 principal amount of Notes pursuant to the exercise of the underwriters’ over-allotment option under the Underwriting Agreement, dated
August 6, 2018, among the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC and UBS Securities LLC, as representatives of the several underwriters. At any
time and from time to time after the date hereof, without the consent of any Holders of the Notes, the Company may execute and deliver additional Notes to the Trustee for authentication, in addition to the $500,000,000 initial aggregate principal
amount previously provided for and in addition to the principal amount of any Notes delivered pursuant to the exercise of the underwriters’ over-allotment option, to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such additional Notes, so long as such additional Notes are fungible for U.S. federal income tax purposes with the Notes issued as of the date hereof. Any additional Notes so issued shall have the same terms and
conditions as the Notes issued on the date hereof in all respects, except for any difference in the issue date, issue price, interest accrued prior to the issue date of the additional Notes and first Interest Payment Date and shall be governed by
this Supplemental Indenture and shall rank equally and ratably in right of payment with the Notes issued on the date of this Supplemental Indenture and, together with the Notes issued as of the date of this Supplemental Indenture, shall be treated
as a single series of Notes for all purposes. 
 Section 2.02. Maturity 

The Notes will mature on August 15, 2058 (the “Maturity Date”). If the Maturity Date is not a Business Day, payment of
principal and interest to be made on the Maturity Date shall be made on the next Business Day (but no interest shall accrue as a result of such postponement). 

Section 2.03. Form 

The Notes shall be substantially in the form of Exhibit A, shall include the Trustee’s certificate of authentication in the form required
by Section 205 of the Base Indenture and shall be issued in fully registered definitive form without interest coupons. 
 The Notes
initially are issuable solely as Global Securities and shall bear the legend required by Section 204 of the Base Indenture. 

  
 5 

 The Depositary for the Notes initially shall be The Depository Trust Company (or any
successor thereto). 
 Section 2.04. Rate of Interest; Interest Payment Dates 

(a) Rate of Interest; Accrual 

The Notes shall bear interest on their principal amount from and including August 13, 2018, to but excluding, the Maturity Date, or any
earlier Redemption Date, at the rate of 5.625% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months. Defaulted Interest and interest
deferred pursuant to Section 2.05 will bear interest, to the extent permitted by law, at the rate of 5.625% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months, from and including the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date. 

(b) Interest Payment Dates 

Subject to Section 2.05, accrued interest on the Notes shall be payable quarterly in arrears on February 15, May 15,
August 15 and November 15 of each year, beginning on November 15, 2018 (each such date, an “Interest Payment Date”), or if any such day is not a Business Day, the next Business Day (but no interest will accrue as a
result of that postponement), to the Holders of the Notes at the close of business on the immediately preceding February 1, May 1, August 1 and November 1 (whether or not a Business Day), as the case may be. 

Section 2.05. Deferral 

(a) Option to Defer Interest Payments 

(i) So long as no Event of Default with respect to the Notes has occurred or is continuing, the Company shall have the right,
at any time and from time to time, to defer the payment of interest on the Notes for one or more consecutive Interest Periods that do not exceed five years for any single Deferral Period, provided that no Deferral Period shall extend beyond
the Maturity Date, any earlier accelerated maturity date arising from an Event of Default or any other earlier redemption of the Notes. If the Company has paid all deferred interest (including compounded interest thereon) on the Notes, the Company
shall have the right to elect to begin a new Deferral Period pursuant to this Section 2.05(a). 
 (ii) At the end of any
Deferral Period, the Company shall pay all deferred interest (including compounded interest thereon) on the Notes to the Persons in whose names the Notes are registered in the Securities Register at the close of business on the Regular Record Date
with respect to the Interest Payment Date at the end of such Deferral Period. 

  
 6 

 (b) Notice of Deferral 

The Company shall give written notice of its election to commence or continue any Deferral Period to the Trustee and the Holders of the Notes
at least one Business Day and not more than 60 Business Days before the next Interest Payment Date. Such notice shall be given to the Trustee and each Holder of Notes at such Holder’s address appearing in the Security Register by first-class
mail, postage prepaid. 
 Section 2.06. Events of Default 

(a) Clauses (1) through (4) of Section 501 of the Base Indenture shall not apply to the Notes. Clauses (5) and (6) of
Section 501 of the Base Indenture shall apply to the Notes. 
 (b) If an Event of Default specified in Clause (5) or (6) of
Section 501 of the Base Indenture occurs, the principal amount of all the Notes shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. 

(c) The Trustee shall provide to the Holders of the Notes notice of any Event of Default or default with respect to the Notes within 90 days
after the actual knowledge of a Responsible Officer of the Trustee of such Event of Default or default. However, except in the case of a default in payment on the Notes, the Trustee will be protected in withholding the notice if one of its
Responsible Officers determines that withholding of the notice is in the interest of such Holders. 
 (d) The Trustee shall have no right or
obligation under the Indenture or otherwise to exercise any remedies on behalf of any Holders of the Notes pursuant to the Indenture in connection with any default, unless such remedies are available under the Indenture and the Trustee is directed
to exercise such remedies pursuant to and subject to the conditions of Section 512 of the Base Indenture, provided, however, that this provision shall not affect the rights of the Trustee with respect to any Events of Default as
set forth in Section 2.06(b) that may occur with respect to the Notes. 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 default were an Event of Default. 
 (e) For purposes of this Section 2.06, the term “default” means any of the
following events: 
 (i) default in the payment of interest, including compounded interest, in full on any Notes for a period
of 30 days after the conclusion of a five-year period following the commencement of any Deferral Period if such Deferral Period has not ended prior to the conclusion of such five-year period; 

(ii) default in the payment of principal of or premium, if any, on the Notes when due; or 

(iii) default in the observance or performance of any covenant or agreement contained in the Indenture or the Notes. 

  
 7 

 Section 2.07. Securities Registrar; Paying Agent; Place of Payment

 The Company appoints the Trustee as Securities Registrar and Paying Agent with respect to the Notes. The Place of Payment for the
Notes will be as specified in the Notes. 
 Section 2.08. No Sinking Fund 

The Notes shall not be subject to Article Thirteen of the Base Indenture. 

Section 2.09. Subordination 

The subordination provisions of Article Eleven of the Base Indenture shall apply to the Notes, except that solely for purposes of the Notes,
Section 1103 of the Base Indenture shall be amended as follows: 
 (a) Clauses (a) and (b) of Section 1103 of the Base
Indenture shall be deleted and replaced with the following: 
 “(a) (1) In the event and during the continuation of any default in the
payment of principal, premium, if any, or interest on any Senior Indebtedness beyond any applicable grace period with respect thereto, (2) in the event that any event of default with respect to any Senior Indebtedness shall have occurred and be
continuing, permitting the direct holders of that Senior Indebtedness (or a trustee on behalf of the holders thereof) to accelerate maturity of that Senior Indebtedness, whether or not the maturity is in fact accelerated (unless, in the case of
either subclause (1) or (2) of this clause (a), the payment default or event of default has been cured or waived or ceased to exist and any related acceleration has been rescinded), or (3) in the event that any judicial proceeding shall be
pending with respect to a payment default or event of default described in subclause (1) or (2) of this clause (a), no payment or distribution of any kind or character, whether in cash, securities or other property, shall be made by the Company
on account of the principal of or interest on the Notes unless and until all amounts then due and payable in respect of such Senior Indebtedness, including any interest accrued after such event occurs, shall have been paid in full.” 

(b) Clause “(c)” of Section 1103 of the Base Indenture shall be renumbered clause “(b)”; and 

(c) Clause “(d)” of Section 1103 of the Base Indenture shall be renumbered clause “(c)”. 

Section 2.10. Senior Indebtedness 

Solely for the purposes of the Notes, the definition of “Senior Indebtedness” in Section 101 of the Base Indenture shall be
deleted and replaced by the following: 

  
 8 

 “Senior Indebtedness” means the principal of, premium, if any, and interest
on and any other payment due pursuant to any of the following, whether Incurred on or prior to the date hereof or hereafter Incurred: 

(i) all obligations of the Company (other than obligations pursuant to the Notes and obligations pursuant to the Indenture with
respect thereto) for money borrowed; 
 (ii) all obligations of the Company evidenced by securities, notes, debentures, bonds
or other similar instruments (other than securities issued under the Indenture, including the Notes), including obligations Incurred in connection with the acquisition of property, assets or businesses; 

(iii) all capital lease obligations of the Company; 

(iv) all reimbursement obligations of the Company with respect to letters of credit, bankers’ acceptances or similar
facilities issued for the account of the Company; 
 (v) all obligations of the Company issued or assumed as the deferred
purchase price of property or services, including all obligations under master lease transactions pursuant to which the Company or any of its subsidiaries have agreed to be treated as owner of the subject property for U.S. federal income tax
purposes; 
 (vi) all payment obligations of the Company under interest rate swap or similar agreements or foreign currency
hedge, exchange or similar agreements at the time of determination, including any such obligations Incurred by the Company solely to act as a hedge against increases in interest rates that may occur under the terms of other outstanding variable or
floating rate indebtedness of the Company; and 
 (vii) all obligations of the type referred to in clauses (i) through
(vi) above of another Person and all dividends of another Person the payment of which, in either case, the Company has assumed or guaranteed or for which the Company is responsible or liable, directly or indirectly, jointly or severally, as obligor,
guarantor or otherwise; 
 provided, however, that “Senior Indebtedness” shall not include: (1) obligations to
trade creditors created or assumed by the Company in the ordinary course of business, (2) indebtedness that is by its terms subordinate, or not superior, in right of payment to the Notes or (3) the Company’s Pari Passu
Securities.” 
 Section 2.11. Defeasance 

The provisions of Section 1402 of the Base Indenture (relating to discharge of the Indenture) shall apply to the Notes. For purposes of
Section 1404(2) of the Base Indenture as applicable to the Notes, the Opinion of Counsel referred to therein shall be an independent counsel satisfactory to the Trustee, and the words “gain or loss” in the eighth line of
Section 1404(2) shall be replaced by the words “income, gain or loss”. 

  
 9 

 ARTICLE THREE 

Covenants 

Section 3.01. Dividend and Other Payment Stoppages 

So long as any Notes remain outstanding, (a) if the Company has given notice of its election to defer interest payments on the Notes but
the related Deferral Period has not yet commenced, or (b) a Deferral Period is continuing, the Company shall not, and shall not permit any Subsidiary to: 

(i) declare or pay any dividends or other distributions on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any shares of capital stock of the Company; 
 (ii) make any payment of principal of, or interest or premium, if
any, on, or repay, purchase or redeem any of the Company’s debt securities that rank upon the Company’s liquidation on a parity with or junior to the Notes; or 

(iii) make any guarantee payments regarding any guarantee issued by the Company of securities of any Subsidiary if the
guarantee ranks upon the Company’s liquidation on a parity with or junior to the Notes; 
 provided, however, the restrictions in clauses
(i), (ii) and (iii) above do not apply to: 
 (A) any purchase, redemption or other acquisition of shares of its capital
stock by the Company in connection with: 
 (1) any employment contract, benefit plan or other similar arrangement with or
for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors; 
 (2) the
satisfaction of the Company’s obligations pursuant to any contract entered into prior to the beginning of the applicable Deferral Period; 

(3) a dividend reinvestment or shareholder purchase plan; or 

(4) the issuance of shares of the Company’s capital stock, or securities convertible into or exercisable for such capital
stock, as consideration in an acquisition transaction, the definitive agreement for which is entered into prior to the applicable Deferral Period; 

(B) any exchange, redemption or conversion of any class or series of the Company’s capital stock, or shares of the capital
stock of one of its Subsidiaries, for any other 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; 

  
 10 

 (C) any purchase of fractional interests in shares of the Company’s
capital stock pursuant to the conversion or exchange provisions of such shares or the securities being converted or exchanged; 

(D) any declaration of a dividend in connection with any shareholder rights plan, or the issuance of rights, stock or other
property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto; or 
 (E) any dividend
in the form of stock, warrants, options or other rights where the dividend stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such
stock; or 
 (F) (i) any payment of current or deferred interest on Parity Securities that is made pro rata to
the amounts due on such Parity Securities (including the Notes) and (ii) any payments of principal or current or deferred interest on Parity Securities that, if not made, would cause the Company to breach the terms of the instrument
governing such Parity Securities. 
 For the avoidance of doubt, notwithstanding anything herein to the contrary, no terms of the Notes will
restrict in any manner the ability of any of the Subsidiaries to pay dividends or make any distributions to the Company or to any other Subsidiaries. 

ARTICLE FOUR 

Redemption of the Notes 
 
Section 4.01. Redemption 
 (a) The Notes shall be redeemable in accordance with the procedures set forth in Article Twelve of
the Base Indenture: 
 (i) in whole at any time or in part from time to time on or after August 15, 2023, at 100% of the
principal amount of the Notes being redeemed plus accrued and unpaid interest to but excluding the Redemption Date, provided that no partial redemption shall be effected unless at least $25 million aggregate principal amount of the
Notes, excluding any Notes held by the Company or any of its Affiliates, shall remain outstanding after giving effect to such redemption; 

(ii) in whole, but not in part, at any time prior to August 15, 2023, within 90 days after the occurrence of a Tax Event
or a Regulatory Capital Event at 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest to but excluding the Redemption Date; or 

(iii) in whole, but not in part, at any time prior to August 15, 2023, within 90 days after the occurrence of a Rating
Agency Event at 102% of the principal amount of the Notes being redeemed plus accrued and unpaid interest to but excluding the Redemption Date; 

  
 11 

 
provided, in each case, that all accrued and unpaid interest, including deferred interest (and compounded interest) shall have been paid in full on all Outstanding Notes for all Interest Periods
ending on or before the Redemption Date. In the event the Notes are treated as “Tier 2 capital” (or a substantially similar concept) under the capital rules of any Capital Regulator applicable to the Company, any redemption of the Notes
shall be subject to the Company’s receipt of any required prior approval from such Capital Regulator and to the satisfaction of any conditions set forth in those capital rules or any other applicable regulations of any other Capital Regulator
that are or will be applicable to the Company’s redemption of the Notes. 
 ARTICLE FIVE 

Original Issue of Notes 
 
Section 5.01. Calculation of Original Issue Discount 
 If during any calendar year any original issue discount shall have
accrued on the Notes, the Company shall file with each Paying Agent (including the Trustee if it is a Paying Agent) promptly at the end of each calendar year (a) a written notice specifying the amount of original issue discount (including daily
rates and accrual periods) accrued on Outstanding Notes 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, or Treasury Regulations enacted thereunder, or other administrative or judicial guidance. 

ARTICLE SIX 

Supplemental Indentures 
 
Section 6.01. Supplemental Indentures without Consent of Holders 
 Solely for purposes of the Notes, Section 901 of the
Base Indenture shall be deleted and replaced with the following: 
 “Section 901. Supplemental Indentures without Consent of
Holders. 
 Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at
any time and from time to time, may supplement or amend the Indenture for any of the following purposes: 
 (1) to evidence
the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Notes; or 

(2) to add to or modify the covenants of the Company for the benefit of the Holders of Notes or to surrender any right or
power herein conferred upon the Company (including the Company’s surrendering, without limitation, of any redemption right, including the Company’s right to redeem the Notes upon the occurrence of the Rating Agency Event); provided
that no such amendment or modification may add Events of Default or acceleration events with respect to the Notes; or 

  
 12 

 (3) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Notes; or 
 (4) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein or in any supplemental indenture, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Notes in any material respect; or 
 (5) to make any changes to the
Indenture in order to conform the Indenture to the final prospectus supplement provided to investors in connection with the offering of the Notes.” 

Section 6.02. Supplemental Indentures with Consent of Holders 

Solely for purposes of the Notes, clauses (1) through (3) of Section 902(a) of the Base Indenture shall be deleted and replaced with
the following clauses (1) through (6): 
 “(1) change the Stated Maturity of any payment of principal of or
interest (including any additional interest) on the Notes; 
 (2) change the manner of calculating payments due on the Notes
in a manner adverse to Holders; 
 (3) reduce the requirements contained in the Indenture for quorum or voting; 

(4) change the Place of Payment for any payment on the Notes that is adverse to the Holders or change the currency in which any
payment on the Notes is payable; 
 (5) impair the right of any Holder to institute suit for the enforcement of any payment
on the Notes; 
 (6) reduce the percentage in principal amount of Outstanding Notes, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of the Indenture or certain defaults hereunder and their consequences; 

(7) reduce the principal amount of, the rate of interest on or any premium payable upon the redemption of the Notes; or 

(8) modify any of the provisions of this Section.” 

  
 13 

 ARTICLE SEVEN 

Miscellaneous 
 
Section 7.01. Effectiveness 
 This Supplemental Indenture will become effective upon its execution and delivery. 

Section 7.02. Successors and Assigns 

All covenants and agreements in the Base Indenture, as supplemented and amended by this Supplemental Indenture, by the Company shall bind its
successors and assigns, whether so expressed or not. 
 Section 7.03. Effect of Recitals 

The recitals contained herein and in the Notes, except the Trustee’s certificates of authentication, shall be taken as the statements of
the Company, and the Trustee does not assume any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture or of the Notes. The Trustee shall not be accountable for
the use or application by the Company of the Notes or the proceeds thereof. 
 Section 7.04. Ratification of Indenture

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

Section 7.05. Tax Treatment 

The Company and, by acceptance of the Notes or a beneficial interest in the Notes, each Holder and beneficial owner of a Note agree to treat
the Notes as indebtedness for United States federal income tax purposes. 
 Section 7.06. Governing Law 

This Supplemental Indenture and the Notes shall be governed by and construed in accordance with the laws of the State of New York. 

Section 7.07. Severability 

If any provision of the Base Indenture, as supplemented and amended by this Supplemental Indenture, shall be held or deemed to be or shall, in
fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative or unenforceable to any extent whatever. 

  
 14 

 Section 7.08. Consequential Damages, Force Majeure and FATCA 

(a) In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever
(including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. 

(b) In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising
out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services, so long as the Trustee maintains and updates from time to time business continuation and disaster recovery procedures that it determines
meet the standards of the industry; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. 

(c) The Company agrees (i) to provide the Trustee with such reasonable information as it has in its possession and that is specifically
requested by the Trustee to enable the Trustee to determine whether any payments pursuant to this Supplemental Indenture are subject to the withholding requirements described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the
“Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations, or agreements thereunder or official interpretations thereof (“Applicable Law”), and (ii) that the Trustee shall be
entitled to make any withholding or deduction from payments under this Supplemental Indenture to the extent necessary to comply with Applicable Law, for which the Trustee shall not have any liability. 

* * * 
 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. 

  
 15 

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

			
	PRUDENTIAL FINANCIAL, INC.
		
	By:	 	 /s/ Paul A. Curcio

	Name:	 	Paul A. Curcio
	Title:	 	Vice President and Assistant Treasurer

  
 [Signature Page to
Twelfth Supplemental Indenture] 

 
			
	 THE BANK OF NEW YORK MELLON,

as Trustee

		
	By:	 	 /s/ Francine Kincaid

	Name:	 	Francine Kincaid
	Title:	 	Vice President

  
 [Signature Page to
Twelfth Supplemental Indenture] 

 EXHIBIT A 

FORM OF NOTE 
 THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY 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 SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. 

UNLESS THIS CERTIFICATE 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 CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS 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. 
  

			
	No.	  	Principal Amount: $                    

  

			
	Issue Date:	  	CUSIP: 744320 805

 PRUDENTIAL FINANCIAL, INC. 

5.625% JUNIOR SUBORDINATED NOTES DUE 2058 

Prudential Financial, Inc., a corporation organized and existing under the laws of the State of New Jersey (hereinafter called the
“Company”, which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay
to                     or registered assigns, the principal sum
of                    dollars ($            ) on August 15, 2058 (the
“Maturity Date”), or if such day is not a Business Day (as defined below), the following Business Day. 
 The Company
further promises to pay interest on said principal sum from and including August 13, 2018 to but excluding August 15, 2058, at the annual rate of 5.625%, (computed on the basis of a 360-day year
consisting of twelve 30-day months) quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on November 15, 2018 (each, an “Interest
Payment Date”), subject to deferral as set forth herein. In the event that any Interest Payment Date falls on a day that is not a Business Day, the interest payment due on that date will be postponed to the next day that is a Business Day,
and no interest will accrue as a result of that postponement. Defaulted Interest and interest deferred pursuant to said Indenture will bear additional interest to the extent permitted by law, at the rate

  
 A-1 

 
of 5.625% per annum (computed on the basis of a 360-day year consisting of twelve 30-day months), from and
including the relevant Interest Payment Date, compounded on each subsequent Interest Payment Date. A “Business Day” shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The
City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office is closed for business. 

The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, as provided in said Indenture, will 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, which shall be February 1, May 1, August 1 and November 1
(whether or not a Business Day), as the case may be, immediately preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid, in the case of deferred interest, as provided in the following paragraph, and otherwise 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 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. 

So long as no Event of Default with respect to this Security has occurred or is continuing, the Company shall have the right at any time
during the term of this Security to defer payment of interest on this Security for one or more consecutive Interest Periods that do not exceed five years for any single Deferral Period, during which the Company shall have the right to make partial
payments of interest on any Interest Payment Date, and at the end of which the Company shall pay all interest then accrued and unpaid; provided, however, that no Deferral Period shall extend beyond the Maturity Date or the earlier
accelerated maturity date arising from an Event of Default or redemption of this Security. Upon the termination of any Deferral Period and upon the payment of all deferred interest then due, the Company may elect to begin a new Deferral Period,
subject to the above requirements. 
 So long as any Securities of this series remain outstanding, if the Company has given notice of its
election to defer interest payments on the Securities 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 to, (i) declare or pay any dividends or
other distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company’s capital stock, (ii) make any payment of principal of, or interest or premium, if any, on or repay, purchase or
redeem any debt securities of the Company that rank upon the Company’s liquidation on a parity with this Security (including the Company’s 4.500%
Fixed-to-Floating Rate Junior Subordinated Notes due 2047, the Company’s 5.375%
Fixed-to-Floating Rate Junior Subordinated Notes due 2045, the Company’s 5.875%
Fixed-to-Floating Rate Junior Subordinated Notes due 2042, the Company’s 5.625%
Fixed-to-Floating Rate Junior Subordinated Notes due 2043, the Company’s 5.20%
Fixed-to-Floating Rate Junior Subordinated Notes due 2044, the Company’s 5.75% Junior Subordinated Notes due 2052 and the Company’s

  
 A-2 

 
5.70% Junior Subordinated Notes due 2053, the “Pari Passu Securities”) or junior to this Security or (iii) make any guarantee payments regarding any guarantee
issued by the Company of securities of any Subsidiary if the guarantee ranks upon the Company’s liquidation on a parity with or junior to this Security (other than (a) any purchase, redemption or other acquisition of shares of its capital
stock in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more of its employees, officers, directors, consultants or independent contractors, (2) the satisfaction
of the Company’s obligations pursuant to any contract entered into prior to the beginning of the applicable Deferral Period, (3) a dividend reinvestment or shareholder purchase plan, or (4) the issuance of shares of the Company’s
capital stock, or securities convertible into or exercisable for such shares, as consideration in an acquisition transaction entered into prior to the applicable Deferral Period, (b) 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 other class or series of its capital stock, or of any class or series of its indebtedness for any class or series of its capital stock, (c) any
purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such shares or the securities being converted or exchanged, (d) any declaration of a dividend in connection with
any shareholder rights plan, or the issuance of rights, stock or other property under any shareholder rights plan, or the redemption or purchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other
rights where the dividend stock or stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equally with or junior to such stock, or (f) (1) any payment of
current or deferred interest on Parity Securities that is made pro rata to the amounts due on such Parity Securities (including the Notes), and (2) any payments of principal or current or deferred interest on Parity Securities that, if not
made, would cause the Company to breach the terms of the instrument governing such Parity Securities). 
 The Company shall give written
notice of its election to commence or continue any Deferral Period to the Trustee and the Holders of all Securities of this series then Outstanding at least one Business Day and not more than 60 Business Days before the next Interest Payment Date.
Such notice shall be given to the Trustee and the Holder of this Security at such Holder’s address appearing in the Security Register by first-class mail, postage prepaid. 

Payment of the principal of (and premium, if any) and interest on this Security will be made at the paying agency office or agency of the
Company maintained for that purpose in the United States, 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 (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at
such place and to such bank account number as may be designated by the Person entitled thereto as specified in the Securities Register in writing not less than ten days before the relevant Interest Payment Date. 

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior 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

  
 A-3 

 
such provisions, (b) authorizes and directs the Trustee on such Holder’s behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes. Each Holder hereof, by such Holder’s acceptance hereof, waives all
notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. 

The Company and, by acceptance of this Security or a beneficial interest in this Security, each Holder and beneficial owner of this Security
agree to treat this Security as indebtedness for United States federal income tax purposes. 
 By acceptance of this Security or a
beneficial interest in this Security, each Holder hereof and any person acquiring a beneficial interest herein, agree that either (A) no portion of the assets used by such purchaser to acquire and hold this Security or a beneficial interest in
this Security constitutes assets of any (i) employee benefit plan subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (ii) any plan, individual retirement accounts and other
arrangement subject to Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), or provisions under any federal, state, local, non-U.S. or other laws or
regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), and (iii) entities whose underlying assets are considered to include “plan assets” of any such plan, account or
arrangement within the meaning of Section 3(42) of ERISA as modified by 29 CFR § 2510.3-101 or under any applicable Similar Laws or (B) the purchase and holding of this Security or a beneficial
interest in this Security by such purchaser will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any applicable
Similar Laws. 
 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. 

  
 A-4 

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

			
	PRUDENTIAL FINANCIAL, INC.
		
	By:	 	  

	Name:	 	Paul A. Curcio
	Title:	 	Vice President and Assistant Treasurer

  

			
	Attest:	 	  

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 

This is one of the Securities of the series designated therein referred to in the within mentioned Indenture. 

Date: 
  

			
	 THE BANK OF NEW YORK MELLON,

as Trustee

		
	By	 	  

		 	            Authorized Officer

  
 A-5 

 (FORM OF REVERSE OF NOTE) 

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 the Indenture, dated as of June 17, 2008 (herein called the “Base Indenture”), between the Company and The Bank of New York Mellon (formerly known as The Bank of New York), as trustee (the
“Trustee”), as amended and supplemented by the Twelfth Supplemental Indenture, dated as of August 13, 2018, between the Company and the Trustee (the “Supplemental Indenture”, and together with the Base
Indenture, the “Indenture”), to which Indenture and all other 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, the holders of the Senior Indebtedness and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. By the terms of the Indenture, the Securities are issuable in series
that may vary as to amount, date of maturity, rate of interest, rank and in any other respect provided in the Indenture. 
 All terms used
in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. 
 The Securities of this
series shall be redeemable at the election of the Company in accordance with the terms of the Indenture. In particular, this Security is redeemable: 

(a) in whole at any time or in part from time to time on or after August 15, 2023, at a redemption price equal to 100% of
the principal amount of the Securities being redeemed plus accrued and unpaid interest to but excluding the Redemption Date; provided that if the Securities of this series are not redeemed in whole, at least $25 million aggregate
principal amount of the Outstanding Securities of this series remain outstanding after giving effect to such redemption; 

(b) in whole, but not in part, at any time prior to August 15, 2023, within 90 days after the occurrence of a Tax Event or
a Regulatory Capital Event, at a redemption price equal to 100% of the principal amount of the Securities being redeemed plus accrued and unpaid interest to but excluding the Redemption Date; or 

(c) in whole, but not in part, at any time prior to August 15, 2023, within 90 days after the occurrence of a Rating
Agency Event, at a redemption price equal to 102% of the principal amount of the Securities being redeemed plus accrued and unpaid interest to but excluding the Redemption Date. 

Notwithstanding the foregoing, the Company may not redeem the Securities of this series unless all accrued and unpaid interest,
including deferred interest (and compounded interest), has been paid in full on all Outstanding Securities of this series for all Interest Periods ending on or before the Redemption Date. 

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

  
 A-6 

 No sinking fund is provided for the Securities. 

The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company
with certain conditions set forth in the Indenture. 
 The Indenture permits, with certain exceptions as therein provided, the Company and
the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than
a majority in principal amount of the Outstanding Securities to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all Securities, 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. 
 As provided in and subject to the provisions of the Indenture, if an Event of Default as
set forth in the Indenture occurs, the principal amount of the Securities shall automatically become due and payable; provided that in any such case the payment of principal and interest on such Securities shall remain subordinated to the
extent provided in Article Eleven of the Base Indenture. 
 No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein
prescribed. 
 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is
registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 1002 of the Base Indenture duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. 
 Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee shall have the right to treat and shall 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. 

  
 A-7 

 The Securities are issuable only in registered form without coupons in minimum denominations
of $25 and any integral multiples of $25 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities are exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same. 
 THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. 

  
 A-8 

 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)

 hereby irrevocably constituting and
appointing                                       
                                         
agent to transfer this Security on the books of the Securities 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-9

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