<PAGE>

October 29, 1998



              Company Order and Officers' Certificate
                Unsecured Medium Term Notes, Series A



The Bank of New York, as Trustee
101 Barclay Street, Floor 21W
New York, New York 10286

Attn: Corporate Trust Division

Ladies and Gentlemen:

Pursuant to Article Two of the Indenture, dated as of October 1, 1998 (as it may
be amended or  supplemented,  the  "Indenture"),  from  Indiana  Michigan  Power
Company (the "Company") to The Bank of New York, as trustee (the "Trustee"), and
the Board  Resolutions  dated August 27, 1998, a copy of which  certified by the
Secretary or an Assistant  Secretary of the Company is being delivered  herewith
under  Section  2.01  of the  Indenture,  and  unless  otherwise  provided  in a
subsequent Company Order pursuant to Section 2.04 of the Indenture,

           1. The Company's  Unsecured Notes,  Series A (the "Notes") are hereby
      established and shall be subject to a Periodic Offering.  Fixed Rate Notes
      shall be in  substantially  the form  attached  hereto  as  Exhibit  1 and
      Floating Rate Notes shall be in substantially  the form attached hereto as
      Exhibit 2.

           2. The terms and  characteristics  of the Notes  shall be as  follows
      (the  numbered  clauses  set forth  below  corresponding  to the  numbered
      subsections  of  Section  2.01 of the  Indenture,  with terms used and not
      defined herein having the meanings specified in the Indenture):

           (i)  the   aggregate   principal   amount  of  Notes   which  may  be
           authenticated  and delivered  under the Indenture shall be limited to
           $100,000,000,  except  as  contemplated  in  Section  2.01(i)  of the
           Indenture;

           (ii) the date or dates on which the  principal  of the Notes shall be
           payable  shall  be  determined  by an  officer  of  the  Company  and
           communicated  to the Trustee by  Instructions,  as defined below,  or
           otherwise in accordance with  procedures,  acceptable to the Trustee,
           specified  in a Company  Order or  Orders  (both of such  methods  of
           determination being hereinafter  referred to as "determined  pursuant
           to Instructions);  provided,  however, that no Note shall have a term
           of less than nine months or more than 50 years;

           (iii)  interest shall accrue from the date of  authentication  of the
           Notes;  with respect to fixed rate Notes,  the Interest Payment Dates
           on which such interest will be payable shall be February 1 and August
           1 or such other date or dates as determined pursuant to Instructions,
           with respect to floating rate Notes, the Interest Payment Dates shall
           be as determined  pursuant to  Instructions;  the Regular Record Date
           shall be the fifteenth calendar day immediately preceding the related
           Interest  Payment  Date or such  other  date or dates  as  determined
           pursuant to Instructions; provided however that if the Original Issue
           Date of a Note  shall be after a Regular  Record  Date and before the
           corresponding  Interest  Payment  Date,  payment  of  interest  shall
           commence on the second Interest Payment Date succeeding such Original
           Issue  Date and shall be paid to the  Person in whose  name this Note
           was  registered on the Regular  Record Date for such second  Interest
           Payment Date;  and provided  further,  that  interest  payable on the
           Stated  Maturity  Date or any  Redemption  Date  shall be paid to the
           Person to whom principal shall be paid;

           (iv)  the  interest  rate or  rates,  or  interest  rate  formula  or
           formulas,  if any, at which the Notes, or any Tranche thereof,  shall
           bear interest shall be determined pursuant to Instructions;

           (v)  the  terms,  if  any,  regarding  the  redemption,  purchase  or
           repayment  of  such   series,   shall  be   determined   pursuant  to
           Instructions;

           (vi) (a) the Notes shall be issued in the form of a Global Note;  (b)
           the  Depositary  for such Global Note shall be The  Depository  Trust
           Company; and (c) the procedures with respect to transfer and exchange
           of Global  Notes  shall be as set forth in the form of Note  attached
           hereto;

           (vii) the title of the Notes shall be  "Unsecured  Medium Term Notes,
           Series A;

           (viii)  the form of the Notes  shall be as set forth in  Paragraph  1
           above;

           (ix) the maximum  interest  rate on fixed rate Notes shall not exceed
           by 3.5% the yield to maturity at the date of pricing on United States
           Treasury Bonds of comparable  maturity and the initial  interest rate
           on any floating rate Note shall not exceed 9%;

           (x) the Notes shall be subject to a Periodic Offering;

           (xi) not applicable;

           (xii) any other information  necessary to complete the Notes shall be
           determined pursuant to Instructions;

           (xiii) not applicable;

           (xiv) not applicable;

           (xv) not applicable;

           (xvi)  whether any Notes shall be issued as Discount  Securities  and
           the terms thereof shall be determined pursuant to Instructions;

           (xvii) not applicable;

           (xviii) not applicable; and

           (xix)  any  other  terms  of the  Notes  not  inconsistent  with  the
           Indenture may be determined pursuant to Instructions.

           3. You are hereby requested to authenticate,  from time to time after
      the  date  hereof  and in the  manner  provided  by  the  Indenture,  such
      aggregate  principal  amount of the Notes  not to exceed  $100,000,000  as
      shall be set forth in Instructions (the  "Instructions")  in substantially
      the form  attached  hereto as Exhibit 3 for fixed rate Notes and Exhibit 4
      for floating rate Notes.

           4. You are hereby requested to hold the Notes authenticated  pursuant
      to  each  of  the  Instructions  in  accordance  with  the  Administrative
      Procedures  attached as Exhibit A to the Selling  Agency  Agreement  dated
      October  29,  1998,  between  the  Company  and each of the  agents  named
      therein.

           5.  Concurrently with this Company Order, an Opinion of Counsel under
      Sections 2.04 and 13.06 of the Indenture is being delivered to you.

           6. The undersigned  Armando A. Pena and John F. Di Lorenzo,  Jr., the
      Treasurer and  Secretary,  respectively,  of the Company do hereby certify
      that:

           (i) we have read the relevant  portions of the  Indenture,  including
           without  limitation  the  conditions  precedent  provided for therein
           relating  to the  action  proposed  to be  taken  by the  Trustee  as
           requested in this Company  Order and Officers'  Certificate,  and the
           definitions in the Indenture relating thereto;

           (ii) we have  read  the  Board  Resolutions  of the  Company  and the
           Opinion of Counsel referred to above;

           (iii) we have  conferred  with other  officers of the  Company,  have
           examined  such  records  of the  Company  and have  made  such  other
           investigation as we deemed relevant for purposes of this certificate;

           (iv) in our opinion,  we have made such  examination or investigation
           as is  necessary  to enable us to express an  informed  opinion as to
           whether or not such conditions have been complied with; and

           (v) on the basis of the  foregoing,  we are of the  opinion  that all
           conditions  precedent  provided for in the Indenture  relating to the
           action  proposed to be taken by the Trustee as requested  herein have
           been complied with.

Kindly  acknowledge  receipt of this Company  Order and  Officers'  Certificate,
including the documents  listed herein,  and confirm the  arrangements set forth
herein by signing and returning the copy of this document.

Very truly yours,


INDIANA MICHIGAN POWER COMPANY


By: /S/ A. A. PENA
      Treasurer


And: /S/ JOHN F. DI LORENZO, JR.
        Secretary


Acknowledged by Trustee:


By: /S/ MICHAEL CULHANE
      Vice President

<PAGE>
                                                                       Exhibit 1


[Unless this  certificate  is presented by an authorized  representative  of The
Depository Trust Company (55 Water Street,  New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
to be issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized  representative  of The Depository  Trust Company and
any payment is made to Cede & Co., 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.

                INDIANA MICHIGAN POWER COMPANY
                Unsecured Medium Term Note, Series A
                                  (Fixed Rate)

CUSIP:                              Original Issue Date:

Stated Maturity:                          Interest Rate:

Principal Amount:

Redeemable:     Yes ____  No ____
In Whole:       Yes ____  No ____
In Part:        Yes ____  No ____

Initial Redemption Date:

Redemption Limitation Date:

Initial Redemption Price:

Reduction Percentage:

      INDIANA MICHIGAN POWER COMPANY,  a corporation duly organized and existing
under the laws of the State of Indiana  (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 CEDE & CO. or
registered  assigns,  the Principal  Amount  specified  above on Stated Maturity
specified  above, and to pay interest on said Principal Amount from the Original
Issue Date specified above 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,  [semi-annually  in  arrears  on  February 1 and August 1 in each
year,]  commencing  (except as  provided  in the  following  sentence)  with the
Interest  Payment Date next succeeding the Original Issue Date specified  above,
at the Interest Rate per annum specified above, until the Principal Amount shall
have been paid or duly provided for.  Interest shall be computed on the basis of
a 360-day year of twelve 30-day months.

      The interest so payable,  and punctually paid or duly provided for, on any
Interest  Payment Date, as provided in the Indenture,  as  hereinafter  defined,
shall be paid to the Person in whose name this Note (or one or more  Predecessor
Securities)  shall have been  registered at the close of business on the Regular
Record  Date with  respect to such  Interest  Payment  Date,  which shall be the
fifteenth  calendar  day  (whether or not a Business  Day),  as the case may be,
immediately  preceding such Interest Payment Date;  provided however that if the
Original Issue Date of this Note shall be after a Regular Record Date and before
the corresponding  Interest Payment Date,  payment of interest shall commence on
the second  Interest  Payment Date succeeding such Original Issue Date and shall
be paid to the  Person in whose  name this Note was  registered  on the  Regular
Record Date for such second Interest  Payment Date; and provided  further,  that
interest  payable on Stated Maturity or any Redemption Date shall be paid to the
Person to whom principal shall be paid. Any such interest not so punctually paid
or duly provided for shall  forthwith  cease to be payable to the Holder on such
Regular Record Date and shall be paid as provided in said Indenture.

      If any Interest  Payment Date, any Redemption  Date or Stated  Maturity is
not a Business  Day,  then  payment of the amounts due on this Note on such date
will be made on the next  succeeding  Business Day, and no interest shall accrue
on such  amounts  for the period  from and after  such  Interest  Payment  Date,
Redemption  Date or Stated  Maturity,  as the case may be. The principal of (and
premium, if any) and the interest on this Note shall be payable at the office or
agency of the Company  maintained  for that purpose in the Borough of Manhattan,
the City of New York,  New York, 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 (other than interest
payable on Stated Maturity or any Redemption  Date) may be made at the option of
the Company by check  mailed to the  registered  holder at such address as shall
appear in the Note Register.

      This  Note is one of a duly  authorized  series  of Notes  of the  Company
(herein sometimes referred to as the "Notes"),  specified in the Indenture,  all
issued or to be issued in one or more series  under and pursuant to an Indenture
dated as of October 1, 1998 duly executed and delivered  between the Company and
The Bank of New York, a corporation organized and existing under the laws of the
State of New York,  as  Trustee  (herein  referred  to as the  "Trustee")  (such
Indenture,  as originally executed and delivered and as thereafter  supplemented
and  amended  being  hereinafter  referred  to as  the  "Indenture"),  to  which
Indenture and all indentures supplemental thereto or Company Orders 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 Notes. By the terms of the Indenture, the Notes 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 Note is one of the series of Notes designated
on the face hereof.

      [If so  specified  on the face  hereof and subject to the terms of Article
Three of the  Indenture,  this Note is subject to  redemption  at any time on or
after the Initial  Redemption Date specified on the face hereof,  as a whole or,
if  specified,  in part,  at the  election  of the  Company,  at the  applicable
redemption  price (as described  below) plus any accrued but unpaid  interest to
the date of such redemption. Unless otherwise specified on the face hereof, such
redemption  price shall be the Initial  Redemption  Price  specified on the face
hereof for the twelve-month period commencing on the Initial Redemption Date and
shall decline for the twelve-month  period commencing on each anniversary of the
Initial  Redemption  Date by a  percentage  of  principal  amount  equal  to the
Reduction Percentage specified on the face hereof until such redemption price is
100% of the principal amount of this Note to be redeemed.]

      [Notwithstanding  the  foregoing,  the  Company  may  not,  prior  to  the
Redemption  Limitation  Date, if any,  specified on the face hereof,  redeem any
Note of this  series  and  Tranche  as  contemplated  above as a part of,  or in
anticipation  of,  any  refunding  operation  by the  application,  directly  or
indirectly,  of moneys borrowed having an effective interest cost to the Company
(calculated in accordance with generally  accepted  financial  practice) of less
than the effective  interest  cost the Company  (similarly  calculated)  of this
Note.]


      [This Note shall be  redeemable  to the extent set forth herein and in the
Indenture  upon not less than  thirty,  but not more than sixty,  days  previous
notice by mail to the registered owner.]

      The Company  shall not be required to (i) issue,  exchange or register the
transfer of any Notes  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  Notes of the same series and Tranche and ending at the close of
business  on the day of such  mailing,  nor (ii)  register  the  transfer  of or
exchange of any Notes of any series or portions  thereof called for  redemption.
This Global Note is  exchangeable  for Notes in definitive  registered form only
under certain limited circumstances set forth in the Indenture.

      In the event of  redemption of this Note in part only, a new Note or Notes
of this series and Tranche,  of like tenor,  for the  unredeemed  portion hereof
will be issued in the name of the Holder hereof upon the surrender of this Note.

      In case an Event of  Default,  as  defined  in the  Indenture,  shall have
occurred and be  continuing,  the principal of all of the Notes 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 Note 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 Notes 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 Notes;  provided,  however,  that no
such supplemental  indenture shall (i) extend the fixed maturity of any Notes 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 reduce the amount of the principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the maturity
thereof  pursuant  to the  Indenture,  without the consent of the holder of each
Note then  outstanding  and affected;  (ii) reduce the  aforesaid  percentage of
Notes,  the holders of which are  required  to consent to any such  supplemental
indenture,  or reduce the percentage of Notes, the holders of which are required
to waive any default and its consequences,  without the consent of the holder of
each Note then outstanding and affected  thereby;  or (iii) modify any provision
of Section  6.01(c) of the  Indenture  (except to  increase  the  percentage  of
principal amount of securities  required to rescind and annul any declaration of
amounts due and payable  under the Notes),  without the consent of the holder of
each Note then  outstanding  and affected  thereby.  The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Notes of all series at the time outstanding  affected thereby,  on behalf of
the  Holders  of the  Notes 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 Notes of such  series.  Any such consent or waiver by the
registered  Holder of this Note  (unless  revoked as provided in the  Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners  of this  Note and of any Note  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 Note.

      No reference  herein to the  Indenture and no provision of this Note 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  Note at the time and  place  and at the rate and in the money
herein prescribed.

      As provided in the  Indenture and subject to certain  limitations  therein
set forth, this Note is transferable by the registered holder hereof on the Note
Register  of the  Company,  upon  surrender  of this  Note for  registration  of
transfer  at the  office or agency of the  Company as may be  designated  by 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 Notes 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 Note, the
Company, the Trustee, any paying agent and any Note Registrar may deem and treat
the registered  Holder hereof as the absolute owner hereof  (whether or not this
Note shall be overdue and  notwithstanding  any notice of  ownership  or writing
hereon  made by  anyone  other  than  the Note  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 Note 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 Note,  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 Notes of this series are  issuable  only in  registered  form  without
coupons  in  denominations  of $1,000  and any  integral  multiple  thereof.  As
provided  in the  Indenture  and subject to certain  limitations,  Notes of this
series and Tranche are  exchangeable  for a like aggregate  principal  amount of
Notes of this  series and  Tranche of a different  authorized  denomination,  as
requested by the Holder surrendering the same.

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

      This Note  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.

      IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.

Dated ____________________


                         INDIANA MICHIGAN POWER COMPANY


                         By:___________________________

Attest:


By:___________________________





                          CERTIFICATE OF AUTHENTICATION

      This is one of the Notes of the series of Notes  designated  in accordance
with, and referred to in, the within-mentioned Indenture.

Dated:_______________

THE BANK OF NEW YORK


By:___________________________
   Authorized Signatory


     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 Note and all rights thereunder, hereby
----------------------------------------------------------------
irrevocably constituting and appointing such person attorney to
----------------------------------------------------------------
transfer such Note 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 Note 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").
<PAGE>


                                                                       Exhibit 2


[Unless this  certificate  is presented by an authorized  representative  of The
Depository Trust Company (55 Water Street,  New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
to be issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized  representative  of The Depository  Trust Company and
any payment is made to Cede & Co., 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.  Except as otherwise provided
in Section 2.11 of the Indenture, this Security 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.]

Registered No. FLR-____

                         INDIANA MICHIGAN POWER COMPANY
                UNSECURED MEDIUM TERM NOTE, SERIES A
                                 (Floating Rate)

CUSIP No.:
Original Issue Date:
Stated Maturity:

Principal Amount:

INTEREST RATE BASIS OR BASES:

      IF LIBOR:                     IF CMT RATE:
   [ ] LIBOR Reuters                Designated CMT Telerate Page:
   [ ] LIBOR Telerate               Designated CMT Maturity Index:


INDEX MATURITY:   INITIAL INTEREST RATE:  %    INTEREST PAYMENT DATE(S):


SPREAD          SPREAD MULTIPLIER:      INITIAL INTEREST RESET DATE:
(PLUS OR MINUS):


MINIMUM INTEREST RATE:  %  MAXIMUM INTEREST RATE:  %  INTEREST RESET DATE(S):


INITIAL REDEMPTION DATE:  INITIAL REDEMPTION        ANNUAL REDEMPTION
                          PERCENTAGE:    %          PERCENTAGE REDUCTION:  %

OPTIONAL REPAYMENT DATE(S):               CALCULATION AGENT:


INTEREST CATEGORY:                  DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note      [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note         from           to
       Fixed Rate Commencement Date:[ ] Actual/360 for the period
       Fixed Interest Rate:    %          from           to


[ ] Inverse Floating Rate Note      [  ] Actual/Actual for the period
       Fixed Interest Rate:    %          from           to
[ ] Original Issue Discount Note     Applicable Interest Rate Basis:
       Issue Price:    %


AUTHORIZED DENOMINATION:
[ ] $1,000 and integral multiples thereof
[ ] Other


DEFAULT RATE:    %


ADDENDUM ATTACHED
[ ] Yes
[ ] No


OTHER/ADDITIONAL PROVISIONS:


      INDIANA MICHIGAN POWER COMPANY,  a corporation duly organized and existing
under the laws of the State of Indiana  (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 CEDE & CO., or
registered assigns, the Principal Amount specified above, on the Stated Maturity
specified  above (or any  Redemption  Date or  Repayment  Date,  each as defined
herein)  (each such Stated  Maturity,  Redemption  Date or Repayment  Date being
hereinafter  referred to as the  "Maturity  Date" with respect to the  principal
repayable on such date) and to pay interest  thereon,  at a rate per annum equal
to the Initial  Interest Rate specified  above until the Initial  Interest Reset
Date specified  above and thereafter at a rate determined in accordance with the
provisions  specified  above and as herein  provided with respect to one or more
Interest Rate Bases specified  above until the principal  hereof is paid or duly
made available for payment, and (to the extent that the payment of such interest
shall be legally  enforceable)  at the Default Rate per annum specified above on
any overdue principal, premium and/or interest. The Company will pay interest in
arrears on each  Interest  Payment  Date,  if any,  specified  above  (each,  an
"Interest  Payment Date"),  commencing with the first Interest Payment Date next
succeeding the Original Issue Date  specified  above,  and on the Maturity Date;
provided,  however,  that if the  Original  Issue Date occurs  between a Regular
Record Date (as defined below) and the next  succeeding  Interest  Payment Date,
interest  payments  will  commence  on the  second  Interest  Payment  Date next
succeeding  the  Original  Issue Date to the holder of this Note on the  Regular
Record Date with respect to such second Interest Payment Date.

      Interest on this Note will accrue from,  and  including,  the  immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from,  and  including,  the Original  Issue Date if no interest has been
paid or duly provided for) to, but excluding,  the applicable  Interest  Payment
Date or the Maturity Date, as the case may be (each, an "Interest Period").  The
interest so payable,  and punctually  paid or duly provided for, on any Interest
Payment Date will,  subject to certain  exceptions  described herein, be paid to
the  person  in whose  name  this  Note (or one or more  predecessor  Notes)  is
registered  at the close of business on the  fifteenth  calendar day (whether or
not a Business  Day, as defined  herein)  immediately  preceding  such  Interest
Payment Date (the  "Regular  Record  Date");  provided,  however,  that interest
payable on the Maturity Date will be payable to the person to whom the principal
hereof and premium,  if any,  hereon shall be payable.  Any such interest not so
punctually paid or duly provided for ("Defaulted Interest") will forthwith cease
to be payable to the holder on any Regular Record Date, and shall be paid to the
person in whose  name  this Note is  registered  at the close of  business  on a
special record date (the "Special  Regular Record Date") for the payment of such
Defaulted  Interest to be fixed by the Trustee  hereinafter  referred to, notice
whereof  shall be given to the holder of this Note by the  Trustee not less than
10 calendar days prior to such Special Regular 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 this note may be listed,  and upon such notice as
may be  required  by  such  exchange,  all as  more  fully  provided  for in the
Indenture.

      Payment of  principal,  premium,  if any,  and interest in respect of this
Note due on the Maturity Date will be made in immediately  available  funds upon
presentation  and  surrender of this Note (and,  with respect to any  applicable
repayment of this Note, a duly completed  election form as contemplated  herein)
at the  office or agency  of the  Company  maintained  for that  purpose  in the
Borough of Manhattan, The City of New York, New York. Payment of interest due on
any Interest  Payment  Date other than the  Maturity  Date will be made by check
mailed to the  address of the person  entitled  thereto  as such  address  shall
appear in the  Security  Register  maintained  at the  aforementioned  office or
agency of the Company;  provided,  however,  that a holder of U.S.$10,000,000 or
more in  aggregate  principal  amount  of Notes  (whether  having  identical  or
different terms and provisions) will be entitled to receive interest payments on
such Interest  Payment Date by wire transfer of immediately  available  funds if
appropriate  wire  transfer  instructions  have been  received in writing by the
Company not less than 15 calendar days prior to such Interest  Payment Date. Any
such wire transfer  instructions  received by the Company shall remain in effect
until revoked by such holder.

      If any Interest  Payment Date other than the Maturity Date would otherwise
be a day  that is not a  Business  Day,  such  Interest  Payment  Date  shall be
postponed  to the  next  succeeding  Business  Day,  except  that if LIBOR is an
applicable  Interest  Rate  Basis  and  such  Business  Day  falls  in the  next
succeeding  calendar month,  such Interest Payment Date shall be the immediately
preceding  Business  Day.  If the  Maturity  Date  falls  on a day that is not a
Business Day, the required payment of principal,  premium,  if any, and interest
shall be made on the next succeeding Business Day with the same force and effect
as if made on the date such payment was due,  and no interest  shall accrue with
respect to such payment for the period from and after the  Maturity  Date to the
date of such payment on the next succeeding Business Day.

      Reference is hereby made to the further  provisions of this Note set forth
herein and,  if so  specified  above,  in the  Addendum  hereto,  which  further
provisions shall have the same force and effect as if set forth herein.

      This Note is one of a duly authorized series of Debt Securities (the "Debt
Securities") of the Company issued and to be issued under an Indenture, dated as
of October 1, 1998, as amended,  modified or supplemented from time to time (the
"Indenture"),  between  the Company  and The Bank of New York,  as Trustee  (the
"Trustee",  which term includes any successor  trustee under the Indenture),  to
which  Indenture and all  indentures  supplemental  and Company  Orders  thereto
reference is hereby made for a statement of the respective  rights,  limitations
of rights,  duties and immunities thereunder of the Company, the Trustee and the
holders of the Debt Securities,  and of the terms upon which the Debt Securities
are, and are to be, authenticated and delivered.  This Note is one of the series
of Debt Securities  designated as "Unsecured  Medium-Term Notes,  Series A" (the
"Notes").  All terms used but not defined in this Note specified herein or in an
Addendum hereto shall have the meanings assigned to such terms in the Indenture.

      [This  Note is  issuable  only  in  registered  form  without
coupons  in  minimum  denominations  of U.S.  $1,000  and  integral
multiples  thereof or any Other Authorized  Denomination  specified
herein.]

      This Note will not be subject to any sinking  fund and,  unless  otherwise
provided  herein  in  accordance  with  the  provisions  of  the  following  two
paragraphs, will not be redeemable or repayable prior to the Stated Maturity.

      [If so  specified  on the face  hereof and subject to the terms of Article
Three of the Indenture,  this Note is subject to redemption at the option of the
Company on any date on or after the Initial  Redemption Date, if any,  specified
herein, in whole or from time to time in part in increments of U.S.$1,000 or any
Other Denomination (provided that any remaining principal amount hereof shall be
at least  U.S.$1,000 or such Other  Denomination),  at the Redemption  Price (as
defined below),  together with unpaid interest accrued thereon to the date fixed
for redemption (each, a "Redemption  Date"), on notice given no more than 60 nor
less than 30 calendar days prior to the Redemption  Date and in accordance  with
the provisions of the Indenture.  The "Redemption  Price" shall initially be the
Initial  Redemption   Percentage  specified  herein  multiplied  by  the  unpaid
principal amount of this Note to be redeemed.  The Initial Redemption Percentage
shall decline at each  anniversary of the Initial  Redemption Date by the Annual
Redemption Percentage  Reduction,  if any, specified herein until the Redemption
Price  is 100% of  unpaid  principal  amount  to be  redeemed.  In the  event of
redemption  of this  Note in  part  only,  a new  Note  of  like  tenor  for the
unredeemed portion hereof and otherwise having the same terms as this Note shall
be issued in the name of the holder hereof upon the  presentation  and surrender
hereof.]

      [This  Note is subject to  repayment  by the  Company at the option of the
holder hereof on the Optional  Repayment  Date(s),  if any, specified herein, in
whole or in part in increments of U.S.$1,000 or any Other Denomination (provided
that any remaining  principal amount hereof shall be at least U.S.$1,000 or such
Other Denomination),  at a repayment price equal to 100% of the unpaid principal
amount to be repaid,  together with unpaid interest  accrued thereon to the date
fixed for repayment (each, a "Repayment Date"). For this Note to be repaid, this
Note must be received,  together with the form hereon entitled  "Option to Elect
Repayment" duly completed, by the Trustee at its corporate trust office not more
than 60 nor less than 30 calendar days prior to the Repayment Date.  Exercise of
such repayment option by the holder hereof will be irrevocable.  In the event of
repayment  of this Note in part only,  a new Note of like tenor for the unrepaid
portion hereof and otherwise  having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.]

      [If the Interest  Category of this Note is specified herein as an Original
Issue  Discount Note, the amount payable to the holder of this Note in the event
of redemption,  repayment or acceleration of maturity of this Note will be equal
to the sum of (1) the Issue Price specified herein (increased by any accruals of
the Discount, as defined below) and, in the event of any redemption of this Note
(if applicable), multiplied by the Initial Redemption Percentage (as adjusted by
the Annual Redemption  Percentage  Reduction,  if applicable) and (2) any unpaid
interest on this Note  accrued from the  Original  Issue Date to the  Redemption
Date,  Repayment Date or date of acceleration  of maturity,  as the case may be.
The difference  between the Issue Price and 100% of the principal amount of this
Note is referred to herein as the "Discount."]

      [For purposes of determining the amount of Discount that has accrued as of
any Redemption Date,  Repayment Date or date of acceleration of maturity of this
Note,  such Discount will be accrued so as to cause an assumed yield on the Note
to be constant.  The assumed  constant  yield will be calculated  using a 30-day
month,  360-day year  convention,  a  compounding  period  that,  except for the
Initial Period (as defined  below),  corresponds to the shortest  period between
Interest  Payment Dates (with ratable accruals within a compounding  period),  a
constant coupon rate equal to the initial  interest rate applicable to this Note
and an assumption that the maturity of this Note will not be accelerated. If the
period from the Original  Issue Date to the initial  Interest  Payment Date (the
"Initial  Period")  is shorter  than the  compounding  period  for this Note,  a
proportionate  amount  of the yield for an  entire  compounding  period  will be
accrued.  If the Initial Period is longer than the compounding period, then such
period will be divided  into a regular  compounding  period and a short  period,
with the short period being treated as provided in the preceding sentence.]

      The interest rate borne by this Note will be determined as follows:

           (i) Unless the Interest  Category of this Note is specified herein as
a "Floating  Rate/Fixed Rate Note" or an "Inverse Floating Rate Note", this Note
shall be designated as a "Regular  Floating Rate Note" and,  except as set forth
herein,  shall  bear  interest  at  the  rate  determined  by  reference  to the
applicable  Interest  Rate Basis or Bases (a) plus or minus the Spread,  if any,
and/or  (b)  multiplied  by the  Spread  Multiplier,  if any,  in  each  case as
specified  herein.  Commencing on the Initial  Interest  Reset Date, the rate at
which  interest on this Note shall be payable shall be reset as of each Interest
Reset Date specified herein; provided, however, that the interest rate in effect
for the period,  if any,  from the Original  Issue Date to the Initial  Interest
Reset Date shall be the Initial Interest Rate.

           (ii) If the Interest  Category of this Note is specified  herein as a
"Floating  Rate/Fixed Rate Note",  then,  except as set forth herein,  this Note
shall bear  interest  at the rate  determined  by  reference  to the  applicable
Interest  Rate Basis or Bases (a) plus or minus the Spread,  if any,  and/or (b)
multiplied by the Spread Multiplier,  if any. Commencing on the Initial Interest
Reset Date,  the rate at which  interest on this Note shall be payable  shall be
reset as of each Interest Reset Date; provided,  however,  that (y) the interest
rate in effect  for the  period,  if any,  from the  Original  Issue Date to the
Initial  Interest  Reset Date  shall be the  Initial  Interest  Rate and (z) the
interest rate in effect for the period commencing on the Fixed Rate Commencement
Date  specified  herein to the Maturity  Date shall be the Fixed  Interest  Rate
specified  herein or, if no such Fixed Interest Rate is specified,  the interest
rate  in  effect  hereon  on  the  day  immediately  preceding  the  Fixed  Rate
Commencement Date.

           (iii) If the Interest Category of this Note is specified herein as an
"Inverse Floating Rate Note", then, except as set forth herein,  this Note shall
bear interest at the Fixed Interest Rate minus the rate  determined by reference
to the applicable  Interest Rate Basis or Bases (a) plus or minus the Spread, if
any, and/or (b) multiplied by the Spread Multiplier, if any; provided,  however,
that, unless otherwise  specified herein,  the interest rate hereon shall not be
less than zero. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note shall be payable shall be reset as of each Interest  Reset
Date;  provided,  however,  that the interest rate in effect for the period,  if
any, from the Original  Issue Date to the Initial  Interest  Reset Date shall be
the Initial Interest Rate.

      Unless otherwise  specified herein, the rate with respect to each Interest
Rate Basis will be  determined  in  accordance  with the  applicable  provisions
below. Except as set forth herein, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest  Determination Date (as defined below)  immediately  preceding such
Interest  Reset  Date or (ii) if such day is not an  Interest  Reset  Date,  the
interest  rate  determined  as of the Interest  Determination  Date  immediately
preceding the most recent Interest Reset Date.

      If any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that if LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding  calendar month, such Interest Reset Date shall
be the immediately  preceding Business Day. In addition, if the Treasury Rate is
an applicable  Interest Rate Basis is an applicable  Interest Rate Basis and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then
such Interest Reset Date will be postponed to the next succeeding Business Day.

      As used  herein,  "Business  Day" means any day,  other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking  institutions
are authorized or required by law or executive order to close in The City of New
York or in any  Place  of  Payment;  provided  that if  LIBOR  is an  applicable
Interest Rate Basis,  such day is also a London Business Day (as defined below).
"London  Business  Day"  means any day on which  dealings  in U.S.  Dollars  are
transacted in the London interbank market.

      The  "Interest  Determination  Date" with respect to the CD Rate,  the CMT
Rate, the Commercial  Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately  preceding the applicable  Interest Reset
Date; and the "Interest  Determination  Date" with respect to LIBOR shall be the
second London Business Day immediately  preceding the applicable  Interest Reset
Date. The "Interest  Determination Date" with respect to the Treasury Rate shall
be the day in the week in which the  applicable  Interest  Reset  Date  falls on
which day Treasury  Bills (as defined  below) are normally  auctioned  (Treasury
Bills are normally  sold at an auction held on Monday of each week,  unless that
day is a legal  holiday,  in which  case the  auction  is  normally  held on the
following  Tuesday,  except  that  such  auction  may be held  on the  preceding
Friday); provided, however, that if an auction is held on the Friday of the week
preceding the applicable  Interest Reset Date, the Interest  Determination  Date
shall be such preceding  Friday. If the interest rate of this Note is determined
with  reference  to two or  more  Interest  Rate  Bases  specified  herein,  the
"Interest  Determination  Date" pertaining to this Note shall be the most recent
Business  Day  which is at  least  two  Business  Days  prior to the  applicable
Interest  Reset Date on which each  Interest  Rate Basis is  determinable.  Each
Interest  Rate Basis shall be  determined  as of such date,  and the  applicable
interest rate shall take effect on the related Interest Reset Date.

      CD Rate.  If an Interest  Rate Basis for this Note is specified  herein as
the CD Rate,  the CD Rate  shall be  determined  as of the  applicable  Interest
Determination Date (a "CD Rate Interest Determination Date") as the rate on such
date for  negotiable  United States dollar  certificates  of deposit  having the
Index  Maturity  specified  herein as published by the Board of Governors of the
Federal  Reserve System in "Statistical  Release  H.15(519),  Selected  Interest
Rates"  or any  successor  publication  ("H.15(519)")  under  the  heading  "CDs
(Secondary  Market)",  or, if not published by 3:00 P.M., New York City time, on
the  related  Calculation  Date  (as  defined  below),  the rate on such CD Rate
Interest  Determination Date for negotiable United States dollar certificates of
deposit of the Index  Maturity as published  by the Federal  Reserve Bank of New
York in its daily statistical release "Composite 3:30 P.M. Quotations for United
States  Government   Securities"  or  any  successor   publication   ("Composite
Quotations")  under the heading  "Certificates of Deposit".  If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time,  on the related  Calculation  Date,  then the CD Rate on such CD Rate
Interest  Determination  Date  will  be  calculated  by  the  Calculation  Agent
specified herein and will be the arithmetic mean of the secondary market offered
rates  as of  10:00  A.M.,  New  York  City  time,  on  such  CD  Rate  Interest
Determination Date, of three leading nonbank dealers in negotiable United States
dollar  certificates  of  deposit  in The  City  of  New  York  selected  by the
Calculation Agent for negotiable United States dollar certificates of deposit of
major  United  States money center banks for  negotiable  United  States  dollar
certificates of deposit with a remaining  maturity closest to the Index Maturity
in an amount that is representative  for a single  transaction in that market at
that time; provided, however, that if the dealers so selected by the Calculation
Agent are not quoting as mentioned in this sentence,  the CD Rate  determined as
of such CD Rate  Interest  Determination  Date  will be the CD Rate in effect on
such CD Rate Interest Determination Date.

      CMT Rate. If an Interest  Rate Basis for this Note is specified  herein as
the CMT rate,  the CMT Rate shall be  determined as of the  applicable  Interest
Determination  Date (a "CMT  Rate  Interest  Determination  Date")  as the  rate
displayed  on the  Designated  CMT  Telerate  Page (as defined  below) under the
caption  "...Treasury  Constant   Maturities...Federal   Reserve  Board  Release
H.15...Mondays Approximately 3:45 P.M.", under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page is
7055,  the  rate on such CMT Rate  Interest  Determination  Date and (ii) if the
Designated  CMT Telerate Page is 7052,  the week, or the month,  as  applicable,
ended  immediately  preceding  the week in which the related  CMT Rate  Interest
Determination  Date occurs.  If such rate is no longer displayed on the relevant
page or is not  displayed  by 3:00  P.M.,  New York City  time,  on the  related
Calculation  Date,  then the CMT Rate for such CMT Rate  Interest  Determination
Date  will be such  treasury  constant  maturity  rate  for the  Designated  CMT
Maturity Index as published in the relevant H.15(519). If such rate is no longer
published or is not  published by 3:00 P.M.,  New York City time, on the related
Calculation Date, then the CMT Rate on such CMT Rate Interest Determination Date
will be such treasury  constant  maturity rate for the  Designated  CMT Maturity
Index (or other United  States  Treasury  rate for the  Designated  CMT Maturity
Index)  for the CMT  Rate  Interest  Determination  Date  with  respect  to such
Interest Reset Date as may then be published by either the Board of Governors of
the Federal Reserve System or the United States  Department of the Treasury that
the Calculation Agent determines to be comparable to the rate formerly displayed
on the Designated CMT Telerate Page and published in the relevant H.15(519).  If
such  information  is not  provided  by 3:00 P.M.,  New York City  time,  on the
related   Calculation  Date,  then  the  CMT  Rate  on  the  CMT  Rate  Interest
Determination  Date will be  calculated by the  Calculation  Agent and will be a
yield to maturity,  based on the arithmetic mean of the secondary market closing
offer side prices as of approximately 3:30 P.M., New York City time, on such CMT
Rate Interest  Determination Date reported,  according to their written records,
by three leading primary United States  government  securities  dealers (each, a
"Reference  Dealer") in The City of New York selected by the  Calculation  Agent
(from  five  such  Reference  Dealers  selected  by the  Calculation  Agent  and
eliminating  the highest  quotation  (or, in the event of  equality,  one of the
highest)  and the lowest  quotation  (or, in the event of  equality,  one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of  the  United  States   ("Treasury   Notes")  with  an  original  maturity  of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such  Designated  CMT  Maturity  Index  minus one year.  If the
Calculation  Agent is unable to obtain three such Treasury Note quotations,  the
CMT Rate on such CMT Rate Interest  Determination Date will be calculated by the
Calculation  Agent and will be a yield to maturity based on the arithmetic  mean
of the secondary  market offer side prices as of  approximately  3:30 P.M.,  New
York City time, on such CMT Rate Interest  Determination Date of three Reference
Dealers in The City of New York (from five such  Reference  Dealers  selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality,  one of the  highest)  and the lowest  quotation  (or, in the event of
equality,  one of the lowest)),  for Treasury Notes with an original maturity of
the number of years  that is the next  highest to the  Designated  CMT  Maturity
Index and a remaining  term to maturity  closest to the  Designated CMT Maturity
Index and in an amount of at least U.S.$100  million.  If three or four (and not
five) of such  Reference  Dealers are quoting as described  above,  then the CMT
Rate will be based on the  arithmetic  mean of the  offer  prices  obtained  and
neither the highest nor the lowest of such quotes will be eliminated;  provided,
however,  that if fewer than three Reference Dealers selected by the Calculation
Agent are quoting as mentioned  herein,  the CMT Rate  determined as of such CMT
Rate Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest  Determination Date. If two Treasury Notes with an original maturity as
described in the second  preceding  sentence  have  remaining  terms to maturity
equally close to the Designated CMT Maturity Index,  the Calculation  Agent will
obtain from five  Reference  Dealers  quotations  for the Treasury Note with the
shorter remaining term to maturity.

      "Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor  service) on the page  specified  herein (or any other
page as may replace  such page on that  service  for the  purpose of  displaying
Treasury  Constant  Maturities  as  reported  in  H.15(519))  for the purpose of
displaying  Treasury  Constant  Maturities as reported in H.15(519).  If no such
page is specified  herein,  the  Designated CMT Telerate Page shall be 7052, for
the most recent week.

      "Designated  CMT Maturity  Index" means the original period to maturity of
the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified  herein with respect to which the CMT Rate will be  calculated.  If no
such maturity is specified herein,  the Designated CMT Maturity Index shall be 2
years.

      Commercial  Paper  Rate.  If an  Interest  Rate  Basis  for  this  Note is
specified  herein as the Commercial  Paper Rate, the Commercial Paper Rate shall
be determined as of the applicable  Interest  Determination  Date (a "Commercial
Paper Rate Interest  Determination  Date") as the Money Market Yield (as defined
below) on such date of the rate for  commercial  paper having the Index Maturity
as published in H.15(519) under the heading "Commercial Paper-Nonfinancial".  In
the event that such rate is not  published by 3:00 P.M.,  New York City time, on
such  Calculation  Date, then the Commercial Paper Rate on such Commercial Paper
Rate Interest  Determination Date will be the Money Market Yield of the rate for
commercial paper having the Index Maturity as published in Composite  Quotations
under the heading  "Commercial  Paper"  (with an Index  Maturity of one month or
three months being deemed to be equivalent to an Index Maturity of 30 days or 90
days,  respectively).  If such rate is not yet published in either  H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on such Calculation Date,
then  the  Commercial   Paper  Rate  on  such  Commercial  Paper  Rate  Interest
Determination  Date will be calculated by the Calculation Agent and shall be the
Money Market Yield of the arithmetic mean of the offered rates at  approximately
11:00  A.M.,  New  York  City  time,  on such  Commercial  Paper  Rate  Interest
Determination  Date of three leading dealers of commercial  paper in The City of
New York selected by the Calculation Agent for commercial paper having the Index
Maturity  placed for an  industrial  issuer  whose bond  rating is "Aa",  or the
equivalent  from  a  nationally  recognized   statistical  rating  organization;
provided,  however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence,  the Commercial Paper Rate determined
as of  such  Commercial  Paper  Rate  Interest  Determination  Date  will be the
Commercial  Paper  Rate  in  effect  on  such  Commercial  Paper  Rate  Interest
Determination Date.

      "Money Market Yield" means a yield (expressed as a percentage)  calculated
in accordance with the following formula:

      Money Market Yield  =    ((D x 360) / (360 - (D x M))) x 100

where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount  basis and expressed as a decimal,  and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.

      Federal  Funds Rate.  If an Interest Rate Basis for this Note is specified
herein as the Federal Funds Rate,  the Federal Funds Rate shall be determined as
of the applicable  Interest  Determination  Date (a "Federal Funds Rate Interest
Determination  Date") as the rate on such date for United States dollar  federal
funds as published in H.15(519)  under the heading  "Federal Funds  (Effective)"
or, if not published by 3:00 P.M., New York City time, on the Calculation  Date,
the rate on such Federal Funds Rate Interest  Determination Date as published in
Composite Quotations under the heading "Federal  Funds/Effective  Rate". If such
rate is not published in either H.15(519) or Composite  Quotations by 3:00 P.M.,
New York City time, on the related Calculation Date, then the Federal Funds Rate
on such Federal  Funds Rate Interest  Determination  Date shall be calculated by
the Calculation  Agent and will be the arithmetic mean of the rates for the last
transaction  in overnight  United States dollar  federal funds arranged by three
leading  brokers of federal funds  transactions in The City of New York selected
by the  Calculation  Agent,  prior to 9:00  A.M.,  New York City  time,  on such
Federal Funds Rate Interest  Determination Date; provided,  however, that if the
brokers so selected by the  Calculation  Agent are not quoting as  mentioned  in
this sentence,  the Federal Funds Rate  determined as of such Federal Funds Rate
Interest  Determination  Date will be the  Federal  Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.

      LIBOR.  If an  Interest  Rate Basis for this Note is  specified  herein as
LIBOR,  LIBOR shall be determined by the Calculation  Agent as of the applicable
Interest   Determination  Date  (a  "LIBOR  Interest   Determination  Date")  in
accordance with the following provisions:

       (i) if (a) "LIBOR  Reuters" is specified  herein,  the arithmetic mean of
the offered rates (unless the  Designated  LIBOR Page (as defined  below) by its
terms  provides  only for a single rate,  in which case such single rate will be
used) for deposits in U.S. Dollars having the Index Maturity,  commencing on the
applicable  Interest  Reset  Date,  that  appear  (or,  if only a single rate is
required as aforesaid,  appears) on the Designated LIBOR Page (as defined below)
as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, or (b)
"LIBOR Telerate" is specified  herein,  or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified herein as the method for calculating  LIBOR, the rate for
deposits in U.S. Dollars having the Index Maturity,  commencing on such Interest
Reset Date, that appears on the Designated  LIBOR Page as of 11:00 A.M.,  London
time, on such LIBOR Interest  Determination Date. If fewer than two such offered
rates appear,  or if no such rate appears,  as  applicable,  LIBOR on such LIBOR
Interest   Determination  Date  shall  be  determined  in  accordance  with  the
provisions described in clause (ii) below.

      (ii) With respect to a LIBOR  Interest  Determination  Date on which fewer
than two offered  rates appear,  or no rate appears,  as the case may be, on the
Designated  LIBOR Page as specified in clause (i) above,  the Calculation  Agent
shall request the principal London offices of each of four major reference banks
in the London interbank market, as selected by the Calculation Agent, to provide
the Calculation  Agent with its offered  quotation for deposits in U.S.  Dollars
for the period of the Index  Maturity,  commencing  on the  applicable  Interest
Reset Date, to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such LIBOR Interest  Determination Date and in a principal
amount that is representative  for a single  transaction in U.S. Dollars in such
market at such time. If at least two such quotations are so provided, then LIBOR
on such LIBOR Interest  Determination  Date will be the arithmetic  mean of such
quotations.  If fewer than two such  quotations  are so provided,  then LIBOR on
such LIBOR Interest  Determination Date will be the arithmetic mean of the rates
quoted at  approximately  11:00 A.M., New York City Time, on such LIBOR Interest
Determination  Date by three major banks in the City of New York selected by the
Calculation  Agent for loans in U.S. Dollars to leading  European banks,  having
the Index Maturity and in a principal amount that is representative for a single
transaction in U.S. Dollars in such market at such time; provided, however, that
if the banks so selected by the  Calculation  Agent are not quoting as mentioned
in this sentence,  LIBOR determined as of such LIBOR Interest Determination Date
shall be LIBOR in effect on such LIBOR Interest Determination Date.

      "Designated  LIBOR Page" means (a) if "LIBOR Reuters" is specified herein,
the display on the Reuter Monitor Money Rates Service (or any successor service)
for the purpose of displaying the London interbank rates of major banks for U.S.
Dollars,  or (b) if "LIBOR  Telerate"  is  specified  herein or  neither  "LIBOR
Reuters" nor "LIBOR  Telerate" is specified herein as the method for calculating
LIBOR, the display on the Dow Jones Telerate Service (or any successor  service)
for the purpose of displaying the London interbank rates of major banks for U.S.
Dollars.

      Prime Rate.  If an Interest  Rate Basis for this Note is  specified on the
face  hereto as the Prime  Rate,  the Prime Rate shall be  determined  as of the
applicable  Interest  Determination  Date (a "Prime Rate Interest  Determination
Date") as the rate on such date as such rate is published in H.15(519) under the
heading "Bank Prime Loan". If such rate is not published prior to 3:00 P.M., New
York City time, on the related  Calculation  Date,  then the Prime Rate shall be
the  arithmetic  mean of the rates of interest  publicly  announced by each bank
that  appears on the Reuters  Screen  USPRIME1  Page (as defined  below) as such
bank's prime rate or base lending rate as in effect for such Prime Rate Interest
Determination  Date. If fewer than four such rates appear on the Reuters  Screen
USPRIME1 Page for such Prime Rate Interest  Determination  Date,  the Prime Rate
shall be the arithmetic  mean of the prime rates or base leading rates quoted on
the basis of the actual  number of days in the year divided by a 360-day year as
of the close of business on such Prime Rate Interest  Determination Date by four
major money  center  banks in The City of New York  selected by the  Calculation
Agent. If fewer than four such quotations are so provided,  the Prime Rate shall
be the  arithmetic  mean of four prime  rates  quoted on the basis of the actual
number of days in the year divided by a 360-day year as of the close of business
on such Prime Rate Interest  Determination  Date as furnished in The City of New
York by the major money center banks, if any, that have provided such quotations
and by as many  substitute  banks or trust companies as necessary to obtain four
such prime rate  quotations,  provided such substitute  banks or trust companies
are organized and doing  business  under the laws of the United  States,  or any
State thereof, each having total equity capital of at least U.S.$500 million and
being  subject to  supervision  or  examination  by Federal or State  authority,
selected  by the  Calculation  Agent to  provide  such rate or rates;  provided,
however,  that if the banks or trust  companies  so selected by the  Calculation
Agent are not quoting as mentioned in this sentence,  the Prime Rate  determined
as of such  Prime  Rate  Interest  Determination  Date will be the Prime Rate in
effect on such Prime Rate Interest Determination Date.

      "Reuters  Screen  USPRIME1  Page"  means the  display  designated  as page
"USPRIME1" on the Reuter  Monitor  Money Rates Service or any successor  service
(or such other page as may replace  the  USPRIME1  page on that  service for the
purpose of  displaying  prime rates or base lending rates of major United States
banks).

      Treasury Rate. If an Interest Rate Basis for this Note is specified herein
as the Treasury Rate, the Treasury Rate shall be determined as of the applicable
Interest  Determination Date (a "Treasury Rate Interest  Determination Date") as
the rate from the auction held on such Treasury Rate Interest Determination Date
(the "Auction") of direct  obligations of the United States  ("Treasury  Bills")
having the Index  Maturity,  as such rate is published  in  H.15(519)  under the
heading "Treasury  Bills-auction  average  (investment)" or, if not published by
3:00 P.M.,  New York City time,  on the related  Calculation  Date,  the auction
average rate of such Treasury Bills (expressed as a bond equivalent on the basis
of a year of 365 or 366 days,  as  applicable,  and applied on a daily basis) as
otherwise  announced by the United States  Department  of the  Treasury.  In the
event  that the  results  of the  Auction  of  Treasury  Bills  having the Index
Maturity are not reported as provided above by 3:00 P.M., New York City time, on
such  Calculation  Date,  or if no such Auction is held,  then the Treasury Rate
shall be  calculated by the  Calculation  Agent and shall be a yield to maturity
(expressed  as a bond  equivalent  on the basis of a year of 365 or 366 days, as
applicable,  and  applied  on a  daily  basis)  of the  arithmetic  mean  of the
secondary market bid rates, as of  approximately  3:30 P.M., New York City time,
on such  Treasury  Rate Interest  Determination  Date, of three leading  primary
United States government  securities  dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining  maturity  closest to the Index
Maturity;  provided, however, that if the dealers so selected by the Calculation
Agent  are  not  quoting  as  mentioned  in this  sentence,  the  Treasury  Rate
determined  as of such Treasury  Rate  Interest  Determination  Date will be the
Treasury Rate in effect on such Treasury Rate Interest Determination Date.

      Notwithstanding  the  foregoing,  the  interest  rate hereon  shall not be
greater  than the  Maximum  Interest  Rate,  if any,  or less  than the  Minimum
Interest  Rate, if any, in each case as specified  herein.  The interest rate on
this Note will in no event be higher than the maximum rate permitted by New York
law, as the same may be modified by United States law of general application.

      The  Calculation  Agent shall  calculate  the  interest  rate hereon on or
before each Calculation Date. The "Calculation Date", if applicable,  pertaining
to any  Interest  Determination  Date  shall  be the  earlier  of (i) the  tenth
calendar  day after such  Interest  Determination  Date or, if such day is not a
Business  Day,  the  next  succeeding  Business  Day or (ii)  the  Business  Day
immediately preceding the applicable Interest Payment Date or the Maturity Date,
as the case may be. At the request of the Holder hereof,  the Calculation  Agent
will provide to the Holder  hereof the interest  rate hereon then in effect and,
if  determined,  the interest  rate that will become  effective as a result of a
determination made for the next succeeding Interest Reset Date.

      Accrued  interest hereon shall be an amount  calculated by multiplying the
principal  amount hereof by an accrued  interest  factor.  Such accrued interest
factor shall be computed by adding the interest  factor  calculated for each day
in the applicable  Interest Period.  Unless otherwise specified as the Day Count
Convention  herein,  the interest factor for each such date shall be computed by
dividing the interest  rate  applicable  to such day by 360 if the CD Rate,  the
Commercial  Paper Rate,  the Federal  Funds Rate,  LIBOR or the Prime Rate is an
applicable  Interest  Rate Basis or by the actual  number of days in the year if
the CMT Rate or the Treasury Rate is an applicable  Interest Rate Basis.  Unless
otherwise  specified as the Day Count Convention herein, the interest factor for
this Note,  if the interest  rate is  calculated  with  reference to two or more
Interest Rate Bases, shall be calculated in each period in the same manner as if
only the Applicable Interest Rate Basis specified herein applied.

      All  percentages  resulting  from any  calculation  on this Note  shall be
rounded to the nearest one  hundred-thousandth  of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in or
resulting from such  calculation  on this Note shall be rounded,  in the case of
United  States  dollars,  to the nearest cent (with  one-half cent being rounded
upwards).

      In case an Event of  Default,  as  defined  in the  Indenture,  shall have
occurred and be  continuing,  the principal of all of the Notes 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 Note 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 Notes 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 Notes;  provided,  however,  that no
such supplemental  indenture shall (i) extend the fixed maturity of any Notes 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 reduce the amount of the principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the maturity
thereof  pursuant  to the  Indenture,  without the consent of the holder of each
Note then  outstanding  and affected;  (ii) reduce the  aforesaid  percentage of
Notes,  the holders of which are  required  to consent to any such  supplemental
indenture,  or reduce the percentage of Notes, the holders of which are required
to waive any default and its consequences,  without the consent of the holder of
each Note then outstanding and affected  thereby;  or (iii) modify any provision
of Section  6.01(c) of the  Indenture  (except to  increase  the  percentage  of
principal amount of securities  required to rescind and annul any declaration of
amounts due and payable  under the Notes),  without the consent of the holder of
each Note then  outstanding  and affected  thereby.  The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Notes of all series at the time outstanding  affected thereby,  on behalf of
the  Holders  of the  Notes 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 Notes of such  series.  Any such consent or waiver by the
registered  Holder of this Note  (unless  revoked as provided in the  Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners  of this  Note and of any Note  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 Note.

      No reference  herein to the  Indenture and no provision of this Note 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  Note at the time and  place  and at the rate and in the money
herein prescribed.

      As provided in the  Indenture and subject to certain  limitations  therein
set forth, this Note is transferable by the registered holder hereof on the Note
Register  of the  Company,  upon  surrender  of this  Note for  registration  of
transfer  at the  office or agency of the  Company as may be  designated  by 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 Notes 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 Note, the
Company, the Trustee, any paying agent and any Note Registrar may deem and treat
the registered  Holder hereof as the absolute owner hereof  (whether or not this
Note shall be overdue and  notwithstanding  any notice of  ownership  or writing
hereon  made by  anyone  other  than  the Note  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 Note 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 Note,  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.

      This Note  shall  not be  entitled  to any  benefit  under  the  Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of  Authentication  hereon shall have been signed by or on behalf of
the Trustee.

      The  Indenture  and  this  Note  shall be  governed  by and  construed  in
accordance  with the laws of the State of New York applicable to agreements made
and to be performed entirely in such State.


      IN WITNESS WHEREOF, the Company has caused this Instrument to be executed.

                         INDIANA MICHIGAN POWER COMPANY


                         By:___________________________
                                                 Treasurer
Attest:


By:___________________________
             Secretary





                          CERTIFICATE OF AUTHENTICATION

      This is one of the Notes of the series of Notes  designated  in accordance
with, and referred to in, the within-mentioned Indenture.

Dated:

THE BANK OF NEW YORK, as Trustee


By:___________________________
   Authorized Signatory





<PAGE>


      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 Note and all rights thereunder, hereby
----------------------------------------------------------------
irrevocably constituting and appointing such person attorney to
----------------------------------------------------------------
transfer such Note 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 Note 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").



<PAGE>


                             [FORM OF ABBREVIATIONS]

      The following  abbreviations,  when used in the inscription on the face of
the within  Bond,  shall be  construed  as though they were  written out in full
according to applicable laws or regulations.

                TEN COM - as tenants in common
                TEN ENT - as tenants by the entireties
                 JT TEN - as joint tenants with right
                          of survivorship and not as
                          tenants in common

UNIF GIFT MIN ACT -                  Custodian
                          (Cust)                   (Minor)

                          Under Uniform Gifts to Minors  Act


                                     (State)

      Additional abbreviations may also be used though not in list above.




<PAGE>


                           [OPTION TO ELECT REPAYMENT

      The undersigned hereby irrevocably  request(s) and instruct(s) the Company
to repay this Note (or portion hereof  specified below) pursuant to its terms at
a price equal to 100% of the principal amount to be repaid, together with unpaid
interest accrued hereon to the Repayment Date, to the undersigned, at

   (Please print or typewrite name and address of the undersigned)

      For this Note to be repaid,  the Trustee  must receive at its
corporate  trust  office in the Borough of  Manhattan,  The City of
New          York,           currently          located          at
                           , not more than 60 nor less
than 30 calendar days prior to the Repayment  Date,  this Note with this "Option
to Elect Repayment" form duly completed.

      If less than the  entire  principal  amount of this Note is to be  repaid,
specify the portion hereof (which shall be increments of U.S.$1,000  (or, if the
Specified  Currency is other than United States dollars,  the minimum Authorized
Denomination  specified  herein))  which the  holder  elects to have  repaid and
specify  the  denomination  or  denominations  (which  shall  be  an  Authorized
Denomination)  of the Notes to be issued to the holder  for the  portion of this
Note not being repaid (in the absence of any such  specification,  one such Note
will be issued for the portion not being repaid).

Principal Amount
to be Repaid:  $
Date:

Notice:  The signature(s) on this Option to Elect Repayment must correspond with
the name(s) as written upon the face of this Note in every  particular,  without
alteration or enlargement or any change whatsoever.

      Notwithstanding  any provisions to the contrary  contained  herein, if the
face of this  Note  specifies  that  an  Addendum  is  attached  hereto  or that
"Other/Additional Provisions" apply, this Note shall be subject to the terms set
forth in such Addendum or such "Other/Additional Provisions".

      Unless the Certificate of  Authentication  hereon has been executed by the
Company by manual  signature,  this Note shall not be  entitled  to any  benefit
under the Indenture or be valid or obligatory for any purpose.]