<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to
Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 18, 1998
AETNA INC.
(Exact Name of Registrant as Specified in its Charter)
Connecticut
(State or Other Jurisdiction of Incorporation)
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1-11913 02-0488491
(Commission File Number) (I.R.S. Employer
Identification No.)
151 Farmington Avenue, Hartford, Connecticut 06156
(Address of Principal Executive Offices) (ZIP Code)
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(860) 273-0123
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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TABLE OF CONTENTS
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Page
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Item 5. Other Events. 3
Item 7(c). Exhibits. 3
Signatures 4
Exhibit Index 5
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Item 5. Other Events.
Pursuant to the terms and conditions of the Underwriting Agreement
dated November 13, 1998, and the Pricing Agreement dated November 13,
1998, each among Aetna Services, Inc., Aetna Inc. and Goldman, Sachs &
Co., Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Morgan
Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc. as Representatives of the
several underwriters, on November 18, 1998, Aetna Services, Inc. issued
$300,000,000 aggregate principal amount of its 5.66% Puttable Reset
Securities PURS(SM) due 2009 ("PURS"), the net proceeds of which will
be used to repay outstanding commercial paper borrowings. The
principal, premium, if any, and interest payable on the PURS is
unconditionally guaranteed by Aetna Inc.
Item 7(c). Exhibits.
Exhibit 1.1 Underwriting Agreement dated November 13, 1998,
among Aetna Services, Inc., Aetna Inc. and Goldman,
Sachs & Co., Deutsche Bank Securities Inc., J.P.
Morgan Securities Inc., Morgan Stanley & Co.
Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc. as
Representatives of the several underwriters.
Exhibit 1.2 Pricing Agreement dated November 13, 1998, among
Aetna Services, Inc., Aetna Inc. and Goldman, Sachs &
Co., Deutsche Bank Securities Inc., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Smith Barney Inc. as Representatives of
the several underwriters.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AETNA INC.
----------------------------
(Registrant)
Date November 24, 1998 By /s/ Alan M. Bennett
---------------------- ------------------------
Alan M. Bennett
Vice President
and Corporate Controller
(Chief Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
1.1 Underwriting Agreement dated November 13, 1998, among
Aetna Services, Inc., Aetna Inc. and Goldman, Sachs &
Co., Deutsche Bank Securities Inc., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Smith Barney Inc. as Representatives of
the several underwriters.
1.2 Pricing Agreement dated November 13, 1998, among
Aetna Services, Inc., Aetna Inc. and Goldman, Sachs &
Co., Deutsche Bank Securities Inc., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated,
Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Salomon Smith Barney Inc. as Representatives of
the several underwriters.
<PAGE> 1
EXHIBIT 1.1
AETNA SERVICES, INC.
AETNA INC.
Guaranteed Debt Securities
Underwriting Agreement
November 13, 1998
To the Underwriters
to be named in the applicable
Pricing Agreement
supplemental hereto
Ladies and Gentlemen:
From time to time Aetna Services, Inc. a Connecticut corporation (the
"Company"), and Aetna Inc., a Connecticut corporation (the "Guarantor"), propose
to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the
form of Annex I hereto, with such additions and deletions as the parties thereto
may determine, and, subject to the terms and conditions stated herein and
therein, to issue and sell to the firms named in Schedule I to the applicable
Pricing Agreement (such firms constituting the "Underwriters" with respect to
such Pricing Agreement and the securities specified therein) certain debt
securities of the Company (the "Securities") specified in Schedule II to such
Pricing Agreement (with respect to such Pricing Agreement, the "Designated
Securities"), guaranteed by the Guarantor, less the Designated Securities
covered by Delayed Delivery Contracts (as defined in Section 3 hereof), if any,
as provided in Section 3 hereof and as may be specified in Schedule II to such
Pricing Agreement (with respect to such Pricing Agreement, any Designated
Securities to be covered by Delayed Delivery Contracts being herein sometimes
referred to as "Contract Securities" and the Designated Securities to be
purchased by the Underwriters (after giving effect to the deduction, if any, for
Contract Securities) being herein sometimes referred to as "Underwriters'
Securities").
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The terms and rights of any particular issuance of Designated Securities
shall be as specified in the Pricing Agreement relating thereto and in or
pursuant to the indenture (the "Indenture") identified in Schedule II to such
Pricing Agreement. The Designated Securities shall be guaranteed (the
"Guarantees") by the Guarantor as specified in the Pricing Agreement relating to
such Designated Securities and in or pursuant to the Indenture identified in
Schedule II to such Pricing Agreement.
1. Particular sales of Designated Securities may be made from time to time
to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to Underwriters who act without any firm being designated
as their representative. Except as incorporated by reference into a Pricing
Agreement, this Underwriting Agreement shall not be construed as an obligation
of the Company or the Guarantor to sell any of the Securities guaranteed by the
Guarantor or as an obligation of any of the Underwriters to purchase any of the
Securities. The obligation of the Company to issue and sell any of the
Securities, the obligation of the Guarantor to issue its Guarantee of any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify,
among other things, the aggregate principal amount of such Designated
Securities, the initial public offering price of such Designated Securities, the
purchase price to the Underwriters of such Designated Securities, the names of
the Underwriters of such Designated Securities, the names of the Representatives
of such Underwriters, the principal amount of such Designated Securities to be
purchased by each Underwriter and whether any of such Designated Securities
shall be covered by Delayed Delivery Contracts, and shall set forth the date,
time and manner of delivery of such Designated Securities and payment therefor.
The Pricing Agreement shall also specify (to the extent not set forth in the
Indenture and the registration statement and prospectus with respect thereto)
the terms of such Designated Securities. A Pricing Agreement shall be in the
form of an executed writing (which may be in counterparts), and may be evidenced
by an exchange of telegraphic communications or any other rapid transmission
device designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company and the Guarantor jointly and severally represent and
warrant to, and agree with, each of the Underwriters that:
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(a) A registration statement in respect of the Securities and
the Guarantees has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered
or to be delivered to the Representatives (with exhibits thereto) for
delivery to each of the other Underwriters (without exhibits thereto),
have been declared effective by the Commission in such form; no other
document with respect to such registration statement or document
incorporated by reference therein has been filed or transmitted for
filing with the Commission prior to the effective date of the
registration statement; and no stop order suspending the effectiveness
of such registration statement has been issued and no proceeding for
that purpose has been initiated or, to the knowledge of the Company or
the Guarantor, threatened by the Commission. Any preliminary prospectus
included in such registration statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Securities Act of 1933, as amended (the "Act"), is
hereinafter called a "Preliminary Prospectus"; the various parts of
such registration statement, including all exhibits thereto, but
excluding Form T-1, each as amended at the time such part of the
registration statement became effective are hereinafter collectively
called the "Registration Statement", provided if the Company and the
Guarantor have filed an abbreviated registration statement to register
additional Securities and Guarantees pursuant to Rule 462(b) under the
Act (the "Rule 462 Registration Statement"), then any reference in this
Agreement or a Pricing Agreement to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement; the
prospectus relating to the Securities and the Guarantees, in the form
in which it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this Agreement, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
the applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed with the
Commission after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and incorporated by reference in such
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Preliminary Prospectus or Prospectus, as the case may be; any reference
to any amendment to the Registration Statement shall be deemed to refer
to and include any annual report of the Guarantor filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective date of
the Registration Statement that is incorporated by reference in the
Registration Statement; and any reference to the Prospectus as amended
or supplemented shall be deemed to refer to the Prospectus as amended
or supplemented in relation to the applicable Designated Securities in
the form in which it is first filed with the Commission pursuant to
Rule 424(b) under the Act in accordance with Section 5(a) hereof,
including any documents incorporated by reference therein as of the
date of such filing;
(b) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"), and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein (i) in the case of
the Registration Statement, not misleading and (ii) in the case of the
Prospectus, in light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company or the Guarantor by an Underwriter of Designated
Securities through the Representatives for use in the Prospectus as
amended or supplemented relating to such Securities;
(c) Each of the Company and the Guarantor has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Connecticut; each of the Company and the
Guarantor is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except where the failure to be so qualified or in good standing would
not have a material adverse
<PAGE> 5
effect on the financial condition of the Guarantor and its subsidiaries
taken as a whole;
(d) The Securities have been duly authorized by the Company;
and, when Designated Securities are issued, executed, authenticated,
delivered and paid for pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Securities and the Indenture
and, in the case of any Contract Securities, pursuant to Delayed
Delivery Contracts with respect to such Contract Securities, such
Designated Securities will have been duly issued, executed and
delivered and will constitute valid and legally binding obligations of
the Company enforceable against the Company in accordance with their
terms, subject to (1) bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereafter in effect relating
to or affecting creditors' rights generally and the rights of creditors
of insurance companies generally and (2) general principles of equity
(regardless of whether considered in a proceeding at law or in equity);
(e) The Guarantees have been duly authorized by the Guarantor;
and, when (i) the Guarantees endorsed on the Designated Securities are
issued and executed by the Guarantor pursuant to the Indenture and (ii)
such Designated Securities are issued, executed, authenticated,
delivered and paid for pursuant to this Agreement and the Pricing
Agreement with respect to such Designated Securities and the Indenture
and, in the case of any Contract Securities, pursuant to Delayed
Delivery Contracts with respect to such Contract Securities, such
Guarantees will have been duly issued, executed and delivered and will
constitute valid and legally binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their terms,
subject to (1) bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and the rights of creditors of insurance
companies generally and (2) general principles of equity (regardless of
whether considered in a proceeding at law or in equity);
(f) The Indenture, which will be substantially in one of the
forms filed as an exhibit to the Registration Statement, has been duly
authorized by the Company and the Guarantor and, at the Time of
Delivery (as defined in Section 4 hereof) for such
<PAGE> 6
Designated Securities, the Indenture will be duly qualified under the
Trust Indenture Act and, assuming due authorization, execution and
delivery by the trustee under such Indenture (the "Trustee"), the
Indenture will constitute a valid and legally binding instrument of the
Company and the Guarantor enforceable against the Company and the
Guarantor in accordance with its terms, subject to (1) bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance companies generally
and (2) general principles of equity (regardless of whether considered
in a proceeding at law or in equity); and the Indenture conforms, and
the Designated Securities and the Guarantees will conform, in all
material respects, to the descriptions thereof contained in the
Prospectus as amended or supplemented with respect to such Designated
Securities;
(g) The issue and sale of the Securities, the issuance of the
Guarantees and the compliance by the Company and the Guarantor with all
of the provisions of the Designated Securities and the Guarantees,
respectively, the Indenture, each of the Delayed Delivery Contracts, if
any, this Agreement and any Pricing Agreement, and the consummation of
the transactions herein and therein contemplated will not (1) conflict
with or result in a breach or violation by the Company or the
Guarantor, as applicable, of any of the terms or provisions of, or
constitute a default by the Company or the Guarantor, as applicable,
under, any indenture, mortgage, deed of trust, loan agreement or other
similar agreement or instrument to which the Company or the Guarantor,
as the case may be, is a party or by which the Company or the
Guarantor, as the case may be, is bound or to which any of the property
or assets of the Company or the Guarantor, as the case may be, is
subject, except, in all such cases, for such conflicts, breaches,
violations or defaults as would not have a material adverse effect on
the financial condition of the Guarantor and its subsidiaries taken as
a whole, or would not have a material adverse effect on the issuance or
sale of the Designated Securities or the issuance of the Guarantees, or
(2) result in any violation of (A) the provisions of the Certificate of
Incorporation or By-Laws of the Company or the Guarantor or (B) any
statute of the United States or the State of Connecticut or any order,
rule or regulation of any court or governmental agency or body of the
United States or the State of Connecticut having jurisdiction over the
Company or the Guarantor or any of their respective properties;
provided, however
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that in the case of clause (B) of this paragraph 2(g), this
representation and warranty shall not extend to such violations as
would not have a material adverse effect on the financial condition of
the Guarantor and its subsidiaries taken as a whole or would not have a
material adverse effect on the issuance or sale of the Designated
Securities or the issuance of the Guarantees; provided further, that
insofar as this representation and warranty relates to the performance
by the Company or the Guarantor of its obligations under the Indenture,
this Agreement, the Pricing Agreement relating to the Designated
Securities, the Delayed Delivery Contracts, if any, and the Designated
Securities and the Guarantees, such performance is subject to
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and the rights of creditors of
insurance companies generally;
(h) No consent, approval, authorization, order, registration,
filing or qualification of or with any court or governmental agency or
body of the United States or the State of Connecticut is required for
the issue and sale of the Securities by the Company or the issuance of
the Guarantees by the Guarantor or the consummation by the Company and
the Guarantor of the transactions contemplated by this Agreement or any
Pricing Agreement or the Indenture or any Delayed Delivery Contract
except such as have been, or will have been prior to the Time of
Delivery, obtained under the Act and the Trust Indenture Act and such
consents, approvals, authorizations, orders, registrations, filings or
qualifications as may be required under state securities or Blue Sky
laws or insurance securities laws of any such jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters, and except those which, if not obtained, will not have a
material adverse effect on the financial condition of the Guarantor and
its subsidiaries taken as a whole or would not have a material adverse
effect on the issuance or sale of the Securities by the Company or the
issuance of the Guarantees by the Guarantor;
(i) In the event any of the Securities are purchased pursuant
to Delayed Delivery Contracts, each of such Delayed Delivery Contracts
has been duly authorized by the Company and the Guarantor and, when
executed and delivered by the Company, the Guarantor and the purchaser
named therein, will constitute a valid and legally binding agreement of
the Company
<PAGE> 8
and the Guarantor enforceable against the Company and the Guarantor in
accordance with its terms, subject to (1) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance companies generally
and (2) general principles of equity (regardless of whether considered
in a proceeding at law or in equity); and any Delayed Delivery
Contracts will conform, in all material respects, to the description
thereof, contained in the Prospectus as amended or supplemented with
respect to such Designated Securities; and
(j) All of the outstanding shares of capital stock of the
Company, Aetna Life Insurance Company, Aetna Life Insurance and Annuity
Company and Aetna U.S. Healthcare Inc. have been duly authorized and
validly issued and are fully paid and non-assessable, and (except for
directors' qualifying shares, if any) are owned directly or indirectly
by the Guarantor.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities, the several Underwriters propose to offer such
Underwriters' Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
The Company may specify in Schedule II to the Pricing Agreement applicable
to any Designated Securities that the Underwriters are authorized to solicit
offers to purchase Designated Securities from the Company pursuant to delayed
delivery contracts (herein called "Delayed Delivery Contracts"), substantially
in the form of Annex II attached hereto but with such changes therein as the
Representatives and the Company may authorize or approve. If so specified, the
Underwriters will endeavor to make such arrangements, and as compensation
therefor the Company will pay to the Representatives, for the accounts of the
Underwriters, at the Time of Delivery, such commission, if any, as may be set
forth in such Pricing Agreement. Delayed Delivery Contracts, if any, are to be
with investors of the types described in the Prospectus as amended or
supplemented and subject to other conditions therein set forth. The Underwriters
will not have any responsibility with respect to the validity or performance of
any Delayed Delivery Contracts.
The principal amount of Contract Securities to be deducted from the
principal amount of Designated Securities to be purchased by each Underwriter as
set forth in Schedule 1 to the Pricing Agreement applicable to such Designated
Securities shall be, in each case, the principal amount of Contract Securities
which
<PAGE> 9
the Company has been advised by the Representatives have been attributed to such
Underwriter, provided that, if the Company has not been so advised, the amount
of Contract Securities to be so deducted shall be, in each case, that proportion
of Contract Securities which the principal amount of Designated Securities to be
purchased by such Underwriter under such Pricing Agreement bears to the total
principal amount of the Designated Securities (rounded as the Representatives
may determine). The total principal amount of Underwriters' Securities to be
purchased by all the Underwriters pursuant to such Pricing Agreement shall be
the total principal amount of Designated Securities set forth in Schedule 1 to
such Pricing Agreement less the principal amount of the Contract Securities so
set forth. If the Company determines to enter into Delayed Delivery Contracts,
the Company will deliver to the Representatives not later than 3:30 p.m., New
York City time, on the third business day preceding the Time of Delivery
specified in the applicable Pricing Agreement (or such other time and date as
the Representatives and the Company may agree upon in writing) a written notice
setting forth the principal amount of Contract Securities.
4. Underwriters' Securities having the Guarantee of the Guarantor endorsed
thereon to be purchased by each Underwriter pursuant to the Pricing Agreement
relating thereto, in definitive form to the extent practicable, and in such
authorized denominations and registered in such names as the Representatives may
request upon at least twenty-four hours prior notice to the Company, shall be
delivered by or on behalf of the Company to the Representatives for the account
of such Underwriter, against payment by such Underwriter or on its behalf of the
purchase price therefor by wire transfer to a bank account specified by the
Company and specified in Schedule II, in federal or other funds immediately
available in New York City, all at the place and the time and date specified in
such Pricing Agreement or at such other place and time and date as the
Representatives and the Company may agree upon in writing, such time and date
being herein called the "Time of Delivery" for such Securities.
Concurrently with the delivery of and payment for the Underwriters'
Securities, the Company will deliver to the Representatives for the accounts of
the Underwriters a check payable to the order of the party designated in the
Pricing Agreement relating to such Securities in the amount of any compensation
payable by the Company to the Underwriters in respect of any Delayed Delivery
Contracts as provided in Section 3 hereof and the Pricing Agreement relating to
such Securities.
5. The Company and the Guarantor agree with each of the Underwriters of
any Designated Securities:
<PAGE> 10
(a) To prepare the Prospectus as amended or supplemented in
relation to the applicable Designated Securities and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of the Pricing Agreement relating to the
applicable Designated Securities or, if applicable, such other time as
may be required by Rule 424(b); to advise the Representatives promptly
of any proposal to amend or supplement the Registration Statement or
Prospectus as amended or supplemented after the date of the Pricing
Agreement relating to such Designated Securities and prior to the Time
of Delivery for such Designated Securities, and afford the
Representatives a reasonable opportunity to comment on any such
proposed amendment or supplement; to advise the Representatives of any
such amendment or supplement promptly after such Time of Delivery for
so long as the delivery of a prospectus is required under the Act in
connection with the offering or sale of such Designated Securities; to
file promptly all reports and any definitive proxy or information
statements required to be filed by the Guarantor with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for
so long as the delivery of a prospectus is required under the Act in
connection with the offering or sale of such Designated Securities, and
during such same period to advise the Representatives, promptly after
the Company or the Guarantor receives notice thereof, of the time when
any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission; for so long as the delivery of a
prospectus is required under the Act in connection with the offering or
sale of the Designated Securities, to advise the Representatives
promptly of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any prospectus relating to
the Designated Securities, of the suspension of the qualification of
such Designated Securities for offering or sale in any jurisdiction or
of the initiation or, if known to the Company or the Guarantor,
threatening of any proceeding for any such purpose, or of any request
by the Commission for amending or supplementing the Registration
Statement or Prospectus; and, in the event of the issuance of any such
stop order or of any such order preventing or suspending the use of any
prospectus relating to the Securities or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
<PAGE> 11
(b) Promptly from time to time to endeavor to take such action
as the Representatives may reasonably request to qualify such
Designated Securities and the Guarantees for offering and sale under
the securities laws of such jurisdictions of the United States, Puerto
Rico and Guam as the Representatives may reasonably request and such
other jurisdictions as the Company and the Representatives may agree
and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of such Designated Securities,
provided that in connection therewith neither the Company nor the
Guarantor shall be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction, and
provided further that in connection therewith neither the Company nor
the Guarantor shall be required to qualify such Designated Securities
and Guarantees for offering and sale under the securities laws of any
such jurisdiction for a period in excess of nine months after the
initial time of issue of the Prospectus as amended or supplemented
relating to such Designated Securities;
(c) To furnish the Underwriters with copies of the Prospectus
as amended or supplemented in such quantities as the Representatives
may from time to time reasonably request, and, if the delivery of a
prospectus is required at any time in connection with the offering or
sale of the Designated Securities and the related Guarantees and if at
such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
in order to comply with the Act or the Exchange Act, to notify the
Representatives and to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many copies as the Representatives may from time to time reasonably
request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such
compliance; provided, however, that in case any Underwriter is required
under the Act to deliver a prospectus in connection with the offering
or sale of the Designated Securities and the related Guarantees at any
time more than nine months after the date of the
<PAGE> 12
Pricing Agreement relating to the Designated Securities and the related
Guarantees, the costs of such preparation and furnishing such amended
or supplemented Prospectus shall be borne by the Underwriters of such
Designated Securities;
(d) To make generally available to the Company's and the
Guarantor's securityholders as soon as practicable, but in any event
not later than eighteen months after the effective date of the
Registration Statement (as defined in Rule 158(c)), an earning
statement of the Guarantor and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including, at the option of
the Guarantor, Rule 158); and
(e) During the period beginning from the date of the Pricing
Agreement for such Designated Securities and continuing to and
including the Time of Delivery for such Designated Securities, not to
offer, sell, contract to sell or otherwise dispose of in the United
States any debt securities of the Company guaranteed by the Guarantor
which mature more than one year after such Time of Delivery and which
are substantially similar to such Designated Securities and the related
Guarantees, without the prior written consent of the Representatives,
which consent shall not be unreasonably withheld.
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's and the Guarantor's counsel and accountants in
connection with the registration of the Securities and the Guarantees under the
Act and all other expenses in connection with the Company's and the Guarantor's
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and, subject to the proviso of Section 5(c), the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or otherwise
producing any Agreement among Underwriters, this Agreement, any Pricing
Agreement, any Indenture, any Delayed Delivery Contracts, any Blue Sky and Legal
Investment Memoranda and any other documents in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities and the Guarantees for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities
<PAGE> 13
rating services for rating the Securities; (v) any filing fees incident to any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Securities; (vi) any cost of preparing certificates or
other evidences of the Securities or any costs of The Depository Trust Company;
(vii) the fees and expenses of any Trustee and any agent of any Trustee and the
fees and disbursements of counsel for any Trustee in connection with any
Indenture and the Securities; and (viii) all other costs and expenses incident
to the performance of the Company's and the Guarantor's obligations hereunder
and under any Delayed Delivery Contracts which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, Section 8 and Section 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
The foregoing provisions of this Section 6 shall be without prejudice to
the Company's or the Guarantor's rights under any separate agreements between
the Company or the Guarantor and their respective attorneys, accountants and
vendors with respect to such fees, disbursements, expenses and costs.
7. The obligations of the Underwriters of any Designated Securities under
the Pricing Agreement relating to such Designated Securities shall be subject,
in the discretion of the Representatives, to the condition that all
representations and warranties and other statements of the Company and the
Guarantor in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company and the
Guarantor shall have performed in all material respects all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to
the applicable Designated Securities shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Act
and in accordance with Section 5(a) hereof; no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or, to the knowledge of the Company or the Guarantor,
threatened by the Commission;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall
have furnished to the Representatives such
<PAGE> 14
opinion or opinions, dated the Time of Delivery for such Designated
Securities, with respect to the incorporation of the Company and the
Guarantor, the validity of the Indenture, the Designated Securities,
the Guarantees, the Delayed Delivery Contracts, if any, the
Registration Statement, the Prospectus as amended or supplemented and
other related matters as the Representatives may reasonably request,
and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c) Thomas J. Calvocoressi, counsel to the Company and the
Guarantor, shall have furnished to the Representatives such counsel's
written opinion, dated the Time of Delivery for such Designated
Securities, in form and substance satisfactory to the Representatives,
to the effect that:
(i) Each of the Company and the Guarantor has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of Connecticut;
(ii) Each of Aetna Life Insurance Company and Aetna
Life Insurance and Annuity Company has been duly incorporated
and is validly existing as an insurance corporation in good
standing under the laws of the State of Connecticut; Aetna
U.S. Healthcare Inc. has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Pennsylvania; all of the outstanding shares of capital stock
of the Company, Aetna Life Insurance and Annuity Company and
Aetna U.S. Healthcare Inc. have been duly authorized and
validly issued and are fully paid and non-assessable, and
(except for directors' qualifying shares, if any) are owned
directly or indirectly by the Guarantor; and all of the
outstanding shares of capital stock of Aetna Life Insurance
Company (except for directors' qualifying shares, if any) are
owned directly or indirectly by the Company;
(iii) To the best of such counsel's knowledge and
other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or
threatened involving the Company or the Guarantor or any of
their respective subsidiaries of a
<PAGE> 15
character required to be disclosed in the Registration
Statement or Prospectus which are not adequately disclosed in
the Registration Statement or Prospectus;
(iv) This Agreement and the Pricing Agreement with
respect to the Designated Securities have been duly
authorized, executed and delivered by the Company and the
Guarantor;
(v) The Designated Securities have been duly
authorized by the Company; assuming the due authentication of
the Underwriters' Securities by the Trustee and payment of the
purchase price therefor, the Underwriters' Securities have
been duly issued, executed and delivered and constitute valid
and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to
(1) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally
and the rights of creditors of insurance companies generally
and (2) general principles of equity (regardless of whether
considered in a proceeding at law or in equity); and assuming
the due authentication of the Contract Securities by the
Trustee, the Contract Securities, if any, when issued,
executed and delivered and when paid for in accordance with
the Delayed Delivery Contracts will constitute valid and
legally binding obligations of the Company enforceable against
the Company in accordance with their terms, subject to (1)
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and the
rights of creditors of insurance companies generally and (2)
general principles of equity (regardless of whether considered
in a proceeding at law or in equity);
(vi) The Guarantees have been duly authorized by the
Guarantor; upon execution and delivery of the Underwriters
Securities by the Company against payment therefor and
assuming the due authentication of the Underwriters'
Securities by the Trustee, the Guarantees endorsed on the
Underwriters' Securities have been duly issued, executed and
delivered and constitute valid and
<PAGE> 16
legally binding obligations of the Guarantor enforceable
against the Guarantor in accordance, with their terms, subject
to (1) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws now or hereafter
in effect relating to or affecting creditors' rights generally
and the rights of creditors of insurance companies generally
and (2) general principles of equity (regardless of whether
considered in a proceeding at law or in equity); and when the
Contract Securities, if any, are issued, executed,
authenticated and delivered in accordance with the Indenture
and paid for in accordance with the Delayed Delivery
Contracts, upon execution and delivery of the Guarantees
endorsed on such Contract Securities in accordance with the
Indenture, such Guarantees will constitute valid and legally
binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their terms, subject to (1)
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and the
rights of creditors of insurance companies generally and (2)
general principles of equity (regardless of whether considered
in a proceeding at law or in equity);
(vii) The Indenture has been duly authorized,
executed and delivered by the Company and the Guarantor and,
assuming the due authorization, execution and delivery thereof
by the Trustee, the Indenture constitutes a valid and legally
binding instrument of the Company and the Guarantor
enforceable against the Company and the Guarantor in
accordance with its terms, subject to (1) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally, and the rights of
creditors of insurance companies generally and (2) general
principles of equity (regardless of whether considered in a
proceeding at law or in equity);
(viii) The issue and sale of the Designated
Securities, the issuance of the Guarantees and the performance
by the Company and the Guarantor of their respective
obligations under the Designated Securities, the
<PAGE> 17
Guarantees, the Indenture, each of the Delayed Delivery
Contracts, if any, this Agreement and the Pricing Agreement
with respect to the Designated Securities will not (1)
conflict with or result in a breach or violation by the
Company or the Guarantor of any of the terms or provisions of,
or constitute a default by the Company or the Guarantor under,
any indenture, mortgage, deed of trust, loan agreement or
other similar agreement or instrument known to such counsel to
which the Company or the Guarantor is a party or by which the
Company or the Guarantor is bound or to which any of the
property or assets of the Company or the Guarantor is subject,
except, in all such cases, for such conflicts, breaches,
violations or defaults as would not have a material adverse
effect on the financial condition of the Guarantor and its
subsidiaries taken as a whole, or would not have a material
adverse effect on the issuance or sale of the Designated
Securities or the issuance of the Guarantees; and (2) result
in any violation of (A) the provisions of the Certificate of
Incorporation or By-Laws of the Company or the Guarantor or
(B) any statute of the United States or the State of
Connecticut or any order, rule or regulation known to such
counsel of any court or governmental agency or body of the
United States or the State of Connecticut having jurisdiction
over the Company or the Guarantor or any of their respective
properties, except with respect to clause (B) of this
Paragraph (viii) (2), such violations as would neither have a
material adverse effect on the financial condition of the
Guarantor and its subsidiaries taken as a whole nor have a
material adverse effect on the issuance or sale of the
Designated Securities or the issuance of the Guarantees (and
except that for purposes of this paragraph (viii) such counsel
need not express any opinion as to any violation of any
fraudulent transfer laws or other antifraud laws or as to any
violation of any federal and state securities laws or blue sky
or insurance laws or any transactions of the type described in
the Prospectus under the caption "ERISA Matters"); provided
further, that insofar as performance by the Company and the
Guarantor of their respective obligations under the Indenture,
the Delayed Delivery Contracts, if any, the Underwriting
Agreement, the Pricing Agreement relating to the Designated
Securities, and the Designated Securities and the Guarantees
is concerned,
<PAGE> 18
such counsel need not express any opinion as to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally and the rights of creditors of insurance
companies generally);
(ix) The documents incorporated by reference in the
Prospectus as amended or supplemented (other than the
financial statements and related notes, information as to
reserves, the financial statement schedules and the other
financial and statistical data included therein or omitted
therefrom, as to which such counsel need express no opinion),
when they became effective or were filed with the Commission,
as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder;
(x) Under the laws of the State of Connecticut and
under the federal laws of the United States, no consent,
approval, authorization, order, registration, filing or
qualification of or with any court or governmental agency or
body is required for the issue and sale of the Designated
Securities and the issuance of the Guarantees in accordance
with the Indenture, each of the Delayed Delivery Contracts, if
any, this Agreement and the Pricing Agreement with respect to
the Designated Securities except for such consents, approvals,
authorizations, orders, registrations, filings or
qualifications as have been obtained under the Act and the
Trust Indenture Act and such as may be required under state
securities or Blue Sky laws or insurance securities laws of
any such jurisdiction in connection with the purchase and sale
and distribution of the Designated Securities by the
Underwriters, and except those which, if not obtained, will
not have a material adverse effect on the financial condition
of the Guarantor and its subsidiaries taken as a whole; and
(xi) In the event any of the Designated Securities
are to be purchased pursuant to Delayed Delivery Contracts,
each of such Delayed Delivery Contracts has been duly
authorized, executed and delivered by the
<PAGE> 19
Company and the Guarantor and, assuming such Delayed Delivery
Contract has been duly authorized, executed and delivered by
the purchaser named therein, and the Securities to be
delivered thereunder have been paid for by the purchaser named
therein, such Delayed Delivery Contract constitutes a valid
and legally binding agreement of the Company and the Guarantor
enforceable against the Company and the Guarantor in
accordance with its terms, subject to (1) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and the rights of
creditors of insurance companies generally and (2) general
principles of equity (regardless of whether considered in a
proceeding at law or in equity); and any Delayed Delivery
Contracts conform in all material respects to the description
thereof in the Prospectus as amended or supplemented.
In addition, such counsel shall state that such counsel does not know of
any contract or other document (i) of a character required to be filed as an
exhibit to the Registration Statement or to any of the documents incorporated by
reference into the Prospectus as amended or supplemented which is not so filed,
(ii) required to be incorporated by reference into the Prospectus as amended or
supplemented which is not so incorporated by reference or (iii) required to be
described in the Registration Statement or the Prospectus as amended or
supplemented which is not so described.
In rendering the opinion required by subsection (c) of this Section, Mr.
Calvocoressi may state that he is admitted to the Bar of the State of
Connecticut and that his opinion is limited to the laws of the State of
Connecticut and the federal laws of the United States of America. Mr.
Calvocoressi may rely (A) as to any matter to which you consent (which consent
shall not be unreasonably withheld), to the extent specified in such opinion,
upon the opinions of other counsel in good standing whom such counsel believes
to be reliable, provided that Mr. Calvocoressi shall state that he and you are
justified in relying on such opinions and (B) as to matters of fact, upon
certificates of officers and representatives of the Company and the Guarantor
and of public officials, and may state that he has not verified independently
the accuracy or completeness of information or documents furnished to such
counsel with respect to the Registration Statement or the Prospectus.
(d) Davis Polk & Wardwell, special counsel for the Company and
the Guarantor, shall have furnished to the
<PAGE> 20
Representatives their written opinion, dated the Time of Delivery for
such Designated Securities, in form and substance satisfactory to the
Representatives, to the effect that:
(i) This Agreement and the Pricing Agreement with
respect to the Designated Securities have been duly
authorized, executed and delivered by the Company and the
Guarantor;
(ii) The Designated Securities have been duly
authorized by the Company; assuming the due authentication of
the Underwriters' Securities by the Trustee and payment of the
purchase price therefor, the Underwriters' Securities are duly
issued, executed and delivered, and constitute valid and
legally binding obligations of the Company enforceable against
the Company in accordance with their terms, subject to (1)
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and the
rights of creditors of insurance companies generally and (2)
general principles of equity (regardless of whether considered
in a proceeding at law or in equity); the Contract Securities
when issued, executed and delivered (and assuming the due
authentication thereof by the Trustee) and when paid for in
accordance with the Indenture and the Delayed Delivery
Contracts, will constitute valid and legally binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to (1) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and the rights of
creditors of insurance companies generally and (2) general
principles of equity (regardless of whether considered in a
proceeding at law or in equity); and the Designated Securities
and the Indenture conform in all material respects to the
descriptions thereof in the Prospectus as amended or
supplemented;
(iii) The Guarantees have been duly authorized by the
Guarantor; upon execution and delivery of the Underwriters'
Securities by the Company against
<PAGE> 21
payment therefor and assuming the due authentication of the
Underwriters' Securities by the Trustee, the Guarantees
endorsed on the Underwriters' Securities will be duly issued,
executed and delivered, and constitute valid and legally
binding obligations of the Guarantor enforceable against the
Guarantor in accordance with their terms, subject to (1)
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally and the
rights of creditors of insurance companies generally and (2)
general principles of equity (regardless of whether considered
in a proceeding at law or in equity); and when the Contract
Securities are issued, executed and delivered (and assuming
the due authentication thereof by the Trustee) and paid for in
accordance with the Indenture and the Delayed Delivery
Contracts, upon execution and delivery of the Guarantees
endorsed on such Contract Securities, such Guarantees will
constitute valid and legally binding obligations of the
Guarantor enforceable against the Guarantor in accordance with
their terms, subject to (1) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other
similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and the rights of
creditors of insurance companies generally and (2) general
principles of equity (regardless of whether considered in a
proceeding at law or in equity); and the Guarantees conform in
all material respects to the description thereof in the
Prospectus as amended or supplemented;
(iv) The Indenture has been duly authorized, executed
and delivered by the Company and the Guarantor and, assuming
the due authorization, execution and delivery thereof by the
Trustee, the Indenture constitutes a valid and legally binding
instrument of the Company and the Guarantor enforceable
against the Company and the Guarantor in accordance with its
terms, subject to (1) bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance companies
generally and (2) general principles of equity (regardless of
whether considered in a proceeding at law or in equity); and
<PAGE> 22
the Indenture has been duly qualified under the Trust
Indenture Act;
(v) In the event any of the Designated Securities are
to be purchased pursuant to Delayed Delivery Contracts, each
of such Delayed Delivery Contracts has been duly authorized,
executed and delivered by the Company and the Guarantor and,
assuming such Delayed Delivery Contract has been duly
authorized, executed and delivered by the purchaser named
therein, and the Securities to be delivered thereunder have
been paid for by the purchaser named therein, such Delayed
Delivery Contract constitutes a valid and legally binding
agreement of the Company and the Guarantor enforceable in
accordance with its terms, subject to (1) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and the rights of
creditors of insurance companies generally and (2) general
principles of equity (regardless of whether considered in a
proceeding at law or in equity); and any Delayed Delivery
Contracts conform in all material respects to the description
thereof in the Prospectus as amended and supplemented;
(vi) The statements contained in the Prospectus under
the captions "Description of Debt Securities and Debt
Guarantees" and "Plan of Distribution" and the corresponding
sections in any prospectus supplement relating to the
description of the Designated Securities or their
distribution, insofar as such statements constitute summaries
of certain provisions of the documents referred to therein,
accurately summarize the material provisions of such documents
required to be stated therein; and
(vii) (1) such counsel is of the opinion that the
Registration Statement, as amended, and the Prospectus, as
amended or supplemented, as of the Time of Delivery (other
than the financial statements and related notes, the financial
statement schedules and the other financial data included
therein or omitted therefrom, as to which such counsel need
express no opinion), comply as to form in all material
respects with the Act and the rules and
<PAGE> 23
regulations of the Commission thereunder, (2) nothing has come
to the attention of such counsel that would cause such counsel
to believe that each part of the Registration Statement (other
than the financial statements and related notes, the financial
statement schedules and the other financial data included
therein or omitted therefrom, as to which such counsel need
express no belief), at the time such part became effective,
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
(3) nothing has come to the attention of such counsel that
would cause such counsel to believe that the Registration
Statement or the Prospectus, as amended or supplemented, as of
the Time of Delivery (other than the financial statements and
related notes, the financial statement schedules and the other
financial data included therein or omitted therefrom, as to
which such counsel need express no belief), contains an untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
With respect to clause (vii) of subsection (d) of this Section, Davis Polk
& Wardwell may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
(other than the documents incorporated by reference therein) and any amendments
or supplements thereto and review and discussion of the contents thereof
(including the documents incorporated by reference therein), but are without
independent check or verification except as specified. In rendering the opinion
required by subsection (d) of this Section, Davis Polk & Wardwell may rely upon
the accuracy of matters (A) involving the application of laws of any
jurisdiction other than the United States or New York and as to any other matter
to which you consent (which consent shall not be unreasonably withheld), to the
extent specified in such opinion, upon the opinions of other counsel reasonably
satisfactory to you (including without limitation, as to matters of Connecticut
law, on the opinion of Thomas J. Calvocoressi, counsel to the Company and the
Guarantor), and (B) of fact upon certificates of officers and representatives of
the Company and the Guarantor and of public officials.
(e) At the Time of Delivery for such Designated Securities,
KPMG Peat Marwick LLP, independent public accountants for the Company
and the Guarantor, shall have
<PAGE> 24
furnished to the Representatives a letter dated such Time of Delivery
to the effect set forth in Annex III hereto and as to such other
matters as the Representatives may reasonably request and in form and
substance satisfactory to the Representatives, provided that the letter
shall use a "cut-off date" not earlier than the date of the Pricing
Agreement;
(f) Since the respective dates as of which information is
given in the Prospectus as amended or supplemented as of the date of
the Pricing Agreement there shall not have been any adverse change or a
development involving a prospective material adverse change in the
financial position, stockholders' equity or results of operations of
the Guarantor and its subsidiaries considered as a whole, otherwise
than as set forth or contemplated in the Prospectus as amended or
supplemented as of the date of the Pricing Agreement, the effect of
which, in any such case described above, is in the reasonable judgment
of the Representatives, after consultation with the Company and
Guarantor, so material and adverse as to make it impracticable to
proceed with the public offering or the delivery of the Underwriters'
Securities on the terms and in the manner contemplated in the
Prospectus as amended or supplemented as of the date of the Pricing
Agreement;
(g) On or after the date of the Pricing Agreement relating to
the Designated Securities, no downgrading shall have occurred in the
rating accorded the Company's or the Guarantor's debt securities by
either the Standard & Poor's Corporation or Moody's Investors Service,
Inc.;
(h) On or after the date of the Pricing Agreement relating to
the Designated Securities, there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York declared by
either Federal or New York state authorities; or (iii) the outbreak or
material escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the
effect of any of the above specified events, in the reasonable judgment
of the Representatives, after consultation with the Company and the
Guarantor, makes it impracticable to proceed with the public offering
or the delivery of the Underwriters' Securities on the
<PAGE> 25
terms and in the manner contemplated by the Prospectus as amended or
supplemented; and
(i) The Company and the Guarantor shall each have furnished or
caused to be furnished to the Representatives at the Time of Delivery
for the Designated Securities a certificate or certificates of the Vice
Chairman for Strategy and Finance or the Vice President, Finance or the
Treasurer as to the accuracy of the representations and warranties of
the Company and the Guarantor herein at and as of such Time of
Delivery, as to the performance by the Company and the Guarantor of all
of their respective obligations hereunder to be performed at or prior
to such Time of Delivery, as to the matters set forth in subsections
(a) and (f) of this Section and as to such other matters as the
Representatives may reasonably request.
8. (a) The Company and the Guarantor, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (i) in the case of the Registration Statement, not misleading and (ii)
in the case of any Prospectus, in light of the circumstances in which they were
made, not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and the Guarantor shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
any preliminary prospectus supplement, the Registration Statement, the
Prospectus as amended or supplemented and any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company or the Guarantor by
any Underwriter of Designated Securities through the Representatives for
inclusion therein; and provided, further, that the Company and the Guarantor
shall not be liable to any Underwriter under the indemnity agreement in this
subsection (a) with respect to
<PAGE> 26
any Preliminary Prospectus or any preliminary prospectus supplement to the
extent that any such loss, claim, damage or liability of such Underwriter
results from the fact that such Underwriter sold Securities to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus (excluding documents incorporated by reference)
or of the Prospectus as then amended or supplemented (excluding documents
incorporated by reference) in any case where such delivery is required by the
Act if the Company has previously furnished copies thereof to such Underwriter
(or to the Representatives) and the loss, claim, damage or liability of such
Underwriter results from an untrue or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary Prospectus or
any preliminary prospectus supplement which was corrected in the Prospectus (or
the Prospectus as amended or supplemented).
(b) Each Underwriter will indemnify and hold harmless the Company
and the Guarantor against any losses, claims, damages or liabilities to which
the Company or the Guarantor may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Securities, or
any amendment or supplement thereto, or arise out or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (i) in the case of the
Registration Statement, not misleading and (ii) in the case of any Prospectus,
in light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company or the
Guarantor by such Underwriter through the Representatives for inclusion therein;
and will reimburse the Company and the Guarantor for any legal or other expenses
reasonably incurred by the Company or the Guarantor in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
<PAGE> 27
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation, unless such
indemnifying party and indemnified party are named parties to any such action
(including any impleaded parties) and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. In no event shall any indemnifying party be liable for the fees
and expenses of more than one counsel (in addition to local counsel) separate
from their own counsel for all indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances. In no event shall
an indemnifying party be liable with respect to any action or claim settled
without its written consent. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and the Guarantor on the one hand and the Underwriters of the
Designated Securities on the other from the offering of the Designated
Securities to which such loss, claim, damage or liability (or action in respect
thereof) relates. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party is not entitled to receive the indemnification provided for in
<PAGE> 28
subsection (a) above because of the second proviso thereof or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and the Guarantor
on the one hand and the Underwriters of the Designated Securities on the other
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantor on the one hand and such Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by such Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company and the Guarantor on the one hand or such Underwriters on the other and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, including with respect to any
Underwriter, the extent to which such losses, claims, damages or liabilities (or
actions in respect thereof) with respect to any Preliminary Prospectus or any
preliminary prospectus supplement result from the fact that the Underwriter sold
Securities to a person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference), if the Company has previously
furnished copies thereof to such Underwriters. The Company, the Guarantor and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the applicable Designated Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages (other than amounts paid or incurred without the consent of the
indemnifying party as provided in this Section 8) which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged
<PAGE> 29
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Designated Securities in this subsection (d) to contribute are
several in proportion to their respective underwriting obligations with respect
to such Securities and not joint. No indemnifying party will be liable for
contribution with respect to any action or claim settled without its written
consent.
(e) The obligations of the Company and the Guarantor under this
Section 8 shall be in addition to any liability which the Company and the
Guarantor may otherwise have and shall extend or not extend, as the case may be,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend or not extend,
as the case may be, upon the same terms and conditions, to each officer and
director of the Company and the Guarantor and to each person, if any, who
controls the Company and the Guarantor within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Underwriters' Securities which it has agreed to purchase under the Pricing
Agreement relating to such Underwriters' Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Underwriters' Securities on the terms contained herein. If within
thirty-six hours after such default by any Underwriter the Representatives do
not arrange for the purchase of such Underwriters' Securities, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties reasonably satisfactory to the
Representatives to purchase such Underwriters' Securities on such terms. In the
event that, within the respective prescribed period, the Representatives notify
the Company and the Guarantor that they have so arranged for the purchase of
such Underwriters' Securities, or the Company notifies the Representatives that
it has so arranged for the purchase of such Underwriters' Securities, the
Representatives or the Company shall have the right to postpone the Time of
Delivery for such Underwriters' Securities for a period of not more than seven
days in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Company and the Guarantor agree to file
promptly any amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
<PAGE> 30
originally been a party to the Pricing Agreement with respect to such Designated
Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate amount of such Underwriters' Securities which remains unpurchased does
not exceed one-tenth of the aggregate principal amount of the Designated
Securities, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the principal amount of Underwriters' Securities which
such Underwriter agreed to purchase under the Pricing Agreement relating to such
Designated Securities and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the principal amount of
Designated Securities which such Underwriter agreed to purchase under such
Pricing Agreement) of the Underwriters' Securities of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Designated Securities which remains unpurchased
exceeds one-tenth of the aggregate principal amount of the Designated
Securities, as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Designated Securities of a defaulting Underwriter or
Underwriters, then the Pricing Agreement relating to such Designated Securities
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Guarantor, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantor and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company or the Guarantor, or any officer or director or controlling person of
the Company or the Guarantor, and shall survive delivery of and payment for the
Securities.
<PAGE> 31
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company and the Guarantor shall not then be under any liability to
any Underwriter with respect to the Designated Securities covered by such
Pricing Agreement except as provided in Section 6 and Section 8 hereof; but, if
for any other reason Underwriters' Securities are not delivered by or on behalf
of the Company as provided herein, the Company will reimburse the Underwriters
through the Representatives for all reasonable out-of-pocket expenses approved
in writing by the Representatives, including reasonable fees and disbursements
of counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of such Designated Securities, but the Company
and the Guarantor shall then be under no further liability to any Underwriter
with respect to such Designated Securities except as provided in Section 6 and
Section 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or the Guarantor shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company and
the Guarantor set forth in the Registration Statement; Attention: Corporate
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company and the Guarantor by the Representatives upon request.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company, the Guarantor
and, to the extent provided in Section 8 and Section 10 hereof, the officers and
directors of the Company, the Guarantor and each person who controls the
Company, the Guarantor or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or any such
Pricing
<PAGE> 32
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence for each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS, BUT WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS, OF THE STATE OF NEW YORK.
<PAGE> 33
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
Very truly yours,
AETNA SERVICES, INC.
By: /s/ Alan J. Weber
--------------------------
Alan J. Weber
Vice Chairman for Strategy
and Finance
AETNA INC.
By: /s/ Alan J. Weber
--------------------------
Alan J. Weber
Vice Chairman for Strategy
and Finance
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
On behalf of each of the
Underwriters
By: /s/ Goldman, Sachs & Co.
------------------------
Goldman, Sachs & Co.
<PAGE> 34
ANNEX I
PRICING AGREEMENT
[Insert Representatives]
As Representatives of the several
Underwriters named in Schedule 1 hereto
-----------, ----.
Ladies and Gentlemen:
Aetna Services, Inc., a Connecticut corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated _______ (the "Underwriting Agreement"), to issue and sell to
the Underwriters named in Schedule I hereto (the "Underwriters") the Securities
specified in Schedule II hereto (the "Designated Securities"). The Securities
specified in Schedule II hereto shall be guaranteed by Aetna Inc., a Connecticut
corporation (the "Guarantor"), as set forth in the Indenture identified in
Schedule II hereto. Each of the provisions of the Underwriting Agreement is
incorporated herein by reference in its entirety, and shall be deemed to be a
part of this Agreement to the same extent as if such provisions had been set
forth in full herein; and each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Pricing
Agreement, except that each representation and warranty that refers to the
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a
representation or warranty as of the date of the Underwriting Agreement in
relation to the Prospectus (as therein defined), and also a representation and
warranty as of the date of this Pricing Agreement in relation to the Prospectus
as amended or supplemented relating to the Designated Securities which are the
subject of this Pricing Agreement. Each reference to the Representatives herein
and in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of each of the Underwriters of the
Designated Securities pursuant to Section 12 of the
<PAGE> 35
Underwriting Agreement and the address of the Representatives referred to in
such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in Schedule II
hereto, the principal amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto, less the principal amount of
Designated Securities covered by Delayed Delivery Contracts, if any, as may be
specified in Schedule II, and the Guarantor agrees to issue its Guarantees with
respect to such Designated Securities.
2
<PAGE> 36
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company and the Guarantor. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company and the Guarantor for examination upon
request.
Very truly yours,
AETNA SERVICES, INC.
By:
-------------------------------------
Name:
Title:
AETNA INC.
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof:
[Insert Representatives]
On behalf of each of the
Underwriters
By:
-----------------------------
Name:
Title:
3
<PAGE> 37
SCHEDULE I
<TABLE>
<CAPTION>
Underwriter Principal
Amount of
Designated
Securities
to be
Purchased
<S> <C>
Goldman, Sachs & Co.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
----------
Total.............................................. $
</TABLE>
<PAGE> 38
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
[ %] Guaranteed [Floating Rate] [Zero Coupon] [Senior]
[Subordinated] [Junior Subordinated]
[Notes] [Debentures] due
AGGREGATE PRINCIPAL AMOUNT:
[$] [Foreign Currency]
PRICE TO PUBLIC:
% of the principal amount of the Designated Securities, plus accrued
interest from to
[and accrued amortization, if any, from to ]
PURCHASE PRICE BY UNDERWRITERS:
% of the principal amount of the Designated Securities, plus accrued
interest from to
[and accrued amortization, if any, from to ]
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Immediately Available Funds
INDENTURE:
Indenture dated 19 , among the Company, the Guarantor and as
Trustee
MATURITY:
INTEREST RATE:
[ %] [Zero Coupon] [See Floating Rate Provisions]
INTEREST PAYMENT DATES:
[months and dates]
REDEMPTION PROVISIONS:
[No provisions for redemption]
<PAGE> 39
[The Designated Securities may be redeemed, otherwise than through the
sinking fund, in whole or in part at the option of the Company, in the amount
of [$] or an integral multiple thereof,
[or on after _________, at the following redemption prices (expressed in
percentages of principal amount). If [redeemed on or before ________, % and
if] redeemed during the 12-month period beginning ,
YEAR REDEMPTION PRICE
and thereafter at 100% of their principal amount, together in each case
with accrued interest to the redemption date.]
[on any interest payment date falling on or after _____, _____, at the
election of the Company, at a redemption price equal to the principal amount
thereof, plus accrued interest to the date of redemption.]
[Other possible redemption provisions, such as mandatory redemption upon
occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
SINKING FUND PROVISIONS:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund to
retire [$] principal amount of Designated Securities on
in each of the years through at 100% of their principal amount
plus accrued interest][, together with (cumulative] [noncumulative]
redemptions at the option of the Company to retire an additional [$]
principal amount of Designated Securities in the years through at
100% of their principal amount plus accrued interest].
[If Securities may be put to the issuer by holders, insert
OPTIONAL REPAYMENT PROVISIONS:
Securities are repayable on , [insert date and years], at
the option of the holder, at their principal amount with accrued interest.
2
<PAGE> 40
[If securities are Floating Rate debt securities, insert -
FLOATING RATE PROVISIONS:
Initial annual interest rate will be % through (and thereafter will be
adjusted (monthly] [on each , and ][to an annual rate of %
above the average rate for -year [month] [securities] [certificates of
deposit] issued by and [insert names of banks] [and the annual interest rate
[thereafter] [from through ] will be the interest yield equivalent
of the weekly average per annum market discount rate for -month Treasury bills
plus % of Interest Differential (the excess, if any, of (i) then current weekly
average per annum secondary market yield for -month certificates of deposit
over (ii) then current interest yield equivalent of the weekly average per annum
market discount rate for -month Treasury bills); [from and
thereafter the rate will be the then current interest yield equivalent plus %
of Interest Differential].]
TIME OF DELIVERY:
CLOSING LOCATION:
DELAYED DELIVERY:
[None] [Underwriters' commission shall be __% of the principal amount of
Designated Securities for which Delayed Delivery Contracts have been entered
into. Such commission shall be payable to the order of ____]
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
[OTHER TERMS]:
3
<PAGE> 41
ANNEX II
DELAYED DELIVERY CONTRACT
Aetna Services, Inc.
151 Farmington Avenue
Hartford, CT 06156
Attention ____________
Aetna Inc.
151 Farmington Avenue
Hartford, CT 06156
Attention ____________
____________, ____
Dear Sirs:
The undersigned hereby agrees to purchase from Aetna Services, Inc.
(hereinafter called the "Company"), and the Company agrees to sell to the
undersigned,
$_________
principal amount of the Company's debt securities (hereinafter called the
"Designated Securities"), guaranteed by Aetna Inc. (hereinafter called the
"Guarantor"), offered by the Company's and the Guarantor's Prospectus dated
_____________, as amended or supplemented, receipt of a copy of which is hereby
acknowledged, at a purchase price of __% of the principal amount thereof, plus
accrued interest from the date from which interest accrues as set forth below,
and on the further terms and conditions set forth below, and on the further
terms and conditions set forth in this contract.
The undersigned will purchase the Designated Securities from the Company
on __________ (the "Delivery Date") and interest on the Designated Securities so
purchased will accrue from ___________.
<PAGE> 42
The undersigned will purchase the Designated Securities from the Company
on the delivery date or dates and in the principal amount or amounts set forth
below:
<TABLE>
<CAPTION>
Date from Which
Delivery Date Principal Amount Amount Interest Accrues
- ------------- ---------------- -----------------------
<S> <C> <C>
___________, 19__ $__________ ____________, 19__
___________, 19__ $__________ ____________, 19__
</TABLE>
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED HEREUNDER IS
HEREINAFTER REFERRED TO AS A "DELIVERY DATE."
Payment for the Designated Securities which the undersigned has agreed to
purchase on each Delivery Date shall be made to the Company in Federal or other
funds immediately available in New York City, by wire transfer to a bank account
specified by the Company, on such Delivery Date upon delivery to the undersigned
of the Designated Securities, having the Guarantee of the Guarantor endorsed
thereon, then to be purchased by the undersigned in definitive fully registered
form and in such denominations and registered in such names as the undersigned
may designate by written, telex or facsimile communication addressed to the
Company not less than five full business days prior to such Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Designated Securities on each Delivery Date shall be subject to the condition
that the purchase of Designated Securities to be made by the undersigned shall
not on such Delivery Date be prohibited under the laws of the jurisdiction to
which the undersigned is subject. The obligation of the undersigned to take
delivery of and make payment for Designated Securities shall not be affected by
the failure of any purchaser to take delivery of and make payment for Designated
Securities pursuant to other contracts similar to this contract.
The undersigned understands that Underwriters (the "Underwriters") are
also purchasing Designated Securities from the Company, but that the obligations
of the undersigned hereunder are not contingent on such purchases. Promptly
after completion of the sale to the Underwriters the Company will mail or
deliver to the undersigned at its address set forth below notice to such effect,
accompanied by a copy of the opinion of counsel for the Company and the
Guarantor delivered to the Underwriters in connection therewith.
2
<PAGE> 43
The undersigned represents and warrants that, as of the date of this
contract, the undersigned is not prohibited from purchasing the Designated
Securities hereby agreed to be purchased by it under the laws of the
jurisdiction to which the undersigned is subject.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
This contract may be executed by either of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
It is understood that the acceptance by the Company and the Guarantor of
any Delayed Delivery Contract (including this contract) is in the Company's and
the Guarantor's sole discretion and that, without limiting the foregoing,
acceptances of such contracts need not be on a first-come, first-served basis.
If this contract is acceptable to the Company and the Guarantor, it is requested
that the Company and the Guarantor sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract among the Company, the
Guarantor and the undersigned when such counterpart is so mailed or delivered by
the Company and the Guarantor.
Yours very truly,
By: ______________________________________
(Authorized Signature)
Name:
Title:
__________________________________________
(Address)
Accepted:__________
Aetna Services, Inc.
By________________________
Name:
Title:
3
<PAGE> 44
Aetna Inc.
By________________________
Name:
Title:
4
<PAGE> 45
ANNEX III
Pursuant to Section 7(f) of the Underwriting Agreement, KPMG Peat Marwick
LLP shall furnish letters to the Underwriters with respect to the Company and
the Guarantor to the effect that:
(i) They are independent certified public
accountants with respect to the Company and the Guarantor and
their respective subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements
and any supplementary financial information and schedules
audited by them and included or incorporated by reference in
the Registration Statement or the Prospectus comply as to form
in all material respects with the applicable accounting
requirements of the Act or the Exchange Act, as applicable,
and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial
statements and selected financial data derived from audited
financial statements of the Company for the periods specified
in such letter, as indicated in their reports thereon, copies
of which have been furnished to the representatives of the
Underwriters (the "Representatives");
(iii) The unaudited selected financial information
with respect to the consolidated results of operations and
financial position of the Company or the Guarantor for the
five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the
Company's or the Guarantor's Annual Report on Form 10-K for
the most recent fiscal year agrees with the corresponding
amounts (after restatement where applicable) in the audited
consolidated financial statements for five such fiscal years
which were included or incorporated by reference in the
Company's or the Guarantor's Annual Reports on Form 10-K for
such fiscal years;
<PAGE> 46
(iv) on the basis of limited procedures, not
constituting an audit in accordance with generally accepted
auditing standards, consisting of a reading of the unaudited
financial statements and other information referred to below,
a reading of the latest available interim financial statements
of the Company or the Guarantor and their respective
subsidiaries, inspection of the minute books of the Company
and the Guarantor and their respective subsidiaries since the
date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of
officials of the Company and the Guarantor and their
respective subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as
may be specified in such letter, nothing came to their
attention that caused them to believe that:
(a) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included or incorporated by reference in the Company's or the
Guarantor's Quarterly Reports on Form 10-Q incorporated by reference
in the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Exchange Act as
it applies to Form 10-Q and the related published rules and
regulations thereunder or, if no report has been issued by such
accountants on the consolidated interim financial statements as set
forth in (ii) above, based on a review under their applicable
professional standards, that any material modifications should be
made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles;
(b) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any such
unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included or
incorporated by reference in the Company's or the Guarantor's Annual
Report on Form 10-K for the most recent fiscal year;
(c) the unaudited financial statements which were not included
in the Prospectus but from which were derived the
2
<PAGE> 47
unaudited condensed financial statements referred to in clause (a)
above and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (b) above
were not determined on a basis substantially consistent with the
basis for the audited financial statements included or incorporated
by reference in the Company's or the Guarantor's Annual Report on
Form 10-K for the most recent fiscal year;
(d) as of a specified date not more than three business days
prior to the date of such letter, there have been any changes in the
consolidated Common Stock (other than issuances of common stock
pursuant to employee benefit plans, upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, which were outstanding
on the date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
Long-Term Debt of the Company and the Guarantor and their respective
subsidiaries, as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Prospectus,
except in each case for changes or increases which the Prospectus
discloses have occurred or may occur or which are described in such
letter; and
(e) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus
to the last day of the month immediately preceding the date of such
letter for which monthly financial statements are available, if any,
there were any decreases in consolidated total revenues or income
before income taxes, discontinued operations and cumulative effect
of accounting changes or the per share amounts of consolidated
income before income taxes, discontinued operations and cumulative
effect of accounting changes, in each case as compared with the
comparable period of the preceding year, except in each case for
decreases which the Prospectus discloses have occurred or may occur
or which are described in such letter; and
(v) In addition to the audit referred to in their
report(s) included or incorporated by reference in the
Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with
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<PAGE> 48
respect to certain amounts, percentages and financial
information specified by the Representatives which are derived
from the general accounting records of the Company or the
Guarantor and their respective subsidiaries, which appear in
the Prospectus (excluding documents incorporated by
reference), or in Part II of, or in exhibits and schedules to,
the Registration Statement specified by the Representatives or
in documents incorporated by reference in the Prospectus
specified by the Representatives, and have compared certain of
such amounts, percentages and financial information with the
accounting records of or schedules prepared by the Company or
the Guarantor and their respective subsidiaries and have found
them to be in agreement.
(vi) If pro forma financial statements and other
pro forma financial information (the "Pro Forma Disclosure")
are required to be included in the Registration Statement,
such letter shall further state that although they are unable
to and do not express any opinion on such Pro Forma Disclosure
or on the pro forma adjustments applied to the historical
amounts included in that statement, for purposes of such
letter they have:
(a) read the Pro Forma Disclosure;
(b) made inquiries of certain officials of the Company and the
Guarantor who have responsibility for financial and accounting
matters about the basis for their determination of the pro forma
adjustments and whether the Pro Forma Disclosure above complies in
form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X; and
(c) proved the arithmetic accuracy of the application of the
pro forma adjustments to the historical amounts in the Pro Forma
Disclosure; and
on the basis of such procedures, and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that the Pro Forma Disclosure
included in the Registration Statement does not comply in form in
all material respects with the applicable requirements of Rule 11-02
of Regulation S-X and that the pro forma adjustments have not
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<PAGE> 49
been properly applied to the historical amounts in the
compilation of that statement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Underwriting Agreement as of the date of the letter
delivered on the date of the Pricing Agreement for purposes of such letter and
to the Prospectus as amended or supplemented (including the documents
incorporated by reference therein) in relation to the applicable Designated
Securities for purposes of the letter delivered at the Time of Delivery for such
Designated Securities.
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<PAGE> 1
EXHIBIT 1.2
PRICING AGREEMENT
Goldman, Sachs & Co.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
Salomon Smith Barney Inc.
As Representatives of the several
Underwriters named in Schedule 1 hereto
November 13, 1998
Ladies and Gentlemen:
Aetna Services, Inc., a Connecticut corporation (the "Company"), proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated November 13 , 1998 (the "Underwriting Agreement"), to issue and
sell to the Underwriters named in Schedule I hereto (the "Underwriters") the
Securities specified in Schedule II hereto (the "Designated Securities"). The
Securities specified in Schedule II hereto shall be guaranteed by Aetna Inc., a
Connecticut corporation (the "Guarantor"), as set forth in the Indenture
identified in Schedule II hereto. Each of the provisions of the Underwriting
Agreement is incorporated herein by reference in its entirety, and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
had been set forth in full herein; and each of the representations and
warranties set forth therein shall be deemed to have been made at and as of the
date of this Pricing Agreement. Each reference to the Representatives herein and
in the provisions of the Underwriting Agreement so incorporated by reference
shall be deemed to refer to you. Unless otherwise defined herein, terms defined
in the Underwriting Agreement are used herein as therein defined. The
Representatives designated to act on behalf of each of the Underwriters of the
Designated Securities pursuant to Section 12 of the Underwriting Agreement and
the address of the Representatives referred to in such Section 12 are set forth
at the end of Schedule II hereto.
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<PAGE> 2
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
issue and to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the time and
place and at the purchase price to the Underwriters set forth in Schedules II
hereto, the principal amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto, and the Guarantor agrees to issue
its Guarantees with respect to such Designated Securities.
At the time of the closing of the sale and purchase of the Designated
Securities, and subject thereto, Goldman, Sachs & Co. will pay to the Company,
in immediately available funds, $6,780,000 in respect of the call option granted
to Goldman, Sachs & Co. pursuant to the terms of the Designated Securities.
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<PAGE> 3
If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company and the Guarantor. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company and the Guarantor for examination upon
request.
Very truly yours,
AETNA SERVICES, INC.
By: /s/ Alan J. Weber
Alan J. Weber
Vice Chairman for Strategy
and Finance
AETNA INC.
By: /s/ Alan J. Weber
Alan J. Weber
Vice Chairman for Strategy
and Finance
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
On behalf of each of the
Underwriters
By: /s/ Goldman, Sachs & Co.
Goldman, Sachs & Co.
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<PAGE> 4
SCHEDULE I
Principal Amount of Designated Securities to be Purchased
<TABLE>
<S> <C>
Goldman, Sachs & Co. $ 180,000,000
Deutsche Bank Securities Inc. 24,000,000
J.P. Morgan Securities Inc. 24,000,000
Merrill Lynch, Pierce, Fenner & 24,000,000
Smith Incorporated
Morgan Stanley & Co. Incorporated 24,000,000
Salomon Smith Barney Inc. 24,000,000
--------------
Total $ 300,000,000
</TABLE>
<PAGE> 5
SCHEDULE II
TITLE OF DESIGNATED SECURITIES:
5.66% Puttable Reset Securities PURS(SM) due 2009 ("PURS")
AGGREGATE PRINCIPAL AMOUNT:
$300,000,000
PRICE TO PUBLIC:
100% of the principal amount of PURS, plus accrued interest, if any,
from November 18, 1998
PURCHASE PRICE BY UNDERWRITERS:
99.8% of the principal amount of PURS, plus accrued interest, if any,
from November 18, 1998
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
Immediately Available Funds
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<PAGE> 6
INDENTURE:
Indenture (Senior Debt Securities) dated July 1, 1996 among
the Company, the Guarantor and State Street Bank and Trust
Company of Connecticut, National Association, as Trustee
MATURITY:
November 15, 2009
INTEREST RATE:
5.66% (initial interest rate)
INTEREST PAYMENT DATES:
Interest is payable semi-annually on May 15 and November 15, commencing
May 15, 1999 (except that the November 1999 interest payment will be
made on November 29, 1999)
REDEMPTION PROVISIONS:
As provided in paragraph 6 of the form of PURS attached
hereto as Exhibit A
SINKING FUND PROVISIONS:
No sinking fund provisions
OPTIONAL REPAYMENT PROVISIONS:
Put Option as provided in paragraph 3 of the form of
PURS attached hereto as Exhibit A
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<PAGE> 7
TIME OF DELIVERY:
November 18, 1998
CLOSING LOCATION:
Davis Polk & Wardwell
450 Lexington Avenue
New York, N.Y. 10017
DELAYED DELIVERY:
None
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives: Goldman, Sachs & Co.
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
Address for Notices, etc.: c/o Goldman, Sachs & Co.
Attn: Registration Department
85 Broad Street
New York, NY 10004
OTHER TERMS:
As provided in paragraphs 2, 3, 4, 5 and 10 of the form of PURS
attached hereto as Exhibit A
At the time of the closing of the sale and purchase of the Designated
Securities, and subject thereto, Goldman, Sachs & Co. will pay to the
Company, in immediately available funds, $6,780,000 in respect of the
call option granted to Goldman, Sachs & Co. pursuant to the terms of
the Designated Securities.
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<PAGE> 8
The opinions in section 7(b), 7(c) and 7(d) of the Underwriting
Agreement will also cover the validity, binding effect and
enforceability of the Calculation Agency Agreement to be entered into
in connection with the Designated Securities.
5
