1
Filed Pursuant to Rule 424(b)(5)
Registration no. 333-56283
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 24, 1998
[HARTFORD LIFE LOGO]
8,000,000 PREFERRED SECURITIES
HARTFORD LIFE CAPITAL II
7.625% TRUST PREFERRED SECURITIES, SERIES B (TRUPS(R))*
(LIQUIDATION AMOUNT $25.00 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT DESCRIBED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS BY
HARTFORD LIFE, INC.
------------------
Each of the 7.625% Trust Preferred Securities, Series B, which we refer to
in this prospectus supplement as "TRUPS(R)" or "preferred securities,"
represents an undivided beneficial ownership interest in the assets of Hartford
Life Capital II. Hartford Life, Inc. will be the owner of all of the undivided
beneficial ownership interests represented by common securities of Hartford Life
Capital II.
A brief description of the preferred securities can be found under "Summary
Information -- Q&A" in this prospectus supplement.
The preferred securities have been approved for listing on the New York
Stock Exchange subject to official notice of issuance. We expect trading of the
preferred securities to begin within 30 days after they are first issued.
SEE "RISK FACTORS" BEGINNING ON PAGE S-5 OF THIS PROSPECTUS SUPPLEMENT TO
READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE BUYING THE PREFERRED
SECURITIES.
------------------
Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
------------------
PER PREFERRED
SECURITY TOTAL
------------- ------------
Initial public offering price(1)............................ $ 25.00 $200,000,000
Underwriting commission to be paid by Hartford Life......... (2) (2)
Proceeds, before expenses, to Hartford Life Capital II...... $ 25.00 $200,000,000
- ---------------
(1) Plus accrued distributions, if any, from March 6, 2001.
(2)In view of the fact that the proceeds of the sale of the preferred securities
will ultimately be used to purchase junior subordinated debt securities of
Hartford Life, the underwriting agreement provides that Hartford Life will
pay as compensation to the underwriters $0.7875 per preferred security for
the accounts of the several underwriters ($6,300,000 in the aggregate).
* TRUPS(R) is a registered service mark of Salomon Smith Barney Inc.
The underwriters expect to deliver the preferred securities in book-entry
form only through the facilities of The Depository Trust Company on or about
March 6, 2001.
------------------
Joint Book-Running Managers
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY
------------------
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
UBS WARBURG LLC
Prospectus Supplement dated February 27, 2001
2
SUMMARY INFORMATION -- Q&A
The following information supplements, and should be read together with,
the information contained in other parts of this prospectus supplement and in
the accompanying prospectus. This summary highlights selected information from
this prospectus supplement and the accompanying prospectus to help you
understand the preferred securities and the related guarantees and junior
subordinated debt securities. You should carefully read this prospectus
supplement and the accompanying prospectus to understand fully the terms of the
preferred securities, as well as the tax and other considerations that are
important to you in making a decision about whether to invest in the preferred
securities. You should pay special attention to the "Risk Factors" section in
this prospectus supplement to determine whether an investment in the preferred
securities is appropriate for you. The preferred securities are one of the
series of preferred securities referred to in the accompanying prospectus.
WHAT ARE THE PREFERRED SECURITIES?
Each preferred security represents an undivided beneficial interest in the
assets of Hartford Life Capital II. Each preferred security will entitle the
holder to receive quarterly cash distributions as described in this prospectus
supplement. The underwriters are offering preferred securities at a price of
$25.00 for each preferred security.
WHO IS HARTFORD LIFE CAPITAL II?
Hartford Life Capital II is a Delaware statutory business trust.
Hartford Life Capital II will sell its preferred securities to the public
and its common securities to Hartford Life, Inc., which we refer to as "Hartford
Life." Hartford Life Capital II will use the proceeds from these sales to buy a
series of junior subordinated debt securities from Hartford Life with the same
financial terms as the preferred securities. Hartford Life will pay interest on
the junior subordinated debt securities at the same rate and at the same times
as Hartford Life Capital II makes payments on the preferred securities. Hartford
Life Capital II will use the payments it receives on the junior subordinated
debt securities to make the corresponding payments on the preferred securities.
Hartford Life will, on a subordinated basis, fully and unconditionally guarantee
the payment by Hartford Life Capital II of the preferred securities to the
extent described in the accompanying prospectus. We refer to this as the
"guarantee." Both the junior subordinated debt securities and the guarantee will
be subordinated to Hartford Life's existing and future senior indebtedness, and
will effectively be subordinated to existing and future obligations of Hartford
Life's subsidiaries.
There are four trustees of Hartford Life Capital II. Two of the trustees
are officers of Hartford Life, who we refer to as the "regular trustees."
Wilmington Trust Company will act as the institutional trustee and Delaware
trustee.
WHO IS HARTFORD LIFE?
Hartford Life is a leading financial services and insurance holding company
that, through its consolidated subsidiaries, provides:
- investment products, including variable annuities, fixed market value
adjusted annuities, mutual funds and retirement plan services for the
savings and retirement needs of over 1.5 million customers,
- individual life insurance for income protection and estate planning to
approximately 500,000 customers,
- group benefits products such as group life and group disability insurance
for the benefit of millions of individuals, and
- corporate owned life insurance.
S-1
3
According to the latest publicly available data, Hartford Life was the
leading writer of individual variable annuities in the United States based on
sales for the year ended December 31, 2000, the third largest writer of group
disability insurance based on sales for the nine months ended September 30, 2000
and the third largest consolidated life insurance group based on statutory
assets as of December 31, 1999. Hartford Life is an indirect wholly owned
subsidiary of The Hartford Financial Services Group, Inc.
WHEN WILL YOU RECEIVE QUARTERLY DISTRIBUTIONS?
If you purchase the preferred securities, you are entitled to receive
cumulative cash distributions at an annual rate of 7.625% of the liquidation
amount of $25.00 per preferred security. Distributions will accumulate from the
date Hartford Life Capital II issues the preferred securities and will be paid
quarterly in arrears on January 15, April 15, July 15 and October 15 of each
year, beginning April 15, 2001.
WHEN CAN PAYMENT OF YOUR DISTRIBUTIONS BE DEFERRED?
Hartford Life can, on one or more occasions, defer interest payments on the
junior subordinated debt securities for up to 20 consecutive quarterly periods.
A deferral of interest payments cannot extend, however, beyond the maturity date
of the junior subordinated debt securities, which is February 15, 2050.
If Hartford Life defers interest payments on the junior subordinated debt
securities, Hartford Life Capital II will also defer distributions on the
preferred securities. During this deferral period, distributions will continue
to accrue on the preferred securities at an annual rate of 7.625% of the
liquidation amount of $25.00 per preferred security and any distributions that
are in arrears beyond the first date they are payable will bear interest at the
rate per year of 7.625% compounded quarterly from the relevant payment date for
such distribution. Once Hartford Life makes all interest payments on the junior
subordinated debt securities, it can again postpone interest payments on the
junior subordinated debt securities.
During any period in which Hartford Life defers interest payment on the
junior subordinated debt securities, neither it nor its subsidiaries will be
permitted to:
- declare or pay a dividend or make any other distribution on Hartford
Life's capital stock, or redeem, purchase or make a liquidation payment
on any of Hartford Life's capital stock, or make any related guarantee
payments, or
- make an interest, principal or premium payment on, or repay, repurchase
or redeem, any of Hartford Life's debt securities that rank equally with
or junior to the junior subordinated debt securities.
There are limited exceptions to these restrictions which are described in
the section entitled "Description of Preferred Securities -- Distributions."
If Hartford Life defers the payment of interest on the junior subordinated
debt securities, the junior subordinated debt securities will be treated as
being reissued at that time with original issue discount for United States
federal income tax purposes. This means that, beginning at the time of deferral,
for United States federal income tax purposes you will be required to accrue
interest income with respect to the junior subordinated debt securities each
year on an economic accrual basis, including during a deferral period, and to
include those amounts in your gross income before you receive any cash
distributions relating to those interest payments. If you sell your preferred
securities prior to the record date for the first distribution after a deferral
period, you will not receive the cash related to the accrued interest that you
reported for tax purposes. See "United States Federal Income Tax Consequences."
WHEN CAN HARTFORD LIFE CAPITAL II REDEEM THE PREFERRED SECURITIES?
Hartford Life Capital II will redeem all of the outstanding preferred
securities when the junior subordinated debt securities are paid at maturity on
February 15, 2050. In addition, if Hartford Life redeems any junior subordinated
debt securities before their maturity, Hartford Life Capital II will use the
cash it receives on the redemption of the junior subordinated debt securities to
redeem, on a proportionate
S-2
4
basis, preferred securities and common securities having an aggregate
liquidation amount equal to the aggregate principal amount of the junior
subordinated debt securities redeemed.
Hartford Life can redeem the junior subordinated debt securities before
their maturity at 100% of their principal amount plus accrued interest to the
date of redemption:
- in whole or in part, on one or more occasions any time on or after March
6, 2006, and
- in whole, but not in part, within 90 days after specified changes in tax
or regulatory law occur and continue, which we refer to as a "tax event"
and an "investment company event," respectively, each of which is more
fully described in the section entitled, "Description of the Preferred
Securities -- Special Event Redemption."
In addition, Hartford Life may redeem the junior subordinated debt
securities at any time prior to March 6, 2006, in whole or in part, at a
redemption price equal to the accrued and unpaid interest on the junior
subordinated debt securities to be redeemed as of the redemption date, plus the
greater of:
- the principal amount of the junior subordinated debt securities to be
redeemed, and
- an amount equal to the discounted remaining payments to initial optional
prepayment date as this term is defined in "Description of the Series B
Junior Subordinated Debt Securities -- Optional Redemption."
WHAT IS HARTFORD LIFE'S GUARANTEE OF THE PREFERRED SECURITIES?
Hartford Life will fully and unconditionally guarantee the preferred
securities based on:
- its obligations under the guarantee;
- its obligations under the trust declaration that governs the terms of the
preferred securities; and
- its obligations under the subordinated indenture that governs the terms
of the junior subordinated debt securities.
If Hartford Life does not make a payment on the junior subordinated debt
securities, Hartford Life Capital II will not have sufficient funds to make
payments on the preferred securities. The guarantee does not cover payments when
Hartford Life Capital II does not have sufficient funds to make payments on the
preferred securities. In such event, a holder of preferred securities may
institute a legal proceeding directly against Hartford Life pursuant to the
terms of the subordinated indenture to enforce payments of amounts equal to such
distributions to such holder. See "Description of the Series B Junior
Subordinated Debt Securities -- Indenture Events of Default." Hartford Life's
obligations under the guarantee are subordinate to its obligations to make
payments on all of its other senior indebtedness except its obligations under
similar guarantees.
WHEN COULD THE JUNIOR SUBORDINATED DEBT SECURITIES BE DISTRIBUTED TO YOU?
Hartford Life may dissolve Hartford Life Capital II at any time. If
Hartford Life Capital II is dissolved, Hartford Life Capital II will redeem the
preferred securities by distributing the junior subordinated debt securities to
holders of the preferred securities and the common securities on a proportionate
basis.
WHAT HAPPENS IF HARTFORD LIFE CAPITAL II IS DISSOLVED AND THE JUNIOR
SUBORDINATED DEBT SECURITIES ARE NOT DISTRIBUTED?
Hartford Life Capital II may also dissolve in circumstances where the
junior subordinated debt securities will not be distributed. In those
situations, subject to the rights of its creditors, Hartford Life Capital II
will pay the liquidation amount of $25.00 for each preferred security, plus
unpaid distributions to the date the payment is made. Hartford Life Capital II
will be able to make this distribution of cash only if the junior subordinated
debt securities are redeemed by Hartford Life.
S-3
5
WILL THE PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?
The preferred securities have been approved for listing on the NYSE subject
to official notice of issuance. Trading is expected to commence within 30 days
after the preferred securities are first issued. You should be aware that the
listing of the preferred securities will not necessarily ensure that a liquid
trading market will be available for the preferred securities or that you will
be able to sell your preferred securities at the price you paid for them. If
Hartford Life Capital II distributes the junior subordinated debt securities,
Hartford Life will use its best efforts to list the junior subordinated debt
securities on the NYSE or any other exchange or other organization on which the
preferred securities are then listed.
IN WHAT FORM WILL THE PREFERRED SECURITIES BE ISSUED?
The preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of The
Depository Trust Company, New York, New York, which we refer to as "DTC," or its
nominee. This means that you will not receive a certificate for your preferred
securities. Hartford Life Capital II expects that the preferred securities will
be ready for delivery through DTC on or about March 6, 2001.
S-4
6
RISK FACTORS
Your investment in the preferred securities will involve some risks. You
should carefully consider the following discussion of risks and the other
information in this prospectus supplement and the accompanying prospectus before
deciding whether an investment in the preferred securities is suitable for you.
Because Hartford Life Capital II will rely on the payments it receives on
the junior subordinated debt securities to fund all payments on the preferred
securities, and because Hartford Life Capital II may distribute the junior
subordinated debt securities in exchange for the preferred securities, you are
making an investment regarding the junior subordinated debt securities as well
as the preferred securities. You should carefully review the information in this
prospectus supplement and the accompanying prospectus about the preferred
securities, the guarantee and the junior subordinated debt securities.
HOLDERS OF OUR SENIOR INDEBTEDNESS WILL GET PAID BEFORE YOU WILL GET PAID UNDER
THE JUNIOR SUBORDINATED DEBT SECURITIES OR THE GUARANTEE
Our obligations to you under the junior subordinated debt securities and
the guarantee will be junior in right of payment to all of our existing and
future senior indebtedness. This means that we cannot make any payments to you
on the junior subordinated debt securities or the guarantees if we are in
default on any of our senior indebtedness. Therefore, in the event of our
bankruptcy, liquidation or dissolution, our assets must be used to pay off our
senior indebtedness in full before any payments may be made on the junior
subordinated debt securities or the guarantee.
As of December 31, 2000, after giving effect to our offering of $400
million in principal amount of senior notes, we had outstanding senior
indebtedness of approximately $1,050 million, and $250 million of trust
preferred securities. The indentures pursuant to which the junior subordinated
debt securities will be issued, the guarantee and the declaration which governs
Hartford Life Capital II do not limit our ability to incur additional senior
indebtedness.
For more information, see "Description of the Series B Junior Subordinated
Debt Securities -- Subordination" in this prospectus supplement and "Description
of Guarantee -- Status of the Guarantee" in this prospectus supplement.
OUR RESULTS OF OPERATIONS DEPEND UPON THE RESULTS OF OPERATIONS OF OUR
SUBSIDIARIES
We are a holding company that conducts substantially all of our operations
through our insurance companies and other subsidiaries. As a result, our ability
to make payments on the junior subordinated debt securities and the guarantee
will depend primarily upon the receipt of dividends and other distributions from
our subsidiaries.
There are various regulatory restrictions on the ability of our insurance
subsidiaries to pay dividends or make other payments to us. Our insurance
subsidiaries are permitted to pay us up to a maximum of approximately $310
million in dividends in 2001 without prior regulatory approval.
In addition, our right to participate in any distribution of assets of any
of our subsidiaries upon the subsidiary's liquidation or otherwise, and thus
your ability as a holder of the preferred securities to benefit indirectly from
that distribution, will be subject to the prior claims of creditors of that
subsidiary, except to the extent that any of our claims as a creditor of that
subsidiary may be recognized. As a result, the junior subordinated debt
securities and the guarantee will effectively be subordinated to all existing
and future liabilities and obligations of our subsidiaries. Therefore, you
should look only to our assets for payments on those securities.
At December 31, 2000, we and our consolidated subsidiaries had outstanding
debt and other liabilities, including deposits, of approximately $140.4 billion.
S-5
7
IF WE DO NOT MAKE PAYMENTS ON THE JUNIOR SUBORDINATED DEBT SECURITIES, HARTFORD
LIFE CAPITAL II WILL NOT BE ABLE TO PAY DISTRIBUTIONS AND OTHER PAYMENTS ON THE
PREFERRED SECURITIES AND THE GUARANTEE WILL NOT APPLY
Hartford Life Capital II's ability to make timely distribution and
redemption payments on the preferred securities is completely dependent upon our
making timely payments on the junior subordinated debt securities. If we default
on the junior subordinated debt securities, Hartford Life Capital II will lack
funds for the payments on the preferred securities. If this happens, holders of
preferred securities will not be able to rely upon the guarantee for payment of
those amounts because the guarantee only guarantees that we will make
distributions and redemption payments on the preferred securities if Hartford
Life Capital II has the funds to do so itself but does not. Instead, you or the
institutional trustee may proceed directly against us for payment of any amounts
due on the preferred securities.
DISTRIBUTIONS ON THE PREFERRED SECURITIES COULD BE DEFERRED; YOU MAY HAVE TO
INCLUDE INTEREST IN YOUR TAXABLE INCOME BEFORE YOU RECEIVE CASH
We can, on one or more occasions, defer interest payments on the junior
subordinated debt securities for up to 20 consecutive quarterly periods, but not
beyond the maturity date of the junior subordinated debt securities. Because
interest payments on the junior subordinated debt securities fund the
distributions on the preferred securities, each deferral would result in a
corresponding deferral of distributions on the preferred securities.
We do not intend to defer interest payments on the junior subordinated debt
securities. However, if we do so in the future, the preferred securities may
trade at a price that does not reflect fully the value of the accrued but unpaid
distributions. Even if we do not do so, our right to defer interest payments on
the junior subordinated debt securities could mean that the market price for the
preferred securities may be more volatile than that of other securities without
interest deferral rights.
If we defer the payment of interest on the junior subordinated debt
securities, the junior subordinated debt securities will be treated as being
reissued at that time with original issue discount for United States federal
income tax purposes. This means that, beginning at the time of deferral, for
United States federal income tax purposes you will be required to accrue
interest income with respect to the junior subordinated debt securities each
year on an economic accrual basis, including during a deferral period, and to
include those amounts in your gross income before you receive any cash
distributions relating to those interest payments. If you sell your preferred
securities prior to the record date for the first distribution after a deferral
period, you will not receive the cash related to the accrued interest that you
reported for tax purposes. YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR
REGARDING THE TAX CONSEQUENCES OF AN INVESTMENT IN THE PREFERRED SECURITIES.
For more information regarding the tax consequences of purchasing the
preferred securities, see below under the caption "United States Federal Income
Tax Consequences -- Interest Income and Original Issue Discount" and "-- Sales
or Redemption of Preferred Securities" in this prospectus supplement.
THE PREFERRED SECURITIES MAY BE REDEEMED PRIOR TO MATURITY; YOU MAY BE TAXED ON
THE PROCEEDS AND YOU MAY NOT BE ABLE TO REINVEST THE PROCEEDS AT THE SAME OR A
HIGHER RATE OF RETURN
The junior subordinated debt securities, and therefore the preferred
securities, may be redeemed in whole or in part on one or more occasions at any
time, or in whole, but not in part, upon the occurrence of specified events
relating to changes in tax or regulatory law. If redeemed on or after March 6,
2006, or upon the occurrence of a tax event or investment company event, the
redemption price for the junior subordinated debt securities would be equal to
100% of the principal amount to be redeemed plus accrued and unpaid interest
thereon. If redeemed prior to March 6, 2006 and no tax event or investment
company event has occurred, the redemption price would be equal to the greater
of the principal amount to be redeemed and the discounted remaining payments
thereof to initial optional prepayment date, as this term is defined in
"Description of Series B Junior Subordinated Debt Securities -- Optional
Redemption," plus accrued and unpaid interest thereon. Upon redemption, Hartford
Life Capital II must use the redemption
S-6
8
price it receives to redeem on a proportionate basis preferred securities and
common securities having an aggregate liquidation amount equal to the aggregate
principal amount of the junior subordinated debt securities redeemed.
The redemption of the preferred securities would be a taxable event to you
for United States federal income tax purposes.
In addition, you may not be able to reinvest the money that you receive in
the redemption at a rate that is equal to or higher than the rate of return on
the preferred securities.
AN ACTIVE TRADING MARKET FOR THE PREFERRED SECURITIES MAY NOT DEVELOP
The preferred securities have been approved for listing on the New York
Stock Exchange subject to official notice of issuance. Trading is expected to
commence within 30 days after the preferred securities are first issued. You
should be aware that the listing of the preferred securities will not
necessarily ensure that an active trading market will be available for the
preferred securities or that you will be able to sell your preferred securities
at the price you originally paid for them.
HARTFORD LIFE GENERALLY WILL CONTROL HARTFORD LIFE CAPITAL II BECAUSE YOUR
VOTING RIGHTS ARE VERY LIMITED
You will only have limited voting rights. In particular, you may not elect
and remove any trustees, except when there is a default under the junior
subordinated debt securities. If a default under the junior subordinated debt
securities occurs, a majority in liquidation amount of the holders of the
preferred securities would be entitled to remove or appoint the institutional
trustee and the Delaware trustee.
HARTFORD LIFE, INC.
We are a leading financial services and insurance holding company that,
through our consolidated subsidiaries, provides:
- investment products, including variable annuities, fixed market value
adjusted annuities, mutual funds and retirement plan services for the
savings and retirement needs of over 1.5 million customers,
- individual life insurance for income protection and estate planning to
approximately 500,000 customers,
- group benefits products such as group life and group disability insurance
for the benefit of millions of individuals, and
- corporate owned life insurance, or COLI.
According to the latest publicly available data, we were the leading writer of
individual variable annuities in the United States based on sales for the year
ended December 31, 2000, the third largest writer of group disability insurance
based on sales for the nine months ended September 30, 2000 and the third
largest consolidated life insurance group based on statutory assets as of
December 31, 1999. In addition, we offer the fastest growing non-proprietary
family of mutual funds. Our strong position in each of our core businesses
provides an opportunity to increase the sale of our products and services as
individuals increasingly save and plan for retirement, protect themselves and
their families against disability or death and engage in estate planning.
In June 2000, we became an indirect wholly-owned subsidiary of The Hartford
Financial Services Group, Inc. following its cash tender offer for all of our
common shares not already owned by it at a price of $50.50 per share. The
Hartford had owned a majority of our common shares following our initial public
offering on May 22, 1997. Prior to that date we were a wholly-owned subsidiary
of The Hartford.
As a holding company that is separate and distinct from our insurance
subsidiaries, we have no significant business operations of our own. Therefore,
we rely on the dividends from our insurance
S-7
9
company subsidiaries, which are primarily domiciled in Connecticut, as the
principal source of cash flow to meet our obligations. These obligations include
payments on our debt securities and the payment of dividends on our capital
stock, including preferred stock. The Connecticut insurance holding company laws
limit the payment of dividends by Connecticut-domiciled insurers. Under these
laws, the insurance subsidiaries may only make their dividend payments out of
earned surplus. In addition, the state insurance commissioner must give approval
to those subsidiaries paying us dividends if the dividend and other dividends or
distributions made within the preceding twelve months exceeds the greater of:
- 10% of the insurer's policyholder surplus as of December 31 of the
preceding year, or
- net gain from operations, for the previous calendar year, in each case
determined under statutory insurance accounting principles.
The insurance holding company laws of the other jurisdictions in which our
insurance subsidiaries are incorporated generally contain similar, and in some
instances more restrictive, limitations on the payment of dividends. Our
insurance subsidiaries are permitted to pay us up to a maximum of approximately
$310 million in dividends in 2001 without prior regulatory approval.
Our rights to participate in any distribution of assets of any of our
subsidiaries, for example upon their liquidation or reorganization, and the
ability of holders of our securities to benefit indirectly from a distribution,
are subject to the prior claims of creditors of the applicable subsidiary,
except to the extent that we may be a creditor of that subsidiary. Claims on
these subsidiaries by persons other than us include, as of December 31, 2000,
claims by policyholders for benefits payable amounting to $22.9 billion, claims
by separate account holders of $114.0 billion and other liabilities, including
claims of trade creditors, claims from guaranty associations and claims from
holders of debt obligations amounting to $3.5 billion.
Our principal executive offices are located at 200 Hopmeadow Street,
Simsbury, Connecticut 06089, and our telephone number is (860) 547-5000.
HARTFORD LIFE CAPITAL II
Hartford Life Capital II is a statutory business trust organized under
Delaware law by the trustees and Hartford Life. Hartford Life Capital II has
been established solely for the following purposes:
- to issue the preferred securities, which represent undivided beneficial
ownership interests in Hartford Life Capital II's assets,
- to issue the common securities to Hartford Life in a total liquidation
amount equal to at least 3% of Hartford Life Capital II's total capital,
- to invest the proceeds of the issuance and sale of the preferred
securities and the common securities in the junior subordinated debt
securities issued by Hartford Life, and
- to engage in other activities that are directly related to the activities
described above, such as registering the transfer of the preferred
securities.
Because Hartford Life Capital II is being established only for the purposes
listed above, the junior subordinated debt securities will be Hartford Life
Capital II's sole assets. Payments on the junior subordinated debt securities
will be Hartford Life Capital II's sole source of income. Hartford Life Capital
II will issue only one series of preferred securities.
S-8
10
RECENT DEVELOPMENTS
RESULTS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
The following table sets forth selected consolidated financial data for the
years ended December 31, 2000 and 1999.
YEAR ENDED DECEMBER 31,
------------------------
2000 1999
----------- ---------
(UNAUDITED) (AUDITED)
(IN MILLIONS)
Net income.................................................. $ 575 $ 467
Core earnings(1)............................................ $ 632 $ 467
Total revenues.............................................. $5,990 $5,536
AS OF DECEMBER 31,
------------------------
2000 1999
----------- ---------
(UNAUDITED) (AUDITED)
(IN MILLIONS)
Total assets................................................ $143,621 $139,033
Total assets under management(2)............................ $155,053 $145,407
- ---------------
(1) We define "core earnings" as after-tax operational results excluding, as
applicable, net realized capital gains or losses, the cumulative effect of
accounting changes, and certain other items. Core earnings should only be
analyzed in conjunction with, and not instead of, net income and may not be
comparable to other performance measures used by our competitors.
(2) Includes mutual fund assets managed by us.
For the year ended December 31, 2000, our net income was up 23 percent from
a year ago. The increase was primarily driven by our Investment Products segment
in which net income increased $94 million, or 28 percent, due principally to
higher fee income. Additionally, net income from each of our other three
operating segments increased 10 percent or more from a year ago. Also included
in our 2000 results were favorable federal and state tax settlements of $32
million. Core earnings and revenues for the year increased 35 percent and 8
percent, respectively, from a year ago. This increase was primarily due to
growth across each of our primary operating segments, particularly the
Investment Products and Group Benefits segments. The revenue growth in the
Investment Products segment was primarily driven by higher fee income in our
individual annuity and mutual fund operations, as average assets in 2000 were
higher than 1999. The Group Benefits segment had higher earned premiums as a
result of strong sales and favorable persistency.
ACQUISITION OF FORTIS FINANCIAL GROUP
On January 25, 2001, we agreed to acquire, for $1.12 billion in cash, the
U.S. individual life, annuity, and mutual fund businesses of Fortis, Inc., which
operates as Fortis Financial Group, or FFG. The transaction, which is subject to
insurance regulatory approval and other customary conditions, is expected to be
completed in the second quarter of 2001. We will effect the acquisition through
the purchase of 100 percent of the stock of Fortis Advisers, Inc. and Fortis
Investors, Inc., wholly-owned subsidiaries of FFG. In addition, we will assume,
through several reinsurance agreements, business written by several subsidiaries
of FFG.
The transaction increases our scale in three strategically important
businesses: individual life insurance, annuities and mutual funds. It will also
broaden our sales platform by providing retail distribution capabilities through
the addition of FFG's retail broker-dealer consisting of approximately 3,000
registered representatives.
In the individual life business, we will nearly double the number of life
insurance contracts we have in force after the transaction. We expect to realize
from the transaction increased scale to our operations,
S-9
11
which will reduce the average cost to maintain business already on our books,
and lower the cost to acquire new business. The transaction also enables us to
broaden our reach in the emerging affluent market. We believe this new business
sales capability will be complementary to our own capability and will move us to
being the third-largest writer of variable life insurance in the United States.
In the individual annuity business, the transaction provides us with the
opportunity to utilize our low-cost operating platform across the FFG business.
The transaction also will add FFG's investment management business, which had
approximately $11 billion of assets under management, including approximately $4
billion of mutual fund assets under management, at December 31, 2000. This will
increase our mutual fund assets under management by over 30 percent.
We expect to finance the acquisition through the $615 million of net
proceeds received from The Hartford from its offering of common stock, the $393
million of net proceeds received from our offering of senior notes and the
proceeds we receive from this offering of preferred securities.
USE OF PROCEEDS
Hartford Life Capital II intends to use the net proceeds from the sale of
the preferred securities in this offering to purchase a corresponding series of
junior subordinated debt securities issued by Hartford Life. We intend to use
the net proceeds from the sale of those junior subordinated debt securities,
estimated to be approximately $193.5 million after deducting the estimated
underwriting discount and expenses, to finance a portion of the $1.12 billion
purchase price for our acquisition of FFG. The remainder of the purchase price
will be financed from net proceeds received from The Hartford from its recently
completed offering of common stock, and our offering of senior notes.
You may find more information about our acquisition of FFG under the
heading "Recent Developments -- Acquisition of Fortis Financial Group" above.
ACCOUNTING TREATMENT
Hartford Life Capital II will be treated as a wholly-owned subsidiary of
Hartford Life for financial reporting purposes. Accordingly, the financial
statements of Hartford Life Capital II will be included in the consolidated
financial statements of Hartford Life. The preferred securities of Hartford Life
Capital II will be classified as a separate line item in the consolidated
balance sheet of Hartford Life similar to its long-term debt, with appropriate
disclosures about the preferred securities included in the footnotes to the
consolidated financial statements. Hartford Life will record distributions
payable on preferred securities as interest expense, consistent with the balance
sheet classification, in the statement of consolidated operations of Hartford
Life. Included in a footnote to the consolidated financial statements will be
disclosure that the sole assets of Hartford Life Capital II are the junior
subordinated debt securities, and the principal amount, interest rate and
maturity date of the junior subordinated debt securities held.
S-10
12
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
December 31, 2000. The following data is qualified in its entirety by our
financial statements and other information contained elsewhere in this
prospectus supplement and the accompanying prospectus, or incorporated by
reference.
The "As Adjusted" column reflects the issuance of the preferred securities
contemplated by this prospectus supplement, The Hartford's contribution of $615
million to us from the net proceeds from its recently completed offering of
shares of common stock and our offering of $400 million in principal amount of
senior notes, and the use of the proceeds of those offerings for the acquisition
of FFG. See "Recent Developments -- Acquisition of Fortis Financial Group" in
this prospectus supplement.
AS OF DECEMBER 31, 2000
------------------------
AS
ACTUAL ADJUSTED
-------- ----------
(UNAUDITED, IN MILLIONS)
Long-Term Debt.............................................. $ 650 $1,050
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely Parent
Junior Subordinated Debt Securities (TRUPS)............... 250 450
Equity, excluding net unrealized capital gains on
securities, net of tax.................................... 3,167 3,782
Net unrealized capital gains on securities, net of tax...... 40 40
------ ------
Total Stockholders' Equity................................ 3,207 3,822
Total Capitalization(1)................................... $4,067 $5,282
- ---------------
(1) Excludes net unrealized capital gains on securities, net of tax.
S-11
13
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of consolidated earnings to fixed
charges for the years indicated:
YEAR ENDED DECEMBER 31,
------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Ratio of Consolidated Earnings to Total Fixed
Charges(1)............................................. 11.1 9.8 9.6 8.2 1.5
Ratio of Consolidated Earnings to Total Fixed Charges,
including Interest Credited to Contractholders(2)...... 1.7 1.5 1.4 1.4 1.0
- ---------------
(1) The 1996 ratio of earnings to total fixed charges, excluding charges of $348
million, before-tax, primarily related to the recognition of losses in our
guaranteed investment contract business, was 6.9.
(2) The 1996 ratio of earnings to total fixed charges including interest
credited to contractholders, excluding charges of $348 million, before-tax,
primarily related to the recognition of losses in our guaranteed investment
contract business, was 1.3.
For purposes of computing the ratio of consolidated earnings to total fixed
charges, "earnings" consists of income from continuing operations before federal
income taxes and fixed charges. "Total Fixed Charges" consists of interest
expense, amortization of debt expense, and an imputed interest component for
rental expense. "Total Fixed Charges, including Interest Credited to
Contractholders," also includes all interest paid or credited to the holders of
policies, annuities and investment contracts.
S-12
14
SELECTED FINANCIAL INFORMATION
The selected consolidated financial data for each of the four fiscal years
in the period ended December 31, 1999 were derived from our consolidated audited
financial statements as of and for the years ended December 31, 1999, 1998, 1997
and 1996. The data presented for the year ended December 31, 2000 was derived
from our unaudited consolidated financial statements as of and for the year
ended December 31, 2000 and include all adjustments, consisting of normal
recurring accruals, which we consider necessary for a fair presentation of our
financial position and results of operations as of such a date and for such
period.
You should read the following information in conjunction with our
consolidated financial statements and the related notes that are incorporated in
this prospectus supplement and the accompanying prospectus by reference.
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- -------
(IN MILLIONS)
INCOME STATEMENT DATA
Revenues(1)........................ $ 5,990 $ 5,536 $ 5,788 $ 4,699 $ 4,384
======== ======== ======== ======== =======
Net income......................... $ 575 $ 467 $ 386 $ 306 $ 24
======== ======== ======== ======== =======
BALANCE SHEET DATA
Assets............................. $143,621 $139,033 $122,022 $100,980 $79,933
======== ======== ======== ======== =======
Long-term debt..................... $ 650 $ 650 $ 650 $ 650 $ --
Company obligated mandatorily
redeemable preferred securities
of subsidiary trusts holding
solely parent junior
subordinated debt securities
(TRUPS)......................... 250 250 250 -- --
Total stockholders' equity......... $ 3,207 $ 2,306 $ 2,493 $ 2,144 $ 1,274
======== ======== ======== ======== =======
- ---------------
(1) 1998 includes $541 million related to the recapture of an in force block of
COLI business from MBL Life Assurance Co. of New Jersey.
S-13
15
DESCRIPTION OF THE PREFERRED SECURITIES
GENERAL
The following summary of the terms of the preferred securities supplements
the description set forth in the accompanying prospectus under the heading
"Description of Preferred Securities". This summary describes the material
provisions of the preferred securities but is not intended to be complete. There
may be other provisions in the declaration that are important to you. We have
filed the form of declaration as an exhibit to the registration statement of
which this prospectus supplement and the accompanying prospectus are a part.
The declaration authorizes Hartford Life Capital II to issue common
securities and preferred securities, which we refer to in this prospectus
supplement as the trust securities. The trust securities represent undivided
beneficial interests in the assets of Hartford Life Capital II. We or one of our
subsidiaries will own all of the common securities. The common securities rank
equally with the preferred securities, and payments to us on the common
securities will be made on a proportionate basis with the preferred securities.
However, if there exists a declaration event of default, our rights as the
holder of the common securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the preferred securities.
The declaration does not permit Hartford Life Capital II to issue any
securities other than the trust securities or to incur any indebtedness. The
institutional trustee will hold title to the junior subordinated debt securities
purchased by Hartford Life Capital II for the benefit of the holders of the
trust securities.
We will guarantee the payment of distributions, and payments upon
redemption of the preferred securities or liquidation of Hartford Life Capital
II, to the extent that Hartford Life Capital II has funds available to make
these payments, as described under "Description of Guarantee." The guarantee
trustee will hold the guarantee for the benefit of the holders of the preferred
securities. In the event that Hartford Life Capital II does not have sufficient
available funds to make these payments, the remedy of a holder of preferred
securities is to:
- vote to direct the institutional trustee to enforce the institutional
trustee's rights under the junior subordinated debt securities, see
"-- Voting Rights," or
- if the failure of Hartford Life Capital II to make these payments is
attributable to our failure to make payments on the junior subordinated
debt securities, institute a proceeding directly against us for
enforcement of payment on the junior subordinated debt securities having
a principal amount equal to the aggregate liquidation amount of the
preferred securities held by the holder on or after the due date
specified in the junior subordinated debt securities. See "-- Declaration
Events of Default."
DISTRIBUTIONS
Distributions on the preferred securities will be fixed at a rate per year
of 7.625% of the stated liquidation amount of $25.00, per preferred security.
Distributions that are in arrears beyond the first date they are payable, or
would be payable if not for any deferral period or default by us on the junior
subordinated debt securities, will bear interest at the rate per year of 7.625%
compounded quarterly from the relevant payment date for such distribution. The
term "distribution" as used in this prospectus supplement includes any such
additional interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months.
Distributions on the preferred securities will be cumulative, will accrue
from and including March 6, 2001, and will be payable quarterly in arrears on
January 15, April 15, July 15 and October 15 of each year, commencing April 15,
2001.
S-14
16
The distribution rate and the distribution payment dates and other payment
dates for the preferred securities will correspond to the interest rate and
interest payment dates and other payment dates on the junior subordinated debt
securities.
We have the right under the subordinated indenture to defer payments of
interest on the junior subordinated debt securities by deferring the interest
payments on the junior subordinated debt securities for a period not exceeding
20 consecutive quarterly interest periods, during which no interest shall be due
and payable. However, we may not defer the interest payment period beyond the
maturity of the junior subordinated debt securities. If we defer the interest
payments, quarterly distributions on the preferred securities would also be
deferred for a corresponding period. In this case, the distributions on the
preferred securities would continue to accrue and distributions that are in
arrears beyond the first date they would be payable will bear interest at a rate
of 7.625% compounded quarterly from the relevant date for such distribution,
since interest would continue to accrue on the junior subordinated debt
securities.
If we exercise our right to defer interest payments, then:
- we will not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock or make any guarantee payment
with respect to those payments, other than:
- repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants,
- repurchases, redemptions or other acquisitions of shares of our capital
stock as a result of an exchange or conversion of any class or series of
our capital stock for any other class or series of our capital stock,
- the purchase of fractional interests in shares our capital stock
pursuant to the conversion or exchange provisions of that capital stock
or the security being converted or exchanged, or
- distributions of rights under any shareholders rights plan we may adopt,
and
- we will not make any payment of interest, principal or premium on, or
repay, repurchase or redeem, any debt securities that we or our
subsidiaries may issue which ranks equally with or junior to the junior
subordinated debt securities.
These restrictions will not apply to any stock dividends we pay where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any deferral period, we may further extend that
deferral period. However, the deferral period, together with all previous and
further extensions of that deferral period, may not exceed 20 consecutive
quarterly interest periods and may not extend beyond the maturity of the junior
subordinated debt securities. Upon the termination of any deferral period and
the payment of all amounts then due, we may commence a new deferral period,
subject to these restrictions. Consequently, there could be numerous deferral
periods of varying lengths throughout the term of the junior subordinated debt
securities. See "Description of the Series B Junior Subordinated Debt
Securities -- Interest" and "--Option to Extend Interest Payment Period."
The regular trustees shall give the holders of the preferred securities
notice of any extension period upon their receipt of notice from us. See
"Description of the Series B Junior Subordinated Debt Securities -- Option To
Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest will be paid to holders of record of the
preferred securities as they appear on the books and records of Hartford Life
Capital II on the record date next following the termination of the deferral
period.
Distributions on the preferred securities will be made on the dates
payable, subject to the deferral provisions described above, to the extent that
Hartford Life Capital II has funds available for the payment of those
distributions in its property account. Hartford Life Capital II's funds
available for distribution to
S-15
17
the holders of the preferred securities will be limited to payments received
from us on the junior subordinated debt securities. See "Description of the
Series B Junior Subordinated Debt Securities." The payment of distributions by
Hartford Life Capital II is guaranteed by us to the extent set forth under
"Description of Guarantee."
Distributions on the preferred securities will be payable to the holders of
the securities as they appear on the books and records of Hartford Life Capital
II at the close of business on the relevant record dates. As long as the
preferred securities remain in book-entry only form, the record dates will be
one business day prior to the relevant payment dates. Distributions will be paid
through the institutional trustee. The institutional trustee will hold amounts
received on the junior subordinated debt securities in the property account for
the benefit of the holders of the trust securities. Subject to any applicable
laws and regulations and the provisions of the declaration, each such payment
will be made as described under " -- Book-Entry Only Issuance -- The Depository
Trust Company" below. In the event that the preferred securities do not continue
to remain in book-entry only form, the relevant record dates will conform to the
rules of any securities exchange on which the preferred securities are listed
and, if none, the regular trustees will have the right to select relevant record
dates, which will be more than 14 days but less than 60 days prior to the
relevant distribution payment dates. In the event that any date on which
distributions are to be made on the preferred securities is not a business day,
then payment of the distributions payable on that date will be made on the next
succeeding day that is a business day, and without any interest or other payment
resulting from any such delay, except that, if that business day is in the next
succeeding calendar year, the payment will be made on the immediately preceding
business day, in each case with the same force and effect as if made on the
relevant distribution payment date. A "business day" will mean any day other
than Saturday, Sunday or any other day on which banking institutions in New
York, New York or Wilmington, Delaware are permitted or required by any
applicable law to close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The preferred securities have no stated maturity date but will be redeemed
upon the maturity of the junior subordinated debt securities or to the extent we
redeem the junior subordinated debt securities. The junior subordinated debt
securities will mature on February 15, 2050. In addition, we may redeem the
junior subordinated debt securities:
- in whole or in part, at any time, or
- at any time, in whole but not in part, if a "special event" as described
under " -- Special Event Redemption," shall occur and be continuing.
If we redeem the junior subordinated debt securities on or after March 6, 2006,
or upon the occurrence of a tax event or an investment company event, the
redemption price will be equal to accrued and unpaid interest on the junior
subordinated debt securities so redeemed to the date fixed for redemption plus
the principal amount of the junior subordinated debt securities so redeemed. If
we redeem the junior subordinated debt securities prior to March 6, 2006, in
whole or in part and no tax event or investment company event has occurred, the
redemption price will be equal to the accrued and unpaid interest on the junior
subordinated debt securities so redeemed to the date fixed for redemption, plus
the greater of:
- the principal amount of the junior subordinated debt securities so
redeemed, or
- an amount equal to the discounted remaining payments to initial optional
prepayment date, as defined in the section entitled, "Description of the
Series B Junior Subordinated Debt Securities -- Optional Redemption."
At the maturity of the junior subordinated debt securities, the proceeds
from our repayment of the junior subordinated debt securities will
simultaneously be applied to redeem all outstanding trust securities at the
redemption price. Upon the redemption of the junior subordinated debt
securities, whether in whole or in part, the proceeds from that redemption will
simultaneously be applied to redeem trust securities having an aggregate
liquidation amount equal to the aggregate principal amount of the junior
subordinated debt securities so redeemed at the redemption price. Holders of
trust securities will be given not less than
S-16
18
30 nor more than 60 days' notice of the redemption. In the event that fewer than
all of the outstanding junior subordinated debt securities are to be redeemed,
the trust securities will be redeemed on a proportionate basis as described
under " -- Book-Entry Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION
A "special event" is defined as either a "tax event" or an "investment
company event."
A "tax event" means that the regular trustees shall have received an
opinion of nationally recognized independent tax counsel experienced in such
matters to the effect that, as a result of:
- any amendment to, or change, including any announced prospective change,
in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or
- any interpretation or application of, or pronouncement with respect to,
those laws or regulations by any legislative body, court, governmental
agency or regulatory authority, including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination,
which amendment or change is effective or which interpretation, application or
pronouncement is announced on or after the date of this prospectus supplement,
there is more than an insubstantial risk that:
- Hartford Life Capital II would be subject to United States federal income
tax with respect to income accrued or received on the junior subordinated
debt securities,
- interest payable to Hartford Life Capital II on the junior subordinated
debt securities would not be deductible, in whole or in part, by us for
United States federal income tax purposes, or
- Hartford Life Capital II would be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
An "investment company event" means that the regular trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the Investment Company Act of 1940, as amended, to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, which we
refer to as a "change in Investment Company Act law," there is more than an
insubstantial risk that Hartford Life Capital II is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended, which change in Investment Company Act law
becomes effective on or after the date of this prospectus supplement.
If at any time there exists a special event, we will have the right, upon
not less than 30 nor more than 60 days' notice, to redeem the junior
subordinated debt securities, in whole but not in part, for cash within 90 days
following the occurrence of the special event. Following that redemption,
Hartford Life Capital II will redeem trust securities with an aggregate
liquidation amount equal to the aggregate principal amount of the junior
subordinated debt securities at the redemption price on a proportionate basis.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
We will have the right at any time to dissolve Hartford Life Capital II and
after satisfaction of the liabilities of creditors of Hartford Life Capital II
as provided by applicable law, cause the junior subordinated debt securities to
be distributed to the holders of the trust securities.
If the junior subordinated debt securities are distributed to the holders
of the preferred securities, we will use our best efforts to cause the junior
subordinated debt securities to be listed on the New York Stock Exchange or on
such other exchange as the preferred securities are then listed.
S-17
19
After the date for any distribution of junior subordinated debt securities
upon dissolution of Hartford Life Capital II:
- the preferred securities will no longer be deemed to be outstanding,
- the securities depositary or its nominee, as the record holder of the
preferred securities, will receive a registered global certificate or
certificates representing the junior subordinated debt securities to be
delivered upon that distribution, and
- any certificates representing preferred securities not held by the
depositary or its nominee will be deemed to represent junior subordinated
debt securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of the preferred securities, with an
interest rate identical to the distribution rate of the preferred
securities, and with accrued and unpaid interest equal to accrued and
unpaid distributions on the preferred securities until the certificates
are presented to us or our agent for transfer or reissuance.
If a dissolution and liquidation of Hartford Life Capital II were to occur,
we could not assure you as to the market prices for either the preferred
securities or the junior subordinated debt securities that may be distributed in
exchange for the preferred securities. Accordingly, the preferred securities
that you may purchase, or the junior subordinated debt securities that you may
receive if a dissolution and liquidation of Hartford Life Capital II were to
occur, may trade at a discount to the price that you paid to purchase the
preferred securities offered by this prospectus supplement.
REDEMPTION PROCEDURES
Hartford Life Capital II may not redeem fewer than all of the outstanding
preferred securities unless all accrued and unpaid distributions have been paid
on all preferred securities for all quarterly distribution periods terminating
on or prior to the date of redemption.
If Hartford Life Capital II gives a notice of redemption of the preferred
securities, and if we have paid to the institutional trustee a sufficient amount
of cash in connection with the related redemption or maturity of the junior
subordinated debt securities, then, by 12:00 noon, New York City time, on the
redemption date, the institutional trustee will irrevocably deposit with the
securities depositary for the preferred securities funds sufficient to pay the
applicable redemption price and will give the securities depositary for the
preferred securities irrevocable instructions and authority to pay the
redemption price to the holders of the preferred securities. See " -- Book-Entry
Only Issuance -- The Depository Trust Company." If notice of redemption shall
have been given and funds deposited as required, then, immediately prior to the
close of business on the date of that deposit, distributions will cease to
accrue and all rights of holders of preferred securities so called for
redemption will cease, except the right of the holders of such preferred
securities to receive the redemption price without interest.
In the event that any date fixed for redemption of preferred securities is
not a business day, then payment of the redemption price payable on that date
will be made on the next succeeding day that is a business day, without any
interest or other payment in respect of any such delay, except that, if that
business day falls in the next calendar year, the payment will be made on the
immediately preceding business day. In the event that payment of the redemption
price on preferred securities is improperly withheld or refused and not paid
either by Hartford Life Capital II or by us under the guarantee, distributions
on those preferred securities will continue to accrue at the then applicable
rate from the original redemption date to the date of payment. In this case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the redemption price.
In the event that fewer than all of the outstanding preferred securities
are to be redeemed, the preferred securities will be redeemed under the
depositary's standard procedures. See " -- Book-Entry Only Issuance -- The
Depository Trust Company."
Subject to the above and applicable law, we or our subsidiaries may at any
time purchase outstanding preferred securities by tender, in the open market or
by private agreement.
S-18
20
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of Hartford Life Capital II, any of which we refer to as a
"liquidation," the holders of the preferred securities will be entitled to
receive out of the assets of Hartford Life Capital II, after satisfaction of
liabilities to creditors, distributions in an amount equal to the aggregate of
the stated liquidation amount of $25.00 per preferred security plus accrued and
unpaid distributions to the date of payment, unless, in connection with the
liquidation, junior subordinated debt securities have been distributed on a
proportionate basis to the holders of such preferred securities. The junior
subordinated debt securities so distributed must have an aggregate stated
principal amount equal to the aggregate stated liquidation amount of the
preferred securities, with an interest rate identical to the distribution rate
of the preferred securities, and with accrued and unpaid interest equal to
accrued and unpaid distributions on the preferred securities outstanding at that
time.
If, upon any liquidation, the liquidation distribution can be paid only in
part because Hartford Life Capital II has insufficient assets available to pay
it in full, then Hartford Life Capital II will pay the available amounts on a
proportionate basis. The holders of the common securities will be entitled to
receive distributions upon any liquidation on a proportionate basis with the
holders of the preferred securities, except that if a declaration event of
default has occurred and is continuing the preferred securities will have a
preference over the common securities over those distributions.
Hartford Life Capital II will dissolve:
- upon our bankruptcy,
- upon the filing of a certificate of dissolution or its equivalent
involving our company, or the revocation of our charter and the
expiration of 90 days after the date of revocation without a
reinstatement,
- upon our determination to dissolve Hartford Life Capital II and to
distribute junior subordinated debt securities to the holders of
preferred securities,
- upon the entry of a decree of a judicial dissolution of our company or
Hartford Life Capital II, or
- upon the redemption of all the trust securities.
The trust, unless earlier dissolved as described above, will exist until
March 6, 2056.
DECLARATION EVENTS OF DEFAULT
An event of default under the subordinated indenture constitutes an event
of default under the declaration. The holder of the common securities will be
deemed to have waived any event of default under the declaration regarding the
common securities until all declaration events of default regarding the
preferred securities have been cured, waived or otherwise eliminated. Until a
declaration event of default regarding the preferred securities has been cured,
waived or otherwise eliminated, the institutional trustee will be deemed to be
acting solely on behalf of the holders of the preferred securities and only the
holders of the preferred securities will have the right to direct the
institutional trustee under the declaration and therefore the subordinated
indenture. If any declaration event of default regarding the preferred
securities is waived by the holders of the preferred securities, we, as the
holder of common securities, have agreed that this waiver also constitutes a
waiver of the declaration event of default regarding the common securities for
all purposes under the declaration. See " -- Voting Rights."
Generally, if the institutional trustee fails to enforce its rights under
the junior subordinated debt securities, you may, to the fullest extent
permitted by law, directly institute a legal proceeding against us to enforce
the institutional trustee's rights under the junior subordinated debt securities
without first instituting any legal proceeding against the institutional trustee
or any other person or entity. If a declaration event of default then exists and
the event is attributable to our failure to pay interest or principal on the
junior subordinated debt securities on the date the interest or principal is
otherwise
S-19
21
payable, or in the case of redemption, on the redemption date, then you may also
directly institute a proceeding for enforcement of payment to you of the
principal or interest on the junior subordinated debt securities having a
principal amount equal to the aggregate liquidation amount of the preferred
securities you hold, on or after the respective due date specified in the junior
subordinated debt securities, without first:
- directing the institutional trustee to enforce the terms of the junior
subordinated debt securities, or
- instituting a legal proceeding against us to enforce the institutional
trustee's rights under the junior subordinated debt securities.
We refer to this as a "direct action." In connection with a direct action, we
will be subrogated to your rights as a holder of preferred securities under the
declaration to the extent of any payment made by us to you in the direct action.
Consequently, we will be entitled to payment of amounts that you receive in
respect of an unpaid distribution that resulted in the bringing of a direct
action to the extent that you receive or have already received full payment
regarding the unpaid distribution from Hartford Life Capital II. You will not be
able to exercise directly any other remedy available to the holders of the
junior subordinated debt securities.
Upon the occurrence of an indenture event of default, the institutional
trustee as the sole holder of the junior subordinated debt securities will have
the right under the subordinated indenture to declare the principal and interest
on the junior subordinated debt securities to be immediately due and payable.
Both we and Hartford Life Capital II are required to file annually with the
institutional trustee an officers' certificate as to our compliance with all
conditions and covenants under the declaration.
VOTING RIGHTS
Except as described in this prospectus supplement and in the accompanying
prospectus under "Description of Guarantee -- Modification of Guarantee;
Assignment," and except as required by law and the declaration, the holders of
the preferred securities will have no voting rights.
The holders of a majority in aggregate liquidation amount of the preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the institutional trustee, or direct the
exercise of any trust or power conferred upon the institutional trustee under
the declaration, including the right to direct the institutional trustee, as
holder of the junior subordinated debt securities, to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the subordinated indenture trustee, or exercising any
trust or power conferred on the subordinated indenture trustee with
respect to the junior subordinated debt securities,
- waive any past indenture event of default that is waivable under Section
5.13 of the subordinated indenture,
- exercise any right to rescind or annul a declaration that the principal
of all the junior subordinated debt securities shall be due and payable,
and
- consent to any amendment, modification or termination of the subordinated
indenture or the junior subordinated debt securities where such consent
shall be required.
However, where a consent or action under the subordinated indenture would
require the consent or act of holders of more than a majority in principal
amount of the junior subordinated debt securities affected by the consent or
act, only the holders of at least that super majority in aggregate liquidation
amount of the preferred securities may direct the institutional trustee to give
the consent or take such action. If the institutional trustee fails to enforce
its rights under the junior subordinated debt securities, other than by reason
of the failure to obtain the opinion set forth in the last sentence of this
paragraph, you may, to the fullest extent permitted by law, directly institute a
legal proceeding against us to enforce the institutional trustee's rights under
the junior subordinated debt securities without first instituting any legal
proceeding
S-20
22
against the institutional trustee or any other person or entity. The
institutional trustee will notify all holders of the preferred securities of any
notice of default received from the subordinated indenture trustee regarding the
junior subordinated debt securities. That notice will state that the indenture
event of default also constitutes a declaration event of default. Except for
directing the time, method and place of conducting a proceeding for a remedy
available to the institutional trustee, the institutional trustee, as holder of
the Series B junior subordinated debt securities, will not take any of the
actions described above unless the institutional trustee has obtained an opinion
of a nationally recognized independent tax counsel experienced in such matters
to the effect that, as a result of such action, Hartford Life Capital II will
not fail to be classified as a grantor trust for United States federal income
tax purposes.
In the event the consent of the institutional trustee, as the holder of the
junior subordinated debt securities, is required under the subordinated
indenture for any amendment, modification or termination of the subordinated
indenture, the institutional trustee will request the written direction of the
holders of the trust securities regarding that amendment, modification or
termination and will vote on that amendment, modification or termination as
directed by a majority in liquidation amount of the trust securities voting
together as a single class. However, where any amendment, modification or
termination under the subordinated indenture would require the consent of a
super majority, the institutional trustee may only give that consent at the
direction of the holders of at least the proportion in aggregate liquidation
amount of the trust securities which the relevant super majority represents of
the aggregate principal amount of the junior subordinated debt securities
outstanding. The institutional trustee will be under no obligation to take any
such action in accordance with the directions of the holders of the trust
securities unless the institutional trustee has obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that for United States federal income tax purposes Hartford Life Capital
II will not be classified as other than a grantor trust.
A waiver of an indenture event of default by the institutional trustee at
the direction of the holders of the preferred securities will constitute a
waiver of the corresponding declaration event of default.
Any required approval or direction of holders of preferred securities may
be given at a separate meeting of holders of preferred securities convened for
that purpose, at a meeting of the holders of trust securities or pursuant to
written consent. The regular trustees will cause a notice of any meeting at
which holders of preferred securities are entitled to vote to be mailed to each
holder of record of preferred securities. Each such notice will include a
statement setting forth the following information:
- the date of the meeting or the date by which the action is to be taken,
- a description of any resolution proposed for adoption at the meeting on
which the holders are entitled to vote or of such matter upon which
written consent is sought, and
- instructions for the delivery of proxies or consents.
No vote or consent of the holders of preferred securities will be required for
Hartford Life Capital II to redeem and cancel preferred securities or distribute
junior subordinated debt securities as provided in the declaration.
Neither Hartford Life or any entity directly or indirectly controlling or
controlled by, or under direct or indirect common control with, Hartford Life
will be entitled to vote or consent any preferred securities held by them. For
purposes of any vote or consent, those securities will be treated as if they
were not outstanding.
The procedures by which holders of preferred securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Except in specified circumstances as set forth in the declaration, you will
have no rights to appoint or remove the Hartford Life Capital II trustees, who
may be appointed, removed or replaced solely by us as the indirect or direct
holder of all of the common securities.
S-21
23
MODIFICATION OF THE DECLARATION
The declaration may be modified and amended if approved by the regular
trustees, and in some circumstances the institutional trustee and the Delaware
trustee. However, if any proposed amendment provides for, or the regular
trustees otherwise propose to effect:
- any action that would adversely affect the powers, preferences or special
rights of the trust securities, whether by way of amendment to the
declaration or otherwise, or
- the dissolution, winding-up or termination of Hartford Life Capital II,
other than as provided by the declaration,
then the holders of the trust securities voting together as a single class will
be entitled to vote on the amendment or proposal and the amendment or proposal
will not be effective except with the approval of holders of at least a majority
in liquidation amount of the trust securities affected. In addition, if any
amendment or proposal referred to in the first clause above would adversely
affect only the preferred securities or the common securities, then only holders
of the affected class will be entitled to vote on the amendment or proposal and
the amendment or proposal will not be effective except with the approval of
holders of a majority in liquidation amount of that class of trust securities.
No amendment or modification may be made to the declaration, however, if
the amendment or modification would:
- cause Hartford Life Capital II to be classified for United States federal
income tax purposes as other than a grantor trust,
- reduce or otherwise adversely affect the powers of the institutional
trustee, or
- cause Hartford Life Capital II to be deemed an "investment company" which
is required to be registered under the Investment Company Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Hartford Life Capital II may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body except as
described below or under "-- Liquidation Distribution Upon Dissolution."
Hartford Life Capital II may, with the consent of the regular trustees and
without the consent of the holders of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State, if it satisfies the following conditions:
- the successor entity either:
- expressly assumes all of the obligations of Hartford Life Capital II
under the trust securities, or
- substitutes for the preferred securities other securities having
substantially the same terms as the trust securities, so long as the
successor securities rank the same as the trust securities rank with
respect to distributions and payments upon liquidation, redemption and
otherwise,
- we expressly acknowledge a trustee of the successor entity possessing the
same powers and duties as the institutional trustee, in its capacity as
the holder of the junior subordinated debt securities,
- the preferred securities or any successor securities are listed or
quoted, or any successor securities will be listed or quoted upon
notification of issuance, on any national securities exchange or with
another organization on which the preferred securities are then listed or
quoted,
- the merger, consolidation, amalgamation or replacement does not cause the
preferred securities, including any successor securities, to be
downgraded by any nationally recognized statistical rating organization,
S-22
24
- the merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the trust
securities, including any successor securities, in any material respect,
other than for any dilution of the holders' interest in the new entity,
- the successor entity has a purpose substantially identical to that of
Hartford Life Capital II,
- prior to the merger, consolidation, amalgamation or replacement, Hartford
Life Capital II has received an opinion of a nationally recognized
independent counsel to Hartford Life Capital II experienced in such
matters to the effect that,
- the merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the trust securities, including any successor securities, in any
material respect, other than any dilution of the holders' interest in
the new entity,
- following the merger, consolidation, amalgamation or replacement,
neither Hartford Life Capital II nor the successor entity will be
required to register as an "investment company" under the Investment
Company Act,
- following the merger, consolidation, amalgamation or replacement,
Hartford Life Capital II, or the successor entity, will continue to be
classified as a grantor trust for United States federal income tax
purposes, and
- we guarantee the obligations of the successor entity under the successor
securities at least to the extent provided by the guarantee.
However, Hartford Life Capital II will not, except with the consent of holders
of 100% in liquidation amount of the trust securities, consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it, if in the
opinion of a nationally recognized independent tax counsel experienced in such
matters, the consolidation, amalgamation, merger or replacement would cause
Hartford Life Capital II or the successor entity to be classified as other than
a grantor trust for United States federal income tax purposes. See "-- Special
Event Redemption" and "-- Liquidation Distribution Upon Dissolution."
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company will act as securities depositary for the
preferred securities. The preferred securities will be issued only as fully
registered securities registered in the name of Cede & Co., DTC's nominee. One
or more fully registered global preferred securities certificates, representing
the total aggregate number of preferred securities, will be issued and will be
deposited with DTC.
The laws of some jurisdictions require that some purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in the global preferred securities
as represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants deposit with
DTC. DTC also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in participants' accounts,
eliminating the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants and by the New York Stock Exchange, the American
Stock Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to others, such as securities brokers
and dealers, banks and trust companies that clear transactions through or
maintain a direct or indirect custodial relationship with a direct participant
either directly or indirectly. The rules applicable to DTC and its participants
are on file with the Securities and Exchange Commission.
S-23
25
Purchases of preferred securities within the DTC system must be made by or
through direct participants, which will receive a credit for the preferred
securities on DTC's records. The ownership interest of each actual purchaser of
each preferred security is in turn to be recorded on the direct and indirect
participants' records. Beneficial owners will not receive written confirmation
from DTC of their purchases, but beneficial owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through
which the beneficial owners purchased preferred securities. Transfers of
ownership interests in the preferred securities are to be accomplished by
entries made on the books of participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the preferred securities, except in the event that use of the
book-entry system for the preferred securities is discontinued.
To facilitate subsequent transfers, all the preferred securities deposited
by participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of preferred securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual beneficial owners of the preferred securities. DTC's records reflect
only the identity of the direct participants to whose accounts the preferred
securities are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than all of the
preferred securities are being redeemed, DTC will reduce the amount of the
interest of each direct participant in the preferred securities in accordance
with its procedures.
Although voting of preferred securities is limited, in those cases where a
vote is required, neither DTC nor Cede & Co. will itself consent or vote the
preferred securities. Under its usual procedures, DTC would mail an omnibus
proxy to Hartford Life Capital II as soon as possible after the record date. The
omnibus proxy assigns Cede & Co. consenting or voting rights to those direct
participants to whose accounts the preferred securities are credited on the
record date. These would be identified in a listing attached to the omnibus
proxy.
Distribution payments on the preferred securities will be made by transfer
of immediately available funds to DTC. DTC's practice is to credit direct
participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on that payment date. Payments by participants to
beneficial owners will be governed by standing instructions and customary
practices, as is the case with securities held for the account of customers in
bearer form or registered in "street name," and these payments will be the
responsibility of the participant and not of DTC, Hartford Life Capital II or
ourselves, subject to any statutory or regulatory requirements to the contrary
that may be in effect from time to time.
Payment of distributions to DTC is the responsibility of Hartford Life
Capital II, disbursement of these payments to direct participants is the
responsibility of DTC, and disbursement of these payments to the beneficial
owners is the responsibility of direct and indirect participants.
Except as described in this prospectus supplement, you will not be entitled
to receive physical delivery of preferred securities. Accordingly, you must rely
on the procedures of DTC to exercise any rights under the preferred securities.
DTC may discontinue providing its services as securities depositary of the
preferred securities at any time by giving reasonable notice to Hartford Life
Capital II. Under these circumstances, if a successor securities depositary is
not obtained, preferred securities certificates are required to be printed and
delivered. Additionally, the regular trustees, with our consent, may decide to
discontinue use of the system
S-24
26
of book-entry transfers through DTC or any successor depositary of the preferred
securities. In that event, certificates for the preferred securities will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we do not
take responsibility for its accuracy.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The institutional trustee, prior to the occurrence of a default regarding
the trust securities, undertakes to perform only those duties as are
specifically set forth in the declaration. After such a default, the
institutional trustee will exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. However, the
institutional trustee is under no obligation to exercise any of the powers
vested in it by the declaration at your request, unless offered reasonable
indemnity by you against the costs, expenses and liabilities which might be
incurred. But the holders of preferred securities will not be required to offer
indemnity if the holders, by exercising their voting rights, direct the
institutional trustee to take any action following a declaration event of
default.
PAYING AGENT; TRANSFER AGENT AND REGISTRAR
If the preferred securities do not remain in book-entry only form, the
following provisions will apply:
- The institutional trustee will act as paying agent and may designate an
additional or substitute paying agent at any time.
- Hartford Life Capital II and the institutional trustee will be entitled
to treat the holders of the preferred securities, as their names appear
in the registration books kept by the institutional trustee at its
corporate office, as the owners of those preferred securities for all
purposes under the declaration.
- Registration of transfers of preferred securities will be effected
without charge by or on behalf of Hartford Life Capital II, but upon
payment, with the giving of such indemnity as Hartford Life Capital II or
we may require, for any tax or other government charges that may be
imposed in relation to it.
- Hartford Life Capital II will not be required to register or cause to be
registered the transfer of preferred securities after they have been
called for redemption, or on or after the liquidation date.
GOVERNING LAW
The declaration and the preferred securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The regular trustees are authorized and directed to operate Hartford Life
Capital II in such a way so that Hartford Life Capital II will not be required
to register as an "investment company" under the Investment Company Act or be
characterized as other than a grantor trust for United States federal income tax
purposes. We are authorized and directed to conduct our affairs so that the
junior subordinated debt securities will be treated as our indebtedness for
United States federal income tax purposes. In this connection, both we and the
regular trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of Hartford Life Capital II or our
certificate of incorporation, that we and the regular trustees determine in our
and their discretion to be necessary or desirable to achieve that end, as long
as such action does not adversely affect the interests of the holders of the
preferred securities or vary the terms of the preferred securities.
Holders of the preferred securities have no preemptive or similar rights.
S-25
27
DESCRIPTION OF THE SERIES B JUNIOR SUBORDINATED DEBT SECURITIES
We have set forth below a description of the specific terms of the junior
subordinated debt securities in which Hartford Life Capital II will invest the
proceeds from the issuance and sale of the trust securities. The subordinated
indenture under which the junior subordinated debt securities will be issued
will be qualified as an indenture under the Trust Indenture Act. Wilmington
Trust Company will act as indenture trustee under the subordinated indenture.
The terms of the junior subordinated debt securities will be those set forth in
the subordinated indenture and the supplemental indenture and those made part of
the guarantee by the Trust Indenture Act. This description supplements the
description of the general terms and provisions of the junior subordinated debt
securities set forth in the accompanying prospectus under the caption
"Description of Junior Subordinated Debt Securities and Corresponding Junior
Subordinated Debt Securities." This summary describes the material provisions of
the junior subordinated debt securities, including the subordinated indenture
and supplemental indenture, but is not intended to be complete. There may be
other provisions in those documents that are important to you. The forms of
those documents have been filed as exhibits to the registration statement of
which this prospectus supplement and the accompanying prospectus are a part.
We will have the right at any time to dissolve the trust and cause the
junior subordinated debt securities to be distributed to the holders of the
trust securities. If the junior subordinated debt securities are distributed to
the holders of the preferred securities, we will use our best efforts to have
the junior subordinated debt securities listed on the New York Stock Exchange or
on such other national securities exchange or similar organization on which the
preferred securities are then listed or quoted.
GENERAL
The junior subordinated debt securities will be issued as unsecured debt
under the subordinated indenture. The junior subordinated debt securities will
be limited in aggregate principal amount to approximately $206,186,000, which is
the sum of the aggregate stated liquidation amount of the preferred securities
and the capital we will contribute to Hartford Life Capital II in exchange for
the common securities.
The junior subordinated debt securities are not subject to a sinking fund
provision. The entire principal amount of the junior subordinated debt
securities will mature and become due and payable, together with any accrued and
unpaid interest, compound interest and additional interest, on February 15,
2050.
If junior subordinated debt securities are distributed to holders of
preferred securities in liquidation of those holders' interests in Hartford Life
Capital II, the junior subordinated debt securities will initially be issued in
the form of one or more global securities. Under limited circumstances, junior
subordinated debt securities may be issued in certificated form in exchange for
a global security. See "-- Book-Entry and Settlement" below. If junior
subordinated debt securities are issued in certificated form, the junior
subordinated debt securities will be in denominations of $25.00 and integral
multiples of $25.00 and may be transferred or exchanged at the offices described
below. We will make payments on junior subordinated debt securities issued as a
global security to DTC, to a successor depositary or, in the event that no
depositary is used, to a paying agent for the junior subordinated debt
securities. If junior subordinated debt securities are issued in certificated
form, principal and interest will be payable, the transfer of the junior
subordinated debt securities will be registrable and junior subordinated debt
securities will be exchangeable for junior subordinated debt securities of other
denominations of a like aggregate principal amount at the corporate trust office
of Wilmington Trust Company, the subordinated indenture trustee, in New York,
New York. However, at our option payment of interest may be made by check mailed
to the address of the persons entitled to the payments.
We do not intend to issue and sell the junior subordinated debt securities
to any purchasers other than Hartford Life Capital II.
S-26
28
There are no covenants or provisions in the subordinated indenture that
would afford the holders of the junior subordinated debt securities protection
in the event of a highly leveraged transaction, reorganization, restructuring,
merger or similar transaction involving us that may adversely affect those
holders.
SUBORDINATION
The subordinated indenture provides that the junior subordinated debt
securities are subordinated and junior in right of payment to all of our present
or future senior indebtedness. We may not make any payment of principal,
including redemption payments, premium or interest on the junior subordinated
debt securities if:
- any of our senior indebtedness has not been paid when due and any
applicable grace period with respect to the default has ended and the
default has not been cured or waived or ceased to exist, or
- the maturity of any of our senior indebtedness has been accelerated
because of a default, until the senior indebtedness is paid in full or
the acceleration has been rescinded.
Upon any distribution of our assets to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all of our senior
indebtedness must be paid in full before the holders of junior subordinated debt
securities are entitled to receive or retain any payment. Upon satisfaction of
all claims related to all of our senior indebtedness then outstanding, the
rights of the holders of the junior subordinated debt securities will be
subrogated to the rights of the holders of our senior indebtedness to receive
payments or distributions applicable to senior indebtedness until all amounts
owing on the junior subordinated debt securities are paid in full.
The term "senior indebtedness" means:
- the principal, premium and interest in respect of:
- indebtedness of Hartford Life for money borrowed, and
- indebtedness evidenced by securities, notes, debentures, bonds or other
similar instruments issued by Hartford Life,
- all capital lease obligations of Hartford Life,
- all obligations of Hartford Life issued or assumed as the deferred
purchase price of property, all conditional sale obligations of Hartford
Life and all obligations of Hartford Life under any conditional sale or
title retention agreement, but excluding trade accounts payable and
accrued liabilities arising in the ordinary course of business,
- all obligations, contingent or otherwise, of Hartford Life in respect of
any letters of credit, banker's acceptance, security purchase facilities
or similar credit transactions,
- all obligations in respect of interest rate swap, cap, floor, collar or
other agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements,
- all obligations of the type referred to in the clauses above of other
persons for the payment of which Hartford Life is responsible or liable
as obligor, guarantor or otherwise, and
- all obligations of the type referred to in the clauses above of other
persons secured by any lien on any property or asset of Hartford Life,
whether or not the obligation is assumed by Hartford Life, except for:
- any such indebtedness that is by its terms subordinated to or ranks
equally with the junior subordinated debt securities, and
S-27
29
- any indebtedness between or among Hartford Life or its affiliates,
including all other debt securities and guarantees in respect of those
debt securities, issued to (1) any other Hartford Life subsidiary trust
or a trustee of such trust and (2) any other trust, or a trustee of that
trust, partnership or other entity affiliated with Hartford Life that is
a financing vehicle of Hartford Life in connection with the issuance by
that financing entity of preferred securities or other securities that
rank equally with, or junior to, the preferred securities.
Senior indebtedness will continue to be senior indebtedness and be entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such senior indebtedness.
We are a non-operating holding company with no significant business
operations of our own. Most of our assets are owned by our subsidiaries.
Accordingly, the junior subordinated debt securities will be effectively
subordinated to all existing and future liabilities of our subsidiaries,
including liabilities under contracts of insurance and annuities written by our
insurance subsidiaries. Holders of junior subordinated debt securities should
look only to our assets for payments of interest and principal and premium.
The subordinated indenture does not limit the aggregate amount of senior
indebtedness that we may issue.
OPTIONAL REDEMPTION
We will have the right to redeem the junior subordinated debt securities:
- in whole or in part, at any time, on or after March 6, 2006, or
- at any time, in whole but not in part, upon the occurrence of a special
event as described under "Description of the Preferred
Securities -- Special Event Redemption," upon not less than 30 nor more
than 60 days' notice,
in either case at a redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest, including additional interest, if
any, to the redemption date.
Prior to March 6, 2006, we will also have the right to redeem the junior
subordinated debt securities at any time, in whole or in part, at a redemption
price equal to the accrued and unpaid interest on the junior subordinated debt
securities so redeemed to the date fixed for redemption, plus the greater of:
- the principal amount of the junior subordinated debt securities so
redeemed, or
- an amount equal to the discounted remaining payments to initial optional
prepayment date, as defined below.
If a partial redemption of the preferred securities resulting from a
partial redemption of the junior subordinated debt securities would result in
the delisting of the preferred securities, we may only redeem the junior
subordinated debt securities in whole. See "Description of the Preferred
Securities -- Mandatory Redemption of Trust Securities" and "-- Special Event
Redemption."
"Discounted remaining payments to initial optional prepayment date" means
an amount equal to the sum of the current value of the amounts of interest and
principal that would have been payable by us pursuant to the terms of the junior
subordinated debt securities on each interest payment date after the redemption
date through and including March 6, 2006, assuming optional redemption of the
junior subordinated debt securities on March 6, 2006.
"Current value" means:
- for any payment of interest, the present value of that amount on the
redemption date after discounting that amount on a quarterly basis from
the originally scheduled date for payment, and
S-28
30
- for any payment of principal, the present value of that amount on the
redemption date after discounting that amount on a quarterly basis from
March 6, 2006. In each case, the discount rate will be the treasury rate
plus 10 basis points.
"Treasury rate" means a per year rate, expressed as a decimal and, in the
case of United States Treasury bills, converted to a per year yield, determined
on the redemption date to be the per year rate equal to the semiannual bond
equivalent yield to maturity, adjusted to reflect quarterly compounding in the
case of the junior subordinated debt securities, for United States Treasury
securities maturing at March 6, 2006, as determined by reference to the weekly
average yield to maturity for United States Treasury securities maturing on
March 6, 2006 if reported in the most recent Statistical Release H.15(519) of
the Board of Governors of the Federal Reserve, or, if no such securities mature
at March 6, 2006, by interpolation between the most recent weekly average yields
to maturity for two series of United States Treasury securities, (1) one
maturing as close as possible to, but earlier than, March 6, 2006 and the other
maturing as close as possible to, but later than, March 6, 2006, in each case as
published in the most recent Statistical Release H.15(519) of the Board of
Governors of the Federal Reserve.
INTEREST
Each Series B junior subordinated debt security will bear interest at the
rate of 7.625% per year, from and including March 6, 2001, payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each year, commencing
April 15, 2001. We will make interest payments to the person in whose name the
Series B junior subordinated debt security is registered, subject to certain
exceptions, at the close of business on the business day next preceding such
interest payment date. If the junior subordinated debt securities will cease to
be held in book-entry only form, we will have the right to select record dates,
which will be more than 14 days but less than 60 days prior to the interest
payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. Except as described in the following
sentence, the amount of interest payable for any period shorter than a full
quarterly period for which interest is computed will be computed on the basis of
the actual number of days elapsed during that period in relation to the deemed
90 days in such quarterly period. In the event that any date on which interest
is payable on the junior subordinated debt securities is not a business day,
then payment of the interest payable on that date will be made on the next
succeeding day that is a business day, and without any interest or other payment
in respect of any such delay, except that, if that business day is in the next
succeeding calendar year, then that payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the relevant interest payment date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
We will have the right at any time, and from time to time, during the term
of the junior subordinated debt securities, to defer payments of interest by
extending the interest payment period for a period not exceeding 20 consecutive
quarters. However, no deferral period may extend beyond the maturity of the
junior subordinated debt securities. At the end of the deferral period, we will
pay all interest then accrued and unpaid, including any additional interest,
together with interest compounded quarterly at the rate specified for the junior
subordinated debt securities to the extent permitted by applicable law. During
any such deferral period:
- we will not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock or make any guarantee payment
with respect to those payments, other than:
- repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants,
S-29
31
- repurchases, redemptions or other acquisitions of shares of our capital
stock as a result of an exchange or conversion of any class or series of
our capital stock for any other class or series of our capital stock,
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of that capital stock
or the security being converted or exchanged, or
- distributions of rights under any shareholders rights plan we may adopt,
and
- we will not make any payment of interest, principal or premium on, or
repay, repurchase or redeem, any debt securities we or our subsidiaries
may issue which ranks equally with or junior to the junior subordinated
debt securities.
These restrictions will not apply to any stock dividends we pay where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any deferral period, we may further defer
payments of interest by extending that deferral period, so long that the
deferral period, including all such previous and further extensions, does not
exceed 20 consecutive quarterly interest periods, including the quarterly
interest period in which notice of the deferral period is given, and does not
extend beyond the maturity of the junior subordinated debt securities. Upon the
termination of any deferral period and the payment of all amounts then due, we
may commence a new deferral period, subject to these restrictions. We will not
be required to pay any interest during an deferral period, except at the end of
the deferral period. We have no present intention of exercising our right to
defer payments of interest by extending the interest payment period on the
junior subordinated debt securities.
If the institutional trustee is the sole holder of the junior subordinated
debt securities, we will give the regular trustees and the institutional trustee
notice of our selection of an extension period one business day prior to the
earlier of:
- the date distributions on the preferred securities would be payable, if
not for the deferral period, or
- the date the regular trustees are required to give notice to the New York
Stock Exchange, or other applicable self-regulatory organization, or to
holders of the preferred securities of the record date or the date that
distribution would be payable, if not for such deferral period,
but in any event one business day prior to that record date. The regular
trustees will give notice of our selection of the deferral period to you. If the
institutional trustee is not the sole holder of the junior subordinated debt
securities, we will give the holders of the junior subordinated debt securities
notice of our selection of the deferral period ten business days prior to the
earlier of:
- the next succeeding interest payment date, or
- the date upon which we are required to give notice to the New York Stock
Exchange, or other applicable self-regulatory organization, or to holders
of the junior subordinated debt securities of the record or payment date
of the related interest payment.
ADDITIONAL INTEREST
If at any time Hartford Life Capital II is required to pay any taxes,
duties, assessments or governmental charges of whatever nature, other than
withholding taxes, imposed by the United States, or any other taxing authority,
then, in any such case, we will pay as additional interest on the junior
subordinated debt securities such additional amounts as shall be required so
that the net amounts received and retained by Hartford Life Capital II after
paying any such taxes, duties, assessments or other governmental charges will be
not less than the amounts Hartford Life Capital II would have received had no
such taxes, duties, assessments or other governmental charges been imposed.
S-30
32
INDENTURE EVENTS OF DEFAULT
If any indenture event of default then exists, the institutional trustee,
as the holder of the junior subordinated debt securities, will have the right to
declare the principal and interest on the junior subordinated debt securities,
including any compound interest and additional interest, and any other amounts
payable under the subordinated indenture to be forthwith due and payable and to
enforce its other rights as a creditor with respect to the junior subordinated
debt securities. See "Description of Debt Securities -- Events of Default" in
the accompanying prospectus for a description of the indenture events of
default. An indenture event of default also constitutes a declaration event of
default. The holders of preferred securities in certain circumstances have the
right to direct the institutional trustee to exercise its rights as the holder
of the junior subordinated debt securities. See "Description of the Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
However, if a declaration event of default then exists and the event is
attributable to our failure to pay interest or principal on the junior
subordinated debt securities on the date the interest or principal is otherwise
payable, we acknowledge that, in such event, you, as a holder of preferred
securities, may institute a direct action for payment on or after the respective
due date specified in the junior subordinated debt securities. We may not amend
the subordinated indenture to remove this right to bring a direct action without
the prior written consent of all of the holders of preferred securities of
Hartford Life Capital II. Notwithstanding any payment made to a holder of
preferred securities by us in connection with a direct action, we will remain
obligated to pay the principal or interest on the junior subordinated debt
securities held by Hartford Life Capital II or the institutional trustee of
Hartford Life Capital II, and we will be subrogated to your rights for payments
on the preferred securities to the extent of any payments made by us to you in
any direct action. You will not be able to exercise directly any other remedy
available to the holders of the junior subordinated debt securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of preferred securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Hartford Life
Capital II, the junior subordinated debt securities will be issued in the form
of one or more global certificates registered in the name of the depositary or
its nominee. Except under the limited circumstances described below, junior
subordinated debt securities represented by a global security will not be
exchangeable for, and will not otherwise be issuable as, junior subordinated
debt securities in definitive form. The global securities described above may
not be transferred except by the depositary to a nominee of the depositary or by
a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that some purchasers of securities
take physical delivery of the securities in definitive form. These laws may
impair the ability to transfer beneficial interests in a global security.
Except as provided below, owners of beneficial interests in a global
security will not be entitled to receive physical delivery of junior
subordinated debt securities in definitive form and will not be considered the
holders of the global security for any purpose under the subordinated indenture.
In addition, no global security representing junior subordinated debt securities
will be exchangeable, except for another global security of like denomination
and tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each beneficial owner must
rely on the procedures of the depositary or, if that person is not a
participant, on the procedures of the participant through which that person owns
its interest to exercise any rights of a holder under the subordinated
indenture.
THE DEPOSITARY
If junior subordinated debt securities are distributed to you in
liquidation of your interests in Hartford Life Capital II, DTC will act as
securities depositary for the junior subordinated debt securities. For a
description of DTC and the specific terms of the depositary arrangements, see
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." The description in
S-31
33
that section of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments of the preferred securities apply in
all material respects to any debt obligations represented by one or more global
securities held by DTC. We may appoint a successor to DTC or any successor
depositary if DTC or the successor depositary is unable or unwilling to continue
as a depositary for the global securities.
None of Hartford Life, Hartford Life Capital II, the subordinated indenture
trustee, any paying agent and any other agent of Hartford Life or the
subordinated indenture trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a global security for the junior subordinated debt
securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A global security will be exchangeable for junior subordinated debt
securities registered in the names of persons other than the depositary or its
nominee only if:
- the depositary notifies us that it is unwilling or unable to continue as
a depositary for the global security and no successor depositary shall
have been appointed,
- the depositary, at any time, ceases to be a clearing agency registered
under the Exchange Act at which time the depositary is required to be so
registered to act as depositary and no successor depositary shall have
been appointed,
- we, in our sole discretion, determine that the global security shall be
so exchangeable, or
- there shall have occurred an indenture event of default regarding the
junior subordinated debt securities.
Any global security that is exchangeable as described in the preceding sentence
will be exchangeable for junior subordinated debt securities registered in such
names as the depositary directs. We expect that those instructions will be based
upon directions received by the depositary from its participants.
CERTAIN FEES AND EXPENSES
The subordinated indenture will provide that we will pay all fees and
expenses related to:
- the offering of the trust securities and the junior subordinated debt
securities,
- the organization, maintenance and dissolution of Hartford Life Capital
II,
- the retention of the Hartford Life Capital II trustees, and
- the enforcement by the institutional trustee of the rights of the holders
of the preferred securities.
GOVERNING LAW
The subordinated indenture and the junior subordinated debt securities will
be governed by, and construed in accordance with, the internal laws of the State
of New York.
DESCRIPTION OF GUARANTEE
We have set forth below a summary of information concerning the guarantee
that we will execute and deliver for your benefit. The guarantee will be
qualified as an indenture under the Trust Indenture Act. Wilmington Trust
Company will act as indenture trustee under the guarantee. The terms of the
guarantee will be those set forth in the guarantee and those made part of the
guarantee by the Trust Indenture Act. This description supplements the
description of the guarantee set forth in the accompanying prospectus under the
caption "Description of Guarantee." This summary describes the material
provisions of the guarantee, but is not intended to be complete. There may be
other provisions in the guarantee that are
S-32
34
important to you. The form of the guarantee has been filed as an exhibit to the
registration statement of which this prospectus supplement and the accompanying
prospectus are a part. The guarantee trustee will hold the guarantee for your
benefit.
GENERAL
To the extent set forth in the guarantee, we will irrevocably and
unconditionally agree to pay in full to the holders of the preferred securities,
except to the extent paid by Hartford Life Capital II, as and when due,
regardless of any defense, right of set-off or counterclaim which Hartford Life
Capital II may have or assert, the following payments, without duplication:
- any accrued and unpaid distributions that are required to be paid on the
preferred securities, to the extent Hartford Life Capital II has funds
available for those payments, and
- the redemption price of $25.00 per preferred security, plus all accrued
and unpaid distributions, to the extent Hartford Life Capital II has
funds available for those payments, with respect to any preferred
securities called for redemption by Hartford Life Capital II, and
- upon a voluntary or involuntary dissolution, winding-up or termination of
Hartford Life Capital II, other than in connection with the distribution
of junior subordinated debt securities to the holders of preferred
securities or the redemption of all of the preferred securities the
lesser of:
- the aggregate of the liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of payment, and
- the amount of assets of Hartford Life Capital II remaining for
distribution to holders of the preferred securities in liquidation of
Hartford Life Capital II.
Our obligation to make a guarantee payment may be satisfied by direct payment of
the required amounts by us to the holders of preferred securities or by causing
Hartford Life Capital II to pay those amounts to those holders.
The guarantee will be a guarantee on a subordinated basis with respect to
the preferred securities from the time of issuance of the preferred securities
but will not apply to any payment of distributions or redemption price, or to
payments upon the dissolution, winding-up or termination of Hartford Life
Capital II, except to the extent Hartford Life Capital II shall have funds
available for those payments. If we do not make interest payments on the junior
subordinated debt securities, Hartford Life Capital II will not pay
distributions on the preferred securities and will not have funds available for
those payments. See "Description of the Series B Junior Subordinated Debt
Securities." If, however, we were to default on our obligation to pay amounts
payable under the junior subordinated debt securities, Hartford Capital Life II
would lack funds for the payment of distributions or amounts payable on
redemption of the preferred securities or otherwise, and, in such event, holders
of the preferred securities would not be able to be rely upon the guarantee for
payment of such amounts. Instead, if any event of default under the subordinated
indenture shall have occurred and be continuing and such event is attributable
to our failure to pay interest or premium, if any, on or principal of the junior
subordinated debt securities on the applicable payment date, then a holder of
preferred securities may institute a direct action against us pursuant to the
terms of the subordinated indenture for enforcement of payment to such holder of
the principal of or interest or premium, if any, on such junior subordinated
debt securities having a principal amount equal to the aggregate liquidation
amount of the preferred securities of such holder. In connection with such
direct action, we will have a right to set-off under the subordinated indenture
to the extent of any payment made by us to such holder of preferred securities
in the direct action. Except as described herein, holders of preferred
securities will not be able to exercise directly any other remedy available to
the holders of the junior subordinated debt securities or assert directly any
other rights in respect of the junior subordinated debt securities. The
declaration provides that each holder of preferred securities by acceptance
thereof agrees to the provisions of the guarantee and the subordinated
indenture.
S-33
35
CERTAIN COVENANTS OF HARTFORD LIFE
In the guarantee, we will covenant that, so long as any preferred
securities remain outstanding, if there shall have occurred any event that would
constitute an event of default under the guarantee or the declaration, then:
- we will not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of our capital stock or make any guarantee payment
with respect to those payments, other than:
- repurchases, redemptions or other acquisitions of shares of our capital
stock in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers,
directors or consultants,
- repurchases, redemptions or other acquisitions of shares of our capital
stock as a result of an exchange or conversion of any class or series of
our capital stock for any other class or series of our capital stock,
- the purchase of fractional interests in shares of our capital stock
pursuant to the conversion or exchange provisions of that capital stock
or the security being converted or exchanged, or
- distributions of rights under any shareholders rights plan we adopt, and
- we will not make any payment of interest, principal or premium on, or
repay, repurchase or redeem, any debt securities we may issue which ranks
equally with or junior to the junior subordinated debt securities.
These restrictions will not apply to any stock dividends we pay where the
dividend stock is the same stock as that on which the dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except for any changes that do not adversely affect the rights of holders
of preferred securities, in which case no vote will be required, the guarantee
may be amended only with the prior approval of the holders of not less than a
majority in aggregate liquidation amount of the outstanding preferred
securities. All guarantees and agreements contained in the guarantee will bind
our successors, assignees, receivers, trustees and representatives and will
inure to the benefit of the holders of the preferred securities then
outstanding.
EVENTS OF DEFAULT
An event of default under the guarantee will occur upon our failure to
perform any of our payment or other obligations under the guarantee. The holders
of a majority in aggregate liquidation amount of the preferred securities have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the guarantee trustee regarding the guarantee or to
direct the exercise of any trust or power conferred upon the guarantee trustee
under the guarantee. If the guarantee trustee fails to enforce the guarantee
trustee's rights under the guarantee, you may directly institute a legal
proceeding against us to enforce the guarantee trustee's rights under the
guarantee without first instituting a legal proceeding against Hartford Life
Capital II, the guarantee trustee or any other person or entity. You may also
directly institute a legal proceeding against us to enforce your right to
receive payment under the guarantee without first:
- directing the guarantee trustee to enforce the terms of the guarantee, or
- instituting a legal proceeding against Hartford Life Capital II or any
other person or entity.
We will be required to provide annually to the guarantee trustee a
statement as to our performance of some of our obligations under the guarantee
and as to any default in that performance.
S-34
36
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default under the
guarantee, undertakes to perform only such duties as are specifically set forth
in the guarantee. After a default under the guarantee, the guarantee trustee
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. However, the guarantee trustee is under
no obligation to exercise any of the powers vested in it by the guarantee at
your request unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred.
TERMINATION OF THE GUARANTEE
The guarantee will terminate upon full payment of the redemption price of
all preferred securities, upon distribution of the junior subordinated debt
securities to the holders of the preferred securities or upon full payment of
the amounts payable as provided in the declaration upon liquidation of Hartford
Life Capital II. The guarantee will continue to be effective or will be
reinstated if at any time any holder of preferred securities must restore
payment of any sums paid under the preferred securities or the guarantee.
STATUS OF THE GUARANTEE
The guarantee will constitute our unsecured obligation and will rank:
- subordinate and junior in right of payment to all of our senior
indebtedness,
- equally with the most senior preferred or preference stock we have now or
may hereafter issue and with any guarantee we have now or may hereafter
enter into by regarding any preferred or preference stock of any of our
subsidiaries, and
- senior to our common stock.
The terms of the preferred securities provide that each holder of preferred
securities by acceptance of the preferred securities agrees to the subordination
provisions and other terms of the guarantee.
The guarantee will constitute a guarantee of payment and not of collection.
That is, the guaranteed party may institute a legal proceeding directly against
us to enforce its rights under the guarantee without instituting a legal
proceeding against any other person or entity.
GOVERNING LAW
The guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE SERIES B JUNIOR
SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the declaration, the sole purpose of Hartford Life Capital
II is to issue the trust securities evidencing undivided beneficial interests in
the assets of Hartford Life Capital II, and to invest the proceeds from that
issuance and sale in the junior subordinated debt securities.
As long as payments of interest and other payments are made when due on the
junior subordinated debt securities, those payments will be sufficient to cover
distributions and payments due on the trust securities because of the following
factors:
- the aggregate principal amount of junior subordinated debt securities
will be equal to the sum of the aggregate stated liquidation amount of
the trust securities,
- the interest rate and the interest and other payment dates on the junior
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the preferred securities,
S-35
37
- under the subordinated indenture, we will pay, and Hartford Life Capital
II will not be obligated to pay, directly or indirectly, all costs,
expenses, debt and obligations of Hartford Life Capital II other than
with respect to the trust securities, and
- the declaration further provides that the Hartford Life Capital II
trustees will not cause or permit Hartford Life Capital II to, among
other things, engage in any activity that is not consistent with the
purposes of Hartford Life Capital II.
Payments of distributions, to the extent funds for those payments are
available, and other payments due on the preferred securities, to the extent
funds for those payments are available, are irrevocably guaranteed by us as and
to the extent set forth under "Description of Guarantee". If we do not make
interest payments on the junior subordinated debt securities purchased by
Hartford Life Capital II, we expect that Hartford Life Capital II will not have
sufficient funds to pay distributions on the preferred securities. The guarantee
is a guarantee on a subordinated basis with respect to the preferred securities
from the time of its issuance but does not apply to any payment of distributions
unless and until Hartford Life Capital II has sufficient funds for the payment
of those distributions.
We have, through the guarantee, the junior subordinated debt securities,
the subordinated indenture and the declaration, taken together, fully,
irrevocably and unconditionally guaranteed our obligations under the preferred
securities.
If we fail to make interest or other payments on the junior subordinated
debt securities when due, taking account of any extension period, the
declaration provides a mechanism for the holders of the preferred securities,
using the procedures described in "Description of the Preferred
Securities -- Book Entry Only Issuance -- The Depository Trust Company" and
"--Voting Rights," to direct the institutional trustee to enforce its rights
under the junior subordinated debt securities. If the institutional trustee
fails to enforce its rights under the junior subordinated debt securities, you
may directly institute a legal proceeding against us to enforce the
institutional trustee's rights under the junior subordinated debt securities
without first instituting any legal proceeding against the institutional trustee
or any other person or entity. If a declaration event of default then exists and
that event is attributable to our failure to pay interest or principal on the
junior subordinated debt securities on the date the interest or principal is
otherwise payable, or in the case of redemption, on the redemption date, then
you may also institute a direct action for payment on or after the respective
due date specified in the junior subordinated debt securities without first:
- directing the institutional trustee to enforce the terms of the junior
subordinated debt securities, or
- instituting a legal proceeding against us to enforce the institutional
trustee's rights under the junior subordinated debt securities.
In connection with a direct action, we will be subrogated to your rights to
the extent of any payment made by us to you in the direct action. Consequently,
we will be entitled to payment of amounts that you receive in respect of an
unpaid distribution that resulted in the bringing of a direct action to the
extent that you receive or have already received full payment with respect to
such unpaid distribution from Hartford Life Capital II. Under the guarantee, we
acknowledge that the guarantee trustee will enforce the guarantee on behalf of
the holders of the preferred securities. If we fail to make payments under the
guarantee, the guarantee provides a mechanism for the holders of the preferred
securities to direct the guarantee trustee to enforce its rights under the
guarantee. If the guarantee trustee fails to enforce the guarantee, you may
directly institute a legal proceeding against us to enforce the guarantee
trustee's rights under the guarantee without first instituting a legal
proceeding against Hartford Life Capital II, the guarantee trustee, or any other
person or entity. You may also directly institute a legal proceeding against us
to enforce your right to receive payment under the guarantee without first
- directing the guarantee trustee to enforce the terms of the guarantee, or
- instituting a legal proceeding against Hartford Life Capital II or any
other person or entity.
S-36
38
Both we and Hartford Life Capital II believe that the above mechanisms and
obligations, taken together, are equivalent to a full and unconditional
guarantee by us of payments due on the preferred securities. See "Description of
Guarantee -- General."
DESCRIPTION OF HARTFORD LIFE'S CAPITAL STOCK
Our authorized capital stock consists of 1,000 shares of common stock, par
value $.01 per share. All of these shares are outstanding and are held by a
wholly owned subsidiary of The Hartford.
Each outstanding share of our common stock is entitled to such dividends as
our board of directors may declare from time to time out of funds that we can
legally use to pay dividends. The holder of our common stock is entitled to one
vote for each share of common stock. In the event of liquidation, dissolution or
winding-up of Hartford Life, the holder of our common stock will be entitled to
receive any assets remaining after provisions of payment of creditors.
This description supercedes the section entitled "Description of Capital
Stock" in the accompanying prospectus.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of the preferred
securities by United States holders, as defined below, who purchase the
preferred securities upon original issuance at their original issue price. For
purposes of this summary, a "United States holder" means a beneficial owner of a
preferred security that is:
- an individual citizen or resident of the United States;
- a corporation created or organized in or under the laws of the United
States, any state of the United States or the District of Columbia; or
- a partnership, estate or trust treated, for United States federal income
tax purposes, as a domestic partnership, estate or trust.
This summary does not address all aspects of United States federal income
taxation that may be relevant to United States holders in light of their
particular circumstances, such as United States holders who are subject to
special tax treatment, for example, dealers in securities or currencies, banks,
regulated investment companies, tax-exempt organizations, traders in securities
that elect to use a mark-to-market method of accounting, persons liable for
alternative minimum tax, insurance companies and persons holding preferred
securities as part of a straddle, hedge, conversion transaction or other
integrated investment. This summary does not address the tax consequences of a
beneficial owner of a preferred security that is not a United States holder. In
addition, this summary does not address any aspects of state, local or foreign
tax law. This summary is based on the Internal Revenue Code of 1986, as amended,
which we refer to as the "Code", the Treasury regulations promulgated under the
Code and administrative and judicial interpretations, all as in effect on the
date of this prospectus supplement, and all of which are subject to change,
possibly with retroactive effect.
The statements of law and legal conclusions in this summary represent the
opinion of Debevoise & Plimpton, counsel to Hartford Life and Hartford Life
Capital II, which we refer to as "tax counsel". The authorities on which this
summary is based are subject to various interpretations, and the opinion of tax
counsel is not binding on the Internal Revenue Service, which we refer to as the
"IRS", or the courts.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES TO
YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES IN
LIGHT OF YOUR OWN PARTICULAR CIRCUMSTANCES, AS WELL AS THE STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES.
S-37
39
CLASSIFICATION OF HARTFORD LIFE CAPITAL II
Tax counsel is of the opinion that, under current law and assuming full
compliance with the terms of the declaration of trust, and based upon certain
facts and assumptions contained in such opinion, Hartford Life Capital II will
be classified as a grantor trust for United States federal income tax purposes
and not as an association taxable as a corporation. As a result, for United
States federal income tax purposes, you generally will be treated as owning an
undivided interest in the junior subordinated debt securities. Thus, you will be
required to include in your gross income your proportionate share of the
interest income or original issue discount that is paid or accrued on the junior
subordinated debt securities. See below under the caption "-- Interest Income
and Original Issue Discount".
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Hartford Life intends to take the position that the junior subordinated
debt securities will be classified for United States federal income tax purposes
as indebtedness of Hartford Life. Hartford Life, Hartford Life Capital II and
you, by your acceptance of a beneficial ownership interest in a preferred
security, agree to treat the junior subordinated debt securities as indebtedness
of Hartford Life for United States federal income tax purposes. The remainder of
this discussion assumes that the junior subordinated debt securities will be
classified as indebtedness of Hartford Life for United States federal income tax
purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
We anticipate that the junior subordinated debt securities will not be
issued with an issue price that is less than their stated redemption price at
maturity by more than the statutory de minimis amount. In this case, subject to
the discussion below, the junior subordinated debt securities will not be
subject to the original issue discount, which we refer to as "OID", rules, at
least upon initial issuance, so that you will generally be taxed on the stated
interest on the junior subordinated debt securities as ordinary income at the
time it is paid or accrued in accordance with your regular method of tax
accounting.
If, however, Hartford Life exercises its right to defer payments of
interest on the junior subordinated debt securities, the junior subordinated
debt securities will be treated as reissued with OID at that time. Under the OID
rules, regardless of your method of accounting, you would accrue interest income
each year with respect to the junior subordinated debt securities on an economic
accrual basis, including during a deferral period. As a result, cash payments of
interest you receive with respect to the junior subordinated debt securities
would not be reported separately as taxable income, any amount of OID included
in your gross income with respect to the junior subordinated debt securities
would increase your tax basis in the preferred securities, and cash payments you
receive with respect to the preferred securities would reduce your tax basis in
the preferred securities.
The Treasury regulations dealing with OID and the deferral of interest
payments have not yet been addressed in any rulings or other interpretations by
the IRS. It is possible that the IRS could assert that the junior subordinated
debt securities were issued initially with OID. If the IRS were successful,
regardless of whether Hartford Life exercises its option to defer payments of
interest on the junior subordinated debt securities, you would be subject to the
OID rules described above.
Because the junior subordinated debt securities are indebtedness for
federal income tax purposes, you will not be entitled to a
dividends-received-deduction with respect to any income you recognize on the
preferred securities.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBT SECURITIES UPON LIQUIDATION OF HARTFORD
LIFE CAPITAL II
The junior subordinated debt securities held by Hartford Life Capital II
may be distributed to you in exchange for the preferred securities if Hartford
Life Capital II is liquidated before the maturity of the junior subordinated
debt securities. Under current law, except as described below, this type of
distribution from a grantor trust would not be taxable. Your total tax basis in
the junior subordinated debt securities you receive will equal the total tax
basis that you had in the preferred securities exchanged and your
S-38
40
holding period in the junior subordinated debt securities you receive will
include your holding period in the preferred securities exchanged. If, however,
Hartford Life Capital II is treated as an association taxable as a corporation
and we elect to distribute the junior subordinated debt securities to you at
that time, the distribution would be taxable to Hartford Life Capital II and to
you.
If you receive junior subordinated debt securities in exchange for the
preferred securities, you would continue to include in your gross income
interest or original issue discount in respect of the junior subordinated debt
securities received in the manner described above under the caption "-- Interest
Income and Original Issue Discount."
SALES OR REDEMPTIONS OF PREFERRED SECURITIES
If you sell the preferred securities or receive cash upon redemption of the
preferred securities, you will recognize gain or loss equal to the difference
between the amount realized on the sale or redemption of the preferred
securities, less an amount equal to any accrued but unpaid stated interest that
you did not previously include in income, which will be taxable as ordinary
income, and your adjusted tax basis in the preferred securities sold or
redeemed. Your gain or loss will be a capital gain or loss, provided that you
held the preferred securities as a capital asset. Such gain or loss will
generally be a long-term capital gain or loss if you have held the preferred
securities for more than one year. Long-term capital gains of individuals are
currently subject to tax at reduced capital gains rates. The deductibility of
capital losses is subject to limitations.
The preferred securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying junior
subordinated debt securities. If you dispose of the securities between record
dates for payments of distributions, you will nevertheless be required to
include accrued but unpaid interest on the junior subordinated debt securities
through the date of disposition in income as ordinary income and to add that
amount to your adjusted tax basis in the preferred securities disposed of. You
will recognize a capital loss to the extent the selling price, which may not
fully reflect the value of accrued but unpaid interest, is less than your
adjusted tax basis, which will include accrued but unpaid interest. The
deductibility of capital losses is subject to limitations.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting will apply to payments of income on the
preferred securities and to the proceeds of the sale of the preferred
securities, unless you are an exempt recipient, for example a corporation. A 31%
backup withholding tax will apply to such payments if you fail to provide a
taxpayer identification number, unless you have provided a certification of
exempt status.
S-39
41
UNDERWRITING
Morgan Stanley & Co. Incorporated and Salomon Smith Barney Inc. are acting
as joint bookrunning managers of the offering and, together with A.G. Edwards &
Sons, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and UBS Warburg
LLC, are acting as representatives of the underwriters named below. Subject to
the terms and conditions stated in the underwriting agreement dated the date of
this prospectus supplement, each underwriter named below has severally agreed to
purchase, and Hartford Life Capital II has agreed to sell to that underwriter,
the number of preferred securities set forth opposite the underwriter's name.
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
- ----------- --------------------
Morgan Stanley & Co. Incorporated........................... 1,470,000
Salomon Smith Barney Inc. .................................. 1,470,000
A.G. Edwards & Sons, Inc. .................................. 1,460,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 1,460,000
UBS Warburg LLC............................................. 1,460,000
Advest, Inc................................................. 40,000
Banc of America Securities LLC.............................. 40,000
BB&T Capital Markets, a Division of Scott & Stringfellow.... 40,000
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated.............................................. 40,000
First Union Capital Markets Corporation..................... 40,000
Gruntal & Co. L.L.C. ....................................... 40,000
H&R Block Financial Advisors, Inc. ......................... 40,000
Janney Montgomery Scott Inc. ............................... 40,000
J.J.B. Hilliard, W.L. Lyons, Inc. .......................... 40,000
Legg Mason Wood Walker, Incorporated........................ 40,000
Pershing/Division of Donaldson, Lufkin & Jenrette Securities
Inc. ..................................................... 40,000
Prudential Securities Incorporated.......................... 40,000
Raymond James & Associates, Inc. ........................... 40,000
Robert W. Baird & Co. Incorporated.......................... 40,000
The Robinson-Humphrey Company, LLC.......................... 40,000
U.S. Bancorp Piper Jaffray Inc. ............................ 40,000
Wells Fargo Van Kasper, LLC................................. 40,000
----------
Total............................................. 8,000,000
==========
The underwriting agreement provides that the obligations of the
underwriters to purchase the preferred securities included in this offering are
subject to approval of legal matters by counsel and to other conditions. The
underwriters are obligated to purchase all the preferred securities if they
purchase any of the preferred securities. In the event of default by any
underwriter, the underwriting agreement provides that, in certain circumstances,
purchase commitments of the non-defaulting underwriters may be increased or the
underwriting agreement may be terminated.
The underwriters propose to offer some of the preferred securities directly
to the public at the initial public offering price set forth on the cover page
of this prospectus supplement and some of the preferred securities to dealers at
the initial public offering price less a concession not to exceed $0.50 per
preferred security. The underwriters may allow, and dealers may reallow, a
concession not to exceed $0.30 per preferred security on sales to other dealers.
If all of the preferred securities are not sold at the initial
S-40
42
public offering price, the representatives may change the initial public
offering price and the other selling terms.
We and Hartford Life Capital II have agreed that, for a period beginning on
the date of this prospectus supplement and continuing to, and including, the
date 30 days after the date of this prospectus supplement, we will not offer,
sell or contract to sell or otherwise dispose of any preferred securities, any
other of our securities or securities of Hartford Life Capital II that are
substantially similar to the preferred securities, including any guarantee of
such securities, or any securities convertible into or exchangeable for such
securities, without the prior written consent of Morgan Stanley & Co.
Incorporated and Salomon Smith Barney, except for the preferred securities
offered in connection with this offering.
The preferred securities have been approved for listing on the New York
Stock Exchange subject to official notice of issuance. We expect trading of the
preferred securities to begin within 30 days after they are first issued.
In view of the fact that the proceeds of the sale of the preferred
securities will ultimately be used to purchase our junior subordinated debt
securities, the underwriting agreement provides that we will pay as compensation
to the underwriters $0.7875 per preferred security for the accounts of the
several underwriters ($6,300,000 in the aggregate).
In connection with the offering, the underwriters may purchase and sell
preferred securities in the open market. These transactions may include short
sales of preferred securities in excess of the number of preferred securities to
be purchased by the underwriters in the offering, which creates a syndicate
short position. The underwriters must close out any short position by purchasing
preferred securities in the open market. A short position is likely to be
created if the underwriters are concerned that there may be downward pressure on
the price of the preferred securities in the open market after pricing that
could adversely affect investors who purchase in the offering. Stabilizing
transactions consist of bids for or purchases of preferred securities in the
open market while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when Morgan
Stanley & Co. Incorporated and Salomon Smith Barney repurchase preferred
securities originally sold by that syndicate member in order to cover syndicate
short positions or make stabilizing purchases.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the preferred securities. They may also cause the
price of the preferred securities to be higher than the price that would
otherwise exist in the open market in the absence of these transactions. The
underwriters may conduct these transactions on the New York Stock Exchange or in
the over-the-counter market, or otherwise. If the underwriters commence any of
these transactions, they may discontinue them at any time.
The expenses associated with the offer and sale of the preferred
securities, to be paid by us, are estimated to be $200,000.
The underwriters have performed investment banking and advisory services
for us from time to time for which they have received customary fees and
expenses. The underwriters may, from time to time, engage in transactions with
and perform services for us in the ordinary course of their business.
A prospectus supplement in electronic format may be made available on the
websites maintained by one or more of the underwriters. The representatives may
agree to allocate a number of shares to underwriters for sale to their online
brokerage account holders. The representatives will allocate shares to
underwriters that may make Internet distributions on the same basis as other
allocations. In addition, shares may be sold by the underwriters to securities
dealers who resell shares to online brokerage account holders.
We and Hartford Life Capital II have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments the underwriters may be required to make
because of any of those liabilities.
S-41
43
VALIDITY OF THE PREFERRED SECURITIES
Certain matters of Delaware law relating to Hartford Life Capital II and
the preferred securities will be passed upon for Hartford Life Capital II and
Hartford Life by Richards, Layton & Finger, P.A., Wilmington, Delaware. The
validity of the junior subordinated debt securities and the guarantee will be
passed upon for us by C. Michael O'Halloran, our Vice President, and by
Debevoise & Plimpton, New York, New York, and for the underwriters by Sullivan &
Cromwell, New York, New York. Certain United States federal income taxation
matters will be passed upon for us by Debevoise & Plimpton, New York, New York.
This statement supersedes the "Legal Opinions" section in the accompanying
prospectus.
EXPERTS
The audited consolidated financial statements and schedules of Hartford
Life, Inc. and subsidiaries incorporated by reference in this prospectus
supplement and accompanying prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference in this prospectus supplement and the accompanying
prospectus in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports. This statement supersedes the section
entitled "Experts" in the accompanying prospectus.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus supplement and the
accompanying prospectus, other than statements of historical fact, are
forward-looking statements. These forward-looking statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 and include estimates and assumptions related to economic, competitive and
legislative developments. These forward-looking statements are subject to change
and uncertainty which are, in many instances, beyond our control and have been
made based upon management's expectations and beliefs concerning future
developments and their potential effect upon Hartford Life. There can be no
assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on Hartford Life will be
those anticipated by management. Actual results could differ materially from
those expected by Hartford Life, depending on the outcome of various factors.
These factors include:
- the possibility of general economic and business conditions that are less
favorable than anticipated, including the possibility of less favorable
conditions than anticipated for the financing of the FFG acquisition;
- less success in integrating the operations of FFG than anticipated;
- changes in interest rates or the stock markets;
- stronger than anticipated competitive activity;
- unfavorable legislative developments; and
- other factors described in the forward-looking statements in this
prospectus supplement and the accompanying prospectus.
S-42
44
PROSPECTUS
HARTFORD LIFE, INC.
DEBT SECURITIES
PREFERRED STOCK
CLASS A COMMON STOCK
DEPOSITARY SHARES
WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
HARTFORD LIFE CAPITAL I
HARTFORD LIFE CAPITAL II
HARTFORD LIFE CAPITAL III
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
HARTFORD LIFE, INC.
[HARTFORD LOGO]
HARTFORD LIFE
Hartford Life, Inc., a Delaware corporation ("Hartford Life"), may from time
to time offer together or separately its (a) debt securities, in one or more
series, which may be either Senior Debt Securities (the "Senior Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities", including the Junior Subordinated Debt Securities (as defined
below) and, together with the Senior Debt Securities, the "Debt Securities")
consisting of debentures, notes or other evidences of indebtedness, (b) shares
of its preferred stock, par value $.01 per share (the "Preferred Stock"), which
may be issued in the form of Depositary Shares (as defined herein) evidenced by
Depositary Receipts (as defined herein), (c) shares of its Class A common stock,
par value $.01 per share (the "Class A Common Stock"), (d) warrants to purchase
any of the foregoing Debt Securities, Preferred Stock or Class A Common Stock
which may be designated by Hartford Life at the time of the offering thereof
(the "Warrants"), (e) Stock Purchase Contracts (the "Stock Purchase Contracts")
to purchase Preferred Stock or Class A Common Stock, (f) Stock Purchase Units
(the "Stock Purchase Units"), each representing ownership of a Stock Purchase
Contract and Debt Securities, preferred securities of a Trust (as defined
herein) or debt obligations of third parties, including U.S. Treasury
securities, securing the holder's obligation to purchase Preferred Stock or
Class A Common Stock under the Stock Purchase Contract, and (g) junior
subordinated deferrable interest debentures, in one or more series (the "Junior
Subordinated Debt Securities"), in each case in amounts, at prices and on terms
to be determined at the time or times of offering.
Hartford Life Capital I, Hartford Life Capital II and Hartford Life Capital
III, each a trust created under the laws of the State of Delaware (each, a
"Trust" and collectively, the "Trusts"), may severally offer, from time to time,
its respective preferred securities, which may be designated as preferred
securities or capital securities representing preferred undivided beneficial
interests in the assets of each of the Trusts (the "Preferred Securities"). The
Debt Securities, Preferred Stock, Class A Common Stock, Warrants, Stock Purchase
Contracts, Stock Purchase Units, Junior Subordinated Debt Securities and
Preferred Securities are referred to herein collectively as the "Offered
Securities". The aggregate initial public offering price of the securities to be
offered by this Prospectus shall not exceed $1,000,000,000.
Hartford Life will be the owner of the common securities (the "Common
Securities", and together with the Preferred Securities, the "Trust Securities")
of each Trust. The payment of periodic cash distributions ("Distributions") with
respect to the Preferred Securities and payments on liquidation or redemption
with respect to such Preferred Securities, in each case out of funds of the
Trusts, are irrevocably guaranteed by Hartford Life to the extent described
herein (the "Guarantees"). See "Description of Guarantee". The obligations of
Hartford Life under the Guarantees will rank subordinate and junior in right of
payment to all other liabilities of Hartford Life and pari passu with the most
senior preferred or preference stock now or hereafter issued by Hartford Life
and with any guarantee now or hereafter entered into by Hartford Life in respect
of any preferred or preference stock of Hartford Life. Concurrently with the
issuance by a Trust of its Preferred Securities, such Trust will invest the
proceeds thereof and any contributions made in respect of the Common Securities
in a corresponding series of Junior Subordinated Debt Securities (the
"Corresponding Junior Subordinated Debt Securities") with terms corresponding to
the terms of such Preferred Securities. The Corresponding Junior Subordinated
Debt Securities will be the sole assets of each Trust and payments thereunder
will be the only revenue of each Trust. To the extent set forth in the
accompanying Prospectus Supplement, Hartford Life may redeem the Corresponding
Junior Subordinated Debt Securities and
(continued on next page)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 24, 1998.
45
(Continued from previous page)
cause the redemption of the Trust Securities or may dissolve the Trust and,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, cause the Corresponding Junior Subordinated Debt Securities to
be distributed to the holders of Preferred Securities in liquidation of their
interest in the Trust.
Specific terms of the particular Offered Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement (the "Prospectus Supplement"), which will describe, without
limitation and where applicable, the following: (a) in the case of the Debt
Securities, the specific designation, aggregate principal amount, authorized
denominations, maturity, premium, if any, interest rate (which may be fixed or
variable) or method of calculating interest, if any, place or places where
principal, premium, if any, and interest, if any, will be payable, currency in
which principal, premium, if any, and interest, if any, will be payable, any
terms of redemption, any sinking fund provisions, ranking as senior or
subordinated, the right of Hartford Life, if any, to defer interest payments and
the maximum length of any such deferral period, terms for any conversion or
exchange into other Offered Securities, initial public offering or purchase
price, methods of distribution and other special terms, (b) in the case of
Preferred Stock, the specific designation, stated value and liquidation
preference per share and number of shares offered, dividend rate (which may be
fixed or variable) or method of calculating dividends, place or places where
dividends will be payable, any terms of redemption, any sinking fund provisions,
terms for any conversion or exchange into other Offered Securities, initial
public offering or purchase price, methods of distribution and other special
terms, (c) in the case of Class A Common Stock, the number of shares offered,
initial public offering or purchase price, methods of distribution and other
special terms, (d) in the case of Warrants, the duration, purchase price,
exercise price and detachability of such Warrants and a description of the
securities for which each Warrant is exercisable, (e) in the case of Depositary
Shares, the fractional share of Preferred Stock represented by each such
Depositary Share, (f) in the case of Stock Purchase Contracts, the designation
and number of shares of Preferred Stock or Class A Common Stock issuable
thereunder, the purchase price of the Preferred Stock or Class A Common Stock,
the date or dates on which the Preferred Stock or Class A Common Stock is
required to be purchased by the holders of the Stock Purchase Contracts, any
periodic payments required to be made by Hartford Life to the holders of the
Stock Purchase Contracts or vice versa, and the terms of the offering and sale
thereof, (g) in the case of Stock Purchase Units, the specific terms of the
Stock Purchase Contracts and any Debt Securities, Preferred Securities or debt
obligations of third parties securing the holder's obligation to purchase the
Preferred Stock or Common Stock under the Stock Purchase Contracts, and the
terms of the offering and sale thereof, (h) in the case of the Junior
Subordinated Debt Securities, the specific designation, aggregate principal
amount, denominations, maturity, interest payment dates, interest rate (which
may be fixed or variable) or method of calculating interest, if any, applicable
interest sinking fund provisions, the right of Hartford Life, if any, to defer
interest payments and the maximum length of any such deferral period, terms for
any conversion or exchange into other securities, initial offering or purchase
price, methods of distribution and any other special terms, and (i) in the case
of the Preferred Securities, the specific title, aggregate amount, stated
liquidation preference, number of securities, distribution rate or method of
calculating such rate, the right of the related trust, if any, to defer
distribution payments and the maximum length of any such deferral period, place
or places where distributions will be payable, any terms of redemption, initial
offering or purchase price, methods of distribution and any other special terms.
The Prospectus Supplement also will contain information, as applicable,
about certain United States federal income tax considerations relating to the
Offered Securities.
The Debt Securities will be unsecured. Unless otherwise specified in an
applicable Prospectus Supplement, the Senior Debt Securities will rank equally
with all other unsecured and unsubordinated indebtedness of Hartford Life. The
Subordinated Debt Securities and the Junior Subordinated Debt Securities will be
subordinated in right of payment to all Senior Indebtedness (as defined herein)
of Hartford Life to the extent described herein and in the applicable Prospectus
Supplement relating thereto. As a non-operating holding company, substantially
all of the assets of Hartford Life and its consolidated subsidiaries are owned
by such subsidiaries and Hartford Life relies primarily on dividends from such
subsidiaries to meet its obligations for payment of principal, interest and
related expenses on its outstanding debt obligations. Accordingly, the Debt
Securities and Junior Subordinated Debt Securities will be effectively
subordinated to all existing and future liabilities of Hartford Life's
subsidiaries, including liabilities under contracts of insurance and annuities
written by Hartford Life's insurance subsidiaries, and holders thereof should
look only to the assets of Hartford Life for payments of interest and principal
and premium, if any.
Hartford Life's Class A Common Stock is traded on the New York Stock
Exchange (the "NYSE") under the symbol "HLI".
The Offered Securities may be sold to or through underwriters, through
dealers, remarketing firms or agents or directly to purchasers. See "Plan of
Distribution". The names of any underwriters, dealers, remarketing firms or
agents involved in the sale of Offered Securities in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them will be set forth in a Prospectus Supplement. The
Prospectus Supplement will state whether the Offered Securities will be listed
on any national securities exchange. If the Offered Securities are not listed on
any national securities exchange, there can be no assurance that there will be a
secondary market for the Offered Securities.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
2
46
No dealer, salesperson or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus, any accompanying Prospectus Supplement or the documents incorporated
or deemed incorporated by reference herein, and any information or
representations not contained herein or therein must not be relied upon as
having been authorized by Hartford Life or any agent, underwriter or dealer.
This Prospectus and the applicable Prospectus Supplement do not constitute an
offer to sell any securities other than those to which they relate, or an offer
to sell or a solicitation of an offer to buy those to which they relate in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus and/or the
applicable Prospectus Supplement at any time does not imply that the information
herein or therein is correct as of any time subsequent to its date.
------------------------
State insurance holding company laws and regulations applicable to Hartford
Life generally provide that no person may acquire control of Hartford Life, and
thus indirect control of its insurance subsidiaries, unless such person has
provided certain required information to, and such acquisition is approved (or
not disapproved) by, the appropriate insurance regulatory authorities.
Generally, any person acquiring beneficial ownership of 10% or more of Hartford
Life's common stock would be presumed to have acquired such control, unless the
appropriate insurance regulatory authorities upon advance application determine
otherwise.
AVAILABLE INFORMATION
Hartford Life is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West Madison
Street, Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The Commission
maintains a Web Site that contains reports, proxy and information statements and
other information regarding registrants such as Hartford Life that file
electronically with the Commission. The address of such site is
http://www.sec.gov. In addition, such reports, proxy statements and other
information concerning Hartford Life can be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
Hartford Life has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the Offered Securities. This Prospectus does not contain all the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
For further information with respect to Hartford Life and the Offered
Securities, reference is made to the Registration Statement and the exhibits and
the financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus concerning the contents of any documents
referred to herein are not necessarily complete, and in each instance are
qualified in all respects by reference to the copy of such document filed as an
exhibit to the Registration Statement.
3
47
FORWARD LOOKING STATEMENTS
This Prospectus contains and incorporates by reference certain forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the results of operations and businesses of
Hartford Life. These forward looking statements involve certain risks and
uncertainties. Factors that may cause actual results to differ materially from
those contemplated or projected, forecast, estimated or budgeted in such forward
looking statements include, among others, the following possibilities: (i) The
Hartford's (as defined herein) control of Hartford Life through its beneficial
ownership of approximately 95.6% of the combined voting power of all the
outstanding common stock and approximately 81.4% of the economic interest in
Hartford Life; (ii) Hartford Life's primary reliance, as a holding company, on
dividends from its subsidiaries to meet debt payment obligations and the
applicable regulatory restrictions on the ability of Hartford Life's
subsidiaries to pay such dividends; (iii) the potential impact on Hartford
Life's reported net income that could result from the adoption of certain
accounting standards by the Financial Accounting Standards Board; (iv) tax law
changes impacting the tax treatment of life insurance and investment products;
(v) heightened competition, including specifically the intensification of price
competition, the entry of new competitors and the development of new products by
new and existing competitors; (vi) adverse state and federal legislation and
regulation, including limitations on premium levels, increases in minimum
capital and reserves, and other financial viability requirements; (vii) failure
to develop multiple distribution channels in order to obtain new customers or
failure to retain existing customers; (viii) inability to carry out marketing
and sales plans, including, among others, changes to certain products and
acceptance of the revised products in the market; (ix) loss of key executives;
(x) changes in interest rates causing a reduction of investment income or
reduction in the value of Hartford Life's investment portfolio; (xi) general
economic and business conditions which are less favorable than expected; (xii)
unanticipated changes in industry trends and ratings assigned by nationally
recognized statistical organizations; (xiii) inaccuracies in assumptions
regarding future morbidity, persistency, mortality and interest rates used in
calculating reserve amounts; and (xiv) failure to continue improvement of the
claims management process.
FINANCIAL STATEMENTS OF THE TRUSTS
No separate financial statements of any of the Trusts have been included
herein. Hartford Life does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of each of the Trusts will be owned, directly or indirectly by
Hartford Life, a reporting company under the Exchange Act, (ii) each of the
Trusts has no independent operations but exists for the sole purpose of issuing
securities representing undivided beneficial interests in the assets of such
Trust and investing the proceeds thereof in Corresponding Junior Subordinated
Debt Securities issued by Hartford Life, and (iii) Hartford Life's obligations
described herein and in any accompanying Prospectus Supplement under the
Declaration of each Trust, the Guarantee issued with respect to the Preferred
Securities issued by that Trust, the Corresponding Junior Subordinated Debt
Securities purchased by that Trust and the related Subordinated Indenture, taken
together, constitute a full and unconditional guarantee of payments due on the
Trust Securities. See "Description of Junior Subordinated Debt Securities and
Corresponding Junior Subordinated Debt Securities" and "Description of
Guarantee."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Hartford Life with the Commission are
incorporated into this Prospectus by reference:
1. Hartford Life's Annual Report on Form 10-K for the year ended
December 31, 1997; and
2. Hartford Life's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
Each document or report filed by Hartford Life pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering described herein shall be deemed to be incorporated
by reference into this Prospectus and to be a part of this Prospectus from the
date of filing of such document. Any statement contained herein, or in a
document all or a portion of which is
4
48
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of the Registration Statement or this Prospectus.
Hartford Life will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference herein (other
than exhibits not specifically incorporated by reference into the texts of such
documents). Requests for such documents should be directed to: Hartford Life,
Inc., 200 Hopmeadow Street, Simsbury, Connecticut 06089, Attention: Investor
Relations Department (telephone: 860-843-7716).
HARTFORD LIFE, INC.
Hartford Life is a leading insurance and financial services company that,
through its consolidated subsidiaries, provides (i) annuity products such as
individual variable annuities and fixed market value adjusted ("MVA") annuities,
deferred compensation plan services and mutual funds for savings and retirement
needs to over 1 million customers, (ii) life insurance for income protection and
estate planning to approximately 500,000 customers and (iii) employee benefits
products such as group life and group disability insurance for the benefit of
over 15 million individuals. Hartford Life is a holding company formed in
December 1996, which holds virtually all the investment products, individual
life insurance and employee benefits operations of The Hartford Financial
Services Group, Inc. (formerly known as ITT Hartford Group, Inc.) ("The
Hartford"). Hartford Life is a direct subsidiary of Hartford Accident and
Indemnity Company and an indirect subsidiary of The Hartford. The Hartford is
among the largest domestic and international providers of commercial
property-casualty insurance, property-casualty reinsurance and personal lines
(including homeowners and auto) coverages. On December 19, 1995, ITT Industries,
Inc. (formerly ITT Corporation) ("ITT") distributed all the outstanding shares
of capital stock of The Hartford to ITT stockholders of record on such date (the
transactions relating to such distribution are referred to herein as the "ITT
Spin-Off"). As a result of the ITT Spin-Off, The Hartford became an independent
publicly traded company.
As a holding company with no significant business operations of its own,
Hartford Life relies on dividends from its subsidiaries, which are primarily
domiciled in the State of Connecticut, as the principal source of cash to meet
its obligations, including the payment of principal of and premium, if any, and
interest on debt obligations of Hartford Life, and the payment of dividends to
holders of its capital stock. The payment of dividends by Connecticut-domiciled
life insurers is limited under the insurance holding company laws of
Connecticut, which require notice to and approval by the Connecticut Insurance
Commissioner for the declaration or payment of any dividend which, together with
other dividends or distributions made within the preceding twelve months,
exceeds the greater of (i) 10% of the insurer's policyholder surplus as of
December 31 of the preceding year or (ii) net gain from operations for the
twelve-month period ending on the December 31 last preceding, in each case
determined under statutory insurance accounting practices. In addition, if any
dividend of a Connecticut-domiciled insurer exceeds the insurer's earned
surplus, it requires the approval of the Connecticut Insurance Commissioner.
Hartford Life is a Delaware corporation. Hartford Life's principal
executive offices are located at 200 Hopmeadow Street, Simsbury, Connecticut
06089, and its telephone number is (860) 843-7716.
5
49
CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION AND
BY-LAWS OF HARTFORD LIFE
TRANSACTIONS WITH INTERESTED PARTIES
Hartford Life's Certificate of Incorporation includes certain provisions
addressing potential conflicts of interest between Hartford Life and The
Hartford and regulating and defining the conduct of certain affairs of Hartford
Life as they may involve The Hartford and its subsidiaries, directors and
officers. The Certificate of Incorporation provides that no contract, agreement,
arrangement or transaction (or amendment, modification or termination thereof)
between Hartford Life and The Hartford or any of its subsidiaries (other than
Hartford Life and its subsidiaries) or between Hartford Life and any entity in
which any of Hartford Life's directors has a financial interest (a "Related
Entity"), or between Hartford Life and any director or officer of Hartford Life,
The Hartford or any subsidiary of Hartford Life or The Hartford or any Related
Entity will be void or voidable for the reason that The Hartford or any
subsidiary thereof, Related Entity or any director or officer of Hartford Life,
The Hartford or any subsidiary of Hartford Life or The Hartford or any Related
Entity is a party thereto, or because any such director or officer is present
at, participates in or votes at a meeting of the Board of Directors or a
committee thereof which authorizes such contract, agreements, arrangement or
transaction (or amendment, modification or termination thereof), if:
(i) the material facts as to such contract, agreement, arrangement or
transaction (or amendment, modification or termination thereof) are
disclosed or are known to the Board of Directors or the committee thereof
that authorizes such contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) and the Board of Directors
or such committee in good faith authorizes, approves or ratifies such
contract, agreement, arrangement or transaction (or amendment, modification
or termination thereof) by the affirmative vote of a majority of the
Disinterested Directors (as defined below), even though the number of
Disinterested Directors voting may be less than a quorum;
(ii) the material facts as to such contract, agreement, arrangement or
transaction (or amendment, modification or termination thereof) are
disclosed or are known to the holders of Common Stock entitled to vote
thereon, and the contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) is specifically approved or
ratified in good faith by a majority of the votes entitled to be cast by
all then outstanding shares of Common Stock present in person or
represented by proxy and not owned by The Hartford or any subsidiary
thereof or a Related Entity, as the case may be; or
(iii) such contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) is fair to Hartford Life at
the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders of Hartford Life.
For purposes hereof, "Disinterested Directors" means the directors of
Hartford Life who are not (i) officers of either Hartford Life or The Hartford
or any of their respective subsidiaries or (ii) directors of The Hartford or any
subsidiary thereof (other than Hartford Life).
CORPORATE OPPORTUNITIES
The Certificate of Incorporation further provides that, subject to any
contract to which Hartford Life is a party and subject to applicable law, The
Hartford or any subsidiary thereof (other than Hartford Life and any subsidiary
thereof) will have the right to: (i) engage in the same or similar business
activities or lines of business as Hartford Life or any subsidiary thereof; (ii)
do business with any client or customer of Hartford Life or any subsidiary
thereof; and (iii) employ or otherwise engage any officer or employee of
Hartford Life or any subsidiary thereof. In addition, in the event that The
Hartford or any of its subsidiaries (other than Hartford Life and its
subsidiaries) or Hartford Life or any of its subsidiaries acquires knowledge of
a potential transaction or matter that may be a corporate opportunity for both
The Hartford and Hartford Life, such person shall have no duty, other than
pursuant to the laws of the State of Delaware, to communicate or present such
corporate opportunity to Hartford Life or The Hartford, as applicable.
6
50
CERTAIN AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
Until The Hartford ceases to beneficially own, directly or indirectly, more
than 20% of the number of outstanding shares of Common Stock, the Certificate of
Incorporation requires the affirmative vote of the holders of 80% or more of the
combined voting power of the Common Stock then outstanding, voting together as a
single class, to alter, amend or repeal, or adopt any provision of the
Certificate of Incorporation which is inconsistent with, any provision of the
Certificate of Incorporation (whether directly or indirectly through any merger
of Hartford Life with any other entity) relating to transactions with interested
parties and corporate opportunities (each as described above), as well as the
provision requiring such 80% vote to effect such an alteration, amendment,
repeal or adoption. Thereafter, under the General Corporation Law of the State
of Delaware (the "DGCL"), an affirmative vote of 50% or more of the combined
voting power of the Common Stock then outstanding would be required to effect
such an alteration, amendment, repeal or adoption. Accordingly, so long as The
Hartford beneficially owns more than 20% of the number of outstanding shares of
Common Stock, it can prevent any such alteration, amendment, repeal or adoption.
In addition, the Certificate of Incorporation requires the affirmative vote
of the holders of at least 80% of the combined voting power of all the then
outstanding shares of Common Stock, voting together as a single class, to alter,
amend or repeal, or adopt any provision of the Certificate of Incorporation
(whether directly or indirectly through any merger of Hartford Life with any
other entity) which is inconsistent with, any provision of the Certificate of
Incorporation relating to the classification of the Board of Directors, the
filling of vacancies on the Board of Directors, the prohibition on the taking of
actions by stockholders by written consent in lieu of a meeting and the calling
of a special meeting of stockholders, as well as the provision requiring such an
80% vote to effect such an alteration, amendment, repeal or adoption.
POTENTIAL LIMITS ON CHANGE OF CONTROL
Certain provisions of the Certificate of Incorporation and By-laws may
delay, defer or prevent a tender offer, proxy contest or other takeover attempt
involving Hartford Life. It is believed that such provisions will enable
Hartford Life to develop its business in a manner that will foster its long-term
growth without disruption caused by the threat of a takeover not deemed by its
Board of Directors to be in the best interests of Hartford Life and its
stockholders. In addition, these provisions also are intended to ensure that the
Board of Directors will have sufficient time to act in what the Board of
Directors believes to be in the best interests of Hartford Life and its
stockholders. However, such provisions could have the effect of making it more
difficult for a third party to undertake, or discouraging a third party from
undertaking, an unsolicited takeover bid or otherwise attempting to obtain
control of Hartford Life or the Board of Directors, although such proposals, if
made, might be considered desirable by a majority of Hartford Life's
stockholders. Such provisions also may have the effect of making it more
difficult for third parties to cause the replacement of the current management
of Hartford Life without the concurrence of the Board of Directors. These
provisions include (i) the availability of shares of Preferred Stock for
issuance from time to time, and with such voting rights and other designations
as may be determined, at the discretion of the Board of Directors; (ii)
prohibitions against stockholders calling a special meeting of stockholders or
acting by written consent in lieu of a meeting; (iii) the classification of the
Board of Directors into three classes, each of which will serve for different
three-year periods; (iv) a requirement, pursuant to Section 141 of the DGCL,
that, due to the classification of the Board of Directors, directors of Hartford
Life may only be removed for cause; (v) a requirement that certain provisions of
the Certificate of Incorporation may be amended only with the approval of the
holders of at least 80% of the combined voting power of the Common Stock then
outstanding; (vi) requirements for advance notice for raising business or making
nominations at stockholders' meetings; and (vii) the ability of the Board of
Directors to increase the size of the board and to appoint directors to fill
newly created directorships. The Hartford, as owner of more than 80% of the
combined voting power of all classes of voting stock, could sell or otherwise
dispose of a substantial portion of its holdings and still be able to block any
tender offer, proxy contest or other takeover attempt by any third party and
certain other material transactions and matters.
7
51
LIMITATION ON LIABILITY
To the fullest extent permitted by applicable law as then in effect, no
director of Hartford Life shall be personally liable to Hartford Life or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to Hartford Life or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the DGCL; or (iv) for any transaction from which
the director derived an improper personal benefit.
While the Certificate of Incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Certificate of Incorporation should have
no effect on the availability of equitable remedies such as an injunction or
recession based on a director's breach of his or her duty of care and does not
eliminate or limit a director's liability arising in connection with causes of
action brought under the federal securities laws. This provision, however, may
discourage or deter stockholders or management from bringing a lawsuit against a
director for a breach of his or her fiduciary duty, though such an action, if
successful, might otherwise have benefited Hartford Life and its stockholders.
The By-laws provide that Hartford Life, to the fullest extent permitted by
applicable law as then in effect, will indemnify any person who was or is
involved in any manner or is threatened to be made so involved in any
threatened, pending or completed investigation, claim, action, suit or
proceeding, by reason of the fact that such person was or is a director,
officer, employee or agent of Hartford Life or was or is serving at the request
of Hartford Life as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such investigation, claim,
action, suit or proceeding. To receive such indemnification under the DGCL as
currently in effect, such a person must have been successful in such
investigation, claim, action, suit or proceeding or acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of Hartford Life.
DELAWARE STATUTE
Hartford Life is a Delaware corporation subject to Section 203 of the DGCL.
Section 203 provides that, subject to certain exceptions specified therein, a
corporation may not engage in any business combination, including mergers or
consolidations or acquisitions of assets or additional shares of the
corporation, with any "interested stockholder" for a period of three years
following the time that such stockholder became an interested stockholder unless
(i) prior to such time, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares) or (iii) on or subsequent to such time, the business combination
is approved by the board of directors of the corporation and authorized at an
annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. Except as otherwise specified in
Section 203 of the DGCL, an "interested stockholder" is defined to include (x)
any person that is the owner of 15% or more of the outstanding voting stock of
the corporation or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the three-year period immediately prior to the relevant date and (y)
the affiliates and associates of any such person. Under certain circumstances,
Section 203 of the DGCL makes it more difficult for an interested stockholder to
effect various business combinations with a corporation for the above-
referenced three-year period, although the stockholders may elect to exclude a
corporation from the restrictions imposed thereunder. By virtue of its
beneficial ownership of the Class B Common Stock, The Hartford is in a position
to elect to exclude Hartford Life from the restrictions under Section 203 of the
DGCL, although it currently has no intention to do so.
8
52
RESTRICTIONS ON OWNERSHIP UNDER INSURANCE LAWS
Although the Certificate of Incorporation and By-laws of Hartford Life do
not contain any provision restricting ownership as a result of the application
of various state insurance laws, such laws will be a significant deterrent to
any person interested in acquiring control of Hartford Life. The insurance
holding company laws of each of the jurisdictions in which Hartford Life's
insurance subsidiaries are incorporated or commercially domiciled (as well as
state corporation laws) govern any acquisition of control of such insurance
subsidiaries or of Hartford Life. In general, such laws provide that no person
or entity may directly or indirectly acquire control of an insurance company
unless such person or entity has received the prior approval of the insurance
regulatory authorities. Such acquisition of control would be presumed in the
case of any person or entity who purchases 10% or more of Hartford Life's
outstanding Common Stock unless the applicable insurance regulatory authorities
determine otherwise.
9
53
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to (i) a declaration of trust, dated as of June 3, 1998, executed by
Hartford Life, as sponsor (the "Sponsor") of such Trust, and the trustees of
such Trust named therein (as described below), and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
June 4, 1998. Each declaration will be amended and restated in its entirety (as
so amended and restated, a "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each Declaration will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities of a Trust, the purchasers thereof will own all of the Preferred
Securities for that Trust. Hartford Life will, directly or indirectly, acquire
the Common Securities in aggregate liquidation amount equal to 3% of the total
capitalization of each Trust. The Trusts exist for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of the Trusts, (ii) investing the gross proceeds of the Trust Securities
in the Corresponding Junior Subordinated Debt Securities and (iii) engaging in
only those other activities necessary or incidental thereto.
Each Trust has a term of approximately 55 years but may dissolve earlier,
as provided in the Declaration. Each Trust's business and affairs are conducted
by its trustees, each appointed by Hartford Life as holder of the Common
Securities. Pursuant to each Declaration, the number of trustees of each Trust
will be four: Wilmington Trust Company, a Delaware banking corporation with its
principal place of business in the State of Delaware, as the Delaware trustee
(the "Delaware Trustee") and as institutional trustee (the "Institutional
Trustee"), and two individual trustees (the "Regular Trustees" and, together
with the Delaware Trustee and the Institutional Trustee, the "Hartford Life
Capital Trustees") who are employees or officers of, or who are affiliated with,
Hartford Life. The Institutional Trustee will act as the sole indenture trustee
under the Declaration for purposes of compliance with the Trust Indenture Act
until removed or replaced by the holder of the Common Securities. Wilmington
Trust Company will also act as Trust Indenture Act trustee (the "Guarantee
Trustee") under the Guarantee, and as Trust Indenture Act trustee (the
"Subordinated Indenture Trustee") under the Subordinated Indenture pursuant to
which the Corresponding Junior Subordinated Debt Securities are issued. See
"Description of Guarantee" and "Description of Debt Securities."
The Institutional Trustee will hold title to the Corresponding Junior
Subordinated Debt Securities for the benefit of the holders of the Trust
Securities and, in its capacity as the holder, the Institutional Trustee will
have the power to exercise all rights, powers and privileges under the
Subordinated Indenture. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debt Securities for the benefit of the holders of the Trust
Securities. The Institutional Trustee will make payments of distributions and
payments on liquidation, redemption and otherwise to the holders of the Trust
Securities out of funds from the Property Account. The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Preferred Securities.
Hartford Life, as the direct or indirect holder of all the Common Securities,
will have the right, subject to certain restrictions contained in the
Declaration, to appoint, remove or replace any Hartford Life Capital Trustee and
to increase or decrease the number of Hartford Life Capital Trustees. Hartford
Life will pay all fees and expenses related to the Trusts and the offering of
the Trust Securities.
The principal place of business of each Trust shall be c/o Hartford Life,
Inc., 200 Hopmeadow Street, Simsbury, Connecticut 06089, and its telephone
number is (860) 843-7716.
10
54
USE OF PROCEEDS
Except as otherwise set forth in the applicable Prospectus Supplement,
Hartford Life intends to use the net proceeds from the sale of Debt Securities,
Preferred Stock, Class A Common Stock, Depositary Shares, Warrants, Stock
Purchase Contracts, Stock Purchase Units and Junior Subordinated Debt Securities
for general corporate purposes, including working capital, capital expenditures,
investments in or loans to subsidiaries, acquisitions, refinancing of debt,
including outstanding commercial paper and other short term bank indebtedness,
the satisfaction of other obligations or for such other purposes as may be
specified in the applicable Prospectus Supplement; and each Trust will use the
net proceeds from the sale of its Preferred Securities to invest in
Corresponding Junior Subordinated Debt Securities of Hartford Life. A more
detailed description of the use of proceeds of any specific offering of Offered
Securities will be set forth in the Prospectus Supplement pertaining to such
offering.
RATIOS OF EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth ratio of earnings to fixed charges and ratio
of earnings to combined fixed charges and Preferred Stock dividends for Hartford
Life and its consolidated subsidiaries for the periods indicated:
FOR THE
THREE
MONTHS
ENDED
FOR THE YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ ------------
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges.......... 7.1 7.0 6.3 1.5 8.2 6.5 9.6
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............. 7.1 7.0 6.3 1.5 8.2 6.5 9.6
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consists of income from continuing operations before federal income
taxes and fixed charges. "Fixed charges" consists of interest expense and an
imputed interest component for rental expense. There were no shares of Preferred
Stock outstanding during the periods included above.
11
55
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities offered hereby are to be issued in one or more
series under the Senior Indenture, dated as of May 19, 1997, as supplemented
from time to time (as so supplemented, the "Senior Indenture"), between Hartford
Life and Citibank, N.A., as trustee (the "Senior Indenture Trustee"). The
Subordinated Debt Securities offered hereby are to be issued in one or more
series under a Subordinated Indenture, as supplemented from time to time (as so
supplemented, the "Subordinated Indenture" and, together with the Senior
Indenture, the "Indentures"), to be entered into between Hartford Life and
Wilmington Trust Company (the "Subordinated Indenture Trustee" and, together
with the Senior Indenture Trustee, the "Indenture Trustees"). Copies of the
Senior Indenture and the form of Subordinated Indenture have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
The statements herein relating to the Debt Securities and the following
summaries of certain provisions of the Indentures do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all the
provisions of the Indentures (as they may be amended or supplemented from time
to time) and the Trust Indenture Act. Whenever particular sections or defined
terms of the Indentures (as they may be amended or supplemented from time to
time) are referred to herein or in a Prospectus Supplement, such sections or
defined terms are incorporated herein or therein by reference.
GENERAL
The Debt Securities will be unsecured obligations of Hartford Life. The
Senior Debt Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated obligations of Hartford Life. The
Subordinated Debt Securities will be subordinate and junior in right of payment
to the extent and in the manner set forth in the Subordinated Indenture to all
Senior Indebtedness (as defined below) of Hartford Life. See "-- Subordination
under the Subordinated Indenture." The Indentures are substantially identical
except for the provisions contained in the Subordinated Indenture relating to
subordination and certain covenants contained in the Senior Indenture only,
including the limitation on incurring certain liens. As a holding company with
no significant business operations of its own, most of the operating assets of
Hartford Life and its consolidated subsidiaries are owned by such subsidiaries
and Hartford Life relies on dividends from such Subsidiaries to meet its
obligations for payment of principal of and premium, if any, and interest on its
outstanding debt obligations and corporate expenses. Accordingly, the Debt
Securities will be effectively subordinated to all existing and future
liabilities of Hartford Life's Subsidiaries, and holders of Debt Securities
should look only to the assets of Hartford Life for payments on the Debt
Securities. The payment of dividends by Hartford Life's insurance company
subsidiaries, is limited under the insurance holding company laws of the states
in which such subsidiaries are incorporated or commercially domiciled. The
Indentures do not limit the aggregate amount of Debt Securities that may be
issued thereunder. Except as otherwise provided in the applicable Prospectus
Supplement, the Indentures, as they apply to any series of Debt Securities, do
not limit the incurrence or issuance of secured or other unsecured debt of
Hartford Life, whether under either of the Indentures, any other indenture that
Hartford Life may enter into in the future or otherwise. See "-- Subordination
under the Subordinated Indenture" and the Prospectus Supplement relating to any
offering of Subordinated Debt Securities.
The Debt Securities will be issuable in one or more series pursuant to an
indenture supplemental to the Senior Indenture or the Subordinated Indenture, as
the case may be, or a resolution of Hartford Life's Board of Directors or a
committee thereof and set forth in an Officer's Certificate.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Debt Securities: (1) the title of the Debt
Securities and the classification as senior or subordinated; (2) any limit upon
the aggregate principal amount of the Debt Securities; (3) the date or dates on
which the principal of the Debt Securities is payable or the method of
determination thereof; (4) the rate or rates, if any, at which the Debt
Securities shall bear interest, the Interest Payment Dates on which any such
interest shall be payable, the right, if any, of Hartford Life to defer or
extend an Interest Payment Date, and the Regular Record Date for any interest
payable on any Interest Payment Date or the method by which any of the foregoing
shall be determined; (5) the place or places where, subject to the terms of the
Indenture as described below under
12
56
"Payment and Paying Agents," the principal of and premium, if any, and interest
on the Debt Securities will be payable and where, subject to the terms of the
Indenture as described below under "Denominations, Registration and Transfer,"
the Debt Securities may be presented for registration of transfer or exchange
and the place or places where notices and demands to or upon Hartford Life in
respect of the Debt Securities and the Indentures may be made ("Place of
Payment"); (6) any period or periods within or date or dates on which, the price
or prices at which and the terms and conditions upon which Debt Securities may
be redeemed, in whole or in part, at the option of Hartford Life; (7) the
obligation or the right, if any, of Hartford Life to redeem, purchase or repay
the Debt Securities pursuant to any sinking fund, amortization or analogous
provisions or at the option of a Holder thereof and the period or periods within
which, the price or prices at which, the currency or currencies (including
currency unit or units) in which and the other terms and conditions upon which
the Debt Securities shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation; (8) the denominations in which any Debt Securities
shall be issuable if other than denominations of $1,000 and any integral
multiple thereof; (9) if other than in U.S. Dollars, the currency or currencies
(including currency unit or units) in which the principal of and premium, if
any, and interest, if any, on the Debt Securities shall be payable, or in which
the Debt Securities shall be denominated; (10) any additions, modifications or
deletions, in the Events of Default or covenants of Hartford Life specified in
the Indenture with respect to the Debt Securities; (11) if other than the
principal amount thereof, the portion of the principal amount of Debt Securities
that shall be payable upon declaration or acceleration of the Maturity thereof;
(12) any additions or changes to the Indenture with respect to a series of Debt
Securities as shall be necessary to permit or facilitate the issuance of such
series in bearer form, registrable or not as to principal, and with or without
interest coupons; (13) any index or indices used to determine the amount of
payments of principal of and premium, if any, and interest, if any, on the Debt
Securities and the manner in which such amounts will be determined; (14) the
issuance of a temporary Global Security representing all of the Debt Securities
of such series and exchange of such temporary Global Security for definitive
Debt Securities of such series; (15) subject to the terms described under
"Global Debt Securities," whether the Debt Securities of the Series shall be
issued in whole or in part in the form of one or more Global Securities and, in
such case, the Depositary for such Global Securities, which Depositary shall be
a clearing agency registered under the Exchange Act; (16) the appointment of any
Paying Agent or Agents; (17) in the case of the Subordinated Indenture, the
relative degree, if any, to which such Debt Securities of the series shall be
senior to or be subordinated to other series of such Debt Securities in right of
payment, whether such other series of Debt Securities are outstanding; and (18)
any other terms of the Debt Securities not inconsistent with the provisions of
the Indentures. (Section 3.01.)
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain federal income tax consequences and
special considerations if applicable to any Debt Securities will be described in
the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is payable in one or
more foreign currencies or currency units or if any Debt Securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any Debt Securities is
payable in one or more foreign currencies or currency units, the restrictions,
elections, certain federal income tax considerations, specific terms and other
information with respect to such issue of Debt Securities and such foreign
currency or currency units will be set forth in the applicable Prospectus
Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Debt Securities, special federal
income tax, accounting and other considerations applicable thereto will be
described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Securities will be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. (Section 3.02.) Debt
Securities of any series will be exchangeable for other Debt Securities of the
same issue
13
57
and series, of any authorized denominations, of a like aggregate principal
amount, of the same Original Issue Date and Stated Maturity and otherwise having
the same terms. (Section 3.05.)
Debt Securities may be presented for exchange as provided above, and may be
presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed), at
the office of the Securities Registrar or at the office of any transfer agent
designated by Hartford Life for such purpose with respect to any series of Debt
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Hartford Life will appoint the Indenture Trustees as
Securities Registrars under the Indentures. (Section 3.05) If a Prospectus
Supplement refers to any transfer agents (in addition to the Securities
Registrar) initially designated by Hartford Life with respect to any series of
Debt Securities, Hartford Life may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any such
transfer agent acts, provided that Hartford Life maintains a transfer agent in
each Place of Payment for such series. Hartford Life may at any time designate
additional transfer agents with respect to any series of Debt Securities.
(Section 10.02.)
In the event of any redemption, neither Hartford Life nor the Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Debt Securities of any series during the period beginning at the opening of
business 15 days before the day of selection for redemption of Debt Securities
of that series and ending at the close of business on the day of mailing of the
relevant notice of redemption or (ii) transfer or exchange any Debt Securities
so selected for redemption, except, in the case of any Debt Securities being
redeemed in part, any portion thereof not to be redeemed. (Section 3.05.)
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Debt Securities that will be deposited with, or on
behalf of, a depositary (the "Depositary") identified in the Prospectus
Supplement relating to such series. Global Debt Securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Debt Securities
represented thereby, a Global Debt Security may not be transferred except as a
whole by the Depositary for such Global Debt Security to a nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. Hartford Life anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Debt Security, and the deposit of such Global
Debt Security with or on behalf of the Depositary, the Depositary for such
Global Debt Security or its nominee will credit on its book-entry registration
and transfer system the respective principal amounts of the individual Debt
Securities represented by such Global Debt Security to the accounts of persons
that have accounts with such Depositary ("Participants"). Such accounts shall be
designated by the dealers, underwriters or agents with respect to such Debt
Securities or by Hartford Life if such Debt Securities are offered and sold
directly by Hartford Life. Ownership of beneficial interests in a Global Debt
Security will be limited to Participants or persons that may hold interests
through Participants. Ownership of beneficial interests in such Global Debt
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the applicable Depositary or its nominee
(with respect to interests of Participants) and the records of Participants
(with respect to interests of persons who hold through Participants). The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Debt Security.
So long as the Depositary for a Global Debt Security, or its nominee, is
the registered owner of such Global Debt Security, such Depositary or such
nominee, as the case may be, will be considered the sole owner or holder of the
Debt Securities represented by such Global Debt Security for all purposes under
the Indenture governing such Debt Securities. Except as provided below, owners
of beneficial interests in a Global Debt Security will not be entitled to have
any of the individual Debt Securities of the series
14
58
represented by such Global Debt Security registered in their names, will not
receive or be entitled to receive physical delivery of any such Debt Securities
of such series in definitive form and will not be considered the owners or
holders thereof under the Indentures governing such Debt Securities.
Payments of principal of and premium, if any, and interest on individual
Debt Securities represented by a Global Debt Security registered in the name of
a Depositary or its nominee will be made to the Depositary or its nominee, as
the case may be, as the registered owner of the Global Debt Security
representing such Debt Securities. None of Hartford Life, the Indenture Trustee
for such Debt Securities, any Paying Agent, or the Securities Registrar for such
Debt Securities will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests of the Global Debt Security for such Debt Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
Hartford Life expects that the Depositary for a series of Debt Securities
or its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Debt Security representing any of such Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of such Global Debt Security for such Debt Securities as shown on the
records of such Depositary or its nominee. Hartford Life also expects that
payments by Participants to owners of beneficial interests in such Global Debt
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name."
Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for a series of Debt Securities is at any time unwilling, unable or
ineligible to continue as Depositary and a successor Depositary is not appointed
by Hartford Life within 90 days, Hartford Life will issue individual Debt
Securities of such series in exchange for the Global Debt Security representing
such series of Debt Securities. In addition, Hartford Life may at any time and
in its sole discretion, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities, determine not to have any Debt
Securities of such series represented by one or more Global Debt Securities and,
in such event, will issue individual Debt Securities of such series in exchange
for the Global Debt Security or Global Debt Securities representing such series
of Debt Securities. Further, if Hartford Life so specifies with respect to the
Debt Securities of a series, an owner of a beneficial interest in a Global Debt
Security representing Debt Securities of such series may, on terms acceptable to
Hartford Life, the Indenture Trustee and the Depositary for such Global Debt
Security, as described in the applicable Prospectus Supplement, receive
individual Debt Securities of such series in exchange for such beneficial
interests in a Global Debt Security. In any such instance, an owner of a
beneficial interest in a Global Debt Security will be entitled to physical
delivery of Individual Debt Securities of the series represented by such Global
Debt Security equal in principal amount to such beneficial interest and to have
such Debt Securities registered in its name. Individual Debt Securities of such
series so issued will be issued in denominations, unless otherwise specified by
Hartford Life in an indenture supplemental to the relevant Indenture, of $1,000
and integral multiples thereof.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium, if any, and any interest on Debt Securities will be
made at the office of the Indenture Trustee for such Debt Securities in the City
of New York, or at an office in a place of payment of such Paying Agent or
Paying Agents as Hartford Life may designate from time to time in an applicable
Prospectus Supplement, as well as such additional methods of payment as may be
specified in an applicable Prospectus Supplement. Unless otherwise indicated in
an applicable Prospectus Supplement, payment of any interest on Debt Securities
will be made to the person in whose name such Debt Security is registered at the
close of business on the Regular Record Date for such interest, except in the
case of Defaulted Interest. Hartford Life may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent; however, Hartford
Life will at all times be required to maintain a Paying Agent in each Place of
Payment for each series of Debt Securities. (Sections 3.01, 3.07 and 10.02.)
15
59
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by Hartford Life in trust, for the payment of the principal of and
premium, if any, or interest on any Debt Security and remaining unclaimed for
two years after such principal and premium, if any, or interest has become due
and payable shall (unless otherwise required by applicable law), at the request
of Hartford Life, be repaid to Hartford Life or be discharged from such trust
and the Holder of such Debt Security shall thereafter look, as a general
unsecured creditor, only to Hartford Life for payment thereof. (Section 10.03.)
REDEMPTION
Unless otherwise indicated in an applicable Prospectus Supplement, Debt
Securities will not be subject to any sinking fund and will not be redeemable
prior to their Stated Maturity.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indentures provide that Hartford Life shall not consolidate with or
merge into any other corporation or convey, transfer or lease its properties and
assets substantially as an entirety to any Person (as defined), and no Person
shall consolidate with or merge into Hartford Life or convey, transfer or lease
its properties and assets substantially as an entirety to Hartford Life, unless
(i) in case Hartford Life consolidates with or merges into another corporation
or conveys or transfers its properties and assets substantially as an entirety
to any Person, the successor corporation is organized under the laws of the
United States of America or any state or the District of Columbia, and such
successor corporation expressly assumes Hartford Life's obligations on the Debt
Securities issued under the related Indenture; (ii) immediately after giving
effect thereto, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (iii) certain other conditions as prescribed in the Indentures
are met. (Sections 8.01 and 8.02.)
LIMITATIONS UPON LIENS
The Senior Indenture provides that Hartford Life will not, nor will it
permit any Restricted Subsidiary to, issue, assume or guarantee any indebtedness
for money borrowed if such indebtedness is secured by a Lien (as defined) upon
any Principal Property of Hartford Life or any Restricted Subsidiary or on any
shares of stock of any Restricted Subsidiary (whether such Principal Property or
shares of stock are now owned or hereafter acquired) without in any such case
effectively providing that the Senior Debt Securities of any series Outstanding
(as defined) which are entitled to the benefits of such provision of the Senior
Indenture (together with, if Hartford Life shall so determine, any other
indebtedness of or indebtedness guaranteed by Hartford Life or such Restricted
Subsidiary entitled thereto, subject to applicable priority of payment) shall be
secured equally and ratably with or prior to such indebtedness, except that the
foregoing restriction shall not apply to (i) Liens on property or shares of
stock of any corporation existing at the time such corporation becomes a
Restricted Subsidiary; (ii) Liens on property existing at the time of
acquisition thereof, or Liens on property which secure the payment of the
purchase price of such property, or Liens on property which secure indebtedness
incurred or guaranteed for the purpose of financing the purchase price of such
property or the construction of such property (including improvements to
existing property), which indebtedness is incurred or guaranteed within 180 days
after the latest of such acquisition or completion of such construction or
commencement of operation of such property; (iii) Liens securing indebtedness
owing by any Restricted Subsidiary to Hartford Life or a wholly owned Restricted
Subsidiary; (iv) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with Hartford Life or a Restricted
Subsidiary or at the time of a purchase, lease or other acquisition of the
properties of a corporation or other Person as an entirety or substantially as
an entirety by Hartford Life or a Restricted Subsidiary; (v) Liens on property
of Hartford Life or a Restricted Subsidiary in favor of the United States of
America or any State thereof or any agency, instrumentality or political
subdivision thereof, or in favor of any other country, or any political
subdivision thereof, to secure any indebtedness incurred or guaranteed for the
purpose of financing all or any part of the purchase price or the cost of
construction of the property subject to such Liens within 180 days after the
latest of the acquisition, completion of construction or commencement of
operation of such property; and (vi) any extension, renewal or replacement (or
successive extensions, renewals or replacements),
16
60
in whole or in part, of any Lien referred to in the foregoing clauses (i) to
(v), inclusive. Notwithstanding the above, Hartford Life and one or more
Restricted Subsidiaries may, without securing the Senior Debt Securities, issue,
assume or guarantee secured indebtedness which would otherwise be subject to the
foregoing restrictions, provided that after giving effect thereto, the aggregate
amount of such indebtedness issued pursuant to such exception at such time does
not exceed 10% of Consolidated Net Tangible Assets. In computing the aggregate
amount of indebtedness outstanding for purposes of the foregoing sentence, there
shall not be included in the calculation any indebtedness issued, assumed or
guaranteed pursuant to clauses (i) through (vi) above. (Section 10.08 of the
Senior Indenture.)
Certain Definitions
"Consolidated Net Tangible Assets" means the total amount of assets (less
applicable reserves and other properly deductible items) after deducting
therefrom (i) all liabilities (excluding any thereof which are by their terms
extendible or renewable at the option of the obligor thereon to a time more than
12 months after the time as of which the amount thereof is being computed) and
(ii) all segregated goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangibles, all as set forth on the most
recent balance sheet of Hartford Life and its consolidated Subsidiaries
("Subsidiary" being defined as any corporation where more than 50% of its voting
stock is owned by Hartford Life or by another Subsidiary) and prepared in
accordance with generally accepted accounting principles. (Section 1.01 of the
Senior Indenture.)
"Principal Property" means all land, buildings, machinery and equipment,
and leasehold interests and improvements in respect of the foregoing, which
would be reflected on a consolidated balance sheet of Hartford Life and its
Subsidiaries prepared in accordance with generally accepted accounting
principles, excluding all such tangible property located outside the United
States of America and excluding any such property which, in the opinion of the
Board of Directors set forth in a Board Resolution, is not material to Hartford
Life and its consolidated Subsidiaries taken as a whole. (Section 1.01 of the
Senior Indenture.)
"Restricted Subsidiary" is defined as any Subsidiary which is incorporated
under the laws of any state of the United States or of the District of Columbia,
and which is a regulated insurance company principally engaged in the property
casualty or life insurance business; provided, however, that no Subsidiary shall
be a Restricted Subsidiary (i) if the total assets of such Subsidiary are less
than 10% of the total assets of Hartford Life and its consolidated Subsidiaries
(including such Subsidiary) in each case as set forth on the most recent fiscal
year-end balance sheets of such Subsidiary and Hartford Life and its
consolidated Subsidiaries, respectively, and computed in accordance with
generally accepted accounting principles, or (ii) if in the judgment of the
Board of Directors, as evidenced by a Board Resolution, such Subsidiary is not
material to the financial condition of Hartford Life and its Subsidiaries taken
as a whole. (Section 1.01.) As of the date of this Prospectus, the Subsidiaries
of Hartford Life which meet the definition of Restricted Subsidiaries are the
following: Hartford Life Insurance Company, Hartford Life & Accident Insurance
Company and Hartford Life and Annuity Insurance Company.
MODIFICATION AND WAIVER
Modification and amendments of each Indenture may be made by Hartford Life
and the Indenture Trustee without the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected thereby; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby, (i) change the Stated Maturity of the principal of, or any installment
of interest on, any Outstanding Debt Security; (ii) reduce the principal amount
of, or the rate of interest on, or any premium payable upon the redemption of,
or the amount of principal of an Original Issue Discount Security that would be
due and payable upon a declaration of acceleration of the Maturity of, any
Outstanding Debt Security; (iii) change the Place of Payment, or the coin or
currency in which any Outstanding Debt Security or the interest thereon is
payable; (iv) impair the right to institute suit for the enforcement of any
payment on or with respect to any Outstanding Debt Security after the Stated
Maturity; or (v) change the provisions of the Indentures relating to amendments
of the Indentures requiring the consent of the affected Holders for waiver of
compliance with
17
61
certain provisions of the Indentures or waiver of past defaults, except to
increase the percentage of the Holders whose consent is required. (Section
9.02.)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as the series is concerned, compliance by Hartford
Life with certain restrictive covenants of the relevant Indenture. (Section
10.09 of the Senior Indenture; Section 10.08 of the Subordinated Indenture.)
Except in certain circumstances under the Subordinated Indenture, the Holders of
not less than a majority in principal amount of the Outstanding Debt Securities
of any series may on behalf of the Holders of that series waive any past default
under the relevant Indenture with respect to that series of Debt Securities,
except a default in the payment of the principal of, or any interest on, any
Debt Security of that series or in respect of a provision which under such
Indenture cannot be modified or amended without the consent of the Holder of
each Outstanding Debt Security of that series affected. (Section 5.13.)
EVENTS OF DEFAULT
Each Indenture provides that the following shall constitute Events of
Default with respect to any series of Debt Securities: (i) default for 30 days
in the payment of any interest when due; (ii) default in the payment of
principal or premium, if any, at Maturity; (iii) default in the performance of
any other covenant or warranty in the relevant Indenture for 60 days in the case
of the Senior Indenture and 90 days in the case of the Subordinated Indenture
after written notice thereof; (iv) certain events in bankruptcy, insolvency or
reorganization; (v) with respect to Senior Debt Securities only, acceleration or
default in the payment of indebtedness for borrowed money in excess of
$25,000,000, which acceleration or default shall not have been rescinded or
annulled within 30 days after notice; or (vi) any other Event of Default
provided in the applicable Board Resolution or supplemental indenture under
which such series of Debt Securities is issued. (Section 5.01.) Hartford Life is
required to furnish the Indenture Trustees annually with a statement as to the
fulfillment by Hartford Life of its obligations under the Indenture. (Section
10.06.) Each Indenture provides that the Indenture Trustee may withhold notice
to the Holders of the Debt Securities of any default (except in respect of the
payment of principal or interest on the Debt Securities) if it considers it in
the interest of the Holders to do so. (Section 6.02.)
If an Event of Default with respect to Outstanding Debt Securities of any
series occurs and is continuing, then and in every such case the Indenture
Trustee or the Holders of not less than 10% in the case of the Senior Indenture
and 25% in the case of the Subordinated Indenture in principal amount of the
Outstanding Debt Securities of that series may declare the principal amount (or,
if the Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of that
series) of all the Debt Securities of that series to be due and payable
immediately, by a notice in writing to Hartford Life (and to the Indenture
Trustee if given by Holders), and upon any such declaration such principal shall
become immediately due and payable. However, at any time after a declaration or
acceleration with respect to Debt Securities of any series has been made, but
before a judgment or decree for payment of the money due has been obtained, the
Holders of a majority in principal amount of Outstanding Debt Securities of that
series may, subject to certain conditions, rescind and annul such declaration.
(Section 5.02.)
Subject to the provisions of the Indentures relating to the duties of the
Indenture Trustee, in case an Event of Default shall occur and be continuing,
the Indenture Trustee shall be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders shall have offered to the Indenture Trustee
reasonable security or indemnity and satisfied certain other conditions.
(Section 6.03.) Subject to such provisions for the security or indemnification
of the Indenture Trustee, the Holders of a majority in principal amount of the
Outstanding Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for, and remedy available
to, the Indenture Trustee, or exercising any trust or power conferred on the
Indenture Trustee with respect to the Debt Securities of that series. (Section
5.12.)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder shall have previously given to the
18
62
Indenture Trustee written notice of a continuing Event of Default with respect
to Debt Securities of that series and unless the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that series shall have
made written request, and offered reasonable indemnity, to the Indenture Trustee
to institute such proceeding as Indenture Trustee, and, within 60 days following
the receipt of such notice, the Indenture Trustee shall not have received from
the Holders of a majority in principal amount of the Outstanding Debt Securities
of that series a direction inconsistent with such request, and the Indenture
Trustee shall have failed to institute such proceeding. (Section 5.07.) However,
the Holder of any Debt Security will have an absolute right to receive payment
of the principal of and premium, if any, and subject to Section 3.07, interest
on such Debt Security on or after the due dates expressed in such Debt Security
and to institute a suit for the enforcement of any such payment. (Section 5.08.)
SATISFACTION AND DISCHARGE OF THE INDENTURES
Each Indenture provides that when, among other things, all Debt Securities
not previously delivered to the Indenture Trustee for cancellation (i) have
become due and payable or (ii) will become due and payable at their Stated
Maturity within one year and Hartford Life deposits or causes to be deposited
with the Indenture Trustee as trust funds in trust for such purpose an amount in
the currency or currencies in which the Debt Securities are payable sufficient
to pay and discharge the entire indebtedness on the Debt Securities not
previously delivered to the Indenture Trustee for cancellation, for the
principal and premium, if any, and interest to the date of the deposit or to the
Stated Maturity, as the case may be, then the Indenture will cease to be of
further effect (except as to certain surviving rights of the Holders, the rights
and obligations of the Indenture Trustee and Hartford Life's obligations to the
Indenture Trustee to pay all other sums due pursuant to the Indenture and to
provide the Officers' Certificates and Opinions of Counsel described therein),
and Hartford Life will be deemed to have satisfied and discharged the Indenture.
(Section 4.01.)
DEFEASANCE
Except as may otherwise be provided in the applicable Prospectus Supplement
with respect to the Debt Securities of any series, each Indenture provides that
Hartford Life shall be deemed to have paid and discharged the entire
indebtedness on all the Debt Securities of a series at any time prior to the
Stated Maturity or redemption thereof when (i) Hartford Life has irrevocably
deposited or caused to be deposited with the Indenture Trustee, in trust, either
(a) sufficient funds to pay and discharge the entire indebtedness on the Debt
Securities of such series for the principal and premium, if any, and interest to
the Stated Maturity or any redemption date or (b) such amount of Government
Obligations (as defined) as will, in the written opinion of independent public
accountants delivered to the Indenture Trustee, together with predetermined and
certain income to accrue thereon, without consideration of any reinvestment
thereof, be sufficient to pay and discharge when due the entire indebtedness on
the Debt Securities of such series for principal and premium, if any, and
interest to the Stated Maturity or any redemption date, (ii) Hartford Life has
paid or caused to be paid all other sums payable with respect to the Debt
Securities of such series, (iii) Hartford Life has delivered to the Indenture
Trustee an officer's certificate and an opinion of counsel to the effect that
(a) Hartford Life has received from, or there has been published by, the
Internal Revenue Service a ruling, or (b) since the date of execution of the
applicable Indenture, there has been a change in the applicable Federal income
tax law, in either case to the effect that, and based thereon such opinion
confirms that, the deposit and related defeasance would not cause the Holders of
the Debt Securities of such series to recognize income, gain or loss for Federal
income tax purposes and such opinion is accompanied by a ruling to such effect
received from or published by the United States Internal Revenue Service, (iv)
Hartford Life has delivered to the Indenture Trustee an opinion of counsel that
neither Hartford Life nor the trust held by such Indenture Trustee will
immediately after the deposit just described be an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940 and (v) Hartford Life has delivered to the
Indenture Trustee such other Officer's Certificates and Opinions of Counsel as
may be required by the Indenture, each stating that all conditions precedent
provided for therein relating to the satisfaction and discharge of the entire
indebtedness on all Debt Securities of such series have been complied with.
(Section 4.03.)
19
63
With respect to the Subordinated Indenture, in order to be discharged as
described above, no default in the payment of principal of or premium, if any,
or interest on any Senior Indebtedness shall have occurred and be continuing or
no other Event of Default with respect to the Senior Indebtedness shall have
occurred and be continuing and shall have resulted in such Senior Indebtedness
becoming or being declared due and payable prior to the date it would have
become due and payable.
SUBORDINATION UNDER THE SUBORDINATED INDENTURE
In the Subordinated Indenture, Hartford Life has covenanted and agreed that
any Subordinated Debt Securities issued thereunder are subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Subordinated Indenture. Upon any payment or distribution of assets to creditors
upon any liquidation, dissolution, winding up, reorganization, assignment for
the benefit of creditors, marshalling of assets or any bankruptcy, insolvency,
debt restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of Hartford Life, the holders of Senior Indebtedness will
first be entitled to receive payment in full of principal of and premium, if
any, and interest, if any, on such Senior Indebtedness before the holders of
Subordinated Debt Securities will be entitled to receive or retain any payment
in respect of the principal of and premium, if any, or interest, if any, on the
Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of Subordinated Debt Securities will be entitled to receive any payment
upon the principal of or premium, if any, or interest, if any, on the
Subordinated Debt Securities.
No payments on account of principal or premium, if any, or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Indebtedness, or any event of default with respect to any Senior Indebtedness
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Senior Indebtedness" means, with respect to Hartford Life, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of
Hartford Life for money borrowed and (B) indebtedness evidenced by securities,
notes, debentures, bonds or other similar instruments issued by Hartford Life;
(ii) all capital lease obligations of Hartford Life; (iii) all obligations of
Hartford Life issued or assumed as the deferred purchase price of property, all
conditional sale obligations of Hartford Life and all obligations of Hartford
Life under any conditional sale or title retention agreement (but excluding
trade accounts payable and accrued liabilities in the ordinary course of
business); (iv) all obligations, contingent or otherwise, of Hartford Life in
respect of any letters of credit, banker's acceptance, security purchase
facilities or similar credit transactions; (v) all obligations in respect of
interest rate swap, cap, floor, collar or other agreements, interest rate future
or option contracts, currency swap agreements, currency future or option
contracts and other similar agreements; (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons for the payment of which
Hartford Life is responsible or liable as obligor, guarantor or otherwise; and
(vii) all obligations of the type referred in clauses (i) through (vi) of other
Persons secured by any lien on any property or asset of Hartford Life (whether
or not such obligation is assumed by Hartford Life), except for (1) any such
indebtedness that is by its terms subordinated or pari passu with the
Subordinated Debt Securities and (2) any indebtedness between or among Hartford
Life or its Affiliates, including all other debt securities and guarantees in
respect of those debt securities, issued to (a) any Hartford Life subsidiary
trust or trustee of such trust (including but not limited to the Trusts) and (b)
any other trust, or a trustee of such trust, partnership or other entity
affiliated with Hartford Life that is a financing vehicle of Hartford Life (a
"Financing Entity") in connection with the issuance by such Financing Entity of
preferred securities or other securities that rank pari passu with, or junior
to, the Preferred Securities.
Hartford Life is a holding company with no significant business operations
of its own, and most of the assets of Hartford Life are owned by its
Subsidiaries. Accordingly, the Debt Securities will be effectively
20
64
subordinated to all existing and future liabilities of Hartford Life's
Subsidiaries, including liabilities under contracts of insurance and annuities
written by Hartford Life's insurance subsidiaries. Holders of Debt Securities
should look only to the assets of Hartford Life for payments of interest and
principal and premium, if any.
The Subordinated Indenture will place no limitation on the amount of
additional Senior Indebtedness that may be incurred by Hartford Life. Hartford
Life expects from time to time to incur additional indebtedness constituting
Senior Indebtedness.
The Subordinated Indenture provides that the foregoing subordination
provisions, insofar as they relate to any particular issue of Subordinated Debt
Securities, may be changed prior to such issuance. Any such change would be
described in the Prospectus Supplement relating to such Subordinated Debt
Securities.
GOVERNING LAW
The Indentures and the Debt Securities will be governed by and construed in
accordance with the laws of the State of New York (without regard to principles
of conflicts of laws). (Section 1.12.)
CONCERNING THE INDENTURE TRUSTEES
Each of the Indenture Trustees acts as depository for funds of, makes loans
to, and performs other services for, Hartford Life and its subsidiaries in the
normal course of business.
The Indenture Trustees shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustees are under no
obligation to exercise any of the powers vested in it by the Indentures at the
request of any holder of Debt Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. Each of the Indenture Trustees is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance of
its duties if the Indenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
21
65
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of Hartford Life consists of 600,000,000
shares of Class A Common Stock, par value $.01 per share and, 600,000,000 shares
of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"
and together with the Class A Common Stock, the "Common Stock"), and 50,000,000
shares of Preferred Stock. As of March 31, 1998, there were 26,028,242 shares of
Class A Common Stock outstanding and 114,000,000 are reserved for issuance upon
conversion of Class B Common Stock into Class A Common Stock. The 114,000,000
shares of Class B Common Stock outstanding are held by The Hartford or one of
its directly or indirectly wholly owned subsidiaries. No shares of Preferred
Stock are outstanding. A description of various provisions of Hartford Life's
Certificate of Incorporation and By-laws affecting the rights of the Class A
Common Stock, Class B Common stock and Preferred Stock is set forth below. This
description is intended as a summary and is qualified in its entirety by
reference to the form of Hartford Life's Certificate of Incorporation and
By-Laws filed as exhibits to the Registration Statement of which this Prospectus
forms a part.
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Dividends
Holders of Class A Common Stock and Class B Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available therefor, subject to any preferential
dividend rights of any outstanding Preferred Stock. Cash dividends may be
declared and paid to the holders of Class A Common Stock only if at such time
cash dividends in the same amount per share are declared and paid to the holders
of Class B Common Stock, and vice versa. Dividends payable other than in cash or
Class A Common Stock (or in rights, options, warrants or securities convertible
into or exchangeable for Class A Common Stock) will be declared and paid to
holders of Class A Common Stock and Class B Common Stock on a pro rata per share
basis. Dividends, consisting of shares of Common Stock, or of rights, options,
warrants or other securities convertible into or exchangeable for such shares,
may be declared and paid only as follows: (i) shares of Class A Common Stock, or
any rights, options, warrants or securities convertible into or exchangeable for
Class A Common Stock, may be declared and paid only to holders of shares of
Class A Common Stock, and shares of Class B Common Stock, or any rights,
options, warrants or securities convertible into or exchangeable for Class B
Common Stock, may be declared and paid only to holders of Class B Common Stock
and (ii) such shares, or such rights, options, warrants or securities
convertible into or exchangeable for such shares, will be declared and paid
proportionately with respect to each outstanding share of a Class A Common Stock
and Class B Common Stock. Hartford Life may not reclassify, subdivide or combine
the shares of either class of Common Stock without at the same time
proportionately reclassifying, subdividing or combining the shares of the other
class.
Voting Rights
Holders of Class A Common Stock and Class B Common Stock generally have
identical voting rights and vote together (and not as separate classes), except
that holders of Class A Common Stock are entitled to one vote per share while
holders of Class B Common Stock are entitled to five votes per share and the
shares of Class B Common Stock maintain certain conversion rights and transfer
restrictions as described below. Except as required by law, all matters to be
voted on by stockholders must be approved by a majority (or, in the case of the
election of directors, by a plurality) of the shares present in person or by
proxy by all shares of Class A Common Stock and Class B Common Stock, voting
together as a single class, subject to any voting rights granted to holders of
any Preferred Stock. Holders of shares of Class A Common Stock and Class B
Common Stock are not entitled to cumulate their votes in the election of
directors. Except as otherwise provided by law, and subject to any voting rights
granted to holders of any outstanding Preferred Stock, amendments to the
Certificate of Incorporation (including any such amendment to increase or
decrease the authorized shares of any class) must be approved by a majority of
the votes entitled to be cast in person or by proxy by all shares of Class A
Common Stock and Class B Common Stock, voting together as a single
22
66
class, except that certain provisions of the Certificate of Incorporation may be
amended only with the approval of the holders of at least 80% of the combined
voting power of the Common Stock then outstanding. See "Certain Provisions of
the Certificate of Incorporation and By-laws of Hartford Life -- Corporate
Opportunities." However, amendments to the Certificate of Incorporation that
would change the powers, preferences and relative participating, optional or
other special rights of the Class A Common Stock or the Class B Common Stock
also must be approved by a majority of the outstanding shares of such class
voting as a separate class. The superior voting rights of the Class B Common
Stock may discourage unsolicited tender offers and merger proposals.
Conversion
Each share of Class B Common Stock is convertible at any time by the holder
thereof or a Class B Transferee (as defined below), if any, at the option of
such holder, into one share of Class A Common Stock, except as provided herein.
Subject to the exceptions described in the following sentence, upon any sale or
transfer of shares of Class B Common Stock, such that any person or persons
other than the holder thereof or any of its affiliates (within the meaning of
the rules and regulations under the Exchange Act), including a Class B
Transferee (as defined below), will have beneficial ownership thereof, such
shares will automatically convert into an equal number of shares of Class A
Common Stock (with the same rights and restrictions as shares of Class A Common
Stock generally). However, if shares of Class B Common Stock representing 50% or
more of all the then outstanding shares of Common Stock (calculated without
regard to the difference in voting rights between the classes of Common Stock)
are transferred by the holder thereof in a single transaction, or series of
related transactions, to any person or persons not affiliated with such
transferor (a "Class B Transferee"), such shares of Class B Common Stock so
transferred will not automatically convert into shares of Class A Common Stock
upon such transfer. Each share of Class B Common Stock retained by such
transferor following any such transfer will automatically convert into a share
of Class A Common Stock upon such transfer. In addition, each share of Class B
Common Stock will automatically convert into one share of Class A Common Stock
on the date on which the number of shares of Class B Common Stock then
outstanding is less than 50% of the aggregate number of shares of Common Stock
then outstanding.
The provisions of Hartford Life's Certificate of Incorporation described
above under "Conversion" are generally designed so that, were The Hartford to
reduce its ownership of the Class B Common Stock to shares of Common Stock
representing less than 50% of the economic interest in Hartford Life represented
by Common Stock, all shares of Class B Common Stock will be automatically
converted into Class A Common Stock, thereby resulting in all holders of Common
Stock having identical voting rights. However, The Hartford (and any subsequent
Class B Transferee) is permitted to transfer shares of Class B Common Stock
representing 50% or more of the economic interest in Hartford Life represented
by Common Stock to a Class B Transferee with the effect that such Class B
Transferee will succeed to ownership of the Class B Common Stock and thus
control of Hartford Life.
Other
Upon the liquidation, dissolution or winding up of Hartford Life, whether
voluntary or involuntary, and subject to the rights of the holders of the
Preferred Stock, the net assets of Hartford Life available for distribution to
stockholders of Hartford Life shall be distributed pro rata to the holders of
the Common Stock in accordance with their respective rights and interests and
the Class B Common Stock shall rank pari passu with the Class A Common Stock as
to such distribution.
No shares of either class of Common Stock are subject to redemption or have
preemptive rights to purchase additional shares of Common Stock.
The outstanding shares of Class A Common Stock and Class B Common Stock are
fully paid and non-assessable.
23
67
PREFERRED STOCK
The authorized Preferred Stock of Hartford Life is available for issuance
from time to time at the discretion of the Board of Directors without
stockholder approval. The Board of Directors has the authority to prescribe for
each series of the Preferred Stock it establishes the number of shares in that
series, any voting, dividend and conversion rights applicable thereto and the
other designations, powers, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or restrictions
thereof. The issuance of Preferred Stock could be used, under certain
circumstances, as a method of delaying or preventing a change of control of
Hartford Life, thereby making removal of the present management of Hartford Life
more difficult, and could have a detrimental effect on the rights of holders of
Class A Common Stock, including loss of voting control and restrictions upon the
payment of dividends and other distributions.
The particular terms of any series of Preferred Stock offered hereby will
be set forth in the Prospectus Supplement relating thereto. The rights,
preferences, privileges and restrictions, including dividend rights, voting
rights, terms of redemption and liquidation preferences, of the Preferred Stock
of each series will be fixed or designated pursuant to a certificate of
designation adopted by the Board of Directors or a duly authorized committee
thereof. The description of the terms of a particular series of Preferred Stock
that will be set forth in a Prospectus Supplement shall not purport to be
complete and shall be qualified in its entirety by reference to the certificate
of designation relating to such series.
DEPOSITARY SHARES
General
Hartford Life may, at its option, elect to offer fractional interests
("Depositary Shares") in Preferred Stock, rather than full shares of Preferred
Stock. In such event, receipts ("Depositary Receipts") for Depositary Shares,
each of which will represent a fraction (to be set forth in the Prospectus
Supplement relating to a particular series of Preferred Stock) of a share of a
particular series of Preferred Stock, will be issued as described below.
The shares of any series of Preferred Stock represented by Depositary
Shares will be deposited under a Deposit Agreement (the "Deposit Agreement") to
be entered into between Hartford Life and a depositary to be named by Hartford
Life in a Prospectus Supplement (the "Depositary"). Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, in
proportion to the applicable fraction of a share of Preferred Stock represented
by such Depositary Share, to all the rights and preferences of the Preferred
Stock represented thereby (including dividend, voting, redemption, subscription
and liquidation rights). The following summary of certain provisions of the
Deposit Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Deposit
Agreement, including the definitions therein of certain terms. Whenever
particular sections of the Deposit Agreement are referred to, it is intended
that such sections shall be incorporated herein by reference. Copies of the
forms of Deposit Agreement and Depositary Receipt will be filed, as exhibits to
a Current Report on Form 8-K incorporated herein by reference to be filed prior
to any offering of Depositary Shares.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares in
an equitable manner, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Hartford Life, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including sale (at public or private
sale) of such property and distribution of the net proceeds from such sale to
such holders.
24
68
The amount so distributed to record holders of Depositary Receipts in any
of the foregoing cases will be reduced by any amount required to be withheld by
Hartford Life or the Depositary on account of taxes.
Conversion and Exchange
If any series of Preferred Stock underlying the Depositary Shares is
subject to provisions relating to its conversion or exchange, as set forth in
the applicable Prospectus Supplement relating thereto, each record holder of
Depositary Receipts will have the right or obligation to convert or exchange the
Depositary Shares represented by such Depositary Receipts pursuant to the terms
thereof.
Redemption of Depositary Shares
If a series of Preferred Stock represented by Depositary Shares is subject
to redemption, the Depositary Shares will be redeemed from the proceeds received
by the Depositary resulting from the redemption, in whole or in part, of such
series of Preferred Stock held by the Depositary. The redemption price per
Depositary Share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of Preferred Stock. Whenever
Hartford Life redeems shares of Preferred Stock held by the Depositary, the
Depositary will redeem as of the same redemption date the number of Depositary
Shares representing shares of Preferred Stock so redeemed. If fewer than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot, pro rata or by any other equitable method as may be
determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by Hartford Life with
the Depositary for any Depositary Shares which the holders thereof fail to
redeem shall be returned to Hartford Life after a period of two years from the
date such funds are so deposited.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the Preferred
Stock are entitled to vote, the Depositary will mail the information contained
in such notice of meeting to the record holders of the Depositary Shares
relating to such Preferred Stock. Each record holder of such Depositary Shares
on the record date (which will be the same date as the record date for the
Preferred Stock) will be entitled to instruct the Depositary as to the exercise
of the voting rights pertaining to the amount of the Preferred Stock represented
by such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of the Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and Hartford Life will
agree to take all reasonable action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of the Preferred Stock to the extent it does not
receive specific instructions from the holder of Depositary Shares representing
such Preferred Stock.
Record Date
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock,
or (ii) the Depositary shall receive notice of any meeting at which holders of
Preferred Stock are entitled to vote or of which holders of Preferred Stock are
entitled to notice, or of the mandatory conversion of, or any election on the
part of Hartford Life to call for the redemption of, any Preferred Stock, the
Depositary shall in each such instance fix a record date (which shall be the
same as the record date for the Preferred Stock) for the determination of the
holders of Depositary Receipts (x) that shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds of
the sale thereof or (y) that shall be entitled to give instructions for the
exercise of voting rights at any such meeting or to receive notice of such
meeting or of such redemption or conversion, subject to the provisions of the
Deposit Agreement.
25
69
Withdrawal of Preferred Stock
Upon surrender of Depositary Receipts at the principal office of the
Depositary, upon payment of any unpaid amount due the Depositary, and subject to
the terms of the Deposit Agreement, the owner of the Depositary Shares evidenced
thereby is entitled to delivery of the number of whole shares of Preferred Stock
and all money and other property, if any, represented by such Depositary Shares.
Partial shares of Preferred Stock will not be issued. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of whole shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares. Holders of Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Receipts evidencing Depositary Shares therefor.
Amendment and Termination of the Deposit Agreement
The Deposit Agreement will provide that the form of Depositary Receipt and
any provision of the Deposit Agreement may at any time be amended by agreement
between Hartford Life and the Depositary. However, any amendment which imposes
or increases any fees, taxes or other charges payable by the holders of
Depositary Receipts (other than taxes and other governmental charges, fees and
other expenses payable by such holders as stated under "Charges of Depositary"),
or which otherwise prejudices any substantial existing right of holders of
Depositary Receipts, will not take effect as to outstanding Depositary Receipts
until the expiration of 90 days after notice of such amendment has been mailed
to the record holders of outstanding Depositary Receipts.
Whenever so directed by Hartford Life, the Depositary will terminate the
Deposit Agreement by mailing notice of such termination to the record holders of
all Depositary Receipts then outstanding at least 30 days prior to the date
fixed in such notice for such termination. The Depositary may likewise terminate
the Deposit Agreement if at any time 60 days shall have expired after the
Depositary shall have delivered to Hartford Life a written notice of its
election to resign and a successor depositary shall not have been appointed and
accepted its appointment. If any Depositary Receipts remain outstanding after
the date of termination, the Depositary thereafter will discontinue the transfer
of Depositary Receipts, will suspend the distribution of dividends to the
holders thereof, and will not give any further notices (other than notice of
such termination) or perform any further acts under the Deposit Agreement except
as provided below and except that the Depositary will continue (i) to collect
dividends on the Preferred Stock and any other distributions with respect
thereto and (ii) to deliver the Preferred Stock together with such dividends and
distributions and the net proceeds of any sales of rights, preferences,
privileges or other property, without liability for interest thereon, in
exchange for Depositary Receipts surrendered. At any time after the expiration
of two years from the date of termination, the Depositary may sell the Preferred
Stock then held by it at public or private sales, at such place or places and
upon such terms as it deems proper, and may thereafter hold the net proceeds of
any such sale, together with any money and other property then held by it,
without liability for interest thereon, for the pro rata benefit of the holders
of Depositary Receipts which have not been surrendered.
Charges of Depositary
Hartford Life will pay all charges of the Depositary, including charges in
connection with the initial deposit of the Preferred Stock, the initial issuance
of the Depositary Receipts, the distribution of information to the holders of
Depositary Receipts with respect to matters on which Preferred Stock is entitled
to vote, withdrawals of the Preferred Stock by the holders of Depositary
Receipts or redemption or conversion of the Preferred Stock, except for taxes
(including transfer taxes, if any) and other governmental charges and such other
charges as are expressly provided in the Deposit Agreement to be at the expense
of holders of Depositary Receipts or persons depositing Preferred Stock.
26
70
Miscellaneous
The Depositary will make available for inspection by holders of Depositary
Receipts, at its Corporate Office and its New York Office, all reports and
communications from Hartford Life which are delivered to the Depositary as the
holder of Preferred Stock.
Neither the Depositary nor Hartford Life will be liable if it is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Depositary under
the Deposit Agreement are limited to performing its duties thereunder without
negligence or bad faith. The obligations of Hartford Life under the Deposit
Agreement are limited to performing its duties thereunder in good faith. Neither
Hartford Life nor the Depositary is obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. Hartford Life and the Depositary are
entitled to rely upon advice of or information from counsel, accountants or
other persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to Hartford Life notice
of its election to do so, and Hartford Life may at any time remove the
Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary and its acceptance of such appointments. Such
successor Depositary must be appointed within 60 days after delivery of the
notice of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
27
71
DESCRIPTION OF WARRANTS
Hartford Life may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), Preferred Stock, Class A Common Stock or other of
its securities. Warrants may be issued independently or together with any such
securities of Hartford Life and may be attached to or separate from such
securities of Hartford Life. The Warrants are to be issued under warrant
agreements (each a "Warrant Agreement") to be entered into between Hartford Life
and a bank or trust company, as warrant agent (the "Warrant Agent"), all as
shall be set forth in the Prospectus Supplement relating to Warrants being
offered pursuant thereto. The description of the terms of the Warrants that are
set forth below and that will be set forth in the applicable Prospectus
Supplement do not purport to be complete and are qualified in their entirety by
reference to the Warrant Agreement and warrant certificate relating to such
Warrants. A copy of the form of Warrant Agreement will be filed as an exhibit to
a Current Report on Form 8-K incorporated herein by reference to be filed prior
to any offering of Warrants.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the warrant certificates representing such Debt Warrants, including the
following: (i) the title of such Debt Warrants; (ii) the Debt Securities of
Hartford Life for which such Debt Warrants are exercisable; (iii) the aggregate
number of such Debt Warrants; (iv) the principal amount of Debt Securities
purchasable upon exercise of each Debt Warrant, and the price or prices at which
such Debt Warrants will be issued; (v) the procedures and conditions relating to
the exercise of such Debt Warrants; (vi) the designation and terms of any
related Debt Securities of Hartford Life with which such Debt Warrants are
issued, and the number of such Debt Warrants issued with each such Debt
Security; (vii) the date, if any, on and after which such Debt Warrants and the
related securities of Hartford Life will be separately transferable; (viii) the
date on which the right to exercise such Debt Warrants shall commence, and the
date on which such right shall expire; (ix) the maximum or minimum number of
such Debt Warrants which may be exercised at any time; (x) if applicable, a
discussion of material United States federal income tax considerations; (xi) any
other terms of such Debt Warrants and terms, procedures and limitations relating
to the exercise of such Debt Warrants; and (xii) the terms of the securities of
Hartford Life purchasable upon exercise of such Debt Warrants.
Debt Warrant certificates may be exchanged for new Debt Warrant
certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants exercisable for Debt Securities will not have
any of the rights of holders of the Debt Securities purchasable upon such
exercise and will not be entitled to payments of principal (or premium, if any)
or interest, if any, on the Debt Securities purchasable upon such exercise.
OTHER WARRANTS
Hartford Life may issue other Warrants. The applicable Prospectus
Supplement will describe the following terms of any such other Warrants in
respect of which this Prospectus is being delivered: (i) the title of such
Warrants; (ii) the securities (which may include Preferred Stock or Class A
Common Stock) for which such Warrants are exercisable; (iii) the price or prices
at which such Warrants will be issued; (iv) if applicable, the designation and
terms of the Preferred Stock or Class A Common Stock with which such Warrants
are issued, and the number of such Warrants issued with each such share of
Preferred Stock or Class A Common Stock; (v) if applicable, the date on and
after which such Warrants and the related Preferred Stock or Class A Common
Stock will be separately transferable; (vi) if applicable, a discussion of
material United States federal income tax considerations; and (vii) any other
terms of such Warrants, including terms, procedures and limitations relating to
the exchange and exercise of such Warrants. The applicable Prospectus Supplement
will also set forth (a) the amount of securities called for by such Warrants,
and if applicable, the amount of Warrants outstanding, and (b) information
relating to provisions, if any, for a change in the exercise price or the
expiration date of such Warrants and the kind, frequency and timing of any
notice to be given. Prior to the exercise of their Warrants for shares of
Preferred Stock or Class A
28
72
Common Stock, holders of such Warrants will not have any rights of holders of
the Preferred Stock or Class A Common Stock purchasable upon such exercise and
will not be entitled to dividend payments, if any, or voting rights of the
Preferred Stock or Class A Common Stock purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase for cash such
principal amount or such number of securities of Hartford Life at such exercise
price as shall in each case be set forth in, or be determinable as set forth in,
the Prospectus Supplement relating to the Warrants offered thereby. Warrants may
be exercised as set forth in the Prospectus Supplement relating to the Warrants
offered thereby at any time up to the close of business on the expiration date
set forth in such Prospectus Supplement. After the close of business on the
expiration date (or such later expiration date as may be extended by Hartford
Life), unexercised Warrants will become void.
Upon receipt of payment and the warrant certificate properly completed and
duly executed at the corporate trust office of the Warrant Agent or any other
office indicated in the applicable Prospectus Supplement, Hartford Life will, as
soon as practicable, forward the securities purchasable upon such exercise. If
less than all of the Warrants represented by such warrant certificate are
exercised, a new warrant certificate will be issued for the remaining Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
Hartford Life may issue Stock Purchase Contracts, including contracts
obligating holders to purchase from Hartford Life, and Hartford Life to sell to
the holders, a specified number of shares of Class A Common Stock or Preferred
Stock at a future date or dates. The price per share of Preferred Stock or Class
A Common Stock may be fixed at the time the Stock Purchase Contracts are issued
or may be determined by reference to a specific formula set forth in the Stock
Purchase Contracts. The Stock Purchase Contracts may be issued separately or as
a part of units ("Stock Purchase Units") consisting of a Stock Purchase Contract
and Debt Securities, Preferred Securities or debt obligations of third parties,
including U.S. Treasury securities, securing the holders' obligations to
purchase the Preferred Stock or the Class A Common Stock under the Purchase
Contracts. The Stock Purchase Contracts may require Hartford Life to make
periodic payments to the holders of the Stock Purchase Units or vice versa, and
such payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner and in certain circumstances Hartford Life may deliver newly
issued prepaid Stock Purchase Contracts ("Prepaid Securities") upon release to a
holder of any collateral securing such holder's obligations under the original
Stock Purchase Contract.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units and, if applicable, Prepaid
Securities. The description in the Prospectus Supplement will not purport to be
complete and will be qualified in its entirety by reference to the Stock
Purchase Contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to such Stock Purchase Contracts or Stock Purchase Units.
Copies of the form of Stock Purchase Contract, and, if applicable, collateral
arrangements and depositary arrangements relating to such Stock Purchase
Contracts will be filed as an exhibit to a Current Report on Form 8-K
incorporated herein by reference to be filed prior to any offering of Stock
Purchase Contracts.
DESCRIPTION OF JUNIOR SUBORDINATED DEBT SECURITIES
AND CORRESPONDING JUNIOR SUBORDINATED DEBT SECURITIES
The Junior Subordinated Debt Securities are to be issued in one or more
series under the Subordinated Indenture, as supplemented from time to time,
between Hartford Life and the Subordinated Indenture Trustee. This summary of
certain terms and provisions of the Junior Subordinated Debt Securities and the
Subordinated Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by
29
73
reference to, the Subordinated Indenture, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
to the Trust Indenture Act. Whenever particular defined terms of the
Subordinated Indenture (as supplemented or amended from time to time) are
referred to herein or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference.
The following description sets forth certain general terms and provisions
of the Junior Subordinated Debt Securities to which any Prospectus Supplement
may relate. The particular terms of the Junior Subordinated Debt Securities
offered by any Prospectus Supplement, including any Corresponding Junior
Subordinated Debt Securities that are issued to a Trust (see "Description of
Preferred Securities"), and the extent, if any, to which such general provisions
may apply to the Junior Subordinated Debt Securities so offered will be
described in the Prospectus Supplement relating to such Junior Subordinated Debt
Securities. Except to the extent set forth below or in the related Prospectus
Supplement, the Junior Subordinated Debt Securities shall have the terms and
provisions applicable to Subordinated Debt Securities as described under
"Description of Debt Securities".
GENERAL
Each series of Junior Subordinated Debt Securities will be direct,
unsecured obligations of Hartford Life. The Junior Subordinated Debt Securities
will be issuable in one or more series pursuant to an indenture supplemental to
the Subordinated Indenture or a resolution of Hartford Life's Board of Directors
or a committee thereof and set forth in an Officer's Certificate.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Junior Subordinated Debt Securities: (i) the
designation, priority, aggregate principal amount and authorized denominations;
(ii) the percentage of their principal amount at which such Junior Subordinated
Debt Securities will be issued; (iii) the date on which such Junior Subordinated
Debt Securities will mature; (iv) the rate per annum at which such Junior
Subordinated Debt Securities will bear interest or the method of determination
of such rate; (v) the dates on which such interest will be payable; (vi) the
rights, if any, to defer payments of interest on the Junior Subordinated Debt
Securities by extending the interest payment period (an "Extension Period"), and
the maximum duration of such extensions; (vii) the place or places where
payments on such Junior Subordinated Debt Securities shall be made; (viii) any
redemption terms or sinking fund provisions; (ix) the terms of subordination of
Junior Subordinated Debt Securities; (x) whether Junior Subordinated Debt
Securities issued in fully registered form will be represented by either a
global security delivered to a depositary and recorded in a book-entry system
maintained by such depositary or by a certificate delivered to the Holder; (xi)
the restrictions, if any, applicable to the exchange of Junior Subordinated Debt
Securities of a series of one form for another of such series and to the offer,
sale and delivery of the Junior Subordinated Debt Securities; (xii) whether and
under what circumstances Hartford Life will pay additional amounts in the event
of certain developments with respect to United States withholding tax or
information reporting laws; or (xiii) other specific terms.
Junior Subordinated Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Certain federal income tax
consequences and special considerations applicable to any such Junior
Subordinated Debt Securities will be described in the applicable Prospectus
Supplement.
SUBORDINATED INDENTURE EVENTS OF DEFAULT
The Subordinated Indenture provides that any one or more of the following
described events with respect to a series of Junior Subordinated Debt Securities
that has occurred and is continuing constitutes an Event of Default with respect
to such series of Junior Subordinated Debt Securities:
(i) failure for 30 days to pay any interest on such series of the
Junior Subordinated Debt Securities when due (subject to the deferral of
any due date in the case of an Extension Period);
(ii) failure to pay any principal or premium, if any, on such series
of Junior Subordinated Debt Securities when due whether at maturity, upon
redemption, by declaration or otherwise;
30
74
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Subordinated Indenture for 90 days after
written notice to Hartford Life from the Subordinated Indenture Trustee or
the Holders of at least 25% in principal amount of such series of
Outstanding Junior Subordinated Debt Securities;
(iv) certain events in bankruptcy, insolvency or reorganization of
Hartford Life;
(v) with respect to Junior Subordinated Debt Securities issued to a
Trust, the dissolution of such Trust; or
(vi) any other Event of Default with respect to Junior Subordinated
Debt Securities of that series.
Hartford Life is required to furnish the Subordinated Indenture Trustee
annually with a statement as to the fulfillment by Hartford Life of its
obligations under the Subordinated Indenture. The Subordinated Indenture
provides that the Subordinated Indenture Trustee may withhold notice to the
Holders of the Junior Subordinated Debt Securities of any default (except in
respect of the payment of principal or interest on the Junior Subordinated Debt
Securities) if it considers it in the interest of the Holders to do so.
If an Event of Default with respect to Junior Subordinated Debt Securities
of any series occurs and is continuing, then and in every such case the
Subordinated Indenture Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Junior Subordinated Debt Securities of that series may
declare the principal amount (or, if the Junior Subordinated Debt Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Junior Subordinated Debt Securities of that series to be due and payable
immediately, by a notice in writing to Hartford Life (and to the Subordinated
Indenture Trustee if given by Holders), and upon any such declaration such
principal shall become immediately due and payable. However, at any time after a
declaration or acceleration with respect to Junior Subordinated Debt Securities
of any series has been made, but before a judgment or decree for payment of the
money due has been obtained, the Holders of a majority in principal amount of
Outstanding Junior Subordinated Debt Securities of that series may, subject to
certain conditions, rescind and annul such declaration.
Subject to the provisions of the Subordinated Indenture relating to the
duties of the Subordinated Indenture Trustee, in case an Event of Default shall
occur and be continuing, the Subordinated Indenture Trustee shall be under no
obligation to exercise any of its rights or powers under the Subordinated
Indenture at the request, order or direction of any of the Holders, unless such
Holders shall have offered to the Subordinated Indenture Trustee reasonable
security or indemnity and satisfied certain other conditions. Subject to such
provisions for the security or indemnification of the Subordinated Indenture
Trustee, the Holders of a majority in principal amount of the Outstanding Junior
Subordinated Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for, and remedy available
to, the Subordinated Indenture Trustee, or exercising any trust or power
conferred on the Subordinated Indenture Trustee with respect to the Junior
Subordinated Debt Securities of that series.
No Holder of any Junior Subordinated Debt Security of any series will have
any right to institute any proceeding with respect to the Subordinated Indenture
or for any remedy thereunder, unless such Holder shall have previously given to
the Subordinated Indenture Trustee written notice of a continuing Event of
Default with respect to Junior Subordinated Debt Securities of that series and
unless the Holders of at least 25% in principal amount of the Outstanding Junior
Subordinated Debt Securities of that series shall have made written request, and
offered reasonable indemnity, to the Subordinated Indenture Trustee to institute
such proceeding as Subordinated Indenture Trustee, and, within 90 days following
the receipt of such notice, the Subordinated Indenture Trustee shall not have
received from the Holders of a majority in principal amount of the Outstanding
Junior Subordinated Debt Securities of that series a direction inconsistent with
such request, and the Subordinated Indenture Trustee shall have failed to
institute such proceeding. However, the Holder of any Junior Subordinated Debt
Security will have an absolute right to receive payment of the principal of and
premium, if any, and interest on such Junior Subordinated Debt Security on or
after the due dates expressed in such Junior Subordinated Debt Security and to
institute a suit for the enforcement of any such payment. Each holder of
Preferred Securities of a Trust will, during the continuance of a default in the
payment of
31
75
interest when due (subject to any right of Hartford Life to defer payment), have
the right to bring suit directly against Hartford Life for the enforcement of
payment in an amount equal to the aggregate liquidation amount of Preferred
Securities of such holder.
CONVERSION OR EXCHANGE
The specific terms on which Junior Subordinated Debt Securities of any
series may be so converted or exchanged for other securities or property of
Hartford Life will be set forth in the applicable Prospectus Supplement. Such
terms may include provisions for conversion or exchange, either mandatory, at
the option of the Holder, or at the option of Hartford Life, in which case the
number of shares of Preferred Securities or other securities or amount of other
property to be received by the Holders of Junior Subordinated Debt Securities
would be calculated as of a time and in the manner stated in the applicable
Prospectus Supplement.
32
76
DESCRIPTION OF PREFERRED SECURITIES
Each Trust's Preferred Securities will represent preferred undivided
beneficial interests in the assets of the related Trust and the holders thereof
will be entitled to a preference in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation over the Common
Securities of the related Trust, as well as other benefits as described in the
Declaration. This summary of certain provisions of the Declaration does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of each Declaration, including the definitions
therein of certain terms, and the Trust Indenture Act. Wherever particular
defined terms of the Declaration are referred to, such defined terms are
incorporated herein by reference. The form of the Declaration has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
Each Trust may issue, from time to time, only one series of Preferred
Securities having such terms including distributions, redemption, voting,
liquidation rights or such restrictions as shall be set forth in the Prospectus
Supplement relating thereto. The Declaration authorizes a Trust to issue one
series of Preferred Securities. The Declaration will be qualified as an
indenture under the Trust Indenture Act. The Institutional Trustee, an
independent trustee, will act as indenture trustee for the Preferred Securities
for purposes of compliance with the provisions of the Trust Indenture Act.
The Preferred Securities will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferred and
other special rights or such restrictions as shall be set forth in the
Declaration or made part of the Declaration by the Trust Indenture Act, and will
have the same terms as the Corresponding Junior Subordinated Debt Securities
issued to and held by the related Trust as described in the applicable
Prospectus Supplement. Reference is made to any Prospectus Supplement relating
to the Preferred Securities for specific terms, including: (i) the distinctive
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by the related Trust, (iii) the annual distribution rate (or
method of determining such rate) for Preferred Securities issued by such Trust
and the date or dates upon which such distributions shall be payable (provided,
however, that distributions on such Preferred Securities shall, subject to any
deferral provisions, and any provisions for payment of defaulted distributions,
be payable on a quarterly basis to holders of such Preferred Securities as of a
record date in each quarter during which such Preferred Securities are
outstanding), (iv) any right of a Trust to defer quarterly distributions on
Preferred Securities as a result of an interest deferral right exercised by
Hartford Life on the Corresponding Junior Subordinated Debt Securities held by
such Trust, (v) whether distributions on Preferred Securities shall be
cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions of Preferred Securities shall be cumulative, (vi)
the amount or amounts which shall be paid out of the assets of such Trust to
holders of Preferred Securities upon voluntary or involuntary dissolution,
winding-up or termination of such Trust, (vii) the obligation, or option, if
any, of such Trust to purchase or redeem Preferred Securities issued by such
Trust and the price or prices at which, the period or periods within which and
the terms and conditions upon which Preferred Securities issued by such Trust
shall be purchased or redeemed, in whole or in part, pursuant to such obligation
or option, (viii) the voting rights, if any, of Preferred Securities issued by
such Trust in addition to those required by law, including the number of votes
per Preferred Security and any requirement for the approval by the holders of
Preferred Securities, as a condition to specified action or amendments to the
Declaration, (ix) the terms, if any, upon which Corresponding Junior
Subordinated Debt Securities of Hartford Life held by such Trust can be
distributed to the holders of Preferred Securities, and (x) any other relevant
rights, preferences, privileges, limitations or restrictions of Preferred
Securities issued by such Trust consistent with the Declaration or with
applicable law. All Preferred Securities offered hereby will be guaranteed by
Hartford Life to the extent described below under "Description of Guarantee".
Certain United States federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
In connection with the issuance of Preferred Securities, each Trust will
issue one series of Common Securities. The Declaration authorizes the Trust to
issue one series of Common Securities having such terms including distributions,
redemption, voting , liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by a Trust will be
substantially identical to the terms of the
33
77
Preferred Securities issued by such Trust and the Common Securities will rank
pari passu, and payments will be made thereon pro rata of such Preferred
Securities, except that, upon an Event of Default under the Declaration, the
rights of the holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of such Preferred Securities. Except
in certain limited circumstances, the Common Securities will also carry the
right to vote and to appoint, remove or replace any of the Trustees. All of the
Common Securities will be directly or indirectly owned by Hartford Life.
If an Event of Default with respect to the Declaration occurs and is
continuing, then the holders of Preferred Securities of the related Trust would
rely on the enforcement by the Institutional Trustee of its rights as a holder
of the Corresponding Junior Subordinated Debt Securities against Hartford Life.
In addition, the holders of a majority in liquidation amount of such Preferred
Securities will have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or to direct the exercise of any trust or power conferred upon the Institutional
Trustee under such Declaration, including the right to direct the Institutional
Trustee to exercise the remedies available to it as a holder of the
Corresponding Junior Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the Corresponding Junior Subordinated Debt
Securities, any holder of such Preferred Securities may to the fullest extent
permitted by law, directly institute a legal proceeding against Hartford Life to
enforce the Institutional Trustee's rights under the Corresponding Junior
Subordinated Debt Securities without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. If an Event of
Default with respect to the Declaration has occurred and is continuing and such
event is attributable to the failure of Hartford Life to pay interest or
principal on the Corresponding Junior Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of related Preferred Securities may also
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Corresponding Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of such Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the Corresponding Junior Subordinated Debt
Securities without first (i) directing the Institutional Trustee to enforce the
terms of the Corresponding Junior Subordinated Debt Securities or (ii)
instituting a legal proceeding against Hartford Life to enforce the
Institutional Trustee's rights under the Corresponding Junior Subordinated Debt
Securities. In connection with such Direct Action, Hartford Life will be
subrogated to the rights of such holder of such Preferred Securities under the
Declaration to the extent of any payment made by Hartford Life to such holder of
such Preferred Securities in such Direct Action. Consequently, Hartford Life
will be entitled to payments of amounts that a holder of Preferred Securities
receives in respect of an unpaid distribution that resulted in the bringing of a
Direct Action to the extent that such holder receives or has already received
full payment with respect to such unpaid distribution from the Trust. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Corresponding Junior Subordinated Debt
Securities.
34
78
DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning each Guarantee that
will be executed and delivered by Hartford Life for the benefit of the holders
of the related Preferred Securities. Each Guarantee will be qualified as an
indenture under the Trust Indenture Act. Wilmington Trust Company will act as
indenture trustee under each Guarantee (the "Guarantee Trustee"). The terms of
each Guarantee will be those set forth in the Guarantee and those made part of
the Guarantee by the Trust Indenture Act. The summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Guarantee, which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. Each Guarantee will be held by the Guarantee Trustee
for the benefit of the holders of the Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in each Guarantee, Hartford Life
will irrevocably and unconditionally agree to pay in full to the holders of the
related Preferred Securities (except to the extent paid by a Trust), as and when
due, regardless of any defense, right of set-off or counterclaim which a Trust
may have or assert, the following payments (the "Guarantee Payments"), without
duplication: (i) any accrued and unpaid distributions that are required to be
paid on the related Preferred Securities, to the extent the related Trust has
funds available therefor, and (ii) the redemption price per Preferred Security
set forth in the applicable Prospectus Supplement plus all accrued and unpaid
distributions (the "Redemption Price"), to the extent the related Trust has
funds available therefor, with respect to any Preferred Securities called for
redemption by the related Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the related Trust (other than in
connection with the distribution of Corresponding Junior Subordinated Debt
Securities to the holders of Preferred Securities or the redemption of all the
Preferred Securities) the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the related Preferred Securities to
the date of payment or (b) the amount of assets of the related Trust remaining
for distribution to holders of the Preferred Securities in liquidation of such
Trust. Hartford Life's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by Hartford Life to the holders of the
related Preferred Securities or by causing the related Trust to pay such amounts
to such holders.
Each Guarantee will be a guarantee on a subordinated basis with respect to
the related Preferred Securities from the time of issuance of the Preferred
Securities but will not apply to any payment of distributions or Redemption
Price, or to payments upon the dissolution, winding-up or termination of the
related Trusts, except to the extent the related Trust shall have funds
available therefor. If Hartford Life does not make interest payments on the
Corresponding Junior Subordinated Debt Securities, the applicable Trust will not
pay distributions on the Preferred Securities and will not have funds available
therefor. See "Description of Junior Subordinated Debt Securities and
Corresponding Junior Subordinated Debt Securities." Each Guarantee, when taken
together with Hartford Life's obligations under the Corresponding Junior
Subordinated Debt Securities, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the related Trust
(other than with respect to Trust Securities), will provide a full and
unconditional guarantee on a subordinated basis by Hartford Life of payments due
on the Preferred Securities.
Hartford Life has also agreed to guarantee the obligations of each Trust
with respect to the Common Securities (the "Common Guarantee") issued by such
Trust to the same extent as the Guarantee, except that, if an Event of Default
under the Subordinated Indenture with respect to the related Corresponding
Junior Subordinated Debt Securities has occurred and is continuing, holders of
Preferred Securities under the Guarantee shall have priority over holders of the
Common Securities under the Common Guarantee with respect to distributions and
payments on liquidation, redemption or otherwise.
35
79
CERTAIN COVENANTS OF HARTFORD LIFE
In each Guarantee, Hartford Life will covenant that, so long as any
Preferred Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default under such Guarantee or the
Declaration, then (a) Hartford Life shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto (other than (i) repurchases, redemptions
or other acquisitions of shares of capital stock of Hartford Life in connection
with any employment contract, benefit plan or other similar arrangement with or
for the benefit of employees, officers, directors or consultants, (ii) as a
result of an exchange or conversion of any class or series of Hartford Life's
capital stock for any other class or series of Hartford Life's capital stock,
(iii) the purchase of fractional interests in shares of Hartford Life's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, or (iv) distributions of rights under
any shareholders rights plan adopted by Hartford Life) and (b) Hartford Life
shall not make any payment of interest on, or principal of (or premium, if any,
on), or repay, repurchase or redeem, any debt securities issued by Hartford Life
which rank pari passu with or junior to the Corresponding Junior Subordinated
Debt Securities or make any guarantee payment with respect thereto. Each
Guarantee, however, will except from the foregoing any stock dividends paid by
Hartford Life where the dividend stock is the same stock as that on which the
dividend is being paid.
MODIFICATION OF GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Guarantee may be amended only with the prior approval of the holders of not
less than a majority in aggregate liquidation amount of the outstanding
Preferred Securities. The manner of obtaining any such approval of holders of
such Preferred Securities will be as set forth in an accompanying Prospectus
Supplement. All guarantees and agreements contained in each Guarantee shall bind
the successors, assignees, receivers, trustees and representatives of Hartford
Life and shall inure to the benefit of the holders of the Preferred Securities
then outstanding.
EVENTS OF DEFAULT
An Event of Default under each Guarantee will occur upon the failure of
Hartford Life to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the related Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee Trustee's rights under the Guarantee, any holder of related
Preferred Securities may directly institute a legal proceeding against Hartford
Life to enforce the Guarantee Trustee's rights under the Guarantee without first
instituting a legal proceeding against the Trusts, the Guarantee Trustee or any
other person or entity. A holder of Preferred Securities may also directly
institute a legal proceeding against Hartford Life to enforce such holder's
right to receive payment under the Guarantee without first (i) directing the
Guarantee Trustee to enforce the terms of the Guarantee or (ii) instituting a
legal proceeding against related Trust or any other person or entity.
Hartford Life will be required to provide annually to the Guarantee Trustee
a statement as to the performance by Hartford Life of certain of its obligations
under the related Guarantee and as to any default in such performance.
TERMINATION OF THE GUARANTEE
Each Guarantee will terminate as to the related Preferred Securities upon
full payment of the Redemption Price of all such Preferred Securities, upon
distribution of the Corresponding Junior Subordinated Debt Securities to the
holders of such Preferred Securities or upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of the related Trust. Each
Guarantee will continue to be
36
80
effective or will be reinstated, as the case may be, if at any time any holder
of the related Preferred Securities must restore payment of any sums paid under
such Preferred Securities or such Guarantee.
STATUS OF THE GUARANTEE
Each Guarantee will constitute an unsecured obligation of Hartford Life and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Hartford Life, including Senior Indebtedness (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by
Hartford Life and with any guarantee now or hereafter entered into by Hartford
Life in respect of any preferred or preference stock of any subsidiary of
Hartford Life and (iii) senior to Hartford Life's common stock. The terms of the
related Preferred Securities provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of the
related Guarantee.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
a Guarantee, undertakes to perform only such duties as are specifically set
forth in such Guarantee and, after default with respect to such Guarantee, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by a
Guarantee at the request of any holder of the related Preferred Securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby.
37
81
PLAN OF DISTRIBUTION
Hartford Life may sell any Debt Securities, Preferred Stock, Class A Common
Stock, Stock Purchase Contracts, Stock Purchase Units and Junior Subordinated
Debt Securities and the Trusts may sell any of the Preferred Securities being
offered hereby in any one or more of the following ways from time to time: (i)
through agents; (ii) to or through underwriters; (iii) through dealers; and (iv)
directly by Hartford Life or the Trusts, as the case may be, to purchasers.
The Prospectus Supplement with respect to the Offered Securities will set
forth the terms of the offering of the Offered Securities, including the name or
names of any underwriters, dealers or agents; the purchase price of the Offered
Securities and the proceeds to Hartford Life and/or the Trusts from such sale;
any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation; any initial public offering
price and any discounts or concession allowed or reallowed or paid to dealers;
and any securities exchange on which such Offered Securities may be listed. Any
initial public offering price, discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The distribution of the Offered Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices.
Sales of Class A Common Stock offered hereby may be effected from time to
time in one or more transactions on the NYSE or in negotiated transactions or a
combination of such methods of sale, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at other negotiated
prices.
Offers to purchase Offered Securities may be solicited by agents designated
by Hartford Life and/or the Trusts from time to time. Any such agent involved in
the offer or sale of the Offered Securities in respect of which this Prospectus
is delivered will be named, and any commissions payable by Hartford Life and/or
the Trusts to such agent, will be set forth in the applicable Prospectus
Supplement. Unless otherwise indicated in such Prospectus Supplement, any such
agent will be acting on a reasonable best efforts basis for the period of its
appointment. Any such agent may be deemed to be an underwriter, as that term is
defined in the Securities Act, of the Offered Securities so offered and sold.
If Offered Securities are sold by means of an underwritten offering,
Hartford Life and/or the Trusts will execute an underwriting agreement with an
underwriter or underwriters at the time an agreement for such sale is reached,
and the names of the specific managing underwriter or underwriters, as well as
any other underwriters, the respective amounts underwritten and the terms of the
transaction, including commissions, discounts and any other compensation of the
underwriters and dealers, if any, will be set forth in the applicable Prospectus
Supplement which will be used by the underwriters to make resales of the Offered
Securities in respect of which this Prospectus is being delivered to the public.
If underwriters are utilized in the sale of any Offered Securities in respect of
which this Prospectus is being delivered, such Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at fixed
public offering prices or at varying prices determined by the underwriters at
the time of sale. Offered Securities may be offered to the public either through
underwriting syndicates represented by managing underwriters or directly by the
managing underwriters. If any underwriter or underwriters are utilized in the
sale of the Offered Securities, unless otherwise indicated in the applicable
Prospectus Supplement, the underwriting agreement will provide that the
obligations of the underwriters are subject to certain conditions precedent and
that the underwriters with respect to a sale of Offered Securities will be
obligated to purchase all such Offered Securities if any are purchased.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, Hartford Life and/or the Trusts will sell
such Offered Securities to the dealer as principal. The dealer may then resell
such Offered Securities to the public at varying prices to be determined by such
dealer at the time of resale. Any such dealer may be deemed to be an
underwriter, as such term is defined in the
38
82
Securities Act, of the Offered Securities so offered and sold. The name of the
dealer and the terms of the transaction will be set forth in the Prospectus
Supplement relating thereto.
Offers to purchase Offered Securities may be solicited directly by Hartford
Life and/or the Trusts and the sale thereof may be made by Hartford Life and/or
the Trusts directly to institutional investors or others, who may be deemed to
be underwriters within the meaning of the Securities Act with respect to any
resale thereof. The terms of any such sales will be described in the Prospectus
Supplement relating thereto.
Offered Securities may also be offered and sold, if so indicated in the
applicable Prospectus Supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more firms ("remarketing firms"), acting as principals
for their own accounts or as agents for Hartford Life. Any remarketing firm will
be identified and the terms of its agreement, if any, with Hartford Life and/or
the Trusts and its compensation will be described in the applicable Prospectus
Supplement. Remarketing firms may be deemed to be underwriters, as that term is
defined in the Securities Act, in connection with the Offered Securities
remarketed thereby.
If so indicated in the applicable Prospectus Supplement, Hartford Life
and/or the Trusts may authorize agents and underwriters to solicit offers by
certain institutions to purchase Offered Securities from Hartford Life at the
public offering price set forth in the applicable Prospectus Supplement pursuant
to delayed delivery contracts providing for payment and delivery on the date or
dates stated in the applicable Prospectus Supplement. Such delayed delivery
contracts will be subject to only those conditions set forth in the applicable
Prospectus Supplement. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters and agents soliciting purchases of
Offered Securities pursuant to delayed delivery contracts accepted by Hartford
Life and/or the Trusts.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements with Hartford Life to indemnification by Hartford Life
against certain liabilities, including liabilities under the Securities Act, or
to contribution with respect to payments which such agents, underwriters,
dealers and remarketing firms may be required to make in respect thereof.
Each series of Offered Securities will be a new issue and, other than the
Class A Common Stock which is listed on the NYSE, will have no established
trading market. Hartford Life and/or the Trusts may elect to list any series of
Offered Securities on an exchange, and in the case of the Class A Common Stock,
on any additional exchange, but, unless otherwise specified in the applicable
Prospectus Supplement, Hartford Life and/or the Trusts shall not be obligated to
do so.
Agents, underwriters, dealers, and remarketing firms may be customers of,
engage in transactions with, or perform services for, Hartford Life and its
subsidiaries in the ordinary course of business.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, certain
legal matters will be passed upon for Hartford Life by Lynda Godkin, General
Counsel of Hartford Life and for the Trusts by Richards, Layton & Finger, P.A.,
special Delaware counsel to Hartford Life and the Trusts and for any
underwriters or agents by counsel to be named in the applicable Prospectus
Supplement.
EXPERTS
The audited consolidated financial statements and schedules of Hartford
Life, Inc. and subsidiaries as of December 31, 1996 and 1997 and for the three
years in the period ended December 31, 1997 incorporated by reference herein and
in the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein and in the Registration
Statement in reliance upon the authority of said firm as experts in giving said
report.
39
83
- ------------------------------------------------------------
- ------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS
SUPPLEMENT IS AN OFFER TO SELL ONLY THE PREFERRED SECURITIES OFFERED HEREBY, BUT
ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS CURRENT ONLY AS OF ITS
DATE.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Summary Information -- Q&A................. S-1
Risk Factors............................... S-5
Hartford Life, Inc......................... S-7
Hartford Life Capital II................... S-8
Recent Developments........................ S-9
Use of Proceeds............................ S-10
Accounting Treatment....................... S-10
Capitalization............................. S-11
Ratio of Earnings to Fixed Charges......... S-12
Selected Financial Information............. S-13
Description of the Preferred Securities.... S-14
Description of the Series B Junior
Subordinated Debt Securities............. S-26
Description of Guarantee................... S-32
Relationship Among the Preferred
Securities, the Series B Junior
Subordinated Debt Securities and the
Guarantee................................ S-35
Description of Hartford Life's Capital
Stock.................................... S-37
United States Federal Income Tax
Consequences............................. S-37
Underwriting............................... S-40
Validity of the Preferred Securities....... S-42
Experts.................................... S-42
Forward-Looking Statements................. S-42
PROSPECTUS
Available Information...................... 3
Forward Looking Statements................. 4
Financial Statements of the Trusts......... 4
Incorporation of Certain Documents by
Reference................................ 4
Hartford Life, Inc......................... 5
Certain Provisions of the Certificate of
Incorporation and By-Laws of Hartford
Life..................................... 6
The Trusts................................. 10
Use of Proceeds............................ 11
Ratios of Earnings to Fixed Charges and
Combined Fixed Charges and Preferred
Stock Dividends.......................... 11
Description of Debt Securities............. 12
Description of Capital Stock............... 22
Description of Warrants.................... 28
Description of Stock Purchase Contracts and
Stock Purchase Units..................... 29
Description of Junior Subordinated Debt
Securities and Corresponding Junior
Subordinated Debt Securities............. 29
Description of Preferred Securities........ 33
Description of Guarantee................... 35
Plan of Distribution....................... 38
Legal Opinions............................. 39
Experts.................................... 39
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
8,000,000 PREFERRED SECURITIES
HARTFORD LIFE CAPITAL II
7.625% TRUST PREFERRED SECURITIES,
SERIES B (TRUPS(R))
(LIQUIDATION AMOUNT $25.00
PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT
DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS BY
HARTFORD LIFE, INC.
[HARTFORD LIFE LOGO]
------------
PROSPECTUS SUPPLEMENT
FEBRUARY 27, 2001
------------
Joint Book-Running Managers
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
UBS WARBURG LLC
- ------------------------------------------------------------
- ------------------------------------------------------------