Exhibit 4.13
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT (the
"Guarantee"), dated as of August 1, 1996, is executed and
delivered by Aetna Inc., a Connecticut corporation ("Aetna"), for
the benefit of the Holders (as defined below) from time to time of
the Preferred Securities (as defined below) of Aetna Capital
L.L.C., a Delaware limited liability company (the "Issuer").
WHEREAS, the Issuer has issued its common limited
liability company interests (the "Common Securities") to and has
received related capital contributions (the "Common Securities
Payments") from Aetna Services, Inc. (formerly Aetna Life and
Casualty Company) ("Aetna Services") and Aetna Capital Holdings,
Inc. ("Aetna Capital"), each a Connecticut corporation and a
wholly owned subsidiary of Aetna, and has issued preferred limited
liability company interests designated its 9 1/2% Cumulative Monthly
Income Preferred Securities, Series A (the "Preferred Securities")
with the powers, preferences and special rights and limitations
and restrictions as are set forth in a written action or actions
dated November 15, 1994 (the "Actions") of the Managing Members
(as defined below) providing for the issue of such Preferred
Securities;
WHEREAS, the Issuer has purchased the Debentures (as
defined below) issued pursuant to the Subordinated Indenture (as
defined below) with the proceeds from the issuance and sale of the
Preferred Securities and the Common Securities Payments; and
WHEREAS, pursuant to a Payment and Guarantee
Agreement dated as of November 22, 1994 executed by Aetna Services
(the "Aetna Services Guarantee Agreement"), Aetna Services has
irrevocably and unconditionally agreed to the extent set forth
therein to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined in the Aetna Services Guarantee
Agreement) on the terms and conditions set forth therein.
WHEREAS, pursuant to an Agreement and Plan of Merger
dated as of March 30, 1996, as amended by Amendment No. 1 thereto
dated as of May 30, 1996, among Aetna Services, Aetna, U.S.
Healthcare, Inc., Antelope Sub, Inc., a wholly owned subsidiary of
Aetna ("Aetna Sub"), and New Merger Corporation, a wholly owned
subsidiary of Aetna, on July 19, 1996 Aetna Sub was merged with
and into Aetna Services with the result that Aetna Services is as
of the date of this Payment and Guarantee Agreement a direct
wholly owned subsidiary of Aetna.
WHEREAS, Aetna desires hereby to irrevocably and
unconditionally agree to the extent set forth herein to pay to the
Holders the Guarantee Payments (as defined below) on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing
and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Aetna executes and delivers this
Guarantee for the benefit of the Holders of the Preferred
Securities.
ARTICLE I
As used in this Guarantee, the terms set forth below
shall have the following meanings:
"Additional Amounts" shall mean, with respect to the
Preferred Securities, any additional amounts that the Issuer is
required to pay as dividends to Holders of the Preferred
Securities pursuant to the Actions establishing the Preferred
Securities in the event that the Issuer is required by law to
withhold or deduct for or on account of any present or future
taxes, duties, assessments or governmental charges of whatever
nature imposed or levied upon or as a result of any payments by
the Issuer in respect of the Preferred Securities by or on behalf
of the United States of America, any state thereof or any other
jurisdiction through which or from which such payment is made, or
any authority therein or thereof having power to tax.
"Debentures" shall mean the $348,101,266 original
principal amount of 9 1/2% Series A Subordinated Debentures Due
November 22, 2024, issued by Aetna Services to the Issuer pursuant
to the Subordinated Indenture that evidence the loan made by the
Issuer to Aetna Services of the proceeds received by the Issuer
from the issuance and sale of the Preferred Securities and the
Common Securities Payments.
"Event of Default" shall have the meaning set forth
in the Subordinated Indenture.
"Guarantee Additional Amounts" shall have the
meaning specified in Article IV.
"Guarantee Payments" shall mean, with respect to the
Preferred Securities, the following payments, without duplication,
to the extent not paid by the Issuer: (i) any accumulated and
unpaid dividends (including Additional Amounts payable by the
Issuer) that have been theretofore declared on the Preferred
Securities, payable out of funds legally available therefor, (ii)
the Redemption Price
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payable out of funds legally available therefor with respect to
any Preferred Securities called for redemption by the Issuer and
(iii) upon the liquidation of the Issuer other than in connection
with the exchange of the Preferred Securities outstanding for the
Debentures, the lesser of (a) the Liquidation Distribution (as
defined below) with respect to Preferred Securities and (b) the
amount of assets of the Issuer legally available for distribution
to Holders of the Preferred Securities in liquidation.
"Holder" shall mean any member of the Issuer from
time to time holding any Preferred Securities; provided, however,
that in determining whether the Holders of the requisite
percentage of Preferred Securities have given any request, notice,
consent or waiver hereunder, "Holder" shall not include Aetna,
Aetna Services or any entity owned 50% or more by Aetna, either
directly or indirectly.
"Liquidation Distribution" shall mean, with respect
to the Preferred Securities, the aggregate of the stated
liquidation preference of such Preferred Securities and all
accumulated and unpaid dividends (whether or not declared) with
respect to the Preferred Securities to the date of payment.
"L.L.C. Agreement" shall mean the Issuer's Amended
and Restated Limited Liability Company Agreement dated as of
November 15, 1994, as amended from time to time.
"Managing Members" shall mean Aetna Services and
Aetna Capital, in their capacity as the members of the Issuer that
own all of the Issuer's outstanding Common Securities.
"Redemption Price" shall mean, with respect to the
Preferred Securities, the aggregate stated liquidation preference
of all Preferred Securities plus accumulated and unpaid dividends
(whether or not declared) with respect to the Preferred Securities
to the date fixed for redemption.
"Subordinated Indenture" shall mean the subordinated
indenture dated as of November 1, 1994 between Aetna Services and
The First National Bank of Chicago, as trustee, as amended by the
First Indenture Supplement thereto dated August 1, 1996 among
Aetna Services, Aetna and The First National Bank of Chicago, as
trustee, as the same may be further amended or supplemented from
time to time.
ARTICLE II
Section 2.01. Aetna irrevocably and unconditionally
agrees, to the extent set forth herein, to pay in
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full to the Holders of the Preferred Securities the Guarantee
Payments with respect to the Preferred Securities, as and when due
(except to the extent paid by the Issuer or paid by Aetna Services
to any trustee appointed by such Holders pursuant to Article VIII
of the L.L.C. Agreement), regardless of any defense, right of
set-off or counterclaim which the Issuer may have or assert. This
Guarantee is continuing, irrevocable, unconditional and
absolute.
Section 2.02. Aetna hereby waives notice of
acceptance of this Guarantee and of any liability to which it
applies or may apply, presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and
all other notices and demands.
Section 2.03. The obligations, covenants,
agreements and duties of Aetna under this Guarantee shall in no
way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by (i) the
Issuer of any express or implied agreement, covenant,
term or condition relating to the Preferred Securities to
be performed or observed by the Issuer or (ii) Aetna
Services of any express or implied agreement, covenant,
term or condition relating to the Preferred Securities in
the Aetna Services Guarantee Agreement to be performed or
observed by Aetna Services;
(b) the extension of time for the payment by the
Issuer or Aetna Services of all or any portion of the
dividends, Redemption Price, Liquidation Distributions or
any other sums payable under the terms of the Preferred
Securities or the Aetna Services Guarantee Agreement or
the extension of time for the performance of any other
obligation under, arising out of, or in connection with,
the Preferred Securities or such Agreement;
(c) any failure, omission, delay or lack of
diligence on the part of the Holders of the Preferred
Securities to enforce, assert or exercise any right,
privilege, power or remedy conferred on such Holders
pursuant to the terms of the Preferred Securities or the
Aetna Services Guarantee Agreement, or any action on the
part of the Issuer or Aetna Services granting indulgence
or extension of any kind;
(d) the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or
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readjustment of debt of, or other similar proceedings
affecting, the Issuer or Aetna Services or any of the
assets of the Issuer or Aetna Services;
(e) any invalidity of, or defect or deficiency in,
any of the Preferred Securities or the Aetna Services
Guarantee Agreement; or
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, Aetna with respect to the happening of any of
the foregoing.
Section 2.04. This is a guarantee of payment and
not of collection. A Holder may enforce this Guarantee directly
against Aetna, and Aetna waives any right or remedy to require
that any action be brought against the Issuer or any other person
or entity (including, without limitation, Aetna Services pursuant
to the Aetna Services Guarantee Agreement) before proceeding
against Aetna. Subject to Section 2.05 hereof, all waivers herein
contained shall be without prejudice to the Holders' right at the
Holders' option to proceed against the Issuer or Aetna Services
pursuant to the Aetna Services Guarantee Agreement, whether by
separate action or by joinder.
Section 2.05. Aetna shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by Aetna under this Guarantee and
shall have the right to waive payment of any amount of dividends
in respect of which payment has been made to the Holders by Aetna
pursuant to Section 2.01 hereof; provided, however, that Aetna
shall not (except to the extent required by mandatory provisions
of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in
all cases as a result of a payment under this Guarantee, if, at
the time of any such payment, any amounts are due and unpaid under
this Guarantee. If any amount shall be paid to Aetna in violation
of the preceding sentence, Aetna agrees to pay over such amount to
the Holders.
Section 2.06. Aetna acknowledges that its
obligations hereunder are independent of the obligations of the
Issuer with respect to the Preferred Securities and the
obligations of Aetna Services pursuant to the Aetna Services
Guarantee Agreement with respect to the Preferred Securities, and
that Aetna shall be liable as principal and sole debtor hereunder
to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence
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of any event referred to in subsections (a) through (f),
inclusive, of Section 2.03 hereof.
ARTICLE III
Section 3.01. So long as any Preferred Securities
remain outstanding, Aetna shall not declare or pay any dividend
on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock or make any guarantee
payments with respect to the foregoing (other than (i) payments
under this Guarantee, (ii) acquisitions of shares of Aetna's
common stock in connection with the satisfaction by Aetna of its
obligations under any employee benefit plans and (iii) redemptions
of any share purchase rights issued by Aetna pursuant to Aetna's
Share Purchase Rights Plan adopted by Aetna on June 6, 1996, as
amended from time to time or the declaration of a dividend of
similar share purchase rights in the future), if at such time
Aetna shall be in default with respect to its payment obligations
hereunder or if there shall have occurred and be continuing an
Event of Default with respect to the Debentures.
Section 3.02. So long as any Preferred Securities
of any series remain outstanding, Aetna shall: (i) not cause or
permit any Common Securities to be transferred; (ii) maintain
direct or indirect 100% ownership of all outstanding securities of
the Issuer other than (x) the preferred limited liability company
interests of any series (including the Preferred Securities) of
the Issuer and (y) any other securities issued by the Issuer
(other than the Common Securities) so long as the issuance thereof
to persons other than Aetna or any of its subsidiaries would not
cause the Issuer to become an "investment company" required to be
registered under the Investment Company Act of 1940, as amended;
(iii) cause at least 21% of the total value of the Issuer and at
least 21% of all interests in the capital, income, gain, loss,
deduction and credit of the Issuer to be represented by Common
Securities; (iv) not voluntarily dissolve, wind up or liquidate
the Issuer (other than in connection with the exchange of all
series of preferred limited liability company interests of the
Issuer outstanding for the related series of debentures issued
under the Subordinated Indenture) or either of the Managing
Members; (v) cause Aetna Services and Aetna Capital to remain the
Managing Members of the Issuer and timely perform all of their
respective duties as Managing Members (including the duty to
declare and pay dividends on the Preferred Securities); and (vi)
use reasonable efforts to cause the Issuer to remain a limited
liability company and otherwise continue to be treated as a
partnership for United States federal income tax purposes;
provided that Aetna may
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permit the Issuer to consolidate or merge with or into or convey,
transfer or lease its properties and assets substantially as an
entirety to another entity upon the terms and subject to the
conditions set forth in the L.L.C. Agreement.
Section 3.03. The Guarantee will constitute an
unsecured obligation of Aetna and will rank (i) subordinate and
junior in right of payment to all other liabilities of Aetna, (ii)
pari passu with the most senior preferred stock now or hereafter
issued by Aetna and with any guarantee now or hereafter entered
into by Aetna in respect of any preferred or preference stock or
interest of any affiliate of Aetna and (iii) senior to Aetna's
common stock.
ARTICLE IV
All Guarantee Payments shall be made without
withholding or deduction for or on account of any present or
future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied upon or as a result of such
payment by or on behalf of the United States of America, any state
thereof or any other jurisdiction through which or from which such
payment is made, or any authority therein or thereof having power
to tax, unless the withholding or deduction of such taxes, duties,
assessments or governmental charges is required by law. In that
event, Aetna will pay such additional amounts as may be necessary
in order that the net amounts received by the Holders of the
Preferred Securities after such withholding or deduction will
equal the amount which would have been receivable in respect of
such Preferred Securities in the absence of such withholding or
deduction ("Guarantee Additional Amounts"), except that no such
Guarantee Additional Amounts will be payable with respect to
Preferred Securities:
(i) if the Holder or beneficial owner thereof is
liable for such taxes, duties assessments or governmental
charges in respect of such Preferred Securities by reason
of such Holder's or owner's having some connection with
the United States, any state thereof or any other
jurisdiction through which or from which such payment is
made (including, without limitation, actual or
constructive ownership, past or present, of 10% or more
of the total combined voting power of all classes of
stock entitled to vote of Aetna), other than being a
holder or beneficial owner of such Preferred Securities,
or
(ii) if the Issuer or Aetna has notified such
Holder of the obligation to withhold taxes and requested
but not received from such Holder or
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beneficial owner a declaration of non-residence, a valid
taxpayer identification number or other claim for
exemption (or information or certification required to
support such claim), and such withholding or deduction
would not have been required had such declaration,
taxpayer identification number or claim been received.
ARTICLE V
This Guarantee shall terminate and be of no further
force and effect as to the Preferred Securities upon full payment
of the Redemption Price of all Preferred Securities or upon the
exchange of all Preferred Securities for Debentures and shall
terminate completely upon full payment of the amounts payable to
Holders upon liquidation of the Issuer; provided, however, that
this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder must
restore payment of any sums paid under the Preferred Securities or
under this Guarantee for any reason whatsoever.
ARTICLE VI
Section 6.01. All guarantees and agreements
contained in this Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of Aetna and shall inure
to the benefit of the Holders. Except in connection with a
consolidation, merger or sale involving Aetna that is permitted
under the Subordinated Indenture, Aetna shall not assign its
obligations hereunder without the prior approval of Holders of not
less than a majority in stated liquidation preference of all
Preferred Securities then outstanding voting as a single class.
Section 6.02. Except with respect to any changes
which do not adversely affect the rights of Holders (in which case
no vote will be required), this Guarantee may only be amended by
an instrument in writing signed by Aetna with the prior approval
of the Holders of not less than a majority in stated liquidation
preference of all Preferred Securities then outstanding voting as
a single class. Such approval shall be obtained in the manner set
forth in Article VIII of the L.L.C. Agreement.
Section 6.03. Any notice, request or other
communication required or permitted to be given hereunder to Aetna
shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), telex or
by registered or certified mail, addressed to Aetna, as follows
(and if so given, shall
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be deemed given when mailed or upon receipt of an answer-back, if
sent by telex), to wit:
Aetna Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Treasurer
(with a copy to the attention of the General
Counsel (000) 000-0000)
Any notice, request or other communication required
or permitted to be given hereunder to the Holders shall be given
by Aetna in the same manner as notices sent by the Issuer to the
Holders.
Section 6.04. The masculine and neuter genders used
herein shall include the masculine, feminine and neuter genders.
Section 6.05. This Guarantee is solely for the
benefit of the Holders and is not separately transferable from the
Preferred Securities.
Section 6.06. THIS GUARANTEE SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
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THIS GUARANTEE is executed as of the day and year
first above written.
Aetna Inc.
By /s/ Xxxxxx X. Xxxxx, Xx.
________________________
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President, Corporate Finance
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