APPALACHIAN POWER CO, S-3, 1996-09-04

APPALACHIAN POWER CO
S-3, 1996-09-04
ELECTRIC SERVICES

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Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

Appalachian Power Company
(Exact name of registrant as specified in its charter)

Virginia 54-0124790
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

40 Franklin Road
Roanoke, Virginia 24011
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 540-985-2300

ARMANDO A. PENA, Treasurer
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza
Columbus, Ohio 43215
614-223-2850
(Name, address and telephone number of agent for service)

It is respectfully requested that the Commission send copies
of all notices, orders and communications to:

Simpson Thacher & Bartlett Dewey Ballantine
425 Lexington Avenue 1301 Avenue of the Americas
New York, NY 10017-3909 New York, NY 10019-6092
Attention: James M. Cotter Attention: E. N. Ellis, IV

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the Registra-
tion Statement.

If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]

If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, please 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 of the earlier effective
registration statement for 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 of 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. [ ]

<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>

Title of Proposed
Each Class Maximum Proposed
of Offering Maximum
Securities Amount Price Aggregate Amount of
to be to be Per Offering Registration
Registered Registered Unit* Price* Fee
<S> <C> <C> <C> <C>

Junior
Subordinated
Debentures $75,000,000 100% $75,000,000 $25,863
</TABLE>

*Estimated solely for purpose of calculating the registration
fee.

The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

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

SUBJECT TO COMPLETION, DATED SEPTEMBER 3, 1996

PROSPECTUS

$75,000,000
APPALACHIAN POWER COMPANY
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
SERIES A, DUE 2026

The Junior Subordinated Deferrable Interest Debentures,
Series A, Due 2026, will mature on September 30, 2026 (the "New
Junior Subordinated Debentures"). Interest on the New Junior
Subordinated Debentures is payable quarterly, in arrears, on each
March 31, June 30, September 30 and December 31, commencing
December 31, 1996. The New Junior Subordinated Debentures will
be redeemable at 100% of the principal amount redeemed plus
accrued interest to the redemption date at the option of the
Company in whole or in part on or after September __, 2001. The
New Junior Subordinated Debentures will be represented by a
global debenture registered in the name of a nominee of The
Depository Trust Company, as Depository, and will be available
for purchase in denominations of $25 and any integral multiple
thereof. See "Description of New Junior Subordinated Debentures"
herein.

Application will be made to have the New Junior Subordinated
Debentures listed on the New York Stock Exchange.

SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE NEW JUNIOR SUBORDINATED
DEBENTURES, INCLUDING THE PERIODS AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENT OF INTEREST ON THE NEW JUNIOR SUBORDINATED
DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX
CONSEQUENCES.

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.

Initial Public Underwriting Proceeds to
Offering Price(1) Discount(2)(4) Company(3)(4)

Per New Junior
Subordinated
Debenture ...... % % %

Total ........ $ $ $

(1) Plus accrued interest, if any, from the date of original
issuance.

(2) The Company has agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended. See "Underwriting"
herein.

(3) Before deducting expenses payable by the Company, estimated
at $195,363.

(4) The Underwriting Discount will be ____% of the principal
amount of the New Junior Subordinated Debentures sold to
certain institutions. Therefore, to the extent any such
sales are made to such institutions, the actual total
Underwriting Discount will be less than, and the actual
total Proceeds to Company will be greater than, the amounts
shown in the table above.

The New Junior Subordinated Debentures are offered severally
by the Underwriters, subject to prior sale, when, as and if
issued and accepted by them, 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 New Junior
Subordinated Debentures will be made in New York, New York, on or
about September __, 1996.

Merrill Lynch & Co.

Dean Witter Reynolds Inc.

Lehman Brothers

PaineWebber Incorporated

Prudential Securities

The date of this Prospectus is September __, 1996.

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

No dealer, salesperson or other person has been authorized
to give any information or to make any representation not
contained in this Prospectus in connection with the offer made by
this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company or any underwriter, agent or dealer. This
Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, by any underwriter, agent or
dealer in any jurisdiction in which it is unlawful for such
underwriter, agent or dealer to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any
sale made thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company since the date hereof or thereof.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and
other information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549; Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661; and 7 World
Trade Center, Suite 1300, New York, NY 10048. Copies of such
material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The SEC maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other
information regarding registrants that file electronically with
the SEC, including the Company. Certain of the Company's
securities are listed on the New York Stock Exchange and on the
Philadelphia Stock Exchange, where reports and other information
concerning the Company may also be inspected.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents filed by the Company with the SEC
are incorporated in this Prospectus by reference:

-- The Company's Annual Report on Form 10-K for the year
ended December 31, 1995; and

-- The Company's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1996 and June 30, 1996.

All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date
of this Prospectus and prior to the termination of the offering
made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the
date of filing of such documents.

Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.

The Company will provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written
or oral request of any such person, a copy of any or all of the
documents described above which have been incorporated by
reference in this Prospectus, other than exhibits to such
documents. Written requests for copies of such documents should
be addressed to Mr. G. C. Dean, American Electric Power Service
Corporation, 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number: 614-223-1000). The information relating to the Company
contained in this Prospectus does not purport to be comprehensive
and should be read together with the information contained in the
documents incorporated by reference.

TABLE OF CONTENTS
Page

Available Information . . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference . . . . . . . . . . . . . 2
Table of Contents . . . . . . . . . . . . . . . . . . . . . . 3
Investment Considerations . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 5
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . 5
Description of New Junior Subordinated Debentures . . . . . . 5
Certain United States Federal Income Tax Consequences . . . . 16
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 19
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . 19

INVESTMENT CONSIDERATIONS

Prospective purchasers of New Junior Subordinated Debentures
should carefully review the information contained elsewhere in
this Prospectus and should particularly consider the following
matters:

Subordination of New Junior Subordinated Debentures

Payment of the principal of, premium, if any, and interest
on the New Junior Subordinated Debentures is subordinated and
subject in right of payment to the prior payment in full of all
Senior Indebtedness of the Company. As of June 30, 1996,
outstanding Senior Indebtedness of the Company aggregated
approximately $1,400,000,000. There are no terms in the New
Junior Subordinated Debentures that limit the Company's ability
to incur additional indebtedness, including indebtedness that
ranks senior to the New Junior Subordinated Debentures. See
"Description of New Junior Subordinated Debentures--
Subordination" herein.

Option to Extend Interest Payment Period

The Company has the right under the Indenture to extend the
interest payment period from time to time on the New Junior
Subordinated Debentures to a period not exceeding 20 consecutive
quarters, and as a consequence, quarterly interest payments on
the New Junior Subordinated Debentures would be deferred (but
would continue to accrue with interest thereon compounded
quarterly to the extent permitted by law) during any such
extended interest payment period. In the event that the Company
exercises this right, the Company may not declare or pay
dividends on, or purchase, acquire, or make a liquidation payment
with respect to, any of its capital stock, or make any guarantee
payments with respect to the foregoing. Therefore, the Company
believes that the extension of an interest payment period on the
New Junior Subordinated Debentures is unlikely. 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 exceed 20 consecutive quarters or extend beyond
the maturity of the New Junior Subordinated Debentures. Upon the
termination of any extension period and the payment of all
accrued and unpaid interest then due, the Company may select a
new extension period, subject to the above requirements. See
"Description of New Junior Subordinated Debentures--Option to
Extend Interest Payment Period" herein.

Should an extended interest payment period occur, holders of
the New Junior Subordinated Debentures will continue to accrue
income (as original issue discount) for United States federal
income tax purposes even though interest is not being paid on a
current basis. As a result, a holder will include such interest
in gross income for United States federal income tax purposes in
advance of the receipt of cash, and will not receive the cash
from the Company related to such income if a holder disposes of
New Junior Subordinated Debentures prior to the record date for
payment of interest. See "Certain United States Federal Income
Tax Consequences--Original Issue Discount, Market Discount and
Acquisition Premium" herein.

Certain Trading Characteristics of the New Junior Subordinated
Debentures

The New Junior Subordinated Debentures are expected to trade
as equity securities on the New York Stock Exchange.
Consequently, purchasers will not pay and sellers will not
receive any accrued and unpaid interest on the New Junior
Subordinated Debentures that is not included in the trading
price. For certain tax consequences with respect to such sales,
see "Certain United States Federal Income Tax Consequences--Sale,
Exchange and Retirement of New Junior Subordinated Debentures"
herein.

THE COMPANY

The Company is engaged in the generation, purchase,
transmission and distribution of electric power to approximately
859,000 customers in Virginia and West Virginia, and in supplying
electric power at wholesale to other electric utility companies
and municipalities in those states and in Tennessee. Its
principal executive offices are located at 40 Franklin Road,
S.W., Roanoke, Virginia 24011 (telephone number: 540-985-2300).
The Company is a subsidiary of American Electric Power Company,
Inc. ("AEP") and is a part of the American Electric Power
integrated utility system (the "AEP System"). The executive
offices of AEP are located at 1 Riverside Plaza, Columbus, Ohio
43215 (telephone number: 614-223-1000).

USE OF PROCEEDS

The Company proposes to use the net proceeds from the sale
of the New Junior Subordinated Debentures to refund cumulative
preferred stock. The Company's Cumulative Preferred Stock, 7.40%
Series, par value $100 per share (250,000 shares outstanding) may
be redeemed at their regular redemption price of $102.11 per
share, plus a sum computed at the annual dividend rate to the
date of redemption. The Company's Cumulative Preferred Stock,
7.80% Series, par value $100 per share (500,000 shares out-
standing) may be redeemed at their regular redemption price of
$107.80 per share on or prior to March 31, 1997 and at $105.20
per share on and after April 1, 1997, plus a sum computed at the
annual dividend rate to the date of redemption.

RATIO OF EARNINGS TO FIXED CHARGES

Below is set forth the ratio of earnings to fixed charges
for each of the twelve month periods ended December 31, 1991
through 1995 and June 30, 1996:

12-Month
Period Ended Ratio

December 31, 1991 2.85
December 31, 1992 2.58
December 31, 1993 2.69
December 31, 1994 2.37
December 31, 1995 2.54
June 30, 1996 2.72

DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES

The New Junior Subordinated Debentures will be issued as a
series of Junior Subordinated Debentures under an Indenture to be
entered into between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee"), as supplemented by a
Supplemental Indenture (collectively, the "Indenture"). 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 forms of Indenture and Supplemental
Indenture, which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. Whenever
particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are
incorporated by reference herein. Section and Article references
used herein are references to provisions of the Indenture unless
otherwise noted.

General

The New Junior Subordinated Debentures will be unsecured,
subordinated obligations of the Company. The Indenture does not
limit the aggregate principal amount of Junior Subordinated
Debentures that may be issued thereunder and provides that the
Junior Subordinated Debentures may be issued thereunder from time
to time in one or more series.

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

Principal Amount, Interest and Maturity

The New Junior Subordinated Debentures will be limited in
aggregate principal amount to $75,000,000.

The New Junior Subordinated Debentures will mature September
30, 2026 and will bear interest at the rate per annum shown in
the title thereof from the date on which the New Junior
Subordinated Debentures are originally issued until the principal
amount thereof becomes due and payable. Interest will be payable
quarterly, in arrears, on each March 31, June 30, September 30
and December 31, commencing December 31, 1996. Interest (other
than interest payable on redemption or maturity) will be payable
to the persons in whose names the New Junior Subordinated
Debentures are registered at the close of business on the
relevant regular record dates, which will be one Business Day (as
hereinafter defined) prior to the relevant payment dates, except
that if the New Junior Subordinated Debentures are no longer
represented by a global debenture, the regular record date for
such interest installment shall be the close of business on March
15, June 15, September 15 or December 15 (regardless of whether
it is a Business Day) next preceding an interest payment date.
Interest payable on redemption or maturity will be payable to the
person to whom the principal is paid. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which interest is payable on the New
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 which is a Business Day (and without any
interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if
made on such date. A "Business Day" shall mean any day other
than a day on which banking institutions in the Borough of
Manhattan, the City and State of New York are authorized or
obligated by law to close.

Redemption

The New Junior Subordinated Debentures will be redeemable at
the option of the Company, in whole or in part, at any time on or
after September __, 2001, upon not less than 30 nor more than 60
days' notice, at 100% of the principal amount redeemed together
with accrued and unpaid interest to the redemption date.

Option to Extend Interest Payment Period

The Company shall have the right at any time during the term
of the New Junior Subordinated Debentures from time to time to
extend the interest payment period of the New Junior Subordinated
Debentures for up to 20 consecutive quarters (the "Extension
Period"), at the end of which Extension Period the Company shall
pay all interest accrued and unpaid thereon (together with
interest thereon compounded quarterly at the rate specified for
the New Junior Subordinated Debentures to the extent permitted by
applicable law); provided that during any such Extension Period,
the Company shall not declare or pay any dividend on, or
purchase, acquire or make a liquidation payment with respect to,
any of its capital stock or make any guarantee payments with
respect to the foregoing. 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 exceed
20 consecutive quarters or extend beyond the maturity of the New
Junior Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all accrued and unpaid
interest then due, the Company may select a new Extension Period,
subject to the above requirements. No interest shall be due and
payable during an Extension Period, except at the end thereof.
The Company shall give the holders of the New Junior Subordinated
Debentures notice of its selection of such Extension Period at
least ten Business Days prior to the earlier of (i) the next
interest payment date or (ii) the date the Company is required to
give notice to holders of the New Junior Subordinated Debentures
(or, if applicable, to the New York Stock Exchange or other
applicable self-regulatory organization) of the record or payment
date of such interest payment, but in any event not less than two
Business Days prior to such record date.

Subordination

The Indenture provides that payment of the principal of,
premium, if any, and interest on Junior Subordinated Debentures
is subordinated and subject in right of payment to the prior
payment in full of all Senior Indebtedness (as defined below) of
the Company as provided in the Indenture. No payment of
principal of (including redemption and sinking fund payments),
premium, if any, or interest on, Junior Subordinated Debentures
may be made if payment of principal, premium, interest or any
other payment on any Senior Indebtedness is not made when due,
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 if the maturity of any Senior Indebtedness 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 of, premium, if any, and interest due
or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on Junior Subordinated Debentures.
Subject to the payment in full of all Senior Indebtedness, the
rights of the holders of Junior Subordinated Debentures will be
subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on Junior Subordinated
Debentures are paid in full. (Sections 14.01 to 14.04).

The term "Senior Indebtedness" shall mean the principal of,
premium, if any, interest on and any other payment due pursuant
to any of the following, whether outstanding at the date of
execution of the Indenture or thereafter incurred, created or
assumed:

(a) all indebtedness of the Company evidenced by
notes, debentures, bonds or other securities sold by the
Company for money or other obligations for money borrowed;

(b) all indebtedness of others of the kinds described
in the preceding clause (a) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the
Company;

(c) all installment purchase agreements entered into
by the Company in connection with revenue bonds issued by an
agency or political subdivision of a state of the United
States of America; and

(d) all renewals, extensions or refundings of
indebtedness of the kinds described in either of the
preceding clauses (a), (b) and (c);

unless, in the case of any particular indebtedness, renewal,
extension or refunding, the instrument creating or evidencing the
same or the assumption or guarantee of the same expressly
provides that such indebtedness, renewal, extension or refunding
is not superior in right of payment to or is pari passu with
Junior Subordinated Debentures. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits
of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
(Sections 1.01 and 14.08).

The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued. As of June 30, 1996, Senior
Indebtedness of the Company aggregated approximately
$1,400,000,000.

Covenant of the Company

The Company will not declare or pay any dividend on, or
purchase, acquire or make a distribution or liquidation payment
with respect to, any of its capital stock or make any guarantee
payments with respect thereto, if at such time (i) an Event of
Default under the Indenture has occurred and is continuing or
(ii) the Company has given notice of its selection of an
Extension Period and such period, or any extension thereof, is
continuing.

Form, Exchange, Registration and Transfer

The New Junior Subordinated Debentures initially will be
issued in registered form and will be represented by a global
debenture (the "Global Debenture"). See "Book-Entry Debentures"
herein. If not represented by one or more global debentures, New
Junior Subordinated Debentures may be presented for registration
of transfer (with the form of transfer endorsed thereon duly
executed) or exchange, at the office of the Debenture Registrar,
without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such
transfer or exchange will be effected upon the Company or the
Debenture Registrar being satisfied with the documents of title
and identity of the person making the request. The Company has
appointed the Trustee as Debenture Registrar with respect to New
Junior Subordinated Debentures. (Section 2.05).

The Company shall not be required to (i) issue, register the
transfer of or exchange any New Junior Subordinated Debenture
during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of less
than all the outstanding New Junior Subordinated Debentures and
ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any New Junior
Subordinated Debentures or portions thereof called for
redemption. (Section 2.05).

Payment and Paying Agents

Payment of principal of and premium (if any) on any New
Junior Subordinated Debenture will be made only against surrender
to the Paying Agent of such New Junior Subordinated Debenture.
Principal of and any premium and interest on New Junior
Subordinated Debentures will be payable at the office of such
Paying Agent or Paying Agents as the Company may designate from
time to time, except that at the option of the Company payment of
any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the
Debenture Register with respect to such New Junior Subordinated
Debentures. See "Principal Amount, Interest and Maturity"
herein.

The Trustee will act as Paying Agent with respect to New
Junior Subordinated Debentures. The Company may at any time
designate additional Paying Agents or rescind the designation of
any Paying Agents or approve a change in the office through which
any Paying Agent acts. (Sections 4.02 and 4.03).

All moneys paid by the Company to a Paying Agent for the
payment of the principal of or premium or interest, if any, on
any New Junior Subordinated Debenture that remain unclaimed at
the end of two years after such principal, premium, if any, or
interest shall have become due and payable, subject to applicable
law, will be repaid to the Company and the holder of such New
Junior Subordinated Debenture will thereafter look only to the
Company for payment thereof. (Section 11.04).

Book-Entry Debentures

Except under the circumstances described below, the New
Junior Subordinated Debentures will be issued in whole or in part
in the form of a Global Debenture that will be deposited with, or
on behalf of, The Depository Trust Company, New York, New York
("DTC"), or such other depository as may be subsequently
designated (the "Depository"), and registered in the name of a
nominee of the Depository.

Book-Entry Debentures represented by a Global Debenture will
not be exchangeable for Certificated Debentures and, except under
the circumstances described below, will not otherwise be issuable
as Certificated Debentures.

So long as the Depository, or its nominee, is the registered
owner of a Global Debenture, such Depository or such nominee, as
the case may be, will be considered the sole owner of the
individual Book-Entry Debentures represented by such Global
Debenture for all purposes under the Indenture. Payments of
principal of and premium, if any, and any interest on individual
Book-Entry Debentures represented by a Global Debenture will be
made to the Depository or its nominee, as the case may be, as the
Owner of such Global Debenture. Except as set forth below,
owners of beneficial interests in a Global Debenture will not be
entitled to have any of the individual Book-Entry Debentures
represented by such Global Debenture registered in their names,
will not receive or be entitled to receive physical delivery of
any such Book-Entry Debentures and will not be considered the
Owners thereof under the Indenture, including, without
limitation, for purposes of consenting to any amendment thereof
or supplement thereto.

If the Depository is at any time unwilling or unable to
continue as depository and a successor depository is not
appointed, the Company will issue individual Certificated
Debentures in exchange for the Global Debenture representing the
corresponding Book-Entry Debentures. In addition, the Company
may at any time and in its sole discretion determine not to have
any New Junior Subordinated Debentures represented by the Global
Debenture and, in such event, will issue individual Certificated
Debentures in exchange for the Global Debenture representing the
corresponding Book-Entry Debentures. In any such instance, an
owner of a Book-Entry Debenture represented by a Global Debenture
will be entitled to physical delivery of individual Certificated
Debentures equal in principal amount to such Book-Entry Debenture
and to have such Certificated Debentures registered in his or her
name. Individual Certificated Debentures so issued will be
issued as registered Debentures in denomination of $25 and
integral multiples thereof.

DTC has confirmed to the Company and the Underwriters the
following information:

1. DTC will act as securities depository for the
Global Debenture. The New Junior Subordinated Debentures
will be issued as fully-registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One
fully-registered Global Debenture will be issued for the
series of New Junior Subordinated Debentures, in the
aggregate principal amount of such series, and will be
deposited with DTC.

2. DTC is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of
the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of
Section 17A of the 1934 Act. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the
need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations, and certain
other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file
with the SEC.

3. Purchases of New Junior Subordinated Debentures
under the DTC system must be made by or through Direct
Participants, which will receive a credit for the New Junior
Subordinated Debentures on DTC's records. The ownership
interest of each actual purchaser of each New Junior
Subordinated Debenture ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from
DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the
transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the New Junior
Subordinated Debentures 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 New
Junior Subordinated Debentures, except in the event that use
of the book-entry system for the New Junior Subordinated
Debentures is discontinued.

4. To facilitate subsequent transfers, all New Junior
Subordinated Debentures deposited by Participants with DTC
are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of New Junior Subordinated
Debentures with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the New
Junior Subordinated Debentures; DTC's records reflect only
the identity of the Direct Participants to whose accounts
such New Junior Subordinated Debentures 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.

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

6. Redemption notices shall be sent to Cede & Co. If
less than all of the New Junior Subordinated Debentures are
being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such
issue to be redeemed.

7. Neither DTC nor Cede & Co. will consent or vote
with respect to the New Junior Subordinated Debentures.
Under its usual procedures, DTC mails an Omnibus Proxy to
the Company as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the
New Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus
Proxy).

8. Principal and interest payments on the New Junior
Subordinated Debentures will be made to DTC. DTC's practice
is to credit Direct Participants' accounts on the date on
which interest is payable in accordance with their
respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on such
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 accounts of
customers in bearer form or registered in "street name", and
will be the responsibility of such Participant and not of
DTC, the Underwriters or the Company, subject to any
statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC
is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall
be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as
securities depository with respect to the New Junior
Subordinated Debentures at any time by giving reasonable
notice to the Company and the Trustee. Under such
circumstances, in the event that a successor securities
depository is not obtained, Certificated Debentures are
required to be printed and delivered.

10. The Company may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor
securities depository). In that event, Certificated
Debentures will be printed and delivered.

The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility
for the accuracy thereof.

None of the Company, the Trustee or any agent for payment on
or registration of transfer or exchange of any Global Debenture
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in such Global Debenture or for maintaining,
supervising or reviewing any records relating to such beneficial
interests.

Modification of 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 principal amount of Junior Subordinated Debentures of
each series that are affected by the modification, to modify the
Indenture or any supplemental indenture affecting that series or
the rights of the holders of that series of Junior Subordinated
Debentures; provided, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated
Debenture affected thereby, (i) extend the fixed maturity of any
Junior Subordinated Debentures of any series, or 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 or (ii) reduce the percentage of
Junior Subordinated Debentures, the holders of which are required
to consent to any such supplemental indenture. (Section 9.02).

In addition, the Company and the Trustee may execute,
without the consent of any holder of Junior Subordinated
Debentures, any supplemental indenture for certain other usual
purposes including the creation of any new series of Junior
Subordinated Debentures. (Sections 2.01, 9.01 and 10.01).

Events of Default

The Indenture provides that any one or more of the following
described events, which has occurred and is continuing,
constitutes an "Event of Default" with respect to each series of
Junior Subordinated Debentures:

(a) failure for 10 days to pay interest on Junior
Subordinated Debentures of that series when due; provided
that a valid extension of the interest payment period by the
Company shall not constitute a default in the payment of
interest for this purpose; or

(b) failure to pay principal or premium, if any, on
Junior Subordinated Debentures of that series when due
whether at maturity, upon redemption, by declaration or
otherwise, or to make payment required by any sinking or
analogous fund with respect to that series; or

(c) failure by the Company to observe or perform any
other covenant (other than those specifically relating to
another series) contained in the Indenture for 90 days after
written notice to the Company from the Trustee or the
holders of at least 25% in principal amount of the
outstanding Junior Subordinated Debentures of that series;
or

(d) certain events involving bankruptcy, insolvency or
reorganization of the Company. (Section 6.01).

The Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of any particular series of Junior
Subordinated Debentures may declare the principal due and payable
immediately upon an Event of Default with respect to such series,
but the holders of a majority in aggregate outstanding principal
amount of such series may annul such declaration and waive the
default with respect to such series if the default has been cured
and a sum sufficient to pay all matured installments of interest
and principal otherwise than by acceleration and any premium has
been deposited with the Trustee. (Sections 6.01 and 6.06).

The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee for that
series. (Section 6.06). Subject to the provisions of the
Indenture relating to the duties of the Trustee in case an Event
of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the holders
of the Junior Subordinated Debentures, unless such holders shall
have offered to the Trustee indemnity satisfactory to it.
(Section 7.02).

The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all Junior Subordinated
Debentures of such series, waive any past default, except a
default in the payment of principal, premium, if any, or interest
when due otherwise than by acceleration (unless such default has
been cured and a sum sufficient to pay all matured installments
of interest and principal otherwise than by acceleration and any
premium has been deposited with the Trustee) or a call for
redemption of Junior Subordinated Debentures of such series.
(Section 6.06). The Company is required to file annually with
the Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the
Indenture. (Section 5.03(d)).

Consolidation, Merger and Sale

The Indenture does not contain any covenant that restricts
the Company's ability to merge or consolidate with or into any
other corporation, sell or convey all or substantially all of its
assets to any person, firm or corporation or otherwise engage in
restructuring transactions, provided that the successor
corporation assumes due and punctual payment of principal or
premium, if any, and interest on the Junior Subordinated
Debentures. (Section 10.01).

Defeasance and Discharge

Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the New
Junior Subordinated Debentures (except in each case for certain
obligations to register the transfer or exchange of New Junior
Subordinated Debentures, replace stolen, lost or mutilated New
Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) if the Company deposits with the
Trustee, in trust, moneys or Governmental Obligations (as defined
in the Indenture), or a combination thereof, in an amount
sufficient to pay all the principal of, and interest on, New
Junior Subordinated Debentures of such series on the dates such
payments are due in accordance with the terms of the New Junior
Subordinated Debentures. Such defeasance or discharge may occur
only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the holders of
the New Junior Subordinated Debentures will not recognize gain,
loss or income for federal income tax purposes as a result of the
satisfaction and discharge of the Indenture with respect to such
series and such holders will be subject to federal income
taxation on the same amounts and in the same manner and at the
same times as if such satisfaction and discharge had not
occurred. (Section 11.01).

Governing Law

The Indenture and New Junior Subordinated Debentures will be
governed by, and construed in accordance with, the laws of the
State of New York. (Section 13.05).

Concerning the Trustee

AEP System companies, including the Company, utilize or may
utilize some of the banking services offered by The First
National Bank of Chicago in the normal course of their
businesses. Among such services are the making of short-term
loans, generally at rates related to the prime commercial
interest rate.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following summary describes certain United States
federal income tax consequences of the ownership of New Junior
Subordinated Debentures as of the date hereof and represents the
opinion of Simpson Thacher & Bartlett, counsel to the Company,
insofar as it relates to matters of law or legal conclusions.
Except where noted, it deals only with New Junior Subordinated
Debentures held by initial purchasers who have purchased New
Junior Subordinated Debentures at the initial offering price
thereof and who hold such New Junior Subordinated Debentures as
capital assets and does not deal with special situations, such as
those of dealers in securities or currencies, financial
institutions, life insurance companies, persons holding New
Junior Subordinated Debentures as a part of a hedging or
conversion transaction or a straddle, United States Holders (as
defined below) whose "functional currency" is not the U.S.
dollar, or Non-United States Holders (as defined below) who own
(actually or constructively) ten percent or more of the combined
voting power of all classes of voting stock of the Company, who
are present in the United States or who have any other special
status with respect to the United States. Furthermore, the
discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations,
rulings and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as
to result in federal income tax consequences different from those
discussed below. Persons considering the purchase, ownership or
disposition of New Junior Subordinated Debentures should consult
their own tax advisors concerning the federal income tax
consequences in light of their particular situations as well as
any consequences arising under the laws of any other taxing
jurisdiction.

United States Holders

As used herein, a "United States Holder" of a New Junior
Subordinated Debenture means a holder that is a citizen or
resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate
or trust the income of which is subject to United States federal
income taxation regardless of its source. A "Non-United States
Holder" is a holder that is not a United States Holder.

Payments of Interest

Except as set forth below, stated interest on a New Junior
Subordinated Debenture will generally be taxable to a United
States Holder as ordinary income at the time it is paid or
accrued in accordance with the United States Holder's method of
accounting for tax purposes.

Original Issue Discount, Market Discount and Acquisition Premium

Under income tax regulations that recently became effective,
the Company believes that the New Junior Subordinated Debentures
will not be treated as issued with original issue discount
("OID"). It should be noted that these regulations have not yet
been addressed in any rulings or other interpretations by the
Internal Revenue Service ("IRS"). Accordingly, it is possible
that the IRS could take a position contrary to the interpretation
described above.

Under the terms of the New Junior Subordinated Debentures,
the Company has the option to defer payments of interest for the
Extension Period and to pay as a lump sum at the end of such
period all of the interest that has accrued during such period.
See "Description of New Junior Subordinated Debentures--Option to
Extend Interest Payment Period". Should the Company exercise
this option to extend the interest payment periods, the New
Junior Subordinated Debentures would at that time be treated as
issued with OID and all the stated interest payments on the New
Junior Subordinated Debentures would thereafter be treated as OID
as long as they remained outstanding. As a result, United States
Holders would, in effect, be required to accrue interest income
even if the holders are on the cash method of tax accounting.
Consequently, in the event that the interest payment period is
extended, a United States Holder would be required to include OID
in income on an economic accrual basis notwithstanding that the
Company will not make any interest payments during such period on
the New Junior Subordinated Debentures.

United States Holders other than initial United States
Holders may be deemed to have acquired the New Junior
Subordinated Debentures with market discount or acquisition
premium. Such holders should consult their own tax advisors
concerning the effect of the market discount and premium rules on
their holding of the New Junior Subordinated Debentures.

Sale, Exchange and Retirement of New Junior Subordinated
Debentures

Upon the sale, exchange or retirement of a New Junior
Subordinated Debenture, a United States Holder will recognize
gain or loss equal to the difference between the amount realized
upon the sale, exchange or retirement and the adjusted tax basis
of the New Junior Subordinated Debenture. A United States
Holder's tax basis in a New Junior Subordinated Debenture will,
in general, be the United States Holder's cost therefor,
increased by any OID previously included in income by the United
States Holder and reduced by any cash payments on the New Junior
Subordinated Debenture. Such gain or loss will be capital gain
or loss and will be long-term capital gain or loss if at the time
of sale, exchange or retirement the New Junior Subordinated
Debenture has been held for more than one year. Under current
law, net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary
income. The deductibility of capital losses is subject to
limitations.

Non-United States Holders

Under present United States federal income and estate tax
law, and subject to the discussion below concerning backup
withholding:

(a) no withholding of United States federal income tax
will be required with respect to the payment by the Company
or any Paying Agent of principal or interest (which for
purposes of this discussion includes OID) on a New Junior
Subordinated Debenture owned by a Non-United States Holder,
provided (i) the beneficial owner is not a controlled
foreign corporation that is related to the Company through
stock ownership, (ii) the beneficial owner is not a bank
whose receipt of interest on a New Junior Subordinated
Debenture is described in section 881(c)(3)(A) of the Code
and (iii) either (y) the beneficial owner certifies to the
Company or its agent, under the penalties of perjury, that
it is not a U. S. person, citizen or resident and provides
its name and address or (z) a financial institution holding
the New Junior Subordinated Debentures on behalf of the
beneficial owner certifies, under penalties of perjury, that
such statement has been received by it and furnishes the
Company or its agent with a copy thereof;

(b) no withholding of United States federal income tax
will be required with respect to any gain or income realized
by a Non-United States Holder upon the sale, exchange or
retirement of a New Junior Subordinated Debenture; and

(c) a New Junior Subordinated Debenture beneficially
owned by an individual who at the time of death is a Non-
United States Holder will not be subject to United States
federal estate tax as a result of such individual's death,
provided that the interest payments with respect to such
debenture would not have been, if received at the time of
such individual's death, effectively connected with the
conduct of a trade or business by such individual in the
United States.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to
certain payments of principal, interest and OID paid on New
Junior Subordinated Debentures and to the proceeds of sale of a
New Junior Subordinated Debenture made to United States Holders
other than certain exempt recipients (such as corporations). A
31 percent backup withholding tax will apply to such payments if
the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.

No information reporting or backup withholding will be
required with respect to payments made by the Company or any
paying agent to Non-United States Holders if a statement
described in (a)(iii) under "Non-United States Holders" has been
received and the payor does not have actual knowledge that the
beneficial owner is a United States person.

Payments of the proceeds from the sale by a Non-United
States Holder of a New Junior Subordinated Debenture made to or
through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the
broker is, for federal income tax purposes, a United States
person, a controlled foreign corporation or a foreign person that
derives 50 percent or more of its gross income for certain
periods from the conduct of a trade or business in the United
States, such payments will not be subject to backup withholding
but may be subject to information reporting. Payments of
proceeds from the sale of a New Junior Subordinated Debenture to
or through the United States office of a broker is subject to
information reporting and backup withholding unless the Non-
United States Holder or the beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules will
be allowed as a refund or a credit against such holder's U. S.
federal income tax liability provided the required information is
furnished to the IRS.

LEGAL OPINIONS

Opinions with respect to the legality of New Junior
Subordinated Debentures will be rendered by Simpson Thacher &
Bartlett (a partnership which includes professional
corporations), 425 Lexington Avenue, New York, New York, and 1
Riverside Plaza, Columbus, Ohio, counsel for the Company, and by
Dewey Ballantine, 1301 Avenue of the Americas, New York, New
York, counsel for the Underwriters. Additional legal opinions in
connection with the offering of the New Junior Subordinated
Debentures may be given by John M. Adams, Jr. or David C. House,
counsel for the Company. Mr. Adams is Assistant General Counsel,
and Mr. House is an Attorney, in the Legal Department of American
Electric Power Service Corporation, a wholly owned subsidiary of
AEP. From time to time, Dewey Ballantine acts as counsel to
affiliates of the Company in connection with certain matters.

Statements as to United States taxation in the Prospectus
under the caption, "Certain United States Federal Income Tax
Consequences" have been passed upon for the Company by Simpson
Thacher & Bartlett, counsel to the Company, and are stated herein
on their authority.

EXPERTS

The financial statements and related financial statement
schedule incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.

UNDERWRITING

Subject to the terms and conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of
the Underwriters named below ("Underwriters"), and each of the
Underwriters has severally agreed to purchase the number of New
Junior Subordinated Debentures set forth opposite its name below:

Principal
Amount of
New Junior
Subordinated
Underwriters Debentures

Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . $
Dean Witter Reynolds Inc. . . . . . . . . . . . . .
Lehman Brothers Inc . . . . . . . . . . . . . . . .
PaineWebber Incorporated . . . . . . . . . . . . .
Prudential Securities . . . . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . $75,000,000

The Underwriters are committed to take and pay for all of
the New Junior Subordinated Debentures, if any are taken. The
Underwriting Agreement provides that under certain circumstances
involving a default of Underwriters, less than all of the New
Junior Subordinated Debentures may be purchased.

The Company has been advised by the Underwriters that the
Underwriters propose initially to offer the New Junior
Subordinated Debentures 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
______% of the principal amount of the New Junior Subordinated
Debentures. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of ______% of the principal
amount of the New Junior Subordinated Debentures to certain other
dealers. After the initial public offering, the public offering
price, concession and reallowance may be changed.

The New Junior Subordinated Debentures are a new issue of
securities with no established trading market. While the Company
intends to list the New Junior Subordinated Debentures on the New
York Stock Exchange, there can be no assurance that an active
market for the New Junior Subordinated Debentures will develop or
be sustained in the future on such Exchange. Listing will depend
upon satisfaction of such Exchange's listing requirements with
respect to the New Junior Subordinated Debentures. The Company
has been advised by the Underwriters that they intend to make a
market in the New Junior Subordinated Debentures, but are not
obligated to do so and may discontinue market making at any time
without notice. No assurance can be given as to the liquidity of
the trading market for the New Junior Subordinated Debentures.

The Underwriters, and certain affiliates thereof, engage in
transactions with and perform services for the Company and its
affiliates in the ordinary course of business.

The Company has agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the
Securities Act of 1933.

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.*

Securities and Exchange Commission Filing Fee . . . . . $ 25,863
Printing Registration Statement, Prospectus . . . . . . 25,000
Printing and Engraving Debentures . . . . . . . . . . . 10,000
Independent Auditors' fees . . . . . . . . . . . . . . 15,000
Charges of Trustee (including counsel fees) . . . . . . 4,500
Legal fees of Counsel . . . . . . . . . . . . . . . . . 45,000
Rating Agency fees . . . . . . . . . . . . . . . . . . 50,000
Miscellaneous expenses . . . . . . . . . . . . . . . . 20,000

Total $195,363

*Estimated, except for filing fees.

Item 15. Indemnification of Directors and Officers.

The Bylaws of the Company provide that the Company shall
indemnify any 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 and whether formal or informal because such person
is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer,
partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, against any obligations to pay judgments,
settlements, penalties, fines (including any excise tax) or
reasonable expenses (including attorneys' fees) incurred by such
person in connection with such action, suit or proceeding if (a)
such person conducted him or herself in good faith, (b) such
person believed in the case of conduct in such person's official
capacity with the Company (as defined) that his or her conduct
was in the best interests of the Company, and, in all other
cases, that his or her conduct was at least not opposed to its
best interests, (c) with respect to any criminal action or
proceeding, such person had no reasonable cause to believe his or
her conduct was unlawful and (d) such person was not grossly
negligent or guilty of willful misconduct. Such
indemnification in connection with a proceeding by or in the
right of the Company is limited to reasonable expenses incurred
in connection with the proceeding. Any such indemnification
(unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that
indemnification of the director is proper in the circumstances
because such person has met the applicable standard of conduct.

Section 13.1-698 of the Code of Virginia provides that
unless limited by the articles of incorporation, a corporation
shall indemnify a director who entirely prevails in the defense
of any action, suit or proceeding to which such person was a
party because such person is or was a director of the corporation
against reasonable expenses incurred in connection with such
action, suit or proceeding. Section 13.1-699 provides that a
corporation may pay for or reimburse reasonable expenses incurred
by a director who is a party to such a proceeding in advance of
final disposition of such proceeding if (a) the director
furnishes a written statement of his or her good faith belief
that the standard of conduct described in the paragraph above has
been met; (b) the director furnishes the corporation a written
undertaking by or on behalf of the director to repay the advance
if it is ultimately determined that such person did not meet the
standard of conduct; and (c) a determination is made that the
facts then known to those making the determination would not
preclude indemnification. Section 13.1-700.1 provides procedures
which allow directors to apply to a court for an order directing
advances or indemnification.

Section 13.1-702 provides that unless limited by the
articles of incorporation, (a) officers are entitled to mandatory
indemnification under Section 13.1-698 and to apply for court
ordered indemnification under Section 13.1-700.1 to the same
extent as a director, and (b) that a corporation may indemnify
and advance expenses to an officer, employee or agent to the same
extent as to a director. Section 13.1-704 provides that any
corporation shall have the power to make any further indemnity to
any director, officer, employee or agent that may be authorized
by the articles of incorporation or any bylaw made by the
stockholders or any resolution adopted, before or after the
event, by the stockholders, except an indemnity against willful
misconduct or a knowing violation of criminal law.

The above is a general summary of certain provisions of the
Company's Bylaws and the Code of Virginia and is subject in all
respects to the specific and detailed provisions of the Company's
Bylaws and the Code of Virginia.

Reference is made to the Underwriting Agreement filed as
Exhibit 1 hereto, which provides for indemnification, under
certain circumstances, of the Company, certain of its directors
and officers, and persons who control the Company.

The Company maintains insurance policies insuring its
directors and officers against certain obligations that may be
incurred by them.

Item 16. Exhibits.

Reference is made to the information contained in the
Exhibit Index filed as part of this Registration Statement.

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

(1) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the regis-
trant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 that is incor-
porated by reference in this registration statement shall be
deemed to be a new registration statement relating to the
New Junior Subordinated Debentures, and the offering thereof
at that time shall be deemed to be the initial bona fide
offering thereof.

(2) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant pursuant to the laws of the Commonwealth of
Virginia, the registrant's bylaws, or otherwise, the
registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed
in said Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the New
Junior Subordinated Debentures, the registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in said Act and will
be governed by the final adjudication of such issue.

(3) 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 registrant 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.

(4) 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.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable cause to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Columbus and State of Ohio, on the 3rd day of September, 1996.

APPALACHIAN POWER COMPANY

E. Linn Draper, Jr.*
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the
following persons in the capacities and on the dates indicated.

Signature Title Date

(i) Principal Executive
Officer Chairman of the Board
and Chief Executive
E. Linn Draper, Jr.* Officer September 3, 1996

(ii) Principal Financial
Officer:

G. P. Maloney* Vice President September 3, 1996

(iii) Principal Accounting
Officer:

P. J. DeMaria* Controller September 3, 1996

(iv) A Majority of the
Directors:

P. J. DeMaria*
E. Linn Draper, Jr.*
H. W. Fayne*
Wm. J. Lhota*
G. P. Maloney
James J. Markowsky*
J. H. Vipperman* September 3, 1996

*By_/s/ G. P. Maloney__
(G. P. Maloney, Attorney-in-Fact)

EXHIBIT INDEX

Certain of the following exhibits, designated with an
asterisk (*), are filed herewith. The exhibits not so designated
have heretofore been filed with the Commission and, pursuant to
17 C.F.R. Sections 201.24 and 230.411, are incorporated herein by
reference to the documents indicated following the descriptions
of such exhibits.

Exhibit No. Description

* 1 - Copy of proposed form of Underwriting Agreement
for the New Junior Subordinated Debentures.

* 4(a) - Copy of form of Indenture to be entered into
between the Company and The First National Bank of
Chicago, as Trustee, for Junior Subordinated
Debentures.

* 4(b) - Copy of form of Supplemental Indenture to be
entered into between the Company and The First
National Bank of Chicago, as Trustee, for New
Junior Subordinated Debentures.

* 5 - Opinion of Simpson Thacher & Bartlett as to the
legality of New Junior Subordinated Debentures.

* 8 - Tax Opinion of Simpson Thacher & Bartlett.

12 - Statement re: Computation of Ratios [Quarterly
Report on Form 10-Q of the Company for the period
ended June 30, 1996, File No. 1-3457, Exhibit 12].

*23(a) - Consent of Deloitte & Touche LLP.

23(b) - Consent of Simpson Thacher & Bartlett (included in
Exhibits 5 and 8).

*24 - Powers of Attorney and resolutions of the Board of
Directors of the Company.

*25 - Form T-1 re: Eligibility of The First National
Bank of Chicago.

Exhibit 1

APPALACHIAN POWER COMPANY

Underwriting Agreement

Dated September __, 1996

AGREEMENT made between APPALACHIAN POWER COMPANY, a
corporation organized and existing under the laws of the
Commonwealth of Virginia (the Company), and the several persons,
firms and corporations (the Underwriters) named in Exhibit 1
hereto.

WITNESSETH:

WHEREAS, the Company proposes to issue and sell $75,000,000
principal amount of its ______% Junior Subordinated Deferrable
Interest Debentures, Series A, Due 2026 (the Debentures) to be
issued pursuant to the Indenture dated as of September 1, 1996,
between the Company and The First National Bank of Chicago, as
trustee (the Trustee), as supplemented by the Supplemental
Indenture dated as of September 1, 1996 between the Company and
the Trustee (said Indenture as so supplemented being hereafter
referred to as the "Indenture"); and

WHEREAS, the Underwriters have designated the person signing
this Agreement (the Representative) to execute this Agreement on
behalf of the respective Underwriters and to act for the
respective Underwriters in the manner provided in this Agreement;
and

WHEREAS, the Company has prepared and filed, in accordance
with the provisions of the Securities Act of 1933 (the Act), with
the Securities and Exchange Commission (the Commission), a
registration statement and a prospectus relating to the
Debentures and such registration statement has become effective;
and

WHEREAS, such registration statement, as it may have been
amended through the time the same first became effective (the
Effective Date), including the financial statements, the
documents incorporated or deemed incorporated therein by
reference, the exhibits thereto and the information deemed to be
part thereof pursuant to Rule 430A(b) of the Commission's General
Rules and Regulations under the Act (the Rules), being herein
called the Registration Statement, the prospectus included in the
Registration Statement when the same became effective that omits
the information, if any, deemed to be a part thereof pursuant to
Rule 430A(b) of the Rules, being herein called the Preliminary
Prospectus, and the prospectus, including the price and terms of
the offering, the interest rate, maturity date and certain
information relating to the Underwriters of the Debentures first
filed with the Commission in accordance with Rule 430A and
pursuant to Rule 424(b) of the Rules, including all documents
then incorporated or deemed to have been incorporated therein by
reference, being herein called the Prospectus.

NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, it is agreed between the
parties as follows:

1. Purchase and Sale: Upon the basis of the warranties
and representations and on the terms and subject to the
conditions herein set forth, the Company agrees to sell to the
respective Underwriters named in Exhibit 1 hereto, severally and
not jointly, and the respective Underwriters, severally and not
jointly, agree to purchase from the Company, the respective
principal amounts of the Debentures set opposite their names in
Exhibit 1 hereto, together aggregating all of the Debentures, at
a price equal to ______% of the principal amount thereof; except
that such price will be increased to ______% of the principal
amount of the Debentures sold to certain institutions.

2. Payment and Delivery: Payment for the Debentures shall
be made to the Company or its order by certified or bank check or
checks, payable in New York Clearing House funds, at the office
of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
New York 10017-3909, or at such other place as the Company and
the Representative shall mutually agree in writing, upon the
delivery of the Debentures to the Representative for the
respective accounts of the Underwriters against receipt therefor
signed by the Representative on behalf of itself and for the
other Underwriters. Such payments and delivery shall be made at
10:00 A.M., New York Time, on September __, 1996 (or on such
later business day, not more than five business days subsequent
to such day, as may be designated by the Company), unless
postponed in accordance with the provisions of Section 7 hereof.
The time at which payment and delivery are to be made is herein
called the Time of Purchase.

The delivery of the Debentures shall be made in fully
registered form, registered in the name of CEDE & CO., to the
offices of The Depository Trust Company in New York, New York and
the Underwriters shall accept such delivery.

3. Conditions of Underwriters' Obligations: The several
obligations of the Underwriters hereunder are subject to the
accuracy of the warranties and representations on the part of the
Company and to the following other conditions:

(a) That all legal proceedings to be taken and all
legal opinions to be rendered in connection with
the issue and sale of the Debentures shall be
satisfactory in form and substance to Dewey
Ballantine, counsel to the Underwriters.

(b) That, at the Time of Purchase, the Representative
shall be furnished with the following opinions,
dated the day of the Time of Purchase, with con-
formed copies or signed counterparts thereof for
the other Underwriters, with such changes therein
as may be agreed upon by the Company and the
Representative with the approval of Dewey
Ballantine, counsel to the Underwriters:

(1) Opinion of Simpson Thacher & Bartlett and
either of John M. Adams, Jr., Esq. or David
C. House, Esq., counsel to the Company,
substantially in the forms attached hereto as
Exhibits A and B;

(2) Opinion of Dewey Ballantine, counsel to the
Underwriters, substantially in the form
attached hereto as Exhibit C.

(c) That the Representative shall have received a
letter from Deloitte & Touche LLP in form and
substance satisfactory to the Representative,
dated as of the day of the Time of Purchase, (i)
confirming that they are independent public
accountants within the meaning of the Act and the
applicable published rules and regulations of the
Commission thereunder, (ii) stating that in their
opinion the financial statements audited by them
and included or incorporated by reference in the
Registration Statement complied as to form in all
material respects with the then applicable
accounting requirements of the Commission,
including the applicable published rules and
regulations of the Commission and (iii) covering
as of a date not more than five business days
prior to the day of the Time of Purchase such
other matters as the Representative reasonably
requests.

(d) That no amendment to the Registration Statement
and that no prospectus or prospectus supplement of
the Company relating to the Debentures and no
document which would be deemed incorporated in the
Prospectus by reference filed subsequent to the
date hereof and prior to the Time of Purchase
shall contain material information substantially
different from that contained in the Registration
Statement which is unsatisfactory in substance to
the Representative or unsatisfactory in form to
Dewey Ballantine, counsel to the Underwriters.

(e) That, at the Time of Purchase, appropriate orders
of the Virginia State Corporation Commission and
of the Tennessee Regulatory Authority, necessary
to permit the sale of the Debentures to the Under-
writers, shall be in effect; and that, prior to
the Time of Purchase, no stop order with respect
to the effectiveness of the Registration Statement
shall have been issued under the Act by the
Commission or proceedings therefor initiated.

(f) That, at the Time of Purchase, there shall not
have been any material adverse change in the
business, properties or financial condition of the
Company from that set forth in the Prospectus
(other than changes referred to in or contemplated
by the Prospectus), and that the Company shall, at
the Time of Purchase, have delivered to the
Representative a certificate of an executive
officer of the Company to the effect that, to the
best of his knowledge, information and belief,
there has been no such change.

(g) That the Company shall have performed such of its
obligations under this Agreement as are to be
performed at or before the Time of Purchase by the
terms hereof.

4. Certain Covenants of the Company: In further
consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:

(a) As soon as practicable, and in any event within
the time prescribed by Rule 424 under the Act, to
file the Prospectus with the Commission; as soon
as the Company is advised thereof, to advise the
Representative and confirm the advice in writing
of any request made by the Commission for
amendments to the Registration Statement or Pro-
spectus or for additional information with respect
thereto or of the entry of a stop order suspending
the effectiveness of the Registration Statement or
of the initiation or threat of any proceedings for
that purpose and, if such a stop order should be
entered by the Commission, to make every reason-
able effort to obtain the prompt lifting or
removal thereof.

(b) To deliver to the Underwriters, without charge, as
soon as practicable (and in any event within 24
hours after the date hereof), and from time to
time thereafter during such period of time (not
exceeding nine months) after the date hereof as
they are required by law to deliver a prospectus,
as many copies of the Prospectus (as supplemented
or amended if the Company shall have made any
supplements or amendments thereto) as the
Representative may reasonably request; and in case
any Underwriter is required to deliver a
prospectus after the expiration of nine months
after the date hereof, to furnish to any
Underwriter, upon request, at the expense of such
Underwriter, a reasonable quantity of a supplemen-
tal prospectus or of supplements to the Prospectus
complying with Section 10(a)(3) of the Act.

(c) To furnish to the Representative a copy, certified
by the Secretary or an Assistant Secretary of the
Company, of the Registration Statement in the form
filed with the Commission and of all amendments
thereto (exclusive of exhibits), and, upon
request, to furnish to the Representative
sufficient plain copies thereof (exclusive of
exhibits) for distribution of one to the other
Underwriters.

(d) For such period of time (not exceeding nine
months) after the date hereof as they are required
by law to deliver a prospectus, if any event shall
have occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to
make the statements therein, in the light of the
circumstances when the Prospectus is delivered to
a purchaser, not misleading, forthwith to prepare
and furnish, at its own expense, to the
Underwriters and to dealers (whose names and
addresses are furnished to the Company by the
Representative) to whom principal amounts of the
Debentures may have been sold by the Representa-
tive for the accounts of the Underwriters and,
upon request, to any other dealers making such
request, copies of such amendments to the Prospec-
tus or supplements to the Prospectus.

(e) As soon as practicable, the Company will make
generally available to its security holders and to
the Underwriters an earning statement or statement
of the Company and its subsidiaries which will
satisfy the provisions of Section 11(a) of the Act
and Rule 158 under the Act.

(f) To use its best efforts to qualify the Debentures
for offer and sale under the securities or "blue
sky" laws of such jurisdictions as the
Representative may designate within six months
after the date hereof and itself to pay, or to
reimburse the Underwriters and their counsel for,
reasonable filing fees and expenses in connection
therewith in an amount not exceeding $3,500 in the
aggregate (including filing fees and expenses paid
and incurred prior to the effective date hereof),
provided, however, that the Company shall not be
required to qualify as a foreign corporation or to
file a consent to service of process or to file
annual reports or to comply with any other
requirements deemed by the Company to be unduly
burdensome.

(g) To pay all expenses, fees and taxes (other than
transfer taxes on resales of the Debentures by the
respective Underwriters) in connection with the
issuance and delivery of the Debentures, except
that the Company shall be required to pay the fees
and disbursements (other than disbursements
referred to in paragraph (f) of this Section 4) of
Dewey Ballantine, counsel to the Underwriters,
only in the events provided in paragraph (h) of
this Section 4, the Underwriters hereby agreeing
to pay such fees and disbursements in any other
event.

(h) If the Underwriters shall not take up and pay for
the Debentures due to the failure of the Company
to comply with any of the conditions specified in
Section 3 hereof, or, if this Agreement shall be
terminated in accordance with the provisions of
Section 7 or 8 hereof, to pay the fees and
disbursements of Dewey Ballantine, counsel to the
Underwriters, and, if the Underwriters shall not
take up and pay for the Debentures due to the
failure of the Company to comply with any of the
conditions specified in Section 3 hereof, to
reimburse the Underwriters for their reasonable
out-of-pocket expenses, in an aggregate amount not
exceeding a total of $10,000, incurred in connec-
tion with the financing contemplated by this
Agreement.

(i) During the period from the date hereof and
continuing to and including the earlier of (i) the
date which is after the Time of Purchase on which
the distribution of the Debentures ceases, as
determined by the Representative in its sole
discretion, and (ii) the date which is 30 days
after the Time of Purchase, the Company agrees not
to offer, sell, contract to sell or otherwise
dispose of any junior subordinated deferrable
interest debentures of the Company or any
substantially similar securities of the Company
without the consent of the Representative.

(j) The Company will use its best efforts to list,
subject to notice of issuance, the Debentures on
the New York Stock Exchange.

(k) The Company will timely file any certificate
required by Rule 52 under the Public Utility
Holding Company Act of 1935 in connection with the
sale of the Debentures.

5. Warranties of and Indemnity by the Company:

(a) The Company warrants and represents to each of the
Underwriters that (i) the Registration Statement
on the Effective Date did, and the Prospectus when
first filed in accordance with Rule 424(b) and at
the Time of Purchase will, comply, or be deemed to
comply, with the applicable provisions of the Act
and the published rules and regulations of the
Commission, (ii) the Registration Statement on the
Effective Date did not contain any untrue
statement of a material fact or omit to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading (other than material omitted in
reliance upon Rule 430A), and (iii) the Prospectus
when first filed in accordance with Rule 424(b)
and at the Time of Purchase will not, contain any
untrue statement of a material fact or omit to
state a material fact required to be stated
therein or necessary in order to make the
statements therein, in the light of the
circumstances under which they were made, not
misleading, except that the Company makes no
warranty or representation to any Underwriter with
respect to any statements or omissions made
therein in reliance upon and in conformity with
information furnished in writing to the Company by
the Representative on behalf of any Underwriter
expressly for use therein.

(b) As of the Time of Purchase, the Indenture will
have been duly authorized by the Company and duly
qualified under the Trust Indenture Act of 1939,
as amended, and, when executed and delivered by
the Trustee and the Company, will constitute a
legal, valid and binding instrument enforceable
against the Company in accordance with its terms
and such Debentures will have been duly
authorized, executed, authenticated and, when paid
for by the purchasers thereof, will constitute
legal, valid and binding obligations of the
Company entitled to the benefits of the Indenture,
except as the enforceability thereof may be
limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of
creditors' rights in general, and except as the
availability of the remedy of specific performance
is subject to general principles of equity
(regardless of whether such remedy is sought in a
proceeding in equity or at law), and by an implied
covenant of good faith and fair dealing.

(c) The Company agrees, to the extent permitted by
law, to indemnify and hold harmless each of the
Underwriters and each person, if any, who controls
any such Underwriter within the meaning of Section
15 of the Act, against any and all losses, claims,
damages or liabilities, joint or several, to which
they or any of them may become subject under the
Act or otherwise, and to reimburse the
Underwriters and such controlling person or
persons, if any, for any legal or other expenses
incurred by them in connection with defending any
action, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based
upon any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, in the Preliminary Pro-
spectus, or in the Prospectus, or if the Company
shall furnish or cause to be furnished to the
Underwriters any amendments or any supplements to
the Prospectus, in the Prospectus as so amended or
supplemented (provided that if such Prospectus or
such Prospectus, as amended or supplemented, is
used after the period of time referred to in Sec-
tion 4(d) hereof, it shall contain such amendments
or supplements as the Company deems necessary to
comply with Section 10(a) of the Act), or arise
out of or are based upon any omission or alleged
omission to state therein a material fact required
to be stated therein or necessary to make the
statements therein not misleading, except insofar
as such losses, claims, damages, liabilities or
actions arise out of or are based upon any such
untrue statement or alleged untrue statement or
omission or alleged omission which was made in the
Registration Statement, in the Preliminary
Prospectus or in such Prospectus, or in the
Prospectus as so amended or supplemented, in
reliance upon and in conformity with information
furnished in writing to the Company by the
Representative on behalf of any Underwriter
expressly for use therein, and except that this
indemnity shall not inure to the benefit of any
Underwriter (or of any person controlling such
Underwriter) on account of any losses, claims,
damages, liabilities or actions arising from the
sale of the Debentures to any person if a copy of
the Prospectus, as the same may then be supple-
mented or amended (excluding, however, any
document then incorporated or deemed incorporated
therein by reference) was not sent or given by or
on behalf of such Underwriter to such person with
or prior to the written confirmation of the sale
involved and the omission or alleged omission or
untrue statement or alleged untrue statement was
corrected in the Prospectus as supplemented or
amended at the time of such confirmation. Each
Underwriter agrees within ten days after the re-
ceipt by it of notice of the commencement of any
action in respect to which indemnity from the
Company on account of its agreement contained in
this Section 5(b) may be sought by it, or by any
person controlling it, to notify the Company in
writing of the commencement thereof, but the fail-
ure of such Underwriter so to notify the Company
of any such action shall not release the Company
from any liability which it may have to such
Underwriter or to such controlling person
otherwise than on account of the indemnity
agreement contained in this Section 5(b). In case
any such action shall be brought against any
Underwriter or any such person controlling such
Underwriter and such Underwriter shall notify the
Company of the commencement thereof, as above
provided, the Company shall be entitled to
participate in (and, to the extent that it shall
wish, including the selection of counsel, to
direct) the defense thereof at its own expense.
In case the Company elects to direct such defense
and select such counsel (hereinafter, Company's
counsel), any Underwriter or any controlling
person shall have the right to employ its own
counsel, but, in any such case, the fees and
expenses of such counsel shall be at the expense
of such Underwriter or controlling person unless
(i) the Company has agreed in writing to pay such
fees and expenses or (ii) the named parties to any
such action (including any impleaded parties)
include both any Underwriter or any controlling
person and the Company, and any Underwriter or any
controlling person shall have been advised by its
counsel that a conflict of interest between the
Company and any Underwriter or any controlling
person may arise (and the Company's counsel shall
have concurred with such advice) and for this
reason it is not desirable for the Company's
counsel to represent both the indemnifying party
and the indemnified party (it being understood,
however, that the Company shall not, in connection
with any one such action or separate but
substantially similar or related actions in the
same jurisdiction arising out of the same general
allegations or circumstances, be liable for the
reasonable fees and expenses of more than one
separate firm of attorneys for any Underwriter or
any controlling person (plus any local counsel
retained by any Underwriter or any controlling
person in their reasonable judgment), which firm
(or firms) shall be designated in writing by any
Underwriter or any controlling person). The
Company shall not be liable in the event of any
settlement of any such action effected without its
consent.

The Company's indemnity agreement contained in Section 5(b)
hereof, and its covenants, warranties and representations
contained in this Agreement, shall remain in full force and
effect regardless of any investigation made by or on behalf of
any person, and shall survive the delivery of and payment for the
Debentures hereunder.

6. Warranties of and Indemnity by Underwriters:

(a) Each Underwriter warrants and represents that the
information furnished in writing to the Company
through the Representative for use in the
Registration Statement, in the Preliminary
Prospectus, in the Prospectus, or in the
Prospectus as amended or supplemented is correct
as to such Underwriter.

(b) Each Underwriter agrees, to the extent permitted
by law, to indemnify, hold harmless and reimburse
the Company, its directors and such of its
officers as shall have signed the Registration
Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of
the Act, to the same extent and upon the same
terms as the indemnity agreement of the Company
set forth in Section 5(c) hereof, but only with
respect to untrue statements or alleged untrue
statements or omissions or alleged omissions made
in the Registration Statement, in the Preliminary
Prospectus, or in the Prospectus, or in the
Prospectus as so amended or supplemented, in
reliance upon and in conformity with information
furnished in writing to the Company by the Repre-
sentative on behalf of such Underwriter expressly
for use therein.

The indemnity agreement on the part of each Underwriter
contained in Section 6(b) hereof, and the warranties and
representations of such Underwriter contained in this Agreement,
shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or other
person, and shall survive the delivery of and payment for the
Debentures hereunder.

7. Default of Underwriters: If any Underwriter under this
Agreement shall fail or refuse (otherwise than for some reason
sufficient to justify, in accordance with the terms hereof, the
cancellation or termination of its obligations hereunder) to
purchase and pay for the principal amount of Debentures which it
has agreed to purchase and pay for hereunder, and the aggregate
principal amount of Debentures which such defaulting Underwriter
or Underwriters agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of the
Debentures, the other Underwriters shall be obligated severally
in the proportions which the amounts of Debentures set forth
opposite their names in Exhibit 1 hereto bear to the aggregate
principal amount of Debentures set forth opposite the names of
all such non-defaulting Underwriters, to purchase the Debentures
which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on the terms set forth herein;
provided that in no event shall the principal amount of
Debentures which any Underwriter has agreed to purchase pursuant
to Section 1 hereof be increased pursuant to this Section 7 by an
amount in excess of one-ninth of such principal amount of
Debentures without the written consent of such Underwriter. If
any Underwriter or Underwriters shall fail or refuse to purchase
Debentures and the aggregate principal amount of Debentures with
respect to which such default occurs is more than one-tenth of
the aggregate principal amount of the Debentures then the Company
shall have the right (a) to require such non-defaulting
Underwriters to purchase and pay for the respective principal
amounts of Debentures that they had severally agreed to purchase
hereunder, as hereinabove provided, and, in addition, the
principal amount of Debentures that the defaulting Underwriter or
Underwriters shall have so failed to purchase up to a principal
amount thereof equal to one-ninth of the respective principal
amounts of Debentures that such non-defaulting Underwriters have
otherwise agreed to purchase hereunder, and/or (b) to procure one
or more others, members of the National Association of Securities
Dealers (NASD) (or, if not members of the NASD, who are foreign
banks, dealers or institutions not registered under the
Securities Exchange Act of 1934 and who agree in making sales to
comply with the NASD's Rules of Fair Practice), to purchase or
agree to purchase, upon the terms herein set forth, the principal
amount of such Debentures that such defaulting Underwriter or
Underwriters had agreed to purchase, or that portion thereof that
the remaining Underwriters shall not be obligated to purchase
pursuant to the foregoing clause (a). In the event the Company
shall exercise its rights under clause (a) and/or (b) above, the
Company shall give written notice thereof to the Underwriters
within 24 hours (excluding any Saturday, Sunday or legal holiday)
of the time when the Company learns of the failure or refusal of
any Underwriter or Underwriters to purchase and pay for its
respective principal amount of Debentures, and thereupon the Time
of Purchase shall be postponed for a period not to exceed five
full business days, as the Company shall determine. In the event
the Company shall be entitled to but shall not elect (within the
time period specified above) to exercise its rights under clause
(a) and/or (b), then this Agreement shall terminate. In the
event of any such termination, the Company shall not be under any
liability to any Underwriter (except to the extent, if any,
provided in Section 4(h) hereof), nor shall any Underwriter
(other than an Underwriter who shall have failed or refused to
purchase the Debentures without some reason sufficient to
justify, in accordance with the terms hereof, its termination of
its obligations hereunder) be under any liability to the Company
or any other Underwriter.

Nothing herein contained shall release any defaulting
Underwriter from its liability to the Company or any non-
defaulting Underwriter for damages occasioned by its default
hereunder.

8. Termination of Agreement by the Underwriters: This
Agreement may be terminated at any time prior to the Time of
Purchase by the Representative if, after the execution and
delivery of this Agreement and prior to the Time of Purchase, in
the Representative's reasonable judgment, the Underwriters'
ability to market the Debentures shall have been materially
adversely affected because:

(i) trading in securities on the New York Stock
Exchange shall have been generally suspended by the
Commission or by the New York Stock Exchange, or

(ii) (A) a war involving the United States of America
shall have been declared, (B) any other national calamity
shall have occurred, or (C) any conflict involving the armed
services of the United States of America shall have
escalated, or

(iii) a general banking moratorium shall have been
declared by Federal or New York State authorities, or

(iv) there shall have been any decrease in the ratings
of the Company's first mortgage bonds by Moody's Investors
Services, Inc. (Moody's) or Standard & Poor's Ratings Group
(S&P) or either Moody's or S&P shall publicly announce that
it has such first mortgage bonds under consideration for
possible downgrade.

If the Representative elects to terminate this
Agreement, as provided in this Section 8, the Representative will
promptly notify the Company by telephone or by telex or facsimile
transmission, confirmed in writing. If this Agreement shall not
be carried out by any Underwriter for any reason permitted
hereunder, or if the sale of the Debentures to the Underwriters
as herein contemplated shall not be carried out because the
Company is not able to comply with the terms hereof, the Company
shall not be under any obligation under this Agreement and shall
not be liable to any Underwriter or to any member of any selling
group for the loss of anticipated profits from the transactions
contemplated by this Agreement (except that the Company shall
remain liable to the extent provided in Section 4(h) hereof) and
the Underwriters shall be under no liability to the Company nor
be under any liability under this Agreement to one another.

9. Notices: All notices hereunder shall, unless otherwise
expressly provided, be in writing and be delivered at or mailed
to the following addresses or by telex or facsimile transmission
confirmed in writing to the following addresses: if to the
Underwriters, to Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as Representative, World Financial Center, North
Tower, 27th Floor, New York, New York 10281-1307, Attention:
Richard A. Vaccari, and, if to the Company, to Appalachian Power
Company, c/o American Electric Power Service Corporation, 1
Riverside Plaza, Columbus, Ohio 43215, attention of A. A. Pena,
Treasurer (fax 614/223-1687).

10. Parties in Interest: The agreement herein set forth
has been and is made solely for the benefit of the Underwriters,
the Company (including the directors thereof and such of the
officers thereof as shall have signed the Registration
Statement), the controlling persons, if any, referred to in
Sections 5 and 6 hereof, and their respective successors,
assigns, executors and administrators, and, except as expressly
otherwise provided in Section 7 hereof, no other person shall
acquire or have any right under or by the virtue of this
Agreement.

11. Definition of Certain Terms: If there be two or more
persons, firms or corporations named in Exhibit 1 hereto, the
term "Underwriters", as used herein, shall be deemed to mean the
several persons, firms or corporations, so named (including the
Representative herein mentioned, if so named) and any party or
parties substituted pursuant to Section 7 hereof, and the term
"Representative", as used herein, shall be deemed to mean the
representative or representatives designated by, or in the manner
authorized by, the Underwriters. All obligations of the
Underwriters hereunder are several and not joint. If there shall
be only one person, firm or corporation named in Exhibit 1
hereto, the term "Underwriters" and the term "Representative", as
used herein, shall mean such person, firm or corporation. The
term "successors" as used in this Agreement shall not include any
purchaser, as such purchaser, of any of the Debentures from any
of the respective Underwriters.

12. Conditions of the Company's Obligations: The
obligations of the Company hereunder are subject to the
Underwriters' performance of their obligations hereunder, and the
further condition that at the Time of Purchase the Virginia State
Corporation Commission and the Tennessee Regulatory Authority
shall have issued appropriate orders, and such orders shall
remain in full force and effect, authorizing the transactions
contemplated hereby.

13. Applicable Law: This Agreement will be governed and
construed in accordance with the laws of the State of New York.

14. Execution of Counterparts: This Agreement may be
executed in several counterparts, each of which shall be regarded
as an original and all of which shall constitute one and the same
document.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, on the date first above written.

APPALACHIAN POWER COMPANY

By_____________________________
G. P. Maloney
Vice President

MERRILL, LYNCH, PIERCE, FENNER & SMITH
INCORPORATED,
as Representative
and on behalf of the Underwriters
named in Exhibit 1 hereto

By:____________________________

EXHIBIT 1

Name Principal
Amount

Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Dean Witter Reynolds Inc.
Lehman Brothers
PaineWebber Incorporated
Prudential Securities ____________

Total $ 75,000,000

Exhibit 4(a)

APPALACHIAN POWER COMPANY

AND

THE FIRST NATIONAL BANK OF CHICAGO

AS TRUSTEE

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

INDENTURE

Dated as of September 1, 1996

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

Junior Subordinated Debentures

CROSS-REFERENCE TABLE

Section of
Trust Indenture Act Section of
of 1939, as amended Indenture

310(a). . . . . . . . . . . . . . . . . . . . . . 7.09
310(b). . . . . . . . . . . . . . . . . . . . . . 7.08
. . . . . . . . . . . . . . . . . . . . . . . . . 7.10
310(c). . . . . . . . . . . . . . . . . . . . . .Inapplicable
311(a). . . . . . . . . . . . . . . . . . . . . . 7.13
311(b). . . . . . . . . . . . . . . . . . . . . . 7.13
311(c). . . . . . . . . . . . . . . . . . . . . .Inapplicable
312(a). . . . . . . . . . . . . . . . . . . . . . 5.01
. . . . . . . . . . . . . . . . . . . . . . . . . 5.02(a)
312(b). . . . . . . . . . . . . . . . . . . . . . 5.02(c)
. . . . . . . . . . . . . . . . . . . . . . . . . 5.02(d)
312(c). . . . . . . . . . . . . . . . . . . . . . 5.02(e)
313(a). . . . . . . . . . . . . . . . . . . . . . 5.04(a)
313(b). . . . . . . . . . . . . . . . . . . . . . 5.04(b)
313(c). . . . . . . . . . . . . . . . . . . . . . 5.04(a)
. . . . . . . . . . . . . . . . . . . . . . . . . 5.04(b)
313(d). . . . . . . . . . . . . . . . . . . . . . 5.04(c)
314(a). . . . . . . . . . . . . . . . . . . . . . 5.03
314(b). . . . . . . . . . . . . . . . . . . . . .Inapplicable
314(c). . . . . . . . . . . . . . . . . . . . . . 13.06(a)
314(d). . . . . . . . . . . . . . . . . . . . . .Inapplicable
314(e). . . . . . . . . . . . . . . . . . . . . . 13.06(b)
314(f). . . . . . . . . . . . . . . . . . . . . .Inapplicable
315(a). . . . . . . . . . . . . . . . . . . . . . 7.01(a)
. . . . . . . . . . . . . . . . . . . . . . . . . 7.02
315(b). . . . . . . . . . . . . . . . . . . . . . 6.07
315(c). . . . . . . . . . . . . . . . . . . . . . 7.01(a)
315(d). . . . . . . . . . . . . . . . . . . . . . 7.01(b)
315(e). . . . . . . . . . . . . . . . . . . . . . 6.08
316(a). . . . . . . . . . . . . . . . . . . . . . 6.06
. . . . . . . . . . . . . . . . . . . . . . . . . 8.04
316(b). . . . . . . . . . . . . . . . . . . . . . 6.04
316(c). . . . . . . . . . . . . . . . . . . . . . 8.01
317(a). . . . . . . . . . . . . . . . . . . . . . 6.02
317(b). . . . . . . . . . . . . . . . . . . . . . 4.03
318(a). . . . . . . . . . . . . . . . . . . . . . 13.08

TABLE OF CONTENTS

This Table of Contents does not constitute part of the
Indenture and should not have any bearing upon the
interpretation of any of its terms or provisions

RECITALS:

Purpose of Indenture. . . . . . . . . . . . . . . . . . . .1
Compliance with legal requirements. . . . . . . . . . . . .1
Purpose of and consideration for Indenture. . . . . . . . .1

ARTICLE ONE - DEFINITIONS

Section 1.01

Certain terms defined, other terms defined
in the Trust Indenture Act of 1939,
as amended, or by reference therein in
the Securities Act of 1933, as amended,
to have the meanings assigned therein

Affiliate. . . . . . . . . . . . . . . . . . . . . . .2
Authenticating Agent . . . . . . . . . . . . . . . . .2
Board of Directors . . . . . . . . . . . . . . . . . .2
Board Resolution . . . . . . . . . . . . . . . . . . .2
Business Day . . . . . . . . . . . . . . . . . . . . .3
Certificate. . . . . . . . . . . . . . . . . . . . . .3
Company. . . . . . . . . . . . . . . . . . . . . . . .3
Corporate Trust Office . . . . . . . . . . . . . . . .3
Debenture or Debentures. . . . . . . . . . . . . . . .3
Debentureholder. . . . . . . . . . . . . . . . . . . .3
Default. . . . . . . . . . . . . . . . . . . . . . . .3
Depository . . . . . . . . . . . . . . . . . . . . . .3
Event of Default . . . . . . . . . . . . . . . . . . .4
Global Debenture . . . . . . . . . . . . . . . . . . .4
Governmental Obligations . . . . . . . . . . . . . . .4
Indenture. . . . . . . . . . . . . . . . . . . . . . .4
Interest Payment Date. . . . . . . . . . . . . . . . .4
Officers' Certificate. . . . . . . . . . . . . . . . .5
Opinion of Counsel . . . . . . . . . . . . . . . . . .5
Outstanding. . . . . . . . . . . . . . . . . . . . . .5
Predecessor Debenture. . . . . . . . . . . . . . . . .5
Responsible Officer. . . . . . . . . . . . . . . . . .6
Senior Indebtedness. . . . . . . . . . . . . . . . . .6
Subsidiary . . . . . . . . . . . . . . . . . . . . . .6
Trustee. . . . . . . . . . . . . . . . . . . . . . . .6
Trust Indenture Act. . . . . . . . . . . . . . . . . .7

ARTICLE TWO - ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF DEBENTURES

Section 2.01
Designation, terms, amount, authentication
and delivery of Debentures . . . . . . . . . . . . . .7

Section 2.02
Form of Debenture and Trustee's certificate. . . . . .8

Section 2.03
Date and denominations of Debentures,
and provisions for payment of principal,
premium and interest . . . . . . . . . . . . . . . . .9

Section 2.04
Execution of Debentures. . . . . . . . . . . . . . . 10

Section 2.05
Exchange of Debentures . . . . . . . . . . . . . . . 12
(a) Registration and transfer
of Debentures . . . . . . . . . . . . . . . . . 12
(b) Debenture Register; Debentures to be accompanied
by proper instruments of transfer . . . . . . . 12
(c) Charges upon exchange, transfer or
registration of Debentures. . . . . . . . . . . 12
(d) Restrictions on transfer or
exchange at time of redemption. . . . . . . . . 12

Section 2.06
Temporary Debentures . . . . . . . . . . . . . . . . 13

Section 2.07
Mutilated, destroyed, lost or
stolen Debentures. . . . . . . . . . . . . . . . . . 13

Section 2.08
Cancellation of surrendered Debentures . . . . . . . 14

Section 2.09
Provisions of Indenture and Debentures
for sole benefit of parties and
Debentureholders . . . . . . . . . . . . . . . . . . 14

Section 2.10
Appointment of Authenticating Agent. . . . . . . . . 14

Section 2.11
Global Debenture . . . . . . . . . . . . . . . . . . 15
(a) Authentication and Delivery;
Legend. . . . . . . . . . . . . . . . . . . . . 15
(b) Transfer of Global Debenture. . . . . . . . . . 15
(c) Issuance of Debentures in
Definitive Form . . . . . . . . . . . . . . . . 16

ARTICLE THREE - REDEMPTION OF DEBENTURES AND
SINKING FUND PROVISIONS

Section 3.01
Redemption of Debentures . . . . . . . . . . . . . . 16

Section 3.02
(a) Notice of redemption. . . . . . . . . . . . . . 16
(b) Selection of Debentures in case
less than all Debentures to be
redeemed. . . . . . . . . . . . . . . . . . . . 17

Section 3.03
(a) When Debentures called for
redemption become due and payable . . . . . . . 18
(b) Receipt of new Debenture upon
partial payment . . . . . . . . . . . . . . . . 18

Section 3.04
Sinking Fund for Debentures. . . . . . . . . . . . . 18

Section 3.05
Satisfaction of Sinking Fund
Payments with Debentures . . . . . . . . . . . . . . 19

Section 3.06
Redemption of Debentures for
Sinking Fund . . . . . . . . . . . . . . . . . . . . 19

ARTICLE FOUR - PARTICULAR COVENANTS OF THE COMPANY

Section 4.01
Payment of principal (and premium
if any) and interest on Debentures . . . . . . . . . 19

Section 4.02
Maintenance of office or agency for
payment of Debentures, designation of
office or agency for payment,
registration, transfer and exchange
of Debentures. . . . . . . . . . . . . . . . . . . . 19

Section 4.03
(a) Duties of paying agent. . . . . . . . . . . . . 20
(b) Company as paying agent . . . . . . . . . . . . 20
(c) Holding sums in trust . . . . . . . . . . . . . 21

Section 4.04
Appointment to fill vacancy in
office of Trustee. . . . . . . . . . . . . . . . . . 21

Section 4.05
Restriction on consolidation,
merger or sale . . . . . . . . . . . . . . . . . . . 21

ARTICLE FIVE - DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

Section 5.01
Company to furnish Trustee information
as to names and addresses of
Debentureholders . . . . . . . . . . . . . . . . . . 21

Section 5.02
(a) Trustee to preserve information
as to names and addresses of
Debentureholders received by it
in capacity of paying agent . . . . . . . . . . 22
(b) Trustee may destroy list of
Debentureholders on certain
conditions. . . . . . . . . . . . . . . . . . . 22
(c) Trustee to make information as to
names and addresses of Debentureholders
available to "applicants" to mail
communications to Debentureholders in
certain circumstances . . . . . . . . . . . . . 22
(d) Procedure if Trustee elects not to
make information available to
applicants. . . . . . . . . . . . . . . . . . . 22
(e) Company and Trustee not accountable
for disclosure of information . . . . . . . . . 23

Section 5.03
(a) Annual and other reports to be filed
by Company with Trustee . . . . . . . . . . . . 23
(b) Additional information and reports
to be filed with Trustee and
Securities and Exchange Commission. . . . . . . 23
(c) Summaries of information and reports
to be transmitted by Company to
Debentureholders. . . . . . . . . . . . . . . . 23
(d) Annual Certificate to be furnished
to Trustee. . . . . . . . . . . . . . . . . . . 24

Section 5.04
(a) Trustee to transmit annual report
to Debentureholders . . . . . . . . . . . . . . 24
(b) Trustee to transmit certain further
reports to Debentureholders . . . . . . . . . . 25
(c) Copies of reports to be filed with
stock exchanges and Securities and
Exchange Commission . . . . . . . . . . . . . . 25

ARTICLE SIX - REMEDIES OF THE TRUSTEE AND
DEBENTUREHOLDERS ON EVENT OF DEFAULT

Section 6.01
(a) Events of default defined . . . . . . . . . . . 25
(b) Acceleration of maturity
upon Event of Default . . . . . . . . . . . . . 27
(c) Waiver of default and rescission
of declaration of maturity. . . . . . . . . . . 27
(d) Restoration of former position
and rights upon curing default. . . . . . . . . 27

Section 6.02
(a) Covenant of Company to pay to
Trustee whole amount due on
Debentures on default in payment
of interest or principal (and
premium, if any). . . . . . . . . . . . . . . . 28
(b) Trustee may recover judgment for
whole amount due on Debentures on
failure of Company to pay . . . . . . . . . . . 28
(c) Billing of proof of claim by Trustee
in bankruptcy, reorganization or
receivership proceeding . . . . . . . . . . . . 28
(d) Rights of action and of asserting
claims may be enforced by Trustee
without possession of Debentures. . . . . . . . 29

Section 6.03
Application of monies collected by Trustee . . . . . 29

Section 6.04
Limitation on suits by holders of Debentures . . . . 30

Section 6.05
(a) Remedies Cumulative . . . . . . . . . . . . . . 30
(b) Delay or omission in exercise
of rights not waiver of default . . . . . . . . 30

Section 6.06
Rights of holders of majority in
principal amount of Debentures to
direct trustee and to waive defaults . . . . . . . . 31

Section 6.07
Trustees to give notice of defaults
known to it, but may withhold in
certain circumstances. . . . . . . . . . . . . . . . 31

Section 6.08
Requirements of an undertaking to pay
costs in certain suits under Indenture
or against Trustee . . . . . . . . . . . . . . . . . 32

ARTICLE SEVEN - CONCERNING THE TRUSTEE

Section 7.01
(a) Upon Event of Default occurring and
continuing, Trustee shall exercise powers
vested in it, and use same degree of
care and skill in their exercise, as
prudent individual will use . . . . . . . . . . 32
(b) Trustee not relieved from liability
for negligence or willful misconduct
except as provided in this section. . . . . . . 33
(1) Prior to Event of Default and
after the curing of all Events of
Default which may have occurred
(i) Trustee not liable except for
performance of duties specifically
set forth
(ii) In absence of bad faith, Trustee
may conclusively rely on
certificates or opinions furnished
it hereunder,subject to duty to
examine the same if specifically
required to be furnished to it
(2) Trustee not liable for error of judgment made
in good faith by Responsible Officer unless
Trustee negligent
(3) Trustee not liable for action or non-action
in accordance with direction of holders
of majority in principal amount of
Debentures
(4) Trustee need not expend own funds without
adequate indemnity

Section 7.02
Subject to provisions of Section 7.01:
(a) Trustee may rely on documents believed
genuine and properly signed or presented. . . . 34
(b) Sufficient evidence by certain
instruments provided for. . . . . . . . . . . . 34
(c) Trustee may consult with counsel and act
on advice or Opinion of Counsel . . . . . . . . 34
(d) Trustee may require indemnity from
Debentureholders. . . . . . . . . . . . . . . . 34
(e) Trustee not liable for actions in good
faith believed to be authorized . . . . . . . . 35
(f) Trustee not bound to investigate facts or
matters stated in certificates, etc. unless
requested in writing by Debentureholders. . . . 35
(g) Trustee may perform duties directly or
through agents or attorneys . . . . . . . . . . 35

Section 7.03
(a) Trustee not liable for recitals in
Indenture or in Debentures. . . . . . . . . . . 35
(b) No representations by Trustee as to
validity or Indenture or of Debentures. . . . . 35
(c) Trustee not accountable for use of
Debentures or proceeds. . . . . . . . . . . . . 35

Section 7.04
Trustee, paying agent or Debenture
Registrar may own Debentures . . . . . . . . . . . . 35

Section 7.05
Monies received by Trustee to be held
in Trust without interest. . . . . . . . . . . . . . 35

Section 7.06
(a) Trustee entitled to compensation,
reimbursement and indemnity . . . . . . . . . . 36
(b) Obligations to Trustee to be
secured by lien prior to
Debentures. . . . . . . . . . . . . . . . . . . 36

Section 7.07
Right of Trustee to rely on certificate
of officers of Company where no other
evidence specifically prescribed . . . . . . . . . . 36

Section 7.08
Trustee acquiring conflicting interest
to eliminate conflict or resign. . . . . . . . . . . 36

Section 7.09
Requirements for eligibility of
trustee. . . . . . . . . . . . . . . . . . . . . . . 37

Section 7.10
(a) Resignation of Trustee and
appointment of successor. . . . . . . . . . . . 37
(b) Removal of Trustee by Company
or by court on Debentureholders'
application . . . . . . . . . . . . . . . . . . 37
(c) Removal of Trustee by holders
of majority in principal amount
of Debentures . . . . . . . . . . . . . . . . . 38
(d) Time when resignation or removal
of Trustee effective. . . . . . . . . . . . . . 38
(e) One Trustee for each series . . . . . . . . . . 38

Section 7.11
(a) Acceptance by successor Trustee . . . . . . . . 38
(b) Trustee with respect to less than
all series. . . . . . . . . . . . . . . . . . . 39
(c) Company to confirm Trustee's rights . . . . . . 39
(d) Successor Trustee to be qualified . . . . . . . 40
(e) Notice of succession. . . . . . . . . . . . . . 40

Section 7.12
Successor to Trustee by merger, consolidation
of succession to business. . . . . . . . . . . . . . 40

Section 7.13
Limitations on rights of Trustee as a
creditor to obtain payment of certain
claims . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE EIGHT - CONCERNING THE DEBENTUREHOLDERS

Section 8.01
Evidence of action by Debentureholders . . . . . . . 40

Section 8.02
Proof of execution of instruments and of
holding of Debentures. . . . . . . . . . . . . . . . 41

Section 8.03
Who may be deemed owners of Debentures . . . . . . . 41

Section 8.04
Debentures owned by Company or controlled
or controlling companies disregarded for
certain purposes . . . . . . . . . . . . . . . . . . 42

Section 8.05
Instruments executed by Debentureholders
bind future holders. . . . . . . . . . . . . . . . . 42

ARTICLE NINE - SUPPLEMENTAL INDENTURES

Section 9.01
Purposes for which supplemental indenture
may be entered into without consent of
Debentureholders . . . . . . . . . . . . . . . . . . 42

Section 9.02
Modification of Indenture with consent
of Debentureholders. . . . . . . . . . . . . . . . . 44

Section 9.03
Effect of supplemental indentures. . . . . . . . . . 44

Section 9.04
Debentures may bear notation of changes
by supplemental indentures . . . . . . . . . . . . . 45

Section 9.05
Opinion of Counsel . . . . . . . . . . . . . . . . . 45

ARTICLE TEN - CONSOLIDATION, MERGER AND SALE

Section 10.01
Consolidations or mergers of Company
and sales or conveyances of property
of Company permitted . . . . . . . . . . . . . . . . 45

Section 10.02
(a) Rights and duties of successor company. . . . . 46
(b) Appropriate changes may be made in
phraseology and form of Debentures. . . . . . . 46
(c) Company may consolidate or merge into
itself or acquire properties of other
corporations. . . . . . . . . . . . . . . . . . 46

Section 10.03
Opinion of Counsel . . . . . . . . . . . . . . . . . 46

ARTICLE ELEVEN - SATISFACTION AND DISCHARGE OF INDENTURE:
UNCLAIMED MONIES

Section 11.01
Satisfaction and discharge of Indenture. . . . . . . 47

Section 11.02
Application by Trustee of funds deposited
for payment of Debentures. . . . . . . . . . . . . . 47

Section 11.03
Repayment of monies held by paying agent . . . . . . 48

Section 11.04
Repayment of monies held by Trustee. . . . . . . . . 48

ARTICLE TWELVE - IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS

Section 12.01
Incorporators, Stockholders, officers and
directors of Company exempt from individual
liability. . . . . . . . . . . . . . . . . . . . . . 48

ARTICLE THIRTEEN - MISCELLANEOUS PROVISIONS

Section 13.01
Successors and assigns of Company
bound by Indenture . . . . . . . . . . . . . . . . . 49

Section 13.02
Acts of board, committee or officer
of successor company valid . . . . . . . . . . . . . 49

Section 13.03
Surrender of powers by Company . . . . . . . . . . . 49

Section 13.04
Required notices or demands may by
served by mail . . . . . . . . . . . . . . . . . . . 49

Section 13.05
Indenture and Debentures to be construed
in accordance with laws of the State
of New York. . . . . . . . . . . . . . . . . . . . . 49

Section 13.06
(a) Officers' Certificate and Opinion of
Counsel to be furnished upon applications
or demands by company . . . . . . . . . . . . . 49
(b) Statements to be included in each
certificate or opinion with respect
to compliance with condition or covenant. . . . 50

Section 13.07
Payments due on non-business days. . . . . . . . . . 50

Section 13.08
Provisions required by Trust Indenture
Act of 1939 to control . . . . . . . . . . . . . . . 50

Section 13.09
Indenture may be executed in counterparts. . . . . . 50

Section 13.10
Separability of Indenture provisions . . . . . . . . 50

Section 13.11
Assignment by Company to subsidiary. . . . . . . . . 50

ARTICLE FOURTEEN - SUBORDINATION OF DEBENTURES

Section 14.01
Agreement of Subordination . . . . . . . . . . . . . 51

Section 14.02
Limitations on payments to Debentureholders. . . . . 51

Section 14.03
Payments in bankruptcy . . . . . . . . . . . . . . . 52

Section 14.04
Subrogation of Debentures. . . . . . . . . . . . . . 53

Section 14.05
Authorization by Debentureholders. . . . . . . . . . 54

Section 14.06
Notice to Trustee. . . . . . . . . . . . . . . . . . 54

Section 14.07
Trustee's relation to Senior Indebtedness. . . . . . 55

Section 14.08
Acts of holders of Senior Indebtedness . . . . . . . 55

ACCEPTANCE OF TRUST BY TRUSTEE . . . . . . . . . . . . . . . . 56

TESTIMONIUM. . . . . . . . . . . . . . . . . . . . . . . . . . 56

SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . 56

ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . 57

THIS INDENTURE, dated as of the 1st day of September, 1996,
between APPALACHIAN POWER COMPANY, a corporation duly organized
and existing under the laws of the Commonwealth of Virginia
(hereinafter sometimes referred to as the "Company"), and THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association
organized and existing under the laws of the United States, as
trustee (hereinafter sometimes referred to as the "Trustee"):

WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the execution and delivery of this Indenture to
provide for the issuance of unsecured debentures (hereinafter
referred to as the "Debentures"), in an unlimited aggregate
principal amount to be issued from time to time in one or more
series as in this Indenture provided, as registered Debentures
without coupons, to be authenticated by the certificate of the
Trustee;

WHEREAS, to provide the terms and conditions upon which the
Debentures are to be authenticated, issued and delivered, the
Company has duly authorized the execution of this Indenture;

WHEREAS, the Debentures and the certificate of
authentication to be borne by the Debentures (the "Certificate of
Authentication") are to be substantially in such forms as may be
approved by the Board of Directors (as defined below) or set
forth in any indenture supplemental to this Indenture;

AND WHEREAS, all acts and things necessary to make the
Debentures issued pursuant hereto, when executed by the Company
and authenticated and delivered by the Trustee as in this
Indenture provided, the valid, binding and legal obligations of
the Company, and to constitute these presents a valid indenture
and agreement according to its terms, have been done and
performed or will be done and performed prior to the issuance of
such Debentures, and the execution of this Indenture has been and
the issuance hereunder of the Debentures has been or will be
prior to issuance in all respects duly authorized, and the
Company, in the exercise of the legal right and power in it
vested, executes this Indenture and proposes to make, execute,
issue and deliver the Debentures;

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That in order to declare the terms and conditions upon which
the Debentures are and are to be authenticated, issued and
delivered, and in consideration of the premises, of the purchase
and acceptance of the Debentures by the holders thereof and of
the sum of one dollar ($1.00) to it duly paid by the Trustee at
the execution of these presents, the receipt whereof is hereby
acknowledged, the Company covenants and agrees with the Trustee,
for the equal and proportionate benefit (subject to the
provisions of this Indenture) of the respective holders from time
to time of the Debentures, without any discrimination, preference
or priority of any one Debenture over any other by reason of
priority in the time of issue, sale or negotiation thereof, or
otherwise, except as provided herein, as follows:

ARTICLE ONE

DEFINITIONS

SECTION 1.01. The terms defined in this Section (except as
in this Indenture otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture,
any resolution of the Board of Directors of the Company and of
any indenture supplemental hereto shall have the respective
meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939,
as amended, or which are by reference in such Act defined in the
Securities Act of 1933, as amended (except as herein otherwise
expressly provided or unless the context otherwise requires),
shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date
of the execution of this instrument.

Affiliate:

The term "Affiliate" of the Company shall mean any company at
least a majority of whose outstanding voting stock shall at the
time be owned by the Company, or by one or more direct or
indirect subsidiaries of or by the Company and one or more direct
or indirect subsidiaries of the Company. For the purposes only
of this definition of the term "Affiliate", the term "voting
stock", as applied to the stock of any company, shall mean stock
of any class or classes having ordinary voting power for the
election of a majority of the directors of such company, other
than stock having such power only by reason of the occurrence of
a contingency.

Authenticating Agent:

The term "Authenticating Agent" shall mean an authenticating
agent with respect to all or any of the series of Debentures, as
the case may be, appointed with respect to all or any series of
the Debentures, as the case may be, by the Trustee pursuant to
Section 2.10.

Board of Directors:

The term "Board of Directors" shall mean the Board of Directors
of the Company, or any duly authorized committee of such Board.

Board Resolution:

The term "Board Resolution" shall mean 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.

Business Day:

The term "business day", with respect to any series of
Debentures, shall mean any day other than a day on which banking
institutions in the Borough of Manhattan, the City and State of
New York, are authorized or obligated by law or executive order
to close.

Certificate:

The term "Certificate" shall mean a certificate signed by the
Chairman of the Board, the President, any Vice President, the
Treasurer or any Assistant Treasurer of the Company. The
Certificate need not comply with the provisions of Section 13.06.

Company:

The term "Company" shall mean Appalachian Power Company, a
corporation duly organized and existing under the laws of the
Commonwealth of Virginia, and, subject to the provisions of
Article Ten, shall also include its successors and assigns.

Corporate Trust Office:

The term "Corporate Trust Office" shall mean the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of the execution of this Indenture is located at The First
National Bank of Chicago, One First National Plaza, Suite 0126,
Chicago, Illinois 60670-0126, Attention: Corporate Trust
Administration.

Debenture or Debentures:

The term "Debenture" or "Debentures" shall mean any Debenture or
Debentures, as the case may be, authenticated and delivered under
this Indenture.

Debentureholder:

The term "Debentureholder", "holder of Debentures", "registered
holder", or other similar term, shall mean the person or persons
in whose name or names a particular Debenture shall be registered
on the books of the Company kept for that purpose in accordance
with the terms of this Indenture.

Default:

The term "Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an Event
of Default.

Depository:

The term "Depository" shall mean, with respect to Debentures of
any series, for which the Company shall determine that such
Debentures will be issued as a Global Debenture, The Depository
Trust Company, New York, New York, another clearing agency, or
any successor registered as a clearing agency under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to either Section
2.01 or 2.11.

Event of Default:

The term "Event of Default" with respect to Debentures of a
particular series shall mean any event specified in Section 6.01,
continued for the period of time, if any, therein designated.

Global Debenture:

The term "Global Debenture" shall mean, with respect to any
series of Debentures, a Debenture executed by the Company and
delivered by the Trustee to the Depository or pursuant to the
Depository's instruction, all in accordance with the Indenture,
which shall be registered in the name of the Depository or its
nominee.

Governmental Obligations:

The term "Governmental Obligations" shall mean securities that
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 supervised by and acting as
an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in
either case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities
Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or
interest on any such Governmental Obligation held by such
custodian for the account of the holder of such 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 from any amount received
by the custodian in respect of the Governmental Obligation or the
specific payment of principal of or interest on the Governmental
Obligation evidenced by such depository receipt.

Indenture:

The term "Indenture" shall mean this instrument as originally
executed, or, if amended or supplemented as herein provided, as
so amended or supplemented.

Interest Payment Date:

The term "Interest Payment Date" when used with respect to any
installment of interest on a Debenture of a particular series
shall mean the date specified in such Debenture or in a Board
Resolution or in an indenture supplemental hereto with respect to
such series as the fixed date on which an installment of interest
with respect to Debentures of that series is due and payable.

Officers' Certificate:

The term "Officers' Certificate" shall mean a certificate signed
by the Chairman of the Board, the President or a Vice President,
its Treasurer or an Assistant Treasurer and the Secretary or an
Assistant Secretary of the Company. Each such certificate shall
include the statements provided for in Section 13.06, if and to
the extent required by the provisions thereof.

Opinion of Counsel:

The term "Opinion of Counsel" shall mean an opinion in writing
signed by legal counsel, who may be an employee of or counsel for
the Company. Each such opinion shall include the statements
provided for in Section 13.06, if and to the extent required by
the provisions thereof.

Outstanding:

The term "outstanding", when used with reference to Debentures of
any series, shall, subject to the provisions of Section 8.04,
mean, as of any particular time, all Debentures of that series
theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the
Trustee or any paying agent, or delivered to the Trustee or any
paying agent for cancellation or which have previously been
canceled; (b) Debentures or portions thereof for the payment or
redemption of which monies or Governmental Obligations in the
necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or
shall have been set aside and segregated in trust by the Company
(if the Company shall act as its own paying agent); provided,
however, that if such Debentures or portions of such Debentures
are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as in Article Three provided, or
provision satisfactory to the Trustee shall have been made for
giving such notice; and (c) Debentures in lieu of or in
substitution for which other Debentures shall have been
authenticated and delivered pursuant to the terms of Section
2.07.

Predecessor Debenture:

The term "Predecessor Debenture" of any particular Debenture
shall mean every previous Debenture evidencing all or a portion
of the same debt as that evidenced by such particular Debenture;
and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 2.07 in lieu of a lost,
destroyed or stolen Debenture shall be deemed to evidence the
same debt as the lost, destroyed or stolen Debenture.

Responsible Officer:

The term "Responsible Officer" when used with respect to the
Trustee shall mean the chairman of the board of directors, the
president, any vice president, the secretary, the treasurer, any
trust officer, any corporate trust officer or any other officer
or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the
time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his or her
knowledge of and familiarity with the particular subject.

Senior Indebtedness:

The term "Senior Indebtedness" of the Company shall mean the
principal of, premium, if any, interest on and any other payment
due pursuant to any of the following, whether outstanding at the
date of execution of this Indenture or thereafter incurred,
created or assumed: (a) all indebtedness of the Company evidenced
by notes, debentures, bonds or other securities sold by the
Company for money or other obligations for money borrowed; (b)
all indebtedness of others of the kinds described in the
preceding clause (a) assumed by or guaranteed in any manner by
the Company or in effect guaranteed by the Company through an
agreement to purchase, contingent or otherwise; (c) all
installment purchase agreements entered into by the Company in
connection with revenue bonds issued by an agency or political
subdivision of a state of the United States of America; and (d)
all renewals, extensions or refundings of indebtedness of the
kinds described in either of the preceding clauses (a) and (b)
unless, in the case of any particular indebtedness, renewal,
extension or refunding, the instrument creating or evidencing the
same or the assumption or guarantee of the same expressly
provides that such indebtedness, renewal, extension or refunding
is not superior in right of payment to or is pari passu with the
Debentures.

Subsidiary:

The term "Subsidiary" shall mean any corporation at least a
majority of whose outstanding voting stock shall at the time be
owned by the Company or by one or more Subsidiaries or by the
Company and one or more Subsidiaries. For the purposes only of
this definition of the term "Subsidiary", the term "voting
stock", as applied to the stock of any corporation, shall mean
stock of any class or classes having ordinary voting power for
the election of a majority of the directors of such corporation,
other than stock having such power only by reason of the
occurrence of a contingency.

Trustee:

The term "Trustee" shall mean The First National Bank of Chicago,
and, subject to the provisions of Article Seven, shall also
include its successors and assigns, and, if at any time there is
more than one person acting in such capacity hereunder, "Trustee"
shall mean each such person. The term "Trustee" as used with
respect to a particular series of the Debentures shall mean the
trustee with respect to that series.

Trust Indenture Act:

The term "Trust Indenture Act", subject to the provisions of
Sections 9.01, 9.02, and 10.01, shall mean the Trust Indenture
Act of 1939, as amended and in effect at the date of execution of
this Indenture.

ARTICLE TWO

ISSUE, DESCRIPTION, TERMS, EXECUTION,
REGISTRATION AND EXCHANGE OF DEBENTURES

SECTION 2.01. The aggregate principal amount of Debentures
which may be authenticated and delivered under this Indenture is
unlimited.

The Debentures may be issued in one or more series up to the
aggregate principal amount of Debentures of that series from time
to time authorized by or pursuant to a Board Resolution or
pursuant to one or more indentures supplemental hereto, prior to
the initial issuance of Debentures of a particular series. Prior
to the initial issuance of Debentures of any series, there shall
be established in or pursuant to a Board Resolution, and set
forth in an Officers' Certificate, or established in one or more
indentures supplemental hereto:

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

(2) any limit upon the aggregate principal amount of
the Debentures of that series which may be authenticated and
delivered under this Indenture (except for Debentures
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Debentures of
that series);

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

(4) the rate or rates at which the Debentures of the
series shall bear interest or the manner of calculation of
such rate or rates, if any;

(5) the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest
will be payable or the manner of determination of such
Interest Payment Dates and the record date for the
determination of holders to whom interest is payable on any
such Interest Payment Dates;

(6) the right, if any, to extend the interest payment
periods and the duration of such extension;

(7) the period or periods within which, the price or
prices at which and the terms and conditions upon which,
Debentures of the series may be redeemed, in whole or in
part, at the option of the Company;

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

(9) the form of the Debentures of the series including
the form of the Certificate of Authentication for such
series;

(10) if other than denominations of $25 or any integral
multiple thereof, the denominations in which the Debentures
of the series shall be issuable;

(11) any and all other terms with respect to such
series (which terms shall not be inconsistent with the terms
of this Indenture); and

(11) whether the Debentures are issuable as a Global
Debenture and, in such case, the identity for the Depository
for such series.

All Debentures of any one series shall be substantially
identical except as to denomination and except as may otherwise
be provided in or pursuant to any such Board Resolution or in any
indentures 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 Officers' Certificate setting
forth the terms of the series.

SECTION 2.02. The Debentures of any series and the
Trustee's certificate of authentication to be borne by such
Debentures shall be substantially of the tenor and purport as set
forth in one or more indentures supplemental hereto or as
provided in a Board Resolution and as set forth in an Officers'
Certificate, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which Debentures of
that series may be listed, or to conform to usage.

SECTION 2.03. The Debentures shall be issuable as
registered Debentures and in the denominations of $25 or any
integral multiple thereof, subject to Section 2.01(10). The
Debentures of a particular series shall bear interest payable on
the dates and at the rate or rates specified with respect to that
series. The principal of and the interest on the Debentures of
any series, as well as any premium thereon in case of redemption
thereof prior to maturity, shall be payable in the coin or
currency of the United States of America which at the time is
legal tender for public and private debt, at the office or agency
of the Company maintained for that purpose. Each Debenture shall
be dated the date of its authentication.

The interest installment on any Debenture which is payable,
and is punctually paid or duly provided for, on any Interest
Payment Date for Debentures of that series shall be paid to the
person in whose name said Debenture (or one or more Predecessor
Debentures) is registered at the close of business on the regular
record date for such interest installment, except that interest
payable on redemption or maturity shall be payable as set forth
in the Officers' Certificate or indenture supplemental hereto
establishing the terms of such series of Debentures.

Any interest on any Debenture which is payable, but is not
punctually paid or duly provided for, on any Interest Payment
Date for Debentures of the same series (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered
holder on the relevant regular record date by virtue of having
been such holder; and such Defaulted Interest shall be paid by
the Company, at its election, as provided in clause (1) or clause
(2) below:

(1) The Company may make payment of any Defaulted
Interest on Debentures to the persons in whose names such
Debentures (or their respective Predecessor Debentures) are
registered at the close of business on a special record date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Debenture and the date of
the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the persons entitled to such
Defaulted Interest as in this clause provided. Thereupon
the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than 15
nor 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 Debentureholder at his
or her address as it appears in the Debenture Register (as
hereinafter defined), 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 mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names such Debentures
(or their respective Predecessor Debentures) are registered
on such special record date and shall be no longer payable
pursuant to the following clause (2).

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

Unless otherwise set forth in a Board Resolution or one or
more indentures supplemental hereto establishing the terms of any
series of Debentures pursuant to Section 2.01 hereof, the term
"regular record date" as used in this Section with respect to a
series of Debentures with respect to any Interest Payment Date
for such series shall mean either the fifteenth day of the month
immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall
occur, if such Interest Payment Date is the first day of a month,
or the last day of the month immediately preceding the month in
which an Interest Payment Date established for such series
pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such
date is a business day.

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

SECTION 2.04. The Debentures shall, subject to the
provisions of Section 2.06, be printed on steel engraved borders
or fully or partially engraved, or legibly typed, as the proper
officers of the Company may determine, and shall be signed on
behalf of the Company by its Chairman of the Board, its
President, one of its Vice Presidents or its Treasurer, under its
corporate seal attested by its Secretary or one of its Assistant
Secretaries. The signature of the Chairman of the Board, the
President, a Vice President or the Treasurer and/or the signature
of the Secretary or an Assistant Secretary in attestation of the
corporate seal, upon the Debentures, may be in the form of a
facsimile signature of a present or any future Chairman of the
Board, President, Vice President or Treasurer and of a present or
any future Secretary or Assistant Secretary and may be imprinted
or otherwise reproduced on the Debentures and for that purpose
the Company may use the facsimile signature of any person who
shall have been a Chairman of the Board, President, Vice
President or Treasurer, or of any person who shall have been a
Secretary or Assistant Secretary, notwithstanding the fact that
at the time the Debentures shall be authenticated and delivered
or disposed of such person shall have ceased to be the Chairman
of the Board, President, Vice President or Treasurer, or the
Secretary or an Assistant Secretary, of the Company, as the case
may be. The seal of the Company may be in the form of a
facsimile of the seal of the Company and may be impressed,
affixed, imprinted or otherwise reproduced on the Debentures.

Only such Debentures as shall bear thereon a Certificate of
Authentication substantially in the form established for such
Debentures, executed manually by an authorized signatory of the
Trustee, or by any Authenticating Agent with respect to such
Debentures, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate
executed by the Trustee, or by any Authenticating Agent appointed
by the Trustee with respect to such Debentures, upon any
Debenture executed by the Company shall be conclusive evidence
that the Debenture so authenticated has been duly authenticated
and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.

At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures of
any series executed by the Company to the Trustee for
authentication, together with a written order of the Company for
the authentication and delivery of such Debentures, signed by its
Chairman of the Board, President or any Vice President or
Treasurer and its Secretary or any Assistant Secretary, and the
Trustee in accordance with such written order shall authenticate
and deliver such Debentures.

In authenticating such Debentures and accepting the
additional responsibilities under this Indenture in relation to
such Debentures, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be fully protected in relying
upon, an Opinion of Counsel stating that the form and terms
thereof have been established in conformity with the provisions
of this Indenture.

The Trustee shall not be required to authenticate such
Debentures if the issue of such Debentures pursuant to this
Indenture will affect the Trustee's own rights, duties or
immunities under the Debentures and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.

SECTION 2.05. (a) Debentures of any series may be
exchanged upon presentation thereof at the office or agency of
the Company designated for such purpose, for other Debentures of
such series of authorized denominations, and for a like aggregate
principal amount, upon payment of a sum sufficient to cover any
tax or other governmental charge in relation thereto, all as
provided in this Section. In respect of any Debentures so
surrendered for exchange, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in
exchange therefor the Debenture or Debentures of the same series
which the Debentureholder making the exchange shall be entitled
to receive, bearing numbers not contemporaneously outstanding.

(b) The Company shall keep, or cause to be kept, at its
office or agency designated for such purpose in the Borough of
Manhattan, the City and State of New York, or such other location
designated by the Company a register or registers (herein
referred to as the "Debenture Register") in which, subject to
such reasonable regulations as it may prescribe, the Company
shall register the Debentures and the transfers of Debentures as
in this Article provided and which at all reasonable times shall
be open for inspection by the Trustee. The registrar for the
purpose of registering Debentures and transfer of Debentures as
herein provided shall be appointed as authorized by Board
Resolution (the "Debenture Registrar").

Upon surrender for transfer of any Debenture at the office
or agency of the Company designated for such purpose in the
Borough of Manhattan, the City and State of New York, or other
location as aforesaid, the Company shall execute, the Trustee
shall authenticate and such office or agency shall deliver in the
name of the transferee or transferees a new Debenture or
Debentures of the same series as the Debenture presented for a
like aggregate principal amount.

All Debentures presented or surrendered for exchange or
registration of transfer, as provided in this Section, shall be
accompanied (if so required by the Company or the Debenture
Registrar) by a written instrument or instruments of transfer, in
form satisfactory to the Company or the Debenture Registrar, duly
executed by the registered holder or by his duly authorized
attorney in writing.

(c) No service charge shall be made for any exchange or
registration of transfer of Debentures, or issue of new
Debentures in case of partial redemption of any series, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge in relation thereto, other than
exchanges pursuant to Section 2.06, Section 3.03(b) and Section
9.04 not involving any transfer.

(d) The Company shall not be required (i) to issue,
exchange or register the transfer of any Debentures during a
period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption of less than all the
outstanding Debentures of the same series and ending at the close
of business on the day of such mailing, nor (ii) to register the
transfer of or exchange any Debentures of any series or portions
thereof called for redemption. The provisions of this Section
2.05 are, with respect to any Global Debenture, subject to
Section 2.11 hereof.

SECTION 2.06. Pending the preparation of definitive
Debentures of any series, the Company may execute, and the
Trustee shall authenticate and deliver, temporary Debentures
(printed, lithographed or typewritten) of any authorized
denomination, and substantially in the form of the definitive
Debentures in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for
temporary Debentures, all as may be determined by the Company.
Every temporary Debenture of any series shall be executed by the
Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with like
effect, as the definitive Debentures of such series. Without
unnecessary delay the Company will execute and will furnish
definitive Debentures of such series and thereupon any or all
temporary Debentures of such series may be surrendered in
exchange therefor (without charge to the holders), at the office
or agency of the Company designated for the purpose, and the
Trustee shall authenticate and such office or agency shall
deliver in exchange for such temporary Debentures an equal
aggregate principal amount of definitive Debentures of such
series, unless the Company advises the Trustee to the effect that
definitive Debentures need not be executed and furnished until
further notice from the Company. Until so exchanged, the
temporary Debentures of such series shall be entitled to the same
benefits under this Indenture as definitive Debentures of such
series authenticated and delivered hereunder.

SECTION 2.07. In case any temporary or definitive Debenture
shall become mutilated or be destroyed, lost or stolen, the
Company (subject to the next succeeding sentence) shall execute,
and upon its request the Trustee (subject as aforesaid) shall
authenticate and deliver, a new Debenture of the same series
bearing a number not contemporaneously outstanding, in exchange
and substitution for the mutilated Debenture, or in lieu of and
in substitution for the Debenture so destroyed, lost or stolen.
In every case the applicant for a substituted Debenture shall
furnish to the Company and to the Trustee such security or
indemnity as may be required by them to save each of them
harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or theft
of the applicant's Debenture and of the ownership thereof. The
Trustee may authenticate any such substituted Debenture and
deliver the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted
Debenture, 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. In
case any Debenture which has matured or is about to mature shall
become mutilated or be destroyed, lost or stolen, the Company
may, instead of issuing a substitute Debenture, pay or authorize
the payment of the same (without surrender thereof except in the
case of a mutilated Debenture) if the applicant for such payment
shall furnish to the Company and to the Trustee such security or
indemnity as they may require to save them harmless, and, in case
of destruction, loss or theft, evidence to the satisfaction of
the Company and the Trustee of the destruction, loss or theft of
such Debenture and of the ownership thereof.

Every Debenture issued pursuant to the provisions of this
Section in substitution for any Debenture which is mutilated,
destroyed, lost or stolen shall constitute an additional
contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Debenture shall be found at
any time, or be enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately
with any and all other Debentures of the same series duly issued
hereunder. All Debentures shall be held and owned upon the
express condition that the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures, and shall preclude (to the
extent lawful) any and all other rights or remedies,
notwithstanding any law or statute existing or hereafter enacted
to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their
surrender.

SECTION 2.08. All Debentures surrendered for the purpose of
payment, redemption, exchange or registration of transfer shall,
if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the
Trustee, shall be canceled by it, and no Debentures shall be
issued in lieu thereof except as expressly required or permitted
by any of the provisions of this Indenture. On request of the
Company, the Trustee shall deliver to the Company canceled
Debentures held by the Trustee. In the absence of such request
the Trustee may dispose of canceled Debentures in accordance with
its standard procedures and deliver a certificate of disposition
to the Company. If the Company shall otherwise acquire any of
the Debentures, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by
such Debentures unless and until the same are delivered to the
Trustee for cancellation.

SECTION 2.09. Nothing in this Indenture or in the
Debentures, express or implied, shall give or be construed to
give to any person, firm or corporation, other than the parties
hereto and the holders of the Debentures, any legal or equitable
right, remedy or claim under or in respect of this Indenture, or
under any covenant, condition or provision herein contained; all
such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the holders of the
Debentures.

SECTION 2.10. So long as any of the Debentures of any
series remain outstanding there may be an Authenticating Agent
for any or all such series of Debentures which the Trustee shall
have the right to appoint. Said Authenticating Agent shall be
authorized to act on behalf of the Trustee to authenticate
Debentures of such series issued upon exchange, transfer or
partial redemption thereof, and Debentures so authenticated shall
be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the
Trustee hereunder. All references in this Indenture to the
authentication of Debentures by the Trustee shall be deemed to
include authentication by an Authenticating Agent for such series
except for authentication upon original issuance or pursuant to
Section 2.07 hereof. Each Authenticating Agent shall be
acceptable to the Company and shall be a corporation which has a
combined capital and surplus, as most recently reported or
determined by it, sufficient under the laws of any jurisdiction
under which it is organized or in which it is doing business to
conduct a trust business, and which is otherwise authorized under
such laws to conduct such business and is subject to supervision
or examination by Federal or State authorities. If at any time
any Authenticating Agent shall cease to be eligible in accordance
with these provisions it shall resign immediately.

Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company.
The Trustee may at any time (and upon request by the Company
shall) terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and to
the Company. Upon resignation, termination or cessation of
eligibility of any Authenticating Agent, the Trustee may appoint
an eligible successor Authenticating Agent acceptable to the
Company. Any successor Authenticating Agent, upon acceptance of
its appointment hereunder, shall become vested with all the
rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.

SECTION 2.11. (a) If the Company shall establish pursuant
to Section 2.01 that the Debentures of a particular series are to
be issued as a Global Debenture, then the Company shall execute
and the Trustee shall, in accordance with Section 2.04,
authenticate and deliver, a Global Debenture which (i) shall
represent, and shall be denominated in an amount equal to the
aggregate principal amount of, all of the Outstanding Debentures
of such series, (ii) shall be registered in the name of the
Depository or its nominee, (iii) shall be delivered by the
Trustee to the Depository or pursuant to the Depository's
instruction and (iv) shall bear a legend substantially to the
following effect: "Except as otherwise provided in Section 2.11
of the Indenture, this Debenture may be transferred, in whole but
not in part, only to another nominee of the Depository or to a
successor Depository or to a nominee of such successor
Depository."

(b) Notwithstanding the provisions of Section 2.05, the
Global Debenture of a series may be transferred, in whole but not
in part and in the manner provided in Section 2.05, only to
another nominee of the Depository for such series, or to a
successor Depository for such series selected or approved by the
Company or to a nominee of such successor Depository.

(c) If at any time the Depository for a series of
Debentures notifies the Company that it is unwilling or unable to
continue as Depository for such series or if at any time the
Depository for such series shall no longer be registered or in
good standing under the Exchange Act, or other applicable statute
or regulation and a successor Depository 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, this Section 2.11 shall no longer be applicable to
the Debentures of such series and the Company will execute, and
subject to Section 2.05, the Trustee will authenticate and
deliver Debentures of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global
Debenture of such series in exchange for such Global Debenture.
In addition, the Company may at any time determine that the
Debentures of any series shall no longer be represented by a
Global Debenture and that the provisions of this Section 2.11
shall no longer apply to the Debentures of such series. In such
event the Company will execute, and subject to Section 2.05, the
Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company, will authenticate and deliver
Debentures of such series in definitive registered form without
coupons, in authorized denominations, and in an aggregate
principal amount equal to the principal amount of the Global
Debenture of such series 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 canceled by the
Trustee. Such Debentures in definitive registered form issued in
exchange for the Global Debenture pursuant to this Section
2.11(c) shall be registered in such names and in such authorized
denominations as the Depository, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct
the Debenture Registrar. The Trustee shall deliver such
Debentures to the Depository for delivery to the persons in whose
names such Debentures are so registered.

ARTICLE THREE

REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS

SECTION 3.01. The Company may redeem the Debentures of any
series issued hereunder on and after the dates and in accordance
with the terms established for such series pursuant to Section
2.01 hereof.

SECTION 3.02. (a) In case the Company shall desire to
exercise such right to redeem all or, as the case may be, a
portion of the Debentures of any series in accordance with the
right reserved so to do, it shall give notice of such redemption
to holders of the Debentures of such series to be redeemed by
mailing, first class postage prepaid, a notice of such redemption
not less than 30 days and not more than 60 days before the date
fixed for redemption of that series to such holders at their last
addresses as they shall appear upon the Debenture Register. Any
notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the
registered holder receives the notice. In any case, failure duly
to give such notice to the holder of any Debenture of any series
designated for redemption in whole or in part, or any defect in
the notice, shall not affect the validity of the proceedings for
the redemption of any other Debentures of such series or any
other series. In the case of any redemption of Debentures prior
to the expiration of any restriction on such redemption provided
in the terms of such Debentures or elsewhere in this Indenture,
the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with any such restriction.

Each such notice of redemption shall specify the date fixed
for redemption and the redemption price at which Debentures of
that series are to be redeemed, and shall state that payment of
the redemption price of such Debentures to be redeemed will be
made at the office or agency of the Company, upon presentation
and surrender of such Debentures, that interest accrued to the
date fixed for redemption will be paid as specified in said
notice, that from and after said date interest will cease to
accrue and that the redemption is for a sinking fund, if such is
the case. If less than all the Debentures of a series are to be
redeemed, the notice to the holders of Debentures of that series
to be redeemed in whole or in part shall specify the particular
Debentures to be so redeemed. In case any Debenture is to be
redeemed in part only, the notice which relates to such Debenture
shall state the portion of the principal amount thereof to be
redeemed, and shall state that on and after the redemption date,
upon surrender of such Debenture, a new Debenture or Debentures
of such series in principal amount equal to the unredeemed
portion thereof will be issued.

(b) If less than all the Debentures of a series are to be
redeemed, the Company shall give the Trustee at least 45 days'
notice in advance of the date fixed for redemption (unless the
Trustee shall agree to a shorter period) as to the aggregate
principal amount of Debentures of the series to be redeemed, and
thereupon the Trustee shall select, by lot or in such other
manner as it shall deem appropriate and fair in its discretion
and which may provide for the selection of a portion or portions
(equal to $25 or any integral multiple thereof, subject to
Section 2.01(10)) of the principal amount of such Debentures of a
denomination larger than $25 (subject as aforesaid), the
Debentures to be redeemed and shall thereafter promptly notify
the Company in writing of the numbers of the Debentures to be
redeemed, in whole or in part.

The Company may, if and whenever it shall so elect, by
delivery of instructions signed on its behalf by its Chairman of
the Board, its President, any Vice President or its Treasurer,
instruct the Trustee or any paying agent to call all or any part
of the Debentures of a particular series for redemption and to
give notice of redemption in the manner set forth in this
Section, such notice to be in the name of the Company or its own
name as the Trustee or such paying agent may deem advisable. In
any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or
cause to be delivered to, or permit to remain with, the Trustee
or such paying agent, as the case may be, such Debenture
Register, transfer books or other records, or suitable copies or
extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required
under the provisions of this Section.

SECTION 3.03. (a) If the giving of notice of redemption
shall have been completed as above provided, the Debentures or
portions of Debentures of the series to be redeemed specified in
such notice shall become due and payable on the date and at the
place stated in such notice at the applicable redemption price,
together with interest accrued to the date fixed for redemption
and interest on such Debentures or portions of Debentures shall
cease to accrue on and after the date fixed for redemption,
unless the Company shall default in the payment of such
redemption price and accrued interest with respect to any such
Debenture or portion thereof. On presentation and surrender of
such Debentures on or after the date fixed for redemption at the
place of payment specified in the notice, said Debentures shall
be paid and redeemed at the applicable redemption price for such
series, together with interest accrued thereon to the date fixed
for redemption (but if the date fixed for redemption is an
interest payment date, the interest installment payable on such
date shall be payable to the registered holder at the close of
business on the applicable record date pursuant to Section 2.03).

(b) Upon presentation of any Debenture of such series which
is to be redeemed in part only, the Company shall execute and the
Trustee shall authenticate and the office or agency where the
Debenture is presented shall deliver to the holder thereof, at
the expense of the Company, a new Debenture or Debentures of the
same series, of authorized denominations in principal amount
equal to the unredeemed portion of the Debenture so presented.

SECTION 3.04. The provisions of Sections 3.04, 3.05 and
3.06 shall be applicable to any sinking fund for the retirement
of Debentures of a series, except as otherwise specified as
contemplated by Section 2.01 for Debentures of such series.

The minimum amount of any sinking fund payment provided for
by the terms of Debentures of any series is herein referred to as
a "mandatory sinking fund payment", and any payment in excess of
such minimum amount provided for by the terms of Debentures of
any series is herein referred to as an "optional sinking fund
payment". If provided for by the terms of Debentures of any
series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 3.05. Each sinking
fund payment shall be applied to the redemption of Debentures of
any series as provided for by the terms of Debentures of such
series.

SECTION 3.05. The Company (i) may deliver Outstanding
Debentures of a series (other than any previously called for
redemption) and (ii) may apply as a credit Debentures of a series
which have been redeemed either at the election of the Company
pursuant to the terms of such Debentures or through the
application of permitted optional sinking fund payments pursuant
to the terms of such Debentures, in each case in satisfaction of
all or any part of any sinking fund payment with respect to the
Debentures of such series required to be made pursuant to the
terms of such Debentures as provided for by the terms of such
series; provided that such Debentures have not been previously so
credited. Such Debentures shall be received and credited for
such purpose by the Trustee at the redemption price specified in
such Debentures for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced
accordingly.

SECTION 3.06. Not less than 45 days prior to each sinking
fund payment date for any series of Debentures, the Company will
deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if
any, which is to be satisfied by delivering and crediting
Debentures of that series pursuant to Section 3.05 and the basis
for such credit and will, together with such Officers'
Certificate, deliver to the Trustee any Debentures to be so
delivered. Not less than 30 days before each such sinking fund
payment date the Trustee shall select the Debentures to be
redeemed upon such sinking fund payment date in the manner
specified in Section 3.02 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 3.02. Such notice
having been duly given, the redemption of such Debentures shall
be made upon the terms and in the manner stated in Section 3.03.

ARTICLE FOUR

PARTICULAR COVENANTS OF THE COMPANY

The Company covenants and agrees for each series of the
Debentures as follows:

SECTION 4.01. The Company will duly and punctually pay or
cause to be paid the principal of (and premium, if any) and
interest on the Debentures of that series at the time and place
and in the manner provided herein and established with respect to
such Debentures.

SECTION 4.02. So long as any series of the Debentures
remain outstanding, the Company agrees to maintain an office or
agency, which if such series of Debentures is not outstanding as
a Global Debenture, shall be in the Borough of Manhattan, the
City and State of New York, with respect to each such series and
at such other location or locations as may be designated as
provided in this Section 4.02, where (i) Debentures of that
series may be presented for payment, (ii) Debentures of that
series may be presented as hereinabove authorized for
registration of transfer and exchange, and (iii) notices and
demands to or upon the Company in respect of the Debentures of
that series and this Indenture may be given or served, such
designation to continue with respect to such office or agency
until the Company shall, by written notice signed by its Chairman
of the Board, its President, any Vice President or its Treasurer
and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. 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, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such
presentations, notices and demands.

SECTION 4.03. (a) If the Company shall appoint one or more
paying agents for all or any series of the Debentures, other than
the Trustee, the Company will cause each such paying agent to
execute and deliver to the Trustee an instrument in which such
agent shall agree with the Trustee, subject to the provisions of
this Section:

(1) that it will hold all sums held by it as such
agent for the payment of the principal of (and premium, if
any) or interest on the Debentures of that series (whether
such sums have been paid to it by the Company or by any
other obligor of such Debentures) in trust for the benefit
of the persons entitled thereto;

(2) that it will give the Trustee notice of any
failure by the Company (or by any other obligor of such
Debentures) to make any payment of the principal of (and
premium, if any) or interest on the Debentures of that
series when the same shall be due and payable;

(3) that it will, at any time during the continuance
of any failure referred to in the preceding paragraph (a)(2)
above, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such paying
agent; and

(4) that it will perform all other duties of paying
agent as set forth in this Indenture.

(b) If the Company shall act as its own paying agent with
respect to any series of the Debentures, it will on or before
each due date of the principal of (and premium, if any) or
interest on Debentures of that series, set aside, segregate and
hold in trust for the benefit of the persons entitled thereto a
sum sufficient to pay such principal (and premium, if any) or
interest so becoming due on Debentures of that series until such
sums shall be paid to such persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of such
action, or any failure (by it or any other obligor on such
Debentures) to take such action. Whenever the Company shall have
one or more paying agents for any series of Debentures, it will,
prior to each due date of the principal of (and premium, if any)
or interest on any Debentures of that series, deposit with the
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 so to act.

(c) Anything in this Section to the contrary
notwithstanding, (i) the agreement to hold sums in trust as
provided in this Section is subject to the provisions of Section
11.04, and (ii) 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 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 terms
and conditions 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.

SECTION 4.04. The Company, whenever necessary to avoid or
fill a vacancy in the office of Trustee, will appoint, in the
manner provided in Section 7.10, a Trustee, so that there shall
at all times be a Trustee hereunder.

SECTION 4.05. The Company will not, while any of the
Debentures remain outstanding, consolidate with, or merge into,
or merge into itself, or sell or convey all or substantially all
of its property to any other company unless the provisions of
Article Ten hereof are complied with.

ARTICLE FIVE

DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY
AND THE TRUSTEE

SECTION 5.01. The Company will furnish or cause to be
furnished to the Trustee (a) on each regular record date (as
defined in Section 2.03) a list, in such form as the Trustee may
reasonably require, of the names and addresses of the holders of
each series of Debentures as of such regular record date,
provided, that the Company shall not be obligated to furnish or
cause to be furnished such list at any time that the list shall
not differ in any respect from the most recent list furnished to
the Trustee by the Company and (b) at such other times as the
Trustee may request in writing within 30 days after the receipt
by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such
list is furnished; provided, however, no such list need be
furnished for any series for which the Trustee shall be the
Debenture Registrar.

SECTION 5.02. (a) The Trustee shall preserve, in as
current a form as is reasonably practicable, all information as
to the names and addresses of the holders of Debentures contained
in the most recent list furnished to it as provided in Section
5.01 and as to the names and addresses of holders of Debentures
received by the Trustee in its capacity as Debenture Registrar
(if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as
provided in Section 5.01 upon receipt of a new list so furnished.

(c) In case three or more holders of Debentures of a series
(hereinafter referred to as "applicants") apply in writing to the
Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Debenture 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 of Debentures of such series or holders of all
Debentures with respect to their rights under this Indenture or
under such Debentures, 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:

(1) afford to such applicants access to the
information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this
Section 5.02; or

(2) inform such applicants as to the approximate
number of holders of Debentures of such series or of all
Debentures, as the case may be, whose names and addresses
appear in the information preserved at the time by the
Trustee, in accordance with the provisions of subsection (a)
of this Section 5.02, and as to the approximate cost of
mailing to such Debentureholders the form of proxy or other
communication, if any, specified in such application.

(d) 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 of
such series or of all Debentures, as the case may be, whose name
and address appears in the information preserved at the time by
the Trustee in accordance with the provisions of subsection (a)
of this Section 5.02, 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 Securities and Exchange Commission (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 interests of the holders of
Debentures of such series or of all Debentures, as the case may
be, 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 the objections so sustained have been met and shall
enter an order so declaring, the Trustee shall mail copies of
such material to all such Debentureholders 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.

(e) Each and every holder of the Debentures, by receiving
and holding the same, agrees with the Company and the Trustee
that neither the Company nor the Trustee nor any paying agent nor
any Debenture Registrar shall be held accountable by reason of
the disclosure of any such information as to the names and
addresses of the holders of Debentures in accordance with the
provisions of subsection (c) of this Section, 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 said subsection (c).

SECTION 5.03. (a) The Company covenants and agrees to file
with the Trustee, within 30 days after the Company is required to
file the same with the Commission, a copy of the annual reports
and of the information, documents and other reports (or a copy 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 such sections, then to file with the
Trustee and the Commission, in accordance with the 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.

(b) The Company covenants and agrees to file with the
Trustee and the Commission, in accordance with the 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
provided for in this Indenture as may be required from time to
time by such rules and regulations.

(c) The Company covenants and agrees to transmit by mail,
first class postage prepaid, or reputable over-night delivery
service which provides for evidence of receipt, to the
Debentureholders, as their names and addresses appear upon the
Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section as may be required by
rules and regulations prescribed from time to time by the
Commission.

(d) The Company covenants and agrees to furnish to the
Trustee, on or before May 15 in each calendar year in which any
of the Debentures are outstanding, or on or before such other day
in each calendar year as the Company and the Trustee may from
time to time agree upon, a certificate from the principal
executive officer, principal financial officer or principal
accounting officer of the Company as to his or her knowledge of
the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this subsection (d), such
compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Indenture.

SECTION 5.04. (a) On or before July 15 in each year in
which any of the Debentures are outstanding, the Trustee shall
transmit by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the
Debenture Register, a brief report dated as of the preceding May
15, with respect to any of the following events which may have
occurred within the previous twelve months (but if no such event
has occurred within such period no report need be transmitted):

(1) any change to its eligibility under Section 7.09,
and its qualifications under Section 7.08;

(2) the creation of or any material change to a
relationship specified in paragraphs (1) through (10) of
Section 310(b) of the Trust Indenture Act;

(3) the character and amount of any advances (and if
the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as
such) which remain unpaid on the date of such report, and
for the reimbursement of which it claims or may claim a lien
or charge, prior to that of the Debentures, on any property
or funds held or collected by it as Trustee if such advances
so remaining unpaid aggregate more than 1/2 of 1% of the
principal amount of the Debentures outstanding on the date
of such report;

(4) any change to the amount, interest rate, and
maturity date of all other indebtedness owing by the
Company, or by any other obligor on the Debentures, to the
Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as
collateral security therefor, except any indebtedness based
upon a creditor relationship arising in any manner described
in Section 7.13;

(5) any change to the property and funds, if any,
physically in the possession of the Trustee as such on the
date of such report;

(6) any release, or release and substitution, of
property subject to the lien of this Indenture (and the
consideration thereof, if any) which it has not previously
reported;

(7) any additional issue of Debentures which the
Trustee has not previously reported; and

(8) any action taken by the Trustee in the performance
of its duties under this Indenture which it has not
previously reported and which in its opinion materially
affects the Debentures or the Debentures of any series,
except any action in respect of a default, notice of which
has been or is to be withheld by it in accordance with the
provisions of Section 6.07.

(b) The Trustee shall transmit by mail, first class postage
prepaid, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, a brief report with respect
to the character and amount of any advances (and if the Trustee
elects so to state, the circumstances surrounding the making
thereof) made by the Trustee as such since the date of the last
report transmitted pursuant to the provisions of subsection (a)
of this Section (or if no such report has yet been so
transmitted, since the date of execution of this Indenture), for
the reimbursement of which it claims or may claim a lien or
charge prior to that of the Debentures of any series on property
or funds held or collected by it as Trustee, and which it has not
previously reported pursuant to this subsection if such advances
remaining unpaid at any time aggregate more than 10% of the
principal amount of Debentures of such series outstanding at such
time, such report to be transmitted within 90 days after such
time.

(c) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the Trustee with
the Company, with each stock exchange upon which any Debentures
are listed (if so listed) and also with the Commission. The
Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.

ARTICLE SIX

REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT

SECTION 6.01. (a) Whenever used herein with respect to
Debentures of a particular series, "Event of Default" means any
one or more of the following events which has occurred and is
continuing:

(1) default in the payment of any installment of
interest upon any of the Debentures of that series, as and
when the same shall become due and payable, and continuance
of such default for a period of 10 days; provided, however,
that a valid extension of an interest payment period by the
Company in accordance with the terms of any indenture
supplemental hereto shall not constitute a default in the
payment of interest for this purpose;

(2) default in the payment of the principal of (or
premium, if any, on) any of the Debentures of that series as
and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise, or
in any payment required by any sinking or analogous fund
established with respect to that series;

(3) failure on the part of the Company duly to observe
or perform any other of the covenants or agreements on the
part of the Company with respect to that series contained in
such Debentures or otherwise established with respect to
that series of Debentures pursuant to Section 2.01 hereof or
contained in this Indenture (other than a covenant or
agreement which has been expressly included in this
Indenture solely for the benefit of one or more series of
Debentures other than such series) for a period of 90 days
after the date on which written notice of such failure,
requiring the same to be remedied and stating that such
notice is a "Notice of Default" hereunder, shall have been
given to the Company by the Trustee, by registered or
certified mail, or to the Company and the Trustee by the
holders of at least 25% in principal amount of the
Debentures of that series at the time outstanding;

(4) a decree or order by a court having jurisdiction
in the premises shall have been entered adjudging the
Company as bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation or reorganization of
the Company under the Federal Bankruptcy Code or any other
similar applicable Federal or State law, and such decree or
order shall have continued unvacated and unstayed for a
period of 90 consecutive days; or an involuntary case shall
be commenced under such Code in respect of the Company and
shall continue undismissed for a period of 90 consecutive
days or an order for relief in such case shall have been
entered; or a decree or order of a court having jurisdiction
in the premises shall have been entered for the appointment
on the ground of insolvency or bankruptcy of a receiver or
custodian or liquidator or trustee or assignee in bankruptcy
or insolvency of the Company or of its property, or for the
winding up or liquidation of its affairs, and such decree or
order shall have remained in force unvacated and unstayed
for a period of 90 consecutive days; or

(5) the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file
a petition or answer or consent seeking liquidation or
reorganization under the Federal Bankruptcy Code or any
other similar applicable Federal or State law, or shall
consent to the filing of any such petition, or shall consent
to the appointment on the ground of insolvency or bankruptcy
of a receiver or custodian or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of
creditors.

(b) In each and every such case, unless the principal of
all the Debentures of that series shall have already become due
and payable, either the Trustee or the holders of not less than
25% in aggregate principal amount of the Debentures of that
series then outstanding hereunder, by notice in writing to the
Company (and to the Trustee if given by such Debentureholders),
may declare the principal of all the Debentures of that series to
be due and payable immediately, and upon any such declaration the
same shall become and shall be immediately due and payable,
anything contained in this Indenture or in the Debentures of that
series or established with respect to that series pursuant to
Section 2.01 hereof to the contrary notwithstanding.

(c) Section 6.01(b), however, is subject to the condition
that if, at any time after the principal of the Debentures of
that series shall have been so declared due and payable, and
before any judgment or decree for the payment of the monies due
shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum
sufficient to pay all matured installments of interest upon all
the Debentures of that series and the principal of (and premium,
if any, on) any and all Debentures of that series which shall
have become due otherwise than by acceleration (with interest
upon such principal and premium, if any, and, to the extent that
such payment is enforceable under applicable law, upon overdue
installments of interest, at the rate per annum expressed in the
Debentures of that series to the date of such payment or deposit)
and the amount payable to the Trustee under Section 7.06, and any
and all defaults under the Indenture, other than the nonpayment
of principal on Debentures of that series which shall not have
become due by their terms, shall have been remedied or waived as
provided in Section 6.06, then and in every such case the holders
of a majority in aggregate principal amount of the Debentures of
that series then outstanding, by written notice to the Company
and to the Trustee, may rescind and annul such declaration and
its consequences with respect to that series of Debentures; but
no such rescission and annulment shall extend to or shall affect
any subsequent default, or shall impair any right consequent
thereon.

(d) In case the Trustee shall have proceeded to enforce any
right with respect to Debentures of that series under this
Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee
shall be restored respectively to their former positions and
rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such
proceedings had been taken.

SECTION 6.02. (a) The Company covenants that (1) in case
default shall be made in the payment of any installment of
interest on any of the Debentures of a series, or any payment
required by any sinking or analogous fund established with
respect to that series as and when the same shall have become due
and payable, and such default shall have continued for a period
of 10 business days, or (2) in case default shall be made in the
payment of the principal of (or premium, if any, on) any of the
Debentures of a series when the same shall have become due and
payable, whether upon maturity of the Debentures of a series or
upon redemption or upon declaration or otherwise, then, upon
demand of the Trustee, the Company will pay to the Trustee, for
the benefit of the holders of the Debentures of that series, the
whole amount that then shall have become due and payable on all
such Debentures for principal (and premium, if any) or interest,
or both, as the case may be, with interest upon the overdue
principal (and premium, if any) and (to the extent that payment
of such interest is enforceable under applicable law and without
duplication of any other amounts paid by the Company in respect
thereof) upon overdue installments of interest at the rate per
annum expressed in the Debentures of that series; and, in
addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, and the amount
payable to the Trustee under Section 7.06.

(b) In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to
institute any action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or
other obligor upon the Debentures of that series and collect in
the manner provided by law out of the property of the Company or
other obligor upon the Debentures of that series wherever
situated the monies adjudged or decreed to be payable.

(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement,
composition or other judicial proceedings affecting the Company,
any other obligor on such Debentures, or the creditors or
property of either, the Trustee shall have power to intervene in
such proceedings and take any action therein that may be
permitted by the court and shall (except as may be otherwise
provided by law) be entitled to file such proofs of claim and
other papers and documents as may be necessary or advisable in
order to have the claims of the Trustee and of the holders of
Debentures of such series allowed for the entire amount due and
payable by the Company or such other obligor under the Indenture
at the date of institution of such proceedings and for any
additional amount which may become due and payable by the Company
or such other obligor after such date, and to collect and receive
any monies or other property payable or deliverable on any such
claim, and to distribute the same after the deduction of the
amount payable to the Trustee under Section 7.06; and any
receiver, assignee or trustee in bankruptcy or reorganization is
hereby authorized by each of the holders of Debentures of such
series to make such payments to the Trustee, and, in the event
that the Trustee shall consent to the making of such payments
directly to such Debentureholders, to pay to the Trustee any
amount due it under Section 7.06.

(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to
Debentures of that series, may be enforced by the Trustee without
the possession of any of such Debentures, or the production
thereof at any trial or other proceeding relative thereto, and
any such suit or 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 payment to the
Trustee of any amounts due under Section 7.06, be for the ratable
benefit of the holders of the Debentures of such series.

In case of an Event of Default hereunder, the Trustee may in
its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce
any of such rights, either at law or in equity or in bankruptcy
or otherwise, whether for the specific enforcement of any
covenant or agreement contained in the Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce
any other legal or equitable right vested in the Trustee by this
Indenture or by law.

Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Debentureholder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures of that series
or the rights of any holder thereof or to authorize the Trustee
to vote in respect of the claim of any Debentureholder in any
such proceeding.

SECTION 6.03. Any monies collected by the Trustee pursuant
to Section 6.02 with respect to a particular series of Debentures
shall be applied in the order following, at the date or dates
fixed by the Trustee and, in case of the distribution of such
monies on account of principal (or premium, if any) or interest,
upon presentation of the several Debentures of that series, and
stamping thereon the payment, if only partially paid, and upon
surrender thereof if fully paid:

FIRST: To the payment of costs and expenses of
collection and of all amounts payable to the Trustee under
Section 7.06;

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

THIRD: To the Company.

SECTION 6.04. No holder of any Debenture of any series
shall have any right by virtue or by availing of any provision of
this Indenture to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Indenture
or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such holder previously shall have given
to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to Debentures of such series
specifying such Event of Default, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate
principal amount of the Debentures of such series then
outstanding shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as
trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and
the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity, shall have failed to institute any such
action, suit or proceeding; it being understood and intended, and
being expressly covenanted by the taker and holder of every
Debenture of such series with every other such taker and holder
and the Trustee, that no one or more holders of Debentures of
such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to
affect, disturb or prejudice the rights of the holders of any
other of such Debentures, or to obtain or seek to obtain priority
over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided
and for the equal, ratable and common benefit of all holders of
Debentures of such series. For the protection and enforcement of
the provisions of this Section, each and every Debentureholder
and the Trustee shall be entitled to such relief as can be given
either at law or in equity.

Notwithstanding any other provisions of this Indenture,
however, the right of any holder of any Debenture to receive
payment of the principal of (and premium, if any) and interest on
such Debenture, as therein provided, on or after the respective
due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates
or redemption date, shall not be impaired or affected without the
consent of such holder.

SECTION 6.05. (a) All powers and remedies given by this
Article to the Trustee or to the Debentureholders shall, to the
extent permitted by law, be deemed cumulative and not exclusive
of any others thereof or of any other powers and remedies
available to the Trustee or the holders of the Debentures, by
judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this
Indenture or otherwise established with respect to such
Debentures.

(b) No delay or omission of the Trustee or of any holder of
any of the Debentures to exercise any right or power accruing
upon any Event of Default occurring and continuing as aforesaid
shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee or to the
Debentureholders may be exercised from time to time, and as often
as shall be deemed expedient, by the Trustee or by the
Debentureholders.

SECTION 6.06. The holders of a majority in aggregate
principal amount of the Debentures of any series at the time
outstanding, determined in accordance with Section 8.04, 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 such series; provided, however, that such direction
shall not be in conflict with any rule of law or with this
Indenture or unduly prejudicial to the rights of holders of
Debentures of any other series at the time outstanding determined
in accordance with Section 8.04 not parties thereto. Subject to
the provisions of Section 7.01, the Trustee shall have the right
to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer or Officers of the Trustee,
determine that the proceeding so directed would involve the
Trustee in personal liability. The holders of a majority in
aggregate principal amount of the Debentures of any series at the
time outstanding affected thereby, determined in accordance with
Section 8.04, may on behalf of the holders of all of the
Debentures of such series waive any past default in the
performance of any of the covenants contained herein or
established pursuant to Section 2.01 with respect to such series
and its consequences, except a default in the payment of the
principal of, or premium, if any, or interest on, any of the
Debentures of that series as and when the same shall become due
by the terms of such Debentures otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay
all matured installments of interest and principal otherwise than
by acceleration and any premium has been deposited with the
Trustee (in accordance with Section 6.01(c))) or a call for
redemption of Debentures of that series. Upon any such waiver,
the default covered thereby shall be deemed to be cured for all
purposes of this Indenture and the Company, the Trustee and the
holders of the Debentures of such series shall be restored to
their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.

SECTION 6.07. The Trustee shall, within 90 days after the
occurrence of a default with respect to a particular series,
transmit by mail, first class postage prepaid, to the holders of
Debentures of that series, as their names and addresses appear
upon the Debenture Register, notice of all defaults with respect
to that series known to the Trustee, unless such defaults shall
have been cured or waived before the giving of such notice (the
term "defaults" for the purposes of this Section being hereby
defined to be the events specified in subsections (1), (2), (3),
(4) and (5) of Section 6.01(a), not including any periods of
grace provided for therein and irrespective of the giving of
notice provided for by subsection (3) of Section 6.01(a));
provided, that, except in the case of default in the payment of
the principal of (or premium, if any) or interest on any of the
Debentures of that series or in the payment of any sinking or
analogous fund installment established with respect to that
series, the Trustee shall be protected in withholding such notice
if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible
Officers, of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of
Debentures of that series; provided further, that in the case of
any default of the character specified in Section 6.01(a)(3) with
respect to Debentures of such series no such notice to the
holders of the Debentures of that series shall be given until at
least 30 days after the occurrence thereof.

The Trustee shall not be deemed to have knowledge of any
default, except (i) a default under subsection (a)(1) or (a)(2)
of Section 6.01 as long as the Trustee is acting as paying agent
for such series of Debentures or (ii) any default as to which the
Trustee shall have received written notice or a Responsible
Officer charged with the administration of this Indenture shall
have obtained written notice.

SECTION 6.08. All parties to this Indenture agree, and each
holder of any Debentures by his or her 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 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 Trustee, to any suit instituted by any
Debentureholder, or group of Debentureholders, holding more than
10% in aggregate principal amount of the outstanding Debentures
of any series, or to any suit instituted by any Debentureholder
for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debenture of such series, on
or after the respective due dates expressed in such Debenture or
established pursuant to this Indenture.

ARTICLE SEVEN

CONCERNING THE TRUSTEE

SECTION 7.01. (a) The Trustee, prior to the occurrence of
an Event of Default with respect to Debentures of a series and
after the curing of all Events of Default with respect to
Debentures of that series which may have occurred, shall
undertake to perform with respect to Debentures of such series
such duties and only such duties as are specifically set forth in
this Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default with
respect to Debentures of a series has occurred (which has not
been cured or waived), the Trustee shall exercise with respect to
Debentures of that series such of the rights and powers vested in
it by this Indenture, and 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.

(b) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct,
except that:

(1) prior to the occurrence of an Event of Default
with respect to Debentures of a series and after the curing
or waiving of all such Events of Default with respect to
that series which may have occurred:

(i) the duties and obligations of the Trustee
shall with respect to Debentures of such series be
determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable with
respect to Debentures of such series except for the
performance of such duties and obligations as are
specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into
this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of
the Trustee, the Trustee may with respect to Debentures
of such series conclusively rely, as to the truth of
the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any
such certificates or opinions which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to
the requirements of this Indenture;

(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or
Responsible Officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the
pertinent facts;

(3) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the direction of the holders of not less
than a majority in principal amount of the Debentures of any
series at the time outstanding relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture with respect
to the Debentures of that series; and

(4) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any
of its rights or powers, if the Trustee reasonably believes
that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Indenture
or adequate indemnity against such risk is not reasonably
assured to it.

SECTION 7.02. Except as otherwise provided in Section 7.01:

(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, consent,
order, approval, bond, security or other paper or document
believed by it (i) to be genuine and (ii) to have been signed or
presented by the proper party or parties;

(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board
Resolution or an instrument signed in the name of the Company by
the Chairman of the Board, the President, any Vice President or
the Treasurer and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer (unless other evidence in
respect thereof is specifically prescribed herein);

(c) 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 or suffered or omitted hereunder in good faith and
in reliance thereon;

(d) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Debentureholders,
pursuant to the provisions of this Indenture, unless such
Debentureholders shall have offered to the Trustee security or
indemnity satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing
herein contained shall, however, relieve the Trustee of the
obligation, upon the occurrence of an Event of Default with
respect to a series of the Debentures (which has not been cured
or waived) to exercise with respect to Debentures of that series
such of the rights and powers vested in it by this Indenture, and
to 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;

(e) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture;

(f) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, security, or other
papers or documents, unless requested in writing so to do by the
holders of not less than a majority in principal amount of the
outstanding Debentures of the particular series affected thereby
(determined as provided in Section 8.04); 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, in the opinion of the Trustee,
not 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 examination shall be paid by the Company or, if paid by the
Trustee, shall be repaid by the Company upon demand; and

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

SECTION 7.03. (a) The recitals contained herein and in the
Debentures (other than the Certificate of Authentication on the
Debentures) shall be taken as the statements of the Company, and
the Trustee assumes no responsibility for the correctness of the
same.

(b) The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Debentures.

(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Debentures or of the
proceeds of such Debentures, or for the use or application of any
monies paid over by the Trustee in accordance with any provision
of this Indenture or established pursuant to Section 2.01, or for
the use or application of any monies received by any paying agent
other than the Trustee.

SECTION 7.04. The Trustee or any paying agent or Debenture
Registrar, in its individual or any other capacity, may become
the owner or pledgee of Debentures with the same rights it would
have if it were not Trustee, paying agent or Debenture Registrar.

SECTION 7.05. Subject to the provisions of Section 11.05,
all monies received by the Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated from other funds
except to the extent required by law. The Trustee shall be under
no liability for interest on any monies received by it hereunder
except such as it may agree with the Company to pay thereon.

SECTION 7.06. (a) The Company covenants and agrees to pay
to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation (which shall not be limited
by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in
the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the
Trustee, and the Company will pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any
of the provisions of this Indenture (including the reasonable
compensation and the reasonable expenses and disbursements of its
counsel and of all persons not regularly in its employ) except
any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Company also covenants to indemnify
the Trustee (and its officers, agents, directors and employees)
for, and to hold it harmless against, any loss, liability or
expense incurred without negligence, willful misconduct or bad
faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust,
including the reasonable costs and expenses of defending itself
against any claim of liability in the premises.

(b) The obligations of the Company under this Section to
compensate and indemnify the Trustee and to pay or reimburse the
Trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder. Such additional indebtedness
shall be secured by a lien prior to that of the Debentures upon
all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of
particular Debentures.

SECTION 7.07. Except as otherwise provided in Section 7.01,
whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or
omitting to take any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by
an Officers' Certificate delivered to the Trustee and such
certificate, in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to the Trustee for any
action taken, suffered or omitted to be taken by it under the
provisions of this Indenture upon the faith thereof.

SECTION 7.08. If the Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.

SECTION 7.09. There shall at all times be a Trustee with
respect to the Debentures issued hereunder which shall at all
times be a corporation organized and doing business under the
laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or a corporation or other
person permitted to act as trustee by the Commission, authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million dollars, and
subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid
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. The
Company may not, nor may any person directly or indirectly
controlling, controlled by, or under common control with the
Company, serve as Trustee. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and
with the effect specified in Section 7.10.

SECTION 7.10. (a) The Trustee or any successor hereafter
appointed, may at any time resign with respect to the Debentures
of one or more series by giving written notice thereof to the
Company and by transmitting notice of resignation by mail, first
class postage prepaid, to the Debentureholders of such series, as
their names and addresses appear upon the Debenture Register.
Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee with respect to Debentures
of such series by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the
mailing 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 Debentures of such series,
or any Debentureholder of that series who has been a bona fide
holder of a Debenture or Debentures for at least six months may,
subject to the provisions of Section 6.08, on behalf of himself
and all others similarly situated, petition any such court for
the appointment of a successor trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(1) the Trustee shall fail to comply with the
provisions of Section 7.08 after written request therefor by
the Company or by any Debentureholder who has been a bona
fide holder of a Debenture or Debentures for at least six
months; or

(2) The Trustee shall cease to be eligible in
accordance with the provisions of Section 7.09 and shall
fail to resign after written request therefor by the Company
or by any such Debentureholder; or

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

then, in any such case, the Company may remove the Trustee with
respect to all Debentures and appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board
of Directors, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee, or,
subject to the provisions of Section 6.08, unless the Trustee's
duty to resign is stayed as provided herein, any Debentureholder
who has been a bona fide holder of a Debenture or Debentures 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 and the appointment of a successor
trustee. Such court may thereupon after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint
a successor trustee.

(c) The holders of a majority in aggregate principal amount
of the Debentures of any series at the time outstanding may at
any time remove the Trustee with respect to such series and
appoint a successor trustee.

(d) Any resignation or removal of the Trustee and
appointment of a successor trustee with respect to the Debentures
of a series pursuant to any of the provisions of this Section
shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 7.11.

(e) Any successor trustee appointed pursuant to this
Section may be appointed with respect to the Debentures of one or
more series or all of such series, and at any time there shall be
only one Trustee with respect to the Debentures of any particular
series.

SECTION 7.11. (a) In case of the appointment hereunder of
a successor trustee with respect to all Debentures, every such
successor trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the
Company or the successor trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor trustee all the rights, powers,
and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and
money held by such retiring Trustee hereunder.

(b) In case of the appointment hereunder of a successor
trustee with respect to the Debentures of one or more (but not
all) series, the Company, the retiring Trustee and each successor
trustee with respect to the Debentures of 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 Debentures of that or
those series to which the appointment of such successor trustee
relates, (2) shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Debentures of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees
co-trustees of the same trust, that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee and that no Trustee shall be responsible for any act or
failure to act on the part of any other Trustee hereunder; 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, such retiring Trustee
shall with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates have no
further responsibility for the exercise of rights and powers or
for the performance of the duties and obligations vested in the
Trustee under this Indenture, and each such successor trustee,
without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates; but, on
request of the Company or any successor trustee, such retiring
Trustee shall duly assign, transfer and deliver to such successor
trustee, to the extent contemplated by such supplemental
indenture, the property and money held by such retiring Trustee
hereunder with respect to the Debentures of that or those series
to which the appointment of such successor trustee relates.

(c) Upon request of any such successor trustee, the Company
shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor trustee all
such rights, powers and trusts referred to in 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 this Article.

(e) Upon acceptance of appointment by a successor trustee
as provided in this Section, the Company shall transmit notice of
the succession of such trustee hereunder by mail, first class
postage prepaid, to the Debentureholders, as their names and
addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the
Company.

SECTION 7.12. 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 the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be qualified under the provisions
of Section 7.08 and eligible under the provisions of Section
7.09, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. In case any Debentures shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Debentures.

SECTION 7.13. If and when the Trustee shall become a
creditor of the Company (or any other obligor upon the
Debentures), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding collection of claims against
the Company (or any obligor upon the Debentures).

ARTICLE EIGHT

CONCERNING THE DEBENTUREHOLDERS

SECTION 8.01. Whenever in this Indenture it is provided that
the holders of a majority or specified percentage in aggregate
principal amount of the Debentures of a particular series may
take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any
other action), the fact that at the time of taking any such
action the holders of such majority or specified percentage of
that series have joined therein may be evidenced by any
instrument or any number of instruments of similar tenor executed
by such holders of Debentures of that series in person or by
agent or proxy appointed in writing.

If the Company shall solicit from the Debentureholders of
any series any request, demand, authorization, direction, notice,
consent, waiver or other action, the Company may, at its option,
as evidenced by an Officers' Certificate, fix in advance a record
date for such series for the determination of Debentureholders
entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other action, 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 action may be given before or after the record
date, but only the Debentureholders of record at the close of
business on the record date shall be deemed to be
Debentureholders for the purposes of determining whether
Debentureholders of the requisite proportion of outstanding
Debentures of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice,
consent, waiver or other action, and for that purpose the
outstanding Debentures of that series shall be computed as of the
record date; provided that no such authorization, agreement or
consent by such Debentureholders on the 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 8.02. Subject to the provisions of Section 7.01,
proof of the execution of any instrument by a Debentureholder
(such proof will not require notarization) or his agent or proxy
and proof of the holding by any person of any of the Debentures
shall be sufficient if made in the following manner:

(a) The fact and date of the execution by any such person
of any instrument may be proved in any reasonable manner
acceptable to the Trustee.

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

SECTION 8.03. Prior to the due presentment for registration
of transfer of any Debenture, the Company, the Trustee, any
paying agent and any Debenture Registrar may deem and treat the
person in whose name such Debenture shall be registered upon the
books of the Company as the absolute owner of such Debenture
(whether or not such Debenture shall be overdue and
notwithstanding any notice of ownership or writing thereon made
by anyone other than the Debenture Registrar) for the purpose of
receiving payment of or on account of the principal of, premium,
if any, and (subject to Section 2.03) interest on such Debenture
and for all other purposes; and neither the Company nor the
Trustee nor any paying agent nor any Debenture Registrar shall be
affected by any notice to the contrary.

SECTION 8.04. In determining whether the holders of the
requisite aggregate principal amount of Debentures of a
particular series have concurred in any direction, consent or
waiver under this Indenture, Debentures of that series which are
owned by the Company or any other obligor on the Debentures of
that series or by any person directly or indirectly controlling
or controlled by or under common control with the Company or any
other obligor on the Debentures of that series shall be
disregarded and deemed not to be outstanding for the purpose of
any such determination, except that for the purpose of
determining whether the Trustee shall be protected in relying on
any such direction, consent or waiver, only Debentures of such
series which the Trustee actually knows are so owned shall be so
disregarded. Debentures so owned which have been pledged in good
faith may be regarded as outstanding for the purposes of this
Section, if the pledgee shall establish to the satisfaction of
the Trustee the pledgee's right so to act with respect to such
Debentures and that the pledgee is not a person directly or
indirectly controlling or controlled by or under direct or
indirect common control with the Company or any such other
obligor. In case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.

SECTION 8.05. At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 8.01, of the
taking of any action by the holders of the majority or percentage
in aggregate principal amount of the Debentures of a particular
series specified in this Indenture in connection with such
action, any holder of a Debenture of that series which is shown
by the evidence to be included in the Debentures the holders of
which have consented to such action may, by filing written notice
with the Trustee, and upon proof of holding as provided in
Section 8.02, revoke such action so far as concerns such
Debenture. Except as aforesaid any such action taken by the
holder of any Debenture shall be conclusive and binding upon such
holder and upon all future holders and owners of such Debenture,
and of any Debenture issued in exchange therefor, on registration
of transfer thereof or in place thereof, irrespective of whether
or not any notation in regard thereto is made upon such
Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the Debentures of a
particular series specified in this Indenture in connection with
such action shall be conclusively binding upon the Company, the
Trustee and the holders of all the Debentures of that series.

ARTICLE NINE

SUPPLEMENTAL INDENTURES

SECTION 9.01. In addition to any supplemental indenture
otherwise authorized by this Indenture, the Company, when
authorized by a Board Resolution, and the Trustee may from time
to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect), without the consent of
the Debentureholders, for one or more of the following purposes:

(a) to evidence the succession of another corporation to
the Company, and the assumption by any such successor of the
covenants of the Company contained herein or otherwise
established with respect to the Debentures; or

(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the
protection of the holders of the Debentures of all or any series
as the Board of Directors shall consider to be for the protection
of the holders of Debentures of all or any series, and to make
the occurrence, or the occurrence and continuance, of a default
in any of such additional covenants, restrictions, conditions or
provisions a default or an Event of Default with respect to such
series permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional
covenant, restriction, condition or provision such supplemental
indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available
to the Trustee upon such default or may limit the right of the
holders of a majority in aggregate principal amount of the
Debentures of such series to waive such default; or

(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which
may be defective or inconsistent with any other provision
contained herein or in any supplemental indenture, or to make
such other provisions in regard to matters or questions arising
under this Indenture as shall not be inconsistent with the
provisions of this Indenture and shall not adversely affect the
interests of the holders of the Debentures of any series; or

(d) 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 Debenture outstanding of
any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision.

The Trustee is hereby authorized to join with the Company in
the execution of any such supplemental indenture, and to make any
further appropriate agreements and stipulations which may be
therein contained, but the Trustee 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.

Any supplemental indenture authorized by the provisions of
this Section may be executed by the Company and the Trustee
without the consent of the holders of any of the Debentures at
the time outstanding, notwithstanding any of the provisions of
Section 9.02.

SECTION 9.02. With the consent (evidenced as provided in
Section 8.01) of the holders of not less than a majority in
aggregate principal amount of the Debentures of each series
affected by such supplemental indenture or indentures at the time
outstanding, the Company, when authorized by a Board Resolution,
and the Trustee may from time to time and at any time enter into
an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in
effect) for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any
manner the rights of the holders of the Debentures of such series
under this Indenture; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any
Debentures of any series, or 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.

Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of
the consent of Debentureholders required to consent thereto as
aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may
in its discretion but shall not be obligated to enter into such
supplemental indenture.

It shall not be necessary for the consent of the
Debentureholders of any series affected thereby under this
Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such
consent shall approve the substance thereof.

Promptly after the execution by the Company and the Trustee
of any supplemental indenture pursuant to the provisions of this
Section, the Trustee shall transmit by mail, first class postage
prepaid, a notice, setting forth in general terms the substance
of such supplemental indenture, to the Debentureholders of all
series affected thereby as their names and addresses appear upon
the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.

SECTION 9.03. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article or of
Section 10.01, this Indenture shall, with respect to such series,
be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the
Trustee, the Company and the holders of Debentures of the series
affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.

SECTION 9.04. Debentures of any series, affected by a
supplemental indenture, authenticated and delivered after the
execution of such supplemental indenture pursuant to the
provisions of this Article or of Section 10.01, may bear a
notation in form approved by the Company, provided such form
meets the requirements of any exchange upon which such series may
be listed, as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Debentures of
that series so modified as to conform, in the opinion of the
Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by
the Company, authenticated by the Trustee and delivered in
exchange for the Debentures of that series then outstanding.

SECTION 9.05. The Trustee, subject to the provisions of
Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to
this Article is authorized or permitted by, and conforms to, the
terms of this Article and that it is proper for the Trustee under
the provisions of this Article to join in the execution thereof.

ARTICLE TEN

CONSOLIDATION, MERGER AND SALE

SECTION 10.01. Nothing contained in this Indenture or in any
of the Debentures shall prevent any consolidation or merger of
the Company with or into any other corporation or corporations
(whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor
or successors shall be a party or parties, or shall prevent any
sale, conveyance, transfer or other disposition of the property
of the Company or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether
or not affiliated with the Company or its successor or
successors) authorized to acquire and operate the same; provided,
however, the Company hereby covenants and agrees that, upon any
such consolidation, merger, sale, conveyance, transfer or other
disposition, the due and punctual payment of the principal of
(premium, if any) and interest on all of the Debentures of all
series in accordance with the terms of each series, according to
their tenor, and the due and punctual performance and observance
of all the covenants and conditions of this Indenture with
respect to each series or established with respect to such series
pursuant to Section 2.01 to be kept or performed by the Company,
shall be expressly assumed, by supplemental indenture (which
shall conform to the provisions of the Trust Indenture Act as
then in effect) satisfactory in form to the Trustee executed and
delivered to the Trustee by the entity formed by such
consolidation, or into which the Company shall have been merged,
or by the entity which shall have acquired such property.

SECTION 10.02. (a) In case of any such consolidation,
merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the due and punctual payment of the
principal of, premium, if any, and interest on all of the
Debentures of all series outstanding and the due and punctual
performance of all of the covenants and conditions of this
Indenture or established with respect to each series of the
Debentures pursuant to Section 2.01 to be performed by the
Company with respect to each series, such successor corporation
shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the party of the
first part, and thereupon the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture
and the Debentures. Such successor corporation thereupon may
cause to be signed, and may issue either in its own name or in
the name of the Company or any other predecessor obligor on the
Debentures, any or all of the Debentures issuable hereunder which
theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor
company, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the
Trustee shall authenticate and shall deliver any Debentures which
previously shall have been signed and delivered by the officers
of the predecessor Company to the Trustee for authentication, and
any Debentures which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose.
All the Debentures so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Debentures
theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Debentures had been issued
at the date of the execution hereof.

(b) In case of any such consolidation, merger, sale,
conveyance, transfer or other disposition such changes in
phraseology and form (but not in substance) may be made in the
Debentures thereafter to be issued as may be appropriate.

(c) Nothing contained in this Indenture or in any of the
Debentures shall prevent the Company from merging into itself or
acquiring by purchase or otherwise all or any part of the
property of any other corporation (whether or not affiliated with
the Company).

SECTION 10.03. The Trustee, subject to the provisions of
Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance,
transfer or other disposition, and any such assumption, comply
with the provisions of this Article.

ARTICLE ELEVEN

SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONIES

SECTION 11.01. If at any time: (a) the Company shall have
delivered to the Trustee for cancellation all Debentures of a
series theretofore authenticated (other than any Debentures which
shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.07 and Debentures
for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereupon
repaid to the Company or discharged from such trust, as provided
in Section 11.04); or (b) the Company shall deposit or cause to
be deposited with the Trustee as trust funds (i) the entire
amount in monies or Governmental Obligations or (ii) a
combination of monies and Governmental Obligations, sufficient in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption
under arrangements satisfactory to the Trustee for the giving of
notice of redemption, all Debentures of a particular series not
theretofore delivered to the Trustee for cancellation, including
principal (and premium, if any) and interest due or to become due
to their date of maturity or date fixed for redemption, as the
case may be, and if such deposit shall be made prior to the
stated maturity date of the Debentures of that series, the
Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the holders of such Debentures will not
recognize gain, loss or income for federal income tax purposes as
a result of the satisfaction and discharge of this Indenture with
respect to such series and such holders will be subject to
federal income taxation on the same amounts and in the same
manner and at the same times as if such satisfaction and
discharge had not occurred, and if the Company shall also pay or
cause to be paid all other sums payable hereunder with respect to
such series by the Company, then this Indenture shall thereupon
cease to be of further effect with respect to such series except
for the provisions of Sections 2.05, 2.07, 4.02 and 7.10, which
shall survive until the date of maturity or redemption date, as
the case may be, and Sections 7.06 and 11.04 which shall survive
to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute
proper instruments acknowledging satisfaction of and discharging
this Indenture with respect to such series.

SECTION 11.02. All monies or Governmental Obligations
deposited with the Trustee pursuant to Sections 11.01 or 11.02
shall be held in trust and shall be available for payment as due,
either directly or through any paying agent (including the
Company acting as its own paying agent), to the holders of the
particular series of Debentures for the payment or redemption of
which such monies or Governmental Obligations have been deposited
with the Trustee.

SECTION 11.03. In connection with the satisfaction and
discharge of this Indenture all monies or Governmental
Obligations then held by any paying agent under the provisions of
this Indenture shall, upon demand of the Company, be paid to the
Trustee and thereupon such paying agent shall be released from
all further liability with respect to such monies or Governmental
Obligations.

SECTION 11.04. Any monies or Governmental Obligations
deposited with any paying agent or the Trustee, or then held by
the Company, in trust for payment of principal of or premium or
interest on the Debentures of a particular series that are not
applied but remain unclaimed by the holders of such Debentures
for at least two years after the date upon which the principal of
(and premium, if any) or interest on such Debentures shall have
respectively become due and payable, upon the written request of
the Company and unless otherwise required by mandatory provisions
of applicable escheat or abandoned or unclaimed property law,
shall be repaid to the Company on May 31 of each year or (if then
held by the Company) shall be discharged from such trust; and
thereupon the paying agent and the Trustee shall be released from
all further liability with respect to such monies or Governmental
Obligations, and the holder of any of the Debentures entitled to
receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof.

ARTICLE TWELVE

IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 12.01. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of any Debenture, or
for any claim based thereon or otherwise in respect thereof,
shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Company or of
any predecessor or successor corporation, either directly or
through the Company or any such 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; it being expressly understood that this Indenture
and the obligations issued hereunder are solely corporate
obligations, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators,
stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because
of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Debentures or
implied therefrom; and that any and all such personal liability
of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and
claims against, every such incorporator, stockholder, officer or
director as such, because of the creation of the indebtedness
hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of such Debentures.

ARTICLE THIRTEEN

MISCELLANEOUS PROVISIONS

SECTION 13.01. All the covenants, stipulations, promises and
agreements in this Indenture contained by or on behalf of the
Company shall bind its successors and assigns, whether so
expressed or not.

SECTION 13.02. Any act or proceeding by any provision of
this Indenture authorized or required to be done or performed by
any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that
shall at the time be the lawful sole successor of the Company.

SECTION 13.03. The Company by instrument in writing executed
by authority of two-thirds of its Board of Directors and
delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall
terminate both as to the Company and as to any successor
corporation.

SECTION 13.04. Except as otherwise expressly provided herein
any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by
the holders of Debentures to or on the Company may be given or
served by being deposited first class postage prepaid in a post
office letter box addressed (until another address is filed in
writing by the Company with the Trustee), as follows: Appalachian
Power Company, 40 Franklin Road, Roanoke, Virginia 24022,
Attention: President; with a copy to American Electric Power
Service Corporation, 1 Riverside Plaza, Columbus Ohio 43215,
Attention: Treasurer. Any notice, election, request or demand
by the Company or any Debentureholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the Corporate Trust
Office of the Trustee.

SECTION 13.05. This Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New
York, and for all purposes shall be construed in accordance with
the laws of said State.

SECTION 13.06. (a) Upon any application or demand by the
Company to the Trustee to take any action under any of the
provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions
precedent 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
have been complied with, except that in the case of any such
application or demand as to which the furnishing of such
documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.

(b) Each certificate or opinion provided for in this
Indenture and delivered to the Trustee with respect to compliance
with a condition or covenant in this Indenture (other than the
certificate provided pursuant to Section 5.03(d) of this
Indenture) shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based; (3)
a statement that, in the opinion of such person, 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 (4) a statement as to
whether or not, in the opinion of such person, such condition or
covenant has been complied with.

SECTION 13.07. Except as provided pursuant to Section 2.01
pursuant to a Board Resolution, and as set forth in an Officers'
Certificate, or established in one or more indentures
supplemental to this Indenture, in any case where the date of
maturity of interest or principal of any Debenture or the date of
redemption of any Debenture shall not be a business day then
payment of interest or principal (and premium, if any) may be
made on the next succeeding business day with the same force and
effect as if made on the nominal date of maturity or redemption,
and no interest shall accrue for the period after such nominal
date.

SECTION 13.08. If and to the extent that any provision of
this Indenture limits, qualifies or conflicts with the duties
imposed by the Trust Indenture Act, such imposed duties shall
control.

SECTION 13.09. This 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.

SECTION 13.10. In case any one or more of the provisions
contained in this Indenture or in the Debentures of any series
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
Indenture or of such Debentures, but this Indenture and such
Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or
therein.

SECTION 13.11. The Company will have the right at all times
to assign any of its rights or obligations under the Indenture to
a direct or indirect wholly owned Subsidiary of the Company;
provided that, in the event of any such assignment, the Company
will remain liable for all such obligations. Subject to the
foregoing, this Indenture is binding upon and inures to the
benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the
parties thereto.

ARTICLE FOURTEEN

SUBORDINATION OF DEBENTURES

SECTION 14.01. The Company covenants and agrees, and each
holder of Debentures issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Debentures shall be
issued subject to the provisions of this Article Fourteen; and
each holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by
such provisions.

The payment of the principal of, premium, if any, and
interest on all Debentures issued hereunder shall, to the extent
and in the manner hereinafter set forth, be subordinated and
subject in right of payment to the prior payment in full of all
Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.

No provision of this Article Fourteen shall prevent the
occurrence of any default or Event of Default hereunder.

SECTION 14.02. In the event and during the continuation of
any default in the payment of principal, premium, interest or any
other payment due on any Senior Indebtedness continuing beyond
the period of grace, if any, specified in the instrument
evidencing such Senior Indebtedness, unless and until such
default shall have been cured or waived or shall have ceased to
exist, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in
either case, no payment shall be made by the Company with respect
to the principal (including redemption and sinking fund payments)
of, or premium, if any, or interest on the Debentures.

In the event that, notwithstanding the foregoing, any
payment shall be received by the Trustee or any holder when such
payment is prohibited by the preceding paragraph of this Section
14.02, such payment shall be held in trust for the benefit of,
and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of
such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that the
holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee within 90 days
of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of Senior Indebtedness.

SECTION 14.03. Upon any payment by the Company, or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due or
to become due upon all Senior Indebtedness shall first be paid in
full, or payment thereof provided for in money in accordance with
its terms, before any payment is made on account of the principal
(and premium, if any) or interest on the Debentures; and upon any
such dissolution or winding-up or liquidation or reorganization
any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, to which the holders of the Debentures or the Trustee
would be entitled, except for the provisions of this Article
Fourteen, shall by paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, or by the holders of the
Debentures or by the Trustee under this Indenture if received by
them or it, directly to the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the
Company) or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full, in money or
money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness, before
any payment or distribution is made to the holders of Debentures
or to the Trustee.

In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, prohibited by
the foregoing, shall be received by the Trustee or the holders of
the Debentures before all Senior Indebtedness is paid in full, or
provision is made for such payment in money in accordance with
its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the
holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests
may appear, as calculated by the Company, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in money in
accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior
Indebtedness.

For purposes of this Article Fourteen, the words "cash,
property or securities" shall not be deemed to include shares of
stock of the Company as reorganized or readjusted, or securities
of the Company or any other corporation provided for by a plan of
reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article
Fourteen with respect to the Debentures to the payment of all
Senior Indebtedness which may at the time be outstanding;
provided that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of the Senior
Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company
into, another corporation or the liquidation or dissolution of
the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article
Ten hereof shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section
14.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Ten hereof. Nothing in Section
14.02 or in this Section 14.03 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.06.

SECTION 14.04. Subject to the payment in full of all Senior
Indebtedness, the rights of the holders of the Debentures shall
be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness
until the principal of (and premium, if any) and interest on the
Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which
the holders of the Debentures or the Trustee would be entitled
except for the provisions of this Article Fourteen, and no
payment over pursuant to the provisions of this Article Fourteen,
to or for the benefit of the holders of Senior Indebtedness by
holders of the Debentures or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness,
and the holders of the Debentures, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness. It is
understood that the provisions of this Article Fourteen are and
are intended solely for the purposes of defining the relative
rights of the holders of the Debentures, on the one hand, and the
holders of the Senior Indebtedness on the other hand.

Nothing contained in this Article Fourteen or elsewhere in
this Indenture or in the Debentures is intended to or shall
impair, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holders of the
Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the
principal of (and premium, if any) and interest on the Debentures
as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures 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 Debenture 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 payment or distribution of assets of the Company
referred to in this Article Fourteen, the Trustee, subject to the
provisions of Section 7.01, and the holders of the Debentures,
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 receiver, trustee in bankruptcy,
liquidation trustee, agent or other person making such payment or
distribution, delivered to the Trustee or to the holders of the
Debentures, for the purposes 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 14.05. Each holder of a Debenture by his acceptance
thereof authorizes and directs the Trustee in 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 any and all such purposes.

SECTION 14.06. The Company shall give prompt written notice
to a Responsible Officer of the Trustee of any fact known to the
Company which 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 Fourteen.

Notwithstanding the provisions of this Article Fourteen or
any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment of monies to or by the Trustee
in respect of the Debentures pursuant to the provisions of this
Article Fourteen, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof at the
Corporate Trust Office of the Trustee 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 7.01, shall be
entitled in all respects to assume that no such facts exist;
provided that if the Trustee shall not have received the notice
provided for in this Section 14.06 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 which may be received by it within
two business days prior to such date.

The Trustee, subject to the provisions of Section 7.01,
shall be entitled to rely on the delivery to it of a written
notice by a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish
that such notice has been given by a holder of 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 Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Fourteen,
the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of 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 Fourteen, and if such evidence is not furnished the
Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such
payment.

SECTION 14.07. The Trustee in its individual capacity shall
be entitled to all 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 this Indenture shall deprive the Trustee of any of its
rights as such holder.

With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article Fourteen, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into
this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior
Indebtedness and, subject to the provisions of Section 7.01, the
Trustee shall not be liable to any holder of Senior Indebtedness
if it shall pay over or deliver to holders of Debentures, the
Company or any other person money or assets to which any holder
of Senior Indebtedness shall be entitled by virtue of this
Article Fourteen or otherwise.

SECTION 14.08. No right of any present or future holder 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 otherwise be charged with.

Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time
and from time to time, without the consent of or notice to the
Trustee or the holders of the Debentures, without incurring
responsibility to the holders of the Debentures and without
impairing or releasing the subordination provided in this Article
or the obligations hereunder of the holders of the Debentures to
the holders of Senior Indebtedness, do any one or more of the
following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior
Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(iii) release any person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other person.

The First National Bank of Chicago, as Trustee, hereby
accepts the trusts in this Indenture declared and provided, upon
the terms and conditions hereinabove set forth.

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.

APPALACHIAN POWER COMPANY

By________________________
Treasurer

Attest:

By________________________
Assistant Secretary

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

By________________________
Vice President

Attest:

By_____________________
Authorized Officer

State of Ohio }
County of Franklin, } ss:

On this ______ day of September, 1996, personally appeared
before me, a Notary Public within and for said County in the
State aforesaid, A. A. Pena and J. M. Adams, Jr., to me known and
known to me to be respectively Treasurer and Assistant Secretary
of APPALACHIAN POWER COMPANY, one of the corporations named in
and which executed the foregoing instrument, who severally
acknowledged that they did sign and seal said instrument as such
Treasurer and Assistant Secretary for and on behalf of said
corporation and that the same is their free act and deed as such
Treasurer and Assistant Secretary, respectively, and the free and
corporate act and deed of said corporation.

In Witness Whereof, I have hereunto set my hand and notarial
seal this ______ day of September, 1996.

[Notarial Seal]

______________________________
MARY M. SOLTESZ
Notary Public, State of Ohio
My Commission Expires: 7-12-99

State of ________ }
County of _______ } ss:

Be it remembered, that on this ____ day of September, 1996,
personally appeared before me the undersigned, a Notary Public
within and for said County and State, The First National Bank of
Chicago, one of the corporations named in and which executed the
foregoing instrument, by _____________ one of its Vice
Presidents, and by ________________, one of its Authorized
Officers, to me known and known by me to be such Vice President
and Authorized Officer, respectively, who severally duly
acknowledged the signing and sealing of the foregoing instrument
to be their free act and voluntary deed, and the free act and
voluntary deed of each of them as such Vice President and
Authorized Officer, respectively, and the free act and voluntary
deed of said corporation, for the uses and purposes therein
expressed and mentioned.

In Witness Whereof, I have hereunto set my hand and notarial
seal this ____ day of September, 1996.

[Notarial Seal]

____________________________________
Notary Public, State of ________
My Commission Expires: ________

Exhibit 4(b)

APPALACHIAN POWER COMPANY

AND

THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee

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

FIRST SUPPLEMENTAL INDENTURE

Dated as of September 1, 1996

INDENTURE

Dated as of September 1, 1996

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

______% Junior Subordinated
Deferrable Interest Debentures,
Series A, Due 2026

FIRST SUPPLEMENTAL INDENTURE, dated as of the 1st day of
September, 1996 (the "First Supplemental Indenture"), between
APPALACHIAN POWER COMPANY, a corporation duly organized and
existing under the laws of the Commonwealth of Virginia
(hereinafter sometimes referred to as the "Company"), and THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association
organized and existing under the laws of the United States, as
trustee (hereinafter sometimes referred to as the "Trustee")
under the Indenture dated as of September 1, 1996 between the
Company and the Trustee (the "Indenture"); all terms used and not
defined herein are used as defined in the Indenture.

WHEREAS, the Company executed and delivered the Indenture to
the Trustee to provide for the future issuance of its junior
subordinated debentures (the "Debentures"), said Debentures to be
issued from time to time in series as might be determined by the
Company under the Indenture, in an unlimited aggregate principal
amount which may be authenticated and delivered thereunder as in
the Indenture provided; and

WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of its
Debentures to be known as its ______% Junior Subordinated
Deferrable Interest Debentures, Series A, Due 2026 (said series
being hereinafter referred to as the "Series A Debentures"), the
form and substance of such Series A Debentures and the terms,
provisions and conditions thereof to be set forth as provided in
the Indenture and this First Supplemental Indenture; and

WHEREAS, the Company desires and has requested the Trustee
to join with it in the execution and delivery of 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 Series A Debentures,
when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company, have been
performed and fulfilled, and the execution and delivery hereof
have been in all respects duly authorized;

NOW THEREFORE, in consideration of the purchase and
acceptance of the Series A Debentures by the holders thereof, and
for the purpose of setting forth, as provided in the Indenture,
the form and substance of the Series A Debentures and the terms,
provisions and conditions thereof, the Company covenants and
agrees with the Trustee as follows:

ARTICLE ONE

General Terms and Conditions of
the Series A Debentures

SECTION 1.01. There shall be and is hereby authorized a
series of Debentures designated the "______% Junior Subordinated
Deferrable Interest Debentures, Series A, Due 2026", limited in
aggregate principal amount to $75,000,000, which amount shall be
as set forth in any written order of the Company for the
authentication and delivery of Series A Debentures pursuant to
Section 2.01 of the Indenture. The Series A Debentures shall
mature and the principal shall be due and payable together with
all accrued and unpaid interest thereon on September 30, 2026,
and shall be issued in the form of registered Series A Debentures
without coupons.

SECTION 1.02. Except as provided in Section 2.11(c) of the
Indenture, the Series A Debentures shall be issued initially in
the form of a Global Debenture in an aggregate principal amount
equal to all outstanding Series A Debentures, to be registered in
the name of the Depository, or its nominee, and delivered by the
Trustee to the Depository for crediting to the accounts of its
participants pursuant to the instructions of the Company. The
Company shall execute a Global Debenture in such aggregate
principal amount and deliver the same to the Trustee for
authentication and delivery as hereinabove and in the Indenture
provided. Payments on the Series A Debentures issued as a Global
Debenture will be made to the Depository. The Depository for the
Series A Debentures shall be The Depository Trust Company, New
York, New York.

SECTION 1.03. If, pursuant to the provisions of Section
2.11(c) of the Indenture, the Series A Debentures are issued in
certificated form, principal, premium, if any, and interest on
the Series A Debentures will be payable, the transfer of such
Series A Debentures will be registrable and such Series A
Debentures will be exchangeable for Series A Debentures bearing
identical terms and provisions at the office or agency of the
Company only upon surrender of such certificated Series A
Debenture and such other documents as required by the Indenture;
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 Debenture Register.

SECTION 1.04. Each Series A Debenture shall bear interest
at the rate of ______% per annum 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 same rate per annum, payable
(subject to the provisions of Article Three hereof) quarterly in
arrears on each March 31, June 30, September 30 and December 31
(each, an "Interest Payment Date"), commencing on December 31,
1996. Interest (other than interest payable on redemption or
maturity) shall be payable to the person in whose name such
Series A Debenture or any predecessor Series A Debenture is
registered at the close of business on the regular record date
for such interest installment. The regular record date for such
interest installment shall be the close of business on the
business day next preceding that Interest Payment Date; except
that if, pursuant to the provisions of Section 2.11(c) of the
Indenture, the Series A Debentures are no longer represented by a
Global Debenture, the regular record date for such interest
installment shall be the close of business on the March 15, June
15, September 15 or December 15 (whether or not a business day)
next preceding the Interest Payment Date. Interest payable on
redemption or maturity shall be payable to the person to whom the
principal is paid. 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 the Series A Debenture (or one
or more Predecessor Debentures) 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 the Series A 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 which the Series A
Debentures may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.

The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the
Series A 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.

ARTICLE TWO

Redemption of the Series A Debentures

SECTION 2.01. Subject to the terms of Article Three of the
Indenture, the Company shall have the right to redeem the Series
A Debentures, in whole or in part, from time to time, at the time
and redemption price set forth in the form of Debenture contained
in Exhibit A hereto. Any redemption pursuant to this Section
will be made upon not less than 30 nor more than 60 days' notice.
If the Series A Debentures are only partially redeemed pursuant
to this Section, the Debentures will be redeemed pro rata or by
lot or by any other method utilized by the Trustee; provided,
that if at the time of redemption, the Series A Debentures are
registered as a Global Debenture, the Depository shall determine
by lot the principal amount of such Series A Debentures held by
each Series A Debentureholder to be redeemed.

ARTICLE THREE

Extension of Interest Payment Period

SECTION 3.01. The Company shall have the right, at any time
during the term of the Series A Debentures, from time to time to
extend the interest payment period of such Series A Debentures
for up to 20 consecutive quarters (the "Extended Interest Payment
Period"), at the end of which period the Company shall pay all
interest accrued and unpaid thereon (together with interest
thereon compounded quarterly at the rate specified for the Series
A Debentures to the extent permitted by applicable law); provided
that, during such Extended Interest Payment Period, the Company
shall not declare or pay any dividend on, or purchase, acquire or
make a liquidation payment with respect to, any of its capital
stock or make any guarantee payments with respect to the
foregoing. Prior to the termination of any such 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 exceed 20 consecutive
quarters or extend beyond the maturity of the Series A
Debentures. Upon the termination of any Extended Interest
Payment Period and upon the payment of all accrued and unpaid
interest then due, the Company may select 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.

SECTION 3.02. (a) The Company shall give the holders of
the Series A Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period at least 10
business days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date the Company is required to
give notice to holders of the Series A Debentures (or, if
applicable, to the New York Stock Exchange or other applicable
self-regulatory organization), of the record or payment date of
such interest payment, but in any event not less than two
business days prior to such record date.

(b) The quarter in which any notice is given pursuant to
paragraph (a) of this Section shall constitute one of the 20
quarters which comprise the maximum Extended Interest Payment
Period.

ARTICLE FOUR

Form of Series A Debenture

SECTION 4.01. The Series A Debentures and the Trustee's
Certificate of Authentication to be endorsed thereon are to be
substantially in the form of Exhibit A hereto.

ARTICLE FIVE

Original Issue of Series A Debentures

SECTION 5.01. Series A Debentures in the aggregate
principal amount of $75,000,000 may, upon execution of this First
Supplemental Indenture, or from time to time thereafter, 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 of the Board, its President, or
any Vice President and its Treasurer or an Assistant Treasurer,
without any further action by the Company.

ARTICLE SIX

Covenant of the Company

SECTION 6.01. The Company will not declare or pay any
dividend on, or purchase, acquire or make a distribution or
liquidation payment with respect to, any of its capital stock, or
make any guarantee payments with respect thereto, if at such time
(i) there shall have occurred and be continuing any Event of
Default under the Indenture or (ii) the Company shall have given
notice of its selection of an Extended Interest Payment Period
and such period, or any extension thereof, shall be continuing.

ARTICLE SEVEN

Miscellaneous Provisions

SECTION 7.01. Except as otherwise expressly provided in
this First Supplemental Indenture or in the form of Series A
Debenture or otherwise clearly required by the context hereof or
thereof, all terms used herein or in said form of Series A
Debenture that are defined in the Indenture shall have the
several meanings respectively assigned to them thereby.

SECTION 7.02. The 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 7.03. 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 7.04. 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.

IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested,
on the date or dates indicated in the acknowledgments and as of
the day and year first above written.

APPALACHIAN POWER COMPANY

By________________________
Treasurer

Attest:

By________________________
Assistant Secretary

THE FIRST NATIONAL BANK OF CHICAGO
as Trustee

By________________________
Vice President

Attest:

By_______________________
Authorized Officer

State of Ohio }
County of Franklin, } ss:

In Witness Whereof, I have hereunto set my hand and notarial
seal this ______ day of September, 1996.

[Notarial Seal]

_________________________
MARY M. SOLTESZ
Notary Public, State of Ohio
My Commission Expires 7-12-99

State of }
County of } ss:

Be it remembered, that on this ______ day of September,
1996, personally appeared before me the undersigned, a Notary
Public within and for said County and State, THE FIRST NATIONAL
BANK OF CHICAGO, one of the corporations named in and which
executed the foregoing instrument, by _______________, one of its
Vice Presidents, and by _______________, one of its Authorized
Officers, to me known and known by me to be such Vice President
and Authorized Officer, respectively, who severally duly
acknowledged the signing and sealing of the foregoing instrument
to be their free act and voluntary deed, and the free act and
voluntary deed of each of them as such Vice President and
Authorized Officer, respectively, and the free act and voluntary
deed of said corporation, for the uses and purposes therein
expressed and mentioned.

In Witness Whereof, I have hereunto set my hand and notarial
seal this ______ day of September, 1996.

[Notarial Seal]

_____________________
Name:
Notary Public, State of ____________
My Commission Expires_______________

Exhibit A

(FORM OF FACE OF DEBENTURE)

[IF THE SERIES A 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 Depository or a nominee of a Depository. This
Debenture is exchangeable for Debentures registered in the name
of a person other than the Depository 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 Depository to a nominee of the Depository or by a
nominee of the Depository to the Depository or another nominee of
the Depository) may be registered except in limited
circumstances.

Unless this Debenture is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), 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 in such other name as is
requested by an authorized representative of DTC and any payment
hereon is made to Cede & Co., or to such other entity as is
requested by an authorized representative of DTC, ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede
& Co., has an interest herein.]

No. ____________ $___________

CUSIP No. ____________

APPALACHIAN POWER COMPANY

______% JUNIOR SUBORDINATED
DEFERRABLE INTEREST DEBENTURE,
SERIES A, DUE 2026

APPALACHIAN POWER COMPANY, a corporation duly organized and
existing under the laws of the Commonwealth of Virginia (herein
referred to as 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 September 30, 2026, and to pay interest on said principal sum
from September __, 1996 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 each March 31,
June 30, September 30 and December 31 commencing December 31,
1996 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 during such overdue period. Interest shall be computed on
the basis of a 360-day year 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 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. The interest
installment so payable, and punctually paid or duly provided for,
on any Interest Payment Date (other than interest payable on
redemption or maturity) will, as provided in the Indenture, be
paid to the person in whose name this Debenture (or one or more
Predecessor Debentures, 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 SECTION 2.11(C) OF THE
INDENTURE THE SERIES A DEBENTURES ARE NO LONGER REPRESENTED BY A
GLOBAL DEBENTURE -- which shall be the close of business on the
March 15, June 15, September 15 or December 15 (whether or not a
business day) next preceding such Interest Payment Date.]
Interest payable on redemption or maturity shall be payable to
the person to whom the principal is paid. 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 Debentures) 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 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 Company maintained for that purpose,
in any coin or currency of the United States of America which 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
Debenture Register.

Payment of the principal of, premium, if any, and interest
on this Debenture is, to the extent provided in the Indenture,
subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, as defined in the Indenture,
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.

Unless the Certificate of Authentication hereon has been
executed by the Trustee or a duly appointed Authentication Agent
referred to on the reverse side hereof, this Debenture shall not
be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

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 ____________________

APPALACHIAN POWER COMPANY

By_______________________

Attest:

By____________________

(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.

THE FIRST NATIONAL BANK OF CHICAGO
as Trustee or as Authentication Agent

By__________________________
Authorized Signatory

(FORM OF REVERSE OF DEBENTURE)

This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the
"Debentures"), specified in the Indenture, all issued or to be
issued in one or more series under and pursuant to an Indenture
dated as of September 1, 1996 duly executed and delivered between
the Company and The First National Bank of Chicago, a national
banking association organized and existing under the laws of
the United States, as Trustee (herein referred to as the
"Trustee"), as supplemented by the First Supplemental Indenture
dated as of September 1, 1996 between the Company and the Trustee
(said Indenture as so supplemented being hereinafter referred to
as 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 Debentures. By the terms of the Indenture, the Debentures
are issuable in series which may vary as to amount, date of
maturity, rate of interest and in other respects as in the
Indenture provided. This series of Debentures is limited in
aggregate principal amount as specified in said First
Supplemental Indenture.

Subject to the terms of Article Three of the Indenture, the
Company shall have the right to redeem this Debenture at the
option of the Company, without premium or penalty, in whole or in
part at any time on or after September __, 2001 (an "Optional
Redemption"), at a redemption price equal to 100% of the
principal amount plus any accrued but unpaid interest to the date
of such redemption (the "Optional Redemption Price"). Any
redemption pursuant to this paragraph will be made upon not less
than 30 nor more than 60 days' notice, at the Optional Redemption
Price. If the Debentures are only partially redeemed by the
Company pursuant to an Optional Redemption, the Debentures will
be redeemed pro rata or by lot or by any other method utilized by
the Trustee; provided that if at the time of redemption, the
Debentures are registered as a Global Debenture, the Depository
shall determine by lot the principal amount of such Debentures
held by each Debentureholder to be redeemed.

In the event of redemption of this Debenture in part only, a
new Debenture or Debentures of this series for the unredeemed
portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.

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 for defeasance at any time
of the entire indebtedness of this Debenture upon compliance by
the Company with certain conditions set forth therein.

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) extend the fixed maturity of any Debentures
of any series, or 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 Debentures of all series at the time
outstanding affected thereby, on behalf of the Holders of the
Debentures of such series, to waive any past default in the
performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture with respect to such
series, and its consequences, except a default in the payment of
the principal of or premium, if any, or interest on any of the
Debentures 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 herefor 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.

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 up to 20 consecutive
quarters (the "Extended Interest Payment Period"), at the end of
which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon compounded quarterly at
the rate specified for the Debentures to the extent that payment
of such interest is enforceable under applicable law); provided
that, during such Extended Interest Payment Period the Company
shall not declare or pay any dividend on, or purchase, acquire or
make a liquidation payment with respect to, any of its capital
stock, or make any guarantee payments with respect thereto.
Prior to the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest
Payment Period, provided that such Period together with all such
previous and further extensions thereof shall not exceed 20
consecutive quarters or extend beyond the maturity of the
Debentures. At the termination of any such Extended Interest
Payment Period and upon the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may
select a new Extended Interest Payment Period.

As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by
the registered holder hereof on the Debenture Register of the
Company, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company 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 or her 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
any Debenture 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
Debenture 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 Debenture
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, stockholder, 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 Debentures of this series are issuable only in
registered form without coupons in denominations of $25 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 $25 and any integral multiple
thereof.] As provided in the Indenture and subject to certain
limitations [herein and] 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.

All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto

(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)

_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Debenture and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such Debenture on the books of the Issuer, with full
________________________________________________________________
power of substitution in the premises.

Dated: ______________________ ____________________________

NOTICE: The signature to this assignment must correspond with
the name as written upon the face of the within
Debenture in every particular, without alteration or
enlargement or any change whatever and NOTICE:
Signature(s) must be guaranteed by a financial
institution that is a member of the Securities Transfer
Agents Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP") or the New York Stock
Exchange, Inc. Medallion Signature Program ("MSP").

Exhibit 5

September 3, 1996

Appalachian Power Company
40 Franklin Road, S.W.
Roanoke, VA 24011

Dear Sirs:

With respect to the Registration Statement on Form S-3 of
Appalachian Power Company (hereinafter called the "Company")
relating to the issuance and sale by the Company of its Junior
Subordinated Debentures (hereinafter called the "Junior
Subordinated Debentures"), we wish to advise you as follows.

We are of the opinion that, when the steps mentioned in
the next paragraph below have been taken, the Junior
Subordinated Debentures will be valid, legal and binding
obligations of the Company, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and
an implied covenant of good faith and fair dealing.

The steps to be taken which are referred to in the next
preceding paragraph consist of the following:

(1) Appropriate definitive action by the Board of
Directors of the Company with respect to the proposed
transaction set forth in said Registration Statement;

(2) Appropriate action by and before Virginia State
Corporation Commission and the Tennessee Regulatory
Authority in respect of the proposed transaction set
forth in said Registration Statement;

(3) Compliance with the Securities Act of 1933, as
amended, and with the Trust Indenture Act of 1939, as
amended; and

(4) Issuance and sale of the Junior Subordinated
Debentures by the Company in accordance with the
governmental and corporate authorizations aforesaid.

Insofar as this opinion relates to matters governed by
laws of the State of New York and the Federal law of the
United States, this firm has consulted, and may consult
further, with local counsel in which this firm has confidence
and will rely, as to such matters, upon such opinions or
advice of such counsel which will be delivered to this firm
prior to the closing of the sale of the Junior Subordinated
Debentures.

We consent to the filing of this opinion as an exhibit to
said Registration Statement and to the use of our name and the
inclusion of the statements in regard to us set forth in said
Registration Statement under the caption "Legal Opinions".

Very truly yours,

/s/ Simpson Thacher & Bartlett

SIMPSON THACHER & BARTLETT

Exhibit 8

September 3, 1996

Appalachian Power Company
40 Franklin Road, S.W.
Roanoke, VA 24011

Dear Sirs:

We have acted as special United States tax counsel to
Appalachian Power Company (the "Company") in connection with
the preparation and filing of the Registration Statement on
Form S-3 filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, in respect
of Junior Subordinated Debentures to be offered by the
Company. In that connection, we have given the opinions
contained in the section entitled "Certain United States
Federal Income Tax Consequences" in the Registration Statement
and related prospectuses.

We hereby confirm that our opinions referenced in this
letter are accurate and hereby consent to the filing of this
letter as an Exhibit to the Registration Statement and to the
use of our name in the section entitled "Certain United States
Federal Income Tax Consequences" in the Registration Statement
and related prospectuses.

We do not express any opinion herein concerning any law
other than the federal law of the United States.

Very truly yours,

/s/ Simpson Thacher & Bartlett

SIMPSON THACHER & BARTLETT

Exhibit 23(a)

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this
Registration Statement of Appalachian Power Company on Form S-3
of our reports dated February 27, 1996, appearing in and
incorporated by reference in the Annual Report on Form 10-K of
Appalachian Power Company for the year ended December 31, 1995
and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.

Deloitte & Touche LLP
Columbus, Ohio
September 3, 1996

Exhibit 24

APPALACHIAN POWER COMPANY

I, John M. Adams, Jr., Assistant Secretary of
APPALACHIAN POWER COMPANY, HEREBY CERTIFY that the following
constitutes a true and exact copy of the resolutions duly adopted
by the affirmative vote of a majority of the Board of Directors
of said Company at a meeting of said Board duly and legally held
on August 28, 1996, at which meeting a quorum of the Board of
Directors of said Company was present and voting throughout. I
further certify that said resolutions have not been altered,
amended or rescinded, and that they are presently in full force
and effect.
GIVEN under my hand this 3rd day of September, 1996.

_/s/ J. M. Adams, Jr._____
Assistant Secretary

APPALACHIAN POWER COMPANY
August 28, 1996

The Chairman reminded the Board that it had previously
authorized certain aspects of the Company's 1996 financing
program which, in part, contemplates the issuance of junior
subordinated debentures. The Chairman then stated that, pursuant
to the 1996 financing program, the Company had previously issued
$200,000,000 of its First Mortgage Bonds, the proceeds of which
were used to refund long-term debt and for other corporate
purposes. The Chairman then proposed that the Company issue and
sell, through a private or public offering with one or more
agents or underwriters, up to $75,000,000 aggregate principal
amount of junior subordinated debentures (the "Debt Securities").

The Chairman then stated that it was proposed that the
proceeds to be received in connection with the proposed sale of
Debt Securities would be added to the general funds of the
Company and used to refund cumulative preferred stock of the
Company and for other corporate purposes.

Thereupon, on motion duly made and seconded, it was
unanimously

RESOLVED, that the proposed issuance and sale of
Debt Securities, as outlined at this meeting, be, and
the same hereby is, in all respects ratified, confirmed
and approved; and further

RESOLVED, that the proper officers of this Company
be, and they hereby are, authorized to take all steps
necessary, or in their opinion desirable, to carry out
the issuance and sale of the Debt Securities outlined
at this meeting.

The Chairman informed the meeting that, in connection
with the issuance and sale of the Debt Securities, it would be
necessary to file one or more Registration Statements pursuant to
the applicable provisions of the Securities Act of 1933, as
amended.

Thereupon, on motion duly made and seconded, it was
unanimously

RESOLVED, that the proper officers of this Company
be, and they hereby are, authorized to execute and file
with the Securities and Exchange Commission (the
"Commission") on behalf of the Company one or more
Registration Statements pursuant to the applicable
provisions of the Securities Act of 1933, as amended;
and further

RESOLVED, that it is desirable and in the best
interest of the Company that the Debt Securities be
qualified or registered for sale in various
jurisdictions; that the Chairman of the Board, the
President, any Vice President or the Treasurer and the
Secretary or an Assistant Secretary hereby are
authorized to determine the jurisdictions in which
appropriate action shall be taken to qualify or
register for sale all or such part of the Debt
Securities of the Company as said officers may deem
advisable; that said officers are hereby authorized to
perform on behalf of the Company any and all such acts
as they may deem necessary or advisable in order to
comply with the applicable laws of any such
jurisdictions, and in connection therewith to execute
and file all requisite papers and documents, including,
but not limited to, applications, reports, surety
bonds, irrevocable consents and appointments of
attorneys for service of process; and the execution by
such officers of any such paper or document or the
doing by them of any act in connection with the
foregoing matters shall conclusively establish their
authority therefor from the Company and the approval
and ratification by the Company of the papers and
documents so executed and the action so taken; and
further

RESOLVED, that the proper officers of this Company
be, and they hereby are, authorized and directed to
take any and all further action in connection
therewith, including the execution and filing of such
amendment or amendments, supplement or supplements and
exhibit or exhibits thereto as the officers of this
Company may deem necessary or desirable.

The Chairman further stated that, in connection with
the filing with the Securities and Exchange Commission of one or
more Registration Statements relating to the proposed issuance
and sale of up to $75,000,000 of Debt Securities, there was to be
filed with the Commission a Power of Attorney, dated August 28,
1996, executed by the officers and directors of this Company
appointing true and lawful attorneys to act in connection with
the filing of such Registration Statement(s) and any and all
amendments thereto.

Thereupon, on motion duly made and seconded, the
following preambles and resolutions were unanimously adopted:

WHEREAS, Appalachian Power Company proposes to
file with the Securities and Exchange Commission one or
more Registration Statements for the registration
pursuant to the applicable provisions of the Securities
Act of 1933, as amended, of up to $75,000,000 aggregate
principal amount of Debt Securities, in one or more new
series, each series to have a maturity of not less than
nine months and not more than fifty years; and

WHEREAS, in connection with said Registration
Statement(s), there is to be filed with the Securities
and Exchange Commission a Power of Attorney, dated
August 28, 1996, executed by certain of the officers
and directors of this Company appointing E. Linn
Draper, Jr., G. P. Maloney, Bruce M. Barber and Armando
A. Pena, or any one of them, their true and lawful
attorneys, with the powers and authority set forth in
said Power of Attorney;

NOW, THEREFORE, BE IT

RESOLVED, that each and every one of said officers
and directors be, and they hereby are, authorized to
execute said Power of Attorney; and further

RESOLVED, that any and all action hereafter taken
by any of said named attorneys under said Power of
Attorney be, and the same hereby is, ratified and
confirmed and that said attorneys shall have all the
powers conferred upon them and each of them by said
Power of Attorney; and further

RESOLVED, that said Registration Statement(s) and
any amendments thereto, hereafter executed by any of
said attorneys under said Power of Attorney be, and the
same hereby are, ratified and confirmed as legally
binding upon this Company to the same extent as if the
same were executed by each said officer and director of
this Company personally and not by any of said
attorneys.

The Chairman thereupon stated to the meeting that it
was proposed to designate independent counsel for the successful
bidder or bidders and/or agents of the Company for any new series
of Debt Securities to be issued and sold in connection with the
proposed financing program of the Company.

Thereupon, on motion duly made and seconded, it was
unanimously

RESOLVED, that Dewey Ballantine be, and said firm
hereby is, designated as independent counsel for the
successful bidder or bidders and/or agents of the
Company for any new series of Debt Securities of this
Company proposed to be issued and sold in connection
with the proposed financing program of this Company.

The Chairman stated that the Company had negotiated a
form of Underwriting Agreement (the "Underwriting Agreement")
with certain underwriters, expected to be managed by Merrill
Lynch, Pierce, Fenner & Smith Incorporated, (collectively, the
"Underwriters"), under which the Underwriters may purchase up to
$75,000,000 aggregate principal amount of Junior Subordinated
Deferrable Interest Debentures, Series A, having an interest rate
and maturity to be determined (the "Debentures"). The price at
which the Underwriters will purchase the Debentures has not yet
been determined. The Chairman then recommended that the Board
authorize the appropriate officers of the Company to enter into
the Underwriting Agreement, which was then presented to the
meeting, and determine the purchase price of the Debentures,
provided that the price shall not be less than 95%, including
compensation to the Underwriters of no more than 3.5%, of the
aggregate principal amount of the Debentures.

Thereupon, it was, on motion duly made and seconded,
unanimously

RESOLVED, that the form, terms and provisions of
the Underwriting Agreement among the Company and the
Underwriters, a copy of which has been submitted to
this meeting, be, and the same hereby are, in all
respects approved; and further

RESOLVED, that the Chairman of the Board, the
President, any Vice President or the Treasurer of this
Company be, and each of them hereby is, authorized to
execute and deliver in the name and on behalf of this
Company, the Underwriting Agreement in substantially
the form of such agreement submitted to this meeting,
with such insertions therein and changes thereto as
shall be approved by the officer executing the same,
such execution to be conclusive evidence of such
approval, provided that the purchase price of the
Debentures shall not be less than 95%, including
compensation to the Underwriters of no more than 3.5%,
of the aggregate principal amount of the Debentures;
and further

RESOLVED, that the proper officers of the Company
be, and they hereby are, authorized to execute and
deliver such other documents and instruments, and to do
such other acts and things, that in their judgment may
be necessary or desirable in connection with the
transactions authorized in the foregoing resolutions.

The Chairman advised the meeting that it was necessary
for the Board of Directors of this Company to authorize the
execution and delivery of an Indenture to be entered into between
the Company and The First National Bank of Chicago (the
"Indenture") to provide for the issuance of unsecured junior
subordinated debentures, in an unlimited aggregate principal
amount to be issued from time to time in one or more series.
Payments on the Debentures will be subordinate to the prior
payment in full of all Senior Indebtedness.

Thereupon, it was, on motion duly made and seconded,
unanimously

RESOLVED, that the Chairman of the Board, the
President, any Vice President or the Treasurer and the
Secretary or any Assistant Secretary be, and they
hereby are, authorized to execute and deliver the
Indenture in substantially the form of such Indenture
submitted to this meeting, with such insertions therein
and changes thereto as shall be approved by the officer
executing the same, such execution to be conclusive
evidence of such approval.

The Chairman next stated that, in connection with the
sale of the Debentures to the Underwriters, it was necessary that
the Board of Directors of this Company authorize the execution
and delivery of a First Supplemental Indenture to the Indenture
between the Company and The First National Bank of Chicago (the
"Supplemental Indenture"), the form of which was presented to the
meeting. The Debentures will be created under the Supplemental
Indenture and will also allow the Company to defer payment of
interest for up to 5 years. The interest rate, maturity and
certain other terms have not yet been determined. The Chairman
then recommended that the Board authorize the appropriate
officers of the Company to create the Debentures and specify the
interest rate, maturity, redemption provisions and other terms at
the time of creation with the interest rate not to exceed 10% and
the maturity not to exceed 50 years.

Thereupon, it was, on motion duly made and seconded,
unanimously

RESOLVED, that the Chairman of the Board, the
President or any Vice President, the Treasurer or any
Assistant Treasurer and the Secretary or any Assistant
Secretary be, and they hereby are, authorized to create
up to $75,000,000 aggregate principal amount of
Debentures to be issued under the Indenture and the
Supplemental Indenture, in substantially the form
presented to this meeting, to be designated and to be
distinguished from debentures of all other series by
the title "______% Junior Subordinated Deferrable
Interest Debentures, Series A, Due ____________", and
to specify the interest rate, maturity, redemption
provisions and other terms, at the time of creation
thereof with the interest rate not to exceed 10% per
annum and the maturity not to exceed 50 years; and
further

RESOLVED, that the Chairman of the Board, the
President or any Vice President, the Treasurer or any
Assistant Treasurer, the Secretary or any Assistant
Secretary be, and they hereby are, authorized and
directed to execute and deliver, under the seal of and
on behalf of this Company, the Supplemental Indenture,
specifying the designation, terms, redemption provi-
sions and other provisions of the Debentures and
providing for the creation of the Debentures, such
instrument to be substantially in the form presented to
this meeting, with such insertions therein and changes
thereto as shall be approved by the officer executing
the same, such execution to be conclusive evidence of
such approval; that The First National Bank of Chicago
is hereby requested to join in the execution of the
Supplemental Indenture, as Trustee; and further

RESOLVED, that the terms and provisions of the
Debentures and the form of the registered Debentures
and of the Trustee's Authentication Certificate be, and
they hereby are, established as provided in the form of
the Supplemental Indenture, with such changes as may be
required upon the establishment of the further terms
thereof by the appropriate officers of the Company as
herein authorized; and further

RESOLVED, that the registered Debentures shall be
substantially in the form set forth in the form of
Supplemental Indenture approved at this meeting; and
further

RESOLVED, that the Chairman of the Board, the
President, any Vice President or the Treasurer and the
Secretary or any Assistant Secretary of this Company
be, and they hereby are, authorized and directed to
execute under the seal of this Company in accordance
with the provisions of the Indenture (the signatures of
such officers to be effected either manually or by
facsimile, in which case such facsimile is hereby
adopted as the signature of such officer thereon), and
to deliver to The First National Bank of Chicago, as
Trustee under the Indenture, the Debentures in the
aggregate principal amount of up to $75,000,000 as
definitive fully registered bonds without coupons in
denominations of $25 or integral multiples thereof; and
further

RESOLVED, that if any authorized officer of this
Company who signs, or whose facsimile signature appears
upon, any of the Debentures ceases to be such an
officer prior to their issuance, the Debentures so
signed or bearing such facsimile signature shall
nevertheless be valid; and further

RESOLVED, that, subject as aforesaid, The First
National Bank of Chicago, as such Trustee, be, and it
hereby is, requested to authenticate, by the manual
signature of an authorized officer of such Trustee, the
Debentures and to deliver the same from time to time in
accordance with the written order of this Company
signed in the name of this Company by its Chairman,
President, one of its Vice Presidents or its Treasurer,
and its Secretary or one of its Assistant Secretaries;
and further

RESOLVED, that John F. Di Lorenzo, Jr. of Upper
Arlington, Ohio, Ann B. Graf of Columbus, Ohio, John M.
Adams, Jr. of Worthington, Ohio, Thomas G. Berkemeyer
of Hilliard, Ohio, and David C. House of Columbus,
Ohio, attorneys and employees of American Electric
Power Service Corporation, an affiliate of this
Company, be, and each of them hereby is, appointed
Counsel to render any Opinion of Counsel required by
the Indenture in connection with the authentication and
delivery of the Debentures; and further

RESOLVED, that the office of The First National
Bank of Chicago, One First National Plaza, Suite 0126,
Chicago, Illinois, be, and it hereby is, designated as
the office or agency of this Company, in accordance
with Section 4.02 of the Indenture, for the payment of
the principal of and the interest on the Debentures,
for the registration, transfer and exchange of
Debentures and for notices or demands to be served on
the Company with respect to the Debentures; and further

RESOLVED, that The First National Bank of Chicago,
be, and it hereby is, appointed the withholding agent
and attorney of this Company for the purpose of
withholding any and all taxes required to be withheld
by the Company under the Federal revenue acts from time
to time in force and the Treasury Department regula-
tions pertaining thereto, from interest paid from time
to time on the Debentures, and is hereby authorized and
directed to make any and all payments and reports and
to file any and all returns and accompanying certifi-
cates with the Federal Government which it may be
permitted or required to make or file as such agent
under any such revenue act and/or Treasury Department
regulation pertaining thereto; and further

RESOLVED, that the officers of this Company be,
and they hereby are, authorized and directed to effect
transfers and exchanges of the Debentures, pursuant to
Section 2.05 of the Indenture without charging a sum
for any Debenture issued upon any such transfer or
exchange other than a charge in connection with each
such transfer or exchange sufficient to cover any tax
or other governmental charge in relation thereto; and
further

RESOLVED, that The First National Bank of Chicago
be, and it hereby is, appointed as Debenture Registrar
in accordance with Section 2.05(b) of the Indenture;
and further

RESOLVED, that the officers of the Company be, and
they hereby are, authorized and directed to execute
such instruments and papers and to do any and all acts
as to them may seem necessary or desirable to carry out
the purposes of the foregoing resolutions.

The Chairman indicated to the meeting that it may be
desirable that the Debentures be listed on the New York Stock
Exchange and in connection with any such application, to register
the Debentures under the Securities Exchange Act of 1934. In
this connection, he presented a form of indemnity agreement to be
executed and delivered by this Company to the New York Stock
Exchange in any such application for such listing.

Thereupon, it was, on motion duly made and seconded,
unanimously

RESOLVED, that the officers of this Company be,
and they hereby are, authorized, in their discretion,
to make application, on behalf of this Company, to the
New York Stock Exchange for the listing of up to
$75,000,000 aggregate principal amount of Debentures;
and further

RESOLVED, that G. P. Maloney, Bruce M. Barber and
Armando A. Pena, or any one of them, be, and they
hereby are, designated to appear before the New York
Stock Exchange with full authority to make such changes
in such application or any agreements relating thereto
as may be necessary or advisable to conform with the
requirements for listing; and further

RESOLVED, that the proper officers be, and they
hereby are, authorized to execute and file, on behalf
of this Company, an application for the registration of
up to $75,000,000 aggregate principal amount of
Debentures with the Securities and Exchange Commission
pursuant to the provisions of the Securities Exchange
Act of 1934, in such form as the officers of this
Company executing the same may determine; and further

RESOLVED, that the indemnity agreement, substan-
tially in the form presented to the meeting, and
providing for indemnification of the New York Stock
Exchange and certain other persons against losses
arising from the use of the facsimile signatures
hereinbefore approved be, and the same hereby is,
approved, and the Chairman of the Board, the President,
any Vice President or the Treasurer and the Secretary
or any Assistant Secretary be, and each of them hereby
is, authorized, in the event said application for
listing is made, to execute and deliver on behalf of
this Company an indemnity agreement in such form, with
such changes therein as the officers executing the same
may approve, their execution to be conclusive evidence
of such approval; and further

RESOLVED, that the Chairman of the Board, the
President, any Vice President or the Treasurer be, and
each of them hereby is, authorized to take any other
action and to execute any other documents that in their
judgment may be necessary or desirable in connection
with listing the Debentures on the New York Stock
Exchange.

APPALACHIAN POWER COMPANY
POWER OF ATTORNEY

Each of the undersigned directors or officers of
APPALACHIAN POWER COMPANY, a Virginia corporation, which is to
file with the Securities and Exchange Commission, Washington,
D.C. 20549, under the provisions of the Securities Act of 1933,
as amended, one or more Registration Statements for the
registration thereunder of up to $75,000,000 aggregate principal
amount of its Debt Securities comprising Junior Subordinated
Deferrable Interest Debentures, to have a maturity of not
exceeding 50 years, does hereby appoint E. LINN DRAPER, JR., G.
P. MALONEY, BRUCE M. BARBER and ARMANDO A. PENA his true and
lawful attorneys, and each of them his true and lawful attorney,
with power to act without the others, and with full power of
substitution or resubstitution, to execute for him and in his
name said Registration Statement(s) and any and all amendments
thereto, whether said amendments add to, delete from or otherwise
alter the Registration Statement(s) or the related Prospectus(es)
included therein, or add or withdraw any exhibits or schedules to
be filed therewith and any and all instruments necessary or
incidental in connection therewith, hereby granting unto said
attorneys and each of them full power and authority to do and
perform in the name and on behalf of each of the undersigned, and
in any and all capacities, every act and thing whatsoever
required or necessary to be done in and about the premises, as
fully and to all intents and purposes as each of the undersigned
might or could do in person, hereby ratifying and approving the
acts of said attorneys and each of them.

IN WITNESS WHEREOF the undersigned have hereunto set
their hands and seals this 28th day of August, 1996.

/s/ E. Linn Draper, Jr._____ /s/ G. P. Maloney___________
E. Linn Draper, Jr. L.S. G. P. Maloney L.S.

/s/ P. J. DeMaria___________ /s/ James J. Markowsky______
P. J. DeMaria L.S. James J. Markowsky L.S.

/s/ Henry Fayne_____________ /s/ J. H. Vipperman_________
Henry Fayne L.S. J. H. Vipperman L.S.

/s/ Wm. J. Lhota____________
Wm. J. Lhota L.S.

<PAGE>

EXHIBIT 25

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1
--------

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____

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

THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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

APPALACHIAN POWER COMPANY
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

VIRGINIA 54-0124790
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

40 FRANKLIN ROAD
ROANOKE, VIRGINIA 24011
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

JUNIOR SUBORDINATED DEBENTURES
(TITLE OF INDENTURE SECURITIES)
<PAGE>

ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
--------------------
INFORMATION AS TO THE TRUSTEE:

(A) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.

Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.

(B) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.

The trustee is authorized to exercise corporate
trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
------------------------------
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.

No such affiliation exists with the trustee.

ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
-----------------
PART OF THIS STATEMENT OF ELIGIBILITY.

1. A copy of the articles of association of the
trustee now in effect.*

2. A copy of the certificates of authority of the
trustee to commence business.*

3. A copy of the authorization of the trustee to
exercise corporate trust powers.*

4. A copy of the existing by-laws of the trustee.

5. Not Applicable.

6. The consent of the trustee required by
Section 321(b) of the Act.

2
<PAGE>

7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.

8. Not Applicable.

9. Not Applicable.

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois, on the 27th day of August, 1996.

THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE

BY /S/ RICHARD D. MANELLA

RICHARD D. MANELLA
VICE PRESIDENT

* EXHIBIT 1, 2 AND 3 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING
IDENTICAL NUMBERS IN ITEM 12 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF
CHICAGO, FILED AS EXHIBIT 26 TO THE REGISTRATION STATEMENT ON FORM S-3 OF THE
CIT GROUP HOLDINGS, INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 16, 1993 (REGISTRATION NO. 33-58418).

3
<PAGE>

EXHIBIT 4

BY-LAWS

THE FIRST NATIONAL BANK OF CHICAGO

AS AMENDED AND RESTATED JULY 12, 1996

4
<PAGE>

BY-LAWS

THE FIRST NATIONAL BANK OF CHICAGO

ARTICLE I
---------

CORPORATE GOVERNANCE
--------------------

To the extent not inconsistent with applicable Federal banking statutes or
regulations, or safe and sound banking practices, the Bank shall follow the
corporate governance procedures of the Delaware General Corporation Law, as
amended.

ARTICLE II
----------

SHAREHOLDERS
------------

SECTION 1. Annual Meeting. The regular annual meeting of shareholders of
---------------
the Bank to elect directors and to transact whatever other business may properly
come before the meeting shall be held in its main office on the second Friday in
May if not a legal holiday under the Laws of Illinois, and if a legal holiday,
then on the next business day following, at 11:30 A.M., or on such other date
and time as shall be designated by the Board of Directors. If, for any cause,
the annual election of directors should not be held on that date, the Board
shall order the election to be held on some subsequent day, of which special
notice shall be given.

SECTION 2. Judges of Election. To the extent required by law, the Board
-------------------
of Directors shall, prior to the time of the election of directors, appoint
three persons to be Judges of Election, who shall hold and conduct the same, and
who shall, after the election has been held, certify under their hands to the
Cashier of the Bank the result thereof and the names of the directors-elect.

SECTION 3. Notice to Directors-Elect. The Cashier upon receiving the
--------------------------
Certificate of the Judges of Election as aforesaid, shall cause the same to be
recorded upon the minute book of the Bank, and shall notify the directors-elect
of their election and of the time at which they are required to meet at the main
office of the Bank for the purpose of organizing the new Board. If at the time
fixed for the meeting of the directors-elect there should not be a quorum
present, the members present may adjourn from time to time until a quorum is
obtained.

SECTION 4. Special Meetings. Special meetings of the shareholders may be
-----------------
called in accordance with Article EIGHTH of the Bank's Articles of Association.

SECTION 5. Record Date. The Board of Directors may fix in advance a day
------------
not more than sixty (60) or less than ten (10) days prior to the date of holding
any regular or special meeting of shareholders as the day as of which
shareholders entitled to notice of and to vote at

5
<PAGE>

such meeting shall be determined.

SECTION 6. Notice. The Bank shall mail notice of any meeting of
-------
shareholders at least 10 days prior to the meeting by first class mail, unless
the Office of the Comptroller of the Currency determines that an emergency
circumstance exists. If the Bank is a wholly-owned subsidiary of a company, the
sole shareholder may waive notice of the shareholder's meeting.

SECTION 7. Consent of Shareholders in Lieu of Annual or Special Meeting.
-------------------------------------------------------------
Unless otherwise restricted by law or the Articles of Association, any action
which may be taken at any annual or special shareholder meeting may be taken
without a meeting, without prior notice and without a vote, if written consent
setting forth the action so taken shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those shareholders who did not give written consent.

SECTION 8. Minutes. The proceedings of shareholders at all regular and
--------
special meetings or by written consent in lieu of a meeting shall be recorded in
the minute book, together with the Articles of Association of the Bank and the
returns of the Judges of Election. The minutes of each meeting shall be signed
by the Presiding Officer, and attested by the Cashier, or other officer of the
Bank acting in place of the Cashier.

ARTICLE III
-----------

DIRECTORS
---------

SECTION 1. Authority. The Board of Directors shall have the power to
----------
manage and administer the business and affairs of the Bank. Except as expressly
limited by law, all corporate powers of the Bank shall be vested in and may be
exercised by the Board of Directors.

SECTION 2. Number. The Board of Directors shall at all times consist of
-------
not less than five nor more than twenty-five individuals. The exact number
within such minimum and maximum limits shall be fixed and determined from time
to time by resolution of a majority of the full Board of Directors or by
resolution of the shareholders at any meeting thereof; provided, however, that
the Board of Directors may not increase the number of directors to a number
which: (1) exceeds by more than two the number of directors last elected by
shareholders where such number was fifteen or less; or (ii) exceeds by more than
four the number of directors last elected by shareholders where such number was
sixteen or more, but in no event shall the number of directors exceed twenty-
five.

SECTION 3. Term of Office. Each director shall hold office from the date
--------------
of his election or appointment until the next annual shareholder meeting. Any
director ceasing to be the owner of the amount of stock required by law or in
any other manner becoming disqualified shall thereupon vacate his office as
director.

6
<PAGE>

SECTION 4. Compensation. The Board of Directors may provide that a
------------
reasonable fee be paid to any of its members or to the members of any duly
authorized committee for services rendered. No such payment shall preclude any
director from serving the Bank in any other capacity and receiving compensation
therefor.

SECTION 5. Regular Meetings. Regular meetings of the Board of Directors
-----------------
shall be held on such dates, times and locations as determined by the Chairman
of the Board and communicated in writing to the directors.

SECTION 6. Special Meetings. Special meetings of the Board of Directors
-----------------
may be called by the Chairman of the Board or the President. Such meetings
shall be held at such times and at such places as shall be determined by the
officer calling the meeting. Notice of any special meeting of directors shall
be given to each director at the director's business or residence in writing by
hand delivery, first-class or overnight mail or courier service, telegram or
facsimile transmission, or orally by telephone. If mailed by first-class mail,
such notice shall be deemed adequately delivered when deposited in the United
States mail so addressed, with postage thereon prepaid, at least two (2) days
before such meeting. If by telegram, overnight mail or courier service, such
notice shall be deemed adequately delivered when the telegram is delivered to
the telegraph company or the notice is delivered to the overnight mail or
courier service company at least twenty-four (24) hours before such meeting. If
by facsimile transmission, such notice shall be deemed adequately delivered when
the notice is transmitted at least twelve (12) hours before such meeting. Such
notice need not state the purposes of the meeting. Any or all directors may
waive notice of any meeting, either before or after the meeting. Attendance of
a director at a meeting shall constitute a waiver of notice of such meeting,
except when the director attends for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened.

SECTION 7. Quorum; Majority Vote. A quorum of directors shall be required
-----------------------
to transact business at any regular or special meeting of the Board of
Directors. A majority of the directors shall constitute a quorum. Each
director shall be entitled to one vote. A vote by a majority of the directors
present at any regular or special meeting of the Board of Directors at which a
quorum is present shall be required to approve any matter or proposal at any
such meeting.

SECTION 8. Vacancies. When any vacancy occurs in the Board of Directors,
----------
a majority of the remaining members of the Board, according to the laws of the
United States, may appoint a director to fill such vacancy at any regular
meeting of the Board of Directors, or at a special meeting called for that
purpose at which a quorum is present, or if the directors remaining in office
constitute fewer than a quorum of the Board of Directors, by the affirmative
vote of a majority of all the directors remaining in office, or by shareholders
at a special meeting called for that purpose. At any such shareholder meeting,
each shareholder entitled to vote shall have the right to multiply the number of
votes he or she is entitled to cast by the number of vacancies being filled and
cast the product for a single candidate or distribute the product among two or
more candidates. A vacancy that will occur at a specific later date (by reason
of a resignation effective at a later date) may be filled before the vacancy
occurs but the new director may not take office until the vacancy occurs.

7
<PAGE>

SECTION 9. Presiding Officer. The Chairman of the Board shall preside
------------------
at all meetings of the Board of Directors at which he is present. In the
absence of the Chairman of the Board, the President shall perform the duties of
the Chairman of the Board and shall preside at the meetings of the Board of
Directors. In the absence of the Chairman of the Board and the President, the
Vice Chairman of the Board (or in the event there be more than one Vice Chairman
of the Board, the Vice Chairmen of the Board in the order designated, or in the
absence of any designation, then in the order of their election) shall perform
their duties and shall preside at the meetings of the Board of Directors.

SECTION 10. Minutes of Meeting. The Cashier shall act as secretary to the
-------------------
Board of Directors to take minutes at any regular or special meeting of the
Board of Directors. If the Cashier is not present at any such meeting, the
Chairman of the Board may designate a secretary pro tem to take minutes at the
meeting. The Cashier or secretary pro tem shall record the actions and
proceedings at each regular or special meeting of the Board of Directors as
minutes of the meeting and shall maintain such minutes in a minute book of
proceedings of such meetings of the Board of Directors. Minutes of each such
meeting shall be signed by the presiding officer and secretary of each meeting.

SECTION 11. Participation in Meetings by Telephone Unless otherwise
----------------------------------------
restricted by law or the Articles of Association, members of the Board of
Directors, or of any committee thereof, may participate in a meeting of the
Board of Directors or committee by means of conference telephone or similar
communications equipment which allows each person participating in the meeting
to hear each other. Participation in such a meeting shall constitute presence
in person at such meeting.

SECTION 12. Consent of Directors in Lieu of Meeting. Unless otherwise
----------------------------------------
restricted by law or the Articles of Association, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.

SECTION 13. Committees. The Board of Directors may, by resolution passed
-----------
by a majority of the entire Board, designate one or more committees, each
committee to consist of two or more of the Directors of the Bank. The Board of
Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution,
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Bank, and may authorize the seal
of the Bank to be affixed to all papers which may require it; provided, however,
that in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. As used in these By-Laws,
"entire Board" means the total number of Directors the Bank would have if there
were no vacancies.

8
<PAGE>

There shall be an Executive Committee composed and created as the Board of
Directors may designate by resolution passed by a majority of the entire Board.
During intervals between the regular meetings of the Board of Directors, the
Executive Committee, to the extent permitted by law, the Articles of Association
of the Bank and the By-Laws, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Bank.

Unless otherwise provided by the Board of Directors, a majority of the
members of any committee appointed by the Board of Directors pursuant to this
Section shall constitute a quorum at any meeting thereof and the act of a
majority of the members present at a meeting at which a quorum is present shall
be the act of such committee. Any such committee shall, subject to any rules
prescribed by the Board of Directors, prescribe its own rules for calling,
giving notice of and holding meetings and its method of procedure at such
meetings and shall keep a written record of all action taken by it. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.

SECTION 14. Honorary Directors. Any person who has at any time been
-------------------
Chairman of the Board, President or Vice Chairman of the Board of the Bank may,
after retirement from the Board of Directors, be appointed by the Board of
Directors as an Honorary Director on a year-to-year basis. In no case shall an
Honorary Director serve as such for more than five years. Honorary Directors
shall serve in an advisory capacity to the Board of Directors, shall have no
vote and shall not be considered directors for the purpose of determining a
quorum. Honorary Directors shall be reimbursed for their expenses in attending
meetings of the Board of Directors and shall receive such fees, if any, for
attendance at each meeting of the Board of Directors as may be fixed from time
to time by the Board of Directors but shall not receive any other directors'
fees or any other compensation for their services.

ARTICLE IV
----------

OFFICERS
--------

SECTION 1. Officer Titles. The officers of the Bank shall include a
---------------
Chairman of the Board and a President and may include one or more Vice Chairmen
of the Board, Executive Vice Presidents, Senior Vice Presidents, First Vice
Presidents, Vice Presidents and Assistant Vice Presidents, a General Auditor, a
General Counsel, a Cashier, and such other officers as may be appropriate for
the prompt and orderly transaction of the business of the Bank. Individuals
appointed as Chairman of the Board, President and Vice Chairman of the Board
must be members of the Board. The same person may hold any two or more offices.
The Chairman of the Board shall have such authority to establish officer titles
as from time to time delegated by the Board of Directors and to delegate such
authority further to other officers of the Bank.

SECTION 2. Chief Executive Officer. The Chairman of the Board shall be
-------------------------
the chief executive officer of the Bank. In case of the death or disability of
the Chairman of the Board, his powers shall be exercised and his duties
discharged by the President. In the event of the death or disability of the
Chairman of the Board and the President, the Vice Chairman of the Board (or in
the event there be more than one Vice Chairman of the Board, the Vice Chairmen
of the Board in the order designated, or in the absence of any designation, then
in the order of

9
<PAGE>

their election) shall exercise the powers and discharge the duties of the
Chairman of the Board.

SECTION 3. Election of Officers. The Board of Directors of the Bank shall
--------------------
have authority to appoint the officers of the Bank. The Chairman of the Board
shall have such authority to appoint officers as from time to time delegated by
the Board of Directors, and to delegate such authority further to other officers
of the Bank.

SECTION 4. Authority and Responsibility. The authorities and
-----------------------------
responsibilities of all officers, in addition to those specifically prescribed
herein, shall be those usually pertaining to their respective offices, or as may
be designated by the Board of Directors or by the Chairman of the Board or by
the President, or by any officer of the Bank designated by one of the foregoing.

SECTION 5. Term of Office. Officers shall be appointed for an indefinite
---------------
term, and their employment may be terminated or they may be removed from office
at any time. The Board of Directors shall have authority to terminate or remove
officers of the Bank. The Chairman of the Board shall have such authority to
terminate or remove officers as from time to time delegated by the Board of
Directors, and to delegate such authority further to other officers of the Bank.

SECTION 6. Surety. All officers and employees of the Bank who shall be
-------
responsible for any moneys, funds or valuables of the Bank shall give bond, or
be covered by a blanket bond, in such penal sum and with such security as shall
be approved by the Board, conditioned for the faithful and honest discharge of
their duties as such officers or employees and that they will faithfully apply
and account for all such moneys, funds and valuables and deliver the same on
proper demand to the order of the Board of the Bank, or to the person or persons
authorized to receive the same.

ARTICLE V
---------

SEAL
----

SECTION 1. Description. The following is a description of the Seal
------------
adopted by the Board of the Bank:

Female with left arm resting on shield, bale of goods and sheaf of grain at
her side, ship and sea in the distance; the whole surrounded with the words,
"The First National Bank of Chicago".

SECTION 2. Attestation. Any instrument which is executed for and on
------------
behalf of the Bank by its duly authorized officers may, when necessary, be
attested and sealed with the corporate seal by any officer of the Bank other
than the officer who executes such instrument on behalf of the Bank.

10
<PAGE>

ARTICLE VI
----------

TRANSFERS OF REAL ESTATE
------------------------

Any Vice President or higher ranking officer shall have authority on behalf
of and in the name of the Bank, to execute any document or instrument and to
take action which may be necessary or appropriate to purchase, convey, lease, or
otherwise affect any real estate or interest in real estate owned or to be owned
by the Bank; provided, however, any document or instrument purchasing, conveying
or leasing real estate used or to be used by the Bank as banking facilities must
be executed by a Senior Vice President or higher ranking officer, or any other
officer designated by any of the foregoing. Any Assistant Vice President or
higher ranking officer shall have authority to execute and deliver on behalf of
and in the name of the Bank, releases of mortgages or trust deeds.

ARTICLE VII
-----------

STOCK AND STOCK CERTIFICATES
----------------------------

SECTION 1. Increase of Stock. In the event of any increase in the capital
------------------
stock of the Bank the preemptive rights of the shareholders in respect of any
such increased stock shall be as set forth in Article FIFTH of the Articles of
Association.

Any warrants or certificates issuable to shareholders in connection with
any increase of the capital stock of the Bank, shall be delivered to the
respective shareholders entitled thereto, either by hand or by mail, first-class
postage prepaid, addressed to their respective addresses as shown on the books
of the Bank.

If, in the event of a sale of additional shares, any subscription rights
shall not have been exercised at the expiration of the specified subscription
period, such unsubscribed new shares may be issued and sold at such price, not
less than the par value thereof, to such persons and on such terms as the Board
of Directors may determine.

SECTION 2. Transfers of Stock. The stock of the Bank shall be assignable
-------------------
only upon the books of the Bank, subject to the restrictions of the Act, and a
transfer book shall be kept in which all assignments and transfers of stock
shall be made. Transfers of stock may be suspended preparatory to any election
or payment of any dividends.

SECTION 3. Certificates of Stock. Certificates of stock signed by any
----------------------
Vice President or higher ranking officer and the Cashier or any Assistant
Cashier may be issued to shareholders, and the Certificates shall state upon the
face thereof that the stock is transferable only upon the books of the Bank. If
such Certificates are manually countersigned by two other officers of the Bank,
the signatures of the officers designated in the preceding sentence may be
facsimiles, engraved or printed. In case any officer who has signed or whose
facsimile signature has been placed upon such Certificates shall have ceased to
be such officer before such Certificates are issued, they may be issued by the
Bank with the same effect as if such officer had not ceased to be such at the
date of issue.

11
<PAGE>

In case of transfer of stock, new Certificates of stock shall not be issued
until other Certificate or Certificates of stock of an equal amount shall first
have been surrendered and cancelled.

Any one of the following officers of the Bank: the Chairman of the Board,
the President, or any Vice Chairman of the Board is each hereby authorized to
cause new Certificates of stock of the Bank to be issued to replace Certificates
reported to have been lost, stolen or destroyed, upon receipt of: (a)
appropriate affidavit or affidavits setting forth whether the Certificates were
lost, stolen or destroyed and the circumstances thereof, and (b) a bond or bonds
(blanket or otherwise) or an agreement or agreements of indemnity, sufficient in
the opinion of any of such officers to protect the interests of the Bank issuing
such new Certificates.

ARTICLE VIII
------------

BANKING HOURS
-------------

The Bank shall be open for business during such days of the year and for
such hours as the Board of Directors or any officer of the Bank designated by
the Board of Directors may from time to time determine.

ARTICLE IX
----------

CONTRACTS, CERTIFICATES OF DEPOSIT AND NOTES
--------------------------------------------

SECTION 1. Execution of Contracts. Any officer of the bank and such
-----------------------
other persons as may be authorized by the Board of Directors are severally and
respectively authorized to execute documents and to take action in the Bank's
name in connection with any and all transactions conducted in the ordinary
course of business of the Bank.

SECTION 2. Certificates of Deposit and Notes. Notwithstanding the
----------------------------------
foregoing, all certificates of deposits and notes evidencing obligations of the
Bank shall be signed either manually or by facsimile signature by any officer of
the Bank, and, if such signature is not a manual signature, shall be validated
by the manual signature of another officer of the Bank whose signature does not
already appear on said certificate of deposit or note or by the authorized
officers of corporate fiduciaries or agents with whom the Board of Directors may
from time to time by resolution authorize the officers of the Bank to contract
for services in connection with the validation and delivery of certificates of
deposit or notes issued by the Bank.

ARTICLE X
---------

VOTING RIGHTS
-------------

The vote of the Bank as stockholder in any corporation in which it may
hold stock or upon any securities carrying voting rights which it shall have the
right to vote in its individual

12
<PAGE>

capacity as a Bank, shall be cast at any stockholders' or shareholders' meeting
by any Vice President or higher ranking officer, or the Cashier, in person, or
by some person or persons authorized by written proxy signed by one of said
officers.

In all cases where shares of stock or other securities carrying voting
rights and owned by the Bank shall be held in the name of a nominee of the Bank,
any Vice President or higher ranking officer, or the Cashier, may authorize such
nominee to vote such stock or other securities in person, either unconditionally
or upon such terms, limitations, or conditions as such officer may direct, or
any such officer may authorize such nominee to execute a proxy to vote such
shares of stock or other securities carrying voting rights, either
unconditionally or upon such terms, conditions and/or limitations as such
officer shall approve.

ARTICLE XI
----------

EXAMINATIONS
------------

It shall be the duty of the General Auditor to examine, from time to time,
the various operations of the Bank, verify its assets and liabilities, and
perform such other procedures as are required to determine that the accounting
records are accurate and to ascertain whether the Bank is in a sound and solvent
condition. Major discrepancies and defalcations shall be reported to the Board
promptly and other reports shall be made directly to the Board when deemed
appropriate either by the General Auditor or the Board. In the event of the
death, resignation, absence or inability of the General Auditor, the Board of
Directors shall appoint a competent person who shall make such examinations and
reports, pending the election of a successor to the General Auditor or the
return of the General Auditor to his duties.

ARTICLE XII
-----------

BONDS OF INDEMNITY
------------------

Bonds of indemnity given to secure the issuance of duplicate or substitute
notes, bonds, stock certificates, checks, debentures or other securities which
may have been lost, destroyed or stolen or to secure the payment of any such
lost, destroyed or stolen securities or to secure the payment by the Bank of
funds deposited by any public authorities, shall be executed by any Assistant
Vice President or higher ranking officer, and, if required, sealed with the
corporate seal and attested by some other officer of the Bank.

ARTICLE XIII
------------

AUTHORITY TO SELL STOCKS, BONDS, ETC.
-------------------------------------

SECTION 1. U.S. Obligations. Any Assistant Vice President or higher
-----------------
ranking officer may at any time, in his discretion, sell, assign and transfer
any and all United States bonds now standing, or which may hereafter stand, in
the name of the Bank, and to appoint one or more

13
<PAGE>

attorneys for that purpose.

SECTION 2. Other Obligations. Any Assistant Vice President or higher
------------------
ranking officer may at any time, in his discretion, sell, assign and transfer
any and all notes, bonds, certificates of indebtedness or obligations of any
corporation, firm or individual, which said notes, bonds, certificates of
indebtedness or obligations are now registered, or may hereafter be registered,
in the name of, or for the benefit of, the Bank, or are payable or indorsed to
the Bank.

SECTION 3. Stock. Any Assistant Vice President or higher ranking officer
------
may at any time in his discretion, sell, assign and transfer to any assignee or
transferee, for and on behalf of the Bank and in its name, any and all shares of
capital stock of any corporation or corporations held by the Bank.

ARTICLE XIV
-----------

FIDUCIARY ACTIVITIES
--------------------

1. Authority to Sign as Registrar, Transfer Agent, etc. Any officer of
---------------------------------------------------
the Bank shall have the right to sign, countersign, certify, register,
authenticate and identify all bonds, notes, interim certificates, and depositary
receipts, warrants, participation certificates, certificates of stock and
similar instruments for or in respect of which the Bank may be acting as
Trustee, Registrar, Transfer Agent or otherwise.

2. Authority to Vote Stock. The vote of the Bank as stockholder in any
-----------------------
corporation or mutual fund in which it may hold capital stock in any fiduciary
capacity, unless the governing instrument directs otherwise, may be voted by any
officer of the Bank in person, electronically or by written proxy signed by one
of said officers.

3. Authority to Sell, Assign and Transfer Stocks, etc. Any officer of the
---------------------------------------------------
Bank may sell, assign and transfer to any assignee or transferee for the Bank
and in its name, any and all shares of the capital stock or other securities and
obligations of any individual or entity held by the Bank in any fiduciary
capacity, and sign and deliver any instruments with respect to any such items.

4. Authority to Sign Checks and Other Instruments. Any officer of the
----------------------------------------------
Bank is authorized to sign for and on behalf of the Bank: checks against any
account or accounts of any organizational unit of the Bank exercising fiduciary
powers; petitions; schedules; accounts; reports; receipts for funds or
securities deposited with the Bank as fiduciary and all instruments or documents
that may be necessary or desirable in connection with the execution of any
fiduciary powers of the Bank.

5. Delegation of Authority. Anything in this Article XIV to the contrary
-----------------------
notwithstanding, the Chairman of the Board is authorized to designate in writing
such persons as shall be authorized in the name of the Bank to sign or
countersign any or all of the documents and instruments enumerated in this
Article XIV relating to transactions conducted in connection

14
<PAGE>

with the execution of any fiduciary powers of the Bank.

ARTICLE XV
----------

AMENDMENT OF BY-LAWS
--------------------

These By-Laws may be changed or amended by the vote of a majority of the
directors present at any regularly constituted meeting of the Board of
Directors.

ARTICLE XVI
-----------

EMERGENCY OPERATION OF BANK
---------------------------

In the event of an emergency declared by the President of the United States
or the person performing his functions, due to threatened or actual enemy attack
or disaster, the officers and employees of the Bank will continue to conduct the
affairs of the Bank under such guidance from the directors as may be available,
except as to matters which by statute require specific approval of the Board of
Directors, and subject to conformance with any governmental directives during
the emergency.

ARTICLE XVII
------------

DELEGATION OF AUTHORITY
-----------------------

Each of the Chairman of the Board, the President, any Vice Chairman of the
Board and the Cashier of the Bank are severally and respectively authorized to
designate in writing such persons who shall be authorized in the name and on
behalf of the Bank to sign any document or instrument, including certificates of
deposit and notes, and to take action which may be necessary or appropriate to
the conduct of the Bank's business, in its individual capacity or any other
capacity. Any such authorization to sign such document or instrument and to
take any action may be general or limited as is determined in the discretion of
the Chairman of the Board, the President, any Vice Chairman of the Board or the
Cashier.

15
<PAGE>

EXHIBIT 6

THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT

August 27, 1996

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In connection with the qualification of an indenture between Appalachian Power
Company and The First National Bank of Chicago, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.

Very truly yours,

THE FIRST NATIONAL BANK OF CHICAGO

BY: /S/ RICHARD D. MANELLA
RICHARD D. MANELLA
VICE PRESIDENT

16
<PAGE>

EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.

SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNTS IN ---------- less than-
THOUSANDS RCFD BIL MIL THOU ---------
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1)........... 0081 3,572,641 1.a.
b. Interest-bearing balances(2).................................... 0071 6,958,367 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)....... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).... 1773 1,448,974 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold.............................................. 0276 5,020,878 3.a.
b. Securities purchased under agreements to resell................. 0277 918,688 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)... RCFD 2122 19,125,160 4.a.
b. LESS: Allowance for loan and lease losses....................... RCFD 3123 379,232 4.b.
c. LESS: Allocated transfer risk reserve........................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)............................ 2125 18,745,928 4.d.
5. Assets held in trading accounts.................................... 3545 9,599,172 5.
6. Premises and fixed assets (including capitalized leases)........... 2145 623,289 6.
7. Other real estate owned (from Schedule RC-M)....................... 2150 8,927 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)..................................... 2130 57,280 8.
9. Customers' liability to this bank on acceptances outstanding....... 2155 632,259 9.
10. Intangible assets (from Schedule RC-M)............................. 2143 156,715 10.
11. Other assets (from Schedule RC-F).................................. 2160 1,592,088 11.
12. Total assets (sum of items 1 through 11)........................... 2170 49,335,206 12.

- ------------------
</TABLE>

(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.

17
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>

SCHEDULE RC-CONTINUED

<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
--------- -------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)........................... RCON 2200 16,878,870 13.a.
(1) Noninterest-bearing(1)............................. RCON 6631 7,855,880 13.a.(1)
(2) Interest-bearing................................... RCON 6636 9,022,990 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E, part II)................ RCFN 2200 12,677,057 13.b.
(1) Noninterest bearing................................ RCFN 6631 766,936 13.b.(1)
(2) Interest-bearing RCFN 6636 11,910,121 13.b.(2)
14. Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the
bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased............................ RCFD 0278 1,318,968 14.a.
b. Securities sold under agreements to repurchase..... RCFD 0279 1,197,589 14.b.
15. a. Demand notes issued to the U.S. Treasury........... RCON 2840 104,546 15.a.
b. Trading Liabilities............................................... RCFD 3548 6,431,784 15.b.

16. Other borrowed money:
a. With original maturity of one year or less......... RCFD 2332 4,437,636 16.a.
b. With original maturity of more than one year....... RCFD 2333 75,308 16.b.
17. Mortgage indebtedness and obligations under
capitalized leases.................................... RCFD 2910 283,041 17.
18. Bank's liability on acceptance executed and
outstanding........................................... RCFD 2920 632,259 18.
19. Subordinated notes and debentures..................... RCFD 3200 1,275,000 19.
20. Other liabilities (from Schedule RC-G)................ RCFD 2930 892,947 20.
21. Total liabilities (sum of items 13 through 20) RCFD 2948 46,205,005 21.
22. Limited-Life preferred stock and related surplus...... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus......... RCFD 3838 0 23.
24. Common stock.......................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred
stock)................................................ RCFD 3839 2,349,164 25.
26. a. Undivided profits and capital reserves............. RCFD 3632 584,878 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities...................... RCFD 8434 (3,951) 26.b.
27. Cumulative foreign currency translation adjustments... RCFD 3284 (748) 27.
28. Total equity capital (sum of items 23 through 27)..... RCFD 3210 3,130,201 28.
29. Total liabilities, limited-life preferred stock, and
equity capital (sum of items 21, 22, and 28)......... RCFD 3300 49,335,206 29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external
Number
--------------
<S> <C> <C> <C>
auditors as of any date during 1995.....................................RCFD 6724....N/A M.1.
--------------
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a external auditors (may be required by state chartering
certified public accounting firm which submits a report authority)
on the bank 5 = Review of the bank's financial statements by external
2 = Independent audit of the bank's parent holding auditors
company conducted in accordance with generally 6 = Compilation of the bank's financial statements by external
accepted auditing standards by a certified public auditors
accounting firm which submits a report on the 7 = Other audit procedures (excluding tax preparation work)
consolidated holding company (but not on the bank 8 = No external audit work
separately)
3 = Directors' examination of the bank conducted in
accordance with generally accepted auditing
standards by a certified public accounting firm
(may be required by state chartering authority)
</TABLE>
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.