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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 11, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AETNA INC. CONNECTICUT 02-0488491
AETNA SERVICES, INC. CONNECTICUT 06-0843808
AETNA CAPITAL TRUST I DELAWARE TO BE APPLIED FOR
AETNA CAPITAL TRUST II DELAWARE TO BE APPLIED FOR
AETNA CAPITAL TRUST III DELAWARE TO BE APPLIED FOR
AETNA CAPITAL TRUST IV DELAWARE TO BE APPLIED FOR
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER) OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBERS)
151 FARMINGTON AVENUE
HARTFORD, CONNECTICUT 06156
(860) 273-0123
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
LUCILLE NICKERSON
VICE PRESIDENT AND CORPORATE SECRETARY
AETNA INC.
151 FARMINGTON AVENUE
HARTFORD, CONNECTICUT 06156
(860) 273-0123
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
WILLIAM J. CASAZZA RICHARD J. SANDLER
VICE PRESIDENT AND DEPUTY GENERAL COUNSEL DAVIS POLK & WARDWELL
AETNA INC. 450 LEXINGTON AVENUE
151 FARMINGTON AVENUE NEW YORK, NEW YORK 10017
HARTFORD, CONNECTICUT 06156 (212) 450-4000
(860) 273-0123
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box: [
]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earliest effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
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Senior debt securities, subordinated debt
securities and junior subordinated debt
securities (collectively, "Debt
Securities") of Aetna Services, Inc.(3)...
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Preferred Securities of
Aetna Capital Trust I, II, III and IV,
severally ("Preferred Securities")(3).....
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Guarantees (the "Debt Guarantees") of Debt
Securities by Aetna Inc.(4)...............
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Guarantees (the "Preferred Securities
Guarantees", and together with the Debt
Guarantees, the "Guarantees") of Preferred
Securities by Aetna Inc. and Aetna
Services, Inc.(4), (5)
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Total.............................. $1,100,000,000(4) 100% $1,100,000,000 $324,500
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(1) In U.S. dollars or the equivalent thereof in any other currency, currency
unit or units, or composite currency or currencies or, if any debt
securities are at original issue discount, such greater amount as shall
result in an aggregate initial offering price of $1,100,000,000. The
Prospectuses herein cover $1,700,000,000 of securities. See below.
(2) Estimated solely for purposes of computing the registration fee.
(3) Such indeterminable amount of (i) Debt Securities as may from time to time
be issued at indeterminate prices or upon exchange of securities so issued;
and (ii) Preferred Securities, as may from time to time be issued at
indeterminate prices. Junior Subordinated Debt Securities may be issued and
sold to Aetna Capital Trust I, II, III and IV, severally, in which event
such Junior Subordinated Debt Securities may later be distributed to the
holders of Preferred Securities upon a dissolution of Aetna Capital Trust I,
II, III or IV and the distribution of the assets thereof.
(4) No separate consideration will be received for the Guarantees.
(5) The Registrants are also registering under this registration statement all
other obligations they may have with respect to the Preferred Securities of
Aetna Capital Trust I, II, III and IV. No separate consideration will be
received for any Preferred Securities Guarantee or any such other
obligations.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectuses
included in this Registration Statement also relate to $600 million of
securities registered and remaining unissued under Registration Statement No.
333-07167 previously filed by Aetna Inc. and Aetna Services, Inc. (formerly
known as Aetna Life and Casualty Company), in respect of which $500,000 has been
paid to the Securities and Exchange Commission as filing fees.
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EXPLANATORY NOTE
This Registration Statement contains two forms of Prospectus to be used in
connection with offerings of the following securities: (1) debt securities (both
senior and subordinated) of Aetna Services, Inc. and guarantees by Aetna Inc. of
such debt securities and (2) junior subordinated debt securities of Aetna
Services, Inc., guarantees by Aetna Inc. of such junior subordinated debt
securities, preferred securities of Aetna Capital Trust I, II, III and IV,
severally, and guarantees by Aetna Inc. and Aetna Services, Inc. of such
preferred securities. Each offering of securities made under this Registration
Statement will be made pursuant to one of these Prospectuses, with the
specifications of the securities offered thereby set forth in an accompanying
Prospectus Supplement.
The complete Prospectus for the offering of the securities described in
(1) follows immediately after this Explanatory Note, which is then immediately
followed by the complete Prospectus for the offering of the securities described
in (2) above.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 11, 1998
[AETNA LOGO]
AETNA SERVICES, INC.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST BY
AETNA INC.
Aetna Services, Inc. (the "Company") may from time to time offer its debt
securities (the "Debt Securities") which may be either senior debt securities
(the "Senior Debt Securities") or subordinated debt securities (the
"Subordinated Debt Securities") in amounts, at prices and on terms to be
determined at the time of offering. The Senior Debt Securities are
unconditionally guaranteed (the "Senior Debt Guarantees") as to the payment of
principal, premium, if any, and interest by Aetna Inc. ("Aetna") and the
Subordinated Debt Securities are unconditionally guaranteed on a subordinated
basis (the "Subordinated Debt Guarantees" and, together with the Senior Debt
Guarantees, the "Debt Guarantees") as to the payment of principal, premium, if
any, and interest by Aetna. The Company is a wholly-owned subsidiary of Aetna.
The Debt Securities offered pursuant to this Prospectus may be issued in
one or more series. By separate prospectus, the form of which is included in the
Registration Statement of which this Prospectus forms a part, four Delaware
statutory business trusts (the "Trusts"), which are direct or indirect wholly
owned subsidiaries of Aetna, may from time to time severally offer preferred
securities guaranteed by Aetna and the Company to the extent set forth therein
and the Company may offer from time to time, either directly or to a Trust,
junior subordinated debt securities, guaranteed on a junior subordinated basis
as to the payment of principal, premium, if any, and interest by Aetna. The
aggregate initial public offering price of the securities to be offered by this
Prospectus and such other prospectus shall not exceed $1,700,000,000 (or its
equivalent (based on the applicable exchange rate at the time of sale) in one or
more foreign currencies, currency units or composite currencies as shall be
designated by the Company).
Certain specific terms of the particular Debt Securities in respect of
which this Prospectus is being delivered are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement"), including, where
applicable, the specific title, aggregate principal amount, the denomination,
whether such Debt Securities are secured or unsecured obligations, maturity,
premium, if any, the interest rate (which may be fixed, floating or adjustable),
the time and method of calculating payment of interest, if any, the place or
places where principal of (and premium, if any) and interest, if any, on such
Debt Securities will be payable, the currency in which the principal (and
premium, if any) and interest, if any, on such Debt Securities will be payable,
any terms of redemptions at the option of the Company or the holder, any sinking
fund provisions, the initial public offering price and other special terms. If
so specified in the applicable Prospectus Supplement, Debt Securities of a
series may be issued in whole or in part in the form of one or more temporary or
permanent global securities.
Unless otherwise specified in a Prospectus Supplement, the Senior Debt
Securities and the Senior Debt Guarantees, when issued, will be unsecured and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company and Aetna, respectively, and the Subordinated Debt Securities and
the Subordinated Debt Guarantees, when issued, will be unsecured and will be
subordinated in right of payment to all Senior Debt (as defined) of the Company
and Senior Debt of Aetna, respectively.
The Prospectus Supplement will contain information concerning certain U.S.
federal income tax considerations relating to the Debt Securities offered, if
applicable.
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 Debt Securities will be sold directly, through agents, underwriters or
dealers as designated from time to time, or through a combination of such
methods. If agents of the Company or any dealers or underwriters are involved in
the sale of the Debt Securities in respect of which this Prospectus is being
delivered, the names of such agents, dealers or underwriters and any applicable
commissions or discounts are set forth in or may be calculated from the
Prospectus Supplement with respect to such Debt Securities.
THE DATE OF THIS PROSPECTUS IS , 1998.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, AETNA OR ANY UNDERWRITERS, AGENTS OR
DEALERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY AND ITS
SUBSIDIARIES OR AETNA AND ITS SUBSIDIARIES SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
AVAILABLE INFORMATION
Aetna is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by Aetna can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
and information statements and other information concerning Aetna may also be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov.
The Company and Aetna have filed with the Commission a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Debt Securities and Debt Guarantees offered hereby (the
"Registration Statement"). This prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Reference is made to the Registration Statement and to the exhibits relating
thereto for further information with respect to the Company and Aetna and the
Debt Securities and Debt Guarantees offered hereby.
No separate financial statements of the Company have been included or
incorporated by reference herein because the Company and Aetna do not believe
that such financial statements would be material to the holders of Debt
Securities. However, summarized financial information for the Company (i) at and
for the years ended December 31, 1997 and 1996 are included in Note 13 of
Aetna's consolidated financial statements for the year ended December 31, 1997
incorporated by reference in Aetna's Annual Report on Form 10-K for the year
ended December 31, 1997 incorporated by reference herein and (ii) at and for the
three month periods ended March 31, 1998 and 1997 are included in Note 11 of
Aetna's consolidated financial statements included in Aetna's Quarterly Report
on Form 10-Q for the three month period ended March 31, 1998 incorporated by
reference herein.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission (File No.
1-11913) by Aetna pursuant to the Exchange Act are incorporated by reference
into this Prospectus:
1. Aetna's Annual Report on Form 10-K for the year ended December 31,
1997.
2. Aetna's Quarterly Report on Form 10-Q for the three month period
ended March 31, 1998.
3. Aetna's Current Report on Form 8-K dated March 16, 1998.
All documents filed by Aetna with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the termination of the offering of the Debt Securities shall hereby be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of 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 or in
any Prospectus Supplement 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 this Prospectus.
The Company and Aetna will provide without charge to each person to whom
this Prospectus is delivered, on written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the office of the Corporate Secretary, Aetna Inc., 151 Farmington
Avenue, Hartford CT 06156, telephone (860) 273-3977.
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THE COMPANIES
Aetna Inc., together with its subsidiaries, is a leading provider of health
and retirement benefit plans and financial services, with three core businesses:
Aetna U.S. Healthcare, Aetna Retirement Services and Aetna International. Aetna
provides nearly 30 million people worldwide with quality products, services and
information that help them manage their health and financial well-being.
Aetna U.S. Healthcare Inc. ("Aetna U.S. Healthcare") is a leading health
care benefits organization with nearly 14 million health members. Aetna U.S.
Healthcare has a network of over 330,000 health care providers and offers a
broad spectrum of products, including a full range of health, prescription drug,
dental and vision plans, as well as group insurance products such as life,
disability and long-term care.
Aetna Retirement Services provides retirement and investment products to
more than 2.2 million customers and 30,000 plan sponsors nationwide in the
education, nonprofit, government and small business sectors. In 1997 Aetna
Retirement Services expanded its financial planning capability by acquiring
Financial Network Investment Corporation, one of the nation's leading financial
planning companies. Through its Aeltus Investment Management Inc. subsidiary
Aetna now manages assets in excess of $45 billion in customer accounts and ranks
among the 100 largest U.S. investment management firms.
Aetna International offers life insurance, pension management, health
products and a limited book of property-casualty coverage to 13 million
customers in 14 countries. Through strategic alliances, the company also
provides group benefits in more than 68 countries and markets investment
products worldwide.
Aetna also has a Large Case Pensions business that offers pension and
annuity products primarily for defined benefit and defined contribution plans.
Aetna Services, Inc. is a direct subsidiary of Aetna Inc., the ultimate
parent of the Aetna companies, that primarily serves as a financing company, and
as a holding company for the Aetna Retirement Services, Aetna International and
Large Case Pensions businesses, as well a portion of Aetna's health operations.
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USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the net proceeds from the sale of the Debt Securities will be added
to the Company's general funds and used for general corporate purposes,
including the repayment of indebtedness.
RATIOS OF EARNINGS TO FIXED CHARGES OF AETNA AND THE COMPANY
The following table sets forth Aetna's and the Company's historical ratios
of earnings to fixed charges for the periods indicated.
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
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1998 1997 1996 1995 1994 1993
--------------- ---- ---- ---- ---- ----
Aetna(a).............................. 4.23 5.74 2.45 4.97 4.74 (b)
The Company........................... 3.77 5.78 2.44 (c) (c) (c)
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(a) Aetna has fully and unconditionally guaranteed the payment of all principal,
premium, if any, and interest on all outstanding debt securities of the
Company.
(b) Aetna reported a pretax loss from continuing operations in 1993 which was
inadequate to cover fixed charges by $1.0 billion.
(c) In connection with the acquisition of U.S. Healthcare, Inc. (now named Aetna
U.S. Healthcare Inc. ("Aetna U.S. Healthcare")) in July 1996, the Company
became a wholly-owned subsidiary of Aetna. Accordingly, the Company's ratio
of earnings to fixed charges for 1995, 1994 and 1993 are the same as
Aetna's.
For purposes of computing the ratios of earnings to fixed charges,
"earnings" represent consolidated earnings from continuing operations before
income taxes, cumulative effect adjustments and extraordinary items plus fixed
charges and minority interests. "Fixed charges" consist of interest (and the
portion of rental expense deemed representative of the interest factor). The
Company's former property-casualty operations (sold to The Travelers Insurance
Group Inc. on April 2, 1996) and certain other operations are reflected as
discontinued operations in its consolidated financial statements for 1996 and
prior years.
DESCRIPTION OF DEBT SECURITIES AND DEBT GUARANTEES
The following description sets forth certain general terms and provisions
of the Debt Securities and Debt Guarantees to which any Prospectus Supplement
may relate. The particular terms of the Debt Securities and Debt Guarantees
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions may not apply to the Debt Securities and Debt Guarantees so
offered will be described in the Prospectus Supplement relating to such Debt
Securities and Debt Guarantees.
The Senior Debt Securities and the Senior Debt Guarantees are to be issued
under an Indenture dated as of July 1, 1996 (the "Senior Indenture"), between
the Company, Aetna and State Street Bank and Trust Company of Connecticut,
National Association, as trustee. The Subordinated Debt Securities and the
Subordinated Debt Guarantees are to be issued under a separate Indenture dated
as of July 1, 1996 (the "Subordinated Indenture"), also between the Company,
Aetna and State Street Bank and Trust Company of Connecticut, National
Association, as trustee. The Senior Indenture and the Subordinated Indenture are
sometimes referred to collectively as the "Indentures." Copies of the Senior
Indenture and the Subordinated Indenture have been filed as exhibits to the
Registration Statement. State Street Bank and Trust Company of Connecticut,
National Association is hereinafter referred to as the "Trustee." The following
summaries of certain provisions of the Senior Debt Securities, the Subordinated
Debt Securities, the Senior Debt Guarantees, the Subordinated Debt Guarantees
and 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 applicable to a particular series of Debt Securities and the related
Debt Guarantees, including the definitions therein of
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certain terms. Wherever particular Sections, Articles or defined terms of the
Indentures are referred to, it is intended that such Sections, Articles or
defined terms shall be incorporated herein by reference. Article and Section
references used herein are references to the applicable Indenture. Capitalized
terms not otherwise defined herein shall have the meaning given in the
Indentures.
GENERAL
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and each Indenture provides that Debt
Securities may be issued thereunder from time to time in one or more series.
Unless otherwise specified in the Prospectus Supplement, the Senior Debt
Securities and the Senior Debt Guarantees when issued will be unsecured and
unsubordinated obligations of the Company and Aetna, respectively, and will rank
equally and ratably with all other unsecured and unsubordinated indebtedness of
the Company and Aetna, respectively. The Subordinated Debt Securities and the
Subordinated Debt Guarantees when issued will be unsecured and subordinated in
right of payment to the prior payment in full of all Senior Debt (as defined) of
the Company and Aetna, respectively, as described under "Subordination of
Subordinated Debt Securities and Subordinated Debt Guarantees" and in the
Prospectus Supplement applicable to an offering of Subordinated Debt Securities
and the Subordinated Debt Guarantees.
Reference is made to the Prospectus Supplement relating to the particular
Debt Securities offered thereby (the "Offered Debt Securities") which shall set
forth whether the Offered Debt Securities shall be Senior Debt Securities,
guaranteed on a senior basis by Aetna pursuant to the Senior Debt Guarantees, or
Subordinated Debt Securities, guaranteed on a subordinated basis by Aetna
pursuant to the Subordinated Debt Guarantees, and shall further set forth the
following terms of the Offered Debt Securities: (1) the title of the Offered
Debt Securities; (2) any limit on the aggregate principal amount of the Offered
Debt Securities; (3) the Person to whom any interest on the Offered Debt
Securities will be payable, if other than the Person in whose name such Offered
Debt Securities are registered on any Regular Record Date; (4) the date or dates
on which the principal of the Offered Debt Securities will be payable; (5) the
rate or rates per annum (which may be fixed, floating or adjustable) at which
the Offered Debt Securities will bear interest, if any, or the formula pursuant
to which such rate or rates shall be determined, the date or dates from which
such interest will accrue and the dates on which such interest, if any, will be
payable, the right, if any, of the Company to defer or extend an interest
payment date and the duration of such deferral or extension and the Regular
Record Dates for such interest payment dates; (6) whether the Offered Debt
Securities will be secured; (7) the place or places where principal of (and
premium, if any) and interest, if any, on Offered Debt Securities will be
payable; (8) if applicable, the price at which, the periods within which and the
terms and conditions upon which the Offered Debt Securities may be redeemed at
the option of the Company pursuant to a sinking fund or otherwise; (9) if
applicable, any obligation of the Company to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of a Holder thereof, and the period or periods within which, the price or prices
at which and the terms and conditions upon which the Offered Debt Securities
will be redeemed or purchased, in whole or in part; (10) if other than
denominations of $1,000 and any integral multiple thereof, the denominations in
which the Offered Debt Securities will be issuable; (11) the currency or
currencies, including composite currencies or currency units, in which payment
of the principal of (or premium, if any) or interest, if any, on any of the
Offered Debt Securities will be payable if other than the currency of the United
States of America; (12) if the amount of payments of principal of (or premium,
if any) or interest, if any, on the Offered Debt Securities may be determined
with reference to one or more indices, the manner in which such amounts will be
determined; (13) if the principal of (or premium if any) or interest, if any, on
any of the Offered Debt Securities of the series is to be payable, at the
election of the Company or a Holder thereof, in one or more currencies,
including composite currencies, or currency units other than that or those in
which the Debt Securities are stated to be payable, the currency, currencies,
including composite currencies, or currency units in which payment of the
principal of (or premium if any) or interest, if any, on Debt Securities of such
series as to which such election is made will be payable, and the periods within
which and the terms and conditions upon which such election is to be made; (14)
the portion of the principal amount of the Offered Debt Securities, if other
than the principal amount thereof, payable upon acceleration of maturity
thereof; (15) whether all or any part of the Offered Debt Securities will be
issued in the form of a Global Security or Securities and, if so, the depositary
for, and other
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terms relating to, such Global Security or Securities; (16) any event or events
of default applicable with respect to the Offered Debt Securities in addition to
those provided in the Indentures; (17) any other covenant or warranty included
for the benefit of the Offered Debt Securities in addition to (and not
inconsistent with) those included in the Indentures for the benefit of Debt
Securities in lieu of any covenant or warranty included in the Indentures for
the benefit of the Debt Securities of all series, or any provision that any
covenant or warranty included in the Indentures for the benefit of Debt
Securities of all series shall not be for the benefit of the Offered Debt
Securities, or any combination of such covenants, warranties or provisions; (18)
the guarantee of Aetna of the Debt Securities if other than as described herein;
(19) any restriction or condition on the transferability of the Offered Debt
Securities; (20) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to the Offered Debt Securities; and (21)
any other terms of the Offered Debt Securities. (Section 301)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Debt Securities are to be issued as registered securities without
coupons in denominations of $1,000 or any integral multiple of $1,000. (Section
302) No service charge will be made for any transfer or exchange of such Offered
Debt Securities, but the Company or the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. (Section 305)
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other considerations
applicable thereto will be described in the Prospectus Supplement relating
hereto.
If any index is used to determine the amount of payment 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.
Since each of Aetna and the Company is a holding company, the rights of
Aetna and the Company, respectively, and hence the right of creditors of Aetna
and the Company (including the Holders of Debt Securities), to participate in
any distribution of the assets of their respective subsidiaries (including in
the case of Aetna, the Company and Aetna U.S. Healthcare), upon any such
Subsidiary's liquidation or reorganization or otherwise is necessarily subject
to the prior claims of creditors of the subsidiary, except to the extent that
claims of Aetna or the Company, as a creditor of the subsidiary, may be
recognized.
The Indentures do not contain any provisions that limit the ability of the
Company or Aetna to incur indebtedness or that afford Holders of the Debt
Securities protection in the event of a highly leveraged or similar transaction
involving the Company or Aetna.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise specified in the Prospectus Supplement, the following
events are defined in the Indentures as "Events of Default" with respect to Debt
Securities of any series: (a) failure to pay principal (including any sinking
fund payment) of, or premium (if any) on, any Debt Security of that series when
due (in the case of the Subordinated Indenture, whether or not payment is
prohibited by the subordination provisions); (b) failure to pay interest, if
any, on any Debt Security of that series when due and such failure continues for
a period of 30 days; (c) failure by the Company or Aetna to perform in any
material respect any other covenant in the Indentures (other than a covenant
included in the Indentures solely for the benefit of a series of Debt Securities
other than that series) continued for a period of 90 days after written notice
to the Company and Aetna; (d) due acceleration (which acceleration shall not
have been rescinded within 30 days after written notice to the Company and
Aetna) of any indebtedness for borrowed money in a principal amount in excess of
$50,000,000 for which the Company, Aetna or a Principal Subsidiary (as defined)
is liable, including Debt Securities for another series (other than acceleration
of Non-Recourse Debt for borrowed money which does not exceed in the aggregate
4% of Aetna's total shareholders' equity, as set forth in the most recently
published audited consolidated balance sheet of Aetna), or a default by the
Company, Aetna or any Principal Subsidiary in the payment at final maturity of
outstanding indebtedness for borrowed money in a principal amount in excess of
$50,000,000 (other than default in payment at final maturity of Non-Recourse
Debt which does not exceed in the aggregate of 4% of Aetna's total shareholders'
equity, as set forth
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in the most recently published audited consolidated balance sheet of Aetna)
unless such acceleration or default at maturity shall be remedied or cured by
the Company, Aetna or such Principal Subsidiary or rescinded, annulled or waived
by the holders of such indebtedness, in which case such acceleration or default
at maturity shall not constitute an Event of Default under this provision and
any acceleration relating thereto shall be rescinded; and (e) certain events of
insolvency, reorganization, receivership or liquidation of the Company or Aetna.
(Section 501)
No Event of Default with respect to Debt Securities of a particular series
shall necessarily constitute an Event of Default with respect to Debt Securities
of any other series. If an Event of Default with respect to Debt Securities of
any series at the time Outstanding shall occur and be continuing, either the
Trustee or the Holders of at least 25% 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
Debt Securities of that series to be due and payable immediately; provided,
however, that under certain circumstances the Holders of a majority in aggregate
principal amount of Outstanding Debt Securities of that series may rescind or
annul such acceleration and its consequences. (Section 502)
Reference is made to the Prospectus Supplement relating to any series of
Offered Debt Securities which are Original Issue Discount Securities for the
particular provisions relating to the principal amount of such Original Issue
Discount Securities due on acceleration upon the occurrence of an Event of
Default and the continuation thereof.
The Indentures provide that the Trustee may withhold notice to the Holders
of the Debt Securities of any default (except in payment of principal (or
premium, if any) or interest, if any) if it considers it in the interest of the
holders of the Debt Securities to do so. (Section 602)
The Company and Aetna will be required to furnish to the Trustee annually a
statement by certain officers of the Company and Aetna as to the compliance with
all conditions and covenants of the Indentures. (Section 1004)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series affected will have the right, subject to certain
limitations, to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to the Debt Securities of such series, and
to waive certain defaults. (Sections 512 and 513)
The Indentures provide that, in case an Event of Default shall occur and be
continuing, the Trustee shall exercise such of its rights and powers under the
Indentures, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. (Section 601) Subject to such provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indentures at
the request of any of the Holders of Debt Securities unless they shall have
offered to the Trustee security or indemnity in form and substance reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request. (Section 603)
No Holder of a 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 Trustee written notice of
a continuing Event of Default with respect to the Debt Securities of such series
and unless also the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of the same series shall have made written request,
and offered indemnity to the Trustee in form and substance reasonably
satisfactory to the Trustee, to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of the same series a
direction inconsistent with such request and shall have failed to institute such
proceeding within 60 days. (Section 507) However, such limitations do not apply
to a suit instituted by a Holder of a Debt Security for enforcement of payment
of the principal of (or premium, if any) or interest, if any, on such Debt
Security on or after the respective due dates expressed in such Debt Security.
(Section 508)
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MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company,
Aetna and the Trustee, with the consent of the Holders of not less than a
majority of aggregate principal amount of each series of the Outstanding Debt
Securities issued under the Indentures which is affected by the modification or
amendment; provided, however, that no such modification or amendment may,
without the consent of each Holder of such Debt Security affected thereby: (1)
change the Stated Maturity of the principal of (or premium if any) or any
installment of principal or interest, if any, on any such Debt Security; (2)
reduce the principal amount of (or premium, if any) or the interest rate, if
any, on any such Debt Security or the principal amount due upon acceleration of
an Original Issue Discount Security; (3) change the place or currency of payment
of principal of (or premium if any) or the interest, if any, on any such Debt
Security; (4) impair the right to institute suit for the enforcement of any such
payment on or with respect to any such Debt Security; (5) reduce the percentage
of Holders of Debt Securities necessary to modify or amend the Indentures; (6)
modify or affect in any manner adverse to the interest of Holders of Debt
Securities the obligation of Aetna under the Debt Guarantees in respect of the
due and punctual payment of the principal of (and premium, if any) or interest
on the Debt Securities; (7) in the case of the Subordinated Indenture, modify
the subordination provisions in a manner adverse to the holders of the
Subordinated Debt Securities; or (8) modify the foregoing requirements or reduce
the percentage of Outstanding Debt Securities necessary to waive compliance with
certain provisions of the Indentures or for waiver of certain defaults. (Section
902)
The holders of at least a majority of the aggregate principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of that
series, waive compliance by the Company and Aetna with certain restrictive
provisions of the Indentures and waive any past default under the Indentures,
except a default in the payment of principal, premium or interest or in the
performance of certain covenants. (Sections 907 and 513)
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that the Company and Aetna, at the Company's option,
(A) will be defeased and discharged from any and all of their respective
obligations with respect to such Debt Securities and the Debt Guarantees
(including, in the case of Subordinated Debt Securities and Subordinated Debt
Guarantees, the provisions described under "Subordination of Subordinated Debt
Securities and Subordinated Debt Guarantees" herein and except for the
obligations to exchange or register the transfer of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency in respect of the Debt Securities, and to hold
monies for payments in trust) ("defeasance"), or (B) will be released from their
respective obligations under the Indentures concerning the restrictions
described under "Limitations on Liens on Common Stock of Principal Subsidiaries"
and "Consolidation, Merger and Sale of Assets" and any other covenants
applicable to such Debt Securities and the Debt Guarantees (including, in the
case of the Subordinated Debt Securities and the Subordinated Debt Guarantees,
the provisions described under "Subordination of Subordinated Debt Securities
and Subordinated Debt Guarantees" herein) which are subject to covenant
defeasance ("covenant defeasance"), and the occurrence of an event described and
notice thereof in clauses (c) and (d) under "Events of Default and Notice
Thereof" (with respect to covenants subject to covenant defeasance) shall no
longer be an Event of Default, in each case, upon the irrevocable deposit with
the Trustee (or other qualifying trustee), in trust for such purpose, of money,
and/or U.S. Government Obligations (as defined) (or Foreign Government
Obligations (as defined) in the case of Debt Securities denominated in foreign
currencies) which through the payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to pay the principal
of (and premium, if any) and interest, if any, on such Debt Securities, and any
mandatory sinking fund or analogous payments thereon, on the scheduled due dates
therefor. Such a trust may only be established if, among other things, (i) the
Company has delivered to the Trustee an opinion of counsel (as specified in the
Indentures) to the effect that the Holders of such Debt Securities will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance or covenant defeasance and will be subject to Federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance or covenant defeasance had not occurred, (ii) no
Event of Default or event which with the giving of notice or
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lapse of time, or both, would become an Event of Default under the Indenture
shall have occurred and be continuing on the date of such deposit (or, with
respect to any event specified in clause (e) under "Events of Default and Notice
Thereof", at any time on or prior to the 90th day after the date of such
deposit) and (iii) in the case of Subordinated Debt Securities, (x) no default
in the payment of principal of (or premium, if any) or interest, if any, on any
Senior Debt of the Company or Aetna beyond any applicable grace period shall
have occurred and be continuing, or (y) no other default with respect to any
Senior Debt of the Company or Aetna shall have occurred and be continuing and
shall have resulted in the acceleration of such Senior Debt. (Article Twelve)
The Company may exercise its defeasance option with respect to such Debt
Securities and Debt Guarantees notwithstanding its prior exercise of its
covenant defeasance option. If the Company exercises its defeasance option,
payment of such Debt Securities may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, payment of
such Debt Securities may not be accelerated by reference to the covenants noted
under clause (B) above. In the event the Company and Aetna omit to comply with
their remaining obligations with respect to such Debt Securities and Debt
Guarantees under the Indentures after the exercise by the Company of its
covenant defeasance option and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations (or Foreign Government Obligations in the case of Debt
Securities denominated in foreign currencies) on deposit with the Trustee may be
insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company and Aetna will remain liable in respect of such payments. (Article
Twelve)
LIMITATIONS ON LIENS ON COMMON STOCK OF PRINCIPAL SUBSIDIARIES
As long as any of the Debt Securities remains outstanding, Aetna will not,
and will not permit any Principal Subsidiary to, issue, assume, incur or
guarantee any indebtedness for borrowed money secured by a mortgage, pledge,
lien or other encumbrance, directly or indirectly, on any of the Common Stock of
a Principal Subsidiary, which Common Stock is owned by Aetna, by the Company or
by any Principal Subsidiary, unless the obligations of the Company under the
Debt Securities and, if the Company or Aetna so elects, any other indebtedness
of the Company or Aetna ranking on a parity with, or prior to, the Debt
Securities or Aetna's obligations under the Debt Guarantees, as the case may be,
shall be secured equally and ratably with, or prior to, such secured
indebtedness for borrowed money so long as it is outstanding and is so secured.
(Section 1005)
"Principal Subsidiary" means only Aetna Life Insurance Company, Aetna Life
Insurance and Annuity Company and Aetna U.S. Healthcare and any other Subsidiary
of Aetna which shall hereafter succeed by merger or otherwise to a major part of
the business of one or more of the Principal Subsidiaries. The decision as to
whether a Subsidiary shall have succeeded to a major part of the business of one
or more of the Principal Subsidiaries shall be made in good faith by the Board
of Directors of Aetna or a committee thereof by the adoption of a resolution so
stating, and Aetna shall within 30 days of the date of the adoption of such
resolution deliver to the Trustee a copy thereof, certified by the Corporate
Secretary or an Assistant Corporate Secretary of Aetna. (Section 101)
"Common Stock" means, with respect to any Principal Subsidiary, stock of
any class, however designated, except stock which is non-participating beyond
fixed dividend and liquidation preferences and the holders of which have either
no voting rights or limited voting rights entitling them, only in the case of
certain contingencies, to elect less than a majority of the directors (or
persons performing similar functions) of such Principal Subsidiary, and shall
include securities of any class, however designated, which are convertible into
such Common Stock. (Section 101)
CONSOLIDATION, MERGER AND SALE OF ASSETS; ASSUMPTION BY AETNA OR SUBSIDIARY OF
COMPANY OBLIGATIONS
Neither the Company nor Aetna may consolidate with or merge into any other
Person or sell its property and assets as, or substantially as, an entirety to
any Person and neither the Company nor Aetna may permit any Person to merge into
or consolidate with the Company or Aetna, as the case may be, unless (i) either
the
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Company or Aetna, as the case may be, will be the resulting or surviving entity
or any successor or purchaser is a corporation, partnership or trust organized
under the laws of the United States of America, any State or the District of
Columbia, and any such successor or purchaser expressly assumes the Company's or
Aetna's obligations on the Debt Securities or the Debt Guarantees, as
applicable, under a supplemental Indenture, (ii) immediately after giving effect
to the transaction no Event of Default shall have occurred and be continuing,
and (iii) certain other conditions are met. (Section 801)
Aetna or any Subsidiary of Aetna may, where permitted by law, assume the
obligations of the Company for the due and punctual payment of the principal of
(premium, if any) and interest on and any other payments with respect to the
Debt Securities of any series and the performance of every covenant of the
Indenture and the Debt Securities on the part of Company to be performed or
observed if (i) Aetna or such Subsidiary, as the case may be, shall expressly
assume such obligations by a supplemental indenture, in form reasonably
satisfactory to the Trustee, and, if such Subsidiary assumed such obligations,
Aetna shall, by such supplemental indenture, confirm that its Debt Guarantees
with respect to the Debt Securities of such series shall apply to such
Subsidiary's obligations under the Debt Securities of such series and the
Indenture; (ii) immediately after giving effect to such transaction, no Event of
Default shall have occurred and be continuing; and (iii) certain other
conditions are met. (Section 803)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES AND SUBORDINATED DEBT GUARANTEES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities and Subordinated Debt
Guarantees.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt of the Company, including the Senior Debt Securities,
and the Subordinated Debt Guarantees will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt of Aetna, including the Senior Debt Guarantees. 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 the Company or Aetna, as the case may be, the holders
of Senior Debt of the Company or Aetna, as the case may be, will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt of the Company or Aetna, as the case may
be, before the holders of the 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. (Subordinated
Indenture Sections 1402 and 1602)
By reason of such subordination, in the event of liquidation or insolvency,
(i) creditors of the Company who are not holders of Senior Debt of the Company
or Subordinated Debt Securities may recover less, ratably, than holders of
Senior Debt of the Company and may recover more, ratably, than the holders of
the Subordinated Debt Securities and (ii) creditors of Aetna who are not holders
of Senior Debt of Aetna or Subordinated Debt Securities may recover less,
ratably, than holders of Senior Debt of Aetna and may recover more, ratably,
than holders of Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt of the Company and Aetna outstanding
at the time of such acceleration will first be entitled to receive payment in
full of all amounts due thereon 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.
(Subordinated Indenture Sections 1403 and 1603)
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 the payment of principal of (or
premium, if any) or interest on Senior Debt of the Company or Aetna, or an event
of default with respect to any Senior Debt of the Company or Aetna resulting in
the acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default. (Subordinated Indenture Sections 1404
and 1604)
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"Debt" means (without duplication and without regard to any portion of
principal amount that has not accrued and to any interest component thereof
(whether accrued or imputed) that is not due and payable) with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed; (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of such Person; and (vi) every obligation of the type
referred to in clauses (i) through (v) of another Person and all dividends of
another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise.
(Subordinated Indenture Section 101)
"Senior Debt" means with respect to any Person the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to such
Person to the extent that such claim for post-petition interest is allowed in
such proceeding), on Debt of such Person, whether incurred on or prior to the
date of the Subordinated Indenture or thereafter incurred, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Subordinated Debt Securities, in the case of the Company, or the
Subordinated Debt Guarantees, in the case of Aetna, or to other Debt of such
Person which is pari passu with, or subordinated to the Subordinated Debt
Securities, in the case of the Company, or the Subordinated Debt Guarantees, in
the case of Aetna; provided, however, that Senior Debt shall be deemed not to
include (i) in the case of the Company, the Subordinated Debt Securities, (ii)
in the case of Aetna, the Subordinated Debt Guarantees or (iii) any other debt
securities or guarantees in respect thereof issued to any other trusts,
partnerships or other entity affiliated with the Company or Aetna which is a
financing vehicle of the Company or Aetna ("Financing Entity") in connection
with the issuance of preferred securities of such Financing Entity, including,
without limitation indebtedness of the Company and Aetna's guarantee in respect
thereof issued to Aetna Capital L.L.C. pursuant to that certain Indenture dated
as of November 1, 1994 between the Company and The First National Bank of
Chicago, as trustee, as amended by the First Indenture Supplement dated August
1, 1996 among the Company, Aetna and The First National Bank of Chicago, as
trustee. (Subordinated Indenture Section 101)
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt of the Company or Aetna, which may include indebtedness
that is senior to the Subordinated Debt Securities and the Subordinated Debt
Guarantees, but subordinate to other obligations of the Company or Aetna,
respectively. The Senior Debt Securities and the Senior Debt Guarantees, when
issued, will constitute Senior Debt of the Company and Aetna, respectively.
At March 31, 1998, each of the Company and Aetna had $2.2 billion of Senior
Debt outstanding, no Subordinated Debt Securities or Subordinated Debt
Guarantees outstanding, and $348 million of indebtedness which would rank junior
in right of payment to the Subordinated Debt Securities and the Subordinated
Debt Guarantees. All such Debt of Aetna consists of guarantees of Debt of the
Company.
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series or the Subordinated Debt Guarantees with respect thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee. In
such a case, one or more Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of Outstanding Debt Securities of the series to be represented by such Global
Security or Securities. Unless and until it is exchanged in whole or in part for
Debt Securities in definitive registered form, a Global Security may
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not be registered for transfer or exchange except as a whole by the Depositary
for such Global Security to a nominee for such Depositary and except in the
circumstances described in the applicable Prospectus Supplement. (Sections 204
and 305)
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
and a description of the Depositary will be contained in the applicable
Prospectus Supplement.
THE TRUSTEE
The Indentures contain limitations on the right of the Trustee, as a
creditor of the Company and Aetna, to obtain payment of claims in certain cases,
or to realize on certain property received in respect of any such claim as
security or otherwise. In addition, the Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the time of
a default under the Indentures it is a creditor of the Company or Aetna.
The Trustee or its affiliates act as depositary for funds of, makes loans
to and performs other services for, or may be a customer of, the Company and
Aetna in the ordinary course of business.
GOVERNING LAW
The Indentures are governed by and shall be construed in accordance with
the laws of the State of New York, but without regard to principles of conflicts
of laws.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors or other
persons directly or through agents. The Company may sell Debt Securities as soon
as practicable after effectiveness of the Registration Statement, provided that
favorable market conditions exist. Any such underwriter or agent involved in the
offer and sale of the Debt Securities will be named in an applicable Prospectus
Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, or at prices related to prevailing market prices
or at negotiated prices. The Company also may, from time to time, authorize
firms acting as the Company's agents to offer and sell the Debt Securities upon
the terms and conditions as shall be set forth in any Prospectus Supplement. In
connection with the sale of Debt Securities, underwriters may be deemed to have
received compensation from the Company in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of Debt Securities
for whom they may act as agent. Underwriters may sell Debt Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasers for whom they may
act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Debt Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Debt Securities may be deemed
to be underwriting discounts and commissions under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements with the
Company and Aetna, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act, and to
reimbursement by the Company for certain expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company and Aetna in the ordinary
course of business.
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If so indicated in an applicable Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit offers by certain
institutions to purchase Debt Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to Delayed Delivery
Contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount
specified in the applicable Prospectus Supplement. Institutions with whom
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of the Debt Securities covered by
its Contracts shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject and
(ii) if the Debt Securities are being sold to underwriters, the Company shall
have sold to such underwriters such amount specified in the applicable
Prospectus Supplement. Agents and underwriters will have no responsibility in
respect of the delivery or performance of Contracts.
The Debt Securities may or may not be listed on a national securities
exchange or a foreign securities exchange. No assurances can be given that there
will be a market for the Debt Securities.
VALIDITY OF THE SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Debt Securities and the Debt Guarantees offered hereby will be
passed upon for the Company and Aetna by Thomas J. Calvocoressi, General Counsel
to the Company and Aetna, and Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York 10017, and for any agents or underwriters by Sullivan & Cromwell,
125 Broad Street, New York, New York 10004. Davis Polk & Wardwell and Sullivan &
Cromwell will rely upon the opinion of Thomas J. Calvocoressi as to certain
matters governed by Connecticut law. As of March 31, 1998, Thomas J.
Calvocoressi beneficially owned 2,701 shares, and had options to purchase 46,704
shares, of Aetna's Common Stock.
EXPERTS
The consolidated financial statements and schedules of Aetna and its
subsidiaries (including the Company) as of December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997 which are
incorporated by reference in Aetna's Annual Report on Form 10-K for the year
ended December 31, 1997, have been incorporated by reference in this Prospectus
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing.
With respect to the unaudited interim financial information of Aetna
incorporated by reference in this Prospectus and of Aetna to be incorporated by
reference in this Prospectus, the independent certified public accountants have
reported and may report that they applied limited procedures in accordance with
professional standards for a review of such information. However, any separate
report included in Aetna's Quarterly Reports on Form 10-Q and incorporated by
reference herein states and will state that they did not audit and they did not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on any report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Securities Act
for any report on the unaudited interim financial information because that
report is not a "report" or a "part" of the Registration Statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
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ERISA MATTERS
Aetna and the Company and certain of their affiliates, including Aetna Life
Insurance Company, Aetna Life Insurance and Annuity Company and Aetna U.S.
Healthcare, may each be considered a "party in interest" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"disqualified person" within the meaning of the Internal Revenue Code of 1986,
as amended (the "Code") with respect to many employee benefit plans. Prohibited
transactions within the meaning of ERISA or the Code may arise, for example, if
Debt Securities are acquired by a pension or other employee benefit plan with
respect to which Aetna, the Company or any of their affiliates is a service
provider, unless such Debt Securities are acquired pursuant to an exemption for
transactions effected on behalf of such plan by a "qualified professional asset
manager" or pursuant to any other available exemption. Any such pension or
employee benefit plan proposing to invest in the Debt Securities should consult
with its legal counsel.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 11, 1998
[AETNA LOGO]
AETNA SERVICES, INC.
JUNIOR SUBORDINATED DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
AETNA INC.
AETNA CAPITAL TRUST I
AETNA CAPITAL TRUST II
AETNA CAPITAL TRUST III
AETNA CAPITAL TRUST IV
PREFERRED SECURITIES GUARANTEED TO THE EXTENT SET FORTH
HEREIN BY AETNA INC. AND AETNA SERVICES, INC.
Aetna Services, Inc. (the "Company"), may from time to time offer its
unsecured junior subordinated debt securities (the "Junior Subordinated Debt
Securities") in one or more series and in amounts, at prices and on terms to be
determined at the time of offering. The Junior Subordinated Debt Securities are
unconditionally guaranteed on a junior subordinated basis (the "Junior
Subordinated Debt Guarantees") as to the payment of principal, premium, if any,
and interest by Aetna Inc. ("Aetna"). Unless otherwise specified in the
accompanying Prospectus Supplement (the "Prospectus Supplement"), the Junior
Subordinated Debt Securities and Junior Subordinated Debt Guarantees, when
issued, will be unsecured and will be subordinated in right of payment to all
Senior Debt (as defined herein) of the Company and Senior Debt of Aetna,
respectively. The Company is a wholly-owned subsidiary of Aetna.
Aetna Capital Trust I, Aetna Capital Trust II, Aetna Capital Trust III and
Aetna Capital Trust IV (collectively, the "Aetna Trusts"), each a statutory
business trust formed under the laws of the State of Delaware, may offer and
sell, from time to time, preferred securities representing undivided beneficial
interests in the assets of the respective Aetna Trust (the "Preferred
Securities") in amounts, at prices and on terms to be determined at the time of
offering. The payment of periodic cash distributions ("distributions") with
respect to Preferred Securities of each of the Aetna Trusts out of moneys held
by the Property Trustee (as defined herein) of each of the Aetna Trusts, and
payments on liquidation of each Aetna Trust and on redemption of Preferred
Securities of such Aetna Trust, will be guaranteed by Aetna and the Company as
and to the extent described herein (each such guarantee a "Preferred Securities
Guarantee"). See "Description of the Preferred Securities Guarantees." Aetna's
and the Company's obligations under each Preferred Securities Guarantee are
unsecured obligations of Aetna and the Company and will rank (i) pari passu in
right of payment with Aetna's and the Company's obligations under the other
Preferred Securities Guarantees and other guarantees of preferred securities,
(ii) subordinate and junior in right of payment to all other liabilities of
Aetna or the Company except those made pari passu or subordinate by their terms
and (iii) senior to all capital stock now or hereafter issued by Aetna or the
Company and to any guarantee now or hereafter issued by Aetna or the Company in
respect of any of its or their capital stock. Junior Subordinated Debt
Securities may be issued and sold from time to time in one or more series by the
Company to an Aetna Trust, or a trustee of such trust, in connection with the
investment of the proceeds from the offering of Preferred Securities and Common
Securities (as defined herein) of such Aetna Trust. The Junior Subordinated Debt
Securities purchased by an Aetna Trust may be subsequently distributed pro rata
to holders of Preferred Securities and Common Securities in connection with the
dissolution of such Aetna Trust, upon the occurrence of certain events as may be
described in an accompanying Prospectus Supplement.
Specific terms of the particular series of Junior Subordinated Debt
Securities or any Preferred Securities of an Aetna Trust in respect of which
this Prospectus is being delivered (the "Offered Securities") are set forth in
the accompanying Prospectus Supplement which will describe, without limitation
and where applicable, the following: (i) in the case of Junior Subordinated Debt
Securities, the specific designation, aggregate principal amount, 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, any terms of redemption,
any sinking fund provisions, the right of the Company, if any, to defer payment
of interest on the Junior Subordinated Debt Securities and the maximum length of
such deferral period, and any listing on a securities exchange, methods of
distribution and other specific terms of the offering; and (ii) in the case of
Preferred Securities, the specific designation, number of securities,
liquidation amount per security, initial public offering or purchase price, and
any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, voting rights (if any), any redemption or
sinking fund provisions, any other rights, preferences, privileges, limitations
or restrictions relating to the Preferred Securities and the terms upon which
the proceeds of the sale of the Preferred Securities shall be used to purchase a
specific series of Junior Subordinated Debt Securities of the Company. If so
specified in the applicable Prospectus Supplement, Offered Securities of a
series may be issued in whole or in part in the form of one or more temporary or
permanent global securities.
By separate prospectus, the form of which is included in the Registration
Statement of which this Prospectus forms a part, the Company may from time to
time offer its Senior Debt Securities or Subordinated Debt Securities which debt
securities will be guaranteed as to the payment of principal, premium, if any,
and interest by Aetna. The aggregate initial public offering price of the
securities to be offered by this Prospectus and such other prospectus shall not
exceed $1,700,000,000 (or its equivalent (based on the applicable exchange rate
at the time of sale) in one or more foreign currencies, currency units or
composite currencies as shall be designated by the Company).
The Prospectus Supplement will contain information concerning certain U.S.
federal income tax considerations relating to the Offered Securities, if
applicable.
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 Offered Securities will be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If agents of the Company and/or any Aetna Trust or any dealers or
underwriters are involved in the sale of the Offered Securities in respect of
which this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts are set forth in or may
be calculated from the Prospectus Supplement with respect to such Offered
Securities.
THE DATE OF THIS PROSPECTUS IS , 1998.
20
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, AETNA OR THE AETNA TRUSTS, OR ANY
UNDERWRITERS, AGENTS OR DEALERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY AND ITS SUBSIDIARIES OR AETNA AND ITS SUBSIDIARIES OR ANY
OF THE AETNA TRUSTS SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
Aetna is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information filed by Aetna can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
and information statements and other information concerning Aetna may also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005. Such material may also be accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
The Company, Aetna and the Aetna Trusts have filed with the Commission a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Junior Subordinated Debt Securities, the
Junior Subordinated Debt Guarantees, the Preferred Securities and the Preferred
Securities Guarantees offered hereby (the "Registration Statement"). This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company, Aetna and the Aetna Trusts and the Junior Subordinated Debt Securities,
the Junior Subordinated Debt Guarantees, the Preferred Securities and the
Preferred Securities Guarantees offered hereby.
No separate financial statements of the Company have been included or
incorporated by reference herein because the Company and Aetna do not believe
that such financial statements would be material to the holders of Junior
Subordinated Debt Securities or Preferred Securities of an Aetna Trust. However,
summarized financial information for the Company (i) at and for the years ended
December 31, 1997 and 1996 are included in Note 13 of Aetna's consolidated
financial statements for the year ended December 31, 1997 incorporated by
reference in Aetna's Annual Report on Form 10-K for the year ended December 31,
1997 incorporated by reference herein and (ii) at and for the three month
periods ended March 31, 1998 and 1997 are included in Note 11 of Aetna's
consolidated financial statements included in Aetna's Quarterly Report on Form
10-Q for the three month period ended March 31, 1998 incorporated by reference
herein.
No separate financial statements of any of the Aetna Trusts have been
included or incorporated by reference herein. The Company, Aetna and the Aetna
Trusts do not consider that such financial statements would be material to
holders of the Preferred Securities because (i) all of the voting securities of
each Aetna Trust will be owned, directly or indirectly, by Aetna, a reporting
company under the Exchange Act, (ii) each
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of the Aetna Trusts is a newly formed special purpose entity, has no operating
history, has no independent operations and is not engaged in, and does not
propose to engage in, any activity other than issuing its Trust Securities (as
defined herein) representing undivided beneficial interests in the assets of
such Aetna Trust and investing the proceeds thereof in Junior Subordinated Debt
Securities issued by the Company and guaranteed on a junior subordinated basis
as to the payment of principal, premium, if any, and interest by Aetna and (iii)
the Company's and Aetna's obligations described herein and in any accompanying
Prospectus Supplement under the Declaration (as defined herein) of an Aetna
Trust, the Preferred Securities Guarantees with respect to the Preferred
Securities issued by such Aetna Trust, the Junior Subordinated Debt Securities
purchased by such Aetna Trust, the Junior Subordinated Debt Guarantees and the
related Indenture, taken together, constitute a full and unconditional guarantee
of payments due on the Preferred Securities of such Aetna Trust. See "The Aetna
Trusts," "Description of the Preferred Securities," "Description of the
Preferred Securities Guarantees" and "Description of the Junior Subordinated
Debt Securities and Junior Subordinated Debt Guarantees". The Aetna Trusts are
statutory business trusts formed under the laws of the State of Delaware. Aetna,
as of the date of this Prospectus, directly or indirectly beneficially owns all
of the beneficial interests in each Aetna Trust.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission (File No.
1-11913) by Aetna pursuant to the Exchange Act are incorporated by reference
into this Prospectus:
1. Aetna's Annual Report on Form 10-K for the year ended December 31,
1997.
2. Aetna's Quarterly Report on Form 10-Q for the three month period
ended March 31, 1998.
3. Aetna's Current Report on Form 8-K dated March 16, 1998.
All documents filed by Aetna with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior
to the termination of the offering of the Offered Securities shall hereby be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of 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 or in
any Prospectus Supplement 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 this Prospectus.
The Company and Aetna will provide without charge to each person to whom
this Prospectus is delivered, on written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference into this
Prospectus (without exhibits to such documents other than exhibits specifically
incorporated by reference into such documents). Requests for such copies should
be directed to the office of the Corporate Secretary, Aetna Inc., 151 Farmington
Avenue, Hartford CT 06156, telephone (860) 273-3977.
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THE COMPANIES
Aetna Inc., together with its subsidiaries, is a leading provider of health
and retirement benefit plans and financial services, with three core businesses:
Aetna U.S. Healthcare, Aetna Retirement Services and Aetna International. Aetna
provides nearly 30 million people worldwide with quality products, services and
information that help them manage their health and financial well-being.
Aetna U.S. Healthcare Inc. ("Aetna U.S. Healthcare") is a leading health
care benefits organization with nearly 14 million health members. Aetna U.S.
Healthcare has a network of over 330,000 health care providers and offers a
broad spectrum of products, including a full range of health, prescription drug,
dental and vision plans, as well as group insurance products such as life,
disability and long-term care.
Aetna Retirement Services provides retirement and investment products to
more than 2.2 million customers and 30,000 plan sponsors nationwide in the
education, nonprofit, government and small business sectors. In 1997 Aetna
Retirement Services expanded its financial planning capability by acquiring
Financial Network Investment Corporation, one of the nation's leading financial
planning companies. Through its Aeltus Investment Management Inc. subsidiary
Aetna now manages assets in excess of $45 billion in customer accounts and ranks
among the 100 largest U.S. investment management firms.
Aetna International offers life insurance, pension management, health
products and a limited book of property-casualty coverage to 13 million
customers in 14 countries. Through strategic alliances, the company also
provides group benefits in more than 68 countries and markets investment
products worldwide.
Aetna also has a Large Case Pensions business that offers pension and
annuity products primarily for defined benefit and defined contribution plans.
Aetna Services, Inc. is a direct subsidiary of Aetna Inc., the ultimate
parent of the Aetna companies, that primarily serves as a financing company, and
as a holding company for the Aetna Retirement Services, Aetna International and
Large Case Pensions businesses, as well a portion of Aetna's health operations.
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USE OF PROCEEDS
Each Aetna Trust will use all of the proceeds received from the sale of its
Trust Securities to purchase Junior Subordinated Debt Securities of the Company.
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the proceeds from the sale of the Junior Subordinated Debt
Securities will be added to the Company's general funds and used for general
corporate purposes, including the repayment of indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES OF AETNA AND THE COMPANY
The following table sets forth Aetna's and the Company's historical ratio
of earnings to fixed charges for the periods indicated.
THREE MONTHS
ENDED MARCH 31, YEARS ENDED DECEMBER 31,
--------------- ------------------------------------
1998 1997 1996 1995 1994 1993
--------------- ---- ---- ---- ---- ----
Aetna (a)................................ 4.23 5.74 2.45 4.97 4.74 (b)
The Company.............................. 3.77 5.78 2.44 (c) (c) (c)
- ---------------
(a) Aetna has fully and unconditionally guaranteed the payment of all principal,
premium, if any, and interest on all outstanding debt securities of the
Company.
(b) Aetna reported a pretax loss from continuing operations in 1993 which was
inadequate to cover fixed charges by $1.0 billion.
(c) In connection with the acquisition of U.S. Healthcare, Inc. (now named Aetna
U.S. Healthcare Inc. ("Aetna U.S. Healthcare")) in July 1996, the Company
became a wholly-owned subsidiary of Aetna. Accordingly, the Company's ratio
of earnings to fixed charges for 1995, 1994 and 1993 are the same as
Aetna's.
For purposes of computing the ratios of earnings to fixed charges,
"earnings" represent consolidated earnings from continuing operations before
income taxes, cumulative effect adjustments and extraordinary items plus fixed
charges and minority interests. "Fixed charges" consist of interest (and the
portion of rental expense deemed representative of the interest factor). The
Company's former property-casualty operations (sold to The Travelers Insurance
Group Inc. on April 2, 1996) and certain other operations are reflected as
discontinued operations in its consolidated financial statements for 1996 and
prior years.
THE AETNA TRUSTS
Each of Aetna Capital Trust I, II, III and IV is a statutory business trust
formed on May 7, 1998 under the Delaware Business Trust Act (the "Business Trust
Act") pursuant to a separate declaration of trust among the Trustees (as defined
herein) of such Aetna Trust and the Company and the filing of a certificate of
trust with the Secretary of State of the State of Delaware. 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 forms a part, as of the date the Preferred
Securities of such Aetna Trust are initially issued. Each Declaration will be
qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
This description summarizes the material terms of the Declarations and is
qualified in its entirety by reference to the form of Declaration, which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part, and the Trust Indenture Act.
TRUST SECURITIES
Upon issuance of any Preferred Securities by an Aetna Trust, the holders
thereof will own all of the issued and outstanding Preferred Securities of such
Aetna Trust. Aetna will acquire directly or indirectly
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securities representing common undivided beneficial interests in the assets of
each Aetna Trust (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") in an amount equal to at least 3% of the
total capital of such Aetna Trust and will own, directly or indirectly, all of
the issued and outstanding Common Securities of each Aetna Trust. The Preferred
Securities and the Common Securities will rank pari passu with each other and
will have equivalent terms; provided that (i) if a Declaration Event of Default
(as defined herein) under the Declaration of an Aetna Trust occurs and is
continuing, the holders of Preferred Securities of such Aetna Trust will have a
priority over holders of the Common Securities of such Aetna Trust with respect
to payments in respect of distributions and payments upon liquidation,
redemption and maturity and (ii) holders of Common Securities of such Aetna
Trust have the exclusive right (subject to the terms of the Declaration) to
appoint, remove or replace the Trustees and to increase or decrease the number
of Trustees. Each Aetna Trust exists for the purpose of (a) issuing its
Preferred Securities, (b) issuing its Common Securities, directly or indirectly,
to Aetna, (c) investing the gross proceeds from the sale of the Trust Securities
in Junior Subordinated Debt Securities of the Company and (d) engaging in only
such other activities as are necessary, convenient or incidental thereto. The
rights of the holders of the Preferred Securities, including economic rights,
rights to information and voting rights, are set forth in the applicable
Declaration, the Business Trust Act and the Trust Indenture Act.
POWERS AND DUTIES OF TRUSTEES
The number of trustees (the "Trustees") of each Aetna Trust shall initially
be five. Three of such Trustees (the "Regular Trustees") are individuals who are
employees or officers of Aetna or its subsidiaries. The fourth such trustee will
be The First National Bank of Chicago, which is unaffiliated with the Company
and Aetna and which will serve as the property trustee (the "Property Trustee")
and act as the indenture trustee for purposes of the Trust Indenture Act. The
fifth such trustee is an affiliate of The First National Bank of Chicago that
has its principal place of business in the State of Delaware (the "Delaware
Trustee"). Pursuant to each Declaration, legal title to the Junior Subordinated
Debt Securities purchased by an Aetna Trust and the related Junior Subordinated
Debt Guarantees will be held by the Property Trustee for the benefit of the
holders of the Trust Securities of such Aetna Trust, and the Property Trustee
will have the power to exercise all rights, powers and privileges under the
Indenture (as defined under "Description of the Junior Subordinated Debt
Securities and Junior Subordinated Debt Guarantees") with respect to the Junior
Subordinated Debt Securities and the related Junior Subordinated Debt
Guarantees. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments in respect of the Junior Subordinated Debt Securities purchased by
an Aetna Trust and the related Junior Subordinated Debt Guarantees for the
benefit of the holders of Trust Securities of such Aetna Trust. The Property
Trustee will promptly make distributions to the holders of the Trust Securities
out of funds from the Property Account. The Preferred Securities Guarantees are
separately qualified under the Trust Indenture Act and will be held by The First
National Bank of Chicago, acting in its capacity as indenture trustee with
respect thereto, for the benefit of the holders of the applicable Preferred
Securities. As used in this Prospectus and any accompanying Prospectus
Supplement, the term "Property Trustee" with respect to an Aetna Trust refers to
The First National Bank of Chicago acting either in its capacity as a Trustee
under the relevant Declaration and the holder of legal title to the Junior
Subordinated Debt Securities purchased by that Aetna Trust and the related
Junior Subordinated Debt Guarantees or in its capacity as indenture trustee
under, and the holder of, the applicable Preferred Securities Guarantee, as the
context may require. The owner of all of the Common Securities of each Aetna
Trust will have the exclusive right (subject to the terms of the related
Declaration) to appoint, remove or replace Trustees and to increase or decrease
the number of Trustees, provided that the number of Trustees shall be at least
five and the majority of Trustees shall be Regular Trustees. The term of an
Aetna Trust will be set forth in the Prospectus Supplement, but may terminate
earlier as provided in such Declaration.
The duties and obligations of the Trustees of an Aetna Trust shall be
governed by the Declaration of such Aetna Trust. Under its Declaration, each
Aetna Trust shall not, and the Trustees shall cause such Aetna Trust not to,
engage in any activity other than in connection with the purposes of such Aetna
Trust or other than as required or authorized by the related Declaration. In
particular, each Aetna Trust shall not and the Trustees shall not (a) invest any
proceeds received by such Aetna Trust from holding the Junior Subordinated Debt
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Securities purchased by such Aetna Trust and the related Junior Subordinated
Debt Guarantees but shall promptly distribute from the Property Account all such
proceeds to holders of Trust Securities pursuant to the terms of the related
Declaration and of the Trust Securities; (b) acquire any assets other than as
expressly provided in the related Declaration; (c) possess Trust property for
other than a Trust purpose; (d) make any loans, other than loans represented by
the Junior Subordinated Debt Securities; (e) possess any power or otherwise act
in such a way as to vary the assets of such Aetna Trust or the terms of its
Trust Securities in any way whatsoever; (f) issue any securities or other
evidences of beneficial ownership of, or beneficial interests in, such Aetna
Trust other than its Trust Securities; (g) incur any indebtedness for borrowed
money or (h)(i) direct the time, method and place of exercising any trust or
power conferred upon the Indenture Trustee (as defined under "Description of the
Junior Subordinated Debt Securities and Junior Subordinated Debt Guarantees")
with respect to the Junior Subordinated Debt Securities or the related Junior
Subordinated Debt Guarantees deposited in that Aetna Trust as trust assets or
upon the Property Trustee of that Aetna Trust with respect to its Preferred
Securities, (ii) waive any past default that is waivable under the Indenture or
the Declaration, (iii) exercise any right to rescind or annul any declaration
that the principal of all of the Junior Subordinated Debt Securities deposited
in that Aetna Trust as trust assets shall be due and payable or (iv) consent to
any amendment, modification or termination of the Indenture or such Junior
Subordinated Debt Securities, the related Junior Subordinated Debt Guarantees or
the Declaration, in each case where such consent shall be required, unless in
the case of this clause (h) the Property Trustee shall have received an
unqualified opinion of nationally recognized independent tax counsel recognized
as expert in such matters to the effect that such action will not cause such
Aetna Trust to be classified for United States Federal income tax purposes as an
association taxable as a corporation or a partnership and that such Aetna Trust
will continue to be classified as a grantor trust for United States Federal
income tax purposes.
BOOKS AND RECORDS
The books and records of each Aetna Trust will be maintained at the
principal office of such Aetna Trust and will be open for inspection by a holder
of Preferred Securities of such Aetna Trust or his representative for any
purpose reasonably related to his interest in such Aetna Trust during normal
business hours. Each holder of Preferred Securities will be furnished annually
with unaudited financial statements of the applicable Aetna Trust as soon as
available after the end of such Aetna Trust's fiscal year.
VOTING
Except as provided under the Business Trust Act, the Declaration and the
Trust Indenture Act, holders of Preferred Securities will have no voting rights.
THE PROPERTY TRUSTEE
The Property Trustee, for the benefit of the holders of the Trust
Securities of an Aetna Trust, is authorized under each Declaration to exercise
all rights under the Indenture with respect to the Junior Subordinated Debt
Securities and the related Junior Subordinated Debt Guarantees deposited in such
Aetna Trust as trust assets, including its rights as the holder of such Junior
Subordinated Debt Securities to enforce the Company's obligations under such
Junior Subordinated Debt Securities and Aetna's obligations under the related
Junior Subordinated Debt Guarantees upon the occurrence of an Event of Default
under the Indenture (as such term is defined under "Description of the Junior
Subordinated Debt Securities and Junior Subordinated Debt Guarantees"; any such
Event of Default, an "Indenture Event of Default"). The Property Trustee shall
also be authorized to enforce the rights of holders of Preferred Securities of
an Aetna Trust under the related Preferred Securities Guarantees. If any Aetna
Trust's failure to make distributions on the Preferred Securities of an Aetna
Trust is a consequence of the Company's exercise of any right under the terms of
the Junior Subordinated Debt Securities deposited in such Aetna Trust as trust
assets to extend the interest payment period for such Junior Subordinated Debt
Securities, the Property Trustee will have no right to enforce the payment of
distributions on such Preferred Securities until a Declaration Event of Default
shall have occurred. Holders of at least a majority in liquidation amount of the
Preferred Securities issued by an Aetna Trust will have the right to direct the
Property Trustee for that Aetna Trust with respect to certain
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matters under the Declaration for that Aetna Trust and the related Preferred
Securities Guarantees. If the Property Trustee fails to enforce its rights under
the Indenture or fails to enforce the Preferred Securities Guarantees, to the
extent permitted by applicable law, any holder of Preferred Securities may
institute a legal proceeding against the Company and Aetna to enforce such
rights or the Preferred Securities Guarantees, as the case may be. In addition,
the holders of at least 25% in aggregate liquidation amount of the outstanding
Preferred Securities would have the right to directly institute proceedings for
enforcement of payment to such holders of principal of, or premium, if any, or
interest on the Junior Subordinated Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such holders.
DISTRIBUTIONS
Pursuant to each Declaration, distributions on the Preferred Securities of
an Aetna Trust must be paid on the dates payable to the extent that the Property
Trustee for that Aetna Trust has cash on hand in the applicable Property Account
to permit such payment. The funds available for distribution to the holders of
the Preferred Securities of an Aetna Trust will be limited to payments received
by the Property Trustee in respect of the Junior Subordinated Debt Securities
and the related Junior Subordinated Debt Guarantees that are deposited in the
Aetna Trust as trust assets. If the Company does not make interest payments on
the Junior Subordinated Debt Securities, and Aetna does not make payments on the
related Junior Subordinated Debt Guarantees, deposited in an Aetna Trust as
trust assets, the Property Trustee will not make distributions on the Preferred
Securities of such Aetna Trust. Under the Declaration, if and to the extent the
Company does make interest payments on the Junior Subordinated Debt Securities,
or Aetna makes such payments pursuant to the related Junior Subordinated Debt
Guarantees, deposited in an Aetna Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities of such Aetna Trust on a
Pro Rata Basis (as defined below). The payment of distributions on the Preferred
Securities of an Aetna Trust is guaranteed by each of Aetna and the Company on a
junior subordinated basis as and to the extent set forth under "Description of
the Preferred Securities Guarantees." A Preferred Securities Guarantee is a full
and unconditional guarantee from the time of issuance of the applicable
Preferred Securities, but a Preferred Securities Guarantee covers distributions
and other payments on the applicable Preferred Securities only if and to the
extent that the Company has made a payment to the Property Trustee of interest
or principal on the Junior Subordinated Debt Securities, or Aetna has made such
payment pursuant to the related Junior Subordinated Debt Guarantees, deposited
in the Aetna Trust as trust assets. As used in this Prospectus, the term "Pro
Rata Basis" shall mean pro rata to each holder of Trust Securities of an Aetna
Trust according to the aggregate liquidation amount of the Trust Securities of
such Aetna Trust held by the relevant holder in relation to the aggregate
liquidation amount of all Trust Securities of such Aetna Trust outstanding
unless, in relation to a payment, a Declaration Event of Default under the
Declaration has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each holder of the Preferred Securities
of such Aetna Trust pro rata according to the aggregate liquidation amount of
the Preferred Securities held by the relevant holder in relation to the
aggregate liquidation amount of all the Preferred Securities of such Aetna Trust
outstanding, and only after satisfaction of all amounts owed to the holders of
such Preferred Securities, to each holder of Common Securities of such Aetna
Trust pro rata according to the aggregate liquidation amount of such Common
Securities held by the relevant holder in relation to the aggregate liquidation
amount of all Common Securities of such Aetna Trust outstanding.
DECLARATION EVENTS OF DEFAULT
If an Indenture Event of Default occurs and is continuing with respect to
Junior Subordinated Debt Securities deposited in an Aetna Trust as trust assets,
an Event of Default under the Declaration (a "Declaration Event of Default") of
such Aetna Trust will occur and be continuing with respect to any outstanding
Trust Securities of such Aetna Trust. In such event, each Declaration provides
that the holders of Common Securities of such Aetna Trust will be deemed to have
waived any such Declaration Event of Default with respect to the Common
Securities until all Declaration Events of Default with respect to the Preferred
Securities of such Aetna Trust have been cured or waived. Until all such
Declaration Events of Default with respect to the Preferred Securities of such
Aetna Trust have been so cured or waived, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities of such
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Aetna Trust and only the holders of such Preferred Securities will have the
right to direct the Property Trustee with respect to certain matters under such
Declaration and consequently under the Indenture. In the event that any
Declaration Event of Default with respect to the Preferred Securities of such
Aetna Trust is waived by the holders of the Preferred Securities of such Aetna
Trust as provided in the Declaration, the holders of Common Securities pursuant
to such Declaration have agreed that such waiver also constitutes a waiver of
such Declaration Event of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote or consent of the
holders of the Common Securities.
RECORD HOLDERS
Preferred Securities will be issued in fully registered form. Each
Declaration provides that the Trustees of such Aetna Trust may treat the person
in whose name a certificate representing its Preferred Securities is registered
on the books and records of such Aetna Trust as the sole holder thereof and of
the Preferred Securities represented thereby for purposes of receiving
distributions and for all other purposes and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such certificate or in
the Preferred Securities represented thereby on the part of any person, whether
or not such Aetna Trust shall have actual or other notice thereof. Unless
otherwise specified in a Prospectus Supplement, Preferred Securities will be
represented by a global certificate registered on the books and records of such
Aetna Trust in the name of a depositary (the "Depositary") named in an
accompanying Prospectus Supplement or its nominee. Under each Declaration:
(i) such Aetna Trust and the Trustees thereof shall be entitled to
deal with the Depositary (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the related Declaration, and except as set forth in the
related Declaration with respect to the Property Trustee, shall have no
obligation to persons owning a beneficial interest in Preferred Securities
("Preferred Security Beneficial Owners") registered in the name of and held
by the Depositary or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be
exercised only through the Depositary (or any successor depositary) and
shall be limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Depositary and/or its
participants. With respect to Preferred Securities registered in the name
of and held by the Depositary or its nominee, all notices and other
communications required under each Declaration shall be given to, and all
distributions on such Preferred Securities shall be given or made to, the
Depositary (or its successor).
The specific terms of the depositary arrangement with respect to the
Preferred Securities will be disclosed in the applicable Prospectus Supplement.
DEBTS AND OBLIGATIONS OF AN AETNA TRUST
In each Declaration, the Company and Aetna have jointly and severally
agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the applicable Aetna Trust,
including the fees and expenses of its Trustees and any taxes and all costs and
expenses with respect thereto, to which such Aetna Trust may become subject,
except for United States withholding taxes. The foregoing obligations of the
Company and Aetna under each Declaration are for the benefit of, and shall be
enforceable by, any person to whom any such debts, obligations, costs, expenses
and taxes are owed (a "Creditor") whether or not such Creditor has received
notice thereof. Any such Creditor may enforce such obligations of the Company
and Aetna directly against the Company and Aetna and the Company and Aetna have
irrevocably waived any right or remedy to require that any such Creditor take
any action against any Aetna Trust or any other person before proceeding against
the Company or Aetna. The Company and Aetna have agreed in each Declaration to
execute such additional agreements as may be necessary or desirable in order to
give full effect to the foregoing.
The business address of each Aetna Trust is c/o Aetna Inc., 151 Farmington
Avenue, Hartford, Connecticut 06156, telephone number (860) 273-0123.
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DESCRIPTION OF THE PREFERRED SECURITIES
Each Aetna Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each Aetna Trust authorizes the Regular Trustees of such
Aetna Trust to issue on behalf of such Aetna Trust one series of Preferred
Securities. Each Declaration will be qualified as an indenture under the Trust
Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the related Declaration or made part of such Declaration by the Trust Indenture
Act. Reference is made to the Prospectus Supplement relating to the Preferred
Securities of an Aetna Trust for specific terms, including (i) the specific
designation of such Preferred Securities, (ii) the number of Preferred
Securities issued by such Aetna Trust, (iii) the annual distribution rate (or
method of calculation thereof) for Preferred Securities issued by such Aetna
Trust, the date or dates upon which such distributions shall be payable and the
record date or dates for the payment of such distributions, (iv) whether
distributions on Preferred Securities issued by such Aetna Trust 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 on Preferred Securities issued by such Aetna
Trust shall be cumulative, (v) the amount or amounts which shall be paid out of
the assets of such Aetna Trust to the holders of Preferred Securities of such
Aetna Trust upon voluntary or involuntary dissolution, winding-up or termination
of such Aetna Trust, (vi) the obligation or right, if any, of such Aetna Trust
to purchase or redeem Preferred Securities issued by such Aetna 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 Aetna Trust shall or
may be purchased or redeemed, in whole or in part, pursuant to such obligation
or right, (vii) the voting rights, if any, of Preferred Securities issued by
such Aetna 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, or of Preferred Securities issued by one or more Aetna
Trusts, or of both, as a condition to specified actions or amendments to the
Declaration of such Aetna Trust, (viii) the terms and conditions, if any, upon
which the Junior Subordinated Debt Securities may be distributed to holders of
Preferred Securities, (ix) if applicable, any securities exchange upon which the
Preferred Securities shall be listed, and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such Aetna Trust consistent with the Declaration of such Aetna Trust
or with applicable law. All Preferred Securities offered hereby will be
guaranteed by Aetna and the Company as and to the extent set forth below under
"Description of the Preferred Securities Guarantees." 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 Aetna Trust
will issue one series of Common Securities. The Declaration of each Aetna Trust
authorizes the Regular Trustees of such trust to issue on behalf of such Aetna
Trust 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 an Aetna Trust will
be substantially identical to the terms of the Preferred Securities issued by
such Aetna Trust and the Common Securities will rank pari passu, and payments
will be made thereon on a Pro Rata Basis with the Preferred Securities except
that if a Declaration Event of Default occurs and is continuing, the rights of
the holders of such Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and maturity will be subordinated to the
rights of the holders of such Preferred Securities. Except in certain limited
circumstances, the Common Securities issued by an Aetna Trust will also carry
the right to vote and to appoint, remove or replace any of the Trustees of that
Aetna Trust. All of the Common Securities of an Aetna Trust will be directly or
indirectly owned by Aetna.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees that will be executed and delivered by Aetna and the
Company for the benefit of the holders from time to time of Preferred
Securities. Each Preferred Security Guarantee will be separately qualified under
the Trust Indenture
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Act and will be held by The First National Bank of Chicago, acting in its
capacity as indenture trustee with respect thereto, for the benefit of holders
of the Preferred Securities of the applicable Aetna Trust. The terms of each
Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Guarantee by the Trust
Indenture Act. This description summarizes the material terms of the Preferred
Securities Guarantees and is qualified in its entirety by reference to the form
of Preferred Securities Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act.
GENERAL
Pursuant to each Preferred Securities Guarantee, Aetna and the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by an Aetna Trust,
the Guarantee Payments (as defined herein) (without duplication of amounts
theretofore paid by such Aetna Trust), to the extent not paid by such Aetna
Trust, regardless of any defense, right of set-off or counterclaim that such
Aetna Trust may have or assert. The following payments or distributions with
respect to Preferred Securities issued by an Aetna Trust to the extent not paid
or made by such Aetna Trust (the "Guarantee Payments"), will be subject to the
Preferred Securities Guarantee (without duplication): (i) any accrued and unpaid
distributions on such Preferred Securities, and the redemption price, including
all accrued and unpaid distributions to the date of redemption, with respect to
any Preferred Securities called for redemption by such Aetna Trust, but only if
and to the extent that in each case the Company has made a payment to the
related Property Trustee of interest or principal on the Junior Subordinated
Debt Securities, or Aetna has made such payment pursuant to the related Junior
Subordinated Debt Guarantees, deposited in such Aetna Trust as trust assets and
(ii) upon a voluntary or involuntary dissolution, winding-up or termination of
such Aetna Trust (other than in connection with the distribution of such Junior
Subordinated Debt Securities to the holders of Preferred Securities or the
redemption of all of the Preferred Securities upon the maturity or redemption of
such Junior Subordinated Debt Securities) the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Preferred
Securities to the date of payment, to the extent such Aetna Trust has funds
available therefor or (b) the amount of assets of such Aetna Trust remaining
available for distribution to holders of such Preferred Securities in
liquidation of such Aetna Trust. Aetna's and the Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
Aetna or the Company to the holders of Preferred Securities or by causing the
applicable Aetna Trust to pay such amounts to such holders.
A Preferred Securities Guarantee is a full and unconditional guarantee from
the time of issuance of the applicable Preferred Securities, but a Preferred
Securities Guarantee covers distributions and other payments on such Preferred
Securities only if and to the extent that the Company has made a payment to the
Property Trustee of interest or principal on the Junior Subordinated Debt
Securities, or Aetna has made such payment pursuant to the related Junior
Subordinated Debt Guarantees, deposited in the applicable Aetna Trust as trust
assets. If the Company does not make interest or principal payments on the
Junior Subordinated Debt Securities, or Aetna does not make such payment
pursuant to the related Junior Subordinated Debt Guarantees, deposited in the
applicable Aetna Trust as trust assets, no payment obligation will arise under a
Preferred Securities Guarantee, the Property Trustee will not make distributions
on the Preferred Securities of such Aetna Trust and the Aetna Trust will not
have funds available therefor.
The Company's and Aetna's obligations under the Declaration for each Aetna
Trust, the Preferred Securities Guarantee issued with respect to Preferred
Securities issued by that Aetna Trust, the Junior Subordinated Debt Securities
purchased by that Aetna Trust, the related Junior Subordinated Debt Guarantees,
and the related Indenture will in the aggregate provide a full and unconditional
guarantee on a subordinated basis by Aetna and the Company of payments due on
the Preferred Securities issued by that Aetna Trust.
CERTAIN COVENANTS OF AETNA AND THE COMPANY
Unless otherwise provided in the applicable Prospectus Supplement, in each
Preferred Securities Guarantee, Aetna and the Company will covenant and agree
that, so long as any Preferred Securities issued by
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the applicable Aetna Trust remain outstanding, Aetna will not, and will cause
the Company not to, and the Company will not, declare or pay any dividends on,
or redeem, purchase, acquire or make any distribution, liquidation or guarantee
payment with respect to its capital stock, if at any time, (i) the Company (or
Aetna pursuant to the Junior Subordinated Debt Guarantee) shall have failed to
make any payment of interest, principal or premium on the related Junior
Subordinated Debt Securities when due (after giving effect to any grace period
for payment thereof as provided in the Indenture), (ii) the Company shall have
given notice of its election to defer payments of interest on such Junior
Subordinated Debt Securities held by such Aetna Trust as trust assets by
extending the interest payment period as provided in the terms of the Junior
Subordinated Debt Securities and such period, or any extension thereof, is
continuing, or (iii) Aetna or the Company shall be in default with respect to
its Guarantee Payments under the related Preferred Securities Guarantee;
provided, that the Company and Aetna may (a) make redemptions, purchases,
retirements, acquisitions or distributions in shares of capital stock of, or
redemptions, purchases or acquisitions of shares of Common Stock (as defined)
of, Aetna, for purposes of any employee benefit plan or program of Aetna or any
subsidiary, (b) pay accrued dividends (and cash in lieu of fractional shares)
upon the conversion of any preferred stock of Aetna as may be outstanding from
time to time, in accordance with the terms of such stock and (c) the foregoing
will not apply to stock dividends paid by Aetna or dividends paid by the Company
provided that the Company is a direct or indirect wholly owned subsidiary of
Aetna. The term "capital stock" shall include Aetna's Common Stock and any issue
of preferred stock from time to time outstanding but shall not include any
indebtedness of any kind, whether or not convertible or exchangeable for shares
of Common Stock or preferred stock of Aetna. In addition, so long as any
Preferred Securities remain outstanding, Aetna has agreed (i) to remain the sole
direct or indirect owner of all of the outstanding Common Securities issued by
the applicable Aetna Trust and shall not cause or permit the Common Securities
to be transferred except to the extent permitted by the related Declaration;
provided that any permitted successor under the Indenture of the owner of the
Common Securities may succeed to such owner's ownership of the Common Securities
issued by the applicable Aetna Trust and (ii) to use reasonable efforts to cause
such Aetna Trust to continue to be treated as a grantor trust for United States
Federal income tax purposes except in connection with a distribution of Junior
Subordinated Debt Securities.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities issued by the applicable Aetna Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be set
forth in an accompanying Prospectus Supplement. All guarantees and agreements
contained in a Preferred Securities Guarantee shall bind the successors,
assignees, receivers, trustees and representatives of Aetna and the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable Aetna Trust then outstanding. Except in connection with a
consolidation, merger or sale involving Aetna or the Company that is permitted
under the Indenture, neither Aetna nor the Company may delegate its obligations
under any Preferred Securities Guarantee.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEES
Each Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities issued by the applicable Aetna
Trust (a) upon full payment of the redemption price of all Preferred Securities
of such Aetna Trust, (b) upon distribution of the Junior Subordinated Debt
Securities to the holders of the Preferred Securities of such Aetna Trust in
exchange for all of the Preferred Securities issued by such Aetna Trust, or (c)
upon full payment of the amounts payable upon liquidation of such Aetna Trust.
Notwithstanding the foregoing, each Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities issued by the applicable Aetna Trust must restore
payment of any sums paid under such Preferred Securities or such Guarantee.
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STATUS OF THE PREFERRED SECURITIES GUARANTEES
Aetna's and the Company's obligations under each Preferred Securities
Guarantee to make the Guarantee Payments will constitute an unsecured obligation
of Aetna and the Company and will rank (i) pari passu in right of payment with
Aetna's and the Company's obligations under the other Preferred Securities
Guarantees and other guarantees of preferred securities, (ii) subordinate and
junior in right of payment to all other liabilities of Aetna, including the
Junior Subordinated Debt Guarantees, and of the Company, including the Junior
Subordinated Debt Securities, except those made pari passu or subordinate by
their terms and (iii) senior to all capital stock now or hereafter issued by
Aetna or the Company and to any guarantee now or hereafter issued by Aetna or
the Company in respect of any of its or their capital stock. Aetna's and the
Company's obligations under each Preferred Securities Guarantee will rank pari
passu with its guarantee of the preferred securities issued by Aetna Capital
LLC. The Preferred Securities Guarantees will be unsecured and, because Aetna
and the Company are non-operating holding companies, will be effectively
subordinated to all liabilities of Aetna and Company subsidiaries, respectively.
Holders of the Preferred Securities Guarantees should look only to the assets of
Aetna and the Company for payment of the Guarantee Payments. Each Declaration
provides that each holder of Preferred Securities issued by the applicable Aetna
Trust by acceptance thereof agrees to the subordination provisions and other
terms of the related Preferred Securities Guarantees.
Each Preferred Securities 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 first instituting a legal proceeding against any other person
or entity). Each Preferred Securities Guarantee will be deposited with The First
National Bank of Chicago, as indenture trustee, to be held for the benefit of
the holders of the Preferred Securities issued by the applicable Aetna Trust.
The First National Bank of Chicago shall enforce the Preferred Securities
Guarantees on behalf of the holders of the Preferred Securities issued by the
applicable Aetna Trust. The holders of not less than a majority in aggregate
liquidation amount of the Preferred Securities issued by the applicable Aetna
Trust have the right to direct the time, method and place of conducting any
proceeding for any remedy available in respect of the related Preferred
Securities Guarantee, including the giving of directions to The First National
Bank of Chicago. If The First National Bank of Chicago fails to enforce such
Preferred Securities Guarantee as above provided, any holder of Preferred
Securities issued by the applicable Aetna Trust may institute a legal proceeding
directly against Aetna or the Company to enforce its rights under such Preferred
Securities Guarantee, without first instituting a legal proceeding against the
applicable Aetna Trust or any other person or entity.
MISCELLANEOUS
Aetna and the Company are required to file annually with The First National
Bank of Chicago an officer's certificate as to Aetna's and the Company's
compliance with all conditions under the Preferred Securities Guarantees.
The First National Bank of Chicago, prior to the occurrence of a default,
undertakes to perform only such duties as are specifically set forth in the
applicable Preferred Securities Guarantees and, after default with respect to a
Preferred Securities 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 First National Bank of Chicago is under no
obligation to exercise any of the powers vested in it by a Preferred Securities
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by, and construed in
accordance with, the laws of the State of New York.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBT SECURITIES
AND JUNIOR SUBORDINATED DEBT GUARANTEES
The following description sets forth certain general terms and provisions
of the Junior Subordinated Debt Securities and Junior Subordinated Debt
Guarantees to which any Prospectus Supplement may relate. The particular terms
of the Junior Subordinated Debt Securities and Junior Subordinated Debt
Guarantees offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may not apply to the Junior Subordinated Debt Securities
and Junior Subordinated Debt Guarantees so offered will be described in the
Prospectus Supplement relating to such Junior Subordinated Debt Securities and
Junior Subordinated Debt Guarantees.
The Junior Subordinated Debt Securities and Junior Subordinated Debt
Guarantees are to be issued under an Indenture (the "Indenture") to be entered
into among the Company, Aetna and The First National Bank of Chicago, as
Trustee. A copy of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The First National
Bank of Chicago is hereinafter referred to as the "Trustee". The following
summaries of certain provisions of the Junior Subordinated Debt Securities, the
Junior Subordinated Debt Guarantees and the Indenture do not purport to be
complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture applicable to a particular series of
Junior Subordinated Debt Securities and related Junior Subordinated Debt
Guarantees, including the definitions therein of certain terms. Capitalized
terms not otherwise defined herein shall have the meaning given in the
Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of Junior
Subordinated Debt Securities which may be issued thereunder and the Indenture
provides that Junior Subordinated Debt Securities may be issued thereunder from
time to time in one or more series. The Junior Subordinated Debt Securities and
the Junior Subordinated Debt Guarantees when issued will be unsecured and
subordinated in right of payment to the prior payment in full of all Senior Debt
(as defined herein) of the Company and Aetna, respectively, as described under
"Subordination of Junior Subordinated Debt Securities and Junior Subordinated
Debt Guarantees" and in the Prospectus Supplement applicable to an offering of
Junior Subordinated Debt Securities and Junior Subordinated Debt Guarantees.
Reference is made to the Prospectus Supplement relating to the particular
Junior Subordinated Debt Securities offered thereby which shall set forth the
following terms of the Junior Subordinated Debt Securities offered thereby: (1)
the title of the Junior Subordinated Debt Securities; (2) any limit on the
aggregate principal amount of such Junior Subordinated Debt Securities; (3) the
Person to whom any interest on such Junior Subordinated Debt Securities will be
payable, if other than the Person in whose name such Junior Subordinated Debt
Securities are registered on any Regular Record Date; (4) the date or dates on
which the principal of such Junior Subordinated Debt Securities will be payable;
(5) the rate or rates per annum (which may be fixed or variable) at which such
Junior Subordinated Debt Securities will bear interest, if any, or the formula
pursuant to which such rate or rates shall be determined, the date or dates from
which such interest will accrue and the dates on which such interest, if any,
will be payable, the right, if any, of the Company to defer or extend an
interest payment date and the duration of such deferral or extension (an
"Extension Period") and the Regular Record Dates for such interest payment
dates; (6) whether the Junior Subordinated Debt Securities will be secured; (7)
the place or places where principal of (and premium, if any) and interest, if
any, on such Junior Subordinated Debt Securities will be payable; (8) if
applicable, the price at which, the periods within which and the terms and
conditions upon which the Junior Subordinated Debt Securities may be redeemed at
the option of the Company, pursuant to a sinking fund or otherwise; (9) if
applicable, any obligation of the Company to redeem or purchase such Junior
Subordinated Debt Securities pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof, and the period or periods
within which, the price or prices at which and the terms and conditions upon
which the Junior Subordinated Debt Securities will be redeemed or purchased, in
whole or in part; (10) the denominations in which such Junior Subordinated Debt
Securities will be issuable; (11) if the amount of payments of principal of (or
premium, if any) or interest, if any, on the Junior Subordinated Debt Securities
may be determined with reference to one
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or more indices, the manner in which such amounts will be determined; (12) the
portion of the principal amount of such Junior Subordinated Debt Securities, if
other than the principal amount thereof, payable upon acceleration of maturity
thereof; (13) whether all or any part of such Junior Subordinated Debt
Securities will be issued in the form of a Global Security or Securities and, if
so, the depositary for, and other terms related to, such Global Security or
Securities; (14) any event or events of default applicable with respect to such
Junior Subordinated Debt Securities in addition to those provided in the
Indenture; (15) the relative degree to which such Junior Subordinated Debt
Securities of the series shall be senior to or be subordinated to other series
of such Junior Subordinated Debt Securities in right of payment, whether such
other series of Junior Subordinated Debt Securities are outstanding or not; (16)
any other covenant or warranty included for the benefit of the Junior
Subordinated Debt Securities in addition to (and not inconsistent with) those
included in the Indenture for the benefit of Junior Subordinated Debt Securities
or in lieu of any covenant or warranty included in the Indenture for the benefit
of the Junior Subordinated Debt Securities of all series, or any provision that
any covenant or warranty included in the Indenture for the benefit of Junior
Subordinated Debt Securities of all series shall not be for the benefit of the
applicable Junior Subordinated Debt Securities, or any combination of such
covenant, warranty or provisions; (17) the guarantee of Aetna of the Junior
Subordinated Debt Securities if other than as described herein; (18) any
restriction or condition on the transferability of the Junior Subordinated Debt
Securities; (19) any authenticating or paying agents, registrars, conversion
agents or any other agents with respect to such Junior Subordinated Debt
Securities; and (20) any other terms of such Junior Subordinated Debt Securities
and Junior Subordinated Debt Guarantees not inconsistent with the terms of the
Indenture. Unless otherwise specified in the applicable Prospectus Supplement,
the Junior Subordinated Debt Securities will not be listed on any securities
exchange.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
Junior Subordinated Debt Securities are to be issued as registered securities
without coupons in denominations of $25 or any integral multiple of $25. No
service charge will be made for any transfer or exchange of such Junior
Subordinated Debt Securities, but the Company or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Junior Subordinated Debt Securities may be issued under the Indenture as
Original Issue Discount Securities to be sold at a substantial discount below
their stated principal amount. United States Federal income tax consequences and
other considerations applicable thereto will be described in the Prospectus
Supplement relating hereto.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Junior Subordinated Debt
Securities, special United States Federal income tax, accounting and other
considerations applicable thereto will be described in the applicable Prospectus
Supplement.
Since each of Aetna and the Company is a holding company, the rights of
Aetna and the Company, respectively, and hence the right of creditors of Aetna
and the Company (including the Holders of Junior Subordinated Debt Securities),
to participate in any distribution of the assets of their respective
subsidiaries (including in the case of Aetna, the Company and Aetna U.S.
Healthcare), upon any such subsidiary's liquidation or reorganization or
otherwise is necessarily subject to the prior claims of creditors of such
subsidiary, except to the extent that claims of Aetna or the Company, as a
creditor of such subsidiary, may be recognized.
The Indenture does not contain any provision that limits the ability of the
Company or Aetna to incur indebtedness or that affords Holders of the Junior
Subordinated Debt Securities protection in the event of a highly leveraged or
similar transaction involving the Company or Aetna.
PAYMENT, REGISTRATION, TRANSFER AND EXCHANGE
Unless otherwise provided in the applicable Prospectus Supplement, payments
in respect of the Junior Subordinated Debt Securities will be made at the office
or agency of the Company maintained for that purpose as the Company may
designate from time to time, except that, at the option of the Company, interest
payments, if any, on Junior Subordinated Debt Securities in registered form may
be made (i) by checks mailed to the holders of Junior Subordinated Debt
Securities entitled thereto at their registered addresses or
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(ii) by wire transfer to an account maintained by the person entitled thereto as
specified in the Register. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of any installment of interest on Junior
Subordinated Debt Securities in registered form will be made to the person in
whose name such Junior Subordinated Debt Security is registered at the close of
business on the Regular Record Date for such interest. Notwithstanding the
foregoing, so long as the Property Trustee is the legal owner and record holder
of the Junior Subordinated Debt Securities and related Junior Subordinated Debt
Guarantees, the payment of the principal of and interest (including compounded
interest, if any) on the Junior Subordinated Debt Securities held by the
Property Trustee will be made by the Company in immediately available funds on
the payment date therefor to the Property Account (as defined in the applicable
Declaration) established and maintained by the Property Trustee pursuant to the
Declaration. Interest payable on any Junior Subordinated Debt Security that is
not punctually paid or duly provided for on any interest payment date will
forthwith cease to be payable to the person in whose name such Junior
Subordinated Debt Security is registered on the relevant record date, and such
defaulted interest will instead be payable to the person in whose name such
Junior Subordinated Debt Security is registered on the special record date or
other specified date determined in accordance with the Indenture; provided,
however, that interest shall not be considered payable by the Company on any
interest payment date falling within an Extension Period unless the Company has
elected to make a full or partial payment of interest accrued on the Junior
Subordinated Debt Securities on such interest payment date.
Unless otherwise provided in the applicable Prospectus Supplement, Junior
Subordinated Debt Securities in registered form will be transferable or
exchangeable at the agency of the Company maintained for such purpose as
designated by the Company from time to time. Junior Subordinated Debt Securities
may be transferred or exchanged without service charge, other than any tax or
other governmental charge imposed in connection therewith.
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless otherwise specified in the Prospectus Supplement, the following
events are defined in the Indenture as "Events of Default" with respect to
Junior Subordinated Debt Securities of any series: (a) failure to pay principal
(including any sinking fund payment) of, or premium (if any) on, any Junior
Subordinated Debt Security of that series when due whether or not payment is
prohibited by the subordination provisions; (b) failure to pay interest, if any,
on any Junior Subordinated Debt Security of that series when due and such
failure continues for a period of 30 days; (c) failure by the Company or Aetna
to perform in any material respect any other covenant in the Indenture (other
than a covenant included in the Indenture solely for the benefit of a series of
Junior Subordinated Debt Securities other than that series) continued for a
period of 90 days after written notice to the Company and Aetna; (d) due
acceleration (which acceleration shall not have been rescinded within 30 days
after written notice to the Company and Aetna) of any indebtedness for borrowed
money in a principal amount in excess of $50,000,000 for which the Company,
Aetna or a Principal Subsidiary (as defined) is liable, including Junior
Subordinated Debt Securities of another series (other than acceleration of
Non-Recourse Debt for borrowed money which does not exceed in the aggregate 4%
of Aetna's total shareholder's equity, as set forth in the most recently
published audited consolidated balance sheet of Aetna), or a default by the
Company, Aetna or any Principal Subsidiary in the payment at final maturity of
outstanding indebtedness for borrowed money in a principal amount in excess of
$50,000,000 (other than default in payment at final maturity of Non-Recourse
Debt which does not exceed in the aggregate 4% of Aetna's total shareholders'
equity, as set forth in the most recently published audited consolidated balance
sheet of Aetna) unless such acceleration or default at maturity shall be
remedied or cured by the Company, Aetna or such Principal Subsidiary or
rescinded, annulled or waived by the holders of such indebtedness, in which case
such acceleration or default at maturity shall not constitute an Event of
Default under this provision and any acceleration relating thereto shall be
rescinded; and (e) certain events of insolvency, reorganization, receivership or
liquidation of the Company or Aetna.
No Event of Default with respect to Junior Subordinated Debt Securities of
a particular series shall necessarily constitute an Event of Default with
respect to Junior Subordinated Debt Securities of any other series. If an Event
of Default with respect to Junior Subordinated Debt Securities of any series at
the time
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Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 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 Junior Subordinated Debt Securities of that series
to be due and payable immediately; provided, however, that under certain
circumstances the Holders of a majority in aggregate principal amount of
Outstanding Junior Subordinated Debt Securities of that series may rescind or
annul such declaration and its consequences.
Reference is made to the Prospectus Supplement relating to any series of
Junior Subordinated Debt Securities which are Original Issue Discount Securities
for the particular provisions relating to the principal amount of such Original
Issue Discount Securities due on acceleration upon the occurrence of an Event of
Default and the continuation thereof.
The Indenture provides that the Trustee may withhold notice to the Holders
of the Junior Subordinated Debt Securities of any default (except in payment of
principal (or premium, if any) or interest, if any) if it considers it in the
interest of the Holders of the Junior Subordinated Debt Securities to do so.
The Company and Aetna will be required to furnish to the Trustee annually a
statement by certain officers of the Company as to the compliance with all
conditions and covenants of the Indenture.
The Holders of a majority in principal amount of the Outstanding Junior
Subordinated Debt Securities of any series affected will have the right, subject
to certain limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Junior Subordinated Debt
Securities of such series, and to waive certain defaults.
The Indenture provides that, in case an Event of Default shall occur and be
continuing, the Trustee shall exercise such of its rights and powers under the
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. Subject to such provisions, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture, at the request of
any of the Holders of Junior Subordinated Debt Securities unless they shall have
offered to the Trustee security or indemnity in form and substance reasonably
satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request.
No Holder of a Junior Subordinated 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 Trustee
written notice of a continuing Event of Default with respect to the Junior
Subordinated Debt Securities of such series and unless also the Holders of at
least 25% in aggregate principal amount of the Outstanding Junior Subordinated
Debt Securities of the same series shall have made written request, and offered
indemnity to the Trustee in form and substance reasonably satisfactory to the
Trustee, to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in aggregate principal amount of the
Outstanding Junior Subordinated Debt Securities of the same series a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a Holder of a Junior Subordinated Debt Security for enforcement of
payment of the principal of (or premium, if any) or interest, if any, on such
Junior Subordinated Debt Security on or after the respective due dates expressed
in such Junior Subordinated Debt Security.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company,
Aetna and the Trustee, with the consent of the Holders of not less than a
majority of aggregate principal amount of each series of the Outstanding Junior
Subordinated Debt Securities issued under the Indenture which is affected by the
modification or amendment; provided, however, that no such modification or
amendment may, without the consent of each Holder of such Junior Subordinated
Debt Security affected thereby: (1) change the Stated Maturity of the principal
of (or premium, if any) or any installment of principal or interest, if any, on
any such
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Junior Subordinated Debt Security; (2) reduce the principal amount of (or
premium, if any) or interest, if any, on any such Junior Subordinated Debt
Security or the principal amount due upon acceleration of an Original Issue
Discount Security; (3) change the place or currency of payment of principal of
(or premium, if any) or the interest, if any, on any such Junior Subordinated
Debt Security; (4) impair the right to institute suit for the enforcement of any
such payment on or with respect to any such Junior Subordinated Debt Security;
(5) reduce the percentage of Holders of Junior Subordinated Debt Securities
necessary to modify or amend the Indenture; (6) modify or affect in any manner
adverse to the Holders of Junior Subordinated Debt Securities the obligation of
Aetna under the Junior Subordinated Debt Guarantees in respect of the due and
punctual payment of the principal of (and premium, if any) or interest on the
Junior Subordinated Debt Securities; (7) modify the subordination provisions in
a manner adverse to the holders of the Junior Subordinated Debt Securities or
(8) modify the foregoing requirements or reduce the percentage of Outstanding
Junior Subordinated Debt Securities necessary to waive compliance with certain
provisions of the Indenture or for waiver of certain defaults.
The holders of at least a majority of the aggregate principal amount of the
Outstanding Junior Subordinated Debt Securities of any series may, on behalf of
all Holders of that series, waive compliance by the Company and Aetna with
certain restrictive provisions of the Indenture and waive any past default under
the Indenture, except a default in the payment of principal, premium or interest
or in the performance of certain covenants.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company and Aetna, at the Company's option,
(A) will be defeased and discharged from any and all of their respective
obligations with respect to such Junior Subordinated Debt Securities and Junior
Subordinated Debt Guarantees (including the provisions described under
"Subordination of Junior Subordinated Debt Securities and Junior Subordinated
Debt Guarantees" herein and except for the obligations to exchange or register
the transfer of such Junior Subordinated Debt Securities, to replace temporary
or mutilated, destroyed, lost or stolen Junior Subordinated Debt Securities, to
maintain an office or agency in respect of the Junior Subordinated Debt
Securities, and to hold monies for payments in trust) ("defeasance"), or (B)
will be released from their respective obligations under the Indenture
concerning the restrictions described under "Limitations on Liens on Common
Stock of Principal Subsidiaries, "Certain Covenants of the Company and Aetna"
and "Consolidation, Merger and Sale of Assets" and any other covenants
applicable to such Junior Subordinated Debt Securities and Junior Subordinated
Debt Guarantees (including the provisions described under "Subordination of
Junior Subordinated Debt Securities and Junior Subordinated Debt Guarantees"
herein) which are subject to covenant defeasance ("covenant defeasance"), and
the occurrence of an event described and notice thereof in clauses (c) and (d)
under "Events of Default and Notice Thereof" (with respect to covenants subject
to covenant defeasance) shall no longer be an Event of Default, in each case,
upon the irrevocable deposit with the Trustee (or other qualifying trustee), in
trust for such purpose, of money, and/or U.S. Government Obligations (as
defined) which through the payment of principal and interest in accordance with
their terms will provide money in an amount sufficient to pay the principal of
(and premium, if any) and interest, if any, on such Junior Subordinated Debt
Securities, and any mandatory sinking fund or analogous payments thereon, on the
scheduled due dates therefor. Such a trust may only be established if, among
other things, (i) the Company has delivered to the Trustee an opinion of counsel
(as specified in the Indenture) to the effect that the Holders of such Junior
Subordinated Debt Securities will not recognize income, gain or loss for United
States Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to United States Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such defeasance or covenant defeasance had not occurred, (ii) no Event of
Default or event which with the giving of notice or lapse of time, or both,
would become an Event of Default under the Indenture shall have occurred and be
continuing on the date of such deposit (or, with respect to any event specified
in clause (e) under "Events of Default and Notice Thereof", at any time on or
prior to the 90th day after the date of such deposit) and (iii) (x) no default
in the payment of principal of (or premium, if any) or interest, if any, on any
Senior Debt of the Company or Aetna beyond any applicable grace period shall
have occurred and be continuing, or (y) no other default with respect to any
Senior Debt of the Company or Aetna shall have occurred and be continuing
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and shall have resulted in the acceleration of such Senior Debt. If the Company
establishes such a trust, it shall be permitted at the date of establishment to
extend the interest payment period for only one Extension Period (including any
Extension Period outstanding at the date of such establishment).
The Company may exercise its defeasance option with respect to such Junior
Subordinated Debt Securities and Junior Subordinated Debt Guarantees
notwithstanding its prior exercise of its covenant defeasance option. If the
Company exercises its defeasance option, payment of such Junior Subordinated
Debt Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of such Junior
Subordinated Debt Securities may not be accelerated by reference to the
covenants noted under clause (B) above. In the event the Company and Aetna omit
to comply with their remaining obligations with respect to such Junior
Subordinated Debt Securities and Junior Subordinated Debt Guarantees under the
Indenture after the exercise by the Company of its covenant defeasance option
and such Junior Subordinated Debt Securities are declared due and payable
because of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations on deposit with the Trustee may be insufficient to pay
amounts due on the Junior Subordinated Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company and Aetna will remain liable in respect of such payments.
LIMITATIONS ON LIENS ON COMMON STOCK OF PRINCIPAL SUBSIDIARIES
As long as any of the Junior Subordinated Debt Securities remains
outstanding, Aetna will not, and will not permit any Principal Subsidiary to,
issue, assume, incur or guarantee any indebtedness for borrowed money secured by
a mortgage, pledge, lien or other encumbrance, directly or indirectly, on any of
the Common Stock of a Principal Subsidiary, which Common Stock is owned by
Aetna, by the Company or by any Principal Subsidiary, unless the obligations of
the Company under the Junior Subordinated Debt Securities and, if the Company or
Aetna so elects, any other indebtedness of the Company or Aetna ranking on a
parity with, or prior to, the Junior Subordinated Debt Securities or Aetna's
obligations under the Junior Subordinated Debt Guarantees, as the case may be,
shall be secured equally and ratably with, or prior to, such secured
indebtedness for borrowed money so long as it is outstanding and is so secured.
"Principal Subsidiary" means only Aetna Life Insurance Company, Aetna Life
Insurance and Annuity Company and Aetna U.S. Healthcare and any other Subsidiary
of Aetna which shall hereafter succeed by merger or otherwise to a major part of
the business of one or more of the Principal Subsidiaries. The decision as to
whether a Subsidiary shall have succeeded to a major part of the business of one
or more of the Principal Subsidiaries shall be made in good faith by the Board
of Directors of the Company or a committee thereof by the adoption of a
resolution so stating, and the Company shall within 30 days of the date of the
adoption of such resolution deliver to the Trustee a copy thereof, certified by
the Corporate Secretary or an Assistant Corporate Secretary of Aetna.
"Common Stock" means, with respect to any Principal Subsidiary, stock of
any class, however designated, except stock which is non-participating beyond
fixed dividend and liquidation preferences and the holders of which have either
no voting rights or limited voting rights entitling them, only in the case of
certain contingencies, to elect less than a majority of the directors (or
persons performing similar functions) of such Principal Subsidiary, and shall
include securities of any class, however designated, which are convertible into
such Common Stock.
CERTAIN COVENANTS OF THE COMPANY AND AETNA
Unless otherwise provided in the applicable Prospectus Supplement, if
Junior Subordinated Debt Securities are issued to an Aetna Trust in connection
with the issuance of Trust Securities by such Aetna Trust, in the Indenture, the
Company and Aetna will covenant and agree that, so long as any of such Junior
Subordinated Debt Securities remain outstanding, the Company and Aetna will not
declare or pay any dividends on, or redeem, purchase, acquire or make any
distribution, liquidation or guarantee payment with respect to its capital
stock, if at any time, (i) the Company (or Aetna pursuant to the Junior
Subordinated Debt Guarantee) shall have failed to make any payment of interest,
principal or premium on the related
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Junior Subordinated Debt Securities when due (after giving effect to any grace
period for payment thereof as provided in the Indenture), (ii) the Company shall
have given notice of its election to defer payments of interest on such Junior
Subordinated Debt Securities held by such Aetna Trust as trust assets by
extending the interest payment period as provided in the terms of the Junior
Subordinated Debt Securities and such period, or any extension thereof, is
continuing, or (iii) Aetna and the Company shall be in default with respect to
its Guarantee Payments under the related Preferred Securities Guarantee;
provided, that the Company and Aetna may (a) make redemptions, purchases,
retirements, acquisitions or distributions in shares of capital stock of, or
redemptions, purchases or acquisitions of shares of Common Stock of, Aetna, for
purposes of any employee benefit plan or program of Aetna or any subsidiary, (b)
pay accrued dividends (and cash in lieu of fractional shares) upon the
conversion of any preferred stock of Aetna as may be outstanding from time to
time, in accordance with the terms of such stock and (c) the foregoing will not
apply to stock dividends paid by Aetna or dividends paid by the Company provided
that the Company is a direct or indirect wholly owned subsidiary of Aetna. The
term "capital stock" shall include Aetna's Common Stock and any issue of
preferred stock from time to time outstanding but shall not include any
indebtedness of any kind, whether or not convertible or exchangeable for shares
of Common Stock or preferred stock of Aetna.
CONSOLIDATION, MERGER AND SALE OF ASSETS; ASSUMPTION BY AETNA OR SUBSIDIARY OF
COMPANY OBLIGATIONS
Neither the Company nor Aetna may consolidate with or merge into any other
Person or sell its property and assets as, or substantially as, an entirety to
any Person and neither the Company nor Aetna may permit any Person to merge into
or consolidate with the Company or Aetna, as the case may be, unless (i) the
Company or Aetna, as the case may be, will be the resulting or surviving entity
or any successor or purchaser is a corporation, partnership or trust organized
under the laws of the United States of America, any State or the District of
Columbia, and any such successor or purchaser expressly assumes the Company's
and Aetna's obligations under the Junior Subordinated Debt Securities or the
Junior Subordinated Debt Guarantees, as applicable, under a supplemental
Indenture, (ii) immediately after giving effect to the transaction no Event of
Default shall have occurred and be continuing, and (iii) certain other
conditions are met.
Aetna or any Subsidiary of Aetna may, where permitted by law, assume the
obligations of the Company for the due and punctual payment of the principal of
(premium, if any) and interest on and any other payments with respect to the
Junior Subordinated Debt Securities of any series and the performance of every
covenant of the Indenture and the Junior Subordinated Debt Securities on the
part of Company to be performed or observed if (i) Aetna or such Subsidiary, as
the case may be, shall expressly assume such obligations by a supplemental
indenture, in form reasonably satisfactory to the Trustee, and, if such
Subsidiary assumed such obligations, Aetna shall, by such supplemental
indenture, confirm that its Junior Subordinated Debt Guarantees with respect to
the Junior Subordinated Debt Securities of such series shall apply to such
Subsidiary's obligations under the Junior Subordinated Debt Securities of such
series and the Indenture; (ii) immediately after giving effect to such
transaction, no Event of Default shall have occurred and be continuing; and
(iii) certain other conditions are met.
SUBORDINATION OF JUNIOR SUBORDINATED DEBT SECURITIES AND JUNIOR SUBORDINATED
DEBT GUARANTEES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Junior Subordinated Debt Securities and Junior
Subordinated Debt Guarantees.
The Junior Subordinated Debt Securities will, to the extent set forth in
the Indenture, be subordinate in right of payment to the prior payment in full
of all Senior Debt of the Company, and the Junior Subordinated Debt Guarantees
will, to the extent set for in the Indenture, be subordinate in right of payment
to the prior payment in full of all Senior Debt of Aetna. 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 the Company or
Aetna, as the case may be, the holders of Senior Debt of the Company or Aetna,
as the case may be, will first be entitled to receive payment in full of
principal of (and premium, if any) and interest, if any, on such Senior Debt of
the Company or Aetna, as the case may be, before the holders of the Junior
Subordinated Debt Securities will be entitled to receive or retain any payment
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in respect of the principal of (and premium, if any) or interest, if any, on the
Junior Subordinated Debt Securities.
By reason of such subordination, in the event of liquidation or insolvency,
(i) creditors of the Company who are not holders of Senior Debt of the Company
or Junior Subordinated Debt Securities may recover less, ratably, than holders
of Senior Debt of the Company and may recover more, ratably, than the holders of
the Junior Subordinated Debt Securities and (ii) creditors of Aetna who are not
holders of Senior Debt of Aetna or Junior Subordinated Debt Securities may
recover less, ratably, than holders of Senior Debt of Aetna and may recover
more, ratably, than holders of Junior Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Junior Subordinated
Debt Securities, the holders of all Senior Debt of the Company and Aetna
outstanding at the time of such acceleration will first be entitled to receive
payment in full of all amounts due thereon before the Holders of Junior
Subordinated Debt Securities will be entitled to receive any payment upon the
principal of (or premium, if any) or interest, if any, on the Junior
Subordinated Debt Securities or the Junior Subordinated Debt Guarantees.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Junior Subordinated Debt Securities may be made if there
shall have occurred and be continuing a default in the payment of principal of
(or premium, if any) or interest on Senior Debt of the Company or Aetna, or an
event of default with respect to any Senior Debt of the Company or Aetna,
resulting in the acceleration of the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
"Debt" means (without duplication and without regard to any portion of
principal amount that has not accrued and to any interest component thereof
(whether accrued or imputed) that is not due and payable) with respect to any
Person, whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed; (ii) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses; (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (iv) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable or
accrued liabilities arising in the ordinary course of business); (v) every
capital lease obligation of such Person; and (vi) every obligation of the type
referred to in clauses (i) through (v) of another Person and all dividends of
another Person the payment of which, in either case, such Person has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means with respect to any Person the principal of (and
premium, if any) and interest, if any (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to such
Person to the extent that such claim for post-petition interest is allowed in
such proceeding), on Debt of such Person, whether incurred on or prior to the
date of the Indenture or thereafter incurred (including, without limitation
indebtedness or guarantees in respect thereof issued or to be issued under the
Indenture dated as of July 1, 1996 among the Company, Aetna and State Street
Bank and Trust Company of Connecticut, National Association, as trustee,
providing for the issuance of subordinated debt securities of the Company and
guarantees of Aetna in respect thereof), unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Junior
Subordinated Debt Securities in the case of the Company, or the Junior
Subordinated Debt Guarantees, in the case of Aetna, or to other Debt of such
Person which is pari passu with, or subordinated to the Junior Subordinated Debt
Securities in the case of the Company, or the Junior Subordinated Debt
Guarantees, in the case of Aetna; provided, however, that Senior Debt shall be
deemed not to include (i) in the case of the Company, the Junior Subordinated
Debt Securities and (ii) in the case of Aetna, the Junior Subordinated Debt
Guarantees and provided, further, that Senior Debt shall not include any other
debt securities or guarantees in respect thereof issued to any other trusts,
partnerships or other entity affiliated with the Company or Aetna which is a
financing vehicle of the Company or Aetna ("Financing Entity") in connection
with the issuance of preferred securities of such Financing Entity, including,
without limitation indebtedness of the Company and Aetna's guarantee in respect
thereof issued to Aetna Capital L.L.C. pursuant to that certain Indenture dated
as of November 1, 1994 between the Company and The First
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National Bank of Chicago, as trustee, as amended by the First Indenture
Supplement dated August 1, 1996 among the Company, Aetna and The First National
Bank of Chicago, as trustee.
The Indenture does not limit or prohibit the incurrence of additional
Senior Debt of the Company or Aetna, which may include indebtedness that is
senior to the Junior Subordinated Debt Securities and the Junior Subordinated
Debt Guarantees, but subordinate to other obligations of the Company or Aetna,
respectively. The Company expects from time to time to incur additional
indebtedness constituting Senior Debt. At March 31, 1998, each of the Company
and Aetna had $2.2 billion aggregate principal amount of Senior Debt
outstanding, no Junior Subordinated Debt Securities or Junior Subordinated Debt
Guarantees outstanding and $348 million of indebtedness ranking pari passu in
right of payment to the Junior Subordinated Debt Securities and the Junior
Subordinated Debt Guarantees. All such Debt of Aetna consists of guarantees of
Debt of the Company.
The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Junior Subordinated Debt Securities or
the Junior Subordinated Debt Guarantees with respect thereto, may be changed
prior to such issuance. Any such change would be described in the Prospectus
Supplement relating to such Junior Subordinated Debt Securities.
VOTING RIGHTS
The holders of the Junior Subordinated Debt Securities will have no voting
rights.
GLOBAL SECURITIES
The Junior Subordinated Debt Securities of a series may be issued in the
form of one or more Global Securities that will be deposited with a Depositary
or its nominee. In such a case, one or more Global Securities will be issued in
a denomination or aggregate denominations equal to the portion of the aggregate
principal amount of Outstanding Junior Subordinated Debt Securities of the
series to be represented by such Global Security or Securities. Unless and until
it is exchanged in whole or in part for Junior Subordinated Debt Securities in
definitive registered form, a Global Security may not be registered for transfer
or exchange except as a whole by the Depositary for such Global Security to a
nominee for such Depositary and except in the circumstances described in the
applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debt Securities to be represented by
a Global Security and a description of the Depositary will be contained in the
applicable Prospectus Supplement.
THE TRUSTEE
The Indenture contains limitations on the right of the Trustee, as a
creditor of the Company and Aetna, to obtain payment of claims in certain cases,
or to realize on certain property received in respect of any such claim as
security or otherwise. In addition, the Trustee may be deemed to have a
conflicting interest and may be required to resign as Trustee if at the time of
a default under the Indenture it is a creditor of the Company or Aetna.
The Trustee or its affiliates act as depositary for funds of, make loans to
and perform other services for, or may be a customer of, the Company and Aetna
in the ordinary course of business.
GOVERNING LAW
The Indenture is governed by and shall be construed in accordance with the
laws of the State of New York, but without regard to principles of conflicts of
laws.
22
41
PLAN OF DISTRIBUTION
The Company may sell Junior Subordinated Debt Securities and the Aetna
Trusts may sell Preferred Securities to one or more underwriters for public
offering and sale by them or may sell Junior Subordinated Debt Securities or
Preferred Securities to investors or other persons directly or through agents.
The Company may sell Junior Subordinated Debt Securities and the Aetna Trusts
may sell Preferred Securities as soon as practicable after effectiveness of the
Registration Statement, provided that favorable market conditions exist. Any
such underwriter or agent involved in the offer and sale of the Offered
Securities will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or at prices related to prevailing market prices
or at negotiated prices. The Company or the applicable Aetna Trust also may,
from time to time, authorize firms acting as the Company's or such Trust's
agents to offer and sell the Junior Subordinated Debt Securities or Preferred
Securities upon the terms and conditions as shall be set forth in any Prospectus
Supplement. In connection with the sale of Offered Securities, underwriters may
be deemed to have received compensation from the Company or the applicable Aetna
Trust in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Offered Securities for whom they may act as
agent. Underwriters may sell Offered Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed from
time to time) from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company or the Aetna Trusts to
underwriters or agents in connection with the offering of Offered Securities,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Offered Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled,
under agreements with the Company, Aetna and the applicable Aetna Trust, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement for certain
expenses.
Underwriters, dealers and agents may engage in transactions with, or
perform services for, or be customers of, the Company, Aetna and the Aetna
Trusts in the ordinary course of business.
If so indicated in an applicable Prospectus Supplement, the Company or the
applicable Aetna Trust will authorize dealers acting as the Company's or such
Trust's agents to solicit offers by certain institutions to purchase Offered
Securities from the Company or the applicable Aetna Trust, as the case may be,
at the public offering price set forth in such Prospectus Supplement pursuant to
Delayed Delivery Contracts ("Contracts") providing for payment and delivery on
the date or dates stated in such Prospectus Supplement. Each Contract will be
for an amount specified in the applicable Prospectus Supplement. Institutions
with whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of the Offered Securities covered
by its Contracts shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is subject
and (ii) if the Offered Securities are being sold to underwriters, the Company
or the applicable Aetna Trust, as the case may be, shall have sold to such
underwriters such amount specified in the applicable Prospectus Supplement.
Agents and underwriters will have no responsibility in respect of the delivery
or performance of Contracts.
The Offered Securities may or may not be listed on a national securities
exchange or a foreign securities exchange. No assurances can be given that there
will be a market for the Offered Securities.
23
42
VALIDITY OF THE SECURITIES
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Junior Subordinated Debt Securities, the Junior Subordinated
Debt Guarantees and the Preferred Securities Guarantees offered hereby will be
passed upon for the Company and Aetna by Thomas J. Calvocoressi, counsel to the
Company and Aetna, and Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017. Unless otherwise indicated in the applicable Prospectus
Supplement, certain matters of Delaware law relating to the validity of the
Preferred Securities will be passed upon for the Aetna Trusts, the Company and
Aetna by Richards, Layton & Finger, P.A., Wilmington, Delaware 19899, special
Delaware counsel to the Aetna Trusts, the Company and Aetna. Certain legal
matters in connection with the Offered Securities will be passed upon for any
agents or underwriters by Sullivan & Cromwell, 125 Broad Street, New York, New
York 10004. Davis Polk & Wardwell and Sullivan & Cromwell will rely upon the
opinions of Thomas J. Calvocoressi and Richards, Layton & Finger, P.A. as to
certain matters governed by Connecticut law or Delaware law, respectively. As of
March 31, 1998, Thomas J. Calvocoressi beneficially owned 2,701 shares, and had
options to purchase 46,704 shares, of Aetna's Common Stock.
EXPERTS
The consolidated financial statements and schedules of Aetna and its
subsidiaries (including the Company) as of December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997 which are
incorporated by reference in Aetna's Annual Report on Form 10-K for the year
ended December 31, 1997, have been incorporated by reference in this Prospectus
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, and upon the authority of said firm as experts in accounting
and auditing.
With respect to the unaudited interim financial information of Aetna
incorporated by reference in this Prospectus and of Aetna to be incorporated by
reference in this Prospectus, the independent certified public accountants have
reported and may report that they applied limited procedures in accordance with
professional standards for a review of such information. However, any separate
report included in Aetna's Quarterly Reports on Form 10-Q and incorporated by
reference herein states and will state that they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on any report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Securities Act
for any report on the unaudited interim financial information because that
report is not a "report" or a "part" of the Registration Statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
ERISA MATTERS
Aetna and the Company and certain of their affiliates, including Aetna Life
Insurance Company, Aetna Life Insurance and Annuity Company and Aetna U.S.
Healthcare, may each be considered a "party in interest" within the meaning of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or a
"disqualified person" within the meaning of the Internal Revenue Code of 1986,
as amended (the "Code") with respect to many employee benefit plans. Prohibited
transactions within the meaning of ERISA or the Code may arise, for example, if
Offered Securities are acquired by a pension or other employee benefit plan with
respect to which Aetna, the Company or any of their affiliates is a service
provider, unless such Offered Securities are acquired pursuant to an exemption
for transactions effected on behalf of such plan by a "qualified professional
asset manager" or pursuant to any other available exemption. Any such pension or
employee benefit plan proposing to invest in the Offered Securities should
consult with its legal counsel.
24
43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered. Except for the SEC
Registration Fee, all amounts shown are estimates.
SEC Registration Fee..................... 324$,500
Accounting Fees and Expenses............. *
Legal Fees and Expenses.................. *
Blue Sky Fees and Expenses............... *
Printing and Engraving Expenses.......... *
Trustee's Fees and Expenses.............. *
Rating Agency Fees....................... *
Miscellaneous............................ *
----
Total.......................... $ *
====
- ---------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Aetna and the Company are Connecticut corporations. Section 33-771(e) of
the Connecticut General Statutes ("C.G.S.") provides for indemnification of
directors and Section 33-776(d) provides for indemnification of officers,
employees and agents of Connecticut corporations.
These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable expenses incurred with
respect to a proceeding). In the case of a proceeding by or in the right of the
corporation, indemnification is limited to reasonable expenses incurred in
connection with the proceeding against the corporation to which the individual
was named a party. The corporation's obligation to provide such indemnification
does not apply unless (1) the individual has met the standard of conduct set
forth in Section 33-171; and (2) a determination is made (by majority vote of a
quorum of the board of directors who were not parties to the proceeding, or if a
quorum cannot be obtained, by a committee of the board selected as described in
Section 33-775(b)(1); by special legal counsel selected by the board of
directors or members thereof as described in Section 33-775(b)(2); or by
shareholders) that the individual met the standard set forth in Section 33-771;
or (3) the court, upon application by the individual, determines in view of all
the circumstances that such person is reasonably entitled to be indemnified.
Section 33-772 and Section 33-776(c) provide, respectively, that a corporation
shall indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
was a director of the corporation against reasonable expenses incurred by him in
connection with the proceeding, and that an officer, employee or agent of a
corporation who is not a director is entitled to mandatory indemnification under
Section 33-772, and may apply to a court under Section 33-774, for
indemnification or advance for expenses, in each case to the same extent to
which a director may be entitled to indemnification or advance for expenses
under those sections. Also, under Section 33-779, a corporation may provide
indemnification of or advance expenses to a director, officer, employee or agent
only as permitted by Sections 33-770 to 33-778, inclusive, of the Connecticut
General Statutes, as amended.
The statute authorizes a corporation to procure indemnification insurance
on behalf of an individual who is or was a director, officer, employer or agent
of the corporation. Consistent with the statute, Aetna has
II-1
44
procured insurance coverage from several carriers for directors and officers of
Aetna and its subsidiaries which supplements the indemnification rights provided
to those individuals by the C.G.S.
Unlike the statute, these policies do not require an after-the-fact
determination of good faith in order for the insured director or officer to
receive the benefits provided under the policies nor do they require affirmative
judicial or corporate action as a prerequisite to the insurance company's duty
to defend (and pay for the defense of) the insured director or officer under the
policies. Furthermore, the insurance policies cover or will cover directors and
officers for any acts not specifically excluded for which the director or
officer is not eligible for indemnification under C.G.S. Section 33-771 and
33-776 to the extent such coverage does not violate public policy.
As permitted under Connecticut law, Aetna's and the Company's Certificates
of Incorporation limit the personal liability of directors for monetary damages
to Aetna and the Company and their respective shareholders for a breach of their
fiduciary duty as directors to the amount of their compensation for serving
Aetna or the Company as directors during the year of the violation. These
provisions do not eliminate the liability of a director if such breach (i)
involved a knowing and culpable violation of law by the director, (ii) enabled
the director or an associate (as defined) to receive an improper personal gain,
(iii) showed a lack of good faith and a conscious disregard for the duty of the
director to Aetna or the Company under circumstances in which the director was
aware that his or her conduct or omission created an unjustifiable risk of
serious injury to Aetna or the Company, (iv) constituted a sustained and
unexcused pattern of inattention that amounted to an abdication of the
director's duty to Aetna or the Company or (v) created liability under C.G.S.
Section 33-757 (relating to the distribution of assets of Aetna or the Company,
whether by dividend, purchase or redemption of shares or otherwise, in violation
of the Connecticut corporation law).
Reference is made to the Underwriting Agreement filed as Exhibit 1.1 to
this Registration Statement for certain provisions relating to the
indemnification of directors and officers of Aetna and the Company against
certain liabilities, including liabilities under the Securities Act.
The Aetna Capital Trust I, II, III and IV are Delaware business trusts.
Each Declaration will provide for the Company and Aetna to indemnify the
Trustees of the relevant Trust, to the fullest extent permitted by applicable
law.
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ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
1.1 Form of Underwriting Agreement relating to the Debt
Securities*
1.2 Form of Underwriting Agreement relating to the Preferred
Securities*
4.1 Senior Indenture, dated as of July 1, 1996, among the
Company, Aetna and State Street Bank and Trust Company of
Connecticut, National Association, as Trustee (including the
forms of the Senior Debt Securities and Senior Debt
Guarantees) (incorporated herein by reference to Exhibit 4.1
of Aetna's Quarterly Report on Form 10-Q filed on October
25, 1996).
4.2 Form of Subordinated Indenture, dated as of July 1, 1996,
among the Company, Aetna and State Street Bank and Trust
Company of Connecticut, National Association, as Trustee
(including the forms of the Subordinated Debt Securities and
Subordinated Debt Guarantees) (incorporated herein by
reference to Exhibit 4.2 of Aetna's and the Company's
Registration Statement on Form S-3 (File No. 333-07167)
filed on June 28, 1996).
4.3 Form of Junior Subordinated Indenture among the Company,
Aetna and The First National Bank of Chicago, as Trustee
(including the forms of the Junior Subordinated Debt
Securities and Junior Subordinated Debt Guarantees)**
4.4 Declaration of Trust of Aetna Capital Trust I
4.5 Declaration of Trust of Aetna Capital Trust II
4.6 Declaration of Trust of Aetna Capital Trust III
4.7 Declaration of Trust of Aetna Capital Trust IV
4.8 Certificate of Trust of Aetna Capital Trust I
4.9 Certificate of Trust of Aetna Capital Trust II
4.10 Certificate of Trust of Aetna Capital Trust III
4.11 Certificate of Trust of Aetna Capital Trust IV
4.12 Form of Amended and Restated Declaration of Trust for each
of Aetna Capital Trust I, II, III, and IV (including the
form of Preferred Securities)**
4.13 Form of Guarantee Agreement among the Company, Aetna and The
First National Bank of Chicago, as Trustee, with respect to
each of Aetna Capital Trust I, II, III and IV's Preferred
Securities**
5.1 Opinion of Thomas J. Calvocoressi, General Counsel to the
Company and Aetna**
5.2 Opinion of Davis Polk & Wardwell**
5.3 Opinion of Richards, Layton & Finger, P.A.**
12.1 Computation of Ratios of Earnings to Fixed Charges
(incorporated herein by reference to Exhibit 12 of Aetna's
Quarterly Report on Form 10Q filed on May 6, 1998)
23.1 Consent of Thomas J. Calvocoressi (contained in Exhibit 5.1)
23.2 Consent of Davis Polk & Wardwell (contained in Exhibit 5.2)
23.3 Consent of Richards, Layton & Finger, P.A. (contained in
Exhibit 5.3)
23.4 Consent of KPMG Peat Marwick LLP
23.5 Letter of KPMG Peat Marwick LLP regarding Unaudited Interim
Financial Information
24.1 Powers of Attorney for the Company**
24.2 Powers of Attorney for Aetna
24.3 Powers of Attorneys for the Company, as sponsor, to sign the
Registration Statement on behalf of Aetna Capital Trust I,
II, III and IV (included in Exhibits 4.4, 4.5, 4.6 and 4.7,
respectively)
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of State Street Bank and Trust Company of
Connecticut, National Association, as Trustee, under the
Senior Indenture
25.2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of State Street Bank and Trust Company of
Connecticut, National Association, as Trustee, under the
Subordinated Indenture
25.3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, under the Junior Subordinated Indenture
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46
EXHIBIT NO. DESCRIPTION
----------- -----------
25.4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust I
25.5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust II
25.6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust III
25.7 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust IV
25.8 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, under the Preferred Securities Guarantee of Aetna
and the Company with respect to the Preferred Securities of
Aetna Capital Trust I
25.9 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, under the Preferred Securities Guarantee of Aetna
and the Company with respect to the Preferred Securities of
Aetna Capital Trust II
25.10 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, under the Preferred Securities Guarantee of Aetna
and the Company with respect to the Preferred Securities of
Aetna Capital Trust III
25.11 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee, under the Preferred Securities Guarantee of Aetna
and the Company with respect to the Preferred Securities of
Aetna Capital Trust IV
- ---------------
* Indicates document to be filed as an exhibit to a subsequent Current Report
on Form 8-K and incorporated herein by reference.
** Indicates document to be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
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Commission by Aetna or the Company pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of Aetna's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(6) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide public offering thereof.
(7) Insofar as indemnification (other than pursuant to the insurance
described in Item 15 above) for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrants
pursuant to the foregoing provisions, or otherwise, the registrants have been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrants of expenses incurred or
paid by a director, officer or controlling person of the registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aetna Services,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hartford, State of Connecticut on May 7, 1998.
AETNA SERVICES, INC.
By: /s/ RICHARD L. HUBER
------------------------------------
Name: Richard L. Huber
Title: Chief Executive Officer,
President and Director
(Principal Executive Officer
and Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following directors and
officers of Aetna Services, Inc. in the capacities indicated on May 7, 1998.
SIGNATURE TITLE
--------- -----
/s/ RICHARD L. HUBER Chief Executive Officer, President and
- ----------------------------------------------------- Director (Principal Executive Officer and
Richard L. Huber Principal Financial Officer)
Director
- -----------------------------------------------------
Timothy A. Holt
/s/ ALAN M. BENNETT Director, Vice President and Corporate
- ----------------------------------------------------- Controller (Controller and Principal
Alan M. Bennett Accounting Officer)
*By:
-------------------------------------------------
Attorney-in-fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aetna Inc. has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut on May 7, 1998.
AETNA INC.
By: /s/ RICHARD L. HUBER
------------------------------------
Name: Richard L. Huber
Title: Chairman, Chief Executive
Officer,
President and Director
(Principal Executive
Officer and Principal
Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following directors and
officers of Aetna Inc. in the capacities indicated on May 7, 1998.
SIGNATURE TITLE
--------- -----
/s/ RICHARD L. HUBER Chairman, Chief Executive Officer, President
- ----------------------------------------------------- and Director (Principal Executive Officer
Richard L. Huber and Principal Financial Officer)
* Director
- -----------------------------------------------------
Leonard Abramson
* Director
- -----------------------------------------------------
Betsy Z. Cohen
Director
- -----------------------------------------------------
William H. Donaldson
* Director
- -----------------------------------------------------
Barbara Hackman Franklin
* Director
- -----------------------------------------------------
Jerome S. Goodman
* Director
- -----------------------------------------------------
Earl G. Graves
Director
- -----------------------------------------------------
Gerald Greenwald
* Director
- -----------------------------------------------------
Ellen M. Hancock
* Director
- -----------------------------------------------------
Michael H. Jordan
* Director
- -----------------------------------------------------
Jack D. Kuehler
* Director
- -----------------------------------------------------
Frank R. O'Keefe, Jr.
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SIGNATURE TITLE
--------- -----
Director
- -----------------------------------------------------
Judith Rodin
/s/ ALAN M. BENNETT Vice President and Corporate Controller
- ----------------------------------------------------- (Controller and Principal Accounting
Alan M. Bennett Officer)
*By: /s/ ALFRED P. QUIRK JR.
- -----------------------------------------------------
Attorney-in-fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aetna Capital
Trust I, Aetna Capital Trust II, Aetna Capital Trust III and Aetna Capital Trust
IV each certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hartford, State of Connecticut on May 7, 1998.
AETNA CAPITAL TRUST I
By: Aetna Services, Inc.,
as Sponsor
By: /s/ ALFRED P. QUIRK JR.
------------------------------------
Name: Alfred P. Quirk Jr.
Title: Vice President Finance
AETNA CAPITAL TRUST II
By: Aetna Services, Inc.,
as Sponsor
By: /s/ ALFRED P. QUIRK JR.
------------------------------------
Name: Alfred P. Quirk Jr.
Title: Vice President Finance
AETNA CAPITAL TRUST III
By: Aetna Services, Inc.,
as Sponsor
By: /s/ ALFRED P. QUIRK JR.
------------------------------------
Name: Alfred P. Quirk Jr.
Title: Vice President Finance
AETNA CAPITAL TRUST IV
By: Aetna Services, Inc.,
as Sponsor
By: /s/ ALFRED P. QUIRK JR.
------------------------------------
Name: Alfred P. Quirk Jr.
Title: Vice President Finance
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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1.1 Form of Underwriting Agreement relating to the Debt
Securities*
1.2 Form of Underwriting Agreement relating to the Preferred
Securities*
4.1 Senior Indenture, dated as of July 1, 1996, among the
Company, Aetna and State Street Bank and Trust Company of
Connecticut, National Association, as Trustee (including
the forms of the Senior Debt Securities and Senior Debt
Guarantees) (incorporated herein by reference to Exhibit
4.1 of Aetna's Quarterly Report on Form 10-Q filed on
October 25, 1996).
4.2 Form of Subordinated Indenture, dated as of July 1, 1996,
among the Company, Aetna and State Street Bank and Trust
Company of Connecticut, National Association, as Trustee
(including the forms of the Subordinated Debt Securities
and Subordinated Debt Guarantees) (incorporated herein by
reference to Exhibit 4.2 of Aetna's and the Company's
Registration Statement on Form S-3 (File No. 333-07167)
filed on June 28, 1996).
4.3 Form of Junior Subordinated Indenture among the Company,
Aetna and The First National Bank of Chicago, as Trustee
(including the forms of the Junior Subordinated Debt
Securities and Junior Subordinated Debt Guarantees)**
4.4 Declaration of Trust of Aetna Capital Trust I
4.5 Declaration of Trust of Aetna Capital Trust II
4.6 Declaration of Trust of Aetna Capital Trust III
4.7 Declaration of Trust of Aetna Capital Trust IV
4.8 Certificate of Trust of Aetna Capital Trust I
4.9 Certificate of Trust of Aetna Capital Trust II
4.10 Certificate of Trust of Aetna Capital Trust III
4.11 Certificate of Trust of Aetna Capital Trust IV
4.12 Form of Amended and Restated Declaration of Trust for each of
Aetna Capital Trust I, II, III, and IV (including the form
of Preferred Securities)**
4.13 Form of Guarantee Agreement among the Company, Aetna and
The First National Bank of Chicago, as Trustee, with
respect to each of Aetna Capital Trust I, II, III and IV's
Preferred Securities**
5.1 Opinion of Thomas J. Calvocoressi, General Counsel to the
Company and Aetna**
5.2 Opinion of Davis Polk & Wardwell**
5.3 Opinion of Richards, Layton & Finger, P.A.**
12.1 Computation of Ratios of Earnings to Fixed Charges (incorporated
herein by reference to Exhibit 12 of Aetna's Quarterly Report
on Form 10Q filed on May 6, 1998)
23.1 Consent of Thomas J. Calvocoressi (contained in Exhibit 5.1)
23.2 Consent of Davis Polk & Wardwell (contained in Exhibit 5.2)
23.3 Consent of Richards, Layton & Finger, P.A. (contained in
Exhibit 5.3)
23.4 Consent of KPMG Peat Marwick LLP
23.5 Letter of KPMG Peat Marwick LLP regarding Unaudited
Interim Financial Information
24.1 Powers of Attorney for the Company**
24.2 Powers of Attorney for Aetna
24.3 Powers of Attorneys for the Company, as sponsor, to sign the
Registration Statement on behalf of Aetna Capital Trust I,
II, III and IV (included in Exhibits 4.4, 4.5, 4.6 and
4.7, respectively)
25.1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of State Street Bank and Trust Company
of Connecticut, National Association, as Trustee, under
the Senior Indenture
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EXHIBIT NO. DESCRIPTION
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25.2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of State Street Bank and Trust Company
of Connecticut, National Association, as Trustee, under
the Subordinated Indenture
25.3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, under the Junior Subordinated Indenture
25.4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust I
25.5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust II
25.6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust III
25.7 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, with respect to the Amended and Restated
Declaration of Trust of Aetna Capital Trust IV
25.8 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, under the Preferred Securities Guarantee of
Aetna and the Company with respect to the Preferred
Securities of Aetna Capital Trust I
25.9 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, under the Preferred Securities Guarantee of
Aetna and the Company with respect to the Preferred
Securities of Aetna Capital Trust II
25.10 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, under the Preferred Securities Guarantee of
Aetna and the Company with respect to the Preferred
Securities of Aetna Capital Trust III
25.11 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago,
as Trustee, under the Preferred Securities Guarantee of
Aetna and the Company with respect to the Preferred
Securities of Aetna Capital Trust IV
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* Indicates document to be filed as an exhibit to a subsequent Current
Report on Form 8-K and incorporated herein by reference.
** Indicates document to be filed by amendment.
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