AETNA LIFE & CASUALTY CO, S-3/A, 1994-04-13

AETNA LIFE & CASUALTY CO
S-3/A, 1994-04-13
LIFE INSURANCE

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As filed with the Securities and Exchange Commission on April 13, 1994

Registration No. 33-52819

No. 33-52819-01
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________

AMENDMENT NO. 1
TO

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________

AETNA CAPITAL L.L.C. AETNA LIFE AND CASUALTY COMPANY
(Exact name of Registrant as (Exact name of Registrant as
specified in its charter) specified in its charter)

Delaware Connecticut
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)

Applied for 06-0843808
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)

c/o Jean M. Waggett Jean M. Waggett
Vice President and Corporate Secretary Vice President and Corporate Secretary
Aetna Life and Casualty Company Aetna Life and Casualty Company
151 Farmington Avenue 151 Farmington Avenue
Hartford, Connecticut 06156 Hartford, Connecticut 06156
(203) 273-0123 (203) 273-0123
(Address, including zip code, and (Address, including zip code, and
telephone number, including area telephone number, including area
code, of Registrant's principal code, of Registrant's principal
executive offices and agent for executive offices and agent for
service) service)
__________

Copy of Correspondence to:

Kirk P. Wickman Robert S. Risoleo Richard J. Sandler
Counsel Sullivan & Cromwell Davis Polk & Wardwell
Aetna Life and 125 Broad Street 450 Lexington Avenue
Casualty Company New York, New York 10004 New York, New York 10017
151 Farmington Avenue (212) 558-4000 (212) 450-4000
Hartford, Connecticut 06156
(203) 273-0123
__________

Approximate Date of Commencement of Proposed sale to the Public:
From time to time after this Registration Statement becomes effective.

If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box: ( )

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box: (X)
__________

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES TAHT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

=============================================================================

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED APRIL 13, 1994
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1994

[LOGO]

12,000,000 SECURITIES
AETNA CAPITAL L.L.C.

% CUMULATIVE MONTHLY INCOME
PREFERRED SECURITIES ("MIPS"*), SERIES A
(LIQUIDATION PREFERENCE $25 PER SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
AETNA LIFE AND CASUALTY COMPANY
__________

The % Cumulative Monthly Income Preferred Securities, Series A (the
"Series A Preferred Securities") offered hereby are being issued by Aetna
Capital L.L.C., a Delaware limited liability company (the "Company"). All
of the common limited liability company interests of the Company are owned
directly or indirectly by Aetna Life and Casualty Company, a Connecticut
insurance corporation ("AL&C"). The Company was formed solely for the
purpose of issuing securities and lending the proceeds from the issuance
thereof and related capital contributions to AL&C.

The payment of dividends, if and to the extent declared out of funds
held by the Company and legally available therefor, and payments on
liquidation or redemption with respect to the Series A Preferred Securities
are guaranteed by AL&C to the extent described in the accompanying
Prospectus. If AL&C fails to make interest payments on the Series A
Debentures evidencing the loan of the proceeds of the offering described
herein, the Company will have insufficient funds to declare or pay
dividends on the Series A Preferred Securities. The Guarantee does not
cover payment of such undeclared dividends. In such event, the remedy of
holders of Series A Preferred Securities is to enforce their rights under
the Series A Preferred Securities, including their right, under certain
circumstances, to appoint a trustee to enforce the Company's rights under
the Series A Debentures. See "Description of the Preferred Securities --
Voting Rights" and "Description of the Debentures and the Subordinated
Indenture -- Debenture Events of Default" in the accompanying Prospectus.
For a discussion of the terms and limitations of the Guarantee, see
"Description of the Guarantee" in the accompanying Prospectus.

The Series A Preferred Securities will entitle holders to receive
cumulative preferential cash dividends, at an annual rate of % of the
liquidation preference of $25 per security, accruing from , 1994 and
payable monthly in arrears on the last day of each calendar month of each
year, commencing , 1994.

The Series A Preferred Securities are redeemable, at the option of the
Company with AL&C's consent, in whole or in part, from time to time, on or
after , 1999, at $25 per security plus accumulated and unpaid dividends
to the date fixed for redemption (the "Redemption Price"). In addition, AL&C
may cause the Company at any time to redeem the Series A Preferred
Securities at the Redemption Price or to exchange the Series A Preferred
Securities for Series A Debentures having an aggregate principal amount and
accrued and unpaid interest equal to the Redemption Price and having an
interest rate equal to the dividend rate on the Series A Preferred
Securities if there shall have occurred after the date of this Prospectus
Supplement a change in any applicable U.S. law or regulation or in the
interpretation thereof (including the enactment or imminent enactment of
any legislation, the publication of any judicial decisions, regulatory
rulings, regulatory procedures or notices or announcements (including
notices or announcements of intent to adopt such procedures or
regulations), or a change in the official position or in the interpretation
of any law or regulation by any legislative body, court, governmental
authority or regulatory body) and AL&C and the Company shall have been
advised by legal counsel (which counsel is not an employee of AL&C or the
Company) that, as a result of such change, there exists more than an
insubstantial risk that (i) the Company will be subject to federal income
tax with respect to the interest received on the Series A Debentures or
(ii) AL&C will be precluded from deducting the interest paid on the Series
A Debentures for federal income tax purposes. See "Description of the
Preferred Securities -- Redemption or Exchange" in the accompanying
Prospectus.

In the event of a liquidation of the Company, holders of Series A
Preferred Securities will be entitled to receive for each Series A
Preferred Security a liquidation preference of $25 plus accumulated and
unpaid dividends (whether or not declared) to the date of payment, subject
to certain limitations. See "Certain Terms of the Series A Preferred
Securities -- Liquidation Preference" herein and "Description of the
Preferred Securities -- Liquidation Distribution" in the accompanying
Prospectus.

For a description of various contractual backup undertakings of AL&C
relating to the Series A Preferred Securities, see "Description of the
Guarantee" and "Description of the Debentures and the Subordinated
Indenture" in the accompanying Prospectus.

See "Certain Investment Considerations" for certain considerations
relevant to an investment in the Series A Preferred Securities, including
circumstances under which payment of dividends on the Series A Preferred
Securities may be deferred.

Application will be made to list the Series A Preferred Securities on
the New York Stock Exchange.
__________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
__________

Initial Public Underwriting Proceeds to
Offering Price Commission(1) Company(2)(3)
-------------- ------------- -------------

Per Series A Preferred Security.. $25 (2) $25
Total(3)(4)...................... $300,000,000 (2) $300,000,000
___________

(1) The Company and AL&C have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting" herein.

(2) In view of the fact that the proceeds of the sale of the Series A
Preferred Securities will be loaned to AL&C, under the Underwriting
Agreement AL&C has agreed to pay to the Underwriters as compensation
("Underwriters' Compensation") for their services $ per Series A
Preferred Security (or $ in the aggregate). See "Underwriting"
herein.

(3) Expenses of the offering, which are payable by AL&C, are estimated to
be $720,000.

(4) The Company has granted to the Underwriters a 30-day option to
purchase, on the same terms set forth above, up to 1,800,000 additional
Series A Preferred Securities at the Initial Public Offering Price
(with additional Underwriters' Compensation) solely to cover
over-allotments, if any. If the option is exercised in full, the total
Initial Public Offering Price, Underwriters' Compensation and Proceeds
to Company will be $345,000,000 , $ and $345,000,000,
respectively. See "Underwriting" herein.

The Series A Preferred Securities offered hereby are offered by the
several Underwriters, as specified herein, subject to receipt and
acceptance by them and subject to their right to reject any order in whole
or in part. It is expected that delivery of the Series A Preferred
Securities will be made only in book-entry form through the facilities of
The Depository Trust Company on or about , 1994.

____________
* An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.

Goldman, Sachs & Co.
__________

The date of this Prospectus Supplement is , 1994.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

_____________________

FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE FOR THE STATE
OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS.

_______________

AETNA LIFE AND CASUALTY COMPANY

AL&C and its subsidiaries ("Aetna") constitute one of the nation's
largest insurance/financial services organizations based on its assets at
December 31, 1992. Based on 1992 premium rankings, Aetna also is one of
the nation's largest stock insurers of property-casualty lines and one of
the largest writers of group health and managed care products, and group
life, annuity and pension products.

AETNA CAPITAL L.L.C.

The Company is a limited liability company formed under the laws of
Delaware. AL&C owns directly or indirectly all of the common limited
liability company interests (the "Common Securities") in the Company, which
Common Securities are nontransferable. The Company's principal executive
offices are located at 151 Farmington Avenue, Hartford, Connecticut 06156,
telephone: (203) 273-0123. The principal executive offices of the
Managing Members (as defined below) of the Company are located at 151
Farmington Avenue, Hartford, Connecticut 06156, telephone: (203) 273-0123.
The Company exists solely for the purpose of issuing preferred limited
liability company interests ("Preferred Securities") and Common Securities
and lending the proceeds from the issuance thereof and related capital
contributions to AL&C.

Each holder of Series A Preferred Securities will be furnished
annually with unaudited financial statements of the Company as soon as
available after the end of the Company's fiscal year.

CERTAIN INVESTMENT CONSIDERATIONS

Prospective purchasers of Series A Preferred Securities should
carefully review the information contained elsewhere in this Prospectus
Supplement and in the Prospectus and should particularly consider the
following matters:

SUBORDINATION OF AL&C'S OBLIGATIONS

AL&C's obligations under the Guarantee are subordinate
and junior in right of payment to all other liabilities of
AL&C and its obligations under the Subordinated Indenture
are subordinate and junior in right of payment to all Senior
Debt of AL&C. As of December 31, 1993, AL&C had
approximately $1.2 billion of Senior Debt outstanding.
There are no provisions in the Series A Preferred
Securities, the Subordinated Indenture or the Guarantee that
limit AL&C's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Guarantee
and the Debentures. See "Description of the Guarantee --
Status of the Guarantee" and "Description of the Debentures
and the Subordinated Indenture -- Subordination" in the
Prospectus.

OPTION TO EXTEND INTEREST PAYMENT PERIOD

AL&C has the right under the Series A Debentures to
extend interest payment periods for up to 60 months (which
right may be exercised from time to time), and, as a
consequence, monthly dividends on the Series A Preferred
Securities can be deferred (but will continue to accumulate)
by the Company during any such extended interest payment
period. In the event that AL&C exercises this right, AL&C
will not be permitted to declare dividends on any shares of
its preferred or common stock, and therefore, the
possibility of an extension of a payment period is, in the
view of the Company and AL&C, remote. See "Description of
the Debentures and the Subordinated Indenture -- Interest"
in the Prospectus.

TAX CONSEQUENCES OF EXTENDED INTEREST PAYMENT PERIOD

Should an extended interest payment period occur,
beneficial owners of Series A Preferred Securities will be
required to include interest accruing on the Series A
Debentures in gross income for U.S. federal income tax
purposes in advance of the receipt of cash, and any
beneficial owners who dispose of Series A Preferred
Securities prior to the record date for payment of dividends
following such period will not receive such dividends from
the Company or AL&C. See "Taxation -- Potential Extension
of Payment Period" in the Prospectus.

SPECIAL REDEMPTION OR EXCHANGE

The Department of the Treasury is studying the federal
income tax treatment of securities similar to the Series A
Preferred Securities. While the Company cannot predict the
outcome of such study, the Company may either (a) redeem the
Series A Preferred Securities, in whole or in part, or (b)
exchange the Series A Preferred Securities for Series A
Debentures if there shall have occurred after the date of
this Prospectus Supplement a change in any applicable U.S.
law or regulation or in the interpretation thereof
(including but not limited to the enactment or imminent
enactment of any legislation, the publication of any
judicial decisions, regulatory rulings, regulatory
procedures, or notices or announcements (including notices
or announcements of intent to adopt such procedures or
regulations), or a change in the official position or in the
interpretation of any law or regulation by any legislative
body, court, governmental authority or regulatory body,
irrespective of the manner in which such change is made
known), and the Company and AL&C have been advised by legal
counsel (which counsel is not an employee of AL&C or the
Company) that, as a result of such change, there exists more
than an insubstantial risk that (i) AL&C will be precluded
from deducting the interest paid on the Series A Debentures
for federal income tax purposes or (ii) the Company will be
subject to federal income tax with respect to the interest
received on the Series A Debentures. See "Description of
the Preferred Securities -- Redemption or Exchange".

USE OF PROCEEDS

Based on the offering price of $25 per Series A Preferred Security,
the proceeds from this offering (prior to deducting Underwriters'
Compensation and estimated expenses) will be $300 million ($345 million if
the Underwriters' over-allotment option is exercised in full). The
proceeds from the sale of the Series A Preferred Securities will be loaned
to AL&C to be used for general corporate purposes.

CAPITALIZATION

The following table sets forth the total consolidated capitalization
of Aetna at December 31, 1993 and as adjusted to give effect to the sale of
the Series A Preferred Securities offered hereby and the application of the
proceeds therefrom as described under "Use of Proceeds" herein.

As of December 31, 1993
-----------------------

As
Actual Adjusted
--------- --------
(Millions, except
share data)

Short-term debt . . . . . . . . . . . $ 35.7 $
--------- --------
Long-term debt . . . . . . . . . . . 1,160.0
Preferred securities of consolidated --
subsidiary . . . . . . . . . . . . .
Shareholders' equity:
Preferred Stock (no par value:
40,000,000 shares authorized; no
shares issued or outstanding). . . -- --
Common Capital Stock (no par value:
250,000,000 shares authorized;
114,939,275 issued and
112,200,567 outstanding) . . . . . 1,422.0 1,422.0
Net unrealized capital gains . . . 648.2 648.2
Retained earnings . . . . . . . . . 5,103.3 5,103.3
Treasury Stock, at cost (2,738,708
shares) . . . . . . . . . . . . . (130.4) (130.4)
--------- --------
Total shareholders' equity . . . $7,043.1 $7,043.1
--------- --------
Total short-term debt and
capitalization . . . . . . . . $8,238.8 $
========= ========

- ---------
For further information, see Notes 8, 9, 11 and 16 of Notes to Financial
Statements in AL&C's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993.

SUMMARY FINANCIAL INFORMATION OF AETNA

The following summary financial information for the years ended
and as of December 31, 1993, 1992, 1991, 1990 and 1989 has been derived
from previously published audited consolidated financial statements of
Aetna, as adjusted, which have been examined and reported upon by KPMG Peat
Marwick, independent auditors. The summary financial information should be
read in conjunction with, and is qualified in its entirety by reference to,
the consolidated financial statements from which it has been derived and
the accompanying notes thereto incorporated by reference in the Prospectus.

Year Ended December 31,
--------------------------------------------------
1993(1)(2) 1992(1) 1991 1990 1989
---------- ------- ------- -------- ---------
(millions)

Statement of Income Data:

Revenue:

Premiums................. $10,574.9 $10,793.9 $11,444.6 $11,923.1 $12,432.6

Net Investment Income.... 4,919.0 5,069.0 5,514.5 5,608.1 5,360.8

Fees and Other Income.... 1,534.0 1,519.4 1,365.5 1,290.5 1,169.3

Net Realized Capital
Gains (Losses)......... 89.8 114.9 (282.1) (122.5) 250.0

Total Revenue.. 17,117.7 17,497.2 18,042.5 18,699.2 19,212.7

Benefits and Expenses:

Benefits and Expenses
(other than Loss on
Discontinuance of
Products and Severance
and Facilities Charges). 16,687.1 17,473.6 17,799.0 18,149.6 18,548.9

Loss on Discontinuance
of Products........... 1,270.0 --- --- --- ---

Severance and Facilities
Charge................ 308.0 145.0 --- 90.0 ---

Income (Loss) from
Continuing
Operations before
Extraordinary
Item and Cumulative
Effect Adjustments....... (615.3) (5.3) 366.4 480.6 512.8

Income from Discontinued
Operations, Net of
Tax(3)................... 27.0 173.8 138.8 133.5 126.6

Extraordinary loss on
debenture redemption,
net of tax................ (4.7) --- --- --- ---

Cumulative effect
adjustments, net of tax:

Discounting of workers'
compensation life table
indemnity claims....... 250.0 --- --- --- ---

Change in accounting for
postemployment benefits.. (48.5) --- --- --- ---

Change in accounting for
retrospectively rated
reinsurance contracts... 26.3 --- --- --- ---

Change in accounting for
debt and equity
securities............... (.7) --- --- --- ---

Change in accounting for
income taxes............. --- 272.5 --- --- ---

Change in accounting for
postretirement benefits
other than pensions...... --- (385.0) --- --- ---

Net Income (Loss).......... $ (365.9) $ 56.0 $ 505.2 $ 614.1 $ 676.4

Net Realized Capital Gains
(Losses), Net of Tax
(included above)......... 59.0 78.6 (187.4) (79.2) 111.7

Year Ended December 31,
--------------------------------------------------
1993(1)(2) 1992(1) 1991 1990 1989
---------- ------- ------- -------- ---------
(millions)

Balance Sheet Data:

Total Assets(4)........ $100,036.7 $94,519.6 $91,987.6 $89,300.7 $87,099.0

Total Investments...... 61,455.8 58,796.5 58,456.9 60,766.2 58,704.8

Total Long-Term Debt... 1,160.0 955.6 1,019.6 1,010.3 1,037.7

Total Shareholders'
Equity............... 7,043.1 7,238.3 7,384.5 7,072.4 6,936.7

Business Segment Earnings
Data:

Income (Loss) from
Continuting Operations
before Extraordinary
Item and Cumulative
Effect Adjustments:

Health and Life
Insurance
and Services.......... $288.1 $280.6 $386.0 $280.3 $241.7

Financial Services..... (808.8) (17.2) (156.9) 28.4 106.9

Commercial Property-
Casualty Insurance
and Services......... (115.9) (245.4) 139.5 199.5 232.0

Personal Property-
Casualty (3.3) (36.2) (28.6) 24.8 (104.6)

International 24.6 12.9 26.4 (52.4) (17.2)
____________________

1 See AL&C's Annual Report on Form 10-K for the fiscal year ended December
31, 1993 for a discussion of the effects of accounting changes adopted
with respect to 1993 and 1992 and for a discussion of the discontinuance
of Aetna's fully guaranteed large case pension products in 1993.

2 In August 1993, the Omnibus Budget Reconciliation Act of 1993 ("OBRA")
was enacted which resulted in an increase in the federal corporate tax
rate from 34% to 35%. The enactment of OBRA resulted in a net benefit of
$21.8 million to continuing operations before extraordinary item and
cumulative effect adjustments. The net benefit resulted from an increase
in Aetna's deferred tax asset partially offset by an increase in current
taxes.

3 In 1992, Aetna sold American Re-Insurance Company, formerly a wholly
owned subsidiary. As a result of the sale, the Reinsurance and Related
Services segment, provided through American Re-Insurance Company, is
presented as a discontinued operation. All prior year financial data has
been restated to reflect the change.

4 Total assets in 1993 include $15.0 billion of assets attributable to
discontinued products.

RECENT DEVELOPMENTS

ACTIONS ANNOUNCED IN JANUARY 1994

In January 1994, Aetna announced a number of actions to improve
the profitability of its operations. The announced actions resulted
in an after-tax charge to 1993 operating earnings (income from
continuing operations, excluding capital gains and losses) of $1.28
billion. The announced actions included the following:

bullet Aetna discontinued the sale of fully guaranteed large case
pension products. These products principally consist of
guaranteed investment contracts and single-premium
annuities. Results in 1993 included an after-tax charge
for anticipated future losses on these products of $825
million ($1,270 million pre-tax).

bullet Aetna increased its workers' compensation reserves for prior
accident years by $574 million (pre-tax). Aetna also
elected, retroactive to January 1, 1993, to begin
discounting its workers' compensation life table
indemnity reserves consistent with industry practice.
After tax and after the current year effect of
discounting, reserves increased by $259 million. The
cumulative effect of discounting workers' compensation
life table indemnity reserves at January 1, 1993, net of
tax, was $250 million.

bullet Aetna announced expense reduction measures, including
the elimination of 4,000 positions and the abandonment of
certain facilities. Results in 1993 included an after-tax
severance and facilities charge of $200 million
related to these measures ($308 million pre-tax). These
cost-reduction measures are expected to be substantially
completed in 1994 and are expected to produce annual
after-tax savings in excess of $200 million by 1995,
including savings resulting from a modification of
Aetna's post-retirement health care plan.

1993 RESULTS

Aetna reported a 1993 net loss of $366 million, compared to net
income of $56 million and $505 million in 1992 and 1991,
respectively. The 1993 net loss reflected the charges detailed
above, as well as income from discontinued operations of $27 million
(compared with $174 million in 1992 and $139 million in 1991) and a
net benefit of $227 million for cumulative effect adjustments for
accounting changes (compared with a net charge of $113 million for
such adjustments in 1992).

Excluding the $1.28 billion charge announced in January, 1994,
operating earnings improved to $610 million in 1993 from $192 million
in 1992. Results in 1993 benefitted from a $173 million after-tax
reduction in operating expenses as well as improved underwriting and
lower catastrophe losses in the property/casualty businesses.

Adverse conditions in commercial real estate markets have
negatively impacted earnings in recent years and may continue to
negatively impact future results of operations. However, Aetna has
reduced its commercial real estate exposure as a percentage of
general account invested assets from 38% at year-end 1991 ($22.2
billion of real estate and mortgage loans) to 26% at year-end 1993
($16.2 billion of real estate and mortgage loans). In addition, as
part of the discontinuance of its fully guaranteed large case pension
products, Aetna took a charge for all anticipated future capital
losses on the $6 billion of real estate and mortgage loans supporting
these products.

For a more complete description of Aetna's financial condition
at December 31, 1993 and 1992 and operating results for the years
ended December 31, 1993, 1992 and 1991, reference is made to AL&C's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993.

RECENT CATASTROPHE LOSSES

Aetna expects that claim costs from the Los Angeles earthquake
and the January and February 1994 winter storms will reduce first
quarter 1994 results by approximately $120 million, after reinsurance
and taxes.

SUMMARY BUSINESS DESCRIPTION

The business of Aetna is conducted through five reportable
segments: Health and Life Insurance and Services; Financial
Services; Commercial Property-Casualty Insurance and Services;
Personal Property-Casualty; and International.

HEALTH AND LIFE INSURANCE AND SERVICES

Group health and life insurance products and services,
including managed health care products and services, are marketed
through units of the Health and Life Insurance and Services segment,
primarily to employers and employer-sponsored groups. These products
and services are provided to employees or other individuals covered
under benefit plans sponsored by those organizations. Individual
life insurance products also are included in Health and Life. Group
life insurance consists chiefly of renewable term coverage, the
amounts of which frequently are linked to individual employee wage
levels. Aetna also offers group universal life and sponsored
universal and whole life products. Group health and disability
insurance includes coverage for medical and dental care expenses and
for disabled employees' income replacement benefits.

Health coverage is provided under both traditional indemnity
and prepaid arrangements, whereby Aetna assumes the full insurance
risk, and under alternative risk-sharing plans, whereby employers
assume all or a significant portion of the insurance risk. Managed
care products, which may be sold on a stand-alone basis or in
combination with traditional indemnity products, vary from
traditional indemnity products primarily through the use of health
care networks (physicians and hospitals) and the implementation of
medical management procedures designed to enhance the quality and
reduce the cost of medical services provided. Aetna's managed care
products include health maintenance organizations, preferred provider
organizations and point-of-service plans. At year-end 1993, Aetna
operated various types of managed care networks in approximately 211
Standard Metropolitan Statistical Areas, with enrollment of
approximately 5 million. The number of members covered under all
arrangements, including traditional health plans, was approximately
15 million at December 31, 1993.

Both the Clinton Administration and a number of states have
proposed significant health care reform legislation. Aetna is
supportive of initiatives that expand access to and control costs of
health care through expanded reliance on managed care and preserve a
strong private sector role in the financing and delivery of health
care. Management currently is not able to predict the outcome of the
various federal and state legislative initiatives or what effect the
resulting legislation, if any, will have on Aetna's health
businesses.

FINANCIAL SERVICES

The business units in the Financial Services segment market a
variety of retirement and other savings and investment products
(including pension and annuity products) and services to businesses,
government units, associations, collectively bargained welfare
trusts, hospitals, educational institutions and individuals. Some
pension and annuity products provide a variety of investment
guarantees, funding and benefit payment distribution options and
other services. Certain products are tailored for marketing to
pension plans that qualify under Internal Revenue Code of 1986, as
amended (the "Code") Section 401 for tax deferral. Other products
qualify for similar tax status under Code Sections 401, 403, 408 and
457. As of December 31, 1993, the Financial Services segment,
including Separate Accounts, had $67.1 billion in assets under
management (including assets supporting discontinued products of
$14.7 billion).

In January 1994, Aetna announced its decision to discontinue
the sale of its fully guaranteed large case pension products. Fully
guaranteed large case pension products consist of guaranteed
investment contracts and single-premium annuities that generally were
offered to larger employers. See "Recent Developments -- Actions
Announced in January 1994".

COMMERCIAL PROPERTY-CASUALTY INSURANCE AND SERVICES

The business units in the Commercial Property-Casualty
Insurance and Services segment provide most types of property-casualty
insurance, bonds, and insurance-related services for businesses, government
units and associations. Commercial coverages accounted for 67% of Aetna's
1993 property-casualty net written premiums. These coverages are sold for
risks of all sizes and include fire and allied lines, multiple peril,
marine, workers' compensation, general liability (including product
liability), commercial automobile, certain professional liability, and
fidelity and surety bonds.

PERSONAL PROPERTY-CASUALTY

The business units in the Personal Property-Casualty segment provide
primarily personal automobile insurance and homeowners insurance. Personal
coverages accounted for 33% of Aetna's 1993 property-casualty net written
premiums. Aetna has in recent years withdrawn from or reduced exposure to
personal automobile insurance in certain states in which management has
concluded that it is not in Aetna's interest to continue selling personal
automobile insurance. Management will continue to evaluate market
conditions and maintain or increase Aetna's presence in those states that
offer acceptable returns.

INTERNATIONAL

The International segment, through subsidiaries and joint
venture operations, sells primarily life insurance and financial
services products in non-U.S. markets including Canada, Malaysia,
Taiwan, Chile, Mexico, the United Kingdom, Hong Kong, Korea and New
Zealand. The International segment's strategy is to invest resources
in areas outside the U.S. that have the potential for attractive
returns, with emphasis on the emerging insurance and financial
services markets of newly industrialized countries. This long-term
strategy requires significant up-front investment and a willingness
to accept negative or low returns in the initial years of such
operations.

A more complete description of Aetna's business operations is
contained in "Item 1 -- Business" of AL&C's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993.

CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES

GENERAL

The following summary of certain terms and provisions of the
Series A Preferred Securities supplements the description of certain
terms and provisions of the Preferred Securities of any series set
forth in the accompanying Prospectus under the heading "Description
of the Preferred Securities", to which description reference is
hereby made. Capitalized terms used and not defined in this
Prospectus Supplement have the meanings ascribed to them in the
Prospectus. The Series A Preferred Securities constitute a series of
Preferred Securities of the Company, which Preferred Securities may
be issued from time to time in one or more series with such
designations, dividend rights, liquidation preference per security,
redemption or exchange provisions, voting rights and other rights,
preferences, privileges, limitations and restrictions as are
established by the Amended and Restated Limited Liability Company
Agreement of the Company (the "L.L.C. Agreement"), the Delaware
Limited Liability Company Act (the "L.L.C. Act") and the resolutions
(the "Resolutions") adopted, or to be adopted, pursuant to the L.L.C.
Agreement and the L.L.C. Act by AL&C and Aetna Capital Holdings,
Inc., in their capacity as the members of the Company that hold all
of the Company's Common Securities (the "Managing Members"). The
summary of certain terms and provisions of the Series A Preferred
Securities set forth below does not purport to be complete and is
subject and qualified in its entirety by reference to the L.L.C.
Agreement and the Resolutions establishing the rights, preferences,
privileges, limitations and restrictions relating to the Series A
Preferred Securities. A copy of the Resolutions relating to the
Series A Preferred Securities will be included as an exhibit to a
Current Report on Form 8-K to be filed by AL&C at or prior to the
closing of the sale of the Series A Preferred Securities offered
hereby.

DIVIDENDS

Dividends on the Series A Preferred Securities will be
cumulative, will accrue from , 1994 and will be payable monthly in
arrears on the last day of each calendar month of each year,
commencing , 1994, when, as and if declared by the Managing Members,
except as otherwise described under "Description of the Preferred
Securities -- Dividends" in the accompanying Prospectus, to holders
of record on the Business Day immediately preceding the relevant
payment date. The Company may only pay dividends on the Series A
Preferred Securities to the extent it has funds legally available
therefor. See "Description of the Preferred Securities -- Dividends"
in the accompanying Prospectus.

The dividend payable on each Series A Preferred Security will
be fixed at a rate per annum of % of the stated liquidation
preference thereof.

LIQUIDATION PREFERENCE

The stated liquidation preference of the Series A Preferred
Securities is $25 per security.

REDEMPTION OR EXCHANGE

The Series A Preferred Securities are redeemable or
exchangeable for Series A Debentures as described in the accompanying
Prospectus. In addition, the Series A Preferred Securities are
redeemable, at the option of the Company and subject to the prior
consent of AL&C, in whole or in part, from time to time, on or after
, 1999, upon not less than 30 nor more than 60 days' notice, at the
redemption price of $25 per security, plus accumulated and unpaid
dividends (whether or not declared) to the date fixed for redemption.

CERTAIN TERMS OF THE SERIES A DEBENTURES

GENERAL

The following summary of certain terms and provisions of the
Debentures relating to the Series A Preferred Securities (the "Series
A Debentures") supplements the description of certain terms and
provisions of the Debentures set forth in the accompanying Prospectus
under the heading "Description of the Debentures and the Subordinated
Indenture", to which description reference is hereby made. Pursuant
to the Subordinated Indenture, AL&C will issue Series A Debentures to
the Company in an aggregate principal amount equal to
approximately $380 million, such amount being the sum of the
aggregate stated liquidation preference of the Series A Preferred
Securities issued and sold by the Company and the proceeds from the
issuance of Common Securities to the Managing Members and related
capital contributions (the "Common Securities Payments"). In the
event that the Underwriters' over-allotment option is exercised, AL&C
will issue additional Series A Debentures to the Company pursuant to
the Subordinated Indenture equal to the aggregate stated liquidation
preference of the Series A Preferred Securities so sold plus the
related Common Securities Payments. If the Underwriters'
over-allotment option is exercised in full, such additional Series A
Debentures will have an aggregate principal amount equal to
approximately $437 million.

The entire principal amount of the Series A Debentures will
become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on the earlier of ,
2024 (subject to AL&C's right to exchange the Series A Debentures for
new Debentures or reborrow the proceeds from the repayment of the
Series A Debentures upon the terms and subject to the conditions set
forth under "Description of the Preferred Securities -- Redemption or
Exchange" in the accompanying Prospectus) and the date upon which the
Company is dissolved, wound up, liquidated or terminated or either
Managing Member is liquidated, bankrupt or insolvent or withdraws,
resigns or is expelled from the Company.

PREPAYMENT

The Series A Debentures may not be prepaid by AL&C except as
described below or in the accompanying Prospectus. The Series A
Debentures may be prepaid at the option of AL&C, without premium or
penalty, in whole or in part (together with accrued but unpaid
interest, including Additional Interest, if any, on the portion being
prepaid) at any time on or after , 1999, upon not less than 30
nor more than 60 days' notice.

INTEREST

The Series A Debentures will bear interest at an annual rate
equal to % from the date they are issued until maturity. Such
interest will be payable on the last day of each calendar month of
each year, commencing , 1994.

UNDERWRITING

Subject to the terms and conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom
Goldman, Sachs & Co., , and are acting as
Representatives, has severally agreed to purchase, the number of Series A
Preferred Securities set forth opposite its name below:

Number of
Series A
Underwriters Preferred Securities
-------------- --------------------
Goldman, Sachs & Co. . . . . . . . . . . . . .

-----------
Total. . . . . . . . . . . . . . . . . . . . . 12,000 ,000
===========

Under the terms and conditions of the Underwriting Agreement,
the Underwriters are committed to take and pay for all the Series A
Preferred Securities offered hereby, if any are taken.

The Underwriters propose to offer the Series A Preferred
Securities in part directly to the public at the initial public
offering price set forth on the cover page of this Prospectus
Supplement and in part to certain securities dealers at such price
less a concession of $. per Series A Preferred Security. The
Underwriters may allow and such dealers may reallow a concession not
in excess of $. per Series A Preferred Security to certain brokers
and dealers. After the Series A Preferred Securities are released
for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.

In view of the fact that the proceeds of the sale of the Series
A Preferred Securities will be loaned to AL&C, under the Underwriting
Agreement AL&C has agreed to pay as compensation for the services of
the Underwriters in New York Clearing House (next day) funds $.
per Series A Preferred Security for the accounts of the several
Underwriters.

The Company has granted the Underwriters an option exercisable
for 30 days after the date of this Prospectus Supplement to purchase
up to 1,800,000 additional Series A Preferred Securities to cover
over-allotments, if any, at the initial public offering price (with
additional Underwriters' Compensation), as set forth on the cover
page of this Prospectus Supplement. If the Underwriters exercise
their over-allotment option, the Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same
percentage thereof that the number of Series A Preferred Securities
to be purchased by each of them, as shown in the foregoing table,
bears to the number of Series A Preferred Securities initially
offered hereby.

Prior to this offering, there has been no market for the Series
A Preferred Securities. In order to meet one of the requirements for
listing the Series A Preferred Securities on the New York Stock
Exchange, the Underwriters will undertake to sell lots of 100 or more
Series A Preferred Securities to a minimum of 400 beneficial holders.

The Company and AL&C have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

Certain of the Underwriters from time to time provide
investment banking services to Aetna.

Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
State.

SUBJECT TO COMPLETION, DATED APRIL 13, 1994

AETNA CAPITAL L.L.C.

PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY

AETNA LIFE AND CASUALTY COMPANY
__________

Aetna Capital L.L.C., a Delaware limited liability company (the
"Company"), may offer from time to time, in one or more series, its
authorized but unissued Preferred Limited Liability Company Interests (the
"Preferred Securities"). All of the Common Limited Liability Company
Interests (the "Common Securities") of the Company are owned directly or
indirectly by Aetna Life and Casualty Company, a Connecticut insurance
corporation ("AL&C"). The payment of dividends, if and to the extent
declared out of funds held by the Company and legally available therefor,
and payments on liquidation or redemption with respect to the Preferred
Securities are guaranteed (the "Guarantee") by AL&C to the extent set forth
herein. No portion of the dividends received by a holder of the Preferred
Securities will be eligible for the dividends received deduction for
federal income tax purposes. The Guarantee will rank subordinate and
junior in right of payment to all other liabilities of AL&C and pari passu
with the most senior preferred stock issued by AL&C. See "Aetna Capital
L.L.C.", "Description of the Guarantee" and "Description of the Debentures
and the Subordinated Indenture" for a description of various contractual
backup obligations of AL&C relating to the Preferred Securities. The total
number of Preferred Securities of all series to be issued under the
registration statement of which this Prospectus forms a part will not
exceed 20,000,000.

The terms of the Preferred Securities of a particular series will be
determined at the time of sale. The specific designation, liquidation
preference per security, initial public offering price, dividend rate (or
method of calculation thereof), dates on which dividends will be payable,
voting rights, any redemption or exchange provisions and the other rights,
preferences, privileges, limitations and restrictions relating to the
Preferred Securities of the particular series in respect of which this
Prospectus is being delivered will be set forth in the Prospectus
Supplement pertaining to such series (the "Prospectus Supplement").

The Preferred Securities may be sold for public offering to or through
underwriters or dealers or may be sold through agents designated from time
to time or directly by the Company. See "Plan of Distribution". The names
of any such underwriters, dealers or agents involved in the sale of the
Preferred Securities of the particular series in respect of which this
Prospectus is being delivered, the number of Preferred Securities to be
purchased by any such underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The proceeds to
the Company will also be set forth in the Prospectus Supplement.
__________

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
__________

No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in
this Prospectus in connection with the offer contained in this Prospectus
and, if given or made, such information or representations must not be
relied upon as having been authorized by AL&C, the Company or any
underwriters, agents or dealers. This Prospectus does not constitute an
offer to sell or solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale
hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of AL&C and its subsidiaries or the
Company since the date hereof or that the information contained herein is
correct at any time subsequent to the date hereof.

This Prospectus may not be used to consummate sales of Preferred
Securities unless accompanied by a Prospectus Supplement.

__________

The date of this Prospectus is , 1994.

AVAILABLE INFORMATION

AL&C is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by AL&C can be inspected and copied
at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Chicago Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and New York Regional Office, 7 World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. AL&C's common stock is listed on the New
York Stock Exchange, the Pacific Stock Exchange and on the Swiss exchanges
in Basel, Geneva and Zurich, and such reports, proxy and information
statements and other information concerning AL&C may also be inspected at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005, and the Pacific Stock Exchange, 301 Pine Street, San
Francisco, California 94104.

The Company and AL&C have filed with the Commission a registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered hereby (the "Registration
Statement"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Reference is
made to the Registration Statement and to the exhibits relating thereto for
further information with respect to AL&C, the Company and the securities
offered hereby.

No separate financial statements of the Company have been included
herein. The Company and AL&C do not consider that such financial
statements would be material to holders of the Preferred Securities because
the Company is a newly formed special purpose entity and has no operating
history. See "Aetna Capital L.L.C.". The Company is a limited liability
company formed under the laws of Delaware and will be managed by AL&C and
Aetna Capital Holdings, Inc., in their capacity as the members of the
Company that hold all of the Company's Common Securities (the "Managing
Members"). AL&C directly or indirectly owns all of the Common Securities,
which are nontransferable.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

AL&C's Annual Report on Form 10-K for the fiscal year ended December
31, 1993, filed with the Commission pursuant to Section 13 of the Exchange
Act under File No. 1-5704, is incorporated by reference into this
Prospectus and made a part hereof.

All documents filed by AL&C with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof
and prior to the termination of the offering described herein shall hereby
be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein or in any Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

AL&C will provide without charge to each person to whom this
Prospectus is delivered, on written or oral request of such person, a copy
of any or all of the foregoing documents incorporated by reference into
this Prospectus (without exhibits to such documents other than exhibits
specifically incorporated by reference into such documents). Requests for
such copies should be directed to the office of the Corporate Secretary,
Aetna Life and Casualty Company, 151 Farmington Avenue, Hartford, CT 06156,
telephone (203) 273-3977.

AETNA LIFE AND CASUALTY COMPANY

AL&C was organized in 1967 as a Connecticut insurance corporation.
The business of Aetna is conducted through five reportable segments: health
and life insurance and services; financial services; commercial property-
casualty insurance and services; personal property-casualty insurance; and
international.

The principal executive offices of AL&C are located at 151 Farmington
Avenue, Hartford, Connecticut 06156; its telephone number is (203) 273-0123.

AETNA CAPITAL L.L.C.

The Company is a limited liability company formed under the laws of
Delaware. AL&C owns directly or indirectly all of the Common Securities of
the Company, which securities are nontransferable. The Company's principal
executive offices are located at 151 Farmington Avenue, Hartford,
Connecticut 06156, telephone: (203) 273-0123. The principal executive
offices of the Managing Members are located at 151 Farmington Avenue,
Hartford, Connecticut 06156, telephone: (203) 273-0123. The Company
exists solely for the purpose of issuing Preferred Securities and Common
Securities and lending the proceeds from the issuance thereof and related
capital contributions to AL&C.

Pursuant to the Company's Amended and Restated Limited Liability
Company Agreement (the "L.L.C. Agreement"), the members of the Company
that hold Common Securities have unlimited liability for the debts,
obligations and liabilities of the Company in the same manner as a general
partner of a Delaware limited partnership (which do not include obligations
to holders of Preferred Securities), to the extent not fully satisfied and
discharged by the Company. That liability on the part of such members is
for the benefit of, and is enforceable by, the liquidating trustee of the
Company in the event of its dissolution, winding up, liquidation or
termination and is for the benefit of third parties to whom the Company
owes such debts, obligations and liabilities. The holders of Preferred
Securities, in their capacity as members of the Company, are not liable for
the debts, obligations or liabilities of the Company.

Each holder of Preferred Securities will be furnished annually with
unaudited financial statements of the Company as soon as available after
the end of the Company's fiscal year.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth Aetna's ratio of earnings to combined
fixed charges and preferred stock dividends for the periods indicated.

Years ended December 31,
-------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends........................ (a) 0.42(a) 2.13 3.03 4.05

___________
(a) Earnings were inadequate to cover fixed charges by $1.1 billion in
1993 and $112.8 million in 1992.

For purposes of computing the ratio of earnings to combined fixed
charges and preferred stock dividends, "earnings" represent consolidated
earnings from continuing operations before income taxes, cumulative effect
adjustments and extraordinary items plus fixed charges and minority
interest. "Fixed charges" consist of interest (and the portion of rental
expense deemed representative of the interest factor). Preferred stock
dividends, which are not deductible for income tax purposes, have been
increased to a taxable equivalent basis. This adjustment has been
calculated by using the effective tax rate for the applicable year. All
shares of AL&C's preferred stock were redeemed in 1989.

USE OF PROCEEDS

The proceeds from the sale of the Preferred Securities will be loaned
to AL&C and, except as may otherwise be set forth in the applicable
Prospectus Supplement, will be used for general corporate purposes.

DESCRIPTION OF THE PREFERRED SECURITIES

The following is a summary of certain terms and provisions of the
Preferred Securities of any series. Certain terms and provisions of the
Preferred Securities of a particular series will be summarized in the
Prospectus Supplement relating to the Preferred Securities of such series.
If so indicated in the Prospectus Supplement, the terms and provisions of
the Preferred Securities of a particular series may differ from the terms
set forth below. The summaries set forth below and in the applicable
Prospectus Supplement address the material terms of the Preferred
Securities of any particular series but do not purport to be complete and
are subject to, and qualified in their entirety by reference to, the L.L.C.
Agreement and the resolutions adopted or to be adopted by the Managing
Members pursuant to the L.L.C. Agreement and the Delaware Limited
Liability Company Act, establishing the rights, preferences, privileges,
limitations and restrictions relating to the Preferred Securities of any
series or of a particular series. A copy of the form of the L.L.C.
Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.

General

The Company is authorized to issue Common Securities and Preferred
Securities. The Preferred Securities may be issued in one or more series
or classes, with such dividend rights, liquidation preference per security,
redemption or exchange provisions, voting rights and other rights,
preferences, privileges, limitations and restrictions as shall be set forth
in the L.L.C. Agreement and the resolutions providing for the issuance
thereof adopted by the Managing Members. All of the Preferred Securities
will rank pari passu with each other with respect to participation in
profits and assets.

The Preferred Securities of any series will be issued in registered
form only without dividend coupons. Registration of, and registration of
transfers of, the Preferred Securities of any series will be by book-entry
only. The Preferred Securities of any series will have the dividend
rights, rights upon liquidation, redemption and exchange provisions and
voting rights set forth below, unless otherwise provided in the Prospectus
Supplement relating to the Preferred Securities of a particular series.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a particular series for specific terms, including (i) the
designation of the Preferred Securities of such series, (ii) the price at
which the Preferred Securities of such series will be issued, (iii) the
dividend rate (or method of calculation thereof) and the dates on which
dividends will be payable, (iv) the voting rights, (v) any redemption or
exchange provisions, (vi) the stated liquidation preference, (vii) any
other rights, preferences, privileges, limitations and restrictions
relating to the Preferred Securities of such series and (viii) the terms
upon which the proceeds from the sale of the Preferred Securities of such
series will be loaned to AL&C.

Dividends

Dividends on the Preferred Securities will be cumulative. Cumulative
dividends on any series of Preferred Securities will accrue from the date
set forth in the Prospectus Supplement relating to such series and will be
payable monthly in arrears on the last day of each calendar month of each
year, commencing on the date specified in the Prospectus Supplement
relating to such series.

The dividend payable on Preferred Securities of a particular series
will be fixed at the rate per annum specified in the Prospectus Supplement
relating to such series. The amount of dividends payable for any full
monthly dividend period will be computed on the basis of twelve 30-day
months and a 360-day year and, for any period shorter than a full monthly
dividend period, will be computed on the basis of the actual number of days
elapsed in such period. If the interest payment period on the Debentures
of any series is extended in the manner described under "Description of the
Debentures and the Subordinated Indenture -- Interest" below, then the rate
at which dividends on the related series of Preferred Securities accumulate
shall be increased by an amount such that the aggregate amount of dividends
that accumulates on all outstanding Preferred Securities of such series
during such interest extension period is equal to the aggregate amount of
interest (including interest payable on unpaid interest) that accrues
during such interest extension period on the portion of such outstanding
Debentures that evidence the loan to AL&C of the proceeds of the issuance
of the outstanding Preferred Securities of such series. The Company may
only pay dividends on Preferred Securities to the extent it has funds
legally available therefor. See "Description of the Guarantee" and
"Description of the Debentures and the Subordinated Indenture" below.

Dividends on the Preferred Securities of any series will be declared
by the Managing Members of the Company to the extent that the Managing
Members reasonably anticipate that at the time of payment the Company will
have, and must be paid by the Company to the extent that at the time of
proposed payment it has, (i) funds legally available for the payment of
such dividends and (ii) cash on hand sufficient to permit such payments.
It is anticipated that the Company's funds will be limited to payments
under the debentures (the "Debentures") to be issued by AL&C to evidence
the loans to be made by the Company to AL&C of the proceeds from the
issuance of the Preferred Securities and the Common Securities and the
related capital contributions. See "Description of the Debentures and the
Subordinated Indenture".

Dividends declared on the Preferred Securities of any series will be
payable to the record holders thereof as they appear on the register for
the Preferred Securities of such series on the relevant record dates, which
will be, unless otherwise specified in the Prospectus Supplement relating
to each such series, one Business Day (as hereinafter defined) prior to the
relevant payment dates. Subject to any applicable fiscal or other laws
and regulations, each such payment will be made as described under
"Book-Entry-Only Issuance; The Depository Trust Company" below. In the
event that any date on which dividends are payable on the Preferred
Securities of any series is not a Business Day, then payment of the
dividend payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by
law to close.

Except as described herein and in the Prospectus Supplement relating
to the Preferred Securities of a particular series, holders of the
Preferred Securities will have no other right to participate in the profits
of the Company.

Certain Restrictions on the Company

If dividends have not been paid in full on the Preferred Securities of
any series, the Company shall not:

(i) pay, or declare and set aside for payment, any dividends on the
Preferred Securities of any other series or any other limited liability
company interests in the Company ranking pari passu with the Preferred
Securities of such series with respect to participation in profits of the
Company ("Company Dividend Parity Securities"), unless the amount of any
dividends declared on any Company Dividend Parity Securities is paid on the
Company Dividend Parity Securities and the Preferred Securities of such
series on a pro rata basis on the date such dividends are paid on such
Company Dividend Parity Securities, so that the ratio of

(x) (A) the aggregate amount paid as dividends on the Preferred
Securities of such series to (B) the aggregate amount paid as
dividends on the Company Dividend Parity Securities is the same as
the ratio of

(y) (A) the aggregate amount of all accumulated arrears of
unpaid dividends on the Preferred Securities of such series to (B)
the aggregate amount of all accumulated arrears of unpaid dividends
on the Company Dividend Parity Securities;

(ii) pay, or declare and set aside for payment, any dividends on any
limited liability company interest in the Company ranking junior to the
Preferred Securities of such series as to dividends ("Company Dividend
Junior Securities"); or

(iii) redeem, purchase or otherwise acquire any Company Dividend
Parity Securities or Company Dividend Junior Securities;

until, in each case, such time as all accumulated arrears of unpaid
dividends on the Preferred Securities of such series shall have been paid
or set aside for payment in full for all dividend periods terminating on or
prior to, in the case of clauses (i) and (ii), such payment, and in the
case of clause (iii), the date of such redemption, purchase or other
acquisition. So long as the Preferred Securities of any series are
represented by one or more global certificates, dividends on such series of
Preferred Securities shall have been paid in full with respect to any
dividend payment date for such series when the amount of dividends payable
on such date has been paid to The Depository Trust Company ("DTC"). See
"Book-Entry-Only Issuance; The Depository Trust Company".

Redemption or Exchange

The Preferred Securities of any series will be redeemable at the
option of the Company and subject to the prior consent of AL&C, in whole or
in part from time to time, on or after the date specified in the Prospectus
Supplement relating to such series, at the stated liquidation preference
per security for such series, plus accumulated and unpaid dividends
(whether or not declared) (the "Redemption Price") to the date fixed for
redemption (the "Redemption Date"). The Preferred Securities of any series
may also be redeemed at the option of the Company on such other terms and
conditions as may be set forth in the Prospectus Supplement relating to
such series.

If at any time after the issuance of the Preferred Securities of any
series, the Company is or would be required to pay Additional Amounts (as
defined below) with respect to any Preferred Securities of such series, the
Company may, upon not less than 30 nor more than 60 days' notice to the
holders of Preferred Securities of such series with respect to which such
Additional Amounts are required to be paid, redeem such Preferred
Securities at the Redemption Price. In connection with any such
redemption, the Company shall (i) cause the global certificate representing
all of the Preferred Securities of such series to be withdrawn from DTC or
its successor securities depository, (ii) issue share certificates in
definitive form representing Preferred Securities of such series and (iii)
redeem the Preferred Securities of such series with respect to which such
Additional Amounts are required to be paid.

In addition, if there shall have occurred after the date of the
Prospectus Supplement relating to any series of Preferred Securities a
change in any applicable U.S. law or regulation or in the interpretation
thereof (including but not limited to the enactment or imminent enactment
of any legislation, the publication of any judicial decisions, regulatory
rulings, regulatory procedures, or notices or announcements (including
notices or announcements of intent to adopt such procedures or
regulations), or a change in the official position or in the interpretation
of any law or regulation by any legislative body, court, governmental
authority or regulatory body, irrespective of the manner in which such
change is made known), and the Company and AL&C shall have been advised by
legal counsel (which counsel is not an employee of AL&C or the Company)
that, as a result of such change, there exists more than an insubstantial
risk that (i) AL&C will be precluded from deducting the interest paid on
the Debentures relating to the Preferred Securities of such series for
federal income tax purposes or (ii) the Company will be subject to federal
income tax with respect to the interest received on such Debentures, then
the Company may, upon not less than 30 nor more than 60 days' notice to the
holders of Preferred Securities of such series, either (a) redeem the
Preferred Securities of such series, in whole or in part, at the Redemption
Price or (b) exchange the Preferred Securities of such series for
Debentures relating to such Preferred Securities having an aggregate
principal amount and accrued and unpaid interest equal to the Redemption
Price and having an interest rate thereon equal to the dividend rate on
such Preferred Securities.

After the date fixed for any exchange of Preferred Securities of any
series for the related series of Debentures, (i) the Preferred Securities
of such series will no longer be deemed to be outstanding, (ii) any global
certificate or certificates representing Preferred Securities of such
series held by DTC or its nominee will be exchanged for a registered global
certificate or certificates representing the Debentures of such series to
be delivered upon such exchange and (iii) any certificates representing
Preferred Securities of such series not held by DTC or its nominee will be
deemed to represent Debentures of such series having a principal amount and
accrued and unpaid interest equal to the Redemption Price of such Preferred
Securities until such certificates are presented to the Company or its
agent for exchange.

The Preferred Securities of any series will also be redeemed at the
Redemption Price with the proceeds from the repayment by AL&C when due of
the series of Debentures relating to such Preferred Securities or upon any
optional prepayment by AL&C of such Debentures as described under
"Description of the Debentures and the Subordinated Indenture -- Optional
Prepayment". Notwithstanding the foregoing, the Preferred Securities of
any series will not be redeemed if (i) in lieu of repaying any series of
Debentures when due or optionally prepaying such Debentures, AL&C is
permitted by the Company to exchange such Debentures for new Debentures or
(ii) AL&C repays such Debentures when due or optionally prepays such
Debentures but is permitted by the Company to reborrow the proceeds from
such repayment or prepayment; provided that the Company will only permit
AL&C to so exchange any series of Debentures for new Debentures or reborrow
the proceeds from the repayment or prepayment thereof if the Company owns
all of such Debentures and, as determined in the judgment of the Managing
Members and the Company's financial advisor (selected by the Managing
Members and who shall be unaffiliated with AL&C and shall be among the 30
largest investment banking firms, measured by total capital, in the United
States at the time of the issuance of the new Debentures that will evidence
the new loan to be made in connection with such exchange or reborrowing),
(a) AL&C is not bankrupt, insolvent or in liquidation, (b) AL&C is not in
default in the payment of any interest or principal under the Subordinated
Indenture, (c) AL&C has made timely payments on the series of Debentures
being exchanged, repaid or prepaid for the immediately preceding 24 months,
(d) such new loan will mature no later than the earlier of (1) the 49th
anniversary of the date of the initial issuance of such Debentures and (2)
the 30th anniversary of the date such new loan is made, (e) the Company is
not in arrears on payments of dividends on the Preferred Securities of the
series relating to such Debentures, (f) AL&C is expected to be able to
make timely payment of principal of and interest on such new loan, (g) such
new loan is being made on terms, and under circumstances, that are
consistent with those which a lender would then require for a loan to an
unrelated party, (h) such new loan is being made at a rate sufficient to
provide payments equal to or greater than the amount of dividend payments
required under the Preferred Securities of such series, (i) such new loan
is being made for a term that is consistent with market circumstances and
AL&C's financial condition and (j) immediately prior to the making of such
new loan, the senior unsecured long-term debt is (or if no such debt is
outstanding, would be) rated not less than BBB (or the equivalent) by
Standard & Poor's Corporation and Baa2 (or the equivalent) by Moody's
Investors Service, Inc. and the subordinated unsecured long-term debt of
AL&C (or, if more than one issue of such subordinated debt is outstanding,
the most junior of such issues) is (or if no such debt is outstanding,
would be) rated not less than BBB- (or the equivalent) by Standard & Poor's
Corporation and Baa3 by Moody's Investors Service, Inc. (or if either of
such rating organizations is not then rating AL&C's senior or subordinated
unsecured long-term debt, as the case may be, the equivalent of such
ratings by any other "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Securities Act).

The Company may not redeem any Preferred Securities of any series
unless all accumulated arrears of unpaid dividends have been paid on all
Preferred Securities of all series for all monthly dividend periods
terminating on or prior to the date of redemption.

In the event that fewer than all the outstanding Preferred Securities
of a particular series are to be redeemed, the Preferred Securities of such
series to be redeemed will be selected as described under "Book-Entry-Only
Issuance; The Depository Trust Company" below.

If the Company gives a notice of redemption in respect of Preferred
Securities of a particular series, then, by 12:00 noon, New York time, on
the applicable Redemption Date, the Company will irrevocably deposit with
DTC funds sufficient to pay the applicable Redemption Price and will give
DTC irrevocable instructions and authority to pay the Redemption Price to
the holders thereof. See "Book-Entry-Only Issuance; The Depository Trust
Company". If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of
holders of such Preferred Securities of a series so called for redemption
will cease, except the right of the holders of such securities to receive
the Redemption Price, but without interest, and such securities will cease
to be outstanding. In the event that any date on which any payment in
respect of the redemption of Preferred Securities of any series is payable
is not a Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of Preferred Securities of any
series is improperly withheld or refused and not paid either by the Company
or by AL&C pursuant to the Guarantee, dividends on such securities will
continue to accrue, at the then applicable rate, from the Redemption Date
originally established by the Company for such securities to the date such
Redemption Price is actually paid, in which case the actual payment date
will be the date fixed for redemption for purposes of calculating the
Redemption Price.

Subject to the foregoing and applicable law (including, without
limitation, U.S. federal securities laws) AL&C or its subsidiaries may at
any time and from time to time purchase outstanding Preferred Securities of
any series by tender, in the open market or by private agreement.

Liquidation Distribution

In the event of any voluntary or involuntary dissolution, winding up,
liquidation or termination of the Company, the holders of Preferred
Securities of each series at the time outstanding will be entitled to
receive out of the assets of the Company legally available for distribution
to securityholders, before any distribution of assets is made to holders of
Common Securities in the Company or any other class of limited liability
company interests in the Company ranking junior to the Preferred Securities
with respect to participation in assets of the Company, but together with
the holders of Preferred Securities of any other series or any other
limited liability company interests in the Company outstanding ranking pari
passu with the Preferred Securities with respect to participation in the
assets of the Company ("Company Liquidation Parity Securities"), an amount
equal, in the case of the holders of the Preferred Securities of such
series, to the aggregate of the stated liquidation preference for Preferred
Securities of such series as set forth in the Prospectus Supplement
relating to such series and all accumulated and unpaid dividends (whether
or not declared) to the date of payment (the "Liquidation Distribution").
If, upon any such liquidation, the Liquidation Distributions can be paid
only in part because the Company has insufficient assets available to pay
in full the aggregate Liquidation Distributions and the aggregate maximum
liquidation distributions on the Company Liquidation Parity Securities,
then the amounts payable directly by the Company on the Preferred
Securities of such series and on such Company Liquidation Parity Securities
shall be paid on a pro rata basis, so that the ratio of

(i)(x) the aggregate amount paid as Liquidation Distributions on the
Preferred Securities of such series to (y) the aggregate amount paid as
liquidation distributions on the Company Liquidation Parity Securities is
the same as the ratio of

(ii)(x) the aggregate Liquidation Distributions to (y) the aggregate
maximum liquidation distributions on the Company Liquidation Parity
Securities.

Pursuant to the L.L.C. Agreement, the Company will automatically
dissolve and be liquidated (i) when the period fixed for the life of the
Company expires, (ii) if the Managing Members by resolution require the
Company to be dissolved, wound up, liquidated, or terminated (subject to
the voting rights of the holders of Preferred Securities described under
"Voting Rights" below) or (iii) if either Managing Member is bankrupt,
insolvent or liquidated or withdraws, resigns or is expelled from the
Company.

Merger, Consolidation, etc. of the Company

The Company may not consolidate or merge with or into or convey,
transfer or lease its properties and assets substantially as an entirety to
any corporation or other body, except as described below. The Company may,
for purposes of changing its state of domicile or avoiding federal income
tax consequences adverse to the Company, AL&C or holders of Preferred
Securities, without the consent of the holders of the Preferred Securities,
consolidate or merge with or into, a limited liability company or limited
partnership or trust organized as such under the laws of any state of the
United States of America; provided that (i) such successor entity either
(x) expressly assumes all of the obligations of the Company under the
Preferred Securities or (y) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor Securities rank, with
respect to participation in the profits or assets of the successor entity,
at least as high as the Preferred Securities rank with respect to
participation in the profits or assets of the Company, (ii) AL&C expressly
acknowledges such successor entity as the holder of the Debentures relating
to the Preferred Securities, (iii) such merger or consolidation does not
cause the Preferred Securities to be delisted by any national securities
exchange or other organization on which the Preferred Securities are then
listed, (iv) such merger or consolidation does not cause the Preferred
Securities to be downgraded by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such merger or
consolidation does not adversely affect the powers, preferences and other
special rights of holders of Preferred Securities in any material respect,
(vi) prior to such merger or consolidation AL&C has received an opinion of
counsel (which counsel is not an employee of AL&C or the Company) to the
effect that (x) holders of outstanding Preferred Securities will not
recognize any gain or loss for federal income tax purposes as a result of
the merger or consolidation, (y) such successor entity will not be treated
as a corporation for federal income tax purposes and (z) such merger or
consolidation will not adversely affect the limited liability of holders of
Preferred Securities.

Voting Rights

If (i) the Company fails to pay dividends in full on the Preferred
Securities of any series for 18 consecutive monthly dividend periods; (ii)
a Debenture Event of Default (as defined in the Subordinated Indenture)
occurs and is continuing; or (iii) AL&C is in default on any of its
payment obligations under the Guarantee (in the manner described under
"Description of the Guarantee -- Certain Covenants of AL&C"), then the
holders of a majority in stated liquidation preference of the outstanding
Preferred Securities of such series, in the case of clause (i) above, and
the holders of a majority in stated liquidation preference of all
outstanding Preferred Securities, in the case of clauses (ii) and (iii)
above, together with the holders of any other limited liability company
interests in the Company having the right to vote for the appointment of a
trustee in such event, acting as a single class, will be entitled to
appoint and authorize a trustee to enforce the Company's rights under the
Subordinated Indenture against AL&C, enforce the obligations undertaken by
AL&C under the Guarantee and declare and pay dividends on the Preferred
Securities of such series in the case of clause (i) above (but only in the
event that the Company's failure to pay dividends is not a consequence of
AL&C's exercise of its right to extend the interest payment period for the
related series of Debentures in the manner described under "Description of
the Debentures and the Subordinated Indenture -- Interest"), and AL&C has
agreed to execute and deliver such documents as may be necessary or
appropriate for the trustee to enforce such rights and obligations. For
purposes of determining whether the Company has failed to pay dividends in
full for 18 consecutive monthly dividend periods, dividends shall be deemed
to remain in arrears, notwithstanding any payments in respect thereof,
until full cumulative dividends have been or contemporaneously are declared
and paid with respect to all monthly dividend periods terminating on or
prior to the date of payment of such full cumulative dividends.

In furtherance of the foregoing, and without limiting the powers of
any trustee so appointed and for the avoidance of any doubt concerning the
powers of the trustee, any trustee, in its own name and as trustee of an
express trust, may institute a proceeding, including, without limitation,
any suit in equity, an action at law or other judicial or administrative
proceeding, to enforce the Company's creditor rights directly against AL&C
to the same extent as the Company and on behalf of the Company, and may
prosecute such proceeding to judgment or final decree, and enforce the same
against AL&C and collect, out of the property, wherever situated, of AL&C
the monies adjudged or decreed to be payable in the manner provided by law.

Not later than 30 days after such right to appoint a trustee arises,
the Managing Members will convene a meeting to appoint such a trustee. If
the Managing Members fail to convene such meeting within such 30-day
period, the holders of 10% in stated liquidation preference of the
outstanding Preferred Securities of such series, in the case of clause (i)
above, and the holders of 10% in stated liquidation preference of all
outstanding Preferred Securities, in the case of clauses (ii) and (iii)
above, and such other limited liability company interests that are entitled
to vote, acting as a single class, will be entitled to convene such
meeting. Any trustee so appointed shall vacate office immediately, subject
to the terms of such other limited liability company interests, if the
Company shall have paid in full all accumulated and unpaid dividends on the
Preferred Securities of such series, in the case of clause (i) above, or
such default by AL&C shall have been cured, in the case of clause (ii) or
(iii) above.

If any resolution is proposed to be adopted by the securityholders of
the Company providing for, or the Managing Members propose to take any
action to effect, (x) any variation or abrogation of the powers,
preferences and special rights of the Preferred Securities of any series by
way of amendment of the L.L.C. Agreement or otherwise (including, without
limitation, the authorization or issuance of any limited liability company
interests in the Company ranking, as to participation in the profits or
assets of the Company, senior to the Preferred Securities) which variation
or abrogation adversely affects the holders of Preferred Securities of such
series, (y) the dissolution, winding up, liquidation or termination of the
Company or (z) the commencement of any bankruptcy, insolvency,
reorganization or other similar proceeding involving the Company, then the
holders of outstanding Preferred Securities of the series, the powers,
preferences or special rights of which are proposed to be amended in the
case of any action described in clause (x) above, and the holders of all
outstanding Preferred Securities, in the case of any action described in
clauses (y) or (z) above, (and, in the case of any action described in
clause (x) above which would adversely affect the powers, preferences or
special rights of any Company Dividend Parity Securities or any Company
Liquidation Parity Securities, such Company Dividend Parity Securities or
such Company Liquidation Parity Securities, as the case may be, or, in the
case of any action described in clause (y) above, all Company Liquidation
Parity Securities or, in the case of any action described in clause (z)
above, all holders of outstanding Preferred Securities, Company Dividend
Parity Securities and any Company Liquidation Parity Securities other than
holders of any such securities that are also creditors of AL&C or any of
its subsidiaries) will be entitled to vote together as a class on such
resolution or action of the Managing Members (but not any other resolution
or action) and such resolution or action shall not be effective except with
the approval of the holders of a majority in stated liquidation preference
of such outstanding securities (or, under certain circumstances, 100% in
stated liquidation preference of such outstanding securities); provided,
however, that no such approval shall be required under clauses (x) and (y)
if the dissolution, winding up, liquidation or termination of the Company
is proposed or initiated upon the initiation of proceedings, or after
proceedings have been initiated, for the bankruptcy, insolvency or
liquidation of either Managing Member or upon the withdrawal, resignation
or expulsion of either Managing Member of the Company.

The powers, preferences or special rights of the Preferred Securities
of any series will be deemed not to be varied by the creation or issue of,
and no vote will be required for the creation or issue of, any further
limited liability company interests in the Company ranking pari passu with
or junior to the Preferred Securities of any series with respect to voting
rights and rights to participate in the profits or assets of the Company.

Any required approval of holders of Preferred Securities may be given
at a meeting of such holders convened for such purpose or pursuant to
written consent. The Company will cause a notice of any meeting at which
holders of the Preferred Securities of a series are entitled to vote, or of
any matter upon which action may be taken by written consent of such
holders, to be mailed to each holder of record of the Preferred Securities
of such series. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be
taken, (ii) a description of any action proposed to be taken at such
meeting on which such holders are entitled to vote or of such matters upon
which written consent is sought and (iii) instructions for the delivery of
proxies or consents.

Notwithstanding that holders of Preferred Securities of any series are
entitled to vote or consent under any of the circumstances described above,
any of the Preferred Securities of any series that are owned by AL&C or any
entity owned more than 50% by AL&C, either directly or indirectly, shall
not be entitled to vote or consent and shall, for the purposes of such vote
or consent, be treated as if they were not outstanding.

Except as described herein and in the Prospectus Supplement relating
to the Preferred Securities of a particular series, holders of Preferred
Securities will have no other voting rights.

Additional Amounts

All payments in respect of the Preferred Securities by the Company
will be made without withholding or deduction for or on account of any
present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied upon or as a result of such payment by or
on behalf of the United States of America, any state thereof or any other
jurisdiction through which or from which such payment is made, or any
authority therein or thereof having power to tax, unless the withholding or
deduction of such taxes, duties, assessments or governmental charges is
required by law. In that event, the Company will pay as a dividend such
additional amounts as may be necessary in order that the net amounts
received by the holders of the Preferred Securities after such withholding
or deduction will equal the amount which would have been receivable in
respect of such Preferred Securities in the absence of such withholding or
deduction ("Additional Amounts"), except that no such Additional Amounts
will be payable with respect to Preferred Securities:

(a) if the holder or beneficial owner thereof is liable for such
taxes, duties, assessments or governmental charges in respect of such
Preferred Securities by reason of such holder's or owner's having some
connection with the United States, any state thereof or any other
jurisdiction through which or from which such payment is made (including,
without limitation, actual or constructive ownership, past or present, of
10% or more of the total combined voting power of all classes of stock
entitled to vote of AL&C), other than being a holder or beneficial owner of
such Preferred Securities, or

(b) if the Company has notified such holder of the obligation to
withhold taxes and requested but not received from such holder or
beneficial owner a declaration of non-residence, a valid taxpayer
identification number or other claim for exemption (or information or
certification required to support such claim), and such withholding or
deduction would not have been required had such declaration, taxpayer
identification number or claim been received.

Book-Entry-Only Issuance; The Depository Trust Company

DTC, New York, New York, will act as securities depository for the
Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). One or more fully-registered global Preferred
Security certificates will be issued for each series of Preferred
Securities, representing all of the Preferred Securities of such series,
and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on
file with the Commission.

Purchases of Preferred Securities under the DTC system must be made by
or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Preferred Security ("Beneficial Owner") is in turn
to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written
confirmations providing details of their transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in Preferred Securities, except in
the event that use of the book-entry system for the Preferred Securities is
discontinued.

To facilitate subsequent transfers, all Preferred Securities deposited
by Participants with DTC are registered in the name of Cede & Co. The
deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Preferred Securities;
DTC's records reflect only the identity of the Direct Participants to whose
accounts such Preferred Securities are credited, which may or may not be
the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.

Redemption notices will be sent to Cede & Co. If less than all of the
Preferred Securities of any series are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such series to be redeemed.

Although voting with respect to the Preferred Securities is limited,
in those cases where a vote is required, neither DTC nor Cede & Co. will
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC mails an Omnibus Proxy to the Company as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).

Dividend payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments
on such payable date. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices and will be
the responsibility of such Participant and not of DTC, the Company or AL&C,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of dividends to DTC will be the responsibility
of the Company, disbursement of such payments to Direct Participants will
be the responsibility of DTC and disbursement of such payments to the
Beneficial Owners will be the responsibility of the Direct and Indirect
Participants.

DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities of any series at any time by
giving reasonable notice to the Company and AL&C. Under such
circumstances, in the event that a successor securities depository is not
obtained, Preferred Security certificates for such series will be printed
and delivered. Additionally, in the event that the Company were to redeem
only a portion of the Preferred Securities of any series because the
Company is required to pay Additional Amounts with respect to such
Preferred Securities to be redeemed, the Company may cause the global
certificate or certificates representing all of the Preferred Securities of
such series to be withdrawn from DTC (or its successor securities
depository) and may issue certificates in definitive form representing such
Preferred Securities. Thereafter, such Preferred Securities subject to
such requirement to pay Additional Amounts would be redeemed.

The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable, but neither the Company nor AL&C takes responsibility for the
accuracy thereof.

Registrar, Transfer Agent and Paying Agent

First Chicago Trust Company of New York will act as registrar,
transfer agent and paying agent for the Preferred Securities.

Registration of transfers of Preferred Securities of any series will
be effected without charge by or on behalf of the Company, but upon payment
(with the giving of such indemnity as the Company or AL&C may require) in
respect of any tax or other governmental charges which may be imposed in
connection therewith.

The Company will not be required to register or cause to be registered
the transfer of Preferred Securities of a particular series after such
Preferred Securities have been called for redemption.

Miscellaneous

The Preferred Securities are not subject to any sinking fund
provisions. Holders of Preferred Securities of any series have no
preemptive rights.

AL&C and the Company will enter into an agreement as to expenses and
liabilities (the "Expense Agreement") pursuant to which AL&C will agree to
guarantee the payment of any liabilities incurred by the Company other than
obligations to holders of Preferred Securities, which will be separately
guaranteed to the extent set forth in the Guarantee. See "Description of
the Guarantee". The Expense Agreement will expressly provide that it is
for the benefit of, and is enforceable by, third parties to whom the
Company owes such obligations. A copy of the form of Expense Agreement has
been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.

DESCRIPTION OF THE GUARANTEE

Set forth below is condensed information concerning the guarantee (the
"Guarantee") which will be executed and delivered by AL&C for the benefit
of the holders from time to time of Preferred Securities. This summary
contains all material information concerning the Guarantee but does not
purport to be complete. References to provisions of the Guarantee are
qualified in their entirety by reference to the text of the Payment and
Guarantee Agreement, a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

General

AL&C will irrevocably and unconditionally agree, to the extent set
forth herein, to pay in full, to the holders of the Preferred Securities of
any series, the Guarantee Payments (as defined below) (except to the
extent paid by the Company or by AL&C to any trustee appointed by such
holders (as described under "Description of the Preferred Securities --
Voting Rights")), as and when due, regardless of any defense, right of
set-off or counterclaim which the Company may have or assert. The following
payments to the extent not paid by the Company (the "Guarantee Payments")
will be subject to the Guarantee (without duplication): (i) any
accumulated and unpaid dividends (including any Additional Amounts payable
by the Company) which have been theretofore declared on the Preferred
Securities of any series out of funds legally available therefor, (ii) the
redemption price (including all accumulated and unpaid dividends) payable
out of funds legally available therefor with respect to Preferred
Securities of any series called for redemption by the Company and (iii)
upon the liquidation of the Company, the lesser of (a) the aggregate of the
stated liquidation preference of the Preferred Securities and all
accumulated and unpaid dividends thereon (whether or not declared) to the
date of payment and (b) the amount of assets of the Company legally
available for distribution to holders of Preferred Securities in
liquidation.

Certain Covenants of AL&C

In the Guarantee, AL&C will covenant that, so long as Preferred
Securities of any series remain outstanding, AL&C will not declare or pay
any dividend on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of AL&C's capital stock or make any guarantee payments
with respect to the foregoing (other than (i) payments under the Guarantee,
(ii) acquisitions of shares of AL&C's common stock in connection with the
satisfaction by AL&C of its obligations under any employee benefit plans
and (iii) redemptions of any share purchase rights (the "Rights") issued by
AL&C pursuant to AL&C's Share Purchase Rights Plan adopted on October 27,
1989, as amended from time to time (the "Rights Plan") or the declaration
of a dividend of similar share purchase rights in the future), if at such
time AL&C will be in default with respect to its payment obligations under
the Guarantee or there shall have occurred a Debenture Event of Default
under the Subordinated Indenture.

In the Guarantee, AL&C will also covenant that, so long as Preferred
Securities of any series remain outstanding, it will (i) not cause or
permit any Common Securities of the Company to be transferred, (ii)
maintain direct or indirect ownership of all outstanding securities of the
Company other than (x) the Preferred Securities of any series and (y) any
other securities issued by the Company (other than the Common Securities)
so long as the issuance thereof to persons other than AL&C or any of its
subsidiaries would not cause the Company to become an "investment company"
under the Investment Company Act of 1940, as amended, (iii) cause at least
21% of the total value of the Company and at least 21% of all interests in
the capital, income, gain, loss, deduction and credit of the Company to be
represented by Common Securities, (iv) not voluntarily dissolve, wind up,
liquidate or terminate the Company or either of the Managing Members, (v)
cause AL&C and Aetna Capital Holdings, Inc. to remain the Managing Members
of the Company and timely perform all of their respective duties as
Managing Members of the Company (including the duty to declare and pay
dividends on the Preferred Securities as described under "Description of
the Preferred Securities -- Dividends") and (vi) use reasonable efforts to
cause the Company to remain a limited liability company and otherwise
continue to be treated as a partnership for U.S. federal income tax
purposes.

Additional Amounts

All Guarantee Payments will be made without withholding or deduction
for or on account of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed or levied upon or as a
result of such payment by or on behalf of the United States of America, any
state thereof or any other jurisdiction through which or from which such
payment is made, or any authority therein or thereof having power to tax,
unless the withholding or deduction of such taxes, duties, assessments or
governmental charges is required by law. In that event, AL&C will pay such
additional amounts as may be necessary in order that the net amounts
received by the holders of the Preferred Securities after such withholding
or deduction will equal the amount which would have been receivable in
respect of such Preferred Securities in the absence of such withholding or
deduction ("Guarantee Additional Amounts"), except that no such Guarantee
Additional Amounts will be payable with respect to Preferred Securities:

(b) if the Company or AL&C has notified such holder of the obligation
to withhold taxes and requested but not received from such holder or
beneficial owner a declaration of non-residence, a valid taxpayer
identification number or other claim for exemption (or information or
certification required to support such claim), and such withholding or
deduction would not have been required had such declaration, taxpayer
identification number or claim been received.

Amendments and Assignment

Except with respect to any changes which do not adversely affect the
rights of holders of Preferred Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of the
holders of a majority in stated liquidation preference of all Preferred
Securities of all series then outstanding. The manner of obtaining any
such approval of holders of the Preferred Securities will be as set forth
under "Description of the Preferred Securities -- Voting Rights". AL&C
shall have the right to assign the Guarantee with the prior consent of the
holders of a majority in stated liquidation preference of all Preferred
Securities then outstanding. All guarantees and agreements contained in
the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of AL&C and shall inure to the benefit of the holders of
the Preferred Securities then outstanding.

Termination of the Guarantee

The Guarantee will terminate and be of no further force and effect as
to the Preferred Securities of any series upon full payment of the
Redemption Price of all Preferred Securities of such series or upon the
exchange of all Preferred Securities of such series for the related series
of Debentures, and shall terminate completely upon full payment of the
amounts payable upon liquidation of the Company. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at
any time any holder of Preferred Securities of any series must restore
payment of any sums paid under the Preferred Securities of such series or
the Guarantee.

Status of the Guarantee

The Guarantee will constitute an unsecured obligation of AL&C and will
rank (i) subordinate and junior in right of payment to all other
liabilities of AL&C, (ii) pari passu with the most senior preferred stock
now or hereafter issued by AL&C and with any guarantee now or hereafter
entered into by AL&C in respect of any preferred or preference stock or
interest of any affiliate of AL&C and (iii) senior to AL&C's common stock.

The Guarantee will constitute a guarantee of payment and not of
collection. A holder of Preferred Securities may enforce the Guarantee
directly against AL&C, and AL&C will waive any right or remedy to require
that any action be brought against the Company or any other person or
entity before proceeding against AL&C. The Guarantee will not be
discharged except by payment of the Guarantee Payments in full to the
extent not paid by the Company.

Governing Law

The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.

DESCRIPTION OF THE DEBENTURES AND THE SUBORDINATED INDENTURE

Set forth below is condensed information concerning the Debentures
that will evidence the loans to be made by the Company to AL&C of the
proceeds of the issuance of (i) Preferred Securities of each series and
(ii) the Company's Common Securities and related capital contributions
("Common Securities Payments") and the Subordinated Indenture (the
"Subordinated Indenture") between AL&C and The First National Bank of
Chicago, as trustee (the "Trustee"). References to provisions of the
Subordinated Indenture are qualified in their entirety by reference to the
text of the Subordinated Indenture, a form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a
part. All Debentures will be issued under the Subordinated Indenture.

General

The Subordinated Indenture does not limit the aggregate principal
amount of Debentures which may be issued thereunder and provides that the
Debentures may be issued thereunder from time to time in one or more
series. The aggregate dollar amount of the Debentures relating to
Preferred Securities of any series will be set forth in the Prospectus
Supplement for such series and will be equal to the sum of the aggregate
liquidation preference of the Preferred Securities of such series and the
related Common Securities Payments.

The entire principal amount of the Debentures relating to the
Preferred Securities of any series will become due and payable, together
with any accrued and unpaid interest thereon, including Additional Interest
(as herein defined), if any, on the earlier of (i) the date that is the
30th anniversary of the issuance of such Preferred Securities, subject to
AL&C's right to exchange such Debentures for new Debentures or reborrow the
proceeds from the repayment of such Debentures upon the terms and subject
to the conditions set forth under "Description of the Preferred Securities
- -- Redemption or Exchange" and (ii) the date upon which the Company is
dissolved, wound up, liquidated or terminated or either Managing Member is
liquidated, bankrupt or insolvent or withdraws, resigns or is expelled from
the Company.

In the event of any exchange of Preferred Securities of any series for
Debentures relating to such series, (i) the Debentures of such series will
no longer be subject to mandatory prepayment upon the dissolution, winding
up, liquidation or termination of the Company, the liquidation, bankruptcy
or insolvency of either Managing Member or the withdrawal, resignation or
expulsion of either Managing Member from the Company, (ii) the Debentures
of such series will not be subject to an election by AL&C to exchange the
Debentures of such series for new Debentures or to prepay or repay the
loans evidenced by the Debentures of such series and reborrow the proceeds
from such prepayment or repayment, (iii) AL&C will use its best efforts to
have the Debentures of such series listed on the same exchange as that on
which the Preferred Securities of such series are listed, (iv) the
Subordinated Indenture may, thereafter, be modified or amended with the
consent of the holders of not less than a majority in principal amount of
the Debentures of such series at the time outstanding; provided, however,
that no such modification or amendment may, without the consent of the
holder of each Debenture affected thereby, (a) change the maturity of the
principal of or interest on any such Debenture; (b) reduce the principal
amount of or the interest rate on any such Debenture; (c) change the place
or currency of payment of principal of or the interest on any such
Debenture; (d) impair the right to institute suit for the enforcement of
any such payment on or with respect to such Debenture; (e) reduce the
percentage of holders of Debentures necessary to modify or amend the
Subordinated Indenture; (f) modify the subordination provisions in a
manner adverse to the holders of such Debentures; or (g) modify the
foregoing requirements or reduce the percentage of outstanding Debentures
necessary to waive compliance with certain provisions of the Subordinated
Indenture or for waiver of certain defaults, (v) AL&C's obligation to pay
Additional Interest (other than Additional Interest, if any, accrued and
unpaid to such date of exchange) shall cease, and (vi) the provisions
described under "Indenture Events of Default" rather than those described
under "Debenture Events of Default" shall apply.

The Subordinated Indenture does not contain any provisions that limit
AL&C's ability to incur indebtedness or that afford holders of Debentures
protection in the event of a highly leveraged or similar transaction
involving AL&C.

Mandatory Prepayment

If the Company redeems Preferred Securities of any series for cash in
accordance with the terms thereof, the Debentures relating to such series
will become due and payable in a principal amount equal to the aggregate
stated liquidation preference of the Preferred Securities of such series so
redeemed (together with any accrued but unpaid interest, including
Additional Interest, if any, on the portion being prepaid). Any payment
pursuant to this provision shall be made prior to 12:00 noon, New York
time, on the date of such redemption or at such other time on such earlier
date as the Company and AL&C shall agree.

Optional Prepayment

AL&C shall have the right to prepay the Debentures relating to
Preferred Securities of a series, without premium or penalty, in whole or
in part (together with any accrued but unpaid interest, including
Additional Interest, if any, on the portion being prepaid) at any time
following the date, if any, set forth in the Prospectus Supplement for such
series.

So long as the Preferred Securities of any series are outstanding AL&C
shall also have the right to prepay the related series of Debentures
without premium or penalty, in whole or in part (together with any accrued
but unpaid interest, including Additional Interest, if any), if there shall
have occurred after the date of the Prospectus Supplement relating to such
series of Preferred Securities a change in any applicable U.S. law or
regulation or in the interpretation thereof (including but not limited to
the enactment or imminent enactment of any legislation, the publication of
any judicial decisions, regulatory rulings, regulatory procedures, or
notices or announcements (including notices or announcements of intent to
adopt such procedures or regulations), or a change in the official position
or in the interpretation of any law or regulation by any legislative body,
court, governmental authority or regulatory body, irrespective of the
manner in which such change is made known), and AL&C shall have been
advised by legal counsel (which counsel is not an employee of AL&C or the
Company) that, as a result of such change, there exists more than an
insubstantial risk that (i) AL&C will be precluded from deducting the
interest paid on such Debentures for federal income tax purposes or (ii)
the Company will be subject to federal income tax with respect to the
interest received on such Debentures.

In addition, if at any time after the issuance of the Preferred
Securities of any series, the Company is or would be required to pay
Additional Amounts with respect to any Preferred Securities of such series,
AL&C shall have the right to prepay without premium or penalty (together
with accrued but unpaid interest, including Additional Interest, if any, on
the portion being prepaid) the Debentures relating to such series in a
principal amount not to exceed the aggregate liquidation preference of the
Preferred Securities of such series with respect to which such Additional
Amounts are required to be paid.

The Debentures relating to Preferred Securities of any series may also
be prepaid at the option of AL&C on such terms and conditions as may be set
forth in the Prospectus Supplement relating to such series.

Interest

The Debentures relating to Preferred Securities of a series shall bear
interest at the annual rate set forth in the Prospectus Supplement for such
series, accruing from the date they are issued until maturity. Such
interest shall be payable monthly on the last day of each calendar month,
commencing on the date specified in the Prospectus Supplement relating to
such series. In the event that any date on which interest is payable on
the Debentures relating to the Preferred Securities of any series is not a
Business Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date; provided that AL&C shall
have the right at any time or times during the term of such Debentures, so
long as AL&C is not in default in the payment of interest under the
Subordinated Indenture, to extend the interest payment period for such
Debentures up to 60 months, at the end of which period AL&C will pay all
interest then accrued and unpaid on such Debentures (together with interest
thereon at the rate specified for such Debentures to the extent permitted
by applicable law); and provided further that any such extended interest
period may only be selected with respect to such Debentures if an extended
interest period of identical length is simultaneously selected for the
Debentures of all series outstanding. Prior to the termination of any such
extended interest payment period AL&C may further extend the interest
payment period for such Debentures; provided that such extended interest
payment period for such Debentures, together with all such further
extensions thereof, may not exceed 60 months. Following the termination of
any extended interest payment period, if the Company has paid all accrued
and unpaid interest required by such Debentures for such period, then the
Company shall have the right to again extend the interest payment period up
to 60 months as herein described. While the Company holds the Debentures
of any series, AL&C shall give the Company notice of its selection of any
extended interest payment period for such Debentures one Business Day prior
to the earlier of (i) the date the Company declares the dividend on the
related series of Preferred Securities and (ii) the date on which the
Company is required to give notice of the record or payment date of such
dividend to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of such series of Preferred Securities, but in
any event not less than two Business Days prior to such record date. AL&C
will cause the Company to give such notice of AL&C's selection of any
extended interest payment period to the holders of the related series of
Preferred Securities. After the Debentures of a series have been exchanged
for the related series of Preferred Stock, AL&C shall give the holders of
such Debentures notice of its selection of any extended interest payment
period for such Debentures not less than two Business Days prior to the
record date for the first interest payment for which such extension will be
effective.

During any extended interest period, AL&C shall not pay or declare any
dividends on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock (other than (i) acquisitions of
shares of AL&C's common stock in connection with the satisfaction by AL&C
of its obligations under any employee benefit plans and (ii) redemptions of
any Rights issued by AL&C under the Rights Plan or the declaration of a
dividend of similar share purchase rights in the future).

Additional Interest

In addition, so long as the Company owns the Debentures of any series,
if at any time following the date of issue of the related series of
Preferred Securities, (i) the Company shall be required to pay any
Additional Amounts or (ii) the Company shall be required to pay, with
respect to its income derived from the interest payments on such
Debentures, any amounts for or on account of any taxes, duties, assessments
or governmental charges of whatever nature imposed by the United States, or
any other taxing authority, then, in any such case, AL&C will pay as
interest such additional amounts ("Additional Interest") as may be
necessary in order that the net amounts received and retained by the
Company after paying such Additional Amounts or after the payment of such
taxes, duties, assessments or governmental charges shall result in the
Company's having such funds as it would have had in the absence of the
payment of such taxes, duties, assessments or governmental charges.

Method and Place of Payment

While the Company holds the Debentures of any series, principal of and
interest (including Additional Interest, if any) on such Debentures shall
be payable in lawful money of the United States, at such place and to such
account as may be designated by the Company. After the Debentures of any
series have been exchanged for the related series of Preferred Stock,
principal of and interest on such Debentures shall be payable at the office
or agency of AL&C maintained for such purposes in the city of Hartford;
provided, however, that at the option of Aetna, payment of interest may be
made by check mailed to the address of the person entitled thereto as such
address shall appear in the Debenture register.

Set-off

Notwithstanding anything to the contrary in the Subordinated Indenture
or Debentures, AL&C shall have the right to set-off any payment it is
otherwise required to make thereunder with and to the extent AL&C has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.

Subordination

The Subordinated Indenture will provide that AL&C and the holders of
the Debentures covenant and agree (and each holder of Preferred Securities
by acceptance thereof agrees) that each of the Debentures is subordinate
and junior in right of payment to all Senior Debt as provided in the
Subordinated Indenture. The term "Senior Debt" means the principal of (and
premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to AL&C to the extent that such claim for post-petition interest
is allowed in such proceeding) on Debt, whether incurred on or prior to the
date of the Subordinated Indenture or thereafter incurred, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right
of payment to the Debentures or to other Debt which is pari passu with, or
subordinated to the Debentures; provided, however, that Senior Debt shall
not be deemed to include the Debentures. The term "Debt" means (without
duplication and without regard to any portion of principal amount that has
not accrued and to any interest component thereof (whether accrued or
imputed) that is not due and payable) with respect to AL&C, whether
recourse is to all or a portion of the assets of AL&C and whether or not
contingent, (i) every obligation of AL&C for money borrowed, (ii) every
obligation of AL&C evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of AL&C with respect to letters of credit, bankers' acceptances
or similar facilities issued for the account of AL&C, (iv) every obligation
of AL&C issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities
arising in the ordinary course of business), (v) every capital lease
obligation of AL&C, and (vi) every obligation of the type referred to in
clauses (i) through (v) of another person and all dividends of another
person the payment of which, in either case, AL&C has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.

In the event of (i) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, arrangement, reorganization, debt
restructuring or other similar case or proceeding in connection with any
insolvency or bankruptcy proceeding, relative to AL&C or to its assets, or
(ii) any liquidation, dissolution or other winding up of AL&C, whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any
other marshalling of assets and liabilities of AL&C, then and in any such
event specified in (i), (ii) or (iii) above (each such event, if any,
herein sometimes referred to as a "Proceeding") the holders of Senior Debt
shall be entitled to receive payment in full of all amounts due or to
become due on or in respect of all Senior Debt, or provision shall be made
for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, before the holders of the
Debentures are entitled to receive any payment or distribution of any kind
or character, whether in cash, property or securities (including any
payment or distribution which may be payable or deliverable by reason of
the payment of any other Debt of AL&C subordinated to the payment of the
Debentures, such payment or distribution being hereinafter referred to as
"Junior Subordinated Payment"), on account of principal of or interest on
the Debentures and the holders of Senior Debt shall be entitled to receive,
for application to the payment thereof, any payment or distribution of any
kind or character, whether in cash, property or securities, including any
Junior Subordinated Payment, which may be payable or deliverable in respect
of the Debentures in any such Proceeding.

In the event that, notwithstanding the foregoing, the holders of the
Debentures shall have received any payment or distribution of assets of
AL&C of any kind or character, whether in cash, property or securities,
including any Junior Subordinated Payment, before all Senior Debt is paid
in full or payment thereof is provided for in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, and if
such fact shall, at or prior to the time of such payment or distribution,
have been made known to such holders, then and in such event such payment
or distribution shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other person making payment or distribution of assets of AL&C for
application to the payment of all Senior Debt remaining unpaid, to the
extent necessary to pay all Senior Debt in full, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.

In the event that any Debentures are declared due and payable before
their stated maturity, then and in such event the holders of the Senior
Debt outstanding at the time such Debentures so become due and payable
shall be entitled to receive payment in full of all amounts due on or in
respect of such Senior Debt, or provision shall be made for such payment in
cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, before the holders of the Debentures are entitled
to receive any payment (including any payment which may be payable by
reason of the payment of any Junior Subordinated Payments) by AL&C on
account of the principal of or interest on the Debentures. In the event
that, notwithstanding the foregoing, AL&C shall make any payment to the
holders of the Debentures prohibited by the foregoing, and if such fact
shall, at or prior to the time of such payment, have been made known to
such holders, then and in such event such payment shall be paid over and
delivered forthwith to AL&C.

In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior Debt, or in
the event that any event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable, unless and until such default
in payment or event of default shall have been cured or waived or shall
have ceased to exist and such acceleration shall have been rescinded or
annulled, or in the event any judicial proceeding shall be pending with
respect to any such default in payment or such event of default, then no
payment (including any payment which may be payable by reason of the
payment of any Junior Subordinated Payments) shall be made by AL&C on
account of principal of or interest on the Debentures. In the event that,
notwithstanding the foregoing, AL&C shall make any payment to the holders
of the Debentures prohibited by the foregoing, and if such fact shall, at
or prior to the time of such payment, have been made known to such holders,
then and in such event such payment shall be paid over and delivered
forthwith to AL&C.

Subject to the payment in full of all Senior Debt, or the provision of
such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, the holders of the Debentures
shall be subrogated to the extent of the payments or distributions made to
the holders of such Senior Debt (equally and ratably with the holders of
all Debt of AL&C which by its express terms is subordinated to Debt of AL&C
to substantially the same extent as the Debentures are subordinated to the
Senior Debt and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Debt) to the
rights of the holders of such Senior Debt to receive payments and
distributions of cash, property and securities applicable to the Senior
Debt until the principal of and interest on the Debentures shall be paid in
full.

By reason of such subordination, in the event of liquidation or
insolvency, creditors of AL&C who are not holders of Senior Debt may
recover less, ratably, than holders of Senior Debt and may recover more
ratably, than the holders of the Debentures with respect to the Debentures.
In addition, since AL&C is a holding company, the rights of AL&C and hence
the rights of creditors of AL&C (including the rights of holders of the
Debentures), to participate in any distribution of the assets of any
subsidiary upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary,
except to the extent that claims of AL&C itself as a creditor of the
subsidiary may be recognized.

Covenants

In the Subordinated Indenture, AL&C will covenant for the benefit of
the holders of the Debentures of any series, that, so long as the related
series of Preferred Securities remains outstanding, AL&C will not declare
or pay any dividend on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of AL&C's capital stock or make any guarantee
payments with respect to the foregoing (other than (i) payments under the
Guarantee, (ii) acquisitions of shares of AL&C's common stock in connection
with the satisfaction by AL&C of its obligations under any employee benefit
plans and (iii) redemptions of any Rights issued by AL&C pursuant to the
Rights Plan or the declaration of a dividend of similar share purchase
rights in the future), if at such time AL&C is in default with respect to
its payment obligations under the Guarantee or there shall have occurred a
Debenture Event of Default under the Subordinated Indenture.

In the Subordinated Indenture, AL&C will also covenant for the benefit
of the holders of the Debentures of any series, that, so long as the
related series of Preferred Securities remains outstanding, it will (i) not
cause or permit any Common Securities of the Company to be transferred,
(ii) maintain direct or indirect ownership of all outstanding securities of
the Company other than (x) the Preferred Securities of any series and (y)
any other securities issued by the Company (other than the Common
Securities) so long as the issuance thereof to persons other than AL&C or
any of its subsidiaries would not cause the Company to become an
"investment company" under the Investment Company Act of 1940, as amended,
(iii) cause at least 21% of the total value of the Company and at least 21%
of all interests in the capital, income, gain, loss, deduction and credit
of the Company to be represented by Common Securities, (iv) not voluntarily
dissolve, wind up, liquidate or terminate the Company or either of the
Managing Members, (v) cause AL&C and Aetna Capital Holdings, Inc. to remain
the Managing Members of the Company and timely perform all of their
respective duties as Managing Members of the Company (including the duty to
declare and pay dividends on the Preferred Securities as described under
"Description of the Preferred Securities -- Dividends"), and (vi) use
reasonable efforts to cause the Company to remain a limited liability
company and otherwise continue to be treated as a partnership for U.S.
federal income tax purposes; provided that AL&C may permit the Company,
solely for purposes of changing its state of domicile or avoiding federal
income tax consequences adverse to AL&C, the Company or holders of
Preferred Securities, to consolidate or merge with or into a limited
liability company or limited partnership or trust organized as such under
the laws of any state of the United States of America upon the terms and
subject to the conditions set forth under "Description of the Preferred
Securities -- Merger, Consolidations, etc. of the Company" above.

Debenture Events of Default

If one or more of the following events (each a "Debenture Event of
Default") shall occur and be continuing while the Company holds the
Debentures of any series:

(a) failure to pay any principal of the Debentures of any series
when due (whether or not payment is prohibited by the provisions
described above under "Subordination" or otherwise);

(b) failure to pay any interest on the Debentures of any series,
including any Additional Interest, when due and such failure continues
for a period of 10 days (whether or not payment is prohibited by the
provisions described above under "Subordination" or otherwise);
provided that a valid extension of the interest payment period by AL&C
shall not constitute a default in the payment of interest for this
purpose;

(c) failure by AL&C to perform in any material respect any other
covenant in the Subordinated Indenture for the benefit of the holders
of Debentures of such series continued for a period of 60 days after
written notice to AL&C from the Company or any holder of Preferred
Securities;

(d) the dissolution, winding up, liquidation or termination of the
Company;

(e) the withdrawal, resignation or expulsion of either Managing
Member from the Company; or

(f) certain events of bankruptcy, insolvency or liquidation of
either of the Managing Members;

then the Company will have the right to declare the principal of all such
Debentures and all accrued interest thereon (including any Additional
Interest and any interest subject to an extension election) to be due and
payable immediately and to enforce its other rights under such Debentures.
Under the terms of the Preferred Securities, the holders of the series of
Preferred Securities related to such Debentures will have the rights
referred to under "Description of the Preferred Securities -- Voting
Rights", including the right to appoint a trustee, which trustee shall be
authorized to exercise the Company's right to accelerate the principal
amount of such Debentures and to enforce the Company's other creditor
rights under such Debentures; provided that any trustee so appointed shall
vacate office immediately if any such Debenture Event of Default shall have
been cured by AL&C. In addition, in the event AL&C fails to pay any
principal of or interest on any series of Debentures held by the Company
when due, holders of the related series of Preferred Securities shall,
under certain circumstances, be entitled to enforce the Company's right to
receive such payments under such Debentures directly against AL&C.

Indenture Events of Default

If one or more of the following events (each an "Indenture Event
of Default") shall occur and be continuing after the Debentures of a series
have been exchanged for the related series of Preferred Securities:

(a) failure to pay any principal of the Debentures of any series when
due (whether or not payment is prohibited by the provisions described above
under "Subordination" or otherwise);

(b) failure to pay any interest on the Debentures of any series,
including any Additional Interest, when due and such failure continues for
a period of 30 days (whether or not payment is prohibited by the provisions
described above under "Subordination" or otherwise); provided that a valid
extension of the interest payment period by AL&C shall not constitute a
default in the payment of interest for this purpose;

(c) failure by AL&C to perform in any material respect any other
covenant in the Subordinated Indenture for the benefit of the holders of
the Debentures of such series continued for a period of 90 days after
written notice to AL&C from the Trustee or to AL&C and the Trustee from the
holders of at least 25% in aggregate principal amount of the Debentures of
such series, or

(d) certain events of bankruptcy, insolvency or liquidation of AL&C;

then the Trustee or the holders of at least 25% in principal amount of such
Debentures may declare the principal amount of all such Debentures and all
accrued interest thereon (including any interest subject to an extension
election) to be due and payable immediately; provided, however, that under
certain circumstances the holders of a majority in aggregate principal
amount of such Debentures may rescind or annul such declaration and its
consequences.

Following the exchange of any series of Preferred Securities for the
related series of Debentures, the holders of a majority in principal amount
of such series of Debentures will have the right, subject to certain
limitations, to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on the Trustee with respect to such series of Debentures
and to waive certain defaults.

Following the exchange of any series of Preferred Securities for the
related series of Debentures, no holder of a Debenture of such series will
have any right to institute any proceeding with respect to the Subordinated
Indenture or for any remedy thereunder, unless such holder shall have
previously given to the Trustee written notice of a continuing Indenture
Event of Default and unless also the holders of at least 25% in aggregate
principal amount of the Debentures of such series shall have made written
request, and offered indemnity to the Trustee in form and substance
reasonably satisfactory to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the holders of a
majority in aggregate principal amount of the Debentures of such series a
direction inconsistent with such request and shall have failed to institute
such proceeding within 60 days. However, such limitations do not apply to
a suit instituted by a holder of a Debenture for enforcement of payment of
the principal of or interest on such Debenture on or after the respective
due dates expressed in such Debenture.

The Subordinated Indenture provides that, in case an Indenture Event
of Default shall occur and be continuing, the Trustee shall exercise such
of its rights and powers under the Subordinated Indenture, and use the same
degree of care and skill in its exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs. Subject
to such provisions, the Trustee will be under no obligation to exercise any
of its rights or powers under the Subordinated Indenture at the request of
any of the holders of Debentures unless they shall have offered to the
Trustee security or indemnity in form and substance reasonably satisfactory
to the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request.

Modification and Waiver

Modifications and amendments of the Subordinated Indenture may be made
by AL&C and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of each series of the Debentures
which is affected by the modification or amendment; provided, however, that
no such modification or amendment may, without the consent of each such
holder of Debentures affected thereby: (i) change the maturity of the
principal of or interest on any such Debenture; (ii) reduce the principal
amount of or the interest rate on any such Debenture; (iii) change the
place or currency of payment of principal of or the interest on any such
Debenture; (iv) impair the right to institute suit for the enforcement of
any such payment on or with respect to such Debenture; (v) reduce the
percentage of holders of Debentures necessary to modify or amend the
Subordinated Indenture; (vi) modify the subordination provisions in a
manner adverse to the holders of such Debentures; or (vii) modify the
foregoing requirements or reduce the percentage of outstanding Debentures
necessary to waive compliance with certain provisions of the Subordinated
Indenture or for waiver of certain defaults.

So long as the Company holds the Debentures of any series, it may not
waive compliance or waive any default in compliance by AL&C with certain
restrictive provisions of the Subordinated Indenture or modify or amend the
Subordinated Indenture without the approval of the same percentage of the
holders of Preferred Securities of the related series as would be required
if the holders of such Preferred Securities then held such Debentures.

The holders of at least a majority of the aggregate principal amount
of the Debentures of any series for which the related Preferred Securities
have been exchanged may, on behalf of all holders of that series, waive
compliance by AL&C with certain restrictive provisions of the Subordinated
Indenture and waive any past default under the Subordinated Indenture,
except a default in the payment of principal or interest or in the
performance of certain covenants.

Global Securities

If at the time of any exchange of Debentures of any series for the
related Preferred Securities, such Preferred Securities are represented by
one or more global securities held by DTC, such Debentures, upon such
exchange, will be represented by one or more global securities registered
in the name of DTC or its nominee that will be deposited with DTC. Unless
and until it is exchanged in whole or in part for such Debentures in
definitive registered form, a global security may not be registered for
transfer or exchange except as a whole by DTC to a nominee for DTC.

For a description of DTC and DTC's book-entry system, see "Description
of the Preferred Securities -- Book-Entry-Only Issuance; The Depository
Trust Company". As of the date of this Prospectus, the description therein
of DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Preferred Securities
apply in all material respects to any debt obligations represented by one
or more global securities held by DTC.

Governing Law

The Debentures and the Subordinated Indenture will be governed by and
construed in accordance with the laws of the State of New York.

The Trustee

The Subordinated Indenture contains limitations on the right of the
Trustee, as a creditor of AL&C, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such
claim as security or otherwise. In addition, the Trustee may be deemed to
have a conflicting interest and may be required to resign as Trustee if at
the time of a default under the Subordinated Indenture it is a creditor of
AL&C.

The Trustee or its affiliates may act as depositary for funds of, make
loans to and perform other services for, or may be a customer of, Aetna in
the ordinary course of business.

Miscellaneous

AL&C shall have the right at all times to assign any of its rights or
obligations under the Subordinated Indenture to a direct or indirect wholly
owned subsidiary of AL&C other than any subsidiary that is an insurance
company; provided that, in the event of any such assignment, AL&C shall
remain jointly and severally liable for all such obligations. AL&C may not
otherwise assign any of its obligations under the Subordinated Indenture.
Except as described above under "Description of the Preferred Securities --
Redemption or Exchange", the Company may not assign any of its rights under
the Subordinated Indenture without the prior written consent of AL&C.
Subject to the foregoing, the Subordinated Indenture shall be binding upon
and inure to the benefit of AL&C and the holders of the Debentures from
time to time and their respective successors and assigns.

The Subordinated Indenture will provide that AL&C may not consolidate
with or merge into any other person or sell its property and assets as, or
substantially as, an entirety to any person and may not permit any person
to merge into or consolidate with AL&C unless (i) either AL&C will be the
resulting or surviving entity or any successor or purchaser is a
corporation, partnership or trust organized under the laws of the United
States of America, any State or the District of Columbia, and any such
successor or purchaser expressly assumes AL&C's obligations under the
Subordinated Indenture and (ii) immediately after giving effect to the
transaction (a) in the event that the Company holds the Debentures of any
series, no Debenture Event of Default shall have occurred and be continuing
and (b) in the event that the Debentures of any series have been exchanged
for the related Preferred Securities, no Indenture Event of Default shall
have occurred and be continuing.

AL&C will be required to furnish to the Trustee annually a statement
by certain officers of AL&C as to the compliance with all conditions and
covenants of the Subordinated Indenture. The Subordinated Indenture
provides that the Trustee may withhold notice to the holders of the
Debentures of any default (except in payment of principal or interest) if
it considers it in the interest of the holders of the Debentures to do so.

TAXATION

The following discussion is a summary of certain United States federal
income tax consequences of the purchase, acquisition, ownership and
disposition of Preferred Securities and Debentures and is based upon the
advice of Davis Polk & Wardwell, counsel to AL&C and the Company. Unless
otherwise stated, it deals only with Preferred Securities and Debentures
held as capital assets by initial purchasers who acquire the Preferred
Securities at the original offering price ("Initial Purchasers"), and not
with special classes of holders, such as dealers in securities or
currencies, life insurance companies, persons holding Preferred Securities
and Debentures as a hedge or hedged against currency risks or as part of a
straddle, or persons whose functional currency is not the U.S. dollar.
This summary is based on tax laws in effect in the United States,
regulations thereunder and administrative and judicial interpretations
thereof, as of the date hereof, all of which are subject to change
(possibly on a retroactive basis). This summary deals only with holders
who purchase Preferred Securities of any series, and is subject to
additional discussion of material United States federal income tax
consequences that may appear in a Prospectus Supplement delivered in
connection with a particular series of Preferred Securities.

PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES OR OTHER TAX
CONSEQUENCES OF THE PURCHASE, ACQUISITION, OWNERSHIP AND DISPOSITION
OF PREFERRED SECURITIES AND DEBENTURES, INCLUDING THE EFFECT OF ANY
STATE OR LOCAL TAX LAWS.

Income from the Preferred Securities and Debentures

The Company will be treated as a partnership for federal income tax
purposes. Each holder of Preferred Securities (a "Securityholder") will be
required to include in gross income the Securityholder's distributive share
of the Company's net income which will generally be equal to the amount of
interest received or accrued on the Debentures. See "Potential Extension
of Payment Period of the Debentures" below. Any amount so included in a
Securityholder's gross income will increase his tax basis in the Preferred
Securities, and the amount of cash dividends to the Securityholder will
reduce such Securityholder's tax basis in the Preferred Securities. No
portion of the amounts received on a Preferred Securities will be eligible
for the dividends received deduction.

The Company does not presently intend to make an election under
Section 754 of the Internal Revenue Code of 1986, as amended (the "Code").
As a result, a subsequent purchaser of Preferred Securities will not be
permitted to adjust its taxable income from the Company to reflect any
difference between its purchase price for the Preferred Securities and the
Company's underlying tax basis for its assets.

The interest payments on the Debentures will be treated as "original
issue discount" under Treasury Regulations. Each holder of Debentures (a
"Debenture Holder") will be required to include the interest on the
Debentures in income as it accrues, in accordance with a constant yield
method based on a compounding of interest, before the receipt of the
interest. The Debenture Holder's tax basis in the Debentures will be
increased by accrued interest previously included as income by the
Debenture Holder and reduced by the payment of such interest.

Market Discount and Bond Premium of the Debentures

Debenture Holders other than Initial Purchasers may be considered to
have acquired the Debentures with market discount, acquisition premium or
amortizable bond premium. Such holders are advised to consult their own
tax advisors as to the income tax consequences of the acquisition,
ownership and disposition of the Debentures.

Disposition of the Preferred Securities

Gain or loss will be recognized on a sale, exchange or other
disposition of the Preferred Securities (including a distribution of cash
in redemption of all of a Securityholder's Preferred Securities but
excluding the exchange of Preferred Securities for Debentures) equal to the
difference between the amount realized and the Securityholder's tax basis
in the Preferred Securities disposed of. In the case of a cash
distribution in partial redemption of a Securityholder's Preferred
Securities, no loss will be recognized, the Securityholder's tax basis in
the Preferred Securities will be reduced by the amount of the distribution,
and the Securityholder will recognize gain to the extent, if any, that the
amount of the distribution exceeds the Securityholder's tax basis in the
Preferred Securities. Gain or loss recognized by a Securityholder on the
sale or exchange of Preferred Securities held for more than one year will
generally be taxable as long-term capital gain or loss. In certain
circumstances, a portion of the proceeds received upon a disposition of a
Preferred Security by a purchaser other than an Initial Purchaser may be
treated as ordinary income.

Disposition or Retirement of the Debentures

Upon the sale, exchange or retirement of a Debenture, a Debenture
Holder will recognize taxable gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and such holder's
adjusted tax basis in the Debenture. Subject to the discussion above under
"Market Discount and Bond Premium of the Debentures", such gain or loss
will be capital gain or loss.

Exchange of the Preferred Securities for Debentures of AL&C

Upon a distribution by Aetna Capital L.L.C. of the Debentures of AL&C
in exchange for the Preferred Securities as described under the caption
"Description of the Preferred Securities -- Redemption or Exchange", such
an exchange will be treated as a non-taxable exchange to each
Securityholder and will result in the Securityholder receiving an aggregate
tax basis in the Debentures equal to such Securityholder's aggregate tax
basis in its Preferred Securities. A Debenture Holder's holding period in
the Debentures so received in exchange for Preferred Securities will
include the period for which the Preferred Securities were held by the
Debenture Holder.

Potential Extension of Payment Period of the Debentures

Under the terms of the Debentures, AL&C may be permitted to extend the
interest payment period up to 60 months. In the event that AL&C exercises
this right, AL&C may not declare dividends on any share of its preferred or
common stock, and therefore, the likelihood of extension of the payment
period is, in the view of the Company and AL&C, remote. In the event that
the payment period is extended before the Preferred Securities are
exchanged for the Debentures, the Company will continue to accrue income,
which will be allocated, but not distributed, to beneficial owners on the
last day of each calendar month. As a result, beneficial owners during an
extended interest payment period will include interest in gross income in
advance of the receipt of cash and any such owners who dispose of Preferred
Securities prior to the record date for the payment of dividends following
such extended interest payment period will include interest in gross income
but will not receive from the Company any cash related thereto.

The tax basis of a Preferred Security will be increased by the amount
of any interest that is included in income without a receipt of cash, and
will be decreased again when such holders of record subsequently receive
cash from the Company.

United States Alien Holders

For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the
United States, a foreign corporation, a non-resident alien individual, a
foreign partnership or a non-resident fiduciary of a foreign estate or
trust.

Under present United States federal income tax law:

(i) payments by the Company or any of its paying agents to any holder
of a Preferred Security who or which is a United States Alien Holder and
payments of principal or interest by AL&C on the Debentures to any holder
of a Debenture who or which is a United States Alien Holder will not be
subject to United States federal withholding tax; provided that (a) the
beneficial owner of the Preferred Security or Debenture, as the case may
be, does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of AL&C entitled to vote, (b)
the beneficial owner of the Preferred Security or Debenture, as the case
may be, is not a controlled foreign corporation that is related to AL&C
through stock ownership, and (c) either (A) the beneficial owner of the
Preferred Security or Debenture certifies to the Company or its agent,
under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution") and
holds the Preferred Security or Debenture certifies to the Company or its
agent under penalties of perjury that such statement has been received from
the beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Company or its agent with a copy
thereof; and

(ii) a United States Alien Holder of a Preferred Security or Debenture
will not be subject to United States federal withholding tax on any gain
realized upon the sale or other disposition of a Preferred Security or
Debenture.

Company Information Returns

Within 90 days after the close of every taxable year of the Company,
the Managing Members of the Company will furnish or cause to be furnished
each holder of the Preferred Securities with a Schedule K-1 setting forth
such Securityholder's allocable share of income for the Company's taxable
year.

Any person who holds Preferred Securities as a nominee for another
person is required to furnish to the Company (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee;
(b) notice of whether each beneficial owner is (i) a person who is not a
United States person, (ii) a foreign government, an international
organization or any wholly owned agency or instrumentality of either of the
foregoing, or (iii) a tax-exempt entity; (c) the amount and description of
Preferred Securities held, acquired or transferred for the beneficial
owner; and (d) certain information including the dates of acquisitions and
transfers, methods of acquisition and the costs thereof, as well as net
proceeds from transfers. Brokers and financial institutions are required
to furnish additional information, including whether they are a United
States person and certain information on Preferred Securities they acquire,
hold or transfer for their own account. A penalty of $50 is imposed for
each failure to report the above information to the Company, up to a
maximum of $100,000 per calendar year for all failures.

PLAN OF DISTRIBUTION

The Company may sell Preferred Securities (i) through underwriters,
(ii) through dealers, (iii) through agents or (iv) directly to purchasers.
The Prospectus Supplement relating to the Preferred Securities of a
particular series will set forth the terms of such offering, including the
names of any underwriters, dealers or agents involved in the sale of such
Preferred Securities, the number of Preferred Securities of such series to
be purchased by any underwriters and any applicable commissions or
discounts. The estimated proceeds to the Company from such series of
Preferred Securities will also be set forth in the Prospectus Supplement.

If underwriters are used in the sale, the Preferred Securities being
sold will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Unless otherwise set forth in the
Prospectus Supplement relating to the Preferred Securities of a particular
series, the obligations of the underwriters to purchase such Preferred
Securities will be subject to certain conditions precedent and the
underwriters will be obliged to purchase all of such Preferred Securities
if any of such Preferred Securities are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.

If dealers are used in the sale, unless otherwise indicated in the
Prospectus Supplement relating to the Preferred Securities of a particular
series, the Company will sell such Preferred Securities to the dealers as
principals. The dealers may then resell such Preferred Securities to the
public at varying prices to be determined by such dealers at the time of
resale.

Preferred Securities of a particular series may also be sold through
agents designated by the Company from time to time or directly by the
Company. Any agent involved in the offering and sale of any such Preferred
Securities will be named, and any commissions payable by the Company or
AL&C to such agent will be set forth, in the Prospectus Supplement relating
to the Preferred Securities of such series. Unless otherwise indicated in
such Prospectus Supplement, any such agent will act on a best efforts basis
for the period of its appointment.

Underwriters, dealers and agents may be entitled under agreements
entered into with the Company or AL&C to indemnification by the Company or
AL&C against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the
underwriters, dealers or agents may be required to make in respect thereof.
Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, the Company or Aetna in the
ordinary course of business.

The Preferred Securities may or may not be listed on a national
securities exchange or a foreign securities exchange. No assurances can be
given that there will be a market for the Preferred Securities.

VALIDITY OF SECURITIES

The validity of the Preferred Securities will be passed upon on behalf
of the Company by Davis Polk & Wardwell, special counsel to AL&C and the
Company. The validity of the Guarantee and the Debentures will be passed
upon on behalf of AL&C by Zoe Baird, Senior Vice President and General
Counsel of AL&C, and Davis Polk & Wardwell, special counsel to AL&C. The
validity of the Guarantee, the Preferred Securities and the Debentures will
be passed upon on behalf of any agents or underwriters by Sullivan &
Cromwell. Davis Polk & Wardwell and Sullivan & Cromwell will rely upon the
opinion of Zoe Baird as to certain matters governed by Connecticut law. As
of February 28, 1994, Zoe Baird beneficially owned 745, and had options to
purchase 11,000, shares of AL&C's common stock.

EXPERTS

The consolidated financial statements and schedules of Aetna as of
December 31, 1993 and 1992, and for each of the years in the three year
period ended December 31, 1993, incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
KPMG Peat Marwick, independent certified public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing. The reports of KPMG Peat Marwick on the December 31, 1993
consolidated financial statements and schedules refer to a change in 1993
in the Company's method of accounting for certain investments in debt and
equity securities, reinsurance of short-duration and long-duration
contracts, postemployment benefits, workers' compensation life table
indemnity reserves and retrospectively rated reinsurance contracts and a
change in 1992 in the Company's methods of accounting for income taxes and
postretirement benefits other than pensions.

With respect to any unaudited interim financial information which may
be incorporated by reference in this Prospectus, the independent certified
public accountants may report that they applied limited procedures in
accordance with professional standards for a review of such information.
However, any separate report included in AL&C's Quarterly Reports on Form
10-Q and incorporated by reference herein will state that they did not
audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on any report on such
information should be restricted in light of the limited nature of the
review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act for any report on
the unaudited interim financial information because that report is not a
"report" or a "part" of the Registration Statement prepared or certified by
the accountants within the meaning of Sections 7 and 11 of the Securities
Act.

ERISA MATTERS

The fiduciary considerations summarized below provide a general
discussion that does not include all of the investment considerations
relevant to pension plans, profit-sharing plans, Individual Retirement
Accounts or other employee benefit plans ("ERISA Plans") subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the employee benefit provisions of the Code. This summary is based on the
current provisions of ERISA and regulations and rulings thereunder, which
may be changed by future legislative, administrative or judicial actions.
This discussion should not be construed as legal advice and ERISA Plan
fiduciaries proposing to invest in the Preferred Securities should consult
with and rely upon their own advisors in evaluating these matters.

Prohibited Transactions

Section 406 of ERISA provides that plan fiduciaries are prohibited
from causing a plan to engage in certain types of transactions with certain
persons or entities that are parties in interest. AL&C and certain
affiliates of AL&C may each be considered a "party in interest" within the
meaning of ERISA or a "disqualified person" within the meaning of the Code
with respect to ERISA Plans. Due to the ownership by AL&C directly or
indirectly of all of the Common Securities, as well as the nature of the
Guarantee and the ability of the Company under certain circumstances to
exchange the Preferred Securities for Debentures, prohibited transactions
within the meaning of ERISA or the Code, may arise, for example, if
Preferred Securities are acquired by an ERISA Plan with respect to which
AL&C or any of its affiliates is a service provider, unless such Preferred
Securities are acquired pursuant to an exemption for transactions effected
on behalf of such ERISA Plan by a "qualified professional asset manager" or
pursuant to any other available exemption.

Plan Assets

In addition, if the assets of the Company were deemed to be plan
assets of ERISA Plans that are shareholders, an ERISA Plan's investment in
the Preferred Securities might be deemed to constitute a delegation under
ERISA of the duty to manage plan assets by a fiduciary of such ERISA Plan.
Thus, the fiduciary responsibility provisions of ERISA could extend to the
Company's actions and certain transactions involving the operation of the
Company might be deemed to constitute prohibited transactions under ERISA
and the Code. The U.S. Department of Labor (the "DOL") has issued a final
regulation with regard to whether the underlying assets of an entity in
which ERISA Plans acquire equity interests would be deemed to be plan
assets. The regulation provides that the underlying assets of an entity
will not be considered to be plan assets if the equity interests acquired
by ERISA Plans are "publicly-offered securities" -- that is, they are (1)
widely held (i.e., owned by more than 100 investors independent of AL&C and
of each other), (2) freely transferable and (3) sold as part of an offering
pursuant to an effective registration statement under the Securities Act
and then timely registered under Section 12(b) or 12(g) of the Exchange
Act. It is expected that the Preferred Securities will meet the criteria
of "publicly-offered securities" above. The Company expects (although no
assurances can be given) that the Preferred Securities will be held by at
least 100 independent investors, there will be no restrictions imposed on
the transfer of the Preferred Securities and the Preferred Securities will
be sold as part of an offering pursuant to an effective registration
statement under the Securities Act and then will be timely registered under
the Exchange Act.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR ANY OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN
ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
__________

TABLE OF CONTENTS

Prospectus Statement Page
------

Aetna Life and Casualty Company . . . . . . . S-2
Aetna Capital L.L.C.. . . . . . . . . . . . . S-2
Certain Investment Considerations. . . . . .. S-3
Use of Proceeds . . . . . . . . . . . . . . . S-4
Capitalization . . . . . . . . . . . . . . . S-5
Summary Financial Information of Aetna. . . . S-5
Recent Developments . . . . . . . . . . . . . S-8
Summary Business Description. . . . . . . . . S-9
Certain Terms of the Series A
Preferred Securities . . . . . . . . . . . S-11
Certain Terms of the Series A
Debentures. . . . . . . . . . . . . . . . . S-12
Underwriting . . . . . . . . . . . . . . . . S-13

Prospectus

Available Information . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . 2
Aetna Capital L.L.C. . . . . . . . . . . . . 3
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock
Dividends . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . 4
Description of the Preferred Securities . . . 4
Description of the Guarantee . . . . . . . . 15
Description of the Debentures and
the Subordinated Indenture . . . . . . . . 18
Taxation . . . . . . . . . . . . . . . . . . 28
Plan of Distribution . . . . . . . . . . . . 32
Validity of Securities . . . . . . . . . . . 32
Experts . . . . . . . . . . . . . . . . . . . 33
ERISA Matters . . . . . . . . . . . . . . . . 34

12,000,000 Securities

Aetna Capital L.L.C.

guaranteed to the extent set forth
herein by

Aetna Life and
Casualty Company

% Cumulative
Monthly Income Preferred Securities,
Series A
__________

__________

(Aetna Logo)
__________

Goldman, Sachs & Co.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection
with the issuance and distribution of the securities being
registered, other than underwriting compensation. Except for the
Registration Fee, all amounts are estimates.

Registration Fee . . . . . . . . . . . . . . $ 172,415
Accounting Fees and Expenses . . . . . . . . . 70,000
Blue Sky Fees and Expenses . . . . . . . . . . 27,500
Legal Fees and Expenses . . . . . . . . . . . 425,000
Printing and Engraving Fees . . . . . . . . . 90,000
Rating Agency Fees . . . . . . . . . . . . . . 250,000
Stock Exchange Listing Fees . . . . . . . . . 100,000
Trustee Fees . . . . . . . . . . . . . . . . . 20,000
Miscellaneous . . . . . . . . . . . . . . . . 45,085
----------
Total . . . . . . . . . . . . . . . . . . $1,200,000
==========

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

AL&C is a Connecticut corporation. Section 33-320a of the
Connecticut General Statutes ("C.G.S.") provides that a
Connecticut corporation shall, under certain circumstances,
indemnify its directors, officers, employees, agents and certain
other persons.

Subsection (b) of C.G.S. Section 33-320a provides that a
corporation shall indemnify any shareholder, director, officer,
employee or agent of the corporation or an eligible outside
party, who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), against judgments, fines, penalties, amounts paid
in settlement and reasonable expenses (including attorneys' fees)
actually incurred by such person in connection with such action,
suit or proceeding provided (1) that such person was successful
on the merits in the defense of such action, suit or proceeding,
or (2) that it shall be concluded that such person acted in good
faith and in a manner he reasonably believed to be in the best
interests of the corporation and, with respect to any criminal
action or proceeding, provided that such person had no reason to
believe his conduct was unlawful, or (3) a court shall have
determined that in view of all the circumstances, such person is
fairly and reasonably entitled to be indemnified, and then for
such amount as the court shall determine; except that, in
connection with an alleged claim based upon the purchase or sale
of securities, the corporation shall only indemnify such person
after a court shall have determined that in view of all the
circumstances, he is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall
determine.

Subsection (c) of C.G.S. Section 33-320a provides that,
where a director or officer was or is a party or was threatened
to be made a party to a proceeding by or in the right of the
corporation, the corporation shall indemnify him against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the proceeding or any appeal therein, in
relation to matters as to which he is finally adjudged not to
have breached his duty to the corporation. The corporation shall
also indemnify a director or officer if a court determines that
in view of all the circumstances, such person is fairly and
reasonably entitled to be indemnified; however, in such a
situation, the individual shall only be indemnified for such
amount as the court determines to be appropriate. Furthermore,
the statute provides that the corporation shall not indemnify a
director or officer for amounts paid to the corporation, to a
plaintiff or to counsel for a plaintiff in settling or otherwise
disposing of a threatened or pending action, with or without
court approval, or for expenses incurred in defending a
threatened action or a pending action which is settled or
otherwise disposed of without court approval.

C.G.S. Section 33-320a is an exclusive statute. A
corporation cannot indemnify a director or officer to an extent
either greater or less than that authorized by the statute;
provided, however, that the statute specifically authorizes a
corporation to procure insurance providing greater
indemnification rights than those set out in C.G.S.
Section 33-320a.

Consistent with the statute, AL&C has procured insurance
from several carriers for its directors and officers which
supplements the indemnification rights provided to those
individuals by C.G.S. Section 33-320a. Unlike the statute, these
policies do not require an after-the-fact determination of good
faith in order for the insured director or officer to receive the
benefits provided under the policies nor do they require
affirmative judicial or corporate action as a prerequisite to the
insurance company's duty to defend (and pay for the defense of)
the insured director or officer under the policies. Furthermore,
the insurance policies cover directors and officers for any acts
not specifically excluded for which the director or officer is
not eligible for indemnification under C.G.S. Section 33-320a to
the extent such coverage does not violate public policy.

Section 5 of AL&C's Certificate of Incorporation limits the
personal liability of directors for monetary damages to the
corporation and its shareholders for a breach of duty as a
director to the amount of the compensation received by the
director for serving the corporation during the year of the
alleged breach of duty.

Reference is made to the Underwriting Agreement filed as
Exhibit 1 to this Registration Statement for certain provisions
relating to the indemnification of directors and officers of AL&C
against certain liabilities, including liabilities under the
Securities Act.

ITEM 16. EXHIBITS.

* 1 -- Form of Underwriting Agreement
* 3.1 -- Certificate of Formation of Aetna Capital L.L.C.
* 3.2 -- Form of Amended and Restated Limited Liability
Company Agreement of Aetna Capital L.L.C.
* 4.1 -- Specimen of Preferred Security Certificate
* 4.2 -- Form of Payment and Guarantee Agreement by Aetna
Life and Casualty Company
4.3 -- Form of Debenture (included in Exhibit 4.4)
4.4 -- Form of Subordinated Indenture between The First National Bank
of Chicago, as trustee and Aetna Life and Casualty Company
**5.1 -- Opinion of Zoe Baird, Senior Vice President and
General Counsel of Aetna Life and Casualty Company
**5.2 -- Opinion of Davis Polk & Wardwell
**8.1 -- Opinion of Davis Polk & Wardwell as to tax matters
*10.1 -- Form of Agreement as to Expenses and Liabilities
between Aetna Capital L.L.C. and Aetna Life and
Casualty Company
12 -- Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (incorporated
by reference to Aetna Life and Casualty Company's
1993 Annual Report on Form 10-K filed on March 18,
1994 (File No. 1-5704))
*23.1 -- Consent of KPMG Peat Marwick
*23.2 -- Consent of Zoe Baird, Senior Vice President and General
Counsel of Aetna Life and Casualty Company
(included in Exhibit 5.1)
*23.3 -- Consent of Davis Polk & Wardwell
(included in Exhibit 5.2)
*23.4 -- Consent of Davis Polk & Wardwell
(included in Exhibit 8.1)
*24 -- Powers of Attorney
25 -- Statement of Eligibility and Qualification of the
Trustee under the Trust Indenture Act
28 -- Information from Reports Furnished to State
Insurance Regulatory Authorities (incorporated
herein by reference to Aetna Life and Casualty
Company's 1993 Annual Report on Form 10-K, filed on
March 18, 1994 (File No. 1-5704))

_________________________
* Previously filed.
** To be filed by amendment.

ITEM 17. UNDERTAKINGS.

Each of the Registrants hereby undertakes:

(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this Registration Statement:

(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this
Registration Statement; and

(iii) To include any material information with respect
to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in this Registration Statement;

provided, however, that the undertakings set forth in paragraphs
(1)(i) and (1)(ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by a Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration
Statement.

(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.

(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of AL&C's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the Securities offered
therein, and the offering of such Securities at that time shall
be deemed to be the initial bona fide offering thereof.

(5) That (a) for purposes of determining any liability
under the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or Rule 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was
declared effective.

(b) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

Insofar as indemnification (other than pursuant to the
insurance described in Item 15 above) for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrants pursuant to
the provisions specified in the first paragraph of Item 15 of
this Registration Statement or otherwise, the Registrants have
been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in said Act and is therefore unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
Aetna Capital L.L.C. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford, State of
Connecticut on April 13, 1994.

AETNA CAPITAL L.L.C.
(Registrant)

By Aetna Life and Casualty Company,
as Managing Member

By /s/ ROBERT E. BROATCH
--------------------------------
Robert E. Broatch
Senior Vice President,
Finance and Corporate Controller
of Aetna Life and Casualty Company

Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 1 to the Registration Statement has been
signed below by the following persons in the capacities indicated
on April 13, 1994.

Signature Title
----------- --------

* President and Chief
------------------------ Executive Officer
Ronald E. Compton of Aetna Life and Casualty Company
(Principal Executive Officer)

* Group Executive, Finance
------------------------ and Administration
Patrick W. Kenny of Aetna Life and Casualty Company
(Principal Financial Officer)

* Senior Vice President, Finance
------------------------ and Corporate Controller of Aetna
Robert E. Broatch Life and Casualty Company
(Principal Accounting Officer)

*By /s/ KIRK P. WICKMAN
-------------------
Kirk P. Wickman
(Attorney-in-fact)

Pursuant to the requirements of the Securities Act of 1933,
Aetna Life and Casualty Company certifies that it has reasonable
grounds to believe that it meets all the requirements for filing
on Form S-3 and has duly caused this Amendment No. 1 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut on April 13, 1994.

AETNA LIFE AND CASUALTY COMPANY
(Registrant)

By /s/ ROBERT E. BROATCH
--------------------------------
Robert E. Broatch
Senior Vice President,
Finance and Corporate Controller

Signature Title
----------- --------

* Chairman, President, Chief
------------------------ Executive Officer and Director
Ronald E. Compton (Principal Executive Officer)

* Group Executive, Finance and
------------------------ Administration
Patrick W. Kenny (Principal Financial Officer)

* Senior Vice President,
------------------------ Finance and Corporate Controller
Robert E. Broatch (Principal Accounting Officer)

* Director
------------------------
Wallace Barnes

* Director
------------------------
John F. Donahue

* Director
------------------------
William H. Donaldson

* Director
------------------------
Barbara Hackman Franklin

* Director
------------------------
Earl G. Graves

* Director
------------------------
Gerald Greenwald

Director
------------------------
Michael H. Jordan

* Director
------------------------
Jack D. Kuehler

* Director
------------------------
Frank R. O'Keefe, Jr.

* Director
------------------------
David M. Roderick

*By /s/ KIRK P. WICKMAN
----------------------
Kirk P. Wickman
(Attorney-in-Fact)

INDEX TO EXHIBITS

Sequentially
Exhibit Numbered
Number Description Pages
------- ----------- ------------

*1 - Form of Underwriting Agreement

*3.1 - Certificate of Formation of Aetna Capital L.L.C.

*3.2 - Form of Amended and Restated Limited Liability
Company Agreement of Aetna Capital L.L.C.

*4.1 - Specimen of Preferred Security Certificate

*4.2 - Form of Payment and Guarantee Agreement by
Aetna Life and Casualty Company

4.3 - Form of Debenture (included in Exhibit 4.4)

4.4 - Form of Subordinated Indenture between The
First National Bank of Chicago, as trustee
and Aetna Life and Casualty Company

**5.1 - Opinion of Zoe Baird, Senior Vice President
and General Counsel of Aetna Life and Casualty
Company

**5.2 - Opinion of Davis Polk & Wardwell

**8.1 - Opinion of Davis Polk & Wardwell as to tax
matters

*10.1 - Form of Agreement as to Expenses and
Liabilities between Aetna Capital L.L.C. and
Aetna Life and Casualty Company

*12 - Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends
(incorporated by reference to Aetna Life and
Casualty Company's 1993 Annual Report on Form
10-K filed on March 18, 1994 (File No. 1-5704))

*23.1 - Consent of KPMG Peat Marwick

**23.2 - Consent of Zoe Baird, Senior Vice President and
General Counsel of Aetna Life and Casualty
Company (included in Exhibit 5.1)

**23.3 - Consent of Davis Polk & Wardwell (included in
Exhibit 5.2)

**23.4 - Consent of Davis Polk & Wardwell (included in
Exhibit 8.1)

*24 - Powers of Attorney

25 - Statement of Eligibility and Qualification of
the Trustee under the Trust Indenture Act

28 - Information from Reports Furnished to State
Insurance Regulatory Authorities (incorporated
herein by reference to Aetna Life and Casualty
Company's 1993 Annual Report on Form 10-K,
filed on March 18, 1994 (File No. 1-5704))

____________
* Previously filed.
** To be filed by amendment.

EXHIBIT 4.4
==============================================================================

AETNA LIFE AND CASUALTY COMPANY

THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE

__________

SUBORDINATED INDENTURE

Dated as of , 1994

__________

Debentures

==============================================================================

AETNA LIFE AND CASUALTY COMPANY
Reconciliation and tie between certain Sections of
this Indenture, dated as of , 1994, and
Sections 310 through 318, inclusive, of
the Trust Indenture Act of 1939:

Trust Indenture
Act Section Indenture Section
--------------- -----------------

Section 310(a)(1) .................................... 609
(a)(2) .................................... 609
(a)(3) .................................... Not Applicable
(a)(4) .................................... Not Applicable
(b) .................................... 608
610
Section 311(a) .................................... 613
(b) .................................... 613
Section 312(a) .................................... 701
702(a)
(b) .................................... 702(b)
(c) .................................... 702(c)
Section 313(a) .................................... 703(a)
(b) .................................... 703(a)
(c) .................................... 703(a)
(d) .................................... 703(b)
Section 314(a) .................................... 704
(a)(4) .................................... 101
1004
(b) .................................... Not Applicable
(c)(1) .................................... 102
(c)(2) .................................... 102
(c)(3) .................................... Not Applicable
(d) .................................... Not Applicable
(e) .................................... 102
Section 315(a) .................................... 601
(b) .................................... 602
(c) .................................... 601
(d) .................................... 601
(e) .................................... 516
Section 316(a) .................................... 101
(a)(1)(A) .................................... 503
504
514
(a)(1)(B) .................................... 515
(a)(2) .................................... Not Applicable
(b) .................................... 510
(c) .................................... 104(c)
Section 317(a)(1) .................................... 505
(a)(2) .................................... 506
(b) .................................... 1003
Section 318(a) .................................... 107

___________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.

TABLE OF CONTENTS
Page
----

PARTIES.............................................................. 1
RECITALS OF THE COMPANY.............................................. 1

ARTICLE ONE

Definitions and Other Provisions
of General Application

Section 101. Definitions .......................................... 1
Act................................................... 2
Additional Amounts.................................... 2
Additional Interest................................... 2
Authenticating Agent.................................. 2
Board of Directors.................................... 3
Board Resolution...................................... 3
Business Day ......................................... 3
Capital............................................... 3
Commission............................................ 3
Common Security....................................... 3
Common Stock.......................................... 3
Company............................................... 3
Company Request....................................... 4
Company Order......................................... 4
Corporate Trust Office................................ 4
corporation........................................... 4
Covenant Defeasance................................... 4
Debenture............................................. 4
Debenture Register.................................... 4
Debenture Registrar................................... 4
Debt.................................................. 4
Defaulted Interest.................................... 5
Defeasance............................................ 5
Depositary............................................ 5
Event of Default...................................... 5
Exchange Act.......................................... 5
Floating or Adjustable Rate Provision................. 5
Floating or Adjustable Rate Debenture................. 5
Foreign Government Obligations........................ 5
Global Debenture...................................... 5
Guarantee............................................. 6
Holder................................................ 6
Indenture............................................. 6
interest.............................................. 6
Interest Payment Date................................. 6
L.L.C. Agreement...................................... 6
Managing Members...................................... 6
Maturity.............................................. 6
Notice of Default..................................... 6
Officers' Certificate................................. 6
Opinion of Counsel.................................... 7
Original Issue Discount Debenture..................... 7
Outstanding........................................... 7
Paying Agent.......................................... 8
Person................................................ 8
Place of Payment...................................... 9
Predecessor Debenture................................. 9
Preferred Security.................................... 9
Proceeding............................................ 9
Redemption Date....................................... 9
Redemption Price...................................... 9
Regular Record Date................................... 9
Responsible Officer................................... 9
Security Exchange..................................... 10
Senior Debt........................................... 10
Special Record Date................................... 10
Stated Maturity....................................... 10
Subsidiary............................................ 10
voting power.......................................... 10
Trustee............................................... 10
Trust Indenture Act................................... 11
U.S. Government Obligations........................... 11
Vice President........................................ 11
Written Action........................................ 11

Section 102. Compliance Certificates and Opinions.................. 11

Section 103. Form of Documents Delivered to Trustee................ 12

Section 104. Acts of Holders; Record Dates......................... 13

Section 105. Notices, Etc., to Trustee and Company................. 14

Section 106. Notice to Holders; Waiver............................. 15

Section 107. Conflict with Trust Indenture Act..................... 16

Section 108. Effect of Headings and Table of Contents.............. 16

Section 109. Successors and Assigns................................ 16

Section 110. Separability Clause................................... 16

Section 111. Benefits of Indenture................................. 16

Section 112. Governing Law......................................... 16

Section 113. Legal Holidays........................................ 17

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc. .................. 17

ARTICLE TWO

Debenture Form

Section 201. Forms Generally....................................... 17

Section 202. Form of Face of Debenture............................. 18

Section 203. Form of Reverse of Debenture.......................... 20

Section 204. Form of Legend for Global Debentures.................. 23

Section 205. Form of Trustee's Certificate of Authentication....... 23

ARTICLE THREE

The Debentures

Section 301. Amount Unlimited; Issuable in Series.................. 23

Section 302. Denominations......................................... 27

Section 303. Execution, Authentication, Delivery and Dating........ 27

Section 304. Temporary Debentures.................................. 30

Section 305. Registration, Registration of Transfer and Exchange... 30

Section 306. Mutilated, Destroyed, Lost and Stolen Debentures...... 32

Section 307. Payment of Interest; Interest Rights Preserved........ 33

Section 308. Persons Deemed Owners................................. 35

Section 309. Cancellation.......................................... 35

Section 310. Computation of Interest............................... 36

Section 311. Additional Interest................................... 36

ARTICLE FOUR

Satisfaction and Discharge

Section 401. Satisfaction and Discharge of Indenture............... 36

Section 402. Application of Trust Fund............................. 39

ARTICLE FIVE

Remedies

Section 501. Events of Default Prior to a Security Exchange........ 39

Section 502. Events of Default After a Security Exchange........... 41

Section 503. Acceleration of Maturity Prior to a Security Exchange. 43

Section 504. Acceleration of Maturity After a Security Exchange.... 44

Section 505. Collection of Indebtedness and Suits for
Enforcement by Trustee.............................. 46

Section 506. Trustee May File Proofs of Claim...................... 47

Section 507. Trustee May Enforce Claims Without Possession
of Debentures....................................... 48

Section 508. Application of Money Collected........................ 48

Section 509. Limitation on Suits................................... 49

Section 510. Unconditional Right of Holders to Receive
Principal, Premium and Interest..................... 50

Section 511. Restoration of Rights and Remedies.................... 50

Section 512. Rights and Remedies Cumulative........................ 50

Section 513. Delay or Omission Not Waiver.......................... 50

Section 514. Control by Holders.................................... 51

Section 515. Waiver of Past Defaults............................... 52

Section 516. Undertaking for Costs................................. 52

ARTICLE SIX

The Trustee

Section 601. Certain Duties and Responsibilities................... 53

Section 602. Notice of Defaults.................................... 53

Section 603. Certain Rights of Trustee............................. 53

Section 604. Not Responsible for Recitals or Issuance of
Debentures.......................................... 55

Section 605. May Hold Debentures................................... 55

Section 606. Money Held in Trust................................... 56

Section 607. Compensation and Reimbursement........................ 56

Section 608. Disqualification; Conflicting Interests............... 56

Section 609. Corporate Trustee Required; Eligibility............... 57

Section 610. Resignation and Removal; Appointment of Successor..... 57

Section 611. Acceptance of Appointment by Successor................ 59

Section 612. Merger, Conversion, Consolidation or
Succession to Business.............................. 60

Section 613. Preferential Collection of Claims Against Company..... 61

Section 614. Appointment of Authenticating Agent................... 61

ARTICLE SEVEN

Holders' Lists and Reports by Trustee and Company

Section 701. Company to Furnish Trustee Names and
Addresses of Holders................................ 63

Section 702. Preservation of Information; Communications
to Holders.......................................... 64

Section 703. Reports by Trustee.................................... 64

Section 704. Reports by Company.................................... 65

ARTICLE EIGHT

Consolidation, Merger, or Sale of Assets

Section 801. Company May Consolidate, Etc., Only on Certain Terms.. 65

Section 802. Successor Substituted................................. 66

ARTICLE NINE

Supplemental Indentures

Section 901. Supplemental Indentures Without Consent of Holders.... 66

Section 902. Supplemental Indentures with Consent of Holders....... 68

Section 903. Execution of Supplemental Indentures.................. 70

Section 904. Effect of Supplemental Indentures..................... 70

Section 905. Conformity with Trust Indenture Act................... 70

Section 906. Reference in Debentures to Supplemental Indentures.... 71

Section 907. Waiver of Compliance by Holders....................... 71

Section 908. Subordination Unimpaired.............................. 71

ARTICLE TEN

Covenants

Section 1001. Payment of Principal, Premium and Interest............ 71

Section 1002. Maintenance of Office or Agency....................... 72

Section 1003. Money for Debentures Payments to Be Held in Trust..... 72

Section 1004. Statement by Officers as to Default................... 74

Section 1005. Limitations on Dividends and Other Payments
on Capital Stock.................................... 74

Section 1006. Limitations on Conduct of Capital..................... 74

Section 1007. Stock Exchange Listing................................ 76

ARTICLE ELEVEN

Redemption of Debentures

Section 1101. Applicability of Article.............................. 76

Section 1102. Election to Redeem; Notice to Trustee................. 76

Section 1103. Selection by Trustee of Debentures to Be Redeemed..... 77

Section 1104. Notice of Redemption.................................. 77

Section 1105. Deposit of Redemption Price........................... 78

Section 1106. Debentures Payable on Redemption Date................. 78

Section 1107. Debentures Redeemed in Part........................... 79

ARTICLE TWELVE

Defeasance and Covenant Defeasance

Section 1201. Company's Option to Effect Defeasance or
Covenant Defeasance................................. 79

Section 1202. Defeasance and Discharge.............................. 79

Section 1203. Covenant Defeasance................................... 80

Section 1204. Conditions to Defeasance or Covenant Defeasance....... 81

Section 1205. Deposited Money and U.S. Government Obligations or
Foreign Government Obligations to be Held In Trust;
Other Miscellaneous Provisions........................ 84

Section 1206. Reinstatement......................................... 85

ARTICLE THIRTEEN

Sinking Funds

Section 1301. Applicability of Article.............................. 85

Section 1302. Satisfaction of Sinking Fund Payments
with Debentures..................................... 86

Section 1303. Redemption of Debentures for Sinking Fund............. 86

ARTICLE FOURTEEN

Subordination of Debentures

Section 1401. Debentures Subordinate to Senior Debt................. 87

Section 1402. Payment Over of Proceeds Upon Dissolution, Etc. ...... 87

Section 1403. Prior Payment to Senior Debt Upon
Acceleration of Debentures.......................... 89

Section 1404. No Payment When Senior Debt in Default................ 89

Section 1405. Payment Permitted If No Default....................... 90

Section 1406. Subrogation to Rights of Holders of Senior Debt....... 91

Section 1407. Provisions Solely to Define Relative Rights........... 91

Section 1408. Trustee to Effectuate Subordination................... 92

Section 1409. No Waiver of Subordination Provisions................. 92

Section 1410. Notice to Trustee..................................... 93

Section 1411. Reliance on Judicial Order or Certificate of
Liquidating Agent................................... 94

Section 1412. Trustee Not Fiduciary For Holders of Senior Debt...... 94

Section 1413. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.................... 94

Section 1414. Article Applicable to Paying Agents................... 95

Section 1415. Defeasance of This Article Fourteen................... 95

ARTICLE FIFTEEN

Miscellaneous

Section 1501. Assignment; Binding Effect............................ 95

Section 1502. Third Party Beneficiaries............................. 95

Section 1503. Set-off............................................... 96

NOTE: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.

INDENTURE, dated as of , 1994, between AETNA
LIFE AND CASUALTY COMPANY, a Connecticut insurance corporation
(herein called the "Company"), having its principal office at 151
Farmington Avenue, Hartford, Connecticut 06156, and THE FIRST
NATIONAL BANK OF CHICAGO, a national association duly organized
and existing under the laws of the United States of America, as
Trustee (herein called the "Trustee").

RECITALS OF THE COMPANY

The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time
to time of its debentures, notes or other evidences of
indebtedness (herein called the "Debentures"), to be issued in
one or more series to evidence the loans to be made to the
Company of the proceeds from the issuance from time to time by
Aetna Capital L.L.C., a Delaware limited liability company
("Capital"), of preferred limited liability company interests in
Capital (the "Preferred Securities"), in one or more series and
common limited liability company interests in Capital (the
"Common Securities") and related capital contributions.

All things necessary to make this Indenture a valid
agreement of the Company, in accordance with its terms, have been
done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the
purchase of the Debentures by the Holders thereof, it is mutually
agreed, for the equal and proportionate benefit of all Holders of
the Debentures or of series thereof, as follows:

ARTICLE ONE

Definitions and Other Provisions
of General Application

Section 101. Definitions.
-----------

For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:

(1) the terms defined in this Article
have the meanings assigned to them in this
Article and include the plural as well as the
singular;

(2) all other terms used herein which
are defined in the Trust Indenture Act or the
Securities Act of 1933, as amended, either
directly or by reference therein, have the
meanings assigned to them therein;

(3) all accounting terms not otherwise
defined herein have the meanings assigned to
them in accordance with generally accepted
accounting principles, and, except as
otherwise herein expressly provided, the term
"generally accepted accounting principles"
with respect to any computation required or
permitted hereunder shall mean such
accounting principles as are generally
accepted at the date of such computation;

(4) the words "Article" and "Section"
refer to an Article and Section,
respectively, of this Indenture; and

(5) the words "herein", "hereof" and
"hereunder" and other words of similar import
refer to this Indenture as a whole and not to
any particular Article, Section or other
subdivision.

"Act", when used with respect to any Holder, has
the meaning specified in Section 104.

"Additional Amounts" when used with respect to the
Preferred Securities of any series means, any additional
amounts that Capital is required to pay as dividends to
holders of the Preferred Securities of such series pursuant
to the Written Action establishing the Preferred Securities
of such series in the event that Capital is required by law
to withhold or deduct for or on account of any present or
future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied upon or as a result of
payments by Capital in respect of the Preferred Securities
of such series by or on behalf of the United States of
America, any state thereof or any other jurisdiction through
which or from which such payment is made, or any authority
therein or thereof having power to tax.

"Additional Interest" has the meaning specified in
Section 311.

"Authenticating Agent" means any Person authorized
by the Trustee pursuant to Section 614 to act on behalf of
the Trustee to authenticate Debentures of one or more
series.

"Board of Directors" means either (i) the board of
directors of the Company, the executive committee of such
board of directors or any other duly authorized committee of
directors and/or officers appointed by such board of
directors or executive committee, or (ii) one or more duly
authorized officers of the Company to whom the board of
directors of the Company or a committee thereof has
delegated the authority to act with respect to the matters
contemplated by this Indenture.

"Board Resolution" means (i) a copy of a
resolution certified by the Corporate Secretary or an
Assistant Corporate Secretary of the Company to have been
duly adopted by the Board of Directors or a committee
thereof and to be in full force and effect on the date of
such certification or (ii) a certificate signed by the
authorized officer or officers of the Company to whom the
board of directors of the Company or a committee thereof has
delegated its authority (as described in the definition of
Board of Directors), and in each case, delivered to the
Trustee.

"Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which
banking institutions in The City of New York are authorized
or required by law or executive order to close.

"Capital" has the meaning stated in the first
recital of this Indenture.

"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under
the Exchange Act, or, if at any time after the execution of
this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such
time.

"Common Security" has the meaning stated in the
first recital of this Indenture.

"Common Stock" means the Company's common capital
stock, without par value.

"Company" means the Person named as the "Company"
in the first paragraph of this instrument until a successor
Person shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall
mean such successor Person.

"Company Request" or "Company Order" means a
written request or order signed in the name of the Company
by (i) any two of the following individuals: the Chairman,
a Vice Chairman, the President or a Vice President, or (ii)
by one of the foregoing individuals and by any other Vice
President, the Treasurer, an Assistant Treasurer, the
Corporate Secretary or an Assistant Corporate Secretary or
any other individual authorized by the Board of Directors
for such purpose, and delivered to the Trustee.

"Corporate Trust Office" means the principal
office of the Trustee located at 1 North State Street, 9th
Floor, Chicago, Illinois 60602 at which at any particular
time its corporate trust business shall be administered.

"corporation" means a corporation, association,
company, joint-stock company or business trust.

"Covenant Defeasance" has the meaning specified in
Section 1203.

"Debenture" has the meaning stated in the first
recital of this Indenture and more particularly means the
Debentures of any series, issued from time to time, by the
Company pursuant to this Indenture.

"Debenture Register" and "Debenture Registrar"
have the respective meanings specified in Section 305.

"Debt" means (without duplication and without
regard to any portion of principal amount that has not
accrued and to any interest component thereof (whether
accrued or imputed) that is not due and payable) with
respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the
acquisition of property, assets or businesses, (iii) every
reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person, (iv) every
obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the
ordinary course of business), (v) every capital lease
obligation of such Person and (vi) every obligation of the
type referred to in clauses (i) through (v) of another
Person and all dividends of another Person the payment of
which, in either case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor or
otherwise.

"Defaulted Interest" has the meaning specified in
Section 307.

"Defeasance" has the meaning specified in Section
1202.

"Depositary" means, with respect to Debentures of
any series issuable in whole or in part in the form of one
or more Global Debentures, a clearing agency registered
under the Exchange Act that is designated to act as
Depositary for such Debentures as contemplated by Section
301.

"Event of Default" when used with respect to the
Debentures of any series shall (a) prior to a Security
Exchange with respect to Debentures of such series, have the
meaning set forth in Section 501 hereof and (b) after a
Security Exchange with respect to Debentures of such series,
have the meaning set forth in Section 502 hereof.

"Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, and any successor
statute thereto.

"Floating or Adjustable Rate Provision" means a
formula or provision, specified in or pursuant to a Board
Resolution or an indenture supplemental hereto, providing
for the determination, whether pursuant to objective factors
or pursuant to the sole discretion of any Person (including
the Company), and periodic adjustment of the interest rate
borne by a Floating or Adjustable Rate Debenture.

"Floating or Adjustable Rate Debenture" means any
Debenture which provides for interest thereon at a periodic
rate that may vary from time to time over the term thereof
in accordance with a Floating or Adjustable Rate Provision.

"Foreign Government Obligations" has the meaning
specified in Section 1204.

"Global Debenture" means a Debenture that
evidences all or part of the Debentures of any series and is
authenticated and delivered to, and registered in the name
of, the Depositary for such Debentures or a nominee thereof.

"Guarantee" means the Payment and Guarantee
Agreement executed and delivered by the Company for the
benefit of the holders from time to time of the Preferred
Securities, as amended from time to time.

"Holder" means a Person in whose name a Debenture
is registered in the Debenture Register.

"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such
supplemental indenture, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the
terms of particular series of Debentures established as
contemplated by Section 301.

"interest", when used with respect to an Original
Issue Discount Debenture which by its terms bears interest
only after Maturity, means interest payable after Maturity.

"Interest Payment Date", when used with respect to
any Debenture, means the Stated Maturity of an instalment of
interest on such Debenture.

"L.L.C. Agreement" means the Amended and Restated
Limited Liability Company Agreement of Capital dated as of
, 1994 by and among the members of Capital, as amended
from time to time.

"Managing Members" means the Company and Aetna
Capital Holdings, Inc., in their capacity as the members of
Capital that hold all of Capital's outstanding Common
Securities.

"Maturity", when used with respect to any
Debenture, means the date on which the principal of such
Debenture or an instalment of principal becomes due and
payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for
redemption or otherwise.

"Notice of Default" means a written notice of the
kind specified in Section 501(4) or 502(4).

"Officers' Certificate" means a certificate signed
by (i) any two of the following individuals: the Chairman,
a Vice Chairman, the President or a Vice President, or (ii)
by one of the foregoing individuals and by any other Vice
President, the Treasurer, an Assistant Treasurer, the
Corporate Secretary or an Assistant Corporate Secretary, of
the Company, or any other individual authorized by the Board
of Directors for such purpose, and delivered to the Trustee.
One of the officers signing an Officers' Certificate given
pursuant to Section 1004 shall be the principal executive,
financial or accounting officer of the Company.

"Opinion of Counsel" means a written opinion of
counsel, who may be an employee of or counsel to the
Company, or who may be other counsel reasonably satisfactory
to the Trustee.

"Original Issue Discount Debenture" means any
Debenture which provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant
to Sections 503 and 504.

"Outstanding", when used with respect to
Debentures, means, as of the date of determination, all
Debentures theretofore authenticated and delivered under
this Indenture, except:

(i) Debentures theretofore cancelled by
the Trustee or delivered to the Trustee for
cancellation;

(ii) Debentures for whose payment or
redemption money in the necessary amount has
been theretofore deposited with the Trustee
or any Paying Agent (other than the Company)
in trust or set aside and segregated in trust
by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such
Debentures; provided that, if such Debentures
are to be redeemed, notice of such redemption
has been duly given pursuant to this
Indenture or provision therefor satisfactory
to the Trustee has been made;

(iii) Debentures as to which Defeasance
has been effected pursuant to Section 1202;
and

(iv) Debentures which have been paid
pursuant to Section 306 or in exchange for or
in lieu of which other Debentures have been
authenticated and delivered pursuant to this
Indenture, other than any such Debentures in
respect of which there shall have been
presented to the Trustee proof satisfactory
to it that such Debentures are held by a bona
fide purchaser in whose hands such Debentures
are valid obligations of the Company;

provided, however, that in determining whether the Holders
of the requisite principal amount of the Outstanding
Debentures have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, (A) the
principal amount of an Original Issue Discount Debenture
that shall be deemed to be Outstanding shall be the amount
of the principal thereof that would be due and payable as of
the date of such determination upon acceleration of the
Maturity thereof pursuant to Sections 503 and 504, (B) the
principal amount of a Debenture denominated in one or more
foreign currencies or currency units shall be the U.S.
dollar equivalent, determined in the manner provided as
contemplated by Section 301 on the date of original issuance
of such Debenture, of the principal amount (or, in the case
of an Original Issue Discount Debenture, the U.S. dollar
equivalent on the date of original issuance of such
Debenture of the amount determined as provided in (A) above)
of such Debenture, and (C) Debentures owned by the Company
or any other obligor upon the Debentures or any Subsidiary
of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Debentures which
the Trustee knows to be so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to
act with respect to such Debentures and that the pledgee is
not the Company or any other obligor upon the Debentures or
any Subsidiary of the Company or of such other obligor.

"Paying Agent" means any Person authorized by the
Company to pay the principal of or any premium or interest
on any Debentures on behalf of the Company.

"Person" means any individual, corporation,
partnership, joint venture, trust, unincorporated
organization or government or any agency or political
subdivision thereof.

"Place of Payment", when used with respect to the
Debentures of any series, means the place or places where
the principal of and any premium and interest on the
Debentures of that series are payable as specified as
contemplated by Section 301.

"Predecessor Debenture" of any particular
Debenture means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under
Section 306 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Debenture shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or
stolen Debenture.

"Preferred Security" has the meaning stated in the
first recital of this Indenture.

"Proceeding" has the meaning specified in Section
1402.

"Redemption Date", when used with respect to any
Debenture to be redeemed, means the date fixed for such
redemption by or pursuant to this Indenture.

"Redemption Price", when used with respect to any
Debenture to be redeemed, means the price at which it is to
be redeemed pursuant to this Indenture.

"Regular Record Date" for the interest payable on
any Interest Payment Date on the Debentures of any series
means the date specified for that purpose as contemplated by
Section 301.

"Responsible Officer", when used with respect to
the Trustee, means the chairman or any vice-chairman of the
board of directors, the chairman or any vice-chairman of the
executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller or
any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed
by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or
her knowledge of and familiarity with the particular
subject.

"Security Exchange" when used with respect to the
Debentures of any series, means an exchange of Debentures of
such series for Preferred Securities of the related series
pursuant to the Written Action establishing the Preferred
Securities of such series.

"Senior Debt" means the principal of (and premium,
if any) and interest, if any, (including interest accruing
on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent that
such claim for post-petition interest is allowed in such
proceeding) on Debt of the Company, whether incurred on or
prior to the date of the Indenture or thereafter incurred,
unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment
to the Debentures or to other Debt which is pari passu with,
or subordinated to the Debentures; provided, however, that
Senior Debt shall not be deemed to include the Debentures.

"Special Record Date" for the payment of any
Defaulted Interest means a date fixed by the Trustee
pursuant to Section 307.

"Stated Maturity", when used with respect to any
Debenture or any instalment of principal thereof or interest
thereon, means the date specified in such Debenture as the
fixed date on which the principal of such Debenture or such
instalment of principal or interest is due and payable.

"Subsidiary" means a corporation more than 50% of
the voting power of which is controlled, directly or
indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting
power" means the power to vote for the election of
directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any
contingency.

"Trustee" means the Person named as the "Trustee"
in the first paragraph of this instrument until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder,
and if at any time there is more than one such Person,
"Trustee" as used with respect to the Debentures of any
series shall mean the Trustee with respect to Debentures of
that series.

"Trust Indenture Act" means the Trust Indenture
Act of 1939 as in force at the date as of which this
instrument was executed; provided, however, that in the
event the Trust Indenture Act of 1939 is amended after such
date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so
amended.

"U.S. Government Obligations" has the meaning
specified in Section 1204.

"Vice President", when used with respect to the
Company or the Trustee, means any vice president, whether or
not designated by a number or a word or words added before
or after the title "vice president".

"Written Action" when used with respect to the
Preferred Securities of any series, means a written action
of the Managing Members pursuant to the L.L.C. Agreement,
establishing the terms of the Preferred Securities of such
series.

Section 102. Compliance Certificates and Opinions.

Upon any application or request by the Company to
the Trustee to take any action under any provision of this
Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be
given in the form of an Officers' Certificate, if to be
given by an officer of the Company, or an Opinion of
Counsel, if to be given by counsel, and shall comply with
the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.

Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture (excluding certificates provided for in Section
1004) shall include

(1) a statement that each individual
signing such certificate or opinion has read
such covenant or condition and the
definitions herein relating thereto;

(2) a brief statement as to the nature
and scope of the examination or investigation
upon which the statements or opinions
contained in such certificate or opinion are
based;

(3) a statement that, in the opinion of
each such individual, such individual has
made such examination or investigation as is
necessary to enable such individual to
express an informed opinion as to whether or
not such covenant or condition has been
complied with; and

(4) a statement as to whether, in the
opinion of each such individual, such
condition or covenant has been complied with.

Section 103. Form of Documents Delivered to Trustee.

In any case where several matters are required to
be certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion
with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several
documents.

Any certificate or opinion of an officer of the
Company may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to
the matters upon which its certificate or opinion is based
are erroneous. Any such certificate or opinion of counsel
may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the
information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in
the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to
such matters are erroneous.

Any certificate, statement or opinion of an
officer of the Company or of counsel may be based, insofar
as it relates to accounting matters, upon a certificate,
opinion or representation by an accountant or firm of
accountants in the employ of the Company, unless such
officer or counsel, as the case may be, knows, or in the
exercise of reasonable care should know, that the
certificate, opinion or representation with respect to such
accounting matters upon which its certificate, statement or
opinion may be based is erroneous.

Where any Person is required to make, give or
execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be
consolidated and form one instrument.

Section 104. Acts of Holders; Record Dates.

(a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided
or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such
Holders in person or by agent duly appointed in writing;
and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument
or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601)
conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section.

(b) The fact and date of the execution by any
Person of any such instrument or writing may be proved by
the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged
to him or her the execution thereof. Where such execution
is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall
also constitute sufficient proof of such signer's authority.
The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee
deems sufficient.

(c) The Company may, in the circumstances
permitted by the Trust Indenture Act, fix any day as the
record date for the purpose of determining the Holders of
Outstanding Debentures of any series entitled to give or
take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action,
authorized or permitted to be given or taken by Holders of
Outstanding Debentures of such series. If not set by the
Company prior to the first solicitation of a Holder of
Debentures of such series made by any Person in respect of
any such action, or, in the case of any such vote, prior to
such vote, the record date for any such action or vote shall
be the 30th day (or, if later, the date of the most recent
list of Holders required to be provided pursuant to
Section 701) prior to such first solicitation or vote, as
the case may be. With regard to any record date for action
to be taken by the Holders of one or more series of
Debentures, only the Holders of Debentures of such series on
such date (or their duly designated proxies) shall be
entitled to give or take, or vote on, the relevant action.

(d) The ownership of Debentures shall be proved
by the Debenture Register or by a certificate of the
Debenture Registrar.

(e) Any request, demand, authorization,
direction, notice, consent, waiver or other Act of the
Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action
is made upon such Debenture.

(f) Without limiting the foregoing, a Holder
entitled hereunder to give or take any action hereunder with
regard to any particular Debenture may do so with regard to
all or any part of the principal amount of such Debenture or
by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any
different part of such principal amount.

Section 105. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon,
given or furnished to, or filed with,

(1) the Trustee by any Holder or by the
Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed
in writing to or with the Trustee at its
Corporate Trust Office, Attention: Steven
Wagner, or

(2) the Company by the Trustee or by
any Holder shall be sufficient for every
purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company
addressed to it at the address of its
principal office specified in the first
paragraph of this instrument, Attention:
Vice President - Finance and Treasurer, or at
any other address previously furnished in
writing to the Trustee by the Company.

Section 106. Notice to Holders; Waiver.

Where this Indenture provides for notice to
Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at its address as it appears
in the Debenture Register, not later than the latest date
(if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice; provided, however,
that the Company or the Trustee, upon a good faith
determination that mailing is in the circumstances
impractical, may give such notice by any other method which,
in the reasonable belief of the Company or, in the case of
the Trustee, of the Company and the Trustee, is likely to be
received by the Holders. In any case where notice to
Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived
in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not
be a condition precedent to the validity of any action taken
in reliance upon such waiver.

In case by reason of the suspension of regular
mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such
notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every
purpose hereunder.

Section 107. Conflict with Trust Indenture Act.

If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that
is required under such Act to be a part of and govern this
Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified
or excluded, the latter provision shall be deemed to apply
to this Indenture as so modified or to be excluded, as the
case may be.

Section 108. Effect of Headings and Table of Contents.

The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.

Section 109. Successors and Assigns.

All covenants and agreements in this Indenture by
the Company shall bind its successors and assigns, whether
so expressed or not.

Section 110. Separability Clause.

In case any provision in this Indenture or in the
Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.

Section 111. Benefits of Indenture.

Nothing in this Indenture or in the Debentures,
express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the
Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.

Section 112. Governing Law.

This Indenture and the Debentures shall be
governed by and construed in accordance with the laws of the
State of New York, but without regard to principles of
conflicts of laws.

Section 113. Legal Holidays.

In any case where any Interest Payment Date,
Redemption Date or Stated Maturity of any Debenture shall
not be a Business Day, then (notwithstanding any other
provision of this Indenture or of the Debentures (other than
a provision of the Debentures of any series which
specifically states that such provision shall apply in lieu
of this Section)) payment of interest or principal (and
premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day (and no interest
shall accrue with respect to such payment for the period
from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be), except that, if
such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as
if made on such Interest Payment Date or Redemption Date, or
at the Stated Maturity.

Section 114. Personal Immunity from Liability for
Incorporators, Stockholders, Etc.

No recourse shall be had for the payment of the
principal of or premium, if any, or interest, if any, on any
Debenture, or for any claim based thereon, or otherwise in
respect of any Debenture, or based on or in respect of this
Indenture or any indenture supplemental hereto, against any
incorporator, or against any past, present or future
stockholder, director or officer, as such, of the Company or
of any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such
liability being expressly waived and released as a condition
of, and as consideration for, the execution of this
Indenture and the issue of the Debentures.

ARTICLE TWO

Debenture Form

Section 201. Forms Generally.

The Debentures of each series shall be in
substantially the form set forth in this Article, or in such
other form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or
permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may,
consistent herewith, be determined by the officers executing
such Debentures, as evidenced by their execution of the
Debentures. If the form of Debentures of any series is
established by action taken pursuant to a Board Resolution,
a copy of an appropriate record of such action shall be
certified by the Corporate Secretary or an Assistant
Corporate Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order
contemplated by Section 303 for the authentication and
delivery of such Debentures.

The definitive Debentures shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the
officers executing such Debentures, as evidenced by their
execution of such Debentures.

Section 202. Form of Face of Debenture.

(Insert any legend required by the Internal
Revenue Code and the regulations thereunder.)

AETNA LIFE AND CASUALTY COMPANY

No. $

AETNA LIFE AND CASUALTY COMPANY, a Connecticut
insurance corporation (herein called the "Company", which
term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby
promises to pay to ,
or registered assigns, the principal sum of Dollars
on , and to pay interest thereon at a rate of %
per annum plus Additional Interest, if any, accruing from
_____ or from the most recent Interest Payment Date to which
interest has been paid or duly provided for and (to the
extent that the payment of such interest shall be legally
enforceable) at the rate of % per annum on any overdue
principal and premium and on any overdue instalment of
interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose
name this Debenture (or one or more Predecessor Debentures)
is registered at the close of business on the Regular Record
Date for such interest, which shall be the ....... or
....... (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such inter-
est not so punctually paid or duly provided for will forth-
with cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose
name this Debenture (or one or more Predecessor Debentures)
is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of
Debentures of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any
other lawful manner not inconsistent with the requirements
of any securities exchange on which the Debentures of this
series may be listed, and upon such notice as may be re-
quired by such exchange, all as more fully provided in said
Indenture.

The indebtedness evidenced by this Debenture is,
to the extent provided in the Indenture, subordinate and
subject in right of payment to the prior payment in full of
all Senior Debt, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each
Holder of this Debenture, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and
directs the Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination
so provided and (c) appoints the Trustee his attorney-in-
fact for any and all such purposes.

Payment of the principal of (and premium, if any)
and interest on this Debenture will be made at the office or
agency of the Company maintained for that purpose in
, in such coin or currency of the United States of
America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that
at the option of the Company payment of interest may be made
by check mailed to the address of the Person entitled
thereto as such address shall appear in the Debenture
Register. Notwithstanding the foregoing, so long as the
Holder of this Debenture is Capital, the payment of the
principal of (and premium, if any) and interest (including
Additional Interest, if any) on this Debenture will be made
at such place and to such account as may be designated by
Capital.

Reference is hereby made to the further provisions
of this Debenture set forth on the reverse hereof, which
further provisions shall for all purposes have the same
effect as if set forth at this place.

Unless the certificate of authentication hereon
has been executed by the Trustee referred to on the reverse
hereof by manual signature, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.

Dated:

AETNA LIFE AND CASUALTY
COMPANY

By______________________

Attest:

Section 203. Form of Reverse of Debenture.

This Debenture is one of a duly authorized issue
of securities of the Company (herein called the
"Debentures), issued and to be issued in one or more series
under an Indenture, dated as of , 1994 (herein
called the "Indenture"), between the Company and The First
National Bank of Chicago, as Trustee (herein called the
"Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee
and the Holders of the Debentures and of the terms upon
which the Debentures are, and are to be, authenticated and
delivered. This Debenture is one of the series designated
on the face hereof(, limited in aggregate principal amount
to $ ).

(If the Debentures are subject to redemption,
insert the terms upon which such Debentures may be
redeemed.)

(If applicable, insert the following: In the
event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series and of like tenor for
the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.)

(If applicable, insert the following: The
Indenture contains provisions for defeasance at any time of
(1) the entire indebtedness of this Debenture or (2) certain
restrictive covenants and Events of Default with respect to
this Debenture, in each case upon compliance with certain
conditions set forth in the Indenture.)

If an Event of Default with respect to Debentures
of this series shall occur and be continuing, the principal
of the Debentures of this series and accrued interest
thereon may be declared due and payable in the manner and
with the effect provided in the Indenture.

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification
of the rights and obligations of the Company and the rights
of the Holders of the Debentures of each series to be
affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of not less than
a majority in aggregate principal amount of the Debentures
at the time Outstanding of each series to be affected (and,
in the event Capital is the Holder of the Debentures of any
series affected thereby, the consent of the holders of not
less than a majority in stated liquidation preference of the
Preferred Securities of the related series). The Indenture
also contains provisions permitting the Holders of specified
percentages in principal amount of the Debentures of each
series at the time Outstanding, on behalf of the Holders of
all Debentures of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences
(except that in the event Capital is the Holder of all
Debentures of such series, any such waiver will also require
the consent of the holders of specified percentages of the
stated liquidation preference of the Preferred Securities of
the related series). Any such consent or waiver by the
Holder of this Debenture shall be conclusive and binding
upon such Holder and upon all future Holders of this
Debenture and of any Debenture issued upon the registration
of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made
upon this Debenture.

As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this
Debenture is registerable in the Debenture Register, upon
surrender of this Debenture for registration of transfer at
the office or agency of the Company in any place where the
principal of and any premium and interest on this Debenture
are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company
and the Debenture Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of this series and of
like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated
transferee or transferees.

The Debentures of this series are issuable only in
registered form without coupons in denominations of $25.00
and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set
forth, Debentures of this series are exchangeable for a like
aggregate principal amount of Debentures of this series and
of like tenor of a different authorized denomination, as
requested by the Holder surrendering the same.

No service charge shall be made for any such
registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.

Prior to due presentment of this Debenture for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name this Debenture is registered as the owner hereof
for all purposes, whether or not this Debenture is overdue,
and neither the Company, the Trustee nor any such agent
shall be affected by notice to the contrary.

No recourse shall be had for the payment of the
principal of (and premium, if any) or interest (including
Additional Interest, if any) on this Debenture, or for any
claim based hereon, or otherwise in respect hereof, or based
on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder,
officer or director, as such, past, present or future, of
the Company or of any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise,
all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly
waived and released.

All terms used in this Debenture which are defined
in the Indenture shall have the meanings assigned to them in
the Indenture.

Section 204. Form of Legend for Global Debentures.

Every Global Debenture authenticated and delivered
hereunder shall bear a legend in substantially the following
form or such other legends as may be required:

This Debenture is a Global Debenture within the
meaning of the Indenture hereinafter referred to
and is registered in the name of a Depositary or a
nominee thereof. This Debenture may not be
transferred to, or registered or exchanged for
Debentures registered in the name of, any Person
other than the Depositary or a nominee thereof and
no such transfer may be registered, except in the
limited circumstances described in the Indenture.
Every Debenture authenticated and delivered upon
registration of transfer of, or in exchange for or
in lieu of, this Debenture shall be a Global
Debenture subject to the foregoing, except in such
limited circumstances.

Section 205. Form of Trustee's Certificate of
Authentication.

The Trustee's certificate of authentication shall
be in substantially the following form:

This is one of the Debentures of the series
designated therein referred to in the within-mentioned
Indenture.

.............................,
As Trustee

By...........................
Authorized Officer

ARTICLE THREE

The Debentures

Section 301. Amount Unlimited; Issuable in Series.

The aggregate principal amount of Debentures which
may be authenticated and delivered under this Indenture is
unlimited.

The Debentures may be issued in one or more
series. There shall be established in or pursuant to a
Board Resolution or established in one or more indentures
supplemental hereto, prior to the issuance of Debentures of
any series,

(1) the title of the Debentures of the
series (which shall distinguish the
Debentures of the series from Debentures of
any other series);

(2) any limit upon the aggregate
principal amount of the Debentures of the
series which may be authenticated and
delivered under this Indenture (except for
Debentures authenticated and delivered upon
registration of transfer of, or in exchange
for, or in lieu of, other Debentures of the
series pursuant to Sections 304, 305, 306,
906 or 1107 and except for any Debentures
which, pursuant to Section 303, are deemed
never to have been authenticated and
delivered hereunder);

(3) the Person to whom any interest on
a Debenture of the series shall be payable,
if other than the Person in whose name that
Debenture (or one or more Predecessor
Debentures) is registered at the close of
business on the Regular Record Date for such
interest;

(4) the date or dates on which the
principal of the Debentures of the series is
payable;

(5) the rate or rates at which the
Debentures of the series shall bear interest,
if any, or the Floating or Adjustable Rate
Provision pursuant to which such rates shall
be determined, the date or dates from which
such interest shall accrue, the Interest
Payment Dates on which any such interest
shall be payable and the Regular Record Date
for any interest payable on any Interest
Payment Date;

(6) the place or places where the
principal of and any premium and interest on
Debentures of the series shall be payable;

(7) the period or periods within which,
the price or prices at which (including
premium, if any) and the terms and conditions
upon which Debentures of the series may be
redeemed, in whole or in part, at the option
of the Company pursuant to a sinking fund or
otherwise;

(8) the obligation, if any, of the
Company to redeem or purchase Debentures of
the series pursuant to any sinking fund or
analogous provisions or at the option of a
Holder thereof and the period or periods
within which, the price or prices at which
and the terms and conditions upon which
Debentures of the series shall be redeemed or
purchased, in whole or in part, pursuant to
such obligation;

(9) if other than denominations of
$25.00 and any integral multiple thereof, the
denominations in which Debentures of the
series shall be issuable;

(10) the currency or currencies,
including composite currencies, or currency
units in which payment of the principal of
and any premium and interest on any
Debentures of the series shall be payable if
other than the currency of the United States
of America and the manner of determining the
equivalent thereof in the currency of the
United States of America for purposes of the
definition of "Outstanding" in Section 101;

(11) if the amount of payments of
principal of or any premium or interest on
any Debentures of the series may be
determined with reference to one or more
indices, the manner in which such amounts
shall be determined;

(12) if the principal of or any premium
or interest on any Debentures of the series
is to be payable, at the election of the
Company or a Holder thereof, in one or more
currencies, including composite currencies,
or currency units other than that or those in
which the Debentures are stated to be
payable, the currency, currencies, including
composite currencies, or currency units in
which payment of the principal of and any
premium and interest on Debentures of such
series as to which such election is made
shall be payable, and the periods within
which and the terms and conditions upon which
such election is to be made;

(13) if other than the principal amount
thereof, the portion of the principal amount
of Debentures of the series which shall be
payable upon declaration of acceleration of
the Maturity thereof pursuant to Sections 503
and 504 or provable under any applicable
federal or state bankruptcy or similar law
pursuant to Section 505;

(14) if and as applicable, that the
Debentures of the series shall be issuable in
whole or in part in the form of one or more
Global Debentures and, in such case, the
Depositary or Depositaries for such Global
Debenture or Global Debentures and any
circumstance other than those set forth in
Section 305 in which any such Global
Debenture may be transferred to, and
registered and exchanged for Debentures
registered in the name of, a Person other
than the Depositary for such Global Debenture
or a nominee thereof and in which any such
transfer may be registered;

(15) any other event or events of
default applicable with respect to the
Debentures of the series in addition to those
provided in Sections 501 and 502;

(16) any other covenant or warranty
included for the benefit of Debentures of the
series in addition to (and not inconsistent
with) those included in this Indenture for
the benefit of Debentures of all series, or
any other covenant or warranty included for
the benefit of Debentures of the series in
lieu of any covenant or warranty included in
this Indenture for the benefit of Debentures
of all series, or any provision that any
covenant or warranty included in this
Indenture for the benefit of Debentures of
all series shall not be for the benefit of
Debentures of the series, or any combination
of such covenants, warranties or provisions;

(17) any restriction or condition
on the transferability of the Debentures
of the series;

(18) any authenticating or paying
agents, registrars or any other agents
with respect to the Debentures of the
series; and

(19) any other terms of the series
(which terms shall not be inconsistent with
the provisions of this Indenture, except as
permitted by Section 901(5)).

All Debentures of any one series shall be
substantially identical except as to denomination and except
as may otherwise be provided in or pursuant to the Board
Resolution referred to above or in any such indenture
supplemental hereto.

If any of the terms of the series are established
by action taken pursuant to a Board Resolution, a copy of
such action shall be delivered to the Trustee.

Section 302. Denominations.

The Debentures of each series shall be issuable in
registered form without coupons in such denominations as
shall be specified as contemplated by Section 301. In the
absence of any such provisions with respect to the
Debentures of any series, the Debentures of such series
shall be issuable in denominations of $25.00 and any
integral multiple thereof.

Section 303. Execution, Authentication, Delivery and
Dating.

The Debentures shall be executed on behalf of the
Company by its Chairman, a Vice Chairman, its President, any
Vice President, its Treasurer or Assistant Treasurer, under
its corporate seal reproduced thereon attested by its
Corporate Secretary or one of its Assistant Corporate
Secretaries. The signature of any of these officers on the
Debentures may be manual or facsimile.

The seal of the Company may be in the form of a
facsimile thereof and may be impressed, affixed, imprinted
or otherwise reproduced on the Debentures. Debentures
bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices
prior to the authentication and delivery of such Debentures
or did not hold such offices at the date of such Debentures.
Minor typographical and other minor errors in the text of
any Debenture or minor defects in the seal or facsimile
signature on any Debenture shall not affect the validity or
enforceability of such Debenture if it has been duly
authenticated and delivered by the Trustee.

At any time and from time to time after the
execution and delivery of this Indenture, the Company may
deliver Debentures of any series executed by the Company to
the Trustee for authentication, together with a Company
Order for the authentication and delivery of such
Debentures, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Debentures. If
the form or terms of the Debentures of the series have been
established in or pursuant to one or more Board Resolutions
as permitted by Sections 201 and 301, in authenticating such
Debentures, and accepting the additional responsibilities
under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating,

(a) if the form of such Debentures has
been established by or pursuant to Board
Resolution as permitted by Section 201, that
such form has been established in conformity
with the provisions of this Indenture;

(b) if the terms of such Debentures
have been established by or pursuant to Board
Resolution as permitted by Section 301, that
such terms have been established in
conformity with the provisions of this
Indenture; and

(c) that such Debentures, when
authenticated and delivered by the Trustee
and issued by the Company in the manner and
subject to any conditions specified in such
Opinion of Counsel, will constitute valid and
legally binding obligations of the Company
enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and
similar laws of general applicability
relating to or affecting creditors' rights
generally or the rights of creditors of
insurance companies generally and to general
equity principles.

The Trustee shall have the right to decline to
authenticate and deliver any Debentures under this Section
if the Trustee, being advised by counsel, determines that
such action may not lawfully be taken or if the Trustee in
good faith by its board of directors, executive committee,
or a trust committee of directors or responsible officers of
the Trustee shall determine that such action would expose
the Trustee to personal liability to existing Holders of
Debentures.

Notwithstanding the provisions of Section 301 and
of the preceding paragraph, if all Debentures of a series
are not to be originally issued at one time, it shall not be
necessary to deliver the Board Resolution otherwise required
pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to such preceding
paragraph at or prior to the time of authentication of each
Debenture of such series if such documents are delivered at
or prior to the authentication upon original issuance of the
first Debenture of such series to be issued.

Each Debenture shall be dated the date of its
authentication.

No Debenture shall be entitled to any benefit
under this Indenture or be valid or obligatory for any
purpose unless there appears on such Debenture a certificate
of authentication substantially in the form provided for
herein executed by the Trustee by manual signature, and such
certificate upon any Debenture shall be conclusive evidence,
and the only evidence, that such Debenture has been duly
authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Debenture shall have been authenticated
and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Debenture to the
Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Debenture shall be deemed
never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits of this Indenture.

Section 304. Temporary Debentures.

Pending the preparation of definitive Debentures
of any series, the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary
Debentures which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive
Debentures in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other
variations as the officers executing such Debentures may
determine, as evidenced by their execution of such
Debentures.

If temporary Debentures of any series are issued,
the Company will cause definitive Debentures of that series
to be prepared without unreasonable delay. After the
preparation of definitive Debentures of such series, the
temporary Debentures of such series shall be exchangeable
for definitive Debentures of such series upon surrender of
the temporary Debentures of such series at the office or
agency of the Company in a Place of Payment for that series,
without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Debentures of any
series, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more
definitive Debentures of the same series, of any authorized
denominations and of a like aggregate principal amount and
tenor. Until so exchanged the temporary Debentures of any
series shall in all respects be entitled to the same
benefits under this Indenture as definitive Debentures of
such series and tenor.

Section 305. Registration, Registration of Transfer and
Exchange.

The Company shall cause to be kept at the
Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office
or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Debenture
Register") in which, subject to such reasonable regulations
as it or the Trustee may prescribe, the Company shall
provide for the registration of Debentures and of transfers
of Debentures. The Trustee is hereby appointed "Debenture
Registrar" for the purpose of registering Debentures and
transfers of Debentures as herein provided.

Upon surrender for registration of transfer of any
Debenture of any series at the office or agency in a Place
of Payment for that series, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new
Debentures of the same series, of any authorized
denominations and of a like aggregate principal amount and
tenor.

At the option of the Holder, Debentures of any
series may be exchanged for other Debentures of the same
series, of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the
Debentures to be exchanged at such office or agency.
Whenever any Debentures are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate
and deliver, the Debentures which the Holder making the
exchange is entitled to receive.

All Debentures issued upon any registration of
transfer or exchange of Debentures shall be the valid
obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the
Debentures surrendered upon such registration of transfer or
exchange.

Every Debenture presented or surrendered for
registration of transfer, exchange, redemption or payment
shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the
Debenture Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.

No service charge shall be made for any
registration of transfer or exchange of Debentures, but the
Company or the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration of
transfer or exchange of Debentures, other than exchanges
pursuant to Section 304, 906 or 1107 not involving any
transfer.

Neither the Company nor the Trustee shall be
required (i) to issue, register the transfer of or exchange
Debentures of any series during a period beginning at the
opening of business 15 days before the day of the mailing of
a notice of redemption of Debentures of that series selected
for redemption under Section 1103 and ending at the close of
business on the day of such mailing, or (ii) to register the
transfer of or exchange any Debenture so selected for
redemption in whole or in part, except the unredeemed
portion of any Debenture being redeemed in part.

Notwithstanding any other provision in this
Indenture, no Global Debenture may be transferred to, or
registered or exchanged for Debentures registered in the
name of, any Person other than the Depositary for such
Global Debenture or any nominee thereof, and no such
transfer may be registered, unless (1) such Depositary (A)
notifies the Company and the Trustee that it is unwilling or
unable to continue as Depositary for such Global Debenture
or (B) ceases to be a clearing agency registered under the
Exchange Act, (2) the Company executes and delivers to the
Trustee a Company Order that such Global Debenture shall be
so transferable, registrable and exchangeable, and such
transfers shall be registrable, (3) there shall have
occurred and be continuing an Event of Default with respect
to the Debentures evidenced by such Global Debenture or (4)
there shall exist such other circumstances, if any, as have
been specified for this purpose as contemplated by Section
301. Notwithstanding any other provision in this Indenture,
a Global Debenture to which the restriction set forth in the
preceding sentence shall have ceased to apply may be
transferred only to, and may be registered and exchanged for
Debentures registered only in the name or names of, such
Person or Persons as the Depositary for such Global
Debenture shall have directed and no transfer thereof other
than such a transfer may be registered.

Every Debenture authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu
of, a Global Debenture to which the restriction set forth in
the first sentence of the preceding paragraph shall apply,
whether pursuant to this Section, Section 304, 306, 906 or
1107 or otherwise, shall be authenticated and delivered in
the form of, and shall be, a Global Debenture.

Section 306. Mutilated, Destroyed, Lost and Stolen
Debentures.

If there shall be delivered to the Company and the
Trustee (i) a mutilated Debenture or (ii) evidence to their
satisfaction of the destruction, loss or theft of any
Debenture and in either case such security or indemnity as
may be required by either of them to save each of them and
any agent of either of them harmless, then, in the absence
of notice to the Company or the Trustee that such Debenture
has been acquired by a bona fide purchaser, the Company
shall execute and the Trustee shall authenticate and
deliver, in lieu of any such mutilated, destroyed, lost or
stolen Debenture, a new Debenture of the same series and of
like tenor and principal amount and bearing a number not
contemporaneously outstanding.

In case any such mutilated, destroyed, lost or
stolen Debenture has become or is about to become due and
payable, the Company in its discretion may, instead of
issuing a new Debenture, pay such Debenture.

Upon the issuance of any new Debenture under this
Section, the Company or the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee)
connected therewith.

Every new Debenture of any series issued pursuant
to this Section in lieu of any destroyed, lost or stolen
Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the
destroyed, lost or stolen Debenture shall be at any time
enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with
any and all other Debentures of that series duly issued
hereunder.

The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debentures.

Section 307. Payment of Interest; Interest Rights
Preserved.

Except as otherwise provided as contemplated by
Section 301 with respect to any series of Debentures,
interest on any Debenture which is payable, and is
punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that
Debenture (or one or more Predecessor Debentures) is
registered at the close of business on the Regular Record
Date for such interest.

Any interest on any Debenture of any series which
is payable, but is not punctually paid or duly provided for,
on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in
Clause (1) or (2) below:

(1) The Company may elect to make
payment of any Defaulted Interest to the
Persons in whose names the Debentures of such
series (or their respective Predecessor
Debentures) are registered at the close of
business on a Special Record Date for the
payment of such Defaulted Interest, which
shall be fixed in the following manner. The
Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed
to be paid on each Debenture of such series
and the date of the proposed payment, and at
the same time the Company shall deposit with
the Trustee an amount of money equal to the
aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee
for such deposit prior to the date of the
proposed payment, such money when deposited
to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest
as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which
shall be not more than 15 days and not less
than 10 days prior to the date of the
proposed payment and not less than 15 days
after the receipt by the Trustee of the
notice of the proposed payment. The Trustee
shall promptly notify the Company of such
Special Record Date and, in the name and at
the expense of the Company, shall cause
notice of the proposed payment of such
Defaulted Interest and the Special Record
Date therefor to be mailed, first-class
postage prepaid, to each Holder of Debentures
of such series at its address as it appears
in the Debenture Register, not less than
10 days prior to such Special Record Date.
Notice of the proposed payment of such
Defaulted Interest and the Special Record
Date therefor having been so mailed, such
Defaulted Interest shall be paid to the
Persons in whose names the Debentures of such
series (or their respective Predecessor
Debentures) are registered at the close of
business on such Special Record Date and
shall no longer be payable pursuant to the
following Clause (2).

(2) The Company may make payment of any
Defaulted Interest on the Debentures of any
series in any other lawful manner not
inconsistent with the requirements of any
securities exchange on which such Debentures
may be listed, and upon such notice as may be
required by such exchange, if, after notice
given by the Company to the Trustee of the
proposed payment pursuant to this Clause,
such manner of payment shall be deemed
practicable by the Trustee.

Subject to the foregoing provisions of this
Section, each Debenture delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by
such other Debenture.

Section 308. Persons Deemed Owners.

Prior to due presentment of a Debenture for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in
whose name such Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal
of and any premium and (subject to Section 307) any interest
on such Debenture and for all other purposes whatsoever,
whether or not such Debenture be overdue, and neither the
Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.

Section 309. Cancellation.

All Debentures surrendered for payment,
redemption, registration of transfer or exchange or for
credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for
cancellation any Debentures previously authenticated and
delivered hereunder which the Company may have acquired in
any manner whatsoever, and may deliver to the Trustee (or to
any other Person for delivery to the Trustee) for
cancellation any Debentures previously authenticated
hereunder which the Company has not issued and sold, and all
Debentures so delivered shall be promptly cancelled by the
Trustee. No Debentures shall be authenticated in lieu of or
in exchange for any Debentures cancelled as provided in this
Section, except as expressly permitted by this Indenture.
All cancelled Debentures held by the Trustee shall be
disposed of as directed by a Company Order. Acquisition by
the Company of any Debenture shall not operate as a
redemption or satisfaction of the indebtedness represented
by such Debenture unless and until the same is delivered to
the Trustee for cancellation.

Section 310. Computation of Interest.

Except as otherwise specified as contemplated by
Section 301 for Debentures of any series, interest on the
Debentures of each series shall be computed on the basis of
a 360-day year of twelve 30-day months.

Section 311. Additional Interest.

Except as otherwise provided as contemplated by
Section 301 with respect to any series of Debentures, if at
any time prior to a Security Exchange with respect to such
series of Debentures, (i) Capital shall be required to pay
any Additional Amounts with respect to the related series of
Preferred Securities or (ii) Capital shall be required to
pay, with respect to its income derived from the interest
payments on such series of Debentures, any amounts for or on
account of any taxes, duties, assessments or governmental
charges of whatever nature imposed by the United States, or
any other taxing authority, then, in any such case, the
Company will pay as interest such additional amounts
("Additional Interest") as may be necessary in order that
the net amounts received and retained by Capital after
paying such Additional Amounts or after the payment of such
taxes, duties, assessments or governmental charges shall
result in Capital's having such funds as it would have had
in the absence of the payment of such taxes, duties,
assessments or governmental charges.

ARTICLE FOUR

Satisfaction and Discharge

Section 401. Satisfaction and Discharge of Indenture.

This Indenture shall upon Company Request cease to
be of further effect (except as to any surviving rights of
registration of transfer or exchange of Debentures of a
series herein expressly provided for) with respect to
Debentures of any series, and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to
a series, when

(1) either

(A) all Debentures of such series
theretofore authenticated and delivered
(other than (i) Debentures which have been
destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306
and (ii) Debentures of such series for whose
payment money has theretofore been deposited
in trust or segregated and held in trust by
the Company and thereafter repaid to the
Company or discharged from such trust, as
provided in Section 1003) have been delivered
to the Trustee for cancellation; or

(B) all such Debentures of such series
not theretofore delivered to the Trustee for
cancellation

(i) have become due and payable,
or

(ii) will become due and payable at
their Stated Maturity within one year,
or

(iii) are to be called for
redemption within one year under
arrangements satisfactory to the Trustee
for the giving of notice of redemption
by the Trustee in the name, and at the
expense, of the Company,

and the Company, in the case of (i), (ii) or
(iii) above, has deposited or caused to be
deposited with the Trustee in trust for the
purpose (A) money (either in United States
dollars or such other currency or currency
unit in which the Debentures of any series
may be payable) in an amount, or (B) U.S.
Government Obligations (or Foreign Government
Obligations if the Debentures are denominated
in a foreign currency or currencies) that
through the scheduled payment of principal
and interest in respect thereof in accordance
with their terms will provide, not later than
one day before the due date of any payment,
money in an amount, or (C) a combination
thereof, sufficient to pay and discharge the
entire indebtedness on such Debentures of
such series not theretofore delivered to the
Trustee for cancellation, for principal of
(and premium, if any) and interest to the
date of such deposit (in the case of
Debentures of such series which have become
due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;

(2) the Company has paid or caused to
be paid all other sums payable hereunder by
the Company; and

(3) the Company has delivered to the
Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all
conditions precedent herein provided for
relating to the satisfaction and discharge of
this Indenture with respect to such series
have been complied with.

In the event there are Debentures of two or more
series outstanding hereunder, the Trustee shall be required
to execute an instrument acknowledging satisfaction and
discharge of this Indenture only if requested to do so with
respect to Debentures of a particular series as to which it
is Trustee and if the other conditions thereto are met. In
the event that there are two or more Trustees hereunder,
then the effectiveness of any such instrument shall be
conditioned upon receipt of such instruments from all
Trustees hereunder.

Notwithstanding the satisfaction and discharge of
this Indenture with respect to a particular series, the
obligations of the Company to the Trustee under Section 607,
the obligations of the Trustee to any Authenticating Agent
under Section 614 and, if money shall have been deposited
with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under
Section 402 and the last paragraph of Section 1003 shall
survive until there are no Debentures Outstanding with
respect to a particular series and the obligations of the
Company and the Trustee with respect to all other series of
Debentures shall survive.

Section 402. Application of Trust Fund.

Subject to provisions of the last paragraph of
Section 1003, all amounts deposited with the Trustee
pursuant to Section 401 shall be held in trust and applied
by it, in accordance with the provisions of the Debentures
and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal and any premium
and interest for whose payment such funds have been
deposited with the Trustee. Money deposited pursuant to
this section not in violation of this Indenture shall not be
subject to claims of the holders of Senior Debt under
Article Fourteen.

ARTICLE FIVE

Remedies

Section 501. Events of Default Prior to a Security
Exchange.

Prior to a Security Exchange with respect to
Debentures of any series, "Event of Default" whenever used
with respect to Debentures of such series means any one of
the following events and such other events as may be
established with respect to the Debentures of such series as
contemplated by Section 301 hereof (whether or not it shall
be occasioned by the provisions of Article Fourteen):

(1) Default in the payment of any instalment
of interest (including any Additional Interest)
upon any of the Debentures of any series as and
when the same shall become due and payable, and
continuance of such default for a period of 10
days; or

(2) Default in the payment of the principal
of or premium, if any, on any of the Debentures of
any series as and when the same shall become due
and payable either at maturity, upon redemption,
by declaration or otherwise; or

(3) Default in the making of any sinking
fund payment, whether mandatory or optional, as
and when the same shall become due and payable by
the terms of the Debentures of any series; or

(4) Failure on the part of the Company duly
to observe or perform in any material respect any
other of the covenants or agreements on the part
of the Company contained in this Indenture for the
benefit of the holders of Debentures of such
series and written notice of such failure, stating
that such notice is a "Notice of Default"
hereunder, and requiring the Company to remedy the
same, shall have been given by registered or
certified mail, return receipt requested, to the
Company by the Trustee, or to the Company and the
Trustee by Capital or by any holder of a Preferred
Security of the related series, and such failure
shall have continued unremedied for a period of 60
days after the date of the Company's receipt of
such Notice of Default; or

(5) The dissolution, winding up, liquidation
or termination of Capital;

(6) The withdrawal, resignation or expulsion
of either Managing Member from Capital;

(7) A decree or order by a court having
jurisdiction in the premises shall have been
entered adjudging either of the Managing Members a
bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization,
arrangement, adjustment or composition of either
of the Managing Members under any applicable
Federal or State bankruptcy or similar law, and
such decree or order shall have continued
undischarged and unstayed for a period of 90 days;
or a decree or order of a court having
jurisdiction in the premises for the appointment
of a receiver, liquidator, trustee, assignee,
sequestrator or similar official in bankruptcy or
insolvency of either of the Managing Members or of
all or substantially all of its property, or for
the winding up or liquidation of its affairs,
shall have been entered, and such decree or order
shall have continued undischarged and unstayed for
a period of 90 days; or

(8) Either of the Managing Members shall
institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing
of a bankruptcy proceeding against it, or shall
file a petition or answer or consent seeking
reorganization, arrangement, adjustment or
composition under any applicable Federal or State
bankruptcy or similar law, or shall consent to the
filing of any such petition, or shall consent to
the appointment of a receiver, liquidator,
trustee, assignee, sequestrator or similar
official in bankruptcy or insolvency of either of
the Managing Members or of all or substantially
all of its property, or shall make an assignment
for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally
as they become due and its willingness to be
adjudged a bankrupt, or corporate action shall be
taken by either of the Managing Members in
furtherance of any of the aforesaid purposes.

Section 502. Events of Default After a
Security Exchange.

After a Security Exchange with respect to
Debentures of any series, "Event of Default" whenever used
with respect to Debentures of such series means any one of
the following events and such other events as may be
established with respect to the Debentures of such series as
contemplated by Section 301 hereof (whether or not it shall
be occasioned by the provisions of Article Fourteen):

(3) Default in the making of any sinking
fund payment, whether mandatory or optional, as
and when the same shall become due and payable by
the terms of the Debentures of any series; or

(4) Failure on the part of the Company duly
to observe or perform in any material respect any
other of the covenants or agreements on the part
of the Company contained in this Indenture for the
benefit of the holders of Debentures of such
series and written notice of such failure, stating
that such notice is a "Notice of Default"
hereunder, and requiring the Company to remedy the
same, shall have been given by registered or
certified mail, return receipt requested, to the
Company by the Trustee, or to the Company and the
Trustee by the holders of at least 25% in
aggregate principal amount of the Outstanding
Debentures of such series and such failure shall
have continued unremedied for a period of 90 days
after the date of the Company's receipt of such
Notice of Default; or

(5) A decree or order by a court having
jurisdiction in the premises shall have been
entered adjudging the Company a bankrupt or
insolvent, or approving as properly filed a
petition seeking reorganization, arrangement,
adjustment or composition of the Company under any
applicable Federal or State bankruptcy or similar
law, and such decree or order shall have continued
undischarged and unstayed for a period of 90 days;
or a decree or order of a court having
jurisdiction in the premises for the appointment
of a receiver, liquidator, trustee, assignee,
sequestrator or similar official in bankruptcy or
insolvency of the Company or of all or
substantially all of its property, or for the
winding up or liquidation of its affairs, shall
have been entered, and such decree or order shall
have continued undischarged and unstayed for a
period of 90 days; or

(6) The Company shall institute proceedings
to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or
consent seeking reorganization, arrangement,
adjustment or composition under any applicable
Federal or State bankruptcy or similar law, or
shall consent to the filing of any such petition,
or shall consent to the appointment of a receiver,
liquidator, trustee, assignee, sequestrator or
similar official in bankruptcy or insolvency of
the Company or of all or substantially all of its
property, or shall make an assignment for the
benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they
become due and its willingness to be adjudged a
bankrupt, or corporate action shall be taken by
the Company in furtherance of any of the aforesaid
purposes.

Section 503. Acceleration of Maturity Prior to a Security
Exchange.

(a) If, prior to a Security Exchange with respect
to the Debentures of any series, an Event of Default with
respect to the Debentures of such series shall occur and be
continuing, then Capital will have the right to declare the
principal amount (or, if any of the Debentures of such
series are Original Issue Discount Debentures, such portion
of the principal amount of such series as may be specified
in the terms thereof) of the Debentures of such series and
accrued interest thereon (including any Additional Interest)
to be due and payable immediately, whereupon the same shall
become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby
expressly waived, anything in this Indenture to the contrary
notwithstanding.

(b) If, prior to a Security Exchange with respect
to the Debentures of any series, an Event of Default with
respect to the Debentures of such series of a character
specified in clause (1), (2) or (3) of Section 501 shall
have occurred and be continuing and Capital shall have
failed to pay any dividends on the Preferred Securities of
the related series when due (other than as a result of any
valid extension of any interest payment period by the
Company for the Debentures of such series) or to pay any
portion of the redemption price of Preferred Securities of
such series called for redemption, then any holder of
Preferred Securities of such series may enforce directly
against the Company Capital's right hereunder to receive
payments of principal and interest on the Debentures of such
series, but only in an amount sufficient to enable Capital
to pay such dividends or redemption price.

(c) The Company expressly acknowledges that under
the terms of the L.L.C Agreement, the holders of Preferred
Securities have the right to appoint a trustee if an Event
of Default has occurred and is continuing, which trustee
shall be authorized to exercise Capital's rights under this
Indenture and the Company agrees to cooperate with such
trustee; provided that any trustee so appointed shall vacate
office immediately in accordance with the L.L.C. Agreement
if all Events of Default giving rise to such right of
appointment have been cured by the Company.

In furtherance of the foregoing and without
limiting the powers of any trustee so appointed and for the
avoidance of any doubt concerning the powers of the trustee,
the Company acknowledges that any trustee, in its own name
and as trustee of an express trust, may institute a
proceeding, including, without limitation, any suit in
equity, an action at law or other judicial or administrative
proceeding, to enforce Capital's rights directly against the
Company to the same extent as Capital and on behalf of
Capital, and may prosecute such proceeding to judgment or
final decree, and enforce the same against the Company and
collect, out of the property, wherever situated, of Company
the monies adjudged or decreed to be payable in the manner
provided by law.

(d) Except as provided in this Section 503,
holders of any series Preferred Securities shall have no
rights to enforce any obligations of the Company under this
Indenture.

Section 504. Acceleration of Maturity After a Security
Exchange.

If, after a Security Exchange with respect to the
Debentures of any series, an Event of Default with respect
to the Debentures of such series at the time Outstanding
occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal
amount of the Outstanding Debentures of such series may
declare the principal amount (or, if any of the Debentures
of that series are Original Issue Discount Debentures, such
portion of the principal amount of such series as may be
specified in the terms thereof) of all of the Debentures of
that series and accrued interest thereon to be due and
payable immediately, by a notice in writing to the Company
(and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount)
shall become immediately due and payable.

At any time after such a declaration of
acceleration with respect to Debentures of any series has
been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in
principal amount of the Outstanding Debentures of that
series, by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences
if

(1) the Company has paid or deposited
with the Trustee a sum sufficient to pay

(A) all overdue interest on all
Debentures of that series,

(B) the principal of (and premium,
if any, on) any Debentures of that
series which have become due otherwise
than by such declaration of acceleration
and any interest thereon at the rate or
rates prescribed therefor in such
Debentures,

(C) to the extent that payment of
such interest is lawful, interest upon
overdue interest at the rate or rates
prescribed therefor in such Debentures,
and

(D) all sums paid or advanced by
the Trustee hereunder and the reasonable
compensation, expenses, disbursements
and advances of the Trustee, its agents
and counsel except such costs and
expenses as are a result of negligence
or bad faith on the part of the Trustee;

and

(2) all Events of Default with respect
to Debentures of that series, other than the
non-payment of the principal of and interest,
if any, on the Debentures of that series
which have become due solely by such declara-
tion of acceleration, have been cured or
waived as provided in Section 515.

No such rescission shall affect any subsequent default or
impair any right consequent thereon.

Upon receipt by the Trustee of any declaration of
acceleration, or any rescission and annulment of any such
declaration, pursuant to this Section 504 with respect to
Debentures of any series, a record date shall automatically
and without any other action by any Person be set for the
purpose of determining the Holders of Outstanding Debentures
of such series entitled to join in such declaration, or
rescission and annulment, as the case may be, which record
date shall be the close of business on the day the Trustee
receives such declaration, or rescission and annulment, as
the case may be. The Holders of Outstanding Debentures of
such series on such record date (or their duly appointed
agents), and only such Persons, shall be entitled to join in
such declaration, or rescission and annulment, as the case
may be, whether or not such Holders remain Holders after
such record date; provided that, unless such declaration, or
rescission and annulment, as the case may be, shall have
become effective by virtue of Holders of at least 25%, in
the case of any declaration of acceleration, or a majority,
in the case of any rescission or annulment, in principal
amount of Outstanding Debentures of such series on such
record date (or their duly appointed agents) having joined
therein on or prior to the 90th day after such record date,
such declaration, or rescission and annulment, as the case
may be, shall automatically and without any action by any
Person be cancelled and of no further effect. Nothing in
this paragraph shall prevent a Holder (or a duly appointed
agent thereof) from giving, before or after the expiration
of such 90-day period, a declaration of acceleration, or a
rescission and annulment of any such declaration, contrary
to or different from, or, after the expiration of such
period, identical to, a declaration, or rescission and
annulment, as the case may be, that has been cancelled
pursuant to the proviso to the preceding sentence, in which
event a new record date in respect thereof shall be set
pursuant to this paragraph.

Section 505. Collection of Indebtedness and Suits for
Enforcement by Trustee.

The Company covenants that if, after a Security
Exchange with respect to the Debentures of any series,

(1) default is made in the payment of
any interest on any Debenture of such series
when such interest becomes due and payable
(except for a valid extension of any interest
period pursuant to the terms of the
Debentures of such series) and such default
continues for a period of 30 days, or

(2) default is made in the payment of
the principal of (or premium, if any, on) any
Debenture of such series at the Maturity
thereof,

the Company will, upon written demand of the Trustee, pay to
it, for the benefit of the Holders of such Debentures, the
whole amount then due and payable on such Debentures for
principal and any premium and interest and, to the extent
that payment of such interest shall be legally enforceable,
interest on any overdue principal and premium and on any
overdue interest, at the rate or rates prescribed therefor
in such Debentures, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel except such costs and
expenses, as are a result of negligence or bad faith on the
part of the Trustee. Until such demand is made by the
Trustee, the Company may pay the principal of and premium,
if any, and interest, if any, on the Debentures of such
series to the Holders thereof, whether or not the Debentures
of such series are overdue.

If, after a Security Exchange with respect to the
Debentures of any series, an Event of Default with respect
to Debentures of such series occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Debentures of
such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any
other proper remedy.

Section 506. Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the
Company (or any other obligor upon the Debentures), its
property or its creditors after a Security Exchange with
respect to the Debentures of any series, the Trustee shall
be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions
authorized under the Trust Indenture Act in order to have
claims of the Holders of Debentures of such series and the
Trustee allowed in any such proceeding. In particular, the
Trustee shall be authorized to collect and receive any
moneys or other property payable or deliverable on any such
claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is
hereby authorized by each Holder of Debentures of such
series to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such
payments directly to the Holders of Debentures of such
series, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 607 except such
costs and expenses, as are a result of negligence or bad
faith on the part of the Trustee.

No provision of this Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding; provided, however, that the
Trustee may, after a Security Exchange with respect to
Debentures of any series on behalf of the Holders of
Debentures of such series, vote for the election of a
trustee in bankruptcy or similar official and be a member of
a creditors' or other similar committee.

Section 507. Trustee May Enforce Claims Without Possession
of Debentures.

All rights of action and claims under this
Indenture or the Debentures may be prosecuted and enforced
by the Trustee without the possession of any of the
Debentures or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel except such costs and expenses, as are a
result of negligence or bad faith on the part of the
Trustee, be for the ratable benefit of the Holders of the
Debentures in respect of which such judgment has been
recovered.

Section 508. Application of Money Collected.

Subject to Article Fourteen, any money collected
by the Trustee pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on
account of principal or any premium or interest, upon
presentation of the Debentures and the notation thereon of
the payment if only partially paid and upon surrender
thereof if fully paid:

FIRST: To the payment of all amounts
due the Trustee under Section 607;

SECOND: To the payment of the amounts
then due and unpaid for principal of and any
premium and interest on the Debentures in
respect of which or for the benefit of which
such money has been collected, ratably,
without preference or priority of any kind,
according to the amounts due and payable on
such Debentures for principal and any premium
and interest, respectively; and

THIRD: To the payment of the
remainder, if any, to the Company or any
other Person lawfully entitled thereto.

Section 509. Limitation on Suits.

After a Security Exchange with respect to the
Debentures of any series, no Holder of any Debenture of that
series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or
for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless

(1) such Holder has previously given
written notice to the Trustee of a continuing
Event of Default with respect to the
Debentures of that series;

(2) the Holders of not less than 25% in
principal amount of the Outstanding
Debentures of that series shall have made
written request to the Trustee to institute
proceedings in respect of such Event of
Default in its own name as Trustee hereunder;

(3) such Holder or Holders have offered
to the Trustee indemnity reasonably
satisfactory in form and substance to the
Trustee against the costs, expenses and
liabilities to be incurred in compliance with
such request;

(4) the Trustee for 60 days after its
receipt of such notice, request and offer of
indemnity has failed to institute any such
proceeding; and

(5) no direction inconsistent with such
written request has been given to the Trustee
during such 60-day period by the Holders of a
majority in principal amount of the
Outstanding Debentures of that series;

it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by
virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of any
other of such Holders, or to obtain or to seek to obtain
priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all
of such Holders.

Section 510. Unconditional Right of Holders to Receive
Principal, Premium and Interest.

Notwithstanding any other provision in this
Indenture, the Holder of any Debenture shall have the right,
which is absolute and unconditional, to receive payment of
the principal of and any premium and (subject to
Section 307) any interest on such Debenture on the Stated
Maturity or Maturities expressed in such Debenture (or, in
the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment and
such rights shall not be impaired without the consent of
such Holder.

Section 511. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such
proceeding had been instituted.

Section 512. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or
stolen Debentures in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

Section 513. Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any
Holder of any Debentures to exercise any right or remedy
accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Subject to Section 509,
every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.

Section 514. Control by Holders.

After a Security Exchange with respect to the
Debentures of any series, the Holders of a majority in
principal amount of the Outstanding Debentures of such
series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred
on the Trustee, with respect to the Debentures of such
series, provided that

(1) such direction shall not be in
conflict with any rule of law or with this
Indenture, and

(2) the Trustee may take any other
action deemed proper by the Trustee which is
not inconsistent with such direction.

Upon receipt by the Trustee of any such direction
with respect to Debentures of any series, a record date
shall be set for determining the Holders of Outstanding
Debentures of such series entitled to join in such
direction, which record date shall be the close of business
on the day the Trustee receives such direction. The Holders
of Outstanding Debentures of such series on such record date
(or their duly appointed agents), and only such Persons,
shall be entitled to join in such direction, whether or not
such Holders remain Holders after such record date; provided
that, unless such direction shall have become effective by
virtue of Holders of at least a majority in principal amount
of Outstanding Debentures of such series on such record date
(or their duly appointed agents) having joined therein on or
prior to the 90th day after such record date, such direction
shall automatically and without any action by any Person be
cancelled and of no further effect. Nothing in this
paragraph shall prevent a Holder (or a duly appointed agent
thereof) from giving, before or after the expiration of such
90-day period, a direction contrary to or different from,
or, after the expiration of such period, identical to, a
direction that has been cancelled pursuant to the proviso to
the preceding sentence, in which event a new record date in
respect thereof shall be set pursuant to this paragraph.

Section 515. Waiver of Past Defaults.

Prior to a Security Exchange with respect to the
Debentures of any series, Capital may not waive any past
default hereunder with respect to such series and its
consequences without the consent of the holders of not less
than a majority in stated liquidation preference of the
Preferred Securities of the related series; provided that
Capital may not waive any default (1) in the payment of the
principal of or any premium or interest on any Debenture or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified without the consent of the
Holder of each Outstanding Debenture of such series affected
without, in each case, the consent of each holder of
Preferred Securities of such series.

After a Security Exchange with respect to the
Debentures of any series, the Holders of not less than a
majority in principal amount of the Outstanding Debentures
of such series may on behalf of the Holders of all the
Debentures of such series waive any past default hereunder
with respect to such series and its consequences, except a
default

(1) in the payment of the principal of
or any premium or interest on any Debenture
of such series, or

(2) in respect of a covenant or
provision hereof which under Article Nine
cannot be modified or amended without the
consent of the Holder of each Outstanding
Debenture of such series affected.

Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.

Section 516. Undertaking for Costs.

In any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the
Trustee for any action taken, suffered or omitted by it as
Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and
may assess costs against any such party litigant, in the
manner and to the extent provided in the Trust Indenture
Act; provided that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in
any suit instituted by the Company.

ARTICLE SIX

The Trustee

Section 601. Certain Duties and Responsibilities.

The duties and responsibilities of the Trustee
shall be as provided by the Trust Indenture Act.
Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability
is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the
provisions of this Section.

Section 602. Notice of Defaults.

If a default occurs hereunder with respect to
Debentures of any series, the Trustee shall give the Holders
of Debentures of such series notice of such default as and
to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character
specified in Sections 501(4) or 502(4) with respect to
Debentures of such series, no such notice to Holders shall
be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default with
respect to Debentures of such series.

Section 603. Certain Rights of Trustee.

Subject to the provisions of Section 601:

(a) the Trustee may rely and shall be
protected in acting or refraining from
acting upon any resolution, certificate,
statement, instrument, opinion, report,
notice, request, direction, consent, order,
bond, debenture, note, other evidence of
indebtedness or other paper or document
believed by it to be genuine and to have
been signed or presented by the proper party
or parties;

(b) any request or direction of the
Company mentioned herein shall be
sufficiently evidenced by a Company Request
or Company Order and any resolution of the
Board of Directors may be sufficiently
evidenced by a Board Resolution;

(c) whenever in the administration of
this Indenture the Trustee shall deem it
desirable that a matter be proved or
established prior to taking, suffering or
omitting any action hereunder, the Trustee
(unless other evidence be herein
specifically prescribed) may, in the absence
of bad faith on its part, rely upon an
Officers' Certificate;

(d) the Trustee may consult with
counsel and the written advice of such
counsel or any Opinion of Counsel shall be
full and complete authorization and
protection in respect of any action taken,
suffered or omitted by it hereunder in good
faith and in reliance thereon;

(e) the Trustee shall be under no
obligation to exercise any of the rights or
powers vested in it by this Indenture at the
request or direction of any of the Holders
pursuant to this Indenture, unless such
Holders shall have offered to the Trustee
security or indemnity reasonably
satisfactory in form and substance to the
Trustee against the costs, expenses and
liabilities which might be incurred by it in
compliance with such request or direction;

(f) prior to the occurrence of an
Event of Default and after the remedy or
waiver of all Events of Default, the Trustee
shall not be bound to make any investigation
into the facts or matters stated in any
resolution, certificate, statement,
instrument, opinion, report, notice,
request, direction, consent, order, bond,
debenture, note, other evidence of
indebtedness or other paper or document, but
the Trustee, in its discretion, may make
such further inquiry or investigation into
such facts or matters as it may see fit,
and, if the Trustee shall determine to make
such further inquiry or investigation, it
shall upon reasonable notice to the Company
be entitled to examine the books, records
and premises of the Company, personally or
by agent or attorney at a time and place
acceptable to the Company; and

(g) the Trustee may execute any of the
trusts or powers hereunder or perform any
duties hereunder either directly or by or
through agents or attorneys and the Trustee
shall not be responsible for any misconduct
or negligence on the part of any agent or
attorney appointed with due care by it
hereunder.

Section 604. Not Responsible for Recitals or Issuance of
Debentures.

The recitals contained herein and in the
Debentures, except the Trustee's certificates of
authentication, shall be taken as the statements of the
Company, and the Trustee or any Authenticating Agent assumes
no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this
Indenture or of the Debentures. The Trustee or any
Authenticating Agent shall not be accountable for the use or
application by the Company of Debentures or the proceeds
thereof.

Section 605. May Hold Debentures.

The Trustee, any Authenticating Agent, any Paying
Agent, any Debenture Registrar or any other agent of the
Company, in its individual or any other capacity, may become
the owner or pledgee of Debentures and, subject to
Sections 608 and 613, may otherwise deal with the Company
with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Debenture Registrar or
such other agent.

Section 606. Money Held in Trust.

Money held by the Trustee in trust hereunder need
not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability
for interest on any money received by it hereunder except as
otherwise agreed with the Company.

Section 607. Compensation and Reimbursement.

The Company agrees

(1) to pay to the Trustee from time to
time reasonable compensation for all services
rendered by it hereunder (which compensation
shall not be limited by any provision of law
in regard to the compensation of a trustee of
an express trust);

(2) except as otherwise expressly
provided herein, to reimburse the Trustee
upon its written request for all reasonable
expenses, disbursements and advances incurred
or made by the Trustee in accordance with any
provision of this Indenture (including the
reasonable compensation, and reasonable
expenses and disbursements of its agents and
outside counsel), except any such expense,
disbursement or advance as may be
attributable to its negligence or bad faith;
and

(3) to indemnify the Trustee for, and
to hold it harmless against, any loss,
liability or expense incurred without
negligence or bad faith on its part, arising
out of or in connection with the acceptance
or administration of the trust or trusts
hereunder, including the reasonable costs and
expenses of defending itself against any
claim or liability in connection with the
exercise or performance of any of its powers
or duties hereunder.

Section 608. Disqualification; Conflicting Interests.

If the Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the
Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.

Section 609. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder
which shall be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000 or is a
subsidiary of a corporation which shall be a Person that has
a combined capital and surplus of at least $50,000,000 and
which unconditionally guarantees the obligations of the
Trustee hereunder. If such Person publishes reports of
condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority,
then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this
Article.

Section 610. Resignation and Removal; Appointment of
Successor.

(a) No resignation or removal of the Trustee and
no appointment of a successor Trustee pursuant to this
Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.

(b) The Trustee may resign at any time with
respect to the Debentures of one or more series by giving
written notice thereof to the Company. If the instrument of
acceptance by a successor Trustee required by Section 611
shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with
respect to the Debentures of such series.

(c) The Trustee may be removed at any time with
respect to the Debentures of any series by Act of the
Holders of a majority in principal amount of the Outstanding
Debentures of such series, delivered to the Trustee and to
the Company.

(d) If at any time:

(1) the Trustee shall fail to comply
with Section 608 after written request
therefor by the Company or by any Holder who
has been a bona fide Holder of a Debenture
for at least six months, or

(2) the Trustee shall cease to be
eligible under Section 609 and shall fail to
resign after written request therefor by the
Company or by any such Holder, or

(3) the Trustee shall become incapable
of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of
its property shall be appointed or any public
officer shall take charge or control of the
Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or
liquidation,

then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee with respect to all
securities, or (ii) subject to Section 516, any Holder who
has been a bona fide Holder of a Debenture for at least six
months may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to all Debentures
and the appointment of a successor Trustee or Trustees.

(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in
the office of Trustee for any cause, with respect to the
Debentures of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Debentures of that or those
series (it being understood that any such successor Trustee
may be appointed with respect to the Debentures of one or
more or all of such series and that at any time there shall
be only one Trustee with respect to the Debentures of any
particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the
Debentures of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding
Debentures of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 611,
become the successor Trustee with respect to the Debentures
of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee
with respect to the Debentures of any series shall have been
so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a Debenture of
such series for at least six months may, on behalf of itself
and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
Trustee with respect to the Debentures of such series.

(f) The Company shall give notice of each
resignation and each removal of the Trustee with respect to
the Debentures of any series and each appointment of a
successor Trustee with respect to the Debentures of any
series to all Holders of Debentures of such series in the
manner provided in Section 106. Each notice shall include
the name of the successor Trustee with respect to the
Debentures of such series and the address of its Corporate
Trust Office.

Section 611. Acceptance of Appointment by Successor.

(a) In case of the appointment hereunder of a
successor Trustee with respect to all Debentures, every such
successor Trustee so appointed shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor Trustee,
such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver
to such successor Trustee all property and money held by
such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a
successor Trustee with respect to the Debentures of one or
more (but not all) series, the Company, the retiring Trustee
and each successor Trustee with respect to the Debentures of
such series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer
the rights, powers, trust and duties of the retiring Trustee
with respect to the Debentures of that or those series to
which the appointment of such successor Trustee relates,
(2) if the retiring Trustee is not retiring with respect to
all Debentures, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee
with respect to the Debentures of that or those series as to
which the retiring Trustee is not retiring shall continue to
be vested in the retiring Trustee, and (3) shall add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental
indenture shall constitute such Trustee co-trustees of the
same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust
or trusts hereunder administered by any other such Trustee;
and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and
each such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee with
respect to the Debentures of that or those series to which
the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Debentures of
that or those series to which the appointment of such
successor Trustee relates.

(c) Upon request of any such successor Trustee,
the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts
referred to in paragraphs (a) and (b) of this Section, as
the case may be.

(d) No successor shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.

Section 612. Merger, Conversion, Consolidation or
Succession to Business.

Any corporation into which the Trustee may be
merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
In case any Debentures shall have been authenticated, but
not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such
Debentures.

Section 613. Preferential Collection of Claims Against
Company.

If and when the Trustee shall be or become a
creditor of the Company (or any other obligor upon the
Debentures), the Trustee shall be subject to the provisions
of the Trust Indenture Act regarding the collection of
claims against the Company (or any such other obligor).

Section 614. Appointment of Authenticating Agent.

The Trustee may with the consent of the Company
appoint an Authenticating Agent or Agents with respect to
one or more series of Debentures which shall be authorized
to act on behalf of the Trustee to authenticate Debentures
of such series issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or
pursuant to Section 306, and Debentures so authenticated
shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference
is made in this Indenture to the authentication and delivery
of Debentures by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized
and doing business under the laws of the United States of
America, any State thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by
Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section,
the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of
this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in
this Section.

Any corporation into which an Authenticating Agent
may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an
Authenticating Agent, shall continue to be an Authenticating
Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the
Authenticating Agent.

An Authenticating Agent may resign at any time by
giving written notice thereof to the Trustee and to the
Company. The Trustee or the Company may at any time
terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to
the Company or the Trustee, as the case may be. Upon
receiving such a notice of resignation or upon such a
termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to
the Company and shall mail written notice of such
appointment by first-class mail, postage prepaid, to all
Holders of Debentures of the series with respect to which
such Authenticating Agent will serve, as their names and
addresses appear in the Debenture Register. Any successor
Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No
successor Authenticating Agent shall be appointed unless
eligible under the provisions of this Section.

The Trustee agrees to pay to each Authenticating
Agent from time to time reasonable compensation for its
services under this Section, and the Trustee shall be
entitled to be reimbursed for such payments, subject to the
provisions of Section 607.

If an appointment with respect to one or more
series is made pursuant to this Section, the Debentures of
such series may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:

This is one of the Debentures of the series
designated therein referred to in the within-mentioned
Indenture.

........................,
As Trustee

By......................,
As Authenticating Agent

By......................,
Authorized Officer

ARTICLE SEVEN

Holders' Lists and Reports by Trustee and Company

Section 701. Company to Furnish Trustee Names and
Addresses of Holders.

After a Security Exchange with respect to
Debentures of any series, the Company will furnish or cause
to be furnished to the Trustee

(a) semi-annually, not later than 10 days
after each Regular Record Date in each year, a
list for such series of Debentures, in such form
as the Trustee may reasonably require, of the
names and addresses of the Holders of Debentures
of such series as of the preceding Regular Record
Date, and

(b) at such other times as the Trustee may
request in writing, within 30 days after the
receipt by the Company of any such request, a list
of similar form and content as of a date not more
than 15 days prior to the time such list is
furnished;

excluding from any such list names and addresses received by
the Trustee in its capacity as Debenture Registrar.

Section 702. Preservation of Information; Communications
to Holders.

(a) The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses
of Holders contained in the most recent list furnished to
the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity
as Debenture Registrar. The Trustee may destroy any list
furnished to it as provided in Section 701 upon receipt of a
new list so furnished.

(b) The rights of the Holders to communicate with
other Holders with respect to their rights under this
Indenture or under the Debentures, and the corresponding
rights and privileges of the Trustee, shall be as provided
by the Trust Indenture Act.

(c) Every Holder of Debentures, by receiving and
holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any agent of
either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.

Section 703. Reports by Trustee.

(a) The Trustee shall transmit to Holders such
reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant
thereto. To the extent that any such report is required by
the Trust Indenture Act with respect to any 12 month period,
such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September
15.

(b) A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee
with each stock exchange upon which any Debentures are
listed, with the Commission and with the Company. The
Company will notify the Trustee when any Debentures are
listed on any stock exchange.

Section 704. Reports by Company.

The Company shall file with the Trustee and the
Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as
may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act;
provided that any such information, documents or reports
required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is so required to
be filed with the Commission.

ARTICLE EIGHT

Consolidation, Merger, or Sale of Assets

Section 801. Company May Consolidate, Etc.,
Only on Certain Terms.

The Company shall not consolidate with or merge
into any other Person or sell its properties and assets as,
or substantially as, an entirety to any Person, and the
Company shall not permit any Person to consolidate with or
merge into the Company, unless:

(1) in case the Company shall
consolidate with or merge into another Person
or sell its properties and assets as, or
substantially as, an entirety to any Person,
the Person formed by such consolidation or
into which the Company is merged or the
Person which purchases the properties and
assets of the Company as, or substantially,
as an entirety shall be a corporation,
partnership or trust, shall be organized and
validly existing under the laws of the United
States of America, any State thereof or the
District of Columbia and shall expressly
assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and
punctual payment of the principal of and any
premium and interest on all the Debentures
and the performance or observance of every
covenant of this Indenture on the part of the
Company to be performed or observed, by
supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the
Trustee, by the Person (if other than the
Company) formed by such consolidation or into
which the Company shall have been merged or
by the corporation which shall have acquired
the Company's assets;

(2) immediately after giving effect to
such transaction, no Event of Default shall
have happened and be continuing; and

(3) the Company has delivered to the
Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such
consolidation, merger, or sale and, if a
supplemental indenture is required in
connection with such transaction, such
supplemental indenture comply with this
Article and that all conditions precedent
herein provided for relating to such
transaction have been complied with.

Section 802. Successor Substituted.

Upon any consolidation of the Company with, or
merger of the Company into, any other Person or any sale of
the properties and assets of the Company as, or
substantially as, an entirety in accordance with Section
801, the successor Person formed by such consolidation or
into which the Company is merged or to which such sale is
made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, the
predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Debentures.

ARTICLE NINE

Supplemental Indentures

Section 901. Supplemental Indentures Without Consent of
Holders.

Without the consent of any Holders, the Company,
when authorized by a Board Resolution, and the Trustee, at
any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

(1) to evidence the succession of
another Person to the Company and the
assumption by any such successor of the
covenants of the Company herein and in the
Debentures; or

(2) to add to the covenants of the
Company for the benefit of the Holders of all
or any series of Debentures (and if such
covenants are to be for the benefit of less
than all series of Debentures, stating that
such covenants are expressly being included
solely for the benefit of such series) or to
surrender any right or power herein conferred
upon the Company; or

(3) to add any additional Events of
Default; or

(4) to add to or change any of the
provisions of this Indenture to such extent
as shall be necessary to permit or facilitate
the issuance of Debentures in bearer form,
registrable or not registrable as to
principal, and with or without interest
coupons, or to permit or facilitate the
issuance of Debentures in uncertificated
form; or

(5) to add to, change or eliminate any
of the provisions of this Indenture in
respect of one or more series of Debentures,
including, without limitation, with respect
to any of the provisions set forth in Article
Fourteen, provided that any such addition,
change or elimination (i) shall neither
(A) apply to any Debenture of any series
created prior to the execution of such
supplemental indenture and entitled to the
benefit of such provision nor (B) modify the
rights of the Holder of any such Debenture
with respect to such provision or (ii) shall
become effective only when there is no such
Debenture Outstanding; or

(6) to secure the Debentures of any
series; or

(7) to establish the form or terms of
Debentures of any series as permitted by
Sections 201 and 301; or

(8) to evidence and provide for the
acceptance of appointment hereunder by a
successor Trustee with respect to the
Debentures of one or more series and to add
to or change any of the provisions of this
Indenture as shall be necessary to provide
for or facilitate the administration of the
trusts hereunder by more than one Trustee,
pursuant to the requirements of
Section 611(b); or

(9) to cure any ambiguity, to correct
or supplement any provision herein which may
be inconsistent with any other provision
herein, or to make any other provisions with
respect to matters or questions arising under
this Indenture, provided that such action
pursuant to this clause (9) shall not
adversely affect the interests of the Holders
of Debentures of any series in any material
respect; or

(10) to conform to any mandatory
provisions of law.

Section 902. Supplemental Indentures with Consent of
Holders.

With the consent of the Holders of not less than a
majority of principal amount of the Outstanding Debentures
of each series affected by such supplemental indenture (and,
in the event Capital is the Holder of all of the Debentures
of such series, the consent of the holders of not less than
a majority in stated liquidation preference of the Preferred
Securities of the related series), by Act of said Holders
delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this
Indenture or of modifying in any manner the rights of the
Holders of Debentures of such series under this Indenture;
provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding
Debenture affected thereby (and, in the event Capital is the
Holder of the Debentures of any series affected thereby, the
consent of the holders of each Preferred Security of the
related series),

(1) change the Stated Maturity of the
principal of, or any instalment of principal
of or interest on, any Debenture, or reduce
the principal amount thereof or the rate of
interest thereon (including any change in the
Floating or Adjustable Rate Provision
pursuant to which such rate is determined
that would reduce such rate for any period)
or any premium payable upon the redemption
thereof, or reduce the amount of the
principal of an Original Issue Discount
Debenture that would be due and payable upon
a declaration of acceleration of the Maturity
thereof pursuant to Sections 503 and 504, or
change any Place of Payment where, or the
coin or currency in which, any Debenture or
any premium or interest thereon is payable,
or impair the right to institute suit for the
enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption
Date), or modify the provisions of this
Indenture with respect to the subordination
of the Debentures of any series in a manner
adverse to the Holders, or

(2) reduce the percentage in principal
amount of the Outstanding Debentures of any
series, the consent of whose Holders is
required for any such supplemental indenture,
or the consent of whose Holders is required
for any waiver (of compliance with certain
provisions of this Indenture or certain
defaults hereunder and their consequences)
provided for in this Indenture, or

(3) modify any of the provisions of
this Section, Section 515 or Section 907,
except to increase any such percentage or to
provide that certain other provisions of this
Indenture cannot be modified or waived
without the consent of the Holder of each
Outstanding Debenture affected thereby,
provided, however, that this clause shall not
be deemed to require the consent of any
Holder with respect to changes in the
references to "the Trustee" and concomitant
changes in this Section and Section 907, or
the deletion of this proviso, in accordance
with the requirements of Sections 611(b) and
901(8).

A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has
expressly been included solely for the benefit of one or
more particular series of Debentures, or which modifies the
rights of the Holders of Debentures of such series with
respect to such covenant or other provision, shall be deemed
not to affect the rights under this Indenture of the Holders
of Debentures of any other series.

It shall not be necessary for any Act of Holders
under this Section to approve the particular form of any
proposed supplemental indenture, but it shall be sufficient
if such Act shall approve the substance thereof.

Section 903. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this
Article or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in
relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise.

Section 904. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture
under this Article, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall
form a part of this Indenture for all purposes; and every
Holder of Debentures theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.

Section 905. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to
this Article shall conform to the requirements of the Trust
Indenture Act.

Section 906. Reference in Debentures to Supplemental
Indentures.

Debentures of any series authenticated and
delivered after the execution of any supplemental indenture
pursuant to this Article may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture.
If the Company shall so determine, new Debentures of any
series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for
Outstanding Debentures of such series.

Section 907. Waiver of Compliance by Holders.

Anything in this Indenture to the contrary
notwithstanding, any of the acts which the Company is
required to do, or is prohibited from doing, by any of the
provisions of this Indenture may, to the extent that such
provisions might be changed or eliminated by a supplemental
indenture pursuant to Section 902 upon consent of Holders of
not less than a majority in aggregate principal amount of
the then Outstanding Debentures of the series affected, be
omitted or done by the Company, if there is obtained the
prior consent or waiver of the Holders of at least a
majority in aggregate principal amount of the then
Outstanding Debentures of such series (and, if Capital is
the Holder of all of the Debentures of such series, holders
of at least a majority in stated liquidation preference of
the Preferred Securities of the related series).

Section 908. Subordination Unimpaired.

No provision in any supplemental indenture that
affects the superior position of the holders of Senior Debt
shall be effective against holders of Senior Debt.

ARTICLE TEN

Covenants

Section 1001. Payment of Principal, Premium and Interest.

The Company covenants and agrees for the benefit
of each series of Debentures that it will duly and
punctually pay or cause to be paid the principal of and any
premium and interest (including any Additional Interest) on
the Debentures of that series in accordance with the terms
of the Debentures and this Indenture.

Section 1002. Maintenance of Office or Agency.

So long as any Debentures are Outstanding, the
Company will maintain in each Place of Payment for any
series of Debentures an office or agency where Debentures of
that series may be presented or surrendered for payment,
where Debentures of that series may be surrendered for
registration of transfer or exchange, and where notices and
demands to or upon the Company in respect of the Debentures
of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee, and
the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and
demands.

The Company may also from time to time designate
one or more other offices or agencies where the Debentures
of one or more series may be presented or surrendered for
any or all such purposes and may from time to time rescind
such designations; provided, however, that no such
designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in
each Place of Payment for Debentures of any series for such
purposes. The Company will give prompt written notice to
the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.

Section 1003. Money for Debentures Payments to Be Held in
Trust.

If the Company shall at any time act as its own
Paying Agent with respect to any series of Debentures, it
will, on or before each due date of the principal of or any
premium or interest on any of the Debentures of that series,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and
any premium and interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its
action or failure so to act.

Whenever the Company shall have one or more Paying
Agents for any series of Debentures, it will, prior to each
due date of the principal of or any premium or interest on
any Debentures of that series, deposit with a Paying Agent a
sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.

The Company will cause each Paying Agent for any
series of Debentures other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will
(i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other
obligor upon the Debentures of that series) in the making of
any payment in respect of the Debentures of that series, and
upon the written request of the Trustee, forthwith pay to
the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Debentures of that series.

The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or by Company Order direct
any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which
such sums were held by the Company or such Paying Agent;
and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further
liability with respect to such money.

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment
of the principal of or any premium or interest on any
Debenture of any series and remaining unclaimed for two
years after such principal, premium or interest has become
due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Debenture
shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause
to be published once, in a newspaper published in the
English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, the
City of New York, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be
repaid to the Company.

Section 1004. Statement by Officers as to Default.

The Company will deliver to the Trustee within 120
days after the end of each fiscal year of the Company ending
after the date hereof, a certificate signed by the Company's
principal executive officer, principal financial officer or
principal accounting officer stating whether or not to the
best knowledge of the signer thereof the Company is in
compliance with all terms, conditions and covenants of this
Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and if the signer
has obtained knowledge of any continuing default by the
Company in the performance, observation or fulfillment of
any such term, condition or covenant, specifying each such
default and the nature thereof.

Section 1005. Limitations on Dividends and Other Payments
on Capital Stock.

Prior to a Security Exchange with respect to
Debentures of any Series, the Company agrees for the benefit
of the Holders of Debentures of such series that it shall
not declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any
of the Company's capital stock or make any guarantee
payments with respect to the foregoing (other than (i)
payments under the Guarantee, (ii) acquisitions of shares of
Common Stock in connection with the satisfaction by the
Company of its obligations under any employee benefit plans
and (iii) redemptions of any share purchase rights issued by
the Company pursuant to the Company's Share Purchase Rights
Plan adopted on October 27, 1989, as amended from time to
time, or the declaration of a dividend of similar share
purchase rights in the future), if at such time the Company
is in default with respect to its payment obligations under
the Guarantee or there shall have occurred an Event of
Default with respect to the Debentures of such Series.

Section 1006. Limitations on Conduct of Capital.

Prior to a Security Exchange with respect to
Debentures of any series, the Company agrees for the benefit
of the Holders of Debentures of such series that it shall
(i) not cause or permit any Common Securities of Capital to
be transferred, (ii) maintain direct or indirect ownership
of all outstanding securities of Capital other than (x) the
Preferred Securities of any series and (y) any other
securities issued by Capital (other than the Common
Securities) so long as the issuance thereof to Persons other
than the Company or any of its Subsidiaries) would not cause
Capital to become an "investment company" under the
Investment Company Act of 1940, as amended, (iii) cause at
least 21% of the total value of Capital and at least 21% of
all interests in the capital, income, gain, loss, deduction
and credit of Capital to be represented by Common
Securities, (iv) not voluntarily dissolve, wind up,
liquidate or terminate Capital or either of the Managing
Members, (v) cause the Company and Aetna Capital Holdings,
Inc. to remain the Managing Members of Capital and timely
perform all of their respective duties as Managing Members
of Capital (including the duty to declare and pay dividends
on the Preferred Securities), and (vi) use reasonable
efforts to cause Capital to remain a limited liability
company and otherwise continue to be treated as a
partnership for U.S. federal income tax purposes; provided
that the Company may permit Capital, solely for purposes of
changing its state of domicile or avoiding federal income
tax consequences adverse to the Company, Capital or holders
of Preferred Securities, to consolidate or merge with or
into a limited liability company or limited partnership or
trust organized as such under the laws of any state of the
United States of America, provided that (i) such successor
entity either (x) expressly assumes all of the obligations
of Capital under the Preferred Securities or (y) substitutes
for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities
(the "Successor Securities") so long as the Successor
Securities rank, with respect to participation in the
profits or assets of the successor entity, at least as high
as the Preferred Securities rank with respect to
participation in the profits or assets of Capital, (ii) the
Company expressly acknowledges such successor entity as the
holder of the Debentures relating to the Preferred
Securities, (iii) such merger or consolidation does not
cause the Preferred Securities to be delisted by any
national securities exchange or other organization on which
the Preferred Securities are then listed, (iv) such merger
or consolidation does not cause the Preferred Securities to
be downgraded by any "nationally recognized statistical
rating organization," as that term is defined by the
Securities and Exchange Commission for purposes of Rule
436(g)(2) under the Securities Act of 1933, as amended, (v)
such merger or consolidation does not adversely affect the
powers, preferences and other special rights of holders of
Preferred Securities in any material respect, (vi) prior to
such merger or consolidation the Company has received an
opinion of counsel (which counsel is not an employee of the
Company and Capital) to the effect that (w) holders of
outstanding Preferred Securities will not recognize any gain
or loss for federal income tax purposes as a result of the
merger or consolidation, (x) such successor entity will not
be treated as a corporation for federal income tax purposes
and (y) such merger or consolidation will not adversely
affect the limited liability of holders of Preferred
Securities.

Section 1007. Stock Exchange Listing.

In the event of a Security Exchange with respect
to Debentures of any series, the Company will use its best
efforts to have the Debentures of such series listed on the
same exchange as that on which the Preferred Securities of
the related series were listed prior to such Security
Exchange.

ARTICLE ELEVEN

Redemption of Debentures

Section 1101. Applicability of Article.

Debentures of any series which are redeemable
before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for Debentures of
any series) in accordance with this Article.

Section 1102. Election to Redeem; Notice to Trustee.

At any time after a Security Exchange with respect
to Debentures of such series, in case of any redemption at
the election of the Company of less than all the Debentures
of such series, the Company shall, at least 60 days prior to
the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date, of the principal amount of
Debentures of such series to be redeemed and, if applicable,
of the tenor of the Debentures to be redeemed. In the case
of any redemption of Debentures prior to the expiration of
any restriction on such redemption provided in the terms of
such Debentures or elsewhere in this Indenture, the Company
shall furnish the Trustee with an Officers' Certificate
evidencing compliance with such restriction.

Section 1103. Selection by Trustee of Debentures to Be
Redeemed.

At any time after a Security Exchange with respect
to Debentures of any series, if less than all the Debentures
of such series are to be redeemed (unless all of the
Debentures of such series and of a specified tenor are to be
redeemed), the particular Debentures to be redeemed shall be
selected not more than 45 days prior to the Redemption Date
by the Trustee, from the Outstanding Debentures of such
series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal
to the minimum authorized denomination for Debentures of
that series or any integral multiple thereof) of the
principal amount of Debentures of such series of a
denomination larger than the minimum authorized denomination
for Debentures of that series. If less than all of the
Debentures of such series and of a specified tenor are to be
redeemed, the particular Debentures to be redeemed shall be
selected not more than 45 days prior to the Redemption Date
by the Trustee, from the Outstanding Debentures of such
series and specified tenor not previously called for
redemption in accordance with the preceding sentence.

The Trustee shall promptly notify the Company in
writing of the Debentures selected for redemption and, in
the case of any Debentures selected for partial redemption,
the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to the
redemption of Debentures shall relate, in the case of any
Debentures redeemed or to be redeemed only in part, to the
portion of the principal amount of such Debentures which has
been or is to be redeemed.

Section 1104. Notice of Redemption.

Notice of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the Redemption Date, to each Holder of
Debentures to be redeemed, at its address appearing in the
Debenture Register.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding
Debentures of any series are to be redeemed,
the identification (and, in the case of
partial redemption of any Debentures, the
principal amounts) of the particular
Debentures to be redeemed,

(4) that on the Redemption Date the
Redemption Price will become due and payable
upon each such Debenture to be redeemed and,
if applicable, that interest thereon will
cease to accrue on and after said date,

(5) the place or places where such
Debentures are to be surrendered for payment
of the Redemption Price, and

(6) that the redemption is for a
sinking fund, if such is the case.

Notice of redemption of Debentures to be redeemed
at the election of the Company shall be given by the Company
or, at the Company's request, by the Trustee in the name and
at the expense of the Company.

Section 1105. Deposit of Redemption Price.

Prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except
if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Debentures which are to be
redeemed on that date.

Section 1106. Debentures Payable on Redemption Date.

Notice of redemption having been given as
aforesaid, the Debentures so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date
(unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Debentures shall
cease to bear interest. Upon surrender of any such
Debenture for redemption in accordance with said notice,
such Debenture shall be paid by the Company at the
Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that, unless otherwise
specified as contemplated by Section 301, installments of
interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such
Debentures, or one or more Predecessor Debentures,
registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of
Section 307.

If any Debenture called for redemption shall not
be so paid upon surrender thereof for redemption, the
principal and any premium shall, until paid, bear interest
from the Redemption Date at the rate prescribed therefor in
the Debenture.

Section 1107. Debentures Redeemed in Part.

Any Debenture which is to be redeemed only in part
shall be surrendered at a Place of Payment therefor (with,
if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory
to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Debenture without service
charge, a new Debenture or Debentures of the same series and
of like tenor, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and
in exchange for the unredeemed portion of the principal of
the Debenture so surrendered.

ARTICLE TWELVE

Defeasance and Covenant Defeasance

Section 1201. Company's Option to Effect Defeasance or
Covenant Defeasance.

Except as otherwise specified as contemplated by
Section 301 for Debentures of any series, the Company may
elect, at any time, to have either Section 1202 or Section
1203 applied to the Outstanding Debentures of any series,
upon compliance with the conditions set forth below in this
Article Twelve.

Section 1202. Defeasance and Discharge.

Upon the Company's exercise of the option provided
in Section 1201 to have this Section 1202 applied to the
Outstanding Debentures of any series, the Company shall be
deemed to have been discharged from its obligations, and the
provisions of Article Fourteen shall cease to be effective,
with respect to the Outstanding Debentures of such series as
provided in this Section on and after the date the
conditions set forth in Section 1204 are satisfied
(hereinafter called "Defeasance"). For this purpose, such
Defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by
the Outstanding Debentures of such series and to have
satisfied all its other obligations under the Debentures of
such series and this Indenture insofar as the Debentures of
such series are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments
acknowledging the same), subject to the following which
shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of Debentures of such
series to receive, solely from the trust fund described in
Section 1204 and as more fully set forth in such Section,
payments in respect of the principal of and any premium and
interest on such Debentures of such series when payments are
due, (2) the Company's obligations with respect to the
Debentures of such series under Sections 304, 305, 306, 1002
and 1003, (3) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including, without
limitation, its rights under Section 607 and (4) this
Article Twelve. Subject to compliance with this Article
Twelve, the Company may exercise its option provided in
Section 1201 to have this Section 1202 applied to the
Outstanding Debentures of any series notwithstanding the
prior exercise of its option provided in Section 1201 to
have Section 1203 applied to the Outstanding Debentures of
such series.

Section 1203. Covenant Defeasance.

Upon the Company's exercise of the option provided
in Section 1201 to have this Section 1203 applied to the
outstanding Debentures of any series, (1) the Company shall
be released from its obligations under Section 1005 and
Section 801 and (2) the occurrence of any event specified in
Sections 501(3), 501(4) (with respect to Section 801 and
Section 1005), 502(3) and 502(4) (with respect to Section
801 and Section 1005) shall be deemed not to be or result in
an Event of Default, and (3) the provisions of Article
Fourteen shall cease to be effective, in each case with
respect to the Outstanding Debentures of such series as
provided in this Section on and after the date the
conditions set forth in Section 1204 are satisfied
(hereinafter called "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that the Company may
omit to comply with and shall have no liability in respect
of any term, condition or limitation set forth in any such
specified Section (to the extent so specified in the case of
Section 501(4) and Section 502(4)), whether directly or
indirectly by reason of any reference elsewhere herein to
any such Section or by reason of any reference in any such
Section to any other provision herein or in any other
document, but the remainder of this Indenture and the
Debentures of such series shall be unaffected thereby.

Section 1204. Conditions to Defeasance or Covenant
Defeasance.

The following shall be the conditions to
application of either Section 1202 or Section 1203 to the
Outstanding Debentures of any series:

(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee that satisfies the requirements contemplated by
Section 609 and agrees to comply with the provisions of
this Article Twelve applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of Outstanding
Debentures of such series, (A) in the case of
Debentures of such series denominated in U.S. dollars,
(i) money in an amount, or (ii) U.S. Government
Obligations that through the scheduled payment of
principal and interest in respect thereof in accordance
with their terms will provide, not later than one day
before the due date of any payment, money in an amount,
or (iii) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee,
to pay and discharge, and which shall be applied by the
Trustee (or any such other qualifying trustee) to pay
and discharge, the principal of and any premium and
interest on the Debentures of such series on the
respective Stated Maturities, in accordance with the
terms of this Indenture and the Debentures of such
series. As used herein, "U.S. Government Obligation"
means (x) any security that is (i) a direct obligation
of the United States of America for the payment of
which full faith and credit of the United States of
America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or
instrumentality for the United States of America the
payment of which is unconditionally guaranteed as a
full faith and credit obligation by the United States
of America, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer
thereof, and (y) any depositary receipt issued by a
bank (as defined in Section 3(a)(2) of the Securities
Act of 1933, as amended) as custodian with respect to
any specific payment of principal of or interest on any
such U.S. Government Obligation specified in Clause (x)
and held by such custodian for the account of the
holder of such depositary receipt, or with respect to
any specific payment of principal of or interest on any
such U.S. Government Obligation, provided that (except
as required by law) such custodian is not authorized to
make any deduction from the amount payable to the
Holder of such depositary receipt from any amount
received by the custodian in respect of the U.S.
Government Obligation or the specific payment of
principal or interest evidenced by such depositary
receipt; or (B) in the case of Debentures of such
series denominated in a currency other than the U.S.
dollar, (i) money in such currency in an amount, or
(ii) Foreign Government Obligations that through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide,
not later than one day before the due date of any
payment, money in such currency in an amount, or (iii)
a combination thereof, in each case sufficient, in the
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or any such
other qualifying trustee) to pay and discharge, the
principal of and any premium and interest on the
Debentures of such series on the respective Stated
Maturities, in accordance with the terms of this
Indenture and the Debentures of such series. As used
herein, "Foreign Government Obligation" means (x) any
security that is (i) a direct obligation of the
government that issued such currency for the payment of
which full faith and credit of such government is
pledged or (ii) an obligation of a Person controlled or
supervised by and acting as an agency or
instrumentality for such government the payment of
which is unconditionally guaranteed as a full faith and
credit obligation by such government, which, in either
case (i) or (ii), is not callable or redeemable at the
option of the issuer thereof, and (y) any depositary
receipt issued by a bank (as defined in Section 3(a)(2)
of the Securities Act of 1933, as amended) as custodian
with respect to any specific payment of principal of or
interest on any such Foreign Government Obligation
specified in Clause (x) and held by such custodian for
the account of the holder of such depositary receipt,
or with respect to any specific payment of principal of
or interest on any such Foreign Government Obligation,
provided that (except as required by law) such
custodian is not authorized to make any deduction from
the amount payable to the Holder of such depositary
receipt from any amount received by the custodian in
respect of the Foreign Government Obligation or the
specific payment of principal or interest evidenced by
such depositary receipt.

(2) In the case of an election under Section
1202, the Company shall have delivered to the Trustee
an Opinion of Counsel stating that the Holders of the
Outstanding Debentures of such series will not
recognize gain or loss for Federal income tax purposes
as a result of the deposit, Defeasance and discharge to
be effective with respect to the Debentures of such
series and will be subject to Federal income tax on the
same amount, in the same manner and at the same times
as would be the case if such deposit, Defeasance and
discharge were not to occur.

(3) In the case of an election under Section
1203, the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that the Holder of
the Outstanding Debentures of such series will not
recognize gain or loss for Federal income tax purposes
as result of the deposit and Covenant Defeasance to be
effected with respect to the Debentures of such series
and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as
would be the case if such deposit and Covenant
Defeasance were not to occur.

(4) The Company shall have delivered to the
Trustee an Officers' Certificate to the effect that the
Debentures of such series, if then listed on any
securities exchange, will not be delisted as a result
of such deposit.

(5) No Event of Default or event that (after
notice or lapse of time or both) would become an Event
of Default shall have occurred and be continuing at the
time of such deposit or, with regard to any event
specified in Sections 501(7) and 501(8) or Sections
502(4) and 502(5), as applicable, at any time on or
prior to the 90th day after the date of such deposit
(it being understood that this condition shall not be
deemed satisfied until after such 90th day).

(6) The Company shall have delivered to the
Trustee an Officer's Certificate and an Opinion of
Counsel, each stating that all conditions precedent
with respect to such Defeasance or Covenant Defeasance
have been complied with.

(7) Such Defeasance or Covenant Defeasance shall
not result in the trust arising from such deposit
constituting an investment company within the meaning
of the Investment Company Act of 1940, as amended,
unless such trust shall be qualified under such Act or
exempt from regulation thereunder.

(8) At the time of such deposit: (A) no default
in the payment of principal of (or premium, if any) or
interest on any Senior Debt shall have occurred and be
continuing or (B) no other event of default with
respect to any Senior Debt shall have occurred and be
continuing and shall have resulted in such Senior Debt
becoming or being declared due and payable prior to the
date on which it would otherwise have become due and
payable, or, in the case of either Clause (A) or Clause
(B) above, each such default or event of default shall
have been cured or waived or shall have ceased to
exist.

Section 1205. Deposited Money and U.S. Government
Obligations or Foreign Government Obligations
to be Held In Trust; Other Miscellaneous
Provisions.

Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations or
Foreign Government Obligations (including the proceeds
thereof) deposited with the Trustee or other qualifying
trustee (solely for purposes of this Section and Section
1206, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1204 in
respect of the Debentures of any series shall be held in
trust and applied by the Trustee, in accordance with the
provisions of the Debentures of such series and this
Indenture, to the payment, either directly or through any
such Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders
of Debentures of such series, of all sums due and to become
due thereon in respect of principal and any premium and
interest, but money so held in trust need not be segregated
from other funds except to the extent required by law.
Money so held in trust shall not be subject to the
provisions of Article Fourteen.

The Company shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations or Foreign
Government Obligations deposited pursuant to Section 1204 or
the principal and interest receive in respect thereof other
than any such tax, fee or other charge that by law is for
the account of the Holders of Outstanding Debentures.

Anything in this Article Twelve to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon Company Request any money or
U.S. Government Obligations or Foreign Government
Obligations held by it as provided in Section 1204 with
respect to Debentures of any series that, in the opinion of
a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to
effect an equivalent Defeasance or Covenant Defeasance with
respect to the Debentures of such series.

Section 1206. Reinstatement.

If the Trustee or the Paying Agent is unable to
apply any money in accordance with this Article Twelve with
respect to the Debentures of any series by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this
Indenture and the Debentures of such series shall be revived
and reinstated as though no deposit had occurred pursuant to
this Article Twelve with respect to Debentures of such
series until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust pursuant to
Section 1205 with respect to Debentures of such series in
accordance with this Article Twelve; provided, however, that
if the Company makes any payment of principal of or any
premium or interest on any Debenture of such series
following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of
Debentures of such series to receive such payment from the
money so held in trust.

ARTICLE THIRTEEN

Sinking Funds

Section 1301. Applicability of Article.

The provisions of this Article shall be applicable
to any sinking fund for the retirement of Debentures of a
series except as otherwise specified as contemplated by
Section 301 for Debentures of such series.

The minimum amount of any sinking fund payment
provided for by the terms of Debentures of any series is
herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided
for by the terms of Debentures of any series is herein
referred to as an "optional sinking fund payment". If
provided for by the terms of Debentures of any series, the
cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1302. Each sinking fund
payment shall be applied to the redemption of Debentures of
any series as provided for by the terms of Debentures of
such series.

Section 1302. Satisfaction of Sinking Fund Payments
with Debentures.

The Company (1) may deliver Outstanding Debentures
of a series (other than any previously called for
redemption) and (2) may apply as a credit Debentures of a
series which have been acquired or redeemed either at the
election of the Company pursuant to the terms of such
Debentures or through the application of permitted optional
sinking fund payments pursuant to the terms of such
Debentures or otherwise, in each case in satisfaction of all
or any part of any sinking fund payment with respect to the
Debentures of such series required to be made pursuant to
the terms of such Debentures as provided for by the terms of
such series; provided that such Debentures have not been
previously so credited. Such Debentures shall be received
and credited for such purpose by the Trustee at the
Redemption Price specified in such Debentures for redemption
through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.

Section 1303. Redemption of Debentures for Sinking Fund.

Not less than 45 days prior to each sinking fund
payment date for any series of Debentures, the Company will
deliver to the Trustee an Officers' Certificate specifying
the amount of the next ensuing sinking fund payment for that
series pursuant to the terms of that series, the portion
thereof, if any, which is to be satisfied by payment of cash
and the portion thereof, if any, which is to be satisfied by
delivering and crediting Debentures of that series pursuant
to Section 1302 and will also deliver to the Trustee any
Debentures to be so delivered. Not less than 15 nor more
than 45 days before each such sinking fund payment date the
Trustee shall select the Debentures to be redeemed upon such
sinking fund payment date in the manner specified in
Section 1103 and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in
the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Debentures shall be
made upon the terms and in the manner stated in
Sections 1106 and 1107.

ARTICLE FOURTEEN

Subordination of Debentures

Section 1401. Debentures Subordinate to Senior Debt.

The Company covenants and agrees, and each Holder
of a Debenture, by its acceptance thereof, likewise
covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article (subject to the
provisions of Article Four and Article Twelve), the payment
of the principal of (and premium, if any) and interest on
each and all of the Debentures are hereby expressly made
subordinate and subject in right of payment to the prior
payment in full of all amounts then due and payable in
respect of all Senior Debt.

Section 1402. Payment Over of Proceeds Upon Dissolution,
Etc.

In the event of (a) any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation,
arrangement, reorganization, debt restructuring or other
similar case or proceeding in connection with any insolvency
or bankruptcy proceeding, relative to the Company or to its
assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (c)
any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company, then
and in any such event specified in (a), (b) or (c) above
(each such event, if any, herein sometimes referred to as a
"Proceeding") the holders of Senior Debt shall be entitled
to receive payment in full of all amounts due or to become
due on or in respect of all Senior Debt, or provision shall
be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior
Debt, before the Holders of the Debentures are entitled to
receive any payment or distribution of any kind or
character, whether in cash, property or securities
(including any payment or distribution which may be payable
or deliverable by reason of the payment of any other Debt of
the Company subordinated to the payment of the Debentures,
such payment or distribution being hereinafter referred to
as "Junior Subordinated Payment"), on account of principal
of (or premium, if any) or interest on the Debentures or on
account of the purchase or other acquisition of Debentures
by the Company or any Subsidiary and to that end the holders
of Senior Debt shall be entitled to receive, for application
to the payment thereof, any payment or distribution of any
kind or character, whether in cash, property or securities,
including any Junior Subordinated Payment, which may be
payable or deliverable in respect of the Debentures in any
such Proceeding.

In the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of any
Debenture shall have received any payment or distribution of
assets of the Company of any kind or character, whether in
cash, property or securities, including any Junior
Subordinated Payment, before all Senior Debt is paid in full
or payment thereof is provided for in cash or cash
equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, and if such fact shall, at or prior
to the time of such payment or distribution, have been made
known to the Trustee or, as the case may be, such Holder,
then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or
distribution of assets of the Company for application to the
payment of all Senior Debt remaining unpaid, to the extent
necessary to pay all Senior Debt in full, after giving
effect to any concurrent payment or distribution to or for
the holders of Senior Debt. Any taxes that have been
withheld or deducted from any payment or distribution in
respect of the Debentures, or any taxes that ought to have
been withheld or deducted from any such payment or
distribution that have been remitted to the relevant taxing
authority, shall not be considered to be an amount that the
Trustee or the Holder of any Debenture receives for purposes
of this Section.

For purposes of this Article only, the words "any
payment or distribution of any kind or character, whether in
cash, property or securities" shall not be deemed to include
shares of stock of the Company as reorganized or readjusted,
or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment
which securities are subordinated in right of payment to all
then outstanding Senior Debt to substantially the same
extent as the Debentures are so subordinated as provided in
this Article. The consolidation of the Company with, or the
merger of the Company into, another Person or the
liquidation or dissolution of the Company following the sale
of all or substantially all of its properties and assets as
an entirety to another Person or the liquidation or
dissolution of the Company following the sale of all or
substantially all of its properties and assets as an
entirety to another Person upon the terms and conditions set
forth in Article Eight shall not be deemed a Proceeding for
the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the
Person which acquires by sale such properties and assets as
an entirety, as the case may be, shall, as a part of such
consolidation, merger, or sale comply with the conditions
set forth in Article Eight.

Section 1403. Prior Payment to Senior Debt Upon
Acceleration of Debentures.

In the event that any Debentures are declared due
and payable before their Stated Maturity, then and in such
event the holders of the Senior Debt outstanding at the time
such Debentures so become due and payable shall be entitled
to receive payment in full of all amounts due on or in
respect of such Senior Debt, or provision shall be made for
such payment in cash or cash equivalents or otherwise in a
manner satisfactory to the holders of Senior Debt, before
the Holders of the Debentures are entitled to receive any
payment (including any payment which may be payable by
reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Debentures)
by the Company on account of the principal of (or premium,
if any) or interest on the Debentures or on account of the
purchase or other acquisition of Debentures by the Company
or any Subsidiary; provided, however, that nothing in this
Section shall prevent the satisfaction of any sinking fund
payment in accordance with Article Thirteen by delivering
and crediting pursuant to Section 1302 Debentures which have
been acquired (upon redemption or otherwise) prior to such
declaration of acceleration.

In the event that, notwithstanding the foregoing,
the Company shall make any payment to the Trustee or the
Holder of any Debenture prohibited by the foregoing
provisions of this Section, and if such fact shall, at or
prior to the time of such payment, have been made known to
the Trustee or, as the case may be, such Holder, then and in
such event such payment shall be paid over and delivered
forthwith to the Company.

The provisions of this Section shall not apply to
any payment with respect to which Section 1402 would be
applicable.

Section 1404. No Payment When Senior Debt in Default.

(a) In the event and during the continuation of
any default in the payment of principal of (or premium, if
any) or interest on any Senior Debt, or in the event that
any event of default with respect to any Senior Debt shall
have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable
prior to the date on which it would otherwise have become
due and payable, unless and until such event of default
shall have been cured or waived or shall have ceased to
exist and such acceleration shall have been rescinded or
annulled, or (b) in the event any judicial proceeding shall
be pending with respect to any such default in payment or
such event of default, then no payment (including any
payment which may be payable by reason of the payment of any
other indebtedness of the Company being subordinated to the
payment of the Debentures) shall be made by the Company on
account of principal of (or premium, if any) or interest on
the Debentures or on account of the purchase or other
acquisition of Debentures by the Company or any Subsidiary;
provided, however, that nothing in this Section shall
prevent the satisfaction of any sinking fund payment in
accordance with Article Thirteen by delivering and crediting
pursuant to Section 1302 Debentures which have been acquired
(upon redemption or otherwise) prior to such default in
payment or event of default.

The provisions of this Section shall not apply to
any payment with respect to which Section 1402 would be
applicable.

Section 1405. Payment Permitted If No Default.

Nothing contained in this Article or elsewhere in
this Indenture or in any of the Debentures shall prevent (a)
the Company, at any time except during the pendency of any
Proceeding referred to in Section 1402 or under the
conditions described in Sections 1403 and 1404, from making
payments at any time of principal of (and premium, if any)
or interest on the Debentures, or (b) the application by the
Trustee of any money deposited with it hereunder to the
payment of or on account of the principal of (and premium,
if any) or interest on the Debentures or the retention of
such payment by the Holders, if, at the time of such
application by the Trustee, it did not have knowledge that
such payment would have been prohibited by the provisions of
this Article.

Section 1406. Subrogation to Rights of Holders of Senior
Debt.

Subject to the payment in full of all Senior Debt,
or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, the Holders of the Debentures shall
be subrogated to the extent of the payments or distributions
made to the holders of such Senior Debt pursuant to the
provisions of this Article (equally and ratably with the
holders of all indebtedness of the Company which by its
express terms is subordinated to indebtedness of the Company
to substantially the same extent as the Debentures are
subordinated to the Senior Debt and is entitled to like
rights of subrogation by reason of any payments or
distributions made to holders of such Senior Debt) to the
rights of the holders of such Senior Debt to receive
payments and distributions of cash, property and securities
applicable to the Senior Debt until the principal of (and
premium, if any) and interest on the Debentures shall be
paid in full. If the Trustee or the Holders of the
Debentures are not for any reason entitled to be subrogated
to the rights of holders of Senior Debt in respect of such
payment or distribution, then the Trustee or the Holders of
the Debentures may require each holder of Senior Debt to
whom any such payment or distribution is made as a condition
to such payment or distribution to assign its Senior Debt to
the extent of such payment or distribution and all rights
with respect thereto to the Trustee on behalf of the
Holders. Such assignment shall not be effective until such
time as all Senior Debt has been paid in full or payment
thereof provided for. For purposes of such subrogation or
assignment, no payments or distributions to the holders of
the Senior Debt of any cash, property or securities to which
the Holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to
the holders of Senior Debt by Holders of the Debentures or
the Trustee, shall, as among the Company, its creditors
other than holders of Senior Debt, and the Holders of the
Debentures, be deemed to be a payment or distribution by the
Company to or on account of the Senior Debt.

Section 1407. Provisions Solely to Define Relative Rights.

The provisions of this Article are and are
intended solely for the purpose of defining the relative
rights of the Holders of the Debentures on the one hand and
the holders of Senior Debt on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or
in the Debentures is intended to or shall (a) impair, as
among the Company, its creditors other than holders of
Senior Debt, and the Holders of the Debentures, the
obligations of the Company, which are absolute and
unconditional (and which, subject to the rights under this
Article of the holders of Senior Debt, are intended to rank
equally with all other general unsecured obligations of the
Company), to pay to the Holders of the Debentures the
principal of (and premium, if any) and interest on the
Debentures as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative
rights against the Company of the Holders of the Debentures
and creditors of the Company other than the holders of
Senior Debt; or (c) prevent the Trustee or the Holder of any
Debenture from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture
including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this
Article of the holders of Senior Debt to receive cash,
property and securities otherwise payable or deliverable to
the Trustee or such Holder.

Section 1408. Trustee to Effectuate Subordination.

Each Holder of a Debenture by his or her
acceptance thereof authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination
provided in this Article and appoints the Trustee his or her
attorney-in-fact for any and all such purposes.

Section 1409. No Waiver of Subordination Provisions.

No right of any present or future holder of any
Senior Debt to enforce subordination as herein provided
shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or by
any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture,
regardless of any knowledge thereof that any such holder may
have or be otherwise charged with.

Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Debt may, at any
time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Debentures, without
incurring responsibility to the Holders of the Debentures,
and without impairing or releasing the subordination
provided in this Article or the obligations hereunder of the
Holders of the Debentures to the holders of Senior Debt, do
any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of,
or renew or alter or increase, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt or any
instrument evidencing the same or any agreement under which
Senior Debt is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person
liable in any manner for the collection of Senior Debt; and
(iv) exercise or refrain from exercising any rights against
the Company and any other Person.

Section 1410. Notice to Trustee.

The Company shall give prompt written notice to
the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in
respect of the Debentures. Notwithstanding the provisions
of this Article or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of
any payment to or by the Trustee in respect of the
Debentures, unless and until the Trustee shall have received
written notice thereof from the Company or a holder of
Senior Debt or from any trustee, agent or representative
therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section
601, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee
shall not have received the notice provided for in this
Section at least two Business Days prior to the date upon
which by the terms hereof any money may become payable for
any purpose (including, without limitation, the payment of
the principal of (and premium, if any) or interest on any
Debenture), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received
by it within two Business Days prior to such date.

Subject to the provisions of Section 601, the
Trustee shall be entitled to rely on the delivery to it of a
written notice by a Person representing himself or herself
to be a holder of Senior Debt (or a trustee, agent or
representative therefor) to establish that such notice has
been given by a holder of Senior Debt (or a trustee, agent
or representative therefor). In the event that the Trustee
determines in good faith that further evidence is required
with respect to the right of any Person as a holder of
Senior Debt to participate in any payment or distribution
pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt held by such
Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this
Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such
payment.

Section 1411. Reliance on Judicial Order or Certificate of
Liquidating Agent.

Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to
the provisions of Section 601, and the Holders of the
Debentures shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in
which such Proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered
to the Trustee or to the Holders of Debentures, for the
purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of the Senior
Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or
to this Article.

Section 1412. Trustee Not Fiduciary For Holders of Senior
Debt.

The Trustee, in its capacity as trustee under this
Indenture, shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt and shall not be liable to any
such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Debentures or to the Company or
to any other Person cash, property or securities to which
any holders of Senior Debt shall be entitled by virtue of
this Article or otherwise.

Section 1413. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.

The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article with
respect to any Senior Debt which may at any time be held by
it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder.

Nothing in this Article shall apply to claims of,
or payments to, the Trustee under or pursuant to Section
607.

Section 1414. Article Applicable to Paying Agents.

In case at any time any Paying Agent other than
the Trustee shall have been appointed by the Company and be
then acting hereunder, the term "Trustee" as used in this
Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and
purposes as if such Paying Agent were named in this Article
in addition to or in place of the Trustee.

Section 1415. Defeasance of This Article Fourteen.

The subordination of the Debentures provided by
this Article Fourteen is expressly made subject to the
provisions for defeasance or covenant defeasance in Article
Twelve and, anything herein to the contrary notwithstanding,
upon the effectiveness of any such defeasance or covenant
defeasance, the Debentures then outstanding shall thereupon
cease to be subordinated pursuant to this Article Fourteen.

ARTICLE FIFTEEN

Miscellaneous

Section 1501. Assignment; Binding Effect.

The Company shall have the right at all times to
assign any of its rights or obligations under this Indenture
to a direct or indirect wholly owned Subsidiary of the
Company other than any Subsidiary that is an insurance
company; provided that, in the event of any such assignment,
the Company shall remain jointly and severally liable for
all such obligations. The Company may not otherwise assign
any of its obligations under this Indenture. Except as
otherwise provided in this Indenture, Capital may not assign
any of its rights under this Indenture without the prior
written consent of the Company. Subject to the foregoing,
this Indenture shall be binding upon and inure to the
benefit of the Company and the Holders from time to time of
the Debentures and their respective successors and assigns.

Section 1502. Third Party Beneficiaries.

The Company hereby acknowledges that prior to a
Security Exchange with respect to the Debentures of any
series, the holders of the Preferred Securities of the
related series shall expressly be third party beneficiaries
of this Indenture.

Section 1503. Set-off.

Notwithstanding anything to the contrary herein,
prior to any Security Exchange with respect to the
Debentures of any series, the Company shall have the right
to set off any payment with respect to the Debentures of
such series with and to the extent the Company has
theretofore made, or is concurrently on the date of such
payment making, a payment under the Guarantee with respect
to Preferred Securities of the related series.

This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to
be an original, but all such counterparts shall together
constitute but one and the same instrument.

_____________________________

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as
of the day and year first above written.

AETNA LIFE AND CASUALTY
COMPANY

By......................

Attest:

........................

THE FIRST NATIONAL BANK
OF CHICAGO

By......................

Attest:

........................

STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )

On the .... day of ..........., 1993, before me
personally came ..........................., to me known,
who, being by me duly sworn, did depose and say that (s)he
is .................... of AETNA LIFE AND CASUALTY COMPANY,
one of the corporations described in and which executed the
foregoing instrument; that (s)he knows the seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that (s)he
signed her/his name thereto by like authority.

........................

STATE OF ILLINOIS )
) ss.:
COUNTY OF )

On the .... day of ..........., 1993, before me
personally came ..........................., to me known,
who, being by me duly sworn, did depose and say that (s)he
is .................... of FIRST NATIONAL BANK OF CHICAGO,
one of the corporations described in and which executed the
foregoing instrument; that (s)he knows the seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that (s)he
signed her/his name thereto by like authority.

........................

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939

OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(B)(2)

THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)

A National Banking Association 36-0899825
(I.R.S. employer
identification number)

One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)

The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)

-------------------

AETNA LIFE AND CASUALTY COMPANY
(Exact name of obligor as specified in its charter)

Connecticut 06-0843808
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)

151 Farmington Avenue 06156
Hartford, Connecticut (Zip Code)
(Address of Principal Executive Offices)

Debt Securities

(Title of Indenture Securities)

ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION
AS TO THE TRUSTEE:

(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISION
AUTHORITY TO WHICH IT IS SUBJECT.

Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation, Washington,
D. C., The Board of Governors of the Federal
Reserve System, Washington, D. C.

(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE
TRUST POWERS.

The trustee is authorized to exercise corporate
trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN
AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

No such affiliation exists with the trustee.

ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
PART OF THIS STATEMENT OF ELIGIBILITY.

1. A copy of the articles of association of the
trustee now in effect.*

2. A copy of the certificates of authority of the
trustee to commence business.*

3. A copy of the authorization of the trustee to
exercise corporate trust powers.*

4. A copy of the existing by-laws of the trustee.*

5. Not applicable.

6. The consent of the trustee required by Section
321(b) of the Act.

7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.

8. Not applicable.

9. Not applicable.

* EXHIBIT 1,2,3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO
EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF
THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 26 TO THE
REGISTRATION STATEMENT ON FORM S-3 OF THE CIT GROUP HOLDINGS,
INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OF
FEBRUARY 16, 1993 (REGISTRATION NO. 33-58418).

Pursuant to the requirements of the Trust Indenture Act of 1939,
as amended, the trustee, The First National Bank of Chicago, a
national banking association organized and existing under the
laws of the United States of America, has duly caused this
Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of
Chicago, and State of Illinois, on the 7th day of April, 1994.

The First National Bank of Chicago,
Trustee,

By: /s/ STEVEN M. WAGNER
-----------------------------
Steven M. Wagner
Vice President & Senior Counsel
Corporate Trust Services Division

EXHIBIT 6

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(B) OF THE ACT

April 7, 1994

Securities and Exchange Commission
Washington, D. C. 20549

Gentlemen:

In connection with the qualification of an indenture between
Aetna Life and Casualty Company and The First National Bank of
Chicago, the undersigned, in accordance with Section 321(b) of
the Trust Indenture Act of 1939, as amended, hereby consents that
the reports of examinations of the undersigned, made by Federal
or State Authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.

Very truly yours,

THE FIRST NATIONAL BANK OF CHICAGO

By: /s/ STEVEN M. WAGNER
------------------------------
Steven M. Wagner
Vice President and Senior Counsel
Corporate Trust Services Division

EXHIBIT 7

A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority.

Legal Title of Bank: The First National Bank Call Date: 12/31/93
Address: of Chicago ST-BK: 17-1630 FFIEC 031
City, State Zip: One First National Plaza, Page RC-1
FDIC Certificate No.: Suite 0460 Chicago, IL 60670
0/3/6/1/8

CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1993

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.

<TABLE>
<CAPTION>
SCHEDULE RC--BALANCE SHEET

C400 <-
DOLLAR AMOUNTS IN ------------- ----
THOUSANDS RCFD BIL MIL THOU
----------------- ---- --- --- ----
<S>
ASSETS <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule
RCA-A):
a. Noninterest-bearing balances and currency and coin(1) . . 0081 3,552,441 1.a.
1.a.
b. Interest-bearing balances(2) . . . . . . . . . . . . . . . 0071 5,687,085 1.b.
2. Securities (from Schedule RC-B) . . . . . . . . . . . . . . . 0390 470,252 2
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold . . . . . . . . . . . . . . . . . . . . 0276 3,985,638 3.a.
b. Securities purchased under agreements to resell . . . . . 0277 880,886 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 13,308,340 4.a.
b. LESS: Allowance for loan and lease losses . . . . . . . . RCFD 3123 339,885 4.b.
c. LESS: Allocated transfer risk reserve . . . . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . 2125 12,968,455 4.d.
5. Assets held in trading accounts . . . . . . . . . . . . . . . 2146 3,109,630 5.
6. Premises and fixed assets (including capitalized leases) . . 2145 497,559 6.
7. Other real estate owned (from Schedule RC-M) . . . . 2150 101,446 7.
8. Investments in unconsolidated subsidiaries and associated
- -98 companies (from Schedule RC-M) . . . . . . . . . . . . . . . 2130 6,375 8.
9. Customers' liability to this bank on acceptances outstanding . 2155 477,130 9.
10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . 2143 147,257 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . 2160 2,607,308 11.
12. Total assets (sum of items 1 through 11) . . . . . . . . . . 2170 34,491,462 12.
<FN>
- ----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
</TABLE>

<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/93 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Suite 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
</TABLE>

SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>

DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
---------------- ---------------
LIABILITIES
<S> <C> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1) . . . . . . . . . . . . RCON 2200 15,870,533 13.a
(1) Noninterest-bearing(1) . . . . . . . . .. . . . . RCON 6631 7,494,138 13.a.(1)
(2) Interest-bearing . . . . . . . . . . . . . . . . RCON 6636 8,376,395 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II) . . . . . . . RCFN 2200 7,254,022 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . . RCFN 6631 352,283 13.b.(1)
(2) Interest-bearing RCFN 6636 6,901,739 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased . . . . . . . . . . . . . RCFD 0278 2,649,907 14.a.
b. Securities sold under agreements to repurchase . . RCFD 0279 171,899 14.b
15. Demand notes issued to the U.S. Treasury . . . . . RCON 2840 106,087 15.
16. Other borrowed money . . . . . . . . . . . . . . . RCFD 2850 1,782,869 16.
17. Mortgage indebtedness and obligations under capitalized
leases . . . . . . . . . . . . . . . . . . . . . RCFD 2910 267,000 17.
18. Bank's liability on acceptance executed and outstanding RCFD 2920 477,130 18.
19. Subordinated notes and debentures . . . . . . . . . . RCFD 3200 1,175,000 19.
20. Other liabilities (from Schedule RC-G) . . . . . RCFD 2930 2,049,329 20.
21. Total liabilities (sum of items 13 through 20) . . . . RCFD 2948 31,803,776 21.
22. Limited-Life preferred stock and related surplus . . . RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus . . . . RCFD 3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,254,940 25.
26. a. Undivided profits and capital reserves . . . . . . . RCFD 3632 232,478 26.a.
b. LESS: Net unrealized loss on marketable equity
securities . . . . . . . . . . . . . . . . . . . . . RCFD 0297 (299) 26.b.
27. Cumulative foreign currency translation adjustments . . RCFD 3284 (889) 27.
28. Total equity capital (sum of items 23 through 27) . . . RCFD 3210 2,687,686 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28) . . . . . . . . . RCFD 3300 34,491,462 29.
</TABLE>

Memorandum
<TABLE>
<S> <C>
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external
auditors as of any date during 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFA.6724 N/A M.1.
</TABLE>

<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
<FN>
_________
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
</TABLE>