Replacement Capital Covenants

​On March 7, 2007, in connection with the closing of the offering of $700,000,000 aggregate principal amount of the Company's Series A Junior Subordinated Notes (the "Series A Notes") and $300,000,000 aggregate principal amount of the Company's Series B Junior Subordinated Notes (the " Series B Notes"), the Company entered into a Replacement Capital Covenant dated as of March 7, 2007 (the "Covenant"), for the benefit of persons (the "covered debtholders") that buy, hold or sell a specified series of the Company's long-term indebtedness (the "covered debt"). The "covered debt" for purposes of the Covenant is the Company's Series C Junior Subordinate Notes (the "Series C Notes"), issued pursuant to an indenture, dated as of May 29, 2008, among the Company, as issuer, Liberty Mutual Holding Company Inc. and LMHC Massachusetts Holdings Inc., as guarantors, and The Bank of New York Mellon Trust Company, N.A., as trustee, which governs the Series C Notes. The holders of the Series C Notes have certain rights under the Covenant. Pursuant to the Covenant, neither the Company nor any of its subsidiaries will repay, redeem, defease or purchase the notes before, with respect to the Series A Notes, March 1, 2067 or, with respect to the Series B Notes, March 1, 2047 or such earlier time as provided for in the Covenant, unless, subject to certain limitations set forth in the Covenant, the principal amount repaid, redeemed or defeased or the applicable redemption or purchase price does not exceed a maximum the Company and its affiliated (as defined in the Covenant) have received from the sale of common stock, warrants, mandatorily convertible preferred stock, debt exchangeable for common equity and certain other qualifying capital securities during the relevant measurement period specified in the Covenant; provided that any net cash proceeds raised by either of the Guarantors will only be counted for purposes of the foregoing if the proceeds so received have been contributed to the Company within the relevant measurement period. For the avoidance of doubt, the foregoing limitation will not restrict the repayment of redemption of any Notes that the Company has previously defeased in accordance with the Covenant. For a complete copy of the Replacement Capital Covenants, please click here.