The Hartford 2008 Annual Report Download - page 642

(ii) Applicable Rules. For purposes of determining whether any of the Covered Payments will be subject
to the Excise Tax and the amount of such Excise Tax:
(A) Such Covered Payments shall be treated as “parachute payments” within the meaning of
Section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined
under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and
except to the extent that, in the good faith judgment of the Company’s independent certified public
accountants appointed prior to the Effective Date or tax counsel selected by such accountants (the
“Accountants”), the Company has a reasonable basis to conclude that such Covered Payments (in
whole or in part) either do not constitute “parachute payments” or represent reasonable compensation
for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise
Tax; and
(B) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the
Accountants in accordance with the principles of Section 280G of the Code.
(iii) Additional Rules. For purposes of determining the amount of the Tax Reimbursement Payment, the
Executive shall be deemed to pay (A) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made,
and (B) any applicable state and local income and other taxes at the highest applicable marginal rate of
taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the
maximum reduction in Federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year.
Page 15 of 23
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009