As
filed with the Securities and Exchange Commission on December 5,
2008
Registration
No. 333-
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Aetna
Inc.
(Exact
Name of Registrant as Specified in Its Charter)
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Pennsylvania
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23-2229683
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(State
or Other Jurisdiction of
Incorporation or
Organization)
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(I.R.S.
Employer
Identification
Number)
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151
Farmington Avenue
Hartford,
Connecticut 06156
(860)
273-0123
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(Address,
Including Zip Code, and Telephone Number, Including Area Code, of
Registrant’s Principal Executive
Offices)
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William
J. Casazza
Senior
Vice President and General Counsel
(860)
273-0123
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(Name,
Address, Including Zip Code, and Telephone Number, Including Area Code, of
Agent For Service)
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Copy
to:
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Richard
J. Sandler
Davis
Polk & Wardwell
450
Lexington Avenue
New
York, NY 10017
(212)
450-4000
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Approximate
date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes
effective.
If the only securities
being registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, check the following box. o
If any of the securities
being registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o _______
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o ______
If this Form is a
registration statement pursuant to General Instruction I.D. or a post-effective
amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following
box. x
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. o
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CALCULATION
OF REGISTRATION FEE
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Title
of Shares
to
be Registered
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Amount
to be
Registered
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Proposed
Maximum
Offering
Price Per
Unit
(1)
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Proposed
Maximum
Aggregate
Offering
Price
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Amount
of
Registration
Fee
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Debt
Securities
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Warrants
to purchase Common Stock
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Warrants to purchase
Debt Securities
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Preferred
Stock
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(1)
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(1)
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(1)
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$0(1)
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Common
Stock
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Purchase
Contracts
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Units
that may include any of the above securities or securities of other
entities
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(1)
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An indeterminate amount of
securities to be offered at indeterminate prices is being registered
pursuant to this registration statement. The registrant is
deferring payment of the registration fee pursuant to Rule 456(b) and is
omitting this information in reliance on Rule 456(b) and Rule 457(r),
except an unutilized registration fee of $9,973.57 was previously paid in
connection with the Registration Statement on Form S-3 (No. 333-130126)
filed by the Registrant on December 5, 2005. Pursuant to Rule
457(p) under the Securities Act, the unutilized filing fee of $9,973.57
previously paid may be applied to the filing fee payable pursuant to this
Registration Statement. Any additional registration fees will
be paid subsequently on a pay-as-you-go
basis.
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PROSPECTUS
Aetna
Inc.
DEBT
SECURITIES
COMMON
SHARES
PREFERRED
SHARES
PURCHASE
CONTRACTS
WARRANTS
UNITS
We may
offer from time to time debt securities, common shares, preferred shares,
purchase contracts, warrants to purchase common shares or warrants to purchase
debt securities, or units that may include any of these securities or securities
of other entities. Specific terms of these securities will be
provided in supplements to this prospectus. The debt securities, preferred
shares, warrants and purchase contracts may be convertible into or exercisable
or exchangeable for common or preferred shares or other securities of the
Company or debt or equity securities of one or more other entities. You should
read this prospectus and any supplement carefully before you
invest.
The
Company may offer and sell these securities to or through one or more
underwriters, dealers and agents, or directly to purchasers, on a continuous or
delayed basis.
This
prospectus describes some of the general terms that may apply to debt
securities. The specific terms of any debt securities and the terms
of any other securities to be offered will be described in a supplement to this
prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
The
date of this prospectus is December 5, 2008
You should
rely only on the information contained in or incorporated by reference in this
prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities
in any state where the offer is not permitted. You should not assume
that the information contained in or incorporated by reference in this
prospectus is accurate as of any date other than the date on the front of this
prospectus. The terms “Aetna”, “we,” “us,” and “our” refer to Aetna
Inc. and its consolidated subsidiaries. Unless the context otherwise
requires, “including” means including without limitation.
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We are one
of the nation’s leading diversified health care benefits companies, serving
approximately 37.2 million people at September 30, 2008, with information
and resources to help them make better informed decisions about their health
care. At September 30, 2008, we served approximately 17.7 million medical
members, 14.1 million dental members and 11.1 million pharmacy members. At
September 30, 2008, we also had over 874,000 health care professionals,
including hospitals and pharmacies, participating in our networks nationwide. We
offer a broad range of traditional and consumer-directed health insurance
products and related services, including medical, pharmacy, dental, behavioral
health, group life and disability plans, and medical management capabilities and
health care management services for Medicaid plans. We offer these products on
both an insured and employer-funded basis. We offer our products in all
50 states, and our customers include employer groups, individuals, college
students, part-time and hourly workers, health plans, governmental units,
government-sponsored plans, labor groups and expatriates. We also have a large
case pensions business that manages a variety of discontinued and other
retirement products (including pension and annuity products) primarily for tax
qualified pension plans of large customers.
Our
principal executive offices are located at 151 Farmington Avenue, Hartford,
Connecticut 06156, and our telephone number is (860) 273-0123. Internet
users can obtain information about Aetna and its services at
http://www.aetna.com. This text is not an active link, and our website and the
information contained on that site, or connected to that site, is not
incorporated into this prospectus.
We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy any document that we file at the
Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C.
20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the
SEC maintains an Internet site at http://www.sec.gov, from which interested
persons can electronically access our filings with the SEC, including the
registration statement containing this prospectus (including the exhibits and
schedules thereto).
We have
filed with the SEC a registration statement on Form S-3 relating to the
securities covered by this prospectus. This prospectus is a part of
the registration statement and does not contain all the information in the
registration statement. Whenever a reference is made in this
prospectus to a contract or other document of the Company, the reference is only
a summary, and you should refer to the exhibits that are a part of the
registration statement for a copy of the contract or other
document. You may review a copy of the registration statement at the
SEC’s public reference room in Washington, D.C., as well as through the SEC’s
Internet site.
The SEC
allows us to “incorporate by reference” the information we file with them, which
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is an important part
of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below and all documents we file with the SEC pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), after December 5, 2008 and prior to the
termination of the offering under this prospectus:
(a) Our
Current Reports on Form 8-K or 8-K/A filed on April 1, 2008,
June 3, 2008, August 6, 2008, September 12, 2008 (other than Item
7.01), September 18, 2008, September 29, 2008 and September 30,
2008;
(b) Our
Quarterly Report on Form 10-Q for the period ended March 31, 2008,
Quarterly Report on Form 10-Q/A for the periods ended June 30, 2008
and Quarterly Report on Form 10-Q for the periods ended September 30, 2008;
and
(c) Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2007.
You may
request a free copy of these filings by writing or telephoning the office of the
Corporate Secretary, Aetna Inc., 151 Farmington Avenue, RW61, Hartford,
Connecticut 06156, Telephone: (860) 273-4970.
We have
made forward-looking statements in this prospectus and the documents
incorporated by reference in this prospectus. These forward-looking
statements are based on our management's beliefs and assumptions and on
information available to our management at the time the statements are or were
made. Forward-looking statements include but are not limited to the information
concerning our possible or assumed future results of operations, business
strategies, financing plans, competitive position, potential growth
opportunities, potential operating performance improvements, the effects of
competition and the effects of future legislation or regulations.
Forward-looking statements include all statements that are not historical facts
and can be identified by the use of forward-looking terminology such as the
words “believe,” “expect,” “seek,” “plan,” intend,” “anticipate,” “estimate,”
“predict,” “project,” “potential,” “continue,” “may,” “will,” “should” or the
negative of these terms or similar expressions.
Forward-looking
statements involve risks, uncertainties and assumptions. Actual results may
differ materially from those expressed in these forward-looking statements. You
should not put undue reliance on any forward-looking statements. We do not have
any intention or obligation to update forward-looking statements to reflect new
information, future events or risks or the eventual outcome of the facts
underlying the forward-looking statements. New information, future
events or risks may cause the forward-looking events we discuss in this
prospectus not to occur or to occur in a manner different from what we
expect.
The risk
factors discussed in “Forward-Looking Information/Risk Factors” in our 2007
Annual Report, incorporated by reference in, and filed with the SEC as an
exhibit to, our Annual Report on Form 10-K for the fiscal year ended December
31, 2007 and/or in our Quarterly Report on Form 10-Q for the periods ended
September 30, 2008, and as updated in any future filings with the SEC, could
cause our results to differ materially from those expressed in forward-looking
statements. There may also be other risks that we are unable to predict at this
time.
Unless
otherwise indicated in a prospectus supplement, the net proceeds from the sale
of the securities will be added to Aetna’s general funds and used for general
corporate purposes, including the repayment of indebtedness and share
repurchases.
The
following description of Aetna’s capital stock is a summary of the material
terms thereof and is qualified in its entirety by reference to the provisions of
Aetna’s Amended and Restated Articles of Incorporation (“Aetna’s Articles”) and
Aetna’s Amended and Restated By-Laws (“Aetna’s By-Laws”). Copies of
Aetna’s Articles and By-Laws are incorporated by reference in this prospectus
and will be sent to holders of shares of Aetna capital stock upon
request. See “Where You Can Find More Information”
above.
Aetna’s
Articles and By-Laws contain certain provisions that could delay or make more
difficult the acquisition of Aetna by means of a tender offer, a proxy contest
or otherwise.
Authorized
Capital Stock
Under
Aetna’s Articles, the total number of shares of all classes of shares that Aetna
has authority to issue is 2,996,654,333, having a par value of $.01
each. At April 30, 2007, Aetna’s Articles designated 7,625,000 shares
as Class A voting preferred shares (the “Class A voting preferred stock”) and
2,883,673,668 shares as common shares (the “Aetna common stock”). Aetna’s
Articles provide that the Aetna board of directors has the power to divide the
authorized but unissued shares into such classes and series, with such voting
rights, designations, preferences, limitations and special rights as the board
shall then fix and determine. Except as otherwise provided in Aetna’s Articles
or in a board resolution, shares purchased, redeemed by, surrendered to or
otherwise acquired by Aetna assume the status of authorized but unissued shares,
undesignated as to class or series, and may thereafter be reissued in the same
manner as other authorized but unissued shares. As of September 30,
2008, Aetna’s authorized capital stock consisted of 7,625,000 shares of Class A
voting preferred stock, 2,753,181,042 shares of Aetna common stock and
235,848,291 shares undesignated as to class or series.
Aetna
Common Stock
The
holders of Aetna common stock are entitled to one vote per share on all matters
voted on by shareholders, including elections of directors. Except as otherwise
required by law, or by the provisions of the Class A voting preferred stock, or
provided in any resolution adopted by the Aetna board with respect to any
subsequently created class or series of Aetna shares, the holders of the Aetna
common stock exclusively possess all voting power. Aetna’s Articles preclude
cumulative voting in the election of directors. Aetna’s Articles
provide for a majority vote standard for uncontested elections of directors, and
a plurality of votes standard for contested elections of directors. Subject to
any rights of any outstanding series of Aetna preferred stock, the holders of
Aetna common stock (i) are entitled to such dividends as may be declared from
time to time by the Aetna board from funds available therefor and (ii) upon
liquidation are entitled to receive pro rata all assets of Aetna available for
distribution to such holders.
The
transfer agent and registrar for the Aetna common stock is Computershare Trust
Company, N.A.
Additional
Aetna Stock, Including Preferred Stock
The Aetna
board is authorized to provide for the issuance of Aetna shares in one or more
classes and series, including preferred shares, to establish the
number of shares in each class and series, and to fix the designations, powers,
preferences and rights of each such class and series and the qualifications,
limitations or restrictions thereof. Aetna’s Articles currently
designate 7,625,000 shares as Class A voting preferred stock.
Preemptive
Rights
No holder
of any shares of Aetna of any class or series authorized at the date of this
prospectus has any preemptive right to subscribe to any securities of Aetna of
any kind or class or series.
Book-Entry
Shareholding
Certificates
representing the Aetna common stock will not be issued unless requested in
writing as set forth below. Holders of record of Aetna common stock have
credited to a book-entry account established for them by, and maintained at,
Computershare Trust Company, N.A. (the transfer agent and registrar for Aetna
common stock) the number of shares of Aetna common stock owned by them. Each
holder of record receives an Ownership Statement from the registrar promptly
following each transfer to or from such account. Shareholders may request the
issuance of a certificate representing the shares of Aetna common stock owned of
record by them by writing to Aetna’s registrar and transfer agent.
Certain
Anti-Takeover Provisions
Advance
Notice Provisions for Special Meetings
Under the
Pennsylvania Business Corporation Law (the “Business Corporation Law”), a
company’s shareholders are not permitted to call or require the company to call
a special meeting of shareholders unless the company’s governing documents
permit them to do so. Aetna’s Articles and By-Laws, taken together,
provide that shareholders entitled to cast at least two-thirds of the votes that
all voting shareholders, voting as a single class, are entitled to cast at the
special meeting may call a special meeting of shareholders by delivery to the
Corporate Secretary of a written petition signed by each of such
shareholders. The written petition must include (i) a brief
description of the business to be conducted at the special meeting and the
reasons for conducting the business at a special meeting; (ii) the name and
address of each shareholder who has signed the petition; (iii) evidence of the
class and number of shares of capital stock of Aetna that are beneficially owned
by each shareholder who has signed the petition; and (iv) any material interest
of any shareholder who has signed the petition in the business described in the
petition. It shall be the duty of the Corporate Secretary to fix the date and
time of any shareholder-called special meeting, which shall be held not more
than 120 days after the Corporate Secretary's receipt of a petition that
complies with the above requirements. Aetna’s By-Laws provide that only such
business may be conducted at a special meeting as is specified in the notice of
meeting given by Aetna.
Potential
Issuances of Aetna Preferred Stock
Aetna’s
Articles currently designate 7,625,000 shares as Class A voting preferred
stock. Aetna’s Articles also authorize the Aetna board to establish,
from the authorized but unissued shares, one or more classes and series of Aetna
shares, including preferred shares, and to determine, with respect to any such
class or series of Aetna shares, the terms and rights of such class or series,
including, for example, (i) the designation of the class or series; (ii) the
number of shares of the class or series, which number the Aetna board may
thereafter (except where otherwise provided in the designation of any
subsequently authorized class or series) increase or decrease (but not below the
number of shares thereof then outstanding); (iii) whether dividends, if any,
will be cumulative or noncumulative and the dividend rate of the class or
series; (iv) the dates on which dividends, if any, will be payable; (v) the
redemption rights and price or prices, if any, for shares of the class or
series; (vi) the terms and amounts of any sinking fund provided for the purchase
or redemption of shares of the class or series; (vii) the amounts payable on
shares of the class or series in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of Aetna; (viii) whether
the shares of the class or series will be convertible into shares of any other
class or series, or any other security, of Aetna or any other corporation, and,
if so, the specification of such other class or series or such other security,
the conversion price or prices or rate or rates, any adjustments thereof, the
date or dates as of which such shares shall be convertible and all other terms
and conditions upon which such conversion may be made; (ix) restrictions on the
issuance of shares of the same class or series or of any other class or series;
and (x) the voting rights, if any, of the holders of such class or
series.
The
authorized shares of Aetna, including shares of preferred stock and common
stock, will be available for issuance without further action by Aetna's
shareholders, unless such action is required by applicable law or the rules of
any stock exchange or automated quotation system on which Aetna's securities may
be listed or traded. If the approval of Aetna's shareholders is not so required,
the Aetna board does not intend to seek shareholder approval.
Although
the Aetna board has no intention at the present time of doing so, it could issue
a class or series of Aetna preferred shares that could, depending on the terms
of such class or series, impede the completion of a merger, tender offer or
other takeover attempt that some, or a majority, of Aetna's shareholders might
believe to be in their best interests or in which shareholders might receive a
premium for their shares over the then-current market price of such
shares.
Potential
Issuances of Rights to Purchase Securities
Aetna does
not currently have a shareholder rights plan, although the Aetna board retains
the right to adopt a new plan at a future date. Aetna’s Articles
grant the Aetna board exclusive authority to create and issue rights entitling
the holders thereof to purchase from Aetna shares of capital stock or other
securities and to elect to repurchase, redeem, terminate or amend any such
rights. The times at which and terms upon which such rights are to be issued,
repurchased, redeemed, terminated or amended are to be determined exclusively by
the Aetna board and set forth in the contracts or instruments that evidence any
such rights. The authority of the Aetna board with respect to such rights
includes, but is not limited to, determining (i) the purchase price of the
capital stock or other securities or property to be purchased upon exercise of
such rights; (ii) provisions relating to the times at which and the
circumstances under which such rights may be exercised or sold or otherwise
transferred, either together with or separately from any other shares or other
securities of Aetna; (iii) provisions which adjust the number or exercise price
of such rights or the amount or nature of the shares, other securities or other
property receivable upon exercise of such rights in the event of a combination,
split or recapitalization of any shares of Aetna, a change in ownership of
Aetna's shares or other securities or a reorganization, merger, consolidation,
sale of assets or other occurrence relating to Aetna or any shares of Aetna, and
provisions restricting the ability of Aetna to enter into any such transaction
absent an assumption by the other party or parties thereto of the
obligations
of Aetna under such rights; (iv) provisions which deny the holder of a specified
percentage of the outstanding securities of Aetna the right to exercise such
rights and/or cause such rights held by such holder to become void; (v)
provisions which permit Aetna to redeem or exchange such rights; and (vi) the
appointment of the rights agent with respect to such rights. This provision is
intended to confirm the Aetna board's exclusive authority to issue, repurchase,
redeem, terminate or amend share purchase rights or other rights to purchase
shares or securities of Aetna or any other corporation.
Advance
Notice Provisions for Shareholder Nominations and Shareholder Proposals at
Annual Meetings
Aetna’s
By-Laws establish an advance notice procedure for shareholders to nominate
candidates for election as directors or to bring other business before annual
meetings of shareholders of Aetna (the “Shareholder Notice
Procedure”).
Nominations
for election to the Aetna board may be made at an annual meeting, or at a
special meeting at which directors are to be elected, only by or at the Aetna
board's direction or by a shareholder who has complied with the Shareholder
Notice Procedure. Aetna’s By-Laws require that notice of a shareholder
nomination set forth certain information with respect to each proposed nominee
and the shareholder giving notice.
Aetna’s
By-Laws provide that at an annual meeting only such business may be conducted as
has been brought before the meeting by, or at the direction of, the Chairman or
the Aetna board or by a shareholder who has given timely written notice to the
Corporate Secretary of Aetna of such shareholder's intention to bring such
business before such meeting in compliance with the Shareholder Notice
Procedure. Under the Shareholder Notice Procedure, a shareholder's notice
relating to the conduct of business at an annual meeting must contain specified
information about such business and about the proposing
shareholder.
The
Shareholder Notice Procedure requires that notice of nominations or proposals
for substantive business must be received by Aetna not later than the 90th day
before such meeting is to be held, or if later, the 10th day after public
announcement of the date of such meeting is made.
If the
Chairman or other officer presiding at a meeting determines that an individual
was not nominated, or other business was not brought before the meeting, in
accordance with the Shareholder Notice Procedure, such individual will not be
eligible for election as a director, or such business will not be conducted at
such meeting, as the case may be.
By
requiring advance notice of nominations by shareholders, the Shareholder Notice
Procedure affords the Aetna board an opportunity to consider the qualifications
of the proposed nominees and, to the extent deemed necessary or desirable by the
Aetna board, to inform shareholders about such qualifications. By requiring
advance notice of other proposed business, the Shareholder Notice Procedure
provides a more orderly procedure for conducting annual meetings of shareholders
and, to the extent deemed necessary or desirable by the Aetna board, provides
the Aetna board with an opportunity to inform shareholders, prior to such
meetings, of any business proposed to be conducted at such meetings, together
with the Aetna board's position regarding action to be taken with respect to
such business, so that shareholders can better decide whether to attend such a
meeting or to grant a proxy regarding the disposition of any such
business.
Although
Aetna’s By-Laws do not give the Aetna board any power to approve or disapprove
shareholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of shareholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to Aetna and its
shareholders.
No
Shareholder Action by Written Consent
Aetna’s
Articles provide that shareholder action may only be taken at an annual or
special meeting of shareholders and may not be taken by written consent in lieu
of a meeting. The inability of the Aetna shareholders to act by
written consent prevents the holders of a majority of the voting power of the
voting shares from unilaterally using the written consent procedure to take
shareholder action.
Provisions
Relating to Shareholder Approval of Business Combination and Other
Transactions
Under the
Business Corporation Law, unless a higher vote is required in a corporation’s
articles of incorporation, a plan of merger or consolidation, a plan of asset
transfer providing for the sale of all or substantially all of the assets of a
corporation, a share exchange, division or voluntary dissolution will be adopted
upon receiving at a properly convened meeting the affirmative vote of a majority
of the votes cast by all shareholders having a right to vote thereon, and if any
class or series is entitled to vote thereon as a class, the affirmative vote of
a majority of the votes cast in each class vote. Aetna’s Articles require that a
plan of merger, consolidation, or asset transfer and a share exchange or
division receive the affirmative vote of the holders of a majority of the shares
of Aetna common stock outstanding on the record date for the meeting at which
such plan is to be voted upon by
shareholders
and, in addition, the affirmative vote of such number or proportion of shares of
any other class or series of Aetna’s capital stock as shall at the time be
required by the terms of such class or series. This higher vote will make it
more difficult to obtain shareholder approval of such a business combination or
other transaction than would be the case if such higher vote were not
required.
Provisions
Relating to Amendments to Aetna’s Articles and By-Laws
Under the
Business Corporation Law, shareholders have the right to adopt, amend or repeal
the articles of incorporation and bylaws of a corporation. However, the Business
Corporation Law requires that any amendment to Aetna’s Articles also be approved
by the board of directors. Under the Business Corporation Law, unless a higher
vote is required in a corporation’s articles of incorporation, amendments to the
corporation’s articles of incorporation will be adopted upon receiving at a
properly convened meeting the affirmative vote of a majority of the votes cast
by all shareholders having a right to vote thereon, and if any class or series
is entitled to vote thereon as a class, the affirmative vote of a majority of
the votes cast in each class vote. Aetna’s Articles provide that the provisions
relating to shareholder approval of business combination and other transactions
described immediately above may only be amended by the affirmative vote of the
holders of a majority of the shares of Aetna common stock outstanding on the
record date for the applicable meeting. In addition, Aetna’s Articles
provide that, among others, the provisions relating to director and officer
liability and indemnification and voluntary dissolution may only be amended by
the affirmative vote of the holders of two-thirds of the shares of Aetna common
stock issued and outstanding on the record date for the meeting at which an
amendment to any such provision is to be voted upon by the
shareholders.
In
addition, Aetna’s By-Laws may be amended by the board of directors with respect
to all matters not exclusively reserved by law to the shareholders, except the
board may not alter the size of the board beyond a range approved by the
shareholders. Certain provisions of Aetna’s By-Laws, including provisions
relating to the calling of special meetings of shareholders, shareholder
nominations and shareholder proposals and the size of, and the filling of
vacancies on, the board, may be amended or repealed by shareholders only with
the approval of at least two-thirds of the outstanding voting power of
Aetna.
Pennsylvania
Anti-Takeover Statutes
Under
Section 1715 of the Business Corporation Law, which is applicable to Aetna,
directors stand in a fiduciary relation to their corporation and, as such, are
required to perform their duties in good faith, in a manner they reasonably
believe to be in the best interests of the corporation and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. In discharging their duties,
directors may, in considering the best interests of their corporation, consider,
among other things, to the extent they deem appropriate: (a) the effects of any
action upon any or all groups affected by the action, including shareholders,
employees, suppliers, customers and creditors of the corporation, and upon
communities in which offices or other establishments of the corporation are
located; (b) the short-term and long-term interests of the corporation; (c) the
resources, intent and conduct (past, stated and potential) of any person seeking
to acquire control of the corporation; and (d) all other pertinent factors. In
considering the best interests of the corporation or the effects of any action,
directors are not required to regard the interests of the shareholders, or any
other group affected by the action, as dominant or controlling. Absent a breach
of fiduciary duty, a lack of good faith or self-dealing, any act of the board of
directors, a committee thereof or an individual director is presumed to be in
the best interests of the corporation. The Business Corporation Law expressly
provides that the fiduciary duty of directors does not require them to (i)
redeem or otherwise render inapplicable outstanding rights issued under any
shareholder rights plan; (ii) render inapplicable specified statutory
anti-takeover provisions, including Subchapter F of Chapter 25 (described
below), which is applicable to Aetna; or (iii) take any action solely because of
the effect it may have on a proposed acquisition or the consideration to be
received by shareholders in such a transaction.
Commentary
associated with Section 1715, and accepted by courts applying the provisions of
that Section to the facts of specific takeover attempts, makes it clear that a
purpose of Section 1715 is to legislatively overrule certain judicial decisions
in other jurisdictions named in the commentary which have had the effect of
limiting the flexibility of incumbent management in contested takeovers. The
provisions of Section 1715, and its construction by the courts, could aid the
Aetna board in resisting a proposed acquisition transaction which it believed
not to be in the best interests of any one of the corporate constituencies
identified in the statute or otherwise not in the best interests of Aetna under
any of the criteria identified in the statute that the board believes are
appropriate to consider.
Aetna is
subject to Subchapter F of Chapter 25 of the Business Corporation Law.
Subchapter F applies to a transaction between a publicly traded corporation and
an interested shareholder (defined generally to be any beneficial owner of 20%
or more of the corporation's voting stock). Subchapter F of Chapter 25 prohibits
such a corporation from engaging in a “business combination” (as defined in the
Business Corporation Law) with an interested shareholder unless (i) the board of
directors of such corporation gives approval to the proposed transaction or
gives approval to the interested shareholder's acquisition of 20% of the shares
entitled to vote in an election of directors of such corporation, in either case
prior to the date on which the shareholder first becomes an interested
shareholder (the “Share Acquisition Date”), (ii) the interested shareholder owns
at least 80% of the stock of such corporation entitled to vote in an election of
directors and, no earlier than three months after such
interested
shareholder reaches such 80% level, the majority of the remaining shareholders
approve the proposed transaction and shareholders receive a minimum “fair price”
for their shares (as set forth in the Business Corporation Law) in the
transaction and the other conditions of Subchapter F of Chapter 25 of the
Business Corporation Law are met, (iii) holders of all outstanding shares of
common stock approve the transaction, (iv) no earlier than five years after the
Share Acquisition Date, a majority of the remaining shares entitled to vote in
an election of directors approve the transaction, or (v) no earlier than five
years after the Share Acquisition Date, a majority of all the shares approve the
transaction, all shareholders receive a minimum “fair price” for their shares
(as set forth in the Business Corporation Law) and the other conditions of
Subchapter F of Chapter 25 of the Business Corporation Law are met.
Under
certain circumstances, Subchapter F of the Business Corporation Law makes it
more difficult for an interested shareholder to effect various business
combinations with a corporation. The provisions of Subchapter F should encourage
persons interested in acquiring Aetna to negotiate in advance with the Aetna
board, since the five-year delay and higher shareholder voting requirements
would not apply if such person, prior to acquiring 20% of Aetna's voting shares,
obtains the approval of the Aetna board for such acquisition or for the proposed
business combination transaction.
Subchapter
F of the Business Corporation Law will not prevent a hostile takeover of Aetna.
It may, however, make more difficult or discourage a takeover of Aetna or the
acquisition of control of Aetna by a significant shareholder and thus the
removal of incumbent management. Any such effect would be enhanced by the
adoption of a shareholder rights plan, as authorized by Aetna’s Articles. Some
shareholders may find this disadvantageous in that they may not be afforded the
opportunity to participate in takeovers that are not approved as required by
Subchapter F of the Business Corporation Law but in which shareholders might
receive, for at least some of their shares, a substantial premium above the
market price at the time of a tender offer or other acquisition
transaction.
Section
2538 of Subchapter D of the Business Corporation Law imposes a higher vote on
certain transactions between an “interested shareholder” (as defined in Section
2538(d) of the Business Corporation Law) and a publicly traded corporation
unless certain procedural requirements are satisfied. Subchapter E of Chapter 25
of the Business Corporation Law requires a person who acquires 20% or more of
the shares of a publicly traded corporation to offer to purchase the shares of
any other shareholder at “fair value” (determined as provided in Section 2547).
Subchapter G of Chapter 25 of the Business Corporation Law also contains certain
provisions applicable to a registered corporation which, under certain
circumstances, permit such a corporation to redeem “control shares” (as defined
in the Business Corporation Law) and remove the voting rights of control shares.
Additionally, Subchapter H of Chapter 25 of the Business Corporation Law
requires the disgorgement of profits by a “controlling person” (as defined in
the Business Corporation Law). Aetna’s Articles provide that Section 2538 of
Subchapter D of the Business Corporation Law, and Subchapters E, G and H of
Chapter 25 of the Business Corporation Law are not applicable to
Aetna.
This
prospectus describes certain general terms and provisions of the debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms for the debt securities in a supplement to this
prospectus. The prospectus supplement will also indicate whether the general
terms and provisions described in this prospectus apply to a particular series
of debt securities.
The senior
debt securities are to be issued under an indenture (the “Senior Indenture”)
between Aetna and U.S. Bank National Association (successor in interest to State
Street Bank and Trust Company), as trustee. The subordinated debt securities are
to be issued under a separate indenture (the “Subordinated Indenture”) also
between Aetna and U.S. Bank National Association (successor in interest to State
Street Bank and Trust Company), as trustee. The Senior Indenture and the
Subordinated Indenture are sometimes referred to individually as an “Indenture”
or collectively as the “Indentures.”
We
sometimes refer below to specific sections of one or both of the Indentures.
When we do so, we indicate where you can find the relevant section in the
Indentures by noting the section number in parentheses. When we do refer to
specific sections contained in the Indentures or terms defined in the
Indentures, including important terms, which we capitalize here, we use them in
this prospectus in the same way we use them in the Indentures, and you should
refer to the Indentures themselves for detailed, specific, legal descriptions.
In this section, “Description of Debt Securities,” when we refer to “Aetna,” we
refer to Aetna Inc., not including its consolidated subsidiaries.
We have
summarized some terms of the Indentures. The summary is not complete. The
Indentures were filed as exhibits to the registration statement of which this
prospectus is a part. You should read the Indentures for a complete statement of
the provisions summarized in this prospectus and for provisions that may be
important to you. The Indentures are subject to and governed by the Trust
Indenture Act of 1939, as amended.
Ranking
The debt
securities will be our direct, unsecured obligations. The senior debt securities
will rank equally with all of our other senior and unsecured, unsubordinated
debt. The subordinated debt securities will have a junior position to all of our
senior debt.
Since a
significant part of our operations are conducted through subsidiaries, a
significant portion of our cash flow, and consequently, our ability to service
debt, including the debt securities, is dependent upon the earnings of our
subsidiaries and the transfer of funds by those subsidiaries to us in the form
of dividends or other transfers, supplemented with borrowing.
Some of
our operating subsidiaries may finance their operations by borrowing from
external creditors. Lending agreements between some of the operating
subsidiaries and external creditors may restrict the amount of net assets
available for cash dividends and other payments to us.
In
addition, holders of the debt securities will have a junior position to claims
of creditors against our subsidiaries, including policy holders, trade
creditors, debtholders, secured creditors, taxing authorities, guarantee holders
and any preferred stockholders, except to the extent that we are recognized as a
creditor of our subsidiary. Any claims of Aetna as the creditor of its
subsidiary would be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by
us.
In
addition to general state law restrictions on payments of dividends and other
distributions to shareholders applicable to all corporations, HMOs and insurance
companies, including some of Aetna's direct and indirect subsidiaries, are
subject to further state regulations that, among other things, may require those
companies to maintain certain levels of equity, and restrict the amount of
dividends and other distributions that may be paid to Aetna.
Terms
of the Debt Securities to be Described in the Prospectus Supplement
The
Indentures do not limit the amount of debt securities that we may issue under
them. We may issue debt securities under the Indentures up to an aggregate
principal amount as we may authorize from time to time. The prospectus
supplement will describe the terms of any debt securities being offered,
including:
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whether
the debt securities will be senior debt securities or subordinated debt
securities;
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any
limit on the aggregate principal amount of the debt
securities;
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the
date or dates on which the principal will be
payable;
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the
interest rate, if any, and the method for calculating the interest
rate;
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the
interest payment dates and the record dates for interest
payments;
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our
right, if any, to defer payment of interest and the maximum length of this
deferral period;
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any
mandatory or optional redemption terms or prepayment or sinking fund
provisions;
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the
place where we will pay principal, interest and any
premium;
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the
currency or currencies, if other than the currency of the United States,
in which principal, interest and any premium will be
paid;
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if
other than denominations of $1,000 or multiples of $1,000, the
denominations in which the debt securities will be
issued;
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whether
the debt securities will be issued in the form of global
securities;
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additional
provisions, if any, relating to the discharge of our obligations under the
debt securities;
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whether
the amount of payment of principal (or premium, if any) or interest, if
any, will be determined with reference to one or more
indices;
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the
portion of the principal amount of the debt securities to be paid upon
acceleration of maturity thereof;
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any
authenticating or paying agents, registrars or other agents;
and
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other
specific terms, including any additional events of default, covenants or
warranties. (Section 301)
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Events
of Default and Notice Thereof
When we
use the term “Event of Default” with respect to debt securities of any series we
mean:
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we
fail to pay principal (including any sinking fund payment) of, or premium
(if any) on, any debt security of that series when
due;
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we
fail to pay interest, if any, on any debt security of that series when due
and the failure continues for a period of 30
days;
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we
fail to perform in any material respect any covenant in an Indenture not
specified in the previous two bullets (other than a covenant included in
an Indenture solely for the benefit of a different series of debt
securities) and the failure to perform continues for a period of 90 days
after receipt of a specified written notice to
us;
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the
acceleration of indebtedness for borrowed money in a principal amount in
excess of $100,000,000 for which we or one of our Principal Subsidiaries
(as defined below) is liable (other than acceleration of Non-Recourse Debt
which does not exceed 4% of our total shareholders' equity), or default by
us or any of our Principal Subsidiaries in the payment at final maturity
of outstanding indebtedness for borrowed money in a principal amount in
excess of $100,000,000 (other than a default by us in the payment, at
final maturity, of our Non-Recourse Debt where such payment does not
exceed 4% of our total shareholders' equity), and such acceleration or
default at maturity is not waived, rescinded or annulled within 30 days
after a specified written notice to us; provided that if such acceleration
or default at maturity is remedied, cured, waived, rescinded or annulled,
then the Event of Default under an Indenture shall also be remedied,
cured, waived, rescinded or annulled;
and
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certain
events of bankruptcy, insolvency, reorganization, receivership or
liquidation of Aetna. (Section 501)
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An Event
of Default with respect to debt securities of a particular series may not
constitute an Event of Default with respect to debt securities of any other
series of debt securities.
If an
Event of Default under an Indenture occurs with respect to the debt securities
of any series and is continuing, then the Trustee or the holders of at least 25%
in principal amount of the Outstanding securities of that series may require us
to repay immediately the entire principal amount (or, if the debt securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all
Outstanding securities of that series; provided, however, that under certain
circumstances the holders of a majority in aggregate principal amount of
Outstanding securities of that series may rescind or annul such acceleration and
its consequences. (Section 502)
Each of
the Indentures contains a provision entitling the Trustee, subject to the duty
of the Trustee during a default to act with the required standard of care
(Section 601), to be indemnified by the holders of debt securities before
proceeding to exercise any right or power under that Indenture at the request of
such holders. (Section 603) Subject to these provisions in the Indentures for
the indemnification of the Trustee and certain other limitations, the holders of
a majority in aggregate principal amount of the debt securities of each affected
series then Outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. (Sections 512 and 513)
Each of
the Indentures provides that the Trustee may withhold notice to the holders of
the debt securities of any default (except in payment of principal (or premium,
if any) or interest, if any) if the Trustee considers it in the interest of the
holders of the debt securities to do so. (Section 602)
Each of
the Indentures provides that holders of at least 25% in aggregate principal
amount of the Outstanding securities of any series may seek to institute a
proceeding with respect to the Indentures or for any remedy thereunder only
after they have made a written request, and offered an indemnity reasonably
satisfactory to the Trustee, to the Trustee to institute a proceeding and the
Trustee shall not have received from the holders of a majority in aggregate
principal amount of the Outstanding securities of that series a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. (Section 507) These limitations do not apply,
however, to a suit instituted by a Holder of a debt security for enforcement of
payment of the principal of (or premium, if any) or interest, if any, on or
after the respective due dates expressed in such debt security. (Section
508)
Each of
the Indentures contains a covenant under which we are required to furnish to the
Trustee an annual statement as to the compliance with all conditions and
covenants of the Indentures. (Section 1004)
“Principal
Subsidiary” means a consolidated subsidiary of Aetna that, as of the time of the
determination of whether such consolidated subsidiary is a “Principal
Subsidiary,” accounted for 10% or more of the total assets of Aetna and its
consolidated subsidiaries, in each case as set forth in the most recent balance
sheet filed by Aetna with the Securities and Exchange Commission. (Section
101)
Modification
and Waiver
Each of
the Indentures (Section 901) provides that we, together with the Trustee, may
enter into supplemental indentures without the consent of the holders of debt
securities to:
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evidence
the assumption by another person of our
obligations;
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add
covenants for the benefit of the holders of all or any series of debt
securities;
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add
any additional Events of Default;
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add
or change an Indenture to permit or facilitate the issuance of debt
securities in bearer form;
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add
to, change or eliminate a provision of an Indenture if such addition,
change or elimination does not apply to a debt security created prior to
the execution of such supplemental indenture or modify the rights of a
Holder of any debt security with respect to such
provision;
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secure
any debt security;
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establish
the form or terms of debt securities of any
series;
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evidence
the acceptance of appointment by a successor
Trustee;
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cure
any ambiguity or correct any inconsistency in an Indenture or make other
changes, provided that any such action does not adversely affect the
interests of the holders of debt securities of any affected series in any
material respect; or
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conform
an Indenture to any mandatory provision of
law.
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Other
amendments and modifications of an Indenture may be made with the consent of the
holders of not less than a majority of the aggregate principal amount of each
series of the Outstanding securities affected by the amendment or modification.
However, no modification or amendment may, without the consent of the Holder of
each Outstanding security affected:
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change
the stated maturity of the principal of (or premium, if any) or any
installment of principal or interest, if any, on any such debt
security;
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reduce
the principal amount of (or premium, if any) or the interest rate, if any,
on any such debt security or the principal amount due upon acceleration of
an Original Issue Discount
Security;
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change
the place or currency of payment of principal of (or premium if any) or
the interest, if any, on any such debt
security;
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impair
the right to institute suit for the enforcement of any such payment on or
with respect to any such debt
security;
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reduce
the percentage of holders of debt securities necessary to modify or amend
an Indenture;
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in
the case of the Subordinated Indenture, modify the subordination
provisions in a manner adverse to the holders of the subordinated debt
securities; or
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modify
the foregoing requirements or reduce the percentage of Outstanding
securities necessary to waive compliance with certain provisions of an
Indenture or for waiver of certain defaults. (Section
902)
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The
holders of at least a majority of the aggregate principal amount of the
Outstanding securities of any series may, on behalf of all holders of that
series, waive our required compliance with certain restrictive provisions of an
Indenture and may waive any past default under an Indenture, except a default in
the payment of principal, premium or interest or in the performance of certain
covenants. (Sections 907 and 513)
Limitations
on Liens on Common Stock of Principal Subsidiaries
Each of
the Indentures provides that so long as any of the debt securities issued under
that Indenture remains outstanding, we will not, and we will not permit any of
our Principal Subsidiaries to, issue, assume, incur or guarantee any
indebtedness for borrowed money secured by a mortgage, pledge, lien or other
encumbrance, directly or indirectly, on any of the Common Stock of a Principal
Subsidiary owned by us or by any of our Principal Subsidiaries, unless our
obligations under the debt securities and, if we so elect, any other of our
indebtedness ranking on a parity with, or prior to, the debt securities, shall
be secured equally and ratably with, or prior to, such secured indebtedness for
borrowed money so long as it is outstanding and is so secured. (Section
1005)
“Common
Stock” means, with respect to any Principal Subsidiary, stock of any class,
however designated, except stock which is non-participating beyond fixed
dividend and liquidation preferences and the holders of which have either no
voting rights or limited voting rights entitling them, only in the case of
certain contingencies, to elect less than a majority of the directors (or
persons performing similar functions) of such Principal Subsidiary, and shall
include securities of any class, however designated, which are convertible into
such Common Stock. (Section 101)
Consolidation,
Merger and Sale of Assets
We may not
consolidate with or merge with or into any other person (other than in a merger
or consolidation in which we are the surviving person) or sell our property and
assets as, or substantially as, an entirety to any person unless:
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the
person formed by the consolidation or with or into which we are merged or
the person that purchases our properties and assets as, or substantially
as, an entirety is a corporation, partnership or trust organized and
validly existing under the laws of the United States of America, any State
or the District of Columbia, and any such successor or purchaser expressly
assumes Aetna's obligations on the debt securities under a supplemental
indenture satisfactory to the
Trustee;
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immediately
after giving effect to the transaction no Event of Default shall have
occurred and be continuing; and
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a
specified officers' certificate and opinion of counsel are delivered to
the Trustee. (Section 801)
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Upon
compliance with the foregoing provisions, the successor or purchaser will
succeed to, and be substituted for Aetna under the Indentures with the same
effect as if such successor or purchaser had been the original obligor under the
debt securities, and thereafter Aetna will be relieved of all obligations and
covenants under the Indentures and the debt securities. (Section
802)
Defeasance
and Covenant Defeasance
If we
deposit, in trust, with the Trustee (or other qualifying trustee), sufficient
cash or specified government obligations to pay the principal of (and premium,
if any) and interest and any other sums due on the scheduled due date for the
debt securities of a particular series, then at our option and subject to
certain conditions (including the absence of an Event of Default):
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we
will be discharged from our obligations with respect to the debt
securities of such series (which we refer to in this prospectus as a
“legal defeasance”), or
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we
will no longer be under any obligation to comply with the covenants
described above under “Limitations on Liens on Common Stock of Principal
Subsidiaries” and “Consolidation, Merger and Sale of Assets”, an Event of
Default relating to any failure to comply with such covenants or an Event
of Default pursuant to the fourth bullet under “Events of Default and
Notice Thereof” (cross-acceleration and cross-payment default) will no
longer apply to us, and, for subordinated debt securities, the
subordination provisions will no longer apply to us (which we refer to in
this prospectus as a “covenant
defeasance”).
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If we
exercise our legal defeasance option, payment of such debt securities may not be
accelerated because of an Event of Default. If we exercise our covenant
defeasance option, payment of such debt securities may not be accelerated by
reference to the covenants from which we have been released or pursuant to
Events of Default referred to above which are no longer applicable. If we fail
to comply with our remaining obligations with respect to such debt securities
under an Indenture after we exercise the covenant defeasance option and such
debt securities are declared due and payable because of the occurrence of any
Event of Default, the amount of money and government obligations on deposit with
the Trustee may be insufficient to pay amounts due on the debt securities of
such series at the time of the acceleration resulting from such Event of
Default. However, we will remain liable for such payments. (Article
Twelve)
Under
current United States federal income tax laws, a legal defeasance would be
treated as an exchange of the relevant debt securities in which holders of those
debt securities might recognize gain or loss. Unless accompanied by other
changes in the terms of the debt securities, a covenant defeasance generally
should not be treated as a taxable exchange. In order to exercise our defeasance
options, we must deliver to the Trustee an opinion of counsel to the effect that
the deposit and related defeasance would not cause the holders of the debt
securities to recognize income, gain or loss for federal income tax
purposes.
Subordination
of Subordinated Debt Securities
Unless
otherwise indicated in the prospectus supplement, the following provisions will
apply to the subordinated debt securities.
The
subordinated debt securities will, to the extent set forth in the Subordinated
Indenture, be subordinate in right of payment to the prior payment in full of
all Senior Debt (as defined below) of Aetna, including the senior debt
securities. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of Aetna, the holders of Senior Debt of Aetna will first
be entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt of Aetna before the holders of the
subordinated debt securities will be entitled to receive or retain any payment
in respect of the principal of (and premium, if any) or interest, if any, on the
subordinated debt securities. (Subordinated Indenture Section 1402)
If the
maturity of any subordinated debt securities is accelerated, the holders of all
Senior Debt of Aetna outstanding at the time of such acceleration will first be
entitled to receive payment in full of all amounts due thereon before the
holders of subordinated debt securities will be entitled to receive any payment
upon the principal of (or premium, if any) or interest, if any, on the
subordinated debt securities. (Subordinated Indenture Section 1403)
No
payments on account of principal (or premium, if any) or interest, if any, in
respect of the subordinated debt securities may be made if there shall have
occurred and be continuing:
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a
default in the payment of principal of (or premium, if any) or interest on
Senior Debt of Aetna, or
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an
event of default with respect to any Senior Debt of Aetna resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall
be pending with respect to any such default. (Subordinated Indenture
Section 1404)
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“Debt”
means (without duplication and without regard to any portion of principal amount
that has not accrued and to any interest component thereof (whether accrued or
imputed) that is not due and payable) with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or not
contingent:
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every
obligation of such person for money
borrowed;
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every
obligation of such person evidenced by bonds, debentures, notes or other
similar instruments;
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every
reimbursement obligation of such person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
person;
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every
obligation of such person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course
of business);
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every
capital lease obligation of such person;
and
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every
obligation of the type referred to in the previous five bullets of another
person and all dividends of another person the payment of which, in either
case, such person has guaranteed or is responsible or liable for, directly
or indirectly, as obligor or otherwise. (Subordinated Indenture Section
101)
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“Senior
Debt” means with respect to any person the principal of (and premium, if any)
and interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to such person to the
extent that such claim for post-petition interest is allowed in such
proceeding), on Debt of such person, whether incurred on or prior to the date of
the Subordinated Indenture or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment to the
subordinated debt securities or to other Debt of such person which is pari passu
with, or subordinated to, the subordinated debt securities; provided, however,
that Senior Debt does not include (i) the subordinated debt securities or (ii)
any other debt securities issued to any other trusts, partnerships or other
entity affiliated with Aetna which is a financing vehicle of Aetna (“Financing
Entity”) in connection with the issuance of preferred securities of such
Financing Entity. (Subordinated Indenture Section 101)
The
Subordinated Indenture does not limit or prohibit the incurrence of additional
Senior Debt of Aetna, which may include indebtedness that is senior to the
subordinated debt securities, but subordinate to other obligations of Aetna. The
senior debt securities, when issued, will constitute Senior Debt of
Aetna.
At
September 30, 2008, Aetna had $3.7 billion principal amount of Senior Debt
outstanding and no subordinated debt securities outstanding.
The
prospectus supplement may further describe the provisions, if any, applicable to
the subordination of the subordinated debt securities of a particular
series.
Concerning
our Relationship with the Trustee
The
Trustee and/or certain of its affiliates participate in our credit facility, and
we maintain ordinary banking relationships with the Trustee and/or certain of
its affiliates.
Governing
Law
Each of
the Indentures is governed by and shall be construed in accordance with the
internal laws of the State of New York.
Each debt
security will be represented either by a certificate issued in definitive form
to a particular investor or by one or more global securities representing the
entire issuance of securities. Certificated securities in definitive form and
global securities will be issued in registered form. Definitive securities name
you or your nominee as the owner of the security, and in order to transfer or
exchange these securities or to receive payments other than interest or other
interim payments, you or your nominee must physically deliver the securities to
the Trustee. Global securities name a depositary or its nominee as the owner of
the debt securities represented by these global securities.
We may
issue the debt securities in the form of one or more fully registered global
securities that will be deposited with a depositary or its nominee identified in
the applicable prospectus supplement and registered in the name of that
depositary or nominee. In those cases, one or more global securities will be
issued in a denomination or aggregate denominations equal to the portion of the
aggregate principal or face amount of the securities to be represented by global
securities. Unless and until it is exchanged in whole for securities in
definitive registered form, a global security may not be transferred except as a
whole by and among the depositary for the global security, the nominees of the
depositary or any successors of the depositary or those nominees.
If not
described below, any specific terms of the depositary arrangement with respect
to any securities to be represented by a global security will be described in
the prospectus supplement relating to those securities. (Sections 204 and 305)
We anticipate that the following provisions will apply to all depositary
arrangements.
Ownership
of beneficial interests in a global security will be limited to persons, called
participants, that have accounts with the depositary. Upon the issuance of a
global security, the depositary will credit, on its book-entry registration and
transfer system, the participants' accounts with the respective principal or
face amounts of the securities beneficially owned by the participants. Any
dealers, underwriters or agents participating in the distribution of the
securities will designate the accounts to be credited. Ownership of beneficial
interests in a global security will be shown on, and the transfer of ownership
interests will be effected only through, records maintained by the depositary,
with respect to interests of participants, and on the records of participants,
with respect to interests of persons holding through participants. The laws of
some states may require that some purchasers of securities take physical
delivery of these securities in definitive form. These laws may impair your
ability to own, transfer or pledge beneficial interests in global
securities.
So long as
the depositary, or its nominee, is the registered owner of a global security,
that depositary or its nominee, as the case may be, will be considered the sole
owner or holder of the securities represented by the global security for all
purposes under the applicable Indenture. Except as described below, owners of
beneficial interests in a global security will not be entitled to have the
securities represented by the global security registered in their names, will
not receive or be entitled to receive physical delivery of the securities in
definitive form and will not be considered the owners or holders of the
securities under the applicable Indenture. Accordingly, each person owning a
beneficial interest in a global security must rely on the procedures of the
depositary for that global security and, if that person is not a participant, on
the procedures of the participant through which the person owns its interest, to
exercise any rights of a holder under the applicable Indenture. We understand
that under existing industry practices, if we request any action of holders or
if an owner of a beneficial interest in a global security desires to give or
take any action that a holder is entitled to give or take under the applicable
Indenture, the depositary for the global security would authorize the
participants holding the relevant beneficial interests to give or take that
action, and the participants would authorize beneficial owners owning through
them to give or take that action or would otherwise act upon the instructions of
beneficial owners holding through them.
Principal
(or premium, if any) and interest payments on debt securities represented by a
global security registered in the name of a depositary or its nominee will be
made to the depositary or its nominee, as the case may be, as the registered
owner of the global security. Neither Aetna nor the Trustee nor any agent of
Aetna or the Trustee will have any responsibility or liability for any aspect of
the records relating to payments made on account of beneficial ownership
interests in the global security or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
We expect
that the depositary for any of the securities represented by a global security,
upon receipt of any payment of principal, premium, interest or other
distribution of underlying securities or other property to holders of that
global security, will immediately credit participants' accounts in amounts
proportionate to their respective beneficial interests in that global security
as shown on the records of the depositary. We also expect that payments by
participants to owners of beneficial interests in a global security held through
participants will be governed by standing customer instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in “street name,” and will be the responsibility of
those participants.
If the
depositary for any of these securities represented by a global security is at
any time unwilling or unable to continue as depositary or ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, and a
successor depositary
registered
as a clearing agency under the Securities Exchange Act of 1934 is not appointed
by us within 90 days, we will issue securities in definitive form in exchange
for the global security that had been held by the depositary. In addition, we
may at any time and in our sole discretion decide not to have any of the
securities represented by one or more global securities. If we make that
decision, we will issue securities in definitive form in exchange for all of the
global security or securities representing those securities. Any securities
issued in definitive form in exchange for a global security will be registered
in the name or names that the depositary gives to the Trustee or relevant agent
of ours or theirs. It is expected that the depositary's instructions will be
based upon directions received by the depositary from participants with respect
to ownership of beneficial interests in the global security that had been held
by the depositary.
The
following discussion is the opinion of Davis Polk & Wardwell. It accurately
describes the material U.S. federal income and certain estate tax consequences
of ownership and disposition of the debt securities. This discussion only
applies to debt securities held as capital assets. This discussion does not
describe all of the tax consequences that may be relevant to holders in light of
their particular circumstances or to holders subject to special rules, such
as:
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certain
financial institutions;
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tax-exempt
organizations;
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persons
holding debt securities as part of a hedge “straddle”, integrated
transaction or similar transaction;
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U.S.
Holders (as defined below) whose functional currency is not the United
States dollar;
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traders
in securities that elect the mark-to-market method of accounting for their
securities holdings;
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partnerships
or other entities classified as partnerships for U.S. federal income tax
purposes; or
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persons
subject to the alternative minimum
tax.
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If an
entity that is classified as a partnership for U.S. federal income tax purposes
holds debt securities, the U.S. federal income tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. Partnerships holding debt securities and partners in
such partnerships should consult their tax advisors as to the particular U.S.
federal income tax consequences to them of holding and disposing of the debt
securities.
This
summary is based on the Internal Revenue Code of 1986, as amended to the date of
this prospectus (the “Code”), administrative pronouncements, judicial decisions
and final, temporary and proposed United States Treasury Regulations, in each
case available on the date of this prospectus. Changes to any of such
statutes, decisions and/or interpretations subsequent to the date of this
prospectus may affect the tax consequences described herein. Persons considering
the purchase of debt securities are urged to consult their tax advisors with
regard to the application of the United States federal income tax laws to their
particular situations as well as any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
Tax
Consequences to U.S. Holders
As used
herein, the term “U.S. Holder” means a beneficial owner of a debt security that
is for United States federal income tax purposes:
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an
individual citizen or resident of the United States and certain former
citizens and residents of the United
States;
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a
corporation, or other entity taxable as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the
United States or of any political subdivision thereof;
or
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an
estate or trust the income of which is subject to United States federal
income taxation regardless of its
source.
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Payments
of Interest
Interest
paid on a debt security will be taxable to a U.S. Holder as ordinary interest
income at the time it accrues or is received in accordance with the U.S.
Holder’s method of accounting for federal income tax purposes. Special rules
governing the treatment of interest paid with respect to original issue discount
debt securities and indexed notes, including certain floating rate debt
securities, are described under “Original Issue Discount” below.
Original
Issue Discount
A debt
security that is issued for an amount less than its “stated redemption price at
maturity” will be considered to have been issued at an original issue discount
for federal income tax purposes (and will be referred to as an “original issue
discount debt security”) unless the debt security satisfies a de minimis
threshold (as described below) or is a short-term debt security (as defined
below). The “issue price” of a debt security will equal the first price to the
public (not including bond houses, brokers or
similar
persons or organizations acting in the capacity of underwriters, placement
agents or wholesalers) at which a substantial amount of the debt security is
sold for money. The “stated redemption price at maturity” of a debt security
will equal the sum of all payments required under the debt security other than
payments of “qualified stated interest.” “Qualified stated interest” is stated
interest unconditionally payable in cash or in property (other than in debt
instruments of the issuer) at least annually during the entire term of the debt
security and equal to the outstanding principal balance of the debt security
multiplied by a single fixed rate of interest or, subject to certain conditions,
based on one or more indices.
If the
difference between a debt security's stated redemption price at maturity and its
issue price is less than a de minimis amount, i.e., 1/4 of 1 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity, then the debt security will not be considered to have original
issue discount. U.S. Holders of a debt security with a de minimis amount of
original issue discount will generally include such original issue discount in
income, as capital gain, on a pro rata basis as principal payments are made on
the debt security.
A U.S.
Holder of original issue discount debt securities will be required to include
any qualified stated interest payments in income in accordance with the U.S.
Holder's method of accounting for federal income tax purposes. U.S. Holders of
original issue discount debt securities that mature more than one year from
their date of issuance will be required to include original issue discount in
income for federal income tax purposes as it accrues, in accordance with a
constant yield method based on a compounding of interest, before the receipt of
cash payments attributable to such income. Under this method, U.S. Holders of
original issue discount debt securities generally will be required to include in
income increasingly greater amounts of original issue discount in successive
accrual periods.
A U.S.
Holder may make an election to include in gross income all interest that accrues
on a debt security (including stated interest, acquisition discount, original
issue discount, de minimis original issue discount, market discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium) in accordance with a constant yield method based
on the compounding of interest (a “constant yield election”). The election is to
be made for the taxable year in which the U.S. Holder acquired the debt security
and may not be revoked without the consent of the Internal Revenue Service (the
“IRS”). U.S. Holders should consult their own tax advisors about this
election.
A debt
security that matures one year or less from its date of issuance (a “short-term
debt security”) will be treated as being issued at a discount and none of the
interest paid on the debt security will be treated as qualified stated interest.
In general, a cash method U.S. Holder of a short-term debt security is not
required to accrue the discount for United States federal income tax purposes
unless it elects to do so. U.S. Holders who so elect and certain other U.S.
Holders, including those who report income on the accrual method of accounting
for federal income tax purposes, are required to include the discount in income
as it accrues on a straight-line basis, unless another election is made to
accrue the discount according to a constant yield method based on daily
compounding. In the case of a U.S. Holder who is not required and who does not
elect to include the discount in income currently, any gain realized on the
sale, exchange or other taxable disposition of the short-term debt securities
will be ordinary income to the extent of the discount accrued on a straight-line
basis (or, if elected, according to a constant yield method based on daily
compounding) through the date of sale, exchange or other taxable disposition. In
addition, those U.S. Holders will be required to defer deductions for any
interest paid on indebtedness incurred to purchase or carry short-term debt
securities in an amount not exceeding the accrued discount until the accrued
discount is included in income.
Under
applicable regulations, if we have an unconditional option to redeem a debt
security prior to its stated maturity date, this option will be presumed to be
exercised if, by utilizing any date on which the debt security may be redeemed
as the maturity date and the amount payable on that date in accordance with the
terms of the debt security as the stated redemption price at maturity, the yield
on the debt security would be lower than its yield to stated maturity. If this
option is not in fact exercised, the debt security would be treated solely for
purposes of calculating original issue discount as if it were redeemed, and a
new debt security were issued, on the presumed exercise date for an amount equal
to the debt security's adjusted issue price on that date.
Contingent
Debt Obligations
Special
rules govern the tax treatment of debt obligations that are treated under
applicable Treasury Regulations as providing for contingent payments
(“contingent debt obligations”). These rules generally require accrual of
interest income on a constant yield method at an assumed yield determined at the
time of issuance of the obligation. Adjustments will be required to these
accruals when any contingent payments are made that differ from the payments
calculated based on the assumed yield. Any gain on the sale, exchange,
retirement or other disposition of a contingent debt obligation will be ordinary
income.
Market
Discount and Premium
If a U.S.
Holder purchases a debt security (other than a short-term original issue
discount debt security) for an amount that is less than its stated redemption
price at maturity (or, in the case of an original issue discount debt security,
its “adjusted issue price”), the amount of the difference will be treated as
“market discount” for federal income tax purposes, unless such difference
is less
than a specified de minimis amount. The “adjusted issue price” of an original
issue discount debt security is defined as the sum of the issue price of the
debt security and the aggregate amount of previously accrued original issue
discount, less any prior payments other than payments of qualified stated
interest.
A U.S.
Holder will be required to treat any principal payment (or, in the case of an
original issue discount debt security, any payment that does not constitute
qualified stated interest) on, or any gain on the sale, exchange, retirement or
other disposition of, a debt security as ordinary income to the extent of the
market discount accrued on the debt security at the time of the payment or
disposition unless this market discount has been previously included in income
by the U.S. Holder pursuant to an election by the U.S. Holder to include market
discount in income as it accrues, or pursuant to a constant yield election by
the U.S. Holder as described under “Original Issue Discount” above. If such debt
security is disposed of in certain nontaxable transactions, accrued market
discount will be includible as ordinary income to the U.S. Holder as if such
U.S. Holder had sold the debt security at its then fair market value. In
addition, the U.S. Holder may be required to defer, until the maturity of the
debt security or its earlier disposition (including certain nontaxable
transactions), the deduction of all or a portion of the interest expense on any
indebtedness incurred or maintained to purchase or carry such debt
security.
Acquisition
Premium and Amortizable Bond Premium
A U.S.
Holder who purchases a debt security for an amount that is greater than its
adjusted issue price but less than or equal to the sum of all amounts payable on
the debt security after the purchase date other than payments of qualified
stated interest will be considered to have purchased such debt security at an
“acquisition premium.” Under the acquisition premium rules of the Code, the
amount of original issue discount which such U.S. Holder must include in its
gross income with respect to such debt securities for any taxable year will be
reduced by the portion of such acquisition premium properly allocable to such
year.
If a U.S.
Holder purchases a debt security for an amount that is greater than the sum of
all amounts payable on the debt security other than qualified stated interest,
such U.S. Holder will be considered to have purchased such debt security with
“amortizable bond premium.” In general, amortizable bond premium with respect to
any debt security will be equal in amount to the excess of the purchase price
over the sum of all amounts payable on the debt security other than qualified
stated interest, and the holder may elect to amortize such premium, using a
constant yield method, over the remaining term of the debt security. Special
rules may apply in the case of debt securities that are subject to optional
redemption. A U.S. Holder may generally use the amortizable bond premium
allocable to an accrual period to offset qualified stated interest required to
be included in such U.S. Holder’s income with respect to the debt security in
that accrual period. A U.S. Holder who elects to amortize bond premium must
reduce its tax basis in the debt securities by the amount of the premium
amortized in any year. An election to amortize bond premium applies to all
taxable debt obligations then owned and thereafter acquired by the taxpayer and
may be revoked only with the consent of the IRS.
If a U.S.
Holder makes a constant yield election (as described under “Original Issue
Discount” above) for a debt security with amortizable bond premium, such
election will result in a deemed election to amortize bond premium for all of
the U.S. Holder’s debt instruments with amortizable bond premium and may be
revoked only with the permission of the IRS with respect to debt instruments
acquired after revocation.
Sale,
Exchange or Retirement of the Debt Securities
Upon the
sale, exchange or other taxable disposition of a debt security, a U.S. Holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or other taxable disposition and the U.S.
Holder's tax basis in the debt security. For these purposes, the amount realized
does not include any amount attributable to accrued interest. Amounts
attributable to accrued interest are treated as interest as described under
“Payments of Interest” above.
Gain or
loss realized on the sale, exchange or other taxable disposition of a debt
security will generally be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or other taxable disposition the
debt security has been held for more than one year. Exceptions to this rule
apply to the extent of any accrued market discount or, in the case of a
short-term debt security, any accrued discount not previously included in the
U.S. Holder's taxable income. See “Original Issue Discount” and “Market Discount
and Premium” above. The deductibility of capital losses is subject to
limitations under the Code.
Debt
Securities With Special Features
Special
rules governing the federal income tax treatments of debt securities with
special features, including debt securities denominated in a currency or
currency unit other than the United States dollar (“foreign currency debt
securities”) or currency-indexed debt securities, will be provided by Aetna in
the applicable prospectus supplement.
Backup
Withholding and Information Reporting
Information
returns will be filed with the IRS in connection with payments on the debt
securities and the proceeds from a sale or other disposition of the debt
securities. A U.S. Holder will be subject to United States backup withholding,
currently at a rate of 28 percent, on these payments if the U.S. Holder fails to
provide its taxpayer identification number to the paying agent and comply with
certain certification procedures or otherwise establish an exemption from backup
withholding. Backup withholding is not an additional
tax. The amount of any backup withholding from a payment to a U.S.
Holder will be allowed as a credit against the U.S. Holder’s United States
federal income tax liability and may entitle the U.S. Holder to a refund,
provided that the required information is timely furnished to the
IRS.
Tax
Consequences to Non-U.S. Holders
As used
herein, the term “Non-U.S. Holder” means a beneficial owner of a debt security
that is, for United States federal income tax purposes:
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an
individual who is classified as a nonresident for U.S. federal income tax
purposes;
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a
foreign corporation; or
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a
foreign estate or trust.
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“Non-U.S.
Holder” does not include a holder who is an individual present in the United
States for 183 days or more in the taxable year of disposition and who is not
otherwise a resident of the United States for U.S. federal income tax
purposes. Such a holder is urged to consult his or her own tax
advisor regarding the U.S. federal income tax consequences of the sale, exchange
or other disposition of a debt security.
Subject to
the discussion below concerning backup withholding:
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payments
of principal, interest (including original issue discount, if any) and
premium on the debt securities by us or any paying agent to any Non-U.S.
Holder will not be subject to United States federal withholding tax,
provided that, in the case of interest, (i) such Non-U.S. Holder does not
own, actually or constructively, 10 percent or more of the total combined
voting power of all classes of stock of Aetna entitled to vote, is not a
controlled foreign corporation related, directly or indirectly, to Aetna
through stock ownership and is not a bank whose receipt of interest is
described in Section 881(c)(3)(A) of the Code; and (ii) if the debt
security is a registered debt security, the certification requirement
described below has been fulfilled with respect to the beneficial owner,
as described below;
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a
Non-U.S. Holder of a debt security will not be subject to United States
federal income tax on gain realized on the sale, exchange or other
disposition of such debt security, unless the gain is effectively
connected with the conduct by the Non-U.S. Holder of a trade or business
in the United States, subject to an applicable income tax treaty providing
otherwise.
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Certification
Requirement
Interest
and original issue discount will not be exempt from withholding tax unless the
beneficial owner of that debt security certifies on IRS Form W-8BEN, under
penalties of perjury, that it is not a United States person. The
exemption will not apply to contingent interest if the amount of such interest
is determined with reference to the financial performance of Aetna or a related
person or with reference to changes in the value of Aetna’s or a related
person’s assets. Unless otherwise provided in the applicable prospectus
supplement, we do not expect to pay this type of interest.
If a
Non-U.S. Holder of a debt security is engaged in a trade or business in the
United States, and if interest (including original issue discount) on the debt
security is effectively connected with the conduct of such trade or business,
the Non-U.S. Holder, although exempt from the withholding tax discussed in the
preceding paragraph, will generally be taxed in the same manner as a U.S. Holder
(see “—Tax Consequences to U.S. Holders” above), subject to an applicable income
tax treaty providing otherwise, except that the Non-U.S. Holder will be required
to provide to Aetna a properly executed IRS Form W-8ECI in order to claim an
exemption from withholding tax. These holders should consult their own tax
advisors with respect to other U.S. tax consequences of the ownership and
disposition of debt securities including the possible imposition of a branch
profits tax at a rate of 30 percent (or a lower treaty rate).
Federal
Estate Tax
Individual
Non-U.S. Holders and entities the property of which is potentially includible in
such an individual’s gross estate for U.S. federal estate tax purposes (for
example, a trust funded by such an individual and with respect to which the
individual has retained certain interests or powers), should note that, absent
an applicable treaty benefit, a debt security or coupon will be treated as U.S.
situs property subject to U.S. federal estate tax if payments on the debt
security, if received by the decedent at the time of death, would have
been:
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subject
to United States federal withholding tax (even if the W-8BEN certification
requirement described above were satisfied);
or
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effectively
connected to the conduct by the Non-U.S. Holder of a trade or business in
the United States.
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Backup
Withholding and Information Reporting
Information
returns will be filed with the IRS in connection with payments on the debt
securities. Unless the Non-U.S. Holder complies with certification procedures to
establish that it is not a United States person, information returns may be
filed with the IRS in connection with the proceeds from a sale or other
disposition, and the Non-U.S. Holder may be subject to United States backup
withholding, currently at a rate of 28 percent, on payments on the debt
securities or on the proceeds from a sale or other disposition of the debt
securities. The certification procedures required to claim the exemption from
withholding tax on interest and original issue discount described above will
satisfy the certification requirements necessary to avoid the backup withholding
tax as well. Backup withholding is not an additional
tax. The amount of any backup withholding from a payment to a
Non-U.S. Holder will be allowed as a credit against the Non-U.S. Holder’s United
States federal income tax liability and may entitle the Non-U.S. Holder to a
refund, provided that the required information is timely furnished to the
IRS.
Unless
otherwise indicated in the applicable prospectus supplement, the validity of the
debt securities offered hereby will be passed upon for Aetna by Davis Polk &
Wardwell, New York, New York. Counsel for any agents or underwriters
will be named in the applicable prospectus supplement. Davis Polk
& Wardwell and counsel for the agents or underwriters may rely upon an
opinion of Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania, special
Pennsylvania counsel to Aetna, as to certain matters governed by Pennsylvania
law.
The
consolidated financial statements and schedule of Aetna Inc. and subsidiaries as
of December 31, 2007 and 2006, and for each of the years in the three-year
period ended December 31, 2007 and management’s assessment of effectiveness of
internal control over financial reporting as of December 31, 2007 have been
incorporated by reference herein and in the registration statement in reliance
upon the reports of KPMG LLP, independent registered public accounting firm, and
upon the authority of said firm as experts in accounting and
auditing. The audit reports covering the December 31, 2007
consolidated financial statements and the related financial statement schedule,
and the effectiveness of internal control over financial reporting, refer to
changes in accounting for employee benefit plans in 2006 and 2007 and
uncertainty in income taxes and the Company’s method of classifying investments
in 2007. With respect to the unaudited interim financial information
for the periods ended March 31, 2008 and 2007, June 30, 2008 and 2007 and
September 30, 2008 and 2007, incorporated by reference herein, the independent
registered public accounting firm has reported that they applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports included in the Company's quarterly
reports on Form 10-Q for the quarters ended March 31, 2008 and September 30,
2008 and Form 10-Q/A for the quarter ended June 30, 2008, all incorporated by
reference herein, state that they did not audit and they do not express an
opinion on any of that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the Securities Act of 1933
(the "1933 Act") for their reports on the unaudited interim financial
information because those reports are not a "report" or a "part" of the
registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the 1933 Act.
Aetna and
certain of its affiliates, including Aetna Life Insurance Company, may each be
considered a “party in interest” within the meaning of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or a “disqualified person”
within the meaning of the Code, with respect to any employee benefit plans
subject to Title I of ERISA or Section 4975 of the Code or entities
deemed to hold the assets of such Plans (each, a “Plan”). Prohibited
transactions within the meaning of ERISA or the Code may arise, for example, if
debt securities are acquired by a Plan with respect to which Aetna or any of its
affiliates is a service provider, unless such debt securities are acquired
pursuant to an exemption for transactions effected on behalf of such Plan by a
“qualified professional asset manager” or pursuant to any other available
statutory, class or individual exemption. In addition, certain governmental,
church and non-U.S. plans (“Non-ERISA Arrangements”) are subject to
federal, state, local or non-U.S. laws that are substantially similar to
Section 406 of ERISA or Section 4975 of the Code (“Similar
Laws”).
Therefore,
each purchaser or holder of the debt securities or any interest therein will be
deemed to have represented by its purchase or holding thereof that either
(i) it is not and is not using the assets of any Plan or Non-ERISA
Arrangement or (ii) its purchase and holding of the debt securities or any
interest therein will not constitute or result in a nonexempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code or
in a similar violation of Similar Laws. Any Plan or Non-ERISA Arrangement
proposing to invest in the debt securities should consult with its legal
counsel.
The sale
of the debt securities that we may offer from time to time hereunder and
pursuant to a prospectus supplement to any Plan or Non-ERISA Arrangement is in
no respect a representation by Aetna or any of its affiliates that such an
investment is appropriate for or meets all relevant legal requirements with
respect to investments by any such Plan or Non-ERISA Arrangement generally or
any particular Plan or Non-ERISA Arrangement.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses
of Issuance and Distribution
The costs
and expenses payable by the Registrant in connection with the sale of the
securities being registered hereby is not known at this time.
Item
15. Indemnification
of Directors and Officers
The
Registrant is a Pennsylvania corporation. The Pennsylvania Business Corporation
Law (the “Business Corporation Law”) provides, in general, that a corporation
may indemnify any person, including its directors, officers and employees, who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or proceeding, whether civil, criminal, administrative or
investigative (including actions by or in the right of the corporation) by
reason of the fact that he or she is or was a representative of, or was serving
at the request of the corporation as a director, officer, employee, agent or
fiduciary of another corporation, partnership, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with the action or proceeding unless the court determines that the
act or failure to act giving rise to the claim for indemnification constituted
willful misconduct or recklessness. In any case, to the extent that a
representative of the corporation has been successful on the merits or otherwise
in defense of any claim, issue or matter, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith. The Business Corporation Law also provides that the
indemnification permitted or required by the law is not exclusive of any other
rights to which a person seeking indemnification may be entitled, provided that
indemnification may not be made in any case where the act is determined by a
court to have constituted willful misconduct or recklessness. The Business
Corporation Law also provides that a corporation may pay expenses (including
attorneys' fees), incurred by a party in an action subject to indemnification in
advance of the final disposition of the action upon receipt of an undertaking by
the party on whose behalf such expenses are paid to repay all amounts to the
corporation in the event it is ultimately determined that the party is not
entitled to be indemnified. Aetna's Articles require indemnification of its
directors and officers, and the advancement of expenses, to the fullest extent
permitted by the Business Corporation Law (except with respect to claims against
the corporation commenced by such a party) and permit, by action of Aetna’s
Board of Directors (the “Board”), indemnification of, and advancement of
expenses to, employees and agents of Aetna as determined by the Board in a
particular case.
Aetna's
Articles provide that a director will not be personally liable for monetary
damages except to the extent such liability may not by law be so limited. The
Business Corporation Law precludes a limitation on liability (i) for any breach
or failure to perform such director's duties under law, which breach constituted
self-dealing, willful misconduct or recklessness; (ii) for responsibility or
liability of a director under any criminal statute; or (iii) for a director's
liability for the payment of taxes under any federal, state or local law.
Aetna's Articles contain a limitation on an officer's liability to the same
effect.
While
Aetna's Articles provide directors and officers with protection against awards
for monetary damages for breaches of their statutory obligations, they do not
eliminate such obligations. Accordingly, Aetna's Articles will have no effect on
the availability of equitable remedies such as an injunction or rescission based
on a director's or officers' breach of his or her statutory
obligations.
Item
16. Exhibits and
Financial Statement Schedules
|
|
(a)
|
The
following exhibits are filed as part of this Registration
Statement:
|
|
Exhibit
No.
|
Document
|
| |
|
|
1.1
|
Underwriting
Agreement, incorporated herein by reference to Exhibit 1.1 to Aetna Inc’s
Current Report on Form 8-K filed on June 9, 2006
|
| |
|
|
4.1
|
Form
of Aetna Inc. Common Share certificate, incorporated herein by reference
to Exhibit 4.1 to Aetna Inc.’s Amendment No. 2 to Registration Statement
on Form 10 filed on December 1, 2000
|
| |
|
|
4.2
|
Senior
Indenture between Aetna Inc. and U.S. Bank National Association, successor
in interest to State Street Bank and Trust Company, incorporated herein by
reference to Exhibit 4.1 to Aetna Inc.’s Quarterly Report on Form 10-Q for
the period ended March 31, 2001 filed on May 10, 2001
|
| |
|
|
4.3
|
Form
of Subordinated Indenture between Aetna Inc. and U.S. Bank National
Association, successor in interest to State Street Bank and Trust Company,
incorporated herein by reference to Exhibit 4.2 to Aetna Inc.’s
Registration Statement on Form S-3 filed on January 19,
2001
|
| |
|
|
5.1
|
Opinion
of Davis Polk & Wardwell
|
| |
|
|
5.2
|
Opinion
of Drinker Biddle & Reath LLP
|
| |
|
|
12.1
|
Statement
regarding computation of ratio of earnings to fixed charges, incorporated
herein by reference to Exhibit 12.1 to Aetna Inc.’s Quarterly Report on
Form 10-Q for the periods ended September 30, 2008 filed on October 29,
2008
|
| |
|
|
15.1
|
Letter from KPMG LLP regarding
unaudited interim financial information
|
| |
|
|
23.1
|
Consent
of KPMG LLP
|
| |
|
|
23.2
|
Consent
of Davis Polk & Wardwell (included in Exhibit 5.1)
|
| |
|
|
23.3
|
Consent
of Drinker Biddle & Reath LLP (included in Exhibit
5.2)
|
| |
|
|
24.1
|
Power
of Attorney
|
| |
|
|
25.1
|
Form
T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of U.S. Bank National Association (successor in
interest to State Street Bank and Trust Company) as Trustee, under the
Senior Indenture
|
| |
|
|
25.2
|
Form
T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of U.S. Bank National Association (successor in
interest to State Street Bank and Trust Company) as Trustee, under the
Subordinated Indenture
|
Item
17. Undertakings
|
|
(a)
|
The
undersigned Registrant hereby
undertakes:
|
(1) To
file, during any period in which offers or sales are being made of securities
registered hereby, a post-effective amendment to this registration
statement:
(i) to
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) to
reflect in the prospectus any facts or events arising after the effective date
of this registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set forth in
the “Calculation of Registration Fee” table in the effective registration
statement;
(iii) to
include any material information with respect to the plan of distribution not
previously disclosed in this registration statement or any material change to
such information in this registration statement;
provided,
however, that paragraphs (i), (ii) and (iii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of this registration
statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(A) Each
prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of this registration statement as of the date the filed prospectus was
deemed part of and included in this registration statement; and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of a registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of
providing the information required by Section 10(a) of the Securities Act of
1933 shall be deemed to be part of and included in this registration statement
as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the
offering described in the prospectus. As provided in Rule 430B, for
liability purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective date of this
registration statement relating to the securities in this registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration
statement or a prospectus that is part of this registration statement or made in
a document incorporated or deemed incorporated by reference into this
registration statement or prospectus that is part of this registration statement
will, as to a purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in this registration
statement or prospectus that was part of this registration statement or made in
any such document immediately prior to such effective date.
(5) That,
for the purpose of determining liability of the Registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned Registrant undertakes that in a primary offering of securities of
the undersigned Registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i)
Any preliminary prospectus or prospectus of the undersigned Registrant relating
to the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned Registrant or used or referred to by the undersigned
Registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned Registrant or its securities provided
by or on behalf of the undersigned Registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
Registrant to the purchaser.
|
|
(b)
|
The
undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan’s annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
|
|
|
(c)
|
Insofar
as indemnification for liabilities arising under the Securities Act of
1933 (the “Act”) may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Hartford, State of Connecticut, on December 5, 2008.
|
AETNA
INC.
|
|
| |
|
| |
|
|
By:
|
/s/
Rajan Parmeswar
|
|
|
|
Rajan
Parmeswar
Vice
President, Controller and Chief Accounting Officer
|
|
Pursuant
to the requirements of the Securities Act of 1933, as amended, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
|
Signature
|
|
Title
|
|
Date
|
| |
|
|
|
|
|
/s/
Ronald A. Williams*
|
|
Chairman,
Chief Executive Officer and Director
(Principal
Executive Officer)
|
|
December
5, 2008
|
|
Ronald
A. Williams
|
|
|
|
|
| |
|
|
|
|
|
/s/
Joseph M. Zubretsky
|
|
Executive
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
|
December
5, 2008
|
|
Joseph
M. Zubretsky
|
|
|
|
|
| |
|
|
|
|
|
/s/
Rajan Parmeswar
|
|
Vice
President, Controller and Chief Accounting Officer
(Principal
Accounting Officer)
|
|
December
5, 2008
|
|
Rajan
Parmeswar
|
|
|
|
|
| |
|
|
|
|
|
/s/
Frank M. Clark*
|
|
Director
|
|
December
5, 2008
|
|
Frank
M. Clark
|
|
|
|
|
| |
|
|
|
|
|
/s/
Betsy Z. Cohen*
|
|
Director
|
|
December
5, 2008
|
|
Betsy
Z. Cohen
|
|
|
|
|
| |
|
|
|
|
|
/s/
Molly J. Coye, M.D.*
|
|
Director
|
|
December
5, 2008
|
|
Molly
J. Coye, M.D.
|
|
|
|
|
| |
|
|
|
|
|
/s/
Roger N. Farah*
|
|
Director
|
|
December
5, 2008
|
|
Roger
N. Farah
|
|
|
|
|
| |
|
|
|
|
|
/s/
Barbara Hackman Franklin*
|
|
Director
|
|
December
5, 2008
|
|
Barbara
Hackman Franklin
|
|
|
|
|
| |
|
|
|
|
|
/s/
Jeffrey E. Garten*
|
|
Director
|
|
December
5, 2008
|
|
Jeffrey
E. Garten
|
|
|
|
|
| |
|
|
|
|
|
/s/
Earl G. Graves*
|
|
Director
|
|
December
5, 2008
|
|
Earl
G. Graves
|
|
|
|
|
| |
|
|
|
|
|
/s/
Gerald Greenwald*
|
|
Director
|
|
December
5, 2008
|
|
Gerald
Greenwald
|
|
|
|
|
| |
|
|
|
|
|
/s/
Ellen M. Hancock*
|
|
Director
|
|
December
5, 2008
|
|
Ellen
M. Hancock
|
|
|
|
|
| |
|
|
|
|
|
/s/
Richard J. Harrington*
|
|
Director
|
|
December
5, 2008
|
|
Richard
J. Harrington
|
|
|
|
|
| |
|
|
|
|
|
/s/
Edward J. Ludwig*
|
|
Director
|
|
December
5, 2008
|
|
Edward
J. Ludwig
|
|
|
|
|
| |
|
|
|
|
|
/s/
Joseph P. Newhouse*
|
|
Director
|
|
December
5, 2008
|
|
Joseph
P. Newhouse
|
|
|
|
|
|
|
|
|
|
|
|
*By:
/s/ Rajan Parmeswar
|
|
|
|
|
|
(Attorney-in-Fact)
|
|
|
|
|
EXHIBIT
INDEX
|
Exhibit
No.
|
Document
|
| |
|
|
1.1
|
Underwriting
Agreement, incorporated herein by reference to Exhibit 1.1 to Aetna Inc’s
Current Report on Form 8-K filed on June 9, 2006
|
| |
|
|
4.1
|
Form
of Aetna Inc. Common Share certificate, incorporated herein by reference
to Exhibit 4.1 to Aetna Inc.’s Amendment No. 2 to Registration Statement
on Form 10 filed on December 1, 2000
|
| |
|
|
4.2
|
Senior
Indenture between Aetna Inc. and U.S. Bank National Association, successor
in interest to State Street Bank and Trust Company, incorporated herein by
reference to Exhibit 4.1 to Aetna Inc.’s Quarterly Report on Form 10-Q for
the period ended March 31, 2001 filed on May 10, 2001
|
| |
|
|
4.3
|
Form
of Subordinated Indenture between Aetna Inc. and U.S. Bank National
Association, successor in interest to State Street Bank and Trust Company,
incorporated herein by reference to Exhibit 4.2 to Aetna Inc.’s
Registration Statement on Form S-3 filed on January 19,
2001
|
| |
|
|
5.1
|
Opinion
of Davis Polk & Wardwell
|
| |
|
|
5.2
|
Opinion
of Drinker Biddle & Reath LLP
|
| |
|
|
12.1
|
Statement
regarding computation of ratio of earnings to fixed charges, incorporated
herein by reference to Exhibit 12.1 to Aetna Inc.’s Quarterly Report on
Form 10-Q for the periods ended September 30, 2008 filed on October 29,
2008
|
| |
|
|
15.1
|
Letter from KPMG LLP regarding
unaudited interim financial information
|
| |
|
|
23.1
|
Consent
of KPMG LLP
|
| |
|
|
23.2
|
Consent
of Davis Polk & Wardwell (included in Exhibit 5.1)
|
| |
|
|
23.3
|
Consent
of Drinker Biddle & Reath LLP (included in Exhibit
5.2)
|
| |
|
|
24.1
|
Power
of Attorney
|
| |
|
|
25.1
|
Form
T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of U.S. Bank National Association (successor in
interest to State Street Bank and Trust Company) as Trustee, under the
Senior Indenture
|
| |
|
|
25.2
|
Form
T-1 Statement of Eligibility and Qualification under the Trust Indenture
Act of 1939, as amended, of U.S. Bank National Association (successor in
interest to State Street Bank and Trust Company) as Trustee, under the
Subordinated Indenture
|
II-7