


                                                     CONFORMED COPY

                         AGREEMENT AND PLAN OF MERGER

                                 dated as of

                                March 30, 1996

                                    among

                       AETNA LIFE AND CASUALTY COMPANY

                            U.S. HEALTHCARE, INC.

                               BUTTERFLY, INC.,

                              ANTELOPE SUB, INC.

                                     AND

                            NEW MERGER CORPORATION

                             TABLE OF CONTENTS(1)

                                                               Page

                                  ARTICLE 1

                                 THE MERGERS

        SECTION 1.1.  U.S. Healthcare Sub Merger  . . . . . . .   1
        SECTION 1.2.  Aetna Sub Merger. . . . . . . . . . . . .   4
        SECTION 1.3.  Surrender and Payment . . . . . . . . . .   5
        SECTION 1.4.  Cancellation of Parent Stock  . . . . . .   7
        SECTION 1.5.  The Merger Date . . . . . . . . . . . . .   7
        SECTION 1.6.  Dissenting Shares . . . . . . . . . . . .   8
        SECTION 1.7.  Stock Options of U.S.
                        Healthcare; Restricted Stock  . . . . .   9
        SECTION 1.8.  Stock Options of Aetna  . . . . . . . . .  11
        SECTION 1.9.  Adjustments . . . . . . . . . . . . . . .  12
        SECTION 1.10. Fractional Shares . . . . . . . . . . . .  12

                                  ARTICLE 2

                          THE SURVIVING CORPORATIONS

        SECTION 2.1.  Articles and Certificate of
                        Incorporation; Bylaws . . . . . . . . .  13
        SECTION 2.2.  Directors and Officers  . . . . . . . . .  13

                                  ARTICLE 3

                        REPRESENTATIONS AND WARRANTIES
                              OF U.S. HEALTHCARE

        SECTION 3.1.  Corporate Existence and Power . . . . . .  14
        SECTION 3.2.  Corporate Authorization . . . . . . . . .  14
        SECTION 3.3.  Governmental Authorization  . . . . . . .  15
        SECTION 3.4.  Non-Contravention . . . . . . . . . . . .  15
        SECTION 3.5.  Capitalization  . . . . . . . . . . . . .  16
        SECTION 3.6.  Subsidiaries  . . . . . . . . . . . . . .  17
        SECTION 3.7.  SEC Filings . . . . . . . . . . . . . . .  17
        SECTION 3.8.  Financial Statements. . . . . . . . . . .  18
        SECTION 3.9.  Disclosure Documents. . . . . . . . . . .  18
        SECTION 3.10. Information Supplied  . . . . . . . . . .  19
       (1)  The Table of Contents is not a part of this Agreement.
        SECTION 3.11. Absence of Certain Changes  . . . . . . .  20
        SECTION 3.12. No Undisclosed Material
                        Liabilities . . . . . . . . . . . . . .  23
        SECTION 3.13. Litigation; Investigations  . . . . . . .  24
        SECTION 3.14. Taxes . . . . . . . . . . . . . . . . . .  24
        SECTION 3.15. ERISA . . . . . . . . . . . . . . . . . .  26
        SECTION 3.16. Permits; Compliance with Laws . . . . . .  29
        SECTION 3.17. Finders' Fees . . . . . . . . . . . . . .  30
        SECTION 3.18. Intellectual Property Rights  . . . . . .  30
        SECTION 3.19. Takeover Statutes . . . . . . . . . . . .  31
        SECTION 3.20. Fairness Opinion  . . . . . . . . . . . .  31

                                  ARTICLE 4

                        REPRESENTATIONS AND WARRANTIES
                                   OF AETNA

        SECTION 4.1.  Corporate Existence and Power . . . . . .  32
        SECTION 4.2.  Corporate Authorization . . . . . . . . .  32
        SECTION 4.3.  Governmental Authorization  . . . . . . .  33
        SECTION 4.4.  Non-Contravention . . . . . . . . . . . .  33
        SECTION 4.5.  Capitalization  . . . . . . . . . . . . .  34
        SECTION 4.6.  SEC Filings . . . . . . . . . . . . . . .  34
        SECTION 4.7.  Financial Statements  . . . . . . . . . .  34
        SECTION 4.8.  Disclosure Documents  . . . . . . . . . .  35
        SECTION 4.9.  Information Supplied  . . . . . . . . . .  35
        SECTION 4.10. Absence of Certain Changes  . . . . . . .  36
        SECTION 4.11. No Undisclosed Material
                        Liabilities . . . . . . . . . . . . . .  38
        SECTION 4.12. Litigation; Investigations  . . . . . . .  39
        SECTION 4.13. Subsidiaries  . . . . . . . . . . . . . .  39
        SECTION 4.14. Taxes . . . . . . . . . . . . . . . . . .  40
        SECTION 4.15. ERISA . . . . . . . . . . . . . . . . . .  41
        SECTION 4.16. Permits; Compliance with Laws . . . . . .  42
        SECTION 4.17. Intellectual Property Rights  . . . . . .  43
        SECTION 4.18. Fairness Opinions . . . . . . . . . . . .  44

                                  ARTICLE 5

                         COVENANTS OF U.S. HEALTHCARE

        SECTION 5.1.  Conduct of U.S. Healthcare  . . . . . . .  44
        SECTION 5.2.  Shareholder Meeting; Proxy
                        Material  . . . . . . . . . . . . . . .  48
        SECTION 5.3.  Access to Information . . . . . . . . . .  49
        SECTION 5.4.  Other Offers Relating to U.S.
                        Healthcare  . . . . . . . . . . . . . .  49
        SECTION 5.5.  Notices of Certain Events . . . . . . . .  51
        SECTION 5.6.  Fiduciary Matters . . . . . . . . . . . .  51

                                  ARTICLE 6

                              COVENANTS OF AETNA

        SECTION 6.1.  Voting of U.S. Healthcare Stock . . . . .  52
        SECTION 6.2.  Shareholder Meeting; Proxy
                        Materials . . . . . . . . . . . . . . .  52
        SECTION 6.3.  Access to Information . . . . . . . . . .  53
        SECTION 6.4.  Notices of Certain Events . . . . . . . .  53
        SECTION 6.5.  Certain Corporate Actions . . . . . . . .  53
        SECTION 6.6.  Other Offers Relating to Aetna  . . . . .  56
        SECTION 6.7.  Amendment of the Stock Purchase
                        Agreement . . . . . . . . . . . . . . .  57
        SECTION 6.8.  Dividends . . . . . . . . . . . . . . . .  57

                                  ARTICLE 7

                             COVENANTS OF AETNA,
                          U.S. HEALTHCARE AND PARENT

        SECTION 7.1.  Best Efforts  . . . . . . . . . . . . . .  58
        SECTION 7.2.  Cooperation . . . . . . . . . . . . . . .  58
        SECTION 7.3.  Public Announcements  . . . . . . . . . .  58
        SECTION 7.4.  Further Assurances  . . . . . . . . . . .  59
        SECTION 7.5.  Rule 145 Affiliates . . . . . . . . . . .  59
        SECTION 7.6.  Director and Officer Liability  . . . . .  59
        SECTION 7.7.  Subsidiary Agreements . . . . . . . . . .  62
        SECTION 7.8.  Plans Following the Closing . . . . . . .  62
        SECTION 7.9.  Voting of Shares  . . . . . . . . . . . .  62
        SECTION 7.10. Form S-4  . . . . . . . . . . . . . . . .  62
        SECTION 7.11. Certain Corporate Matters with
                        Respect to Parent . . . . . . . . . . .  62
        SECTION 7.12. Governmental Authorization  . . . . . . .  65
        SECTION 7.13. Disclosure Documents  . . . . . . . . . .  65
        SECTION 7.14. Listing of Stock  . . . . . . . . . . . .  65

                                  ARTICLE 8

                          CONDITIONS TO THE MERGERS

        SECTION 8.1.  Conditions to the Obligations of
                        Each Party  . . . . . . . . . . . . . .  65
        SECTION 8.2.  Conditions to the Obligations of
                        Aetna . . . . . . . . . . . . . . . . .  67
        SECTION 8.3.  Conditions to the Obligations of
                        U.S. Healthcare . . . . . . . . . . . .  68

                                  ARTICLE 9

                                 TERMINATION

        SECTION 9.1.  Termination . . . . . . . . . . . . . . .  69
        SECTION 9.2.  Effect of Termination . . . . . . . . . .  71

                                  ARTICLE 10

                                MISCELLANEOUS

        SECTION 10.1.  Notices  . . . . . . . . . . . . . . . .  71
        SECTION 10.2.  Entire Agreement; Survival of
                        Representations and
                        Warranties  . . . . . . . . . . . . . .  72
        SECTION 10.3.  Amendments; No Waivers . . . . . . . . .  72
        SECTION 10.4.  Expenses . . . . . . . . . . . . . . . .  73
        SECTION 10.5.  Successors and Assigns . . . . . . . . .  74
        SECTION 10.6.  Governing Law  . . . . . . . . . . . . .  74
        SECTION 10.7.  Jurisdiction . . . . . . . . . . . . . .  74
        SECTION 10.8.  Counterparts; Effectiveness  . . . . . .  75

             Exhibit A        Form of Designations, Rights and
                                 Preferences of Parent Preferred
                                 Stock

             Exhibit B        Forms of Affiliate Letters
                             TABLE OF DEFINITIONS

           Term                                            Section

           1933 Act                                         1.7(d)
           1933 Act Affiliates                              7.5
           1934 Act                                         1.7(a)
           Acquisition Proposal                             5.4
           Aetna                                            preamble
           Aetna Acquisition Proposal                       6.6
           Aetna Balance Sheet                              4.7
           Aetna Balance Sheet Date                         4.7
           Aetna Benefit Arrangements                       4.15(c)
           Aetna Certificate of Merger                      1.5
           Aetna Common Stock                               4.5
           Aetna Class A Stock                              4.5
           Aetna Class B Stock                              4.5
           Aetna Class C Stock                              4.5
           Aetna Disclosure Documents                       4.8(a)
           Aetna Employee Plan                              4.15(a)
           Aetna Health Operations                          4.10(d)
           Aetna Merger Consideration                       1.2(b)
           Aetna Permits                                    4.16(a)
           Aetna Proxy Statement                            4.8(a)
           Aetna Shareholder Meeting                        6.2(a)
           Aetna Software                                   4.17(b)
           Aetna Stock                                      1.2(b)
           Aetna Stock Option                               1.8(a)
           Aetna Sub                                        preamble
           Aetna Sub Common Stock                           1.2(b)
           Aetna Sub Merger                                 1.2(a)
           Aetna Subsidiary Securities                      4.13(b)
           Aetna Substitute Option                          1.8(a)
           Aetna Surviving Corporation                      1.2(a)
           Aetna Surviving Corporation Common Stock         1.2(b)
           Aetna 10-K                                       4.6(a)
           Affiliate                                        1.1(b)
           Average Closing Stock Price                      8.3(b)
           Cash Consideration                               1.1(b)
           Claim                                            7.6(a)
           Class B Stock                                    1.1(b)
           Code                                             preamble
           Common Stock                                     1.1(b)
           Confidentiality Agreement                        5.4
           Connecticut Law                                  1.2(b)
           The Consolidated Health Operations               7.11(c)
           Co-Presidents                                    7.11(c)
           D&O Insurance                                    7.6(d)
           Employee Benefit Plan                            3.15(a)
           ERISA                                            3.15(a)
           ERISA Affiliate                                  3.15(a)
           Excess Shares                                    1.10
           Exchange Agent                                   1.3(a)
           Form S-4                                         7.10
           HSR Act                                          3.3
           Indemnified Party                                7.6(a)
           Initial Number of U.S. Healthcare Option Shares  1.7(a)(i)
           Lien                                             3.4
           Material Adverse Effect                          3.1
           Mergers                                          1.4
           Merger Date                                      1.5
           Merger Consideration                             1.1(b)
           Multiemployer Plan                               3.15(b)
           New Annual Dividend                              6.8
           NYSE                                             1.10
           Parent                                           preamble
           Parent Common Stock                              1.1(b)
           Parent Disclosure Documents                      7.13
           Parent Preferred Stock                           1.1(b)
           Pennsylvania Law                                 1.1(b)
           Pension Plans                                    3.15(a)
           Person                                           1.3(c)
           Pre-Merger Matters                               7.6(a)
           Principal Shareholder                            7.11(b)
           SEC                                              1.7(d)
           Scheduled Contracts                              7.7
           Specified U.S. Healthcare Officer                3.11(j)
           Stock Purchase Agreement                         8.1(i)
           Subject Company                                  7.5
           Subsidiary                                       1.1(b)
           Taxes                                            3.14(k)
           Taxing Authorities                               3.14(k)
           Tax Return                                       3.14(k)
           U.S. Healthcare                                  preamble
           U.S. Healthcare Articles of Merger               1.5
           U.S. Healthcare Balance Sheet                    3.8
           U.S. Healthcare Balance Sheet Date               3.8
           U.S. Healthcare Benefit Arrangements             3.15(e)
           U.S. Healthcare Designees                        7.11(b)
           U.S. Healthcare Disclosure Documents             3.9(a)
           U.S. Healthcare Employee Stock Option            1.7(a)
           U.S. Healthcare Merger Consideration             1.1(b)
           U.S. Healthcare Non-Employee Stock Option        1.7(a)
           U.S. Healthcare Permits                          3.16(a)
           U.S. Healthcare Proxy Statement                  3.9(a)
           U.S. Healthcare Restricted Stock                 1.7(b)
           U.S. Healthcare Securities                       3.5
           U.S. Healthcare Shareholder Meeting              5.2(a)
           U.S. Healthcare Software                         3.18(b)
           U.S. Healthcare Stock                            1.1(b)
           U.S. Healthcare Stock Option                     1.7(a)
           U.S. Healthcare Sub                              preamble
           U.S. Healthcare Sub Common Stock                 1.1(b)
           U.S. Healthcare Sub Merger                       1.1(a)
           U.S. Healthcare Substitute Option                1.7(a)(i)
           U.S. Healthcare Surviving Corporation            1.1(a)
           U.S. Healthcare Surviving Corporation Common     1.1(b)
            Stock
           U.S. Healthcare 10-K                             3.6(a)
           Voting Agreement                                 9.1(d)

                         AGREEMENT AND PLAN OF MERGER

                  AGREEMENT AND PLAN OF MERGER dated as of March
          30, 1996 among Aetna Life and Casualty Company, a
          Connecticut insurance corporation ("Aetna"), U.S.
          Healthcare, Inc., a Pennsylvania corporation ("U.S.
          Healthcare"), Butterfly, Inc., a Connecticut corporation
          ("Parent"), Antelope Sub, Inc., a Connecticut corporation
          and a wholly-owned subsidiary of Parent ("Aetna Sub"),
          and New Merger Corporation, a Pennsylvania corporation
          and a wholly-owned subsidiary of Parent ("U.S. Healthcare
          Sub").

                  WHEREAS, the respective Boards of Directors of
          Aetna and U.S. Healthcare have determined that it is in
          the best interests of their respective shareholders to
          combine their health businesses and to enter into this
          Agreement; 

                  WHEREAS, the respective Boards of Directors of
          Aetna and U.S. Healthcare have approved this Agreement
          and the mergers contemplated hereby; and

                  WHEREAS, for United States federal income tax
          purposes, it is intended that the transactions
          contemplated by this Agreement qualify as transfers
          subject to Section 351(a) of the Internal Revenue Code of
          1986, as amended, and the rules and regulations
          promulgated thereunder (the "Code") and that the
          shareholders of U.S. Healthcare be treated as if they
          transferred their U.S. Healthcare Stock to Parent in
          exchange for the U.S. Healthcare Merger Consideration and
          that the shareholders of Aetna be treated as if they
          transferred their Aetna Stock to Parent in exchange for
          the Aetna Merger Consideration;

                  NOW, THEREFORE, in consideration of the promises
          and the representations, warranties, covenants, and
          agreements set forth herein, intending to be legally
          bound hereby, the parties hereto agree as follows:

                                  ARTICLE 1

                                 THE MERGERS

                  SECTION 1.1.  U.S. Healthcare Sub Merger.  (a) 
                                __________________________
          Upon the terms and subject to the conditions set forth
          herein, on the Merger Date, U.S. Healthcare Sub shall
          merge into U.S. Healthcare (the "U.S. Healthcare Sub
          Merger") and the separate existence of U.S. Healthcare
          Sub shall cease.  U.S. Healthcare shall be the surviving
          corporation in the U.S. Healthcare Sub Merger
          (hereinafter sometimes referred to as the "U.S.
          Healthcare Surviving Corporation") and its separate
          corporate existence, with all its purposes, objects,
          rights, privileges, powers and franchises, shall continue
          unaffected and unimpaired by the U.S. Healthcare Sub
          Merger.
                  (b)  Pursuant to the U.S. Healthcare Sub Merger:

                  (i)  Each share of Common Stock, par value $0.005
             per share, of U.S. Healthcare (the "Common Stock"),
             and each share of Class B Stock, par value $0.005 per
             share, of U.S. Healthcare (the "Class B Stock", and
             together with the Common Stock, the "U.S. Healthcare
             Stock") held by U.S. Healthcare as treasury stock or
             owned by Aetna or any Subsidiary of Aetna immediately
             prior to the Merger Date shall be canceled and no
             payment shall be made with respect thereto; provided
                                                         ________
             that any shares of U.S. Healthcare Stock (i) held by
             Aetna or any Subsidiary of Aetna for the account of
             another Person, (ii) as to which Aetna or any
             Subsidiary or Affiliate of Aetna is or may be required
             to act as a fiduciary or in a similar capacity or
             (iii) the cancellation of which would violate any
             legal duties or obligations of Aetna or any Subsidiary
             or Affiliate of Aetna shall not be canceled but,
             instead, shall be treated as set forth in Section
             1.1(b)(ii) or 1.6.  For purposes of this Agreement,
             the term "Subsidiary", when used with respect to any
             Person, means any corporation or other organization,
             whether incorporated or unincorporated, (A) of which
             (i) at least a majority of the securities or other
             interests having by their terms ordinary voting power
             to elect a majority of the board of directors or
             others performing similar functions with respect to
             such corporation or other organization is directly or
             indirectly owned or controlled by such Person or (ii)
             such Person or any other Subsidiary of such Person is
             a general partner or (B) which is controlled, directly
             or indirectly, by such Person (through ownership of
             securities, by contract or otherwise) but shall not
             include investment companies managed by subsidiaries
             of Aetna.  For purposes of this Agreement, the term
             "Affiliate", when used with respect to any Person,
             means any other Person directly or indirectly
             controlling, controlled by, or under common control
             with such Person; and

                  (ii)  Each share of U.S. Healthcare Stock
             outstanding immediately prior to the Merger Date
             shall, except as otherwise provided in Section
             1.1(b)(i) or as provided in Section 1.6 with respect
             to shares of U.S. Healthcare Stock as to which
             dissenters rights have been exercised (which shares
             shall be treated in accordance with Section 1930 of
             the Pennsylvania Business Corporation Law of 1988, as
             amended (the "Pennsylvania Law")), be converted into
             the following (the consideration referred to in the
             following clauses (A), (B) and (C) is referred to
             collectively as the "U.S. Healthcare Merger
             Consideration"):

                       (A)  the right to receive 0.2246 shares of
                  Common Capital Stock, par value $1.00 per share,
                  of Parent ("Parent Common Stock");

                       (B)  the right to receive 0.0749 shares of
                  6.25% Class C Non-Voting Preferred Stock, par
                  value $.01 per share, of Parent (the terms of

                  which are set forth in Exhibit A hereto) (the
                  "Parent Preferred Stock"); and

                       (C) subject to any adjustment as
                  contemplated by Section 8.3(b) hereof, the right
                  to receive in cash without interest an amount
                  equal to $34.20 (the "Cash Consideration"). 

                  (iii)  At the Merger Date, each share of common
             stock, without par value, of U.S. Healthcare Sub
             ("U.S. Healthcare Sub Common Stock") outstanding
             immediately prior to the Merger Date shall be
             converted into an equal number of shares of Common
             Stock, par value $1.00 per share, of the U.S.
             Healthcare Surviving Corporation ("U.S. Healthcare
             Surviving Corporation Common Stock").

          From and after the Merger Date, all shares of U.S.
          Healthcare Stock converted in accordance with Section
          1.1(b)(ii) shall no longer be outstanding and shall
          automatically be canceled and retired and shall cease to
          exist, and each holder of such shares shall cease to have
          any rights with respect thereto, except the right to
          receive the U.S. Healthcare Merger Consideration, the
          right to exercise dissenters rights in accordance with
          and subject to the provisions of the Pennsylvania Law and
          the other rights specified in this Agreement.  From and
          after the Merger Date, all certificates representing U.S.
          Healthcare Sub Common Stock shall be deemed for all
          purposes to represent the number of shares of U.S.
          Healthcare Surviving Corporation Common Stock into which
          they were converted in accordance with Section
          1.1(b)(iii).

                  SECTION 1.2.  Aetna Sub Merger.    (a)  Upon the
                                ________________
          terms and subject to the conditions set forth herein, on
          the Merger Date, Aetna Sub shall merge into Aetna (the
          "Aetna Sub Merger") and the separate existence of Aetna
          Sub shall cease.  Aetna shall be the surviving
          corporation in the Aetna Sub Merger (hereinafter
          sometimes referred to as the "Aetna Surviving
          Corporation") and its separate corporate existence, with
          all its purposes, objects, rights, privileges, powers and
          franchises, shall continue unaffected and unimpaired by
          the Aetna Sub Merger.

                  (b)  Pursuant to the Aetna Sub Merger:

                  (i)  Each share of common capital stock without
             par value of Aetna (the "Aetna Stock") held by Aetna
             as treasury stock or owned by U.S. Healthcare or any
             Subsidiary of U.S. Healthcare immediately prior to the
             Merger Date shall be canceled and no payment shall be
             made with respect thereto; 

                  (ii)  Each share of Aetna Stock outstanding
             immediately prior to the Merger Date shall, except as
             otherwise provided in Section 1.2(b)(i) or as provided
             in Section 1.6 with respect to shares of Aetna Stock
             as to which rights of objecting shareholders have been
             exercised (which shares shall be treated in accordance
             with Sections 33-373 and 33-374 of the Connecticut
             Stock Corporation Act (the "Connecticut Law")), be
             converted into the right to receive one share of
             Parent Common Stock (the "Aetna Merger Consideration"
             and, together with the U.S. Healthcare Merger
             Consideration, the "Merger Consideration").

                  (iii) At the Merger Date, each share of common
             stock, par value $1.00 per share, of Aetna Sub ("Aetna
             Sub Common Stock"), outstanding immediately prior to
             the Merger Date shall be converted into an equal
             number of shares of Common Stock, par value $.01 per
             share, of the Aetna Surviving Corporation ("Aetna
             Surviving Corporation Common Stock").

          From and after the Merger Date, all shares of Aetna Stock
          converted in accordance with Section 1.2(b)(ii) shall no
          longer be outstanding and shall automatically be canceled
          and retired and shall cease to exist, and each holder of
          such shares shall cease to have any rights with respect
          thereto, except the right to receive the Aetna Merger
          Consideration, the right to exercise dissenters rights in
          accordance with and subject to the provisions of the
          Connecticut Law and the other rights specified in this
          Agreement.  From and after the Merger Date, all
          certificates representing Aetna Sub Common Stock shall be
          deemed for all purposes to represent the number of shares
          of the Aetna Surviving Corporation Common Stock into
          which they were converted in accordance with Section
          1.2(b)(iii).

                  (c)  Upon consummation of the Aetna Sub Merger,
          the Rights Agreement (the "Rights Agreement") dated as of
          October 27, 1989 between Aetna and First Chicago Trust
          Company of New York shall automatically terminate and be
          of no further force or effect; and Aetna shall effect any
          amendments to the Rights Agreement necessary to effect
          the foregoing.

                  SECTION 1.3.  Surrender and Payment.  (a)  Prior
                                _____________________
          to the Merger Date, Aetna and U.S. Healthcare shall cause
          Parent to appoint an agent (the "Exchange Agent") for the
          purpose of exchanging certificates representing shares of
          U.S. Healthcare Stock for the U.S. Healthcare Merger
          Consideration.  Parent will make available to the
          Exchange Agent, as needed, certificates representing the
          Parent Common Stock and the Parent Preferred Stock in
          respect of the U.S. Healthcare Merger Consideration and
          the Cash Consideration to be paid in respect of shares of
          U.S. Healthcare Stock, in accordance with the terms of
          Section 1.1(b).  Promptly after the Merger Date, Parent
          shall send, or shall cause the Exchange Agent to send, to
          each holder of shares of U.S. Healthcare Stock at the
          Merger Date a letter of transmittal for use in such
          exchange (which shall specify that delivery of the U.S.
          Healthcare Merger Consideration shall be effected, and
          risk of loss and title shall pass, only upon proper
          delivery of the certificates representing shares of U.S.
          Healthcare Stock, to the Exchange Agent).  Upon the
          conversion of Aetna Stock into Parent Common Stock in
          accordance with Section 1.2(b), all shares of Aetna Stock
          so converted shall be cancelled and cease to exist, and
          each certificate theretofore representing any such shares
          shall, without any action on the part of the holder
          thereof, be deemed to represent an equivalent number of
          shares of Parent Common Stock.

                  (b)  Each holder of shares of U.S. Healthcare
          Stock that have been converted into a right to receive
          the U.S. Healthcare Merger Consideration upon surrender
          to the Exchange Agent of a certificate or certificates
          representing such shares of U.S. Healthcare Stock
          together with a properly completed letter of transmittal
          covering such shares of U.S. Healthcare Stock will be
          entitled to receive the U.S. Healthcare Merger
          Consideration payable in respect of such shares of U.S.
          Healthcare Stock and the other amounts, if any, specified
          in this Agreement.  Until so surrendered, each such
          certificate shall, after the Merger Date, represent for
          all purposes only the right to receive the U.S.
          Healthcare Merger Consideration and the other amounts, if
          any, specified in this Agreement.

                  (c)  If any portion of the U.S. Healthcare Merger
          Consideration is to be paid to a Person other than the
          registered holder of the shares of U.S. Healthcare Stock
          represented by the certificate or certificates
          surrendered in exchange therefor, it shall be a condition
          to such payment that the certificate or certificates so
          surrendered shall be properly endorsed or otherwise be in
          proper form for transfer and that the Person requesting
          such payment shall pay to the Exchange Agent any transfer
          or other taxes required as a result of such payment to a
          Person other than the registered holder of such shares of
          U.S. Healthcare Stock or establish to the satisfaction of
          the Exchange Agent that such tax has been paid or is not
          payable.  For purposes of this Agreement, "Person" means
          an individual, a corporation, a limited liability
          company, a partnership, an association, a trust or any
          other entity or organization, including, without
          limitation, a government or political subdivision or any
          agency or instrumentality thereof.

                  (d)  After the Merger Date, there shall be no
          further registration of transfers of shares of U.S.
          Healthcare Stock.  If, after the Merger Date,
          certificates representing shares of U.S. Healthcare Stock
          or Aetna Stock are presented to the respective surviving
          corporations in the Mergers, they shall be canceled and
          exchanged for the consideration provided for, and in
          accordance with the procedures set forth, in this Article
          1.

                  (e)  Any portion of the U.S. Healthcare Merger
          Consideration made available to the Exchange Agent
          pursuant to Section 1.3(a) that remains unclaimed by the
          holders of shares of U.S. Healthcare Stock six months
          after the Merger Date shall be returned to Parent, upon
          demand, and any such holder who has not exchanged his
          shares of U.S. Healthcare Stock for the U.S. Healthcare
          Merger Consideration in accordance with this Section 1.3
          prior to that time shall thereafter look only to Parent
          for his claim for Parent Common Stock, Parent Preferred
          Stock, any cash in lieu of fractional shares of Parent
          Common Stock or Parent Preferred Stock, as applicable,
          and any dividends or distributions with respect to Parent
          Common Stock or Parent Preferred Stock, as applicable,
          and the Cash Consideration. Notwithstanding the
          foregoing, Parent shall not be liable to any holder of
          shares of U.S. Healthcare Stock for any amount paid to a
          public official pursuant to applicable abandoned property
          laws.  Any amounts remaining unclaimed by holders of
          shares of U.S. Healthcare Stock immediately prior to such
          time as such amounts would otherwise escheat to or become
          property of any governmental entity shall, to the extent
          permitted by applicable law, become the property of
          Parent free and clear of any claim or interest of any
          Person previously entitled thereto.

                 (f)  Any portion of the U.S. Healthcare Merger
          Consideration made available to the Exchange Agent
          pursuant to Section 1.3(a) to pay for shares of U.S.
          Healthcare Stock in respect of which dissenters rights
          have been perfected shall be returned to Parent, upon
          demand.

                  (g)  No dividends or other distributions with
          respect to the Parent Common Stock or Parent Preferred
          Stock, as applicable, constituting all or a portion of
          the U.S. Healthcare Merger Consideration shall be paid to
          the holder of any unsurrendered certificate representing
          U.S. Healthcare Stock until such certificates are
          surrendered as provided in this Section 1.3.  Subject to
          the effect of applicable laws, following such surrender,
          there shall be paid, without interest, to the record
          holder of the certificates representing the Parent Common
          Stock or Parent Preferred Stock, as applicable, (i) at
          the time of such surrender, the amount of dividends or
          other distributions with a record date after the Merger
          Date payable prior to or on the date of such surrender
          with respect to such whole shares of Parent Common Stock
          or Parent Preferred Stock, as applicable, and not paid,
          less the amount of any withholding taxes which may be
          required thereon, and (ii) at the appropriate payment
          date, the amount of dividends or other distributions with
          a record date after the Merger Date but prior to the date
          of surrender and a payment date subsequent to the date of
          surrender payable with respect to such whole shares of
          Parent Common Stock or Parent Preferred Stock, as
          applicable, less the amount of any withholding taxes
          which may be required thereon.

                  SECTION 1.4.  Cancellation of Parent Stock.  All
                                ____________________________
          outstanding shares of the capital stock of Parent
          immediately prior to the Merger Date shall be canceled
          immediately upon consummation of the Aetna Sub Merger. 
          The U.S. Healthcare Sub Merger and the Aetna Sub Merger
          are sometimes together referred to as the "Mergers".

                  SECTION 1.5.  The Merger Date.  As soon as
                                _______________
          practicable (but in no event more than two business days)
          after the satisfaction or, to the extent permitted
          hereunder or under applicable law, waiver of all
          conditions to each of the Mergers, (a) U.S. Healthcare
          and U.S. Healthcare Sub shall file the articles of merger
          required to effect the U.S. Healthcare Sub Merger (the
          "U.S. Healthcare Articles of Merger") with the Department
          of State of the Commonwealth of Pennsylvania and make all
          other filings or recordings required by the Pennsylvania
          Law in connection with the U.S. Healthcare Sub Merger,
          and (b) Aetna and Aetna Sub shall file a certificate of
          merger (the "Aetna Certificate of Merger") with the
          Secretary of the State of the State of Connecticut and
          make all other filings or recordings required by the
          Connecticut Law in connection with the Aetna Sub Merger,
          and (c) the Mergers shall become effective, it being
          understood that the U.S. Healthcare Sub Merger shall
          become effective immediately prior to the Aetna Sub
          Merger in accordance with the terms of such U.S.
          Healthcare Articles of Merger and Aetna Certificate of
          Merger (such time and date are referred to as the "Merger
          Date").

                  SECTION 1.6.  Dissenting Shares.  Notwithstanding
                                _________________
          Section 1.1 or Section 1.2, as applicable, shares of U.S.
          Healthcare Stock or Aetna Stock outstanding immediately
          prior to the Merger Date and held by a holder who has not
          voted in favor of the U.S. Healthcare Sub Merger or the
          Aetna Sub Merger, as applicable, and who has exercised
          dissenters rights in respect of such shares of U.S.
          Healthcare Stock in accordance with the Pennsylvania Law,
          or rights of objecting shareholders in respect of such
          shares of Aetna Stock in accordance with the Connecticut
          Law, shall not be converted into a right to receive the
          U.S. Healthcare Merger Consideration or the Aetna Merger
          Consideration, as applicable, unless such holder fails to
          perfect or withdraws or otherwise loses his dissenters'
          or objecting shareholders' rights.  Shares of U.S.
          Healthcare Stock in respect of which dissenters rights
          have been exercised shall be treated in accordance with
          Section 1930 of the Pennsylvania Law.  Shares of Aetna
          Stock in respect of which objecting shareholders' rights
          have been exercised shall be treated in accordance with
          Sections 33-373 and 33-374 of the Connecticut Law.  If
          after the Merger Date such holder fails to perfect or
          withdraws or otherwise loses his right to demand the
          payment of fair value for shares of U.S. Healthcare Stock
          under Pennsylvania Law, or shares of Aetna Stock under
          Connecticut Law, as applicable, such shares of U.S.
          Healthcare Stock or Aetna Stock shall be treated as if
          they had been converted as of the Merger Date into a
          right to receive the U.S. Healthcare Merger Consideration
          or the Aetna Merger Consideration, as applicable.  U.S.
          Healthcare shall give Aetna prompt notice of any demands
          received by U.S. Healthcare for the exercise of
          dissenters rights with respect to shares of U.S.
          Healthcare Stock and Aetna shall have the right to
          participate in all negotiations and proceedings with
          respect to such demands.  U.S. Healthcare shall not,
          except with the prior written consent of Aetna, make any
          payment with respect to, or settle or offer to settle,
          any such demands.

                  SECTION 1.7.  Stock Options of U.S. Healthcare;
                                ________________________________
          Restricted Stock.  (a)  As of the date of this Agreement,
          ________________
          each outstanding option granted to (i) a U.S. Healthcare
          employee to acquire U.S. Healthcare Stock (a "U.S.
          Healthcare Employee Stock Option") and (ii) each
          outstanding option granted to a non-employee to acquire
          U.S. Healthcare Stock (a "U.S. Healthcare Non-Employee
          Stock Option" and together with the U.S. Healthcare
          Employee Stock Options, the "U.S. Healthcare Stock
          Options"), in each case, under any incentive plan of U.S.
          Healthcare, shall become fully vested and exercisable. 
          At the Merger Date, each U.S. Healthcare Stock Option
          then outstanding shall be canceled and treated as
          follows:

                  (i)  with respect to all U.S. Healthcare Non-
             Employee Stock Options and the number of shares
             subject to U.S. Healthcare Employee Stock Options held
             by each holder which, if all such holder's canceled
             U.S. Healthcare Employee Stock Options were exercised
             immediately prior to the Merger Date, would give rise
             to 40% of the income which would be recognized by such
             holder upon such exercise (assuming, for these
             purposes, that all such options were nonqualified
             options) (the "Initial Number of U.S. Healthcare
             Option Shares"), Parent shall issue in substitution
             therefor options to purchase Parent Common Stock on
             the terms and conditions described herein (each such
             substitute option, a "U.S. Healthcare Substitute
             Option").  U.S. Healthcare Substitute Options shall be
             issued under a Parent stock option plan to be adopted
             prior to the Merger Date and which shall comply in all
             respects with the applicable requirements of Rule 16b-
             3 promulgated under the Securities Exchange Act of
             1934, as amended, and the rules and regulations
             promulgated thereunder (the "1934 Act").  The number
             of shares of Parent Common Stock subject to each such
             U.S. Healthcare Substitute Option and the exercise
             price thereunder shall be computed in compliance with
             the requirements of Section 424(a) of the Code, and
             each such U.S. Healthcare Substitute Option shall
             otherwise be subject to the other applicable terms and
             conditions of the U.S. Healthcare Stock Option for
             which it is substituted.  Without limiting the
             generality of the foregoing, (A) the exercise price of
             each U.S. Healthcare Substitute Option shall equal the
             exercise price of the U.S. Healthcare Stock Option for
             which such U.S. Healthcare Substitute Option was
             substituted, multiplied by a fraction, the numerator
             of which is the average closing price of Parent Common
             Stock for the five trading days following the Merger
             Date ("X") and the denominator of which is the closing
             price of U.S. Healthcare Stock on the last trading day
             preceding the Merger Date ("Y") and (B) the number of
             shares subject to such U.S. Healthcare Substitute
             Option shall equal the Initial Number of U.S.
             Healthcare Option Shares, multiplied by a fraction,
             the numerator of which is Y and the denominator of
             which is X.  The U.S. Healthcare Stock Options for
             which U.S. Healthcare Substitute Options shall be
             issued with respect to each holder shall be selected
             in the following order:

                  (1)  first, incentive stock options, and 

                  (2)  second, nonqualified options, 

             in each case giving priority to those with the highest
             exercise price.

                  (ii) with respect to each remaining canceled U.S.
             Healthcare Employee Stock Option, the holder shall
             receive in cash, within two business days following
             the Merger Date, an amount equal to the excess of (A)
             the closing price of U.S. Healthcare Stock on the last
             trading day preceding the Merger Date, over (B) the
             exercise price of such U.S. Healthcare Stock Option,
             multiplied by the number of shares of U.S. Healthcare
             Stock subject to such remaining U.S. Healthcare
             Employee Stock Option.

                  (b)   As of the date of this Agreement, each
          outstanding share of restricted stock of U.S. Healthcare
          issued to U.S. Healthcare employees (the "U.S. Healthcare
          Restricted Stock") shall become fully vested and entitled
          to receive the U.S. Healthcare Merger Consideration. 
          Each outstanding share of restricted stock of U.S.
          Healthcare issued to any Person who is not an employee of
          U.S. Healthcare shall become fully vested and entitled to
          receive the U.S. Healthcare Merger Consideration on the
          Merger Date.

                  (c)  Prior to the Merger Date, U.S. Healthcare
          (i) shall use its best efforts to obtain any consents
          from holders of any U.S. Healthcare Stock Options or U.S.
          Healthcare Restricted Stock and (ii) shall make any
          amendments to the terms of any of their respective
          incentive plans or arrangements, in each case that are
          necessary to give effect to the transactions contemplated
          by this Section 1.7.

                  (d)  As soon as practicable after the Merger
          Date, Parent shall file with the Securities and Exchange
          Commission ("SEC") a registration statement on Form S-8
          with respect to the shares of Parent Common Stock
          underlying the U.S. Healthcare Substitute Options and use
          its reasonable best efforts to have such registration
          statement declared effective under the Securities Act of
          1933, as amended, and the rules and regulations
          thereunder (the "1933 Act")

                  SECTION 1.8.  Stock Options of Aetna.   (a)  At
                                ______________________
          the Merger Date, each outstanding option to purchase
          shares of Aetna Stock (an "Aetna Stock Option") under any
          of Aetna's incentive plans, whether vested or unvested,
          shall be canceled and Parent shall issue in substitution
          therefor an option to purchase Parent Common Stock on the
          terms and conditions described herein (each such
          replacement option an "Aetna Substitute Option").  Aetna
          Substitute Options shall be issued under a Parent stock
          option plan to be adopted prior to the Merger Date and
          which shall comply in all respects with the applicable
          requirements of Rule 16b-3 promulgated under the 1934
          Act.  The number of shares of Parent Common Stock subject
          to each such Aetna Substitute Option and the exercise
          price thereunder shall be computed in compliance with the
          requirements of Section 424(a) of the Code and each such
          Aetna Substitute Option shall be subject to substantially
          all of the other terms and conditions (including vesting
          schedule) of the Aetna Stock Option it replaces.  Without
          limiting the generality of the foregoing, (A) the
          exercise price of each Aetna Substitute Option shall
          equal the exercise price of the Aetna Stock Option for
          which such Aetna Substitute Option was substituted,
          multiplied by a fraction, the numerator of which is the
          average closing price of Parent Common Stock for the five
          trading days following the Merger Date ("X") and the
          denominator of which is the closing price of Aetna Stock
          on the last trading day preceding the Merger Date ("Y")
          and (B) the number of shares subject to such Aetna
          Substitute Option shall equal the number of Aetna Option
          shares, multiplied by a fraction, the numerator of which
          is Y and the denominator of which is X.

                  (b)  Prior to the Merger Date, Aetna shall (i)
          use its best efforts to obtain any consents from holders
          of any Aetna Stock Options and (ii) make any amendments
          to the terms of any of its incentive plans or
          arrangements, in each case, that are necessary to give
          effect to the transactions contemplated by this Section
          1.8.

                  (c)  As soon as practicable after the Merger
          Date, Parent shall file with the SEC a registration
          statement on Form S-8 with respect to the shares of
          Parent Common Stock underlying the Aetna Substitute
          Options and use its reasonable best efforts to have such
          registration statement declared effective under the 1933
          Act.

                  SECTION 1.9.  Adjustments.  If at any time during
                                ___________
          the period between the date of this Agreement and the
          Merger Date, any change in the outstanding shares of
          Aetna Stock or U.S. Healthcare Stock shall occur,
          including by reason of any reclassification,
          recapitalization, stock split or combination, exchange or
          readjustment of shares, or any stock dividend thereon
          with a record date during such period, the Merger
          Consideration shall be appropriately adjusted.

                  SECTION 1.10. Fractional Shares.  No fractional
                                _________________
          shares of Parent Common Stock or Parent Preferred Stock
          shall be issued in the U.S. Healthcare Sub Merger, but in
          lieu thereof each holder of U.S. Healthcare Stock
          otherwise entitled to a fractional share of Parent Common
          Stock or Parent Preferred Stock, as applicable, will be
          entitled to receive, from the Exchange Agent in
          accordance with the provisions of this Section 1.10, a
          cash payment in lieu of such fractional shares of Parent
          Common Stock or Parent Preferred Stock, as applicable,
          representing such holder's proportionate interest, if
          any, in the net proceeds from the sale by the Exchange
          Agent in one or more transactions (which sale
          transactions shall be made at such times, in such manner
          and on such terms as the Exchange Agent shall determine
          in its reasonable discretion) on behalf of all such
          holders of the aggregate of the fractional shares of
          Parent Common Stock or Parent Preferred Stock, as
          applicable, which would otherwise have been issued (the
          "Excess Shares").  The sale of the Excess Shares by the
          Exchange Agent shall be executed on the New York Stock
          Exchange, Inc. (the "NYSE") through one or more member
          firms of the NYSE and shall be executed in round lots to
          the extent practicable.  Until the net proceeds of such
          sale or sales have been distributed to the holders of
          shares of U.S. Healthcare Stock, the Exchange Agent will
          hold such proceeds in trust for the holders of U.S.
          Healthcare Stock.  Parent shall pay all commissions,
          transfer taxes and other out-of-pocket transaction costs,
          including, without limitation, the expenses and
          compensation of the Exchange Agent, incurred in
          connection with such sale of the Excess Shares.  As soon
          as practicable after the determination of the amount of
          cash, if any, to be paid to holders of U.S. Healthcare
          Stock in lieu of any fractional shares of Parent Common
          Stock or Parent Preferred Stock, as applicable, the
          Exchange Agent shall make available such amounts to such
          holders of shares of U.S. Healthcare Stock without
          interest.

                                  ARTICLE 2

                          THE SURVIVING CORPORATIONS

                  SECTION 2.1.  Articles and Certificate of
                                ___________________________
          Incorporation; Bylaws.  (a) The articles of incorporation
          _____________________
          and bylaws of U.S. Healthcare in effect at the Merger
          Date shall be the articles of incorporation and bylaws,
          respectively, of the U.S. Healthcare Surviving
          Corporation until amended in accordance with applicable
          law.  The U.S. Healthcare Surviving Corporation shall
          have the same name as U.S. Healthcare.  The U.S.
          Healthcare Surviving Corporation shall succeed to all of
          the rights, privileges, powers and franchises, of a
          public as well as of a private nature, of U.S. Healthcare
          and U.S. Healthcare Sub, all of the properties and assets
          and all of the debts of U.S. Healthcare and U.S.
          Healthcare Sub, chooses in action and other interests due
          or belonging to U.S. Healthcare and U.S. Healthcare Sub
          and shall be subject to, and responsible for, all of the
          debts, liabilities and duties of U.S. Healthcare and U.S.
          Healthcare Sub with the effect set forth in the
          Pennsylvania Law.

                  (b)  The certificate of incorporation and bylaws
          of Aetna in effect at the Merger Date shall be the
          certificate of incorporation and bylaws, respectively, of
          the Aetna Surviving Corporation until amended in
          accordance with applicable law.  The Aetna Surviving
          Corporation shall have the same name as Aetna.  The Aetna
          Surviving Corporation shall succeed to all of the rights,
          privileges, powers and franchises, of a public as well as
          of a private nature, of Aetna and Aetna Sub, all of the
          properties and assets of and all of the debts of Aetna
          and Aetna Sub, chooses in action and other interests due
          or belonging to Aetna and Aetna Sub and shall be subject
          to, and responsible for, all of the debts, liabilities
          and duties of Aetna and Aetna Sub with the effect set
          forth in the Connecticut Law.

                  SECTION 2.2.  Directors and Officers.  From and
                                ______________________
          after the Merger Date, until successors are duly elected
          or appointed and qualified in accordance with applicable
          law, (a) the directors of the U.S. Healthcare Surviving
          Corporation immediately after the Merger Date shall be
          designated by Parent and shall include, without
          limitation, the two Co-Presidents, (b) the directors of
          Parent immediately after the Merger Date shall be the
          directors of the Aetna Surviving Corporation, (c) the
          officers of U.S. Healthcare immediately prior to the
          Merger Date (other than the Principal Shareholder) shall
          be the officers of the U.S. Healthcare Surviving
          Corporation and (d) the officers of Aetna immediately
          prior to the Merger Date shall be the officers of the
          Aetna Surviving Corporation.

                                  ARTICLE 3

                        REPRESENTATIONS AND WARRANTIES
                              OF U.S. HEALTHCARE

                  U.S. Healthcare represents and warrants to Aetna
          that:

                  SECTION 3.1.  Corporate Existence and Power. 
                                _____________________________
          U.S. Healthcare is a corporation duly incorporated,
          validly existing and in good standing under the laws of
          the Commonwealth of Pennsylvania, and has all corporate
          powers and all governmental licenses, authorizations,
          consents and approvals required to carry on its business
          as now conducted.  U.S. Healthcare is duly qualified to
          do business as a foreign corporation and is in good
          standing in each jurisdiction where the character of the
          property owned or leased by it or the nature of its
          activities makes such qualification necessary, except for
          those jurisdictions where the failure to be so qualified
          would not, individually or in the aggregate, have a
          Material Adverse Effect on U.S. Healthcare.  For purposes
          of this Agreement, a "Material Adverse Effect" means,
          with respect to any Person, a material adverse effect on
          the condition (financial or otherwise), business, assets,
          or results of operations of such Person and its
          Subsidiaries taken as a whole or on the ability of such
          Person to perform its obligations hereunder.  U.S.
          Healthcare has heretofore delivered to Aetna true and
          complete copies of U.S. Healthcare's articles of
          incorporation and bylaws as currently in effect.

                  SECTION 3.2.  Corporate Authorization.  The
                                _______________________
          execution, delivery and, subject to receipt of the
          approvals referred to in Section 3.3, the performance by
          U.S. Healthcare of this Agreement and the consummation by
          U.S. Healthcare of the transactions contemplated by this
          Agreement are within U.S. Healthcare's corporate powers
          and, except as set forth in the third sentence of this
          Section 3.2, have been duly authorized by all necessary
          corporate action.  Without limiting the generality of the
          foregoing, the Board of Directors of U.S. Healthcare has
          unanimously adopted a resolution adopting and approving
          this Agreement.  The affirmative vote of a majority of
          the total voting power represented by the outstanding
          shares of U.S. Healthcare Stock entitled to vote thereon,
          voting as a single class, is the only vote of any class
          or series of U.S. Healthcare's capital stock necessary to
          approve and adopt this Agreement and the transactions
          contemplated by this Agreement.  This Agreement has been
          duly executed and delivered by U.S. Healthcare and
          constitutes a valid and binding agreement of U.S.
          Healthcare, enforceable against U.S. Healthcare in
          accordance with its terms, subject to (a) bankruptcy,
          insolvency, moratorium and other similar laws now or
          hereafter in effect relating to or affecting creditors'
          rights generally and (b) general principles of equity
          (regardless of whether considered in a proceeding at law
          or in equity).

                  SECTION 3.3.  Governmental Authorization.  The
                                __________________________
          execution, delivery and performance by U.S. Healthcare of
          this Agreement, and the consummation by U.S. Healthcare
          of the transactions contemplated by this Agreement
          require no action, by or in respect of, or filing with,
          any governmental body, agency, official or authority
          other than (a) the filing of the U.S. Healthcare Articles
          of Merger in accordance with the Pennsylvania Law; (b)
          compliance with any applicable requirements of the
          Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
          amended (the "HSR ACT"); (c) compliance with any
          applicable requirements of the 1934 Act; (d) compliance
          with any applicable requirements of the 1933 Act; (e)
          compliance with any applicable foreign or state
          securities or Blue Sky laws; (f) approvals or filings
          required under laws, rules and regulations governing
          insurance and insurance companies, health maintenance
          organizations, health care service plans, third party
          administrators or other managed health care
          organizations; and (g) filings and notices not required
          to be made or given until after the Merger Date.

                  SECTION 3.4.  Non-Contravention.  Except as
                                _________________
          disclosed on Schedule 3.4, the execution, delivery and
          performance by U.S. Healthcare of this Agreement and the
          consummation by U.S. Healthcare of the transactions
          contemplated by this Agreement do not and will not (a)
          assuming receipt of the approvals referred to in Sections
          3.2, contravene or conflict with the articles of
          incorporation or bylaws of U.S. Healthcare, (b) assuming
          compliance with the matters referred to in Section 3.3,
          contravene or conflict with or constitute a violation of
          any provision of any law, regulation, judgment,
          injunction, order or decree binding upon or applicable to
          U.S. Healthcare or any Subsidiary of U.S. Healthcare, (c)
          constitute a default (or an event which with notice, the
          lapse of time or both would become a default) under or
          give rise to a right of termination, cancellation or
          acceleration of any right or obligation of U.S.
          Healthcare or any Subsidiary of U.S. Healthcare or to a
          loss of any benefit to which U.S. Healthcare or any
          Subsidiary of U.S. Healthcare is entitled under any
          provision of any agreement, contract or other instrument
          binding upon U.S. Healthcare or any Subsidiary of U.S.
          Healthcare or any license, franchise, permit or other
          similar authorization held by U.S. Healthcare or any
          Subsidiary of U.S. Healthcare, or (d) result in the
          creation or imposition of any Lien on any asset of U.S.
          Healthcare or any Subsidiary of U.S. Healthcare, except
          for such contraventions, conflicts or violations referred
          to in clause (b) or defaults, rights of termination,
          cancellation or acceleration, losses or Liens referred to
          in clause (c) or (d) that would not, individually or in
          the aggregate, have a Material Adverse Effect on U.S.
          Healthcare.  For purposes of this Agreement, "Lien"
          means, with respect to any asset, any mortgage, lien,
          pledge, charge, security interest or encumbrance of any
          kind in respect of such asset.

                  SECTION 3.5.  Capitalization.  As of February 29,
                                ______________
          1996, the authorized capital stock of U.S. Healthcare
          consists of 275,000,000 shares of Common Stock,
          50,000,000 shares of Class B Stock and 50,000,000 shares
          of preferred stock.  As of February 29, 1996, there were
          (i) 139,481,136 shares of Common Stock outstanding,
          including 748,481 shares of employee and non-employee
          unvested restricted common stock, (ii) 14,429,867 shares
          of Class B Stock outstanding and (iii) no shares of
          preferred stock outstanding.  As of February 29, 1996,
          there were employee and non-employee stock options to
          purchase an aggregate of 4,004,857 shares of Common Stock
          outstanding (of which options to purchase an aggregate of
          802,346 shares of Common Stock were exercisable).  All
          outstanding shares of capital stock of U.S. Healthcare
          have been duly authorized and validly issued and are
          fully paid and nonassessable.  Except as set forth in
          this Section 3.5 and except for changes since February
          29, 1996 resulting from the exercise of stock options
          outstanding on such date, there are outstanding (a) no
          shares of capital stock or other voting securities of
          U.S. Healthcare, (b) no securities of U.S. Healthcare
          convertible into or exchangeable for shares of capital
          stock or voting securities of U.S. Healthcare, and (c) no
          options or other rights to acquire from U.S. Healthcare,
          and no obligation of U.S. Healthcare to issue, any
          capital stock, voting securities or securities
          convertible into or exchangeable for capital stock or
          voting securities of U.S. Healthcare (the items in
          clauses (a), (b) and (c) being referred to collectively
          as the "U.S. Healthcare Securities").  There are no
          outstanding obligations of U.S. Healthcare or any
          Subsidiary of U.S. Healthcare to repurchase, redeem or
          otherwise acquire any U.S. Healthcare Securities other
          than put rights with respect to not more than 100,000
          shares of Common Stock held by providers of medical
          services.

                  SECTION 3.6.  Subsidiaries.  (a)  Each Subsidiary
                                ____________
          of U.S. Healthcare is duly incorporated, validly existing
          (as an insurance corporation, corporation organized as a
          health maintenance organization or otherwise) and in good
          standing under the laws of its jurisdiction of
          incorporation, has all corporate powers and all
          governmental licenses, authorizations, consents and
          approvals required to carry on its business as now
          conducted and is duly qualified to do business as a
          foreign corporation or is duly licensed to do business as
          an insurer, a health maintenance organization or
          otherwise and is in good standing in each jurisdiction
          where the character of the property owned or leased by it
          or the nature of its activities makes such qualification
          necessary, except for those jurisdictions where failure
          to be so qualified or licensed would not, individually or
          in the aggregate, have a Material Adverse Effect on U.S.
          Healthcare.  All Subsidiaries and their respective
          jurisdictions of incorporation are identified in U.S.
          Healthcare's annual report on Form 10-K for the fiscal
          year ended December 31, 1995 (the "U.S. Healthcare
          10-K").

                  (b)  Except as disclosed on Schedule 3.6, all of
          the outstanding capital stock of, or other ownership
          interests in, each Subsidiary of U.S. Healthcare, is
          owned by U.S. Healthcare, directly or indirectly, free
          and clear of any Lien and free of any other limitation or
          restriction (including, without limitation, any
          restriction on the right to vote, sell or otherwise
          dispose of such capital stock or other ownership
          interests).  Except as disclosed on Schedule 3.6, there
          are no outstanding (i) securities of U.S. Healthcare or
          any Subsidiary of U.S. Healthcare convertible into or
          exchangeable for shares of capital stock or other voting
          securities or ownership interests in any Subsidiary of
          U.S. Healthcare, and (ii) options or other rights to
          acquire from U.S. Healthcare or any Subsidiary of U.S.
          Healthcare, and no other obligation of U.S. Healthcare or
          any Subsidiary of U.S. Healthcare to issue, any capital
          stock, voting securities or other ownership interests in,
          or any securities convertible into or exchangeable for,
          any capital stock, voting securities or ownership
          interests in, any Subsidiary of U.S. Healthcare (the
          items in clauses (i) and (ii) being referred to
          collectively as the "U.S. Healthcare Subsidiary
          Securities").  Except as disclosed on Schedule 3.6, there
          are no outstanding obligations of U.S. Healthcare or any
          Subsidiary of U.S. Healthcare to repurchase, redeem or
          otherwise acquire any outstanding U.S. Healthcare
          Subsidiary Securities.

                  SECTION 3.7.  SEC Filings.  (a)  U.S. Healthcare
                                ___________
          has delivered to Aetna (i) U.S. Healthcare's annual
          reports on Form 10-K for its fiscal years ended December
          31, 1995, 1994 and 1993, (ii) its proxy or information
          statements relating to meetings of, or actions taken
          without a meeting by, the shareholders of U.S. Healthcare
          held since January 1, 1993, and (iii) all of its other
          reports, statements, schedules and registration
          statements filed with the SEC since January 1, 1993.  

                  (b)  As of its filing date, each such report,
          statement, schedule or registration statement filed
          pursuant to the 1934 Act did not contain any untrue
          statement of a material fact or omit to state any
          material fact necessary in order to make the statements
          made therein, in the light of the circumstances under
          which they were made, not misleading.

                  (c)  Each such registration statement, as amended
          or supplemented, if applicable, filed pursuant to the
          1933 Act as of the date such registration statement or
          amendment became effective did not contain any untrue
          statement of a material fact or omit to state any
          material fact required to be stated therein or necessary
          to make the statements therein not misleading.

                  SECTION 3.8.  Financial Statements.  The audited
                                ____________________
          consolidated financial statements of U.S. Healthcare
          included in its annual reports on Form 10-K referred to
          in Section 3.7 fairly present, in conformity with
          generally accepted accounting principles applied on a
          consistent basis (except as may be indicated in the notes
          thereto), the consolidated financial position of U.S.
          Healthcare and its consolidated Subsidiaries as of the
          dates thereof and their consolidated results of
          operations and cash flows for the periods then ended.
          For purposes of this Agreement, "U.S. Healthcare Balance
          Sheet" means the consolidated balance sheet of U.S.
          Healthcare as of December 31, 1995 set forth in the U.S.
          Healthcare 10-K and "U.S. Healthcare Balance Sheet Date"
          means December 31, 1995.

                  SECTION 3.9.  Disclosure Documents.  (a)  Each
                                ____________________
          document required to be filed by U.S. Healthcare with the
          SEC in connection with the transactions contemplated by
          this Agreement (the "U.S. Healthcare Disclosure
          Documents"), including, without limitation, the proxy or
          information statement of U.S. Healthcare (the "U.S.
          Healthcare Proxy Statement"), if any, to be filed with
          the SEC in connection with the U.S. Healthcare Sub
          Merger, and any amendments or supplements thereto, will,
          when filed, comply as to form in all material respects
          with the applicable requirements of the 1934 Act.

                  (b)  At the time the U.S. Healthcare Proxy
          Statement or any amendment or supplement thereto is first
          mailed to shareholders of U.S. Healthcare and at the time
          such shareholders vote on the adoption and approval of
          this Agreement, the U.S. Healthcare Proxy Statement, as
          supplemented or amended, if applicable, will not contain
          any untrue statement of a material fact or omit to state
          any material fact necessary in order to make the
          statements made therein, in the light of the
          circumstances under which they were made, not misleading. 
          At the time of the filing of any U.S. Healthcare
          Disclosure Document other than the U.S. Healthcare Proxy
          Statement and at the time of any distribution thereof,
          such U.S. Healthcare Disclosure Document will not contain
          any untrue statement of a material fact or omit to state
          a material fact necessary in order to make the statements
          made therein, in the light of the circumstances under
          which they were made, not misleading.  The
          representations and warranties contained in this Section
          3.9(b) will not apply to statements included in or
          omissions from the U.S. Healthcare Disclosure Documents
          based upon information furnished to U.S. Healthcare in
          writing by Aetna or Parent specifically for use therein.

                  SECTION 3.10. Information Supplied.  The
                                ____________________
          information supplied or to be supplied by U.S. Healthcare
          for inclusion or incorporation by reference in (i) the
          Aetna Proxy Statement or any amendment or supplement
          thereto will not, at the time the Aetna Proxy Statement
          is first mailed to shareholders of Aetna and at the time
          such shareholders vote on the proposals relating to the
          Aetna Sub Merger set forth therein, contain any untrue
          statement of a material fact or omit to state any
          material fact necessary in order to make the statements
          made therein, in light of the circumstances under which
          they were made is not misleading, (ii) the Form S-4 or
          any amendment or supplement thereto will not, at the time
          the Form S-4 becomes effective under the 1933 Act and at
          the Merger Date, contain any untrue statement of a
          material fact or omit to state a material fact required
          to be stated therein or necessary to make the statements
          therein not misleading and (iii) any Aetna Disclosure
          Document or Parent Disclosure Document (other than the
          Aetna Proxy Statement, the Form S-4 and any amendments or
          supplements to either) will not, at the time of
          effectiveness of such Aetna Disclosure Document or Parent
          Disclosure Document and at the time of any distribution
          thereof, contain any untrue statement of a material fact
          or omit to state a material fact necessary in order to
          make the statements made therein, in light of the
          circumstances under which they were made, not misleading.

                  SECTION 3.11. Absence of Certain Changes.  Except
                                __________________________
          as disclosed in the U.S. Healthcare 10-K, as set forth on
          Schedule 3.11, or as specifically permitted by Section
          5.1, since the U.S. Healthcare Balance Sheet Date U.S.
          Healthcare and its Subsidiaries have conducted their
          business in the ordinary course consistent with past
          practice and there has not been:

                  (a)  any event, occurrence or facts which has had
             or is reasonably expected to have a Material Adverse
             Effect on U.S. Healthcare;

                  (b)  any declaration, setting aside or payment of
             any dividend or other distribution with respect to any
             shares of capital stock of U.S. Healthcare (other than
             payment of U.S. Healthcare's regular quarterly
             dividend on U.S. Healthcare Common Stock in an amount
             not exceeding $0.275 per share and on Class B Stock in
             an amount not exceeding $0.248 per share), or any
             repurchase, redemption or other acquisition by U.S.
             Healthcare or any Subsidiary of U.S. Healthcare of any
             amount of outstanding shares of capital stock or other
             securities of, or other ownership interests in, U.S.
             Healthcare, which repurchase, redemption or other
             acquisition, individually or in the aggregate, is
             material to U.S. Healthcare and its Subsidiaries,
             taken as a whole;

                  (c)  any amendment of any term of any outstanding
             security of U.S. Healthcare or any Subsidiary of U.S.
             Healthcare (other than amendments to the U.S.
             Healthcare Stock Options or the restricted stock of
             U.S. Healthcare to accelerate the vesting thereof upon
             execution of this Agreement);

                  (d)  any incurrence, assumption or guarantee by
             U.S. Healthcare or any Subsidiary of U.S. Healthcare
             of any indebtedness from any third party for borrowed
             money other than in the ordinary course of business
             and in amounts and on terms consistent with past
             practices;

                  (e)  any creation or assumption by U.S.
             Healthcare or any Subsidiary of U.S. Healthcare of any
             Lien on any material asset other than in the ordinary
             course of business consistent with past practices;

                  (f)  any making of any loan, advance or capital
             contribution to or investment in any Person other than
             (i) loans, advances or capital contributions to or
             investments in Subsidiaries of U.S. Healthcare, (ii)
             investments in securities consistent with past
             practice or (iii) other loans, advances, capital
             contributions or investments in an aggregate amount
             not exceeding $25,000,000;

                  (g)  any damage, destruction or other casualty
             loss (whether or not covered by insurance) affecting
             the business or assets of U.S. Healthcare or any
             Subsidiary of U.S. Healthcare which, individually or
             in the aggregate, is or may reasonably be expected to
             be material to U.S. Healthcare and its Subsidiaries,
             taken as a whole;

                  (h)  any transaction or commitment made, or any
             contract or agreement entered into, by U.S. Healthcare
             or any Subsidiary of U.S. Healthcare relating to its
             assets or business (including, without limitation, the
             acquisition or disposition of any assets) or any
             relinquishment by U.S. Healthcare or any Subsidiary of
             U.S. Healthcare of any contract, license or other
             right which, in any such case, individually or in the
             aggregate, would have a Material Adverse Effect on
             U.S. Healthcare, other than transactions, commitments,
             contracts or agreements contemplated by this
             Agreement;

                  (i)  any change in any method of accounting or
             accounting principle or practice by U.S. Healthcare or
             any Subsidiary of U.S. Healthcare, except for any such
             change required by reason of a concurrent change in
             generally accepted accounting principles or statutory
             accounting principles;

                  (j)  (A) except for new employment agreements
             with the Persons listed on Schedule 3.11(j) (each, a
             "Specified U.S. Healthcare Officer"), entered into as
             of the date hereof, or in the case of those Specified
             U.S. Healthcare Officers listed on Schedule 8.2(b), in
             the form of Schedule 3.11(j)(A) hereto (i) any grant
             by U.S. Healthcare or any of its Subsidiaries of any
             severance or termination pay to, or entry into any
             employment, termination or severance arrangement with,
             any Specified U.S. Healthcare Officer or, (ii) except
             in the ordinary course of business consistent in
             magnitude and character with past practice and with
             the terms of severance or termination arrangements in
             effect or pending on the U.S. Healthcare Balance Sheet
             Date with respect to individuals with comparable
             positions or responsibilities, any grant of any
             severance or termination pay to, or entry into any
             employment, termination or severance arrangement with,
             any other employees; (B)(i) any amendment in any
             material respect of any employment, termination or
             severance arrangement with any Specified U.S.
             Healthcare Officer or (ii) except in the ordinary
             course, any amendment in any material respect of any
             employment termination or severance arrangement with
             any other directors, officers or employees (it being
             understood that for the purposes of clauses (i) and
             (ii), any increase or acceleration of benefits under
             any such agreement or arrangement shall be deemed
             material); (C) any (x) establishment, adoption, entry
             into, or (y) except (I) the matters described in the
             parenthetical clause of Section 3.11(c) hereof and
             (II) the acceleration of vesting of U.S. Healthcare
             Non-Employee Stock Options and restricted stock of
             U.S. Healthcare issued to Persons who are not
             employees of U.S. Healthcare, amendment or action to
             accelerate or enhance any rights or benefits under,
             (i) any plan providing for options, stock, performance
             awards or other forms of incentive or deferred
             compensation or (ii) any collective bargaining, bonus,
             profit sharing, thrift, compensation, restricted
             stock, pension, retirement, deferred compensation,
             employment, termination, severance or other plan,
             agreement, trust, fund, policy or arrangement for the
             benefit of any of its directors, officers or
             employees; (D) any grant, conferment or award of any
             options, stock, performance awards or other awards to
             acquire any shares of capital stock of U.S. Healthcare
             (other than an aggregate of 150,000 options to acquire
             U.S. Healthcare Stock and/or shares of restricted
             stock of U.S. Healthcare pursuant to the terms
             existing on the date hereof of U.S. Healthcare's plans
             to persons other than the Specified U.S. Healthcare
             Officers); (E) any increase in the contribution
             percentages under U.S. Healthcare's defined
             contribution plans; or (F) (i) other than an annual
             adjustment with respect to the 1997 calendar year if
             the Merger Date occurs after December 31, 1996, which
             adjustment shall be of a magnitude and character
             consistent with past practice, any increase in the
             compensation or benefits of Specified U.S. Healthcare
             Officers or any payment of any benefit not required by
             any plan or arrangement in effect as of the date
             hereof or (ii) except in the ordinary course of
             business consistent in magnitude and character with
             past practice and in no event greater than 6% in the
             aggregate on a per annum basis for all other
             individuals as a group, any increase in the
             compensation or benefits of any other employees or
             payment of any benefit not required by any plan or
             arrangement as in effect on the U.S. Healthcare
             Balance Sheet Date; 

                  (k)  except such contracts as would not be
             material to U.S. Healthcare and its Subsidiaries as a
             whole or material to their operations in any Standard
             Metropolitan Statistical Area, any entry by U.S.
             Healthcare or any of its Subsidiaries into any
             contract limiting the right of U.S. Healthcare or any
             of its Subsidiaries at any time on or after the date
             of this Agreement or Aetna or any of its Subsidiaries
             or Affiliates at or after the Merger Date, to engage
             in, or to compete with any Person in, any business,
             including, without limitation, any contract which
             includes exclusivity provisions restricting the
             geographical area in which, or the method by which,
             any such business may be conducted by U.S. Healthcare
             or any of its Subsidiaries or Affiliates, or by Aetna
             or any of its Subsidiaries or Affiliates after the
             Merger Date;

                  (l)  any entry by U.S. Healthcare or any of its
             Subsidiaries into any acquisition, joint venture, or
             franchising agreement or arrangement which is material
             to U.S. Healthcare and its Subsidiaries, taken as a
             whole; or 

                  (m) any entry by U.S. Healthcare or any of its
             Subsidiaries into any agreement or arrangement with a
             third party on an exclusive basis to offer or market
             any of the following services of such third party: 
             group life, disability, managed workers' compensation,
             long term care, dental, behavioral or pharmacy
             benefits.

                  SECTION 3.12. No Undisclosed Material
                                _______________________
          Liabilities.  There are no liabilities, commitments or
          ___________
          obligations (whether pursuant to contracts or otherwise)
          of U.S. Healthcare or any Subsidiary of U.S. Healthcare
          of any kind whatsoever, whether accrued, contingent,
          absolute, determined, determinable or otherwise,
          including, without limitation, any fines, disciplinary
          actions or other adverse actions that may be taken or
          reported concerning the conduct of U.S. Healthcare or any
          of its Subsidiaries, other than:

                  (a)  liabilities, commitments or obligations
             disclosed or provided for in the U.S. Healthcare
             Balance Sheet or in the U.S. Healthcare 10-K;

                  (b)  liabilities, commitments or obligations
             incurred in the ordinary course of business since the
             U.S. Healthcare Balance Sheet Date;

                  (c)  liabilities, commitments or obligations
             under this Agreement; and

                  (d)  liabilities, commitments or obligations
             which, individually or in the aggregate, have not had,
             and are not reasonably likely to have, a Material
             Adverse Effect on U.S. Healthcare.

                  SECTION 3.13. Litigation; Investigations.  Except
                                __________________________
          as disclosed or referred to in the U.S. Healthcare 10-K
          or in Schedule 3.13, there is no action, claim, suit,
          investigation, proceeding or examination, including,
          without limitation, any insurance or health related
          investigations, proceedings or examinations pending
          against or affecting, or to the knowledge of U.S.
          Healthcare threatened against or affecting, U.S.
          Healthcare or any Subsidiary of U.S. Healthcare or any of
          their respective properties before any court or
          arbitrator or any governmental body, agency, authority or
          official which, net of reserves established therefor
          reflected in the U.S. Healthcare 10-K and giving effect
          to reinsurance probable of recovery, individually or in
          the aggregate, is reasonably likely to have a Material
          Adverse Effect on U.S. Healthcare.

                  SECTION 3.14. Taxes.  (a)  All Tax Returns
                                _____
          required to be filed (taking into account all extensions
          heretofore granted) on or before the date hereof or the
          Merger Date by or on behalf of U.S. Healthcare or any of
          its Subsidiaries have been filed within the time and in
          the manner prescribed by law, other than those Tax
          Returns the failure of which to file would not have a
          Material Adverse Effect on U.S. Healthcare.

                  (b)  As of the time of filing, all such Tax
          Returns correctly reflected in all material respects
          all facts regarding the income, business, assets,
          operations, activities and status of U.S. Healthcare
          and its Subsidiaries and any other information
          required to be shown therein.  

                  (c)  All Taxes shown to be due and payable by
          U.S. Healthcare and any of its Subsidiaries on all
          such Tax Returns have been timely paid, or withheld
          and remitted to the appropriate Taxing Authorities.

                  (d)  Except as set forth on Schedule 3.14, all
          applicable statutes of limitations for the assessment
          of material Taxes against U.S. Healthcare and any of
          its Subsidiaries have expired.  No deficiency payment
          of any Taxes for any period has been asserted by any
          Taxing Authority which remains unsettled at the date
          hereof except for deficiencies which would not have a
          Material Adverse Effect on U.S. Healthcare.

                  (e)  Except for Tax Returns required to be filed
          with respect to the 1995 taxable year, neither U.S.
          Healthcare nor any of its Subsidiaries has requested
          any extension of time within which to file any Tax
          Return which has not yet been filed.

                  (f)  There are no material Liens upon any
          property or assets of U.S. Healthcare or any of its
          Subsidiaries for Taxes, except for Tax liens in
          respect of Taxes not yet due or which are being
          contested in good faith and by appropriate proceedings
          (and for the payment of which adequate reserves have
          been provided) and reflected in the U.S. Healthcare
          10-K.

                  (g)  Except as set forth on Schedule 3.14, there
          is no claim, audit, action, suit, proceeding, or
          investigation now pending or threatened against or
          with respect to U.S. Healthcare or any of its
          Subsidiaries in respect of any Taxes.

                  (h)  Neither U.S. Healthcare nor any of its
          Subsidiaries has any contractual obligations under any
          tax sharing agreement or similar agreement or tax
          indemnity agreement with any corporation which is not
          a member of the affiliated group of corporations of
          which U.S. Healthcare is the common parent.

                  (i)  There are no requests for rulings or
          determinations in respect of any Tax pending between
          U.S. Healthcare or any of its Subsidiaries and any
          Taxing Authorities.

                  (j)  Neither U.S. Healthcare nor any of its
          Subsidiaries owns any interest in real property in the
          State of New York or in any other jurisdiction in
          which a Tax is imposed on the transfer of a
          controlling interest in an entity that owns any
          interest in real property.

                  (k)  For purposes of this Agreement, "Taxes"
          means all United States Federal, state, local and
          foreign taxes, levies and other assessments,
          including, without limitation, all income, sales, use,
          goods and services, value added, capital, capital
          gains, net worth, transfer, profits, withholding,
          payroll, employer health, unemployment insurance
          payments, excise, real property and personal property
          taxes, and any other taxes, assessments or similar
          charges in the nature of a tax, including, without
          limitation, interest, additions to tax, fines and
          penalties, imposed by a governmental or public body,
          agency, official or authority (the "Taxing
          Authorities").  For purposes of this Agreement, "Tax
          Return" shall mean any return, report, information
          return or other document (including any related or
          supporting information) required to be filed with any
          Taxing Authority in connection with the determination,
          assessment, collection, administration or imposition
          of any Taxes.

                  SECTION 3.15. ERISA.  (a)  Schedule 3.15 contains
                                _____
          a list identifying each "Employee Benefit Plan", as
          defined in Section 3(3) of the Employee Retirement Income
          Security Act of 1974 ("ERISA"), which (i) is subject to
          any provision of ERISA and (ii) is maintained,
          administered or contributed to by U.S. Healthcare or any
          Subsidiary of U.S. Healthcare and covers any employee or
          former employee of U.S. Healthcare or any Subsidiary of
          U.S. Healthcare or under which U.S. Healthcare or any
          Subsidiary of U.S. Healthcare has any liability.  Copies
          of such plans (and, if applicable, related trust
          agreements) and all amendments thereto and written
          interpretations thereof have been furnished to Aetna
          together with (A) the three most recent annual reports
          (Form 5500 including, if applicable, Schedule B thereto)
          prepared in connection with any such plan and (B) the
          most recent actuarial valuation report prepared in
          connection with any such plan.  Such plans are referred
          to collectively herein as the "U.S. Healthcare Employee
          Plans".  For purposes of this Section, "ERISA Affiliate"
          of any Person means any other Person which, together with
          such Person, would be treated as a single employer under
          Section 414 of the Code.  The only U.S. Healthcare
          Employee Plans which individually or collectively would
          constitute an "employee pension benefit plan" as defined
          in Section 3(2) of ERISA (the "Pension Plans") are
          identified as such in the list referred to above.  U.S.
          Healthcare has provided Aetna with complete age, salary,
          service and related data as of a recent date for
          employees and former employees of U.S. Healthcare and any
          Subsidiary of U.S. Healthcare covered under the Pension
          Plans.

                  (b)  Except as set forth in Schedule 3.15, no
          U.S. Healthcare Employee Plan (i) constitutes a
          "multiemployer plan", as defined in Section 3(37) of
          ERISA (a "Multiemployer Plan"), (ii) is maintained in
          connection with any trust described in Section 501(c)(9)
          of the Code  or (iii) is subject to Title IV of ERISA. 
          Neither U.S. Healthcare nor any ERISA Affiliate of U.S.
          Healthcare has (i) engaged in, or is a successor or
          parent corporation to an entity that has engaged in, a
          transaction described in Sections 4069 or 4212(c) of
          ERISA or (ii) incurred, or reasonably expects to incur
          prior to the Merger Date, (A) any liability under Title
          IV of ERISA arising in connection with the termination
          of, or a complete or partial withdrawal from, any plan
          covered or previously covered by Title IV of ERISA or (B)
          any liability under Section 4971 of the Code that in
          either case could become a liability of Parent or any of
          its Affiliates after the Merger Date.  Nothing done or
          omitted to be done and no transaction or holding of any
          asset under or in connection with any U.S. Healthcare
          Employee Plan has or will make U.S. Healthcare or any
          Subsidiary of U.S. Healthcare, or any officer or director
          of U.S. Healthcare or any Subsidiary of U.S. Healthcare,
          subject to any liability under Title I of ERISA or liable
          for any tax pursuant to Section 4975 of the Code that
          could have a Material Adverse Effect on U.S. Healthcare.

                  (c)  With respect to each U.S. Healthcare
          Employee Plan which is intended to be qualified under
          Section 401(a) of the Code, U.S. Healthcare has received
          a favorable determination letter that the plan is so
          qualified and that each trust forming a part thereof is
          exempt from tax pursuant to Section 501(a) of the Code
          and, to the knowledge of U.S. Healthcare, no event has
          occurred since the date of such determination that would
          adversely affect such qualification and exception.  U.S.
          Healthcare has furnished to Aetna copies of the most
          recent Internal Revenue Service determination letters
          with respect to each such Plan.  Each U.S. Healthcare
          Employee Plan has been maintained in all material
          respects in compliance with its terms and with the
          requirements prescribed by any and all statutes, orders,
          rules and regulations, including but not limited to ERISA
          and the Code, which are applicable to such Plan.

                  (d)  Except as set forth in Schedule 3.15 or in,
          connection with the transactions contemplated by this
          Agreement, there is no contract, agreement, plan or
          arrangement covering any employee or former employee of
          U.S. Healthcare or any Subsidiary of U.S. Healthcare
          that, individually or collectively, could give rise to
          the payment of any amount that would not be deductible
          pursuant to the terms of Sections 162(a)(1), 162(m) or
          280G of the Code.

                  (e)  U.S. Healthcare has provided Aetna with a
          list of each employment, severance or other similar
          contract, arrangement or policy and each plan or
          arrangement (written or oral) providing for insurance
          coverage (including any self-insured arrangements),
          workers' compensation, disability benefits, supplemental
          unemployment benefits, vacation benefits, retirement
          benefits or for deferred compensation, profit-sharing,
          bonuses, stock options, stock appreciation or other forms
          of incentive compensation or post-retirement insurance,
          compensation or benefits which (i) is not an U.S.
          Healthcare Employee Plan, (ii) is entered into,
          maintained or contributed to, as the case may be, by U.S.
          Healthcare or any of its Subsidiaries and (iii) covers
          any employee or former employee of U.S. Healthcare or any
          of its Subsidiaries.  Such contracts, plans and
          arrangements as are described above, copies or
          descriptions of all of which have been furnished or made
          available previously to Aetna, are referred to
          collectively herein as the "U.S. Healthcare Benefit
          Arrangements".  Each U.S. Healthcare Benefit Arrangement
          has been maintained in substantial compliance with its
          terms and with the requirements prescribed by any and all
          statutes, orders, rules and regulations that are
          applicable to such U.S. Healthcare Benefit Arrangement.

                  (f)  Except for the Retiree Health Benefit Plan,
          neither U.S. Healthcare nor any Subsidiary of U.S.
          Healthcare has any current or projected liability in
          respect of post-employment or post-retirement health or
          medical or life insurance benefits for retired, former or
          current employees of U.S. Healthcare or any Subsidiary of
          U.S. Healthcare, except as required to avoid excise tax
          under Section 4980B of the Code.  No condition exists
          that would prevent U.S. Healthcare or any Subsidiary of
          U.S. Healthcare from amending or terminating any U.S.
          Healthcare Employee Plan or U.S. Healthcare Benefit
          Arrangement providing health or medical benefits in
          respect of any active employee of U.S. Healthcare or any
          Subsidiary other than limitations imposed under the terms
          of a collective bargaining agreement.

                  (g)  Except as disclosed in writing to Aetna
          prior to the date hereof, there has been no amendment to,
          written interpretation or announcement (whether or not
          written) by U.S. Healthcare or any of its Subsidiaries
          relating to, or change in employee participation or
          coverage under, any U.S. Healthcare Employee Plan or U.S.
          Healthcare Benefit Arrangement which would increase
          materially the expense of maintaining such U.S.
          Healthcare Employee Plan or U.S. Healthcare Benefit
          Arrangement above the level of the expense incurred in
          respect thereof for the fiscal year ended on the U.S.
          Healthcare Balance Sheet Date.

                  (h)  Except as set forth in Schedule 3.15,
          neither U.S. Healthcare nor any Subsidiary of U.S.
          Healthcare is a party to or subject to any union contract
          or any employment contract or arrangement providing for
          annual future cash compensation of $250,000 or more with
          any officer, director or employee.

                  (i)  U.S. Healthcare has provided or made
          available a list of (a) the names, titles, annual
          salaries and other compensation of all officers of U.S.
          Healthcare or its Subsidiaries and all other employees of
          U.S. Healthcare or its Subsidiaries whose annual base
          salary exceeds $250,000 and (b) the wage rates for non-
          salaried employees of U.S. Healthcare and its
          Subsidiaries (by classification).  None of the employees
          referred to in clause (a) and no other key employee of
          U.S. Healthcare or its Subsidiaries has disclosed to U.S.
          Healthcare and its Subsidiaries that he or she intends to
          resign or retire as a result of the transactions
          contemplated by this Agreement, or otherwise for any
          other reason within one year after the date of this
          Agreement (other than the Principal Shareholder).

                  (j)  U.S. Healthcare and its Subsidiaries are in
          compliance with all currently applicable laws respecting
          employment and employment practices, terms and conditions
          of employment and wages and hours, and are not engaged in
          any unfair labor practice, failure to comply with which
          or engagement in which, as the case may be, would
          reasonably be expected to have a Material Adverse Effect
          on U.S. Healthcare.  There is no unfair labor practice
          complaint pending or, to the knowledge of U.S.
          Healthcare, threatened against U.S. Healthcare or any
          Subsidiary of U.S. Healthcare before the National Labor
          Relations Board which would reasonably be expected to
          have a Material Adverse Effect on U.S. Healthcare; and

                  (k)  None of the assets of U.S. Healthcare
          constitute the assets of any employee benefit plan
          subject to Title I of ERISA or Section 4975 of the Code.

                  SECTION 3.16. Permits; Compliance with Laws.  (a)
                                _____________________________
          U.S. Healthcare and its Subsidiaries hold all
          governmental licenses, authorizations, consents and
          approvals required to carry on their respective
          businesses as now conducted (the "U.S. Healthcare
          Permits") and are in compliance in all respects with the
          terms of the U.S. Healthcare Permits, except for any
          noncompliance which, individually or in the aggregate,
          has not had and is not reasonably likely to have a
          Material Adverse Effect on U.S. Healthcare or as
          disclosed in the U.S. Healthcare 10-K.  Except as
          disclosed in the U.S. Healthcare 10-K, neither U.S.
          Healthcare nor any Subsidiary of U.S. Healthcare is in
          violation of, or has violated, any applicable provisions
          of any laws, rules, ordinances or regulations, in any
          such case, in a manner that, individually or in the
          aggregate, has had or is reasonably likely to have a
          Material Adverse Effect on U.S. Healthcare.  U.S.
          Healthcare has advised Aetna of the facts underlying
          currently pending formal proceedings with respect to any
          potentially material violations of any of the foregoing.

                  (b)  U.S. Healthcare and its Subsidiaries have
          complied in all respects with all laws, rules, ordinances
          and regulations governing all Medicare, Medicaid and any
          other contracts with any government entity and have filed
          all returns, cost reports and other filings in the manner
          prescribed by applicable laws, rules, ordinances or
          regulations, except for any such non-compliance or
          failure to make any such filing or filings, which
          individually or in the aggregate, has not had and is not
          reasonably expected to have a Material Adverse Effect on
          U.S. Healthcare.  All returns, cost reports and other
          financial filings made by U.S. Healthcare or any of its
          Subsidiaries to Medicare, Medicaid or any other
          governmental health or welfare related entity or third
          party payor were true, correct and complete in all
          material respects as of their date of filing.  Neither
          U.S. Healthcare nor any of its Subsidiaries has been
          subject to any written finding of fraudulent procedures
          or practices arising out of the provision of health care
          services relating to Medicare, Medicaid or any other
          government entity with which U.S. Healthcare or any
          Subsidiary of U.S. Healthcare has a contract to provide
          health care services or benefits, and except as disclosed
          in Schedule 3.16, neither U.S. Healthcare nor any of its
          Subsidiaries is currently subject to any pending or
          threatened audit relating to such fraudulent procedures
          or practices.

                  SECTION 3.17. Finders' Fees.  Except for Goldman,
                                _____________
          Sachs & Co. and Merrill Lynch & Co., Inc., copies of
          whose engagement agreements have been or will be promptly
          provided to Aetna, there is no investment banker, broker,
          finder or other intermediary which has been retained by,
          or is authorized to act on behalf of, U.S. Healthcare or
          any Subsidiary of U.S. Healthcare who might be entitled
          to any fee or commission from U.S. Healthcare, Aetna or
          any Subsidiary or Affiliate of either upon consummation
          of the transactions contemplated by this Agreement.

                  SECTION 3.18. Intellectual Property Rights.  (a) 
                                ____________________________
          U.S. Healthcare and its Subsidiaries own or have rights
          to use, free and clear of all Liens, and have not
          assigned, hypothecated or otherwise encumbered, the name
          "U.S. Healthcare" and any of U.S. Healthcare's related
          trademarks, tradenames, service marks or logos.  Except
          as set forth on Schedule 3.18, U.S. Healthcare has no
          knowledge of any current pending or threatened
          infringement or challenge by any Person with respect to
          the name "U.S. Healthcare" and the U.S. Healthcare logo.

                  (b)  Except as set forth on Schedule 3.18, each
          of U.S. Healthcare and its Subsidiaries owns outright or
          holds valid and enforceable licenses to all copies of the
          operating and applications computer software programs and
          databases material to the conduct by U.S. Healthcare and
          its Subsidiaries of their respective businesses (other
          than programs and databases that are generally
          commercially available) as of the date hereof
          (collectively, the "U.S. Healthcare Software").  None of
          the U.S. Healthcare Software used by U.S. Healthcare and
          its Subsidiaries, and no use thereof, infringes upon or
          violates any patent, copyright, trade secret or other
          proprietary right of any other Person and, to the best
          knowledge of U.S. Healthcare, no claim with respect to
          any such infringement or violation is pending or
          threatened, except for any such infringement which,
          individually or in the aggregate, has not had and is not
          reasonably expected to have a Material Adverse Effect on
          U.S. Healthcare.  Upon consummation of the transactions
          contemplated by this Agreement, except for U.S.
          Healthcare Software sold or otherwise disposed of in the
          ordinary course of business after the date hereof, each
          of U.S. Healthcare and its Subsidiaries (i) will continue
          to own all the U.S. Healthcare Software owned by it, free
          and clear of all claims, Liens, encumbrances, obligations
          and liabilities and (ii) with respect to all agreements
          for the lease or license of U.S. Healthcare Software
          which require consents or other actions as a result of
          the consummation of the transactions contemplated by this
          Agreement in order for U.S. Healthcare and its
          Subsidiaries to continue to use and operate such U.S.
          Healthcare Software after the consummation of the
          transactions contemplated by this Agreement, shall have
          obtained such consents or taken such other actions so
          required prior to the Merger Date, except for such
          consents or actions that if not obtained or taken,
          individually or in the aggregate, would not be reasonably
          expected to have a Material Adverse Effect on U.S.
          Healthcare.

                  SECTION 3.19. Takeover Statutes.  The provisions 
                                _________________
          of Subchapters G, H, I and J of Chapter 25 of the
          Pennsylvania Law are not applicable to U.S. Healthcare.

                  SECTION 3.20. Fairness Opinion.  U.S. Healthcare
                                ________________
          has received the opinion of Merrill Lynch & Co., Inc. to
          the effect that, as of the date hereof, the U.S.
          Healthcare Merger Consideration to be received by the
          holders of U.S. Healthcare Stock (other than Aetna and
          its Affiliates) in the U.S. Healthcare Sub Merger is fair
          to such holders from a financial point of view and the
          opinion of Goldman, Sachs & Co. that the U.S. Healthcare
          Merger Consideration to be received by the holders of
          U.S. Healthcare Stock pursuant to this Agreement is, as
          of the date of this Agreement, fair to such holders.  It
          is agreed and understood that such opinions are for the
          sole benefit of the Board of Directors of U.S. Healthcare
          and may not be relied upon by Parent, Aetna or any third
          party.

                                       ARTICLE 4

                             REPRESENTATIONS AND WARRANTIES
                                        OF AETNA

                  Aetna represents and warrants to U.S. Healthcare
          that:

                  SECTION 4.1.  Corporate Existence and Power. 
                                _____________________________
          Aetna is duly incorporated and validly existing as an
          insurance corporation in good standing under the laws of
          its jurisdiction of incorporation, and has all corporate
          powers and all governmental licenses, authorizations,
          consents and approvals required to carry on its business
          as now conducted.  Aetna is duly qualified to do business
          as a foreign corporation and is in good standing in each
          jurisdiction where the character of the property owned or
          leased by it or the nature of its activities makes such
          qualification necessary, except for those jurisdictions
          where the failure to be so qualified would not,
          individually or in the aggregate, have a Material Adverse
          Effect on Aetna.  Aetna has heretofore delivered to U.S.
          Healthcare true and complete copies of Aetna's
          certificate of incorporation and bylaws as currently in
          effect.

                  SECTION 4.2.  Corporate Authorization.  The
                                _______________________
          execution, delivery and, subject to receipt of the
          approvals referred to in Section 4.3, the performance by
          Aetna of this Agreement and the consummation by Aetna of
          the transactions contemplated by this Agreement are
          within the corporate powers of Aetna and have been duly
          authorized by all necessary corporate action, except for
          any required approval by Aetna's shareholders of this
          Agreement and the transactions contemplated hereby.  This
          Agreement has been duly executed and delivered by Aetna
          and constitutes a valid and binding agreement of Aetna
          enforceable against Aetna in accordance with its terms,
          subject to (a) bankruptcy, insolvency, reorganization,
          fraudulent transfer, moratorium and other similar laws
          now or hereafter in effect relating to or affecting
          creditors' rights generally and, in the case of Aetna,
          the rights of creditors of insurance companies generally
          and (b) general principles of equity (regardless of
          whether considered in a proceeding at law or in equity).

                  SECTION 4.3.  Governmental Authorization.  The
                                __________________________
          execution, delivery and performance by Aetna of this
          Agreement and the consummation by Aetna of the
          transactions contemplated by this Agreement require no
          action by or in respect of, or filing with, any
          governmental body, agency, official or authority other
          than (a) the filing of an Aetna Certificate of Merger in
          accordance with the Connecticut Law; (b) compliance with
          any applicable requirements of the HSR Act; (c)
          compliance with any applicable requirements of the 1934
          Act; (d) compliance with any applicable requirements of
          the 1933 Act; (e) compliance with any applicable foreign
          or state securities or Blue Sky laws; (f) approvals or
          filings required under laws, rules and regulations
          governing insurance and insurance companies, health
          maintenance organizations, health care services plans,
          third party administrators or other managed health care
          organizations; (g) the filing with the Secretary of the
          State and, if required, the Insurance Commissioner of the
          State of Connecticut of an amendment to Parent's
          certificate of incorporation to reflect the changes
          contemplated by Section 7.11 hereof; and (h) filings and
          notices not required to be made or given until after the
          Merger Date.

                  SECTION 4.4.  Non-Contravention.  Except as
                                _________________
          disclosed on Schedule 4.4, the execution, delivery and
          performance by Aetna of this Agreement and the
          consummation by Aetna of the transactions contemplated by
          this Agreement do not and will not (a) assuming receipt
          of the approvals referred to in Section 4.2, contravene
          or conflict with the certificate of incorporation or
          bylaws of Aetna, (b) assuming compliance with the matters
          referred to in Section 4.3, contravene or conflict with
          or constitute a violation of any provision of any law,
          regulation, judgment, injunction, order or decree binding
          upon or applicable to Aetna or any Subsidiary of Aetna,
          (c) constitute a default (or an event which with notice,
          the lapse of time or both would become a default) under
          or give rise to a right of termination, cancellation or
          acceleration of any right or obligation of Aetna or any
          Subsidiary of Aetna or to a loss of any benefit to which
          Aetna or any Subsidiary of Aetna is entitled under any
          provision of any agreement, contract or other instrument
          binding upon Aetna or any Subsidiary of Aetna or any
          license, franchise, permit or other similar authorization
          held by Aetna or any Subsidiary of Aetna, or (d) result
          in the creation or imposition of any Lien on any asset of
          Aetna or any Subsidiary of Aetna, except for such
          contraventions, conflicts or violations referred to in
          clause (b) or defaults, rights of termination,
          cancellation or acceleration, losses or Liens referred to
          in clause (c) or (d) that would not, individually or in
          the aggregate, have a Material Adverse Effect on Aetna.

                  SECTION 4.5.  Capitalization.  As of February 29,
                                ______________
          1996, the authorized capital stock of Aetna consisted of
          10,000,000 shares of Class A Voting Preferred Stock
          without par value ("Aetna Class A Stock"), 15,000,000
          shares of Class B Voting Preferred Stock without par
          value ("Aetna Class B Stock"), 15,000,000 shares of Class
          C Non-Voting Preferred Stock without par value ("Aetna
          Class C Stock") and 250,000,000 shares of Aetna common
          stock without par value ("Aetna Common Stock").  As of
          February 29, 1996, there were (i) no shares of Aetna
          Class A Stock outstanding, (ii) no shares of Aetna Class
          B Stock outstanding, (iii) no shares of Aetna Class C
          Stock outstanding and (iv) 114,990,477 shares of Aetna
          Common Stock outstanding.  As of February 29, 1996, an
          aggregate of 15,208,090 shares of Aetna Common Stock were
          reserved for issuance or issuable under employee benefit
          or other compensation plans or programs or dividend
          reinvestment plans of Aetna.  All outstanding shares of
          capital stock of Aetna have been duly authorized and
          validly issued and are fully paid and nonassessable.  

                  SECTION 4.6.  SEC Filings.  (a)  Aetna has
                                ___________
          delivered to U.S. Healthcare (i) Aetna's annual reports
          on Form 10-K for its fiscal years ended December 31, 1995
          (the "AETNA 10-K"), 1994 and 1993, (ii) its proxy or
          information statements relating to meetings of or actions
          taken without a meeting by Aetna's shareholders held
          since January 1, 1993, and (iii) all of its other
          reports, statements, schedules and registration
          statements filed with the SEC since January 1, 1993.

                  (b)  As of its filing date, each such report or
          statement, schedule or registration filed pursuant to the
          1934 Act did not contain any untrue statement of a
          material fact or omit to state any material fact
          necessary in order to make the statements made therein,
          in the light of the circumstances under which they were
          made, not misleading. 

                  (c)  Each such registration statement, as amended
          or supplemented, if applicable, filed pursuant to the
          1933 Act as of the date such registration statement or
          amendment became effective did not contain any untrue
          statement of a material fact or omit to state any
          material fact required to be stated therein or necessary
          to make the statements therein not misleading.

                  SECTION 4.7.  Financial Statements.  The audited
                                ____________________
          consolidated financial statements of Aetna included in
          its annual reports on Form 10-K referred to in Section
          4.6 fairly present, in conformity with generally accepted
          accounting principles applied on a consistent basis
          (except as may be indicated in the notes thereto), the
          consolidated financial position of Aetna and its
          consolidated Subsidiaries as of the dates thereof and
          their consolidated results of operations and cash flows
          for the periods then ended.  For purposes of this
          Agreement, "Aetna Balance Sheet" means the consolidated
          balance sheet of Aetna as of December 31, 1995 set forth
          in the Aetna 10-K and the "Aetna Balance Sheet Date"
          means December 31, 1995.

                  SECTION 4.8.  Disclosure Documents.   (a)  Each
                                ____________________
          document required to be filed by Aetna with the SEC in
          connection with the transactions contemplated by this
          Agreement (the "Aetna Disclosure Documents"), including,
          without limitation, the proxy or information statement of
          Aetna (the "Aetna Proxy Statement"), if any, to be filed
          with the SEC in connection with this Agreement and the
          Aetna Sub Merger, and any amendments or supplements
          thereto, will, when filed, comply as to form in all
          material respects with the applicable requirements of the
          1934 Act.

                  (b)  At the time the Aetna Proxy Statement or any
          amendment or supplement thereto is first mailed to
          shareholders of Aetna and at the time such shareholders
          vote on the proposals relating to this Agreement and the
          Aetna Sub Merger set forth therein, the Aetna Proxy
          Statement, as supplemented or amended, if applicable,
          will not contain any untrue statement of a material fact
          or omit to state any material fact necessary in order to
          make the statements made therein, in light of the
          circumstances under which they were made, not misleading. 
          At the time of the filing of any Aetna Disclosure
          Document other than the Aetna Proxy Statement and at the
          time of any distribution thereof, such Aetna Disclosure
          Document will not contain any untrue statement of a
          material fact or omit to state a material fact necessary
          in order to make the statements made therein, in the
          light of the circumstances under which they were made,
          not misleading.  The representations and warranties
          contained in this Section 4.8 will not apply to
          statements included in or omissions from the Aetna
          Disclosure Documents based upon information furnished to
          Aetna in writing by U.S. Healthcare or Parent
          specifically for use therein.

                  SECTION 4.9.  Information Supplied.  The
                                ____________________
          information supplied or to be supplied by Aetna for
          inclusion or incorporation by reference in (i) the U.S.
          Healthcare Proxy Statement or any amendment or supplement
          thereto will not, at the time the U.S. Healthcare Proxy
          Statement is first mailed to shareholders of U.S.
          Healthcare and at the time such shareholders vote on the
          approval and adoption of this Agreement, contain any
          untrue statement of a material fact or omit to state any
          material fact necessary in order to make the statements
          made therein, in the light of the circumstances under
          which they were made, not misleading, (ii) the Form S-4
          or any amendment or supplement thereto will not, at the
          time the Form S-4 or any amendment or supplement thereto
          become effective under the 1933 Act and on the Merger
          Date, contain any untrue statement of a material fact or
          omit to state a material fact required to be stated
          therein or necessary to make the statements therein not
          misleading and (iii) any U.S. Healthcare Disclosure
          Document or Parent Disclosure Document (other than the
          U.S. Healthcare Proxy Statement and the Form S-4) will
          not, at the time of effectiveness of such U.S. Healthcare
          Disclosure Document and at the time of any distribution
          thereof contain any untrue statement of a material fact
          or omit to state a material fact necessary in order to
          make the statements made therein, in light of the
          circumstances under which they were made, not misleading.

                  SECTION 4.10. Absence of Certain Changes.  Except
                                __________________________
          as disclosed on Schedule 4.10 or as specifically
          permitted by Section 6.5 and except as disclosed in the
          Aetna 10-K and except for the proposed sale of Aetna's
          property-casualty business and transactions related
          thereto, since the Aetna Balance Sheet Date, Aetna has
          conducted the Aetna Health Operations in the ordinary
          course consistent with past practice and there has not
          been:

                  (a)  any event, occurrence or facts which has had
             or is reasonably expected to have a Material Adverse
             Effect on Aetna;

                  (b)  any declaration, setting aside or payment of
             any dividend or other distribution with respect to any
             shares of capital stock of Aetna (other than payment
             of Aetna's regular quarterly dividend on Aetna Common
             Stock in an amount not exceeding $0.69 per share), or
             any repurchase, redemption or other acquisition by
             Aetna or any Subsidiary of Aetna of any amount of
             outstanding shares of capital stock or other
             securities of, or other ownership interests in, Aetna
             which repurchase, redemption or other acquisition,
             individually or in the aggregate, is material to Aetna
             and its Subsidiaries taken as a whole;

                  (c)  any amendment of any term of any outstanding
             security of Aetna;

                  (d)  any incurrence, assumption or guarantee by
             any of Aetna's domestic (U.S.) health care operations
             ("Aetna Health Operations") of any indebtedness from
             any third party for borrowed money other than in the
             ordinary course of business and in amounts and on
             terms consistent with past practices;

                  (e)  any creation or assumption by Aetna Health
             Operations of any Lien on any material asset other
             than in the ordinary course of business consistent
             with past practices;

                  (f)  any making of any loan, advance or capital
             contribution by any Aetna Health Operations to or
             investment in any Person other than (i) loans,
             advances or capital contributions to or investments in
             Subsidiaries of Aetna, (ii) investments in securities
             consistent with past practice or (iii) other loans,
             advances, capital contributions or investments in an
             aggregate amount not exceeding $25,000,000;

                  (g)  any damage, destruction or other casualty
             loss (whether or not covered by insurance) affecting
             the business or assets of Aetna or any Subsidiary of
             Aetna which, individually or in the aggregate, is or
             may reasonably be expected to be material to Aetna and
             its Subsidiaries, taken as a whole;

                  (h)  any transaction or commitment made, or any
             contract or agreement entered into, by any Aetna
             Health Operations relating to its assets or business
             (including, without limitation, the acquisition or
             disposition of any assets) or any relinquishment by
             any Aetna Health Operations of any contract, license
             or other right, which in any such case, individually
             or in the aggregate, would have a Material Adverse
             Effect on Aetna, other than transactions, commitments,
             contracts or agreements contemplated by this
             Agreement;

                  (i)  any change in any method of accounting or
             accounting principle or practice by Aetna or any
             Subsidiary of Aetna, except for any such change
             required by reason of a concurrent change in generally
             accepted accounting principles or statutory accounting
             principles;

                  (j)  except for such contracts as would not be
             material to Aetna and its Subsidiaries taken as a
             whole or material to their operation in any Standard
             Metropolitan Statistical Area, any entry by any Aetna
             Health Operations into any contract limiting the right
             of any Aetna Health Operations at any time on or after
             the date of this Agreement or U.S. Healthcare or any
             of its Subsidiaries or Affiliates at or after the
             Merger Date, to engage in, or to compete with any
             Person in, any business conducted by U.S. Healthcare,
             including, without limitation, any contract which
             includes exclusivity provisions restricting the
             geographical area in which, or the method by which,
             any such business may be conducted by Aetna or any of
             its Subsidiaries or Affiliates, or by U.S. Healthcare
             or any of its Subsidiaries or Affiliates after the
             Merger Date; or

                  (k)  any entry by any Aetna Health Operations
             into any acquisition, joint venture or franchising
             agreement or arrangement which is material to Aetna
             and its Subsidiaries taken as a whole; or

                  (m) any entry by any Aetna Health Operations or
             any of its Subsidiaries into any agreement or
             arrangement with a third party on an exclusive basis
             to offer or market any of the following services of
             such third party:  group life, disability, managed
             workers' compensation, long term care, dental,
             behavioral or pharmacy benefits.

                  SECTION 4.11. No Undisclosed Material
                                _______________________
          Liabilities.  There are no liabilities, commitments or
          ___________
          obligations (whether pursuant to contracts or otherwise)
          of Aetna or any Subsidiary of Aetna of any kind
          whatsoever, whether accrued, contingent, absolute,
          determined, determinable or otherwise, and there is no
          existing condition, situation or set of circumstances
          which could reasonably be expected to result in such a
          liability, commitment or obligation, including, without
          limitation, any fines, disciplinary actions or other
          adverse actions that may be taken or reported concerning
          the conduct of Aetna or any of its Subsidiaries, other
          than:

                  (a)  liabilities, commitments or obligations
             disclosed or provided for in the Aetna Balance Sheet
             or in the Aetna 10-K;

                  (b)  liabilities, commitments or obligations
             incurred in the ordinary course of business since the
             Aetna Balance Sheet Date;

                  (c)  liabilities, commitments or obligations
             under this Agreement; and

                  (d)  liabilities, commitments or obligations
             which, individually or in the aggregate, have not had,
             and are not reasonably likely to have, a Material
             Adverse Effect on Aetna. 

                  SECTION 4.12. Litigation; Investigations.  Except
                                __________________________
          as disclosed or referred to in the Aetna 10-K or on
          Schedule 4.12, there is no action, claim, suit,
          investigation, proceeding or examination, including,
          without limitation, any insurance or health related
          investigations, proceedings or examinations pending
          against or affecting, or to the knowledge of Aetna
          threatened against or affecting, Aetna or any Subsidiary
          of Aetna or any of their respective properties before any
          court or arbitrator or any governmental body, agency,
          authority or official which, net of reserves established
          therefor reflected in the Aetna 10-K and giving effect to
          reinsurance probable of recovery, individually or in the
          aggregate, is reasonably likely to have a Material
          Adverse Effect on Aetna.

                  SECTION 4.13. Subsidiaries.  (a)  Each Subsidiary
                                ____________
          of Aetna is duly incorporated, validly existing (as an
          insurance corporation, corporation organized as a health
          maintenance organization or otherwise) and in good
          standing under the laws of its jurisdiction of
          incorporation, has all corporate powers and all
          governmental licenses, authorizations, consents and
          approvals required to carry on its business as now
          conducted and is duly qualified to do business as a
          foreign corporation or is duly licensed to do business as
          an insurer, a health maintenance organization or
          otherwise and is in good standing in each jurisdiction
          where the character of the property owned or leased by it
          or the nature of its activities makes such qualification
          necessary, except for those jurisdictions where failure
          to be so qualified or licensed would not, individually or
          in the aggregate, have a Material Adverse Effect on
          Aetna.  All material Subsidiaries and their respective
          jurisdictions of incorporation are identified in the
          Aetna 10-K.

                  (b)  Except as disclosed on Schedule 4.13, all of
          the outstanding capital stock of, or other ownership
          interests in, each Subsidiary of Aetna, is owned by
          Aetna, directly or indirectly, free and clear of any Lien
          and free of any other limitation or restriction
          (including, without limitation, any restriction on the
          right to vote, sell or otherwise dispose of such capital
          stock or other ownership interests).  Except as disclosed
          on Schedule 4.13, there are no outstanding (i) securities
          of Aetna or any Subsidiary of Aetna convertible into or
          exchangeable for shares of capital stock or other voting
          securities or ownership interests in any Subsidiary of
          Aetna, and (ii) options or other rights to acquire from
          Aetna or any Subsidiary of Aetna, and no other obligation
          of Aetna or any Subsidiary of Aetna to issue, any capital
          stock, voting securities or other ownership interests in,
          or any securities convertible into or exchangeable for,
          any capital stock, voting securities or ownership
          interests in, any Subsidiary of Aetna (the items in
          clauses (i) and (ii) being referred to collectively as
          the "Aetna Subsidiary Securities").  Except as disclosed
          in Schedule 4.13, there are no outstanding obligations of
          Aetna or any Subsidiary of Aetna to repurchase, redeem or
          otherwise acquire any outstanding Aetna Subsidiary
          Securities.

                  SECTION 4.14. Taxes.  (a)  All Tax Returns
                                _____
          required to be filed (taking into account all extensions
          heretofore granted) on or before the date hereof or the
          Merger Date by or on behalf of Aetna or any of its
          Subsidiaries have been filed within the time and in the
          manner prescribed by law, other than those Tax Returns
          the failure of which to file would not have a Material
          Adverse Effect on Aetna.

                  (b)  As of the time of filing, all such Tax
          Returns correctly reflected in all material respects all
          facts regarding the income, business, assets, operations,
          activities and status of Aetna and its Subsidiaries and
          any other information required to be shown therein.  

                  (c)  All Taxes shown to be due and payable by
          Aetna and any of its Subsidiaries on all such Tax Returns
          have been timely paid, or withheld and remitted to the
          appropriate Taxing Authorities.

                  (d)  Except as set forth on Schedule 4.14(d), all
          applicable statutes of limitations for the assessment of
          material Taxes against Aetna and any of its Subsidiaries
          have expired.  No deficiency payment of any Taxes for any
          period has been asserted by any Taxing Authority which
          remains unsettled at the date hereof except for
          deficiencies which would not have a Material Adverse
          Effect on Aetna.

                  (e)  Except for Tax Returns required to be filed
          with respect to the 1995 taxable year, neither Aetna nor
          any of its Subsidiaries has requested any extension of
          time within which to file any Tax Return which has not
          yet been filed.

                  (f)  There are no material Liens upon any
          property or assets of Aetna or any of its Subsidiaries
          for Taxes, except for Tax liens in respect of Taxes not
          yet due or which are being contested in good faith and by
          appropriate proceedings (and for the payment of which
          adequate reserves have been provided) and reflected in
          the Aetna 10-K.  

                  (g)  Except as set forth on Schedule 4.14(g),
          there is no claim, audit, action, suit, proceeding, or
          investigation now pending or threatened against or with
          respect to Aetna or any of its Subsidiaries in respect of
          any Taxes.

                  (h)  Except as set forth in Schedule 4.14(h),
          neither Aetna nor any of its Subsidiaries has any
          contractual obligations under any tax sharing agreement
          or similar agreement or tax indemnity agreement with any
          corporation which is not a member of the affiliated group
          of corporations of which Aetna is the common parent.

                  (i)  Except as set forth on Schedule 4.14(i),
          there are no requests for rulings or determinations in
          respect of any Tax pending between Aetna or any of its
          Subsidiaries and any Taxing Authorities.

                  SECTION 4.15. ERISA.  (a)  Neither Aetna nor any
                                _____
          ERISA Affiliate of Aetna has (i) engaged in, or is a
          successor or parent corporation to an entity that has
          engaged in, a transaction described in Sections 4069 or
          4212(c) of ERISA or (ii) incurred, or reasonably expects
          to incur prior to the Merger Date, (A) any liability
          under Title IV of ERISA arising in connection with the
          termination of, or a complete or, except as may be
          incurred by reason of the transactions contemplated by
          the Stock Purchase Agreement, partial withdrawal from,
          any plan covered or previously covered by Title IV of
          ERISA or (B) any liability under Section 4971 of the Code
          that in either case could become a liability of Parent or
          any of its Affiliates after the Merger Date.  Nothing
          done or omitted to be done, and no transaction or holding
          of any asset under or in connection with any "employee
          benefit plan" as defined in Section 3(3) of ERISA which
          (i) is subject to any provision of ERISA and (ii) is
          maintained, administered or contributed to by Aetna or
          any Subsidiary of Aetna and covers any employees or
          former employees of Aetna or any Subsidiary of Aetna
          under which Aetna or any Subsidiary of Aetna has any
          liability (each an "Aetna Employee Plan") has or will
          make Aetna or any Subsidiary of Aetna, or any officer or
          director of Aetna or any Subsidiary of Aetna, subject to
          any liability under Title I of ERISA or liable for any
          tax pursuant to Section 4975 of the Code that could have
          a Material Adverse Effect on Aetna.

                  (b)  With respect to each Aetna Employee Plan
          which is intended to be qualified under Section 401(a) of
          the Code, Aetna has received a favorable determination
          letter that the plan is so qualified and that each trust
          forming a part thereof is exempt from tax pursuant to
          Section 501(a) of the Code.  Each Aetna Employee Plan has
          been maintained in all material respects in compliance
          with its terms and with the requirements prescribed by
          any and all statutes, orders, rules and regulations,
          including but not limited to ERISA and the Code, which
          are applicable to such Plan.

                  (c)  Each employment, severance or other similar
          contract, arrangement or policy and each plan or
          arrangement (written or oral) providing for insurance
          coverage (including any self-insured arrangements),
          workers' compensation, disability benefits, supplemental
          unemployment benefits, vacation benefits, retirement
          benefits or for deferred compensation, profit-sharing,
          bonuses, stock options, stock appreciation or other forms
          of incentive compensation or post-retirement insurance,
          compensation or benefits which (i) is not an Aetna
          Employee Plan, (ii) is entered into, maintained or
          contributed to, as the case may be, by Aetna or any of
          its Subsidiaries and (iii) covers any employee or former
          employee of Aetna or any of its Subsidiaries (the "Aetna
          Benefit Arrangements") has been maintained in substantial
          compliance with its terms and with the requirements
          prescribed by any and all statutes, orders, rules and
          regulations that are applicable to such Aetna Benefit
          Arrangement.

                  (d)  Aetna and its Subsidiaries are in compliance
          with all currently applicable laws respecting employment
          and employment practices, terms and conditions of
          employment and wages and hours, and are not engaged in
          any unfair labor practice, failure to comply with which
          or engagement in which, as the case may be, would
          reasonably be expected to have a Material Adverse Effect
          on Aetna.  There is no unfair labor practice complaint
          pending or, to the knowledge of Aetna, threatened against
          Aetna or any Subsidiary of Aetna before the National
          Labor Relations Board which would reasonably be expected
          to have a Material Adverse Effect on Aetna.

                  (e)  None of the assets of Aetna constitute the
          assets of any employee benefit plan subject to Title I of
          ERISA or Section 4975 of the Code.

                  SECTION 4.16. Permits; Compliance with Laws.  (a)
                                _____________________________
          Aetna and its Subsidiaries hold all governmental
          licenses, authorizations, consents and approvals required
          to carry on their respective businesses as now conducted
          (the "Aetna Permits") and are in compliance in all
          respects with the terms of the Aetna Permits, except for
          any noncompliance which, individually or in the
          aggregate, has not had and is not reasonably likely to
          have a Material Adverse Effect on Aetna or as disclosed
          in the Aetna 10-K.  Except as disclosed in the Aetna 10-
          K, neither Aetna nor any Subsidiary of Aetna is in
          violation of, or has violated, any applicable provisions
          of any laws, rules, ordinances or regulations, in any
          such case, in a manner that, individually or in the
          aggregate, has had or is reasonably likely to have a
          Material Adverse Effect on Aetna.  Aetna has advised U.S.
          Healthcare of the facts underlying currently pending
          formal proceedings with respect to any potentially
          material violations of any of the foregoing.

                  (b) Neither Aetna nor any of its Subsidiaries has
          been subject to any written finding of fraudulent
          procedures or practices arising out of the provision of
          health care services relating to Medicare, Medicaid or
          any other government entity with which Aetna or any
          Subsidiary of Aetna has a contract to provide health care
          services or benefits, and except as disclosed in Schedule
          4.16, neither Aetna nor any of its Subsidiaries is
          currently subject to any pending or threatened audit
          relating to such fraudulent procedures or practices.

                  SECTION 4.17. Intellectual Property Rights.  (a) 
                                ____________________________
          Aetna and its Subsidiaries own or have rights to use,
          free and clear of all Liens, and have not assigned,
          hypothecated or otherwise encumbered, the name "Aetna"
          and any of Aetna's related trademarks, tradenames,
          service marks or logos.  Aetna has no knowledge of any
          current pending or threatened infringement or challenge
          by any Person with respect to the name "Aetna" and the
          Aetna logo.

                  (b)  Except as set forth on Schedule 4.17, each
          of Aetna and its Subsidiaries owns outright or holds
          valid and enforceable licenses to all copies of the
          operating and applications computer software programs and
          databases material to the conduct by Aetna and its
          Subsidiaries of their respective businesses (other than
          programs and databases that are generally commercially
          available) as of the date hereof (collectively, the
          "Aetna Software").  None of the Aetna Software used by
          Aetna and its Subsidiaries, and no use thereof, infringes
          upon or violates any patent, copyright, trade secret or
          other proprietary right of any other Person and, to the
          best knowledge of Aetna, no claim with respect to any
          such infringement or violation is pending or threatened,
          except for any such infringement which, individually or
          in the aggregate, has not had and is not reasonably
          expected to have a Material Adverse Effect on Aetna. 
          Upon consummation of the transactions contemplated by
          this Agreement, except for Aetna Software sold or
          otherwise disposed of in the ordinary course of business
          after the date hereof, each of Aetna and its Subsidiaries
          (i) will continue to own all the Aetna Software owned by
          it, free and clear of all claims, Liens, encumbrances,
          obligations and liabilities and (ii) with respect to all
          agreements for the lease or license of Aetna Software
          which require consents or other actions as a result of
          the consummation of the transactions contemplated by this
          Agreement in order for Aetna and its Subsidiaries to
          continue to use and operate such Aetna Software after the
          consummation of the transactions contemplated by this
          Agreement, shall have obtained such consents or taken
          such other actions so required prior to the Merger Date,
          except for such consents or actions that if not obtained
          or taken, individually or in the aggregate, would not be
          reasonably expected to have a Material Adverse Effect on
          Aetna.

                  SECTION 4.18. Fairness Opinions.  Aetna has
                                _________________
          received opinions of Wasserstein Perella & Co., Inc. and
          J.P. Morgan & Co. to the effect that, as of the date
          hereof, the consideration to be paid to the holders of
          U.S. Healthcare Stock in the U.S. Healthcare Sub Merger
          is fair, from a financial point of view, to Aetna.  It is
          agreed and understood that such opinions are for the sole
          benefit of the Board of Directors of Aetna and may not be
          relied upon by Parent, U.S. Healthcare or any third
          party.

                                       ARTICLE 5

                              COVENANTS OF U.S. HEALTHCARE

                  U.S. Healthcare agrees that:

                  SECTION 5.1.  Conduct of U.S. Healthcare.  From
                                __________________________
          the date hereof until the Merger Date, U.S. Healthcare
          and its Subsidiaries shall conduct their business in the
          ordinary course consistent with past practice and shall
          use their best efforts to preserve intact their business
          organizations and relationships with third parties and to
          keep available the services of their present officers and
          employees.  Without limiting the generality of the
          foregoing, from the date hereof until the Merger Date,
          except as contemplated by this Agreement, without the
          prior written consent of Aetna:

                  (a)  U.S. Healthcare will not adopt or propose
             any change in its articles of incorporation or bylaws;

                  (b)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, (i) merge
             or consolidate with any other Person (other than a
             merger of consolidation of a Subsidiary of U.S.
             Healthcare with a wholly-owned Subsidiary of U.S.
             Healthcare) or (ii) acquire, whether by means of
             merger, consolidation or otherwise, any business or
             assets, other than acquisitions of products or
             services used in the ordinary course operations of the
             business of U.S. Healthcare and its Subsidiaries in a
             manner consistent with past practice and other
             acquisitions in an aggregate amount not exceeding
             $75,000,000;

                  (c)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, sell,
             lease, license or otherwise dispose of any material
             assets or property except in the ordinary course of
             business pursuant to contracts or commitments existing
             on the date hereof;

                  (d)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, declare,
             set aside or pay any dividend (other than the payment
             of U.S. Healthcare regular quarterly dividend on U.S.
             Healthcare Common Stock in an amount not exceeding
             $0.275 per share and on Class B Stock in an amount not
             exceeding $0.248 per share) or make any other
             distribution with respect to any shares of U.S.
             Healthcare' capital stock;

                  (e)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, create or
             assume any Lien on any material asset other than in
             the ordinary course consistent with past practices;

                  (f)  except pursuant to contracts or commitments
             existing on the date hereof and other than the
             issuance of an aggregate of 150,000 options to acquire
             U.S. Healthcare Stock and/or shares of restricted
             stock of U.S. Healthcare to Persons other than the
             Specified U.S. Healthcare Officers, U.S. Healthcare
             will not, and will not permit any Subsidiary of U.S.
             Healthcare to, issue, deliver or sell, or authorize or
             propose the issuance, delivery or sale of, any U.S.
             Healthcare Securities, any U.S. Healthcare Subsidiary
             Securities or any securities convertible into or
             exchangeable for, or any rights, warrants or options
             to acquire, any U.S. Healthcare Securities or U.S.
             Healthcare Subsidiary Securities;

                  (g) Except as disclosed on Schedule 5.1(g), (i) 
             U.S. Healthcare will not split, combine or reclassify,
             or take any other similar action with respect to, any
             capital stock of U.S. Healthcare, and (ii) U.S.
             Healthcare will not, and will not permit any
             Subsidiary of U.S. Healthcare to, repurchase, redeem
             or otherwise acquire an amount of shares of capital
             stock of, or other ownership interests in, U.S.
             Healthcare or any Subsidiary of U.S. Healthcare, which
             repurchase, redemption or other acquisition,
             individually or in the aggregate, is material to U.S.
             Healthcare and its Subsidiaries, taken as a whole;

                  (h)  Except for borrowings or guarantees in the
             ordinary course of business consistent with past
             practice, U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, incur or
             assume any indebtedness from any third party for
             borrowed money or guarantee any such indebtedness;

                  (i)  Except for (i) loans, advances or capital
             contributions to or investments in Subsidiaries of
             U.S. Healthcare, (ii) investments in securities
             consistent with past practices or (iii) other loans,
             advances, capital contributions or investments in an
             aggregate amount not exceeding $25,000,000, U.S.
             Healthcare will not, and will not permit any
             Subsidiary of U.S. Healthcare to, make any material
             loans, advances or capital contributions to, or
             investments in, any other Person;

                  (j)  except for new employment agreements with
             those Specified U.S. Healthcare Officers listed on
             Schedule 8.2(b) in the form attached hereto as
             Schedule 3.11(j)(A), U.S. Healthcare will not, and
             will not permit any of its Subsidiaries to: (i) (A)
             grant any severance or termination pay to, or enter
             into any employment, termination or severance
             arrangement with, any Specified U.S. Healthcare
             Officer or, (B) except in the ordinary course of
             business consistent in magnitude and character with
             past practice and with the terms of severance or
             termination arrangements in effect or pending on the
             date hereof with respect to individuals with
             comparable positions or responsibilities, grant any
             severance or termination pay to, or enter into any
             employment, termination or severance arrangement with,
             any other employees; (ii) (A) amend in any material
             respect any employment, termination or severance
             arrangement with any Specified U.S. Healthcare Officer
             or (B) except in the ordinary course, amend in any
             material respect any employment, termination or
             severance arrangement with any other directors,
             officers or employees (it being understood that for
             purposes of clauses (A) and (B) any increase or
             acceleration of benefits under any such agreement
             shall be deemed material); (iii) (x) establish, adopt,
             enter into, or (y) except (I) the matters described in
             the parenthetical clause of Section 3.11(c) hereof and
             (II) the acceleration of vesting of U.S. Healthcare
             Non-Employee Stock Options and restricted stock of
             U.S. Healthcare issued to Persons who are not
             employees of U.S. Healthcare, amend or take action to
             accelerate or enhance any rights or benefits under,
             (A) any plan providing for options, stock, performance
             awards or other forms of incentive or deferred
             compensation or (B) any collective bargaining, bonus,
             profit sharing, thrift, compensation, restricted
             stock, pension, retirement, deferred compensation,
             employment, termination, severance or other plan,
             agreement, trust, fund, policy or arrangement for the
             benefit of any of its directors, officers or
             employees; (iv) grant, confer or award any options,
             stock, performance awards or other awards to acquire
             any shares of its capital stock (other than an
             aggregate of 150,000 options to acquire U.S.
             Healthcare Stock and/or shares of restricted stock of
             U.S. Healthcare pursuant to the terms existing on the
             date hereof of U.S. Healthcare's plans to Persons
             other than the Specified U.S. Healthcare Officers; (v)
             increase the contribution percentages under U.S.
             Healthcare's defined contribution plans; or (vi) (A)
             other than an annual adjustment with respect to the
             1997 calendar year if the Merger Date occurs after
             December 31, 1996, which adjustment shall be of a
             magnitude and character consistent with past practice,
             increase the compensation or benefits of any Specified
             U.S. Healthcare Officer or pay any benefit not
             required by any plan or arrangement as in effect as of
             the date hereof or (B) except in the ordinary course
             of business consistent in magnitude and character with
             past practice and in no event greater than 6% in the
             aggregate on a per annum basis for all such
             individuals as a group, increase the compensation or
             benefits of any other employees or pay any benefit not
             required by any plan or arrangement as in effect as of
             the date hereof; provided that Aetna agrees it will
                              ________
             not unreasonably withhold its consent, if requested by
             U.S. Healthcare, to transactions proposed under this
             paragraph (j);

                  (k)  U.S. Healthcare will not, and will not
             permit any of its Subsidiaries to, authorize,
             recommend, propose or announce an intention to adopt a
             plan of complete or partial liquidation or dissolution
             of U.S. Healthcare or any Subsidiary of U.S.
             Healthcare, or any plan of division or share exchange
             involving U.S. Healthcare or any of its Subsidiaries;

                  (l)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, change
             any method of accounting or any accounting principle
             or practice used by U.S. Healthcare or any Subsidiary
             of U.S. Healthcare, except for any such change
             required by reason of a concurrent change in generally
             accepted accounting principles or statutory accounting
             principles;

                  (m)  except as previously disclosed to Aetna and
             except for such contracts as would not be  material to
             U.S. Healthcare and its Subsidiaries taken as a whole
             or material to their operation in any Standard
             Metropolitan Statistical Area, U.S. Healthcare will
             not and will not permit any Subsidiary of U.S.
             Healthcare to enter into any contract limiting the
             right of U.S. Healthcare or any of its Subsidiaries at
             any time on or after the date of this Agreement or
             Aetna or any of its Subsidiaries or Affiliates at or
             after the Merger Date, to engage in, or to compete
             with any Person in, any business, including, without
             limitation, any contract which includes exclusivity
             provisions restricting the geographical area in which,
             or the method by which, any such business may be
             conducted by U.S. Healthcare or any of its
             Subsidiaries or Affiliates, or by Aetna or any of its
             Subsidiaries or Affiliates after the Merger Date;

                  (n)  subject (in the case of an acquisition) to
             Section 5.1(b), U.S. Healthcare will not and will not
             permit any of its Subsidiaries to enter into any
             acquisition, joint venture, national vendor or
             franchising agreement or arrangement which is material
             to U.S. Healthcare and its Subsidiaries, taken as a
             whole; 

                  (o) U.S. Healthcare will not, and will not permit
             any of its Subsidiaries to, enter into any agreement
             or arrangement with a third party on an exclusive
             basis to offer or market any of the following services
             of such third party:  group life, disability, managed
             workers' compensation, long term care, dental,
             behavioral or pharmacy benefits; and

                  (p)  U.S. Healthcare will not, and will not
             permit any Subsidiary of U.S. Healthcare to, agree,
             commit or adopt any plan or proposal to do any of the
             foregoing.

                  SECTION 5.2.  Shareholder Meeting; Proxy
                                __________________________
          Material.  (a)  U.S. Healthcare shall cause a meeting of
          ________
          its shareholders (the "U.S. Healthcare Shareholder
          Meeting") to be duly called and held as soon as
          reasonably practicable for the purpose of voting on the
          approval and adoption of this Agreement and, to the
          extent submitted to U.S. Healthcare's shareholders for
          approval, the transactions contemplated by this
          Agreement, and the Board of Directors of U.S. Healthcare
          shall recommend approval and adoption of this Agreement
          and the U.S. Healthcare Sub Merger by U.S. Healthcare's
          shareholders; provided that such meeting need not be
                        ________
          called and held and, prior to the U.S. Healthcare
          Shareholder Meeting, such recommendation may be
          withdrawn, modified or amended to the extent that, as a
          result of the commencement or receipt of an Acquisition
          Proposal with respect to U.S. Healthcare, the Board of
          Directors of U.S. Healthcare determines in good faith
          that it is necessary to so act in order to comply with
          its fiduciary duties under applicable law after
          consultation with independent counsel.  

                  (b)  In connection with the U.S. Healthcare
          Shareholder Meeting, and subject to the proviso to
          Section 5.2(a), U.S. Healthcare (i) will promptly prepare
          and file with the SEC, will use its best efforts to have
          cleared by the SEC and will thereafter mail to its
          shareholders as promptly as practicable the U.S.
          Healthcare Proxy Statement and all other proxy materials
          for such meeting, (ii) will use its best efforts to
          obtain the shareholder approvals referred to in Section
          5.2(a) and (iii) will otherwise comply with all legal
          requirements applicable to such meeting.

                  SECTION 5.3.  Access to Information.  To the
                                _____________________
          extent permitted by applicable law, from the date hereof
          until the Merger Date, U.S. Healthcare will give (or
          cause to be given) Aetna, its counsel, financial
          advisors, auditors and other authorized representatives
          full access to the offices, properties, books and records
          of U.S. Healthcare and its Subsidiaries, will furnish (or
          cause to be furnished) to Aetna, its counsel, financial
          advisors, auditors and other authorized representatives
          such financial and operating data and other information
          as such Persons may reasonably request and will instruct
          the employees, counsel and financial advisors of U.S.
          Healthcare and its Subsidiaries to cooperate with Aetna
          in its investigation of the business of U.S. Healthcare
          and its Subsidiaries; provided that no investigation
          pursuant to this Section shall affect any representation
          or warranty given by U.S. Healthcare to Aetna hereunder.

                  SECTION 5.4.  Other Offers Relating to U.S.
                                ____________________________
          Healthcare.  From the date hereof until the termination
          __________
          of this Agreement, U.S. Healthcare will not, and will
          cause its Subsidiaries and the directors, officers,
          employees, financial advisors and other agents or
          representatives of U.S. Healthcare or any of its
          Subsidiaries not to, directly or indirectly, take any
          action to solicit, initiate or encourage any Acquisition
          Proposal with respect to U.S. Healthcare or engage in
          negotiations with, or disclose any nonpublic information
          relating to U.S. Healthcare or any Subsidiary of U.S.
          Healthcare or afford access to the properties, books or
          records of U.S. Healthcare or any Subsidiary of U.S.
          Healthcare to, any Person that may be considering making,
          or has made, an Acquisition Proposal with respect to U.S.
          Healthcare; provided that nothing contained in this
                      ________
          Section 5.4 shall prevent U.S. Healthcare from furnishing
          non-public information to, or entering into discussions
          or negotiations with, any Person in connection with an
          unsolicited bona fide Acquisition Proposal with respect
          to U.S. Healthcare, if and only to the extent that
          (1) the Board of Directors of U.S. Healthcare determines
          in good faith after consultation with independent counsel
          that such action is necessary in order to comply with its
          fiduciary duties under applicable law and (2) prior to
          furnishing non-public information to, or entering into
          discussions or negotiations with, such Person, U.S.
          Healthcare receives from such Person an executed
          confidentiality agreement with terms no less favorable to
          U.S. Healthcare than those contained in the
          Confidentiality Agreement dated as of January 16, 1996
          between U.S. Healthcare and Aetna (the "Confidentiality
          Agreement").  U.S. Healthcare will promptly (and in no
          event later than 24 hours after receipt of the relevant
          Acquisition Proposal with respect to U.S. Healthcare),
          notify (which notice shall be provided orally and in
          writing and shall identify the Person making the relevant
          Acquisition Proposal with respect to U.S. Healthcare and
          set forth the material terms thereof) Aetna after receipt
          of any Acquisition Proposal with respect to U.S.
          Healthcare or any request for nonpublic information
          relating to U.S. Healthcare or any Subsidiary of U.S.
          Healthcare or for access to any properties, books or
          records of U.S. Healthcare or any Subsidiary of U.S.
          Healthcare by any Person that may be considering making,
          or has made, an Acquisition Proposal with respect to U.S.
          Healthcare and will keep Aetna fully informed of the
          status and details of any such Acquisition Proposal with
          respect to U.S. Healthcare.  U.S. Healthcare shall give
          Aetna at least one days' advance notice of any
          information to be supplied to, and at least three days'
          advance notice of any agreement to be entered into with,
          any Person making such Acquisition Proposal with respect
          to U.S. Healthcare.  U.S. Healthcare shall, and shall
          cause its Subsidiaries and the directors, officers,
          employees, financial advisors and other agents or
          representatives of U.S. Healthcare or any of its
          Subsidiaries to, cease immediately and cause to be
          terminated all activities, discussions or negotiations,
          if any, with any Persons conducted heretofore with
          respect to any Acquisition Proposal with respect to U.S.
          Healthcare.  For purposes of this Agreement, with respect
          to any Person, "Acquisition Proposal" means any offer or
          proposal for, or any indication of interest in, (i) a
          merger or other business combination involving such
          Person or any Subsidiary of such Person or (ii) the
          acquisition in any manner of any significant equity
          interest in, or a substantial portion of the assets of,
          such Person or any Subsidiary of such Person, in each
          case other than the transactions contemplated by this
          Agreement.

                  SECTION 5.5.  Notices of Certain Events.  U.S.
                                _________________________
          Healthcare shall promptly notify Aetna of:

                  (a)  any notice or other communication from any
             Person alleging that the consent of such Person is or
             may be required in connection with the transactions
             contemplated by this Agreement;

                  (b)  any notice or other communication from any
             governmental body, agency, official or authority in
             connection with the transactions contemplated by this
             Agreement; and

                  (c)  any actions, suits, claims, investigations,
             proceedings or health or insurance related proceedings
             or market conduct examinations or audits commenced or,
             to the best of U.S. Healthcare's knowledge threatened
             against, relating to or involving or otherwise
             affecting U.S. Healthcare or any Subsidiary of U.S.
             Healthcare which, if pending on the date of this
             Agreement, would have been required to have been
             disclosed pursuant to Section 3.13 or which relate to
             the consummation of the transactions contemplated by
             this Agreement.

                  SECTION 5.6.  Fiduciary Matters.  U.S. Healthcare
                                _________________
          shall, and shall direct the appropriate fiduciaries to,
          exercise all appropriate fiduciary responsibilities with
          respect to shares of U.S. Healthcare Stock held in any of
          its U.S. Healthcare Employee Plans.

                                       ARTICLE 6

                                   COVENANTS OF AETNA

                  Aetna agrees that:

                  SECTION 6.1.  Voting of U.S. Healthcare Stock. 
                                _______________________________
          Aetna agrees to vote or cause to be voted all shares of
          U.S. Healthcare Stock owned by it or any of its
          Subsidiaries in favor of the approval and adoption of
          this Agreement at the U.S. Healthcare Shareholder
          Meeting; provided that this Section 6.1 shall not impose
                   ________
          any obligations in respect of shares of U.S. Healthcare
          Stock (i) held by Aetna or any Subsidiary of Aetna for
          the account of another Person, (ii) as to which Aetna or
          any Subsidiary or Affiliate of Aetna is or may be
          required to act as fiduciary or in a similar capacity or
          (iii) the voting of which pursuant to the provisions of
          this Section 6.1 would violate any legal duties or
          obligations of Aetna or any Subsidiary or Affiliate of
          Aetna.

                  SECTION 6.2.  Shareholder Meeting; Proxy
                                __________________________
          Materials.  (a)  Aetna shall cause a special meeting of
          _________
          its shareholders (the "Aetna Shareholder Meeting") to be
          duly called and held as soon as reasonably practicable
          for the purpose of voting on the approval and adoption of
          this Agreement, and, to the extent submitted to Aetna's
          shareholders for approval, the transactions contemplated
          by this Agreement, and the Board of Directors of Aetna
          shall recommend approval and adoption of this Agreement
          by Aetna's shareholders; provided that such special
                                   ________
          meeting need not be called and held and, prior to the
          Aetna Shareholder Meeting, such recommendation may be
          withdrawn, modified or amended, to the extent that, as a
          result of the commencement or receipt of an Aetna
          Acquisition Proposal, the Board of Directors of Aetna
          determines in good faith that it is necessary to so act
          in order to comply with its fiduciary duties under
          applicable law after consultation with independent
          counsel. 

                  (b)  In connection with the Aetna Shareholder
          Meeting, and subject to the proviso to Section 6.2(a),
          Aetna (i) will promptly prepare and file with the SEC,
          will use its best efforts to have cleared by the SEC and
          will thereafter mail to its shareholders as promptly as
          practicable the Aetna Proxy Statement and all other proxy
          materials for such meeting, (ii) will use its best
          efforts to obtain the shareholder approvals referred to
          in Section 6.2(a), and (iii) will otherwise comply with
          all legal requirements applicable to such meeting.

                  SECTION 6.3.  Access to Information.  To the
                                _____________________
          extent permitted by applicable law, from the date hereof
          until the Merger Date, Aetna will give (or cause to be
          given) U.S. Healthcare, its counsel, financial advisors,
          auditors and other authorized representatives full access
          to the offices, properties, books and records of Aetna
          and its Subsidiaries, will furnish (or cause to be
          furnished) to U.S. Healthcare, its counsel, financial
          advisors, auditors and other authorized representatives
          such financial and operating data and other information
          as such Persons may reasonably request and will instruct
          the employees, counsel and financial advisors of Aetna
          and its Subsidiaries to cooperate with U.S. Healthcare in
          its investigation of the business of Aetna and its
          Subsidiaries; provided that no investigation pursuant to
          this Section shall affect any representation or warranty
          given by Aetna to U.S. Healthcare hereunder.

                  SECTION 6.4.  Notices of Certain Events.   Aetna
                                _________________________
          shall promptly notify U.S. Healthcare of:

                  (a)  any notice or other communication from any
             Person alleging that the consent of such Person is or
             may be required in connection with the transactions
             contemplated by this Agreement;

                  (b)  any notice or other communication from any
             governmental body, agency, official or authority in
             connection with the transactions contemplated by this
             Agreement; and

                  (c)  any actions, suits, claims, investigations,
             proceedings or health or insurance related proceedings
             or market conduct examinations commenced or, to the
             best of Aetna's knowledge threatened against, relating
             to or involving or otherwise affecting Aetna or any
             Subsidiary of Aetna which relate to the consummation
             of the transactions contemplated by this Agreement.

                  SECTION 6.5.  Certain Corporate Actions.  Prior
                                _________________________
          to the Merger Date, except as contemplated by this
          Agreement or in Schedule 6.5, unless U.S. Healthcare has
          consented in writing thereto:

                  (a)  Aetna will not adopt or propose any change
             in its certificate of incorporation or bylaws;

                  (b)  (i) Aetna will not, and will not permit any
             Subsidiary of Aetna to, merge or consolidate with any
             other Person (other than a merger or consolidation of
             a Subsidiary of Aetna with a wholly-owned Subsidiary
             of Aetna) and (ii) Aetna shall cause the Aetna Health
             Operations not to acquire, whether by means of merger,
             consolidation or otherwise, any business or assets,
             other than acquisitions of products or services used
             in the ordinary course operations of the business of
             Aetna and its Subsidiaries in a manner consistent with
             past practice and other acquisitions in an aggregate
             amount not exceeding $75,000,000;

                  (c)  Aetna will not permit any Aetna Health
             Operations to, sell, lease, license or otherwise
             dispose of any material assets or property except in
             the ordinary course of business pursuant to contracts
             or commitments existing on the date hereof;

                  (d)  Aetna will not, and will not permit any
             Subsidiary of Aetna to, declare, set aside or pay any
             dividend (other than the payment of a regular
             quarterly dividend on Aetna Common Stock in an amount
             not exceeding $0.69 per share), or make any other
             distribution, with respect to any shares of Aetna's
             capital stock;

                  (e)  Aetna will not, and will not permit the
             Aetna Health Operations to, create or assume any Lien
             on any material asset other than in the ordinary
             course consistent with past practices;

                  (f)  Aetna will not, and will not permit any
             Subsidiary of Aetna to, issue, deliver or sell, or
             authorize or propose the issuance, delivery or sale
             of, any capital stock of Aetna or Aetna Subsidiary
             Securities or any securities convertible into or
             exchangeable for, or any rights, warrants or options
             to acquire, any such securities of Aetna or any Aetna
             Subsidiary Securities except (i) pursuant to contracts
             and commitments existing on the date hereof, (ii) the
             issuance of Aetna Stock pursuant to existing Aetna
             stock plans or in connection with the exercise of
             Aetna Stock Options, and (iii) any such securities
             issued in one or a series of transactions at fair
             market value which would not require the approval of
             the shareholders of Aetna under the applicable NYSE
             rules;

                  (g) except as disclosed in Schedule 6.5(g), (i)
             Aetna will not split, combine or reclassify, or take
             any other similar action with respect to, any capital
             stock of Aetna, and (ii) Aetna will not, and will not
             permit any Subsidiary of Aetna to, repurchase, redeem
             or otherwise acquire an amount of shares of capital
             stock of, or other ownership interests in, Aetna or
             any Aetna Subsidiary Securities which repurchase,
             redemption or other acquisition, individually or in
             the aggregate, is material to Aetna and its
             Subsidiaries taken as a whole;

                  (h)  except for borrowings or guarantees in the
             ordinary course of business consistent with past
             practice, Aetna will not permit any Aetna Health
             Operation to incur or assume any indebtedness from any
             third party for borrowed money or guarantee any such
             indebtedness;

                  (i)  except for (i) loans, advances or capital
             contributions to or investments in Subsidiaries of
             Aetna, (ii) investments in securities consistent with
             past practice or (iii) other loans, advances, capital
             contributions or investments in an aggregate amount
             not exceeding $25,000,000, Aetna will not permit any
             Aetna Health Operation to, make any material loans,
             advances or capital contributions to, or investments
             in, any other Person;

                  (j)  Aetna will not, and will not permit any of
             its Subsidiaries to, authorize, recommend, propose or
             announce an intention to adopt a plan of complete or
             partial liquidation or dissolution of Aetna or any
             Subsidiary of Aetna, or any plan of division or share
             exchange involving Aetna or any of its Subsidiaries;

                  (k)  Aetna will not, and will not permit any
             Subsidiary of Aetna to, change any method of
             accounting or any accounting principle or practice
             used by Aetna or any Subsidiary of Aetna, except for
             any such change required by reason of a concurrent
             change in generally accepted accounting principles or
             statutory accounting principles;

                  (l)  except as previously disclosed to U.S.
             Healthcare and except for such contracts as would not
             be material to Aetna or the Aetna Health Operation or
             material to their operation in any Standard
             Metropolitan Statistical Area, Aetna will not permit
             any Aetna Health Operation to enter into any contract
             limiting the right of any Aetna Health Operation at
             any time on or after the date of this Agreement or
             U.S. Healthcare or any of its Subsidiaries or
             Affiliates at or after the Merger Date, to engage in,
             or to compete with any Person in, any business,
             including, without limitation, any contract which
             includes exclusivity provisions restricting the
             geographical area in which, or the method by which,
             any such business may be conducted by Aetna or any of
             its Subsidiaries or Affiliates, or by U.S. Healthcare
             or any of its Subsidiaries or Affiliates after the
             Merger Date;

                  (m)  Aetna will not permit any Aetna Health
             Operation to enter into any acquisition, joint
             venture, national vendor or franchising agreement or
             arrangement which is material to Aetna and its
             Subsidiaries, taken as a whole;

                  (n)  subject (in the case of an acquisition) to
             Section 6.5(b), Aetna will not permit any Aetna Health
             Operation to enter into any agreement or arrangement
             with a third party on an exclusive basis to offer or
             market any of the following services of such third
             party:  group life, disability, managed workers'
             compensation, long term care, dental, behavioral or
             pharmacy benefits; and

                  (o)  Aetna will not, and will not permit any
             Subsidiary of Aetna to, agree, commit or adopt any
             plan or proposal to do any of the foregoing.

                  SECTION 6.6.  Other Offers Relating to Aetna. 
                                ______________________________
          From the date hereof until the termination hereof, Aetna
          will not, and will cause its Subsidiaries and the
          directors, officers, employees, financial advisors and
          other agents or representatives of Aetna or any of its
          Subsidiaries not to, directly or indirectly, take any
          action to solicit, initiate or encourage any Aetna
          Acquisition Proposal or engage in negotiations with, or
          disclose any nonpublic information relating to Aetna or
          any Subsidiary of Aetna or afford access to the
          properties, books or records of Aetna or any Subsidiary
          of Aetna to, any Person that may be considering making,
          or has made, an Aetna Acquisition Proposal; provided that
          nothing contained in this Section 6.6 shall prevent Aetna
          from furnishing non-public information to, or entering
          into discussions or negotiations with, any Person in
          connection with an unsolicited bona fide Aetna
          Acquisition Proposal, with respect to if and only to the
          extent that (1) the Board of Directors of Aetna
          determines in good faith after consultation with
          independent counsel that such action is necessary in
          order to comply with its fiduciary duties under
          applicable law and (2) prior to furnishing non-public
          information to, or entering into discussions or
          negotiations with, such Person, Aetna receives from such
          Person an executed confidentiality agreement with terms
          no less favorable to Aetna than those contained in the
          Confidentiality Agreement.  Aetna will promptly (and in
          no event later than 24 hours after receipt of the
          relevant Aetna Acquisition Proposal) notify (which notice
          shall be provided orally and in writing and shall
          identify the Person making the relevant Aetna Acquisition
          Proposal and set forth the material terms thereof) U.S.
          Healthcare after receipt of any Aetna Acquisition
          Proposal or any request for nonpublic information
          relating to Aetna or any Subsidiary of Aetna or for
          access to any properties, books or records of Aetna or
          any Subsidiary of Aetna by any Person that may be
          considering making, or has made, an  Aetna Acquisition
          Proposal and will keep U.S. Healthcare fully informed of
          the status and details of any such Aetna Acquisition
          Proposal.  Aetna shall give U.S. Healthcare at least one
          days' advance notice of any information to be supplied
          to, and at least three days' advance notice of any
          agreement to be entered into with, any Person making such
          Aetna Acquisition Proposal.  Aetna shall, and shall cause
          its Subsidiaries and the directors, officers, employees,
          financial advisors and other agents or representatives of
          Aetna or any of its Subsidiaries to, cease immediately
          and cause to be terminated all activities, discussions or
          negotiations, if any, with any Persons conducted
          heretofore with respect to any Aetna Acquisition
          Proposal.  For purposes of this Agreement, "Aetna
          Acquisition Proposal" means any offer or proposal for, or
          any indication of interest in, (i) a merger or other
          business combination involving Aetna or any of the Aetna
          Health Operations or (ii) the acquisition in any manner
          of any significant equity interest in, or a substantial
          portion of the assets of, the Aetna Health Operations, in
          each case other than the transactions contemplated by
          this Agreement.

                  SECTION 6.7.  Amendment of the Stock Purchase
                                _______________________________
          Agreement.  Aetna agrees that it will not agree to any
          _________
          amendment, modification or waiver of the Stock Purchase
          Agreement which would have a Material Adverse Effect on
          Aetna or which would materially impair or adversely
          affect in a material respect the ability of Aetna to
          satisfy its obligations under this Agreement.

                  SECTION 6.8.  Dividends.  It is understood by
                                _________
          U.S. Healthcare that the annual dividend to be paid in
          respect of Parent Common Stock (the "New Annual
          Dividend") will be an amount below the dividend currently
          paid in respect of Aetna Common Stock.  Initially after
          the Merger Date, subject to applicable law, the New
          Annual Dividend will not be less than $0.80 per share of
          Parent Common Stock.

                                       ARTICLE 7

                                  COVENANTS OF AETNA,
                               U.S. HEALTHCARE AND PARENT

                  The parties hereto agree that:

                  SECTION 7.1.  Best Efforts.  Subject to the terms
                                ____________
          and conditions of this Agreement, each party will use its
          reasonable best efforts to take, or cause to be taken,
          all actions and to do, or cause to be done, all things
          necessary, proper or advisable under applicable laws and
          regulations to consummate the Mergers and the other
          transactions contemplated by this Agreement. 

                  SECTION 7.2.  Cooperation.  Without limiting the
                                ___________
          generality of Section 7.1, Aetna and U.S. Healthcare
          shall together, or pursuant to an allocation of
          responsibility to be agreed between them, coordinate and
          cooperate (i) with respect to the timing of the Aetna
          Shareholder Meeting and U.S. Healthcare Shareholder
          Meeting and shall use their reasonable best efforts to
          hold such meetings on the same day, (ii) in connection
          with the preparation of U.S. Healthcare Disclosure
          Documents, the Aetna Disclosure Documents and the Parent
          Disclosure Documents, (iii) in determining whether any
          action by or in respect of, or filing with, any
          governmental body, agency, official or authority is
          required, or any actions, consents, approvals or waivers
          are required to be obtained from parties to any material
          contracts, in connection with the consummation of the
          Mergers or the other transactions contemplated by this
          Agreement, (iv) in seeking any such actions, consents,
          approvals or waivers or making any such filings,
          furnishing information required in connection therewith
          or with the U.S. Healthcare Disclosure Documents, the
          Aetna Disclosure Documents and the Parent Disclosure
          Documents, and timely seeking to obtain any such actions,
          consents, approvals or waivers and (v) in diligently
          opposing any objections to, appeals from or other similar
          actions with respect to any such actions, consents,
          approvals or waivers.  Subject to the terms and
          conditions of this Agreement, Parent, Aetna and U.S.
          Healthcare will each use its reasonable best efforts to
          have the Form S-4 declared effective under the 1933 Act
          as promptly as practicable after the Form S-4 is filed. 

                  SECTION 7.3.  Public Announcements.  Aetna and
                                ____________________
          U.S. Healthcare will (i) mutually agree on the text of
          any press release and (ii) consult with each other before
          making any other public statement with respect to this
          Agreement and the transactions contemplated by this
          Agreement, except, in each such case, as may be required
          by applicable law or any listing or similar agreement
          with any national securities exchange or the National
          Association of Securities Dealers Automated Quotation
          System.

                  SECTION 7.4.  Further Assurances.  At and after
                                __________________
          the Merger Date, the directors and officers of each of
          the surviving corporations in the Mergers will be
          authorized to execute and deliver, in the name and on
          behalf of (x) U.S. Healthcare or U.S. Healthcare Sub, and
          (y) Aetna or Aetna Sub, any deeds, bills of sale,
          assignments or assurances and to take and do, in the name
          and on behalf of (x) U.S. Healthcare or U.S. Healthcare
          Sub, and (y) Aetna or Aetna Sub, any other actions and
          things to vest, perfect or confirm of record or otherwise
          in such surviving corporation any and all right, title
          and interest in, to and under any of the rights,
          properties or assets of U.S. Healthcare or Aetna, as
          applicable, acquired or to be acquired by such surviving
          corporation as a result of, or in connection with, the
          Mergers.

                  SECTION 7.5.  Rule 145 Affiliates.  At least 40
                                ___________________
          days prior to the Merger Date, each of U.S. Healthcare
          and Aetna (each of which is referred to for purposes of
          this Section 7.5 as a "Subject Company") shall cause to
          be delivered to Parent a letter identifying all Persons
          who are at the time of the Subject Company's Shareholder
          Meeting described in Section 5.2 or 6.2, as applicable,
          deemed to be "affiliates" of the Subject Company for
          purposes of Rule 145 under the 1933 Act (the "1933 Act
          Affiliates").  Each Subject Company shall use its best
          efforts to cause each person who is identified as a 1933
          Act Affiliate to deliver to Parent at least 30 days prior
          to the Merger Date an agreement substantially in the form
          of Exhibit B-1 or B-2, as applicable, to this Agreement.

                  SECTION 7.6.  Director and Officer Liability. 
                                ______________________________
          (a)  From and after the Merger Date, Parent shall, and
          shall cause the U.S. Healthcare Surviving Corporation to,
          indemnify, defend and hold harmless any person who is on
          the date hereof, or has been at any time prior to the
          date hereof, or who becomes prior to the Merger Date, an
          officer, director, or employee or agent, and the
          Principal Shareholder (the "Indemnified Party") of U.S.
          Healthcare or any of its Subsidiaries against all losses,
          claims, damages, liabilities, costs and expenses
          (including attorney's fees and expenses), judgments,
          fines, losses, and amounts paid in settlement in
          connection with any actual or threatened action, suit,
          claim, proceeding or investigation (each a "Claim") to
          the extent that any such Claim is based on, or arises out
          of, (i) the fact that such person is or was a director,
          officer, employee or agent or the Principal Shareholder
          of U.S. Healthcare or any of its Subsidiaries at any time
          prior to the Merger Date or is or was serving at the
          request of U.S. Healthcare or any of its Subsidiaries as
          a director, officer, employee or agent of another
          corporation, partnership, joint venture, trust or other
          enterprise at any time prior to the Merger Date, or (ii)
          this Agreement, the Voting Agreement or any of the
          transactions contemplated hereby or thereby, or (iii)
          Claims relating to the facts specified in the
          consolidated lawsuit captioned J.H. Realty et. al. v.
                                         _____________________
          U.S. Healthcare (C.A. 95-CV-4176 and 95-CV-7180 (E.D.
          _______________
          Pa.)) in each case to the extent that any such Claim
          pertains to any matter or fact arising, existing, or
          occurring prior to or at the Merger Date, regardless of
          whether such Claim is asserted or claimed prior to, at or
          after the Merger Date (the matters described in clauses
          (i), (ii) and (iii) the "Pre-Merger Matters"), to the
          fullest extent indemnified under U.S. Healthcare's
          articles of incorporation, bylaws in effect as of the
          date hereof or indemnification agreements in effect at
          the date hereof, including provisions relating to
          advancement of expenses incurred in the defense of any
          action or suit; provided that, for purposes of the
                          ________
          foregoing, the Principal Shareholder, in his capacity as
          such, shall be deemed to be a beneficiary of such
          indemnification provisions; and, provided further that
                                           ________ _______
          such indemnification shall be subject to any limitation
          imposed from time to time under applicable laws.

                  (b)  Parent and the U.S. Healthcare Surviving
          Corporation agree that all rights to indemnification and
          all limitations or exculpation of liabilities existing in
          favor of the Indemnified Party as provided in U.S.
          Healthcare's articles of incorporation and bylaws as in
          effect as of the date hereof shall continue in full force
          and effect with respect to Pre-Merger Matters, without
          any amendment thereto, for a period of six years from the
          Merger Date to the extent such rights are consistent with
          Pennsylvania Law; provided that, in the event any Claim
                            ________ ____
          or Claims with respect to any such Pre-Merger Matters are
          asserted or made within such six year period, all rights
          to indemnification in respect of any such Claim or Claims
          shall continue until disposition of any and all such
          Claims; provided further, that any determination required
                  ________ _______
          to be made with respect to whether an Indemnified Party's
          conduct complies with the standards set forth under
          Pennsylvania Law, U.S. Healthcare's articles of
          incorporation or bylaws or such agreements, as the case
          may be, shall be made by independent legal counsel
          selected by the Indemnified Party and reasonably
          acceptable to Parent; and provided further, that nothing
                                    ________ _______
          in this Section 7.6 shall impair any rights or
          obligations of any present or former directors or
          officers of U.S. Healthcare.

                  (c)  In the event Parent or the U.S. Healthcare
          Surviving Corporation or any of their successors or
          assigns (i) consolidates with or merges into any other
          Person and shall not be the continuing or surviving
          corporation or entity of such consolidation or merger, or
          (ii) transfers or conveys all or substantially all of its
          properties and assets to any Person, then, and in each
          such case, to the extent necessary to effectuate the
          purposes of this Section 7.6, proper provision shall be
          made so that the successors and assigns of Parent and
          U.S. Healthcare assume the obligations set forth in this
          Section 7.6 and none of the actions described in clause
          (i) or (ii) shall be taken until such provision is made.

                  (d)  Parent or the U.S. Healthcare Surviving
          Corporation shall maintain U.S. Healthcare's officers'
          and directors' liability insurance policy as of the
          Merger Date ("D&O Insurance") with respect to Pre-Merger
          Matters for a period of not less than six years after the
          Merger Date, provided, that Parent or the U.S. Healthcare
                       ________
          Surviving Corporation may substitute therefor policies of
          substantially similar coverage and amounts containing
          terms no less advantageous to such former directors or
          officers; provided, further, if the existing D&O
                    ________  _______
          Insurance with respect to Pre-Merger Matters expires or
          is canceled during such period, Parent or the U.S.
          Healthcare Surviving Corporation will use their best
          efforts to obtain substantially similar D&O Insurance;
          and provided further that in satisfying its obligations
              ________ _______
          under this Section, Parent shall not be obligated to pay
          premiums in excess of 150% of the premium for D&O
          Insurance paid by U.S. Healthcare as of the date hereof,
          which amount has previously been disclosed to Aetna.

                  (e)  The terms of Section 7.6(a) - 7.6(d) shall
          also apply, mutatis mutandis, to Aetna, and Parent shall
                      _______ ________
          have obligations with respect to Aetna corresponding to
          those of Parent with respect to U.S. Healthcare set forth
          in Section 7.6.

                  (f)  Notwithstanding anything to the contrary in
          Section 7.6(a), the obligations of Parent to indemnify
          the Principal Shareholder set forth in Section 7.6(a) in
          his capacity as such and not as a director or officer
          shall (i) take effect as of the date hereof, (ii) prior
          to the Merger Date, be the obligations of Aetna and (iii)
          be limited to Claims based on, or arising out of, this
          Agreement, the Voting Agreement or any of the
          transactions contemplated hereby or thereby involving the
          Principal Shareholder in his capacity as such.  Expenses
          that are subject to indemnification under this Section
          7.6 shall be advanced by Parent or Aetna, as applicable,
          and indemnification shall be paid in accordance with the
          procedures set forth in U.S. Healthcare's bylaws in
          effect as of the date hereof as the same have been
          modified pursuant to Section 7.6(b).

                  SECTION 7.7.  Subsidiary Agreements.  Parent
                                _____________________
          shall cause the U.S. Healthcare Surviving Corporation to
          perform its obligations under the agreements described in
          Schedule 7.7 (the "Scheduled Contracts") and the
          employment agreements with the Specified U.S. Healthcare
          Officers.  In addition, Parent shall not permit the U.S.
          Healthcare Surviving Corporation to terminate the
          Scheduled Contracts until 2004 absent a breach by any
          other party thereto.

                  SECTION 7.8.  Plans Following the Closing. 
                                ___________________________
          Through December 31, 1998, Parent will maintain employee
          plans and benefit arrangements for the benefit of U.S.
          Healthcare employees that are reasonably comparable in
          the aggregate to the U.S. Healthcare Employee Plans and
          U.S. Healthcare Benefit Arrangements.  Any changes shall
          be deemed reasonably comparable in the aggregate unless
          unanimously rejected by the two Co-Presidents of U.S.
          Healthcare in their reasonable good faith discretion.

                  SECTION 7.9.  Voting of Shares.  Aetna and U.S.
                                ________________
          Healthcare shall cause Parent to vote, whether by means
          of written consent or otherwise, all shares of capital
          stock of U.S. Healthcare Sub and Aetna Sub owned by
          Parent or any of its Subsidiaries in favor of the
          approval and adoption of this Agreement.

                  SECTION 7.10. Form S-4.  Subject to Sections 5.2
                                ________
          and 6.2, Aetna and U.S. Healthcare shall cause Parent to
          promptly prepare and file with the SEC a registration
          statement on Form S-4 with respect to the Parent Common
          Stock and Parent Preferred Stock issuable in connection
          with the Mergers (the "Form S-4") and to take any action
          required to be taken under applicable Blue Sky law in
          connection with such issuance of Parent Common Stock and
          Parent Preferred Stock.

                  SECTION 7.11. Certain Corporate Matters with
                                ______________________________
          Respect to Parent.  (a) Aetna and U.S. Healthcare shall
          _________________
          cause Parent to take all necessary corporate action to
          amend the certificate of incorporation and bylaws of
          Parent prior to the Merger Date (x) to be in
          substantially the form of the certificate of
          incorporation and bylaws of Aetna in effect on the date
          hereof (modified (i) as may be appropriate to effect the
          transactions contemplated by this Agreement, (ii) as may
          be appropriate to reflect the fact that Parent is not an
          "insurance corporation", (iii) to change the par value of
          the Parent Common Stock from  $1.00 to $.01, (iv) to
          change the name of Parent to Aetna, Inc., (v) to increase
          the authorized capital stock of the Parent and (vi) as
          may be agreed by U.S. Healthcare and Aetna), and (y) to
          fix the designation, rights and preferences of the Parent
          Preferred Stock substantially in the form of Exhibit A
          hereto.   

                  (b) From and after the Merger Date, until
          successors are duly elected or appointed and qualified in
          accordance with applicable law, the Board of Directors of
          Parent shall consist of the Board of Directors of Aetna
          immediately prior to the Merger Date, and, no later than
          sixty days following the Merger Date, the Board of
          Directors of Parent shall be expanded to include Leonard
          Abramson (the "Principal Shareholder"), and two other
          Persons designated by U.S. Healthcare (the Principal
          Shareholder and such Persons, the "U.S. Healthcare
          Designees"), provided that such other Persons may elect
                       ________
          to become members of the Board of Directors of Parent at
          any time during such sixty day period.  The U.S.
          Healthcare Designees shall be nominated by the Parent
          Board of Directors for election to the Parent Board of
          Directors for a period of no less than two consecutive
          years immediately following the Merger Date.  The Parent
          Board of Directors shall appoint the Principal
          Shareholder to any committee of the Parent Board of
          Directors that is constituted for the purpose of
          identifying and recommending a candidate to become Chief
          Executive Officer of Parent at such time as the current
          Chief Executive Officer of Parent retires.

                  (c)  From and after the Merger Date, all of the
          lines of business and operations of U.S. Healthcare
          (including but not limited to all HMO, POS, indemnity
          health insurance and other lines of business and
          operations) and all of the domestic (U.S.) lines of
          business and operations of Aetna Health Plans (including
          but not limited to all Health, Specialty Health and Group
          Insurance lines of business and operations) (hereinafter
          referred to collectively as "The Consolidated Health
          Operations") shall report to the two Co-Presidents of
          U.S. Healthcare as of the date hereof, who will then
          assume the positions of Co- Presidents of the
          Consolidated Health Operations (hereinafter referred to
          as the "Co-Presidents").  The Co-Presidents shall have
          their principal offices in Blue Bell, PA  or such other
          location as they shall determine, and shall report
          directly and exclusively to the Chief Executive Officer
          of Aetna.  Reporting directly and exclusively to the Co-
          Presidents shall be the individuals who serve as the
          Chief Financial Officer, Chief Medical Officer, Senior
          Sales Officer and Chief Legal Officer of U.S. Healthcare
          as of the date hereof, who will each assume similar
          positions and responsibilities for the Consolidated
          Health Operations as of the Merger Date except as may
          otherwise be mutually agreed between the Co-Presidents
          and any of the specific officers.  The Co-Presidents will
          also select and appoint those other senior officers who
          will be reporting directly to the Co-Presidents and
          responsible for other areas of responsibility for the
          Consolidated Health Operations (including but not limited
          to Group Insurance, Information Technology, Operations,
          Sales, National Accounts, Behavioral Health, Dental,
          Pharmacy, Health Education, and Human Resources),
          provided, however, that such appointments shall be made
          only in consultation with and with the approval of the
          Chief Executive Officer of Aetna.  The Co-Presidents will
          also serve as Co-Chairs of a transition group consisting
          of U.S. Healthcare and Aetna executives who will plan for
          and oversee the integration activities of the
          Consolidated Health Operations to occur on and after the
          Merger Date.  For a period of twenty-four (24) months
          from the Merger Date, no person employed by U.S.
          Healthcare as of the date hereof will be discharged with
          or without cause or have his or her compensation reduced
          or his or her principal office location changed absent
          the prior consent and approval of the Co-Presidents.  Any
          change or termination in the use of the U.S. Healthcare
          name or apple logo with respect to U.S. Healthcare
          products marketed as of the date hereof shall be as
          mutually agreed by the Chairman of Aetna and the Co-
          Presidents.  The provisions of this paragraph shall be
          subject to the terms of any employment agreements entered
          into by U.S. Healthcare with any of its employees as of
          the date hereof or with the Specified U.S. Healthcare
          Officers as contemplated by this Agreement.

                  (d) Each of U.S. Healthcare and Aetna shall cause
          Parent to take all necessary corporate action for the
          establishment of the Parent stock option plan
          contemplated by Sections 1.7 and 1.8 hereof and agrees to
          vote the shares of capital stock of Parent owned by it in
          favor of the adoption of such plan as required under the
          laws of the State of Connecticut.

                  (e) From the date hereof until the Merger Date,
          Aetna and U.S. Healthcare shall cause Parent (x) not to
          take any action inconsistent with the provisions of this
          Agreement and (y) not to conduct business or activity
          other than in connection with this Agreement.

                  SECTION 7.12. Governmental Authorization.  Aetna
                                __________________________
          and U.S. Healthcare shall cause Parent to take all
          actions by or in respect of, or filing with, any
          governmental body, agency, official or authority required
          for the execution, delivery and performance by Parent of
          this Agreement and the consummation by Parent of the
          transactions contemplated by this Agreement, including
          (a) compliance with any applicable requirements of the
          HSR Act; (b) compliance with any applicable requirements
          of the 1934 Act; (c) compliance with any applicable
          requirements of the 1933 Act; (d) compliance with any
          applicable foreign or state securities or Blue Sky laws;
          (e) approvals or filings required under laws, rules and
          regulations governing insurance and insurance companies,
          health maintenance organizations, health care services
          plans, third party administrators or other managed health
          care organizations; and (f) the filing with the Secretary
          of the State and, if required, the Insurance Commissioner
          of the State of Connecticut of an amendment to the
          Parent's certificate of incorporation to reflect the
          matters contemplated by Section 7.11.

                  SECTION 7.13. Disclosure Documents.   Aetna and
                                ____________________
          U.S. Healthcare shall cause each document required to be
          filed by Parent with the SEC in connection with the
          transactions contemplated by this Agreement (the "Parent
          Disclosure Documents"), including, without limitation,
          the Form S-4, if any, to be filed with the SEC in
          connection with the Mergers, and any amendments or
          supplements thereto, to, when filed, comply as to form in
          all material respects with the applicable requirements of
          the 1934 Act.

                  SECTION 7.14. Listing of Stock.    Each of Aetna
                                ________________
          and U.S. Healthcare shall, subject to the terms of this
          Agreement, use its reasonable best efforts to make
          application to the NYSE or such other stock exchanges as
          shall be agreed for the listing of the Parent Common
          Stock and Parent Preferred Stock and to list such stock
          on the NYSE or such other exchanges.

                                       ARTICLE 8

                               CONDITIONS TO THE MERGERS

                  SECTION 8.1.  Conditions to the Obligations of
                                ________________________________
          Each Party.  The obligations of U.S. Healthcare to
          __________
          consummate the U.S. Healthcare Sub Merger and of Aetna to
          consummate the Aetna Sub Merger are subject to the
          satisfaction (or waiver by the party for whose benefit
          such conditions exist) of the following conditions:

                  (a)  this Agreement and the transactions
             contemplated by this Agreement shall have been
             approved and adopted by the shareholders of U.S.
             Healthcare in accordance with the laws of the
             Commonwealth of Pennsylvania;

                  (b) this Agreement and the transactions
             contemplated by this Agreement shall have been
             approved and adopted by the shareholders of Aetna in
             accordance with the laws of the State of Connecticut;

                  (c)  any applicable waiting period under the HSR
             Act relating to the transactions contemplated by this
             Agreement shall have expired;

                  (d)  no provision of any applicable law or
             regulation and no judgment, injunction, order or
             decree of a court of competent jurisdiction shall
             prohibit the consummation of either of the Mergers;

                  (e)  the Form S-4 shall have been declared
             effective under the 1933 Act and no stop order
             suspending the effectiveness of the Form S-4 shall be
             in effect and no proceedings for such purpose shall be
             pending before or threatened by the SEC;

                  (f) (i)  U.S. Healthcare shall have received an
             opinion of Skadden, Arps, Slate, Meagher & Flom in
             form and substance reasonably satisfactory to U.S.
             Healthcare, and (ii) Aetna shall have received an
             opinion of Davis Polk & Wardwell in form and substance
             satisfactory to Aetna, in each case on the basis of
             certain facts, representations and assumptions set
             forth in such opinion which are consistent with the
             state of facts existing on the Merger Date, to the
             effect that neither it nor any of its shareholders
             shall recognize gain or loss for U.S. Federal income
             tax purposes as a result of the Merger to which it is
             a party (other than in respect of (x) the Cash
             Consideration or (y) any cash paid in lieu of
             fractional shares).  In rendering the opinions
             described in the preceding sentence, such counsel may
             require and rely upon representations contained in
             certificates of officers of Parent, U.S. Healthcare,
             Aetna and their respective Subsidiaries;

                  (g)  the shares of Parent Common Stock and Parent
             Preferred Stock issuable in the Mergers shall have
             been approved for listing on the NYSE upon official
             notice of issuance or such other stock exchanges as
             shall be agreed; 

                  (h)  all actions by or in respect of or filings
             with any governmental body, agency, official or
             authority required to permit the consummation of the
             U.S. Healthcare Sub Merger and the Aetna Sub Merger
             including, without limitation, any approvals or
             filings required under federal or state laws, rules
             and regulations governing insurance and insurance
             companies, health maintenance organizations, health
             care services plans, third party administrators or
             other managed health care organizations, or any
             actions or filings pursuant to the New Jersey
             Industrial Site Recovery Act shall have been made or
             obtained; and

                  (i)  the transaction contemplated by the Stock
             Purchase Agreement dated as of November 28, 1995
             between The Travelers Insurance Group Inc. and Aetna
             (the "Stock Purchase Agreement") relating to the
             purchase and sale of 100% of the Common Stock of The
             Aetna Casualty and Surety Company and The Standard
             Fire Insurance Company shall have been consummated.

                  SECTION 8.2.  Conditions to the Obligations of
                                ________________________________
          Aetna.  The obligations of Aetna to consummate the Aetna
          _____
          Sub Merger are subject to the satisfaction (or waiver by
          Aetna) of the following further conditions:

                  (a) (i) U.S. Healthcare shall have performed in
             all material respects all of its obligations hereunder
             required to be performed by it at or prior to the
             Merger Date, (ii) the representations and warranties
             of U.S. Healthcare contained in this Agreement shall
             be true at and as of the Merger Date, as if made at
             and as of the Merger Date (without giving effect to
             any materiality or Material Adverse Effect
             qualifications or materiality exceptions contained
             therein); provided that the condition set forth in
                       ________
             clause (ii) shall be deemed satisfied if any
             inaccuracies in any such representations and
             warranties at and as of the Merger Date (without
             giving effect to any materiality or Material Adverse
             Effect qualifications or materiality exceptions
             contained therein) would not, individually or in the
             aggregate, have or reasonably be expected to have a
             Material Adverse Effect on U.S. Healthcare; and Aetna
             shall have received a certificate signed by an
             executive officer of U.S. Healthcare to the effect set
             forth in clauses (i) and (ii) (after giving effect to
             the proviso therein); and

                  (b)  At least twelve of the Persons listed on
             Schedule 8.2(b) shall have entered into employment
             agreements with U.S. Healthcare substantially in the
             form of Schedule 3.11(j)(A) hereto.

                  SECTION 8.3.  Conditions to the Obligations of
                                ________________________________
          U.S. Healthcare.  The obligations of U.S. Healthcare to
          _______________
          consummate the U.S. Healthcare Sub Merger are subject to
          the satisfaction (or waiver by U.S. Healthcare) of the
          following further conditions:

                  (a)  (i)  Aetna shall have performed in all
             material respects all of its obligations hereunder
             required to be performed by it at or prior to the
             Merger Date, (ii) the representations and warranties
             of Aetna contained in this Agreement shall be true at
             and as of the Merger Date, as if made at and as of the
             Merger Date (without giving effect to any materiality
             or Material Adverse Effect qualifications or
             materiality exceptions contained therein); provided
                                                        ________
             that the condition set forth in clause (ii) shall be
             deemed satisfied if any inaccuracies in any such
             representations and warranties at and as of the Merger
             Date (without giving effect to any materiality or
             Material Adverse Effect qualifications or materiality
             exceptions contained therein) would not, individually
             or in the aggregate, have or reasonably be expected to
             have a Material Adverse Effect on Aetna; and U.S.
             Healthcare shall have received a certificate signed by
             an executive officer of Aetna to the effect set forth
             in clauses (i) and (ii) hereof (after giving effect to
             the proviso therein); and 

                  (b)  the average of the closing prices per share
             of the Aetna Common Stock on the NYSE Composite Tape
             for the 20 consecutive trading days immediately prior
             to the proposed Merger Date (the "Average Closing
             Stock Price") is not less than $60.90, provided that
                                                    ________
             this condition shall be deemed to be satisfied
             notwithstanding the fact that the Average Closing
             Stock Price is less than $60.90 if Aetna, in its sole
             discretion, agrees to increase that portion of the
             Merger Consideration payable in respect of each share
             of U.S. Healthcare Stock by an amount in cash equal to
             (A) the difference between (I) a fraction, the
             numerator of which is $60.90 and the denominator of
             which is the Average Closing Stock Price and (II) 1,
             and multiplying such difference by (B) the product of
             (y) 0.2995 and (z) the Average Closing Stock Price.

                                       ARTICLE 9

                                      TERMINATION

                  SECTION 9.1.  Termination.  This Agreement may be
                                ___________
          terminated and the Mergers may be abandoned at any time
          prior to the Merger Date (notwithstanding any approval of
          this Agreement by the shareholders of U.S. Healthcare or
          Aetna):

                  (a)  by mutual written consent of U.S. Healthcare
             and Aetna;

                  (b)  by either U.S. Healthcare or Aetna, if the
             Merger has not been consummated by the date twelve
             months following the date of this Agreement;

                  (c)  by either U.S. Healthcare or Aetna, if there
             shall be any law or regulation that makes consummation
             of either of the Mergers illegal or otherwise
             prohibited or if any judgment, injunction, order or
             decree enjoining Aetna or U.S. Healthcare from
             consummating their respective Mergers is entered and
             such judgment, injunction, order or decree shall
             become final and nonappealable;

                  (d)  by Aetna, in the event of any breach by the
             Principal Shareholder of any obligations under the
             Voting Agreement dated as of the date hereof (the
             "Voting Agreement") among the Principal Shareholder,
             Aetna Life Insurance and Annuity Company and Aetna
             Life Insurance Company;

                  (e)  (i) by U.S. Healthcare, if the approvals of
             the shareholders of Aetna contemplated by this
             Agreement shall not have been obtained by reason of
             the failure to obtain the required vote at a duly held
             meeting of shareholders or any adjournment thereof or
             (ii) by Aetna, if the approvals of the shareholders of
             U.S. Healthcare contemplated by this Agreement shall
             not have been obtained by reason of the failure to
             obtain the required vote at a duly held meeting of
             shareholders or any adjournment thereof;

                  (f)  by Aetna, if, (i) the Board of Directors of
             U.S. Healthcare determines not to call or hold the
             U.S. Healthcare Shareholder Meeting or (ii) prior to
             the U.S. Healthcare Shareholder Meeting, the Board of
             Directors of U.S. Healthcare shall have withdrawn,
             modified or changed in a manner adverse to Aetna its
             approval or recommendation of this Agreement or the
             U.S. Healthcare Sub Merger;

                  (g)  by U.S. Healthcare, if, (i) the Board of
             Directors of Aetna determines not to call or hold the
             Aetna Shareholder Meeting or (ii) prior to the Aetna
             Shareholder Meeting, the Board of Directors of Aetna
             shall have withdrawn, modified or changed in a manner
             adverse to U.S. Healthcare its approval or
             recommendation of this Agreement or the Aetna Sub
             Merger;

                  (h)  by Aetna, upon a breach of any
             representation, warranty, covenant or agreement of
             U.S. Healthcare, or if any representation or warranty
             of U.S. Healthcare shall become untrue, in either case
             such that the conditions set forth in Section 8.2(a)
             would be incapable of being satisfied by the first
             anniversary of the date hereof (or as otherwise
             extended); 

                  (i)  by U.S. Healthcare, upon a breach of any
             representation, warranty, covenant or agreement of
             Aetna, or if any representation or warranty of Aetna
             shall become untrue, in either case such that the
             conditions set forth in Section 8.3(a) would be
             incapable of being satisfied by the first anniversary
             of the date hereof (or as otherwise extended); 

                  (j)  by U.S. Healthcare, upon payment to Aetna of
             the amounts referred to in Section 10.4(b), if prior
             to the U.S. Healthcare Shareholder Meeting, the Board
             of Directors of U.S. Healthcare shall have withdrawn
             or modified in a manner adverse to Aetna its approval
             or recommendation of this Agreement or the U.S.
             Healthcare Sub Merger in order to permit U.S.
             Healthcare to execute a definitive agreement in
             connection with an Acquisition Proposal with respect
             to U.S. Healthcare which the Board of Directors of
             U.S. Healthcare determines in good faith (based on the
             presentation of an investment banking firm of national
             reputation) to be more favorable to U.S. Healthcare's
             shareholders than the U.S. Healthcare Sub Merger; and

                  (k)  by U.S. Healthcare, if the Stock Purchase
             Agreement is terminated in accordance with its terms.

             The party desiring to terminate this Agreement pursuant
             to this Section 9.1 shall give written notice of such
             termination to the other party in accordance with Section
             10.1.

                  SECTION 9.2.  Effect of Termination.  If this
                                _____________________
          Agreement is terminated pursuant to Section 9.1, this
          Agreement shall become void and of no effect with no
          liability on the part of any party hereto, except that
          (a) the agreements contained in this Section 9.2 and in
          Section 10.4 shall survive the termination hereof and
          (b) no such termination shall relieve any party of any
          liability or damages resulting from any breach by that
          party of this Agreement.

                                       ARTICLE 10

                                     MISCELLANEOUS

                  SECTION 10.1.  Notices.  Except as provided in
                                 _______
          Section 5.4, all notices, requests and other
          communications to any party hereunder shall be in writing
          (including telecopy or similar writing) and shall be
          given,

                       if to Aetna, to:
                                   Aetna Life and Casualty Company
                                   151 Farmington Avenue
                                   Hartford, CT 06156-7505
                                   Fax: 860-549-6755
                                   Attention:  Richard L. Huber
                                               Vice Chairman

                            with a copy to:  

                                   Davis Polk & Wardwell
                                   450 Lexington Avenue
                                   New York, New York  10017
                                   Fax: (212) 450-4800
                                   Attention:  Lewis B. Kaden

                       if to U.S. Healthcare, to:

                                   U.S. Healthcare, Inc.
                                   780 Jolly Road
                                   P.O. Box 1109
                                   Blue Bell, PA 19422
                                   Fax:  215-283-6401
                                   Attention:  David Simon

                            with a copy to:  

                                   Skadden, Arps, Slate, Meagher & Flom
                                   919 Third Avenue
                                   New York, New York  10022
                                   Fax: (212) 735-2000
                                   Attention:  Stephen M. Banker

                       if to Parent, to:

                                   each of the addresses set forth above

          or such other address or telecopy number as such party
          may hereafter specify for the purpose by notice to the
          other parties hereto.  Each such notice, request or other
          communication shall be effective (a) if given by
          telecopy, when such telecopy is transmitted to the
          telecopy number specified in this Section and the
          appropriate telecopy confirmation is received or (b) if
          given by any other means, when delivered at the address
          specified in this Section.

                  SECTION 10.2.  Entire Agreement; Survival of
                                 _____________________________
          Representations and Warranties.  (a)  This Agreement
          ______________________________
          (including the Exhibits hereto), the other agreements
          referred to in this Agreement and the Confidentiality
          Agreement constitute the entire agreement among the
          parties with respect to the subject matter hereof and
          thereof and supersede all prior agreements,
          understandings and negotiations, both written and oral,
          between the parties with respect to such subject matter. 
          None of this Agreement, the Confidentiality Agreement or
          any other agreement contemplated hereby or thereby (or
          any provision hereof or thereof) is intended to confer on
          any Person other than the parties hereto or thereto any
          rights or remedies (except that Sections 7.6 and 7.7 are
          intended to confer rights and remedies on the Persons
          specified therein, Sections 7.8 and 7.11(c) are intended
          to confer rights and remedies on the Co-Presidents and
          Section 7.11(b) is intended to confer rights and remedies
          on the Principal Shareholder).

                  (b)  The representations and warranties contained
          herein shall not survive the Merger Date.

                  SECTION 10.3.  Amendments; No Waivers.  (a)  Any
                                 ______________________
          provision of this Agreement may be amended or waived
          prior to the Merger Date if, and only if, such amendment
          or waiver is in writing and signed, in the case of an
          amendment, by U.S. Healthcare, Aetna and Parent or, in
          the case of a waiver, by the party against whom the
          waiver is to be effective; provided that after the
                                     ________
          adoption of this Agreement by the shareholders of (i)
          U.S. Healthcare, no such amendment or waiver shall,
          without the further approval of such shareholders, alter
          or change (A) the amount or kind of consideration to be
          received in exchange for any shares of capital stock of
          U.S. Healthcare, or (B) any of the terms or conditions of
          this Agreement if such alteration or change would
          adversely affect the holders of any shares of capital
          stock of U.S. Healthcare and (ii) Aetna, no such
          amendment or waiver shall, without the further approval
          of such shareholders, alter or change (A) the amount or
          kind of consideration to be received in exchange for any
          shares of capital stock of Aetna or (B) any of the terms
          or conditions of this Agreement if such alteration or
          change would adversely affect the holders of any shares
          of capital stock of Aetna.

                  (b)  No failure or delay by any party in
          exercising any right, power or privilege hereunder shall
          operate as a waiver thereof nor shall any single or
          partial exercise thereof preclude any other or further
          exercise thereof or the exercise of any other right,
          power or privilege.  The rights and remedies herein
          provided shall be cumulative and not exclusive of any
          rights or remedies provided by law.

                  SECTION 10.4.  Expenses.  (a)  Except as
                                 ________
          otherwise specified in this Section 10.4 or agreed in
          writing by the parties, all costs and expenses incurred
          in connection with this Agreement and the transactions
          contemplated by this Agreement shall be paid by the party
          incurring such cost or expense.

                  (b)  U.S. Healthcare agrees that if this
          Agreement shall be terminated pursuant to Section
          9.1(e)(ii), (f), or (j), it will pay Aetna an amount
          equal to $100,000,000 plus all out-of-pocket expenses,
                                ____
          not to exceed $25,000,000, incurred by Aetna in
          connection with this Agreement, the Mergers and all
          related transactions by wire transfer of immediately
          available funds promptly, but in no event later than two
          business days, after such termination; provided that no
                                                 ________
          payment will be required pursuant to this Section 10.4(b)
          if this Agreement is terminated pursuant to Section
          9.1(e)(ii) unless, after the date hereof, U.S. Healthcare
          shall have received, or there shall have been commenced,
          an Acquisition Proposal with respect to U.S. Healthcare.

                  (c)  U.S. Healthcare agrees that if this
          Agreement shall be terminated pursuant to Section
          9.1(e)(ii) and no payment is required by it pursuant to
          Section 10.4(b), it will reimburse Aetna for all out-of-
          pocket expenses (not to exceed $25,000,000) incurred by
          Aetna in connection with this Agreement, the Merger and
          all related transactions.  Such payment shall be made by
          wire transfer of immediately available funds promptly,
          but in no event later than two business days, after such
          termination.

                  (d)  Aetna agrees that if this Agreement shall be
          terminated (i) pursuant to Section 9.1(e)(i), (g) or (k),
          or (ii) pursuant to Section 9.1(b) and (A) the condition
          set forth in Section 8.1(i) has not been satisfied or
          waived by Aetna and (B) all other conditions set forth in
          Section 8.1 and 8.2 have theretofore been, or are then
          capable of being satisfied, it will pay U.S. Healthcare
          an amount equal to $100,000,000 plus all out-of-pocket
                                          ____
          expenses, not to exceed $25,000,000, incurred by U.S.
          Healthcare in connection with this Agreement, the Mergers
          and all related transactions by wire transfer of
          immediately available funds promptly, but in no event
          later than two business days, after such termination;
          provided that no payment will be required pursuant to
          ________
          this Section 10.4(d) if this Agreement is terminated
          pursuant to Section 9.1(e)(i) unless, after the date
          hereof, Aetna shall have received, or there shall have
          been commenced, an Aetna Acquisition Proposal.

                  (e)  Aetna agrees that if this Agreement shall be
          terminated pursuant to Section 9.1(e)(i) and no payment
          is required by it pursuant to Section 10.4(d), it will
          reimburse U.S. Healthcare for all out-of-pocket expenses
          (not to exceed $25,000,000) incurred by U.S. Healthcare
          in connection with this Agreement, the Mergers and all
          related transactions.  Such payment shall be made by wire
          transfer of immediately available funds promptly, but in
          no event later than two business days, after receipt by
          Aetna of a written notice given by U.S. Healthcare
          setting forth the amount of such expenses.

                  SECTION 10.5.  Successors and Assigns.  The
                                 ______________________
          provisions of this Agreement shall be binding upon and
          inure to the benefit of the parties hereto and their
          respective successors and assigns; provided that no party
                                             ________
          may assign, delegate or otherwise transfer any of its
          rights or obligations under this Agreement without the
          consent of the other parties hereto; provided further
                                               ________ _______
          that Aetna may assign its rights, but not its
          obligations, under this Agreement to a wholly-owned
          subsidiary of Aetna.

                  SECTION 10.6.  Governing Law.  This Agreement
                                 _____________
          shall be construed in accordance with and governed by the
          law of the State of New York (without regard to
          principles of conflict of laws).

                  SECTION 10.7.  Jurisdiction.  Any suit, action or
                                 ____________
          proceeding seeking to enforce any provision of, or based
          on any matter arising out of or in connection with, this
          Agreement or the transactions contemplated by this
          Agreement may be brought against any of the parties in
          the United States District Court for the Southern
          District of New York or any state court sitting in the
          City of New York, Borough of Manhattan, and each of the
          parties hereto hereby consents to the exclusive
          jurisdiction of such courts (and of the appropriate
          appellate courts) in any such suit, action or proceeding
          and waives any objection to venue laid therein.  Process
          in any such suit, action or proceeding may be served on
          any party anywhere in the world, whether within or
          without the State of New York.  Without limiting the
          generality of the foregoing, each party hereto agrees
          that service of process upon such party at the address
          referred to in Section 10.1, together with written notice
          of such service to such party, shall be deemed effective
          service of process upon such party.

                  SECTION 10.8.  Counterparts; Effectiveness.  This
                                 ___________________________
          Agreement may be signed in any number of counterparts,
          each of which shall be an original, with the same effect
          as if the signatures thereto and hereto were upon the
          same instrument.  This Agreement shall become effective
          when each party hereto shall have received counterparts
          hereof signed by all of the other parties hereto.


                  IN WITNESS WHEREOF, the parties hereto have
          caused this Agreement to be duly executed by their respective
          authorized officers as of the day and year first above
          written.

                            AETNA LIFE AND CASUALTY COMPANY

                            By /s/ Ronald Compton          
                            _____________________
                              Name:  Ronald Compton
                              Title: Chairman and Chief Executive Officer

                            U.S. HEALTHCARE, INC.

                            By /s/ Joseph T. Sebastianelli  
                            ______________________________
                              Name:  Joseph T. Sebastianelli
                              Title: Co-President

                            BUTTERFLY, INC.

                            By /s/ Richard Huber            
                            ____________________
                              Name:  Richard Huber
                              Title: Vice President

                            ANTELOPE SUB, INC.

                            By /s/ Richard Huber            
                            ____________________
                              Name:  Richard Huber
                              Title: Vice President

                            NEW MERGER CORPORATION

                            By /s/ James Dickerson          
                            ______________________
                              Name:  James Dickerson
                              Title: President



                                                          EXHIBIT A

                                   FORM OF

                   Designations, Rights and Preferences of
                   6.25% Class C Non-Voting Preferred Stock

                    The terms, limitations and relating rights and
          preferences of shares of the Corporation's Class C Non-
          Voting Preferred Stock without par value to be designated
          as 6.25% PACS, Class C Non-Voting Preferred Stock are
          hereby fixed as follows:

                    SECTION 1.     DESIGNATION AND AMOUNT.

                    The designation of the series of Class C Non-
          Voting Preferred Stock created by this Article ___ shall
          be "6.25% PACS, Class C Non-Voting Preferred Stock" (the
          "PACS").  The authorized number of shares constituting
          the PACS shall be ________ shares.  

                    SECTION 2.     DIVIDENDS. 

                    (a)  The holders of outstanding shares of PACS
          shall be entitled to receive, when, as and if declared by
          the Board of Directors of the Corporation, out of funds
          legally available therefor, cumulative preferential
          dividends from [closing date], 1996, at the rate per
          share of $4.7578 per annum,* in cash payable quarterly in
          equal amounts (other than with respect to the initial
          dividend period) on _______________, ________________,
          ________________, and ____________ of each year (each
          such date being hereinafter referred to as a "Dividend
          Payment Date"), or, if any Dividend Payment Date is not a
          business day, then the Dividend Payment Date shall be the
          next succeeding business day; provided, however, that
                                        ________  _______
          with respect to any dividend period during which a
          redemption occurs, the Corporation may, at its option,
          declare accrued dividends to, and pay such dividends on,
          the redemption date, in which case such dividends would
          be payable on the redemption date in cash to the holders
          of the shares of PACS as of the record date for such
          dividend payment and such accrued dividends would not be
          included in the calculation of the related Call Price (as
          hereinafter defined).  Each dividend on the shares of
          PACS shall be payable to holders of record as they appear
          on the stock register of the Corporation on such record
          date, not less than 10 nor more than 70 days preceding
          the payment dates thereof, as shall be fixed by the Board
          of Directors of the Corporation.  The first dividend
          payment shall be for the period from [closing date], 1996
          to ________, 1996 and the first dividend will be payable
          on _________, 1996.  Dividends (or amounts equal to
          accrued and unpaid dividends) payable on shares of PACS
          for any period less than a full quarterly dividend period
          will be computed on the basis of a 360-day year of twelve
          30-day months and the actual number of days elapsed in
          any period less than one month.  

               *If the annual dividend for the Aetna Common Stock
          at the Merger Date is set at a level above $0.83 per
          share, the annual PACS dividend will be determined as
          follows:  $4.7578 + [(annual dividend per share on Aetna
          Common Stock - $0.83) x 0.8197]

                    Dividends on the shares of PACS will accrue on
          a daily basis beginning on the date immediately following
          a Dividend Payment Date (except that, with respect to the
          initial Dividend Payment Date, dividends on the shares of
          PACS will accrue beginning on [closing date], 1996)
          whether or not there are funds legally available for the
          payment of such dividends and whether or not such
          dividends are declared.  Accumulated unpaid dividends
          shall not bear interest.  Dividends will cease to accrue
          in respect of shares of PACS on the Mandatory Conversion
          Date (as hereinafter defined) or on the date of their
          earlier conversion or redemption.

                    (b)  So long as any shares of PACS are
          outstanding, no dividends or other distributions (other
          than dividends payable in Junior Securities (as defined
          below) or warrants, rights or options exercisable for or
          convertible into Junior Securities, together with cash in
          lieu of fractional shares of Junior Securities or
          fractional interests in any such warrants, rights or
          options), and no redemption, purchase or other
          acquisition for value (other than redemptions, purchases
          or acquisitions payable in Junior Securities or warrants,
          rights or options exercisable for or convertible into
          Junior Securities, together with cash in lieu of
          fractional shares of Junior Securities or fractional
          interests in any such warrants, rights or options), shall
          be paid or made, as the case may be, with respect to, nor
          may any funds be set aside or made available for any
          sinking fund for the purchase or redemption of, (a) the
          Common Capital Stock ____ par value of the Corporation
          ("Common Stock") or any other class or series of the
          Corporation's capital stock ranking junior to the PACS
          with respect to dividends or liquidation preferences
          (such capital stock, including the Common Stock,
          collectively "Junior Securities") or (b) Parity Preferred
          Stock (as defined below) until cumulative dividends on
          the PACS and Parity Preferred Stock in the full amounts
          owing for all dividend periods ending, and all amounts
          payable upon redemption or conversion of PACS and Parity
          Preferred Stock, on or prior to the date on which the
          proposed dividend or distribution is paid, or the
          proposed redemption, purchase or other acquisition is
          effected, have been, in the case of dividends, declared
          and, in all cases, paid or set apart for payment.

                    (c)  If any dividends are not paid or set apart
          in full, as aforesaid, with respect to shares of PACS and
          any Parity Preferred Stock, all dividends declared with
          respect to shares of PACS and any Parity Preferred Stock
          shall be declared pro rata based on the number of shares
          so that the amount of dividends declared per share on
          shares of PACS and such Parity Preferred Stock shall in
          all cases bear to each other the same ratio that accrued
          dividends per share on shares of PACS and such Parity
          Preferred Stock bear to each other.  Holders of the
          shares of PACS shall not be entitled to any dividends,
          whether payable in cash, property or stock, in excess of
          full cumulative dividends as provided in Section (2)(a).

                    (d)  Subject to the foregoing provisions of
          this Section (2), the Board of Directors may declare and
          the Corporation may pay or set apart for payment
          dividends and other distributions on any of the Junior
          Securities and Parity Preferred Stock and may redeem,
          purchase or otherwise acquire any Junior Securities and
          Parity Preferred Stock, in either case from time to time,
          and the holders of the shares of PACS shall not be
          entitled to share therein.

                    (e)  Any dividend payment made on shares of
          PACS shall first be credited against the earliest accrued
          but unpaid dividend due with respect to shares of PACS.

                    (f)  All dividends paid with respect to shares
          of PACS pursuant to this Section (2) shall be paid pro
          rata to the holders entitled thereto.

                    SECTION 3.     REDEMPTION AND CONVERSION.

                    (a)  Mandatory Conversion.  On [anniversary
          date of closing date], 2000 (the "Mandatory Conversion
          Date"), subject to (x) the right of the Corporation to
          redeem the shares of PACS on or after [anniversary date
          of closing date], 1999 (the "Initial Redemption Date")
          and prior to the Mandatory Conversion Date, as described
          below, and (y) the conversion of the shares of PACS at
          the option of the holder at any time prior to the
          Mandatory Conversion Date, as described below, each
          outstanding share of PACS shall convert automatically
          (the "Mandatory Conversion") into 

                    (i)  shares of Common Stock at the Common
                         Equivalent Rate (as hereinafter defined)
                         in effect on the Mandatory Conversion
                         Date; and 

                    (ii) the right to receive an amount in cash
                         equal to all accrued and unpaid dividends
                         on such share of PACS (the "Accrued
                         Dividend Amount") (other than previously
                         declared dividends payable to a different
                         holder of record on a prior date) to the
                         Mandatory Conversion Date, whether or not
                         declared, out of funds legally available
                         for the payment of dividends.  The Common
                         Equivalent Rate is initially one share of
                         Common Stock for each share of PACS and is
                         subject to adjustment as set forth below
                         (the "Common Equivalent Rate").  

                    (b)  Redemption by the Corporation.

                    (i)  Right to Redeem.  Shares of PACS are not
                         _______________
                         redeemable by the Corporation prior to the
                         Initial Redemption Date.  At any time and
                         from time to time on or after the Initial
                         Redemption Date and prior to the Mandatory
                         Conversion Date, the Corporation shall
                         have the right to redeem, in whole or in
                         part, the outstanding shares of PACS. 
                         Upon any such redemption, the Corporation
                         shall deliver to the holders of shares of
                         PACS in exchange for each share so
                         redeemed, the greater of (A) a number of
                         shares of Common Stock equal to the Call
                         Price (as hereinafter defined) in effect
                         on the redemption date, divided by the
                         Current Market Price of the Common Stock
                         determined as of the second trading day
                         immediately preceding the Notice Date (as
                         hereinafter defined) or (B) .8197 of a
                         share of Common Stock (each a "Redemption
                         Rate")(subject to adjustment as set forth
                         below).  The public announcement of any
                         call for redemption shall be made prior
                         to, or at the time of, the mailing of the
                         notice of such call to holders of shares
                         of PACS as described below.  If fewer than
                         all the outstanding shares of PACS are to
                         be redeemed, shares of PACS to be redeemed
                         shall be selected by the Corporation from
                         outstanding shares of PACS not previously
                         redeemed by lot or pro rata (as nearly as
                         may be practicable).  As used in this
                         subparagraph (b), the term "Notice Date"
                         with respect to any notice given by the
                         Corporation in connection with a
                         redemption of shares of PACS means the
                         date on which first occurs either the
                         public announcement of such redemption or
                         the commencement of mailing of such notice
                         to the holders of shares of PACS.

                    (ii) Notice of Redemption.  The Corporation
                         ____________________
                         shall provide notice of any redemption of
                         the shares of PACS pursuant to this
                         subparagraph (b) to holders of record of
                         PACS to be called for redemption not less
                         than 15 days nor more than 60 days prior
                         to the date fixed for such redemption. 
                         The earliest Notice Date for any call for
                         redemption of shares of PACS is not
                         earlier than [60 days prior to anniversary
                         date of closing], 1999.  Such notice shall
                         be provided by mailing notice of such
                         redemption, first class postage prepaid,
                         to each holder of record of shares of PACS
                         to be redeemed, at such holder's address
                         as it appears on the stock register of the
                         Corporation; provided that neither failure
                                      ________
                         to give such notice nor any defect therein
                         shall affect the validity of the
                         proceeding for the redemption of any
                         shares of PACS to be redeemed except as to
                         the holders to whom the Corporation has
                         failed to give said notice or whose notice
                         was defective.

                         Each such notice shall state, as
                         appropriate, the following and may contain
                         such other information as the Corporation
                         deems advisable:

                         (A)  the redemption date;

                         (B)  that all outstanding shares of PACS
                         are to redeemed or, in the case of a call
                         for redemption of fewer than all
                         outstanding shares of PACS, the number of
                         such shares held by such holder to be
                         redeemed;

                         (C)  the number of shares of Common Stock
                         deliverable upon redemption of each share
                         of PACS to be redeemed and, if applicable,
                         the Redemption Rate and the Current Market
                         Price used to calculate such number of
                         shares of Common Stock;

                         (D)  the place or places where
                         certificates for such shares are to be
                         surrendered for redemption; and 

                         (E)  that dividends on the shares of PACS
                         to be redeemed shall cease to accrue on
                         such redemption date (except as otherwise
                         provided herein).

                    (c)  Procedures Upon Conversion and Redemption.

                    (i)  Deposit of Shares and Funds.  The
                         ___________________________
                         Corporation's obligation to deliver shares
                         of Common Stock and provide funds upon
                         redemption in accordance with Sections
                         3(a) and 3(b) shall be deemed fulfilled
                         if, on or before the Mandatory Conversion
                         Date or a redemption date, as applicable,
                         the Corporation shall irrevocably deposit,
                         with a bank or trust company, or an
                         affiliate of a bank or trust company,
                         having an office or agency in New York
                         City, or shall set aside or make other
                         reasonable provision for the issuance of
                         such number of shares of Common Stock as
                         are required to be delivered by the
                         Corporation pursuant to Section 3(a) or
                         3(b), as the case may be, upon the
                         occurrence of the Mandatory Conversion or
                         the related redemption (and for the
                         payment of cash in lieu of the issuance of
                         fractional share amounts and accrued and
                         unpaid dividends payable in cash on the
                         shares to be redeemed as and to the extent
                         provided by Section 3(a) or 3(b), as the
                         case may be).  Any interest accrued on
                         such funds shall be paid to the
                         Corporation from time to time.  Subject to
                         applicable laws, any shares of Common
                         Stock or funds so deposited and unclaimed
                         at the end of two years from such
                         redemption date shall be repaid and
                         released to the Corporation, after which
                         time the holder or holders of such shares
                         of PACS so converted or called for
                         redemption shall look only to the
                         Corporation for delivery of such shares of
                         Common Stock or funds.

                    (ii) Surrender of Certificates; Status.  Each
                         _________________________________
                         holder of shares of PACS to be converted
                         or redeemed pursuant to Section 3(a) or
                         3(b), as the case may be, shall surrender
                         the certificates evidencing such shares
                         (properly endorsed or assigned for
                         transfer, if the Board of Directors shall
                         so require and the notice shall so state)
                         to the Corporation at the place designated
                         by the Corporation and shall thereupon be
                         entitled to receive certificates
                         evidencing shares of Common Stock and to
                         receive any funds payable pursuant to
                         Sections 3(a) or 3(b), as the case may be,
                         following such surrender and following the
                         date of such conversion or redemption.  In
                         case fewer than all the shares represented
                         by any such surrendered certificate are
                         called for redemption, a new certificate
                         shall be issued at the expense of the
                         Corporation representing the unredeemed
                         shares.  If, on the Mandatory Conversion
                         Date, or, in the event of a redemption, on
                         the date fixed for redemption, as the case
                         may be, shares of Common Stock and funds
                         necessary for such Mandatory Conversion or
                         redemption, as applicable, shall have been
                         irrevocably either set aside by the
                         Corporation separate and apart from its
                         other funds or assets in trust for the
                         account of the holders of the shares to be
                         converted or to be redeemed (and so as to
                         be and continue to be available therefor)
                         or deposited with a bank or trust company
                         or an affiliate thereof or the Corporation
                         shall have made other reasonable provision
                         therefor, then, notwithstanding that the
                         certificates evidencing any shares of PACS
                         so converted or called for redemption
                         shall not have been surrendered, the
                         shares of PACS represented thereby so
                         converted or called for redemption shall
                         be deemed no longer outstanding, dividends
                         with respect to the shares so converted or
                         called for redemption shall cease to
                         accrue on the Mandatory Conversion Date or
                         the date fixed for redemption, as
                         applicable, (except that holders of shares
                         of PACS at the close of business on a
                         record date for any payment of dividends
                         shall be entitled to receive the dividend
                         payable on such shares on the
                         corresponding Dividend Payment Date
                         notwithstanding the redemption of such
                         shares following such record date and
                         prior to such Dividend Payment Date) and
                         all rights with respect to the shares so
                         converted or called for redemption shall
                         forthwith after such date cease and
                         terminate, except for the rights of the
                         holders to receive the shares of Common
                         Stock and funds, if any, payable pursuant
                         to Sections 3(a) or 3(b) without interest
                         upon surrender of their certificates
                         therefor (unless the Corporation defaults
                         on the delivery of such shares or the
                         payment of such funds).  Holders of shares
                         of PACS that are converted or redeemed
                         shall not be entitled to receive dividends
                         declared and paid on such shares of Common
                         Stock, and such shares of Common Stock
                         shall not be entitled to vote, until such
                         shares of Common Stock are issued upon the
                         surrender of the certificates representing
                         such shares of PACS and upon such
                         surrender such holders shall be entitled
                         to receive such dividends declared and
                         paid on such shares of Common Stock
                         subsequent to such redemption date or
                         Mandatory Conversion Date with interest
                         thereon.  Amounts payable in cash in
                         respect of shares of PACS or shares of
                         Common Stock shall not bear interest.

                    (d)  Conversion at Option of Holder.  Shares of
          PACS are convertible, in whole or in part, at the option
          of the holder thereof, at any time prior to the Mandatory
          Conversion Date, unless previously redeemed, into shares
          of Common Stock at a rate of .8197 of a share of Common
          Stock for each share of PACS (the "Optional Conversion
          Rate"), subject to adjustment as set forth below.  The
          right to convert shares of PACS called for redemption
          shall terminate immediately prior to the close of
          business on the redemption date with respect to such
          shares.

                    Conversion of shares of PACS at the option of
          the holder may be effected by delivering certificates
          evidencing such shares, together with written notice of
          conversion and a proper assignment of such certificates
          to the Corporation or in blank, to the office or agency
          to be maintained by the Corporation for that purpose
          (and, if applicable, cash payment of an amount equal to
          the dividend payable on such shares), and otherwise in
          accordance with conversion procedures established by the
          Corporation.  Each optional conversion shall be deemed to
          have been effected immediately prior to the close of
          business on the date on which the foregoing requirements
          shall have been satisfied.  The conversion shall be at
          the Optional Conversion Rate in effect at such time and
          on such date.

                    Holders of shares of PACS at the close of
          business on a record date for any payment of declared
          dividends shall be entitled to receive the dividend
          payable on such shares on the corresponding Dividend
          Payment Date notwithstanding the conversion of such
          shares following such record date and prior to the
          corresponding Dividend Payment Date.  However, shares of
          PACS surrendered for conversion after the close of
          business on a record date for any payment of dividends
          and before the opening of business on the next succeeding
          Dividend Payment Date must be accompanied by payment to
          the Corporation in cash of an amount equal to the
          dividend thereon which is to be paid on such Dividend
          Payment Date (unless such shares have been called for
          redemption on a redemption date between such record date
          and such Dividend Payment Date).  A holder of shares of
          PACS called for redemption on [anniversary date of
          closing date], 1999 or any other Dividend Payment Date
          thereafter will receive the dividend on such shares
          payable on that date without paying an amount equal to
          such dividend to the Corporation upon conversion.  Except
          as provided above, upon any optional conversion of shares
          of PACS, the Corporation shall make no payment or
          allowance for unpaid dividends, whether or not in
          arrears, on converted shares of PACS or for previously
          declared dividends or distributions on the shares of
          Common Stock issued upon such conversion.

                    (e)  Adjustments of the Common Equivalent Rate,
          Optional Conversion Rate and Redemption Rate.  The Common
          Equivalent Rate, the Optional Conversion Rate and the
          Redemption Rates (collectively, the "Rates") shall be
          each subject to adjustment from time to time as provided
          below in this section (e).

                         (i)  If the Corporation shall, after
          [closing date],  1996:

                              (A)  pay a stock dividend or make a
                                   distribution with respect to its
                                   Common Stock in shares of such
                                   Common Stock,

                              (B)  subdivide or split its
                                   outstanding Common Stock into a
                                   greater number of shares,

                              (C)  combine its outstanding shares
                                   of Common Stock into a smaller
                                   number of shares, or

                              (D)  issue by reclassification of its
                                   shares of Common Stock any
                                   shares of Common Stock of the
                                   Corporation;

                              then, in any such event, the Rates in
                              effect immediately prior to such
                              event shall each be adjusted so that
                              the holder of any shares of PACS
                              shall thereafter be entitled to
                              receive, upon Mandatory Conversion or
                              upon conversion at the option of the
                              holder or redemption, the number of
                              shares of Common Stock of the
                              Corporation which such holder would
                              have owned or been entitled to
                              receive immediately following any
                              event described above had such shares
                              of PACS been converted immediately
                              prior to such event or any record
                              date with respect thereto.   Such
                              adjustment shall become effective at
                              the opening of business on the
                              business day next following the
                              record date for determination of
                              stockholders entitled to receive such
                              dividend or distribution, in the case
                              of a dividend or distribution, and
                              shall become effective immediately
                              after the effective date, in the case
                              of a subdivision, split, combination
                              or reclassification.  Such
                              adjustments shall be made
                              successively.

                         (ii) If the Corporation shall, after
                              [closing date], 1996, issue rights or
                              warrants to all holders of its Common
                              Stock (other than Rights issued
                              pursuant to any Rights Plan of the
                              Corporation) entitling them to
                              subscribe for or purchase shares of
                              Common Stock at a price per share
                              less than the Current Market Price at
                              the time of such issue, then, in any
                              such event unless such rights or
                              warrants are issued to holders of
                              shares of PACS on a pro rata basis
                              with the shares of Common Stock based
                              on the Common Equivalent Rate on the
                              date immediately preceding such
                              issuance, each Rate shall be adjusted
                              by multiplying such Rate, in effect
                              immediately prior to the date of
                              issuance of such rights or warrants,
                              by a fraction, of which the numerator
                              shall be the number of shares of
                              Common Stock outstanding on the date
                              of issuance of such rights or
                              warrants, immediately prior to such
                              issuance, plus the number of
                              additional shares of Common Stock
                              offered for subscription or purchase
                              pursuant to such rights or warrants,
                              and of which the denominator shall be
                              the number of shares of Common Stock
                              outstanding on the date of issuance
                              of such rights or warrants,
                              immediately prior to such issuance,
                              plus the number of additional shares
                              of Common Stock which the aggregate
                              offering price of the total number of
                              shares of Common Stock so offered for
                              subscription or purchase pursuant to
                              such rights or warrants would
                              purchase at such Current Market Price
                              (determined by multiplying such total
                              number of shares by the exercise
                              price of such rights or warrants and
                              dividing the product so obtained by
                              such Current Market Price).  Such
                              adjustment shall become effective at
                              the opening of business on the
                              business day next following the
                              record date for the determination of
                              stockholders entitled to receive such
                              rights or warrants. To the extent
                              that shares of Common Stock are not
                              delivered after the expiration of
                              such rights or warrants, each Rate
                              shall be readjusted to the applicable
                              Rate which would then be in effect
                              had the adjustments been made upon
                              the issuance of such rights or
                              warrants upon the basis of delivery
                              of only the number of shares of
                              Common Stock actually delivered. 
                              Such adjustment shall be made
                              successively.

                         (iii)     If the Corporation shall after
                                   [closing date], 1996, pay a
                                   dividend or make a distribution
                                   to all holders of its Common
                                   Stock of evidences of its
                                   indebtedness, cash or other
                                   assets (including capital stock
                                   of the Corporation or any
                                   subsidiary of the Corporation,
                                   but excluding (x) the
                                   Corporation's regular quarterly
                                   cash dividend and (y) dividends
                                   referred to in subparagraph (i)
                                   above) or shall issue to all
                                   holders of its Common Stock
                                   rights or warrants to subscribe
                                   for or purchase any of its
                                   securities (other than Rights
                                   issued pursuant to any Rights
                                   Plan of the Corporation and
                                   those referred to in
                                   subparagraph (ii) above), then
                                   unless such dividend is paid or
                                   distribution is made to each
                                   holder of shares of PACS on a
                                   pro rata basis with the shares
                                   of Common Stock based on the
                                   Common Equivalent Rate on the
                                   date immediately preceding such
                                   payment or distribution, in any
                                   such event, each Rate shall be
                                   adjusted by multiplying such
                                   Rate in effect on the record
                                   date mentioned below, by a
                                   fraction of which the numerator
                                   shall be the Current Market
                                   Price per share of the Common
                                   Stock on the record date for the
                                   determination of stockholders
                                   entitled to receive such
                                   dividend or distribution, and of
                                   which the denominator shall be
                                   such Current Market Price per
                                   share of Common Stock less the
                                   fair market value (as determined
                                   in good faith by the Board of
                                   Directors, whose good faith
                                   determination shall be
                                   conclusive, and described in a
                                   resolution adopted with respect
                                   thereto) as of such record date
                                   of the portion of the assets or
                                   evidences of indebtedness so
                                   distributed or of such
                                   subscription rights or warrants
                                   applicable to one share of
                                   Common Stock.  Such adjustment
                                   shall become effective on the
                                   opening of business on the
                                   business day next following the
                                   record date for the
                                   determination of stockholders
                                   entitled to receive such
                                   dividend or distribution.  Such
                                   adjustment shall be made
                                   successively.  

                         (iv) Any shares of Common Stock issuable
                              in payment of a dividend or other
                              distribution shall be deemed to have
                              been issued immediately prior to the
                              close of business on the record date
                              for such dividend or other
                              distribution for purposes of
                              calculating the number of outstanding
                              shares of Common Stock under
                              subsection (ii) above.

                         (v)  The Corporation shall also be
                              entitled to make upward adjustments
                              in the Common Equivalent Rate, the
                              Optional Conversion Rate, the
                              Redemption Rate and the Call Price,
                              as it in its sole discretion shall
                              determine to be advisable, in order
                              that any stock dividends,
                              subdivisions of shares, distribution
                              of rights to purchase stock or
                              securities, or distribution of
                              securities convertible into or
                              exchangeable for stock (or any
                              transaction which could be treated as
                              any of the foregoing transactions
                              pursuant to Section 305 of the
                              Internal Revenue Code of 1986, as
                              amended) made by the Corporation to
                              its stockholders after [closing
                              date], 1996 shall not be taxable.

                         (vi) In any case in which subsection 4(e)
                              shall require that an adjustment as a
                              result of any event becomes effective
                              at the opening of business on the
                              business day next following a record
                              date and the date fixed for
                              conversion pursuant to subsection
                              3(a) or redemption pursuant to
                              subsection 3(b) or 3(d) occurs after
                              such record date, but before the
                              occurrence of such event, the
                              Corporation may, in its sole
                              discretion, elect to defer the
                              following until after the occurrence
                              of such event: (A) issuing to the
                              holder of any converted or redeemed
                              shares of PACS the additional shares
                              of Common Stock issuable upon such
                              conversion or redemption over the
                              shares of Common Stock issuable
                              before giving effect to such
                              adjustments and (B) paying to such
                              holder any amount in cash in lieu of
                              a fractional share of Common Stock
                              pursuant to subsection 3(j).

                         (vii)     All adjustments to the Rates
                                   shall be calculated to the
                                   nearest 1/100th of a share of
                                   Common Stock.  No adjustment in
                                   the Rates shall be required
                                   unless such adjustment would
                                   require an increase or decrease
                                   of at least one percent therein;
                                   provided, however, that any
                                   adjustment which by reason of
                                   this subsection (vii) is not
                                   required to be made shall be
                                   carried forward and taken into
                                   account in any subsequent
                                   adjustment.

                    (f)  Adjustment for Consolidation or Merger. 
          In case of any consolidation or merger to which the
          Corporation is a party (other than a merger or
          consolidation in which the Corporation is the surviving
          or continuing corporation and in which the Common Stock
          outstanding immediately prior to the merger or
          consolidation remains unchanged), or in the case of any
          sale or transfer to another corporation of the property
          of the Corporation as an entirety or substantially as an
          entirety, proper provisions shall be made so that each
          share of PACS shall, after consummation of such
          transaction, be subject to (i) conversion at the option
          of the holder into the kind and amount of securities,
          cash or other property receivable upon consummation of
          such transaction by a holder of the number of shares of
          Common Stock into which such share of PACS might have
          been converted immediately prior to consummation of such
          transaction, (ii) conversion on the Mandatory Conversion
          Date into the kind and amount of securities, cash or
          other property receivable upon consummation of such
          transaction by a holder of the number of shares of Common
          Stock into which such shares of PACS would have converted
          if the conversion on the Mandatory Conversion Date had
          occurred immediately prior to the date of consummation of
          such transaction, plus the right to receive cash in an
          amount equal to all accrued and unpaid dividends on such
          shares of PACS (other than previously declared dividends
          payable to a holder of record as of a prior date), and
          (iii) redemption on any redemption date in exchange for
          the kind and amount of securities, cash or other property
          receivable upon consummation of such transaction by a
          holder of the number of shares of Common Stock that would
          have been issuable at the Redemption Rate in effect on
          such redemption date upon a redemption of such share
          immediately prior to consummation of such transaction,
          assuming in each case that such holder of Common Stock
          failed to exercise rights of election, if any, as to the
          kind or amount of securities, cash or other property
          receivable upon consummation of such transaction
          (provided that if the kind or amount of securities, cash
          or other property receivable upon consummation of such
          transaction is not the same for each non-electing share,
          then the kind and amount of securities, cash or other
          property receivable upon consummation of such transaction
          for each non-electing share shall be deemed to be the
          kind and amount so receivable per share by a plurality of
          the non-electing shares).  The kind and amount of
          securities into or for which the shares of PACS shall be
          convertible or redeemable after consummation of such
          transaction shall be subject to adjustment as described
          in Section 3(e) following the date of consummation of
          such transaction.  The Corporation may not become a party
          to any such transaction unless (A) the terms thereof are
          consistent with the foregoing or (B) the holders of
          shares of PACS shall have approved other terms in
          accordance with the provisions of Section 5(c).

                    For purposes of the immediately preceding
          paragraph, any sale or transfer to another corporation of
          property of the Corporation which did not account for at
          least 50% of the consolidated net income of the
          Corporation for its most recent fiscal year ending prior
          to the consummation of such transaction shall not in any
          event be deemed to be a sale or transfer of the property
          of the Corporation as an entirety or substantially as an
          entirety.

                    (g)  Notices of Adjustments. (i) Whenever the
          Rates are adjusted as herein provided, the Corporation
          shall:

                         (A)  forthwith compute the adjusted Rates
                              in accordance herewith and prepare a
                              certificate signed by an officer of
                              the Corporation setting forth the
                              adjusted Rates, the method of
                              calculation thereof in reasonable
                              detail and the facts requiring such
                              adjustment and upon which such
                              adjustment is based, which
                              certificate shall be conclusive,
                              final and binding evidence of the
                              correctness of the adjustment, and
                              file such certificate forthwith with
                              the transfer agent for the shares of
                              PACS and the Common Stock; and

                         (B)  make a prompt public announcement and
                              mail a notice to the holders of the
                              outstanding shares of PACS stating
                              that the Rates have been adjusted,
                              the facts requiring such adjustment
                              and upon which such adjustment is
                              based and setting forth the adjusted
                              Rates,  such notice to be mailed at
                              or prior to the time the Corporation
                              mails an interim statement to its
                              stockholders covering the fiscal
                              quarter during which the facts
                              requiring such adjustment occurred,
                              but in any event within 45 days of
                              the end of such fiscal quarter.

                    (ii) In case, at any time while any of the
                         shares of PACS are outstanding,

                         (A)  the Corporation shall declare a
                              dividend (or any other distribution)
                              on its Common Stock, excluding any
                              cash dividends; or

                         (B)  the Corporation shall authorize the
                              issuance to all holders of its Common
                              Stock of rights or warrants to
                              subscribe for or purchase shares of
                              its Common Stock or of any other
                              subscription rights or warrants; or

                         (C)  the Corporation shall authorize any
                              reclassification, subdivision or
                              split  of its Common Stock (other
                              than a subdivision or combination
                              thereof) or any consolidation or
                              merger to which the Corporation is a
                              party and for which approval of any
                              stockholders of the Corporation is
                              required (except for a merger of the
                              Corporation into one of its
                              subsidiaries solely for the purpose
                              of changing the corporate domicile of
                              the Corporation to another state of
                              the United States and in connection
                              with which there is no substantive
                              change in the rights or privileges of
                              any securities of the Corporation
                              other than changes resulting from
                              differences in the corporate statutes
                              of the then existing and the new
                              state of domicile), or the sale or
                              transfer to another corporation of
                              the property of the Corporation as an
                              entirety or substantially as an
                              entirety; or

                       (D)    the Corporation shall authorize the
                              voluntary or involuntary dissolution,
                              liquidation or winding up of the
                              Corporation;

          then the Corporation shall cause to be filed at each
          office or agency maintained for the purpose of conversion
          of the shares of PACS, and shall cause to be mailed to
          the holders of shares of PACS at their last addresses as
          they shall appear on the stock register, at least 10 days
          before the date hereinafter specified (or the earlier of
          the dates hereinafter specified, in the event that more
          than one date is specified), a notice stating (A) the
          date on which a record is to be taken for the purpose of
          such dividend, distribution, rights or warrants, or, if a
          record is not to be taken, the date as of which the
          holders of Common Stock of record to be entitled to such
          dividend, distribution, rights or warrants are to be
          determined, or (B) the date on which any such
          reclassification, consolidation, merger, sale, transfer,
          dissolution, liquidation or winding up is expected to
          become effective, and the date as of which it is expected
          that holders of Common Stock of record shall be entitled
          to exchange their Common Stock for securities or other
          property (including cash), if any, deliverable upon such
          reclassification, consolidation, merger, sale, transfer,
          dissolution, liquidation or winding up.  The failure to
          give or receive the notice required by this subsection
          (g)(ii) or any defect therein shall not affect the
          legality or validity of such dividend, distribution,
          right or warrant or other action.

                    (h)  Effect of Conversions and Redemptions. 
          The person or persons in whose name or names any
          certificate or certificates for shares of Common Stock
          shall be issuable upon any conversion or redemption shall
          be deemed to have become on the date of any such
          conversion or redemption the holder or holders of record
          of the shares represented thereby; provided, however,
          that any such surrender on any date when the stock
          transfer books of the Corporation shall be closed shall
          constitute the person or persons in whose name or names
          the certificate or certificates for such shares are to be
          issued as the record holder or holders thereof for all
          purposes at the opening of business on the next
          succeeding day on which such stock transfer books are
          open.

                    (i)  No Fractional Shares.  No fractional
          shares or scrip representing fractional shares of Common
          Stock shall be issued upon the redemption or conversion
          of any shares of PACS.  In lieu of any fractional share
          otherwise issuable in respect of the aggregate number of
          shares of PACS of any holder which are redeemed or
          converted on any redemption date or upon Mandatory
          Conversion or any optional conversion, such holder shall
          be entitled to receive an amount in cash (computed to the
          nearest cent) equal to the value of such fractional
          shares based on the (i) Current Market Price as of the
          second Trading Date immediately preceding the Notice
          Date, in the case of redemption, or (ii) Closing Price of
          the Common Stock determined (A) as of the fifth Trading
          Date immediately preceding the Mandatory Conversion Date,
          in the case of Mandatory Conversion, or (B) as of the
          second Trading Date immediately preceding the effective
          date of conversion, in the case of an optional conversion
          by a holder.  If more than one share shall be surrendered
          for conversion or redemption at one time by or for the
          same holder, the number of full shares of Common Stock
          issuable upon conversion thereof shall be computed on the
          basis of the aggregate number of shares of PACS so
          surrendered or redeemed.

                    (j)  Reissuance.  Shares of PACS that have been
          issued and reacquired in any manner, including shares
          purchased, exchanged, redeemed or converted, shall not be
          reissued as part of PACS and shall (upon compliance with
          any applicable provisions of the laws of the State of
          Connecticut) have the status of authorized and unissued
          shares of preferred stock of the Corporation ("Preferred
          Stock") undesignated as to series and may be redesignated
          and reissued as part of any series of Preferred Stock.

                    (k)  Definitions.  As used in this Article ___:

                    (i)  the term "Business Day" shall mean any day
                         other than a Saturday, Sunday, or a day on
                         which banking institutions in the State of
                         New York or the State of Connecticut are
                         authorized or obligated by law or
                         executive order to close or are closed
                         because of a banking moratorium or
                         otherwise;

                    (ii) the term "Call Price" of each share of
                         PACS shall be the sum of (x) $76 1/8 and
                         (y) all accrued and unpaid dividends
                         thereon to but not including the
                         redemption date (other than previously
                         declared dividends payable to a holder of
                         record as of a prior date);

                   (iii) the term "Closing Price" on any day
                         shall mean the last reported sales
                         price on such day or, in case no such
                         sale takes place on such day, the
                         average of the reported closing high
                         and low quotations, in either case on
                         the principal national securities
                         exchange on which the Common Stock is
                         listed or admitted to trading or, if
                         the Common Stock is not listed or
                         admitted to trading on a national
                         securities exchange, on the Nasdaq
                         National Market System, or, if the
                         Common Stock is not listed or
                         admitted to trading on a national
                         securities exchange or the Nasdaq
                         National Market System, the average
                         of the high bid and low-asked
                         quotations of the Common Stock in the
                         over-the-counter market on the day in
                         question as reported by the National
                         Quotation Bureau Incorporated, or a
                         similarly generally accepted
                         reporting service, or, if no such
                         quotations are available, the fair
                         market value of the Common Stock as
                         determined by any New York Stock
                         Exchange member firm selected from
                         time to time by the Board of
                         Directors for such purpose;

                    (iv) the term "Current Market Price" per share
                         of Common Stock at any date shall be
                         deemed to be the lesser of (x) the average
                         of the daily Closing Prices for the twenty
                         consecutive Trading Dates ending on and
                         including the date in question or (y) the
                         Closing Price of the Common Stock for such
                         date of determination; provided, that, if
                                                ________
                         any event that results in an adjustment of
                         the Common Equivalent Rate occurs during
                         such twenty day period, the Current Market
                         Price as determined pursuant to the
                         foregoing shall be appropriately adjusted
                         to reflect the occurrence of such event; 

                    (v)  the term "Parity Preferred Stock" means
                         the Corporation's Class A Voting Preferred
                         Stock without par value and Class B
                         Preferred Stock without par value and any
                         other class or series of the Corporation's
                         Preferred Stock that by its terms ranks on
                         a parity as to both the payment of
                         dividends and distribution of assets upon
                         a liquidation of the Corporation; and

                    (vi) the term "Trading Date" shall mean a date
                         on which the New York Stock Exchange (or
                         any successor thereto) is open for the
                         transaction of business.

                    (l)  Payment of Taxes.  The Corporation shall
          pay any and all documentary, stamp or similar issue or
          transfer taxes payable in respect of the issue or
          delivery of shares of Common Stock on the redemption or
          conversion of shares of PACS pursuant to this Section 3;
          provided, however, that the Corporation shall not be
          ________  _______
          required to pay any tax which may be payable in respect
          of any registration of transfer involved in the issue or
          delivery of shares of Common Stock in a name other than
          that of the registered holder of shares of PACS redeemed
          or converted or to be redeemed or converted, and no such
          issue or delivery shall be made unless and until the
          person requesting such issue has paid to the Corporation
          the amount of any such tax or has established, to the
          satisfaction of the Corporation, that such tax has been
          paid.

                    (m)  Reservation of Common Stock.  The
          Corporation shall at all times reserve and keep
          available, free from preemptive rights, out of the
          aggregate of its authorized but unissued Common Stock
          and/or its issued Common Stock held in its treasury, for
          the purpose of effecting any Mandatory Conversion of the
          shares of PACS or any conversion of the shares of PACS at
          the option of the holder, the full number of shares of
          Common Stock then deliverable upon any such conversion of
          all outstanding shares of PACS.

                         SECTION 4.     LIQUIDATION RIGHTS.

                    (a)  In the event of the liquidation,
          dissolution, or winding up of the business of the
          Corporation, whether voluntary or involuntary, the
          holders of shares of PACS then outstanding, after payment
          or provision for payment of the debts and other
          liabilities of the Corporation and the payment or
          provision for payment of any distribution on any shares
          of the Corporation having a preference and a priority
          over the shares of PACS on liquidation, and before any
          distribution to the holders of Junior Securities, shall
          be entitled to be paid out of the assets of the
          Corporation available for distribution to its
          stockholders an amount per share of PACS in cash equal to
          the sum of (i) $76 1/8 plus (ii) all accrued and unpaid
          dividends thereon.  All amounts paid in respect of such
          liquidation, dissolution or winding up shall be paid pro
          rata to the holders of PACS entitled thereto.  In the
          event the assets of the Corporation available for
          distribution to the holders of the shares of PACS upon
          any dissolution, liquidation or winding up of the
          Corporation shall be insufficient to pay in full the
          liquidation payments payable to the holders of
          outstanding shares of PACS and of all other series of
          Parity Securities, the holders of shares of PACS and of
          all series of Parity Securities shall share ratably in
          such distribution of assets in proportion to the amount
          which would be payable on such distribution if the
          amounts to which the holders of outstanding shares of
          PACS and the holders of outstanding shares of such Parity
          Preferred Stock were paid in full.  Except as provided in
          this Section 4, holders of PACS shall not be entitled to
          any distribution in the event of liquidation, dissolution
          or winding up of the affairs of the Corporation.

                    (b)  For the purposes of this Section 4, none
          of the following shall be deemed to be a voluntary or
          involuntary liquidation, dissolution or winding up of the
          Corporation:

                         (i)  the sale, transfer, lease or exchange
                              of the assets of the Corporation as
                              an entirety or substantially as an
                              entirety; or

                         (ii) the consolidation or merger of the
                              Corporation with one or more other
                              corporations (whether or not the
                              Corporation is the corporation
                              surviving such consolidation or
                              merger).

                    SECTION 5.     VOTING RIGHTS.

                    (a)  The holders of record of shares of PACS
          shall not be entitled to any voting rights except as
          provided in Section 5 or as otherwise provided by law.**

          (**)  At Aetna's election, the terms of the PACS may be
          modified to provide for voting rights as determined by
          Aetna.  In that event, the PACS shall be designated
          "6.25% Class A Voting Preferred Stock."

                    (b)  For so long as any shares of PACS are
          outstanding, if at any time dividends payable on the
          shares of PACS or any other series of Preferred Stock are
          in arrears and unpaid in an aggregate amount equal to or
          exceeding the aggregate amount of dividends payable
          thereon for six quarterly dividend periods, or if any
          other series of Preferred Stock shall be entitled for any
          other reason to exercise voting rights, separate from the
          Common Stock, to elect any Directors of the Corporation
          ("Preferred Stock Directors"), the holders of the shares
          of PACS, voting separately as a class with the holders of
          all other series of Preferred Stock upon which like
          voting rights have been conferred and are exercisable,
          with each share of PACS entitled to vote on this and
          other matters upon which holders of Preferred Stock vote
          as a group, shall have the right to vote for the election
          of two Preferred Stock Directors of the Corporation, such
          Directors to be in addition to the number of Directors
          constituting the Board of Directors immediately prior to
          the accrual of such right.  Such right of the holders of
          shares of PACS to elect two Preferred Stock Directors
          shall, when vested, continue until all dividends in
          arrears on the shares of PACS and such other series of
          Preferred Stock shall have been paid in full and the
          right of any other series of Preferred Stock to exercise
          voting rights, separate from the Common Stock, to elect
          Preferred Stock Directors shall terminate or have
          terminated and, when so paid, and any such termination
          occurs or has occurred, such right of the holders of
          shares of PACS to elect two Preferred Stock Directors
          separately as a class shall cease, subject always to the
          same provisions for the vesting of such right of the
          holders of the shares of PACS to elect two Preferred
          Stock Directors in the case of future dividend defaults.

                    The term of office of each Director elected
          pursuant to the preceding paragraph shall terminate on
          the earlier of (i) the next annual meeting of
          stockholders at which a successor shall have been elected
          and qualified or (ii) the termination of the right of the
          holders of shares of PACS and such other series of
          Preferred Stock to vote for Directors pursuant to the
          preceding paragraph.  Vacancies on the Board of Directors
          resulting from the death, resignation or other cause of
          any such Director shall be filled exclusively by no less
          than two-thirds of the remaining Directors and the
          Director so elected shall hold office until a successor
          is elected and qualified.

                    (c)  For as long as any shares of PACS remain
          outstanding, the affirmative consent of the holders of at
          least two-thirds thereof actually voting (voting
          separately as a class) given in person or by proxy, at
          any annual meeting or special meeting of the shareholders
          called for such purpose, shall be necessary to (i) amend,
          alter or repeal any of the provisions of the Articles of
          Incorporation of the Corporation which would adversely
          affect the powers, preferences or rights of the holders
          of the shares of PACS then outstanding or reduce the
          minimum time required for any notice to which holders of
          shares of PACS then outstanding may be entitled;
          provided, however, that any such amendment, alteration or 
          ________  _______
          repeal that would authorize, create or increase the
          authorized amount of any additional shares of Junior
          Securities or any other shares of stock (whether or not
          already authorized) ranking on a parity with the shares
          of PACS shall be deemed not to adversely affect such
          powers, preferences or rights and shall not be subject to
          approval by the holders of shares of PACS; and provided
                                                         ________
          further that clause (i) shall not be applicable to the
          _______
          amendment, alteration or repeal of any provisions of the
          Articles of Incorporation of the Corporation approved at
          a meeting of the shareholders the record date of which is
          prior to the issuance of any shares of PACS; (ii)
          authorize or create, or increase the authorized amount
          of, any capital stock, or any security convertible into
          capital stock, of any class ranking senior to PACS as to
          payment of dividends or the distribution of assets upon
          liquidation, dissolution or winding up of the
          Corporation; or (iii) merge or consolidate with or into
          any other corporation, unless each holder of the shares
          of PACS immediately preceding such merger or
          consolidation shall have the right either to (A) receive
          or continue to hold in the resulting corporation the same
          number of shares, with substantially the same rights and
          preferences, as correspond to the shares of PACS so held
          or (B) convert into shares of Common Stock at the Common
          Equivalent Rate in effect on the date immediately
          preceding the announcement of any such merger or
          consolidation.

                    There is no limitation on the issuance by the
          Corporation of Parity Preferred Stock or of any class
          ranking junior to the shares of PACS.

                    Notwithstanding the provisions summarized in
          the preceding two paragraphs, however, no such approval
          described therein of the holders of the shares of PACS
          shall be required to authorize an increase in the number
          of authorized shares of Preferred Stock or if, at or
          prior to the time when such amendment, alteration, or
          repeal is to take effect or when the authorization,
          creation or increase of any such senior stock or security
          is to be made, or when such consolidation or merger,
          liquidation, dissolution or winding up is to take effect,
          as the case may be, provision is made for the redemption
          of all shares of PACS at the time outstanding.

                    SECTION 6.     PREEMPTIVE RIGHTS.

                    The holders of shares of PACS shall have no
          preemptive rights, including rights with respect to any
          shares of capital stock or other securities of the
          Corporation convertible into or carrying rights or
          options to purchase any such shares.

                    SECTION 7.     LIMITATIONS.

                    Except as may otherwise be required by law, the
          shares of PACS shall not have any terms, limitations, and
          relating rights and preferences other than those
          specifically set forth in this resolution (as such
          resolution may be amended from time to time) or otherwise
          in the Certificate of Incorporation of the Corporation.




                                                        EXHIBIT B-1

                           FORM OF AFFILIATE LETTER
                              (U.S. Healthcare)

          Butterfly, Inc.
          [address]
          [address]

          Ladies and Gentlemen:

                    I have been advised that as of the date of this
          letter I may be deemed to be an "affiliate" of U.S.
          Healthcare, Inc., a Pennsylvania corporation ("U.S.
          Healthcare"), as the term "affiliate" is defined for
          purposes of paragraphs (c) and (d) of Rule 145 of the
          rules and regulations (the "Rules and Regulations") of
          the Securities and Exchange Commission (the "Commission")
          under the Securities Act of 1933, as amended (the "Act"). 
          Pursuant to the terms of the Agreement and Plan of Merger
          dated as of March 30, 1996 (the "Agreement") among U.S.
          Healthcare, Aetna Life and Casualty Company, a
          Connecticut insurance corporation ("Aetna"), Butterfly,
          Inc., a Connecticut corporation ("Parent"), New Merger
          Corporation, a Pennsylvania corporation and a wholly
          owned subsidiary of Parent ("U.S. Healthcare Sub") and
          Antelope Sub, Inc., a Connecticut corporation and a
          wholly owned subsidiary of Parent, U.S. Healthcare will
          be merged with and into U.S. Healthcare Sub with U.S.
          Healthcare to be the survivor in the merger (the "U.S.
          Healthcare Sub Merger").

                    As a result of the U.S. Healthcare Sub Merger,
          I will receive shares of Common Stock, par value $1.00
          per share, and Preferred Stock, par value $.01 per share,
          of Parent (the "Parent Securities") in exchange for
          shares owned by me of Common Stock, par value $0.005 per
          share, and Class B Stock, par value $0.005 per share, of
          U.S. Healthcare.

                    I represent, warrant and covenant to Parent
          that as of the date I receive any Parent Securities as a
          result of the U.S. Healthcare Sub Merger:

                    A.   I shall not make any sale, transfer or
          other disposition of the Parent Securities in violation
          of the Act or the Rules and Regulations.

                    B.   I have carefully read this letter and the
          Agreement and discussed the requirements of such
          documents and other applicable limitations upon my
          ability to sell, transfer or otherwise dispose of the
          Parent Securities to the extent I felt necessary with my
          counsel or counsel for U.S. Healthcare.

                    C.   I have been advised that the issuance of
          Parent Securities to me pursuant to the U.S. Healthcare
          Sub Merger has been registered with the Commission under
          the Act on a Registration Statement on Form S-4. 
          However, I have also been advised that, since at the time
          the U.S. Healthcare Sub Merger was submitted for a vote
          of the shareholders of U.S. Healthcare, I may be deemed
          to have been an affiliate of U.S. Healthcare and the
          distribution by me of the Parent Securities has not been
          registered under the Act, I may not sell, transfer or
          otherwise dispose of the Parent Securities issued to me
          in the U.S. Healthcare Sub Merger unless (i) such sale,
          transfer or other disposition has been registered under
          the Act, (ii) such sale, transfer or under other
          disposition is made in conformity with Rule 145
          promulgated by the Commission under the Act, or (iii) in
          the opinion of counsel reasonably acceptable to Parent,
          or a "no action" letter obtained by the undersigned from
          the staff of the Commission, such sale, transfer or other
          disposition is otherwise exempt from registration under
          the Act.

                    D.   I understand that Parent is under no
          obligation to register the sale, transfer or other
          disposition of the Parent Securities by me or on my
          behalf under the Act or to take any other action
          necessary in order to make compliance with an exemption
          from such registration available.*

                    E.   I also understand that there will be
          placed on the certificates for the Parent Securities
          issued to me or any substitutions therefor, a legend
          stating in substance: * Affiliate Letter of the Principal
          Stockholder will contain the following additional
          language: "other than pursuant to the terms of the
          Registration Rights Agreement, dated as of March 30,
          1996, between Parent and the Principal Stockholder."

                    "THE SHARES REPRESENTED BY THIS CERTIFICATE
                    WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
                    PROMULGATED UNDER THE SECURITIES ACT OF 1933
                    APPLIES.  THE SHARES REPRESENTED BY THIS
                    CERTIFICATE MAY ONLY BE TRANSFERRED IN
                    ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
                    ___________ BETWEEN THE REGISTERED HOLDER
                    HEREOF AND BUTTERFLY, INC., A COPY OF WHICH
                    AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
                    OF BUTTERFLY, INC."

                    F.   I also understand that unless the transfer
          by me of my Parent Securities has been registered under
          the Act or is a sale made in conformity with the
          provisions of Rule 145, Parent reserves the right to put
          the following legend on the certificates issued to my
          transferee:

                    "THE SHARES REPRESENTED BY THIS CERTIFICATE
                    HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                    ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
                    RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
                    RULE 145 PROMULGATED UNDER THE SECURITIES ACT
                    OF 1933 APPLIES.  THE SHARES HAVE BEEN ACQUIRED
                    BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
                    IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
                    WITHIN THE MEANING OF THE SECURITIES ACT OF
                    1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
                    TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
                    EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
                    THE SECURITIES ACT OF 1933."

                    It is understood and agreed that the legends
          set forth in paragraphs E and F above shall be removed by
          delivery of substitute certificates without such legend
          if such legend is not required for purposes of the Act or
          this Agreement.

                    Execution of this letter should not be
          considered an admission on my part that I am an
          "affiliate" of U.S. Healthcare as described in the first
          paragraph of this letter or as a waiver of any rights I
          may have to object to any claim that I am such an
          affiliate on or after the date of this letter. 

                                             Very truly yours,

                                             ______________________
                                             Name:

          Accepted this ____ day of 
          ____________, 1996 by 
          BUTTERFLY, INC.

          By:  _____________________________
               Name:
               Title
                                                        EXHIBIT B-2

                           FORM OF AFFILIATE LETTER
                                   (Aetna)

          Butterfly, Inc.
          [address]
          [address]

          Ladies and Gentlemen:

                    I have been advised that as of the date of this
          letter I may be deemed to be an "affiliate" of Aetna Life
          and Casualty Company, a Connecticut insurance corporation
          ("Aetna"), as the term "affiliate" is defined for
          purposes of paragraphs (c) and (d) of Rule 145 of the
          rules and regulations (the "Rules and Regulations") of
          the Securities and Exchange Commission (the "Commission")
          under the Securities Act of 1933, as amended (the 
          "Act").  Pursuant to the terms of the Agreement and Plan
          of Merger dated as of March 30, 1996, (the "Agreement")
          among Aetna, U.S. Healthcare, Inc., a Pennsylvania
          corporation ("U.S. Healthcare"), Butterfly, Inc., a
          Connecticut corporation ("Parent"), Antelope Sub, Inc., a
          Connecticut corporation and a wholly owned subsidiary of
          Parent ("Aetna Sub") and New Merger Corporation, a
          Pennsylvania corporation and wholly owned subsidiary of
          Parent, Aetna will be merged with and into Aetna Sub with
          Aetna to be the survivor in the merger (the "Aetna Sub
          Merger").

                    As a result of the Aetna Sub Merger, I will
          receive shares of Common Stock, par value $1.00 per
          share, of Parent (the "Parent Securities") in exchange
          for shares owned by me of Common Stock, without par
          value, of Aetna.

                    I represent, warrant and covenant to Parent
          that as of the date I receive any Parent Securities as a
          result of the Aetna Sub Merger:

                    A.   I shall not make any sale, transfer or
          other disposition of the Parent Securities in violation
          of the Act or the Rules and Regulations.

                    B.   I have carefully read this letter and the
          Agreement and discussed the requirements of such
          documents and other applicable limitations upon my
          ability to sell, transfer or otherwise dispose of the
          Parent Securities to the extent I felt necessary with my
          counsel or counsel for Aetna.

                    C.   I have been advised that the issuance of
          Parent Securities to me pursuant to the Aetna Sub Merger
          has been registered with the Commission under the Act on
          a Registration Statement on Form S-4.  However, I have
          also been advised that, since at the time the Aetna Sub
          Merger was submitted for a vote of the shareholders of
          Aetna, I may be deemed to have been an affiliate of Aetna
          and the distribution by me of the Parent Securities has
          not been registered under the Act, I may not sell,
          transfer or otherwise dispose of the Parent Securities
          issued to me in the Aetna Sub Merger unless (i) such
          sale, transfer or other disposition has been registered
          under the Act, (ii) such sale, transfer or under other
          disposition is made in conformity with Rule 145
          promulgated by the Commission under the Act, or (iii) in
          the opinion of counsel reasonably acceptable to Parent,
          or a "no action" letter obtained by the undersigned from
          the staff of the Commission, such sale, transfer or other
          disposition is otherwise exempt from registration under
          the Act.

                    D.  I understand that Parent is under no
          obligation to register the sale, transfer or other
          disposition of the Parent Securities by me or on my
          behalf under the Act or to take any other action
          necessary in order to make compliance with an exemption
          from such registration available.

                    E.  I also understand that there will be placed
          on the certificates for the Parent Securities issued to
          me or any substitutions therefor, a legend stating in
          substance: 

                    "THE SHARES REPRESENTED BY THIS CERTIFICATE
                    WERE ISSUED IN A TRANSACTION TO WHICH RULE 145
                    PROMULGATED UNDER THE SECURITIES ACT OF 1933
                    APPLIES.  THE SHARES REPRESENTED BY THIS
                    CERTIFICATE MAY ONLY BE TRANSFERRED IN
                    ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
                    ___________ BETWEEN THE REGISTERED HOLDER
                    HEREOF AND BUTTERFLY, INC., A COPY OF WHICH
                    AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
                    OF BUTTERFLY, INC."

                    F.  I also understand that unless the transfer
          by me of my Parent Securities has been registered under
          the Act or is a sale made in conformity with the
          provisions of Rule 145, Parent reserves the right to put
          the following legend on the certificates issued to my
          transferee:
                    "THE SHARES REPRESENTED BY THIS CERTIFICATE
                    HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
                    ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
                    RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH
                    RULE 145 PROMULGATED UNDER THE SECURITIES ACT
                    OF 1933 APPLIES.  THE SHARES HAVE BEEN ACQUIRED
                    BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
                    IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
                    WITHIN THE MEANING OF THE SECURITIES ACT OF
                    1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
                    TRANSFERRED EXCEPT IN ACCORDANCE WITH AN
                    EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
                    THE SECURITIES ACT OF 1933."

                    It is understood and agreed that the legends
          set forth in paragraphs E and F above shall be removed by
          delivery of substitute certificates without such legend
          if such legend is not required for purposes of the Act or
          this Agreement.

                    Execution of this letter should not be
          considered an admission on my part that I am an
          "affiliate" of Aetna as described in the first paragraph
          of this letter or as a waiver of any rights I may have to
          object to any claim that I am such an affiliate on or
          after the date of this letter. 

                                             Very truly yours,

                                             ______________________
                                             Name:

          Accepted this ____ day of 
          ____________, 1996 by 
          BUTTERFLY, INC.

          By:  _____________________________
               Name:
               Title:

