We hereby approve the form of the attached Private Placement Memorandum
for use in connection with the offering of notes.
Humana Inc.
/s/ James W. Doucette
James W. Doucette September 11, 1997
Vice President and Treasurer
September 1997
$1,500,000,000
Private Placement of Commercial Paper Notes
THE COMMERCIAL PAPER NOTES ("NOTE") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND INITIAL SALE OF THE NOTES
MAY BE MADE ONLY TO INSTITUTIONAL INVESTORS APPROVED AS "ACCREDITED
INVESTORS" (AS DEFINED IN RULE 501 (a) UNDER THE ACT) BY MERRILL LYNCH MONEY
MARKETS INC. ("MERRILL LYNCH") OR ANOTHER AUTHORIZED PLACEMENT AGENT, AN
("AUTHORIZED PLACEMENT AGENT"). SUBSEQUENT SALES OF THE NOTES MAY BE MADE
ONLY TO INSTITUTIONAL INVESTORS APPROVED AS ACCREDITED INVESTORS BY AN
AUTHORIZED PLACEMENT AGENT OR TO "QUALIFIED INSTITUTIONAL BUYERS" (AS DEFINED
IN RULE 144A UNDER THE ACT). BY ITS ACCEPTANCE OF A NOTE, THE PURCHASER
REPRESENTS (1) THAT THE NOTE IS BEING ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO, OR FOR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF: (2) THAT
IT IS AN ACCREDITED INVESTOR OR, IN THE CASE OF RESALES PURSUANT TO RULE 144A,
THAT IT IS A QUALIFIED INSTITUTIONAL BUYER; (3) THAT IT UNDERSTANDS THAT THE
NOTE MAY BE SOLD TO IT PURSUANT TO RULE 144A; (4) THAT IT AGREES THAT ANY
RESALE OF THE NOTE WILL BE MADE ONLY IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE ACT AND ONLY (A) TO AN AUTHORIZED PLACEMENT AGENT, (B) THROUGH
AN AUTHORIZED PLACEMENT AGENT TO AN APPROVED INSTITUTIONAL ACCREDITED
INVESTOR OR A QUALIFIED INSTITUTIONAL BUYER OR (C) DIRECTLY TO A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MADE PURSUANT TO RULE 144A; AND
(5) AS TO THE OTHER MATTER SET FORTH UNDER THE SECTION "PRIVATE PLACEMENT"
CONTAINED HEREIN.
PLACEMENT AGENT:
Merrill Lynch Money Markets Inc.
The date of this Private Placement Memorandum is September 22, 1997.
CREDIT RATINGS (1)
Commercial Paper
Standard & Poor's Ratings Service A-2
Moody's Investors Service P-2
TERMS OF COMMERCIAL PAPER NOTES
Issuer: Humana Inc. (the "Company"). Since 1983, the
Company has offered managed health care products
which integrate management with the delivery of
health care services through a network of providers
who share financial risk or who have incentives to
deliver cost-effective medical services.
Incorporation: Delaware
Program Size: Authorized to a maximum outstanding of
$1,500,000,000.
Securities: Unsecured commercial paper notes (the "Notes"),
ranking pari passu with Humana Inc.'s other
unsubordinated and unsecured indebtedness.
Exemption: The Notes are exempt from registration under the
Securities Act of 1933 pursuant to Section 4(2), as
amended, and cannot be resold unless registered
pursuant to an exemption from registration.
Offering Price: Par less a discount representing an interest factor
or, if interest bearing, at par.
Denominations: Minimum of $250,000.
Maturities: Up to 270 days from date of issue.
Redemption: The Notes will not be redeemed prior to maturity or
be subject to voluntary prepayment.
Form: Each Note will be evidenced by (i) a note
certificate issued in bearer form or (ii) one of
two master notes (interest bearing or discount)
registered in the name of the nominee of the
Depository Trust Company ("DTC"). Each master note
(the "Book-Entry Notes") will be deposited with the
Issuing and Paying Agent as subcustodian for DTC or
its successor. DTC will record, by appropriate
entries on its book-entry registration and transfer
system, the respective amounts payable in respect
of Book-Entry Notes. Payments by DTC participants
to purchasers for whom a DTC participant is acting
as agent in respect of Book-Entry Notes will be
governed by the standing instructions and customary
practices under which securities are held at DTC
through DTC participants.
Settlement: Unless otherwise agreed to, same day basis, in
immediately available funds.
(1) Such ratings are only accurate as of the date hereof, as they have been
obtained with the understanding that Standard & Poor's Ratings Service and
Moody's Investors Service would continue to monitor the credit of the Company
and make future adjustments to such ratings to the extent warranted. The
ratings may be changed, superseded or withdrawn, and therefore, a prospective
purchaser should check the current ratings before purchasing the Notes.
Issuing & Paying Agent: Chase Manhattan Bank
c/o Morgan Guaranty Trust Company
15 Broad Street
18th Floor, CP Window
New York, NY 10023
USE OF PROCEEDS
Proceeds from the sale of the commercial paper notes will be used to meet
working capital requirements and for general corporate purposes, including
the funding of acquisitions and share repurchases.
BANK FACILITIES
Humana Inc. maintains unsecured bank borrowing facilities sufficient to
support the commercial paper outstanding.
PRIVATE PLACEMENT
The Commercial Paper Notes (the "Notes") have not been registered under the
Securities Act of 1933, as amended (the "Act") in reliance upon the exemption
from registration provided by Section 4(2) thereof, which exempts transactions
by an issuer not involving any public offering. The Notes are being offered
initially only to accredited investors in minimum denominations of $250,000.
In the case of a non-bank purchaser acting as a fiduciary for one or more
third parties, each third party must be an accredited investor and must
purchase at least $250,000 in Notes. Each purchaser of a Note from or
through an Authorized Placement Agent will be deemed to have represented and
agreed as follows: (1) the purchaser understands that the Notes are being
issued only in transactions not involving any public offering within the
meaning of the Act; (2) the purchaser is a sophisticated institutional
investor who (A) is an "Accredited Investor" (as that term is defined in Rule
501(a) of Regulation D under the Act) (or is a fiduciary or agent (other than
a U.S. bank or savings and loan association) which is purchasing the Notes
for the account of an institutional Accredited Investor), (B) has knowledge
and experience (or is a fiduciary or agent with sole investment discretion
having such knowledge and experience) in financial and business matters and
it (or such fiduciary or agent) is capable of evaluating the merits and risks
of investing in the Notes, (C) has had access to such information as the
purchaser deems necessary in order to make an informed investment decision,
and (D) in the case of a resale of Notes pursuant to Rule 144A under the Act,
is a "Qualified Institutional Buyer" as defined in Rule 144A or is a
Qualified Institutional Buyer purchasing the Notes on behalf of one or more
other Qualified Institutional Buyers; (3) such Note is being purchased for
the purchaser's own account (or for the account of one or more institutional
Accredited Investors (or, in the case of a resale pursuant to Rule 144A under
the Act, one or more other Qualified Institutional Buyers) for which it is
acting as duly authorized fiduciary or agent) for investment and not with a
view to, or for sale in connection with, any distribution thereof; (4) if in
the future the purchaser (or any such investor or any other fiduciary or
agent representing such investor) decides to sell such Note prior to maturity,
it will be sold only in a transaction exempt from registration under the Act,
and only (A) to an Authorized Placement Agent, (B) through an Authorized
Placement Agent to an institutional investor approved by an Authorized
Placement Agent as an Accredited Investor or a Qualified Institutional
Buyer or (C) directly to a Qualified Institutional Buyer in a transaction
made pursuant to Rule 144A; (5) the purchaser understands that, although an
Authorized Placement Agent may repurchase Notes, the Authorized Placement
Agents are not obligated to do so, and accordingly the purchaser (or any
such other investor) should be prepared to hold such Note until maturity;
(6) the purchaser has had the opportunity to ask questions of, and receive
answers from, the Company; (7) the purchaser acknowledges that the Authorized
Placement Agents have not verified any of the information contained or
incorporated by reference in this Memorandum and make no representation of
any kind as to the accuracy or completeness of such information; (8) the
purchaser acknowledges that Notes sold to the purchaser by an Authorized
Placement Agent may be sold to the purchaser pursuant to Rule 144A under the
Act; and (9) the purchaser understands that each Note will bear a legend
substantially as set forth in capital letters on the cover page.
AVAILABLE INFORMATION
Humana Inc. has made financial and other information readily available on
Disclosure Inc. and Moody's/Docutronics Information Service, Inc. The
Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information may be inspected
without charge at the public reference facilities maintained by the
Commission at 450 Fifth Street, NW, Washington, D.C. 20549, and at the
Regional Offices of the Commission. Copies thereof may be obtained from the
Commission upon payment of the prescribed fees. If available, such reports
and other information may also be accessed electronically through the
Commission's electronic data gathering, analysis and retrieval system
("EDGAR") via electronic means, including the Commission's web site on the
Internet (http://www.sec.gov). Humana will provide without charge to each
purchaser of the Notes, upon oral or written request, a copy of any and all
documents filed with the Commission and any and all publicly available
financial information. Requests should be directed to: Humana Inc.,
500 West Main Street, Louisville, Kentucky 40202, (502) 580-1000. If you
have any questions or require any additional information please contact:
Merrill Lynch Money Markets Inc., Marketing Department - 11th Floor, World
Financial Center, North Tower, 250 Vesey Street, New York, N.Y. 10281-1311,
(212) 449-0296.