AMERICAN HERITAGE LIFE INVESTMENT CORP, S-3/A, 1997-06-23

AMERICAN HERITAGE LIFE INVESTMENT CORP
S-3/A, 1997-06-23
LIFE INSURANCE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1997

REGISTRATION NO. 333-24153
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 2

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
AHL FINANCING
(Exact Name of Registrants as Specified in their Charters)

<TABLE>
<S> <C>
FLORIDA 59-1219710
DELAWARE APPLIED FOR
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.)
Organization)
</TABLE>

1776 AMERICAN HERITAGE LIFE DRIVE, JACKSONVILLE, FLORIDA 32224, (904) 992-1776
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
------------------------
W. MICHAEL HEEKIN, ESQ.
SENIOR VICE PRESIDENT AND CORPORATE SECRETARY
1776 AMERICAN HERITAGE LIFE DRIVE
JACKSONVILLE, FLORIDA 32224
(904) 992-1776
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service for Each Registrant)
Copies to:

<TABLE>
<C> <C>
JOHN R. BYERS, ESQ. JOHN W. OSBORN, ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
50 NORTH LAURA STREET, SUITE 2800 919 THIRD AVENUE
JACKSONVILLE, FLORIDA 32202 NEW YORK, NEW YORK 10022
(904) 354-8000 (212) 735-3000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box: []
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, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: []
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number or the earlier
effective registration statement of the same offering: []
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number or the earlier effective registration statement
for the same offering: []
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: []
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================================================
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TO BE OFFERING PRICE OFFERING REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1)(3) PRICE(1)(2)(3) FEE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FELINE PRIDES(4)...................................... 2,070,000 $50.00 $103,500,000 $31,363.64
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, $1.00 par value, of AHLIC(5)............ $103,500,000 $31,363.64
- ------------------------------------------------------------------------------------------------------------------------------
Total........................................ $207,000,000 $62,727.28(6)
==============================================================================================================================
</TABLE>

(1) Such indeterminate number of Trust Preferred Securities of AHL Financing and
such indeterminate principal amount of Purchase Contracts, and Common Stock
of American Heritage Life Investment Corporation, a Florida corporation
("AHLIC"), as may from time to time be issued at indeterminate prices. %
Junior Subordinated Debentures will be issued and sold by AHLIC to AHL
Financing, which may later be distributed to the holders of Trust Preferred
Securities upon a dissolution of AHL Financing and the distribution of the
assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(3) Exclusive of accrued interest and distributions, if any.
(4) Each FELINE PRIDES is a unit that consists initially of a Purchase Contract
and a Trust Preferred Security. Each Purchase Contract obligates AHLIC to
sell, and the registered owner thereof to purchase, on or before the
Purchase Contract Settlement Date, certain shares of Common Stock of AHLIC.
AHLIC has issued a Guarantee of the Trust Preferred Securities.
(5) Such indeterminate number of shares of Common Stock to be issued by AHLIC
upon settlement of the Purchase Contracts.

(6) $52,273.00 of the Registration Fee has been previously paid.

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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE> 2

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 JUNE 23, 1997

PROSPECTUS

1,800,000 FELINE PRIDES(SM) [AHL LOGO]

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
AHL FINANCING

The securities offered hereby are 1,800,000 FELINE PRIDES(SM) (the
"Securities") of American Heritage Life Investment Corporation, a Florida
corporation ("AHLIC" or the "Company"), and AHL Financing, a Delaware statutory
business trust (the "Trust"). Each FELINE PRIDES offered hereby initially will
consist of a unit (referred to as an Income PRIDES(SM)) with a Stated Amount of
$50 (the "Stated Amount") comprised of (a) a stock purchase contract (the
"Purchase Contract") under which (i) the holder will purchase from the Company
on August 16, 2000 (the "Purchase Contract Settlement Date"), for an amount in
cash equal to the Stated Amount, a number of shares of common stock, $1.00 par
value, of the Company (the "Common Stock") equal to the Settlement Rate or Cash
Settlement Rate described herein, as applicable, and (ii) the Company will pay
the holder unsecured, subordinated contract adjustment payments ("Contract
Adjustment Payments"), and (b) beneficial ownership of a % Trust Originated
Preferred Security (a "Trust Preferred Security"), having a stated liquidation
amount per Trust Preferred Security equal to the Stated Amount, representing a
preferred undivided beneficial interest in the assets of the Trust. The Company
will, directly or indirectly, own all of the common securities (the "Common
Securities") representing common undivided beneficial interests in the assets of
the Trust. The Trust exists for the sole purpose of issuing the Trust Preferred
Securities and Common Securities and investing the proceeds thereof in an
equivalent amount of % Junior Subordinated Debentures of the Company, due
August 16, 2002 (the "Junior Subordinated Debentures"). As long as the FELINE
PRIDES are in the form of Income PRIDES, the Trust Preferred Securities will be
pledged to the Collateral Agent (as defined herein), to secure the holder's
obligation to purchase Common Stock under the Purchase Contract.

(Continued on next page)
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING
AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE SECURITIES MAY BE DEFERRED AND
THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------------

Prior to the offering made hereby there has been no public market for the
Securities. The Income PRIDES have been approved for listing on the New York
Stock Exchange ("NYSE") under the symbol "AHL prI", subject to official notice
of issuance. The Growth PRIDES (as defined herein) and the Trust Preferred
Securities will not be listed or traded on any securities exchange. On June 19,
1997, the last reported sale price of the Common Stock on the NYSE was $30.63
per share.

------------------------

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.

<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) COMMISSION(2) COMPANY(3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Income PRIDES...................... $50.00 $ $
- ------------------------------------------------------------------------------------------------------------------
Total(4)............................... $90,000,000 $ $
==================================================================================================================
</TABLE>

(1) Plus accrued distributions on the Trust Preferred Securities and Contract
Adjustment Payments, if any, from , 1997.
(2) The Company and the Trust have agreed to indemnify the Underwriters against
certain liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting estimated expenses payable by the Company estimated at
$ .

(4) The Company and the Trust have granted the Underwriters a 30-day option to
purchase up to an additional 270,000 Income PRIDES to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public will
be $ , Underwriting Commission will be $ and Proceeds to the Company
will be $ . See "Underwriting."

------------------------

The Securities are offered by the several Underwriters, subject to prior
sale, when as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Securities offered hereby will be made in New York, New York on
or about , 1997.
------------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
OPPENHEIMER & CO., INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
------------------------

THE DATE OF THIS PROSPECTUS IS , 1997.
- ---------------

(SM) Service Mark of Merrill Lynch & Co. Inc.
<PAGE> 3

Payments of % of the Stated Amount per annum will be made or accrue on
each Income PRIDES quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1997, until the Purchase
Contract Settlement Date. These payments will consist of cumulative cash
distributions on the Trust Preferred Securities payable by the Trust at the rate
of % of the Stated Amount per annum, and Contract Adjustment Payments payable
by the Company at the rate of % of the Stated Amount per annum. The ability of
the Trust to make the quarterly distributions on the Trust Preferred Securities
is solely dependent upon the receipt of corresponding interest payments from the
Company on the Junior Subordinated Debentures. The Company has the right at any
time, and from time to time, limited to a period not extending beyond the
maturity date of the Junior Subordinated Debentures, to defer the interest
payments due on the Junior Subordinated Debentures and to defer Contract
Adjustment Payments until the Purchase Contract Settlement Date. As a
consequence of such deferral, quarterly distributions on the Income PRIDES would
be deferred, but would continue to accrue with interest compounded quarterly.

The payment of distributions out of moneys held by the Trust and payments
on liquidation of the Trust are guaranteed by the Company (the "Guarantee") to
the extent described herein and under "Description of the Guarantee." The
Guarantee covers payments of distributions and other payments on the Trust
Preferred Securities only if and to the extent the Trust has funds available
therefor, which will not be the case unless the Company has made a payment of
principal or interest on the Junior Subordinated Debentures held by the Trust as
its sole asset. The Guarantee, when taken together with the Company's
obligations under the Junior Subordinated Debentures, the Indenture (as defined
below) and the Company's obligations under the Declaration (as defined below),
provides a full and unconditional guarantee on a subordinated basis by the
Company of amounts due on the Trust Preferred Securities. The Guarantee is
subordinate and junior in right of payment to all other liabilities of the
Company and ranks pari passu with the most senior preferred stock, if any,
issued from time to time by the Company.

Each holder will have the right, at any time after issuance of the Income
PRIDES, to substitute for any Trust Preferred Securities held by the Collateral
Agent zero-coupon U.S. Treasury Securities (CUSIP No. 912820 AX5) which are
principal strips of the 8.75% U.S. Treasury Securities which mature on August 15
, 2000 (the "Treasury Securities") in a principal amount per Purchase Contract
equal to the Stated Amount per Trust Preferred Security. Holders may make such
substitution only in integral multiples of 20 Income PRIDES. Securities with
respect to which Treasury Securities have been substituted for Trust Preferred
Securities as collateral to secure a holder's obligation under the Purchase
Contracts, are referred to herein as Growth PRIDES(SM). Each Growth PRIDES will
consist of a unit with a face amount of $1,000 comprised of (a) 20 Purchase
Contracts under which for each Purchase Contract (i) the holder will purchase
from the Company on the Purchase Contract Settlement Date or earlier for an
amount of cash equal to the Stated Amount, a number of shares of Common Stock of
the Company equal to the Cash Settlement Rate described herein, and (ii) the
Company will pay the holder Contract Adjustment Payments, and (b) beneficial
ownership of a Treasury Security having a principal amount at maturity equal to
$1,000. Upon the substitution of Treasury Securities for Trust Preferred
Securities as collateral, such Trust Preferred Securities will be released to
the holder as described herein and thereafter will trade separately from the
resulting Growth PRIDES. Contract Adjustment Payments will be payable by the
Company on the Growth PRIDES on March 31, June 30, September 30 and December 31
of each year. In addition, interest will accrete on the underlying Treasury
Securities. Distributions on any Trust Preferred Securities still outstanding
after the Purchase Contract Settlement Date or after a substitution of
collateral resulting in the creation of Growth PRIDES will continue to be
payable by the Trust at the rate of % of the Stated Amount per annum, subject
to the deferral right described above. A holder of Growth PRIDES will have the
right to subsequently recreate Income PRIDES by delivering a Growth PRIDES to
the Purchase Contract Agent plus 20 Trust Preferred Securities per Growth PRIDES
to the Collateral Agent in exchange for 20 Income PRIDES and the release of the
underlying Treasury Securities to such holder.

On the Purchase Contract Settlement Date, unless a holder of the Income
PRIDES (i) has settled the underlying Purchase Contract either through the early
delivery of cash to the Purchase Contract Agent in the manner described herein
or otherwise or (ii) has notified the Purchase Contract Agent of its intention
to settle the related Purchase Contract with separate cash on the Purchase
Contract Settlement Date and has so settled the related Purchase Contract, such
holder will be deemed to have requested the Trust to put the related

2
<PAGE> 4

Junior Subordinated Debenture to the Company, and the principal amount of such
Junior Subordinated Debenture equal to the Stated Amount per Purchase Contract
will automatically be applied to satisfy in full such holder's obligation to
purchase Common Stock under the Purchase Contract. To the extent that holders of
Income PRIDES settle the related Contracts as described in (i) or (ii) above,
the related Trust Preferred Securities will not be redeemed on the Purchase
Contract Settlement Date as stated above and the holders of such Trust Preferred
Securities will have the right on the Contract Purchase Settlement Date and for
a period of ninety days thereafter to require the Trust to put to the Company,
and the Company to repurchase, the related Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures -- Put Option."

With respect to each Growth PRIDES outstanding on the Purchase Contract
Settlement Date, the principal amount of the Treasury Securities underlying each
Growth PRIDES, when paid at maturity, will be automatically applied to satisfy
in full the holder's obligation to purchase Common Stock under the 20 Purchase
Contracts per Growth PRIDES.

In the event that a holder of either an Income PRIDES or Growth PRIDES
effects the early settlement of a related Purchase Contract through the delivery
of cash or the holder of an Income PRIDES settles a Purchase Contract with cash
on the Purchase Contract Settlement Date, the underlying Trust Preferred
Securities or Treasury Securities, as the case may be, will be released to the
holder as described herein.

A holder of Income PRIDES whose Purchase Contract has been settled with
cash, or a holder of Growth PRIDES whose Purchase Contract has been settled
through application of the principal amount of the related Treasury Securities,
on the Purchase Contract Settlement Date, will receive 0.125% more shares of
Common Stock per Purchase Contract than will be received by a holder of Income
PRIDES whose Purchase Contracts are settled through the put of the related
Junior Subordinated Debentures to the Company, and the redemption of the related
Trust Preferred Securities, on the Purchase Contract Settlement Date. A holder
of FELINE PRIDES whose Purchase Contract has settled through Early Settlement
will receive 0.125% more shares of Common Stock per Purchase Contract than would
be received by a holder of Income PRIDES who receives the Settlement Rate on the
Purchase Contract Settlement Date if the Applicable Market Value was then equal
to or greater than the Threshold Appreciation Price.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES AND
THE SHARES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF
SECURITIES AND THE SHARES TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION
OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

THE STATES IN WHICH THE COMPANY'S INSURANCE SUBSIDIARIES ARE DOMICILED HAVE
ENACTED LEGISLATION OR ADOPTED ADMINISTRATIVE REGULATIONS AFFECTING THE
ACQUISITION OF CONTROL OF INSURANCE COMPANIES AS WELL AS TRANSACTIONS BETWEEN
INSURANCE COMPANIES AND PERSONS CONTROLLING THEM. MOST STATES REQUIRE
ADMINISTRATIVE APPROVAL OF THE ACQUISITION OF CONTROL OF AN INSURANCE COMPANY
INCORPORATED IN THE STATE OR THE ACQUISITION OF CONTROL OF AN INSURANCE HOLDING
COMPANY WHOSE INSURANCE SUBSIDIARY IS INCORPORATED IN THE STATE. IN FLORIDA, THE
ACQUISITION OF 5% AND IN TEXAS, THE ACQUISITION OF 10% OF SUCH SHARES IS
GENERALLY DEEMED TO BE THE ACQUISITION OF "CONTROL" FOR THE PURPOSE OF THE
HOLDING COMPANY STATUTES AND REQUIRES NOT ONLY FILING OF DETAILED INFORMATION
CONCERNING THE ACQUIRING PARTIES AND THE PLAN OF ACQUISITION, BUT ALSO
ADMINISTRATIVE APPROVAL PRIOR TO THE ACQUISITION. HOWEVER, IN LIEU OF OBTAINING
SUCH APPROVAL, THE FLORIDA AND TEXAS DEPARTMENTS OF INSURANCE PROVIDE PROCEDURES
FOR OBTAINING GREATER PERCENTAGES OF SUCH SHARES BY FILING DISCLAIMERS, SEEKING
WAIVERS OR OTHER SIMILAR PROCEDURES.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
TRUST OR BY ANY AGENT,

3
<PAGE> 5

DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AT ANY
TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.

NO EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR INDIVIDUAL RETIREMENT
ACCOUNT OR PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "ARC") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE
"PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET
ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY ACQUIRE OR
SHOULD HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR
HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF
LABOR PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1
OR 84-14. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL
BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT EITHER
(A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING SUCH SECURITIES
ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B) IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH
RESPECT TO SUCH PURCHASE AND HOLDING. SEE "ERISA CONSIDERATIONS."
------------------------

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 which are not historical
facts, and involve risks and uncertainties that could cause actual results to
differ materially from those expected, projected, estimated or budgeted. Such
risks and uncertainties include, but are not limited to, the following: (i)
heightened competition, including specifically the intensification of price
competition, the entry of new competitors and the formation of new products by
new and existing competitors, (ii) adverse state and federal legislation and
regulation, including limitations on premium levels, increases in minimum
capital and reserves, and other financial viability requirements, benefit
mandates, limitations on the ability to manage health care and utilization, and
tax treatment of insurance products, (iii) failure to obtain new customers or
retain existing customers, (iv) inability to carry out marketing and sales
plans, (v) loss of key executives, (vi) changes in interest rates causing a
reduction of investment income, (vii) general economic and business conditions
which are less favorable than expected, (viii) unanticipated changes in industry
trends, (ix) failure to maintain adequate reinsurance, (x) possible claims
relating to sales practices for insurance products and claim denials, (xi)
adverse changes in the ratings obtained by independent rating agencies, and
(xii) inaccuracies in assumptions regarding future morbidity, persistency,
mortality and interest rates used in calculating reserve amounts. In addition,
factors that could cause actual results of the Company to differ materially from
those contemplated by or projected, forecast, estimated or budgeted in forward
looking statements relating to the results of operations and business of the
Company following the acquisition of Columbia Universal Corporation and its
insurance subsidiary include the following possibilities: (i) the expected cost
savings to be realized are not made or unanticipated offsetting costs are
incurred, and (ii) costs or difficulties related to the integration of the
businesses of the Company and Columbia Universal Corporation are greater than
expected. Accordingly, there can be no assurance that the actual results will
conform to the forward-looking statements in this Prospectus.
------------------------

4
<PAGE> 6

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Reports, proxy statements and other information
concerning the Company can be inspected and copied at the SEC's Public Reference
Room, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as
the following Regional Offices of the SEC: 7 World Trade Center, Suite 1300, New
York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, at prescribed rates. The SEC also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The address of such site is http://www.sec.gov. Such reports, proxy statements
and other information may also be inspected at the offices of the NYSE, on which
the Company's Common Stock is traded, at 20 Broad Street, New York, New York
10005.

This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and the Trust with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), with respect to the Securities.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company, the Trust and the Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC or incorporated by
reference herein are not necessarily complete, and in each instance reference is
made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.

No separate financial statements of the Trust have been included herein.
The Company does not consider that such financial statements would be material
to holders of the Securities because (i) all of the voting securities of the
Trust will be owned, directly or indirectly, by the Company, a reporting company
under the Exchange Act, (ii) the Trust has no independent operations but exists
for the sole purpose of issuing securities representing undivided beneficial
interests in the assets of such Trust and investing the proceeds thereof in %
Junior Subordinated Debentures issued by the Company, and (iii) the Company's
obligations described herein and in any accompanying prospectus supplement under
the Declaration of Trust, the Guarantee issued with respect to Trust Preferred
Securities issued by the Trust, the % Junior Subordinated Debentures
purchased by the Trust and the Indenture, taken together, constitute a full and
unconditional guarantee of payments due on the Trust's Securities. See
"Description of the % Junior Subordinated Debentures" and "Description of the
Guarantee."

The Trust is not currently subject to the information reporting
requirements of the 1934 Act. The Trust will become subject to such requirements
upon the effectiveness of the Registration Statement, although the Trust intends
to seek and expects to receive an exemption therefrom.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company (File No. 1-7255) with the SEC
pursuant to the 1934 Act are incorporated by reference herein and made a part
hereof:

1. Annual Report on Form 10-K for the year ended December 31, 1996.

2. Quarterly Report on Form 10-Q for the period ended March 31, 1997.

3. Current Report on Form 8-K dated January 2, 1997.

4. Current Report on Form 8-K dated March 3, 1997 as amended by
Current Report on Form 8-K/A dated March 3, 1997.

5
<PAGE> 7

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date hereof and prior to the termination
of the offering of the Securities pursuant hereto shall be deemed to be
incorporated by reference in this Prospectus or in any Prospectus Supplement 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 in this Prospectus or in any Prospectus Supplement shall be deemed to
be modified or superseded for purposes of this Prospectus or any Prospectus
Supplement to the extent that a statement contained in this Prospectus or in any
Prospectus Supplement or in any other subsequently filed document which also is
or is deemed to be incorporated by reference in this Prospectus or in any
Prospectus Supplement modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or any Prospectus Supplement.

The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the foregoing documents incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to: Corporate Secretary, American Heritage Life Investment
Corporation, 1776 American Heritage Life Drive, Jacksonville, Florida 32224;
Telephone: (904) 992-1776.

6
<PAGE> 8

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere in this
Prospectus or incorporated herein by reference. Except as otherwise noted, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment option. Except as otherwise indicated, all financial information
regarding the Company and its insurance subsidiaries has been prepared in
accordance with generally accepted accounting principles rather than statutory
accounting principles.

THE COMPANY

American Heritage Life Investment Corporation is a holding company whose
principal subsidiaries are American Heritage Life Insurance Company, a Florida
life insurance company ("AHL"), and Columbia Universal Life Insurance Company, a
Texas life insurance company ("Columbia Universal"). The Company is engaged in
the business of underwriting life and accident and health insurance on an
individual, group and credit basis. The Company is a leading marketer of life
and supplemental health insurance products through payroll allotment, a
specialized distribution method on which it has focused since its inception.
Payroll allotment is an efficient way to distribute most products to employees
on the job by conveniently deducting the premium from their paychecks. The
Company was organized on September 11, 1956 and is presently authorized to do
business as a life insurance company in all states, other than New York, and in
the District of Columbia, U.S. Virgin Islands and Puerto Rico.

The Company entered into an agreement in principle on December 10, 1996 to
acquire Columbia Universal Corporation and its principal subsidiary, Columbia
Universal Life Insurance Company (collectively, "Columbia Universal"), for a
purchase price of $44.0 million. The acquisition was closed on March 3, 1997. On
April 16, 1997 the Company announced an agreement in principle to acquire
Concord General Life Insurance Company ("Concord") for total consideration of
$7.5 million in cash, which is expected to close in the second quarter of 1997.

The Company has reported increased operating earnings for 21 consecutive
years and has increased dividends to shareholders for 28 consecutive years. The
following chart presents the Company's consolidated operating earnings for the
last ten years. Operating earnings are defined as net earnings excluding
realized investment gains and losses, net of income taxes, and non-recurring
gains related to the sale of home office property.

OPERATING EARNINGS HISTORY(1)

<TABLE>
<CAPTION>
YEAR ENDED % INCREASE
DECEMBER 31 OPERATING EARNINGS FROM PRIOR YEAR
----------- ------------------ ---------------
(IN THOUSANDS)
<S> <C> <C>
1987................................................... $ 9,637 6.5%
1988................................................... 10,649 10.5
1989................................................... 11,920 11.9
1990................................................... 13,409 12.5
1991................................................... 15,019 12.0
1992................................................... 16,739 11.5
1993................................................... 18,945 13.2
1994................................................... 22,334 17.9
1995................................................... 24,174 8.2
1996................................................... 26,759 10.7
</TABLE>

- ---------------

(1) Excluding investment income on the net proceeds of $33.5 million from a
secondary public stock offering in 1993, the percentage increase in
operating earnings was 11.9% and 11.4% for 1994 and 1993, respectively, and
the average annual percentage increase in earnings from operations for the
period 1987-1996 was 10.7%.

7
<PAGE> 9

AHL is rated "A (Excellent)" by A. M. Best Company ("A. M. Best"), an
independent nationally recognized insurance publishing and rating service.
During the second quarter of 1997, Columbia Universal's A.M. Best rating was
upgraded from "B (Adequate)" to "A- (Excellent)". Standard & Poor's Insurance
Rating Services ("S&P") has given AHL an insurer claims-paying ability rating of
"AA". At March 31, 1997, the Company had $1.7 billion of total assets, $225.7
million of stockholders' equity and more than $22.1 billion of gross life
insurance volume in force. Also, approximately 96% of the $803.4 million of debt
securities held by the Company had investment grade ratings.

The Company operates in three marketing areas -- ordinary, group and
credit -- which accounted for 82%, 11% and 7%, respectively, of the Company's
pre-tax operating earnings for the three months ended March 31, 1997.

ORDINARY OPERATIONS provide interest-sensitive products (universal life,
single and flexible premium deferred annuities and excess-interest whole life),
single premium immediate annuities, level and decreasing term products and
supplemental accident and health insurance products to individuals. The largest
portion (76.7% for the three months ended March 31, 1997) of new annualized
sales was produced on a payroll allotment basis with the remainder produced by a
variety of direct billing methods through individual agents. The Company's
strategy in its ordinary operations is to offer a broader product mix than its
competitors in the payroll allotment area and to solicit all of the employee
base by targeting direct sales of insurance products to higher income employees
in addition to payroll allotment sales. Recent life insurance studies published
by LIMRA International, a prominent industry market research organization,
indicate that the Company is one of only four life insurance companies that sell
in excess of $40 million of voluntary payroll life and payroll health insurance
premiums per year. To describe the Company's differentiation in the marketplace,
the Company has coined the following descriptive phrase: "AHL -- The Workplace
Marketer(R) -- the Company that serves the life and supplemental health
insurance needs of the American worker -- from the lunchroom to the board room."

GROUP OPERATIONS distribute insurance products and related services to
large employers for their employee benefit plans. The Company provides life,
disability, medical and dental insurance programs, which constitute the
foundation of any employer's package of group benefits. The Company furnishes
all components necessary to effectively manage program costs for the client
companies including a provider network, managed care program and benefits
determination. Group products include group term life insurance, accidental
death and dismemberment, short-term disability, long-term disability, dental and
major medical coverage. In offering these product lines, the Company provides a
wide range of funding vehicles from fully insured to employer funded products,
which the Company tailors to the particular needs of its employer clients. The
Company's strategy in the group market is to focus on southeastern employers
with 500 to 5,000 employees. The Company formed a health maintenance
organization subsidiary in 1996 which was licensed in the second quarter of
1997.

CREDIT OPERATIONS consist of life and accident and health insurance
coverages offered to consumer debtors, chiefly through banks, automobile
dealers, finance companies and retailers. The Company currently offers credit
insurance products in 44 states and ranks among the top 15 credit life insurance
providers in the country. Typically, this insurance will pay outstanding loan
obligations in the event of an insured loss. This coverage is issued on either
the single-premium or outstanding loan balance basis. Credit life is sold on a
reducing or level-term basis. Credit accident and health insurance will normally
only be written in conjunction with credit life insurance. To complement credit
life and accident and health sales, First Colonial Insurance Company, a
subsidiary of the Company ("FCIC") and a Florida insurance company, offers
credit property insurance coverage.

BUSINESS STRATEGIES

The Company's objective is to continue its record of increased operating
earnings by following the strategies set forth below:

COMMITMENT TO CORE BUSINESSES. The Company's primary focus will
continue to be on its core businesses. Additionally, the Company will
continue to evaluate opportunities to grow from internal

8
<PAGE> 10

expansion as well as by acquisitions of blocks of business and/or companies
that are compatible with the Company's core businesses.

CONCENTRATION ON MARKET NICHE. The Company believes it has a
competitive advantage in the payroll allotment marketplace based upon its
commitment to provide quality service, its offering of an expanding
portfolio of products, and its development of processes and technology that
are unique to servicing and administering that marketplace.

SYNERGISTIC MARKETING AND STRATEGIC ALLIANCES. The Company's three
marketing areas -- ordinary, group and credit -- provide opportunities for
cross-selling the Company's products. The Company's group operations in
particular provide the Company's ordinary operations access to sell payroll
allotment products. The Company also has and is continuing to develop
strategic alliances with other insurers to cross-sell such entities'
products and to allow each entity access to the other's distribution
channels. The Company presently has strategic alliance partnerships in
various stages of development with several major life insurance companies
which are expected to provide access to significant distribution systems
during 1997.

FOCUS ON EXPENSE CONTROL. The Company believes that its record of
profitable growth has resulted from a combination of revenue growth and
focus on expense control. The Company's ratio of general insurance expenses
to total revenue (defined for this purpose as including premiums, premium
equivalents and investment income and excluding realized investment gains
and losses) has been recognized as being low as compared to industry norms.
General insurance expenses as a percentage of total revenues for the years
ended December 31, 1987 through 1996 and for the three months ended March
31, 1997 ranged from a high of 6.2% to a low of 4.9%.

ACQUISITIONS

The Company entered into an agreement in principle on December 10, 1996 to
acquire Columbia Universal for a purchase price of $44.0 million. The
acquisition was closed on March 3, 1997. Columbia Universal markets individual
life, annuity and supplemental health products to selected markets. Columbia
Universal had premiums and premium equivalents of $36.4 million for the year
ended December 31, 1996, and total assets of $368.5 million at December 31,
1996. The acquisition provides new distribution channels for the Company's
ordinary payroll products and sales opportunities for both the Company and
Columbia Universal and is projected to have a positive impact on the Company's
future operating earnings.

On April 16, 1997, the Company announced an agreement in principle to
acquire Concord, a subsidiary of Concord General Mutual Insurance Company of
Concord, New Hampshire, for total consideration of $7.5 million in cash. The
transaction, which is subject to regulatory approval and the execution of a
definitive agreement, is expected to be completed in the second quarter of 1997.
Concord primarily markets supplemental life and health insurance products
through worksite marketing and will increase the Company's presence in the
Northeast.

Effective December 31, 1996, the Company acquired a block of payroll
deduction interest-sensitive whole life business from Kentucky Home Mutual Life
Insurance Company. Additionally, during the past six years, the Company has
acquired three other blocks of business. Excluding the Columbia Universal and
Concord acquisitions, these four acquisitions aggregated $23.4 million in
additional annualized premiums and $155.4 million in total assets and have
provided new distribution channels for the Company's ordinary payroll products.

9
<PAGE> 11

SUMMARY FINANCIAL INFORMATION

The following summary consolidated financial data have been derived from
the consolidated financial statements of the Company and should be read in
conjunction with the consolidated financial statements of the Company and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(UNAUDITED)
($ IN THOUSANDS, EXCEPT LIFE INSURANCE VOLUME IN FORCE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Insurance revenues................. $ 65,048 $ 61,187 $ 258,519 $ 247,251 $ 230,589 $ 227,376 $ 212,062
Net investment income.............. 25,223 19,070 77,035 70,601 66,706 63,875 59,721
Realized investment gains
(losses)......................... 103 105 420 6,003 2,011 1,184 237
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total income................. $ 90,374 $ 80,362 $ 335,974 $ 323,855 $ 299,306 $ 292,435 $ 272,020
========== ========== ========== ========== ========== ========== ==========
Operating earnings................. $ 7,678 $ 6,661 $ 26,759 $ 24,174 $ 22,334 $ 18,945 $ 16,739
========== ========== ========== ========== ========== ========== ==========
Net earnings....................... $ 7,745 $ 6,729 $ 27,032 $ 28,075 $ 23,641 $ 19,715 $ 16,896
========== ========== ========== ========== ========== ========== ==========
PER SHARE DATA:
Operating earnings................. $ .56 $ .48 $ 1.94 $ 1.74 $ 1.61 $ 1.53 $ 1.41
Net earnings....................... .56 .49 1.96 2.02 1.71 1.59 1.42
Cash dividends paid................ .19 .18 .74 .70 .64 .59 .56
SEGMENT DATA:
Insurance revenues and premium
equivalents(1):
Ordinary........................... $ 53,147 $ 40,319 $ 181,469 $ 167,328 $ 161,612 $ 149,106 $ 138,241
Group.............................. 50,201 48,502 214,933 206,354 167,520 158,188 163,701
Credit............................. 40,517 33,177 171,209 138,134 116,318 103,113 93,027
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total........................ $ 143,865 $ 121,998 $ 567,611 $ 511,816 $ 445,450 $ 410,407 $ 394,969
========== ========== ========== ========== ========== ========== ==========
Pre-tax operating earnings:
Ordinary........................... $ 10,185 $ 8,359 $ 35,070 $ 28,935 $ 26,049 $ 21,798 $ 17,322
Group.............................. 1,419 1,696 4,513 7,470 7,323 6,042 5,269
Credit............................. 881 631 3,750 2,739 1,754 1,720 2,969
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total........................ $ 12,485 $ 10,686 $ 43,333 $ 39,144 $ 35,126 $ 29,560 $ 25,560
========== ========== ========== ========== ========== ========== ==========
OTHER DATA:
Consolidated return on
stockholders' equity(2).......... 13.1% 12.5% 12.8% 12.4% 12.6% 13.8% 14.2%
Life insurance volume in force (in
millions)........................ $ 22,134 $ 18,725 $ 20,523 $ 18,384 $ 16,816 $ 15,601 $ 15,468
BALANCE SHEET DATA:
Total investments.................. $1,325,727 $ 975,002 $1,011,449 $ 979,603 $ 845,729 $ 854,363 $ 766,871
Total assets....................... 1,738,090 1,329,077 1,370,117 1,317,896 1,179,257 1,138,578 1,016,984
Notes payable...................... 116,019 95,974 85,459 94,994 84,201 72,481 62,102
Stockholders' equity............... 225,726 216,881 228,943 219,329 173,360 183,930 147,965
</TABLE>

- ---------------

(1) For an explanation of insurance revenues and premium equivalents refer to
Footnote (1) on page 39.
(2) Based on operating earnings for the prior twelve month period divided by
average stockholders' equity for the prior twelve month period which
excludes any unrealized investment gains (losses).

10
<PAGE> 12

THE TRUST

AHL Financing is a statutory business trust formed under Delaware law
pursuant to (i) a declaration of trust, dated as of March 20, 1997, executed by
the Company, as sponsor (the "Sponsor"), and the trustees of the Trust (the "AHL
Trustees," which shall include all trustees serving at such applicable time as
trustees) and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on March 20, 1997. Such declaration will be
amended and restated in its entirety (as so amended and restated, the
"Declaration") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Declaration will be
qualified as an indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The Trust exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of the Trust, (ii) investing the gross proceeds of the Trust Securities
in the Junior Subordinated Debentures and (iii) engaging in only those other
activities necessary or incidental thereto. See "The Trust."

THE OFFERING

Securities Offered......... 1,800,000 Income PRIDES.

Issuers.................... American Heritage Life Investment Corporation
("AHLIC" or the "Company") and AHL Financing (the
"Trust").

Stated Amount.............. $50 per Income PRIDES.

Components of FELINE
PRIDES................... Each FELINE PRIDES offered hereby initially will
consist of a unit (referred to as an Income PRIDES)
comprised of (a) a stock purchase contract (the
"Purchase Contract") under which (i) the holder
will purchase from the Company on August 16, 2000
(the "Purchase Contract Settlement Date"), for an
amount equal to the Stated Amount, a number of new
shares of common stock, par value $1.00 per share
(the "Common Stock"), of the Company equal to the
Settlement Rate or the Cash Settlement Rate (each
as defined herein), as applicable, and (ii) the
Company will pay Contract Adjustment Payments to
the holder, and (b) beneficial ownership of a
% Trust Preferred Security, having a stated
liquidation amount equal to the Stated Amount,
representing a preferred, undivided beneficial
interest in the assets of the Trust.

The Company will, directly or indirectly, own all
of the Common Securities. The Trust exists for the
sole purpose of issuing the Trust Preferred
Securities and the Common Securities and investing
the proceeds thereof in an equivalent amount of
% Junior Subordinated Debentures of the
Company, due August 16, 2002 (the "Junior
Subordinated Debentures"). Upon the occurrence of a
Tax Event or an Investment Company Event, as
described below, the Junior Subordinated Debentures
would be substituted for the Trust Preferred
Securities. References herein to Trust Preferred
Securities, unless the context otherwise requires,
mean the (i) Trust Preferred Securities or (ii) the
Junior Subordinated Debentures which have been
delivered to holders in the case of a Tax Event or
an Investment Company Event. The distribution rate
and the payment dates for the Trust Preferred
Securities will correspond to the interest rate and
the payment dates for the Junior Subordinated
Debentures, which will be the sole assets of the
Trust. As long as the FELINE PRIDES are in the form
of Income PRIDES, the Trust Preferred Securities
will be pledged with The Chase Manhattan Bank as
collateral agent for the Company (together with any
successor thereto in such capacity, the "Collateral
Agent"), to secure the holders'

11
<PAGE> 13

obligations to purchase Common Stock under the
Purchase Contracts. See "Risk Factors."

Purchase Contract
Agreement................ The FELINE PRIDES will be issued under a Purchase
Contract Agreement, dated as of , 1997
(the "Purchase Contract Agreement"), between the
Company and The First National Bank of Chicago, as
agent for the holders of the FELINE PRIDES
(together with any successor thereto in such
capacity, the "Purchase Contract Agent").

Substitution of Pledged
Securities............... Each holder will have the right, at any time after
issuance of the Income PRIDES, to substitute for
any Trust Preferred Securities held by the
Collateral Agent zero-coupon U.S. Treasury
Securities (CUSIP No. 912820 AX5) which are
principal strips of the 8.75% U.S. Treasury
Securities which mature on August 15, 2000 (the
"Treasury Securities") in a principal amount per
Purchase Contract equal to the Stated Amount per
Trust Preferred Security. Holders may make such
substitution only in integral multiples of 20
Income PRIDES. Securities with respect to which
Treasury Securities have been substituted for Trust
Preferred Securities as collateral to secure a
holder's obligation under the Purchase Contracts
will be referred to as Growth PRIDES(SM). Each
Growth PRIDES will consist of a unit with a face
amount of $1000 comprised of (a) 20 Purchase
Contracts under which for each Purchase Contract
(i) the holder will purchase from the Company on
the Purchase Contract Settlement Date or earlier
for an amount of cash equal to the Stated Amount, a
number of shares of Common Stock of the Company
equal to the Cash Settlement Rate described herein,
and (ii) the Company will pay the holder Contract
Adjustment Payments, and (b) beneficial ownership
of a Treasury Security having a principal amount at
maturity equal to $1,000. Upon the substitution of
Treasury Securities for Trust Preferred Securities
as collateral, such Trust Preferred Securities will
be released to the holder as described herein and
thereafter will trade separately from the resulting
Growth PRIDES. See "Description of the FELINE
PRIDES -- Substitution of Pledged Securities."

Holders who elect to substitute Pledged Securities
(as defined in "Description of the Purchase
Contracts -- Pledged Securities and Pledge
Agreement"), thereby creating Growth PRIDES or
recreating Income PRIDES (as discussed below), will
be responsible for any fees or expenses payable in
connection therewith. See "Certain Provisions of
the Purchase Contract Agreement and the Pledge
Agreement -- Miscellaneous."

Recreating Income PRIDES... A holder of Growth PRIDES will have the right to
subsequently recreate an Income PRIDES by
delivering a Growth PRIDES to the Purchase Contract
Agent plus 20 Trust Preferred Securities to the
Collateral Agent in exchange for 20 Income PRIDES
and the release of the underlying Treasury Security
to such holder. See "Description of the FELINE
PRIDES -- Recreating Income PRIDES."

Current Payments........... Holders of Income PRIDES are entitled to receive
cash distributions at a rate of % of the
Stated Amount per annum payable quarterly in
arrears. The quarterly payments will consist of
cumulative cash distributions on the Trust
Preferred Securities payable by the Trust at the
rate of % of the Stated Amount per annum, and
Contract Adjustment

12
<PAGE> 14

Payments, payable by the Company, until the
Purchase Contract Settlement Date, at the rate of
% of the Stated Amount per annum. The ability
of the Trust to make the quarterly distributions on
the Trust Preferred Securities is solely dependent
upon the receipt of corresponding interest payments
from the Company on the Junior Subordinated
Debentures. The Company's obligations with respect
to the Contract Adjustment Payments are subordinate
and junior in right of payment to all liabilities
of the Company (other than the Company's guarantee
of junior subordinated debentures with which they
rank pari passu). See "Risk Factors -- Ranking of
Contract Adjustment Payments and Subordinate
Obligations Under the Guarantee and Junior
Subordinated Debentures."

Subject to the Company's rights of deferral
described herein, in the event holders of Income
PRIDES elect to substitute Treasury Securities for
the Trust Preferred Securities, holders of Growth
PRIDES would receive the quarterly distributions of
Contract Adjustment Payments and, to the extent
that they continue to hold any Trust Preferred
Securities, the quarterly distributions on the
Trust Preferred Securities. In addition, interest
would continue to accrete on the Treasury
Securities. See "Risk Factors -- Right to Defer
Current Payments."

Option to Extend
Distribution Payment
Periods.................. The Company has the right at any time, and from
time to time, limited to a period not extending
beyond the maturity date of the Junior Subordinated
Debentures, to defer the interest payments due on
the Junior Subordinated Debentures. As a
consequence of such deferral, quarterly
distributions to holders of Income PRIDES (or any
Trust Preferred Securities outstanding after the
Purchase Contract Settlement Date or after a
substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but
despite such deferral, would continue to accumulate
quarterly and would accrue interest thereon
compounded quarterly at the same rate as interest
on the Junior Subordinated Debentures). The Company
also has the right to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until
no later than the Purchase Contract Settlement
Date; however, deferred Contract Adjustment
Payments will bear additional Contract Adjustment
Payments at the rate of % per annum (such
deferred installments of Contract Adjustment
Payments together with the additional Contract
Adjustment Payments shall be referred to as the
"Deferred Contract Adjustment Payments"). See
"Description of the Purchase Contracts -- Contract
Adjustment Payments." If interest payments on the
Junior Subordinated Debentures or the Contract
Adjustment Payments are deferred, the Company has
agreed, among other things, not to declare or pay
any dividend on or repurchase its capital stock
during the period of such deferral.

In the event that the Company elects to defer the
payment of Contract Adjustment Payments on the
Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Income PRIDES or
Growth PRIDES will receive on the Purchase Contract
Settlement Date, in lieu of a cash payment, a
number of shares of Common Stock (in addition to a
number of shares of Common Stock equal to the
Settlement Rate or the Cash Settlement Rate) equal
to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to a holder of either
Income PRIDES or Growth PRIDES divided by (y) the
Applicable

13
<PAGE> 15

Market Value. See "Description of the Purchase
Contracts -- Option to Defer Contract Adjustment
Payments."

Payment Dates.............. Subject to the distribution deferral provisions
described herein, the current payments described
above will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each
year, commencing September 30, 1997, through and
including (i) in the case of the Contract
Adjustment Payments, the Purchase Contract
Settlement Date or the most recent such quarterly
date on or prior to the early settlement of the
Purchase Contracts and (ii) in the case of Trust
Preferred Securities, through and including the
most recent such quarterly date on or prior to the
date a Junior Subordinated Debenture represented by
a Trust Preferred Security is put to the Company,
as described under "Description of the Junior
Subordinated Debenture -- Put Option", or the date
the stated amount of a Trust Preferred Security,
together with all accrued and unpaid distributions
thereon, is paid in full (each, a "Payment Date").

Purchase Contract
Settlement Date.......... On the Purchase Contract Settlement Date, unless a
holder of the Income PRIDES (i) has settled the
underlying Purchase Contract either through the
early delivery of cash to the Purchase Contract
Agent in the manner described herein or otherwise,
or (ii) has notified the Purchase Contract Agent of
its intention to settle the related Purchase
Contract with separate cash on the Purchase
Contract Settlement Date and has so settled the
related Purchase Contract, or an event described
under "Description of the Purchase
Contracts -- Termination" occurs, such holder will
be deemed to have requested the Trust to put the
related Junior Subordinated Debenture to the
Company, and the principal amount of such Junior
Subordinated Debenture equal to the Stated Amount
per Purchase Contract will automatically be applied
to satisfy in full such holder's obligation to
purchase Common Stock under the Purchase Contract.
See "Description of the Junior Subordinated
Debentures -- Put Option."

With respect to each Growth PRIDES outstanding on
the Purchase Contract Settlement Date, the
principal amount of the Treasury Securities
underlying each Growth PRIDES, when paid at
maturity, will be automatically applied to satisfy
in full the holder's obligation to purchase Common
Stock under the 20 Purchase Contracts per Growth
PRIDES.

In the event that a holder of either an Income
PRIDES or Growth PRIDES effects the early
settlement of a related Purchase Contract through
the delivery of cash or settles a Purchase Contract
with cash on the Purchase Contract Settlement Date,
the underlying Trust Preferred Securities or
Treasury Securities, as the case may be, will be
released to the holder as described herein.

Settlement Rate and Cash
Settlement Rate.......... The number of new shares of Common Stock issuable
upon settlement of each Purchase Contract through
the put of the related Junior Subordinated
Debentures to the Company, and the redemption of
the related Trust Preferred Securities, on the
Purchase Contract Settlement Date (the "Settlement
Rate") will be calculated as follows (subject to
adjustment under certain circumstances): (a) if the
Applicable Market Value (as defined below) is equal
to or greater than $ (the "Threshold
Appreciation Price"), the Settlement Rate will be
,

14
<PAGE> 16

(b) if the Applicable Market Value is less than the
Threshold Appreciation Price, but greater than
$ the Settlement Rate will equal the
Stated Amount divided by the Applicable Market
Value, and (c) if the Applicable Market Value is
less than or equal to $ , the Settlement
Rate will be . "Applicable Market Value"
means the average of the Closing Price (as defined)
per share of Common Stock on each of the thirty
consecutive Trading Days (as defined) ending on the
second Trading Day immediately preceding the
Purchase Contract Settlement Date.

The number of new shares of Common Stock issuable
upon settlement of each Purchase Contract through
Early Settlement of FELINE PRIDES, cash settlement
of the Income Prides on the Purchase Contract
Settlement Date and settlement of Growth PRIDES
through application of the related Treasury
Securities on the Purchase Contract Settlement Date
(the "Cash Settlement Rate") will be calculated as
(a) shares, in the case of Early Settlement
(which is equivalent to the number of shares of
Common Stock that would be received upon Cash
Settlement of Income PRIDES on the Purchase
Contract Settlement Date where the Applicable
Market Value is equal to or greater than the
Threshold Appreciation Price), or (b) 1.00125 times
the Settlement Rate, in those other cases.

A holder of Income PRIDES whose Purchase Contract
has been settled with cash, or a holder of Growth
PRIDES whose Purchase Contract has been settled
through application of the principal amount of the
related Treasury Securities, on the Purchase
Contract Settlement Date, will receive 0.125% more
shares of Common Stock per Purchase Contract than
will be received by a holder of Income PRIDES whose
Purchase Contracts are settled through the put of
the related Junior Subordinated Debentures to the
Company, and the redemption of the related Trust
Preferred Securities, on the Purchase Contract
Settlement Date. A holder of FELINE PRIDES whose
Purchase Contract has settled through Early
Settlement will receive 0.125% more shares of
Common Stock per Purchase Contract than would be
received by a holder of Income PRIDES who receives
the Settlement Rate on the Purchase Contract
Settlement Date if the Applicable Market Value was
then equal to or greater than the Threshold
Appreciation Price.

Early Settlement........... A holder of Income PRIDES or Growth PRIDES may
settle (an "Early Settlement") the underlying
Purchase Contracts prior to the Purchase Contract
Settlement Date in the manner described herein, but
only in integral multiples of 20 Income PRIDES or
one Growth PRIDES. Upon such Early Settlement, (a)
the holder will pay to the Company through the
Purchase Contract Agent in immediately available
funds an amount equal to the Stated Amount per
Purchase Contract and deliver the Income PRIDES or
Growth PRIDES, as the case may be, to the Purchase
Contract Agent, (b) the Trust Preferred Securities
underlying such Income PRIDES or, if substituted,
the Treasury Securities underlying such Growth
PRIDES will, within three Business Days of the date
of Early Settlement, be transferred to the holder
free and clear of the Company's security interest
therein, and (c) the Company will, within three
Business Days of the date of Early Settlement,
deliver newly issued shares of Common Stock to the
holder under the Purchase Contract Agreement. Upon
Early Settlement, (i) the holder's rights to
receive Deferred Contract Adjustment Payments, if
any, on the Purchase Contracts being settled will
be forfeited, and (ii) the holder's right to

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<PAGE> 17

receive additional Contract Adjustment Payments
will terminate and, except as contemplated by
clause (c) above, no adjustment will be made to or
for the holder on account of current or deferred
amounts accrued in respect thereof.

Termination................ The Purchase Contracts (including the right to
receive accrued or Deferred Contract Adjustment
Payments and the obligation to purchase Common
Stock) will automatically terminate upon the
occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the
Company. Upon such termination, the Collateral
Agent will release the Trust Preferred Securities,
or if substituted, the Treasury Securities, held by
it to the Purchase Contract Agent for distribution
to the holders, although there may be a limited
delay before such release and distribution.

Voting Rights.............. Holders of Trust Preferred Securities will not be
entitled to vote to appoint, remove or replace, or
to increase or decrease the number of Trustees and
will generally have no voting rights except in the
limited circumstances described under "Description
of Trust Preferred Securities -- Voting Rights."
Holders of Purchase Contracts forming part of the
Income PRIDES or Growth PRIDES will have no voting
rights.

Listing of the Income
PRIDES................... The Income PRIDES have been approved for listing on
the New York Stock Exchange (the "NYSE" ) under the
symbol "AHL prI", subject to official notice of
issuance. The Growth PRIDES and the Trust Preferred
Securities will not be listed or traded on any
securities exchange. See "Underwriting."

NYSE Symbol of Common
Stock.................... "AHL"

TRUST PREFERRED SECURITIES

The Trust.................. AHL Financing, a Delaware statutory business trust
(the "Trust"). The sole assets of the Trust will
consist of the Junior Subordinated Debentures of
the Company. The Company will directly or
indirectly own all of the Common Securities (the
"Common Securities" and, together with the Trust
Preferred Securities, the "Trust Securities")
representing undivided beneficial interests in the
assets of the Trust.

Trust Preferred
Securities............... 1,800,000 of % Trust Preferred Securities
(liquidation amount $50 per Trust Preferred
Security), representing preferred undivided
beneficial interests in the assets of the Trust.

Distributions.............. Distributions on the Trust Preferred Securities,
which constitute a portion of the distributions on
the Income PRIDES, will be cumulative, will accrue
from the first date of issuance of the Trust
Preferred Securities and will be payable at the
annual rate of % of the liquidation amount of
$50 per Trust Preferred Security when, as and if
funds are available for payment. Subject to the
distribution deferral provisions, distributions
will be payable quarterly in arrears on each March
31, June 30, September 30 and December 31,
commencing September 30, 1997.

Distribution Deferral
Provisions............... The ability of the Trust to pay distributions on
the Trust Preferred Securities is solely dependent
on the receipt of interest payments from the
Company on the Junior Subordinated Debentures. The
Company

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<PAGE> 18

has the right at any time, and from time to time,
to defer the interest payments due on the Junior
Subordinated Debentures for successive extension
periods (the "Extension Periods"), limited, in the
aggregate, to a period not extending beyond the
maturity date of the Junior Subordinated
Debentures. Quarterly distributions on the Trust
Preferred Securities would be deferred by the Trust
(but would continue to accumulate quarterly and
would accrue interest, compounded quarterly, at the
same rates as interest on the Junior Subordinated
Debentures) until the end of any such Extension
Period. If a deferral of an interest payment
occurs, the holders of the Trust Preferred
Securities will accrue interest income for United
States federal income tax purposes in advance of
the receipt of any corresponding cash distribution
with respect to such deferred interest payments.
See "Risk Factors -- Right to Defer Current
Payments," "Description of the Trust Preferred
Securities -- Distributions" and "Certain Federal
Income Tax Consequences -- Distributions on Trust
Preferred Securities."

Rights Upon Deferral of
Distribution............. During any period in which interest payments on the
Junior Subordinated Debentures are deferred,
interest will accrue on the Junior Subordinated
Debentures (compounded quarterly) and quarterly
distributions on the Trust Preferred Securities
will continue to accumulate with interest thereon
at the distribution rate, compounded quarterly.

Liquidation Preference..... In the event of any liquidation of the Trust,
holders will be entitled to receive Junior
Subordinated Debentures in an aggregate stated
principal amount equal to the aggregate stated
liquidation amount of the Trust Preferred
Securities.

Put Option................. On the Purchase Contract Settlement Date, each
holder of Income PRIDES that has neither previously
exercised its option of Early Settlement nor
settled its Purchase Contract with cash will be
deemed to have requested the Trust to put the
aggregate principal amount of its Junior
Subordinated Debentures to the Company in an amount
per Junior Subordinated Debenture equal to $50,
plus accumulated and unpaid distributions, if any
(a "Put Option"). Upon the repurchase of the Junior
Subordinated Debentures by the Company pursuant to
such Put Option, (i) the proceeds from such
repurchase shall simultaneously be applied to
redeem Trust Preferred Securities of such holder
having an aggregate Stated Amount equal to the
aggregate principal amount of the Junior
Subordinated Debentures so repurchased and will be
applied to satisfy in full such holder's obligation
to purchase Common Stock under the Purchase
Contract as described herein and (ii) any
accumulated and unpaid distributions with respect
to the Junior Subordinated Debentures so
repurchased will be paid to such holder in cash.

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<PAGE> 19

for an amount equal to $50, plus accumulated and
unpaid distributions, if any. Upon such repurchase
by the Company, the Trust shall simultaneously use
the proceeds from such repurchase to redeem in cash
the Trust Preferred Securities of such holders
having an aggregate stated amount equal to $50 per
Trust Preferred Security and to pay in cash any
accumulated and unpaid distributions to the holders
thereof.

Tax Event or Investment
Company Event
Distribution............. In certain circumstances involving a Tax Event
(which event will generally be triggered upon the
occurrence of certain adverse tax consequences or
the denial of an interest deduction to the Company
on the Junior Subordinated Debentures held by the
Trust) or an Investment Company Event (which event
will generally be triggered if the Trust is
considered an "investment company" under the
Investment Company Act of 1940, as amended), the
Trust would be dissolved, with the result that the
Junior Subordinated Debentures with an aggregate
principal amount equal to the aggregate stated
liquidation amount of the Trust Preferred
Securities, would be distributed to the holders of
the Trust Preferred Securities on a pro rata basis.
In such event, an Income PRIDES would thereafter
consist of a Junior Subordinated Debenture with a
principal amount equal to the Stated Amount and the
related Purchase Contract and a holder could, on
the Purchase Contract Settlement Date, cause the
Junior Subordinated Debenture to be repaid and the
proceeds thereof applied to satisfy in full such
holder's obligation to purchase Common Stock under
the Purchase Contract as described herein.

Redemption................. The Company will not have the ability to redeem the
Junior Subordinated Debentures prior to the stated
maturity date.

Guarantee.................. The Company will irrevocably and unconditionally
guarantee (the "Guarantee"), on a subordinated
basis and to the extent described herein, the
payment in full of (i) distributions on the Trust
Preferred Securities to the extent the Trust has
funds available therefor, and (ii) generally, the
liquidation amount of the Trust Preferred
Securities to the extent the Trust has assets
available for distribution to holders of Trust
Preferred Securities in the event of a dissolution,
winding up or termination of the Trust. The
Guarantee will be unsecured and will be subordinate
and junior in right of payment to all other
liabilities of the Company and will rank pari passu
in right of payment with the most senior preferred
stock issued, from time to time, if any, by the
Company and with any guarantee entered into by the
Company in respect of any preferred or preference
stock of any affiliate of the Company. See "Risk
Factors -- Ranking of Contact Adjustment Payments
and Subordinate Obligations Under the Guarantee and
Junior Subordinated Debentures."

Junior Subordinated
Debentures............... The Junior Subordinated Debentures will mature on
August 16, 2002, and will bear interest at the rate
of % per annum, payable quarterly in arrears on
each March 31, June 30, September 30 and December
31 commencing September 30, 1997. Interest payments
may be deferred from time to time by the Company
for successive Extension Periods not extending, in
the aggregate, beyond the stated maturity date of
the Junior Subordinated Debentures. During any
Extension Period, interest would continue to accrue
and compound quarterly. Upon the termination

18
<PAGE> 20

of any Extension Period and the payment of all
amounts then due, the Company may commence a new
Extension Period, provided such extended Extension
Period does not extend beyond the stated maturity
date of the Junior Subordinated Debentures. No
interest shall be due during an Extension Period
until the end of such period. During an Extension
Period, the Company will be prohibited from paying
dividends on or purchasing any of its capital stock
and making certain other restricted payments until
quarterly interest payments are resumed and all
amounts due on the Junior Subordinated Debentures
are made current. The Junior Subordinated
Debentures will be subordinate in right of payment
of principal and interest to all Senior
Indebtedness (as defined herein) of the Company and
will rank pari passu in right of payment with other
subordinated debentures issued by the Company and
with all unsecured trade creditors of the Company.
See "Description of the Junior Subordinated
Debentures."

Federal Income Tax
Consequences............. Provided the Company does not exercise its right to
defer interest on the Junior Subordinated
Debentures, holders of Income PRIDES and Trust
Preferred Securities will include in income their
allocable share of interest with respect to the
Junior Subordinated Debentures when paid or
accrued, in accordance with their regular method of
accounting. The Company intends to report the
Contract Adjustment Payments as income to holders
of Income PRIDES and Growth PRIDES, but holders
should consult their tax advisors concerning the
possibility that the Contract Adjustment Payments
may be treated as loans, purchase price
adjustments, rebates or option premiums rather than
being includible in income on a current basis.
Holders of Growth PRIDES will continue to include
in income any original issue discount ("OID") or
market discount or amortize any bond premium
otherwise includible or deductible, respectively,
with respect to the Treasury Securities posted with
the Collateral Agent. See "Certain Federal Income
Tax Consequences."

Use of Proceeds............ All of the proceeds from the sale of the Income
PRIDES, of which the Trust Preferred Securities are
a component, will be invested by the Trust in
Junior Subordinated Debentures of the Company and
the net proceeds of approximately $ million
ultimately will be used by the Company for the
repayment of bank debt and for general corporate
purposes. Repayment of bank debt will increase the
available funding under the Company's existing
lines of credit. Any additional amounts received by
the Company upon settlement of the Purchase
Contracts, whether on the Purchase Contract
Settlement Date or an Early Settlement Date, are
expected to be used for the repayment of bank debt
or general corporate purposes. See "Use of
Proceeds."

RISK FACTORS

Potential purchasers of the Securities offered hereby should carefully
consider the risk factors set forth herein under "Risk Factors" as well as other
information contained in this Prospectus.

19
<PAGE> 21

RISK FACTORS

Prospective purchasers of Securities should consider, in addition to the
other information contained or incorporated by reference in this Prospectus, the
following information relating to the Securities and to the Company and the
industry in which it operates.

RISK FACTORS -- THE SECURITIES

LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION; RISK OF DECLINE IN EQUITY
VALUE

The opportunity for equity appreciation afforded by an investment in the
FELINE PRIDES is less than the opportunity for equity appreciation afforded by a
direct investment in the Common Stock, because the value of Common Stock to be
received by a holder of Purchase Contracts on the Purchase Contract Settlement
Date will only exceed the Stated Amount if the Applicable Market Value of the
Common Stock exceeds the Threshold Appreciation Price (which represents an
appreciation of % over the closing price of the Common Stock on the date
hereof). If the Applicable Market Value of the Common Stock is less than the
closing price of the Common Stock on the date hereof, such value to be received
by the holder on the Purchase Contract Settlement Date will be less than the
Stated Amount paid for the Income PRIDES, in which case an investment in the
Income PRIDES will result in a loss. Accordingly, a holder of the Purchase
Contracts assumes the risk that the market value of the Common Stock may
decline, and that such decline could be substantial.

FACTORS AFFECTING TRADING PRICES

The trading prices of the Income PRIDES and the Growth PRIDES in the
secondary market will be directly affected by the trading prices of the Common
Stock in the secondary market, the general level of interest rates and the
credit quality of the Company. It is impossible to predict whether the price of
Common Stock or interest rates generally will rise or fall. Trading prices of
Common Stock will be influenced by the Company's operating results and prospects
and by economic, financial and other factors and market conditions that can
affect the capital markets generally, including the level of, and fluctuations
in, the trading prices of stocks generally and sales of substantial amounts of
Common Stock in the market subsequent to the offering of the Securities or the
perception that such sales could occur. Fluctuations in interest rates may give
rise to opportunities for arbitrage based upon changes in the relative value of
the Common Stock underlying the Purchase Contracts and of the other components
of the FELINE PRIDES. Any such arbitrage could, in turn, affect the trading
prices of the Income PRIDES, Growth PRIDES, Trust Preferred Securities and
Common Stock.

VOTING RIGHTS

Holders of Trust Preferred Securities will not be entitled to vote to
appoint, remove or replace, or to increase or decrease the number of Trustees
and will generally have no voting rights except in the limited circumstances
described under "Description of Trust Preferred Securities -- Voting Rights."
Holders of Purchase Contracts underlying the Income PRIDES or Growth PRIDES will
have no voting rights.

DILUTION OF COMMON STOCK

The number of shares of Common Stock that holders of the FELINE PRIDES are
entitled to receive on the Purchase Contract Settlement Date is subject to
adjustment for certain events arising from stock splits and combinations, stock
dividends and certain other actions of the Company that modify its capital
structure. See "Description of the Purchase Contracts -- Anti-Dilution
Adjustments." Such number of shares of Common Stock to be received by such
holders on the Purchase Contract Settlement Date will not be adjusted for other
events, such as offerings of Common Stock for cash or in connection with
acquisitions. The Company is not restricted from issuing additional Common Stock
during the term of either the Purchase Contracts or the Trust Preferred
Securities. Additional issuances may materially and adversely affect the price
of the Common Stock and, because of the relationship of the number of shares to
be received on the Purchase Contract

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<PAGE> 22

Settlement Date to the price of the Common Stock, such other events may
adversely affect the trading price of the Income PRIDES or Growth PRIDES.

POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET

It is not possible to predict how the Income PRIDES, the Growth PRIDES or
the Trust Preferred Securities will trade in the secondary market or whether the
market for any such securities will be liquid or illiquid. The Income PRIDES and
the Growth PRIDES are novel securities and there is currently no secondary
market for either the Income PRIDES or Growth PRIDES. The Income PRIDES have
been approved for listing on the NYSE, subject to official notice of issuance.
The Growth PRIDES and the Trust Preferred Securities will not be listed or
traded on any securities exchange. The Company and the Trust have been advised
by the Underwriters that they presently intend to make a market for the Growth
PRIDES and the Trust Preferred Securities; however, they are not obligated to do
so and any market making may be discontinued at any time. There can be no
assurance as to the liquidity of any such market that may develop for the Income
PRIDES, the Growth PRIDES or the Trust Preferred Securities, the ability of
holders to sell such securities, the price at which holders would be able to
sell such securities or whether a trading market, if it develops, will continue.
In addition, in the event that holders of Income PRIDES were to substitute
Treasury Securities for the Trust Preferred Securities, thereby converting their
Income PRIDES to Growth PRIDES, the liquidity of Income PRIDES could be
adversely affected. There can be no assurance that the Income PRIDES will not be
delisted from the NYSE or that trading in the Income PRIDES will not be
suspended as a result of the election by holders to create Growth PRIDES through
the substitution of collateral, which could cause the number of Income PRIDES to
fall below the minimum requirements for listing the securities on the NYSE.

PLEDGED SECURITIES ENCUMBERED

Although holders of FELINE PRIDES will be beneficial owners of the
underlying Trust Preferred Securities or the Treasury Securities (together, the
"Pledged Securities"), as the case may be, those Pledged Securities will be
pledged with the Collateral Agent to secure the obligations of the holders under
the Purchase Contracts. Thus, rights of the holders to their Pledged Securities
will be subject to the Company's security interest. Additionally,
notwithstanding the automatic termination of the Purchase Contracts, in the
event that the Company becomes the subject of a case under the United States
Bankruptcy Code (the "Bankruptcy Code"), the delivery of the Pledged Securities
to holders of the Securities may be delayed by the imposition of the automatic
stay of Section 362 of the Bankruptcy Code.

TAX EVENT OR INVESTMENT COMPANY EVENT DISTRIBUTION

Upon the occurrence of a Tax Event or an Investment Company Event, the
Trust will be dissolved (except in the limited circumstances described in the
following sentence) with the result that the Junior Subordinated Debentures with
an aggregate principal amount equal to the aggregate stated liquidation amount
of the Trust Preferred Securities would be distributed to the holders of the
Trust Preferred Securities on a pro rata basis. In the case of the occurrence of
a Tax Event, such dissolution and distribution shall be conditioned on the
Company being unable to avoid such Tax Event within a 90 day period by taking
some ministerial action or pursuing some other reasonable measure that will have
no adverse effect on the Trust, the Company or the holders of the Trust
Preferred Securities, and will involve no material cost. See "Description of the
Trust -- Trust Preferred Securities -- Special Event Distribution."

Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust would not be a
taxable event to holders of the Trust Preferred Securities including the
Collateral Agent. See "Certain Federal Income Tax Consequences -- Receipt of
Junior Subordinated Debentures upon Liquidation of the Trust."

There can be no assurance as to the impact on the market prices for the
Income PRIDES of a distribution of the Junior Subordinated Debentures in
exchange for Trust Preferred Securities upon a dissolution or liquidation of the
Trust. Because the Income PRIDES will consist of Junior Subordinated

21
<PAGE> 23

Debentures and related Purchase Contracts upon the occurrence of an Investment
Company Event, or, in certain circumstances, a Tax Event or liquidation of the
Trust, prospective purchasers of Income PRIDES are also making an investment
decision with regard to the Junior Subordinated Debentures and should carefully
review all the information regarding the Junior Subordinated Debentures
contained herein. See "Description of the Trust Preferred Securities -- Special
Event Distribution" and "Description of the Junior Subordinated
Debentures -- General."

RIGHT TO DEFER CURRENT PAYMENTS

The Company may, at its option, defer the payment of Contract Adjustment
Payments on the Purchase Contracts until the Purchase Contract Settlement Date.
However, deferred installments of Contract Adjustment Payments will bear
additional Contract Adjustment Payments at the rate of % per annum
(compounding on each succeeding Payment Date) until paid (such deferred
installments of Contract Adjustment Payments together with the additional
Contract Adjustment Payments shall be referred to herein as the "Deferred
Contract Adjustment Payments"). If the Purchase Contracts are settled early or
terminated (upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company), the right to receive Contract
Adjustment Payments, and Deferred Contract Adjustment Payments, will terminate.

In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Purchase Contracts will receive on the Purchase
Contract Settlement Date, in lieu of a cash payment, a number of shares of
Common Stock (in addition to a number of shares of Common Stock equal to the
Settlement Rate or the Cash Settlement Rate) equal to (x) the aggregate amount
of Deferred Contract Adjustment Payments payable to a holder of Securities
divided by (y) the Applicable Market Value. See "Description of the Purchase
Contracts -- Contract Adjustment Payments."

The Company also has the right under the Indenture (as such term is defined
in "Description of Junior Subordinated Debentures" herein) to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Trust Preferred Securities, held either as a component of the Income PRIDES
or held separately, would be deferred (but despite such deferrals would accrue
interest compounded on a quarterly basis) by the Trust during any such extended
interest payment period. Such right to extend the interest payment period for
the Junior Subordinated Debentures is limited to a period, in the aggregate, not
extending beyond the maturity date of the Junior Subordinated Debentures. See
"Description of the Trust Preferred Securities -- Distributions" and
"Description of the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period."

The Company believes that the likelihood that it will exercise its right to
defer payments of interest on the Junior Subordinated Debentures is remote and
that, therefore, the Junior Subordinated Debentures should not be considered to
be issued with OID unless it actually exercises such deferral right. There is no
assurance that the Internal Revenue Service (the "IRS") will agree with such
position. See "Certain Federal Income Tax Consequences -- Distributions on Trust
Preferred Securities."

Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Trust Preferred Securities
held either as a component of the Income PRIDES or held separately will accrue
income (as OID) in respect of the deferred interest allocable to its Trust
Preferred Securities for United States federal income tax purposes, which will
be allocated but not distributed to holders of record of Trust Preferred
Securities. As a result, each such holder of Trust Preferred Securities will
recognize income for United States federal income tax purposes in advance of the
receipt of cash and will not receive the cash from the Trust related to such
income if such holder disposes of its Trust Preferred Securities prior to the
record date for the date on which distributions of such amounts are made. The
Company has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Junior Subordinated
Debentures. However, should the Company determine to exercise such right in the
future, the market price of the Trust Preferred Securities is likely to be
affected. A holder that disposes of

22
<PAGE> 24

its Trust Preferred Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continues to hold its
Trust Preferred Securities. In addition, as a result of the existence of the
Company's right to defer interest payments, the market price of the Trust
Preferred Securities (which represent an undivided beneficial interest in the
assets of the Trust) may be more volatile than the market price of other
securities that are not subject to such deferral. See "Certain Federal Income
Taxation -- Distributions on Trust Preferred Securities."

RANKING OF CONTRACT ADJUSTMENT PAYMENTS AND SUBORDINATE OBLIGATIONS UNDER THE
GUARANTEE AND JUNIOR SUBORDINATED DEBENTURES

The Company's obligations with respect to the Contract Adjustment Payments
and the Guarantee are subordinate and junior in right of payment to all
liabilities of the Company (other than the Company's guarantee of its other
subordinated debentures, if any, with which they rank pari passu). The
obligations of the Company under the Junior Subordinated Debentures are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of the Company and pari passu with other subordinated debentures
issued by the Company and obligations to or rights of the Company's other
general unsecured creditors and other junior subordinated debentures issued
hereafter. No payment of principal of (including redemption payments, if any),
premium, if any, or interest on the Junior Subordinated Debentures may be made
if (i) any Senior Indebtedness of the Company is not paid when due and any
applicable grace period with respect to such default has ended with such default
not having been cured or waived or ceasing to exist, or (ii) the maturity of any
Senior Indebtedness has been accelerated because of a default. As of March 31,
1997, Senior Indebtedness aggregated approximately $116.0 million. There are no
terms in the Trust Preferred Securities, the Junior Subordinated Debentures or
the Guarantee that limit the Company's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Contract Adjustment Payments,
the Junior Subordinated Debentures and the Guarantee. See "Description of the
Guarantee," "Description of the Purchase Contracts -- Contract Adjustment
Payments" and "Description of the Junior Subordinated
Debentures -- Subordination."

PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT

Although the Trust Preferred Securities constituting a part of the Income
PRIDES will be issued pursuant to a Declaration (as defined herein) qualified
under the Trust Indenture Act, the Purchase Contract Agreement will not be
qualified as an indenture under the Trust Indenture Act, and the Purchase
Contract Agent will not be required to qualify as a trustee thereunder.
Accordingly, holders will not have the benefit of the protection of the Trust
Indenture Act. The protections generally afforded the holder of a security
issued under an indenture that has been qualified under the Trust Indenture Act
include disqualification of the indenture trustee for "conflicting interests" as
defined under the Trust Indenture Act, provisions preventing a trustee that is
also a creditor of the issuer from improving its own credit position at the
expense of the security holders immediately prior to or after a default under
the Indenture and the requirement that the indenture trustee deliver reports at
least annually with respect to certain matters concerning the indenture trustee
and the securities. Under the terms of the Purchase Contract Agreement, the
Purchase Contract Agent will not be required to resign as agent in the event of
a "conflicting interest," will not be obligated to establish a separate account
for the benefit of holders in the case of a credit relationship with the Company
at the time of a default under the Purchase Contract Agreement and will not be
required to furnish any annual reports. A holder of a Trust Preferred Security,
as a part of an Income PRIDES or otherwise, will have the protections of the
Declaration, which will be qualified under the Trust Indenture Act.

PROPOSED TAX LEGISLATION

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<PAGE> 25

stock, such as certain issuances of a forward contract in connection with the
issuance of debt. The effective date of the proposals is the date of first
Congressional committee action. The House Ways and Means Committee has approved
a similar provision as part of the Revenue Reconciliation Act of 1997 (the
"Revenue Act"). The effective date of this provision of the Revenue Act is for
instruments issued after June 8, 1997 which is the date prior to the date of
first Congressional Committee action which occurred on June 9, 1997. The
legislative language of the Revenue Act, as approved by the House Ways and Means
Committee, provides for a transition rule for instruments described in a filing
with the Securities and Exchange Commission made on or prior to June 8, 1997
where such filing was required solely by reason of the distribution. The Junior
Subordinated Debentures were described in a filing with the Securities and
Exchange Commission made prior to June 8, 1997 and such filing was required
solely by reason of their distribution. Accordingly, the proposals in their
current form, including the applicable provision of the Revenue Act, would not
apply to the Junior Subordinated Debentures since they would be subject to the
transition rules, In addition, if the proposals are enacted into law as
currently drafted, they should not apply to the Junior Subordinated Debentures
since the issuance of the Junior Subordinated Debentures and the issuance of the
Purchase Contract should not be considered as part of an arrangement designed to
result in the payment of the Junior Subordinated Debentures with stock of the
issuer. There can be no assurance, however, that the proposals, if enacted, will
be enacted as currently drafted or will include such a transitional rule or that
other legislation enacted after the date hereof will not adversely affect the
tax treatment of the Junior Subordinated Debentures or cause a Tax Event,
resulting in the distribution of the Junior Subordinated Debentures to holders
of Trust Preferred Securities. See "Description of the Trust Preferred
Securities -- Special Event Distribution."

RISK FACTORS -- THE INDUSTRY

RESERVES

The Company maintains reserves for future policy benefits and unpaid claims
expenses which include policy reserves and claims reserves established for its
insurance products. Policy reserves represent the portion of premiums received
which are reserved to provide for future claims. Claims reserves are established
for future payments not yet due on claims already incurred. Neither generally
accepted accounting principles nor statutory reserves represent an exact
calculation of future benefit liabilities but are instead estimates made by the
Company using actuarial and statistical procedures. However, there can be no
assurance that any such reserves would be sufficient to fund future liabilities
in all circumstances. Future loss development could require reserves for prior
periods to be increased, which would adversely affect earnings in future
periods. Adjustments to reserve amounts may be required in the event of changes
from the assumptions regarding future morbidity (the incidence of claims and the
rate of recovery, including the effects thereon of inflation, and other societal
and economic factors), persistency, mortality, and interest rates used in
calculating the reserve amounts.

COMPETITION

The Company's businesses are highly competitive. The Company's
profitability is affected by a number of factors, including rate competition,
mortality and morbidity experience, lapse rates, government regulation, interest
rates, and general business considerations. There are many insurance companies
which actively compete with the Company in its lines of businesses, some of
which are larger and have greater financial resources than the Company, and
there is no assurance that the Company will be able to compete effectively
against such companies in the future.

RATINGS

Claims-paying and financial strength ratings, such as those assigned by
A.M. Best, S&P and other independent insurance rating organizations, have become
an increasingly important factor in establishing the competitive position of
insurance companies. A.M. Best and S&P ratings are intended to provide an
independent opinion of an insurer's ability to meet its obligations to
policyholders and should not be considered an investment recommendation.
Management believes that such ratings held by the Company's

24
<PAGE> 26

insurance subsidiaries are important credentials that allow and enhance
marketing opportunities. Lower ratings could adversely affect the ability of the
insurance subsidiaries to gain new business.

RELIANCE ON DIVIDENDS AND OTHER PAYMENTS FROM INSURANCE SUBSIDIARIES

The Company is a holding company with no independent business operations.
Consequently, the Company's primary sources of cash to meet its debt service and
other obligations and to pay dividends on its capital stock are dividends,
management fees, surplus debenture payments and tax sharing payments from its
various subsidiaries. The ability of the Company's insurance subsidiaries to pay
dividends and make other payments is limited by the insurance laws of their
respective states of domicile. There can be no assurance that the Company's
insurance subsidiaries will continue to be able to make sufficient funds
available to the Company without regulatory approval or that the Company will be
able to obtain any regulatory approvals that may be required from time to time.

REGULATION

Insurance companies are subject to governmental regulation in each of the
jurisdictions in which they conduct business. Insurance regulatory agencies have
broad administrative power with respect to all aspects of an insurance company's
business, including rates, policy forms, dividend payments, capital adequacy and
the amount and type of investments it may have. These regulations are intended
primarily to protect policyholders rather than security holders.

25
<PAGE> 27

THE TRUST

AHL Financing is a statutory business trust formed under Delaware law
pursuant to (i) the Declaration, executed by the Company, as Sponsor, and the
AHL Trustees and (ii) the filing of a certificate of trust with the Secretary of
State of the State of Delaware on March 20, 1997. The Declaration will be
qualified as an indenture under the Trust Indenture Act. Although upon issuance
of the Trust Preferred Securities, the holders of Income PRIDES will be
beneficial owners of the underlying Trust Preferred Securities, these Trust
Preferred Securities will be pledged with the Collateral Agent to secure the
obligations of the holders under the Purchase Contracts. See "Description of the
Purchase Contracts -- Pledged Securities and Pledge Agreement" and "Description
of the Trust Preferred Securities-Book-Entry Only Issuance -- The Depository
Trust Company." The Company will directly or indirectly acquire Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Trust. The Trust exists for the exclusive purposes of (i) issuing the
Trust Securities representing undivided beneficial interests in the assets of
the Trust, (ii) investing the gross proceeds of the Trust Securities in the
Junior Subordinated Debentures and (iii) engaging in only those other activities
necessary or incidental thereto. The Trust has a term of approximately seven
years, but may terminate earlier as provided in the Declaration.

Pursuant to the Declaration, the number of trustees at the time of issuance
of the Trust Securities will be four. Two of the Trustees (the "Regular
Trustees") will be persons who are employees or officers of or who are
affiliated with the Company. A third trustee will be an entity that is
unaffiliated with the Company and that has its principal place of business in
the State of Delaware (the "Delaware Trustee"). Initially, The First National
Bank of Chicago, a national banking corporation, will serve as institutional
trustee and the fourth trustee under the Declaration and as Indenture Trustee
for the purposes of compliance with the provisions of the Trust Indenture Act
(the "Institutional Trustee"). The First National Bank of Chicago will be the
Institutional Trustee until removed or replaced by the holder of the Common
Securities. For the purpose of compliance with the provisions of the Trust
Indenture Act, The First National Bank of Chicago will also act as trustee (the
"Guarantee Trustee") under the Guarantee and an affiliate, First Chicago
Delaware Inc., will act as Delaware Trustee for the purposes of the Trust Act
(as defined herein), until removed or replaced by the holder of the Common
Securities. See "Description of the Trust Preferred Securities Guarantees" and
"Description of the Trust Preferred Securities -- Voting Rights."

The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Trust Preferred Securities. The
Company, as the direct or indirect holder of all the Common Securities, will
have the right to appoint, remove or replace any trustee and to increase or
decrease the number of trustees; provided, that the number of trustees shall be
at least three, a majority of which shall be Regular Trustees. The Company will
pay all fees and expenses related to the Trust and the offering of the Trust
Securities. See "Description of the Junior Subordinated
Debentures -- Miscellaneous."

The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Trust Preferred Securities."

The Delaware Trustee is First Chicago Delaware Inc. The principal place of
business of the Trust shall be c/o American Heritage Life Investment
Corporation, 1776 American Heritage Life Drive, Jacksonville, Florida 32224, and
its telephone number is (904) 992-1776.

26
<PAGE> 28

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The high and low sales prices of the Common Stock of the Company, as
reported on the NYSE Composite Tape (ticker symbol: "AHL"), and the dividends
paid on the Common Stock during the fiscal years ended December 31, 1995 and
1996, and for the first and second quarters of fiscal 1997 are set out below:

<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PAID PER SHARE
------ ------ --------------
<S> <C> <C> <C>
1995:
First Quarter......................................... $19.75 $17.88 $.1650
Second Quarter........................................ 21.25 16.25 .1750
Third Quarter......................................... 21.50 18.88 .1800
Fourth Quarter........................................ 23.25 19.25 .1800
1996:
First Quarter......................................... $23.88 $20.50 $.1800
Second Quarter........................................ 24.25 19.88 .1800
Third Quarter......................................... 21.75 19.00 .1900
Fourth Quarter........................................ 27.75 19.75 .1900
1997:
First Quarter......................................... $27.00 $23.50 $.1900
Second Quarter (through June 19, 1997)................ 30.63 23.88 .1900
</TABLE>

On April 24, 1997, the Company declared a 5.3% quarterly dividend increase
to $.20 per share, payable in the third quarter of 1997, which marks the 28th
year of increased dividends to shareholders.

On June 19, 1997, the last reported sale price of the Common Stock on the
NYSE was $30.63 per share. As of April 30, 1997, the approximate number of
holders of record of Common Stock was 8,400.

The Company's Board of Directors currently intends to continue to declare a
quarterly cash dividend on each share. The amount of such dividend is intended
to be based on the Company's net income and cash flow. Each declaration of
dividends will be reviewed by the Board of Directors quarterly and will be
determined, at the discretion of the Board of Directors, in light of the
Company's results of operations, financial condition, capital requirements, and
other factors deemed relevant at that time by the Company's Board of Directors.
As an insurance holding company, the Company depends on dividends and other
permitted payments from its subsidiaries to pay cash dividends to shareholders.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "Business -- Government
Regulation," and "Business -- Dividend Regulation."

USE OF PROCEEDS

All of the proceeds from the sale of the Income PRIDES, of which the Trust
Preferred Securities are a component, will be invested by the Trust in Junior
Subordinated Debentures of the Company pursuant to the Indenture described
herein and the net proceeds of approximately $ million ultimately will be used
by the Company for the repayment of bank debt and for general corporate
purposes. Repayment of bank debt will increase the available funding under the
Company's existing lines of credit. Any additional amounts received by the
Company upon settlement of the Purchase Contracts, whether on the Purchase
Contract Settlement Date or Early Settlement Date, are expected to be used for
the repayment of bank debt or general corporate purposes. The Company's bank
debt consists of two components: (i) demand lines of credit and (ii) an
acquisition line of credit. The demand lines of credit have interest rates that
range primarily between LIBOR plus 50 basis points to LIBOR plus 55 basis
points. The acquisition line of credit has an interest rate of LIBOR plus 55
basis points. The acquisition line of credit is a revolving loan with a four
year maturity that converts to a two year term loan upon maturity. The
acquisition line of credit funded the acquisition of Columbia Universal.

27
<PAGE> 29

CAPITALIZATION

The following table sets forth the summary capitalization at March 31,
1997, of the Company and its consolidated subsidiaries on a historical basis and
on a pro forma basis after giving effect to the sale by the Company of the
FELINE PRIDES offered hereby and the application of the net proceeds therefrom.
See "Use of Proceeds." The table should be read in conjunction with the
Company's consolidated financial statements and notes thereto and other
financial data included elsewhere herein.

<TABLE>
<CAPTION>
AT MARCH 31, 1997
--------------------------
ACTUAL PRO FORMA(1)
----------- ------------
(UNAUDITED)
($ IN THOUSANDS EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Notes payable to banks...................................... $116,019 $
-------- --------
AHLIC-obligated mandatorily redeemable preferred securities
of subsidiaries holding solely subordinated debentures of
AHLIC(2).................................................. --
-------- --------
Stockholders' equity:
Common stock of $1.00 par value.
Authorized 35,000,000 shares; issued 13,990,371 shares.... 13,990 13,990
Additional paid-in capital.................................. 43,228 43,228
Retained earnings........................................... 168,582 168,582
Net unrealized investment gains (losses).................... 3,717 3,717
Less: Cost of 173,128 common shares in treasury............. (3,791) (3,791)
-------- --------
Total stockholders' equity........................ 225,726 225,726
-------- --------
Total capitalization.............................. $341,745 $
======== ========
Debt as a percentage of total capitalization...... 33.9% %
======== ========
</TABLE>

- ---------------

(1) Adjusted for the sale of Trust Preferred Securities, the application of the
estimated net proceeds to the purchase of the Junior Subordinated Debentures
and the application by the Company of all of the estimated net proceeds of
Junior Subordinated Debentures for the repayment of bank debt. See "Use of
Proceeds."
(2) The sole assets of the Trust will be % subordinated debentures of the
Company due 2002 with a principal amount of approximately $ .
Upon redemption of such debt, the Trust Preferred Securities of such
subsidiary will be mandatorily redeemable.

ACCOUNTING TREATMENT

The financial statements of the Trust will be reflected in the Company's
consolidated financial statements with the $ Trust Preferred Securities
shown as AHLIC-obligated mandatorily redeemable preferred securities of
subsidiaries holding solely subordinated debentures of the Company. The notes to
the consolidated financial statements of the Company will reflect that the sole
asset of the Trust will be approximately $ principal amount of %
Junior Subordinated Debentures due August 16, 2002 of the Company. See
"Capitalization." Under current generally accepted accounting principles, the
Purchase Contracts will not be recorded on the Company's consolidated balance
sheet but will be disclosed in the notes to the consolidated financial
statements.

28
<PAGE> 30

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following summary data should be read in conjunction with the Company's
consolidated financial statements and the notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
annual income statement and balance sheet data set forth below for the years
1992 through 1996 have been derived from the consolidated financial statements
audited by KPMG Peat Marwick LLP, independent accountants. The audited
consolidated balance sheets at December 31, 1995 and 1996 and the related
audited consolidated statements of earnings and of cash flows for the three
years ended December 31, 1996, notes thereto and related Auditor's Report appear
elsewhere in this Prospectus. The unaudited financial information as of and for
the three months ended March 31, 1997 and 1996 has been derived from unaudited
financial statements which include, in the Company's opinion, all adjustments
(consisting of normal recurring adjustments) necessary for a fair statement of
the interim results. Interim results are not necessarily indicative of the
results to be expected for the full year.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
($ IN THOUSANDS, EXCEPT LIFE INSURANCE VOLUME IN FORCE AND SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Income:
Insurance revenues.......... $ 65,048 $ 61,187 $ 258,519 $ 247,251 $ 230,589 $ 227,376 $ 212,062
Net investment income....... 25,223 19,070 77,035 70,601 66,706 63,875 59,721
Realized investment gains,
net....................... 103 105 420 6,003 2,011 1,184 237
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total income.......... 90,374 80,362 335,974 323,855 299,306 292,435 272,020
----------- ----------- ----------- ----------- ----------- ----------- -----------
Benefits, claims and expenses:
Benefits and claims......... 41,618 35,929 148,887 148,581 146,146 159,335 155,722
Underwriting, acquisitions
and insurance expenses:
Taxes and commissions..... 19,324 19,785 85,690 77,697 67,164 54,657 42,969
General expenses.......... 9,363 7,390 31,724 28,702 28,162 27,641 28,043
Amortization of deferred
acquisition costs....... 6,937 6,403 25,628 23,744 20,758 20,091 19,450
Other operating expenses.... 1,582 954 4,186 3,694 2,413 1,806 1,685
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total benefits claims
and expenses........ 78,824 70,461 296,115 282,418 264,643 263,530 247,869
----------- ----------- ----------- ----------- ----------- ----------- -----------
Earnings before income
taxes................... 11,550 9,901 39,859 41,437 34,663 28,905 24,151
Income taxes.................. 3,805 3,172 12,827 13,362 11,022 9,190 7,255
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net earnings............ $ 7,745 $ 6,729 $ 27,032 $ 28,075 $ 23,641 $ 19,715 $ 16,896
=========== =========== =========== =========== =========== =========== ===========
Operating earnings(3)......... $ 7,678 $ 6,661 $ 26,759 $ 24,174 $ 22,334 $ 18,945 $ 16,739
=========== =========== =========== =========== =========== =========== ===========
PER SHARE DATA:
Net earnings................ $ .56 $ .49 $ 1.96 $ 2.02 $ 1.71 $ 1.59 $ 1.42
Operating earnings(3)....... .56 .48 1.94 1.74 1.61 1.53 1.41
Cash dividends paid......... .19 .18 .74 .70 .64 .59 .56
Weighted average number of
shares outstanding........ 13,810,142 13,833,356 13,825,560 13,882,041 13,855,297 12,399,070 11,902,790
BALANCE SHEET DATA:
Total investments........... $ 1,325,727 $ 975,002 $ 1,011,449 $ 979,603 $ 845,729 $ 854,363 $ 766,871
Total assets................ 1,738,090 1,329,077 1,370,117 1,317,896 1,179,257 1,138,578 1,016,984
Notes payable............... 116,019 95,974 85,459 94,994 84,201 72,481 62,102
Stockholders' equity........ 225,726 216,881 228,943 219,329 173,360 183,930 147,965
OTHER DATA:
Consolidated return on
stockholders' equity(1)... 13.1% 12.5% 12.8% 12.4% 12.6% 13.8% 14.2%
First year annualized,
issued, delivered and paid
premiums on a weighted
basis..................... $ 65,399 $ 78,585 $ 290,173 $ 252,332 $ 221,502 $ 191,921 $ 160,892
Life insurance volume in
force (in millions)....... 22,134 18,725 20,523 18,384 16,816 15,601 15,468
Ratio of earnings to fixed
charges(2)................ 7.80x 7.41x 7.49x 7.38x 9.13x 8.76x 9.47x
</TABLE>

- ---------------

(1) Based on operating earnings for the prior twelve month period divided by
average stockholders' equity for the prior twelve month period which
excludes any unrealized investment gains (losses).

(2) For the purposes of the ratio of earnings to fixed charges, earnings were
calculated by adding interest expense to operating earnings before income
taxes and excluding any unrealized investment gains and losses. Fixed
charges consist of interest expense payable on bank debt and issuance of the
Junior Subordinated Debentures. The pro forma ratio of earnings to fixed
charges for the three months ended March 31, 1997, giving pro forma effect
to the sale of the Income PRIDES as if such sale and issuance had occurred
at January 1, 1997, assuming repayment of bank indebtedness from the net
proceeds, was 7.16x.

(3) The amounts exclude realized investment gains and losses.

29
<PAGE> 31

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

American Heritage Life Investment Corporation and its subsidiaries are
engaged primarily in the life and health insurance business. The Company's
consolidated earnings are primarily attributable to its principal subsidiaries,
American Heritage Life Insurance Company ("AHL") and Columbia Universal.
Following is a discussion of the significant components of the consolidated
results of operations for the years ended December 31, 1996, 1995 and 1994 and
for the three months ended March 31, 1997 and 1996.

INSURANCE OPERATIONS

Insurance revenues pursuant to generally accepted accounting principles
("GAAP") include only the mortality, expense and surrender charges for
interest-sensitive products. Insurance revenues do not include group and credit
premium equivalents and cash deposits from interest-sensitive products.

As a result of more of the ordinary life business being interest-sensitive,
the group business being on a self-funded or split funded basis and the credit
business being written on an administrative services only basis, in which only
the fees charged are included in insurance revenues for GAAP purposes, it is
necessary to evaluate insurance revenues including premium equivalents.

For 1996, 1995 and 1994, insurance revenues were $258.5 million, $247.3
million and $230.6 million, respectively, while total insurance revenues
including premium equivalents were $567.6 million, $511.8 million and $445.5
million, respectively.

Insurance revenues for the three months ended March 31, 1997 were $65.0
million, an increase of 6.3% from the $61.2 million for the same period in 1996.
This increase was due primarily to an increase in ordinary accident and health
insurance revenues and the inclusion of Columbia Universal revenues of $3.5
million in 1997 with no comparable amount in 1996. Including premium equivalents
of $78.8 million and $60.8 million for the three months ended March 31, 1997 and
1996, respectively, insurance revenues, including premium equivalents, were
$143.9 million and $122.0 million, up 17.9% in 1997. These increases in
insurance revenues including premium equivalents were due to an increase in
long-term care revenues. Additionally, credit insurance revenues and premium
equivalents were up due to increased sales of reinsurance, which generally
provides less risk to the Company at an acceptable profit margin and an increase
in administrative services only business. Also, Columbia Universal revenues and
premium equivalents were $9.3 million in 1997 with no comparable amount in 1996.

Ordinary insurance revenues amounted to $137.4 million, $123.7 million and
$114.0 million, in 1996, 1995 and 1994, respectively. Premiums including
equivalents were $181.5 million, $167.3 million and $161.6 million for the years
ended December 31, 1996, 1995 and 1994, respectively. The increases in revenues
and premiums and premium equivalents in 1996 over 1995 and 1995 over 1994 were
due primarily to increased policy charges on interest-sensitive products due to
increased sales, increased sales of individual accident and health plans, and
rate increases on certain cancer/dread disease plans. The increase in individual
accident and health sales in 1996 compared to 1995 included for the first time a
full year of long-term care product sales that increased revenues approximately
$5.7 million.

Group insurance revenues in 1996, 1995 and 1994 totaled $35.5 million,
$39.9 million and $43.2 million, respectively. Premiums and premium equivalents
were $214.9 million, $206.4 million and $167.5 million for 1996, 1995 and 1994,
respectively. These increases in premiums and premium equivalents included the
sales to larger group cases that were sold on a self-funded basis.

Credit insurance revenues for 1996, 1995 and 1994 were $85.6 million, $83.6
million and $73.4 million, respectively. Credit premiums and premium equivalents
amounted to $171.2 million, $138.1 million and $116.3 million for the years
ended December 31, 1996, 1995 and 1994, respectively. Credit insurance revenues
and premiums and premium equivalents increased during these periods as a result
of geographic expansion and increased sales of reinsured business, which
generally provides less risk to the Company at an acceptable

30
<PAGE> 32

profit margin. The increase in 1996 over 1995 was also attributed to additional
fee income generated from administering the run-off of credit life and health
insurance for another insurance company, effective June 1996.

Benefits and claims were $41.6 million for the three months ended March 31,
1997, up 15.8% from the $35.9 million for the same period in 1996. The increase
for the three months ended March 31, 1997 versus 1996 was due primarily to
increased ordinary benefits, including increased dread disease claims and an
increase in reserves for long-term care business due to its growth. Also, 1997
included benefits and claims for Columbia Universal of $6.7 million with no
comparable amount for 1996.

Ordinary benefits and claims in 1996, 1995 and 1994 were $111.0 million,
$103.2 million and $95.6 million, respectively. The increase each year was the
result of growth in first year and renewal business, increased interest credited
to policyholder account balances and some increase in mortality and morbidity
experience.

Group benefits and claims in 1996, 1995 and 1994 totaled $24.0 million,
$25.6 million and $29.1 million, respectively. Group benefits have been reduced
as a result of a managed care program, the AHL Select Provider Network, and new
cases written on a self-funded or split-funded basis where claims are not
included in the Company's benefits and claims expense for financial statement
purposes.

Credit benefits and claims amounted to $13.9 million, $19.8 million and
$21.4 million in 1996, 1995 and 1994, respectively. These decreases were due, in
part, to a reduction in the change in unearned premiums which is included in
credit benefits and claims. These reductions were also the result of terminating
unprofitable accounts and certain previously retained business accounts
converting to reinsured accounts.

The Company's major operating costs consist of commissions, payroll,
premium taxes and administrative-related expenditures. Taxes, commissions, and
general expenses aggregated $28.7 million for the first three months of 1997
versus $27.2 million for the first three months of 1996, or an increase of 5.6%.
The increase was primarily due to Columbia Universal taxes, commissions and
general expenses of $1.5 million for 1997 with no comparable amount for 1996.

General insurance expenses as a percentage of total income, excluding
realized investment gains (losses) and including premium equivalents for the
years ended December 31, 1994 through 1996 and for the three months ended March
31, 1997 ranged from a high of 5.5% to a low of 4.9%. This demonstrates that the
Company has been able to control the level of general insurance expenses, which
in turn has been a significant factor in the Company's steady growth in
operating earnings.

Ordinary taxes, commissions and general expenses were $33.1 million, $29.4
million and $29.0 million for 1996, 1995 and 1994, respectively. The increase
each year was primarily the result of growth in ordinary business. Group taxes,
commissions and general expenses were $12.3 million, $12.2 million and $12.5
million, respectively. These expenses have remained relatively flat due to a
decrease in taxes and commissions offset by an increase in general expenses. The
decrease in commissions and taxes was the result of reduced premiums. The
increases in general insurance expenses in 1996 and 1995 were due to growth in
business, administration of larger group cases and the implementation of a new
local area network group system. Credit taxes, commissions and general expenses
were $72.3 million, $65.1 million and $54.1 million in 1996, 1995 and 1994,
respectively. The increase each year was primarily due to an increase in
commissions earned as a result of increased insurance revenues and a higher
effective commission rate, due to increased contingent commissions as a result
of improved claims experience.

Pursuant to GAAP, the initial costs directly associated with selling,
underwriting, and processing ordinary insurance are deferred and amortized over
the premium-paying period of the related policies for traditional products. For
interest-sensitive products, these costs are amortized over the lives of the
policies in relation to the present value of estimated gross profits from
surrender charges and investment, mortality, and expense margins. These costs
increase as the amount of sales and insurance in force increases. The charge to
earnings for acquisition costs of ordinary insurance is comprised of two
components: (1) the amortization of costs for policies which remain in force,
and (2) the write-off of unamortized costs related to policies which are
terminated. For the three months ended March 31, 1997, the amortization of
deferred acquisition costs was

31
<PAGE> 33

$6.9 million compared to $6.4 million for the comparable period in 1996. The
increase in amortization expense for the three months ended March 31, 1997 was
primarily due to increased amortization from the growth of business in force and
Columbia Universal amortization of $.9 million for 1997 with no comparable
amount for 1996.

Amortization of deferred acquisition costs was $25.6 million in 1996, $23.7
million in 1995 and $20.8 million in 1994. These increases were primarily due to
growth in business in force and an increase in lapses of individual health
business resulting from the implementation of rate increases, which increase the
write-off of the policies' deferred acquisition costs.

For the three months ended March 31, 1997, other operating expenses were
$1.6 million compared to $1.0 million for the same period in 1996, or an
increase of 65.8%. This increase was due primarily to an increase in interest
expense as a result of an increase in the amount of average outstanding bank
debt including increased debt related to the acquisition of Columbia Universal.

Non-segmented operating expenses in 1996, 1995 and 1994 were $3.9 million,
$3.4 million and $2.2 million, respectively. These expenses primarily relate to
non-life insurance operations, including interest expense. Interest expense is a
function of the average debt outstanding and interest rate charged. Interest
expense included in non-segmented operating expenses was $3.7 million, $3.3
million and $2.0 million for 1996, 1995 and 1994, respectively. These increases
were due primarily to additional bank debt outstanding in 1996 and 1995 and an
increase in interest rates in 1995 from 1994.

INCOME TAXES

Income taxes increased 20.0% for the three months ended March 31, 1997 from
the same period in 1996, primarily as a result of an increase in net earnings
and a higher effective tax rate. For the three months ended March 31, 1997 and
1996, the effective tax rate was 32.9% and 32.0%, respectively. The increase in
the effective tax rate was primarily due to Columbia Universal's earnings being
taxed at a rate of 35% in 1997.

Income tax expense was down in 1996 compared to 1995 due to a decrease in
pre-tax earnings and up in 1995 compared to 1994 due to increased pre-tax
earnings. The effective tax rates on net earnings were 32.2% in 1996 and 1995
and 31.8% in 1994.

NET INVESTMENT INCOME

For the three months ended March 31, 1997, net investment income was $25.2
million, an increase of 32.3% over the $19.1 million reported for the same
period in 1996. This increase in net investment income for the three months
ended March 31, 1997 compared to the same period in 1996 was due primarily to an
increase in invested assets, and $6.1 million of investment income for Columbia
Universal with no comparable amount in 1996, partially offset by a decrease in
Management Security Plan ("MSP") policy loan interest due to a decrease in the
average rate charged (7.98% in 1997 versus 9.36% in 1996) on increased policy
loan balances (see page 35 for discussion regarding MSP loans.) The effective
yield on invested assets for the three months ended March 31, 1997 was 7.50%
compared to 7.80% for the same period in 1996.

Net investment income was $77.0 million, $70.6 million and $66.7 million
for the years ended December 31, 1996, 1995 and 1994, respectively. These
increases were due primarily to an increase in invested assets and changes made
in the investment portfolio to improve the yield. The effective yield on
invested assets for the year ended December 31, 1996 was 7.72% compared to 7.64%
for the year ended December 31, 1995 and 7.87% for the year ended December 31,
1994. The increase in yield from 1995 to 1996 was due to changes made in the
investment portfolio including a reduction in lower yielding equity securities
and an increase in higher yielding corporate bonds and mortgage loans. The
reduction in yield from 1994 to 1995 was primarily the result of declining
interest rates during 1995.

PRE-TAX OPERATING EARNINGS

For the three months ended March 31, 1997, ordinary pre-tax operating
earnings were $10.2 million compared to $8.4 million for the three months ended
March 31, 1996. The increase in 1997 is the result of

32
<PAGE> 34

growth in business and additional earnings from Columbia Universal with no
comparable amount for 1996. Ordinary pre-tax operating earnings were $35.1
million, $28.9 million and $26.0 million for the years ended December 31, 1996,
1995 and 1994, respectively. The increase each year was primarily due to growth
in insurance revenues and investment income, less normal growth in benefits and
claims, and expenses.

For the three months ended March 31, 1997, group pre-tax operating earnings
were $1.4 million versus $1.7 million for the three months ended March 31, 1996.
Group pre-tax operating earnings were $4.5 million, $7.5 million and $7.3
million for the years ended December 31, 1996, 1995 and 1994, respectively. The
decreases in group pre-tax operating earnings in 1997 and 1996 were the result
of reduced margins on certain cases due to the competitive pricing in the group
marketplace on both administrative services only and insured business and
increased health claims on insured cases. The increase in group pre-tax
operating earnings from 1994 to 1995 was the result of necessary rate actions on
certain cases, the terminations of certain unprofitable cases.

For the three months ended March 31, 1997, credit pre-tax operating
earnings were $.9 million compared to $.6 million for the three months ended
March 31, 1996. Credit pre-tax operating earnings were $3.8 million, $2.7
million and $1.8 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The increases in credit pre-tax operating earnings for the periods
were the result of terminating certain unprofitable accounts and reducing the
commissions paid on accounts with unsatisfactory margins which negatively
impacted operations in 1994. Additionally, the Company is administering the
run-off of the credit life and health insurance business for another insurance
company, effective June 1996, which will increase fee income over a four-year
period. The Company is only responsible for administration of the run-off and
has no insurance risk.

OTHER ITEMS

Management is not aware of any pending regulation from the various state
insurance departments that would have a significant impact on the Company's
operations.

The Company's legal department includes a compliance area headed by an
officer who is a lawyer with regulatory experience. The compliance area reviews
and approves marketing material, policy filings and other areas which are the
subject of market conduct compliance requirements of the various state insurance
departments.

REALIZED INVESTMENT GAINS

Realized investment gains, net were $102,766 for the three months ended
March 31, 1997, consistent with the $105,472 reported for the three months ended
March 31, 1996. Realized investment gains, net were $419,511 for the year ended
December 31, 1996 compared to $6.0 million for the year ended December 31, 1995
and $2.0 million for the year ended December 31, 1994. The realized investment
gains for the respective periods were primarily the result of adjustments made
in the investment portfolio to increase the yield on invested assets less
recognizing any decline in value other than temporary in the value of certain
investments. The 1995 realized investment gains also included realized gains on
real estate.

LIQUIDITY AND CAPITAL RESOURCES

The Company is engaged primarily in the life and health insurance business.
The Company's insurance subsidiaries generate major sources of cash flow from
premiums collected for traditional insurance products, deposits and policy
charges for interest-sensitive products, and investment income attributable to
its life insurance operations and associated investment portfolio. This results
in a significant portion of the Company's assets being liquid.

As insurers, the Company's subsidiaries are required to maintain
substantial liabilities for future policy benefits and policyholders' account
balances. Since premiums and deposits received in anticipation of such benefits
are investable funds, it is expected that the Company's insurance subsidiaries
will continue to increase their investment portfolios using cash flow from
operations.

33
<PAGE> 35

OPERATING ACTIVITIES

The increase in net cash provided by operating activities of $24.9 million
for the three months ended March 31, 1997, compared to $4.2 million for the same
period in 1996, was due primarily to 1996 including the funding of surrenders of
certain ordinary life policies with no such comparable surrenders for 1997.

The increase in net cash used by investing activities of $49.7 million for
the first quarter of 1997 versus $1.9 million for the same period in 1996 was
due primarily to the acquisition of Columbia Universal.

The increase in net cash provided by financing activities of $21.1 million
for the three months ended March 31, 1997, compared to $1.7 million used for the
same period in 1996, was due primarily to increased borrowing on a line of
credit for the acquisition of Columbia Universal, which was partially offset
with the pay off of $20.0 million of debt related to certain investment
purchases in prior years.

The net cash provided by operating activities for the years ended December
31, 1996, 1995 and 1994 aggregated $66.5 million, $75.8 million and $48.5
million, respectively. The decrease in 1996 from 1995 was due primarily to (i)
the funding of surrenders and maturities of certain ordinary life policies in
1996 and (ii) an increase in reinsurance receivables primarily from the
increased sales from credit reinsured accounts. The increase in 1995 from 1994
was due primarily to (i) the funding in 1994 of the termination of certain
premium deposit accounts amounting to $16.4 million with no comparable
reductions in 1995 and (ii) an increase in accrued investment income and a
related decrease in unearned investment income due to changing policy loan
interest on certain plans from in advance to in arrears during 1994 discussed in
the following paragraph.

The net cash used by investing activities amounted to $45.0 million, $75.0
million and $51.3 million for 1996, 1995 and 1994, respectively. These changes
are consistent with the amounts available to invest as a result of the cash
provided by operating activities and borrowings.

Net cash of $20.5 million was used by financing activities in 1996 compared
to cash provided by financing activities of $.3 and $3.3 million in 1995 and
1994, respectively. The changes in these amounts are primarily related to
increases or payoffs of borrowings.

INVESTMENTS

The Company's balance sheet contains a high ratio of liquid assets. Such
assets are made up of cash, short-term investments and readily marketable
securities.

At March 31, 1997, the fair value of the Company's debt and equity security
portfolio aggregated $839.6 million compared with an amortized cost of $834.8
million, or an unrealized gain of $4.8 million. At December 31, 1996, the fair
value of the portfolio aggregated $556.4 million compared with an amortized cost
of $534.4 million, or an unrealized gain of $22.0 million. This change in the
unrealized gain was primarily due to changes in market conditions.

The Company's amortized cost of high-yield bonds (rated below BBB by
Standard & Poor's Corporation and excluding non-rated and private placements) at
March 31, 1997 aggregated $31.3 million with a market value of $30.5 million. At
market value, these investments represented 1.8% of total assets, or 2.3% of
total invested assets. The amortized cost of high yield bonds at December 31,
1996 aggregated $14.8 million with a market value of $15.0 million. At December
31, 1996 these investments represented only 1.1% of total assets or 1.5% of
invested assets.

At March 31, 1997, U. S. Treasury obligations and mortgage backed
securities at market value aggregated $195.7 million, or 25.3% of the total bond
portfolio of $774.5 million.

Financial Accounting Standard No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," requires that securities classified as
available-for-sale be reported at fair value and the related unrealized gain or
loss net of deferred income taxes be reported as a separate component of
stockholders' equity. Additionally, pursuant to GAAP, deferred acquisition costs
for interest-sensitive products, decreased $3.4 million at December 31, 1996 and
decreased $7.3 million at December 31, 1995 for the effect that would

34
<PAGE> 36

have been recognized had the unrealized gain/loss at December 31, 1996 and 1995
on debt securities actually been realized.

During 1996 and 1995, consistent with the Company's investment strategy,
certain changes were made in the investment portfolio to improve the overall
investment results. Changes to the investment portfolio in 1996 included sales
of GNMA's and purchases of corporate bonds and mortgage loans. During 1995, the
Company sold certain parcels of real estate, reduced common stock and GNMA
holdings, and increased investments in bonds and mortgage loans. The current
investment strategy includes increasing investments in corporate bonds and
mortgage loans while decreasing investments in GNMA's as they pay down.

The mortgage loan portfolio at December 31, 1996, which aggregated $53.7
million, consisted of residential mortgages of $1.2 million and commercial
mortgages of $52.5 million (with no concentration in any particular industry),
all of which were first mortgages on properties. There were no non-performing
mortgage loans in the portfolio at December 31, 1996.

The Company's policy loans are a higher percentage of invested and total
assets than industry norm as a result of a significant block of MSP business.
The MSP product is an interest-sensitive, deferred compensation/executive
benefit-type product with the policy loan feature being an integral part of the
product. A market rate of interest is charged on the policy loans, and a
predetermined built-in spread is achieved between the interest rate charged on
the policy loans and the interest rate credited on the loaned funds.
Accordingly, all MSP policy loans are completely collateralized by the
underlying policyholders' account balances. All policy loans are funded out of
cash provided by operating activities and do not represent a significant
restriction on the Company's liquidity.

Policy loans totaled $399.6 million at December 31, 1996, or 39.5% of total
invested assets. The significant amount of policy loans was attributable to the
policy loans associated with the MSP executive deferred compensation plan
offered by the Company which aggregated $370.7 million at December 31, 1996. As
discussed earlier, the policy loan feature is an integral part of the product.
MSP policy loans increased by approximately $22.1 million in 1996 over 1995.

The Company's investment strategy is to earn a favorable return on its
investments in excess of rates for which the Company is contractually obligated
to its policyholders. To achieve this policy, the Company maintains an
asset/liability matching program, monitoring the investment spread achieved on
each product. Targeted investment spreads have been maintained for all products
despite fluctuations in interest rates and an overall compression of market
rates.

NOTES PAYABLE TO BANKS

Notes payable to banks at March 31, 1997 were $116.0 million. The increase
in bank debt at March 31, 1997, compared to the amount at December 31, 1996,
reflected the cash needs for the Company including the acquisition of Columbia
Universal, stockholder dividends, federal income taxes, and interest expense on
outstanding debt partially offset by the payoff of $20.0 million of debt related
to investment purchases.

Notes payable to banks at December 31, 1996 were $85.5 million compared to
a balance of $95.0 million at December 31, 1995. The decrease in bank debt at
December 31, 1996 compared to the amount at December 31, 1995 reflected the 1996
payoff of a $20.0 million loan related to investment purchases. Partially
offsetting this reduction was an increase in bank debt for cash needs of the
Company including stockholder dividends, interest expense on outstanding debt
and federal income taxes during 1996.

Notes payable to banks at December 31, 1996 included $20.0 million related
to a $20.0 million investment purchase where the Company is earning a positive
spread on the invested assets acquired less the interest paid on the bank debt.
This loan was paid off in the first quarter of 1997. The weighted average
interest rate on the remaining $65.5 million of bank debt at December 31, 1996
was 6.12%. Also, the Company has an acquisition line of credit to be used to
fund acquisitions of blocks of business or other life and health insurance
companies. The Company borrowed $47.3 million on this acquisition line during
the first quarter of 1997 to fund the acquisition of Columbia Universal.

35
<PAGE> 37

ACQUISITIONS

On April 16, 1997, the Company announced an agreement in principle to
acquire Concord General Life Insurance Company for total consideration of $7.5
million in cash. The transaction, which is subject to regulatory approval and
the execution of a definitive agreement, is expected to be completed in the
second quarter of 1997. Concord primarily markets supplemental life and health
insurance products through worksite marketing and will increase the Company's
presence in the Northeast.

On December 10, 1996, the Company announced it had entered into an
agreement in principle to acquire Columbia Universal for $44 million in cash.
This acquisition closed on March 3, 1997. Columbia Universal had premiums and
premium equivalents of $36.4 million for the year ended December 31, 1996 and
total assets of $368.5 million at December 31, 1996. This acquisition was
reflected in the Company's financial statements in 1997. Effective December 31,
1996, the Company acquired a block of business from Kentucky Home Mutual Life
Insurance Company with approximately $1.8 million of premiums and premium
equivalents and $3.3 million of assets.

OTHER

The Company is a holding company and its liquidity is largely dependent on
the ability of its subsidiaries, primarily AHL, to pay dividends and on external
financing. In addition, the Company charges its subsidiaries a management fee to
cover its basic operating expenses.

The amount of dividends that AHL can pay to the Company is limited by
regulatory restriction to an annual amount equal to the greater of 10% of AHL's
statutory surplus, or its prior year's statutory gain from operations plus net
realized capital gains on a noncumulative basis if AHL will have surplus as to
policyholders equal to or exceeding 115% of the minimum required statutory
surplus as to policyholders after the dividend is paid. A dividend of
approximately $13.2 million, related to AHL's earnings in 1994, was paid to the
Company in 1995. AHL chose not to pay any dividends to the Company during 1996
and 1994. Approximately $20.8 million, related to 1996 earnings, is available to
dividend to the Company during 1997 without regulatory approval. The outstanding
bank debt of the Company is serviced through either dividends from AHL in excess
of the amount used to pay stockholder dividends or by replacement borrowing.

As a Texas domiciled insurance company, Columbia Universal is subject to
Texas law to the effect that its dividends are limited to the greater of the net
statutory gain from operations for the preceding year or 10% of net statutory
surplus at the end of the preceding year, as further restricted by the balance
of "unassigned surplus" from which dividends are paid. For 1997, the maximum
amount available for payment of dividends by Columbia Universal would be
approximately $2.9 million. Payment of dividends in excess of such amount would
require approval of the Texas Department of Insurance. Prior notification to the
Texas Department of Insurance is required before the payment of any dividends.

In the fourth quarter of 1995, the Company's Board of Directors authorized
management to repurchase from time to time up to 300,000 shares of the Company's
common stock. At December 31, 1996, 101,700 shares had been acquired and funded
by borrowings of $2.2 million.

The Risk-Based Capital for Life and/or Health Insurers Model Act was
adopted by the National Association of Insurance Commissioners ("NAIC") in 1992.
A similar act was adopted for property and casualty insurance companies in 1994.
The main purpose of these model acts was to provide a tool for insurance
regulators to evaluate the capital of insurers. Based on calculations using the
appropriate NAIC formula, AHL, Columbia Universal and FCIC exceeded the
Risk-Based Capital requirements at December 31, 1996 and 1995.

36
<PAGE> 38

BUSINESS

The Company is a holding company whose principal subsidiaries are AHL, a
Florida life insurance company, and Columbia Universal, a Texas life insurance
company. The Company is engaged in the business of underwriting life and
accident and health insurance on an individual, group and credit basis. The
Company is a leading marketer of life and supplemental health insurance products
through payroll allotment, a specialized distribution method on which it has
focused since its inception. Payroll allotment is an efficient way to distribute
most products to employees on the job by conveniently deducting the premium from
their paychecks. The Company was organized on September 11, 1956 and is
presently authorized to do business as a life insurance company in all states,
other than New York, and in the District of Columbia, U.S. Virgin Islands and
Puerto Rico.

OPERATING EARNINGS HISTORY(1)

<TABLE>
<CAPTION>
YEAR ENDED % INCREASE
DECEMBER 31 OPERATING EARNINGS FROM PRIOR YEAR
- ----------- ------------------ ---------------
(IN THOUSANDS)
<S> <C> <C>
1987...................................................... $ 9,637 6.5%
1988...................................................... 10,649 10.5
1989...................................................... 11,920 11.9
1990...................................................... 13,409 12.5
1991...................................................... 15,019 12.0
1992...................................................... 16,739 11.5
1993...................................................... 18,945 13.2
1994...................................................... 22,334 17.9
1995...................................................... 24,174 8.2
1996...................................................... 26,759 10.7
</TABLE>

- ---------------

AHL, is rated "A (Excellent)" by A. M. Best, an independent nationally
recognized insurance publishing and rating service and has an insurer claims
paying ability rating of "AA" from S&P. A.M. Best ratings for solvent insurance
companies range from "A++ (Superior)" to "D (Very Vulnerable)." During the
second quarter of 1997, Columbia Universal's A.M Best rating was upgraded from
"B (Adequate)" to "A- (Excellent)". An A.M. Best rating is intended to provide
an independent opinion of an insurer's ability to meet its obligations to
policyholders and should not be considered an investment recommendation. A
Standard & Poor's insurance claims paying ability rating is an assessment of an
operating insurance company's financial capacity to meet obligations under an
insurance policy in accordance with its terms. Standard & Poor's ratings ranges
from "AAA (Extremely strong capacity to meet contractual policy obligations)" to
"D (Default, terms of the obligation will not be met)". AHL's "AA" rating, the
second highest major rating category, indicates a very strong capacity to meet
contractual policy obligations. At March 31, 1997, the Company had $1.7 billion
of total assets, $225.7 million of stockholders' equity, and more than $22.1
billion of gross life insurance volume in force. Also, approximately 96% of the
$803.4 million of debt securities held by the Company had investment grade
ratings.

The executive offices of the Company and its subsidiaries, other than
Columbia Universal, are located at the American Heritage Life Building, 1776
American Heritage Life Drive, Jacksonville, Florida 32224 and

37
<PAGE> 39

the Company's telephone number is (904) 992-1776. The executive offices of
Columbia Universal are located at 11044 Research Boulevard, Building A, 5th
Floor, Austin, Texas 78759 and its telephone number is (512) 345-3200.

BUSINESS STRATEGIES

The Company's objective is to continue its record of increased operating
earnings by following the strategies set forth below:

COMMITMENT TO CORE BUSINESSES. The Company's primary focus will
continue to be on its core businesses. Additionally, the Company will
continue to evaluate opportunities to grow from internal expansion as well
as by acquisitions of blocks of business and/or companies that are
compatible with the Company's core businesses.

FOCUS ON EXPENSE CONTROL. The Company believes that its record of
profitable growth has resulted from a combination of revenue growth and
focus on expense control. The Company's ratio of general insurance expenses
to total revenue (defined for this purpose as including premiums, premium
equivalents and investment income and excluding realized investment gains
and losses) has been recognized as being low as compared to industry norms.
General insurance expenses as a percentage of total revenues for the years
ended December 31, 1987 through 1996 and the three months ended March 31,
1997 ranged from a high of 6.2% to a low of 4.9%.

ACQUISITIONS

The Company entered into an agreement in principle on December 10, 1996 to
acquire Columbia Universal for a purchase price of $44.0 million. This
transaction closed on March 3, 1997. Columbia Universal markets individual life,
annuity and supplemental health products to selected markets. Columbia Universal
had premiums and premium equivalents of $36.4 million for the year ended
December 31, 1996, and total assets of $368.5 million at December 31, 1996. The
acquisition provides new distribution channels for the Company's ordinary
payroll products and sales opportunities for both companies and is projected to
have a positive impact on the Company's future operating earnings.

On April 16, 1997, the Company announced an agreement in principle to
acquire Concord General Life Insurance Company, for total consideration of $7.5
million in cash. The transaction, which is subject to regulatory approval and
the execution of a definitive agreement, is expected to be completed in the
second quarter of 1997. Concord primarily markets supplemental life and health
insurance products through worksite marketing and will increase the Company's
presence in the Northeast.

Effective December 31, 1996, the Company acquired a block of payroll
deduction interest-sensitive whole life business from Kentucky Home Mutual Life
Insurance Company. Additionally, during the past six years, the Company has
acquired three other blocks of business. Excluding the Columbia Universal and
Concord acquisitions, these four blocks of business aggregated $23.4 million in
additional annualized premiums and $155.4 million in assets and have provided
new distribution channels for the Company's ordinary payroll products.

The financial information included in this prospectus includes the balance
sheet information on the acquisition of Kentucky Home Mutual Life Insurance
Company as of December 31, 1996, the effective date

38
<PAGE> 40

for the acquisition, and March 31, 1997. Amounts for Columbia Universal are not
reflected in the Company's December 31, 1996 financial statements.

MARKETING AREAS

The Company has three primary marketing areas: ordinary, group and credit.
The following table sets forth the insurance revenues and pre-tax operating
earnings of the three marketing areas for each of the years in the five year
period ended December 31, 1996 and for the three months ended March 31, 1997 and
1996.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INSURANCE REVENUES(1):
Ordinary
Life................ $ 13,404 $ 9,233 $ 42,998 $ 40,173 $ 38,405 $ 37,000 $ 35,753
Accident and
health............ 25,845 22,796 94,423 83,545 75,588 71,975 65,464
-------- -------- -------- -------- -------- -------- --------
Total
ordinary..... $ 39,249 $ 32,029 $137,421 $123,718 $113,993 $108,975 $101,217
-------- -------- -------- -------- -------- -------- --------
Group
Life................ $ 1,878 $ 1,717 $ 10,482 $ 8,604 $ 7,719 $ 10,350 $ 10,832
Accident and
health............ 5,232 7,016 24,998 31,321 35,503 42,473 48,325
-------- -------- -------- -------- -------- -------- --------
Total group.... $ 7,110 $ 8,733 $ 35,480 $ 39,925 $ 43,222 $ 52,823 $ 59,157
-------- -------- -------- -------- -------- -------- --------
Credit
Life................ $ 7,155 $ 8,021 $ 36,650 $ 35,380 $ 29,516 $ 29,183 $ 25,053
Accident and
health............ 11,534 12,404 48,968 48,228 43,858 36,395 26,635
-------- -------- -------- -------- -------- -------- --------
Total credit... $ 18,689 $ 20,425 $ 85,618 $ 83,608 $ 73,374 $ 65,578 $ 51,688
-------- -------- -------- -------- -------- -------- --------
Total.......... $ 65,048 $ 61,187 $258,519 $247,251 $230,589 $227,376 $212,062
======== ======== ======== ======== ======== ======== ========
INSURANCE REVENUES AND
PREMIUM EQUIVALENTS(1):
Ordinary............... $ 53,147 $ 40,319 $181,469 $167,328 $161,612 $149,106 $138,241
Group.................. 50,201 48,502 214,933 206,354 167,520 158,188 163,701
Credit................. 40,517 33,177 171,209 138,134 116,318 103,113 93,027
-------- -------- -------- -------- -------- -------- --------
Total.......... $143,865 $121,998 $567,611 $511,816 $445,450 $410,407 $394,969
======== ======== ======== ======== ======== ======== ========
PRE-TAX OPERATING
EARNINGS(2):
Ordinary............... $ 10,185 $ 8,359 $ 35,070 $ 28,935 $ 26,049 $ 21,798 $ 17,322
Group.................. 1,419 1,696 4,513 7,470 7,323 6,042 5,269
Credit................. 881 631 3,750 2,739 1,754 1,720 2,969
-------- -------- -------- -------- -------- -------- --------
Total.......... $ 12,485 $ 10,686 $ 43,333 $ 39,144 $ 35,126 $ 29,560 $ 25,560
======== ======== ======== ======== ======== ======== ========
</TABLE>

- ---------------

(1) Pursuant to generally accepted accounting principles, insurance revenues
include only the fees charged for interest-sensitive and administrative
services only business and do not include group and credit premium
equivalents and cash deposits from interest-sensitive products. Thus it is
necessary to evaluate insurance revenues including premium equivalents.
Ordinary insurance revenues for reporting purposes pursuant to generally
accepted accounting principles include only the cost of insurance, expense
and surrender charges for interest-sensitive products. Insurance revenues do
not include cash deposits from interest-sensitive products. Group and credit
insurance revenues do not include premium equivalents for the periods
presented. Group premium equivalents represent the claim costs paid for
split funded or self funded type plans which are paid with policyholder
funds as opposed to being paid by the Company. Under indemnity type plans
offered by the Company, claims are considered in determining the premiums

39
<PAGE> 41

to be paid by the policyholder. For split funded or self funded type plans,
the Company pays the claim costs with policyholder funds and such amounts
are not included in the premiums paid to the Company. Credit premium
equivalents represent reinsured premiums and earned premium equivalents
related to administrative services only business.
(2) Pre-tax operating earnings represent the pre-tax operating earnings of the
respective marketing areas excluding non-insurance related income and
expense and realized investment gains and losses.

ORDINARY DEPARTMENT

GENERAL. Ordinary operations provide interest-sensitive products
(universal life, single and flexible premium deferred annuities and
excess-interest whole life), single premium immediate annuities, level and
decreasing term products and supplemental accident and health insurance products
to individuals. The largest portion (76.7% for the three months ended March 31,
1997) of new annualized sales was produced on a payroll allotment basis with the
remainder produced by a variety of direct billing methods through individual
agents. The Company's strategy in its ordinary operations is to offer a broader
product mix than its competitors in the payroll allotment area and to solicit
all of the employee base by targeting direct sales of insurance products to
higher income employees in addition to payroll allotment sales. Recent life
insurance studies published by LIMRA International, a prominent industry market
research organization, indicate that the Company is one of only four life
insurance companies that sell in excess of $40 million of voluntary payroll life
and payroll health insurance premiums per year. To describe the Company's
differentiation in the marketplace, the Company has coined the following
descriptive phrase: "AHL -- The Workplace Marketer(R) -- the Company that serves
the life and supplemental health insurance needs of the American worker -- from
the lunchroom to the board room."

Distribution by payroll allotment requires a sophisticated data processing
capability which the Company has developed over the years. The Company believes
it has sufficient data processing capacity to accommodate future growth for the
foreseeable future without any significant additional capital expenditures.

The Ordinary Department has been a key component of the strategy and
profit-making ability of the Company since its founding. For the three months
ended March 31, 1997, the Ordinary Department accounted for approximately 82% of
the Company's pre-tax operating earnings, which excludes non-operating items not
allocated to the marketing areas.

Initially, ordinary operations consisted only of life insurance products.
In the mid-1970's, ordinary health insurance products were introduced into the
product portfolio in response to the Company's increasing sales opportunities
and successes in the payroll allotment market niche.

More recently, the Company has begun to recognize an adjunct market that is
available and very synergistic to the payroll deduction marketing
efforts -- that being the corporate life insurance needs of the payroll
deduction client companies and the personal life insurance needs of the owners,
executives and managers of those client companies. As a result, the strategic
marketing mission has been expanded to include this adjunct market niche in
addition to the more traditional rank and file worker market addressed by other
payroll deduction marketing life insurance companies.

MARKETS. Many ordinary life insurance companies focus on the upscale
market consisting of those individuals earning $80,000 or more. However, this
target market constitutes a small percentage of the buyer population. By
targeting the entire workplace, including the lower income worker earning under
$40,000 per year and the middle income worker earning $40,000-$80,000 per year,
the Company has increased its market to a majority of the buyer population.
Furthermore, the Company offers a multiple product line of life and supplemental
health products, rather than the more narrow product mix offered by some other
companies, thereby increasing its marketing opportunities.

The Company believes that by targeting a much larger market and offering
the workplace market a full range of life and supplemental health products
results in a stronger marketing strategy.

40
<PAGE> 42

TECHNOLOGY. The Company has introduced new state-of-the-art technology for
its agents during the first part of 1997. This new comprehensive system consists
of three components:

- An integrated software package that provides sales presentations,
proposal illustrations and computer enrollment capabilities of its entire
portfolio of life, health and annuity products.

- An "on-line" access that provides its agents 24 hours a day, seven days a
week access via modem to their in-force and pending policyholder data and
production information.

- An agent management software package specifically designed for the
payroll deduction marketplace that assists the Company's agents in
managing their business.

The Company believes that the new technology will allow its agency force to
operate more effectively and allow the Company to process new business more
efficiently.

PRODUCTS. The Company's strategy is to price its products at levels
competitive with those of comparable products in the market, so long as they
will provide an acceptable profit margin. Set forth below are the primary
products offered:

<TABLE>
<CAPTION>
PAYROLL ALLOTMENT PRODUCTS: UPSCALE PRODUCTS:
- --------------------------- -----------------
<S> <C>
Universal Life Universal Life
Term Life Term Life
Annuities Annuities
Cancer/Dread Disease Long Term Care
Accident Home Health Care
Disability Income
Hospital Indemnity
Long Term Care
</TABLE>

It is the general policy of the Company to declare the interest rate to be
credited on funds received from interest-sensitive products monthly with such
rates being guaranteed for one year for both first year and renewal funds during
a particular month. All interest-sensitive products are subject to surrender
charge provisions which vary depending upon the particular type of policy. For
universal life-type policies, the surrender charges generally range over a
period of 10-20 years at varying rates, depending upon the plan of insurance.
For annuities, the surrender charges generally range over a period of 7-10 years
with charges varying from 1% to 10% of the accumulated fund value over the
surrender charge period.

All ordinary accident and health products are guaranteed renewable, with
periodic rate increases permitted due to adverse claims experience with the
approval of the respective state insurance departments. Major health products
include cancer/dread disease, accident, disability income, long-term care, home
health care and hospital income. Premiums on ordinary policies are payable on a
monthly, quarterly, semi-annual, annual, single or flexible premium basis.

The Company's current practice dictates that unless the need for a medical
examination is indicated by the age and amount applied for or by an
investigation, the majority of ordinary life insurance is written without
requiring a medical examination in amounts up to $250,000 on applicants aged
0-35; up to $150,000 on applicants aged 36-40; up to $99,999 on applicants aged
41-50; up to $49,999 on applicants up to age 60. Somewhat higher limits are
permitted for certain agents with home office approval. A blood chemistry
profile is generally required for insurance amounts of $100,000 and greater.

DISTRIBUTION SYSTEM/STRATEGIC ALLIANCES. The Company's products are
marketed through the personal producing general agent ("PPGA") system in 49
states. The Company has found the PPGA system to be an efficient distribution
system. These agents are not exclusively AHL producers but may write business
for several insurance companies. Each PPGA's compensation is based only upon
production. Additionally, in 1996 AHL launched a strategic alliance initiative
by seeking targeted life insurance companies to offer AHL's workplace marketing
products through their existing distribution systems. The interest level
expressed by the targeted companies was high due to several factors, including
the promising potential of workplace marketing,

41
<PAGE> 43

the targeted companies' lack of one or more of the major components necessary
for success in workplace marketing, and the targeted companies' recognition of
AHL as a successful, quality company dedicated and committed to workplace
marketing. The Company presently has strategic alliance partnerships in various
stages of development with several major life insurance companies which are
expected to provide access to significant distribution systems during 1997.

The Ordinary Department distribution system operates with the efficiency
and effectiveness that are consistent with the Company's philosophy as a service
oriented, results driven organization. In addition to the Home Office, the
Company maintains regional offices located throughout the United States. The
Company has implemented plans to expand its national presence in 1997 by
establishing additional regional offices in Lacrosse, Wisconsin; Denver,
Colorado; and a site to be determined in New England. The decision to expand the
number of regional offices was influenced by the Company's desire to fully
support the evolving opportunities developing with strategic alliances and
national accounts.

GROUP DEPARTMENT

GENERAL. Group operations distribute insurance products and related
services to large employers for their employee benefit plans. The Company
provides life, disability, medical and dental insurance programs, which are the
foundation of any employer's package of group benefits. The Company furnishes
all components necessary to effectively manage program costs for the client
companies including a provider network, managed care program and benefits
determination. Group products include group term life insurance, accidental
death and dismemberment, short-term disability, long-term disability, dental and
major medical coverage. In offering these product lines, the Company provides a
wide range of funding vehicles from fully insured to employer funded products,
which the Company tailors to the particular needs of its employer clients.

MARKETS. Although the Company's Group Department focuses its efforts in
the southeastern United States, it has clients of national scope. The Company's
primary market for group life and health insurance is corporate employers that
have more than 100 employees located in the southeast. Employer groups range in
size from 100 to over 40,000 employees. The Company has focused on an integrated
approach to manage benefits. With health care being a locally delivered product,
it is important to establish close relations with providers and client
companies.

The Company's target market will continue to be corporate employers with
100 or more lives. Particular emphasis has been placed on direct marketing to
those employers having a home office or regional presence within the
southeastern United States employing between 500 and 5,000 employees. The
products offered by the Company's Group Department complement the individual
life and health products sold on a payroll deduction basis and provide the
Company's agents and brokers and the Company's client companies with a complete
portfolio of products and services.

PRODUCTS. The Company's group products include group term life insurance,
accidental death and dismemberment, short-term disability, long-term disability,
dental, and major medical coverage. A wide range of funding vehicles, including
fully insured, split funding and self-funded products, are sold within these
product lines. For the years ended December 31, 1996 and 1995, approximately 83%
and 81%, respectively, of group business (based on premiums and premiums
equivalents) was written on a self-funded or split funded basis. For the three
months ended March 31, 1997 and 1996, approximately 86% and 82%, respectively,
of group business was written on a self-funded or split funded basis.

The Company's group business has responded to the market by offering more
products which allow employers to share more of the risk for the financing of
their health benefit programs. There has been a shift in the Company's block of
business from traditionally funded products to split funded products and
administrative services only products which may be purchased with or without
specific and aggregate stop-loss coverage. The impact of this in the financial
statement presentation has been a reduction in traditional premium levels offset
by an increase in premium equivalents.

The Company has developed innovative new products and approaches to
controlling and reducing health care costs for its client companies.
Specifically, two areas that continue to enhance the products and services

42
<PAGE> 44

offered by the Group Department are the AHL Select Provider Network and its
managed care activities. Through the AHL Select Provider Network, AHL's
customers receive preferential pricing from hospitals, physicians, and other
providers of medical services and supplies. At March 31, 1997, there were 2,019
hospitals and 125,423 physicians included in the AHL Select Provider Network.
The Company's managed care activities, which utilize a professional staff with
diverse medical and clinical backgrounds to assist the Company's insureds in
obtaining quality medical care, include preadmission certification, prenatal,
cancer, psychiatric, substance abuse, and large case management programs.

The Company will continue to develop products and services to meet
employer/employee needs. As managed care has gained growing acceptance within
the Company's market, the Company has decided to complement its product line
with the introduction of health maintenance organization ("HMO") products. The
creation of a new HMO subsidiary and filing with Florida regulatory agencies
took place during 1996. The HMO subsidiary was licensed during the second
quarter of 1997 and initial product offerings will be within the North Florida
area with expansion to other Florida metropolitan areas.

DISTRIBUTION SYSTEM. The Company's group life and health products are
distributed through its regional group managers working with agents,
consultants, brokers and directly with policyholders.

The Company's strategy of focusing its marketing efforts on the brokerage
and consulting community has resulted in a significant portion of sales coming
from this important business segment. The Company has been successful in
demonstrating the value of its products and services to leading brokerage firms.

CREDIT DEPARTMENT

GENERAL. Credit operations consist of life and accident and health
insurance coverages offered to consumer debtors, primarily through banks,
automobiles dealers, finance companies and retailers. The Company currently
offers credit insurance products in 44 states and ranks among the top 15 credit
life insurance providers in the country. Typically, credit insurance will pay
outstanding loan obligations in the event of an insured loss. This coverage is
issued on either the single-premium or outstanding loan balance basis. Credit
life is sold on a reducing or level-term basis. Credit accident and health
insurance will normally only be written in conjunction with credit life
insurance.

MARKETS AND PRODUCTS. AHL is a full service credit insurance operation
(credit life, credit accident and health insurance) providing direct and
reinsured programs to a broad spectrum of the marketplace. In addition, credit
related property insurance coverage through its wholly-owned subsidiary, First
Colonial Insurance Company ("FCIC"), is offered.

The Credit Department tailors programs to meet specific consumer and
lending requirements. The Company's ability to offer property products, as well
as life and disability products, has contributed to its current growth and
should continue to enhance future growth as FCIC expands into new markets and
develops new products. FCIC is currently licensed in 13 states.

Credit operations consist of life, accident and health and property
insurance coverages offered to consumer debtors, primarily through banks,
automobiles dealers, finance companies and retailers. Typically, this insurance
will pay outstanding loan obligations in the event of an insured loss. This
coverage is issued on either a single-premium or outstanding loan balance basis.
Credit life is sold on a reducing or level-term basis and is available on a
single-life or, if permitted by state law, on a joint-life basis where the
related loan is co-signed.

FCIC's products are designed to address the additional needs of the clients
of the Credit Department. Collateral protection coverage is marketed to
financial institutions and installment floater and vendor's single interest
coverage are marketed to consumer finance companies and retail dealers. In
addition, unemployment insurance is offered where permitted. All of the
foregoing terms and limits are subject to statutory requirements which may vary
in individual states from those specified above.

COMPETITION. The credit insurance industry is well established and is
closely controlled by state regulation. Competition is still very strong even
though there has been some retrenchment in the industry.

43
<PAGE> 45

Several companies have restricted their marketing and several major providers
have withdrawn completely from the marketplace, which management believes has
provided significant opportunities for both new account sales and the
administration of runoff business for companies that have ceased writing credit
insurance.

The Company has successfully administered the run-off business of two
companies that had terminated their credit operations and is currently
administering the business of a large automobile credit insurance company that
ceased writing new business in 1995. The Company also has increased its writings
of reinsured business which currently accounts for 68% of total credit business
and which generally provides less risk to the Company than fully insured
programs. At December 31, 1996, the Company administered 134 reinsurance
companies compared to 10 in 1990 which with tight expense control allows the
Company to be very competitive in this market.

DISTRIBUTION SYSTEM. The distribution channels used by AHL and FCIC
include direct marketing by regional sales managers, home office-based marketing
staff and the general agency system. The credit marketing employees' primary
responsibilities are to attract new business, service accounts and support the
general agents. AHL and FCIC do not use direct mail or other mass
solicitation-type marketing.

INVESTMENTS

The Company's investment objective is to earn a favorable return on
invested assets in excess of contractual obligations through a diversified
portfolio of high-quality, income-producing assets including primarily bonds,
preferred stocks, common stocks and mortgages (residential and commercial). The
Company's current investment strategy includes increasing its investments in
corporate bonds and mortgage loans while decreasing its investments in GNMA's as
they pay down. The Company carefully matches the investment portfolio's assets
with its policy liabilities. A positive investment spread has been attained for
all products. The maturity of the investment portfolio is monitored so that the
Company will be able to fund its future expected cash obligations.

At March 31, 1997 and December 31, 1996, the Company had consolidated
invested assets of $1.3 billion and $1.0 billion, respectively. The following
tabulation sets forth the categories, amounts and percentages of these
investments.

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 % OF TOTAL 1996 % OF TOTAL
---------- ---------- ------------ ----------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt securities available-for-sale.............. $ 803,415 60.6% $ 521,916 51.6%
Equity securities available-for-sale............ 36,202 2.7 34,520 3.4
Mortgage loans on real estate................... 60,663 4.6 53,736 5.3
Investment real estate.......................... 461 -- 453 --
Policy loans.................................... 423,078 31.9 399,608 39.5
Short-term investments.......................... 1,908 .2 1,216 .2
---------- ----- ---------- -----
Total................................. $1,325,727 100.0% $1,011,449 100.0%
========== ===== ========== =====
</TABLE>

44
<PAGE> 46

At March 31, 1997, the Company had consolidated debt securities
available-for-sale at an amortized cost of $812.7 million and a fair value of
$803.4 million. The following tabulation sets forth these investments by
Standard and Poor's rating categories.

<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1997
RATING AMORTIZED COST FAIR VALUE
- ------ -------------- --------------
($ IN THOUSANDS)
<S> <C> <C>
AAA......................................................... $279,894 $273,184
AA.......................................................... 59,568 58,278
A,A-........................................................ 177,379 176,514
BBB+, BBB, BBB-............................................. 226,889 225,232
BB+ and lower............................................... 31,341 30,459
Non-rated................................................... 345 361
Private placements.......................................... 7,692 10,448
-------- --------
Total bonds................................................. 783,108 774,476
Redeemable preferred stocks................................. 29,598 28,939
-------- --------
Total debt securities available-for-sale.......... $812,706 $803,415
======== ========
</TABLE>

The amortized cost and estimated fair value of debt securities at March 31,
1997, by contractual maturity, were as follows. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
repay obligations with or without penalties.

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------------------
AMORTIZED COST ESTIMATED FAIR VALUE
-------------- --------------------
($ IN THOUSANDS)
<S> <C> <C>
Due in one year or less..................................... $ 1,650 $ 1,657
Due after one year through five years....................... 30,481 31,402
Due after five years through ten years...................... 163,701 166,313
Due after ten years......................................... 348,083 341,768
Mortgage backed securities.................................. 239,193 233,336
Redeemable preferred stocks................................. 29,598 28,939
-------- --------
Total............................................. $812,706 $803,415
======== ========
</TABLE>

The following tabulation provides information with respect to the
investment results of the Company for the years ended December 31, 1996, 1995
and 1994 and for the three months ended March 31, 1997 and 1996:

<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- ------------------------------
1997 1996 1996 1995 1994
---------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Average invested assets,
weighted(1)...................... $1,345,939 $977,797 $997,599 $923,946 $848,012
Net investment income.............. 25,223 19,070 77,035 70,601 66,706
Realized investment gains.......... 103 105 420 6,003 2,011
Change in unrealized investment
gains (losses) on equity and debt
securities(2).................... (8,441) (6,464) (4,614) 27,664 (24,919)
Ratio of net investment income to
weighted average invested
assets(3)........................ 7.50% 7.80% 7.72% 7.64% 7.87%
</TABLE>

- ---------------

(1) Average invested assets are calculated using fair values for all securities
as required by Financial Accounting Standard No. 115 (FAS 115), "Accounting
for Certain Investments in Debt and Equity Securities."
(2) Unrealized gains and losses are calculated on both equity and debt
securities as prescribed by FAS 115.
(3) Since all securities are carried at fair values for all years presented, all
increases (decreases) in fair value result in a reduction (increase) of the
ratio calculated above.

45
<PAGE> 47

At March 31, 1997, U.S. Treasury obligations and mortgage backed
securities, aggregated at fair value $195.7 million or 25.3% of the total bond
portfolio of $774.5 million. The amortized cost of non-investment grade bonds
(rated below BBB by Standard & Poor's Corporation and excluding private
placements and non-rated securities) at March 31, 1997 was $31.3 million with a
fair value of $30.5 million. At fair value, these investments represented 1.8%
of total consolidated assets, or 2.3% of invested assets. The Company's holdings
of non-investment grade paper has been limited and will continue to be minimal
in the future.

The Company's mortgage loan portfolio aggregated $60.7 million at March 31,
1997. There were no non-performing mortgage loans at March 31, 1997.

ADDITIONAL INFORMATION REGARDING INSURANCE OPERATIONS

The following table sets forth the cash premiums and deposits received by
geographic region in the United States for the Company's insurance subsidiaries
for the three years ended December 31, 1996 and for the three months ended March
31, 1997 and 1996:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Southeast........................... $60,313 $63,036 $265,784 $258,408 $252,531
Southwest........................... 19,573 9,618 45,307 43,804 41,863
Midwest............................. 5,172 3,565 16,204 14,185 13,007
Northeast........................... 2,350 2,122 12,920 8,220 6,934
Northwest........................... 2,924 2,525 14,699 12,523 8,586
------- ------- -------- -------- --------
Total..................... $90,332 $80,866 $354,914 $337,140 $322,921
======= ======= ======== ======== ========
</TABLE>

The following tabulation sets forth the amount of gross life insurance
volume in force by industry segment at December 31, 1996, 1995, and 1994 and at
March 31, 1997 and 1996:

<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
----------------- ---------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Type of Insurance:
Ordinary............................... $11,495 $ 9,272 $ 9,759 $ 9,167 $ 8,282
Credit................................. 4,485 4,255 4,590 4,138 3,578
Group.................................. 6,154 5,198 6,174 5,079 4,956
------- ------- ------- ------- -------
Total.......................... $22,134 $18,725 $20,523 $18,384 $16,816
======= ======= ======= ======= =======
</TABLE>

REINSURANCE

It is the general practice of the life insurance industry to reinsure
portions of life and accident and health insurance risks with other companies.
The maximum amount of ordinary insurance that AHL generally retains on any one
life currently insured under ordinary policies is $100,000 for policies issued
prior to July 1, 1994 and $200,000 for policies issued subsequent to July 1,
1994, with reductions for certain substandard, military and older age risks. The
major portion of reinsurance ceded on a GAAP basis is under agreements with
American United Life Insurance Company, Barnett Banks Insurance, Inc., General
Financial Life Insurance Company, Lincoln National Life Insurance Company,
Optimum Reassurance Life Insurance Company, RGA Reinsurance Company,
Southwestern Dealers Insurance Company, and Transamerica Occidental Life
Insurance Company. At December 31, 1996, the aggregate amount of life insurance
volume in force ceded under reinsurance agreements totaled $4.6 billion (22.4%
of the total in force at that date). For the year ended December 31, 1996, $50.1
million, or 22.9%, of the total accident and health insurance premiums written
were reinsured.

46
<PAGE> 48

Pursuant to GAAP and the terms and conditions of the reinsurance agreements
with the reinsurers, the Company has taken credit in its consolidated financial
statements for the portion ceded to the respective reinsurer.

Management reviews the financial condition of its reinsurers and monitors
concentrations of credit risk arising from similar geographic regions,
activities or economic characteristics of the reinsurers to minimize its
exposure to significant losses from reinsurer insolvencies. All receivables due
from the reinsurers have been settled in a timely manner.

GOVERNMENT REGULATION

The Company and its insurance subsidiaries are subject to regulation and
supervision by the states in which the insurance subsidiaries transact business.
The laws of the various states establish regulatory agencies with broad
administrative powers to grant and revoke licenses to transact business,
regulate rates on certain business prior to use, establish reserve requirements,
determine the form and content of required statutory financial statements,
determine the reasonableness and adequacy of statutory capital and surplus and
prescribe the types of permitted investments and the maximum concentrations of
certain classes of investments. As part of their routine regulatory oversight
process, approximately once every three years state insurance departments
conduct periodic detailed examinations of the books, records and accounts of
insurance companies domiciled in their states. Further, insurance companies are
subject to market conduct examinations by state insurance regulators. Such
examinations are not conducted according to any fixed schedule.

Insurance companies are required to file detailed annual and quarterly
statements with the state insurance regulators in each of the states in which
they do business, and their business and accounts are subject to examination by
such agencies at any time. State insurance receivership laws, rather than
federal bankruptcy laws, govern the liquidation or rehabilitation of insurance
companies.

This insurance regulation and supervision is designed primarily to ensure
the financial stability of insurance companies and to protect policyholders
rather than shareholders or general creditors.

FINANCIAL REGULATION

The Risk-Based Capital for Life and/or Health Insurers Model Act (the
"Model Act") was adopted by the National Association of Insurance Commissioners
("NAIC") in 1992. A similar model act was adopted for property and casualty
insurance companies in 1994. The main purpose of these model acts was to provide
a tool for insurance regulators to evaluate the capital of insurers with respect
to the risks assumed by them and determine whether there is a need for possible
corrective action.

These model acts provide for four different levels of regulatory action,
each of which may be triggered if an insurer's Total Adjusted Capital is less
than a corresponding "level" of Risk Based Capital ("RBC"). A modified phase-in
test is triggered if an insurer's Total Adjusted Capital is less than 200% of
its "Authorized Control Level RBC" (as defined in the Model Act), or less than
250% of its Authorized Control Level RBC and the insurer has a negative trend
("the Company Action Level"). At the Company Action Level, the insurer must
submit a comprehensive plan to the regulatory authority which discusses proposed
corrective actions to improve its capital position. The "Regulatory Action
Level" is triggered if an insurer's Total Adjusted Capital is less than 150% of
its Authorized Control Level RBC. At the Regulatory Action Level, the regulatory
authority will perform a special examination of the insurer and issue an order
specifying corrective actions that must be followed. The "Authorized Control
Level" is triggered if an insurer's Total Adjusted Capital is less than 100% of
its Authorized Control Level RBC, and at that level the regulatory authority is
authorized (although not mandated) to take regulatory control of the insurer.
The "Mandatory Control Level" is triggered if an insurer's Total Adjusted
Capital is less than 70% of its Authorized Control Level RBC, and at that level
the regulatory authority must take regulatory control of the insurer. Regulatory
control may lead to rehabilitation or liquidation of an insurer.

Based on calculations using the NAIC formula as of December 31, 1996, all
of the Company's insurance subsidiaries exceeded the required level for RBC at
such time.

47
<PAGE> 49

DIVIDEND REGULATION

The Company is a legal entity separate and distinct from its subsidiaries.
As a holding company with no other significant business operations, its primary
sources of cash to meet its obligations are borrowings, dividends and other
payments from its insurance subsidiaries.

The Company's insurance subsidiaries are subject to various regulatory
restrictions on the maximum amount of payments, including dividends and other
distributions, that they may make to the Company without obtaining prior
regulatory approval. As a Florida domiciled insurance company, AHL is subject to
Florida law, to the effect that life and health insurance company dividends may
be made without prior approval of the Florida Insurance Commissioner if the
dividend is equal to or less than the greater of: (a) 10% of AHL's surplus as to
policyholders derived from realized net operating profits on its business and
net realized capital gains; or (b) AHL's entire net operating profits and
realized net capital gains derived during the immediately preceding calendar
year, if AHL will have surplus as to policyholders equal to or exceeding 115% of
the minimum required statutory surplus as to policyholders after the dividend is
paid.

As a Texas domiciled insurance company, Columbia Universal is subject to
Texas law to the effect that its dividends are limited to the greater of the net
statutory gain from operations for the preceding year or 10% of net statutory
surplus at the end of the preceding year, as further restricted by the balance
of "unassigned surplus" from which dividends are paid. Payment of dividends in
excess of such amount would require approval of the Texas Department of
Insurance. Prior notification to the Texas Department of Insurance is required
before the payment of dividends of any lesser amount.

If insurance regulators determine that payment of a dividend or any other
payment to an affiliate (such as a payment under a tax allocation agreement or
for employee or other services or pursuant to a surplus debenture) would,
because of the financial condition of the paying insurance company or otherwise,
be hazardous to such insurance company's policyholders or creditors or to
certain other parties, the regulators may block payment of such dividends or
such other payment to the affiliates that would otherwise be permitted without
prior approval.

CHANGE OF CONTROL REGULATION

The states in which the Company's insurance subsidiaries are domiciled have
enacted legislation or adopted administrative regulations affecting the
acquisition of control of insurance companies as well as transactions between
insurance companies and persons controlling them. Most states require
administrative approval of the acquisition of control of an insurance company
incorporated in the state or the acquisition of control of an insurance holding
company whose insurance subsidiary is incorporated in the state. In Florida and
Texas, the acquisition of 5% and 10% of such shares, respectively, is generally
deemed to be the acquisition of "control" for the purpose of the holding company
statutes and requires not only filing of detailed information concerning the
acquiring parties and the plan of acquisition, but also administrative approval
prior to the acquisition.

LITIGATION

The Company's insurance subsidiaries, like other insurance companies, are
currently defendants in lawsuits that involve claims for punitive, exemplary or
other extracontractual damages, which are for amounts substantially in excess of
the actual damages sought. Management considers such litigation regrettably to
be of the type to which insurance companies are usually and customarily
subjected in the ordinary course of business and to date the settlements of such
claims of this nature have not been material to the financial position of the
Company. In the opinion of management, based on the currently ascertained facts
of the pending litigation, which the Company intends to vigorously defend, the
ultimate resolution of such litigation should not be material to the financial
position of the Company.

48
<PAGE> 50

COMPETITION

The life insurance industry is highly competitive. The competitors of the
Company consist of both stock and mutual companies, and in many instances they
have been in business for longer periods of time and may have greater financial
resources than the Company. However, management of the Company believes that its
policies are generally competitive with similar types of policies being offered
by other insurers doing business in the jurisdictions in which they operate.

In addition to life and health insurance companies which are competitors of
the Company, there are banks and other financial institutions that could be
permitted to sell life insurance products directly, thereby increasing
competition even more. However, there are a number of unresolved regulatory
issues related to the authority of banks located in the Company's major
marketing areas to compete directly with the Company in the sale of life
insurance products, including interest-sensitive products.

OTHER BUSINESS

The non-life insurance operations, excluding AHL, Columbia Universal and
FCIC, consisted primarily of intercompany operations which were eliminated in
consolidation and accordingly did not contribute materially to consolidated
operating earnings.

49
<PAGE> 51

MANAGEMENT

The following tabulation is a list of the names and ages as well as the
position held for the past five years by each executive officer and director of
the Company and certain executive officers of AHL, none of whom is related to
each other either by blood or marriage, except W. Ashley Verlander and Chris A.
Verlander, who are father and son, respectively, and A. Dano Davis and Robert D.
Davis, who are first cousins.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
T. O'Neal Douglas......................... 61 AHL and AHLIC -- Chairman of the Board and Chief
Executive Officer, Director
Chris A. Verlander........................ 49 AHL and AHLIC -- President and Chief Operating
Officer, Director
C. Richard Morehead....................... 50 AHL and AHLIC -- Executive Vice-President, Treasurer
and Chief Financial Officer
Charles C. Baggs.......................... 46 AHL -- Senior Vice-President, Administration
James H. Baum............................. 45 AHL -- Senior Vice-President Group Department
David A. Bird............................. 40 AHL -- Senior Vice-President Agency Department
W. Michael Heekin......................... 44 AHLIC -- Senior Vice-President and Corporate
Secretary; AHL -- Senior Vice-President, General
Counsel and Corporate Secretary
Elizabeth A. Mahin........................ 36 AHL -- Senior Vice-President and Chief Accounting
Officer
William J Thomas.......................... 52 AHL -- Senior Vice-President Credit Department
Curtiss S. Sheldon........................ 56 AHL -- Senior Vice-President and Chief Actuary
Edward L. Baker........................... 62 Director
A. Dano Davis............................. 51 Director
Robert D. Davis........................... 65 Director
H. Corbin Day............................. 59 Director
Radford D. Lovett......................... 63 Director
W. Ashley Verlander....................... 77 Director
</TABLE>

T. O'NEAL DOUGLAS' principal positions are those of: Chairman of the Board
of Directors of the Company, a position he has held since April, 1994; Chief
Executive Officer of the Company, a position he has held since February, 1990;
Director of the Company, a position he has held since July, 1987; Director of
AHL, a position he has held since January, 1984; Chief Executive Officer of AHL,
a position he has held since February, 1990; and Chairman of AHL, a position he
has held since April, 1994. From February, 1990 to April, 1996 he was President
of the Company. From July, 1986 to April, 1994 he was President of AHL. Mr.
Douglas is also a director of Physicians Sales and Service, Inc.

CHRIS A. VERLANDER'S principal positions are those of: President and Chief
Operating Officer of the Company, which he has held since April, 1996; Director
of the Company, a position he has held since July, 1987; Director of AHL which
he has held since April, 1985, Chief Operating Officer of the Company, which he
has held since April, 1996, and President of AHL, which he has held since April,
1994. Prior to April, 1996, and since April, 1990, he was Executive Vice
President of the Company. Prior to April, 1994 and since April, 1990, he was
Executive Vice President of AHL. Prior to April, 1994 and since September, 1985,
he was Corporate Secretary of the Company and AHL.

C. RICHARD MOREHEAD'S principal positions are those of Executive Vice
President of the Company and AHL, which he has held since April, 1994, Treasurer
and Chief Financial Officer and Chief Accounting Officer of the Company and
Chief Financial Officer of AHL, which he has held since July, 1986 and Director

50
<PAGE> 52

of AHL, which he has held since July, 1990. Prior to April, 1994 and since July,
1986, he was Senior Vice President and Chief Financial Officer of the Company
and AHL. Prior to July, 1986 and since 1983, he was a partner in the accounting
firm of Peat, Marwick, Mitchell & Co. (now KPMG Peat Marwick LLP) and had been
affiliated with that firm since 1976.

CHARLES C. BAGG'S principal position is that of Senior Vice President of
AHL, a position he has held since December, 1990. Prior to December, 1990 and
since November, 1988 he was Vice President of AHL.

JAMES H. BAUM'S principal position is that of Senior Vice President, Group
Department, of AHL, a position he has held since September, 1987.

DAVID A. BIRD'S principal position is that of Senior Vice President, Agency
Department of AHL, which he has held since May, 1994. Prior to May, 1994 and
since January, 1994 he was Vice-President of AHL. Prior to 1994 and since 1987,
he was a Regional Director of AHL.

W. MICHAEL HEEKIN'S principal positions are those of Senior Vice President
and Corporate Secretary of the Company, which he has held since April, 1994;
Senior Vice President and General Counsel of AHL, which he has held since March,
1993; and Corporate Secretary of AHL, which he has held since April, 1994. Prior
to March, 1993 and since July, 1991, he was engaged by the Florida State
Insurance Department as the Deputy Receiver of Guarantee Security Life Insurance
Company in Receivership in Jacksonville, Florida. Prior to July 1991 and since
October, 1988, Mr. Heekin was Associate Dean of Florida State University College
of Law in Tallahassee, Florida.

ELIZABETH A. MAHIN'S principal position is that of Senior Vice President
and Chief Accounting Officer of AHL, which she has held since April, 1994. Prior
to April, 1994 and since August, 1990 she was Vice President and Controller of
AHL.

WILLIAM J THOMAS' principal position is that of Senior Vice President of
AHL, a position he has held since July, 1995. Prior to July, 1995 and since
April, 1990, he was Vice President of AHL.

CURTISS S. SHELDON'S principal position is that of Senior Vice President
and Chief Actuary of AHL, which he has held since August, 1993. Prior to August,
1993 and since June, 1978, he was with Southern Farm Bureau Life Insurance
Company, serving as vice president and chief actuary since February, 1987.

EDWARD L. BAKER has served as a Director since 1994. Mr. Baker has been
Chairman of the Board of Florida Rock Industries, Inc., a construction products
company since February, 1989. Mr. Baker is also a director of FRP Properties,
Inc., Flowers Industries, Inc. and Regency Realty.

A. DANO DAVIS has served as a Director since June, 1993. Mr. Davis has been
Chairman of the Board and Principal Executive Officer of Winn-Dixie Stores,
Inc., a retail grocery chain, since 1988.

ROBERT D. DAVIS has served as a Director since 1968. Mr. Davis has been
Chairman of the Board of D.D.I., Inc., a private investment company, since 1984.
Prior to June, 1990 and since 1988 he was Vice Chairman of the Board of
Winn-Dixie Stores, Inc. Mr. Davis is also a director of Winn-Dixie Stores, Inc.,
and First Union Corporation, a bank holding company.

H. CORBIN DAY has served as a Director since June, 1993 and has served on
the board of AHL since 1989. Mr. Day has been Chairman of the Board of Jemison
Investment Co., Inc., an investment banking firm since May, 1988. Mr. Day is
also a director of Blount International, Inc., a construction and manufacturing
company and a limited partner of Goldman, Sachs & Co., one of the Underwriters.

RADFORD D. LOVETT has served as a Director since 1989. Mr. Lovett has been
Chairman of the Board of Commodores Point Terminal Corp., which operates a
marine terminal, since 1982. Mr. Lovett is also a director of First Union
Corporation, Winn-Dixie Stores, Inc., Florida Rock Industries, Inc., a
construction products company and FRP Properties, Inc., a trucking and real
estate company.

W. ASHLEY VERLANDER has served as a Director of the Company since its
organization in 1968. He served as Chairman of the Board of the Company from
February, 1990 to April, 1994. He was Chairman of the Board of AHL from July,
1986 to April, 1994.

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DIRECTORS OF AHL

The following are the members of the Board of Directors of AHL, the
Company's principal subsidiary.

F. DUANE ACKERMAN, President and Chief Executive Officer of BellSouth
Corporation, Atlanta, Georgia (Telecommunications).

EDWARD L. BAKER, Chairman of the Board of Florida Rock Industries, Inc.,
Jacksonville, Florida (Construction Products Company).

I. JON BRUMLEY, Chairman of the Board and Chief Executive Officer of Mesa,
Inc., Irving, Texas (Oil and Gas Production Company).

JOHN ELLIS "JEB" BUSH, President of Codina Group, Inc., Coral Gables,
Florida (Real Estate).

ALVIN R. "PETE" CARPENTER, President and Chief Executive Officer of CSX
Transportation, Inc., Jacksonville, Florida (Transportation).

A. DANO DAVIS, Chairman of the Board and Principal Executive Officer of
Winn-Dixie Stores, Inc., Jacksonville, Florida (Retail Grocery Chain).

ROBERT D. DAVIS, Chairman of the Board of D.D.I., Inc., Jacksonville,
Florida (Investments).

H. CORBIN DAY, Chairman of the Board of Jemison Investment Co., Inc.,
Birmingham, Alabama (Investment Banker).

T. O'NEAL DOUGLAS, Chairman of the Board and Chief Executive Officer of the
Company and AHL.

LANGDON S. FLOWERS, Retired Chairman of the Board of Flowers Industries,
Inc., Thomasville, Georgia (Food Manufacturing and Distribution).

RADFORD D. LOVETT, Chairman of the Board of Commodores Point Terminal
Corp., Jacksonville, Florida (Marine Terminal).

CLARENCE V. MCKEE, Chairman of the Board, Chief Executive Officer and
President, McKee Communications, Inc., Tampa, Florida (Broadcasting).

PATRICIA G. MORAN, President and Chief Executive Officer of JM Family
Enterprises, Inc., Deerfield Beach, Florida (Automobile Distribution).

C. RICHARD MOREHEAD, Executive Vice President, Treasurer and Chief
Financial Officer of the Company and AHL.

HERBERT H. PEYTON, President of Gate Petroleum Company, Jacksonville,
Florida (Petroleum Products Retailing).

FREDERICK H. SCHULTZ, Private Investor, Jacksonville, Florida. Former Vice
Chairman of the Board of Governors of the Federal Reserve System, Washington,
D.C.

JAY STEIN, Chairman of the Board and Chief Executive Officer of Stein Mart,
Inc., Jacksonville, Florida (Retail Department Store Chain).

ROLF H. TOWE, Senior Partner of The Clipper Group, L.P., New York, New York
(Investments).

CHRIS A. VERLANDER, President and Chief Operating Officer of the Company
and AHL.

W. ASHLEY VERLANDER, Retired Chairman of the Board of the Company and AHL.

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DESCRIPTION OF THE FELINE PRIDES

The summaries of certain provisions of documents described below do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of such documents (including the
definitions therein of certain terms), forms of which are on file with the
Commission. Wherever particular sections of, or terms defined in, such documents
are referred to herein, such sections or defined terms are incorporated by
reference herein.

Each FELINE PRIDES will be issued under a Purchase Contract Agreement
between the Company and the Purchase Contract Agent. Each FELINE PRIDES offered
hereby initially will consist of a unit (referred to as an Income PRIDE) with a
Stated Amount of $50 comprised of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Purchase Contract Settlement Date
of August 16, 2000, for an amount equal to the Stated Amount, a number of new
shares of Common Stock equal to the Settlement Rate or the Cash Settlement Rate,
as applicable, described below under "Description of the Purchase
Contracts-General," and (ii) the Company will pay Contract Adjustment Payments
to the holder, and (b) (i) beneficial ownership of a % Trust Preferred
Security, having a stated liquidation amount per Trust Preferred Security equal
to the Stated Amount, representing a preferred, undivided beneficial interest in
the assets of the Trust, which will consist solely of the Junior Subordinated
Debentures, or (ii) in the case of a Tax Event or an Investment Company Event,
as described below, Junior Subordinated Debentures of the Company having a
principal amount equal to the Stated Amount. As long as the FELINE PRIDES are in
the form of Income PRIDES, the Trust Preferred Securities will be pledged to the
Collateral Agent, to secure the holder's obligation to purchase Common Stock
under the Purchase Contract.

SUBSTITUTION OF PLEDGED SECURITIES

Each holder will have the right, at any time after issuance of the Income
PRIDES, to substitute for any Trust Preferred Securities held by the Collateral
Agent Treasury Securities, in a principal amount per Purchase Contract equal to
the Stated Amount per Trust Preferred Security. Holders may make such
substitution only in integral multiples of 20 Income PRIDES. Securities with
respect to which Treasury Securities have been substituted for Trust Preferred
Securities as collateral to secure a holder's obligation under the Purchase
Contracts will be referred to as Growth PRIDES(SM). To create each Growth
PRIDES, the Income PRIDES holder will (a) deposit with the Collateral Agent a
Treasury Security and (b) transfer 20 Income PRIDES to the Purchase Contract
Agent accompanied by a notice stating that the Income PRIDES holder has
deposited a Treasury Security with the Collateral Agent and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release to such holder
the 20 Trust Preferred Securities underlying such Income PRIDES. Upon such
deposit and receipt of an instruction from the Purchase Contract Agent, the
Collateral Agent will effect the release of the 20 Trust Preferred Securities
from the pledge under the Pledge Agreement free and clear of the Company's
security interest therein to the Purchase Contract Agent, which will (i) cancel
the 20 Income PRIDES, (ii) transfer the 20 Trust Preferred Securities to such
holder and (iii) deliver one Growth PRIDES to the holder. Each Growth PRIDES
will therefore consist of a unit with a face amount of $1,000 comprised of (a)
20 Purchase Contracts with respect to which (i) the holder will purchase from
the Company on the Purchase Contract Settlement Date or earlier for an amount of
cash equal to the Stated Amount, a number of shares of Common Stock of the
Company equal to the Cash Settlement Rate described herein, and (ii) the Company
will pay the holder Contract Adjustment Payments, and (b) beneficial ownership
of a Treasury Security having a principal amount at maturity equal to $1,000.
The Trust Preferred Securities released to the holder thereafter will trade
separately from the resulting Growth PRIDES. Contract Adjustment Payments will
be payable by the Company on the Growth PRIDES on March 31, June 30, September
30 and December 31 of each year from the time each Growth PRIDES was created. In
addition, interest would accrete on the underlying Treasury Securities.
Distributions on any Trust Preferred Securities still outstanding after the
Purchase Contract Settlement Date or after a substitution of collateral
resulting in the creation of Growth PRIDES will continue to be payable by the
Trust at the rate of % of the Stated Amount per annum, subject to the
Company's deferral rights described in "-- Current Payments."

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<PAGE> 55

Holders who elect to substitute Pledged Securities, thereby creating Growth
PRIDES or recreating Income PRIDES (as discussed below), shall be responsible
for any fees or expenses payable in connection therewith. See "Certain
Provisions of the Purchase Contract Agreement and the Pledge Agreement --
Miscellaneous."

RECREATING INCOME PRIDES

A holder of each Growth PRIDES may recreate 20 Income PRIDES by (a)
depositing with the Collateral Agent 20 Trust Preferred Securities and (b)
transferring a Growth PRIDES to the Purchase Contract Agent accompanied by a
notice stating that the Growth PRIDES holder has deposited 20 Trust Preferred
Securities with the Collateral Agent and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release to such holder the Treasury
Security related to such Growth PRIDES. Upon such deposit and receipt of
instructions from the Purchase Contract Agent, the Collateral Agent will effect
the release of the Treasury Security from the pledge of the Pledge Agreement
free and clear of the Company's security interest therein to the Purchase
Contract Agent which will (i) cancel the Growth PRIDES, (ii) transfer the
Treasury Security to such holder and (iii) deliver 20 Income PRIDES to the
holder.

CURRENT PAYMENTS

Holders of Income PRIDES are entitled to receive cash distributions at a
rate of % of the Stated Amount per annum, payable quarterly in arrears. The
quarterly payments on the Income PRIDES set forth on the cover page of this
Prospectus will consist of (i) cumulative cash distributions on the Trust
Preferred Securities payable by the Trust at the rate of % of the Stated
Amount per annum and (ii) Contract Adjustment Payments, payable by the Company,
until the Purchase Contract Settlement Date, at the rate of % of the Stated
Amount per annum.

The ability of the Trust to make the quarterly distributions on the Trust
Preferred Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Junior Subordinated Debentures. The
Company has the right at any time, and from time to time, limited to a period
not extending beyond the maturity of the Junior Subordinated Debentures, to
defer the interest payments on the Junior Subordinated Debentures. As a
consequence of such deferral, quarterly distributions to holders of Income
PRIDES (or any Trust Preferred Securities outstanding after the Purchase
Contract Settlement Date or after a substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but despite such deferral, would
continue to accumulate quarterly and would accrue interest thereon compounded
quarterly at the same rate as interest on the Junior Subordinated Debentures).
The Company also has the right to defer the payment of Contract Adjustment
Payments on the Purchase Contracts until the Purchase Contract Settlement Date;
however, deferred Contract Adjustment Payments will bear additional Contract
Adjustment Payments at the rate of % per annum (such deferred installments of
Contract Adjustment Payments together with the additional Contract Adjustment
Payments shall be referred to as the "Deferred Contract Adjustment Payments").
See "Description of the Purchase Contracts-Contract Adjustment Payments" and
"Description of the Trust Preferred Securities -- Distributions."

Subject to the Company's rights of deferral, in the event a holder of
Income PRIDES substituted Treasury Securities for the Trust Preferred
Securities, such holder would still receive quarterly Contract Adjustment
Payments. In addition, interest would accrete on the underlying Treasury
Securities.

VOTING RIGHTS

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LISTING OF THE SECURITIES

The Income PRIDES have been approved for listing on the NYSE under the
symbol "AHL prI," subject to official notice of issuance. The Growth PRIDES and
the Trust Preferred Securities will not be listed or traded on any securities
exchange.

NYSE SYMBOL OF COMMON STOCK

The Common Stock of the Company is listed on the NYSE under the symbol
"AHL."

DESCRIPTION OF THE PURCHASE CONTRACTS

GENERAL

Each Purchase Contract underlying a FELINE PRIDES (unless earlier
terminated, or earlier settled at the holder's option) will obligate the holder
of such Purchase Contract to purchase, and the Company to sell, on the Purchase
Contract Settlement Date, for an amount in cash equal to the Stated Amount, a
number of new shares of Common Stock, in the case of Income PRIDES, equal to the
Settlement Rate or Cash Settlement Rate, as applicable, or in the case of Growth
PRIDES, equal to the Cash Settlement Rate. The Settlement Rate will be
calculated as follows (subject to adjustment under certain circumstances): (a)
if the Applicable Market Value is equal to or greater than the Threshold
Appreciation Price, the Settlement Rate will be , (b) if the
Applicable Market Value is less than the Threshold Appreciation Price but
greater than $ , the Settlement Rate will equal the Stated Amount
divided by the Applicable Market Value, and (c) if the Applicable Market Value
is less than or equal to $ , the Settlement Rate will be
. "Applicable Market Value" means the average of the Closing
Prices (as defined) per share of Common Stock on each of the thirty consecutive
Trading Days (as defined) ending on the second Trading Day immediately preceding
the Purchase Contract Settlement Date.

The number of new shares of Common Stock issuable upon settlement of each
Purchase Contract through Early Settlement of FELINE PRIDES, cash settlement of
the Income PRIDES on the Purchase Contract Settlement Date and settlement of the
Growth PRIDES through application of the related Treasury Securities on the
Purchase Contract Settlement Date (the "Cash Settlement Rate") will be
calculated as (a) shares, in the case of Early Settlement (which is
equivalent to the number of shares that would be received upon Cash Settlement
of Income PRIDES on the Purchase Contract Settlement Date where the Applicable
Market Value is equal to or greater than the Threshold Appreciation Price), or
(b) 1.00125 times the Settlement Rate, in those other cases.

No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of fractional shares otherwise issuable in
respect of Purchase Contracts being settled by a holder of Income PRIDES or
Growth PRIDES the holder will be entitled to receive an amount of cash equal to
such fraction of a share times the Applicable Market Value.

On the Purchase Contract Settlement Date, unless a holder of Income PRIDES
(i) has settled the underlying Purchase Contracts prior to the Purchase Contract
Settlement Date through the early delivery of cash to the Purchase Contract
Agent or (ii) has notified the Purchase Contract Agent of its intention to
settle the related Purchase Contract with separate cash on the Purchase Contract
Settlement Date in the manner described under "-- Early Settlement" and under
"-- Notice to Settle with Cash," respectively, and has so settled the Purchase
Contract or an event described under "-- Termination" below occurs, such holder
will be

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<PAGE> 57

deemed to have requested the Trust to put the aggregate principal amount of its
Junior Subordinated Debenture to the Company, in return for an amount per Junior
Subordinated Debenture equal to $50, plus accumulated and unpaid distributions,
if any. Upon the repurchase of the Junior Subordinated Debentures by the Company
pursuant to a Put Option (as defined herein), (i) the proceeds from such
repurchase shall simultaneously be applied to redeem Trust Preferred Securities
of such holder having an aggregate Stated Amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so repurchased and will
be automatically applied to satisfy in full such holder's obligation to purchase
Common Stock under the Purchase Contract and (ii) any accumulated and unpaid
distributions with respect to Junior Subordinated Debentures so repurchased will
be paid to such holder in cash. See "Description of the Junior Subordinated
Debentures -- Put Option." With respect to each Growth PRIDES outstanding on the
Purchase Contract Settlement Date, the principal amount of the Treasury
Securities underlying each Growth PRIDES, when paid at maturity, will be
automatically transferred to the Company to satisfy in full the holder's
obligation to purchase Common Stock under the 20 Purchase Contracts per Growth
PRIDES. Such Common Stock will then be issued and delivered to such holder or
such holder's designee, upon presentation and surrender of the certificate
evidencing such FELINE PRIDES (a "FELINE PRIDES Certificate") and payment by the
holder of any transfer or similar taxes payable in connection with the issuance
of the Common Stock to any person other than such holder. In the event that a
holder of either an Income PRIDES or Growth PRIDES effects the early settlement
of a Purchase Contract through the delivery of cash or a holder of Income PRIDES
settles a Purchase Contract with cash on the Purchase Contract Settlement Date,
the underlying Trust Preferred Securities or Treasury Securities, as the case
may be, will be released to the holder as described herein.

Prior to the date on which shares of Common Stock are issued in settlement
of Purchase Contracts, the Common Stock underlying the related Purchase
Contracts will not be deemed to be outstanding for any purpose and the holder
thereof will generally not have any voting rights, rights to dividends or other
distributions or other rights or privileges of a stockholder by virtue of
holding such Purchase Contracts. See "Description of Trust Preferred
Securities -- Voting Rights."

Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the Purchase Contracts be
deemed to have (a) irrevocably agreed to be bound by the terms of the Purchase
Contracts and the Pledge Agreement for so long as such holder remains a holder
of such FELINE PRIDES and (b) duly appointed the Purchase Contract Agent as such
holder's attorney-in-fact to enter into and perform the related Purchase
Contracts on behalf of and in the name of such holder.

EARLY SETTLEMENT

A holder of Income PRIDES or Growth PRIDES may settle the underlying
Purchase Contracts prior to the Purchase Contract Settlement Date by presenting
and surrendering the FELINE PRIDES certificate evidencing such Income PRIDES or
Growth PRIDES at the offices of the Purchase Contract Agent with the form of
"Election to Settle Early" on the reverse side of the certificate completed and
executed as indicated, accompanied by payment (in the form of a certified or
cashier's check payable to the order of the Company) of an amount equal to the
Stated Amount times the number of Purchase Contracts being settled. So long as
the FELINE PRIDES are evidenced by one or more global security certificates
deposited with the Depositary (as defined below), procedures for early
settlement will also be governed by standing arrangements between the Depositary
and the Purchase Contract Agent. HOLDERS MAY SETTLE SECURITIES EARLY ONLY IN
INTEGRAL MULTIPLES OF 20 Income PRIDES or one Growth PRIDES.

Upon Early Settlement of Purchase Contracts underlying any Income PRIDES or
Growth PRIDES, (a) the holder will receive shares of Common Stock per
Income PRIDES having a Stated Amount of $50 or shares of Common Stock per
Growth PRIDES having a face amount of $1,000 (regardless of the market price of
the Common Stock on the date of purchase), subject to adjustment under certain
circumstances, (b) the Trust Preferred Securities underlying such Income PRIDES
or, if substituted, the Treasury Securities underlying such Growth PRIDES, will
thereupon be transferred to the holder free and clear of the Company's security
interest therein, (c) the holder's right to receive Deferred Contract Adjustment
Payments (as defined below), if any, on the Purchase Contracts being settled
will be forfeited and

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(d) the holder's right to receive future Contract Adjustment Payments will
terminate and, except as contemplated by clause (a) above, no adjustment will be
made to or for the holder on account of current or deferred amounts accrued in
respect thereof.

If the Purchase Contract Agent receives the FELINE PRIDES Certificate,
accompanied by the completed "Election to Settle Early" and requisite check,
from a holder of Securities by 5:00 p.m., New York City time, on a Business Day,
that day will be considered the settlement date. If the Purchase Contract Agent
receives the foregoing after 5:00 p.m., New York City time, on a Business Day or
at any time on a day that is not a Business Day, the next Business Day will be
considered the settlement date.

Upon Early Settlement of Purchase Contracts in the manner described above,
presentation and surrender of the FELINE PRIDES Certificate evidencing the
related Income PRIDES or Growth PRIDES and payment of any transfer or similar
taxes payable by the holder in connection with the issuance of the Common Stock
to any person other than the holder of such Income PRIDES or Growth PRIDES, the
Company will cause the shares of Common Stock being purchased to be issued, and
the Trust Preferred Securities or, if substituted, the Treasury Securities
securing such Purchase Contracts, to be released from the pledge under the
Pledge Agreement (described in "-- Pledged Securities and Pledge Agreement") and
transferred, within three Business Days following the settlement date, to the
purchasing holder or such holder's designee.

NOTICE TO SETTLE WITH CASH

A holder of an Income PRIDES wishing to settle the related Purchase
Contract with separate cash on the Purchase Contract Settlement Date must notify
the Purchase Contract Agent by presenting and surrendering the FELINE PRIDES
Certificate evidencing such Income PRIDES at the offices of the Purchase
Contract Agent with the form of "Notice to Settle by Separate Cash" on the
reverse side of the certificate completed and executed as indicated on or prior
to 5:00 p.m., New York city time, on the second Business Day immediately
preceding the Purchase Contract Settlement Date. Such form must be accompanied
by payment (in the form of a certified or cashier's check payable to the order
of the Company) of an amount equal to the Stated Amount times the number of
Purchase Contracts being settled.

CONTRACT ADJUSTMENT PAYMENTS

Contract Adjustment Payments will be fixed at a rate per annum of % of
the Stated Amount per Purchase Contract. Contract Adjustment Payments in arrears
for more than one quarter will bear interest thereon at the rate per annum of
% thereof compounded quarterly. Contract Adjustment Payments payable for
any period will be computed on the basis of a 360-day year of twelve 30
day-months. Contract Adjustment Payments will accrue from , 1997 and
will be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing September 30, 1997.

Contract Adjustment Payments will be payable to the holders thereof as they
appear on the books and records of the Purchase Contract Agent on the relevant
record dates, which, as long as the Income PRIDES or Growth PRIDES remain in
book-entry only form, will be one Business Day prior to the relevant payment
dates. Such distributions will be paid through the Purchase Contract Agent who
will hold amounts received in respect of the Contract Adjustment Payments for
the benefit of the holders of the Purchase Contracts underlying the Income
PRIDES or Growth PRIDES. Subject to any applicable laws and regulations, each
such payment will be made as described under "Book-Entry System" below. In the
event that the Income PRIDES or Growth PRIDES do not continue to remain in
book-entry only form, the Company shall have the right to select relevant record
dates, which shall be more than one Business Day but less than 60 Business Days
prior to the relevant payment dates. In the event that any date on which
Contract Adjustment Payments are to be made on the Purchase Contracts underlying
the Income PRIDES or Growth PRIDES is not a Business Day, then payment of the
Contract Adjustment Payments 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 payment date. A "Business Day" shall mean any day other than Saturday,
Sunday or any other day on which banking institutions in New York City (in the
State of New York) are permitted or required by any applicable law to close.

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The Company's obligations with respect to Contract Adjustment Payments are
subordinate and junior in right of payment to all liabilities of the Company
(other than the Company's guarantee of junior subordinated debentures, if any,
issued by the Company, with which they rank pari passu). See "Risk
Factors -- Ranking of Contract Adjustment Payments and Subordinated Obligations
Under the Guarantee and Junior Subordinated Debentures."

OPTION TO DEFER CONTRACT ADJUSTMENT PAYMENTS

The Company may, at its option and upon prior written notice to the holders
of the Income PRIDES or Growth PRIDES and the Purchase Contract Agent, defer the
payment of Contract Adjustment Payments on the Purchase Contracts until no later
than the Purchase Contract Settlement Date. However, Deferred Contract
Adjustment Payments will bear additional Contract Adjustment Payments at the
rate of % per annum (compounding on each succeeding Payment Date) until
paid. If the Purchase Contracts are terminated (upon the occurrence of certain
events of bankruptcy, insolvency or reorganization with respect to the Company),
the right to receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments will terminate.

In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Income PRIDES or Growth PRIDES will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock (in addition to a number of shares of Common Stock equal
to the Settlement Rate or the Cash Settlement Rate) equal to (x) the aggregate
amount of Deferred Contract Adjustment Payments payable to a holder of either
Income PRIDES or Growth PRIDES divided by (y) the Applicable Market Value.

No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Contract Adjustment Payments, the holder
will be entitled to receive an amount in cash equal to such fraction of a share
times the Applicable Market Value.

In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase shares of Common Stock, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's capital
stock or (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing.

ANTI-DILUTION ADJUSTMENTS

The formula for determining the Settlement Rate will be subject to
adjustment upon the occurrence of certain events, including: (a) the payment of
dividends (and other distributions) of Common Stock on Common Stock; (b) the
issuance to all holders of Common Stock of rights, warrants or options entitling
them, for a period of up to 45 days, to subscribe for or purchase Common Stock
at less than the Current Market Price (as defined) thereof; (c) subdivisions,
splits and combinations of Common Stock; (d) distributions to all holders of
Common Stock of evidences of indebtedness of the Company, shares of capital
stock, securities, cash or property (excluding any dividend or distribution
covered by clause (a) or (b) above and any dividend or distribution paid
exclusively in cash); (e) distributions consisting exclusively of cash to all
holders of Common Stock in an aggregate amount that, together with (i) other
all-cash distributions made within the

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preceding 12 months and (ii) any cash and the fair market value, as of the
expiration of the tender or exchange offer referred to below, of consideration
payable in respect of any tender or exchange offer by the Company or a
subsidiary for the Common Stock concluded within the preceding 12 months,
exceeds 15% of the Company's aggregate market capitalization (such aggregate
market capitalization being the product of the Current Market Price (as defined)
of the Common Stock multiplied by the number of shares of Common Stock then
outstanding) on the date of such distribution; and (f) the successful completion
of a tender or exchange offer made by the Company or any subsidiary for the
Common Stock which involves an aggregate consideration that, together with (i)
any cash and the fair market value of other consideration payable in respect of
any tender or exchange offer by the Company or a subsidiary for the Common Stock
concluded within the preceding 12 months and (ii) the aggregate amount of any
all-cash distributions to all holders of the Company's Common Stock made within
the preceding 12 months, exceeds 15% of the Company's aggregate market
capitalization on the expiration of such tender or exchange offer.

In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
Income PRIDES or Growth PRIDES as the case may be, become a contract to purchase
only the kind and amount of securities, cash and other property receivable upon
consummation of the transaction by a holder of the number of shares of Common
Stock which would have been received by the holder of the related Income PRIDES
or Growth PRIDES immediately prior to the date of consummation of such
transaction if such holder had then settled such Purchase Contract.

If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (i.e., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
to capital stock) and, pursuant to the Settlement Rate adjustment provisions of
the Purchase Contract Agreement, the Settlement Rate is increased, such increase
may be deemed to be the receipt of taxable income to holders of Securities. See
"Certain Federal Income Tax Consequences -- Adjustment of Settlement Rate."

In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of shares of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for income tax purposes or for any other reasons.

Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the Settlement Rate; provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.

The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate, to provide written notice to the Purchase Contract Agent of the occurrence
of such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting forth the
revised Settlement Rate.

Each adjustment to the Settlement Rate will result in a corresponding
adjustment to the number of shares of Common Stock issuable upon early
settlement of a Purchase Contract.

TERMINATION

The Purchase Contracts, and the rights and obligations of the Company and
of the holders of the FELINE PRIDES thereunder (including the right to receive
accrued Contract Adjustment Payments or Deferred Contract Adjustment Payments
and the right and obligation to purchase Common Stock), will automatically
terminate upon the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company. Upon such termination, the
Collateral Agent will release the Trust Preferred Securities or, if substituted,
the Treasury Securities held by it to the Purchase Contract Agent for
distribution

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to the holders. Upon such termination, however, such release and termination may
be subject to a limited delay. In the event that the Company becomes the subject
of a case under the Bankruptcy Code, such delay may occur as a result of the
automatic stay under the Bankruptcy Code and continue until such automatic stay
has been lifted.

PLEDGED SECURITIES AND PLEDGE AGREEMENT

The Trust Preferred Securities underlying the Income PRIDES or, if
substituted, the Treasury Securities underlying the Growth PRIDES (together, the
"Pledged Securities") will be pledged to the Collateral Agent, for the benefit
of the Company, pursuant to a pledge agreement, to be dated as of ,
1997 (the "Pledge Agreement"), to secure the obligations of the holders to
purchase Common Stock under the Purchase Contracts. The rights of holders of
Income PRIDES or Growth PRIDES to the underlying Pledged Securities will be
subject to the Company's security interest therein created by the Pledge
Agreement. No holder of Income PRIDES or Growth PRIDES will be permitted to
withdraw the Pledged Securities underlying such Income PRIDES or Growth PRIDES
from the pledge arrangement except (i) to substitute Treasury Securities for
Trust Preferred Securities, (ii) to substitute Trust Preferred Securities for
Treasury Securities (for both (i) and (ii), as provided for under "Description
of the FELINE PRIDES -- Substitution of Pledged Securities") or (iii) upon the
termination or Early Settlement of the related Purchase Contracts. Subject to
such security interest and the terms of the Purchase Contract Agreement and the
Pledge Agreement, each holder of an Income PRIDES will be entitled through the
Purchase Contract Agent and the Collateral Agent to all of the proportional
rights and preferences of a Trust Preferred Security (including distribution,
voting, redemption, repayment and liquidation rights) and each holder of a
Growth PRIDES will retain beneficial ownership of the Treasury Securities
pledged in respect of such Purchase Contracts. The Company will have no interest
in the Pledged Securities other than its security interest.

The Collateral Agent will, upon receipt of distributions on the Pledged
Securities, distribute such payments to the Purchase Contract Agent, which will
in turn distribute those payments, together with Contract Adjustment Payments
received from the Company, to the persons in whose names the related Income
PRIDES or Growth PRIDES are registered at the close of business on the Record
Date immediately preceding the date of such distribution.

The quarterly payments on the Income PRIDES set forth on the cover page of
this Prospectus will consist of (i) cumulative cash distributions on the Trust
Preferred Securities payable by the Trust at the rate of % of the Stated
Amount per annum, and (ii) Contract Adjustment Payments, payable by the Company,
at the rate of % per annum.

The ability of the Trust to make quarterly distributions on the Trust
Preferred Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Junior Subordinated Debentures. The
Company has the right at any time, and from time to time, limited to a period
not extending beyond the maturity of the Junior Subordinated Debentures, to
defer the interest payments on the Junior Subordinated Debentures and to defer
Contract Adjustment Payments. As a consequence of such deferral, quarterly
distributions to holders would be deferred (but despite such deferral, would
continue to accrue with interest thereon compounded quarterly at the same rate
as interest on the Junior Subordinated Debentures). See "Description of the
Purchase Contract -- Contract Adjustment Payments" and "Description of the Trust
Preferred Securities -- Distributions."

BOOK-ENTRY SYSTEM

The Depository Trust Company (the "Depositary") will act as securities
depositary for the FELINE PRIDES. The FELINE PRIDES will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global security certificates
("Global Security Certificates"), representing the total aggregate number of
FELINE PRIDES, will be issued and will

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be deposited with the Depositary and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to
below.

The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the FELINE PRIDES so
long as such FELINE PRIDES are represented by Global Security Certificates.

The Depositary 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 Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary 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").
The Depositary is owned by a number of its Direct Participants and by the NYSE,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the Depositary system is also available to others, such
as securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants are
on file with the Commission.

No FELINE PRIDES represented by Global Security Certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no transfer of
Global Security Certificates in whole or in part may be registered, in the name
of any person other than the Depositary or any nominee of the Depositary unless
the Depositary has notified the Company that it is unwilling or unable to
continue as depositary for such Global Security Certificates or has ceased to be
qualified to act as such as required by the Purchase Contract Agreement or there
shall have occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts. All FELINE PRIDES represented
by one or more Global Security Certificates or any portion thereof will be
registered in such names as the Depositary may direct.

As long as the Depositary or its nominee is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the Global Security
Certificates and all FELINE PRIDES represented thereby for all purposes under
the FELINE PRIDES and the Purchase Contract Agreement. Except in the limited
circumstances referred to above, owners of beneficial interests in Global
Security Certificates will not be entitled to have such Global Security
Certificates or the FELINE PRIDES represented thereby registered in their names,
will not receive or be entitled to receive physical delivery of FELINE PRIDES
Certificates in exchange therefor and will not be considered to be owners or
holders of such Global Security Certificates or any FELINE PRIDES represented
thereby for any purpose under the FELINE PRIDES or the Purchase Contract
Agreement. All payments on the FELINE PRIDES represented by the Global Security
Certificates and all transfers and deliveries of Trust Preferred Securities,
Treasury Securities and Common Stock with respect thereto will be made to the
Depositary or its nominee, as the case may be, as the holder thereof.

Ownership of beneficial interests in the Global Security Certificates will
be limited to Participants or persons that may hold beneficial interests through
institutions that have accounts with the Depositary or its nominee. Ownership of
beneficial interests in Global Security Certificates will be shown only on, and
the transfer of those ownership interests will be effected only through, records
maintained by the Depositary or its nominee (with respect to Participants'
interests) or any such Participant (with respect to interests of persons held by
such Participants on their behalf). Procedures for settlement of Purchase
Contracts on the Purchase Contract Settlement Date or upon Early Settlement will
be governed by arrangements among the Depositary, Participants and persons that
may hold beneficial interests through Participants designed to permit such
settlement without the physical movement of certificates. Payments, transfers,
deliveries, exchanges and other matters relating to beneficial interests in
Global Security Certificates may be subject to various policies and

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procedures adopted by the Depositary from time to time. None of the Company, the
Purchase Contract Agent or any agent of the Company or the Purchase Contract
Agent will have any responsibility or liability for any aspect of the
Depositary's or any Participant's records relating to, or for payments made on
account of, beneficial interests in Global Security Certificates, or for
maintaining, supervising or reviewing any of the Depositary's records or any
Participant's records relating to such beneficial ownership interests.

DESCRIPTION OF THE COMMON STOCK

The shares of the Company's Common Stock presently outstanding, including
those to be ultimately purchased in this offering, will be, legally issued,
fully paid and non-assessable. The shareholders are entitled to receive ratably
such dividends as may from time to time be declared by the Board of Directors.
Upon liquidation, the holders of the shares are entitled to share ratably in the
net assets of the Company. All voting rights are vested exclusively in the
holders of the shares and each shareholder is entitled to one vote for each
share held. The holders of the shares have no cumulative voting or preemptive
rights.

Under Florida law, the Company may pay dividends only out of net income,
retained earnings, and capital and surplus.

Article VI of the Articles of Incorporation of the Company provides for the
division of the Board of Directors of the Company as equally as possible into
three classes whose terms are staggered and each class is elected for a term of
three years. The By-Laws of the Company provide that its Board consist of eight
Directors as follows: three directors in Class I; two directors in Class II; and
three directors in Class III. Article VI also provides that (1) no class of
directors shall be subject to election by shareholders until all classes holding
office for terms of longer duration without being subject to election shall be
so subject and directors have been elected with respect thereto, and (2) no one
meeting of shareholders can consider or act upon the election of more than one
class of directors, except that shareholders can fill vacancies occurring in any
class as may be provided for in the By-laws. This Article also provides that no
amendment to the By-laws of the Company decreasing the number of directors shall
have the effect of shortening the term of any incumbent director and no action
shall be taken by the directors to increase the number of directors as provided
in the By-Laws unless at least 75% of the directors then in office concur. The
affirmative vote of the holders of at least 75% of the outstanding shares is
required to (a) amend Article VI, (b) remove a director with or without cause,
or (c) increase the number of directors as provided in the By-Laws of the
Company.

Article XI of the Articles of Incorporation of the Company provides that
the affirmative vote of at least 80% of the outstanding shares is required to
approve any merger or consolidation of the Company into another corporation or
other entity or any sale, lease, or exchange of all or substantially all of the
assets of the Company to or with another corporation, person, or any other
entity if such other corporation, person, or entity is the beneficial owner of
10% or more of the outstanding shares.

The Company is subject to several anti-takeover provisions under Florida
law. These provisions permit a corporation to elect to opt out of such provision
in its articles of incorporation or (depending on the provision in question) its
bylaws. The Company has not elected to opt out of these provisions. The Florida
Business Corporation Act (the "Florida Act") contains a provision that prohibits
the voting of shares in a publicly-held Florida corporation which are acquired
in a "control share acquisition" unless the holders of a majority of the
corporation's voting shares (exclusive of shares held by officers of the
corporation, inside directors or the acquiring party) approve the granting of
voting rights as to the shares acquired in the control share acquisition. A
control share acquisition is defined as an acquisition that immediately
thereafter entitles the acquiring party to vote in the election of directors
within each of the following ranges of voting power: (i) one-fifth or more but
less than one-third of such voting power, (ii) one-third or more but less than a
majority of such voting power and (iii) a majority or more of such voting power.

The Florida Act also contains an "affiliated transaction" provision that
prohibits a publicly-held Florida corporation from engaging in a broad range of
business combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a majority of
disinterested directors before the person becomes an interested shareholder,
(ii) the interested shareholder has

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owned at least 80% of the corporation's outstanding voting shares for at least
five years, or (iii) the interested shareholder is the beneficial owner of at
least 90% of the outstanding voting shares of the Company, exclusive of shares
acquired directly from the Company in a transaction not approved by a majority
of the disinterested directors. An interested shareholder is defined as a person
who together with affiliates and associates beneficially owns more than 10% of
the corporation's outstanding voting shares.

SunTrust Bank, Atlanta, Georgia, is transfer agent and registrar of the
shares of the Company's Common Stock.

The Company sends to its shareholders annual reports including financial
statements audited by independent public accountants and quarterly unaudited
interim financial reports.

CERTAIN PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT

GENERAL

Distributions on the FELINE PRIDES will be payable, Purchase Contracts (and
documents related thereto) will be settled and transfers of the FELINE PRIDES
will be registrable at the office of the Purchase Contract Agent in the Borough
of Manhattan, The City of New York. In addition, in the event that the FELINE
PRIDES do not remain in book-entry form, payment of distributions on the FELINE
PRIDES may be made, at the option of the Company, by check mailed to the address
of the person entitled thereto as shown on the Security Register.

On the Purchase Contract Settlement Date, shares of Common Stock will be
delivered, or, if the Purchase Contracts have terminated, Pledged Securities
will be delivered potentially after a limited delay (see "Description of the
Purchase Contracts -- Termination") in each case upon presentation and surrender
of the FELINE PRIDES Certificate at the office of the Purchase Contract Agent.

If a holder of outstanding Income PRIDES or Growth PRIDES fails to present
and surrender the FELINE PRIDES Certificate evidencing such Income PRIDES or
Growth PRIDES to the Purchase Contract Agent on the Purchase Contract Settlement
Date, the shares of Common Stock issuable in settlement of the applicable
Purchase Contract and in payment of any Deferred Contract Adjustment Payments
will be registered in the name of the Purchase Contract Agent and, together with
any distributions thereon, shall be held by the Purchase Contract Agent as agent
for the benefit of such holder, until such FELINE PRIDES Certificate is
presented and surrendered or the holder provides satisfactory evidence that such
certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Purchase Contract Agent and the Company.

If the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, the Pledged Securities have been transferred to the Purchase
Contract Agent for distribution to the holders entitled thereto and a holder
fails to present and surrender the FELINE PRIDES Certificate evidencing such
holder's Income PRIDES or Growth PRIDES to the Purchase Contract Agent, the
Pledged Securities delivered to the Purchase Contract Agent and payments thereon
shall be held by the Purchase Contract Agent as agent for the benefit of such
holder, until such FELINE PRIDES Certificate is presented or the holder provides
the evidence and indemnity described above.

The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.

No service charge will be made for any registration of transfer or exchange
of the FELINE PRIDES, except for any tax or other governmental charge that may
be imposed in connection therewith.

MODIFICATION

The Purchase Contract Agreement and the Pledge Agreement will contain
provisions permitting the Company and the Purchase Contract Agent or Collateral
Agent, as the case may be, with the consent of the

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holders of not less than 66 2/3% of the Purchase Contracts at the time
outstanding, to modify the terms of the Purchase Contracts, the Purchase
Contract Agreement and the Pledge Agreement, except that no such modification
may, without the consent of the holder of each outstanding Purchase Contract
affected thereby, (a) change any Payment Date, (b) change the amount or type of
Pledged Securities underlying the Purchase Contract, impair the Right of the
holder of any Pledged Securities to receive distributions on the underlying
Pledged Securities (except for the rights of holders of Income PRIDES to
substitute the Treasury Securities for the Trust Preferred Securities or the
rights of holders of Growth PRIDES to substitute Trust Preferred Securities for
the Treasury Securities) or otherwise adversely affect the holder's rights in or
to such Pledged Securities, (c) change the place or currency of payment or
reduce any Contract Adjustment Payments or any Deferred Contract Adjustment
Payments, (d) impair the right to institute suit for the enforcement of any
Purchase Contract, (e) reduce the amount of Common Stock purchasable under any
Purchase Contract, increase the price to purchase Common Stock on settlement of
any Purchase Contract, change the Purchase Contract Settlement Date or otherwise
adversely affect the holder's rights under any Purchase Contract or (f) reduce
the above-stated percentage of outstanding Purchase Contracts the consent of
whose holders is required for the modification or amendment of the provisions of
the Purchase Contracts, the Purchase Contract Agreement or the Pledge Agreement;
provided, that if any amendment or proposal referred to above would adversely
affect only the Income PRIDES or the Growth PRIDES, then only the affected class
of holder will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the consent of the
holders of not less than 66 2/3% of such class.

NO CONSENT TO ASSUMPTION

Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the Income PRIDES or
Growth PRIDES, be deemed expressly to have withheld any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in the event that the Company becomes the subject of a case under the
Bankruptcy Code.

CONSOLIDATION, MERGER, SALE OR CONVEYANCE

The Company will covenant in the Purchase Contract Agreement that it will
not merge or consolidate with any other entity or sell, assign, transfer, lease
or convey all or substantially all of its properties and assets to any person,
firm or corporation unless the Company is the continuing corporation or the
successor corporation is a corporation organized under the laws of the United
States of America or a state thereof and such corporation expressly assumes the
obligations of the Company under the Purchase Contracts, the Junior Subordinated
Debentures, the Purchase Contract Agreement and the Pledge Agreement, and the
Company or such successor corporation is not, immediately after such merger,
consolidation, sale, assignment, transfer, lease or conveyance, in default in
the performance of any of its obligations thereunder.

TITLE

The Company, the Purchase Contract Agent and the Collateral Agent may treat
the registered owner of any FELINE PRIDES as the absolute owner thereof for the
purpose of making payment and settling the Purchase Contracts and for all other
purposes.

REPLACEMENT OF FELINE PRIDES CERTIFICATES

In the event that physical certificates have been issued, any mutilated
FELINE PRIDES Certificate will be replaced by the Company at the expense of the
holder upon surrender of such certificate to the Purchase Contract Agent. FELINE
PRIDES Certificates that become destroyed, lost or stolen will be replaced by
the Company at the expense of the holder upon delivery to the Company and the
Purchase Contract Agent of evidence of the destruction, loss or theft thereof
satisfactory to the Company and the Purchase Contract Agent. In the case of a
destroyed, lost or stolen FELINE PRIDES Certificate, an indemnity satisfactory
to the Purchase Contract Agent and the Company may be required at the expense of
the holder of the FELINE PRIDES evidenced by such certificate before a
replacement will be issued.

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Notwithstanding the foregoing, the Company will not be obligated to issue
any Income PRIDES or Growth PRIDES on or after the Purchase Contract Settlement
Date or after the Purchase Contracts have terminated. The Purchase Contract
Agreement will provide that in lieu of the delivery of a replacement FELINE
PRIDES Certificate following the Purchase Contract Settlement Date, the Purchase
Contract Agent, upon delivery of the evidence and indemnity described above,
will deliver the Common Stock issuable pursuant to the Purchase Contracts
included in the Income PRIDES or Growth PRIDES evidenced by such certificate,
or, if the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, transfer the principal amount of the Pledged Securities
included in the Income PRIDES or Growth PRIDES evidenced by such certificate.

GOVERNING LAW

The Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of the
State of New York.

INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT

The First National Bank of Chicago will be the Purchase Contract Agent. The
Purchase Contract Agent will act as the agent for the holders of Income PRIDES
and Growth PRIDES from time to time. The Purchase Contract Agreement will not
obligate the Purchase Contract Agent to exercise any discretionary actions in
connection with a default under the terms of the Income PRIDES and Growth PRIDES
or the Purchase Contract Agreement.

The Purchase Contract will contain provisions limiting the liability of the
Purchase Contract Agent. The Purchase Contract Agreement will contain provisions
under which the Purchase Contract Agent may resign or be replaced. Such
resignation or replacement would be effective upon the appointment of a
successor.

INFORMATION CONCERNING THE COLLATERAL AGENT

The Chase Manhattan Bank will be the Collateral Agent. The Collateral Agent
will act solely as the agent of the Company and will not assume any obligation
or relationship of agency or trust for or with any of the holders of the Income
PRIDES and Growth PRIDES except for the obligations owed by a pledgee of
property to the owner thereof under the Pledge Agreement and applicable law.

The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.

MISCELLANEOUS

The Purchase Contract Agreement will provide that the Company will pay all
fees and expenses related to (i) the offering of the FELINE PRIDES, (ii) the
retention of the Collateral Agent and (iii) the enforcement by the Purchase
Contract Agent of the rights of the holders; provided, however, that holders who
elect to substitute Pledged Securities, thereby creating Growth PRIDES or
recreating Income PRIDES, shall be responsible for any fees or expenses payable
to the Collateral Agent in connection therewith, as well as any commissions,
fees or other expenses incurred in acquiring the Pledged Securities to be
substituted, and the Company shall not be responsible for any such fees or
expenses.

DESCRIPTION OF THE TRUST PREFERRED SECURITIES

The Trust Preferred Securities, which form a component of the Income
PRIDES, and which, under certain circumstances, will trade separately, will be
issued pursuant to the terms of the Declaration. See "Description of the FELINE
PRIDES -- Substitution of Pledged Securities." The Declaration will be qualified
as an indenture under the Trust Indenture Act. The Institutional Trustee, The
First National Bank of Chicago, an independent trustee, will act as indenture
trustee for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred

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Securities will include those stated in the Declaration and those made part of
the Declaration by the Trust Indenture Act. The following summary of the
material terms and provisions of the Trust Preferred Securities does not purport
to be complete and is subject to, and qualified in its entirety by reference to
the Declaration, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, the Trust Act and the Trust
Indenture Act.

GENERAL

The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly by the Company. The Common Securities rank pari passu, and payments
will be made thereon on a pro rata basis, with the Trust Preferred Securities,
except that upon the occurrence and during the continuance of a Declaration
Event of Default, the rights of the holders of the Common Securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Trust
Preferred Securities. The Declaration does not permit the issuance by the Trust
of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee will own the Junior Subordinated Debentures purchased by the Trust for
the benefit of the holders of the Trust Securities. The payment of distributions
out of money held by the Trust, and payments upon redemption of the Trust
Preferred Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under "Description of the Guarantee." The Guarantee,
when taken together with the Company's obligations under the Junior Subordinated
Debentures and the Indenture and its obligations under the Declaration,
including the obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Preferred Securities), provides a
full and unconditional guarantee of amounts due on the Trust Preferred
Securities. The Guarantee will be held by The First National Bank of Chicago,
the Guarantee Trustee, for the benefit of the holders of the Trust Preferred
Securities. The Guarantee does not cover payment of distributions when the Trust
does not have sufficient available funds to pay such distributions. In such
event, the remedy of a holder of Trust Preferred Securities is to vote to direct
the Institutional Trustee to enforce the Institutional Trustee's rights under
the Junior-Subordinated Debentures (except in the limited circumstances in which
the holder may take direct action). See "-- Declaration Events of Default" and
"-- Voting Rights."

DISTRIBUTIONS

Distributions on the Trust Preferred Securities will be fixed at a rate per
annum of % of the stated liquidation amount of $50 per Trust Preferred
Security. Distributions in arrears for more than one quarter will bear interest
thereon at the rate per annum of % thereof compounded quarterly. The term
"distribution" as used herein includes any such interest payable unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.

Distributions on the Trust Preferred Securities will be cumulative and will
accrue from June , 1997 and will be payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing September 30,
1997, when, as and if funds are available for payment. Distributions will be
made by the Institutional Trustee, except as otherwise described below.

The Company has the right under the Indenture to defer payments of interest
on the Junior Subordinated Debentures by extending the interest payment period
from time to time on the Junior Subordinated Debentures, which right, if
exercised, would defer quarterly distributions on the Trust Preferred Securities
(though such distributions would continue to accrue with interest since interest
would continue to accrue on the Junior Subordinated Debentures) during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period, in the
aggregate, not extending beyond the maturity date of the Junior Subordinated
Debentures. In the event that the Company exercises this right, then (a) the
Company shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock (other than (i) purchases or acquisitions of shares
of the Company's Common Stock in connection with the satisfaction by the Company
of its obligations under any employee benefit plans or the

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satisfaction by the Company of its obligations pursuant to any contract or
security outstanding on the date of such event requiring the Company to purchase
shares of the Company's Common Stock, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock or (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such Company capital stock or the security being converted or exchanged) or make
any guarantee payments with respect to the foregoing, (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank pari passu with or junior to such Junior Subordinated
Debentures, and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than pursuant to the Trust Preferred Securities
Guarantee). Prior to the termination of any such Extension Period, the Company
may further extend the interest payment period; provided, that such Extension
Period, together with all such previous and further extensions thereof, may not
extend beyond the maturity date of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may select a new Extension Period, subject to the above requirements.
See "Description of the Junior Subordinated Debentures -- Interest" and
"-- Option to Extend Interest Payment Period." If distributions are deferred,
the deferred distributions and accrued interest thereon shall be paid to holders
of record of the Trust Preferred Securities as they appear on the books and
records of the Trust on the record date next following the termination of such
deferral period.

Distributions on the Trust Preferred Securities must be paid on the dates
payable to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Trust Preferred Securities will be limited to
payments received from the Company on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is guaranteed by the Company to
the extent set forth under "Description of the Guarantee."

Distributions on the Trust Preferred Securities will be payable to the
holders thereof, including the Collateral Agent, as they appear on the books and
records of the Trust on the relevant record dates, which, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Institutional Trustee which will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Preferred Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment will be
made as described under "Book-Entry Only Issuance-The Depository Trust Company"
below. In the event that the Trust Preferred Securities do not continue to
remain in book-entry form, the Regular Trustees shall have the right to select
relevant record dates, which shall be more than one Business Day but less than
60 Business Days prior to the relevant payment dates. In the event that any date
on which distributions are to be made on the Trust Preferred Securities is not a
Business Day, then payment of the distributions 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 record date.

MATURITY

Subject to the holder's right to require the Trust to put the Junior
Subordinated Debentures to the Company on the Purchase Contract Settlement Date,
the Junior Subordinated Debentures will mature on August 16, 2002. Upon the
repayment of the Junior Subordinated Debentures at maturity, the proceeds from
such repayment shall simultaneously be applied to redeem Trust Preferred
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Junior Subordinated Debentures so repaid. See
"Description of the Junior Subordinated Debentures."

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SPECIAL EVENT DISTRIBUTION

"Tax Event" means the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to or change in an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), which change or amendment, in
the ease of (a) or (b), becomes effective on or after the date of this
Prospectus, there is more than an insubstantial risk that (i) the Trust would be
subject to federal income tax with respect to income accrued or received on the
Junior Subordinated Debentures, (ii) interest payable to the Trust on the Junior
Subordinated Debentures would not be deductible by the Company for federal
income tax purposes or (iii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges.

"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined below) to the effect that, as a result of the occurrence of
a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus, there is
more than an insubstantial risk that the Trust is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act") .

If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the limited circumstances described below, be dissolved, with
the result that, after satisfaction of creditors, the Junior Subordinated
Debentures with an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Trust Securities, would be distributed to the holders of the Trust
Securities in liquidation of such holders' interests in the Trust on a pro rata
basis within 90 days following the occurrence, of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, such dissolution and
distribution shall be conditioned on the Company being unable to avoid such Tax
Event within such 90 day period by taking some ministerial action or pursuing
some other reasonable measure that will have no adverse effect on the Trust, the
Company or the holders of the Trust Securities and will involve no material
cost. If a Special Event occurs, Junior Subordinated Debentures distributed to
the Collateral Agent in liquidation of such holder's interest in the Trust would
continue to be pledged to secure Income PRIDES holders' obligations to purchase
Common Stock under the Purchase Contracts.

After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Trust Preferred Securities will no longer be
deemed to be outstanding, (ii) the Depositary or its nominee, as the record
holder of the Trust Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution, and (iii) any certificates representing
Trust Preferred Securities not held by the Depositary or its nominee will be
deemed to represent Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, such Trust Preferred Securities
until such certificates are presented to the Company or its agent for transfer
or reissuance.

There can be no assurance as to the market prices for either the Trust
Preferred Securities or the Junior Subordinated Debentures that may be
distributed in exchange for the Trust Preferred Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Trust Preferred
Securities or the Junior Subordinated Debentures that an investor may receive if
a dissolution and liquidation of the Trust were to occur may trade at a discount
to the price that the investor paid to purchase the Trust Preferred Securities
forming a part of the Income PRIDES offered hereby.

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Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its subsidiaries may at any time, and
from time to time, purchase outstanding Trust Preferred Securities by tender, in
the open market or by private agreement.

LIQUIDATION DISTRIBUTION UPON DISSOLUTION

In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Trust Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, Junior
Subordinated Debentures in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Trust Preferred Securities on a pro rata basis in
exchange for such Trust Preferred Securities (the "Liquidation Distribution").

The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the Trust
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Trust Preferred Securities shall have a preference over
the Trust Common Securities with regard to such distributions.

Pursuant to the Declaration, the Trust shall terminate (i) on March 20,
2004, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company, (iii) upon the filing of a certificate of dissolution or its equivalent
with respect to the Company, the filing of a certificate of cancellation with
respect to the Trust after obtaining the consent of the holders of at least a
majority in liquidation amount of the Trust Securities effected thereby voting
together as a single class to file such certificate of cancellation, or the
revocation of the charter of the Company and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) upon the distribution
of Junior Subordinated Debentures upon the occurrence of an Investment Company
Event or a Tax Event or (v) upon the entry of a decree of a judicial dissolution
of the holder of the Common Securities, the Company or the Trust.

DECLARATION EVENTS OF DEFAULT

An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until such Declaration Events
of Default with respect to the Trust Preferred Securities have been so cured,
waived or otherwise eliminated, the Institutional Trustee will be deemed to be
acting solely on behalf of the holders of the Trust Preferred Securities and
only the holders of the Trust Preferred Securities will have the right to direct
the Institutional Trustee with respect to certain matters under the Declaration
and, therefore, the Indenture. If a Declaration Event of Default with respect to
the Trust Preferred Securities is waived by holders of Trust Preferred
Securities, such waiver will also constitute the waiver of such Declaration
Event of Default with respect to the Common Securities without any further act,
vote or consent of the holders of the Common Securities. If the Institutional
Trustee fails to enforce its rights under the Junior Subordinated Debentures,
after a holder of Trust Preferred Securities has made a written request, such
holder of Trust Preferred Securities may, to the fullest extent permitted by
applicable law, institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Junior Subordinated Debentures, on
the date such interest or principal is otherwise payable, then a holder of Trust
Preferred Securities may directly institute a proceeding for enforcement of
payment (a "Direct Action") to such holder directly of the principal of or
interest on the Junior Subordinated Debentures having a principal amount equal
to the aggregate liquidation amount of the Trust Preferred Securities of such
holder on or after the respective due date specified in the Junior Subordinated
Debentures. In connection with such Direct Action, the Company will be
subrogated to the

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rights of such holder of Trust Preferred Securities under the Declaration to the
extent of any payment made by the Company to such holder of Trust Preferred
Securities in such Direct Action. The holders of Trust Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Junior Subordinated Debentures. See "Effect of Obligations under the Junior
Subordinated Debentures and the Guarantee."

Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
Right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. The Company and the
Trust are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.

VOTING RIGHTS

Except as described herein, under the Trust Act and the Trust Indenture Act
and under "Description of the Guarantee -- Modification of the Guarantee;
Assignment", and as otherwise required by law and the Declaration the holders of
the Trust Preferred Securities will have no voting rights.

Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Trust Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration including the right to direct the
Institutional Trustee, as holder of the Junior Subordinated Debentures, to (i)
exercise the remedies available under the Indenture with respect to the Junior
Subordinated Debentures, (ii) waive any past Indenture Event of Default that is
available under Section 513 of the Indenture (as defined herein), (iii) exercise
any right to rescind or annul a declaration that the principal of all the Junior
Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures where such consent shall be required; provided, however,
that, where a consent or action under the Indenture would require the consent or
act of holders of more than a majority in principal amount of the Junior
Subordinated Debentures (a "Super-Majority") affected thereby, only the holders
of at least such Super-Majority in aggregate liquidation amount of the Trust
Preferred Securities may direct the Institutional Trustee to give such consent
or take such action. If the Institutional Trustee fails to enforce its rights
under the Junior Subordinated Debentures, a record holder of Trust Preferred
Securities may, to the fullest extent permitted by applicable law, after such
holder's written request to the Institutional Trustee to enforce such rights,
institute a legal proceeding directly against the Company to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. The Institutional Trustee shall notify all holders of
the Trust Preferred Securities of any notice of default received from the Debt
Trustee (as defined below) with respect to the Junior Subordinated Debentures.
Such notice shall state that such Indenture Event of Default also constitutes a
Declaration Event of Default. Except with respect to directing the time, method
and place of conducting a proceeding for a remedy, the Institutional Trustee
shall not take any of the actions described in clauses (i), (ii) or (iii) above
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for federal income tax purposes.

In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Preferred
Securities and the Common Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Preferred Securities and the Common Securities voting together as a
single class; provided, however, that where a consent under the Indenture would
require the consent of a Super-Majority, the Institutional Trustee may only give
such consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Preferred Securities and the Trust Common
Securities which the relevant

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Super-Majority represents of the aggregate principal amount of the Junior
Subordinated Debentures outstanding. The Institutional Trustee shall be under no
obligation to take any such action in accordance with the directions of the
holders of the Trust Preferred Securities and the Trust Common Securities unless
the Institutional Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of federal income tax, the Trust will not be classified as
other than a grantor trust.

A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.

Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to redeem and cancel Trust
Preferred Securities or distribute Junior Subordinated Debentures in accordance
with the Declaration.

Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Preferred Securities that are owned at such time by the Company or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Preferred Securities were not outstanding.

The procedures by which holders of Trust Preferred Securities may exercise
their voting rights are described below. See "-- Book-Entry Only Issuance The
Depository Trust Company" below.

Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Company Trustees, who may be appointed, removed or replaced solely by
the Company as the indirect or direct holder of all of the Trust Common
Securities.

MODIFICATION OF THE DECLARATION

The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided, that if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, that if any amendment or proposal referred to in clause (i) above
would adversely affect only the Trust Preferred Securities or the Trust Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
securities.

Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the 1940 Act.

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MERGERS, CONSOLIDATIONS OR AMALGAMATIONS

The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) such successor entity either (x)
expressly assumes all of the obligations of the Trust under the Trust Preferred
Securities or (y) substitutes for the Trust Preferred Securities other
securities having substantially the same terms as the Trust Securities (the
"Successor Securities"), so long as the Successor Securities rank the same as
the Trust Securities with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Junior Subordinated Debentures, (iii)
if the Trust Preferred Securities are listed any Successor Securities will be
listed upon notification of issuance, on any national securities exchange or
with another organization on which the Trust Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Trust Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion of a nationally recognized independent
counsel to the Trust experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely effect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and (C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the successor entity) will continue
to be classified as a grantor trust for federal income tax purposes, and (viii)
the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee and the
Common Securities Guarantee. Notwithstanding the foregoing the Trust shall not,
except with the consent of holders of 100% in liquidation amount of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it, if such consolidation, amalgamation, merger or
replacement would cause the Trust or the successor entity to be classified as
other than a grantor trust for federal income tax purposes.

BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY

The Depositary will act as securities depositary for the Trust Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global Trust Preferred
Securities certificates, representing the total aggregate number of Trust
Preferred Securities, will be issued and will be deposited with the Depositary.

The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a global certificate.

Purchases of Trust Preferred Securities within the Depositary's system must
be made by or through Direct Participants, which will receive a credit for the
Trust Preferred Securities on the Depositary's records. The ownership interest
of each actual purchaser of each Trust Preferred Security (a "Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from the Depositary of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the

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Direct or Indirect Participants through which the Beneficial Owners purchased
Trust Preferred Securities. Transfers of ownership interests in the Trust
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 the Trust
Preferred Securities, except in the event that use of the book-entry system for
the Trust Preferred Securities is discontinued.

To facilitate subsequent transfers, all the Trust Preferred Securities
deposited by Participants with the Depositary are registered in the name of the
Depositary's nominee, Cede & Co. The deposit of Trust Preferred Securities with
the Depositary and their registration in the name of Cede & Co. effect no change
in beneficial ownership. The Depositary has no knowledge of the actual
Beneficial Owners of the Trust Preferred Securities. The Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust 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.

So long as the Depositary or its nominee is the registered owner or holder
of a Global Certificate, the Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Trust Preferred Securities
represented thereby for all purposes under the Declaration and the Trust
Preferred Securities. No beneficial owner of an interest in a Global Certificate
will be able to transfer that interest except in accordance with the Depositary
applicable procedures, in addition to those provided for under the Declaration.

The Depositary has advised the Company that it will take any action
permitted to be taken by a holder of Trust Preferred Securities (including the
presentation of Trust Preferred Securities for exchange as described below) only
at the direction of one or more Participants to whose account the Depositary's
interests in the Global Certificates are credited and only in respect of such
portion of the aggregate liquidation amount of Trust Preferred Securities as to
which such Participant or Participants has or have given such directions.
However, if there is an Event of Default under the Trust Preferred Securities,
the Depositary will exchange the Global Certificates for Certificated
Securities, which it will distribute to its Participants.

Conveyance of notices and other communications by the Depositary to Direct
Participants and 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 that may be in effect from
time to time.

Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities. Under
its usual procedures, the Depositary would mail an Omnibus Proxy to the Trust as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.
consenting or voting rights to those Direct Participants to whose accounts the
Trust Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy). The Company and the Trust believe that
the arrangements among the Depositary, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a record
holder of a beneficial interest in the Trust.

Distribution payments on the Trust Preferred Securities will be made to the
Depositary in immediately available funds. The Depositary's practice is to
credit Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on the Depositary's records unless the
Depositary has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of the
Depositary, the Trust or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to the Depositary is the responsibility of the Trust, disbursement
of such payments to Direct Participants is the responsibility of the Depositary,
and disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.

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Except as provided herein, a Beneficial Owner in a global Trust Preferred
Security certificate will not be entitled to receive physical delivery of Trust
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of the Depositary to exercise any rights under the Trust Preferred
Securities.

Although the Depositary has agreed to the foregoing procedure in order to
facilitate transfer of interest in the Global Certificates among Participants of
the Depositary, the Depositary is under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
None of the Company, the Trust or any Trustee will have any responsibility for
the performance by the Depositary or its Participants or Indirect Participants
under the rules and procedures governing the Depositary. The Depositary may
discontinue providing its services as securities depositary with respect to the
Trust Preferred Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Trust Preferred Securities certificates are required to be printed
and delivered to holders. Additionally, the Regular Trustees (with the consent
of the Company) may decide to discontinue use of the system of book-entry
transfers through the Depositary (or any successor depositary) with respect to
the Trust Preferred Securities. In that event, certificates for the Trust
Preferred Securities will be printed and delivered to holders. In each of the
above circumstances, the Company will, appoint a paying agent with respect to
the Trust Preferred Securities.

The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
and the Trust believe to be reliable, but neither the Company nor the Trust
takes responsibility for the accuracy hereof.

REGISTRAR, TRANSFER AGENT AND PAYING AGENT

Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to the Depositary, which shall credit the
relevant accounts at the Depositary on the applicable distribution dates or, in
the case of Certificated Securities, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address shall appear on
the Register. The Paying Agent shall be permitted to resign as Paying Agent upon
30 days' written notice to the Regular Trustees. In the event that The First
National Bank of Chicago shall no longer be the Paying Agent, the Trustee shall
appoint a successor to act as Paying Agent (which shall be a bank or trust
company).

The Institutional Trustee will act as registrar, transfer agent and paying
agent for the Trust Preferred Securities.

Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (the giving of
such indemnity as the Trust or the Company may require) in respect of any tax or
other government charge which may be imposed in relation to it.

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

INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE

The Institutional Trustee prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Institutional Trustee to take any action it is empowered to take
under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.

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GOVERNING LAW

The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.

MISCELLANEOUS

The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
federal income tax purposes. The Company is authorized and directed to conduct
its affairs so that the Junior Subordinated Debentures will be treated as
indebtedness of the Company for federal income tax purposes. In this connection,
the Company and the Regular Trustees are authorized to take any action not
inconsistent with applicable law, the certificate of trust of the Trust or the
certificate of incorporation of the Company, that each of the Company and the
Regular Trustees determines in its discretion to be necessary or desirable to
achieve such end, as long as such action does not adversely affect the interests
of the holders of the Trust Preferred Securities or vary the terms thereof.

Holders of the Trust Preferred Securities have no preemptive rights.

DESCRIPTION OF THE GUARANTEE

Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by AHL for the benefit of the holders from time
to time of Trust Preferred Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. The First National Bank of Chicago, an
independent trustee, will act as indenture trustee under the Guarantee (the
"Guarantee Trustee") for the purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Guarantee will be those set forth in the
Guarantee and those made part of the Guarantee by the Trust Indenture Act. The
following summary does not purport to be complete and is subject in all respects
to the provisions of, and is qualified in its entirety by reference to, the form
of Guarantee, which is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, and the Trust Indenture Act. The Guarantee
will be held by the Guarantee Trustee for the benefit of the holders of the
Trust Preferred Securities of the Trust.

GENERAL

Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
Trust Preferred Securities issued by the Trust, the Guarantee Payments (as
defined herein) (except to the extent paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Trust may
have or assert. The following payments or distributions with respect to Trust
Preferred Securities issued by the Trust to the extent not paid by the Trust
(the "Guarantee Payments"), will be subject to the Guarantee thereon (without
duplication): (i) any accrued and unpaid distributions which are required to be
paid on the Trust Preferred Securities, to the extent the Trust shall have funds
available therefor; and (ii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Trust (other than in connection with the
distribution of Subordinated Debt Securities to the holders of Trust Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Trust Preferred Securities to the date
of payment, to the extent the Trust has funds available therefor and (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Trust Preferred Securities in liquidation of the Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Trust Preferred Securities or
by causing the Trust to pay such amounts to such holders.

The Guarantee will be a guarantee with respect to the Trust Preferred
Securities issued by the Trust, but will not apply to any payment of
distributions except to the extent the Trust shall have funds available
therefor. If the Company does not make interest payments on the Junior
Subordinated Debentures purchased by the Trust, the Trust will not pay
distributions on the Trust Preferred Securities and will not have funds
available therefor. See "Effect of Obligations under the Junior Subordinated
Debentures and the Guarantee."

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The Guarantee, when taken together with the Company's obligations under the
Junior Subordinated Debentures, the Indenture, and the Declaration will provide
a full and unconditional guarantee on a subordinated basis by the Company of
payments due on the Trust Preferred Securities.

The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Guarantee, except
that upon an event of default under the Indenture, holders of Trust Preferred
Securities shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.

CERTAIN COVENANTS OF THE COMPANY

In the Guarantee, the Company will covenant that, so long as any Trust
Preferred Securities issued by the Trust remain outstanding, if there shall have
occurred any event that would constitute an event of default under such
Guarantee or the Declaration, then (a) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of Common Stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such event
requiring the Company to purchase shares of Common Stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock or, (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such Company capital stock or the security being converted or
exchanged), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company which rank pari passu with or
junior to the Junior Subordinated Debentures and (c) the Company shall not make
any guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee).

MODIFICATION OF THE GUARANTEE; ASSIGNMENT

Except with respect to any changes which do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of the
holders of not less than a majority in liquidation amount of the outstanding
Trust Preferred Securities issued by the Trust. All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Trust Preferred Securities then outstanding.

TERMINATION

The Guarantee will terminate (a) upon distribution of the Junior
Subordinated Debentures held by the Trust to the holders of the Trust Preferred
Securities or (b) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Trust. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Trust Preferred Securities must restore payment of any sums paid under the
Trust Preferred Securities or the Guarantee.

EVENTS OF DEFAULT

An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder.

The holders of a majority in liquidation amount of the Trust Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
such Guarantee, any holder of Trust Preferred Securities to which the Guarantee
relates may institute a legal proceeding directly against the

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Company to enforce such holder's rights under the Guarantee, without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if the Company has failed
to make a guarantee payment, a holder of Trust Preferred Securities may directly
institute a proceeding against the Company for enforcement of the Guarantee for
such payment. The Company waives any right or remedy to require that any action
be brought first against the Trust or any other person or entity before
proceeding directly against the Company.

STATUS OF THE GUARANTEE

The Guarantee will constitute unsecured obligations of the Company and will
rank (i) subordinate and junior in right of payment to all other liabilities of
the Company, (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company; and (iii) senior to the Company's common stock.
The terms of the Trust Preferred Securities provide that each holder of Trust
Preferred Securities issued by the Trust by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.

The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Trust Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Guarantee Trustee, upon the
occurrence of an event of default under the Guarantee, from exercising the
rights and powers vested in it by the Guarantee.

GOVERNING LAW

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

DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES

Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which the Trust will invest the proceeds from the
issuance and sale of the Trust Securities. The following description does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Indenture, dated as of June 23, 1997 between the Company and
The First National Bank of Chicago, as Trustee (the "Debt Trustee"). Certain
capitalized terms used herein are defined in the Indenture.

Under certain circumstances involving the dissolution of the Trust
following the occurrence of a Special Event, Junior Subordinated Debentures may
be distributed to the holders of the Trust Securities in liquidation of the
Trust. See "Description of the Trust Preferred Securities -- Special Event
Distribution."

GENERAL

The Junior Subordinated Debentures will be issued as unsecured debt under
the Indenture. The Junior Subordinated Debentures will be limited in aggregate
principal amount to $ , such amount being the sum of the aggregate
stated liquidation of the Trust Preferred Securities and the capital contributed
by the Company in exchange for the Common Securities (the "Company Payment").
Future subordinated debentures may be issued from time to time in one or more
series in accordance with the terms of the Indenture and with one or more
indentures supplemental to the Indenture.

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The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and Additional
Interest (as defined herein), if any, on August 16, 2002.

If Junior Subordinated Debentures are distributed to holders of Trust
Preferred Securities in liquidation of such holders' interests in the Trust,
such Junior Subordinated Debentures will initially be issued as a Global
Security (as defined herein). As described herein, under certain limited
circumstances, Junior Subordinated Debentures may be issued in certificated form
in exchange for a Global Security. See "--Book-Entry and Settlement" below. In
the event that Junior Subordinated Debentures are issued in certificated form,
such Junior Subordinated Debentures will be in denominations of $50 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Junior Subordinated Debentures issued as a Global Security
will be made to the Depositary, a successor depositary or, in the event that no
depositary is used, to a Paying Agent for the Junior Subordinated Debentures. In
the event Junior Subordinated Debentures are issued in certificated form,
principal and interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable and Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures of other denominations of a like
aggregate principal amount at the corporate trust office or agency of the
Institutional Trustee in Chicago, Illinois; provided, that at the option of the
Company, payment of interest may be made by check mailed to the address of the
holder entitled thereto or by wire transfer to an account appropriately
designated by the holder entitled thereto. Notwithstanding the foregoing, so
long as the holder of any Junior Subordinated Debentures is the Institutional
Trustee, the payment of principal and interest on the Junior Subordinated
Debentures held by the Institutional Trustee will be made at such place and to
such account as may be designated by the Institutional Trustee.

The Indenture does not contain provisions that afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged
transaction involving the Company.

SUBORDINATION

The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of the
Company and pari passu with Company trade creditors and other junior
subordinated debentures issued by the Company. No payment of principal, premium,
if any, or interest on the Junior Subordinated Debentures may be made if (i) any
Senior Indebtedness of the Company is not paid when due, (ii) any applicable
grace period with respect to such default has ended and such default has not
been cured or waived or ceased to exist, or (iii) the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default. Upon any
distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal,
premium, if any, and interest due or to become due on all Senior Indebtedness of
the Company must be paid in full before the holders of Junior Subordinated
Debentures are entitled to receive or retain any payment. Subject to the payment
in full of all Senior Indebtedness, the rights of the holders of the Junior
Subordinated Debentures will be subrogated to the rights of the holders of
Senior Indebtedness of the Company to receive payments or distributions
applicable to Senior Indebtedness until all amounts owing on the Junior
Subordinated Debentures are paid in full.

The term "Senior Indebtedness" means the principal of and premium, if any,
and interest on the following, whether outstanding on the date of execution of
the Indenture or thereafter incurred or created: (i) indebtedness of the Company
for money borrowed by the Company (including purchase money obligations with an
original maturity in excess of one year) or evidenced by debentures (other than
the Junior Subordinated Debentures), notes, bankers' acceptances or other
corporate debt securities or similar instruments issued by the Company; (ii)
obligations with respect to letters of credit; (iii) indebtedness of the Company
constituting a guarantee of indebtedness of others of the type referred to in
the preceding clauses (i) and (ii); or (iv) renewals, extensions or refundings
of any of the indebtedness referred to in the preceding clauses (i), (ii) and
(iii) unless, in the case of any particular indebtedness, renewal, extension or
refunding, under the express provisions of the instrument creating or evidencing
the same, or pursuant to which the same

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is outstanding, such indebtedness or such renewal extension or refunding thereof
is not superior in right of payment to the Junior Subordinated Debentures.

The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company. As of March 31, 1997, Senior Indebtedness of
the Company aggregated approximately $116.0 million.

INTEREST

Each Junior Subordinated Debenture shall bear interest at the rate of
% per annum from the original date of issuance, payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (each an
"Interest Payment Date"), commencing September 30, 1997, to the person in whose
name such Junior Subordinated Debenture is registered, subject to certain
exceptions, at the close of business on the Business Day next preceding such
Interest Payment Date. In the event the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, the Company shall have the right to
select record dates, which shall be more than fifteen Business Days but less
than 60 Business Days prior to the Interest Payment Date.

The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed, will be computed on the basis of the actual number of days elapsed
in such a 90-day period. In the event that any date on which interest is payable
on the Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that 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, then 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.

PROPOSED TAX LEGISLATION

On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. One proposal would preclude the issuer from deducting interest on debt
instruments payable in stock of the issuer. A debt instrument would be treated
as payable in stock of the issuer if it were part of an arrangement designed to
result in payment of debt with such stock, such as certain issuances of a
forward contract in connection with the issuance of debt. The effective date of
the proposals is the date of first Congressional committee action. The House
Ways and Means Committee has approved a similar provision as part of the Revenue
Reconciliation Act of 1997 (the "Revenue Act"). The effective date of this
provision of the Revenue Act is for instruments issued after June 8, 1997 which
is the date prior to the date of first Congressional Committee action which
occurred on June 9, 1997. The legislative language of the Revenue Act, as
approved by the House Ways and Means Committee, provides for a transition rule
for instruments described in a filing with the Securities and Exchange
Commission made on or prior to June 8, 1997 where such filing was required
solely by reason of the distribution. The Junior Subordinated Debentures were
described in a filing with the Securities and Exchange Commission made prior to
June 8, 1997 and such filing was required solely by reason of their
distribution. Accordingly, the proposals in their current form, including the
applicable provision of the Revenue Act, would not apply to the Junior
Subordinated Debentures since they would be subject to the transition rules, In
addition, if the proposals are enacted into law as currently drafted, they
should not apply to the Junior Subordinated Debentures since the issuance of the
Junior Subordinated Debentures and the issuance of the Purchase Contract should
not be considered as part of an arrangement designed to result in the payment of
the Junior Subordinated Debentures with stock of the issuer. There can be no
assurance, however, that the proposals, if enacted, will be enacted as currently
drafted or will include such a transitional rule or that other legislation
enacted after the date hereof will not adversely affect the tax treatment of the
Junior Subordinated Debentures or cause a Tax Event, resulting in the
distribution of the Junior Subordinated Debentures to holders of Trust Preferred
Securities. See "Description of the Trust Preferred Securities -- Special Event
Distribution."

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REDEMPTION

The Company will not have the ability to redeem the Junior Subordinated
Debentures prior to the stated maturity date. However, the Company will be able
to defease the Junior Subordinated Debentures by making an irrevocable deposit
with the Debt Trustee of money and/or U.S. governmental obligations that will
provide money in an amount sufficient, in the opinion of a nationally recognized
independent accounting firm, to pay each payment of principal and interest on
the Junior Subordinated Debentures.

PUT OPTION

In accordance with the terms of the Junior Subordinated Debentures,
holders, including the Institutional Trustee and the Collateral Agent, have the
right to require the Company to repurchase, on the Purchase Contract Settlement
Date and for a period of ninety days thereafter, either in whole or in part, the
Junior Subordinated Debentures at an amount per Junior Subordinated Debenture
equal to $50, plus accumulated and unpaid distributions, if any. See
"Description of Purchase Contracts -- General."

On the Purchase Contract Settlement Date, each holder of Income PRIDES that
has neither previously exercised its option of Early Settlement nor settled its
Purchase Contract with cash will be deemed to have requested the Trust to put
the aggregate principal amount of its Junior Subordinated Debentures to the
Company in an amount per Junior Subordinated Debenture equal to $50, plus
accumulated and unpaid distributions, if any. Upon the repurchase of the Junior
Subordinated Debentures by the Company pursuant to such Put Option, (i) the
proceeds from such repurchase shall simultaneously be applied to redeem Trust
Preferred Securities of such holder having an aggregate Stated Amount equal to
the aggregate principal amount of the Junior Subordinated Debentures so
repurchased and will be applied to satisfy in full such holder's obligation to
purchase Common Stock under the Purchase Contract as described herein and (ii)
any accumulated and unpaid distributions with respect to the Junior Subordinated
Debentures so repurchased will be paid to such holder in cash.

To the extent that holders of Income PRIDES exercise their right of Early
Settlement or settle their Purchase Contracts with cash on the Purchase Contract
Settlement Date, the related Trust Preferred Securities will not be redeemed on
the Purchase Contract Settlement Date as stated above. All holders of Trust
Preferred Securities that are not redeemed on the Purchase Contract Settlement
Date will have the option on the Purchase Contract Settlement Date and for a
period of ninety days thereafter to require the Trust to put to the Company, and
the Company to repurchase, the related Junior Subordinated Debentures for an
amount equal to $50, plus accumulated and unpaid distributions, if any. Upon
such repurchase by the Company, the Trust shall simultaneously use the proceeds
from such repurchase to redeem in cash the Trust Preferred Securities of such
holders having an aggregate Stated Amount equal to $50 per Trust Preferred
Security and to pay in cash any accumulated and unpaid distributions to the
holders thereof.

OPTION TO EXTEND INTEREST PAYMENT PERIOD

The Company shall have the right at any time, and from time to time, during
the term of the Junior Subordinated Debentures, to defer payments of interest by
extending the interest payment period for a period not extending, in the
aggregate, beyond the maturity date of the Junior Subordinated Debentures. At
the end of any Extension Period, the Company shall pay all interest then accrued
and unpaid (including any Additional Interest, as herein defined) together with
interest thereon compounded quarterly at the rate specified for the Junior
Subordinated Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (a) the Company
shall not declare or pay dividends or make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock (other than (i) purchases or acquisitions of shares of the
Company Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase shares of AHL Common Stock, (ii)
as a result of a reclassification of the Company capital stock or the exchange
or conversion of one class or series of the Company's capital stock for another
class or series of the Company capital stock or

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(iii) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such Company capital
stock (or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by the Company that
rank pari passu with or junior to the Junior Subordinated Debentures, and (c)
the Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Trust Preferred Securities Guarantee). Prior to the
termination of any such Extension Period, the Company may further defer payments
of interest by extending the interest payment period; provided, however, that
such Extension Period, including all such previous and further extensions, may
not extend beyond the maturity date of the Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all amounts then due,
the Company may commence a new Extension Period, subject to the terms set forth
in this section. No interest shall be due and payable during an Extension
Period, except at the end thereof. The Company has no present intention of
exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures. If the Institutional
Trustee shall be the sole holder of the Junior Subordinated Debentures, the
Company shall give the Regular Trustees and the Institutional Trustee notice of
its selection of such Extension Period one Business Day prior to the earlier of
(i) the date distributions on the Trust Preferred Securities are payable or (ii)
the date the Regular Trustees are required to give notice, if applicable, to the
New York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Trust Preferred Securities of the record date or the date such
distribution is payable. The Regular Trustees shall give notice of the Company's
selection of such Extension Period to the holders of the Trust Preferred
Securities. If the Institutional Trustee shall not be the sole holder of the
Junior Subordinated Debentures, the Company shall give the holders of the Junior
Subordinated Debentures notice of its selection of such Extension Period ten
Business Days prior to the earlier of (i) the Interest Payment Date or (ii) the
date upon which the Company is required to give notice, if applicable, to the
New York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Junior Subordinated Debentures of the record or payment date of
such related interest payment.

ADDITIONAL INTEREST

If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Junior Subordinated Debentures such additional amounts as shall be
required so that the net amounts received and retained by the Trust after paying
any such taxes, duties, assessments or other governmental charges will be not
less than the amounts the Trust would have received had no such taxes, duties,
assessments or other governmental charges been imposed.

INDENTURE EVENTS OF DEFAULT

If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures.

The following are Events of Default under the Indenture with respect to the
Junior Subordinated Debentures: (1) failure to pay interest on the Junior
Subordinated Debentures when due, continued for 30 days; however, if the Company
is permitted by the terms of the Junior Subordinated Debentures to defer the
payment in question, the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the Junior
Subordinated Debentures; (2) failure to pay the principal of (or premium, if
any, on) the Junior Subordinated Debentures when due and payable at Maturity,
upon redemption or otherwise; however, if the Company is permitted by the terms
of the Junior Subordinated Debentures to defer the payment in question, the date
on which such payment is due and payable shall be the date on which the

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Company is required to make payment following such deferral, if such deferral
has been elected pursuant to the terms of the Junior Subordinated Debentures;
(3) failure to observe or perform any other covenant, warranty or agreement
contained in the Junior Subordinated Debentures or in the Indenture, continued
for a period of 60 days after notice has been given to the Company by the
Trustee or Holders of at least 25% in aggregate principal amount of the
Outstanding Junior Subordinated Debentures; (4) failure to pay at final
maturity, or acceleration of, Indebtedness of the Company, having an aggregate
principal amount of more than 1% of the Company's consolidated total assets
(determined as of its most recent fiscal year-end), unless cured within 10 days
after notice has been given to the Company by the Trustee or Holders of at least
10% in aggregate principal amount of the Outstanding Junior Subordinated
Debentures; and (5) certain events of bankruptcy, insolvency or reorganization
relating to the Company.

The Indenture provides that the Trustee shall, within 30 days after the
occurrence of any Default or Event of Default with respect to the Junior
Subordinated Debentures, give the Holders of the Junior Subordinated Debentures
notice of all uncured Defaults or Events of Default known to it (the term
"Default" includes any event which after notice or passage of time or both would
be an Event of Default); provided, however, that, except in the case of an Event
of Default or a Default in a payment on the Junior Subordinated Debentures, the
Trustee shall be protected in withholding such notice of and so long as the
board of directors, the executive committee or directors or responsible officers
of the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders of the Junior Subordinated Debentures.

If an Event of Default with respect to the Junior Subordinated Debentures
(other than due to events of bankruptcy, insolvency or reorganization) occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Junior Subordinated Debentures, by notice in
writing to the Company (and to the Trustee if given by the Holders of at least
25% in aggregate principal amount of the Junior Subordinated Debentures), may
declare the unpaid principal of and accrued interest to the date of acceleration
on all the Outstanding Junior Subordinated Debentures to be due and payable
immediately and, upon any such declaration, the Junior Subordinated Debentures
shall become immediately due and payable.

In addition, in the case of the Junior Subordinated Debentures held by the
Trust, if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal, then a
holder of Preferred Trust Securities may directly institute a proceeding against
the Company for payment.

If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Junior Subordinated Debentures will become immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder of the
Junior Subordinated Debentures.

Any such declaration with respect to the Junior Subordinated Debentures may
be annulled and past Events of Default and Defaults (except, unless theretofore
cured, an Event of Default or a Default in payment of principal of or interest
on the Junior Subordinated Debentures) may be waived by the Holders of a
majority of the principal amount of the Outstanding Junior Subordinated
Debentures, upon the conditions provided in the Indenture.

The Indenture provides that the Company shall periodically file statements
with the Trustee regarding compliance by the Company with certain of the
respective covenants thereof and shall specify any Event of Default or Defaults
with respect to the Junior Subordinated Debentures, in performing such
covenants, of which the signers may have knowledge.

An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Trust Preferred Securities in certain circumstances have
the right to direct the Institutional Trustee to exercise its rights as the
holder of the Junior Subordinated Debentures. See "Description of the Trust
Preferred Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable, the Company acknowledges that a
holder of Trust Preferred Securities may directly

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institute a proceeding for enforcement of payment to such holder directly of the
principal of and interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Trust
Preferred Securities of such holder on or after the respective due date
specified in the Junior Subordinated Debentures. Notwithstanding any payments
made to such holder of Trust Preferred Securities by the Company in connection
with a Direct Action, the Company shall remain obligated to pay the principal of
or interest on the Junior Subordinated Debt Securities held by the Trust or the
Institutional Trustee of the Trust, and the Company shall be subrogated to the
rights of the holder of such Trust Preferred Securities with respect to payments
on the Trust Preferred Securities to the extent of any payments made by the
Company to such holder in any Direct Action. The holders of Trust Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures.

BOOK-ENTRY AND SETTLEMENT

If distributed to holders of Trust Preferred Securities in connection with
the involuntary or voluntary dissolution, winding-up or liquidation of the Trust
as a result of the occurrence and continuation of a Special Event, the Junior
Subordinated Debentures will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the Depositary
or its nominee. Except under the limited circumstances described below, Junior
Subordinated Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debentures in definitive form. The Global Securities described above may not be
transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or to a successor depositary or its nominee.

The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.

Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.

THE DEPOSITARY

If Junior Subordinated Debentures are distributed to holders of Trust
Preferred Securities in liquidation of such holders' interests in the Trust, the
Depositary will act as securities depositary for the Junior Subordinated
Debentures. For a description of the Depositary and the specific terms of the
depositary arrangements, see "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance The Depository Trust Company." As of the
date of this Prospectus, the description therein of the Depositary's book-entry
system and the Depositary's practices as they relate to purchases, transfers,
notices and payments with respect to the Trust Preferred Securities apply in all
material respects to any debt obligations represented by one or more Global
Securities held by the Depositary. The Company may appoint a successor to the
Depositary or any successor depositary in the event the Depositary or such
successor depositary is unable or unwilling to continue as a depositary for the
Global Securities.

None of the Company, the Trust, the Institutional Trustee, any paying agent
and any other agent of the Company or the Debt Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Junior Subordinated Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.

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A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Junior Subordinated
Debentures. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Junior Subordinated Debentures registered in
such names as the Depositary shall direct. It is expected that such instructions
will be based upon directions received by the Depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.

GOVERNING LAW

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

MISCELLANEOUS

The Company will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Junior Subordinated Debentures, (ii) the
organization, maintenance and dissolution of the Trust, (iii) the retention of
the Company Trustees and (iv) the enforcement by the Institutional Trustee of
the rights of the holders of the Trust Preferred Securities. The payment of such
fees and expenses will be fully and unconditionally guaranteed by the Company.

EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE

As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the Junior
Subordinated Debentures and engage in only those other activities necessary or
incidental thereto.

As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Trust Preferred Securities; (iii)
the Company shall pay, and the Trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debts, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the Company trustees shall not take or cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.

Payments of distributions (to the extent funds therefor are available) and
other payments due on the Trust Preferred Securities (to the extent funds
therefor are available) are guaranteed by the Company as and to the extent set
forth under "Description of the Guarantee." If the Company does not make
interest payments on the Junior Subordinated Debentures purchased by the Trust,
it is expected that the Trust will not have sufficient funds to pay
distributions on the Trust Preferred Securities. The Guarantee does not apply to
any payment of distributions unless and until the Trust has sufficient funds for
the payment of such distributions. The Guarantee covers the payment of
distributions and other payments on the Trust Preferred Securities only if and
to the extent that the Company has made a payment of interest or principal on
the Junior Subordinated Debentures held by the Trust as its sole asset.

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If the Company fails to make interest or other payments on the Junior
Subordinated Debentures when due (taking account of any Extension Period), the
Declaration provides a mechanism whereby the holders of the Trust Preferred
Securities, using the procedures described in "Description of the Trust
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" and "-- Voting Rights," may direct the Institutional Trustee to enforce
its rights under the Junior Subordinated Debentures. If the Institutional
Trustee fails to enforce its rights under the Junior Subordinated Debentures, a
holder of Trust Preferred Securities may institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, then a holder of Trust Preferred Securities may
directly institute a proceeding against the Company for payment. The Company,
under the Guarantee, acknowledges that the Guarantee Trustee shall enforce the
Guarantee on behalf of the holders of the Trust Preferred Securities. If the
Company fails to make payments under the Guarantee, the Guarantee provides a
mechanism whereby the holders of the Trust Preferred Securities may direct the
Guarantee Trustee to enforce its rights thereunder. Notwithstanding the
foregoing, if the Company has failed to make a payment under the Guarantee, any
holder of Trust Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee, or any
other person or entity.

The Guarantee, when taken together with the Company's obligations under the
Junior Subordinated Debentures and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provide a full and unconditional guarantee of amounts due on the Trust Preferred
Securities. See "Description of Guarantee."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain of the material United States
("U.S.") federal income tax consequences of the purchase, ownership and
disposition of Income PRIDES, Trust Preferred Securities and Growth PRIDES. The
summary represents the opinion of LeBoeuf, Lamb, Green & MacRae, L.L.P.
("Special Tax Counsel"), special tax counsel to the Company, insofar as it
relates to matters of law and legal conclusions. Unless otherwise stated, the
summary deals only with holders who purchase Income PRIDES upon their original
issuance for an amount equal to the Stated Amount of the Trust Preferred
Securities and who hold the Income PRIDES, or upon the substitution of Treasury
Securities, the Growth PRIDES and Trust Preferred Securities, as capital assets.
The summary does not address the federal income tax consequences of the
purchase, ownership or disposition of Treasury Securities. The summary deals
only with holders who are citizens or residents of the U.S., corporations,
partnerships or other entities organized in or under the laws of the U.S. or any
political subdivision thereof, or estates or trusts defined in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"). The
summary does not address the tax considerations applicable to investors that may
be subject to special U.S. federal income tax treatment, such as dealers in
securities, persons holding the Income PRIDES, Growth PRIDES or Trust Preferred
Securities as part of a "straddle" or a "conversion transaction" for U.S.
federal income tax purposes or as part of a synthetic security or other
integrated investment, or persons who have a functional currency other than the
U.S. dollar, and does not address the tax consequences under state, local or
foreign law. The summary is based upon the Code, Treasury 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.

No statutory, judicial or administrative authority directly addresses the
characterization of the FELINE PRIDES or instruments similar to the FELINE
PRIDES for U.S. federal income tax purposes. As a result no assurance can be
given that the IRS will agree with the tax consequences described herein.
ACCORDINGLY, A PROSPECTIVE INVESTOR (INCLUDING A TAX-EXEMPT INVESTOR) IN THE
FELINE PRIDES SHOULD CONSULT ITS TAX ADVISOR IN DETERMINING THE TAX CONSEQUENCES
OF AN INVESTMENT IN THE FELINE PRIDES, INCLUDING THE APPLI-

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CATION OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN FEDERAL OR OTHER TAX LAWS.

CLASSIFICATION OF THE TRUST

In connection with the issuance of the Trust Preferred Securities, Special
Tax Counsel will render an opinion generally to the effect that, under current
law and assuming full compliance with the terms of the Trust Agreement, the
Indenture, and certain other documents, and based upon certain facts and
assumptions contained in such opinion, the Trust will be classified, for U.S.
federal income tax purposes, as a grantor trust and not as an association
taxable as a corporation. Accordingly, for U.S. federal income tax purposes,
each holder of Trust Preferred Securities generally will be treated as the owner
of an undivided beneficial interest in the Junior Subordinated Debentures and as
further discussed below, will be required to include in ordinary income such
holder's allocable share of interest or OID paid or accrued on the Junior
Subordinated Debentures.

CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES

In connection with the issuance of the Junior Subordinated Debentures,
Special Tax Counsel will render an opinion generally to the effect that, under
current law and assuming full compliance with the terms of the Indenture and
certain other documents, and based upon certain facts and assumptions contained
in such opinion, the Junior Subordinated Debentures to be held by the Trust will
be classified, for U.S. federal income tax purposes, as indebtedness of the
Company.

PROPOSED TAX LEGISLATION

On February 6, 1997, as part of the fiscal budget submitted to Congress,
the Clinton Administration proposed a number of changes to federal income tax
laws. One proposal would preclude the issuer from deducting interest on debt
instruments payable in stock of the issuer. A debt instrument would be treated
as payable in stock of the issuer if it were part of an arrangement designed to
result in payment of debt with such stock such as certain issuances of a forward
contract in connection with the issuance of debt. The effective date of the
proposals is the date of first Congressional committee action. The House Ways
and Means Committee has approved a similar provision as part of the Revenue
Reconciliation Act of 1997 (the "Revenue Act"). The effective date of this
provision of the Revenue Act is for instruments issued after June 8, 1997 which
is the date prior to the date of first Congressional Committee action which
occurred on June 9, 1997. The legislative language of the Revenue Act, as
approved by the House Ways and Means Committee, provides for a transition rule
for instruments described in a filing with the Securities and Exchange
Commission made on or prior to June 8, 1997 where such filing was required
solely by reason of the distribution. The Junior Subordinated Debentures were
described in a filing with the Securities and Exchange Commission made prior to
June 8, 1997 and such filing was required solely by reason of their
distribution. Accordingly, the proposals in their current form, including the
applicable provision of the Revenue Act, would not apply to the Junior
Subordinated Debentures since they would be subject to the transition rules, In
addition, if the proposals are enacted into law as currently drafted, they
should not apply to the Junior Subordinated Debentures since the issuance of the
Junior Subordinated Debentures and the issuance of the Purchase Contract should
not be considered as part of an arrangement designed to result in the payment of
the Junior Subordinated Debentures with stock of the issuer. There can be no
assurance, however, that the proposals, if enacted, will be enacted as currently
drafted or will include such a transitional rule or that other legislation
enacted after the date hereof will not adversely affect the tax treatment of the
Junior Subordinated Debentures or cause a Tax Event, resulting in the
distribution of the Junior Subordinated Debentures to holders of Trust Preferred
Securities. See "Description of the Trust Preferred Securities -- Special Event
Distribution."

INITIAL TAX BASIS IN TRUST PREFERRED SECURITY AND PURCHASE CONTRACT

The purchase price of each Income PRIDES will be allocated between the
Trust Preferred Security and the Purchase Contract included in an Income PRIDES
in proportion to their respective fair market values at

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the time of purchase. Such allocation will establish the Holder's initial tax
basis in the Trust Preferred Security and Purchase Contract.

The Company intends to take the position that, at the time of issuance of
the Income PRIDES, the fair market value of each Trust Preferred Security equals
its Stated Amount and the fair market value of each Purchase Contract equals
zero. As a result, a holder should allocate the entire purchase price for an
Income PRIDES (i.e., the Stated Amount of a Trust Preferred Security) to the
Trust Preferred Security and should not allocate any portion of the purchase
price to the Purchase Contract. The Company's position will be binding upon each
holder unless the holder explicitly discloses a contrary position on a statement
attached to the holder's timely filed U.S. federal income tax return for the
taxable year in which the Income PRIDES is acquired.

DISTRIBUTIONS ON TRUST PREFERRED SECURITIES

Under applicable Treasury regulations, a debt instrument will be issued
with OID if there is more than a remote contingency that periodic stated
interest payments due on the instrument will not be timely paid. Because the
exercise by the Company of its option to defer the payment of stated interest on
the Junior Subordinated Debentures would, among other things, prevent the
Company from declaring dividends on any of its capital stock, the Company
believes that the likelihood of its exercising the option is remote within the
meaning of such regulations. As a result, the Company intends to take the
position, based upon the advice of Special Tax Counsel, that the Junior
Subordinated Debentures will not be issued with OID. Accordingly, based upon
this position, a holder of Trust Preferred Securities will include stated
interest payments on the Junior Subordinated Debentures in ordinary income at
the time that such payments are paid or accrued, in accordance with such
holder's regular method of accounting. Because such regulations have not yet
been addressed in any published rulings or other published interpretations
issued by the IRS, it is possible that the IRS could take a position contrary to
the position taken by the Company.

If the Company were to exercise its option to defer the payment of stated
interest on the Junior Subordinated Debentures, the Junior Subordinated
Debentures would be treated, solely for purposes of the OID rules, as being
re-issued at such time with OID. Under these rules, a holder of Trust Preferred
Securities would be required to include OID in ordinary income, on a current
basis, over the period that the Trust Preferred Securities are held even though
the Company would not make actual cash payments during the extended interest
payment period. The amount of OID includible in the taxable income of a holder
of Trust Preferred Securities would be determined on the basis of a constant
yield method over the remaining term of the instrument, and the actual payment
of stated interest on the Junior Subordinated Debentures would not be separately
reported as taxable income. The amount of OID that would accrue, in the
aggregate, during an extended interest payment period would approximately equal
the amount of the cash payment due at the end of such period. Any OID included
in income would increase such holder's tax basis in the Trust Preferred Security
and actual payments of stated interest would reduce such tax basis.

Because income on the Trust Preferred Securities will constitute interest
for U.S. federal income tax purposes, corporate holders of Trust Preferred
Securities will not be entitled to a dividends-received deduction in respect of
such income.

CONTRACT ADJUSTMENT PAYMENTS

There is no authority for the treatment of the Contract Adjustment Payments
under current law. For federal income tax information reporting purposes, the
Company intends to report the Contract Adjustment Payments and the Deferred
Contract Adjustment Payments (if any) to holders in the taxable year in which
they are paid. The Company intends to take the position that the Contract
Adjustment Payments constitute taxable income to holders when received or
accrued, in accordance with the holder's regular method of accounting. Holders
should consult their respective tax advisors concerning the treatment of the
Contract Adjustment Payments and Deferred Contract Adjustment Payments,
including the possibility that the receipt of a Contract Adjustment Payment may
be treated as a loan, purchase price adjustment, rebate or option premium rather
than being includible in income on a current basis. The Company does not intend
to deduct

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the Contract Adjustment Payments or Deferred Contract Adjustment Payments
because it views them as a cost of issuing the Common Stock. Contract Adjustment
Payments and Deferred Contract Adjustment Payments received by a regulated
investment company should be treated as income derived with respect to such
company's business of investing in stocks and securities.

RECEIPT OF JUNIOR SUBORDINATED DEBENTURES UPON LIQUIDATION OF THE TRUST

If the Company exercises its right to liquidate the Trust and cause the
Junior Subordinated Debentures to be distributed, on a pro rata basis, to
holders of Trust Preferred Securities (or to the Collateral Agent on behalf of
such holders), such distribution would not be taxable to such holders. In such
event, each holder of Trust Preferred Securities would have a tax basis in the
Junior Subordinated Debentures received in the liquidation equal to the tax
basis in the holder's Trust Preferred Securities surrendered therefor, and the
holding period of such Junior Subordinated Debentures would include the period
during which the holder had held the Trust Preferred Securities. If, however,
the Trust is classified, for U.S. federal income tax purposes, as an association
taxable as a corporation at the time of such liquidation, the distribution of
Junior Subordinated Debentures would constitute a taxable event to holders of
Trust Preferred Securities.

POSTING OF TREASURY SECURITIES TO CREATE GROWTH PRIDES

A holder of an Income PRIDES that chooses to substitute a Treasury Security
for Trust Preferred Securities held by the Collateral Agent generally will not
recognize taxable gain or loss upon release of the Trust Preferred Securities to
the holder, and the holder's tax basis in the Trust Preferred Securities and
Purchase Contract will remain unchanged. In general the substitution of the
Treasury Security should not constitute a taxable event (except with respect to
a holder who, because of the holder's particular tax status or the circumstances
under which the holder holds the Treasury Security, may be subject to tax, such
as a person who holds the Treasury Security as part of a "straddle" or a
"conversion transaction" for U.S. federal income tax purposes). Such holder will
continue to include in income any OID or market discount or amortize any bond
premium otherwise includible or deductible, respectively, by such holder with
respect to such Treasury Security. Holders should consult their respective tax
advisors concerning the tax consequences of purchasing, owning and disposing of
Treasury Securities.

POSTING OF TRUST PREFERRED SECURITIES TO RECREATE INCOME PRIDES

A holder of a Growth PRIDES that delivers Trust Preferred Securities to the
Collateral Agent generally will not recognize taxable gain or loss upon release
of the Treasury Security to the holder.

SALE OR DISPOSITION

A holder generally will recognize gain or loss upon the sale or other
disposition of an Income PRIDES, a Growth PRIDES or a Trust Preferred Security
(including a redemption of a Trust Preferred Security by the Trust). In the case
of an Income PRIDES or a Growth PRIDES, such gain or loss will be separately
calculated with respect to the Trust Preferred Security or Treasury Security, as
the case may be, and the related Purchase Contract by allocating the sum of any
cash and the fair market value of any property received upon the sale or other
disposition between the two components in proportion to their respective fair
market values. The amount of gain or loss with respect to each component
generally should equal the difference between the consideration so allocated to
each component (reduced by any amount attributable to accrued interest or
Contract Adjustment Payments, which will be taxable as described above) and the
holder's tax basis in the respective components. In the case of a Trust
Preferred Security, the amount of gain or loss will equal the difference between
the sum of any cash and the fair market value of any property received upon the
sale or other disposition of such Trust Preferred Security (reduced by any
amount attributable to accrued interest or Contract Adjustment Payments, which
will be taxable as described above) and the holder's tax basis in the Trust
Preferred Security. Any such gain or loss generally will be capital gain or loss
and will be long-term capital gain or loss (determined separately for each
component of an Income PRIDES or a Growth PRIDES and for a Trust Preferred
Security) if the holder held the respective component of the Income

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PRIDES or Growth PRIDES or the Trust Preferred Security, as the case may be, for
more than one year at the time of such sale or disposition.

PURCHASE OF COMMON STOCK UNDER PURCHASE CONTRACT

A holder of an Income PRIDES that directs the Trust to put its Junior
Subordinated Debenture to the Company on the Purchase Contract Settlement Date
will not recognize taxable gain or loss upon the exercise of such Put Option
because the holder's tax basis in its Trust Preferred Security should equal the
amount received (the Stated Amount) and be automatically applied to the holder's
purchase of the Common Stock. A holder of an Income PRIDES will not recognize
taxable gain or loss upon the tender of cash to settle the Purchase Contract and
the release of the Trust Preferred Security to such holder. A holder of a Growth
PRIDES will not recognize taxable gain or loss upon the tender of cash to settle
the Purchase Contract early and the release of the Treasury Securities to such
holder. A holder of a Growth PRIDES will recognize taxable gain or loss upon the
automatic application of the Treasury Security to settle the Purchase Contract
on the Purchase Contract Settlement Date equal to the difference, if any,
between the fair market value of the Treasury Security automatically applied to
purchase the Common Stock and the holder's tax basis in such Treasury Security.

A holder's tax basis in the Common Stock will equal the purchase price for
such Common Stock plus the holder's tax basis, if any, in the Purchase Contract.
The holding period for the Common Stock will begin on the day after the purchase
of such Common Stock.

OWNERSHIP OF COMMON STOCK ACQUIRED UNDER PURCHASE CONTRACT

Assuming that the Company has current or accumulated earnings and profits,
for U.S. federal income tax purposes, at least equal to the amount of any
dividend, a holder of Common Stock will include such a dividend in income when
paid, and the dividend will be eligible for the dividends-received deduction if
received by an otherwise qualifying corporate holder that meets the holding
period and other requirements for such deduction.

Upon the sale or other disposition of the Common Stock, a holder will
recognize gain or loss equal to the difference between the amount of cash and
fair market value of any property received and the holder's tax basis in such
Common Stock. Any such gain or loss generally will be capital gain or loss and
will be long-term capital gain or loss if the holder held the Common Stock for
more than one year at the time of such sale or disposition.

ADJUSTMENT OF SETTLEMENT RATE

Holders of Income PRIDES or Growth PRIDES might be treated as receiving a
constructive distribution from the Company if (i) the Settlement Rate is
adjusted and, as a result of such adjustment, the proportionate interest of such
holders in the assets or earnings and profits of the Company is increased, and
(ii) the adjustment is not made pursuant to a bona fide, reasonable antidilution
formula. An adjustment in the Settlement Rate would not be considered made
pursuant to such a formula if the adjustment were made to compensate for certain
taxable distributions with respect to the Common Stock. Thus, although not
currently anticipated, under certain circumstances, an increase in the
Settlement Rate may be taxable to holders of Income PRIDES and Growth PRIDES as
a dividend to the extent of the current accumulated earnings and profits of the
Company. Each Holder would be required to include its allocable share of such
constructive dividend in gross income but would not receive any cash related
thereto.

ERISA CONSIDERATIONS

Generally, employee benefit plans that are subject to ERISA, plans and
individual retirement accounts that are subject to Section 4975 of the IRC and
entities whose assets are considered assets of such plans ("Plans"), may
purchase the Securities subject to the investing fiduciary's determination that
the investment in the Securities satisfies ERISA's fiduciary standards and other
requirements applicable to investments by

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Plans. Accordingly, among other factors, the fiduciary should consider whether
the investment would satisfy the prudence and diversification requirements of
ERISA and would be consistent with the documents and instruments governing the
Plans.

Under regulations issued by the U.S. Department of Labor (the "DOL"), a
Plan that owns the Securities may be deemed to own a portion of the assets held
in the Trust, including a portion of the Junior Subordinated Debentures held in
the Trust. In addition, the Company and its affiliates may be "parties in
interest" (within the meaning of ERISA) or "disqualified persons" (within the
meaning of Section 4975 of the IRC) with respect to certain Plans (generally,
Plans maintained or sponsored by, or contributed to by, any such persons or
Plans with respect to which any such persons are fiduciaries or service
providers). The acquisition and ownership of the Securities and a deemed
acquisition and ownership of an interest in the Junior Subordinated Debentures
by a Plan with respect to which the Company or any of its affiliates is
considered a party in interest or a disqualified person may constitute or result
in a prohibited transaction under ERISA or Section 4975 of the IRC, unless such
securities are acquired and are held pursuant to and in accordance with an
applicable exemption. In this regard, the DOL has issued PTCEs that may apply to
the acquisition and holding of the Securities. These class exemptions are PTCE
84-14 (respecting transactions determined by independent qualified professional
asset managers), PTCE 90-1 (respecting insurance company separate accounts),
PTCE 91-38 (respecting bank collective trust funds), PTCE 95-60 (respecting
insurance company general accounts) and PTCE 96-23 (respecting transactions
determined by in-house asset managers).

Any fiduciary proposing to acquire the Securities on behalf of a Plan
should consult with ERISA counsel for the Plan and should not acquire the
Securities unless it is determined that such acquisition and holding does not
and will not constitute a prohibited transaction and will satisfy the applicable
fiduciary requirements imposed under ERISA. Any such acquisition by a Plan shall
be deemed a representation by the Plan and the fiduciary effecting the
investment on behalf of the Plan that such acquisition and holding satisfies the
applicable fiduciary requirements of ERISA, and is entitled to exemptive relief
from the prohibited transaction provisions of ERISA and the IRC in accordance
with one or more of the foregoing PTCEs or another available prohibited
transaction exemption.

90
<PAGE> 92

UNDERWRITING

Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Underwriting Agreement") among the Company, the Trust and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Oppenheimer & Co.,
Inc. and The Robinson-Humphrey Company, Inc. (the "Underwriters"), the Company
and the Trust have agreed to sell to the Underwriters, and each of the
Underwriters severally has agreed to purchase from the Company and the Trust,
the number of Income PRIDES set forth opposite each Underwriter's name. In the
Underwriting Agreement, the several Underwriters severally have agreed, subject
to the terms and conditions set forth therein, to purchase all of the Income
PRIDES offered hereby if any of the Income PRIDES are purchased. In the event of
default by an Underwriter, the Underwriting Agreement provides that, in certain
circumstances, the purchase commitments of the nondefaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS INCOME PRIDES
------------ -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Goldman, Sachs & Co. .......................................
Oppenheimer & Co., Inc......................................
The Robinson-Humphrey Company, Inc. ........................
---------
Total.......................................... 1,800,000
=========
</TABLE>

The Underwriters have advised the Company and the Trust that they propose
initially to offer the Income PRIDES to the public at the public offering price
set forth on the cover page of this Prospectus and to certain dealers at such
price less a concession not in excess of $ per Income PRIDES. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Income PRIDES on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.

Until the distribution of the Securities is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
any selling group members to bid for and purchase the Securities or shares of
Common Stock. As an exception to these rules, the Underwriters are permitted to
engage in certain transactions that stabilize the price of the Securities or the
Common Stock. Such transactions consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Securities or the Common Stock.

If the Underwriters create a short position in the Securities in connection
with the Offering, i.e., if they sell more Securities than are set forth on the
cover page of this Prospectus, the Underwriters may reduce that short position
by purchasing Securities in the open market. The Underwriters may also elect to
reduce any short position by exercising all or part of the over-allotment option
described below.

The Underwriters may also impose a penalty bid on certain Underwriters and
selling group members. This means that if the Underwriters purchase Securities
in the open market to reduce the Underwriters' short position or to stabilize
the price of the Securities, they may reclaim the amount of the selling
concession from any Underwriter and any selling group members who sold those
Securities as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.

Neither the Company, the Trust nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Securities or the
Common Stock. In addition, neither the Company, the Trust nor any of the
Underwriters makes any representation that the Underwriters will engage in such
transaction or that such transactions, once commenced, will not be discontinued
without notice.

91
<PAGE> 93

The Company and the Trust have granted to the Underwriters an option,
exercisable for 30 days following the date of this Prospectus, to purchase up to
an aggregate of additional 270,000 Income PRIDES from the Company and the Trust,
at the price to the public set forth on the cover page of this Prospectus, less
the underwriting discount. The Underwriters may exercise this option only to
cover over-allotments, if any, made on the sale of the Income PRIDES offered
hereby. If the Underwriters exercise their over-allotment option, each of the
Underwriters has severally agreed, subject to certain conditions, to effect the
foregoing transactions with respect to approximately the same percentage of such
Income PRIDES that the respective number of Income PRIDES set forth opposite its
name in the foregoing table bears to the Income PRIDES offered hereby.

The Company and the Trust have agreed, for a period of 180 days after the
date of this Prospectus, to not, without the prior written consent of Merrill
Lynch, Pierce, Fenner and Smith Incorporated, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of, or
enter into any agreement to sell, any Income PRIDES, Purchase Contracts, Trust
Originated Trust Preferred Securities or Common Stock, as the case may be, or
any securities of the Company similar to the Income PRIDES, Purchase Contracts,
Trust Originated Trust Preferred Securities or Common Stock or any security
convertible into or exchangeable or exercisable for Income PRIDES, Purchase
Contracts, Trust Originated Trust Preferred Securities or Common Stock other
than to the Underwriters pursuant to the Underwriting Agreement, other than
shares of Common Stock or options for shares of Common Stock issued pursuant to
or sold in connection with any employee benefit, dividend reinvestment and stock
option and stock purchase plans of the Company and its subsidiaries and other
than the Growth PRIDES or shares of Common Stock issuable upon early settlement
of the Income PRIDES or exercise of stock options.

Prior to this offering, there has been no public market for the Income
PRIDES. The public offering price for the Income PRIDES was determined in
negotiations between the Company, the Trust and the Underwriters. In determining
the terms of the Income PRIDES, including the public offering price, the
Company, the Trust and the Underwriters considered the market price of the
Company's Common Stock and also considered the Company's recent results of
operations, the future prospects of the Company and the industry in general,
market prices and terms of, and yields on, securities of other companies
considered to be comparable to the Company and prevailing conditions in the
securities markets. The Income PRIDES have been approved for listing on the NYSE
under the symbol "AHL prI", subject to official notice of issuance. The Growth
PRIDES and the Trust Preferred Securities will not be listed or traded on any
securities exchange. The Company and the Trust have been advised by the
Underwriters that they presently intend to make a market for the Growth PRIDES
and the Trust Preferred Securities; however, they are not obligated to do so and
any market making may be discontinued at any time. There can be no assurance
that an active trading market will develop for the Income PRIDES, the Growth
PRIDES or the Trust Preferred Securities or that the Income PRIDES will trade in
the public market subsequent to the offering at or above the initial public
offering price.

The Company and the Trust have agreed to indemnify the Underwriters
against, or to contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, the Company and its subsidiaries in the
ordinary course of business. H. Corbin Day, a director of the Company, is also a
limited partner of Goldman, Sachs & Co., one of the Underwriters of this
offering.

LEGAL MATTERS

The validity of the Purchase Contracts, the Common Stock issuable upon
settlement thereof, the Indenture, the Guarantee, the Junior Subordinated
Debentures and certain other matters will be passed upon for the Company and the
Trust by W. Michael Heekin, Senior Vice President and Corporate Secretary of the
Company. Certain matters will be passed upon for the Company and the Trust by
LeBoeuf, Lamb, Greene & MacRae, L.L.P., New York, New York, as special tax
counsel for the Company in connection with the Securities. Certain legal matters
will be passed upon for the Underwriters by Skadden, Arps, Slate, Meagher

92
<PAGE> 94

& Flom LLP, New York, New York. Mr. Heekin is a full-time employee and officer
of the Company and owned 3,148 shares of the Company's Common Stock as of April
30, 1997. LeBoeuf, Lamb, Greene & MacRae, L.L.P., from time to time renders
legal services to the Company.

EXPERTS

The consolidated financial statements and the financial statement schedules
of the Company and its subsidiaries as of December 31, 1996 and 1995, and for
each of the years in the three-year period ended December 31, 1996 included
herein and elsewhere in this Registration Statement have been included herein
and elsewhere in this Registration Statement in reliance on the report of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

The consolidated financial statements of Columbia Universal and its
subsidiaries as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996 which report is included in the Company's
current report on Form 8-K dated March 3, 1997 and incorporated by reference
into this Registration Statement in reliance on the report of Coopers & Lybrand
L.L.P., independent certified public accountants, and upon the authority of said
firm as experts in accounting and auditing.

93
<PAGE> 95

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Accountants' Report............................. F-2
Consolidated Statements of Earnings for the Years Ended
December 31, 1996, 1995 and 1994.......................... F-3
Consolidated Balance Sheets as of December 31, 1996 and
1995...................................................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994.............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994.......................... F-6
Notes to Consolidated Financial Statements.................. F-7
Consolidated Statements of Earnings (Unaudited) for the
Three Months Ended March 31, 1997 and 1996................ F-21
Consolidated Balance Sheets (Unaudited) as of March 31, 1997
and 1996.................................................. F-22
Consolidated Statements of Stockholders' Equity (Unaudited)
for the Three Months Ended March 31, 1997 and 1996........ F-23
Consolidated Statements of Cash Flows (Unaudited) for the
Three Months Ended March 31, 1997 and 1996................ F-24
Notes to Consolidated Financial Statements (Unaudited) for
the Three Months Ended March 31, 1997 and 1996............ F-25
Schedule I -- Summary of Investments........................ S-1
Schedule II -- Condensed Financial Information of
Registrant................................................ S-2
Schedule III -- Supplementary Insurance Information......... S-6
Schedule IV -- Reinsurance.................................. S-7
</TABLE>

F-1
<PAGE> 96

INDEPENDENT ACCOUNTANTS' REPORT

The Stockholders and Board of Directors
American Heritage Life Investment Corporation

We have audited the consolidated financial statements of American Heritage
Life Investment Corporation and subsidiaries as listed in the accompanying
index. In connection with our audits of the consolidated financial statements,
we have also audited the financial statement schedules as listed in the
accompanying index. These consolidated financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American
Heritage Life Investment Corporation and subsidiaries at December 31, 1996 and
1995, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedules when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

KPMG PEAT MARWICK LLP

January 29, 1997

F-2
<PAGE> 97

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Income:
Insurance revenues........................................ $258,519 $247,251 $230,589
Net investment income..................................... 77,035 70,601 66,706
Realized investment gains, net............................ 420 6,003 2,011
-------- -------- --------
Total income...................................... 335,974 323,855 299,306
-------- -------- --------
Benefits, claims and expenses:
Benefits and claims....................................... 148,887 148,581 146,146
Underwriting, acquisition and insurance expenses:
Taxes, commissions and general expenses................ 117,414 106,399 95,326
Amortization of deferred acquisition costs............. 25,628 23,744 20,758
Other operating expenses.................................. 4,186 3,694 2,413
-------- -------- --------
Total benefits, claims and expenses............... 296,115 282,418 264,643
-------- -------- --------
Earnings before income taxes...................... 39,859 41,437 34,663
Income taxes................................................ 12,827 13,362 11,022
-------- -------- --------
Net earnings...................................... $ 27,032 $ 28,075 $ 23,641
-------- -------- --------
Net earnings per share of common stock...................... $ 1.96 $ 2.02 $ 1.71
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE> 98

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1995
---------- ----------
(IN THOUSANDS EXCEPT
SHARE AND PER SHARE
ASSETS AMOUNTS)
<S> <C> <C>

Investments:
Debt securities, available-for-sale, at fair value
(amortized cost of $512,900 in 1996 and $493,814 in
1995).................................................. $ 521,916 $ 515,429
Equity securities, available-for-sale, at fair value (cost
of $21,465 in 1996 and $23,209 in 1995)................ 34,520 34,735
Mortgage loans on real estate............................. 53,736 29,506
Investment real estate, at cost........................... 453 375
Policy loans.............................................. 399,608 376,672
Short-term investments.................................... 1,216 22,886
---------- ----------
Total investments................................. 1,011,449 979,603
---------- ----------
Cash........................................................ 21,672 20,682
Agents' balances and prepaid commissions.................... 35,730 39,077
Premiums receivable......................................... 40,989 41,816
Accrued investment income................................... 24,958 24,274
Deferred acquisition costs.................................. 173,699 158,250
Property and equipment, at cost, less accumulated
depreciation of $11,825 in 1996 and $10,337 in 1995....... 28,926 27,830
Reinsurance receivables..................................... 13,423 9,231
Other assets................................................ 19,271 17,133
---------- ----------
Total assets...................................... $1,370,117 $1,317,896
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy liabilities:
Future policy benefits.................................... $ 203,396 $ 205,088
Policyholders' account balances........................... 681,098 635,670
Unearned premiums......................................... 52,279 53,317
Policy and contract claims................................ 51,261 50,375
---------- ----------
Total policy liabilities.......................... 988,034 944,450
---------- ----------
Notes payable to banks...................................... 85,459 94,994
Deferred income taxes....................................... 32,344 28,882
Other liabilities........................................... 35,337 30,241
---------- ----------
Total liabilities................................. 1,141,174 1,098,567
---------- ----------
Stockholders' equity:
Common stock of $1.00 par value:
Authorized 35,000,000 shares in 1996 and 20,000,000
shares in 1995; issued 13,967,253 in 1996 and
13,933,206 in 1995.................................... 13,967 13,933
Preferred stock:
Convertible of $10.00 par value: Authorized 500,000
shares; none issued................................... -- --
Non-convertible of $10.00 par value: Authorized 500,000
shares; none issued................................... -- --
Additional paid-in capital................................ 42,644 42,215
Retained earnings......................................... 163,460 148,454
Net unrealized investment gains (losses).................. 12,158 16,772
---------- ----------
232,229 221,374
Less cost of 153,728 in 1996 and 97,277 in 1995 common
shares in treasury........................................ 3,286 2,045
---------- ----------
Total stockholders' equity........................ 228,943 219,329
---------- ----------
Total liabilities and stockholders' equity........ $1,370,117 $1,317,896
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 99

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS EXCEPT SHARE
AND PER SHARE AMOUNTS)
<S> <C> <C> <C>
Common stock:
Balance at beginning of year......................... $ 13,933 $ 13,906 $ 13,880
Add shares issued on exercise of stock options....... 20 5 2
Other shares issued (surrendered), net............... 14 22 24
-------- -------- --------
Balance at end of year............................... 13,967 13,933 13,906
-------- -------- --------
Additional paid-in capital:
Balance at beginning of year......................... 42,215 41,866 41,483
Addition (deduction) related to exercise of stock
options........................................... 112 (54) (22)
Excess over par value on other shares issued......... 317 403 405
-------- -------- --------
Balance at end of year............................... 42,644 42,215 41,866
-------- -------- --------
Retained earnings:
Balance at beginning of year......................... 148,454 129,406 115,465
Add net earnings..................................... 27,032 28,075 23,641
Deduct cash dividends declared on common stock ($.87
per share in 1996, $.65 per share in 1995 and $.70
per share in 1994)................................ (12,026) (9,027) (9,700)
-------- -------- --------
Balance at end of year............................... 163,460 148,454 129,406
-------- -------- --------
Net unrealized investment gains (losses):
Balance at beginning of year......................... 16,772 (10,892) 14,027
Unrealized gain upon adoption of FAS 115 at beginning
of year........................................... -- -- 3,855
Change during the year............................... (4,614) 27,664 (28,774)
-------- -------- --------
Balance at end of year............................... 12,158 16,772 (10,892)
-------- -------- --------
Treasury stock:
Balance at beginning of year......................... 2,045 926 925
Add treasury shares purchased (56,451 shares in 1996,
51,323 shares in 1995 and 127 shares in 1994)..... 1,241 1,119 1
-------- -------- --------
Balance at end of year............................... 3,286 2,045 926
-------- -------- --------
Total stockholders' equity................... $228,943 $219,329 $173,360
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 100

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net earnings............................................. $ 27,032 $ 28,075 $ 23,641
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for depreciation and amortization........... 2,613 1,706 1,908
Amortization of deferred acquisition costs............ 25,628 23,744 20,758
Acquisition costs deferred............................ (36,018) (33,067) (27,154)
Change in agents' balances and prepaid commissions.... 3,346 70 (1,685)
Change in premiums receivable......................... 878 1,618 (1,119)
Change in accrued investment income................... (683) (8,072) (10,106)
Change in reinsurance receivables..................... (4,192) 2,500 (4,373)
Change in future policy benefits...................... (4,833) 12,576 8,168
Change in policyholders' account balances............. 45,410 49,147 45,244
Change in unearned premiums........................... (1,039) 1,713 4,726
Change in policy and contract claims liability........ 885 (3,433) (3,106)
Change in income taxes................................ 5,846 3,171 5,764
Change in unearned investment income.................. (301) (804) (16,237)
Other, net............................................ 1,974 (3,110) 2,080
-------- --------- ---------
Net cash provided by operating activities........ 66,546 75,834 48,509
-------- --------- ---------
Investing activities:
Sales of debt securities................................. 14,718 46,210 32,103
Maturities of debt securities............................ 46,109 32,026 65,019
Sales of equity securities............................... 5,968 13,951 2,577
Maturities of mortgage loans on real estate.............. 3,479 2,033 2,019
Policy loans paid........................................ 25,372 18,124 18,565
Sales of property and equipment and investment real
estate................................................ 17 1,296 13
Acquisition of block of business......................... 1,561 6,047 --
Purchases of debt securities............................. (80,010) (121,355) (104,742)
Purchases of equity securities........................... (5,239) (2,437) (5,818)
Origination of mortgage loans on real estate............. (27,709) (10,913) (4,727)
Sales (purchases) of short-term investments, net......... 21,669 (15,188) (5,039)
Policy loans made........................................ (48,129) (42,737) (35,055)
Purchases of property and equipment and investment real
estate................................................ (2,789) (2,030) (13,063)
Other, net............................................... (26) -- (3,116)
-------- --------- ---------
Net cash used by investing activities............ (45,009) (74,973) (51,264)
-------- --------- ---------
Financing activities:
Net proceeds (paydowns) on borrowings.................... (9,535) 10,793 11,720
Dividends to stockholders................................ (12,026) (9,027) (9,700)
Purchase of treasury stock............................... (1,241) (1,119) (1)
Other, net............................................... 2,255 (316) 1,241
-------- --------- ---------
Net cash provided (used) by financing
activities..................................... (20,547) 331 3,260
-------- --------- ---------
Increase in cash................................. 990 1,192 505
Cash at beginning of year.................................. 20,682 19,490 18,985
-------- --------- ---------
Cash at end of year........................................ $ 21,672 $ 20,682 $ 19,490
======== ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest................................................. $ 6,325 $ 5,721 $ 4,040
Federal income taxes..................................... 6,550 9,650 4,800
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 101

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Consolidation Policy

The accompanying consolidated financial statements include the accounts of
American Heritage Life Investment Corporation (AHLIC) and its subsidiaries. All
significant intercompany accounts have been eliminated in consolidation. The
term "Company" as used herein includes AHLIC and its subsidiaries.

AHLIC is a holding company whose principal subsidiary is American Heritage
Life Insurance Company (AHL). AHL is licensed to do business as a life insurance
company in 49 states, Puerto Rico, the District of Columbia and the U.S. Virgin
Islands. It markets life and accident and health insurance on an individual,
group and credit basis through licensed agents and brokers. First Colonial
Insurance Company, a subsidiary of AHL, markets credit property insurance and is
currently licensed in twelve states.

(b) Basis of Presentation

The accompanying consolidated financial statements are presented on the
basis of generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

Such principles differ in some respects from those followed in preparing
statutory reports filed with various insurance departments. Under GAAP:

(1) Insurance Revenue and Expense Recognition: For traditional
insurance products, premiums, benefits and expenses are reported in a
manner which results in the recognition of profits over the life of the
policies. For interest-sensitive products, premiums received are recognized
as deposits; revenues consist of surrender, mortality and expense charges;
and profits are recognized as earned.

(2) Investments: Bonds and redeemable preferred stocks, which are
classified as debt securities available-for-sale, are stated at fair value.

(3) Deferred Acquisition Costs: The costs (principally commissions)
of acquiring traditional life, interest-sensitive products and accident and
health contracts, certain expenses of the policy issue and underwriting
department, and certain agency expenses, all of which vary with and are
primarily related to the production of new business, have been deferred.
Deferred acquisition costs of traditional life and accident and health
contracts are being amortized over the premium payment period of the
related policies using the same assumptions as were used for computing
liabilities for future policy benefits, together with appropriate expense
assumptions. For interest-sensitive life products, deferred acquisition
costs are being amortized over the lives of the policies in relation to the
present value of estimated gross profits from surrender charges and
investment, mortality and expense margins. Assumptions used for estimating
the related gross profits are evaluated regularly (at least annually) and
amortization is appropriately modified.

(4) Insurance Liabilities: The liabilities for future policy benefits
(which represent the excess of the present value of future benefits to be
paid on behalf of or to policyholders over the present value of future net
premiums, except for interest-sensitive products) are computed by a net
level premium method using estimated future investment yields from 3.75% to
8.00%; withdrawals based on Company experience; mortality, and morbidity
from recognized morbidity and mortality tables modified for anticipated
company experience, with reasonable provisions for possible future adverse
experience deviations. Policyholders' account balances represent premiums
received plus interest credited during the contract accumulation period,
less contract charges for mortality and expenses. For the years ended
December 31, 1996 and 1995, the weighted average interest rates credited to
the policyholders' account balances were 5.37% and 6.28%, respectively; and
the related interest credited to the policyholders'

F-7
<PAGE> 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

account balances was $36.9 million and $35.2 million. The surrender charge
provisions for interest-sensitive policies vary depending upon the type of
policy. For universal life-type policies, the surrender charges generally
range over a period of 10-20 years at varying rates depending upon the plan
of insurance. For annuities, the surrender charges generally range over a
period of 7-10 years with charges varying from 1% to 10% of the accumulated
fund value over the surrender charge period.

Debt securities are investments which mature at a specified future date
more than one year after they were issued. Equity securities include common
stocks. During the year ended December 31, 1994, the Company adopted the
provisions of Financial Accounting Standard Board's Statement of the Financial
Accounting Standard No. 115, "Accounting for Investments in Certain Debt and
Equity Securities." Under these provisions, investments are required to be
categorized as (1) held to maturity, (2) available-for-sale, or (3) trading. All
debt and equity securities have been classified by the Company as
available-for-sale and are stated at fair value. Unrealized gains or losses on
debt and equity securities available-for-sale resulting from fluctuations in
fair values were recorded, net of deferred income taxes and adjustments to the
deferred acquisition costs for interest-sensitive insurance products, directly
to a separate component of stockholders' equity. Realized investment gains or
losses are calculated on the basis of specific identification and include
writedowns on those investments where the decline in value below its cost or
amortized cost is considered to be other than temporary.

Policy loans are carried at the actual amount loaned to the policyholder.
No policy loans are made for amounts in excess of the cash surrender value of
the related policy. Accordingly, in all instances, the policy loans are fully
collateralized by the related liability for future policy benefits for
traditional insurance policies and by the policyholders' account balance for
interest-sensitive policies.

Mortgage loans are reported at amortized cost, less an allowance for
possible losses.

(d) Property and Equipment

Depreciation of property and equipment is computed on the straight-line
method over the estimated useful lives of the respective assets.

(e) Policy and Contract Claims

Accruals are provided to cover the cost of reported claims not paid and for
claims incurred but not reported to the Company. The accruals are computed based
on historical claims experience modified for variations in expected future
benefits.

(f) Other Operating Expenses

Other operating expenses include primarily interest expense related to bank
borrowings and other general corporate expenses of AHLIC.

(g) Income Taxes

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income tax expense in the period that includes the enactment date.

F-8
<PAGE> 103

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(h) Earnings Per Share

Earnings per share of common stock are based on the weighted average number
of shares outstanding during each year, excluding treasury shares. Options
outstanding to purchase common stock had no significant dilutive effect on
earnings per share.

(i) Reclassifications

Certain amounts for 1995 and 1994 have been reclassified to conform with
the presentation adopted in 1996.

(2) INCOME TAXES

The effective federal income tax rates on earnings before income taxes were
lower than the maximum statutory rates as follows:

<TABLE>
<CAPTION>
1996 1995 1994
-------------- -------------- --------------
AMT.(*) % AMT.(*) % AMT.(*) %
------- --- ------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax expense..... $13,951 35 $14,503 35 $12,132 35
Dividends received deduction........ (324) (1) (448) (1) (570) (2)
Tax exempt interest................. (5) -- (8) -- (13) --
Credits from oil and gas
investments....................... (788) (2) (677) (2) (523) (1)
Other, net.......................... (7) -- (8) -- (4) --
------- -- ------- -- ------- --
Effective income tax expense........ $12,827 32 $13,362 32 $11,022 32
======= == ======= == ======= ==
</TABLE>

- ---------------

* Presented in thousands.

Deferred income taxes reflect the impact of temporary differences between
the financial statement and tax basis carrying values of assets and liabilities.
The temporary differences that gave rise to significant portions of the deferred
tax liability and the effect on deferred income tax expense of changes in those
temporary differences (in thousands) for the years ended December 31, 1996, 1995
and 1994 were as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Excess of GAAP earnings over statutory earnings of
life insurance operations........................... $ 4,726 $ 3,571 $ 6,248
Difference in tax and statutory policy liabilities.... (986) (450) (1,494)
Unearned investment income............................ 2 149 4,683
Deferred acquisition costs tax........................ (2,533) (2,573) (2,157)
Deferred gain on real estate.......................... -- 2,286 --
Miscellaneous items, net.............................. 1,795 252 (338)
------- ------- -------
Deferred income tax expense........................... $ 3,004 $ 3,235 $ 6,942
======= ======= =======
</TABLE>

The components of income tax expense (in thousands) for each of the three
years ended December 31 were as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current............................................... $ 9,823 $10,127 $ 4,080
Deferred.............................................. 3,004 3,235 6,942
------- ------- -------
Total....................................... $12,827 $13,362 $11,022
======= ======= =======
</TABLE>

F-9
<PAGE> 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of temporary differences that gave rise to significant
portions of the deferred tax liabilities and deferred tax assets at December 31,
1996 and December 31, 1995 (in thousands) were as follows:

<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets:
Insurance reserves........................................ $21,320 $23,081
Unearned investment income................................ 299 400
Other..................................................... -- 304
------- -------
Total deferred tax assets......................... 21,619 23,785
------- -------
Deferred tax liabilities:
Deferred acquisition costs................................ 44,412 41,350
Unrealized investment gains on securities
available-for-sale..................................... 6,546 9,031
Deferred gain on real estate.............................. 1,738 2,286
Other..................................................... 1,267 --
------- -------
Total deferred tax liabilities.................... 53,963 52,667
------- -------
Net deferred tax liability................................ 32,344 28,882
Current tax liability (asset)............................. 100 100
------- -------
Accrued and deferred income taxes................. $32,444 $28,982
======= =======
</TABLE>

No valuation allowance was recorded at December 31, 1996 or 1995.

Prior to 1985, certain life insurance company income was not subject to
federal income tax until distributed. For tax purposes such income was
accumulated in a memorandum "policyholders' surplus account" and taxed upon
distribution. At December 31, 1996, the policyholders' surplus account was $8.8
million.

(3) INVESTMENTS

For the years ended December 31, 1996, 1995 and 1994, net investment income
(in thousands) was as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Investment income:
Debt securities....................................... $41,573 $38,676 $37,387
Equity securities..................................... 809 1,679 1,746
Mortgage loans on real estate......................... 3,657 2,290 1,921
Investment real estate................................ 54 43 52
Policy loans.......................................... 33,496 30,231 27,554
Short-term investments................................ 2,928 2,776 2,855
Other................................................. 4 4 8
------- ------- -------
Gross investment income....................... 82,521 75,699 71,523
Investment expenses..................................... 5,486 5,098 4,817
------- ------- -------
Net investment income......................... $77,035 $70,601 $66,706
======= ======= =======
</TABLE>

F-10
<PAGE> 105

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Proceeds from sales and maturities of investments in debt securities during
1996, 1995 and 1994 were $59.1 million, $69.3 million and $97.2 million,
respectively. Gross gains and losses on those sales, and net gains and losses on
sales of other investments (in thousands), were as follows:

<TABLE>
<CAPTION>
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
Debt securities -- gains............................... $ 794 $ 898 $ 2,578
Debt securities -- losses.............................. (2,683) (14,709) (2,305)
------- -------- -------
Debt securities, net................................... (1,889) (13,811) 273
Equity securities, net................................. 2,309 13,187 1,750
Real estate............................................ -- 7,127 (12)
Other, net............................................. -- (500) --
------- -------- -------
Realized investment gains, net............... $ 420 $ 6,003 $ 2,011
======= ======== =======
</TABLE>

Stockholders' equity included the following unrealized investment gains
(losses) (in thousands) at December 31:

<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Equity securities available-for-sale:
Gross unrealized investment gains.................... $13,434 $12,068 $ 18,717
Gross unrealized investment losses................... (379) (542) (1,825)
------- ------- --------
13,055 11,526 16,892
------- ------- --------
Debt securities available-for-sale:
Gross unrealized investment gains.................... 12,583 23,966 2,034
Gross unrealized investment losses................... (3,567) (2,351) (39,957)
------- ------- --------
9,016 21,615 (37,923)
------- ------- --------
Gross unrealized investment gains (losses)... 22,071 33,141 (21,031)
Increase (decrease)in deferred acquisition costs for
interest-sensitive insurance products................ (3,367) (7,338) 10,139
Deferred federal income tax (benefit).................. (6,546) (9,031) --
------- ------- --------
Net unrealized investment gains (losses)..... $12,158 $16,772 $(10,892)
======= ======= ========
</TABLE>

F-11
<PAGE> 106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The amortized cost and fair values of debt securities available-for-sale by
category of securities (in thousands) were as follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAIN LOSS VALUE
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
December 31, 1996:
Obligations of U.S. government
corporations and agencies............. $ 17,339 $ 759 $ 80 $ 18,018
Obligations of state and local
governments........................... 345 20 -- 365
Public utilities......................... 53,344 392 285 53,451
Corporate securities..................... 289,076 10,944 155 299,865
Mortgage backed securities............... 152,796 468 3,047 150,217
-------- ------- ------ --------
Total............................ $512,900 $12,583 $3,567 $521,916
======== ======= ====== ========
December 31, 1995:
Obligations of U.S. government
corporations and agencies............. $ 13,932 $ 1,330 $ -- $ 15,262
Obligations of state and local
governments........................... 345 28 -- 373
Public utilities......................... 35,189 963 75 36,077
Corporate securities..................... 247,857 20,142 638 267,361
Mortgage backed securities............... 196,491 1,503 1,638 196,356
-------- ------- ------ --------
Total............................ $493,814 $23,966 $2,351 $515,429
======== ======= ====== ========
</TABLE>

The amortized cost and fair value of debt securities available-for-sale (in
thousands) at December 31, 1996, by contractual maturity, were as follows.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or repay obligations with or without penalties.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------
AMORTIZED FAIR
COST VALUE
--------- --------
<S> <C> <C>
Due in one year or less..................................... $ 1,092 $ 1,104
Due after one year through five years....................... 23,497 25,071
Due after five years through ten years...................... 127,467 133,828
Due after ten years......................................... 172,526 176,671
Mortgage backed securities.................................. 152,796 150,217
Redeemable preferred stocks................................. 35,522 35,025
-------- --------
Total............................................. $512,900 $521,916
======== ========
</TABLE>

The amortized cost of high yield bonds included in debt securities
available-for-sale was $14.8 million with a market value of $15.0 million, which
represented 1.5% of invested assets.

There were no individual investments at December 31, 1996, other than U.S.
government securities, which exceeded 10% of the Company's stockholders' equity.

F-12
<PAGE> 107

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(4) FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values (in thousands) of the Company's financial
instruments are summarized as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
------------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Debt securities............................................. $ 521,916 $ 521,916
Equity securities........................................... 34,520 34,520
Mortgage loans on real estate............................... 53,736 58,786
Investment real estate...................................... 453 2,400
Policy loans................................................ 399,608 399,608
Cash and short-term investments............................. 22,888 22,888
---------- ----------
Total cash and investments........................ $1,033,121 $1,040,118
---------- ----------
Notes payable to banks...................................... $ 85,459 $ 85,459
========== ==========
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1995
------------------------
CARRYING ESTIMATED
AMOUNT FAIR VALUE
---------- ----------
<S> <C> <C>
Debt securities............................................. $ 515,429 $ 515,429
Equity securities........................................... 34,735 34,735
Mortgage loans on real estate............................... 29,506 35,570
Investment real estate...................................... 375 2,400
Policy loans................................................ 376,672 376,672
Cash and short-term investments............................. 43,568 43,567
---------- ----------
Total cash and investments........................ $1,000,285 $1,008,373
---------- ----------
Notes payable to banks...................................... $ 94,994 $ 94,994
========== ==========
</TABLE>

These fair values were determined as follows:

Debt securities

The fair value and carrying value of debt securities were estimated based
on bid prices published in financial newspapers or bid quotations received from
securities dealers.

Equity securities

The fair value and carrying value of equity securities, other than private
placements, were based on bid prices published in financial newspapers. For
private placements, cost has been determined to approximate fair value.

Mortgage loans on real estate

For residential mortgage loans, fair value was estimated using quoted
market prices for securities backed by similar loans. The fair value of
commercial loans was estimated by discounting expected future cash flows using
current rates at which similar loans would be made to borrowers with similar
credit ratings and for the same remaining maturities. The outstanding principal
balance of adjustable-rate mortgage loans is assumed to approximate their fair
values.

Investment in real estate

The fair value of real estate was calculated using estimated market values.

F-13
<PAGE> 108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Policy loans

The fair value of policy loans approximates the book value, as interest
rates charged for a majority of the policy loans are updated to current market
rates on an annual basis.

Cash and short-term investments

The carrying amount approximates fair value because of the short maturity
of these instruments.

Notes payable to banks

The carrying amount estimates fair value because the interest rates charged
approximate current market rates.

(5) NOTES PAYABLE TO BANKS

At December 31, 1996, all of the notes payable to banks were short-term,
unsecured, and related to advances under $120.0 million lines of credit ($54.5
million available to be drawn at December 31, 1996) bearing interest at rates
ranging from 6.09% to 7.75%. The arrangements under the terms of the lines of
credit are reviewed annually for renewal. Debt of $20.0 million matures in 1997
and relates to the acquisition of $20.0 million of GNMA's, which were financed
at an interest rate of 6.10% and which provides a positive interest spread
between the rate earned on the GNMA's and the respective borrowing rate.

Interest expense for the years ended December 31, 1996, 1995 and 1994
totaled $6.1 million, $5.6 million and $4.0 million, respectively, of which $3.7
million, $3.3 million and $2.0 million, respectively, were included in other
operating expenses and $2.4 million, $2.2 million and $2.0 million,
respectively, related to the purchase of the GNMA's discussed above which
reduced net investment income.

(6) REINSURANCE

In the normal course of business, the Company seeks to limit its exposure
to loss on any single insured and to recover a portion of benefits paid by
ceding insurance to other insurance companies or reinsurers under excess
coverage and co-insurance contracts. The maximum risk generally retained on
AHL's ordinary life insurance on any one insured is $100,000 for policies issued
prior to July 1, 1994 and $200,000 on policies issued subsequent to July 1,
1994. The amount retained on group and credit life insurance is generally
$50,000. Generally, income from reinsurance arrangements is recognized in a
manner similar to the income recognition on the underlying policy contracts.

A contingent liability exists for that portion of the policies reinsured in
the event that the reinsuring companies are unable to pay their share of any
resulting claims as reinsurance contracts do not relieve the Company from its
obligations to its policyholders. The Company evaluates the financial condition
of its reinsurers and monitors concentrations of credit risk arising from
similar geographic regions, activities, or economic characteristics of the
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies.

The amount of insurance premiums assumed and ceded under reinsurance
agreements for the year ended December 31, 1996 was $5.8 million and $111.7
million, respectively. For the year ended December 31, 1995 the amount assumed
and ceded was $12.6 million and $97.8 million, respectively. The amounts of
recoveries for benefits paid under reinsurance agreements for the years ended
December 31, 1996 and 1995 were $104.0 million and $96.7 million, respectively.

(7) STOCK COMPENSATION PLANS

At December 31, 1996, the Company had six stock-based compensation plans,
which are described below. The Company applies Accounting Principles Board
Opinion No. 25 "Accounting for Stock issued to

F-14
<PAGE> 109

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Employees" and related interpretations in accounting for its plans. Accordingly,
no compensation cost has been recognized for its fixed option plans. The
compensation that has been charged against income for the long-term incentive
plan stock, employee stock purchase and agents stock purchase plans (in
thousands) was as follows:

<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Long-term incentive plan stock.............................. $487 $379 $308
Employee stock purchase plan................................ 70 66 64
Agents stock investment plan................................ 13 9 10
</TABLE>

Compensation cost determined pursuant to Financial Accounting Standard No.
123 "Accounting for Stock-Based Compensation" would not have had a material
effect on the Company's net earnings and earnings per share for 1996 and 1995.

(A) FIXED STOCK OPTION PLANS

The Company has three fixed stock option plans primarily for its employees.
Under the 1980 Stock Option Plan, the Company may grant options to its employees
for up to 300,000 shares of common stock. Under the 1988 Stock Option Plan, the
Company may grant options to its employees for up to 266,666 shares of common
stock. Under the 1996 Stock Option Plan, the Company may grant options to its
employees for up to 350,000 shares of common stock. Under all plans, the
exercise price of each option equals the market price of the Company's stock on
the date of grant. The Company had a 1982 Stock Option Plan which expired in
1992 but options which were granted under that plan prior to its expiration
continue in effect. Under the 1980 and 1996 Plans, the option's maximum term is
ten years. Under the 1988 Plan, the option's maximum term is six years. Under
the 1980 Plan, options are granted in the first part of the year and vest in
increments of 33% per year beginning one year from date of grant and continuing
for two more years. Under the 1988 Plan, options are granted during the year and
vest in increments of 20% per year over a five year period beginning no less
than six months after the grant.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1996 and 1995, respectively: dividend yield of
3.1% and 3.6%; expected volatility of 20% for both years for the 1980 Plan
options. No options were granted under the 1982 or 1988 plans during the period.

F-15
<PAGE> 110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the status of the Company's fixed stock option plans as of
December 31, 1996 and 1995, and changes during the years ended on those dates is
presented below:

<TABLE>
<CAPTION>
1996 1995
------------------ ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
FIXED STOCK OPTION PLANS SHARES PRICE SHARES PRICE
- ------------------------ ------- -------- ------- --------
<S> <C> <C> <C> <C>
1980 PLAN:
Outstanding at beginning of year................ 77,111 $19.21 44,391 $19.98
Granted......................................... 23,300 22.63 41,984 18.50
Exercised....................................... -- -- -- --
Forfeited....................................... -- -- (9,264) 19.66
------- ------ ------- ------
Outstanding at end of year...................... 100,411 20.00 77,111 19.21
------- ------ ------- ------
Options exercisable at year-end ................ 43,639 19.71 17,944 20.43
------- ------ ------- ------
Weighted-average fair value of options granted
during the year.............................. $ 6.51 -- $ 4.79 --
------- ------ ------- ------
1988 PLAN:
Outstanding at beginning of year................ 167,500 18.71 202,500 18.72
Granted......................................... -- -- -- --
Exercised....................................... -- -- -- --
Forfeited....................................... -- -- (35,000) 18.79
------- ------ ------- ------
Outstanding at end of year...................... 167,500 18.71 167,500 18.71
------- ------ ------- ------
Options exercisable at year-end ................ 94,000 19.22 60,500 19.51
------- ------ ------- ------
1982 PLAN:
Outstanding at beginning of year................ 27,336 11.13 44,670 11.13
Granted......................................... -- -- -- --
Exercised....................................... (27,336) 11.13 (17,334) 11.13
Forfeited....................................... -- -- -- --
------- ------ ------- ------
Outstanding at end of year...................... -- -- 27,336 11.13
------- ------ ------- ------
Options exercisable at year-end ................ -- -- 16,000 11.13
------- ------ ------- ------
ALL PLANS:
Outstanding at beginning of year................ 271,947 18.09 291,561 17.75
Granted......................................... 23,300 22.63 41,984 18.50
Exercised....................................... (27,336) 11.13 (17,334) 11.13
Forfeited....................................... -- -- (44,264) 18.97
------- ------ ------- ------
Outstanding at end of year...................... 267,911 19.19 271,947 18.09
------- ------ ------- ------
Options exercisable at year-end ................ 137,639 19.38 94,444 18.26
------- ------ ------- ------
Weighted-average fair value of options granted
during the year.............................. $ 6.51 -- $ 4.79 --
======= ====== ======= ======
</TABLE>

F-16
<PAGE> 111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes information about fixed stock options
outstanding at December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------------- --------------------------
NUMBER WEIGHTED-AVG WEIGHTED-AVG NUMBER WEIGHTED-AVG
EXERCISE OUTSTANDING REMAINING EXERCISE EXERCISABLE EXERCISE
PRICES AT 12-31-96 CONTRACTUAL LIFE PRICE AT 12-31-96 PRICE
-------- ----------- ---------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
1980 PLAN
$18.50 39,729 8.1years $18.50 13,230 $18.50
18.75 20,876 7.1 18.75 13,903 18.75
21.50 16,506 6.1 21.50 16,506 21.50
22.63 23,300 9.1 22.63 -- 22.63
------- ------ ------ ------
100,411 $20.00 43,639 $19.71
------- ------ ------ ------
1988 PLAN
17.50 100,000 2.9years 17.50 40,000 17.50
20.50 67,500 1.7 20.50 54,000 20.50
------- ------ ------ ------
167,500 $18.71 94,000 $19.22
======= ====== ====== ======
</TABLE>

(B) LONG-TERM INCENTIVE PLAN

Under the Company's Long-Term Incentive Plan, the restricted stock feature
provides for the grant of common stock to a participating employee. The number
of shares of restricted stock available to be issued in the name of each
participating employee is determined at the beginning of each fiscal year, and
is based on the prior year's operating results. Such shares are held by the
Company in the name of the participating employee, who has the right to vote and
to receive dividends paid on all such shares.

During the years ended December 31, 1996, 1995 and 1994, the Company
granted 10,970, 19,985 and 12,651 shares of restricted stock, respectively.

Under the Company's Long-Term Incentive Plan, the performance units feature
provides for the grant to a participating employee of shares of common stock
based on targeted award levels established for each participating employee at
the beginning of each fiscal year in accordance with a formula relating to
individual levels of performance.

During the years ended December 31, 1996 and 1995, the Company granted
4,214 and 5,383 shares of common stock related to the performance units feature.
No shares were granted in 1994.

The Company maintains a stock purchase plan under which its employees and
directors and those of its subsidiaries can purchase shares of its common stock
in the open market through an unaffiliated plan administrator. Pursuant to the
plan, 328,534 shares had been purchased as of December 31, 1996. During the
years ended December 31, 1996 and 1995, 29,331 shares and 29,512 shares,
respectively, were purchased pursuant to the plan. This plan provides for
monthly payroll and directors' fees purchases up to $1,500, with the employer
making a monthly percentage contribution for the account of each participant,
based upon their purchases, as follows: (a) 25% of amounts from $5 through $25,
(b) 20% of amounts in excess of $25 through $50, and (c) 15% of amounts in
excess of $50 through $1,500.

(D) AGENTS STOCK INVESTMENT PLAN

The Company maintains a stock purchase plan under which its agents can
purchase shares of its common stock in the open market through an unaffiliated
plan administrator. Pursuant to the plan, 33,558 shares had been purchased as of
December 31, 1996. During the years ended December 31, 1996 and 1995, 12,952
shares and 10,448 shares, respectively, were purchased pursuant to the plan. The
plan provides for monthly

F-17
<PAGE> 112

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

deductions from commissions payable by participating subsidiaries of the Company
to their participating agents with a minimum monthly deduction of $500 and
maximum of $2,000. The participating subsidiary contributes, at the time of each
purchase, an amount equal to five percent (5%) of its agent's deduction for
purchases from commissions payable.

(8) PROFIT SHARING PLAN

The Company has a trusteed profit sharing plan for the exclusive benefit of
eligible employees. The Company's annual contribution to the plan is equal to
the lesser of 10% of consolidated earnings as defined or 10% of qualifying
compensation paid to participants. The annual contributions amounted to $1.2
million in 1996 and 1995, and $1.1 million in 1994. The total return to
participants in 1996 was 7.74%. The average annual return to participants for
the last ten years was 8.55%.

(9) POLICY AND CONTRACT CLAIMS

Activity in the liability for policy and contract claims (in thousands) at
December 31, 1996, 1995 and 1994 is summarized as follows:

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Balance at beginning of year................... $ 50,375 $ 53,309 $ 56,415
Less reinsurance recoverables................ 3,592 3,142 2,096
-------- -------- --------
Net balance at beginning of year............... 46,783 50,167 54,319
-------- -------- --------
Incurred related to:
Current year................................. 144,248 126,874 118,065
Prior years.................................. (953) (383) (1,130)
-------- -------- --------
Total incurred....................... 143,295 126,491 116,935
-------- -------- --------
Paid related to:
Current year................................. 128,137 114,149 101,868
Prior years.................................. 16,166 15,726 19,219
-------- -------- --------
Total paid........................... 144,303 129,875 121,087
-------- -------- --------
Net balance at end of year..................... 45,775 46,783 50,167
Plus reinsurance recoverables................ 5,486 3,592 3,142
-------- -------- --------
Balance at end of year......................... $ 51,261 $ 50,375 $ 53,309
-------- -------- --------
</TABLE>

(10) INDUSTRY SEGMENT INFORMATION

Insurance revenues, total income, and pre-tax operating earnings,
reconciled to net earnings, for the three years ended December 31, 1996 for each
industry segment, Ordinary, Group and Credit, were as follows:

<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
*Insurance revenues:
Ordinary..................................... $137,421 $123,718 $113,993
Group........................................ 35,480 39,925 43,222
Credit....................................... 85,618 83,608 73,374
-------- -------- --------
Total insurance revenues............. $258,519 $247,251 $230,589
-------- -------- --------
</TABLE>

F-18
<PAGE> 113

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
*Total income:
Ordinary..................................... $204,749 $185,277 $171,471
Group........................................ 40,801 45,281 48,879
Credit....................................... 89,983 87,619 77,221
Other non-segmented income less
eliminations.............................. 21 (325) (276)
Realized investment gains (losses)........... 420 6,003 2,011
-------- -------- --------
Total income......................... $335,974 $323,855 $299,306
-------- -------- --------
Operating earnings:
*Ordinary -- Total income.................... $204,749 $185,277 $171,471
Less deductions:
Benefits and claims....................... 110,959 103,184 95,637
Taxes, commissions and general expenses... 33,092 29,414 29,027
Amortization of deferred acquisition
costs................................... 25,628 23,744 20,758
-------- -------- --------
Pre-tax operating earnings................ 35,070 28,935 26,049
-------- -------- --------
*Group -- Total income....................... 40,801 45,281 48,879
Less deductions:
Benefits and claims..................... 24,013 25,595 29,094
Taxes, commissions and general
expenses............................. 12,275 12,216 12,462
-------- -------- --------
Pre-tax operating earnings.............. 4,513 7,470 7,323
-------- -------- --------
*Credit -- Total income...................... 89,983 87,619 77,221
Less deductions:
Benefits and claims..................... 13,901 19,802 21,415
Taxes, commissions and general
expenses............................. 72,332 65,078 54,052
-------- -------- --------
Pre-tax operating earnings................ 3,750 2,739 1,754
-------- -------- --------
Other -- Total income..................... 441 5,677 1,735
Less: Total expenses...................... 3,915 3,384 2,198
-------- -------- --------
Total other.......................... (3,474) 2,293 (463)
-------- -------- --------
Earnings before income taxes.............. 39,859 41,437 34,663
Income taxes................................. 12,827 13,362 11,022
-------- -------- --------
Net earnings.............................. $ 27,032 $ 28,075 $ 23,641
======== ======== ========
</TABLE>

- ---------------

* Total income, insurance revenues and operating profits are net of reinsurance.

Total income includes net investment income which is allocated to the
industry segments based on required liabilities for future policy benefits and
policyholders' account balances.

A majority of the Company's assets consists of investments and cash which
are not identified with a specific operation. Accordingly, it is not possible to
separate assets, capital expenditures, and depreciation by industry segment.

(11) STOCKHOLDERS' EQUITY AND NET EARNINGS

The payment of dividends to AHLIC by AHL is subject to the regulation of
the State of Florida Department of Insurance. A dividend may be made without
prior Florida Insurance Commissioner's approval if the dividend is equal to or
less than the greater of: (a) 10% of AHL's surplus as to policyholders derived
from realized net operating profits on its business and net realized capital
gains; or (b) AHL's entire net operating profits and realized net capital gains
derived during the immediately preceding calendar year, if

F-19
<PAGE> 114

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

AHL will have surplus as to policyholders equal to or exceeding 115% of the
minimum required statutory surplus as to policyholders after the dividend is
paid. As a result of such restrictions, the maximum dividend which could be paid
to AHLIC by its insurance subsidiaries during 1997 without prior approval is
$24.8 million.

AHLIC's insurance subsidiaries had statutory net operating earnings of
$20.6 million, $19.0 million and $13.5 million and statutory net earnings of
$22.1 million, $33.9 million and $14.1 million for the years ended December 31,
1996, 1995 and 1994, respectively. Statutory stockholders' equity of such
subsidiaries was $145.0 million at December 31, 1996 and $134.5 million at
December 31, 1995. At December 31, 1996, pursuant to the insurance laws of the
State of Florida, the minimum capital and surplus required to be maintained by
AHL was approximately $45.6 million.

(12) NEW PRONOUNCEMENTS BY THE FINANCIAL ACCOUNTING STANDARDS BOARD

No pronouncements which have been issued by the Financial Accounting
Standards Board have or will have a significant impact on the consolidated
financial statements of the Company.

(13) CONTINGENT LIABILITIES

The Company's insurance subsidiaries, like other insurance companies, are
currently defendants in lawsuits that involve claims for punitive, exemplary or
other extracontractual damages, which are for amounts substantially in excess of
the actual damages sought. Management considers such litigation regrettably to
be of the type to which insurance companies are usually and customarily
subjected in the ordinary course of business, and to date the settlements of
such claims of this nature have not been material to the financial position of
the Company. In the opinion of management, based on the currently ascertained
facts of the pending litigation, which the Company intends to vigorously defend,
the ultimate resolution of such litigation should not be material to the
financial position of the Company.

(14) ACQUISITION

On March 3, 1997, AHL acquired all the outstanding common stock of Columbia
Universal Corporation (Columbia Universal) whose primary operating subsidiary is
Columbia Universal Life Insurance Company for $44.0 million in cash. Columbia
Universal Life Insurance Company is a life insurance company which sells
annuity, supplemental health and individual life insurance products. The
acquisition will be accounted for using the purchase method. At December 31,
1996 Columbia Universal had consolidated assets of $368.5 million and for the
year ended December 31, 1996 premiums and premium equivalents of $36.4 million.

On a pro forma basis at December 31, 1996, including the acquisition of
Columbia Universal, total assets for the Company would have been $1.7 billion
and life insurance volume in force would have been $22.1 billion.

F-20
<PAGE> 115

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1996
------------ ------------
(AMOUNTS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Income:
Insurance revenues........................................ $ 65,048 $ 61,187
Net investment income..................................... 25,223 19,070
Realized investment gains, net............................ 103 105
---------- ----------
Total income...................................... 90,374 80,362
---------- ----------
Benefits, claims and expenses:
Benefits and claims....................................... 41,618 35,929
Underwriting, acquisition and insurance expenses:
Taxes, commissions and general expenses................ 28,687 27,175
Amortization of deferred acquisition costs............. 6,937 6,403
Other operating expenses.................................. 1,582 954
---------- ----------
Total benefits, claims and expenses............... 78,824 70,461
---------- ----------
Earnings before income taxes...................... 11,550 9,901
Income taxes................................................ 3,805 3,172
---------- ----------
Net earnings...................................... $ 7,745 $ 6,729
========== ==========
Net earnings per share of common stock...................... $ .56 $ .49
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-21
<PAGE> 116

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
-----------------------
1997 1996
---------- ----------
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE AND PER
ASSETS SHARE AMOUNTS)
<S> <C> <C>

Investments:
Debt securities, available-for-sale, at fair value (cost
of $812,706 in 1997 and $514,327 in 1996).............. $ 803,415 $ 520,856
Equity securities, available-for-sale, at fair value (cost
of $22,072 in 1997 and $24,141 in 1996)................ 36,202 35,875
Mortgage loans on real estate............................. 60,663 34,440
Investment real estate, at cost........................... 461 386
Policy loans.............................................. 423,078 374,302
Short-term investments.................................... 1,908 9,143
---------- ----------
Total investments................................. 1,325,727 975,002
---------- ----------
Cash...................................................... 17,916 21,328
Agents' balances and prepaid commissions.................. 34,361 38,944
Premiums receivable....................................... 41,320 43,043
Accrued investment income................................. 35,080 29,928
Deferred acquisition costs................................ 210,871 164,977
Property and equipment, at cost, less accumulated
depreciation........................................... 29,724 28,152
Reinsurance receivables................................... 11,445 10,203
Other assets.............................................. 31,646 17,500
---------- ----------
Total assets...................................... $1,738,090 $1,329,077
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy liabilities:
Future policy benefits.................................... $ 266,040 $ 197,654
Policyholders' account balances........................... 950,120 648,187
Unearned premiums......................................... 51,673 53,545
Policy and contract claims................................ 53,855 47,789
---------- ----------
Total policy liabilities.......................... 1,321,688 947,175
Notes payable to banks.................................... 116,019 95,974
Deferred income taxes..................................... 33,729 28,384
Other liabilities......................................... 40,928 40,663
---------- ----------
Total liabilities................................. 1,512,364 1,112,196
---------- ----------
Stockholders' equity:
Common stock of $1 par value. Authorized 35,000,000 shares
in 1997 and 20,000,000 in 1996; issued 13,990,371 in
1997 and 13,961,107 in 1996............................ 13,990 13,961
Additional paid-in capital................................ 43,228 42,632
Retained earnings......................................... 168,582 152,698
Net unrealized investment gains (losses).................. 3,717 10,308
---------- ----------
229,517 219,599
Less cost of 173,128 in 1997 and 126,670 in 1996 common
shares in treasury..................................... 3,791 2,718
---------- ----------
Total stockholders' equity........................ 225,726 216,881
---------- ----------
Total liabilities and shareholders' equity........ $1,738,090 $1,329,077
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-22
<PAGE> 117

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1997 1996
----------- -----------
(AMOUNTS IN THOUSANDS,
EXCEPT SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C>
Common stock:
Balance at beginning of period............................ $ 13,967 $ 13,933
Other shares issued....................................... 23 28
-------- --------
Balance at end of period.................................. 13,990 13,961
-------- --------
Additional paid-in capital:
Balance at beginning of period............................ 42,644 42,215
Excess over par value on shares issued.................... 584 317
Net change on exercise of stock options................... -- 100
-------- --------
Balance at end of period.................................. 43,228 42,632
-------- --------
Retained earnings:
Balance at beginning of period............................ 163,460 148,454
Add net earnings.......................................... 7,745 6,729
-------- --------
171,205 155,183
Deduct cash dividends declared on common stock -- $.19 per
share in 1997 and $.18 per share in 1996............... (2,623) (2,485)
-------- --------
Balance at end of period.................................. 168,582 152,698
-------- --------
Net unrealized investment gains (losses):
Balance at beginning of period............................ 12,158 16,772
Change during the period.................................. (8,441) (6,464)
-------- --------
Balance at end of period.................................. 3,717 10,308
-------- --------
Treasury stock:
Balance at beginning of period............................ 3,287 2,045
Add treasury shares purchased (19,400 shares in 1997 and
29,393 shares in 1996)................................. 504 673
-------- --------
Balance at end of period.................................. 3,791 2,718
-------- --------
Total stockholders' equity........................ $225,726 $216,881
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-23
<PAGE> 118

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1996
--------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Operating activities:
Net earnings.............................................. $ 7,745 $ 6,729
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Change in agents' balances and prepaid commissions..... 1,369 133
Change in premiums receivable.......................... (331) (1,226)
Change in accrued investment income.................... (4,918) (5,654)
Change in reinsurance receivables...................... 1,733 (972)
Amortization of deferred acquisition costs............. 6,937 6,403
Acquisition costs deferred............................. (10,269) (8,196)
Change in future policy benefits....................... (1,685) (7,434)
Change in policyholders' account balances.............. 21,075 12,517
Change in unearned premiums............................ (921) 228
Change in policy and contract claims................... 1,232 (2,586)
Change in income taxes................................. 4,414 2,882
Provision for depreciation and amortization............ 710 791
Change in unearned investment income................... (90) (129)
Other, net............................................. (2,112) 757
-------- --------
Net cash provided by operating activities.............. 24,889 4,243
-------- --------
Investing activities:
Sales of debt securities.................................. 25,180 1,232
Maturities of debt securities............................. 10,975 6,980
Sales (purchases) of short-term investments, net.......... 1,545 13,742
Sales of equity securities................................ 1,533 68
Maturities of mortgage loans on real estate............... 1,005 1,251
Policy loans paid......................................... 2,408 9,540
Acquisition, net of cash acquired......................... (45,266) --
Purchases of debt securities.............................. (33,144) (28,810)
Purchases of equity securities............................ -- (1,411)
Origination of mortgage loans on real estate.............. (5,595) (6,185)
Policy loans made......................................... (7,544) (7,169)
Purchases and additions of property and equipment and
investment real estate................................. (777) (715)
Other, net................................................ (36) 9,618
-------- --------
Net cash used by investing activities..................... (49,716) (1,859)
-------- --------
Financing activities:
Change in notes payable to banks, net..................... 23,590 980
Dividends to stockholders................................. (2,623) (2,486)
Other, net................................................ 104 (232)
-------- --------
Net cash provided (used) by financing activities.......... 21,071 (1,738)
-------- --------
Increase (decrease) in cash................................. (3,756) 646
Cash, beginning of period................................... 21,672 20,682
-------- --------
Cash, end of period......................................... $ 17,916 $ 21,328
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-24
<PAGE> 119

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)

(1) The accompanying consolidated financial statements, which are
unaudited, in the opinion of management, include all adjustments necessary to
present fairly the consolidated results of operations and financial position of
the Company for the periods indicated. However, certain information and note
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. It is suggested
that these consolidated financial statements be read in conjunction with the
consolidated financial statements, schedules and notes thereto included in the
Company's Form 10-K for the year ended December 31, 1996.

(2) The financial statements of the Company's life insurance operations,
primarily the operations of American Heritage Life Insurance Company (AHL) and
Columbia Universal Life Insurance Company (Columbia Universal), have been
included in the consolidated financial statements on the basis of generally
accepted accounting principles.

(3) On March 3, 1997, the Company closed on the acquisition of Columbia
Universal Corporation and its principal subsidiary, Columbia Universal, for
$44.0 million in cash. Columbia Universal markets individual life, annuity and
supplemental health products to selected markets. Amounts for Columbia Universal
are reflected in the Company's March 31, 1997 financial statements.

(4) Earnings per share of common stock were based on the weighted average
number of shares outstanding during each period, excluding treasury shares.
Options outstanding to purchase common stock had no significant dilutive effect
on earnings per share.

(5) Current accrued income taxes were included in other liabilities in the
amount of $2,360,000 at March 31, 1997 and $100,000 at March 31, 1996, in the
accompanying consolidated balance sheets.

(6) The Company's insurance subsidiaries, like other insurance companies,
are currently defendants in lawsuits that involve claims for punitive, exemplary
or other extracontractual damages, which are for amounts substantially in excess
of the actual damages sought. Management considers such litigation regrettably
to be of the type to which insurance companies are usually and customarily
subjected to in the ordinary course of business and to date the settlements of
such claims of this nature have not been material to the financial position of
the Company. In the opinion of management, based on the currently ascertained
facts of the pending litigation, which the Company intends to vigorously defend,
the ultimate resolution of such litigation should not be material to the
financial position of the Company.

F-25
<PAGE> 120

SCHEDULE I

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN RELATED PARTIES
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
AMOUNT AT
WHICH SHOWN
FAIR IN THE
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- ------------------ -------- -------- -------------
<S> <C> <C> <C>
Debt securities available-for sale:
Bonds:
United States Government and government agencies and
authorities.......................................... $170,135 $168,234 $ 168,234
States, municipalities and political subdivisions...... 345 365 365
Public utilities....................................... 51,328 51,454 51,454
Convertibles and bonds with warrants attached.......... 1,295 1,472 1,472
All other corporate.................................... 254,275 265,366 265,366
Redeemable preferred stock................................ 35,522 35,025 35,025
-------- -------- ----------
Total debt securities............................. 512,900 521,916 521,916
-------- -------- ----------
Equity securities available-for-sale:
Common stocks:
Public utilities....................................... 490 989 989
Banks, trust and insurance companies................... 1,429 4,693 4,693
Industrial, miscellaneous and all other................ 19,546 28,838 28,838
-------- -------- ----------
Total equity securities........................... 21,465 $ 34,520 34,520
-------- ======== ----------
Mortgage loans on real estate............................... 53,736 53,736
Real estate................................................. 453 453
Policy loans................................................ 399,608 399,608
Short-term investments...................................... 1,216 1,216
-------- ----------
Total investments................................. $989,378 $1,011,449
======== ==========
</TABLE>

See Footnote 1(c) to the Consolidated Financial Statements on page F-8
which sets forth the accounting policies related to investments.

S-1
<PAGE> 121

SCHEDULE II

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

The following condensed balance sheets of American Heritage Life Investment
Corporation ("Registrant") as of December 31, 1996 and 1995 and its condensed
statements of earnings and cash flows for the years ended December 31, 1996,
1995 and 1994 should be read in conjunction with the notes to consolidated
financial statements included elsewhere in this report. Since the Registrant's
condensed statements of changes in stockholders' equity for the years ended
December 31, 1996, 1995 and 1994 are identical to the consolidated statements of
changes in stockholders' equity included elsewhere in this report, such
statements are not repeated in this schedule.

In the years 1996 and 1994, no dividend was paid to the Registrant by AHL.
On December 27, 1995, a dividend of $13,245,264 related to American Heritage
Life Insurance Company's (AHL's) earnings in 1994, was paid from AHL to the
Registrant.

S-2
<PAGE> 122

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
(REGISTRANT)

CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash........................................................ $ 13,551 $ 46,174
Certificate of deposit...................................... 100,000 100,000
Investment in life insurance subsidiaries, at equity........ 274,516,430 249,370,749
Investment in non-life insurance subsidiaries, at equity.... 4,484,531 4,454,226
Accounts receivable......................................... 5,122,599 11,449,111
Intercompany accounts....................................... 1,752,116 756,600
Other assets................................................ 11,901,626 9,485,563
------------ ------------
$297,890,853 $275,662,423
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable to banks.................................... $ 65,459,000 $ 54,994,000
Other liabilities......................................... 3,488,935 1,339,193
------------ ------------
Total liabilities................................. 68,947,935 56,333,193
------------ ------------
Stockholders' equity:
Common stock of $1.00 par value. Authorized 20,000,000
shares in 1996 and 1995; issued 13,967,253 in 1996 and
13,933,206 in 1995..................................... 13,967,253 13,933,206
Preferred stock:
Convertible of $10.00 par value. Authorized 500,000
shares; none issued.................................. 0 0
Non-convertible of $10.00 par value. Authorized 500,000
shares; none issued.................................. 0 0
Additional paid-in capital................................ 42,644,212 42,214,787
Retained earnings......................................... 163,460,222 148,454,353
Unrealized investment gains (losses)...................... 12,157,809 16,772,078
------------ ------------
232,229,496 221,374,424
Less cost of 153,728 in 1996 and 97,277 in 1995 common
shares in treasury..................................... 3,286,578 2,045,194
------------ ------------
Total stockholders' equity........................ 228,942,918 219,329,230
------------ ------------
$297,890,853 $275,662,423
============ ============
</TABLE>

S-3
<PAGE> 123

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
(REGISTRANT)

CONDENSED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Investment income................................. $ 363,993 $ 62,678 $ 14,120
Other income...................................... 304,200 304,200 307,111
----------- ----------- -----------
Total income.............................. 668,193 366,878 321,231
Operating expenses.................................. 4,225,930 3,719,580 2,429,137
----------- ----------- -----------
Loss before income tax benefits........... (3,557,737) (3,352,702) (2,107,906)
Income tax benefits................................. (1,260,200) (1,203,700) (780,500)
----------- ----------- -----------
Loss before equity in earnings (loss) of
subsidiaries............................ (2,297,537) (2,149,002) (1,327,406)
Equity in net earnings of life insurance
subsidiaries...................................... 29,669,949 30,565,760 25,320,502
Equity in net losses of non-life insurance
subsidiaries...................................... (340,806) (341,372) (352,194)
----------- ----------- -----------
Net earnings.............................. $27,031,606 $28,075,386 $23,640,902
=========== =========== ===========
</TABLE>

S-4
<PAGE> 124

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
(REGISTRANT)

CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Operating activities:
Net earnings................................... $ 27,031,606 $ 28,075,386 $ 23,640,902
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Change in accounts receivable............... 6,326,512 (10,988,112) (138,117)
Change in other assets...................... (2,416,063) 1,247,340 (1,270,691)
Change in other liabilities................. 2,149,742 (915,652) 1,082,606
Equity in net earnings of life insurance
subsidiaries.............................. (29,669,949) (30,565,760) (25,320,502)
Equity in net loss of non-life insurance
subsidiaries.............................. 340,806 341,372 352,194
------------ ------------ ------------
Net cash provided (used) from operating
activities........................... 3,762,654 (12,805,426) (1,653,608)
------------ ------------ ------------
Financing activities:
Dividends from subsidiaries.................... 0 13,245,264 0
Capital contribution to subsidiaries........... (99,000) (120,000) (240,000)
Increase (decrease) in notes payable to
banks....................................... 10,465,000 10,794,000 11,720,000
Change in intercompany accounts................ (995,516) (969,631) (170,635)
Dividends to stockholders...................... (12,387,849) (9,389,613) (10,061,465)
Purchase of treasury stock..................... (1,241,384) (1,118,462) (2,229)
Excess over par value on shares issued......... 317,029 402,718 405,830
Other, net..................................... 146,443 (26,896) 3,321
------------ ------------ ------------
Net cash provided (used) by financing
activities........................... (3,795,277) 12,817,380 1,654,822
------------ ------------ ------------
Increase (decrease) in cash............ (32,623) 11,954 1,214
Cash at beginning of year........................ 46,174 34,220 33,006
------------ ------------ ------------
Cash at end of year.............................. $ 13,551 $ 46,174 $ 34,200
============ ============ ============
</TABLE>

S-5
<PAGE> 125

SCHEDULE III

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
SUPPLEMENTARY INSURANCE INFORMATION
<TABLE>
<CAPTION>

DEFERRED FUTURE POLICYHOLDERS' POLICY AND NET
ACQUISITION POLICY ACCOUNT UNEARNED CONTRACT INSURANCE INVESTMENT
INDUSTRY SEGMENT COSTS BENEFITS BALANCES PREMIUMS CLAIMS REVENUES(C) INCOME(A)
- ---------------------- ------------ ----------- -------------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER
31, 1996
Ordinary............ $173,698,681 261,223,527 924,690,539 5,689,412 12,774,597 137,421,080 67,327,761
Group............... 0 6,501,968 4,354,512 0 29,229,231 35,479,632 5,320,531
Credit.............. 0 0 0 46,904,097 11,819,172 85,618,365 4,365,225
Other............... 0 0 0 0 0 0 21,459
------------ ----------- ----------- ------------ ---------- ----------- ------------
$173,698,681 267,725,495 929,045,051 52,593,509 53,823,000 258,519,077 77,034,976
============ =========== =========== ============ ========== =========== ============
YEAR ENDED DECEMBER
31, 1995
Ordinary............ $158,250,346 195,859,984 629,589,633 3,360,538 9,537,431 123,718,289 61,559,101
Group............... 0 9,227,751 6,080,433 0 31,380,088 39,924,809 5,356,427
Credit.............. 0 0 0 49,956,614 9,457,926 83,608,031 4,011,351
Other............... 0 0 0 0 0 0 (325,514)
------------ ----------- ----------- ------------ ---------- ----------- ------------
$158,250,346 205,087,735 635,670,066 53,317,152 50,375,445 247,251,129 70,601,365
============ =========== =========== ============ ========== =========== ============
YEAR ENDED DECEMBER
31, 1994
Ordinary............ $162,867,773 183,043,220 570,024,695 1,677,180 8,198,767 113,993,333 57,477,827
Group............... 0 9,468,534 6,511,065 0 36,376,975 43,221,583 5,657,542
Credit.............. 0 0 0 49,927,086 8,733,157 73,373,760 3,846,885
Other............... 0 0 0 0 0 0 (275,761)
------------ ----------- ----------- ------------ ---------- ----------- ------------
$162,867,773 192,511,754 576,535,760 51,604,266 53,308,899 230,588,676 66,706,493
============ =========== =========== ============ ========== =========== ============

<CAPTION>
AMORTIZATION TAXES,
BENEFITS OF DEFERRED COMMISSIONS
AND ACQUISITION AND GENERAL
INDUSTRY SEGMENT CLAIMS COSTS EXPENSES(B)
- ---------------------- ----------- ------------ ------------
<S> <C> <C> <C>
YEAR ENDED DECEMBER
31, 1996
Ordinary............ 110,958,680 25,628,001 33,092,274
Group............... 24,013,352 0 12,275,230
Credit.............. 13,901,069 0 72,331,652
Other............... 14,183 0 (285,708)
----------- ---------- -----------
148,887,284 25,628,001 117,413,448
=========== ========== ===========
YEAR ENDED DECEMBER
31, 1995
Ordinary............ 103,183,528 23,744,359 29,414,331
Group............... 25,595,022 0 12,216,464
Credit.............. 19,801,846 0 65,077,894
Other............... 0 0 (309,722)
----------- ---------- -----------
148,580,296 23,744,359 106,398,967
=========== ========== ===========
YEAR ENDED DECEMBER
31, 1994
Ordinary............ 95,637,818 20,757,868 29,026.850
Group............... 29,093,520 0 12,462,165
Credit.............. 21,414,613 0 54,052,460
Other............... 0 0 (215,082)
----------- ---------- -----------
146,145,951 20,757,868 95,326,393
=========== ========== ===========
</TABLE>

- ---------------

(a) Allocated to the industry segment based on required liabilities for future
policy benefits.
(b) Allocated on functional cost basis unless specifically identifiable with
industry segment.
(c) Includes only cost of insurance, expense and surrender charges for
interest-sensitive products. Insurance revenues do not include group and
credit premium equivalents and cash deposits from interest-sensitive
products.

S-6
<PAGE> 126

SCHEDULE IV

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

REINSURANCE
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
CEDED TO ASSUMED PERCENTAGE
GROSS OTHER FROM OTHER NET OF AMOUNT
YEAR ENDED DECEMBER 31, 1996 AMOUNT COMPANIES COMPANIES AMOUNTS ASSUMED TO NET
- ---------------------------- ----------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Life insurance volume in force... $16,798,842 $5,031,374 $5,310,210 $17,077,678 31.1%
=========== ========== ========== =========== ====
Insurance revenues(a):
Ordinary....................... $ 142,397 $ 6,963 $ 1,987 $ 137,421 1.4%
Group.......................... 38,294 6,583 3,769 35,480 10.6%
Credit......................... 183,787 98,169 0 85,618 --%
----------- ---------- ---------- ----------- ----
Total.................. $ 364,478 $ 111,715 $ 5,756 $ 258,519 2.2%
=========== ========== ========== =========== ====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
- ----------------------------
<S> <C> <C> <C> <C> <C>
Life insurance volume in force... $15,016,456 $3,836,741 $3,367,550 $14,547,265 23.1%
=========== ========== ========== =========== ====
Insurance revenues(a):
Ordinary....................... $ 119,182 $ 5,756 $ 10,292 $ 123,718 8.3%
Group.......................... 44,602 6,989 2,312 39,925 5.8%
Credit......................... 168,677 85,081 12 83,608 .1%
----------- ---------- ---------- ----------- ----
Total.................. $ 332,461 $ 97,826 $ 12,616 $ 247,251 5.1%
=========== ========== ========== =========== ====
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
- ----------------------------
<S> <C> <C> <C> <C> <C>
Life insurance volume in force... $13,818,345 $3,284,122 $2,977,321 $13,531,544 22.2%
=========== ========== ========== =========== ====
Insurance revenues(a):
Ordinary....................... $ 120,009 $ 6,016 $ 0 $ 113,993 --%
Group.......................... 51,534 8,502 190 43,222 .4%
Credit......................... 129,880 59,475 2,969 73,374 4.0%
----------- ---------- ---------- ----------- ----
Total.................. $ 301,423 $ 73,993 $ 3,159 $ 230,589 1.4%
=========== ========== ========== =========== ====
</TABLE>

- ---------------

(a) Includes both life and accident and health premiums and commission and
expense allowances on reinsurance ceded.

S-7
<PAGE> 127
======================================================

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL 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 MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY AHLIC, AHL FINANCING OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF AHLIC OR AHL FINANCING SINCE THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 5
Incorporation of Certain Documents by
Reference........................... 5
Prospectus Summary.................... 7
Risk Factors.......................... 20
The Trust............................. 26
Price Range of Common Stock and
Dividends........................... 27
Use of Proceeds....................... 27
Capitalization........................ 28
Accounting Treatment.................. 28
Selected Consolidated Financial
Information......................... 29
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 30
Business.............................. 37
Management............................ 50
Description of the FELINE PRIDES...... 53
Description of the Purchase
Contracts........................... 55
Description of the Common Stock....... 62
Certain Provisions of the Purchase
Contract Agreement and the Pledge
Agreement........................... 63
Description of the Trust Preferred
Securities.......................... 65
Description of the Guarantee.......... 75
Description of the Junior Subordinated
Debentures.......................... 77
Effect of Obligations Under the Junior
Subordinated Debentures and the
Guarantee........................... 84
Certain Federal Income Tax
Consequences........................ 85
ERISA Considerations.................. 89
Underwriting.......................... 91
Legal Matters......................... 92
Experts............................... 93
Index to Consolidated Financial
Statements and Financial Statement
Schedules........................... F-1
</TABLE>

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

1,800,000 FELINE PRIDES(SM)

[AHL LOGO]
AMERICAN HERITAGE
LIFE INVESTMENT
CORPORATION

AHL FINANCING

---------------------
PROSPECTUS
---------------------

MERRILL LYNCH & CO.

GOLDMAN, SACHS & CO.

OPPENHEIMER & CO., INC.

THE ROBINSON-HUMPHREY COMPANY, INC.

, 1997

(SM) Service Mark of Merrill Lynch & Co. Inc.

======================================================
<PAGE> 128

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 62,800
NASD Filing Fee............................................. 21,300
NYSE Listing Fee............................................ 30,000
Printing and Engraving...................................... 100,000
Rating Agency Fee........................................... 38,000
Accounting Fees............................................. 55,000
Legal Fees.................................................. 155,000
Blue Sky Fees............................................... 10,000
Fees of Trustees, Purchase Contract Agent and Collateral
Agent..................................................... 23,000
Miscellaneous............................................... 29,900
--------
Total............................................. $525,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Subsection (1) of Section 607.0850 of the Florida Business Corporation Act
(the "FBCA") empowers a corporation to indemnify any person who was or is a
party to any proceeding (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against liability incurred in connection with such proceeding
(including any appeal thereof) if he or she acted in good faith and in a manner
he or she reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.

Subsection (2) of Section 607.0850 of the FBCA empowers a corporation to
indemnify any person who was or is a party to any proceeding by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth in the preceding paragraph,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expenses of litigating the proceeding
including appeals, provided that the person acted under the standards set forth
in the preceding paragraph. However, no indemnification may be made for any
claim, issue or matter as to which such person is adjudged to be liable unless,
and only to the extent that, the court in which such proceeding was brought, or
any other court of competent jurisdiction, determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses that the court deems proper.

Section 607.0850(3) of the FBCA provides that to the extent a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in the defense of any proceeding referred to in subsections (1) and
(2) of Section 607.0850 or in the defense of any claim, issue or matter therein,
he or she shall be indemnified against expenses actually and reasonably incurred
by him or her in connection therewith.

Subsection (4) provides that any indemnification under subsections (1) and
(2) of Section 607.0850, unless determined by a court, shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances

II-1
<PAGE> 129

because he or she has met the applicable standard of conduct set forth in
subsections (1) and (2) of Section 607.0850. Such determination shall be made:

(a) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;

(b) if such a quorum is not obtainable, or, even if obtainable, by a
majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two
or more directors not at the time parties to the proceeding;

(1) selected by the board of directors as prescribed in paragraph
(a) or a committee selected as prescribed in paragraph (b); or

(2) if no quorum of directors can be obtained under paragraph (a),
and no committee can be designated under paragraph (b), by a majority
vote of the full board of directors (in which directors who are parties
may participate); or

(d) by the shareholders by a majority vote of a quorum of shareholders
who were not parties to such proceedings or if no quorum is obtainable, by
a majority vote of shareholders who were not parties to such proceeding.

Expenses incurred by a director or officer in defending a civil or criminal
proceeding may be paid by the corporation in advance of the final disposition
thereof upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it is ultimately determined that such director
or officer is not entitled to indemnification under Section 607.0850.

Section 607.0850(7) of the FBCA states that indemnification and advancement
of expenses are not exclusive and empowers the corporation to make any other
further indemnification or advancement of expenses of it directors, officers,
employees or agents under any bylaw, agreement vote of shareholders or
disinterested directors or otherwise, for actions in an official capacity and in
other capacities while holding an office. However, a corporation cannot
indemnify or advance expenses if a judgment or other final adjudication
establishes that the actions of the director, officer, employee or agent (a)
violated criminal law, unless the director, officer, employee or agent had
reasonable cause to believe his or her conduct was lawful or had no reasonable
cause to believe his or her conduct was unlawful, (b) derived an improper
personal benefit from such transaction, (c) was or is a director in a
circumstance where the liability under Section 607.0834 of the FBCA (relating to
unlawful distributions) applies, or (d) engages in willful misconduct or
conscious disregard for the best interests of the corporation in a proceeding by
or in right of the corporation to procure a judgment in its favor or in a
proceeding by or in right of a shareholder.

Section 607.0850(9) of the FBCA permits any director, officer, employee or
agent who is or was a party to a proceeding to apply for indemnification or
advancement of expenses to any court of competent jurisdiction. Section
607.0850(12) of the FBCA permits a corporation to purchase and maintain
insurance for a director, officer, employee or agent against any liability
incurred in his or her official capacity or arising out of his or her status as
such regardless of the corporation's power to indemnify him or her against such
liability under this section.

The Company's Articles of Incorporation (the "Articles") provide that the
Company will indemnify the officers and directors of the Company against
expenses actually and necessarily incurred by such person in connection with the
defense of any action, suit or proceeding in which such person is made a party
by reason of being or having been an officer or director of the Company. The
Articles provide, however, that such indemnification provision does not apply in
relation to matters as to which such person shall be adjudged liable for
negligence or misconduct in the performance of duty. The Company's Articles also
provide that the Company may reimburse any officer or director for the
reasonable costs of settlement of any such action, suit, or proceeding if a
majority of a committee composed of the directors of the Company not involved in
the matter or controversy finds that it was in the interest of the Company that
such settlement be made and that such officer or director was not guilty of
negligence or misconduct.

The Company's Bylaws provide specific provisions for indemnification of the
Company's officers and directors and provide further that, in addition to such
indemnification, the Company shall be obligated to

II-2
<PAGE> 130

indemnify the officers and directors of the Company to the fullest extent as is
provided and allowed pursuant to the law of the State of Florida as it shall be
enacted at the time such indemnification is to be made.

The Company maintains directors' and officers' liability insurance which
covers certain liabilities arising from the performance of their
responsibilities as directors and officers.

The Declaration of Trust provides that no Institutional Trustee or any of
its Affiliates, Delaware Trustee or any of its Affiliates, or officer, director,
shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, Affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of the Trust or its Affiliates (each a "Company Indemnified Person") shall
be liable, responsible or accountable in damages or otherwise to such Trust or
any officer, director, shareholder, partner, member, representative, employee or
agent of the Trust or its Affiliates for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Fiduciary Indemnified
Person or Company Indemnified Person in good faith on behalf of such Trust and
in a manner such Fiduciary Indemnified Person or Company Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Fiduciary Indemnified Person or Company Indemnified Person by such Declaration
or by law, except that a Fiduciary Indemnified Person or Company Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of
such Fiduciary Indemnified Person's or Company Indemnified Person's gross
negligence (or, in the case of a Fiduciary Indemnified Person, negligence) or
willful misconduct with respect to such acts or omissions.

The Declaration of Trust also provides that to the full extent permitted by
law, the Company shall indemnify any Company Indemnified Person 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 Trust), by reason
of the fact that he is or was a Company Indemnified Person, against expenses
(including attorneys fees), judgments, fines and any amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Declaration of Trust also provides that to the full
extent permitted by law, the Company shall indemnify any Company Indemnified
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust
to procure a judgment in its favor by reason of the fact that he is or was a
Company Indemnified Person against expenses (including attorneys fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust and except
that no such indemnification shall be made in respect of any claim issue or
matters to which such Company Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonable entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper. The Declaration of Trust further provides that expenses
(including attorneys fees) incurred by a Company Indemnified Person in defending
a civil, criminal, administrative or investigative action, suit or proceeding
referred to in the immediately preceding two sentences shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Company Indemnified
Person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Company as authorized in the Declaration. The
directors and officers of the Company and the Regular Trustees are covered by
insurance policies indemnifying them against certain liabilities, including
certain liabilities arising under the Securities Act of 1933, which might be
incurred by them in such capacities and against which they cannot be indemnified
by the Company or the Trust.

II-3
<PAGE> 131

ITEM 16. EXHIBITS

Exhibits identified in parentheses below are on file with the SEC and are
incorporated by reference to such previous filings.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S> <C>
1 -- Form of Underwriting Agreement with respect to the AHLIC
Income PRIDES.
3(a) -- Amended and Restated Articles of Incorporation of American
Heritage Life Investment Corporation dated April 25, 1996.
Incorporated by reference to Exhibit 3(a) of the Form 8-K,
dated May 8, 1996. (File No. 1-7255).
3(b) -- By-Laws of American Heritage Life Investment Corporation as
amended and restated, dated February 6, 1996. Incorporated
by reference to Exhibit 3 of the Form 8-K, dated February
15, 1996 (File No. 1-7255).
4(a) -- Common Stock Certificate of American Heritage Life
Investment Corporation. Incorporated by reference to Exhibit
4 of the Form 10-K filed by the Registrant for the period
ended December 31, 1994 (File No. 1-7255).
4(b) -- Form of Indenture between the Company and The First National
Bank of Chicago, as Trustee.
4(c) -- Form of Preferred Security.
4(d) -- Form of Junior Subordinated Debenture.
4(e) -- Form of Guarantee Agreement with respect to Trust Preferred
Securities.
4(f) -- Form of Purchase Contract Agreement, between the Company and
The First National Bank of Chicago, as Purchase Contract
Agent (including as Exhibit A the form of Income PRIDES and
as Exhibit B the form of Growth PRIDES).
4(g) -- Form of Pledge Agreement, among the Company, The Chase
Manhattan Bank, as Collateral Agent and The First National
Bank of Chicago, as Purchase Contract Agent.
4(h) -- Certificate of Trust of AHL Financing.
4(i) -- Declaration of Trust of AHL Financing.
4(j) -- Form of Supplemental Indenture to Indenture to be used in
connection with issuance of Junior Subordinated Debentures
related to Income PRIDES.
4(k) -- Form of Amended and Restated Declaration of Trust of AHL
Financing.
5(a) -- Opinion of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company regarding the validity
of certain of the Securities.
5(b) -- Opinion of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company regarding the validity
of certain of the Securities.
8 -- Tax Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
12 -- Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends.
23(a) -- Consent of KPMG Peat Marwick LLP
23(b) -- Consent of Coopers & Lybrand L.L.P.
23(c) -- Consent of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company (included in Exhibits
5(a) and 5(b)).
25(a) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago, as
Trustee under the Indenture.
25(b) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the First National Bank of Chicago, as
Trustee of the Trust Preferred Securities Guarantee of the
Company for the benefit of the holders of Trust Preferred
Securities of AHL Financing.
25(c) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of the First National Bank of Chicago, as
Trustee under the Declaration of Trust of AHL Financing.

</TABLE>

- ---------------

References are to the Company (File No. 1-7255) for documents incorporated by
reference.

II-4
<PAGE> 132

ITEM 17. UNDERTAKINGS

The undersigned Registrants hereby undertake:

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

(i) To include any prospectus required in 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 the Registration Statement;

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

provided, however, that paragraphs (1)(i) and (1)(ii) 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 the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such 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; and

(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.

Insofar as indemnification 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 described under Item 15 above, 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 the 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 its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned Registrants hereby undertake that:

(1) 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 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) 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.

II-5
<PAGE> 133

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Trust
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and that it has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto to duly authorized, in the City of Jacksonville and State of Florida
on June 20, 1997.

AHL FINANCING

By: /s/ T. O'NEAL DOUGLAS
------------------------------------
T. O'Neal Douglas
Trustee

By: /s/ C. RICHARD MOREHEAD
------------------------------------
C. Richard Morehead
Trustee

Pursuant to the requirements of the Securities Act of 1933, the Company
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 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jacksonville, State of Florida, on June 20,
1997.

AMERICAN HERITAGE LIFE INVESTMENT
CORPORATION

By: /s/ T. O'NEAL DOUGLAS
------------------------------------
T. O'Neal Douglas
Chairman of the Board and
Chief Executive Officer

II-6
<PAGE> 134

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities with American Heritage Life Investment Corporation and on the dates
indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ T. O'NEAL DOUGLAS Chairman of the Board, Chief June 20, 1997
- ----------------------------------------------------- Executive Officer and Director
T. O'Neal Douglas (Principal Executive Officer)

/s/ C. RICHARD MOREHEAD Executive Vice President, June 20, 1997
- ----------------------------------------------------- Treasurer and Chief Financial
C. Richard Morehead Officer (Principal Financial
Officer and Principal
Accounting Officer

* Director June 20, 1997
- -----------------------------------------------------
Edward L. Baker

* Director June 20, 1997
- -----------------------------------------------------
A. Dano Davis

* Director June 20, 1997
- -----------------------------------------------------
Robert D. Davis

* Director June 20, 1997
- -----------------------------------------------------
H. Corbin Day

* Director June 20, 1997
- -----------------------------------------------------
Radford D. Lovett

/s/ CHRIS A. VERLANDER President, Chief Operating June 20, 1997
- ----------------------------------------------------- Officer and Director
Chris A. Verlander

* Director June 20, 1997
- -----------------------------------------------------
W. Ashley Verlander

/s/ W. MICHAEL HEEKIN
*By: ------------------------------------------------
(Attorney-in-Fact)

</TABLE>

II-7
<PAGE> 135

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement with respect to the AHLIC
Income PRIDES.*
3(a) -- Amended and Restated Articles of Incorporation of American
Heritage Life Investment Corporation dated April 25, 1996.
Incorporated by reference to Exhibit 3(a) of the Form 8-K,
dated May 8, 1996. (File No. 1-7255).
3(b) -- By-Laws of American Heritage Life Investment Corporation as
amended and restated, dated February 6, 1996. Incorporated
by reference to Exhibit 3 of the Form 8-K, dated February
15, 1996 (File No. 1-7255).
4(a) -- Common Stock Certificate of American Heritage Life
Investment Corporation. Incorporated by reference to Exhibit
4 of the Form 10-K filed by the Registrant for the period
ended December 31, 1994 (File No. 1-7255).
4(b) -- Form of Indenture between the Company and The First National
Bank of Chicago, as Trustee.**
4(c) -- Form of Preferred Security.*
4(d) -- Form of Junior Subordinated Debenture.*
4(e) -- Form of Guarantee Agreement with respect to Trust Preferred
Securities.*
4(f) -- Form of Purchase Contract Agreement, between the Company and
The First National Bank of Chicago, as Purchase Contract
Agent (including as Exhibit A the form of Income PRIDES and
as Exhibit B the form of Growth PRIDES).*
4(g) -- Form of Pledge Agreement, among the Company, The Chase
Manhattan Bank, as Collateral Agent and The First National
Bank of Chicago, as Purchase Contract Agent.*
4(h) -- Certificate of Trust of AHL Financing.*
4(i) -- Declaration of Trust of AHL Financing.*
4(j) -- Form of Supplemental Indenture to Indenture to be used in
connection with issuance of Junior Subordinated Debentures
related to Income PRIDES.**
4(k) -- Form of Amended and Restated Declaration of Trust of AHL
Financing.*
5(a) -- Opinion of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company regarding the validity
of certain of the Securities.*
5(b) -- Opinion of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company regarding the validity
of certain of the Securities.*
8 -- Tax Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
12 -- Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends.*
23(a) -- Consent of KPMG Peat Marwick LLP**
23(b) -- Consent of Coopers & Lybrand L.L.P.**
</TABLE>

II-8
<PAGE> 136

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF DOCUMENT PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
23(c) -- Consent of W. Michael Heekin, Senior Vice President and
Corporate Secretary for the Company (included in Exhibits
5(a) and 5(b)).
25(a) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago as
Trustee under the Indenture.*
25(b) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago as
Trustee of the Trust Preferred Securities Guarantee of the
Company for the benefit of the holders of Trust Preferred
Securities of AHL Financing.*
25(c) -- Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The First National Bank of Chicago as
Trustee under the Declaration of Trust of AHL Financing.*
</TABLE>

- ---------------

* Indicates document previously filed.
** Indicates document filed herewith.

References are to the Company (File No. 1-7255) for documents incorporated
by reference.

II-9

<PAGE> 1

Exhibit 4(b)

- --------------------------------------------------------------------------------

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION,
AS ISSUER

THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE

- --------------------------------------------------------------------------------

Indenture

SUBORDINATED DEBT SECURITIES

DATED AS OF June 23, 1997

- --------------------------------------------------------------------------------
<PAGE> 2

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

RECONCILIATION AND TIE BETWEEN TRUST
INDENTURE ACT OF 1939, AS AMENDED
AND INDENTURE, DATED AS OF June 23, 1997
-------
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
<S> <C> <C>
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)
(d)(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a), 601(c)
(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)
(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502, 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1009
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
- -----------------------
</TABLE>

NOTE: THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THIS INDENTURE.
<PAGE> 3

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bankruptcy Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Security holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Registered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
<PAGE> 4

<TABLE>
<S> <C>
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 114. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE 2

SECURITY FORMS

SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 203. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 204. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 205. Securities in Global Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 206. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 207. Form of Legend for the Securities in Global Form . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 3.

THE SECURITIES

SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 4.

SATISFACTION AND DISCHARGE

SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE 5.

REMEDIES

SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . . . 24

</TABLE>
<PAGE> 5

<TABLE>
<S> <C> <C>
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . 25
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 505. Trustee May Enforce Claims
Without Possession of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . . . . . . 27
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

ARTICLE 6.

THE TRUSTEE

SECTION 601. Certain Duties and Responsibilities of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . . 33
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

ARTICLE 7.

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . . 34
SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE 8.

CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER

SECTION 801. When Company May Merge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 802. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 803. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 9.
SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 902. Supplemental Indentures with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

</TABLE>
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<TABLE>
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SECTION 905. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 10.

COVENANTS

SECTION 1001. Payments of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 1003. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 1004. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 1005. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 1006. Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 1007. Commission Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 1008. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 1009. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 1010. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 1011. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE 11.

REDEMPTION OF SECURITIES

SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

ARTICLE 12.

SINKING FUNDS

SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

ARTICLE 13.

DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 1302. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1303. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1304. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 1305. Deposited Money and Government Obligations
To Be Held In Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE 14.

SUBORDINATION

SECTION 1401. Agreement of Security Holders that Securities
Subordinated to Extent Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

</TABLE>
<PAGE> 7

<TABLE>
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SECTION 1402. Company not to Make Payments with Respect
to Securities in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 1403. Securities Subordinated to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization
of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 1404. Security Holders to be Subrogated to Right of Holders
of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 1405. Obligation of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 1406. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1407. Application by Trustee of Monies Deposited With It . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1408. Subordination Rights not Impaired by Acts or Omissions of
Company or Holders of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1409. Security Holders Authorize Trustee to Effectuate
Subordination of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1410. Right of Trustee to Hold Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1411. Article Fourteen Not to Prevent Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE 15.

MISCELLANEOUS

SECTION 1501. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

</TABLE>
<PAGE> 8

Indenture, dated as of June 23,1997, between AMERICAN HERITAGE LIFE
INVESTMENT CORPORATION, a corporation duly organized and existing under the
laws of the State of Florida (herein called the "Company "), having its
principal office at 1776 American Heritage Life Drive, Jacksonville, Florida,
32224 and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association,
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 unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture
provided.

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
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:

ARTICLE 1

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, 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 GAAP;

(4) the word "Including" (and with the correlative meaning
"Include") means including, without limiting the generality of, any description
preceding such term; 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.

Certain terms, used principally in Article Six, are defined in that
Article.

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

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
<PAGE> 9

"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

"Board of Directors" means the board of directors of the Company;
provided, however, that when the context refers to actions or resolutions of
the Board of Directors, then the term "Board of Directors" shall also mean any
duly authorized committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to exercise the power
of the Board of Directors of the Company.

"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law or regulation to close.

"Capitalized Lease Obligation" means an obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligation shall
be the capitalized amount of such obligation determined ln accordance with
such principles.

"Capital Stock" of any Person shall mean any and all shares,
interests, participations or other equivalents of or interests in (however
designated) equity of such Person, including any preferred stock, but excluding
any debt securities convertible into such equity.

"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 Depositary" has the meaning specified in Section 304.

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

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.

"Corporate Trust Office" means the office of the Trustee in Chicago,
Illinois at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at One
First National Plaza, Mail Suite 0126, Chicago, Illinois 60670-0126.

"Covenant Defeasance" has the meaning specified in Section 1303.

"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.

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

"Defeasance" has the meaning specified in Section 1302.

"Dollars" and "$" means lawful money of the United States of America.

"Event of Default" has the meaning specified in Section 501.

2
<PAGE> 10

"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated
thereunder.

"GAAP" means such accounting principles that are generally accepted in
the United States of America as of the date of any computation required
hereunder.

"Holder" or "Security holder" means a Person in whose name a Security
if registered in the Security Register.

"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable; (ii) all Capitalized Lease Obligations of such Person;
(iii) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations under
any title retention agreement (but excluding trade accounts payable arising in
the ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) all obligations of the type referred to
in clauses (i) through (iv) of other Persons and all dividends of other Persons
for the payment of which, in either case, such Person is responsible or liable
as obligor, guarantor or otherwise; and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured by any Lien on
any property or asset of such Person (whether or not such obligation is assumed
by such Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.

"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
and shall include the terms of particular series of Securities established as
contemplated by Section 301.

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

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

"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).

"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment 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.

"Officer" means the Chairman of the Board, the Vice Chairman of the
Board, the President, the Executive Vice President, any Vice President, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of the Company.

"Officer's Certificate" means a certificate signed by an Officer and delivered
to the Trustee.

"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.

3
<PAGE> 11

"Original Issue Discount Security" means any Security 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 Section 502.

"Outstanding," when used with respect to Securities or Securities of
any series, means, as of the date of determination, all such Securities
theretofore authenticated and delivered under this Indenture, except: (i)
Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation; (ii) Securities, or portions thereof, 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 Securities; provided that, if such
Securities 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) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser in
whose hands such Securities are valid obligations of the Company; and (iv)
Securities which have been defeased pursuant to Section 1302; provided,
however, that in determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding for such purposes shall be that portion of the principal amount
thereof that could be declared to be due and payable upon the occurrence of an
Event of Default and the continuation thereof pursuant to the terms of such
Original Issue Discount Security as of the date of such determination and (b)
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate 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 Securities which the Trustee knows
to be so owned shall be so disregarded. Securities 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 Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company. The Company may act as Paying Agent with respect to any Securities
issued hereunder.

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

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

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

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

"Registered Security" means any Security issued hereunder and
registered in the Security Register.

"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities 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
any officer of the Trustee in its Corporate Trust Office and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.

4
<PAGE> 12

"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and
delivered under this Indenture.

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

"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of this
Indenture or thereafter incurred or created: (i) indebtedness of the Company
for money borrowed by the Company (including purchase money obligations with an
original maturity in excess of one year) or evidenced by debentures (other than
the Securities), notes, bankers' acceptances or other corporate debt securities
or similar instruments issued by the Company; (ii) obligations with respect to
letters of credit; (iii) indebtedness of the Company constituting a guarantee
of indebtedness of others of the type referred to in the preceding clauses (i)
and (ii); or (iv) renewals, extensions or refundings of any of the indebtedness
referred to in the preceding clauses (i), (ii) and (iii) unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same, or pursuant to
which the same is outstanding, such indebtedness or such renewal, extension or
refunding thereof is not superior in right of payment to the Securities.

"Significant Subsidiary" means a Subsidiary or Subsidiaries of the
Company possessing assets (including the assets of its own Subsidiaries but
without regard to the Company or any other Subsidiary) having a book value, in
the aggregate, equal to not less than 10% of the book value of the aggregate
assets of the Company and its Subsidiaries calculated on a consolidated basis.

"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 Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.

"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall
mean a Subsidiary of the Company.

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

"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 Securities of any series shall mean the Trustee with respect to
Securities of that series.

"U.S. Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more permanent
global Securities, the Person designated as U.S. Depositary by the Company
pursuant to Section 301, which must be a clearing agency registered under the
Exchange Act until a successor U.S. Depositary shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "U.S.
Depositary" shall mean or include each Person who is then a U.S. Depositary
hereunder, and if at any time there is more than one such Person, "U.S.
Depositary" shall mean the U.S. Depositary with respect to the Securities of
that series.

"U.S. Government Obligations" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or

5
<PAGE> 13

supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed by the
full faith and credit of the United States of America which, in either case,
are not callable or redeemable at the option of the issuer thereof or otherwise
subject to prepayment, and shall also include a depository receipt issued by a
New York Clearing House bank or trust company as custodian with respect to any
such U.S. Government Obligation or a specific payment or interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, 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 depository receipt or from any amount
held by the custodian in respect of the U.S. Government Obligation or the
specific payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.

"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".

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, other than an action
permitted by Sections 205 and 704 hereof, the Company shall furnish to the
Trustee an Officer's Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate
or opinion need be furnished.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

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

(b) 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;

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

(d) 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 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 his 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.

6
<PAGE> 14

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.

(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided 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 agents 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 the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his 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.

(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security 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 Security.

(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act, but the Company shall have no obligation to do so. If such a record date
is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or
other Act, and for that purpose the Outstanding Securities shall be computed as
of such record date; provided that no such authorization, agreement or consent
by the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.

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,

(a) 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 and received by the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Administration, or

(b) 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

7
<PAGE> 15

to it at the address of its principal office specified in the first paragraph of
this Indenture, attention: Secretary, or at any other address previously
furnished in writing to the Trustee by the Company.

SECTION 106. NOTICE TO HOLDERS; WAIVER.

Where this Indenture or any Security provides for notice to Holders of
any event, such notice shall be deemed sufficiently given (unless otherwise
herein or in such Security expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. 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 or the validity of the proceedings to which such notice relates.
Where this Indenture or any Security 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.

Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.

SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.

If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required 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 shall 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 Securities 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 Securities, 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.

8
<PAGE> 16

SECTION 112. GOVERNING LAW.

This Indenture and the Securities shall be governed by and construed in
accordance with the laws (other than the choice of law provisions) of the State
of New York.

SECTION 113. LEGAL HOLIDAYS.

In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day or on such other day as may be set out in the Officer's
Certificate pursuant to Section 301 at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.

SECTION 114. NO RECOURSE AGAINST OTHERS.

A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Security holder, by accepting
a Security, waives and releases all such liability. Such waivers and releases
are part of the consideration for the issuance of the Securities.

ARTICLE 2

SECURITY FORMS

SECTION 201. FORMS GENERALLY.

The Securities 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, consistently herewith, be determined by the
Officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities 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 Secretary or an Assistant 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
Securities.

The Trustee's certificates of authentication shall be in substantially
the form set forth in this Article.

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

SECTION 202. FORM OF FACE OF SECURITY.

(If the Security is an Original Issue Discount Security, insert --FOR
PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), THE AMOUNT OF ORIGINAL ISSUE DISCOUNT (AS DEFINED IN SECTION 1273(a)
(1) OF THE CODE AND TREASURY REGULATION SECTION 1.1273-l(a)) WITH RESPECT TO
THIS SECURITY IS ________, THE ISSUE PRICE (AS DEFINED IN TREASURY REGULATION
SECTION 1.1273-2) OF THIS SECURITY IS __________,THE ISSUE DATE (AS DEFINED IN
SECTION 1275(a)(2) OF THE CODE AND TREASURY REGULATION SECTION 1.1273-2) OF THIS
SECURITY IS __________ AND THE YIELD TO MATURITY OF THIS SECURITY IS _________).

<PAGE> 17

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
........................

No. ________ ($)________

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION, a corporation duly
organized and existing under the laws of Florida (herein called the "Company,"
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to _______________, or
registered assigns, the principal sum of $____________ on ____________. (If the
Security is to bear interest prior to Maturity, insert --, and to pay interest
thereon from _______________ or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, (semi-annually) (quarterly)
(monthly) on _______________ and in each year, commencing
______________________, at the rate of _____% per annum, until the principal
hereof is paid or made available for payment (If applicable insert--, 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 installment 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 Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the _______________ of
_______________ (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) 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 Securities
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 Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture.)

(If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of _____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of _____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.)

Payment of the principal of (and premium, if any) and (if applicable,
insert--any such) interest on this Security will be made at the office or agency
of the Company maintained for that purpose in ________________, in Dollars (if
applicable, insert--; 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 Security Register).

Reference is hereby made to the further provisions of this Security 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 Security
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.

AMERICAN HERITAGE LIFE
INVESTMENT CORPORATION

<PAGE> 18

By:
----------------------------------
Attest:

- -------------------------------

(SEAL)

SECTION 203. FORM OF REVERSE OF SECURITY.

This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of June 23, 1997 (herein called the
"Indenture"), between the Company and 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 Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof
(limited in aggregate principal amount to $ ________).

(If applicable, insert--The Securities of this series are subject to redemption
upon not less than 30 nor more than 45 days' notice by first class mail, (if
applicable, insert--(1) on _______________ in any year commencing with the year
____________ and ending with the year _______________ through operation of the
sinking fund for this series at a Redemption Price equal to 100% of the
principal amount, and (2)) at any time (on or after _______________, ), as a
whole or in part, at the election of the Company, at the following Redemption
Prices (expressed as percentages of the principal amount):

If redeemed (on or before ______________________, _______%, and if
redeemed) during the 12-month period beginning ______________ of the years
indicated,

Year Redemption Price Year Redemption Price

and thereafter at a Redemption Price equal to _______ of the principal amount,
together in the case of any such redemption (if applicable, insert -- (whether
through operation of the sinking fund or otherwise)) with accrued and unpaid
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.)

(If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 45 days' notice by first class
mail, (1) on _______________ in any year commencing with the year ____________
and ending with the year _______________ through operation of the sinking fund
for this series at the Redemption Prices for redemption through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below, and (2) at any time (on or after ____________), as a whole or in
part, at the election of the Company, at the Redemption Prices for redemption
otherwise than through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below:

If redeemed during a 12-month period beginning _____________________
of the years indicated,

<PAGE> 19

Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund

and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued and unpaid interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.)

(Notwithstanding the foregoing, the Company may not, prior to
__________ redeem any Securities of this series as contemplated by (clause (2)
of) the preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed having
an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than ____% per annum.)

(The sinking fund for this series provides for the redemption on
____________ in each year beginning with the year _____ and ending with the year
_____ of (not less than) $______ (("mandatory sinking fund") and not more than
$________ aggregate principal amount of Securities of this series.) (Securities
of this series acquired or redeemed by the Company otherwise than through
(mandatory) sinking fund payments may be credited against subsequent (mandatory)
sinking fund payments otherwise required to be made--in the (inverse) order in
which they become due.)

(In the event of redemption of this Security in part only a new
Security or Securities of this series for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.)

(If the Security is not an Original Issue Discount Security, insert --
If any Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.) (If the Security is an Original Issue Discount Security, insert --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal -- insert formula for determining the
amount.) Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.

This Security is a general unsecured obligation of the Company and will
be subordinate in right of payment to all existing and future Senior
Indebtedness of the Company.

This Security is subject to Defeasance as described in the Indenture.

The Indenture may be modified by the Company and the Trustee without
consent of any Holder with respect to certain matters as described in the
Indenture. In addition, 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 Securities 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 a majority in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities 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. Any such consent or waiver by the
Holder of this Security shall bind such

<PAGE> 20

Holder and all future Holders of this Security and of any Security 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 Security.

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.

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

The Securities of this series are issuable only in registered form
without coupons in denominations of ($1,000) and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series 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 Security 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 Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

The Indenture imposes certain covenants and limitations on the
Company. All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report periodically
to the Trustee on compliance with the covenants in the Indenture.

A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this
Security or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder, by accepting a Security,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Security.

(If applicable, insert -- Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures ("CUSIP"), the
Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of the Securities of this series. No
representation is made as to the correctness or accuracy of such numbers as
printed on the Securities of this series and reliance may be placed only on the
other identification numbers printed hereon.)

All capitalized terms used in this Security without definition which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.

<PAGE> 21

ASSIGNMENT FORM

To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to

- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. number)

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)

and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

Dated:___________ Your Signature:_____________________________________________
(Sign exactly as your name
appears on the other side
of this Security)

Signature Guaranty:_________________________________________________
(Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Transfer Agent, which requirements will
include membership or participation in STAMP or
such other "signature guarantee program" as may be
determined by the Transfer Agent in addition to,
or in substitution for, STAMP all in accordance
with the Exchange Act.)

Social Security Number or Taxpayer Identification Number:_______________________

SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.

Dated:____________________

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

The First National Bank of Chicago

as Trustee

By:
-------------------------------------
Authorized Signatory

SECTION 205. SECURITIES IN GLOBAL FORM.

If Securities of a series are issuable in global form, as contemplated
by Section 301, then, notwithstanding the provisions of Section 302, any such
Security shall represent such of the Outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities from

<PAGE> 22

time to time endorsed thereon and that the aggregate amount of Outstanding
Securities represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a Security in qlobal form to reflect the amount,
or any increase or decrease in the amount, of Outstanding Securities represented
thereby shall be made in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in the Company Order to be delivered
to the Trustee pursuant to Section 303 or Section 304. Subject to the provisions
of Section 303 and, if applicable, Section 304, the Trustee shall deliver and
redeliver any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.

The provisions of Section 309 shall apply to any Security represented
by a Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby.

Notwithstanding the provisions of Sections 201 and 307, unless
otherwise specified as contemplated by Section 301, payment of principal of,
premium, if any, and interest on any Security in permanent global form shall be
made to the Person or Persons specified therein.

Notwithstanding the provisions of Section 308 and except as provided in
the preceding paragraph, the Company, the Trustee and any agent of the Company
and the Trustee shall treat a Person as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security as shall be
specified in a written statement of the Holder of such permanent global
Security.

SECTION 206. CUSIP NUMBER.

The Company in issuing Securities of any series may use a "CUSIP"
number, and, if so, the Trustee may use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed on the notice or on the
Securities of such series, and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP number of any series of
Securities.

SECTION 207. FORM OF LEGEND FOR THE SECURITIES IN GLOBAL FORM.

Any Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form:

"This Security is in global form within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Common Depositary or
a U.S. Depositary. Unless and until it is exchanged in whole or in part for
Securities in certificated form, this Security may not be transferred except as
a whole by the Common Depositary or a U.S. Depositary or by a nominee of the
Common Depositary or a nominee of the U.S. Depositary as the case may be."

ARTICLE 3.

THE SECURITIES

SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.

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

<PAGE> 23

The Securities may be issued from time to time in one or more series.
There shall be established in or pursuant to a Board Resolution, and set forth
in an Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:

(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);

(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Sections 304, 305, 306, 906 or 1107);

(3) whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, (i) whether beneficial
owners of interests in any such permanent global security may exchange such
interests for Securities of such series and of like tenor of any authorized form
and denomination and the circumstances under which any such exchanges may occur,
if other than in the manner provided in Section 305, and (ii) the name of the
Common Depositary (as defined in Section 304) or the U.S. Depositary, as the
case may be, with respect to any global security;

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

(5) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment Date and, if
applicable to such series of Securities, the basis points and United States
Treasury rate(s) and any other rates to be used in calculating the reset rate;

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

(7) the right of the Company, if any, to defer any payment of
principal of or interest on the Securities of the series, and the maximum length
of any such deferral period;

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

(9) the obligation, if any, of the Company to redeem or purchase
Securities 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 Securities of
the series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and, where applicable, the obligation of the Company to select the
Securities to be redeemed;

(10) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the series shall be
issuable;

(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;

(12) additional Events of Default with respect to Securities of the
series, if any, other than those set forth herein;

(13) if either or both of Section 1302 and Section 1303 shall be
inapplicable to the Securities of the series (provided that if no such
inapplicability shall be specified, then both Section 1302 and Section 1303
shall be applicable to the Securities of the series);

<PAGE> 24

(14) if other than U.S. dollars, the currency or currencies or units
based on or related to currencies in which the Securities of such series shall
be denominated and in which payments or principal of, and any premium and
interest on, such Securities shall or may by payable;

(15) additional covenants with respect to Securities of the series, if
any, other than those set forth herein;

(16) if other than the Trustee, the identity of the Registrar and any
Paying Agent; and

(17) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).

All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officer's Certificate 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 an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officer's
Certificate setting forth, or providing the manner for determining, the terms of
the Securities of such series.

SECTION 302. DENOMINATIONS.

The Securities 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
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.

SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.

The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities 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 Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any security that
has been duly authenticated and delivered by the Trustee.

Securities 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 Securities or did not
hold such offices at the date of such Securities.

At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and make such Securities available for
delivery. If the form or terms of the Securities 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 Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Sections 315(a)
through (d) of the Trust Indenture Act) shall be fully protected in relying
upon, an Opinion of Counsel stating,

(a) if the form of such Securities 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 Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms have
been established in conformity wit the provisions of this Indenture;

17
<PAGE> 25

(c) that such Securities, 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, except
to the extent enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law); and

(d) that no consent, approval, authorization, order, registration or
qualification of or with any court or any governmental agency or body having
jurisdiction over the Company is required for the execution and delivery of such
Securities by the Company, except such as have been obtained (except that no
opinion need be expressed as to state securities or Blue Sky laws).

If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee, or in the written opinion of
counsel to the Trustee (which counsel may be an employee of the Trustee) such
authentication may not lawfully be made or would involve the Trustee in personal
liability.

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

If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in the form of one or more global
Securities, then the Company shall execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to the authentication and
delivery of such series, authenticate and deliver one or more global Securities
that (i) shall be in an aggregate amount equal to the aggregate principal amount
specified in such Company Order, (ii) shall be registered in the name of the
Common Depositary or U.S. Depositary, as the case may be, therefor or its
nominee, and (iii) shall be made available for delivery by the Trustee to such
depositary or pursuant to such depositary's instruction.

Each depositary designated pursuant to Section 301 must, at the time of
its designation and at all times while it serves as depositary, be a clearing
agency registered under the Exchange Act and any other applicable statute or
regulation.

Unless otherwise provided for in the form of security, each security
shall be dated the date of its authentication.

No security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
security shall be conclusive evidence, and the only evidence, that such security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.

SECTION 304. TEMPORARY SECURITIES.

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

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<PAGE> 26

In the case of Securities of any series, such temporary Securities may
be in global form, representing all or a portion of the Outstanding Securities
of such series.

Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with the provisions of Section 305), if temporary
Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities 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 Securities of any
series, the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor. Until so exchanged, the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.

If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided therein, be
delivered to the office of a depositary or common depositary (the "COMMON
DEPOSITARY") for credit to the respective accounts of the beneficial owners of
such Securities (or to such other accounts as they may direct).

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 "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of registration of transfers of Securities. The
Trustee is hereby appointed "Security Register" for the purpose of registering
Securities and transfers of Securities as herein provided.

Upon surrender for registration of transfer of any security of any
series at the office or agency of the Company in Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and Stated Maturity.

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

Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global security shall be exchangeable
only as provided in this paragraph. If the beneficial owners of interests in a
permanent global security are entitled to exchange such interests for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified and as subject to the conditions contemplated by
Section 301, then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company shall
deliver to the Trustee definitive Securities of that series in aggregate
principal amount equal to the principal amount of such permanent global
security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent global Securities shall be
surrendered from time to time by the Common Depositary or the U.S. Depositary,
as the case may be, and in accordance with instructions given to the Trustee and
the Common Depositary or the U.S. Depositary, as the case may be (which
instructions shall be in writing but need not comply with Section 102 or be
accompanied by an Opinion of Counsel), as shall be specified in the Company
Order with respect thereto to the Trustee, as the Company's agent for such
purpose, to be exchanged, in whole or in part, for definitive Securities of the
same series without charge. The Trustee shall authenticate and make available
for delivery, in exchange for each portion of such surrendered permanent global
security, a like aggregate principal amount of definitive Securities of the same
series of authorized denominations and of like tenor as the portion of such
permanent global security to be exchanged which

19
<PAGE> 27

shall be in the form of the Securities of such series; provided, however, that
no such exchanges may occur during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Securities of
that series selected for redemption under Section 1103 and ending at the close
of business on the day of such mailing. Promptly following any such exchange in
part, such permanent global Security shall be returned by the Trustee to the
Common Depositary or the U.S. Depositary, as the case may be, or such other
Common Depositary or U.S. Depositary referred to above in accordance with the
written instructions of the Company referred to above. If a Security in the form
specified for such series is issued in exchange for any portion of a permanent
global Security after the close of business at the office or agency where such
exchange occurs on (i) any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or (ii)
any Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, such interest or Defaulted Interest will not be
payable on such Interest Payment Date or proposed date for payment, as the case
may be, in respect of such security in the form specified for such series, but
will be payable on such Interest Payment Date or proposed date for payment, as
the case may be, only to the Person to whom interest in respect of such portion
of such permanent global Security is payable in accordance with the provisions
of this Indenture.

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

Every Security presented or surrendered for registration of transfer or
for exchange 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 Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

Unless otherwise provided in the Securities to be transferred or
exchanged, no service charge shall be made for any registration of transfer or
exchange of Securities, but the Company 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 Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.

The Company shall not be required (i) to issue, register the transfer
of or exchange Securities 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
Securities 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 security so selected for redemption in whole or in
part, except the unredeemed portion of any security being redeemed in part.

SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.

If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such Security or indemnity as may be required by 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 Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security 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 Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company
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.

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<PAGE> 28

Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security 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 Securities 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 Securities.

SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

Interest on any Security 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 Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.

Any interest on any Security 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 Securities of such series (or their respective
Predecessor Securities) 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 Security 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 Section
307 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
10 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
Securities of such series at his address as it appears in the security
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 Securities of such series (or their respective
Predecessor Securities) 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
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities 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 Section
307, such manner of payment shall be deemed practicable by the Trustee.

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

SECTION 308. PERSONS DEEMED OWNERS.

Prior to due presentment of a Security 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 Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security 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.

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None of the Company, the Trustee or any agent of the Company or the
Trustee shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interest of a
Security in global form, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interest. Notwithstanding the
foregoing, with respect to any Security in global form, nothing herein shall
prevent the Company or the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by any Common Depositary (or its nominee), as a Holder, with respect
to such Security in global form or impair, as between such Common Depositary and
owners of beneficial interests in such Security in global form, the operation of
customary practices governing the exercise of the right of such Common
Depositary (or its nominee) as holder of such Security in global form.

SECTION 309. CANCELLATION.

All Securities 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 Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities shall be held by the Trustee and may
be destroyed (and, if so destroyed, certification of their destruction shall be
delivered to the Company, unless, by a Company Order, the Company shall direct
that cancelled Securities be returned to it).

SECTION 310. COMPUTATION OF INTEREST.

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

ARTICLE 4.

SATISFACTION AND DISCHARGE

SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.

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

(1) either

(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities 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 1009) have been delivered to the Trustee
for cancellation; or

(B) all such Securities 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,

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and the Company, in the case of (i), (ii) or (iii) above, has deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or 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 Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for herein relating to the satisfaction and discharge of this Indenture have
been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company 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 1009 shall survive.

SECTION 402. APPLICATION OF TRUST MONEY.

Subject to the provisions of the last paragraph of Section 1009, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities 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 premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.

ARTICLE 5.

REMEDIES

SECTION 501. EVENTS OF DEFAULT.

"EVENT OF DEFAULT," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or to be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

(1) the Company defaults in the payment of interest on any Security of
that series when such interest becomes due and payable and the default continues
for a period of 30 days; provided, however, that if the Company is permitted by
the terms of the Securities of the applicable series to defer the payment in
question, the date on which such payment is due and payable shall be the date on
which the Company is required to make payment following such deferral, if such
deferral has been elected pursuant to the terms of the Securities; or

(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any Security of that series when the same becomes due and
payable at Maturity, upon redemption (including redemptions under Article 11),
or otherwise; provided, however, that if the Company is permitted by the terms
of the Securities of the applicable series to defer the payment in question, the
date on which such payment is due and payable shall be the date on which the
Company is required to make payment following such deferral, if such deferral
has been elected pursuant to the terms of the Securities; or

(3) the Company fails to observe or perform any of its other covenants,
warranties or agreements in the Securities of that series or this Indenture
(other than a covenant, agreement or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of series of
Securities other than that series), and the failure to observe or perform
continues for the period and after the notice specified in the last paragraph of
this Section; or

(4) any Event of Default under any series of Securities issued pursuant
to this Indenture or any event of default, as defined in any other Indenture,
mortgage, indenture, or instrument under which there may be issued, or

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by which there may be secured or evidenced, any Indebtedness of the Company or a
Subsidiary (whether such Indebtedness now exists or shall hereafter be created
or incurred) shall occur and shall consist of default in the payment of such
Indebtedness at the maturity thereof (after giving effect to any applicable
grace period) or shall result in Indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable,
and such default in payment is not cured or such acceleration shall not be
rescinded or annulled within 10 days after written notice to the Company from
the Trustee or to the Company and to the Trustee from the Holders of at least
10% in aggregate principal amount of the Securities of that series at the time
outstanding; provided that it shall not be an Event of Default if the principal
amount of Indebtedness (other than Indebtedness represented by Securities issued
pursuant to this Indenture) which is not paid at maturity or the maturity of
which is accelerated is less than the amount equal to 1% of the Company's
consolidated total assets (determined as of its most recent fiscal year-end)
provided further that if, prior to a declaration of acceleration of the maturity
of the Securities of that series or the entry of judgment in favor of the
Trustee in a suit pursuant to Section 503, such default shall be remedied or
cured by the Company or waived by the holders of such Indebtedness, then the
Event of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon the part of
either the Trustee or any of the Holders of the Securities of that series, and
provided further, that, subject to Sections 601 and 602, the Trustee shall not
be charged with knowledge of any such default unless written notice of such
default shall have been given to the Trustee by the Company, by a holder or an
agent of a holder of any such Indebtedness, by the trustee then acting under any
indenture or other instrument under which such default shall have occurred, or
by the Holders of at least five percent in aggregate principal amount of the
Securities of that series at the time outstanding; or

(5) the Company pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to or acquiesces in the institution of bankruptcy or insolvency
proceedings against it, (D) applies for, consents to or acquiesces in the
appointment of or taking possession by a Custodian of the Company or for any
material part of its property, (E) makes a general assignment for the benefit of
its creditors or (F) takes any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or

(6) (i) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company in an involuntary case or proceeding
under any Bankruptcy Law which shall (A) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in respect of the
Company, (B) appoint a Custodian of the Company or for any material part of its
property, or (C) order the winding-up or liquidation of its affairs, and such
judgment, decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (ii) any bankruptcy or insolvency petition or application
is filed, or any bankruptcy or insolvency proceeding is commenced against the
Company and such petition, application or proceeding is not dismissed within 60
days; or (iii) a warrant of attachment is issued against any material portion of
the property of the Company which is not released within 60 days of service; or

(7) any other Event of Default provided with respect to Securities of
that series.

A Default under clause (3) above is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series notify the Company of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default." When a Default under clause (3) above is
cured within such 60-day period, it ceases.

SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

If an Event of Default with respect to Securities of any series (other
than an Event of Default specified in clause (5) or (6) of Section 501) occurs
and is continuing, the Trustee by notice in writing to the Company, or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series by notice in writing to the Company and the Trustee,
may declare the unpaid principal of and accrued interest to the date of
acceleration (or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) on all the Outstanding Securities of that series to be due
and payable

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immediately and, upon any such declaration, the Outstanding Securities of that
series (or specified principal amount) shall become and be immediately due and
payable.

If an Event of Default specified in clause (5) or (6) of Section 501
occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or specified principal amount) shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder of any Security of that series.

Upon payment of all such principal and interest, all of the Company's
obligations under the Securities of that series and (upon payment of the
Securities of all series) this Indenture shall terminate, except obligations
under Section 607.

The Holders of a majority in principal amount of the Outstanding
Securities of that series by notice to the Trustee may rescind an acceleration
and its consequences if (i) all existing Events of Default, other than the
nonpayment of the principal and interest of the Securities of that series that
has become due solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal that has become due
otherwise than by such declaration of acceleration have been paid, (iii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 607 have been made.

SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.

The Company covenants that if:

(1) default is made in the payment of any interest on any Security of
any series when such interest becomes due and payable 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 Security of any series at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.

If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.

If an Event of Default with respect to Securities of any 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 Securities 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 secure any other proper remedy.

SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.

In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or

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<PAGE> 33

otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,

(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel) and of the Holders allowed in such judicial proceedings, and

(ii) 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 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, 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.

Nothing herein contained 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 Securities
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.

SECTION 505. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF SECURITIES.

All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities 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, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION 506. APPLICATION OF MONEY COLLECTED.

Any money collected by the Trustee pursuant to this Article in respect
of the Securities of any series 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 premium, if any) or interest, upon
presentation of the Securities in respect of which moneys have been collected
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
applicable to such series;

Second: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Securities of such series 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 Securities of such series for principal (and premium, if
any) and interest, respectively; and

Third: To the Company.

The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least fifteen (15) days before such
record date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.

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SECTION 507. LIMITATION ON SUITS.

No Holder of any Security of any 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 Securities of that series;

(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities 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 reasonable
indemnity 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 Securities of that series;

it being understood and intended that no one or more of Holders of Securities of
any series 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 Holders of Securities of the affected series.

SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.

Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the Stated Maturity or Maturities
expressed in such Security (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 509. 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 has been instituted.

SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.

Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities 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 ln 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.

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SECTION 511. DELAY OR OMISSION NOT WAIVER.

No delay or omission of the Trustee or of any Holder of any Securities
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. 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 512. CONTROL BY HOLDERS.

The Holders of a majority in principal amount of the Outstanding
Securities of any 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
Securities of such series, provided that:

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

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

(3) subject to Section 601, the Trustee need not take any action which
might involve the Trustee in personal liability or be unduly prejudicial to the
Holders not joining therein.

SECTION 513. WAIVER OF PAST DEFAULTS.

The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may by written notice to the Trustee on
behalf of the Holders of all the Securities of such series waive any Default or
Event of Default with respect to such series and its consequences, except a
Default or Event of Default

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

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

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

SECTION 514. UNDERTAKING FOR COSTS.

All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities of any series, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of (or premium,
if any) or interest on any Security on or after the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on or
after the Redemption Date).

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ARTICLE 6.

THE TRUSTEE

SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.

(a) Except during the continuance of an Event of Default, the Trustee's
duties and responsibilities under this Indenture shall be governed by Section
315(a) of the Trust Indenture Act.

(b) In case an Event of Default has occurred and is continuing, and is
known to the Trustee, the Trustee shall exercise the rights and powers vested in
it by this Indenture, and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.

SECTION 602. NOTICE OF DEFAULTS.

Within 30 days after the occurrence of any Default or Event of Default
with respect to the Securities of any series, the Trustee shall give to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such Default or Event of Default known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any) or interest on
any Security of such series or in the payment of any sinking fund installment
with respect to Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or directors or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders
of Securities of such series.

SECTION 603. CERTAIN RIGHTS OF TRUSTEE.

Subject to the provisions of the Trust Indenture Act:

(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 Officer's 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 to its reasonable satisfaction
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 with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default which may have occurred, the Trustee shall not be bound to make any

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investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, approval or other paper or document, or the books and records of the
Company, unless requested in writing to do so by the Holders of a majority in
principal amount of the Outstanding Securities of any series; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding; the reasonable expense of every
such investigation shall be paid by the Company or, if paid by the Trustee,
shall be repaid by the Company upon demand;

(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; and

(h) the Trustee shall not be required 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 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.

SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

The recitals herein and in the Securities, 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 Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

SECTION 605. MAY HOLD SECURITIES.

The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities 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, Security
Registrar or such other agent.

SECTION 606. MONEY HELD IN TRUST.

Money held by the Trustee in trust hereunder (including amounts held by
the Trustee as Paying Agent) shall to be segregated from other funds except
as otherwise provided by law. The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed upon
in writing 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 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 the expenses and
disbursements of its agents and 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, damage, claim or expense, including taxes (other than taxes
based upon or determined or measured by the income of the Trustee),

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incurred without gross 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 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.

When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.

The provisions of this Section 607 shall survive this Indenture.

SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.

The Trustee shall be disqualified only where such disqualification is
required by Section 310(b) of the Trust Indenture Act. Nothing shall prevent the
Trustee from filing with the Commission the application referred to in the
second to last paragraph of Section 310(b) of the Trust Indenture Act.

SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be a Trustee hereunder which shall be eligible
to act as Trustee under Section 310(a)(1) of the Trust Indenture Act having a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by federal or State authority. If such corporation 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 corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. Neither the Company nor any Person directly or indirectly
controlling, controlled by, or under common control with the Company may serve
as Trustee. 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 Securities
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
Securities of such series.

(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities 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 310(b) of the
Trust Indenture Act after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security 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 of a Security who has been a bona fide Holder of a Security for at
least six months; or

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(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 315(e) of the
Trust Indenture Act, any Holder who has been a bona fide Holder of a security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities 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 Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities 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 Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities 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 Securities of such series
and to that extent supersede the successor Trustee appointed by the Company with
respect to such Securities. If no successor Trustee with respect to the
Securities 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 security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.

(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities 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 Securities, 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 Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more 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 and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities 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 Securities, 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 Securities 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 Trustees
co-trustees of the same trust and that each such Trustee shall

<PAGE> 40

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 Securities 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 Securities 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 paragraph (a) or (b) of this Section, as the case may be.

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

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 Securities 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 Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.

SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.

At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of, and subject to the
direction of, the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 306, and Securities 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 Securities 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

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<PAGE> 41

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 may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. 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
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the security 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 Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.

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

Form of Authenticating Agent's
Certificate of Authentication

Dated:
--------------------------

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

The First National Bank of Chicago

As Trustee

By:
-------------------------------------
As Authenticating Agent

By:
-------------------------------------
Authorized Signatory

ARTICLE 7.

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.

The Company will furnish or cause to be furnished to the Trustee:

(a) semi-annually, not later than January 1 and July 1 in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of the preceding December 15 or June 15, as the case
may be; and

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(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;

provided, however, that so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.

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 Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit
then the Trustee shall, within five Business Days after the receipt of such
application, at its election, either

(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section 702(a); or

(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the approximate
cost of mailing to such Holders the form of proxy or other communication, if
any, specified in such application.

If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.

(c) Every Holder of Securities, 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 the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).

SECTION 703. REPORTS BY TRUSTEE.

(a) Within 60 days after May 15 of each year commencing with the year
1998, the Trustee shall transmit by mail to all Holders of Securities as
provided in Section 313(c) of the Trust Indenture Act, a brief report dated as
of May 15, if required by and in compliance with Section 313(a) of the Trust
Indenture Act.

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<PAGE> 43

(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
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

SECTION 704. REPORTS BY COMPANY.

The Company shall:

(1) file with the Trustee, within 30 days after the Company is required
to file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
said Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;

(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations;

(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, (a) concurrently with furnishing the same to
its shareholders, the Company's annual report to shareholders, containing
certified financial statements, and any other financial reports which the
Company generally furnishes to its shareholders, and (b) within 30 days after
the filing thereof with the Trustee, such summaries of any other information,
documents and reports required to be filed by the Company pursuant to paragraphs
(1) and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission; and

(4) furnish to the Trustee, on or before May 1 of each year, a brief
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture. For purposes
of this paragraph, such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Indenture. Such
certificate need not comply with Section 102.

ARTICLE 8.

CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER

SECTION 801. WHEN COMPANY MAY MERGE, ETC.

The Company shall not consolidate with, or merge with or into any other
corporation (whether or not the Company shall be the surviving corporation), or
sell, assign, transfer or lease all or substantially all of its properties and
assets as an entirety or substantially as an entirety to any Person or group of
affiliated Persons, in one transaction or a series of related transactions,
unless:

(1) either the Company shall be the continuing Person or the Person (if
other than the Company) formed by such consolidation or with which or into which
the Company is merged or the Person (or group of affiliated Persons) to which
all or substantially all the properties and assets of the Company as an entirety
or substantially as an entirety are sold, assigned, transferred or leased shall
be a corporation (or constitute corporations) organized and existing under the
laws of the United States of America or 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, all
the obligations of the Company under the Securities and this Indenture; and

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<PAGE> 44

(2) immediately before and after giving effect to such transaction or
series of related transactions, no Event of Default, and no Default, shall have
occurred and be continuing.

SECTION 802. OPINION OF COUNSEL.

The Company shall deliver to the Trustee prior to the proposed
transaction(s) covered by Section 801 an Officer's Certificate and an Opinion of
Counsel stating that the transaction(s) and such supplemental indenture comply
with this Indenture and that all conditions precedent to the consummation of the
transaction(s) under this Indenture have been met.

SECTION 803. SUCCESSOR CORPORATION SUBSTITUTED.

Upon any consolidation by the Company with or merger by the Company
into an other corporation or any lease, sale, assignment, or transfer of all or
substantially all of the property and assets of the Company in accordance with
Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or the successor corporation or affiliated group of
corporations to which such lease, sale, assignment, or transfer 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
corporation or corporations had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor corporation or
corporations shall be relieved of all obligations and covenants under this
Indenture and the Securities and in the event of such conveyance or transfer,
except in the case of a lease, any such predecessor corporation may be dissolved
and liquidated.

ARTICLE 9.

SUPPLEMENTAL INDENTURES

SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

Without notice to or 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 corporation to the Company
and the assumption by any such successor of the covenants of the Company herein
and in the Securities; or

(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of series) or to surrender
any right or power herein conferred upon the Company; or

(3) to add any additional Events of Default with respect to all or any
series of Securities; or

(4) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons; or

(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental Indenture which is entitled to the benefit of such provision;
or

(6) to secure the Securities; or

(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or

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<PAGE> 45

(8) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities 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, defect or inconsistency or to correct or
supplement any provision herein which may be inconsistent with any other
provision herein; or

(10) to make any change that does not materially adversely affect the
interests of the Holders of Securities of any series.

Upon request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon receipt
by the Trustee of the documents described in (and subject to the last sentence
of) Section 903, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture.

SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

With the written consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
shall, subject to Section 903, 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 Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding security affected
thereby,

(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof or extend the time for payment thereof, or reduce the amount
of the principal of an Original Issue Discount security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency in
which, any security or any premium or the 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);

(2) reduce the percentage in principal amount of the Outstanding
Securities 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 Defaults or
Events of Default hereunder and their consequences provided for in this
Indenture; or

(3) change the redemption provisions (including Article Eleven) hereof
in a manner adverse to such Holder; or

(4) modify any of the provisions of this Section or Section 513, 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 Security 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, 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 provisions of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities 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 Securities 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.

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SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.

The Trustee shall sign any supplemental indenture authorized pursuant
to this Article, subject to the last sentence of this Section 903. 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 Officer's Certificate
and 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 Securities 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 as then in effect.

SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.

Securities 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 Securities 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 authenticate and delivered by the
Trustee in exchange for Outstanding Securities of such series.

ARTICLE 10.

COVENANTS

SECTION 1001. PAYMENTS OF SECURITIES.

With respect to each series of Securities, the Company will duly and
punctually pay the principal of (and premium, if any) and interest on such
Securities in accordance with their terms and this Indenture, and will duly
comply with all the other terms, agreements and conditions contained in, or made
in the Indenture for the benefit of, the Securities of such series.

SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.

The Company will maintain an office or agency in each Place of Payment
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment,where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in
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 address of the Trustee as set forth in Section 105
hereof.

The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. 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.

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Unless otherwise set forth in, or pursuant to, a Board Resolution or
indenture supplemental hereto with respect to a series of Securities, the
Company hereby initially designates the office of The First National Bank of
Chicago, Corporate Trust Administration located in One First National Plaza,
Mail Suite 0126, Chicago, Illinois 60670-0126 as such office of the Company.

SECTION 1003. CORPORATE EXISTENCE.

Subject to Article 8 hereof, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and that of each of its Subsidiaries and the rights (charter and
statutory) of the Company and its Subsidiaries; provided, however, that (a) the
Company shall not be required to preserve any such right, license or franchise
or the corporate existence of any of its Subsidiaries if the Board of Directors,
or the board of directors of the Subsidiary concerned, as the case may be, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any of its Subsidiaries and that the loss thereof
is not materially disadvantageous to the Holders, and (b) nothing herein
contained shall prevent any Subsidiary of the Company from liquidating or
dissolving, or merging into, or consolidating with the Company (provided that
the Company shall be the continuing or surviving corporation) or with any one or
more Subsidiaries if the Board of Directors or the board of directors of the
Subsidiary concerned, as the case may be, shall so determine.

SECTION 1004. PAYMENT OF TAXES AND OTHER CLAIMS.

The Company will pay or discharge, or cause to be paid or discharged,
before the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a material lien upon the property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which adequate provision has been made.

SECTION 1005. MAINTENANCE OF PROPERTIES.

The Company will cause all material properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (normal wear
and tear excepted) and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary,
so that the business carried on in connection therewith may be properly
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or
disposal is, in the judgment of the Board of Directors or of the board of
directors of the Subsidiary concerned, as the case may be, desirable in the
conduct of the business of the Company or any Subsidiary of the Company and not
materially disadvantageous to the Holders.

SECTION 1006. COMPLIANCE CERTIFICATES.

(a) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year of the Company (which fiscal year currently ends on
December 31), an Officer's Certificate stating whether or not the signer knows
of any Default or Event of Default by the Company that occurred prior to the end
of the fiscal year and is then continuing. If the signer does know of such a
Default or Event of Default, the certificate shall describe each such Default or
Event of Default and its status and the specific section or sections of this
Indenture in connection with which such Default or Event of Default has
occurred. The Company shall also promptly notify the Trustee in writing should
the Company's fiscal year be changed so that the end thereof is on any date
other than the date on which the Company's fiscal year currently ends. The
certificate need not comply with Section 102 hereof.

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(b) The Company shall deliver to the Trustee, within 10 days after the
occurrence thereof, notice of any acceleration which with the giving of notice
and the lapse of time would be an Event of Default within the meaning of Section
501(4) hereof.

(c) The Company shall deliver to the Trustee forthwith upon becoming
aware of a Default or Event of Default (but in no event later than 10 days after
the occurrence of each Default or Event of Default that is continuing), an
Officer's Certificate setting forth the details of such Default or Event of
Default and the action that the Company proposes to take with respect thereto
and the specific section or sections of this Indenture in connection with which
such Default or Event of Default has occurred.

SECTION 1007. COMMISSION REPORTS.

(a) The Company shall file with the Trustee, within 30 days after it
files them with the Commission, copies of the quarterly and annual reports and
of the information, documents, and other reports (or copies of such portions of
any of the foregoing as the Commission may by rules and regulations prescribe)
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. If the Company is not subject to the requirement
of such Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Trustee, within 30 days after it would have been required to file such
information with the Commission, financial statements, including any notes
thereto and, with respect to annual reports, an auditors' report by an
accounting firm of established national reputation and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Company would have been required to include in such
annual reports, information, documents or other reports if the Company had been
subject to the requirements of such Sections 13 or 15(d) of the Exchange Act.
The Company also shall comply with the other provisions of Section 314(a) of the
Trust Indenture Act.

(b) So long as the Securities remain outstanding, the Company shall
cause its annual report to shareholders and any other financial reports
furnished by it to shareholders generally, to be mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Security
Registrar in each case at the time of such mailing or furnishing to
shareholders. If the Company is not required to furnish annual or quarterly
reports to its shareholders pursuant to the Exchange Act, the Company shall
cause its financial statements, including any notes thereto and, with respect to
annual reports, an auditors' report by an accounting firm of established
national reputation and a "Management's Discussion and Analysis of Financial
Condition and Results of Operations," to be so filed with the Trustee and mailed
to the Holders within 90 days after the end of each of the Company's fiscal
years and within 45 days after the end of each of the first three quarters of
each fiscal year.

(c) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Company may
be required to deliver to the Holders under this Section 1007.

SECTION 1008. WAIVER OF STAY, EXTENSION OR USURY LAWS.

The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim, and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.

SECTION 1009. MONEY FOR SECURITIES 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 Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or 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.

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Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure to so act.

The Company will cause each Paying Agent for any series of Securities
(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) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;

(ii) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any payment
of principal (and premium, if any) or interest on the Securities of that series;
and

(iii) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.

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 (and premium, if
any) or interest on any security of any series and remaining unclaimed for two
years after such principal (and premium, if any) 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 security
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 of 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 New York, 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 1010. LIMITATION ON LIENS.

Neither the Company will, nor will it permit any Significant Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the property of the
Company or any of its Subsidiaries, except:

(i) Liens for taxes, assessments or governmental charges or levies on
its property if the same shall not at the time be delinquent or thereafter can
be paid without penalty or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside on its books.

(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.

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(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.

(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries.

(v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's assets that secure
financings for or for the benefit of the Company or such Subsidiary.

(vi) Purchase money liens upon or in property now owned or hereafter
acquired in the ordinary course of business (consistent with the Company's
business practices) to secure (A) the purchase price of such property or (B)
Indebtedness incurred solely for the purpose of financing the acquisition,
construction, or improvement of any such property to be subject to such liens,
or Liens existing on any such property at the time of acquisition, or
extensions, renewals, or replacements of any of the foregoing for the same or a
lesser amount; provided that no such lien shall extend to or cover any property
other than the property being acquired, constructed, or improved and
replacements, modifications, and proceeds of such property, and no such
extension, renewal, or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed, or replaced.

(vii) Liens existing on the date Securities are first issued
hereunder.

(viii) Liens for no more than 90 days arising from a transaction
involving accounts receivable or third-party reimbursements of the Company
(including the sale of such accounts receivable or third-party reimbursements),
where such accounts receivable or third-party reimbursements arose in the
ordinary course of the Company's business.

SECTION 1011. WAIVER OF CERTAIN COVENANTS.

The Company may omit in any particular instance to comply with any
covenant or condition set forth in Section 1010 hereof, if before or
after the time for such compliance the Holders of not less than a majority in
principal amount of the Securities at the time Outstanding of each series which
is affected thereby, shall, by consent in writing of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or conditions except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.

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ARTICLE 11.

REDEMPTION OF SECURITIES

SECTION 1101. APPLICABILITY OF ARTICLE.

Securities 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 Securities of any series)
in accordance with this Article.

SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.

The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 45
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 and of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction.

SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.

If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, substantially pro rata, by lot
or by any other method as the Trustee considers fair and appropriate and that
complies with the requirements of the principal national securities exchange, if
any, on which such Securities are listed, and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series; provided that
in case the Securities of such series have different terms and maturities, the
Securities to be redeemed shall be selected by the Company and the Company shall
give notice thereof to the Trustee.

The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities 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 the Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities 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 45 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.

All notices of redemption shall state:

(1) the Redemption Date;

(2) the Redemption Price;

(3) if less than all the Outstanding Securities of any series are
to be redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed;

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(4) that on the Redemption Date the Redemption Price will be come due
and payable upon each such security 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 Securities are to be surrendered for
payment of the Redemption Price;

(6) that the redemption is for a sinking fund, if such is the case;

(7) the CUSIP number, if any, of the Securities to be redeemed; and

(8) unless otherwise provided as to a particular series of Securities,
if at the time of publication or mailing of any notice of redemption the Company
shall not have deposited with the Trustee or Paying Agent and/or irrevocably
directed the Trustee or Paying Agent to apply, from money held by it available
to be used for the redemption of Securities, an amount in cash sufficient to
redeem all of the Securities called for redemption, including accrued interest
to the Redemption Date, such notice shall state that it is subject to the
receipt of the redemption moneys by the Trustee or Paying Agent before the
Redemption Date (unless such redemption is mandatory) and such notice shall be
of no effect unless such moneys are so received before such date.

Notice of redemption of Securities 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 1009) 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 Securities
which are to be redeemed on that date.

SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.

Notice of redemption having been given as aforesaid, the Securities 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 Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular or Special Record Dates
according to their terms and the provisions of Section 307.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, lf any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
thereof or in the Security.

SECTION 1107. SECURITIES REDEEMED IN PART.

Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company 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 security without service charge, a new Security or Securities of
the same series and Stated Maturity, 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 Security so surrendered.

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ARTICLE 12.

SINKING FUNDS

SECTION 1201. APPLICABILITY OF ARTICLE.

The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series, except as otherwise specified as
contemplated by Section 301 for Securities of such series.

The minimum amount of any sinking fund payment provided for by the
terms of Securities 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 Securities of any series is herein referred to as an "Optional
Sinking Fund Payment." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to redemption as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.

SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.

The Company (1) may deliver Securities of a series (other than any
Securities previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.

Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officer's
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 Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities 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 Securities shall be made upon the terms and in the
manner stated in Sections 1106 and 1107.

ARTICLE 13.

DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1301. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO
EFFECT DEFEASANCE OR COVENANT DEFEASANCE.

Unless pursuant to Section 301 provision is made for the
inapplicability of either or both of (a) Defeasance of the Securities of a
series under Section 1302 or (b) Covenant Defeasance of the Securities of a
series under Section 1303, then the provisions of such Section or Sections, as
the case may be, together with the other provisions of this Article, shall be
applicable to the Securities of such series, and the Company may at its option
by Board Resolution, at any time, with respect to the Securities of such series,
elect to have either Section 1302 (unless inapplicable) or Section 1303 (unless
inapplicable) be applied to the Outstanding Securities of such series upon
compliance with the applicable conditions set forth below in this Article.

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SECTION 1302. DEFEASANCE AND DISCHARGE.

Upon the Company's exercise of the option provided in Section 1301 to
defease the Outstanding Securities of a particular series, the Company shall be
discharged from its obligations with respect to the Outstanding Securities of
such series on the date the applicable conditions set forth in Section 1304 are
satisfied (hereinafter, "Defeasance"). Defeasance shall mean that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Securities of such series and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same); provided, however, that the
following rights, obligations, powers, trusts, duties and immunities shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund provided for in Section 1304, payments in respect of the principal of
(and premium, if any) and interest on such Securities when such payments are
due, (B) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1009, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (D) this Article. Subject to
compliance with this Article, the Company may exercise its option with respect
to Defeasance under this Section 1302 notwithstanding the prior exercise of its
option with respect to Covenant Defeasance under Section 1303 in regard to the
Securities of such series.

SECTION 1303. COVENANT DEFEASANCE.

Upon the Company's exercise of the option provided in Section 1301 to
obtain a Covenant Defeasance with respect to the Outstanding Securities of a
particular series, the Company shall be released from its obligations under this
Indenture (except its obligations under Sections 304, 305, 306, 506, 509, 610,
1001, 1002, 1006, 1008 and 1009) with respect to the Outstanding Securities of
such series on and after the date the applicable conditions set forth in Section
1304 are satisfied (hereinafter, "Covenant Defeasance"). Covenant Defeasance
shall mean that, with respect to the Outstanding Securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in this Indenture (except its
obligations under Sections 304, 305, 306, 506, 509, 610, 1001, 1002, 1006, 1008
and 1009), whether directly or indirectly by reason of any reference elsewhere
herein or by reason of any reference to any other provision herein or in any
other document, and such omission to comply shall not constitute an Event of
Default under Section 501(4) with respect to Outstanding Securities of such
series, and the remainder of this Indenture and of the Securities of such series
shall be unaffected thereby.

SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.

The following shall be the conditions to Defeasance under Section 1302
and Covenant Defeasance under Section 1303 with respect to the Outstanding
Securities of a particular series:

(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 609 who shall agree to comply with the provisions of this Article
applicable to it), under the terms of an irrevocable trust agreement in form and
substance reasonably satisfactory to such Trustee, 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 such Securities, (A)
Dollars in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in accordance
with their terms will provide, not later than the due date of any payment, money
in an amount, or (C) a combination thereof, in each case sufficient, after
payment of all federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, 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 other qualifying trustee) to pay and
discharge, (i) the principal of (and premium, if any, on) and each installment
of principal of (and premium, if any) and interest on the Outstanding Securities
of such series on the Stated Maturity of such principal or installment of
principal or interest and (ii) any mandatory sinking fund payments or analogous
payments applicable to the Outstanding Securities of such series on the day on
which such payments are due and payable in accordance with the terms of this
Indenture and of such Securities.

(2) No Default or Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit, and no Default or Event of Default

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under clause (5) or (6) of Section 501 hereof shall occur and be continuing, at
any time during the period ending on the 31st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until the
expiration of such period).

(3) Such deposit, Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.

(4) Such Defeasance or Covenant Defeasance shall not cause any
Securities of such series then listed on any national securities exchange
registered under the Exchange Act to be delisted.

(5) In the case of an election with respect to Section 1302, the
Company shall have delivered to the Trustee either (A) a ruling directed to the
Trustee received from the Internal Revenue Service to the effect that the
Holders of the Outstanding Securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Defeasance had not
occurred or (B) an Opinion of Counsel, based on such ruling or on a change in
the applicable federal income tax law since the date of this Indenture, in
either case to the effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
such Defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
Defeasance had not occurred.

(6) In the case of an election with respect to Section 1303, the
Company shall have delivered to the Trustee an Opinion of Counsel or a ruling
directed to the Trustee received from the Internal Revenue Service to the effect
that the Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred.

(7) Such Defeasance or Covenant Defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.

(8) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Defeasance under Section 1302 or
the Covenant Defeasance under Section 1303 (as the case may be) have been
complied with.

SECTION 1305. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS
TO BE HELD IN TRUST.

Subject to the provisions of the last paragraph of Section 1009, all
money and Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee--collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Securities of a particular series shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Securities 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 Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest. Such
money shall be segregated from other funds except as otherwise provided by
law.

The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof, other than any such tax, fee or other charge which by law is for the
account of the Holders of the Outstanding Securities of such series.

Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided ln Section 1304 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written

48
<PAGE> 56

certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited for the purpose for which
such money or Government Obligations were deposited.

ARTICLE 14.

SUBORDINATION

SECTION 1401. AGREEMENT OF SECURITY HOLDERS THAT SECURITIES
SUBORDINATED TO EXTENT PROVIDED.

The Company, for itself, its successors and assigns, covenants and
agrees and each Holder of the Securities by his acceptance thereof likewise
covenants and agrees that the payment of the principal of, premium, if any, and
interest on each and all of the Securities is hereby expressly subordinated, to
the extent and in the manner hereinafter set forth, to the prior payment in full
of all Senior Indebtedness. The provisions of this Article shall constitute a
continuing offer to all persons who, in reliance upon such provisions, become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are
hereby made obligees hereunder the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.

SECTION 1402. COMPANY NOT TO MAKE PAYMENTS WITH RESPECT
TO SECURITIES IN CERTAIN CIRCUMSTANCES.

(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium, if any, and
interest thereon shall first be paid in full, or such payment duly provided for
in cash or in a manner satisfactory to the holder or holders of such Senior
Indebtedness, before any payment is made on account of the principal of or
premium, if any, or interest on the Securities or to acquire any of the
Securities or on account of any sinking fund (except sinking fund payments made
in Securities acquired by the Company before the maturity of such Senior
Indebtedness).

(b) Upon the happening of (i) an event of default with respect to any
Senior Indebtedness, as such event of default is defined therein or in the
instrument under which it is outstanding, permitting the holders to accelerate
the maturity thereof, or (ii) an event which, with the giving of notice, or
lapse of time, or both, would constitute such an event of default, then, unless
and until such event shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Company with respect to the principal of
or premium, if any, or interest on the Securities or to acquire any of the
Securities or on account of any sinking fund for the Securities (except sinking
fund payments made in Securities acquired by the Company before such default and
notice thereof).

(c) In the event that notwithstanding the provisions of this Section
1402 the Company shall make any payment to the Trustee on account of the
principal of or premium, if any, or interest on the Securities, or on account of
any sinking fund, or the Holders of the Securities shall receive any such
payment, after the happening of a default in payment of the principal of or
premium, if any, or interest on Senior Indebtedness, then, unless and until such
default or event of default shall have been cured or waived or shall have ceased
to exist, such payment (subject to the provisions of Section 1406) shall be held
by the Trustee or the Holders of the Securities, as the case may be, in trust
for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness (pro rata as to each of such holders on the basis
of the respective amounts of Senior Indebtedness held by them) or their
representative or the trustee under the Indenture or other agreement (if any)
pursuant to which any instruments evidencing any Senior Indebtedness may have
been issued, as their respective interests may appear, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness. The Company shall give prompt written
notice to the Trustee of any default under any Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been issued.

49
<PAGE> 57

SECTION 1403. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL
SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION
OR REORGANIZATION OF COMPANY.

Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):

(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full of the principal thereof, premium, if any, and interest
due thereon before the Holders of the Securities are entitled to receive any
payment on account of the principal of, premium, if any, or interest on the
Securities;

(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Securities or the Trustees would be entitled except for the provisions of this
Article Fourteen, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
holders of Senior Indebtedness or their representative or representatives, or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, to the extent
necessary to make payment in full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness;

(c) in the event that notwithstanding the foregoing provisions of this
Section 1403, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be received by the
Trustee or the Holders of the Securities on account of principal, premium, if
any, or interest on the Securities before all Senior Indebtedness is paid in
full, or effective provision made for its payment, such payment or distribution
(subject to the provisions of Section 1406 and 1407) shall be received and held
in trust for and shall be paid over to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for application
to the payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full, after giving effect to any concurrent payment or
distribution or provision the effect to the holders of such Senior Indebtedness.

SECTION 1404. SECURITY HOLDERS TO BE SUBROGATED TO RIGHT OF HOLDERS
OF SENIOR INDEBTEDNESS.

Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Securities
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders of the Securities by virtue of this
Article which otherwise would have been made to the Holders of the Securities
shall, as between the Company and the Holders of the Securities, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Article Fourteen are and are intended
solely for the purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.

SECTION 1405. OBLIGATION OF THE COMPANY UNCONDITIONAL.

Nothing contained in this Article Fourteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair as between the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities the
principal of, premium, if any, and interest on the Securities as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any
security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Fourteen of the holders of Senior Indebtedness in respect of cash, property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred

50
<PAGE> 58

to in this Article Fourteen, the Trustee, subject to the provisions of Section
601, and the Holders of the Securities shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities, for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the Senior Indebtedness 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 Fourteen.

SECTION 1406. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED
IN ABSENCE OF NOTICE.

The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of monies
to or by the Trustee, unless and until a Responsible Officer of the Trustee
shall have received written notice thereof from the Company or from one or more
holders of Senior Indebtedness or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled to assume conclusively that no such facts exist.

SECTION 1407. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.

Anything in this Indenture to the contrary notwithstanding, any deposit
of monies by the Company with the Trustee or any Paying Agent (whether or not in
trust) for the payment of the principal of or premium, if any, or interest on
any Securities shall be subject to the provisions of Sections 1401, 1402, 1403
and 1404 except that, if prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including, without
limitation, the payment of either the principal of or the interest or premium,
if any, on any Security) a Responsible Officer of the Trustee shall not have
received with respect to such monies the notice provided for in Section 1406,
then, anything herein contained to the contrary notwithstanding, the Trustee
shall have full power and authority to receive such monies and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such date.

SECTION 1408. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.

No right of any present or future holders of any Senior Indebtedness 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 which any such holder may have or
be otherwise charged with.

SECTION 1409. SECURITY HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.

Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Fourteen and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of the Company, the
immediate filing of a claim for the unpaid balance of its or his Securities in
the form required in said proceedings and cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form required
in such proceeding prior to 30 days before the expiration of the time to file
such claim or claims, then the holder or holders of Senior Indebtedness are
hereby authorized to and have the right to file an appropriate claim for and on
behalf of the holders of said Securities.

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<PAGE> 59

SECTION 1410. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.

The Trustee shall be entitled to all of the rights set forth in this
Article Fourteen in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in
Section 613 or elsewhere in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.

SECTION 1411. ARTICLE FOURTEEN NOT TO PREVENT EVENTS OF DEFAULT.

The failure to make a payment on account of principal, interest or
sinking fund by reason of any provision in this Article Fourteen shall not be
construed as preventing the occurrence of an Event of Default under Section 501.

ARTICLE 15.

MISCELLANEOUS

SECTION 1501. MISCELLANEOUS.

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.

AMERICAN HERITAGE LIFE
INVESTMENT CORPORATION

By /s/
-------------------------
Name:
Title:

Attest:

/s/
----------------------------
Name:
Title:

(Signatures continued on following page)

<PAGE> 60

The First National Bank of Chicago, as Trustee

By /s/
---------------------------------------------
Name:
Title:

Attest:

/s/
- ---------------------------
Name:
Title:

<PAGE> 1
EXHIBIT 4 (j)
--------

--------------------------------------------------------------------------

FIRST SUPPLEMENTAL INDENTURE

Dated as of June 23, 1997

between

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION,

AS ISSUER

and

THE FIRST NATIONAL BANK OF CHICAGO,

AS TRUSTEE

--------------------------------------------------------------------------
<PAGE> 2

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page

ARTICLE I
DEFINITIONS

SECTION 1.1. Definition of Terms.............................................................................1

ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

SECTION 2.1. Designation and Principal Amount ...............................................................2
SECTION 2.2. Maturity ......................................................................................3
SECTION 2.3. Form of Payment.................................................................................3
SECTION 2.4. Global Debenture................................................................................3
SECTION 2.5. Interest .......................................................................................4
SECTION 2.6 No Sinking Fund.................................................................................4

ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 3.1. Extension of Interest Payment Period............................................................5
SECTION 3.2 Notice of Extension.............................................................................5
SECTION 3.3. Limitation of Transactions......................................................................6
SECTION 3.4 Option to Put Debentures........................................................................6
SECTION 3.5 Repurchase Procedure for Debentures.............................................................6

ARTICLE IV
EXPENSES

SECTION 4.1 Payment of Expenses.............................................................................7
SECTION 4.2 Payment Upon Resignation or Removal.............................................................8

ARTICLE V
NOTICE

SECTION 5.1 Notice by the Company...........................................................................8

ARTICLE VI
FORM OF DEBENTURE

SECTION 6.1. Form of Debenture...............................................................................8

ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES

SECTION 7.1. Original Issue of Debentures...................................................................14
</TABLE>

<PAGE> 3

Page
<S> <C>

ARTICLE VIII
MISCELLANEOUS

SECTION 8.1. Ratification of Indenture......................................................................14
SECTION 8.2. Trustee Not Responsible for Recitals...........................................................14
SECTION 8.3. Governing Law..................................................................................14
SECTION 8.4. Separability...................................................................................14
SECTION 8.5. Counterparts ..................................................................................14
</TABLE>

<PAGE> 4

FIRST SUPPLEMENTAL INDENTURE, dated as of June 23, 1997 (the "First
Supplemental Indenture"), between American Heritage Life Investment Corporation,
a corporation duly organized and existing under the laws of the State of
Florida, having its principal office at 1776 American Heritage Life Drive,
Jacksonville,, Florida 32224 (the "Company" ), and The First National Bank of
Chicago, as trustee (the "Trustee").

WHEREAS, the Company executed and delivered the indenture dated as of
June 23, 1997 (the "Base Indenture"), to the Trustee to provide for the future
issuance of the Company's unsecured debentures, notes or other evidence of
indebtedness (the "Securities" ), to be issued from time to time in one or more
series as might be determined by the Company under the Base Indenture;

WHEREAS, pursuant to the terms of the Base Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its _______ % Junior Subordinated Debentures due August 16, 2002 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Base
Indenture and this First Supplemental Indenture (together, the "Indenture");

WHEREAS, AHL Financing, a Delaware statutory business trust (the "Trust"),
has offered to the public $ _________ million aggregate liquidation
amount of its _____ % Trust Originated Preferred Securities (the "Preferred
Securities"), representing undivided beneficial interests in the assets of the
Trust and proposes to invest the proceeds from such offering, together with the
proceeds of the issuance and sale by the Trust to the Company of $ __________
million aggregate liquidation amount of its __________ % Trust Originated
Common Securities (the "Common Securities" and together with the Preferred
Securities, the "Trust Securities"), in $_________ million aggregate principal
amount of the Debentures; and

WHEREAS, the Company has requested that the Trustee execute and deliver
this First Supplemental Indenture and all requirements necessary to make this
First Supplemental Indenture a valid instrument in accordance with its terms,
and to make the Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects:

NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1. DEFINITION OF TERMS.

Unless the context otherwise requires:

(a) a term defined in the Base Indenture has the same meaning when used in
this First Supplemental Indenture;

(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;

(d) headings are for convenience of reference only and do not affect
interpretation;

(e) the following terms have the meanings given to them in the Declaration:
(i) Business Day; (ii) Clearing Agency; (iii) Delaware Trustee; (iv) Depositary;
(v) Preferred Security Certificate; (vi) Pricing Agreement; (vii)
<PAGE> 5

Institutional Trustee; (viii) Regular Trustees; (ix) Special Event; (x) Tax
Event; (xi) Investment Company Event; and (xii) Underwriting Agreement;

(f) the following terms have the meanings given to them in this Section
1.11(f):

"Additional Interest" shall have the meaning set forth in Section 2.5.

"Common Stock" means the common stock of the Company.

"Compounded Interest" shall have the meaning set forth in Section 3.1.

"Coupon Rate" shall have the meaning set forth in Section 2.5.

"Debenture Repayment Price" shall have the meaning set forth in Section
3.4.

"Declaration" means the Amended and Restated Declaration of Trust of AHL
Financing, a Delaware statutory business trust, dated as of June 23, 1997.

"Deferred Interest" shall have the meaning set forth in Section 3.1 hereof.

"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration, and the Debentures held by the Institutional Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Declaration.

"Extended Interest Payment Period" shall have the meaning set forth in
Section 3.1.

"Global Debentures" shall have the meaning set forth in Section 2.4.

"Maturity Date" means the date on which the Debentures mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Compounded Interest and Additional Interest, if any.

"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.4.

"Purchase Contract Agreement" means the Purchase Contract Agreement, dated
as of _________, 1997, between the Company and The First National Bank of
Chicago, as purchase contract agent.

"Put Option" shall have the meaning set forth in Section 3.4.

(g) the following terms shall have the meanings given to them in the
Purchase Contract Agreement: (i) Cash Settlement; (ii) Collateral Agent; (iii)
Collateral Settlement; (iv) Early Settlement Date; (v) Purchase Contract; and
(vi) Purchase Contract Settlement Date.

ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT.

There is hereby authorized a series of Securities designated the "_____ %
Junior Subordinated Debentures due _________, 2002", limited in aggregate
principal amount to $_______ million, which amount shall be as set forth in any
written order of the Company for the authentication and delivery of
Debentures pursuant to Section 303 of the Indenture.

2
<PAGE> 6

SECTION 2.2. MATURITY. The Maturity Date will be August 16, 2002.

SECTION 2.3. FORM AND PAYMENT.

Except as provided in Section 2.4, the Debentures shall be issued in fully
registered certificated form without interest coupons. Principal and interest on
the Debentures issued in certificated form will be payable, the transfer of such
Debentures will be registrable and such Debentures will be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of the
Institutional Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Holder at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so long as
the Holder of any Debentures is the Institutional Trustee or the Collateral
Agent, the payment of the principal of and interest (including Compounded
Interest and Additional Interest, if any) on such Debentures held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.

SECTION 2.4. GLOBAL DEBENTURE.

(a) In connection with a Dissolution Event,

(i) the Debentures in certificated form may be presented to the
Trustee by the Collateral Agent or Institutional Trustee in exchange for a
global Debenture in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Debentures (a "Global Debenture"), to be
registered in the name of the Depositary, or its nominee, and delivered by the
Institutional Trustee to the Depositary for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees. The Company
upon any such presentation shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Base Indenture and this First Supplemental
Indenture. Payments on the Debentures issued as a Global Debenture will be made
to the Depositary; and

(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to the
Trustee by the Institutional Trustee and any Preferred Security Certificate
which represents Preferred Securities other than Preferred Securities held by
the Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial interests in Debentures presented to the
Trustee by the Institutional Trustee having an aggregate principal amount equal
to the aggregate liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates are presented to the Security
Registrar for transfer or reissuance at which time such Preferred Security
Certificates will be cancelled and a Debenture, registered in the name of the
holder of the Preferred Security Certificate or the transferee of the holder of
such Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Security Certificate cancelled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance with the Base
Indenture and this First Supplemental Indenture. On issue of such Debentures,
Debentures with an equivalent aggregate principal amount that were presented by
the Institutional Trustee to the Trustee will be deemed to have been cancelled.

(b) Unless and until it is exchanged for the Debentures in registered form,
a Global Debenture may be transferred, in whole but not in part, only to another
nominee of the Depositary, or to a successor Depositary selected or approved by
the Company or to a nominee of such successor Depositary.

(c) If at any time the Depositary notifies the Company that it is unwilling
or unable to continue as Depositary or if at any time the Depositary for such
series shall no longer be registered or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, and
a successor Depositary for such series is not appointed by the Company within 90
days after the Company receives such notice or becomes aware of such condition,
as the case may be, the Company will execute, and, subject to Article III of the
Base Indenture, the Trustee, upon written notice from the Company, will
authenticate and deliver the Debentures in definitive registered form

3
<PAGE> 7
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Debenture in exchange for
such Global Debenture. In addition, the Company may at any time determine that
the Debentures shall no longer be represented by Global Debenture. In such event
the Company will execute, and subject to Section 301 of the Base Indenture, the
Trustee, upon receipt of an Officers Certificate evidencing such determination
by the Company, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. Upon the exchange of the Global Debenture
for such Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debenture shall be cancelled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the Depositary for delivery to the Persons in whose names
such Securities are so registered.

SECTION 2.5. INTEREST.

(a) Each Debenture will bear interest at the rate of_____ % per annum
(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on March
31, June 30, September 30, and December 31 of each year (each, an "Interest
Payment Date," commencing on September 30, 1997), to the Person in whose name
such Debenture or any predecessor Debenture is registered, at the close of
business on the regular record date for such interest installment, which, in
respect of (i) Debentures of which the Institutional Trustee is the Holder and
the Preferred Securities are in book-entry only form or (ii) a Global
Debenture, shall be the close of business on the Business Day next preceding
that Interest Payment Date. Notwithstanding the foregoing sentence, if (i) the
Debentures are held by the Institutional Trustee and the Preferred Securities
are no longer in book-entry only form or (ii) the Debentures are not
represented by a Global Debenture, the Company may select a regular record date
for such interest installment which shall be any date at least ten Business
Days before an Interest Payment Date.

(b) The amount of interest payable for any period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Except as provided
in the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed on
the basis of the actual number of days elapsed in such a 90-day period. In the
event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of 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.

(c) If, at any time while the Institutional Trustee or the Collateral
Agent is the Holder of any Debentures, the Trust or the Institutional Trustee
or the Collateral Agent is required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in any case, the
Company will pay as additional interest ("Additional Interest") on the
Debentures held by the Institutional Trustee or the Collateral Agent, such
additional amounts as shall be required so that the net amounts received and
retained by the Trust and the Institutional Trustee or the Collateral Agent
after paying such taxes, duties, assessments or other governmental charges will
be equal to the amounts the Trust and the Institutional Trustee or the
Collateral Agent would have received had no such taxes, duties, assessments or
other government charges been imposed.

SECTION 2.6. NO SINKING FUND.

The Debentures are not entitled to the benefit of any sinking fund.

4
<PAGE> 8

ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 3.1. EXTENSION OF INTEREST PAYMENT PERIOD.

The Company shall have the right at any time, and from time to time, during
the term of the Debentures, to defer payments of interest by extending the
interest payment period of such Debentures for a period not extending, in the
aggregate, beyond the Maturity Date of the Debentures (the "Extended Interest
Payment Period"), during which Extended Interest Payment Period no interest
shall be due and payable. To the extent permitted by applicable law, interest,
the payment of which has been deferred because of the extension of the interest
payment period pursuant to this Section 3.1, will bear interest thereon at the
Coupon Rate compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest (together,
"Deferred Interest") that shall be payable to the Holders of the Debentures in
whose names the Debentures are registered in the Security Register on the first
record date after the end of the Extended Interest Payment Period. Before the
termination of any Extended Interest Payment Period, the Company may further
extend such period, provided that such period together with all such previous
and further extensions thereof shall not extend beyond the maturity date of the
Debentures. Upon the termination of any Extended Interest Payment Period and
upon the payment of all Deferred Interest then due, the Company may commence a
new Extended Interest Payment Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extended Interest Payment Period,
except at the end thereof, but the Company may prepay at any time all or any
portion of the interest accrued during an Extended Interest Payment Period.

SECTION 3.2. NOTICE OF EXTENSION.

(a) If the Institutional Trustee or the Collateral Agent is the only
registered Holder of the Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to all trustees
of the Trust, the Collateral Agent and the Trustee of its selection of such
Extended Interest Payment Period one Business Day before the earlier of (i) the
next succeeding date on which Distributions on the Trust Securities issued by
the Trust are payable, or (ii) the date the Trust is required to give notice of
the record date, or the date such Distributions are payable, to the New York
Stock Exchange or other applicable self-regulatory organization or to holders
of the Preferred Securities issued by the Trust, but in any event at least one
Business Day before such record date.

(b) If the Institutional Trustee or the Collateral Agent is not the only
Holder of the Debentures at the time the Company selects an Extended Interest
Payment Period, the Company shall give the Holders of the Debentures and the
Trustee written notice of its selection of such Extended Interest Payment
Period at least 10 Business Days before the earlier of (i) the next succeeding
Interest Payment Date, or (ii) the date the Company is required to give notice
of the record or

5
<PAGE> 9
payment date of such interest payment to the New York Stock Exchange or other
applicable self-regulatory organization or to Holders of the Debentures.

SECTION 3.3. LIMITATION OF TRANSACTIONS.

If (i) the Company shall exercise its right to defer payment of interest as
provided in Section 3.1, or (ii) there shall have occurred any Event of Default,
as defined in the Indenture, then (a) the Company shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of shares of its common stock in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security requiring the Company to purchase shares of
its common stock, (ii) as a result of a reclassification of its capital stock or
the exchange or conversion of one class or series of its capital stock for
another class or series of its capital stock or, (iii) the purchase of
fractional interests in shares of its capital stock pursuant to the conversion
or exchange provisions of such capital stock or security being converted or
exchanged) or make any guarantee payment with respect thereto, (b) the Company
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Company which rank
pari passu with or junior to the Debentures, and (c) the Company shall not
make any guarantee payments with respect to the foregoing (other than pursuant
to the Preferred Security Guaranty).

SECTION 3.4. OPTION TO PUT DEBENTURES.

(a) Each Holder of Debentures, including the Institutional Trustee and the
Collateral Agent, shall have the right to require the Company to repurchase the
Debentures on the Purchase Contract Settlement Date and for a period of ninety
days thereafter (the "Put Option"), either in whole or in part, at an amount per
Debenture equal to $50, plus accumulated and unpaid distributions, if any (the
"Debenture Repayment Price").

(b) Pursuant to the Purchase Contract Agreement, on the Purchase Contract
Settlement Date, each holder of Preferred Securities that has not settled its
Purchase Contract with cash will be deemed to have requested the Trust to put
the aggregate principal amount of its Debentures to the Company for an amount
equal to the Debenture Repayment Price. Upon such repurchase by the Company,
the Trust shall simultaneously use the proceeds from such repurchase to redeem
the Preferred Securities of such holder having an aggregate Stated Amount equal
to the aggregate principal amount of the Debentures so repurchased and shall be
applied to satisfy in full such holder's obligation to purchase Common Stock
under the Purchase Contract and any accumulated and unpaid distributions with
respect to the Debentures so repurchased shall be paid to the holder thereof in
cash.

(c) Pursuant to the Purchase Contract Agreement, each holder of Preferred
Securities that has settled its Purchase Contract with cash shall have the
right to require the Company to repurchase the Debentures on the Purchase
Contract Settlement Date and at any time during a period of ninety days
thereafter for an amount equal to the Debenture Repayment Price. Upon such
repurchase by the Company the Trust shall simultaneously use the proceeds from
such repurchase to redeem in cash the Preferred Securities of such holder
having an aggregate Stated Amount equal to the aggregate principal amount of
the Debentures so repurchased and shall pay in cash any accumulated and unpaid
distributions to the holder thereof.

SECTION 3.5. REPURCHASE PROCEDURE FOR DEBENTURES.

(a) In order for the Debentures to be repurchased on the Purchase Contract
Settlement Date or for a period of ninety days thereafter, the Company must
receive at the Corporate Trust Office in the City of Chicago, Illinois the
Debentures to be repurchased with the form entitled "Option to Elect Repayment"
on the reverse of or otherwise accompanying such Debentures duly completed. All
questions as to the validity, eligibility (including time of receipt)

6
<PAGE> 10
and acceptance of the Debentures for repayment shall be determined by the
Company, whose determination shall be final and binding. Notwithstanding the
foregoing, so long as the Holder is the Institutional Trustee or the Collateral
Agent, such Debentures may be received at the Corporate Trust Office at any time
prior to 11:00 a.m., New York City time, on the Purchase Contract Settlement
Date, or on any Business Day during the ninety days immediately thereafter, in
the form and manner as may be designated by the Institutional Trustee or the
Collateral Agent and acceptable to the Trustee.

(b) Payment of the Debenture Repayment Price to Holders of Debentures
shall be made through the Trustee, subject to the Trustee's receipt of payment
from the Company in accordance with the terms of the Indenture. Notwithstanding
the foregoing, so long as the Holder of any Debentures presented for repayment
is the Institutional Trustee or the Collateral Agent, the payment of the
Debenture Repayment Price in respect of such Debentures shall be made, either
through the Trustee or the Company acting as Paying Agent, no later than 12:00
noon, New York City time, on the Purchase Contract Settlement Date, or on any
Business Day during the ninety days immediately thereafter, and to such account
as may be designated by the Institutional Trustee or the Collateral Agent, as
the case may be. If the Trustee holds immediately available funds sufficient to
pay the Debenture Repayment Price of the Debentures presented for repayment
(or, if the Company is acting as Paying Agent or the Institutional Trustee has
received the Debenture Repayment Price), then, immediately prior to the close
of business on the Purchase Contract Settlement Date, or on any Business Day
during the ninety days immediately thereafter, such Debentures will cease to be
outstanding and interest thereon will cease to accrue, whether or not such
Debentures have been received by the Company, and all other rights of the Holder
in respect of the Debentures, including the Holder's right to require the
Company to repay such Debenture, shall terminate and lapse (other than the
right to receive the Debenture Repayment Price upon delivery of such debentures
but without interest on such Debenture Repayment Price). Neither the
Institutional Trustee nor the Company will be required to register or cease to
be registered the transfer of any Debentures for which repayment has been
elected.

ARTICLE IV
EXPENSES

SECTION 4.1. PAYMENT OF EXPENSES.

In connection with the offering, sale and issuance of the Debentures to the
Institutional Trustee and in connection with the sale of the Trust Securities by
the Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall:

(a) pay all costs and expenses relating to the offering, sale and issuance
of the Debentures, including commissions to the underwriters payable pursuant to
the Underwriting Agreement and the Pricing Agreement and compensation of the
Trustee under the Base Indenture in accordance with the provisions of Section
607 of the Base Indenture;

(b) pay all costs and expenses of the Trust (including, but not limited to,
costs and expenses relating to the organization of the Trust, the offering, sale
and issuance of the Trust Securities (including commissions to the underwriters
in connection therewith), the fees and expenses of the Institutional Trustee and
the Delaware Trustee, the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of accountants,
attorneys, statistical or bookkeeping services, expenses for printing and
engraving and computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets).

(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.

7
<PAGE> 11

SECTION 4.2. PAYMENT UPON RESIGNATION OR REMOVAL.

Upon termination of this First Supplemental Indenture or the Base
Indenture or the removal or resignation of the Trustee pursuant to this Section
4.2, the Company shall pay to the Trustee all amounts accrued to the date of
such termination, removal or resignation. Upon termination of the Declaration
or the removal or resignation of the Delaware Trustee or the Institutional
Trustee, as the case may be, pursuant to Section 4.6 of the Declaration, the
Company shall pay to the Delaware Trustee or the Institutional Trustee, as the
case may be, all amounts accrued to the date of such termination, removal or
resignation.

ARTICLE V
NOTICE

SECTION 5.1. NOTICE BY THE COMPANY.

The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Debentures pursuant
to the provisions of this Article V. Notwithstanding the provisions of Article
Fourteen of the Base Indenture or any other provision of the Base Indenture and
this First Supplemental Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Debentures pursuant to
the provisions of Article Fourteen of the Base Indenture, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 601 of the Base Indenture, 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 Article V 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 (or 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 purposes for which they were received,
and shall not be affected by any notice to the contrary that may be received by
it within two Business Days prior to such date.

The Trustee, subject to the provisions of Section 601 of the Base
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company, as the case may be (or a trustee on behalf of such
holder), to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee on behalf of any such holder or holders. 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 such Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article V, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness 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 V, 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.

ARTICLE VI
FORM OF DEBENTURE

SECTION 6.1 FORM OF DEBENTURE.

The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:

<PAGE> 12

(FORM OF FACE OF DEBENTURE)

[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - 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 of a Depositary. This
Debenture is exchangeable for Debentures registered in the name of a person
other than the Depositary or its nominee only in the limited circumstances
described in the Indenture, and no transfer of this Debenture (other than a
transfer of this Debenture as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.

Unless this Debenture is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]

No.___________________________
$_____________________________
CUSIP No._____________________

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
____% JUNIOR SUBORDINATED DEBENTURE
DUE August 16, 2002

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION, a Florida corporation (the

"Company", which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to, or registered assigns, the principal sum of ___________________ Dollars
($______) on August 16, 2002, and to pay interest on said principal sum from
____, 1997, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on March 31,
June 30, September 30 and December 31 of each year commencing September 30,
1997, at the rate of % ____ per annum until the principal hereof shall have
become due and payable, and on any overdue principal and premium, if any, and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded quarterly. The amount of interest payable on any
Interest Payment Date shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that 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. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment which shall be the close of business on the
business day next preceding such Interest Payment Date. [IF PURSUANT TO THE
PROVISIONS OF THE INDENTURE THE DEBENTURES ARE NO LONGER REPRESENTED BY A
GLOBAL Debenture -- which shall be the close of business on the ___________
business day next preceding such Interest Payment Date.] Any such interest
installment not punctually paid or duly provided for shall forthwith cease to
be payable to the registered Holders on such regular record date and may be
paid to the Person in whose name this Debenture (or one or more Predecessor
Securities) is registered at the close of business on a special record date to
be fixed by the Trustee for the payment of such defaulted interest, notice
whereof shall be given to the registered Holders of this series of Debentures
not less than 10 days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on

9
<PAGE> 13

which the Debentures may be listed, and upon such notice as may be required by
such exchange all as more fully provided in the Indenture. The principal of (and
premium, if any) and the interest on this Debenture shall be payable at the
office or agency of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Institutional Trustee or the Collateral Agent, the payment of the principal of
(and premium, if any) and interest on this Debenture will be made at such place
and to such account as may be designated in writing by the Institutional Trustee
or the Collateral Agent.

The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness and pari passu in right of payment with the
Company's other junior subordinated debentures, 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 or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.

The provisions of this Debenture are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed.

Dated
--------------------

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION

By:
------------------------------------------
Name:
Title:

Attest:

By:
-------------------------
Name:
Title:

<PAGE> 14
(FORM OF CERTIFICATE OF AUTHENTICATION)

CERTIFICATE OF AUTHENTICATION

This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.

Dated
------------------------------

THE FIRST NATIONAL BANK OF CHICAGO
as Trustee

By
--------------------------------
Authorized Signatory

(FORM OF REVERSE OF DEBENTURE)

This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Securities"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of June 23, 1997 (the "Base Indenture"), duly executed
and delivered between the Company and The First National Bank of Chicago, as
Trustee (the "Trustee") as supplemented by a First Supplemental Indenture,
dated as of June 23, 1997, (the Base Indenture as so supplemented, the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Securities. By the terms of the Indenture, the
Securities are issuable in series that may vary as to amount, date of maturity,
rate of interest and in other respects as provided in the Indenture. This
series of Securities is limited in aggregate principal amount as specified in
said First Supplemental Indenture.

The Debentures are not entitled to the benefit of any sinking fund.

The Holder of this Debenture, including the Institutional Trustee and the
Collateral Agent, shall have the right to require the Company to repurchase this
Debenture on the Purchase Contract Settlement Date and for a period of ninety
days thereafter (the "Put Option"), either in whole or in part, at an amount per
Debenture equal to $50, plus accumulated and unpaid distributions, if any (the
"Debenture Repurchase Price"). On the Purchase Contract Settlement Date, each
Holder of Debentures that has not settled its Purchase Contract with cash will
be deemed to have requested the Trust to put the aggregate principal amount of
its Debentures to the Company for an amount equal to the Debenture Repayment
Price. Upon such repurchase by the Company, the Trust shall simultaneously use
the proceeds from such repurchase to redeem the Preferred Securities of such
Holder having an aggregate Stated Amount equal to the aggregate principal amount
of the Debentures so repurchased and shall be applied to satisfy in full such
Holder's obligation to purchase Common Securities under the Purchase Contract
and any accumulated and unpaid distributions with respect to the Debentures so
repurchased shall be paid to the Holder thereof in cash. Each Holder of
Debentures that has settled its Purchase Contract with cash shall have the right
to request the Company to repurchase the Debentures on the Purchase Contract
Settlement Date and at any time during a period of ninety days thereafter for an
amount equal to the Debenture Repayment Price. Upon such repurchase by the
Company the Trust shall simultaneously use the proceeds from such repurchase to
redeem in cash the Preferred Securities of such Holder having an aggregate
Stated Amount equal to the aggregate principal amount of the Debentures so
repurchased and shall pay in cash any accumulated and unpaid distributions to
the Holder thereof. In order for the Debentures to be repurchased on the
Purchase Contract Settlement Date or for a period of ninety days thereafter, the
Company must receive at the Corporate Trust Office in the City of Chicago,
Illinois the Debentures to be repurchased with the form

11
<PAGE> 15

entitled "Option to Elect Repayment" on the reverse of or otherwise accompanying
such Debentures duly completed. All questions as to the validity, eligibility
(including time of receipt) and acceptance of the Debentures for repurchase
shall be determined by the Company, whose determination shall be final and
binding. Notwithstanding the foregoing, so long as the Holder is the
Institutional Trustee or the Collateral Agent this Debenture may be received at
the Corporate Trust Office at any time prior to 11:00 a.m., New York City time,
on the Purchase Contract Settlement Date in the form and manner as may be
designated by the Institutional Trustee or the Collateral Agent and acceptable
to the Trustee. So long as the Holder of any Debentures presented for repayment
is the Institutional Trustee or the Collateral Agent, the payment of the
Debentures Repayment Price in respect of such Debentures shall be made, either
through the Trustee or the Company acting as Paying Agent, no later than 12:00
noon, New York City time, on the Purchase Contract Settlement Date or on any
Business Day during the ninety days immediately thereafter.

In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.

The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indenture shall (i) reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any premium payable upon the redemption thereof, without the
consent of the Holder of each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debentures, the Holders of which are required to consent
to any such supplemental indenture, without the consent of the Holders of each
Debenture then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Debentures of such series, to waive Default or
Event of Default with respect to such series, and its consequences, except a
Default or Event of Default in the payment of the principal of or premium, if
any, or interest on any of the Securities of such series. Any such consent or
waiver by the registered Holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture issued in
exchange he for or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.

No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.

So long as the Company is not in default in the payment of interest on the
Debenture, the Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for a period not extending, in the aggregate, beyond the maturity
date of the Debentures (an "Extended Interest Payment Period"). At the end of an
Extended Interest Payment Period, the Company shall pay all interest then
accrued and unpaid (together with the interest thereon at the rate specified for
the Debentures to the extent that payment of such interest is enforceable under
applicable law). In the event that the Company exercises this right, then (a)
the Company shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of shares of its Common Stock in connection with the satisfaction by the Company
of its obligations under any employee benefit plans or the satisfaction by the
Company of its obligations pursuant to any contract or security requiring the
Company to purchase shares of the Company's Common Stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock or (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being

12
<PAGE> 16

converted or exchanged) or make any guarantee payments with respect to the
foregoing), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank pari passu with or junior
to such Debentures and (c) the Company shall not make any guarantee payments
with respect to the foregoing (other than pursuant to the Preferred Securities
Guarantee). Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend the interest payment period; provided,
that such Extended Interest Payment Period, together with all such previous and
further extensions thereof, may not extend beyond the maturity date of the
Debenture. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional amount
then due, the Company may commence a new Extended Interest Payment Period,
subject to the above requirements.

As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Trustee in the City of
Chicago and State of Illinois accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company or the Trustee duly executed by
the registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Debenture,
the Company, the Trustee, any paying agent and the Security Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Security Registrar
shall be affected by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or 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 issuance hereof, expressly
waived and released.

The Indenture imposes certain covenants and limitations on the Company.
All such covenants and limitations are subject to a number of important
qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.

The Debentures of this series are issuable only in registered form without
coupons in denominations of $50 and any integral multiple thereof. This Global
Debenture is exchangeable for Debentures in definitive form only under certain
limited circumstances set forth in the Indenture. Debentures of this series so
issued are issuable only in registered form without coupons in denominations of
$50 and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Debentures of this series so issued
are exchangeable for a like aggregate principal amount of Debentures of this
series of a different authorized denomination, as requested by the Holder
surrendering the same.

<PAGE> 17

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

ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES

SECTION 7.1. ORIGINAL ISSUE OF DEBENTURES.

Debentures in the aggregate principal amount of $_______________ may, upon
execution of this First Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its Chairman, its Vice Chairman, its President, or any Vice
President and its Treasurer or an Assistant Treasurer, without any further
action by the Company.

ARTICLE VIII
MISCELLANEOUS

SECTION 8.1. RATIFICATION OF INDENTURE.

The Base Indenture as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.

SECTION 8.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS.

The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.

SECTION 8.3. GOVERNING LAW.

This First Supplemental Indenture and each Debenture shall be deemed to be
a contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State.

SECTION 8.4 SEPARABILITY.

In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

SECTION 8.5. COUNTERPARTS.

This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.

<PAGE> 18

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
affixed and attested, on the date or dates indicated in the acknowledgments and
as of the day and year first above written.

AMERICAN HERITAGE LIFE INVESTMENT CORPORATION
as Issuer

By
---------------------------------
Name:
Title:

Attest:

By:
-----------------------------

THE FIRST NATIONAL BANK OF CHICAGO
as Trustee

By
--------------------------------
Name:
Title:

Attest:

By:
----------------------------

<PAGE> 1

EXHIBIT 23(A)

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
American Heritage Life Investment Corporation

We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus (Amended S-3).

KPMG PEAT MARWICK LLP

Jacksonville, Florida

June 20, 1997

<PAGE> 1

EXHIBIT 23(B)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of American Heritage Life Investment Corporation on Form S-3 (File No.
333-24153) of our report dated February 18, 1997, on our audits of the
consolidated financial statements of Columbia Universal Corporation and
subsidiaries as of December 31, 1996 and 1995, and for each of the three years
in the period ended December 31, 1996, which report is included in the American
Heritage Life Investment Corporation Current Report on Form 8-K dated March 3,
1997 filed with the Securities Exchange Commission. We also consent to the
reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Austin, Texas

June 20, 1997