1
Filed Pursuant to Rule 424(b)(1)
Registration Nos. 333-56283, 333-56283-01,
333-56283-02, and 333-56283-03
PROSPECTUS SUPPLEMENT
(To Prospectus dated June 24, 1998)
10,000,000 SECURITIES
HARTFORD LIFE CAPITAL I
7.20% TRUST PREFERRED SECURITIES, SERIES A (TRUPS(R))
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
HARTFORD LIFE, INC.
[HARTFORD LIFE LOGO]
HARTFORD LIFE
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The 7.20% Trust Preferred Securities, Series A (TRUPS(R)) (the "Series A
Preferred Securities") offered hereby represent preferred undivided beneficial
interests in the assets of Hartford Life Capital I, a statutory business trust
created under the laws of the State of Delaware ("Hartford Life Capital I" or
the "Trust"). Hartford Life, Inc., a Delaware corporation ("Hartford Life" or
the "Company"), will directly or indirectly own all the common securities (the
"Series A Common Securities" and, together with the Series A Preferred
Securities, the "Trust Securities") representing common undivided beneficial
interests in the assets of Hartford Life Capital I. Hartford Life Capital I
exists for the sole purposes of issuing the Series A Preferred Securities and
Series A Common Securities, investing the proceeds thereof in an equivalent
amount of 7.20% junior subordinated deferrable interest debentures due June 30,
2038 (the "Series A Junior Subordinated Debt Securities") of the Company and
engaging in those activities necessary or incidental thereto.
(continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-9 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE SERIES A
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application has been made to list the Series A Preferred Securities on the
New York Stock Exchange, Inc. (the "New York Stock Exchange"). If approved for
listing, trading of the Series A Preferred Securities on the New York Stock
Exchange is expected to commence within a 30-day period after the initial
delivery of the Series A Preferred Securities. See "Underwriting."
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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 SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
========================================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO HARTFORD
OFFERING PRICE(1) COMMISSIONS(2) LIFE CAPITAL I(3)(4)
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Per Preferred Security $25.00 (3) $25.00
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Total $250,000,000 (3) $250,000,000
========================================================================================================================
(1) Plus accrued distributions, if any, from June 29, 1998.
(2) For information regarding indemnification of the Underwriters, see
"Underwriting."
(3) Because the proceeds of the sale of the Series A Preferred Securities will
be invested in the Series A Junior Subordinated Debt Securities, the
Company has agreed to pay to the Underwriters, as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds, $0.7875 per Series A Preferred Security (or $7,875,000 in
the aggregate). See "Underwriting."
(4) Expenses of the offering, which are payable by the Company, are estimated
to be $400,000.
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The Series A Preferred Securities offered hereby are being offered by the
several Underwriters named herein, subject to prior sale, when, as and if
accepted by them and subject to certain conditions. It is expected that delivery
of the Series A Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about June 29,
1998.
"TRUPS(R)" is a registered service mark of Salomon Brothers Inc
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SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JUNE 24, 1998
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(continued from previous page)
Upon the event of a default under the Declaration (as defined herein), the
holders of Series A Preferred Securities will have a preference over the holders
of the Series A Common Securities with respect to payments in respect of
distributions and payments upon redemption, liquidation and otherwise.
Holders of the Series A Preferred Securities are entitled to receive
cumulative cash distributions at an annual rate of 7.20% of the liquidation
amount of $25 per Series A Preferred Security, accruing from, and including,
June 29, 1998 and payable quarterly in arrears on January 15, April 15, July 15
and October 15 of each year, commencing July 15, 1998 ("Distributions"). The
payment of distributions out of monies held by Hartford Life Capital I and
payments on liquidation of Hartford Life Capital I or the redemption of Series A
Preferred Securities out of monies held by Hartford Life Capital I, as set forth
below, are irrevocably guaranteed by the Company (the "Guarantee") to the extent
described under "Description of Guarantee." The Guarantee will be a guarantee on
a subordinated basis with respect to the Series A Preferred Securities from the
time of issuance of the Series A 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 I, except to the
extent Hartford Life Capital I shall have funds available therefor. The Company
has through the Guarantee, the Series A Junior Subordinated Debt Securities, the
Subordinated Indenture and the Declaration, taken together, fully, irrevocably
and unconditionally guaranteed the obligations of the Trust under the Series A
Preferred Securities. The obligations of the Company under the Guarantee rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including Senior Indebtedness (as defined herein), (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any subsidiary of the Company
and (iii) senior to the Company's common stock. The obligations of the Company
under the Series A Junior Subordinated Debt Securities are subordinate and
junior in right of payment to all present and future Senior Indebtedness of the
Company. Because the Company is a non-operating holding company, and therefore
relies upon dividends from its subsidiaries, its obligations also will be
effectively subordinated to all existing and future liabilities and obligations
of the Company's subsidiaries. As of March 31, 1998, the aggregate amount of
Senior Indebtedness was approximately $700 million. The terms of the Series A
Junior Subordinated Debt Securities place no limitation on the senior debt that
may be incurred by the Company.
The distribution rate and the distribution payment date and other payment
dates for the Series A Preferred Securities will correspond to the interest rate
and interest payment dates and other payment dates on the Series A Junior
Subordinated Debt Securities, which will be the sole assets of Hartford Life
Capital I. As a result, if principal or interest is not paid on the Series A
Junior Subordinated Debt Securities by the Company, no amounts will be paid on
the Series A Preferred Securities because Hartford Life Capital I will not have
sufficient funds to make distributions on the Series A Preferred Securities. In
such event, the Guarantee will not apply to such distributions until Hartford
Life Capital I has sufficient funds available therefor.
The Company has the right to defer payments of interest on the Series A
Junior Subordinated Debt Securities by extending the interest payment period on
the Series A Junior Subordinated Debt Securities at any time for up to 20
consecutive quarters (each, an "Extension Period"); provided, that no Extension
Period may extend beyond the maturity of the Series A Junior Subordinated Debt
Securities. If interest payments are so deferred, distributions on the Series A
Preferred Securities will also be deferred. During any Extension Period,
distributions on the Series A Preferred Securities will continue to accrue with
interest thereon (to the extent permitted by applicable law) at an annual rate
of 7.20% per annum compounded quarterly. Additionally, during any Extension
Period, holders of Series A Preferred Securities will be required to include
deferred interest income in the form of original issue discount ("OID") in their
gross income for United States federal income tax purposes in advance of receipt
of the cash distributions with respect to such deferred interest payments. There
could be several Extension Periods of varying lengths throughout the term of the
Series A Junior Subordinated Debt Securities. See "Description of the Series A
Junior Subordinated Debt Securities -- Option to Extend Interest Payment
Period," "Risk Factors-- Option to Extend Interest
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Payment Period" and "Certain Federal Income Tax Considerations -- Interest
Income and Original Issue Discount."
The Series A Junior Subordinated Debt Securities are redeemable by the
Company, (i) in whole or in part, from time to time, on or after June 30, 2003,
or (ii) at any time, in whole but not in part, in certain circumstances upon the
occurrence of a Special Event (as defined herein), in either case, at a
redemption price equal to accrued and unpaid interest on the Series A Junior
Subordinated Debt Securities so redeemed to the date fixed for redemption plus
the principal amount thereof; provided, that, prior to June 30, 2003, the
Company shall also have the right to redeem the Series A 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 Series A Junior Subordinated Debt
Securities so redeemed to the date fixed for redemption, plus the greater of (a)
the principal amount thereof or (b) an amount equal to the Discounted Remaining
Payments to Initial Optional Prepayment Date (as defined herein). If not
previously redeemed, the Series A Junior Subordinated Debt Securities will
mature on June 30, 2038. See "Description of the Series A Preferred
Securities -- Special Event Redemption" and "Description of the Series A Junior
Subordinated Debt Securities."
If the Company redeems Series A Junior Subordinated Debt Securities,
whether at maturity or upon an earlier redemption as described herein, Hartford
Life Capital I must redeem Trust Securities on a pro rata basis having an
aggregate liquidation amount equal to the aggregate principal amount plus
accrued and unpaid interest of the Series A Junior Subordinated Debt Securities
so redeemed. The redemption price (the "Redemption Price") of the Trust
Securities shall be equal to the proceeds from the related redemption of Series
A Junior Subordinated Debt Securities. See "Description of the Series A
Preferred Securities -- Mandatory Redemption of Trust Securities." The Company
will have the right at any time to dissolve the Trust and cause the Series A
Junior Subordinated Debt Securities to be distributed to the holders of the
Trust Securities. If the Series A Junior Subordinated Debt Securities are
distributed to the holders of the Series A Preferred Securities, the Company
will use its best efforts to have the Series A Junior Subordinated Debt
Securities listed on the New York Stock Exchange or on such other exchange as
the Series A Preferred Securities are then listed. See "Description of the
Series A Preferred Securities -- Distribution of the Series A Junior
Subordinated Debt Securities."
In the event of the involuntary or voluntary dissolution, winding up or
termination of Hartford Life Capital I, the holders of the Series A Preferred
Securities will be entitled to receive for each Preferred Security a liquidation
amount of $25 plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment, unless, in connection with such dissolution,
the Series A Junior Subordinated Debt Securities are distributed to the holders
of the Series A Preferred Securities. See "Description of the Series A Preferred
Securities -- Liquidation Distribution Upon Dissolution."
This Prospectus Supplement, together with an appropriate Prospectus, may be
used by Salomon Brothers Inc, Smith Barney Inc., or any successor thereto (the
"Salomon Smith Barney Subsidiaries") in connection with offers and sales of an
indeterminate amount of the Series A Preferred Securities in market-making
transactions at negotiated prices related to prevailing market prices at the
time of sale. Any Salomon Smith Barney Subsidiary may act as principal or agent
in such transactions.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SERIES A
PREFERRED SECURITIES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION
WITH THE OFFERING AND MAY BID FOR, AND PURCHASE, THE SERIES A PREFERRED
SECURITIES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
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SUMMARY
The following information is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus (including the documents incorporated by reference
herein).
THE COMPANY
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 and retirement 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. According to the latest publicly
available data, with respect to the United States, the Company is the largest
writer of both total individual annuities and individual variable annuities
based on sales for the year ended December 31, 1997, the fourth largest
consolidated life insurance company based on statutory assets as of December 31,
1997, and the second largest writer of group long-term disability insurance
based on premiums written for the year ended December 31, 1997. The Company has
achieved rapid growth of assets by pursuing a strategy of selling diverse and
innovative products through multiple distribution channels, achieving cost
efficiencies through economies of scale and improved technology, maintaining
effective risk management and prudent underwriting techniques and capitalizing
on its brand name and customer recognition. The Company's strong position in
each of its core businesses provides an opportunity to increase the sale of its
products and services as individuals increasingly save and plan for retirement,
protect their families against disability or death and prepare their estates for
an efficient transfer of wealth between generations.
On May 22, 1997, the Company completed an initial public offering of its
common stock and became a public company that is indirectly majority-owned by
The Hartford Financial Services Group, Inc. ("The Hartford"). The Hartford
beneficially owns all of the outstanding shares of Class B Common Stock of the
Company, representing approximately 81.4% of the total equity interest in the
Company, and approximately 95.6% of the combined voting power of the outstanding
Class A and Class B Common Stock as of May 31, 1998. For further description of
the Company's corporate structure, see "Hartford Life, Inc." in the accompanying
Prospectus.
The principal offices of the Company are located at 200 Hopmeadow Street,
Simsbury, Connecticut 06089 and its telephone number is (860) 843-7716.
THE TRUST
Hartford Life Capital I is a statutory business trust created under
Delaware law pursuant to (i) a declaration of trust, dated as of June 3, 1998,
executed by the Company, as sponsor (the "Sponsor"), and the trustees of
Hartford Life Capital I 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. Such declaration will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part. The Declaration will be qualified
as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Series A Preferred Securities, the
purchasers thereof will own all of the Series A Preferred Securities. See
"Description of the Series A Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." The Company will directly or
indirectly acquire Series A Common Securities in an aggregate liquidation amount
equal to 3% or more of the total capital of Hartford Life Capital I. Hartford
Life Capital I exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
Trust, (ii) investing the gross proceeds of the Trust Securities in the Series A
Junior Subordinated Debt Securities and (iii) engaging in only those other
activities necessary or incidental thereto.
S-4
5
Hartford Life Capital I has a term of approximately 55 years, but may
dissolve earlier as provided in the Declaration. Hartford Life Capital I's
business and affairs are conducted by its trustees, each appointed by the
Company as holder of the Series A Common Securities. Pursuant to the
Declaration, the number of trustees of Hartford Life Capital I 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
Institutional Trustee and the Delaware Trustee, the "Hartford Life Capital I
Trustees") will be persons who are employees or officers of, or who are
affiliated with the Company. 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 Series A
Common Securities. Wilmington Trust Company will also act as Trust Indenture Act
indenture trustee (the "Guarantee Trustee") under the Guarantee, and as Trust
Indenture Act indenture trustee (the "Subordinated Indenture Trustee") under the
Subordinated Indenture pursuant to which the Series A Junior Subordinated Debt
Securities are issued. See "Description of Guarantee" and "Description of the
Series A Junior Subordinated Debt Securities."
The Institutional Trustee will hold title to the Series A 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 pursuant to which the Series A Junior Subordinated Debt
Securities are issued. 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 Series A 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 Series A Preferred
Securities. The Company, as the direct or indirect holder of all the Series A
Common Securities, will have the right, subject to certain restrictions
contained in the Declaration, to appoint, remove or replace any Hartford Life
Capital I Trustee and to increase or decrease the number of Hartford Life
Capital I Trustees. The Company will pay all fees and expenses related to
Hartford Life Capital I and the offering of the Trust Securities. See
"Description of the Series A Junior Subordinated Debt Securities -- Certain Fees
and Expenses."
The rights of the holders of the Series A Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Series A Preferred Securities."
The principal place of business of the Delaware Trustee is c/o Wilmington
Trust Company, Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration. The principal place
of business of the Trust shall be c/o Hartford Life, Inc., 200 Hopmeadow Street,
Simsbury, Connecticut 06089, and its telephone number is (860) 843-7716.
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SERIES A PREFERRED SECURITIES OFFERING
General.................... The Series A Preferred Securities represent
undivided beneficial interests in Hartford Life
Capital I's assets, which will consist solely of
the Series A Junior Subordinated Debt Securities.
The Series A Junior Subordinated Debt Securities,
in which the proceeds of the Series A Preferred
Securities offered hereby will be invested, mature
on June 30, 2038, unless the Series A Junior
Subordinated Debt Securities are redeemed by the
Company prior to such maturity as described under
"Description of the Series A Preferred
Securities -- Mandatory Redemption of Trust
Securities" and "-- Special Event Redemption."
Distributions.............. The distributions payable on each Series A
Preferred Security will be fixed at a rate per
annum of 7.20% of the stated liquidation amount of
$25 per Series A Preferred Security, will be
cumulative, will accrue from June 29, 1998, the
date of issuance of the Series A Preferred
Securities, and will be payable quarterly in
arrears, on January 15, April 15, July 15 and
October 15 of each year, commencing July 15, 1998.
See "Description of the Series A Preferred
Securities -- Distributions."
Option to Extend Interest
Payment Period........... The Company has the right, at any time, and from
time to time, to defer payments of interest on the
Series A Junior Subordinated Debt Securities for a
period not exceeding 20 consecutive quarters;
provided, that no Extension Period may extend
beyond the maturity date of the Series A Junior
Subordinated Debt Securities. If the Company
extends the interest payment period, quarterly
distributions on the Series A Preferred Securities
would be deferred (though such distributions would
continue to accrue with interest thereon compounded
quarterly, since interest would continue to accrue
on the Series A Junior Subordinated Debt
Securities) during any such extended interest
payment period. If the Company exercises its right
to extend an interest payment period, then (a) the
Company 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, and (b)
the Company 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 the Company or its subsidiaries which
rank pari passu with or junior to the Series A
Junior Subordinated Debt Securities. The foregoing,
however, will not apply (i) to any stock dividends
paid by the Company where the dividend stock is the
same stock as that on which the dividend is being
paid or (ii) in certain other limited
circumstances. See "Description of the Series A
Junior Subordinated Debt Securities -- Option to
Extend Interest Payment Period". Prior to the
termination of any Extension Period, the Company
may further extend such Extension Period; provided,
that such Extension Period together with all such
previous and further extensions thereof may not
exceed 20 consecutive quarters or the maturity date
of the Series A Junior Subordinated Debt
Securities. Upon the termination of any Extension
Period and the payment of all amounts then due, the
Company may commence a new Extension Period,
subject to the foregoing requirements.
See "Description of the Series A Junior
Subordinated Debt Securities -- Interest" and
"-- Option to Extend Interest Payment Period."
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Should an Extension Period occur, holders of Series
A Preferred Security holders will continue to
recognize interest income for United States federal
income tax purposes. As a result, such holders will
be required to include such interest in gross
income for United States federal income tax
purposes in advance of the receipt of cash, and
such holders will not receive the cash from
Hartford Life Capital I related to such income if
such holders dispose of Series A Preferred
Securities prior to the record date for payment of
distributions. See "Certain Federal Income Tax
Considerations -- Interest Income and Original
Issue Discount."
Redemption of Series A
Junior Subordinated Debt
Securities............... The Company has the right to redeem the Series A
Junior Subordinated Debt Securities (i) on or after
June 30, 2003, in whole at any time or in part from
time to time or (ii) at any time, in whole but not
in part, upon the occurrence of a Special Event (as
defined herein) as described under "Description of
the Series A Preferred Securities--Special Event
Redemption," in each case at a redemption price
equal to accrued and unpaid interest on the Series
A Junior Subordinated Debt Securities so redeemed
to the date fixed for redemption plus the principal
amount thereof; provided, that, prior to June 30,
2003, the Company shall also have the right to
redeem the Series A 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 Series A Junior Subordinated Debt
Securities so redeemed to the date fixed for
redemption, plus the greater of (a) the principal
amount thereof and (b) an amount equal to the
Discounted Remaining Payments to Initial Optional
Prepayment Date (as defined herein). See
"Description of the Series A Junior Subordinated
Debt Securities -- Optional Redemption." If not
previously redeemed, the Series A Junior
Subordinated Debt Securities will mature on June
30, 2038. If the Company redeems any Series A
Junior Subordinated Debt Securities, whether at
maturity or upon earlier redemption, the proceeds
from such redemption will be applied by the
Institutional Trustee to redeem a like amount of
Trust Securities on a pro rata basis.
Mandatory Redemption of
Series A Preferred
Securities............... Upon the repayment of the Series A Junior
Subordinated Debt Securities, whether at maturity
or upon earlier redemption as provided in the
Subordinated Indenture, the proceeds from such
repayment will be applied by the Institutional
Trustee to redeem a like amount of Trust
Securities, upon the terms and conditions described
herein. See "Description of the Series A Preferred
Securities -- Mandatory Redemption of Trust
Securities."
Dissolution of Trust and
Distribution of Series A
Junior Subordinated Debt
Securities............... The Company will have the right at any time to
dissolve the Trust and cause the Series A Junior
Subordinated Debt Securities to be distributed to
the holders of the Trust Securities. See
"Description of the Series A
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Preferred Securities -- Distribution of the Series
A Junior Subordinated Debt Securities."
Voting Rights.............. Generally, the holders of the Series A Preferred
Securities will not have any voting rights. See
"Description of the Series A Preferred
Securities -- Voting Rights."
Subject to certain conditions, including that the
Institutional Trustee obtain the opinion of counsel
described under "Description of the Series A
Preferred Securities -- Voting Rights" prior to
taking certain actions, the holders of a majority
in aggregate liquidation amount of the Series A
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 Series
A Junior Subordinated Debt Securities, to (i)
exercise the remedies available under the
Subordinated Indenture with respect to the Series A
Junior Subordinated Debt Securities, (ii) waive any
past Indenture Event of Default that is waivable
under the Subordinated Indenture, (iii) exercise
any right to rescind or annul a declaration that
the principal of all the Series A Junior
Subordinated Debt Securities shall be due and
payable, or (iv) consent to any amendment,
modification or termination of the Subordinated
Indenture or the Series A Junior Subordinated Debt
Securities where such consent shall be required;
provided, however, that where a consent or action
under the Subordinated Indenture would require the
consent or act of a Super Majority (as defined
herein) of holders of the Series A Junior
Subordinated Debt Securities affected thereby, only
the holders of at least such Super Majority in
aggregate liquidation amount of the Series A
Preferred Securities may direct the Institutional
Trustee to give such consent or take such action.
See "Description of the Series A Preferred
Securities -- Voting Rights."
Use of Proceeds............ The proceeds from the sale of the Series A
Preferred Securities offered hereby will be used by
Hartford Life Capital I to purchase the Series A
Junior Subordinated Debt Securities issued by the
Company. The Company expects to use such proceeds
to retire $50 million of its outstanding commercial
paper and for general corporate purposes, which may
include working capital, capital expenditures,
investments in or loans to subsidiaries, possible
acquisitions or retirement of other obligations of
the Company. See "Use of Proceeds."
Listing.................... Application has been made to list the Series A
Preferred Securities on the New York Stock
Exchange. If so approved, trading of the Series A
Preferred Securities on the New York Stock Exchange
is expected to commence within a 30-day period
after the initial delivery of the Series A
Preferred Securities.
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus (including the documents incorporated by reference herein), the
matters set forth under the caption "Risk Factors" in this Prospectus Supplement
before purchasing the Series A Preferred Securities offered hereby.
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RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus Supplement and the accompanying
Prospectus (including the documents incorporated by reference herein), the
following risk factors before purchasing the Series A Preferred Securities
offered hereby.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A JUNIOR SUBORDINATED DEBT
SECURITIES AND THE GUARANTEE
The obligations of the Company under the Series A Junior Subordinated Debt
Securities are subordinate and junior in right of payment to all present and
future Senior Indebtedness of the Company and will be effectively subordinated
to all existing and future liabilities of the Company's subsidiaries. No payment
of principal (including redemption payments, if any), premium, if any, or
interest on the Series A Junior Subordinated Debt Securities may be made if (i)
any Senior Indebtedness of the Company is not paid when due and any applicable
grace period with respect to such default has ended with such default not having
been cured or waived or ceasing to exist, or (ii) the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default, until
such Senior Indebtedness is paid in full or such acceleration has been
rescinded. The Company's obligations under the Guarantee rank (i) subordinate
and junior in right of payment to all other liabilities of the Company,
including Senior Indebtedness, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any subsidiary of the Company and (iii) senior to the
Company's Common Stock. As of March 31, 1998, the Senior Indebtedness was
approximately $700 million. There are no terms in the Series A Preferred
Securities, the Series A Junior Subordinated Debt Securities or the Guarantee
that limit the Company's ability to incur additional indebtedness, including
indebtedness that ranks senior to the Series A Junior Subordinated Debt
Securities and the Guarantee. See "Description of Guarantee -- Status of the
Guarantee" and "Description of the Series A Junior Subordinated Debt
Securities -- Subordination."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act and the Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Series A Preferred Securities.
The Guarantee guarantees to the holders of the Series A Preferred
Securities the payment of (i) any accrued and unpaid distributions that are
required to be paid on the Series A Preferred Securities, to the extent Hartford
Life Capital I has funds available therefor, (ii) the Redemption Price with
respect to Series A Preferred Securities called for redemption by Hartford Life
Capital I, to the extent Hartford Life Capital I has funds available therefor,
and (iii) upon a voluntary or involuntary dissolution, winding-up or termination
of Hartford Life Capital I (other than in connection with the distribution of
Series A Junior Subordinated Debt Securities to the holders of Series A
Preferred Securities or a redemption of all the Series A Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Series A Preferred Securities to the date of the
payment or (b) the amount of assets of Hartford Life Capital I remaining
available for distribution to holders of the Series A Preferred Securities in
liquidation of Hartford Life Capital I. The holders of a majority in liquidation
amount of the Series A Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee 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, any holder of Series A Preferred Securities may directly
institute a legal proceeding against the Company to enforce the Guarantee
Trustee's rights under the Guarantee without first instituting a legal
proceeding against Hartford Life Capital I, the Guarantee Trustee or any other
person or entity. A holder of Series A Preferred Securities may also directly
institute a legal proceeding against the Company 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 Hartford Life Capital I or any other person or entity. If the
Company were to default on its obligation to pay amounts payable on the Series A
Junior Subordinated Debt Securities, Hartford Life Capital I would lack
available funds for the payment of distributions or amounts
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payable on redemption of the Series A Preferred Securities or otherwise, and, in
such event, holders of the Series A Preferred Securities would not be able to
rely upon the Guarantee for payment of such amounts. Instead, a holder of the
Series A Preferred Securities would rely on the enforcement (1) by the
Institutional Trustee of its rights as registered holder of the Series A Junior
Subordinated Debt Securities against the Company pursuant to the terms of the
Series A Junior Subordinated Debt Securities or (2) by such holder of Series A
Preferred Securities of its right against the Company to enforce payments on the
Series A Junior Subordinated Debt Securities. See "Description of Guarantee" and
"Description of the Series A Junior Subordinated Debt Securities." The
Declaration provides that each holder of Series A Preferred Securities, by
acceptance thereof, agrees to the provisions of the Declaration, of the
Guarantee (including the subordination provisions thereof) and of the
Subordinated Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF SERIES A PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Series A Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Series
A Junior Subordinated Debt Securities against the Company. In addition, the
holders of a majority in liquidation amount of the Series A 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 the Declaration, including the right to direct the Institutional Trustee
to exercise the remedies available to it as a holder of the Series A Junior
Subordinated Debt Securities. Subject to certain conditions, if the
Institutional Trustee fails to enforce its rights under the Series A Junior
Subordinated Debt Securities, any holder of Series A Preferred Securities may
directly institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Series A 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 has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Series A 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
Series A Preferred Securities may also directly institute a proceeding against
the Company for enforcement of payment to such holder of the principal of or
interest on the Series A Junior Subordinated Debt Securities having a principal
amount equal to the aggregate liquidation amount of the Series A Preferred
Securities of such holder (a "Direct Action") on or after the respective due
date specified in the Series A Junior Subordinated Debt Securities without first
(i) directing the Institutional Trustee to enforce the terms of the Series A
Junior Subordinated Debt Securities or (ii) instituting a legal proceeding
against the Company to enforce the Institutional Trustee's rights under the
Series A Junior Subordinated Debt Securities. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Series A
Preferred Securities under the Declaration to the extent of any payment made by
the Company to such holder of Series A Preferred Securities in such Direct
Action. Consequently, the Company will be entitled to payment of amounts that a
holder of Series A 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 Hartford Life Capital I. The holders of Series A
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Series A Junior Subordinated Debt Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company has the right under the Subordinated Indenture to defer
payments of interest on the Series A Junior Subordinated Debt Securities by
extending the interest payment period from time to time on the Series A Junior
Subordinated Debt Securities for an Extension Period not exceeding 20
consecutive quarterly interest periods during which no interest shall be due and
payable; provided, that no Extension Period may extend beyond the maturity of
the Series A Junior Subordinated Debt Securities. As a consequence of such an
extension, quarterly distributions on the Series A Preferred Securities would be
deferred (but despite such deferral would continue to accrue with interest
thereon compounded quarterly) by Hartford Life Capital I during any such
extended interest payment period. If the Company exercises this right
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to defer interest payments, then (a) the Company 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 the Company 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 the Company's capital stock for any other class or series of the
Company's capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, or (iv)
distribution of rights under any shareholder rights plan adopted by the
Company), and (b) the Company 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 the Company which rank pari passu with or junior to such
Series A Junior Subordinated Debt Securities. The foregoing, however, will not
apply to any stock dividends paid by the Company where the dividend stock is the
same stock as that on which the dividend is being paid. Prior to the termination
of any Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarterly interest
periods; provided, further, that no Extension Period may extend beyond the
maturity of the Series A Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the above requirements.
Consequently, there could be numerous Extension Periods of varying lengths
throughout the term of the Series A Junior Subordinated Debt Securities. See
"Description of the Series A Preferred Securities -- Distributions" and
"Description of the Series A Junior Subordinated Debt Securities -- Option to
Extend Interest Payment Period."
The junior subordinated debt securities issued from time to time pursuant
to the Subordinated Indenture in connection with the issuance of trust preferred
securities by other subsidiary trusts of the Company will contain the same
restrictive covenants described in the preceding paragraph. The effect of such
restrictive covenants will be to limit the rights of holders of Series A
Preferred Securities to receive payments with respect thereto if there has been
a deferral of interest under any such junior subordinated debt securities.
The Company believes that, for United States federal income tax purposes,
the terms and conditions of the Series A Junior Subordinated Debt Securities are
such that the likelihood that it will exercise its right to defer payments of
interest is a remote contingency, and that, therefore, the Series A Preferred
Securities should not be considered to be issued with OID unless the Company
were actually to exercise such deferral right. There is no assurance that the
Internal Revenue Service will agree with such position. See "Certain Federal
Income Tax Considerations -- Interest Income and Original Issue Discount."
Should the Company exercise its right to defer any payment of interest on
the Series A Junior Subordinated Debt Securities by extending the interest
payment period, each holder of Series A Preferred Securities will be required to
accrue income in the form of OID in respect of the deferred interest allocable
to its Series A Preferred Securities for United States federal income tax
purposes, which will be allocated but not distributed, to holders of record of
Series A Preferred Securities. As a result, during any Extension Period, each
such holder of Series A Preferred Securities will recognize income for United
States federal income tax purposes in advance of the receipt of cash and will
not receive the cash from Hartford Life Capital I related to such income if such
holder disposes of its Series A Preferred Securities prior to the record date
set to establish which holders will receive distributions of such amounts are
made. The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Series A
Junior Subordinated Debt Securities. However, should the Company exercise such
right in the future, the market price of the Series A Preferred Securities is
likely to be affected. A holder that disposes of its Series A Preferred
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its Series A
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Series A Preferred
Securities (which represent an undivided beneficial interest in the Series A
Junior Subordinated Debt Securities) may be more volatile than other similar
securities where the issuer does not have such rights to
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defer interest payments. See "Certain Federal Income Tax
Considerations -- Interest Income and Original Issue Discount" and "-- Sales or
Redemption of Series A Preferred Securities."
REDEMPTION OR DISTRIBUTION
The Company will have the right at any time to dissolve the Trust and cause
the Series A Junior Subordinated Debt Securities to be distributed to the
holders of the Trust Securities. In certain circumstances the Company has the
right to redeem the Series A Junior Subordinated Debt Securities, in which event
Hartford Life Capital I will redeem the Trust Securities on a pro rata basis to
the same extent as the Series A Junior Subordinated Debt Securities are redeemed
by the Company. See "Description of the Series A Preferred
Securities -- Distribution of the Series A Junior Subordinated Debt Securities"
and "Description of the Series A Preferred Securities -- Special Event
Redemption."
Under current United States federal income tax law, a distribution of
Series A Junior Subordinated Debt Securities upon the dissolution of Hartford
Life Capital I would not be a taxable event to holders of the Series A Preferred
Securities. See "Certain Federal Income Tax Considerations -- Distribution of
Series A Junior Subordinated Debt Securities to U.S. Holders of Series A
Preferred Securities." A dissolution of Hartford Life Capital I in which holders
of the Series A Preferred Securities receive cash would be a taxable event to
such holders. See "Certain Federal Income Tax Considerations -- Sales or
Redemption of Series A Preferred Securities."
There can be no assurance as to the market prices for the Series A
Preferred Securities or the Series A Junior Subordinated Debt Securities that
may be distributed in exchange for Series A Preferred Securities if a
dissolution or liquidation of Hartford Life Capital I were to occur.
Accordingly, the Series A Preferred Securities that an investor may purchase,
whether pursuant to the offer made hereby or in the secondary market, or the
Series A Junior Subordinated Debt Securities that a holder of Series A Preferred
Securities may receive on dissolution and liquidation of Hartford Life Capital
I, may trade at a discount to the price that the investor paid to purchase the
Series A Preferred Securities offered hereby. Because holders of Series A
Preferred Securities may receive Series A Junior Subordinated Debt Securities
upon the occurrence of a Special Event, prospective purchasers of Series A
Preferred Securities are also making an investment decision with regard to the
Series A Junior Subordinated Debt Securities and should carefully review all the
information regarding the Series A Junior Subordinated Debt Securities contained
herein and in the accompanying Prospectus. See "Description of the Series A
Preferred Securities -- Special Event Redemption" and "Description of the Series
A Junior Subordinated Debt Securities -- General."
PROPOSED TAX LAW CHANGES
From time to time, the Clinton Administration has proposed certain tax law
changes that would, among other things, generally deny interest deductions to a
corporate issuer if the debt instrument has a term exceeding 15 years (earlier
proposed tax law changes would have denied interest deductions if the debt
instrument had a term exceeding 20 years) and if such debt instrument is not
reflected as indebtedness on such issuer's consolidated balance sheet. As of the
date hereof no such proposal is pending. However, in the event similar tax law
changes were proposed and enacted in the future, and applied retroactively to
the Series A Junior Subordinated Debt Securities, such changes could give rise
to a Tax Event, which would permit the Company to cause a redemption of the
Series A Junior Subordinated Debt Securities and of the related Trust
Securities, as described more fully under "Description of the Series A Preferred
Securities -- Distribution of the Series A Junior Subordinated Debt Securities"
and "Description of the Series A Preferred Securities -- Special Event
Redemption" herein.
LIMITED VOTING RIGHTS
Holders of Series A Preferred Securities will have limited voting rights
and, subject to certain exceptions as set forth in the Declaration, will not be
entitled to vote to appoint, remove or replace, or to increase or decrease the
number of, Hartford Life Capital I Trustees, which voting rights are vested
exclusively in the
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holder of the Series A Common Securities. See "Description of the Series A
Preferred Securities -- Voting Rights."
TRADING PRICE
The Series A Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Series A Junior Subordinated Debt Securities. A holder of Series A Preferred
Securities who disposes of its Series A Preferred Securities between record
dates for payments of distributions thereon will be required to include in
income as ordinary income accrued but unpaid interest on the Series A Junior
Subordinated Debt Securities to the date of disposition, and to add such amount
to its adjusted tax basis in its pro rata share of the underlying Series A
Junior Subordinated Debt Securities deemed disposed of. Similarly, should the
Company exercise its option to defer interest payments on the Series A Junior
Subordinated Debt Securities, a holder would be required to include as ordinary
income the accrued OID through the date of disposition and add such amount to
its adjusted basis in the Series A Preferred Securities disposed of. To the
extent the selling price is less than such holder's adjusted tax basis (which
will include accrued interest or OID), such holder will recognize a capital
loss. Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes. See
"Certain Federal Income Tax Considerations -- Interest Income and Original Issue
Discount" and "-- Sales or Redemption of Series A Preferred Securities."
USE OF PROCEEDS
The proceeds from the sale of the Series A Preferred Securities offered
hereby will be used by Hartford Life Capital I to purchase the Series A Junior
Subordinated Debt Securities issued by the Company. The Company expects to use
such proceeds to retire $50 million (with an average effective interest rate of
5.6%) of its outstanding commercial paper and for general corporate purposes,
which may include working capital, capital expenditures, investments in or loans
to subsidiaries, acquisitions or retirement of other obligations of the Company.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company and its subsidiaries as of March 31, 1998 and as adjusted to give effect
to the issuance of the Series A Preferred Securities offered hereby and the use
of proceeds therefrom. The following data should be read in conjunction with the
consolidated financial statements and notes thereto of the Company and its
subsidiaries incorporated herein by reference.
AS OF MARCH 31, 1998
---------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN MILLIONS)
Short-Term Debt............................................. $ 50 $ 0
Long-Term Debt.............................................. 650 650
Company Obligated Mandatorily Redeemable Series A Preferred
Securities of Subsidiary Trust Holding Solely Parent
Junior Subordinated Debt Securities(1).................... -- 250
Equity excluding net unrealized capital gains on securities,
net of tax................................................ 1,978 1,978
Net unrealized capital gains on securities, net of tax...... 238 238
------ ------
Total Capitalization.............................. $2,916 $3,116
====== ======
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(1) As described herein, the sole assets of Hartford Life Capital I will be
$257,732,000 of 7.20% Series A Junior Subordinated Debt Securities, issued
by the Company to Hartford Life Capital I. The Series A Junior Subordinated
Debt Securities will mature on June 30, 2038. The Company owns all of the
Common Securities of Hartford Life Capital I. It is anticipated that
Hartford Life Capital I will not be subject to the reporting requirements
under the Securities and Exchange Act of 1934, as amended.
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RATIOS OF EARNINGS TO FIXED CHARGES
AND COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's and its consolidated
subsidiaries' ratios of earnings to fixed charges and ratio of earnings to
combined fixed charges and Preferred Stock dividends for the periods indicated:
FOR THE THREE
FOR THE YEAR ENDED MONTHS 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 of the Company outstanding during the periods included above.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of the Company and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of the Company. The Series A Preferred
Securities will be presented as a separate line item in the balance sheet of the
Company and disclosures concerning the Series A Preferred Securities, the
related Series A Preferred Securities Guarantee and the Series A Junior
Subordinated Debt Securities will be included in the notes to the consolidated
financial statements. For financial reporting purposes, the Company will record
Distributions payable on the Series A Preferred Securities as an expense.
DESCRIPTION OF THE SERIES A PREFERRED SECURITIES
The Series A Preferred Securities will be issued pursuant to the terms of
the Declaration. The Declaration will be qualified as an indenture under the
Trust Indenture Act. The Institutional Trustee, Wilmington Trust Company, will
act as indenture trustee under the Declaration for purposes of compliance with
the provisions of the Trust Indenture Act. The terms of the Series A Preferred
Securities will include those stated in the Declaration and those made part of
the Declaration by the Trust Indenture Act. This description supplements the
description of the general terms and provisions of the Series A Preferred
Securities set forth in the accompanying Prospectus under the caption
"Description of Preferred Securities." The following summary of the material
terms and provisions of the Series A Preferred Securities does not purport to be
complete and is subject to, and qualified in its entirety by reference to the
description in the accompanying Prospectus, the Declaration (a copy of which is
filed as an exhibit to the Registration Statement of which this Prospectus
Supplement is a part), the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes Hartford Life Capital I to issue the Trust
Securities, which represent undivided beneficial interests in the assets of
Hartford Life Capital I. All of the Series A Common Securities will be owned,
directly or indirectly, by the Company. The Series A Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the Series A
Preferred Securities, except that upon the occurrence and during the continuance
of a Declaration Event of Default, the rights of the holders of the Series A
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 Series A Preferred Securities. The Declaration does not permit
the issuance by Hartford Life Capital I of any securities other than the Trust
Securities or the incurrence of any indebtedness by Hartford Life Capital I.
Pursuant to the Declaration, the
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Institutional Trustee will hold title to the Series A Junior Subordinated Debt
Securities purchased by Hartford Life Capital I for the benefit of the holders
of the Trust Securities. The payment of distributions out of money held by
Hartford Life Capital I, and payments upon redemption of the Series A Preferred
Securities or liquidation of Hartford Life Capital I out of money held by
Hartford Life Capital I, are guaranteed by the Company to the extent described
under "Description of Guarantee." The Guarantee will be held by Wilmington Trust
Company, the Guarantee Trustee, for the benefit of the holders of the Series A
Preferred Securities. The Guarantee does not cover payment of distributions when
Hartford Life Capital I does not have sufficient available funds to pay such
distributions. In such event, the remedy of a holder of Series A Preferred
Securities is to (i) vote to direct the Institutional Trustee to enforce the
Institutional Trustee's rights under the Series A Junior Subordinated Debt
Securities or (ii) if the failure of Hartford Life Capital I to pay
distributions is attributable to the failure of the Company to pay interest or
principal on the Series A Junior Subordinated Debt Securities, institute a
proceeding directly against the Company for enforcement of payment to such
holder of the principal or interest on the Series A Junior Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Series A Preferred Securities of such holder on or after the respective
due date specified in the Series A Junior Subordinated Debt Securities. See
"-- Voting Rights."
DISTRIBUTIONS
Distributions on the Series A Preferred Securities will be fixed at a rate
per annum of 7.20% of the stated liquidation amount of $25 per Series A
Preferred Security. Distributions in arrears beyond the first date such
distributions are payable (or would be payable, if not for any Extension Period
or default by the Company on the Series A Junior Subordinated Debt Securities)
will bear interest thereon at the rate per annum of 7.20% thereof compounded
quarterly. The term "distribution" as used herein includes any such 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 Series A Preferred Securities will be cumulative, will
accrue from and including June 29, 1998, and will be payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each year (each a
"Distribution Payment Date"), commencing July 15, 1998.
The distribution rate and the Distribution Payment Dates and other payment
dates for the Series A Preferred Securities will correspond to the interest rate
and Interest Payment Dates (as defined herein) and other payment dates on the
Series A Junior Subordinated Debt Securities.
The Company has the right under the Subordinated Indenture to defer
payments of interest on the Series A Junior Subordinated Debt Securities by
extending the interest payment period from time to time on the Series A Junior
Subordinated Debt Securities for an Extension Period not exceeding 20
consecutive quarterly interest periods during which no interest shall be due and
payable; provided, that no Extension Period may extend beyond the maturity of
the Series A Junior Subordinated Debt Securities. If the Company extends the
interest payment period, quarterly distributions on the Series A Preferred
Securities would be deferred (though such distributions would continue to accrue
with interest thereon compounded quarterly, since interest would continue to
accrue on the Series A Junior Subordinated Debt Securities) during any such
extended interest payment period.
If the Company exercises its right to extend the interest payment period,
then (a) the Company 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 the Company 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 the Company's
capital stock for any other class or series of the Company's capital stock,
(iii) the purchase of fractional interests in shares of the Company'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 the Company), and (b) the Company shall
not make any
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payment of interest on or principal of (or premium, if any, on), or repay,
repurchase or redeem, any debt securities issued by the Company or its
subsidiaries which rank pari passu with or junior to the Series A Junior
Subordinated Debt Securities. The foregoing, however, will not apply to any
stock dividends paid by the Company where the dividend stock is the same stock
as that on which the dividend is being paid. Prior to the termination of any
Extension Period, the Company may further extend such Extension Period;
provided, that such Extension Period, together with all such previous and
further extensions thereof, may not exceed 20 consecutive quarterly interest
periods; provided further, that no Extension Period may extend beyond the
maturity of the Series A Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the above requirements.
Consequently, there could be numerous Extension Periods of varying lengths
throughout the term of the Series A Junior Subordinated Debt Securities. See
"Description of the Series A Junior Subordinated Debt Securities -- Interest"
and "-- Option to Extend Interest Payment Period." The Regular Trustees shall
give the holders of the Series A Preferred Securities notice of any Extension
Period upon their receipt of notice thereof from the Company. See "Description
of the Series A Junior Subordinated Debt Securities -- Option To Extend Interest
Payment Period." If distributions are deferred, the deferred distributions and
accrued interest thereon shall be paid to holders of record of the Series A
Preferred Securities as they appear on the books and records of Hartford Life
Capital I on the record date next following the termination of such deferral
period. Distributions on the Series A Preferred Securities will be made on the
dates payable to the extent that Hartford Life Capital I has funds available for
the payment of such distributions in the Property Account. Hartford Life Capital
I's funds available for distribution to the holders of the Series A Preferred
Securities will be limited to payments received from the Company on the Series A
Junior Subordinated Debt Securities. See "Description of the Series A Junior
Subordinated Debt Securities." The payment of distributions out of monies held
by Hartford Life Capital I is guaranteed by the Company to the extent set forth
under "Description of Guarantee."
Distributions on the Series A Preferred Securities will be payable to the
holders thereof as they appear on the books and records of Hartford Life Capital
I at the close of business on the relevant record dates, which, as long as the
Series A Preferred Securities remain in book-entry only form, will be one
Business Day prior to the relevant payment dates. Such distributions will be
paid through the Institutional Trustee who will hold amounts received in respect
of the Series A 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 Series A Preferred Securities do not
continue to remain in book-entry only form, the relevant record dates shall
conform to the rules of any securities exchange on which the Series A Preferred
Securities are listed and, if none, the Regular Trustees shall have the right to
select relevant record dates, which shall 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 Series A Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall 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"
shall mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) or Wilmington, Delaware
are permitted or required by any applicable law to close.
MANDATORY REDEMPTION OF TRUST SECURITIES
The Series A Preferred Securities have no stated maturity date but will be
redeemed upon the maturity of the Series A Junior Subordinated Debt Securities
or to the extent the Series A Junior Subordinated Debt Securities are redeemed.
The Series A Junior Subordinated Debt Securities will mature on June 30, 2038,
and may be redeemed, (i) in whole or in part, at any time on or after June 30,
2003, or (ii) at any time, in whole but not in part, in certain circumstances
upon the occurrence of a Special Event, in either case, at a redemption price
equal to accrued and unpaid interest on the Series A Junior Subordinated Debt
Securities so redeemed to the date fixed for redemption plus the principal
amount thereof; provided, that, prior
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to June 30, 2003, the Company shall also have the right to redeem the Series A
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 Series A Junior
Subordinated Debt Securities so redeemed to the date fixed for redemption, plus
the greater of (a) the principal amount thereof or (b) an amount equal to the
Discounted Remaining Payments to Initial Optional Prepayment Date (as defined
herein). See "Description of the Series A Junior Subordinated Debt
Securities -- Optional Redemption." Upon the maturity of the Series A Junior
Subordinated Debt Securities, the proceeds of the repayment thereof shall
simultaneously be applied to redeem all outstanding Trust Securities at the
Redemption Price. Upon the redemption of the Series A Junior Subordinated Debt
Securities, whether in whole or in part (either at the option of the Company or
pursuant to a Special Event), the proceeds from such redemption shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Series A
Junior Subordinated Debt Securities so redeemed at the Redemption Price;
provided, that holders of Trust Securities shall be given not less than 30 nor
more than 60 days' notice of such redemption. In the event that fewer than all
of the outstanding Series A Junior Subordinated Debt Securities are to be
redeemed, the Trust Securities will be redeemed pro rata as described under
"-- Book-Entry Only Issuance -- The Depository Trust Company" below.
SPECIAL EVENT REDEMPTION
"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 (a) 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 (b) any interpretation or application of, or pronouncement with
respect to, such 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 (i)
Hartford Life Capital I would be subject to United States federal income tax
with respect to income accrued or received on the Series A Junior Subordinated
Debt Securities, (ii) interest payable to Hartford Life Capital I on the Series
A Junior Subordinated Debt Securities would not be deductible, in whole or in
part, by the Company for United States federal income tax purposes or (iii)
Hartford Life Capital I would be subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practicing under the 1940 Act (as defined herein) 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 (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that Hartford Life Capital I is or will
be considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement.
If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Company
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Series A Junior Subordinated Debt Securities, in whole but not in
part, for cash within 90 days following the occurrence of such Special Event,
and, following such redemption, Trust Securities with an aggregate liquidation
amount equal to the aggregate principal amount of the Series A Junior
Subordinated Debt Securities so redeemed shall be redeemed by Hartford Life
Capital I at the Redemption Price on a pro rata basis.
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DISTRIBUTION OF THE SERIES A JUNIOR SUBORDINATED DEBT SECURITIES
The Company will have the right at any time to dissolve Hartford Life
Capital I and after satisfaction of the liabilities of creditors of Hartford
Life Capital I as provided by applicable law, cause the Series A Junior
Subordinated Debt Securities to be distributed to the holders of the Trust
Securities.
If the Series A Junior Subordinated Debt Securities are distributed to the
holders of the Series A Preferred Securities, the Company will use its best
efforts to cause the Series A Junior Subordinated Debt Securities to be listed
on the New York Stock Exchange or on such other exchange as the Series A
Preferred Securities are then listed.
After the date for any distribution of Series A Junior Subordinated Debt
Securities upon dissolution of Hartford Life Capital I, (i) the Series A
Preferred Securities will no longer be deemed to be outstanding, (ii) the
securities depositary or its nominee, as the record holder of the Series A
Preferred Securities, will receive a registered global certificate or
certificates representing the Series A Junior Subordinated Debt Securities to be
delivered upon such distribution, and (iii) any certificates representing Series
A Preferred Securities not held by the depositary or its nominee will be deemed
to represent Series A Junior Subordinated Debt Securities having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and with accrued and unpaid
interest equal to accrued and unpaid distributions on, such Series A Preferred
Securities until such certificates are presented to the Company or its agent for
transfer or reissuance.
If a dissolution and liquidation of Hartford Life Capital I were to occur,
there can be no assurance as to the market prices for either the Series A
Preferred Securities or the Series A Junior Subordinated Debt Securities that
may be distributed in exchange for the Series A Preferred Securities.
Accordingly, the Series A Preferred Securities that an investor may purchase,
whether pursuant to the offer made hereby or in the secondary market, or the
Series A Junior Subordinated Debt Securities that an investor may receive if a
dissolution and liquidation of Hartford Life Capital I were to occur, may trade
at a discount to the price that the investor paid to purchase the Series A
Preferred Securities offered hereby.
REDEMPTION PROCEDURES
Hartford Life Capital I may not redeem fewer than all of the outstanding
Series A Preferred Securities unless all accrued and unpaid distributions have
been paid on all Series A Preferred Securities for all quarterly distribution
periods terminating on or prior to the date of redemption.
If Hartford Life Capital I gives a notice of redemption in respect of the
Series A Preferred Securities (which notice will be irrevocable), then, by 12:00
noon, New York City time, on the redemption date, and if the Company has paid to
the Institutional Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Series A Junior Subordinated Debt
Securities, the Institutional Trustee will irrevocably deposit with the
securities depositary for the Series A Preferred Securities funds sufficient to
pay the applicable Redemption Price and will give the securities depositary for
the Series A Preferred Securities irrevocable instructions and authority to pay
the Redemption Price to the holders of the Series A 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 such deposit,
distributions will cease to accrue and all rights of holders of Series A
Preferred Securities so called for redemption will cease, except the right of
the holders of such Series A Preferred Securities to receive the Redemption
Price without interest on such Redemption Price.
In the event that any date fixed for redemption of Series A Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such 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 such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Series A Preferred Securities is improperly
withheld or refused and not paid either by Hartford Life Capital I, or by the
Company pursuant to the Guarantee, distributions on such Series A Preferred
Securities will continue to accrue at the then
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applicable rate from the original redemption date to the date of payment, in
which 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 Series A Preferred
Securities are to be redeemed, the Series A Preferred Securities will be
redeemed in accordance with the depositary's standard procedures. See
"-- Book-Entry Only Issuance -- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or its subsidiaries, may at
any time, and from time to time, purchase outstanding Series A Preferred
Securities by tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of Hartford Life Capital I (each a "Liquidation"), the holders of the
Series A Preferred Securities will be entitled to receive out of the assets of
Hartford Life Capital I, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $25 per Series A Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, Series A Junior Subordinated Debt
Securities in an aggregate stated principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and with accrued and unpaid interest equal to accrued and unpaid
distributions on, the Series A Preferred Securities outstanding at such time
have been distributed on a pro rata basis to the holders of such Series A
Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because Hartford Life Capital I has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by Hartford Life Capital I on the Series A Preferred Securities shall
be paid on a pro rata basis. The holders of the Series A Common Securities will
be entitled to receive distributions upon any such Liquidation pro rata with the
holders of the Series A Preferred Securities, except that if a Declaration Event
of Default has occurred and is continuing the Series A Preferred Securities
shall have a preference over the Series A Common Securities with regard to such
distributions.
Pursuant to the Declaration, Hartford Life Capital I shall dissolve (i) on
June 30, 2053, the expiration of the term of the Trust, (ii) upon the bankruptcy
of the Company or the holder of the Series A Common Securities, (iii) upon the
filing of a certificate of dissolution or its equivalent with respect to the
holder of the Series A Common Securities or the Company, or the revocation of
the charter of the holder of the Series A Common Securities or the Company and
the expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Series A Junior Subordinated Debt
Securities to the holders of Series A Preferred Securities, (v) upon the entry
of a decree of a judicial dissolution of the holder of the Series A Common
Securities, the Company or Hartford Life Capital I, or (vi) upon the redemption
of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Subordinated Indenture (an "Indenture Event
of Default") constitutes an event of default under the Declaration with respect
to the Trust Securities (a "Declaration Event of Default"); provided, that
pursuant to the Declaration the holder of the Series A Common Securities will be
deemed to have waived any Declaration Event of Default with respect to the
Series A Common Securities until all Declaration Events of Default with respect
to the Series A Preferred Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the Series
A Preferred Securities have been so cured, waived or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Series A Preferred Securities and only the holders of the Series
A Preferred Securities will have the right to direct the Institutional Trustee
with respect to certain matters under the Declaration and therefore the
Subordinated Indenture. In the event that any Declaration Event of Default with
respect to the Series A Preferred Securities is waived by the holders of the
Series A Preferred Securities as provided in the Declaration, the holders of
Series A Common Securities pursuant to
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the Declaration have agreed that such waiver also constitutes a waiver of such
Declaration Event of Default with respect to the Series A Common Securities for
all purposes under the Declaration without any further act, vote or consent of
the holders of Series A Common Securities. See "-- Voting Rights."
If the Institutional Trustee fails to enforce its rights under the Series A
Junior Subordinated Debt Securities, any holder of Series A Preferred Securities
may, to the fullest extent permitted by law, directly institute a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Series A 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 has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Series A Junior Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), then a holder of Series A Preferred Securities may also
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Series A Junior Subordinated Debt Securities
having a principal amount equal to the aggregate liquidation amount of the
Series A Preferred Securities of such holder on or after the respective due date
specified in the Series A Junior Subordinated Debt Securities without first (i)
directing the Institutional Trustee to enforce the terms of the Series A Junior
Subordinated Debt Securities or (ii) instituting a legal proceeding against the
Company to enforce the Institutional Trustee's rights under the Series A Junior
Subordinated Debt Securities. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Series A Preferred Securities
under the Declaration to the extent of any payment made by the Company to such
holder of Series A Preferred Securities in such Direct Action. Consequently, the
Company will be entitled to payment of amounts that a holder of Series A
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
Hartford Life Capital I. The holders of Series A Preferred Securities will not
be able to exercise directly any other remedy available to the holders of the
Series A Junior Subordinated Debt Securities.
Upon the occurrence of an Indenture Event of Default, the Institutional
Trustee as the sole holder of the Series A Junior Subordinated Debt Securities
will have the right under the Subordinated Indenture to declare the principal of
and interest on the Series A Junior Subordinated Debt Securities to be
immediately due and payable. The Company and Hartford Life Capital I are each
required to file annually with the Institutional Trustee an officers'
certificate as to its 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 provided under the Trust Act, the Trust Indenture Act
and as otherwise required by law and the Declaration, the holders of the Series
A Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Series A 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 Series A Junior Subordinated Debt
Securities, to (i) 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 Series A Junior Subordinated Debt Securities, (ii) waive any
past Indenture Event of Default that is waivable under Section 5.13 of the
Subordinated Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Series A Junior Subordinated Debt
Securities shall be due and payable, or (iv) consent to any amendment,
modification or termination of the Subordinated Indenture or the Series A Junior
Subordinated Debt Securities where such consent shall be required; provided,
however, that, 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 Series A Junior Subordinated Debt Securities (a "Super Majority")
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affected thereby, only the holders of at least such Super Majority in aggregate
liquidation amount of the Series A Preferred Securities may direct the
Institutional Trustee to give such consent or take such action. If the
Institutional Trustee fails to enforce its rights under the Series A Junior
Subordinated Debt Securities (other than by reason of the failure to obtain the
opinion set forth in the last sentence of this paragraph), any record holder of
Series A Preferred Securities may, to the fullest extent permitted by law,
directly institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Series A Junior Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. The Institutional Trustee
shall notify all holders of the Series A Preferred Securities of any notice of
default received from the Subordinated Indenture Trustee with respect to the
Series A Junior Subordinated Debt Securities. Such notice shall state that such
Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to 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 A Junior Subordinated Debentures,
shall not take any of the actions described in clauses (i), (ii), (iii) or (iv)
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 I 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
Series A Junior Subordinated Debt Securities, is required under the Subordinated
Indenture with respect to any amendment, modification or termination of the
Subordinated Indenture, the Institutional Trustee shall request the written
direction of the holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however, that
where any amendment, modification or termination under the Subordinated
Indenture would require the consent of a Super Majority, the Institutional
Trustee may only give such 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
Series A Junior Subordinated Debt Securities outstanding. The Institutional
Trustee shall 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 I 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 Series A Preferred Securities will
constitute a waiver of the corresponding Declaration Event of Default.
Any required approval or direction of holders of Series A Preferred
Securities may be given at a separate meeting of holders of Series A Preferred
Securities convened for such purpose, at a meeting of all 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 Series A Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Series A
Preferred Securities. Each such notice will include a statement setting forth
the following information: (i) the date of such meeting or the date by which
such action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Series A
Preferred Securities will be required for Hartford Life Capital I to redeem and
cancel Series A Preferred Securities or distribute Series A Junior Subordinated
Debt Securities in accordance with the Declaration.
Notwithstanding that holders of Series A Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Series A Preferred Securities that are owned at such time by the Company or any
entity directly or indirectly controlling or controlled by, or under direct or
indirect common control with, the Company, shall not be entitled to vote or
consent and shall, for purposes of such vote or consent, be treated as if such
Series A Preferred Securities were not outstanding.
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The procedures by which holders of Series A Preferred Securities may
exercise their voting rights are described below. See "-- Book-Entry Only
Issuance -- The Depository Trust Company."
Except in certain circumstances as set forth in the Declaration, holders of
the Series A Preferred Securities will have no rights to appoint or remove the
Hartford Life Capital I Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Series A
Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and the
Delaware Trustee); provided, that, if any proposed amendment provides for, or
the Regular Trustees otherwise propose to effect, (i) 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 (ii)
the dissolution, winding-up or termination of Hartford Life Capital I, other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities voting together as a single class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of holders of at least a majority in liquidation amount
of the Trust Securities affected thereby; provided, that, if any amendment or
proposal referred to in clause (i) above would adversely affect only the Series
A Preferred Securities or the Series A Common Securities, then only holders of
the affected class will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the approval of
holders of a majority in liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Hartford Life
Capital I to be classified for United States federal income tax purposes as
other than a grantor trust, (ii) reduce or otherwise adversely affect the powers
of the Institutional Trustee or (iii) cause Hartford Life Capital I to be deemed
an "investment company" which is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Hartford Life Capital I 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 I 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; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of Hartford Life Capital I under the
Trust Securities or (y) substitutes for the Series A Preferred Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor 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, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee, in its capacity as the holder of the Series A Junior
Subordinated Debt Securities, (iii) the Series A 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 Series A Preferred Securities
are then listed or quoted, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Series A Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized statistical
rating organization, (v) such 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 with respect to any dilution of the holders' interest in the
new entity), (vi) such successor entity has a purpose substantially identical to
that of Hartford Life Capital I, (vii) prior to such merger, consolidation,
amalgamation or replacement, Hartford Life Capital I has received an opinion of
a nationally recognized independent counsel to Hartford Life Capital I
experienced in such matters to the effect that, (A) such merger, consolidation,
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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 with respect to any dilution of
the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither Hartford Life Capital I nor
such successor entity will be required to register as an "investment company"
under the 1940 Act and (C) following such merger, consolidation, amalgamation or
replacement, Hartford Life Capital I (or such successor entity) will continue to
be classified as a grantor trust for United States federal income tax purposes;
and (viii) the Company guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, Hartford Life Capital I shall 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, such consolidation, amalgamation, merger or
replacement would cause Hartford Life Capital I 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 ("DTC") will act as securities depositary for
the Series A Preferred Securities. The Series A 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 Series A Preferred
Securities certificates, representing the total aggregate number of Series A
Preferred Securities, will be issued and will be deposited with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Series A
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 (the "Exchange Act"). DTC holds securities that its
participants ("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, thereby 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 ("Direct Participants"). 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. (the
"NASD"). 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 ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission (the "Commission").
Purchases of Series A Preferred Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit for the
Series A Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Series A Preferred Security ("Beneficial Owner") 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 Series A Preferred Securities. Transfers of ownership interests in the
Series A 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
Series A Preferred Securities, except in the event that use of the book-entry
system for the Series A Preferred Securities is discontinued.
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To facilitate subsequent transfers, all the Series A Preferred Securities
deposited by Participants with DTC are registered in the name of DTC's nominee,
Cede & Co. The deposit of Series A 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 Series A Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Series A 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 shall be sent to Cede & Co. If less than all of the
Series A Preferred Securities are being redeemed, DTC will reduce the amount of
the interest of each Direct Participant in such Series A Preferred Securities in
accordance with its procedures.
Although voting with respect to the Series A Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede & Co.
will itself consent or vote with respect to Series A Preferred Securities. Under
its usual procedures, DTC would mail an Omnibus Proxy to Hartford Life Capital I
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
Series A Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Series A 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 such 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 such payments will
be the responsibility of such Participant and not of DTC, Hartford Life Capital
I or the Company, 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 I, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as described herein, a Beneficial Owner in a global Series A
Preferred Security certificate will not be entitled to receive physical delivery
of Series A Preferred Securities. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the Series A Preferred
Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Series A Preferred Securities at any time by giving reasonable
notice to Hartford Life Capital I. Under such circumstances, in the event that a
successor securities depositary is not obtained, Series A Preferred Securities
certificates are required to be printed and delivered. Additionally, the Regular
Trustees (with the consent of the Company) may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor depositary) with
respect to the Series A Preferred Securities. In that event, certificates for
the Series A 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 the Company and Hartford Life Capital I
believe to be reliable, but neither the Company nor Hartford Life Capital I
takes responsibility for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such a default,
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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 provisions, the
Institutional Trustee is under no obligation to exercise any of the powers
vested in it by the Declaration at the request of any holder of Series A
Preferred Securities, unless offered reasonable indemnity by such holder against
the costs, expenses and liabilities which might be incurred thereby.
Notwithstanding the foregoing, the holders of Series A Preferred Securities will
not be required to offer such indemnity in the event such 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
In the event that the Series A 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 I and the Institutional Trustee
shall be entitled to treat the holders of the Series A Preferred Securities, as
their names appear in the registration books kept by the Institutional Trustee
at its corporate office, as the owners of those Series A Preferred Securities
for all purposes under the Declaration. Registration of transfers of Series A
Preferred Securities will be effected without charge by or on behalf of Hartford
Life Capital I, but upon payment (with the giving of such indemnity as Hartford
Life Capital I or the Company may require) in respect of any tax or other
government charges that may be imposed in relation to it. Hartford Life Capital
I will not be required to register or cause to be registered the transfer of
Series A Preferred Securities after such Series A Preferred Securities have been
called for redemption, or on or after the liquidation date.
GOVERNING LAW
The Declaration and the Series A 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 I in such a way so that Hartford Life Capital I will not be required to
register as an "investment company" under the 1940 Act or be characterized as
other than a grantor trust for United States federal income tax purposes. The
Company is authorized and directed to conduct its affairs so that the Series A
Junior Subordinated Debt Securities will be treated as indebtedness of the
Company for United States federal income tax purposes. In this connection, the
Company and the Regular Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of Hartford Life
Capital I or the certificate of incorporation of the Company, that each of the
Company and the Regular Trustees determine in their discretion to be necessary
or desirable to achieve such end, as long as such action does not adversely
affect the interests of the holders of the Series A Preferred Securities or vary
the terms thereof.
Holders of the Series A Preferred Securities have no preemptive or similar
rights.
DESCRIPTION OF THE SERIES A JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Series A
Junior Subordinated Debt Securities in which Hartford Life Capital I will invest
the proceeds from the issuance and sale of the Trust Securities. 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." The following description
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to: (i) the description of Junior Subordinated Debt
Securities Series A in the accompanying Prospectus; (ii) the Subordinated
Indenture dated as of June 1, 1998 (the "Base Indenture") and the First
Supplemental Indenture dated as of June 29, 1998 (together with the Base
Indenture, the "Subordinated Indenture"), between the Company and Wilmington
Trust Company, as Trustee (the "Subordinated Indenture Trustee"), the form of
which is filed as an exhibit to the Registration Statement of which this
Prospectus
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Supplement and the accompanying Prospectus form a part; and (iii) the Trust
Indenture Act. Certain capitalized terms used herein are defined in the
Subordinated Indenture.
The Company will have the right at any time to dissolve the Trust and cause
the Series A Junior Subordinated Debt Securities to be distributed to the
holders of the Trust Securities.
If the Series A Junior Subordinated Debt Securities are distributed to the
holders of the Series A Preferred Securities, the Company will use its best
efforts to have the Series A Junior Subordinated Debt Securities listed on the
New York Stock Exchange or on such other national securities exchange or similar
organization on which the Series A Preferred Securities are then listed or
quoted.
GENERAL
The Series A Junior Subordinated Debt Securities will be issued as
unsecured debt under the Subordinated Indenture. The Series A Junior
Subordinated Debt Securities will be limited in aggregate principal amount to
approximately $257,732,000, such amount being the sum of the aggregate stated
liquidation amount of the Series A Preferred Securities and the capital
contributed by the Company to Hartford Life Capital I in exchange for the Series
A Common Securities (the "Common Subscription Payment").
The Series A Junior Subordinated Debt Securities are not subject to a
sinking fund provision. The entire principal amount of the Series A Junior
Subordinated Debt Securities will mature and become due and payable, together
with any accrued and unpaid interest thereon including Compound Interest (as
defined herein) and Additional Interest (as defined herein), if any, on June 30,
2038.
If Series A Junior Subordinated Debt Securities are distributed to holders
of Series A Preferred Securities in liquidation of such holders' interests in
Hartford Life Capital I, such Series A Junior Subordinated Debt Securities will
initially be issued in the form of one or more Global Securities (as defined
under "Book-Entry and Settlement" below). As described herein, under certain
limited circumstances, Series A Junior Subordinated Debt Securities may be
issued in certificated form in exchange for a Global Security. See "Book-Entry
and Settlement" below. In the event that Series A Junior Subordinated Debt
Securities are issued in certificated form, such Series A Junior Subordinated
Debt Securities will be in denominations of $25 and integral multiples thereof
and may be transferred or exchanged at the offices described below. Payments on
Series A Junior Subordinated Debt Securities issued as a Global Security will be
made to DTC, to a successor depositary or, in the event that no depositary is
used, to a Paying Agent for the Series A Junior Subordinated Debt Securities. In
the event Series A Junior Subordinated Debt Securities are issued in
certificated form, principal and interest will be payable, the transfer of the
Series A Junior Subordinated Debt Securities will be registrable and Series A
Junior Subordinated Debt Securities will be exchangeable for Series A Junior
Subordinated Debt Securities of other denominations of a like aggregate
principal amount at the corporate trust office of the Subordinated Indenture
Trustee in New York, New York; provided, that payment of interest may be made at
the option of the Company by check mailed to the address of the persons entitled
thereto.
The Company does not intend to issue and sell the Series A Junior
Subordinated Debt Securities to any purchasers other than Hartford Life Capital
I.
There are no covenants or provisions in the Subordinated Indenture that
would afford the holders of the Series A Junior Subordinated Debt Securities
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving the Company that may
adversely affect such holders.
SUBORDINATION
The Subordinated Indenture provides that the Series A Junior Subordinated
Debt Securities are subordinated and junior in right of payment to all present
or future Senior Indebtedness of the Company. No payment of principal (including
redemption payments), premium, if any, or interest on the Series A Junior
Subordinated Debt Securities may be made if (i) any Senior Indebtedness of the
Company has not been paid
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when due and any applicable grace period with respect to such default has ended
and such default has not been cured or waived or ceased to exist, or (ii) the
maturity of any Senior Indebtedness of the Company has been accelerated because
of a default, until such Senior Indebtedness is paid in full or such
acceleration has been rescinded. Upon any distribution of assets of the Company
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 Senior Indebtedness of the Company must be paid in full before the
holders of Series A Junior Subordinated Debt Securities are entitled to receive
or retain any payment. Upon satisfaction of all claims related to all Senior
Indebtedness of the Company then outstanding, the rights of the holders of the
Series A Junior Subordinated Debt Securities will be subrogated to the rights of
the holders of Senior Indebtedness of the Company to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Series A Junior Subordinated Debt Securities are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued by the Company, (ii) all
capital lease obligations of the Company, (iii) all obligations of the Company
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of the Company and all obligations of the Company under any
conditional sale or title retention agreement (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of business),
(iv) all obligations, contingent or otherwise, of the Company 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) above of other persons for the payment of which the Company is responsible
or liable as obligor, guarantor or otherwise and (vii) all obligations of the
type referred to in clauses (i) through (vi) above of other persons secured by
any lien on any property or asset of the Company (whether or not such obligation
is assumed by the Company), except for (1) any such indebtedness that is by its
terms subordinated to or pari passu with the Series A Junior Subordinated Debt
Securities and (2) any indebtedness between or among the Company or its
affiliates, including all other debt securities and guarantees in respect of
those debt securities, issued to (a) any other Hartford Life subsidiary trust or
a trustee of such trust and (b) any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
vehicle of the Company (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 Series A Preferred Securities. Such Senior
Indebtedness shall 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. The Company is a
non-operating holding company with no significant business operations of its
own, and most of the assets of the Company are owned by its subsidiaries.
Accordingly, the Series A Junior Subordinated Debt Securities will be
effectively subordinated to all existing and future liabilities of the Company's
subsidiaries, including liabilities under contracts of insurance and annuities
written by the Company's insurance subsidiaries. Holders of Series A Junior
Subordinated Debt Securities should look only to the assets of the Company for
payments of interest and principal and premium, if any.
The Subordinated Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by the Company.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series A Junior Subordinated
Debt Securities, (i) in whole or in part, at any time, on or after June 30,
2003, or (ii) at any time, in whole but not in part, in certain circumstances
upon the occurrence of a Special Event as described under "Description of the
Series A 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 (as defined herein), if any, to the
redemption date; provided,
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that, prior to June 30, 2003, the Company shall also have the right to redeem
the Series A 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
Series A Junior Subordinated Debt Securities so redeemed to the date fixed for
redemption, plus the greater of (a) the principal amount thereof or (b) an
amount equal to the Discounted Remaining Payments to Initial Optional Prepayment
Date (as defined herein). If a partial redemption of the Series A Preferred
Securities resulting from a partial redemption of the Series A Junior
Subordinated Debt Securities would result in the delisting of the Series A
Preferred Securities, the Company may only redeem the Series A Junior
Subordinated Debt Securities in whole. See "Description of the Series A
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 Values of the amounts of interest and
principal that would have been payable by the Company pursuant to the terms of
the Series A Junior Subordinated Debt Securities on each Interest Payment Date
after the redemption date through and including June 30, 2003, assuming optional
redemption of the Series A Junior Subordinated Debt Securities on June 30, 2003.
"Current Value" means, (i) in respect of 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
(ii) in respect of any payment of principal, the present value of that amount on
the redemption date after discounting that amount on a quarterly basis from June
30, 2003. In each case, the discount rate shall be the Treasury Rate.
"Treasury Rate" means a per annum rate (expressed as a decimal and, in the
case of United States Treasury bills, converted to a per annum yield) determined
on the redemption date to be the per annum rate equal to the semiannual bond
equivalent yield to maturity (adjusted to reflect quarterly compounding in the
case of the Series A Junior Subordinated Debt Securities) for United States
Treasury securities maturing at June 30, 2003, as determined by reference to the
weekly average yield to maturity for United States Treasury securities maturing
on June 30, 2003 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 June 30, 2003, by interpolation between the most recent weekly average yields
to maturity for two series of United States Treasury securities, (i) one
maturing as close as possible to, but earlier than, June 30, 2003 and (ii) the
other maturing as close as possible to, but later than, June 30, 2003, 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 A Junior Subordinated Debt Security shall bear interest at the
rate of 7.20% per annum, from and including the original date of issuance,
payable quarterly in arrears on January 15, April 15, July 15 and October 15 of
each year (each an "Interest Payment Date"), commencing July 15, 1998 to the
person in whose name such Series A 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. In the event the Series
A Junior Subordinated Debt Securities shall cease to be held in book-entry only
form, the Company shall have the right to select record dates, which shall 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 such 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 Series A Junior Subordinated Debt Securities is not a Business
Day, then payment of the interest payable on such 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 such Business Day is in the next
succeeding calendar year, then such payment shall 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.
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OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Series A Junior Subordinated Debt Securities, to defer payments
of interest by extending the interest payment period for a period not exceeding
20 consecutive quarters; provided, that no Extension Period may extend beyond
the maturity of the Series A Junior Subordinated Debt Securities, at the end of
which Extension Period, the Company shall pay all interest then accrued and
unpaid (including any Additional Interest) together with interest thereon
compounded quarterly at the rate specified for the Series A Junior Subordinated
Debt Securities to the extent permitted by applicable law ("Compound Interest");
provided further, that during any such Extension Period, (a) the Company 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
the Company 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 the Company's capital stock for any other class or series of the
Company's capital stock, (iii) the purchase of fractional interests in shares of
the Company'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 the
Company), and (b) the Company 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 the Company or its subsidiaries which rank pari passu with
or junior to the Series A Junior Subordinated Debt Securities. The foregoing,
however, will not apply to any stock dividends paid by the Company where the
dividend stock is the same stock as that on which the dividend is being paid.
Prior to the termination of any Extension Period, the Company may further defer
payments of interest by extending such Extension Period; provided, however, that
such Extension Period, including all such previous and further extensions, may
not exceed 20 consecutive quarterly interest periods (including the quarterly
interest period in which notice of such Extension Period (as described below) is
given); provided further, that no Extension Period may extend beyond the
maturity of the Series A Junior Subordinated Debt Securities. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may commence a new Extension Period, subject to the terms set forth in
this section. No interest during an Extension Period, except at the end thereof,
shall be due and payable. The Company has no present intention of exercising its
right to defer payments of interest by extending the interest payment period on
the Series A Junior Subordinated Debt Securities. If the Institutional Trustee
shall be the sole holder of the Series A Junior Subordinated Debt Securities,
the Company shall give the Regular Trustees and the Institutional Trustee notice
of its selection of such Extension Period one Business Day prior to the earlier
of (i) the date distributions on the Series A Preferred Securities would be
payable, if not for such Extension Period, or (ii) 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 Series A Preferred Securities
of the record date or the date such distribution would be payable, if not for
such Extension Period, but in any event one Business Day prior to such record
date. The Regular Trustees shall give notice of the Company's selection of such
Extension Period to the holders of the Series A Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Series A Junior
Subordinated Debt Securities, the Company shall give the holders of the Series A
Junior Subordinated Debt Securities notice of its selection of such Extension
Period ten Business Days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date upon which the Company is required to
give notice to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Series A Junior Subordinated Debt Securities
of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time Hartford Life Capital I shall be 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, the Company will pay as additional interest ("Additional
Interest") on the Series A Junior Subordinated Debt Securities such additional
amounts as shall be required so that the net amounts received and retained by
Hartford Life Capital I after paying any such taxes, duties,
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assessments or other governmental charges will be not less than the amounts
Hartford Life Capital I would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Series A Junior Subordinated Debt
Securities, will have the right to declare the principal of and the interest on
the Series A Junior Subordinated Debt Securities (including any Compound
Interest and Additional Interest, if any) 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 Series A 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 Series A Preferred Securities in certain circumstances have the right
to direct the Institutional Trustee to exercise its rights as the holder of the
Series A Junior Subordinated Debt Securities. See "Description of the Series A
Preferred Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Series A Junior Subordinated Debt
Securities on the date such interest or principal is otherwise payable, the
Company acknowledges that, in such event, a holder of Series A Preferred
Securities may institute a Direct Action for payment on or after the respective
due date specified in the Series A Junior Subordinated Debt Securities. The
Company may not amend the Subordinated Indenture to remove the foregoing right
to bring a Direct Action without the prior written consent of all of the holders
of Series A Preferred Securities of Hartford Life Capital I. Notwithstanding any
payment made to such holder of Series A Preferred Securities by the Company in
connection with a Direct Action, the Company shall remain obligated to pay the
principal of or interest on the Series A Junior Subordinated Debt Securities
held by Hartford Life Capital I or the Institutional Trustee of Hartford Life
Capital I, and the Company shall be subrogated to the rights of the holder of
such Series A Preferred Securities with respect to payments on the Series A
Preferred Securities to the extent of any payments made by the Company to such
holder in any Direct Action. The holders of Series A Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Series A Junior Subordinated Debt Securities.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Series A Preferred Securities in connection
with the involuntary or voluntary dissolution, winding-up or liquidation of
Hartford Life Capital I, the Series A Junior Subordinated Debt Securities will
be issued in the form of one or more global certificates (each a "Global
Security") registered in the name of the depositary or its nominee. Except under
the limited circumstances described below, Series A Junior Subordinated Debt
Securities represented by a Global Security will not be exchangeable for, and
will not otherwise be issuable as, Series A 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 certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Series A Junior
Subordinated Debt Securities in definitive form and will not be considered the
Holders (as defined in the Subordinated Indenture) thereof for any purpose under
the Subordinated Indenture, and no Global Security representing Series A Junior
Subordinated Debt Securities shall 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
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Beneficial Owner must rely on the procedures of the depositary or if such person
is not a Participant, on the procedures of the Participant through which such
person owns its interest to exercise any rights of a holder under the
Subordinated Indenture.
THE DEPOSITARY
If Series A Junior Subordinated Debt Securities are distributed to holders
of Series A Preferred Securities in liquidation of such holders' interests in
Hartford Life Capital I, DTC will act as securities depositary for the Series A
Junior Subordinated Debt Securities. For a description of DTC and the specific
terms of the depositary arrangements, see "Description of the Series A Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company." As of
the date of this Prospectus Supplement, the description therein of DTC's
book-entry system and DTC's practices as they relate to purchases, transfers,
notices and payments with respect to the Series A Preferred Securities apply in
all material respects to any debt obligations represented by one or more Global
Securities held by DTC. The Company may appoint a successor to DTC or any
successor depositary in the event DTC or such successor depositary is unable or
unwilling to continue as a depositary for the Global Securities.
None of the Company, Hartford Life Capital I, the Subordinated Indenture
Trustee, any paying agent and any other agent of the Company 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 such Series A 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 shall be exchangeable for Series A Junior Subordinated
Debt Securities registered in the names of persons other than the depositary or
its nominee only if (i) the depositary notifies the Company that it is unwilling
or unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) 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 such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Series A Junior Subordinated Debt Securities. Any Global Security that is
exchangeable pursuant to the preceding sentence shall be exchangeable for Series
A Junior Subordinated Debt Securities registered in such names as the depositary
shall direct. It is expected that such instructions will be based upon
directions received by the depositary from its Participants with respect to
ownership of beneficial interests in such Global Security.
CERTAIN FEES AND EXPENSES
The Subordinated Indenture will provide that the Company will pay all fees
and expenses related to (i) the offering of the Trust Securities and the Series
A Junior Subordinated Debt Securities, (ii) the organization, maintenance and
dissolution of Hartford Life Capital I, (iii) the retention of the Hartford Life
Capital I Trustees and (iv) the enforcement by the Institutional Trustee of the
rights of the holders of the Series A Preferred Securities.
GOVERNING LAW
The Subordinated Indenture and the Series A Junior Subordinated Debt
Securities will be governed by, and construed in accordance with, the internal
laws of the State of New York.
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DESCRIPTION OF GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by the Company for the benefit of the holders of
Series A Preferred Securities. 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 "Guarantee Trustee"). 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 general terms and provisions of the Guarantee set forth in
the accompanying Prospectus under the caption "Description of Guarantee." 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 Supplement forms a part, and the Trust Indenture Act. The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Series A Preferred Securities.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company will
irrevocably and unconditionally agree to pay in full to the holders of the
Series A Preferred Securities (except to the extent paid by Hartford Life
Capital I), as and when due, regardless of any defense, right of set-off or
counterclaim which Hartford Life Capital I 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 Series A Preferred
Securities, to the extent Hartford Life Capital I has funds available therefor,
and (ii) the redemption price of $25 per Series A Preferred Security, plus all
accrued and unpaid distributions (the "Redemption Price"), to the extent
Hartford Life Capital I has funds available therefor, with respect to any Series
A Preferred Securities called for redemption by Hartford Life Capital I, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
Hartford Life Capital I (other than in connection with the distribution of
Series A Junior Subordinated Debt Securities to the holders of Series A
Preferred Securities or the redemption of all of the Series A Preferred
Securities) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Series A Preferred Securities to the
date of payment or (b) the amount of assets of Hartford Life Capital I remaining
for distribution to holders of the Series A Preferred Securities in liquidation
of Hartford Life Capital I. The Company's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Company to the
holders of Series A Preferred Securities or by causing Hartford Life Capital I
to pay such amounts to such holders.
The Guarantee will be a guarantee on a subordinated basis with respect to
the Series A Preferred Securities from the time of issuance of the Series A
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 I, except to the extent Hartford Life Capital I shall
have funds available therefor. If the Company does not make interest payments on
the Series A Junior Subordinated Debt Securities, Hartford Life Capital I will
not pay distributions on the Series A Preferred Securities and will not have
funds available therefor. See "Description of the Series A Junior Subordinated
Debt Securities." The Company has through the Guarantee, the Series A Junior
Subordinated Debt Securities, the Subordinated Indenture and the Declaration,
taken together, fully, irrevocably and unconditionally guaranteed the
obligations of the Company under the Series A Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Series A
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) the Company 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 the Company 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 the Company's
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capital stock for any other class or series of the Company's capital stock,
(iii) the purchase of fractional interests in shares of the Company'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 the Company) and (b) the Company 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 the Company which
rank pari passu with or junior to the Series A Junior Subordinated Debt
Securities. The Guarantee, however, will except from the foregoing any stock
dividends paid by the Company where the dividend stock is the same stock as that
on which the dividend is being paid.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Series A 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 Series A Preferred Securities. All guarantees and agreements
contained in the Guarantee shall bind the successors, assignees, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Series A Preferred Securities then outstanding.
EVENTS OF DEFAULT
An Event of Default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation amount of the Series A 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 Series
A Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Hartford Life Capital I, the
Guarantee Trustee or any other person or entity. A holder of Series A Preferred
Securities may also directly institute a legal proceeding against the Company 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 Hartford Life Capital I or any other
person or entity.
The Company will be required to provide annually to the Guarantee Trustee a
statement as to the performance by the Company of certain of its obligations
under the Guarantee and as to any default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default with respect to the 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 the
Guarantee at the request of any holder of Series A Preferred Securities unless
it is offered reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to the Series A Preferred Securities upon
full payment of the Redemption Price of all Series A Preferred Securities, upon
distribution of the Series A Junior Subordinated Debt Securities to the holders
of the Series A Preferred Securities or upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of Hartford Life Capital I.
The Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of Series A Preferred Securities must restore
payment of any sums paid under the Series A Preferred Securities or the
Guarantee.
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STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, including Senior Indebtedness, (ii) pari passu with
the most senior preferred or preference stock now or hereafter issued by the
Company and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any subsidiary of the Company
and (iii) senior to the Company's common stock. The terms of the Series A
Preferred Securities provide that each holder of Series A Preferred Securities
by acceptance thereof 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
the guarantor 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 SERIES A
PREFERRED SECURITIES, THE SERIES A
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Hartford Life Capital
I is to issue the Trust Securities evidencing undivided beneficial interests in
the assets of Hartford Life Capital I, and to invest the proceeds from such
issuance and sale in the Series A Junior Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Series A Junior Subordinated Debt Securities, such payments will be sufficient
to cover distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Series A Junior
Subordinated Debt Securities will be equal to the sum of the aggregate stated
liquidation amount of the Trust Securities; (ii) the interest rate and the
interest and other payment dates on the Series A Junior Subordinated Debt
Securities will match the distribution rate and distribution and other payment
dates for the Series A Preferred Securities; (iii) pursuant to the Subordinated
Indenture, the Company shall pay, and Hartford Life Capital I shall not be
obligated to pay, directly or indirectly, all costs, expenses, debt and
obligations of Hartford Life Capital I other than with respect to the Trust
Securities; and (iv) the Declaration further provides that the Hartford Life
Capital I Trustees shall not cause or permit Hartford Life Capital I to, among
other things, engage in any activity that is not consistent with the purposes of
Hartford Life Capital I.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Series A Preferred Securities (to the extent funds
therefor are available) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of Guarantee" in the accompanying
Prospectus. If the Company does not make interest payments on the Series A
Junior Subordinated Debt Securities purchased by Hartford Life Capital I, it is
expected that Hartford Life Capital I will not have sufficient funds to pay
distributions on the Series A Preferred Securities. The Guarantee is a guarantee
on a subordinated basis with respect to the Series A Preferred Securities from
the time of its issuance but does not apply to any payment of distributions
unless and until Hartford Life Capital I has sufficient funds for the payment of
such distributions.
The Company has through the Guarantee, the Series A Junior Subordinated
Debt Securities, the Subordinated Indenture and the Declaration, taken together,
fully, irrevocably and unconditionally guaranteed the obligations of the Company
under the Series A Preferred Securities.
If the Company fails to make interest or other payments on the Series A
Junior Subordinated Debt Securities when due (taking account of any Extension
Period), the Declaration provides a mechanism whereby the holders of the Series
A Preferred Securities, using the procedures described in "Description of
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the Series A Preferred Securities -- Book Entry Only Issuance -- The Depository
Trust Company" and "-- Voting Rights," may direct the Institutional Trustee to
enforce its rights under the Series A Junior Subordinated Debt Securities. If
the Institutional Trustee fails to enforce its rights under the Series A Junior
Subordinated Debt Securities, any holder of Series A Preferred Securities may
directly institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Series A 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 has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Series A 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
Series A Preferred Securities may also institute a Direct Action for payment on
or after the respective due date specified in the Series A Junior Subordinated
Debt Securities without first (i) directing the Institutional Trustee to enforce
the terms of the Series A Junior Subordinated Debt Securities or (ii)
instituting a legal proceeding against the Company to enforce the Institutional
Trustee's rights under the Series A Junior Subordinated Debt Securities. In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of Series A Preferred Securities under the Declaration to the
extent of any payment made by the Company to such holder of Series A Preferred
Securities in such Direct Action. Consequently, the Company will be entitled to
payment of amounts that a holder of Series A 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 Hartford Life Capital I.
The Company, under the Guarantee, acknowledges that the Guarantee Trustee shall
enforce the Guarantee on behalf of the holders of the Series A Preferred
Securities. If the Company fails to make payments under the Guarantee, the
Guarantee provides a mechanism whereby the holders of the Series A Preferred
Securities may direct the Guarantee Trustee to enforce its rights thereunder. If
the Guarantee Trustee fails to enforce the Guarantee, any holder of Series A
Preferred Securities may directly institute a legal proceeding against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against Hartford Life Capital I, the
Guarantee Trustee, or any other person or entity. A holder of Series A Preferred
Securities may also directly institute a legal proceeding against the Company 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 Hartford Life Capital I or any other
person or entity.
The Company and Hartford Life Capital I believe that the above mechanisms
and obligations, taken together, are equivalent to a full and unconditional
guarantee by the Company of payments due on the Series A Preferred Securities.
See "Description of Guarantee -- General."
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
considerations relevant to the purchase, ownership and disposition of Series A
Preferred Securities by a beneficial owner acquiring Series A Preferred
Securities on their original issue at their original offering price who is, for
United States federal income tax purposes, (i) an individual citizen or resident
of the United States, (ii) a corporation or partnership organized in or under
the laws of the United States or any state thereof or the District of Columbia
or (iii) an estate the income of which is subject to United States federal
income taxation regardless of its source or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust and one or more United States fiduciaries have the authority to
control all the substantial decisions of such trust, in each case holding Series
A Preferred Securities as a capital asset (for purposes of this summary, a "U.S.
Holder"). The statements of law or legal conclusion set forth in this summary
constitute the opinion of Debevoise & Plimpton, special counsel to the Company
and Hartford Life Capital I.
This summary does not address potential tax considerations applicable to a
prospective purchaser that is not a U.S. Holder. Prospective investors in the
Series A Preferred Securities that are not U.S. Holders are urged to consult
their tax advisors.
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This summary does not purport to address all potential tax consequences
that may be applicable to a beneficial owner of a Series A Preferred Security,
and is not intended to be wholly applicable to all categories of U.S. Holders
(including, for example, banks, insurance companies, tax-exempt organizations
and dealers in securities or currencies), or to persons that will hold Series A
Preferred Securities as a part of a position in a "straddle" or as part of a
"hedging" or "conversion" transaction for United States federal income tax
purposes or whose functional currency is not the United States dollar. In
addition, it does not include any description of any alternative minimum tax
consequences or the laws of any state or local government that may be applicable
to the Series A Preferred Securities. This summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (including
proposed Treasury Regulations), Internal Revenue Service rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change at any time. Such changes may be applied retroactively in a manner that
could cause the tax consequences to vary substantially from the consequences
described below, possibly adversely affecting a beneficial owner of a Series A
Preferred Security. These authorities are subject to various interpretations and
it is therefore possible that the United States federal income tax treatment of
the Series A Preferred Securities may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF SERIES A PREFERRED
SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF HARTFORD LIFE CAPITAL I
In connection with the issuance of the Series A Preferred Securities,
Debevoise & Plimpton will render its opinion to the effect that, under current
law and assuming compliance with the terms of the Declaration (and certain other
documents) and based on certain assumptions described in such opinion, the Trust
will be classified as a grantor trust and not as an association taxable as a
corporation for United States federal income tax purposes. Accordingly, each
U.S. Holder will be treated as owning an undivided beneficial interest in the
Series A Junior Subordinated Debt Securities and will take into account its pro
rata share of the interest income accrued with respect to the Series A Junior
Subordinated Debt Securities whether or not actually distributed. Any amount
included in a U.S. Holder's gross income will increase such U.S. Holder's tax
basis in its Series A Preferred Securities, and the amount of distributions to a
U.S. Holder will reduce such U.S. Holder's tax basis in its Series A Preferred
Securities.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the terms of the Subordinated Indenture, the Company has the right to
defer the payment of interest on the Series A Junior Subordinated Debt
Securities for up to 20 consecutive quarters (each, an "Extension Period");
provided, that no Extension Period may extend beyond the maturity of the Series
A Junior Subordinated Debt Securities. The existence of the Company's option to
extend the interest payment period could cause the Series A Junior Subordinated
Debt Securities to be subject to the original issue discount ("OID") rules for
United States federal income tax purposes. The Company, however, believes, and
intends to take the position, that, as of the issue date, the terms and
conditions of the Series A Junior Subordinated Debt Securities (in particular
the restrictions on the Company's ability to pay dividends during an Extension
Period) make the likelihood that the Company would elect to defer the payment of
interest a "remote" contingency for these purposes. As a result, the Series A
Junior Subordinated Debt Securities should not be subject to the OID rules
unless the Company exercises its option to extend the interest payment period.
Unless and until the Company exercises its option, a U.S. Holder generally
should include stated interest in income as ordinary income when paid to the
Trust or accrued, in accordance with such U.S. Holder's regular method of
accounting.
If the Company were to exercise its option to defer payments of interest,
the Series A Junior Subordinated Debt Securities would at that time be treated,
solely for purposes of the OID rules, as reissued with OID. In such event, all
of a U.S. Holder's taxable interest income with respect to the Series A Junior
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Subordinated Debt Securities would thereafter be accounted for on an economic
accrual basis regardless of such U.S. Holder's method of tax accounting.
Consequently, each U.S. Holder (including those using the cash basis of
accounting) would be required to include OID in its gross income daily even
though the Company would not make actual cash payments during an Extension
Period.
The IRS could take the position that the likelihood the Company would
exercise its right to defer payments of interest is not a "remote" contingency
for purposes of the OID rules, in which case U.S. Holders would be required to
accrue OID on the Series A Junior Subordinated Debt Securities on an economic
accrual basis under the OID rules described in the preceding paragraph.
Corporate U.S. Holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Series A
Preferred Securities.
DISTRIBUTION OF SERIES A JUNIOR SUBORDINATED DEBT SECURITIES TO U.S. HOLDERS OF
SERIES A PREFERRED SECURITIES
The Company will have the right at any time to liquidate the Trust and
cause the Series A Junior Subordinated Debt Securities to be distributed to the
holders of the Trust Securities. Under current law, such distribution would be
non-taxable to U.S. Holders. In such event, a U.S. Holder would have an
aggregate tax basis in the Series A Junior Subordinated Debt Securities received
in the liquidation equal to the aggregate tax basis such U.S. Holder had in its
Series A Preferred Securities surrendered therefor, and the holding period of
such Series A Junior Subordinated Debt Securities would include the period
during which such U.S. Holder had held the Series A Preferred Securities. A U.S.
Holder will continue to include interest (or OID) in respect of Series A Junior
Subordinated Debt Securities received from the Trust in the manner described
above under "-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF SERIES A PREFERRED SECURITIES
Gain or loss will be recognized by a U.S. Holder on a sale or redemption of
the Series A Preferred Securities (including a redemption for cash) in an amount
equal to the difference between the amount realized by the U.S. Holder on the
sale or redemption (except to the extent that such amount realized is
attributable to accrued interest, which will be taxable as ordinary income to
the extent not previously included in income) and the U.S. Holder's adjusted tax
basis in the Series A Preferred Securities sold or so redeemed. Gain or loss
recognized by a U.S. Holder on Series A Preferred Securities held for more than
one year will generally be taxable as long-term capital gain or loss. In the
case of U.S. Holders that are individuals, long-term capital gains are taxed at
a lower rate if the U.S. Holder held the Series A Preferred Securities for more
than 18 months.
The Series A Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Series A Junior Subordinated Debt Securities. A U.S. Holder who disposes of
Series A Preferred Securities between record dates for payments of distributions
will nevertheless be required to include in income as ordinary income accrued
but unpaid interest on the Series A Junior Subordinated Debt Securities to the
date of disposition, and to add such amount to its adjusted tax basis in its pro
rata share of the underlying Series A Junior Subordinated Debt Securities deemed
disposed of. Similarly, should the Company exercise its option to defer interest
payments on the Series A Junior Subordinated Debt Securities, a holder would be
required to include as ordinary income the accrued OID through the date of
disposition and add such amount to its adjusted basis in the Series A Preferred
Securities disposed of. Such U.S. Holder generally will recognize a capital loss
to the extent the selling price (which may not fully reflect the value of
accrued but unpaid interest or OID) is less than the U.S. Holder's adjusted tax
basis (which will include accrued but unpaid interest and OID, if any). Subject
to certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
PROPOSED TAX LAW CHANGES
From time to time, the Clinton Administration has proposed certain tax law
changes that would, among other things, generally deny interest deductions to a
corporate issuer if the debt instrument has a term
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exceeding 15 years (earlier proposed tax law changes would have denied interest
deductions if the debt instrument had a term exceeding 20 years) and if such
debt instrument is not reflected as indebtedness on such issuer's consolidated
balance sheet. As of the date hereof, no such proposal is pending. However, in
the event similar tax law changes were proposed and enacted in the future and
applied retroactively to the Series A Junior Subordinated Debt Securities, such
changes could give rise to a Tax Event, which would permit the Company to cause
a redemption of the Series A Junior Subordinated Debt Securities and of the
related Trust Securities, as described more fully under "Description of the
Series A Preferred Securities -- Special Event Redemption."
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
In general, information reporting requirements on Form 1099 will apply to
payments on the Series A Preferred Securities to non-corporate U.S. Holders and
"backup withholding" at a rate of 31% may apply to such payments if the U.S.
Holder thereof fails to supply an accurate taxpayer identification number or
otherwise fails to comply with applicable United States information reporting or
certification requirements.
ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (an "ERISA Plan") should consider the fiduciary standards of ERISA in
the context of the ERISA Plan's particular circumstances before authorizing an
investment in the Series A Preferred Securities of the Trust. Among other
factors, the fiduciary should consider whether such an investment is in
accordance with the documents governing the ERISA Plan and whether the
investment is appropriate for the ERISA Plan in view of its overall investment
policy and diversification of its portfolio.
Certain provisions of ERISA and the Code prohibit ERISA Plans, as well as
individual retirement accounts and Keogh plans subject to section 4975 of the
Code (collectively, "Plans"), from engaging in certain transactions involving
"plan assets" with parties that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the Plan. The U.S.
Department of Labor has issued a final regulation (the "Regulation") with regard
to whether the underlying assets of an entity in which employee benefit plans
acquire equity interests are deemed to be plan assets.
Under such Regulation, for purposes of ERISA and section 4975 of the Code,
the assets of the Trust would be deemed to be "plan assets" of a Plan whose
assets were used to purchase Series A Preferred Securities of the Trust if the
Series A Preferred Securities of the Trust were considered to be equity
interests in the Trust and no exception to plan asset status were applicable
under the Regulation. An "equity interest" is defined under the Regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features and specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Regulation, the assets of the
Trust would not be deemed to be "plan assets" of investing Plans if, immediately
after the most recent acquisition of any equity interest in the Trust, less than
25% of the value of each class of equity interests in the Trust were held by
Plans, other employee benefit plans not subject to ERISA or Section 4975 of the
Code (such as governmental, church and foreign plans), and entities holding
assets deemed to be "plan assets" of any Plan (collectively, "Benefit Plan
Investors"). No assurance can be given that the value of the Series A Preferred
Securities held by Benefit Plan Investors will be less than 25% of the total
value of such Series A Preferred Securities at the completion of the initial
offering or thereafter, and no monitoring or other measures will be taken with
respect to the satisfaction of the conditions of this exception.
If the assets of the Trust were determined under ERISA or the Code to be
"plan assets" of Plans holding Series A Preferred Securities, fiduciaries of
such Plans might under certain circumstances be subject to liability for actions
taken by the Trust. Moreover, fiduciaries with responsibilities to Plans (other
than IRAs) might be deemed to have improperly delegated their fiduciary
responsibilities to the Trustees of the
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Trust in violation of ERISA. If this were the case, an investment in Series A
Preferred Securities of the Trust by a Plan might constitute, or in the course
of the operation of the Trust give rise to, a prohibited transaction under ERISA
or the Code. In particular, it is likely that under such circumstances a
prohibited extension of credit to the Company would be considered to have
occurred under ERISA and the Code.
In addition, the Company might be considered a "party in interest" or
"disqualified person" with respect to certain Plans for reasons unrelated to the
operation of the Trust, e.g., because of the provision of services by the
Company or an affiliate to the Plan. A purchase of Series A Preferred Securities
of the Trust by any such Plan would be likely to result in a prohibited
transaction, as a prohibited extension of credit to the Company by the Plan,
without regard to whether the assets of the Trust constitute plan assets of any
Plan.
Because of the possibility that a prohibited transaction could occur as a
result of the purchase or holding of the Series A Preferred Securities of the
Trust by a Plan, the Series A Preferred Securities of the Trust may be not
purchased or held by any Plan or any person investing "plan assets" of any Plan,
in either case, with respect to which the Company is a "party in interest" or
"disqualified person," unless such purchase or holding is eligible for the
exemptive relief available under Prohibited Transaction Class Exemption ("PTCE")
96-23 (for certain transactions determined by in-house asset managers), PTCE
95-60 (for certain transactions involving insurance company general accounts),
PTCE 91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company separate
accounts), or PTCE 84-14 (for certain transactions determined by independent
qualified asset managers), or pursuant to any other available applicable
exemptive relief. Any purchaser of the Series A Preferred Securities of the
Trust or any interest therein, in either case, with respect to which the Company
is a "party in interest" or "disqualified person," will be deemed to have
represented to the Trust and the Company that either (a) it is not a Plan and is
not purchasing such securities (or interest therein) on behalf of or with "plan
assets" of any Plan or (b) its purchase and holding of the Series A Preferred
Securities of the Trust (or interest therein) is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or pursuant to
any other available applicable exemptive relief.
An exception from the above rules may be available under the Regulation for
investments by Plans in certain publicly-registered securities. In order to
qualify for this exception, the securities in question must be: (i) freely
transferable; (ii) owned by at least 100 investors independent of the issuer and
of one another; and (iii) either (a) part of a class of securities registered
under Section 12(b) or 12(g) of the Securities Exchange Act, or (b) sold as part
of a public offering pursuant to an effective registration statement under the
Securities Act and registered under the Securities Exchange Act within 120 days
(or such later time as may be allowed by the Commission) after the end of the
issuer's fiscal year during which the offering occurred.
It is currently anticipated that the Series A Preferred Securities will be
"freely transferable" for purposes of the above-referred exception, and will be
owned by at least 100 investors independent of the issuer and of one another.
Finally, no Series A Preferred Securities will be sold except pursuant to an
effective registration statement under the Securities Act, and it is intended
that the required filings under the Securities Exchange Act will be made for
purposes of the above-referred exception. Therefore, the Trust should qualify
for the exception, so that the Trust assets should not be "plan assets" of any
Plan, and the Trust's underlying assets should not be treated as "plan assets"
of Plan investors for purposes of determining whether any prohibited transaction
has occurred.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person considering
the purchase of Series A Preferred Securities of the Trust with Plan assets
consult with its counsel regarding the consequences under ERISA and the Code of
the acquisition and ownership of Series A Preferred Securities of the Trust and
the availability of exemptive relief under the class exemptions listed above. In
John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 114
S.Ct. 517 (1993), the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA purposes
under certain circumstances. The issues raised in Harris Trust have also been
the subject of legislative action, and have been addressed in proposed
regulations issued by the U.S. Department of Labor in December 1997.
S-39
40
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated June 24, 1998 (the "Underwriting Agreement"), each Underwriter named below
(the "Underwriters"), for whom Smith Barney Inc., A.G. Edwards & Sons, Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and PaineWebber Incorporated
are acting as Representatives (the "Representatives"), has severally agreed to
purchase from Hartford Life Capital I, and Hartford Life Capital I has agreed to
sell to such Underwriter, the number of Series A Preferred Securities set forth
opposite the name of such Underwriter below.
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
------------ ----------
Smith Barney Inc............................................ 1,951,250
A.G. Edwards & Sons, Inc.................................... 1,951,250
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 1,951,250
PaineWebber Incorporated.................................... 1,951,250
Bear Stearns & Co........................................... 100,000
J.C. Bradford & Co.......................................... 100,000
BT Alex. Brown Incorporated................................. 100,000
CIBC Oppenheimer Corp....................................... 100,000
Credit Suisse First Boston Corporation...................... 100,000
Dain Rauscher Wessels....................................... 100,000
Donaldson Lufkin & Jenrette Securities Corporation.......... 100,000
EVEREN Securities, Inc. .................................... 100,000
Goldman, Sachs & Co......................................... 100,000
Janney Montgomery Scott Inc................................. 100,000
Legg Mason Wood Walker, Incorporated........................ 100,000
J.P. Morgan Securities Inc.................................. 100,000
Piper Jaffray Inc........................................... 100,000
Prudential Securities Incorporated.......................... 100,000
Raymond James & Associates, Inc. ........................... 100,000
The Robinson-Humphrey Company, LLC.......................... 100,000
Wheat, First Securities, Inc. .............................. 100,000
Advest, Inc................................................. 45,000
Cowen & Company............................................. 45,000
Fahenstock & Co. Inc........................................ 45,000
Fidelity Capital Markets -- a division of National Financial
Services Corporation...................................... 45,000
Gibraltar Securities Co. ................................... 45,000
Gruntal & Co., L.L.C........................................ 45,000
McDonald & Company Securities, Inc.......................... 45,000
McGinn, Smith & Co., Inc.................................... 45,000
Morgan Keegan & Company, Inc. .............................. 45,000
Olde Discount Corporation................................... 45,000
Roney & Co LLC.............................................. 45,000
----------
Total............................................. 10,000,000
==========
The Underwriters are obligated to take and pay for the total number of
Series A Preferred Securities offered hereby if any such Series A Preferred
Securities are purchased. In the event of default by any
S-40
41
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 Underwriting Agreement provides that Hartford Life Capital I and the
Company will indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, and to make
certain contributions in respect thereof.
Hartford Life Capital I and the Company have agreed, during the period
beginning on the date of the Underwriting Agreement and continuing to and
including the date that is 30 days after the closing date for the purchase of
the Series A Preferred Securities, not to offer, sell, contract to sell or
otherwise dispose of any preferred securities, any preferred stock or any other
securities (including any backup undertakings of such preferred stock or other
securities) of the Company or of Hartford Life Capital I, in each case that are
substantially similar to the Series A Preferred Securities, or any securities
convertible into or exchangeable for the Series A Preferred Securities or such
substantially similar securities of either Hartford Life Capital I or the
Company, except preferred securities offered pursuant to the accompanying
Prospectus, without the prior written consent of Smith Barney Inc.
In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will ultimately be used to purchase the Series A Junior Subordinated
Debt Securities of the Company, the Underwriting Agreement provides that the
Company will pay as compensation to the Underwriters $0.7875 per Series A
Preferred Security for the accounts of the several Underwriters ($7,875,000 in
the aggregate).
The Underwriters propose to offer the Series A Preferred Securities, in
part, directly to the public at the initial public offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession of $0.50 per Series A Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $0.35 per Series A Preferred Security to certain brokers and dealers. After
the Series A Preferred Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by the
Representatives of the Underwriters.
Application for listing of the Series A Preferred Securities on the New
York Stock Exchange has been made. If approved for listing, trading of the
Series A Preferred Securities on the New York Stock Exchange is expected to
commence within a 30-day period after the initial delivery of the Series A
Preferred Securities.
In order to facilitate the offering of the Series A Preferred Securities,
the Underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the Series A Preferred Securities. Specifically,
the Underwriters may overallot in connection with the offering, creating a short
position in the Series A Preferred Securities for their own account. In
addition, to cover overallotments or to stabilize the price of the Series A
Preferred Securities, the Underwriters may bid for, and purchase, the Series A
Preferred Securities in the open market. Finally, the underwriting syndicate may
reclaim selling concessions allowed to an underwriter or a dealer for
distributing the Series A Preferred Securities in the offering, if the syndicate
repurchases previously distributed Series A Preferred Securities in transactions
to cover syndicate short positions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the Series
A Preferred Securities above independent market levels. The Underwriters are not
required to engage in those activities, and if commenced, may end any of these
activities at any time.
Certain of the Underwriters and their affiliates have in the past provided,
and may in the future provide, investment and/or commercial banking services to
the Company and its subsidiaries in the ordinary course of business.
S-41
42
LEGAL MATTERS
The validity of the Series A Preferred Securities, the Series A Junior
Subordinated Debt Securities, the Guarantee and certain matters relating thereto
and certain United States federal income tax matters will be passed upon for the
Company by Lynda Godkin, Vice-President and General Counsel of Hartford Life,
and by Debevoise & Plimpton, New York, New York. Certain legal matters will be
passed upon for the Underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a
limited liability partnership including professional corporations, New York, New
York. Certain matters of Delaware law relating to the validity of the Series A
Preferred Securities will be passed upon on behalf of Hartford Life Capital I
and the Company by Richards, Layton & Finger, P.A., Special Delaware Counsel.
S-42
43
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.
44
(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
45
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
46
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
47
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
48
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.
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
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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.
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.
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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.
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.
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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.
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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.
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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
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described below under "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
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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 represented by
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56
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.)
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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 replace-
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ments), 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
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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 Indenture
Trustee written notice of a continuing Event of Default with respect to Debt
Securities of that series and
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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.)
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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 subordinated
to all existing and future liabilities of Hartford Life's Subsidiaries,
including liabilities under
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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.
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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 class,
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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.
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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.
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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.
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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.
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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.
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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 Common
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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
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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;
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(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
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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.
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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
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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.
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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.
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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
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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.
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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 Securities Act,
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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.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HARTFORD
LIFE, INC., HARTFORD LIFE CAPITAL I OR ANY UNDERWRITER, DEALER OR AGENT. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER
TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF HARTFORD LIFE, INC. OR HARTFORD LIFE CAPITAL I SINCE THE DATE HEREOF.
------------------
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary......................................... S-4
Risk Factors.................................... S-9
Use of Proceeds................................. S-13
Capitalization.................................. S-13
Ratios of Earnings to Fixed Charges and Combined
Fixed Charges and Preferred Stock Dividends... S-14
Accounting Treatment............................ S-14
Description of the Series A Preferred
Securities.................................... S-14
Description of the Series A Junior Subordinated
Debt Securities............................... S-25
Description of Guarantee........................ S-32
Relationship Among the Series A Preferred
Securities, the Series A Junior Subordinated
Debt Securities and the Guarantee............. S-34
Certain Federal Income Tax Considerations....... S-35
ERISA Considerations............................ S-38
Underwriting.................................... S-40
Legal Matters................................... 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...................................... 9
Use of Proceeds................................. 10
Ratio of Earnings to Fixed Charges and Combined
Fixed Charges and Preferred Stock Dividends... 10
Description of Debt Securities.................. 11
Description of Capital Stock.................... 21
Description of Warrants......................... 27
Description of Stock Purchase Contracts and
Stock Purchase Units.......................... 28
Description of Junior Subordinated Debt
Securities and Corresponding Junior
Subordinated Debt Securities.................. 28
Description of Preferred Securities............. 32
Description of Guarantee........................ 34
Plan of Distribution............................ 37
Legal Opinions.................................. 38
Experts......................................... 38
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10,000,000 SECURITIES
[HARTFORD LOGO]
HARTFORD LIFE
HARTFORD LIFE CAPITAL I
7.20% TRUST PREFERRED
SECURITIES, SERIES A
(TRUPS(R))
GUARANTEED TO THE EXTENT SET FORTH
HEREIN BY
HARTFORD LIFE, INC.
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PROSPECTUS SUPPLEMENT
JUNE 24, 1998
(INCLUDING PROSPECTUS
DATED JUNE 24, 1998)
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SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
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