Document:

Exhibit 10.1

                          PURCHASE AND SALE AGREEMENT

                   PAT BAKER D/B/A BAKER EXPLORATION COMPANY,
                         THE SEBASTIAN REVOCABLE TRUST,
GEORGE R. SMITH REVOCABLE TRUST, & GEORGE SMITH FAMILY LIMITED PARTNERSHIP D/B/A
                            GSTX LIMITED PARTNERSHIP
                            (COLLECTIVELY, "SELLERS")

                                      AND

                     NEW CENTURY ENERGY CORP. ("PURCHASER")

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

Recitals                                                                      5
1.     Effective Date                                                         5
2.     Purchase and Sale                                                      5
3.     Apportionment of Proceeds                                              6
4.     Excluded Assets                                                        6
5.     Sales Price                                                            6
6.     Manner of Payment                                                      7
7.     Adjustments                                                            7
8.     Post-Closing Adjustments                                               7
9.     Closing                                                                8
10.    Purchaser's Due Diligence                                              9
        A.     Access to Sellers' Non-Proprietary Information                 9
        B.     Title Defect                                                   9
        C.     Notice of Title Defect                                         9
        D.     Remedies for Title Defects                                     10
        E.     Permitted Encumbrances                                         11
11.     Representations                                                       12
        A.     Mutual Representations                                         12
        B.     Brokers                                                        12
        C.     Further Distribution                                           13
        D.     Sellers' Representations                                       13
12.     Disclaimer of Representations and Warranties                          14
        A.     Limitation of Warranties and Representations                   14
        B.     Waiver of Consumer Protection Statutes                         15
        C.     Financial Information                                          15
        D.     Instruments to Contain Disclaimers                             16
        E.     Purchaser Acknowledges that the Waivers in this
               Section are Conspicuous                                        16
13.     Conditions of Closing                                                 16
        A.     Representations                                                16
        B.     Performance                                                    16
        C.     Pending Matters                                                16
        D.     Financial Condition                                            16
14.     Allocation  of Production and Proceeds                                16
15.     Taxes and Prepaid Items                                               16
        A.     Apportionment of Ad Valorem and Property Taxes                 16
        B.     Proration of Taxes, Etc                                        17
        C.     Other Taxes                                                    17
        D.     Indemnification                                                17
16.     Responsibilities and Indemnifications                                 17
17.     General Limitation of Damages                                         20
18.     Physical Condition of the Interests                                   20
19.     Further Assurances                                                    21
        A.     Performance of Obligations                                     21
        B.     Further Conveyances and Assumptions                            21
20.     Notices                                                               21
21.     Purchaser's Post-Closing Obligation                                   22
22.     Sellers' Post-Closing Obligations                                     22
23.     Severability                                                          22
24.     Waiver                                                                22
25.     Construction of Ambiguity                                             23
26.     Captions                                                              23
27.     Governing Law                                                         23
28.     Waiver of Jury Trial                                                  23
29.     Limitation of Liability                                               23
30.     Publicity                                                             23
31.     Use of Sellers' Names                                                 23
32.     Counterparts                                                          23
33.     Assignment                                                            23
34.     Costs and Expenses                                                    24
35.     Joint Venture, Partnership and Agency                                 24
36.     Confidentiality                                                       24
37.     Post-Closing Confidentiality                                          24
38.     Survival                                                              24
39.     Limitations of Obligations                                            24
40.     Entire Agreement                                                      24
EXHIBITS
A.     Form  of  Assignment

<PAGE>

                           PURCHASE AND SALE AGREEMENT

     THIS  PURCHASE  AND SALE AGREEMENT ("Agreement") is made to be EFFECTIVE as
of  the  2nd  day  of September, 2005, between Pat Baker d/b/a Baker Exploration
Company,  with  place  of  business  at  XXXXXXXXXXXXXXXXXXXXXX;  The  Sebastian
Revocable  Trust,  XXXXXXXXXXXXXXXXXX;  George  R.  Smith  Revocable  Trust,
XXXXXXXXXXXXXXXXXXXX;  and  George  Smith  Family Limited Partnership d/b/a GSTX
Limited  Partnership,  XXXXXXXXXXXXXXXXXXXX  (collectively,  "Sellers")  and New
Century  Energy  Corp., a Colorado corporation, with a place of business at 5851
San Felipe, Suite 775, Houston, Texas 77057 ("Purchaser").

                                    RECITALS
                                    --------

     WHEREAS,  Sellers  desire  to  sell  to  Purchaser and Purchaser desires to
purchase  from  Sellers  on the terms and conditions set forth in this Agreement
Sellers' interests in certain oil and gas properties and leases;

     WHEREAS, Pat Baker d/b/a Baker Exploration Company, The Sebastian Revocable
Trust,  George  R.  Smith  Revocable  Trust,  and  George  Smith  Family Limited
Partnership d/b/a GSTX Limited Partnership own and desire to convey to Purchaser
interests  in  certain leases that have been pooled into the Lindholm-Hanson Gas
Unit together with interests in a certain contiguous lease (the "Leases");

     NOW,  THEREFORE,  for  good  and  valuable consideration and for the mutual
covenants herein contained, Sellers and Purchaser agree as follows:

1.   Effective  Date.  The  effective  date  of  the  sale  and  purchase of the
     ---------------
     interests provided for herein shall be July 1, 2005 (the "Effective Date").

2.   Purchase  and  Sale.  Subject  to  the terms, conditions, reservations, and
     -------------------
     exceptions  specified  in  this Agreement, Sellers shall sell and Purchaser
     shall purchase as of the Effective Date certain interests in and to the oil
     and  gas  leases  and  the  properties  located  within and adjacent to the
     Lindholm-Hanson  Gas  Unit  (the  "Unit"),  and  all  of  Sellers'  related
     interests in all contracts and agreements concerning the Leases, including,
     but  not  limited to, unit agreements and pooling agreements (collectively,
     with  the  Leases,  called the "Interests"). The Interests shall consist of
     the following ownership in the leases described in Exhibit "A":

                                   Interest               Net  Revenue  Interest
                                   ---------------------------------------------
Baker Exploration Company          0.0300 Working Interest          0.022500 NRI
The  Sebastian Revocable Trust     0.0225 Working Interest          0.016875 NRI
George  R.  Smith  Revocable Trust 0.0200 Working Interest(1)       0.012500 NRI
GSTX  Limited  Partnership         0.0025 Overriding  Royalty      0.002500  NRI
                                   =============================================
TOTAL=                              .0725 WORKING INTEREST         0.054375  NRI

(1) Subject to GSTX Limited Partnership's Overriding Royalty.

                                        5
<PAGE>

3.   Apportionment  of  Proceeds.  The  cash  proceeds  of the sale as described
     ---------------------------
     below  shall be attributable among the Sellers in accordance with section 5
     below.  Purchaser  shall  issue  Form  1099's  for  2005  that reflect this
     apportionment,  not  the  payment  solely  to  Baker Exploration Company as
     described in section 6.

4.   Excluded  Assets.  Notwithstanding  anything  to  the contrary contained in
     ----------------
     this  Agreement,  the  Interests  shall  not include and Purchaser will not
     acquire any interest in or purchase any of the following (collectively, the
     "Excluded Assets"):

     A.   All  minute  books,  tax  returns,  partnership  documents  of Sellers
          or  any  of  their  affiliates  as  well  as other business records or
          related  documents  of Sellers or any of their affiliates that are not
          related to the Interests.

     B.   All  records  that  are  (i)  proprietary  in  nature, (ii) covered by
          the  attorney-client  privilege  or  work  product doctrine, (iii) not
          readily  severable  from  Sellers'  general  records  through diligent
          efforts,  or (iv) required by applicable Law to be retained by Sellers
          or any of Sellers' affiliates in their care, custody, or control.

          C.   All  rights  of  Sellers  or  any  of  Sellers'  affiliates under
               this Agreement.

          D.   All  contracts  or  agreements  related  solely  to  the Excluded
               Assets.

     E.   All  rights  and  claims  arising,  occurring,  or existing in Sellers
          prior to the Effective Date including, but not limited to, any and all
          contract  rights, claims, penalties, receivables, revenues, recoupment
          rights,  rights  of  reimbursement,  audit  rights,  recovery  rights
          (excepting  gas  imbalances),  accounting  adjustments,  mispayments,
          erroneous  payments  or  other claims of any nature relating solely to
          any time period prior to the Effective Date.

     F.   Any  claims,  rights  and  interest  of  Sellers  or  any  of Sellers'
          affiliates  in  and  to  any  refunds  of  taxes or fees of any nature
          whatsoever which relate solely to and arise out of the period prior to
          the Effective Date.

     G.   The consideration received by Sellers hereunder.

5.   Sales  Price.  The  sales  price  for  the Interests shall be $8,750,000.00
     ------------
     attributable as follows:

                                    AllocationPercentage     Amount  of Proceeds
                                    --------------------     -------------------
Baker  Exploration  Company              41.3793               $  3,620,689.66
The  Sebastian  Revocable  Trust         31.0345               $  2,715,517.24
George  R.  Smith  Revocable  Trust      22.9885               $  2,011,494.25
GSTX  Limited  Partnership                4.5977               $    402,298.85
-----------------------------------     ---------               --------------
                   TOTALS=              100.00000              $  8,750,000.00

                                        6
<PAGE>

6.   Manner  of  Payment.  The  Sales  Price  shall  be  paid  as  follows:
     -------------------

     A.   At  the  Closing,  as  hereafter  defined,  Purchaser  shall  pay  the
          Sales  Price  to  Sellers  via  wire transfer of immediately available
          funds  (the  "Sales  Price  Funds")  to  the  following  account:
          XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXX.

     B.   Baker  Exploration  Company  shall  disburse  the Sales Price Funds to
          the Sellers in accordance with this Agreement. Sellers agree to and do
          hereby  appoint  Pat  Baker  as their attorney in fact for the limited
          purpose  of  accepting and disbursing the Sales Price Funds. Purchaser
          shall  have  fully  performed  its  payment obligations when the Sales
          Price  Funds  arrive  in  the designated account, and Sellers agree to
          indemnify  and  hold  Purchaser  harmless  for  damages  or any claims
          resulting  from  any  failure  thereafter  concerning  the  proper
          disbursement of the Sales Price Funds.

7.   Adjustments.  The  Sales  Price  shall  be  adjusted  as  follows:
     -----------

     A.   Sellers  shall  pay  Purchaser  at  Closing  the  aggregate  amount of
          the  following  proceeds actually received by Sellers and attributable
          to  production  during  the  period between the Effective Date and the
          date  upon  which  the  Closing  occurs  (with  the period between the
          Effective  Date and the date of Closing referred to as the "Adjustment
          Period"):  (i) proceeds from the sale of oil, gas and hydrocarbons net
          of  gathering processing and transportation costs, and any production,
          severance, sales or excise and similar taxes not reimbursed to Sellers
          by  the  purchaser  of  production and (ii) other proceeds earned with
          respect to the Interests during the Adjustment Period;

     B.   Sellers  shall  pay  Purchaser  at  Closing  all  ad  valorem  taxes
          prorated to Sellers and assumed by Purchaser;

     C.   Purchaser  shall  pay  Sellers  at  Closing  the  amount  of all costs
          attributable  to the ownership and operation of the Interests that are
          paid by Sellers and incurred at or after the Effective Date.

     D.   The  adjustments  made  pursuant  to  this  section, based on all then
          available  information  concerning these matters for adjustment, shall
          be made by checks to be exchanged at Closing.

8.   Post-Closing  Adjustments.
      -------------------------

     A.   As  soon  as  practicable  after  the  Closing  but  not later than 45
          days  thereafter,  Sellers  and  Purchaser shall confer and attempt to
          jointly  produce  in  accordance  with  this  Agreement  and generally
          accepted  accounting  principles  a  statement  (herein  the  "Final
          Settlement Statement") setting forth each adjustment, if any, that was
          not  finally  determined as of the Closing and showing the calculation
          of  such adjustments. If needed, the parties shall attempt to agree to
          the  amounts  due  pursuant to such Post-Closing adjustments not later
          than 90 days after the Closing.

                                        7
<PAGE>

     B.   If  Purchaser  and  Sellers  are  unable  to  agree  upon  a  Final
          Settlement  Statement within one-hundred (100) days after the Closing,
          Sellers  shall  select  an  independent accounting firm from a list of
          three  (3)  such  firms  provided  by Purchaser upon Sellers' request,
          which  firm shall audit the Purchaser's Final Settlement Statement and
          the  Sellers'  Final  Settlement  Statement  and  determine  the final
          purchase price. The decision of such independent accounting firm shall
          be binding on Purchaser and Sellers, and the fees and expenses of such
          independent  accounting  firm  shall  be  borne  one-half  by  each of
          Purchaser and Sellers.

9.   Closing.  The  sale  and  purchase  of  the Interests shall take place at a
     ------
     closing  (the  "Closing"),  at which the Purchaser shall pay or cause to be
     paid  to  Sellers  the  Sales  Price and any applicable closing charges and
     Sellers  shall  deliver  or cause to be delivered instruments sufficient to
     convey  the  Interests to Purchaser. The Closing shall occur at New Century
     Energy  Corp. offices located at 5851 San Felipe, Suite 775, Houston, Texas
     77057  at  2:00  p.m., CST on September 20, 2005, or at such other time and
     place  to which the parties may agree (the "Closing Date"). At the Closing,
     the following shall occur:

     A.   Sellers  shall  deliver  executed  and  acknowledged  Assignments  for
          the  Interests  in  substantially  the  same  form as that attached as
          Exhibit  A.  Notwithstanding  any  and  all  other  disclaimers  and
          limitations  of  warranty  contained  herein, the specified assignment
          shall  be  provided  with warranty of title by, through, and under the
          respective  Sellers,  but not otherwise, and subject to: (a) all Title
          Defects  assumed  by  Purchaser  pursuant to section 10.D; and (b) the
          Permitted Encumbrances pursuant to section 10.E.

     B.   Purchaser  shall  wire  to  Sellers'  designee,  Pat  Baker, the Sales
          Price and deliver any check due under section 7.C.

     C.   Sellers  shall  deliver  to  Purchaser  any  check  due under sections
          7.A. and 7.B.

     D.   Sellers  shall  (subject  to  the  terms  of  applicable  operating
          agreements and other provisions hereof) deliver to Purchaser exclusive
          possession of the Interests, effective as of the Effective Date.

     E.   Immediately  after  the  Closing,  Purchaser  shall  notify  all
          operators,  non-operators, oil and gas purchasers, government agencies
          and royalty owners that it has purchased the Interests and execute any
          and all transfer orders to reflect the same.

     F.   Sellers  shall,  at  or  as  promptly as reasonably possible after the
          Closing,  provide  Purchaser with copies of all files (OTHER THAN DATA
          OR  INFORMATION WHICH SELLERS CONSIDERS PROPRIETARY OR CONFIDENTIAL OR

                                        8
<PAGE>

          WHICH  SELLERS  CANNOT  PROVIDE  PURCHASER  BECAUSE  OF  THIRD-PARTY
          RESTRICTIONS  ON  SELLER),  to  the extent they are available to or in
          Sellers'  possession  relating to the Interests. This will include all
          well  and  property  files,  including  all  geological  well  logs,
          engineering, geophysical land, accounting and other technical files in
          its possession.

10.  Purchaser's  Due  Diligence.  Subject  to  Purchaser's  execution  of  a
     ---------------------------
     Confidentiality Agreement satisfactory in form and substance to Seller:

     A.   Access  to  Sellers'  Non-Proprietary  Information.  Sellers  have and
          --------------------------------------------------
          shall  make  available  to  Purchaser  during normal business hours at
          Sellers'  offices,  or  other  locations  designated  by  Sellers, all
          material  non-proprietary  files,  records,  documents  and
          non-interpretive  data  in  Sellers'  possession  relating  to  the
          Interests,  including  but  not  limited  to  lease,  land,  title and
          division order files (including any abstracts of title, title opinions
          and  title  curative  documents),  regulatory and environmental files,
          contracts,  correspondence,  permitting files, engineering, production
          and  well files and well logs (to the extent not subject to applicable
          confidentiality  or intellectual property restrictions). Sellers shall
          not  be  obligated  to  perform  any additional title work and Sellers
          shall  not  be  obligated  to  make  any  existing abstracts and title
          opinions current.

     B.   Title  Defect.  For  the  purpose  of this Agreement, a "Title Defect"
          ------------
          shall  mean  a  material  deficiency  in  one or more of the following
          respects,  provided  that  the  non-transferability requirement in any
          license,  permit,  right-of-way,  pipeline  franchise  or  easement
          affecting  the Interests or a requirement that it be renegotiated upon
          a transfer of ownership shall not constitute a Title Defect unless the
          inability  to  transfer  any  such  rights  to  Purchaser would have a
          material  adverse  effect  on  Purchaser's ability to continue to use,
          exploit,  and/or  otherwise  benefit  from the Interests, and provided
          also  that  the  litigation  identified  in  section  11.D.3 shall not
          constitute a Title Defect:

          1)   The  title  at  the  Effective  Date,  as  to  one or more of the
               Interests,  is subject to an outstanding mortgage, deed of trust,
               lien or encumbrance or other adverse claim;

          2)   The Interests are less than as set forth in section 2; or

          3)   One  or  more  of  Sellers  is  in  default  under  some material
               provision  of  a  lease,  agreement  or other contract materially
               affecting the Interests.

     C.   Notice  of  Title  Defect.  Upon  discovery  of  a  Title  Defect,
          ------------------------
          Purchaser shall immediately notify Sellers in writing of the nature of
          the  Title  Defect  and  furnish  Sellers  Purchaser's  basis  for the
          assertion  of  such  Title Defect and data in support thereof. Sellers
          may request an increase in the Sales Price by delivery to Purchaser of
          written  notice,  together  with  data  in  support  thereof, that the
          interest  actually  owned  by one or more of the Sellers in any of the
          Interests  is  greater than that shown in section 2. Without affecting
          the  warranty  of  title  provided in the assignment, any Title Defect
          which  is  not  disclosed  to  Sellers or any increase in the interest
          owned  by  one  or  more of Sellers that is not disclosed to Purchaser
          within  two  (2) business days prior to the Closing shall conclusively
          be  deemed  waived  by  Purchaser  or  Sellers, as applicable, for all
          purposes.

                                        9
<PAGE>

D.   Remedies  for  Title  Defects.  Upon  timely  delivery of notice, either by
     Purchaser  of  a  Title  Defect  or  by  Sellers of an increase in Sellers'
     interest,  Purchaser  and  Sellers shall meet and use their best efforts to
     agree  on  the  validity  of  the  claim  and  the  amount  of any required
     adjustment to the Sales Price. If the Purchaser and Sellers cannot agree on
     the  amount  of  such  a  Sales  Price  adjustment,  said  amount  shall be
     determined in accordance with the following guidelines:

     1)   If  the  Title  Defect  is  based  upon Purchaser's notice that one or
          more  of  the  Sellers  owns  a  lesser interest or the notice is from
          Sellers  to  the effect that one or more of the Sellers owns a greater
          interest  than  that  shown in section 2 then the portion of the Sales
          Price  fairly  allocated  to such Seller shall be reduced or increased
          (as  the  case may be) in the same proportion that the actual interest
          bears to the interest shown in section 2 for such Seller.

     2)   If  the  Title  Defect  is  a lien, encumbrance or other charge upon a
          property  which  is liquidated in amount, then the adjustment shall be
          the sum necessary to be paid to the obligee to remove the Title Defect
          from  the  affected  property.  If  the  Title  Defect  represents  an
          obligation or burden upon the affected property for which the economic
          detriment  to  one or more of the Sellers is not liquidated but can be
          estimated  with  reasonable certainty as agreed to by the parties, the
          adjustment  shall  be the sum necessary to compensate Purchaser at the
          Closing  for  the  adverse economic effect which the Title Defect will
          have  on  the  affected property. If there is a lien or encumbrance in
          the form of a judgment secured by a supersedeas bond or other security
          approved  by  the  Court  issuing such order, such lien or encumbrance
          shall not be considered a Title Defect under this Agreement.

     3)   Subject  to  paragraph  4  below,  if  the  Title  Defect  cannot  be
          accommodated pursuant to paragraph 1 or 2 above and the parties cannot
          otherwise agree on the amount of such an adjustment to the Sales Price
          or Sellers cannot cure the Title Defect to the reasonable satisfaction
          of  Purchaser  prior to the Closing, the portion affected by the Title
          Defect  shall,  if  requested  by  Purchaser,  be  excluded  from  the
          Interests  conveyed  to  Purchaser  at the Closing and the Sales Price
          shall  be  reduced  by  the amount fairly attributable to the excluded
          portion under section 2.

     4)   Purchaser  may  only  adjust  the  Sales  Price  for  Title Defects at
          the  Closing if the cumulative amount of such adjustments in its favor
          exceeds $25,000.00. Similarly, Sellers may only adjust the Sales Price
          by  reason of the Sellers owning a greater net revenue interest at the
          Closing  if  the  cumulative  amount  of such adjustments in its favor
          exceeds  $25,000.00.  In  the  event the net amount of the Sales Price
          adjustments  downward  or  upward  pursuant  to  the foregoing exceeds
          $250,000.00  then Sellers or Purchaser may, upon written notice to the
          other  party,  terminate  this  Agreement  and the same shall be of no
          further force and effect.

                                       10
<PAGE>

     5)   If  Purchaser  shall  receive  an  adjustment  at  the  Closing  on
          account  of a Title Defect, Sellers shall have until a date that is 90
          days  after  the Closing Date to cure the Title Defect at its cost. If
          by  such  date  Sellers  can  demonstrate  to  Purchaser's  reasonable
          satisfaction  the  Title  Defect  has been cured then Sellers shall be
          entitled  to  reimbursement  by  Purchaser  for  the  amount  of  the
          adjustment  received  by  Purchaser  at the Closing as a result of the
          Title  Defect.  Purchaser  shall  pay  such amount without interest to
          Sellers  within  ten (10) business days from the date that the parties
          agree the Title Defect has been cured.

E.   Permitted  Encumbrances.  The  Interests  may  be  subject  to  and  Title
     -----------------------
     Defects shall not include the following ("Permitted Encumbrances"):

     1)   Non-participating  royalty  interests  and  other  burdens  (and  any
          liens  or security interests created by law or reserved in instruments
          creating  such interests to secure payment of same) to the extent that
          they  do  not,  individually  or  in  the  aggregate,  reduce Sellers'
          interests below that shown in section 2;

     2)   All  leases,  unit  agreements,  pooling  agreements,  operating
          agreements,  production  sales  contracts,  division  orders and other
          contracts,  agreements and instruments applicable to the Interests, to
          the  extent that they do not, individually or in the aggregate, reduce
          Sellers' interests below that shown in section 2;

     3)   Third-party  consent  requirements,  preferential  rights  or  other
          rights  assertable  by  third parties with respect to which waivers or
          consents  are  obtained  by  Sellers  prior  to  the  Closing  or  the
          appropriate  time  period  for asserting the right has expired or that
          need not be satisfied prior to a transfer;

     4)   Liens  for  current  taxes  or  assessments  not yet due or delinquent
          on  the  Closing  or,  if  delinquent, that are being contested in the
          ordinary course of business;

     5)   Materialmen's,  mechanic's,  repairman's,  employee's,  contractor's,
          operator's  and other similar liens or charges arising in the ordinary
          course of business, for amounts not yet delinquent;

     6)   All  rights  to  consent  by,  required  notices  to,  filings with or
          other  actions by governmental authorities in connection with the sale
          or  conveyance  of  oil and gas leases or interests therein or sale of
          production  therefrom  if the same are customarily obtained subsequent
          to such sale or conveyance;

                                       11
<PAGE>

     7)   Easements,  rights  of  way,  servitudes,  permits, surface leases and
          other  rights  in  respect of surface operations on or over any of the
          Interests  that  do  not  materially  interfere  with  the  current or
          proposed operations on the Interests; or

     8)   Any  encumbrances  that  do  not,  individually  or  in the aggregate,
          materially  detract from the value of or materially interfere with the
          use,  ownership  or  operation  of  the  Interests  subject thereto or
          affected  thereby (as currently used, owned or operated) or that would
          be  accepted by a reasonably prudent purchaser engaged in the business
          of owning and operating oil and gas properties in Texas.

11.  Representations.  THE  EXPRESS  REPRESENTATIONS  OF  SELLERS  AND PURCHASER
     ---------------
     CONTAINED  IN  THIS  PARAGRAPH  OR  OTHERWISE  STATED IN THIS AGREEMENT ARE
     EXCLUSIVE  AND  ARE IN LIEU OF ALL OTHER REPRESENTATIONS, EXPRESS, IMPLIED,
     STATUTORY, OR OTHERWISE.

     A.   Mutual  Representations.  Each  party  to  this  Agreement  represents
          ----------------------
          that:

          1)   if  the  party  is  not  an  individual then it is an entity duly
               organized,  validly  existing and in good standing under the laws
               of  the  State  of  its organization or incorporation and is duly
               qualified to do business in Texas;

          2)   the  party  has  all  authority  necessary  to  enter  into  this
               Agreement  and  to  perform  all  of  the  party's  obligations
               hereunder;

          3)   the  party's  execution,  delivery  and  performance  of  this
               Agreement  and the transactions contemplated hereby will not: (a)
               violate  or  conflict  with  any  provision of its Certificate of
               Organization  or  Incorporation,  By-Laws  or  other  governing
               documents;  (b)  result in the breach of any term or condition of
               or  constitute  a  default  or  cause  the  acceleration  of  any
               obligation  under  any agreement or instrument to which the party
               is  a  party  or  by  which the party is bound; or (c) violate or
               conflict  with  any  applicable  judgment, decree, order, permit,
               law, rule or regulation;

          4)   this  Agreement  has  been  duly  executed  and  delivered on the
               party's  behalf, and at the Closing all documents and instruments
               required  hereunder  will  have been duly executed and delivered.
               This  Agreement,  and  all  documents  and  instruments  required
               hereunder,  shall constitute legal, valid and binding obligations
               enforceable in accordance with their respective terms; and

          5)   the  party  has  been  represented  by  legal  counsel of its own
               selection who has reviewed this Agreement.

B.   Brokers.  Neither  Sellers  nor  Purchaser  has  incurred any obligation or
     -------
     liability,  contingent  or  otherwise,  for  brokers'  or  finders' fees in
     connection with this Agreement in respect of which the other party may have
     any  responsibility;  and any such obligation or liability that might exist
     shall be the sole obligation of the party whose action gave rise thereto.

                                       12
<PAGE>

C.   Further  Distribution.  Purchaser  is  acquiring  the Interests for its own
     ---------------------
     account  and  not with the intent to make a distribution thereof within the
     meaning  of  the  Securities  Act  of  1933,  as amended, and the rules and
     regulations  thereunder  or in violation of any other applicable securities
     laws.

D.   Sellers'  Representations.  Except  as  expressly  disclaimed in section 12
     ------------------------
     hereof,  Sellers represent the following to the best of their knowledge and
     belief:

     1)   The  Interests  are  owned  as  represented,  and the Sellers have the
          authority and capacity to sell and convey the same;

     2)   None  of  the  Sellers  have  defaulted  or  violated any agreement to
          which  they  are  a  party  in  any  material  respect or any material
          obligation  to  which Sellers are bound affecting or pertaining to the
          Interests other than as disclosed hereunder or on any Exhibit attached
          hereto;

     3)   There  are  no  pending  suits,  actions,  claims,  investigations  or
          any  legal,  administrative  or  arbitration  proceedings affecting or
          pertaining  to the Interests other than Cause No. M-05-0003-CV-A, Neil
          E.  Hanson,  et  al.  v.  Hazel  Andrews, et al., in the 36th Judicial
          District Court of McMullen County, Texas;

     4)   The  oil  and  gas  leases  included  within  and  underlying  the
          Interests are in full force and effect;

     5)   To  the  knowledge  of  Seller,  all  material  royalties  (other than
          royalties  held in suspense), rentals and other payments due under the
          leases  being  conveyed  have  been  properly and timely paid, and all
          conditions  necessary  to  keep  such  leases in force have been fully
          performed.  No  notices  have been received by Sellers of any claim to
          the contrary;

     6)   From  July  1,  2005,  until  Closing, there has not been and will not
     be:

          a)   Any  material  damage,  destruction  or  loss  to  or  of  the
               Interests or related assets, whether or not covered by insurance;

          b)   Any  sale,  lease  or  other  disposition  of  the  Interests  or
               related assets;

          c)   Any  mortgage,  pledge  or  grant  of a lien or security interest
               in any of the Interests; or

          d)   Any contract or commitment to do any of the foregoing.

                                       13
<PAGE>

7)   There  will  not  be  as  of  Closing  any  imbalances  in the purchase and
     sale  of  oil  and  gas from the Interests that would impair the ability of
     Purchaser  to  receive future payments for a share of production of oil and
     gas proportionate to the Interests being purchased; and

8)   Sellers  have  not  paid  to  the  operator  Sellers' share of expenses for
     drilling  the  Lindholm-Hanson  Gas  Unit  No. 11 and the Lindholm Fee No.1
     wells.

12.  Disclaimer  of  Representations  and  Warranties.
     ------------------------------------------------

     A.   LIMITATION  OF  WARRANTIES  AND  REPRESENTATIONS.  EXCEPT  AS PROVIDED
          ------------------------------------------------
          FOR  IN SECTIONS 9.A and 11, THE TRANSACTION CONTEMPLATED HEREBY SHALL
          BE  WITHOUT  ANY  WARRANTY OR REPRESENTATION OF TITLE, EITHER EXPRESS,
          IMPLIED,  STATUTORY  OR  OTHERWISE,  WITHOUT  ANY  EXPRESS,  IMPLIED,
          STATUTORY  OR  OTHER  WARRANTY  OR REPRESENTATION AS TO THE CONDITION,
          QUANTITY,  QUALITY,  FITNESS  FOR  A  PARTICULAR PURPOSE, FREEDOM FROM
          REDHIBITORY  VICES  OR  DEFECTS,  CONFORMITY  TO  MODELS OR SAMPLES OF
          MATERIALS  OR  MERCHANTABILITY  OF ANY OF THE EQUIPMENT OR ITS FITNESS
          FOR  ANY  PURPOSE AND WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR
          OTHER  WARRANTY  OR  REPRESENTATION  WHATSOEVER.  PURCHASER SHALL HAVE
          INSPECTED  OR  WAIVED  ITS  RIGHT  TO  INSPECT  THE  INTERESTS FOR ALL
          PURPOSES  AND  SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
          CONDITION,  BOTH  SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO
          CONDITIONS  SPECIFICALLY  RELATED TO THE PRESENCE OR RELEASE OR ONSITE
          DISPOSAL  OF  HAZARDOUS  SUBSTANCES,  AND  THE  CONDITION  OF ANY WELL
          CASING, TUBING OR DOWNHOLE EQUIPMENT. PURCHASER IS RELYING SOLELY UPON
          ITS OWN INSPECTION OF THE INTERESTS, AND PURCHASER SHALL ACCEPT ALL OF
          THE  SAME  IN  THEIR "AS IS, WHERE IS" CONDITION. IN ADDITION, SELLERS
          MAKES  NO  WARRANTY  OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR
          OTHERWISE,  AS  TO  THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS,
          RECORDS,  PROJECTIONS,  INFORMATION  OR  MATERIALS  NOW, HERETOFORE OR
          HEREAFTER  FURNISHED OR MADE AVAILABLE TO PURCHASER IN CONNECTION WITH
          THIS  AGREEMENT  INCLUDING, WITHOUT LIMITATION, ANY DESCRIPTION OF THE
          INTERESTS,  PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON
          RESERVES  (IF  ANY)  ATTRIBUTABLE  TO  THE INTERESTS OR THE ABILITY OR
          POTENTIAL  OF  THE  INTERESTS  TO  PRODUCE  HYDROCARBONS  OR  THE
          ENVIRONMENTAL  CONDITION  OF  THE  INTERESTS  OR  ANY  OTHER  MATTERS
          CONTAINED  IN THE PROPRIETARY DATA OR ANY OTHER MATERIALS FURNISHED OR
          MADE  AVAILABLE  TO  PURCHASER  BY  SELLERS  OR  BY SELLERS' AGENTS OR
          REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS,
          INFORMATION AND OTHER MATERIALS FURNISHED BY SELLERS OR OTHERWISE MADE
          AVAILABLE  TO PURCHASER ARE PROVIDED TO PURCHASER AS A CONVENIENCE AND
          SHALL  NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLERS.
          ANY  RELIANCE  ON OR USE OF THE SAME SHALL BE AT PURCHASER'S SOLE RISK
          TO THE MAXIMUM EXTENT PERMITTED BY LAW.

                                       14
<PAGE>

     B.   WAIVER  OF  CONSUMER  PROTECTION  STATUTES.  SELLERS  AND  PURCHASER
          ------------------------------------------
          CERTIFY  THAT THEY ARE NOT "CONSUMERS" WITHIN THE MEANING OF THE TEXAS
          DECEPTIVE  TRADE  PRACTICES-CONSUMER  PROTECTION  ACT, SUBCHAPTER E OF
          CHAPTER 17, SECTIONS 17.41, ET SEQ., OF VERNON'S TEXAS CODE ANNOTATED,
          BUSINESS  AND  COMMERCE CODE, AS AMENDED (THE "DTPA") IF THE INTERESTS
          ARE  LOCATED  IN  TEXAS.  PURCHASER HEREBY WAIVES ITS RIGHTS UNDER THE
                                    --------------------------------------------
          DTPA, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
          ----------------------------------------------------------------------
          CONSULTATION  WITH  AN  ATTORNEY  OF  ITS  OWN  SELECTION,  PURCHASER
          ----------------------------------------------------------------------
          VOLUNTARILY  CONSENTS TO THIS WAIVER. TO EVIDENCE ITS ABILITY TO GRANT
          ----------------------------------------------------------------------
          SUCH  WAIVER, PURCHASER REPRESENTS TO SELLERS THAT: (I) IT IS NOT IN A
          ----------------------------------------------------------------------
          SIGNIFICANTLY DISPARATE BARGAINING POSITION; (II) IT IS REPRESENTED BY
          ----------------------------------------------------------------------
          LEGAL  COUNSEL  IN  ENTERING INTO THIS AGREEMENT; AND (III) SUCH LEGAL
          ----------------------------------------------------------------------
          COUNSEL  WAS  NOT  DIRECTLY  OR  INDIRECTLY  IDENTIFIED, SUGGESTED, OR
          ----------------------------------------------------------------------
          SELECTED BY SELLERS OR AN AGENT OF SELLERS.
          -------------------------------------------

     C.   Financial  Information.  Purchaser  has  been  provided  certain
          ----------------------
          financial  information  relating to the ownership and operation of the
          Interests  for  the  period commencing on the date of the first modern
          leases  through  the  present (the "Financial Information"). EXCEPT AS
          PROVIDED  IN  THIS AGREEMENT, WITH RESPECT TO THE INTERESTS' FINANCIAL
          INFORMATION,  SELLERS,  THEIR AFFILIATES AND THEIR CONSULTANTS MAKE NO
          REPRESEN-TATION  OR  WARRANTY,  WHETHER EXPRESS, STATUTORY OR IMPLIED,
          AND EXPRESSLY DISCLAIM ANY SUCH REPRESENTATION AND WARRANTY AS TO: (I)
          THE  ACCURACY,  COMPLETENESS,  OR  MATERIALITY  OF  ANY  FINANCIAL
          INFORMATION  FURNISHED  TO  PURCHASER IN CONNECTION WITH ANY INTEREST;
          (II)  THE  CON-DITION, QUALITY AND QUANTITY OF ANY INTEREST; (III) THE
          PRESENT  OR  FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS,
          IF  ANY,  TO  BE  DERIVED FROM ANY INTEREST; OR (IV) THE ENVIRONMENTAL
          CONDITION  OF  THE  INTERESTS.  ANY FINANCIAL INFORMATION FURNISHED BY
          SELLERS  IS  PROVIDED  TO  PURCHASER  AS A CONVENIENCE AND PURCHASER'S
          RELIANCE ON OR USE OF THE SAME IS AT PURCHASER'S SOLE RISK.

                                       15
<PAGE>

     D.   INSTRUMENTS  TO  CONTAIN  DISCLAIMERS.  THE  CONVEYANCE INSTRUMENTS TO
          -------------------------------------
          BE  DELIVERED  BY  SELLERS  AT  CLOSING  SHALL EXPRESSLY SET FORTH THE
          DISCLAIMERS  OF  REPRESENTATIONS  AND  WARRANTIES  CONTAINED  IN  THIS
          SECTION  AND SHALL EXPRESSLY STATE THAT THEIR TERMS ARE SUBJECT TO THE
          TERMS AND CONDITIONS CONTAINED IN THIS AGREEMENT.

     E.   PURCHASER  ACKNOWLEDGES  THAT  THE  WAIVERS  IN  THIS  SECTIONARE
          -----------------------------------------------------------------
          CONSPICUOUS.
          ------------

13.  Conditions  of  Closing.  Each  party's  obligation  to  consummate  the
     -----------------------
     transaction provided for herein is subject to the satisfaction or waiver by
     the other party of the following conditions:

     A.   Representations.  The  representations  contained  in  section  11
          ---------------
          hereof  shall  be  true  and  correct  in all material respects on the
          Closing Date as though made on and as of the Closing Date.

     B.   Performance.  Each  party  shall  have  performed  in  all  material
          -----------
          respects  the  obligations,  covenants  and agreements hereunder to be
          performed by it at or prior to the Closing Date.

     C.   Pending  Matters.  Except  as  set  forth  in section 11.D.3 above, no
          ----------------
          suit,  action  or  other proceeding by a third party or a governmental
          authority  shall  be  pending  which  seeks  damages,  fines  or other
          penalties from either party in connection with the Interests, or seeks
          to  restrain,  enjoin  or  otherwise  prohibit the consummation of the
          transactions contemplated by this Agreement.

     D.   Financial  Condition.  No  material  adverse  change  has  occurred in
          --------------------
          the financial condition of either party.

14.  Allocation  of  Production  and  Proceeds.  All  production of oil, gas and
     -----------------------------------------
     other  minerals  from  the  Interests  prior  to the Effective Date and all
     proceeds from the sale of such production shall be the property of Sellers.
     All such production upon and after the Effective Date and all proceeds from
     the  sale  thereof  shall be the property of Purchaser. Production shall be
     allocated to the parties based upon the most reliable measurement method or
     allocation  calculation  information  available  to  the parties. Purchaser
     shall  assume all rights and/or liabilities of Sellers arising from any gas
     imbalances affecting the Interests as of the Effective Date and thereafter.

15.  Taxes  and  Prepaid  Items.
     --------------------------

     A.   Apportionment  of  Ad  Valorem  and  Property  Taxes.  All  ad valorem
          ----------------------------------------------------
          taxes,  real  property  taxes,  personal  property  taxes  and similar
          obligations  with respect to the Interests for the tax period in which
          the  Effective  Date  occurs  shall be apportioned as of the Effective
          Date  between  Sellers  and Purchaser. The portion of such apportioned
          tax  liability  which is attributable to the Sellers shall be credited
          to  Purchaser's  account as an adjustment under section 7.B. hereof or
          Purchaser  shall  assume responsibility for the payment of all such ad
          valorem  and  property  taxes  and  hold  Sellers  harmless therefrom.

                                       16
<PAGE>

          Purchaser  shall  file  or  cause to be filed all required reports and
          returns  incident  to  such taxes and shall pay or cause to be paid to
          the taxing authorities all such taxes arising out of the tax period in
          which  the  Effective Date occurs. Purchaser shall supply Sellers with
          copies of the filed reports and proof of payment promptly after filing
          and paying same.

     B.   Proration  of  Taxes,  Etc.  All  other  taxes,  including,  but  not
          --------------------------
          limited  to, excise taxes, state severance taxes, and any other local,
          state,  and/or  federal  taxes  or  assessments  attributable  to  the
          properties  or any part thereof relating to oil and gas produced prior
          to  the  Effective  Date  remain  Sellers'  responsibility,  and  all
          deductions,  credits  and  refunds  pertaining  to  the aforementioned
          taxes,  attributable to the Interests or any part thereof prior to the
          Effective  Date  (no matter when received) belong to Sellers. All such
          taxes  attributable  to the Interests or any part thereof at and after
          the Effective Date are Purchaser's responsibility, and Purchaser shall
          reimburse  Sellers  for  any such taxes previously paid by Sellers and
          all  deductions,  credits, and refunds pertaining thereto at and after
          the Effective Date (no matter when received) belong to Purchaser.

     C.   OtherTaxes.  Purchaser  agrees  to  be  liable  for  any  and  all
          ---------
          conveyance, transfer, recording and registration fees and sales, gross
          receipts,  use,  motor  vehicle  transfer  and  excise,  real  estate
          transfer,  documentary  stamp  and similar transfer taxes imposed with
          respect  to  the  sale,  conveyance  and  assignment  of the Interests
          hereunder.  Purchaser  shall prepare and file (or cause to be prepared
          and  filed),  to the extent permitted by applicable law, any necessary
          tax  returns  in  connection  with  the foregoing taxes and fees to be
          borne  by  Purchaser and pay all filing and recording fees relating to
          the  filing  and  recording of any instruments delivered by Sellers to
          convey the Interests to Purchaser.

     D.   Indemnification.  As  used  in  this  paragraph  and the subparagraphs
          ---------------
          hereunder,  "Claim" and "Claims" shall include claims, demands, causes
          of action, liabilities, damages, fines, penalties and judgments of any
          kind  or  character,  whether  matured  or  unmatured,  absolute  or
          contingent,  accrued or unaccrued, liquidated or unliquidated or known
          or  unknown, and whether or not resulting from third party claims, and
          all  costs  and  fees  (including,  without  limitation,  interest,
          reasonable  attorneys'  fees, reasonable costs of experts, court costs
          and  reasonable  costs  of  investigation, including those incurred in
          enforcing  the indemnification provisions contained in this Agreement)
          in  connection  therewith.  As used herein, "Claims" shall not include
          Title  Defects,  or  other  items for which Purchaser or Sellers shall
          have received an adjustment to the Sales Price hereunder.

16.  Responsibilities  and  Indemnifications.  In  addition  to  any  other
     ---------------------------------------
     indemnification or reservation provision contained in this Agreement:

     A.   Purchaser  shall  (i)  as  of  the  Effective  Date  assume,  be
          responsible  for  and  comply  with  all duties and obligations of the
          Sellers, express or implied, with respect to the Interests, including,
          without  limitation,  those  arising  under or by virtue of any lease,
          contract,  agreement,  document,  permit,  applicable  law, statute or
          rule,  regulation or order of any governmental authority (specifically
          including, without limitation, any governmental request or requirement
          to  plug,  re-plug or abandon any well, or take any clean-up, remedial
          or  other  action  with  respect  to  the  Interests) and (ii) defend,

                                       17
<PAGE>

          indemnify  and hold Sellers harmless from and pay or reimburse Sellers
          for  any  and all Claims in connection with the duties and obligations
          of Sellers set forth in (i) above or in connection with the ownership,
          operation,  management or control of the Interests before or after the
          Effective  Date (except as set forth in paragraph B below), except (a)
          to  the  extent any such Claim has been asserted against Sellers prior
          to  the  Effective  Date, (b) as otherwise set forth in this Agreement
          and  (c)  any  Claim expressly assumed by Sellers. With respect to any
          Claim for cleanup or remediation of the Interests, such Claim shall be
          deemed  asserted  against  Sellers  at  the  time  the Order requiring
          cleanup  or  remediation has been issued by the appropriate regulatory
          agency.

     B.   After  the  Closing,  Sellers  shall  be responsible for, shall pay on
          a  current  basis, and shall indemnify, save, hold harmless, discharge
          and  release  Purchaser  from  and  against any and all Claims arising
          from,  based  upon,  related  to  or  associated  with  (a) any act or
          omission  by  Sellers involving or relating to the Interests occurring
          before  the  Effective  Date,  other  than obligations and liabilities
          assumed by Purchaser pursuant to paragraph A above; and (b) any act or
          omission  by  Sellers  involving  or  relating  to the Excluded Assets
          whether occurring before or after the Effective Date.

     C.   Except  as  provided  in  paragraph  D  below, Purchaser shall defend,
          indemnify  and hold Sellers harmless from and pay or reimburse Sellers
          for  any  and  all Claims for damage to the environment, environmental
          cleanup,  remediation, or compliance, or for any other relief, arising
          directly  or  indirectly  from  or  incident  to  the use, occupation,
          operation,  maintenance  or  abandonment  of  any of the Interests, or
          condition  of  the  Interests,  whether  latent  or patent, including,
          without  limitation,  contamination  of  the property or premises with
          Naturally  Occurring  Radioactive  Materials  (NORM), and WHETHER SUCH
          CLAIM  IS  CAUSED  BY  SELLERS' NEGLIGENCE, INCLUDING SOLE NEGLIGENCE,
          SIMPLE  NEGLIGENCE,  CONCURRENT NEGLIGENCE, ACTIVE NEGLIGENCE, PASSIVE
          NEGLIGENCE,  OR  STRICT  LIABILITY  OR  FAULT  OF SELLERS OR ANY OTHER
          THEORY  OF  LIABILITY  OR  FAULT,  WHETHER  IN  LAW (WHETHER COMMON OR
          STATUTORY)  OR  EQUITY,  EXCLUDING  GROSS  NEGLIGENCE  AND  WILLFUL
          MISCONDUCT OF SELLERS OR OF SELLERS' AGENTS, EMPLOYEES, OR CONTRACTORS
          AND  ASSERTED  AGAINST  PURCHASER  AND/OR  SELLERS  AFTER THE CLOSING,
          WHETHER  OR  NOT  ANY  SUCH  CLAIMS RESULT FROM CONDITIONS, ACTIONS OR
          INACTIONS  PRESENT  OR  EXISTING  ON  OR  BEFORE  THE  CLOSING.  This
          indemnification  shall  not  apply to any off-site disposal by Sellers
          which occurred prior to the Effective Date.

                                       18
<PAGE>

     D.   Any  Claim  for  indemnity  under  the  paragraphs  above or under any
          other provision of this Agreement shall be made by written notice from
          the  party  seeking  indemnification  (the "Indemnified Party") to the
          party  required  to  provide same (the "Indemnifying Party"), together
          with  a  written  description  of  any  third-party  Claim against the
          Indemnified  Party, stating the nature and basis of such Claim and, if
          ascertainable, the amount thereof. The Indemnifying Party shall have a
          period  of  thirty (30) days after receipt of such notice within which
          to  respond  thereto  or,  in  the  case  of a third-party Claim which
          requires  a  shorter  time for response, within such shorter period as
          specified  by  the  Indemnified  Party  in  such  notice  (the "Notice
          Period").  If the Indemnifying Party denies responsibility or fails to
          respond  to the notice within the Notice Period, the Indemnified Party
          may  defend  or  compromise  the Claim as it deems appropriate without
          prejudice  to any of the Indemnified Party's rights hereunder, with no
          further  obligation  to inform the Indemnifying Party of the status of
          the  Claim  and  no  right  of  the  Indemnifying  Party to approve or
          disapprove  any  actions  taken  in  connection  therewith  by  the
          Indemnified  Party.  If the Indemnifying Party accepts responsibility,
          it  shall so notify the Indemnified Party within the Notice Period and
          elect  either  (a)  to  undertake  the  defense  or compromise of such
          third-party  Claim with counsel selected by the Indemnifying Party and
          reasonably  approved  by  the Indemnified Party or (b) to instruct the
          Indemnified  Party  to  defend  or  compromise  such  Claim.  If  the
          Indemnifying  Party  undertakes  the  defense  or  compromise  of such
          third-party Claim, the Indemnified Party shall be entitled, at its own
          expense,  to  participate in such defense. No compromise or settlement
          of  any  third-party  Claim shall be made without reasonable notice to
          the  Indemnified  Party  and,  unless  such  compromise  or settlement
          includes  a general release of the Indemnified Party in respect of the
          matter  with  no admission of liability on the part of the Indemnified
          Party  and  no  constraints  on  the  future  conduct of its business,
          without the prior written approval of the Indemnified Party.

     E.   Each  party's  indemnity  given  under  this  Section  shall extend to
          the  other  and to the other's parent, subsidiaries and affiliates and
          their  present  and  former directors, officers, employees, attorneys,
          contractors, agents and members and to each of their heirs, executors,
          successors  and  assigns  and  shall  apply  to  all  obligations  and
          liabilities  described  above,  INCLUDING  THOSE  BASED ON NEGLIGENCE,
          INCLUDING  SOLE  NEGLIGENCE, SIMPLE NEGLIGENCE, CONCURRENT NEGLIGENCE,
          ACTIVE  NEGLIGENCE,  PASSIVE NEGLIGENCE, STRICT LIABILITY OR LIABILITY
          WITHOUT  FAULT  OF  THE  OTHER (OR ANY OTHER INDEMNIFIED PARTY) OR ANY
          OTHER  THEORY OF LIABILITY OR FAULT, WHETHER IN LAW (WHETHER COMMON OR
          STATUTORY)  OR  EQUITY,  excluding  gross  negligence  and  willful
          misconduct  of  the  party  or  of  the  party's agents, employees, or
          contractors.

                                       19
<PAGE>

17.  General  Limitation  of  Damages.  NOTWITHSTANDING  ANY  OTHER PROVISION OF
     -------------------------------
     THIS  AGREEMENT  TO  THE  CONTRARY,  NEITHER  PARTY  SHALL BE LIABLE TO ANY
     INDEMNIFIED  PARTY  FOR  ANY  EXEMPLARY,  PUNITIVE,  SPECIAL,  INDIRECT,
     CONSEQUEN-TIAL,  REMOTE  OR  SPECULATIVE  DAMAGES (INCLUDING ANY DAMAGES ON
     ACCOUNT  OF  LOST  PROFITS  OR OPPORTUNITIES) ARISING OUT OF OR RELATING TO
     THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

18.  Physical  Condition  of  the  Interests.
     ---------------------------------------

     A.   THE  INTERESTS  HAVE  BEEN  USED  FOR  OIL  AND  GAS  DRILLING  AND
          PRODUCING  OPERATIONS,  RELATED  OIL FIELD OPERATIONS AND POSSIBLY FOR
          THE  STORAGE  AND DISPOSAL OF WASTE MATERIALS OR HAZARDOUS SUBSTANCES.
          PHYSICAL  CHANGES  IN  THE  LAND MAY HAVE OCCURRED AS A RESULT OF SUCH
          USES.  THE  INTERESTS  ALSO  MAY  CONTAIN  BURIED  PIPELINES AND OTHER
          EQUIPMENT,  WHETHER OR NOT OF A SIMILAR NATURE, THE LOCATIONS OF WHICH
          MAY  NOT  NOW BE KNOWN BY SELLERS OR BE READILY APPARENT BY A PHYSICAL
          INSPECTION  OF  THE  PROPERTY. PURCHASER UNDERSTANDS THAT SELLERS DOES
          NOT  HAVE  THE REQUISITE INFORMATION WITH WHICH TO DETERMINE THE EXACT
          NATURE  OR  CONDITION  OF THE INTERESTS OR THE EFFECT ANY SUCH USE HAS
          HAD ON THE PHYSICAL CONDITION OF THE INTERESTS.

     B.   PURCHASER  ACKNOWLEDGES  THAT:  (I)  IT  HAS  ENTERED  INTO  THIS
          AGREEMENT  ON  THE  BASIS  OF  ITS  OWN  INVESTIGATION OF THE PHYSICAL
          CONDITION  OF  THE  INTERESTS INCLUDING SUBSURFACE CONDITION; (II) THE
          INTERESTS  HAVE BEEN USED IN THE MANNER AND FOR THE PURPOSES SET FORTH
          ABOVE  AND THAT PHYSICAL CHANGES TO THE INTERESTS MAY HAVE OCCURRED AS
          A  RESULT  OF  SUCH  USE;  AND (III) LOW LEVELS OF NATURALLY OCCURRING
          RADIOACTIVE MATERIAL (NORM) AND MAN-MADE MATERIAL FIBERS (MMMF) MAY BE
          PRESENT  AT  SOME  LOCATIONS.  PURCHASER  ACKNOWLEDGES  THAT NORM IS A
          NATURAL  PHENOMENON  ASSOCIATED  WITH  MANY OIL FIELDS IN THE U.S. AND
          THROUGHOUT  THE  WORLD. PURCHASER SHOULD MAKE ITS OWN DETERMINATION OF
          THIS  PHENOMENON AND OTHER CONDITIONS. SELLERS DISCLAIMS ANY LIABILITY
          ARISING  OUT  OF OR IN CONNECTION WITH ANY PRESENCE OF NORM OR MMMF ON
          THE  PROPERTY AND ON THE CLOSING DATE, PURCHASER SHALL ASSUME THE RISK
          THAT THE INTERESTS MAY CONTAIN WASTES OR CONTAMINANTS AND THAT ADVERSE
          PHYSICAL CONDITIONS, INCLUDING THE PRESENCE OF WASTES OR CONTAMINANTS,
          MAY  NOT  HAVE  BEEN  REVEALED  BY  PURCHASER'S  INVESTIGATION. ON THE
          CLOSING  DATE,  ALL  RESPONSIBILITY AND LIABILITY RELATED TO DISPOSAL,
          SPILLS,  WASTE,  OR  CONTAMINATION ON AND BELOW THE INTERESTS SHALL BE
          TRANSFERRED  FROM  SELLERS TO PURCHASER AND PURCHASER SHALL INDEMNIFY,
          DEFEND  AND  HOLD  SELLERS  HARMLESS  THEREFROM. SELLERS AND PURCHASER
          AGREE THAT THE PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE CLOSING.

                                       20
<PAGE>

19.  Further  Assurances.
     -------------------

     A.   Performance  of  Obligations.  Sellers  and  Purchaser  shall  use all
          ----------------------------
          reasonable  efforts  to take, or cause to be taken, all actions and to
          do,  or cause to be done, all things necessary, proper or advisable to
          carry out all of their respective obligations under this Agreement and
          to  consummate  and  make  effective  the  purchase  and  sale  of the
          Interests pursuant to this Agreement.

     B.   Further  Conveyances  and  Assumptions.  After  the  Closing,  Sellers
          --------------------------------------
          and  Purchaser  shall  execute, acknowledge and deliver or cause to be
          executed,  acknowledged  and  delivered  all such further conveyances,
          transfer  orders,  notices,  assumptions  and  releases and such other
          instruments,  and shall take such further actions, as may be necessary
          or  appropriate  to  assure  fully  to Purchaser and its successors or
          assigns  all  of  the Interests and to assure fully to Sellers and its
          successors  and assigns the assumptions of liabilities and obligations
          of  Purchaser  or  to  otherwise carry out the terms and provisions of
          this Agreement.

20.  Notices.  All  notices  and  consents  to  be  given  hereunder shall be in
     -------
     writing  and  shall  be  deemed  to  have  been  duly  given  if  delivered
     personally;  faxed  with  receipt  acknowledged; mailed by registered mail,
     return  receipt  requested,  postage  prepaid; or delivered by a recognized
     commercial  courier  to  the  party  at the address set forth below or such
     other  address  as  any  party shall have designated for itself by ten (10)
     days'  prior  notice to the other party. Notice is deemed to have been duly
     received:  on  the day personally delivered; on the day after it is sent by
     fax;  seven  (7) days after mailing by registered mail; or the day after it
     is received from a recognized commercial courier.

SELLERS:
-------
            Baker  Exploration  Company
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            Phone:          XXX-XXX-XXXX
            Fax:            XXX-XXX-XXXX

            The  Sebastian  Revocable  Trust
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            Phone:          XXX-XXX-XXXX
            Fax:            XXX-XXX-XXXX

                                       21
<PAGE>

            George  R.  Smith  Revocable  Trust
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            Phone:        XXX-XXX-XXXX
            Fax:          XXX-XXX-XXXX

            George  Smith  Family  Limited  Partnership  d/b/a  GSTX  Limited
            Partnership
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            XXXXXXXXXXXXXXXXX
            Phone:        XXX-XXX-XXXX
            Fax:          XXX-XXX-XXXX

            PURCHASER:
            ---------

            New  Century  Energy  Corp.
            5851  San  Felipe,  Suite  775
            Houston,  Texas  77057

            Phone:        713-266-4344
            Fax:          713-266-4358

21.  Purchaser's  Post-Closing  Obligations.  If  at  any time subsequent to the
     --------------------------------------
     Closing,  Purchaser comes into possession of money or property belonging to
     Sellers,  such  money  or  other  property  shall  be promptly delivered to
     Sellers.  Purchaser  shall  allow  Sellers  access  to  the  Records during
     Purchaser's  normal  business hours after Closing for the purpose of filing
     and  amending  a  tax  return or for any other legitimate business purpose,
     provided  that  any  copies of Records made by Sellers shall be at the sole
     expense of Sellers.

22.  Sellers'  Post-Closing  Obligations.  If  at  any  time  subsequent  to the
     -----------------------------------
     Closing, Sellers come into possession of money or property belonging to the
     Purchaser,  such money or other property shall be promptly delivered to the
     Purchaser.  Furthermore,  Sellers recognize that Purchaser will be required
     to  audit  the  historical performance of the Interests and shall cooperate
     with  Purchaser  and  provide copies of documents requested by Purchaser to
     accomplish the same.

23.  Severability.  In  the  event  any  covenant,  condition,  or  provision
     ------------
     contained  herein  is  held  to  be  invalid  by  a  court  of  competent
     jurisdiction,  the  invalidity of any such covenant, condition or provision
     shall  in  no  way  affect  any  other  covenant,  condition,  or provision
     contained  herein,  provided,  however,  that  any such invalidity does not
     materially  prejudice  either  the  Purchaser  or Sellers in its respective
     rights  and  obligations  contained in the valid covenants, conditions, and
     provisions of this Agreement.

                                       22
<PAGE>

24.  Waiver.  No  waiver  of  any  of  the  provisions  of  this Agreement shall
     ------
     constitute  a  waiver  of  any  other  provisions  hereof  (whether  or not
     similar),  nor  shall  such  waiver  constitute  a continuing waiver unless
     otherwise expressly provided.

25.  Construction  of  Ambiguity.  In  the  event of any ambiguity in any of the
     ---------------------------
     terms  or  conditions  of this Agreement, including any exhibits hereto and
     whether  or not placed of record, such ambiguity shall not be construed for
     or  against  any  party  hereto on the basis that such party did or did not
     author the same.

26.  Captions.  The  captions  in  this  Agreement  are for convenience only and
     --------
     shall  not  be  considered  a  part  of  or  affect  the  construction  or
     interpretation of any provisions of this Agreement.

27.  Governing  Law.  This  Agreement  shall  be  governed by and interpreted in
     --------------
     accordance  with  the  laws of the State of Texas, without reference to the
     conflict of laws principles applied by the courts of the State of Texas.

28.  Waiver  of  Jury  Trial.  SELLERS  AND  PURCHASER  DO  HEREBY  IRREVOCABLY
     -----------------------
     WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL
     BY  JURY  IN ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED UPON, ARISING
     OUT  OF  OR  RELATING  TO  THIS  AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
     HEREBY.

29.  Limitation  of  Liability.  Sellers  and  Purchaser  do hereby covenant and
     -------------------------
     agree  that  the recovery by either party hereto of any damages suffered or
     incurred  by  it  as  a  result  of  any  breach  by the other party of any
     provision of this Agreement shall be limited to the actual damages suffered
     or  incurred  by  the  non-breaching party as a result of the breach by the
     breaching  party and in no event shall the breaching party be liable to the
     non-breaching  party for any indirect, consequential, exemplary or punitive
     damages  suffered or incurred by the non-breaching party as a result of the
     breach by the breaching party.

30.  Publicity.  Sellers  acknowledge  and  understand  that  Purchaser  is  a
     ---------
     publicly  traded  company subject to exchange-imposed obligations regarding
     confidentiality  and  non-disclosure of material non-public information. In
     this regard, Sellers agree that they shall not make or cause to be made any
     disclosure  of  the  transaction  contemplated herein to any third party or
     otherwise  disseminate any news or announcement of any kind with respect to
     this  Agreement  or the underlying transactions without the express written
     approval  of  Purchaser.  Sellers  further  agree  to  keep all information
     regarding  this  Agreement and the underlying transactions confidential and
     not  to  disclose,  reveal,  or  discuss  any  such information without the
     written approval of Purchaser.

31.  Use  of  Sellers'  Name.  As  soon  as  practicable  after  the  Closing,
     -----------------------
     Purchaser  shall  remove or cause to be removed the names and marks used by
     Sellers  and  all  variations  and  derivations  thereof and logos relating
     thereto from the Interests and shall not thereafter make any use whatsoever
     of those names, marks and logos.

                                       23
<PAGE>

32.  Counterparts.  This  Agreement  may  be  executed  in  one  or  more
     ------------
     counterparts,  each  of which shall be deemed an original, but all of which
     together shall constitute one and the same instrument.

33.  Assignment.  Except  as  otherwise  provided  herein,  this Agreement shall
     ----------
     be  binding  upon  and inure to the benefit of the parties hereto and their
     respective  permitted successors and assigns. All future conveyances of all
     or  any  portion  of the Interests shall expressly recognize and perpetuate
     the rights and obligations set out in this Agreement.

34.  Cost  and  Expenses.  Except  as  otherwise expressly provided herein, each
     -------------------
     party  shall  bear  and  pay its own costs and expenses, including, but not
     limited to, attorneys fees, incurred in connection with this transaction.

35.  Joint  Venture,  Partnership  and  Agency.  Nothing  contained  in  this
     -----------------------------------------
     Agreement  shall  be  deemed  to  create  a joint venture, partnership, tax
     partnership or agency relationship between the parties.

36.  Confidentiality.  Prior  to  the  Closing,  Sellers  and  Purchaser, to the
     ---------------
     extent  permitted  by law, shall keep confidential all information received
     from the other unless such information is readily ascertainable from public
     or published information or trade sources or is received from a third-party
     having  no  obligation of confidentiality with respect to such information.
     In  the  event  of the termination of this Agreement, Sellers and Purchaser
     shall  return  to  the  other  or destroy all information received from the
     other  and to the extent permitted by law keep confidential and not use any
     confidential information obtained pursuant to this Agreement.

37.  Post-Closing  Confidentiality.  Following  the  Closing,  Sellers agrees to
     -----------------------------
     keep confidential all information relative to the Interests covered by this
     Agreement.  Such  obligation  of  confidentiality  shall continue until the
     earlier  of  the following: (1) three years from the Closing; (ii) the date
     upon  which Purchaser has conveyed the Interests to a third party; or (iii)
     the  date  upon  which  Purchaser  provides  Sellers  written notice of the
     termination  of  such  confidentiality  requirements.  The  obligations  of
     confidentiality  shall  not apply to any information that is required to be
     disclosed  by  Sellers  as  a result of applicable law, regulation, rule or
     order of a duly empowered court or governmental entity.

38.  Survival.  Except  as  otherwise  specifically  provided in this Agreement,
     --------
     all  covenants,  obligations,  agreements  and guarantees shall survive the
     execution  of  this Agreement, the Closing and the delivery and recordation
     of  any deeds, assignments or bills of sale which convey the Interests from
     Sellers to Purchaser.

39.  Limitations  of  Obligations.  Notwithstanding  anything  to  the  contrary
     ----------------------------
     contained  herein,  all  representations,  warranties,  covenants  and
     indemnities  made  by  Sellers  hereunder  shall  be  limited  only  to the
     Interests conveyed hereby.

40.  Entire  Agreement.  This  Agreement,  together  with  any  Confidentiality
     -----------------
     Agreements  relating  to  the  Interests  previously executed by Purchaser,
     constitute the entire agreement between the parties and supersede all prior
     agreements,  understandings,  negotiations and discussions, whether oral or
     written,  of  the  parties.  No  supplement,  amendment,  alteration,
     modification,  waiver  or  termination  of  this Agreement shall be binding
     unless  executed  in  writing  by the parties hereto after the execution of
     this  Agreement.  IN WITNESS WHEREOF, the parties hereto have executed this
     Agreement to be EFFECTIVE as of the day and year first set forth above.

                                       24
<PAGE>

                                 SELLERS:

                                 PAT  BAKER  D/B/A  BAKER  EXPLORATION  COMPANY

                                 /s/ Pat Baker
                                 ----------------------------------------------

                                 THE  SEBASTIAN  REVOCABLE  TRUST

                                 /s/ Raymond F. Sebastian
                                 ----------------------------------------------

                                 By:  Raymond F. Sebastian
                                    -------------------------------------------
                                 Trustee

                                 GEORGE  R.  SMITH  REVOCABLE  TRUST

                                 /s/ George R. Smith
                                 ---------------------------------------------

                                 By:  George  R.  Smith

                                 Trustee

<PAGE>

                                 GEORGE  SMITH  FAMILY  LIMITED  PARTNERSHIP
                                 D/B/A  GSTX  LIMITED  PARTNERSHIP

                                 /s/ George R. Smith
                                 ---------------------------------------------

                                 By:  George  R.  Smith

                                 General  Partner

                                 PURCHASER:

                                 NEW  CENTURY  ENERGY  CORP.

                                 /s/ Edward R. DeStefano
                                 ---------------------------------------------

                                 By:   Edward R. DeStefano

                                 President  &  CEO

<PAGE>Exhibit 4(b)

    
      
        

      

      Exhibit
        4(b)

      June
        18,
        1998

      

      

      Company
        Order and Officers' Certificate

      Unsecured
        Medium Term Notes, Series B

      

      

      Bankers
        Trust Company, as Trustee

      Four
        Albany Street

      New
        York,
        New York 10006

      

      Attn:
        Corporate Trust Division

      

      Ladies
        and Gentlemen:

      

      Pursuant
        to Article Two of the Indenture, dated as of September 1, 1997 (as it may
        be
        amended or supplemented, the "Indenture"), from Columbus Southern Power Company
        (the "Company") to Bankers Trust Company, as trustee (the "Trustee"), and
        the
        Board Resolutions dated April 22, 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 Medium Term Notes, Series B (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 $150,000,000,
                  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 42
                  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 March 1 and September 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 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
                  B";

              
	 	 	 
	 	
                (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 2.5%
                  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 10%;

              
	 	 	 
	 	
                (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;

              
	 	 	 
	 	
                (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 $150,000,000 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 June 18, 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 attached hereto.

      

      Very
        truly yours,

      

      COLUMBUS
        SOUTHERN POWER COMPANY

      

      

      By: /s/
        A. A.
        Pena

      Treasurer

      

      

      And: /s/
        John
        F. Di Lorenzo, Jr.

      Secretary

      

      

      Acknowledged
        by Trustee:

      

      

      By: /s/
        Scott
        F. Thiel

      Assistant
        Vice President

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Exhibit
        1

      

      

      [Unless
        this certificate is presented by an authorized representa-tive 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.

      

      

      COLUMBUS
        SOUTHERN POWER COMPANY

      Unsecured
        Medium Term Note, Series B

      (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:

              	 

      

      

      

      COLUMBUS
        SOUTHERN POWER COMPANY, a corporation duly organized and existing under the
        laws
        of the State of Ohio (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 Prin-cipal 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 March 1 and September 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 pro-vided 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
        September 1, 1997 duly executed and delivered between the Company and Bankers
        Trust Company, 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 herein-after 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 condi-tions 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
        provi-sions 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
        Inden-ture with respect to such series, and its consequences, except a de-fault
        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 pro-vided 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 princi-pal 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
        ____________________

      

      

      
        	 	
                COLUMBUS
                  SOUTHERN 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:_______________

      

      BANKERS
        TRUST COMPANY

      

      

      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").

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      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-____

      

      COLUMBUS
        SOUTHERN POWER COMPANY

      UNSECURED
        MEDIUM-TERM NOTE, SERIES B

      (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
                    CURRENCY:

                	 

        

      

      

        
          	
                  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 PERCENTAGE:    %

                	
                  ANNUAL
                    REDEMPTION PERCENTAGE REDUCTION:
                    %

                

        

      

       

      
        
          	
                  OPTIONAL
                    REPAYMENT DATE(S):

                	
                  CALCULATION
                    AGENT:

                
	 	 
	
                  INTEREST
                    CATEGORY:

                	
                  DAY
                    COUNT CONVENTION:

                
	
                  [
                    ]
                    Regular Floating Rate Note

                	
                  [
                    ]
                    30/360 for the period from     to

                
	
                  [
                    ]
                    Floating Rate/Fixed Rate Note

                	
                  [
                    ]
                    Actual/360 for the period from    
                    to
                    

                
	
                  Fixed
                    Rate Commencement Date:

                	 
	
                  Fixed
                    Interest Rate: %

                	 
	
                  [
                    ]
                    Inverse Floating Rate Note

                	
                  [
                    ]
                    Actual/Actual for the period from    
                    to
                    

                
	
                  Fixed
                    Interest Rate: %

                	 
	
                  [
                    ]
                    Original Issue Discount Note

                	
                  Applicable
                    Interest Rate Basis:

                
	
                  Issue
                    Price: %

                	 
	 	 
	
                  SPECIFIED
                    CURRENCY:

                	
                  AUTHORIZED
                    DENOMINATION:

                
	
                  [
                    ]
                    United States dollars

                	
                  [
                    ]
                    $1,000 and integral multiples thereof

                
	
                  [
                    ]
                    Other

                	
                  [
                    ]
                    Other:

                
	 	 
	
                  EXCHANGE
                    RATE AGENT:

                	 
	 	 
	
                  DEFAULT
                    RATE: %

                	 
	 	 
	
                  ADDENDUM
                    ATTACHED

                	 
	
                  [
                    ]
                    Yes

                	 
	
                  [
                    ]
                    No

                	 
	 	 
	
                  ELIGIBLE
                    OBLIGATIONS (IF OTHER THAN UNITED STATES DOLLARS):

                
	 	 
	
                  OTHER/ADDITIONAL
                    PROVISIONS:

                	 

        

      

       

       

      

      COLUMBUS
        SOUTHERN POWER COMPANY, a corporation duly organized and existing under the
        laws
        of the State of Ohio (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 pay-able,
        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"); pro-vided, however, that interest payable on the Maturity
        Date
        will be payable to the person to whom the princi-pal 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; provided, however, that if such payment is
        to be
        made in a Specified Currency other than United States dollars as set forth
        below, such payment will be made by wire transfer of immediately available
        funds
        to an account with a bank designated by the holder hereof at least 15 calendar
        days prior to the Maturity Date, provided that such bank has appropriate
        facilities therefor and that this Note (and, if applicable, a duly completed
        repayment election form) is presented and surrendered at the aforementioned
        office or agency of the Company in time for the Company to make such payment
        in
        such funds in accordance with its normal procedures. 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,
        if the Specified Currency specified above is other than United States dollars,
        the equivalent thereof in the Specified Currency) 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
        instruc-tions 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.

      

      The
        Company is obligated to make payment of principal, premium, if any, and interest
        in respect of this Note in the Specified Currency (or, if the Specified Currency
        is not at the time of such payment legal tender for the payment of public
        and
        private debts, in such other coin or currency of the country which issued
        the
        Specified Currency as at the time of such payment is legal tender for the
        payment of such debts). If the Specified Currency is other than United States
        dollars, any such amounts so payable by the Company will be converted by
        the
        Exchange Rate Agent specified above into United States dollars for payment
        to
        the holder of this Note; provided, however, that the holder of this Note
        may
        elect to receive such amounts in such Specified Currency pursuant to the
        provisions set forth below.

      

      If
        the
        Specified Currency is other than United States dollars and the holder of
        this
        Note shall not have duly made an election to receive all or a specified portion
        of any payment of principal, premium, if any, and/or interest in respect
        of this
        Note in the Specified Currency, any United States dollar amount to be received
        by the holder of this Note will be based on the highest bid quotation in
        The
        City of New York received by the Exchange Rate Agent at approximately 11:00
        A.M., New York City time, on the second Business Day preceding the applicable
        payment date from three recognized foreign exchange dealers (one of whom
        may be
        the Exchange Rate Agent) selected by the Exchange Rate Agent and approved
        by the
        Company for the purchase by the quoting dealer of the Specified Currency
        for
        United States dollars for settlement on such payment date in the aggregate
        amount of the Specified Currency payable to all holders of Notes scheduled
        to
        receive United States dollar payments and at which the applicable dealer
        commits
        to execute a contract. All currency exchange costs will be borne by the holder
        of this Note by deductions from such payments. If three such bid quotations
        are
        not available, payments on this Note will be made in the Specified
        Currency.

      

      If
        the
        Specified Currency is other than United States dollars, the holder of this
        Note
        may elect to receive all or a specified portion of any payment of principal,
        premium, if any, and/or interest in respect of this Note in the Specified
        Currency by submitting a written request for such payment to the Company
        at its
        office or agency in The City of New York on or prior to the applicable Regular
        Record Date or at least 15 calendar days prior to the Maturity Date, as the
        case
        may be. Such written request may be mailed or hand delivered or sent by cable,
        telex or other form of facsimile transmission. The holder of this Note may
        elect
        to receive all or a specified portion of all future payments in the Specified
        Currency in respect of such principal, premium, if any, and/or interest and
        need
        not file a separate election for each payment. Such election will remain
        in
        effect until revoked by written notice to the Company, but written notice
        of any
        such revocation must be received by the Company on or prior to the applicable
        Regular Record Date or at least 15 calendar days prior to the Maturity Date,
        as
        the case may be.

      

      If
        the
        Specified Currency is other than United States dollars or a composite currency
        and the holder of this Note shall have duly made an election to receive all
        or a
        specified portion of any payment of principal, premium, if any, and/or interest
        in respect of this Note in the Specified Currency and if the Specified Currency
        is not available due to the imposition of exchange controls or other
        circumstances beyond the control of the Company, the Company will be entitled
        to
        satisfy its obligations to the holder of this Note by making such payment
        in
        United States dollars on the basis of the Market Exchange Rate (as defined
        below) on the second Business Day prior to such payment date or, if such
        Market
        Exchange Rate is not then available, on the basis of the most recently available
        Market Exchange Rate or as otherwise specified herein. The "Market Exchange
        Rate" for the Specified Currency means the noon dollar buying rate in The
        City
        of New York for cable transfers for the Specified Currency as certified for
        customs purposes by (or if not so certified, as otherwise determined by)
        the
        Federal Reserve Bank of New York. Any payment made under such circumstances
        in
        United States dollars will not constitute an Event of Default (as defined
        in the
        Indenture).

      

      If
        the
        Specified Currency is a composite currency and the holder of this Note shall
        have duly made an election to receive all or a specified portion of any payment
        of principal, premium, if any, and/or interest in respect of this Note in
        the
        Specified Currency and if such composite currency is unavailable due to the
        imposition of exchange controls or other circumstances beyond the control
        of the
        Company, then the Company will be entitled to satisfy its obligations to
        the
        holder of this Note by making such payment in United States dollars. The
        amount
        of each payment in United States dollars shall be computed by the Exchange
        Rate
        Agent on the basis of the equivalent of the composite currency in United
        States
        dollars. The component currencies of the composite currency for this purpose
        (collectively, the "Component Currencies" and each, a "Component Currency")
        shall be the currency amounts that were components of the composite currency
        as
        of the last day on which the composite currency was used. The equivalent
        of the
        composite currency in United States dollars shall be calculated by aggregating
        the United States dollar equivalents of the Component Currencies. The United
        States dollar equivalent of each of the Component Currencies shall be determined
        by the Exchange Rate Agent on the basis of the most recently available Market
        Exchange Rate for each such Component Currency, or as otherwise specified
        herein.

      

      If
        the
        official unit of any Component Currency is altered by way of combination
        or
        subdivision, the number of units of the currency as a Component Currency
        shall
        be divided or multiplied in the same proportion. If two or more Component
        Currencies are consolidated into a single currency, the amounts of those
        currencies as Component Currencies shall be replaced by an amount in such
        single
        currency equal to the sum of the amounts of the consolidated Component
        Currencies expressed in such single currency. If any Component Currency is
        divided into two or more currencies, the amount of the original Component
        Currency shall be replaced by the amounts of such two or more currencies,
        the
        sum of which shall be equal to the amount of the original Component
        Currency.

      

      All
        determinations referred to above made by the Exchange Rate Agent shall be
        at its
        sole discretion and shall, in the absence of manifest error, be conclusive
        for
        all purposes and binding on the holder of this Note.

      

        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 September
        1,
        1997, as amended, modified or supplemented from time to time (the "Indenture"),
        between the Company and Bankers Trust Company, 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 B" (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 the minimum 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 the minimum
        Authorized Denomination (provided that any remaining principal amount hereof
        shall be at least U.S.$1,000 or such minimum Authorized 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 Redemp-tion 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 Redemp-tion 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 the minimum Authorized Denomination (provided
        that any remaining principal amount hereof shall be at least U.S.$1,000 or
        such
        minimum Authorized 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, however, that if the Specified Currency is other
        than United States dollars and any payment is to be made in the Specified
        Currency in accordance with the provisions hereof, such day is also not a
        day on
        which banking institutions are authorized or required by law or executive
        order
        to close in the Principal Financial Center (as defined below) of the country
        issuing the Specified Currency (or, in the case of European Currency Units
        ("ECU"), is not a day that appears as an ECU non-settlement day on the display
        designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day
        so
        designated by the ECU Banking Association) or, if ECU non-settlement days
        do not
        appear on that page (and are not so designated), is not a day on which payments
        in ECU cannot be settled in the international interbank market); provided,
        further,
        that if
        LIBOR is an applicable Interest Rate Basis, such day is also a London Business
        Day (as defined below). "London Business Day" means (i) if the Index Currency
        (as defined below) is other than ECU, any day on which dealings in such Index
        Currency are transacted in the London interbank market or (ii) if the Index
        Currency is ECU, any day that does not appear as an ECU non-settlement day
        on
        the display designated as "ISDE" on the Reuter Monitor Money Rates Service
        (or a
        day so designated by the ECU Banking Association) or, if ECU non-settlement
        days
        do not appear on that page (and are not so designated), is not a day on which
        payments in ECU cannot be settled in the international interbank market.
        "Principal Financial Center" means the capital city of the country issuing
        the
        Specified Currency, or solely with respect to the calculation of LIBOR, the
        Index Currency, except that with respect to United States dollars, Canadian
        dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian lire,
        Swiss
        francs and ECU, the "Principal Financial Center" shall be The City of New
        York,
        Toronto, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg,
        respectively.

      

      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,
        unless the Index Currency is British pounds sterling, in which case the
        "Interest Determination Date" will be 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 Determi-nation Date (a "Commercial Paper Rate Interest Deter-mination
        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 Calcula-tion
        Agent for commercial paper having the Index Maturity placed for an industrial
        issuer whose bond rating is "Aa", or the equi-valent from a nationally
        recognized statistical rating organization; provided, however, that if the
        dealers so selected by the Calculation Agent are not quoting as men-tioned
        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
        Deter-mination 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 the Index Currency 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 the Index Currency 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 the Index Currency
        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 such Index Currency
        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., in the applicable Principal Financial
        Center, on such LIBOR Interest Determination Date by three major banks in
        such
        Principal Financial Center selected by the Calculation Agent for loans in
        the
        Index Currency to leading European banks, having the Index Maturity and in
        a
        principal amount that is representative for a single transaction in such
        Index
        Currency 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.

      

      "Index
        Currency" means the currency or composite currency specified herein as to
        which
        LIBOR shall be calculated. If no such currency or composite currency is
        specified herein, the Index Currency shall be United States
        dollars.

      

      "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 the Index Currency,
        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 the Index
        Currency.

      

      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 substi-tute 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 pri-mary 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,
        how-ever, 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 or, in the case of a Specified Currency other
        than
        United States dollars, to the nearest unit (with one-half cent or unit 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
        provi-sions 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
        Inden-ture with respect to such series, and its consequences, except a de-fault
        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 pro-vided 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 princi-pal 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 prin-cipal amount and
        series
        will be issued to the designated transferee or transferees. No service charge
        will be made for any such trans-fer, 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.

       

      

        
          	 	
                  COLUMBUS
                    SOUTHERN 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:
        

      

      BANKERS
        TRUST COMPANY, as Trustee

      

      

      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").

      

      

      [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.

      

      

      [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.]

      

      

      

      Exhibit
        3

      

      

      Instruction
        No.

      

      

        Columbus
          Southern Power Company

        Unsecured
          Medium Term Notes, Series B

        

        

        Instructions

        (Fixed
          Rate)

      

      

      To:
        Bankers Trust Company, as Trustee

      

      

      Trade
        or
        sale date:

      

      

      Principal
        Amount: $

      

      

      Maturity
        Date:

      

      

      Interest
        Rate: ______%

      

      

      Redemption
        Provisions:

      

      Redeemable:            
        Yes___ No___

              In
        Whole:    Yes___
        No___

              In
        Part:       
        Yes___ No___

      

      Initial
        Redemption Date:

      

      Redemption
        Limitation Date:

      

      Initial
        Redemption Price:

      

      Reduction
        Percentage:

      

      

      Original
        Issue Date:

      

      

      Public
        Offering Price: ______%

      

      

      Presenting
        Agent's Commission: ______%

      

      

      Net
        Proceeds to Company: ______%

      

      

      CUSIP
        No.: _____________________

      

      

      Account
        number of participant account maintained by DTC
        on
        behalf of Presenting Agent:

      

      

      Account
        number of participant account maintained by DTC
        on
        behalf of Trustee:

      

      

      Each
        Presenting Agent's name and proportionate
        amount of Global Note:

      

      

      Name
        in
        which the Note is to be registered (Registered Owner):

      

      Cede
        & Co.

      

      

      Address
        and taxpayer identification number of Registered Owner and address for
        payment:

      

      The
        Depository Trust Company

      55
        Water
        Street

      New
        York,
        NY 10041

      #13-2555119

      

      

      Discount
        Security: Yes___ No___

      

      Yield
        to
        Maturity: ________%

      

      Initial
        Accrual Period: ____________________________________

      

      Account
        of Company into which net proceeds are to be deposited:
        __________________________________________________

      

      Any
        Other
        Book-Entry Note represented by Global
        Security (to the extent known):

      

      

      

      COLUMBUS
        SOUTHERN POWER COMPANY

      

      

      By:____________________________

      (President,
        Vice President, or
        Treasurer)

      

      

      

      Exhibit
        4

      

      

      Instruction
        No.

      

      
        Columbus
          Southern Power Company

        Unsecured
          Medium Term Notes, Series B

        

        

        Instructions

        (Floating
          Rate)

        

      

      To:
        Bankers Trust Company, as Trustee

      

      

      Trade
        or
        sale date:

      

      

      Principal
        Amount: $

      

      

      Maturity
        Date:

      

      

      Initial
        Interest Rate: ______%

      

      

      Original
        Issue Date:

      

      

      Public
        Offering Price: ______%

      

      

      Presenting
        Agent's Commission: ______%

      

      

      Net
        Proceeds to Company: ______%

      

      

      CUSIP
        No.: _____________________

      

      

      Calculation
        Agent:

      

      

      Interest
        Calculation:

      [
        ]
        Regular Floating Rate Note  [
        ]
        Floating Rate/Fixed Rate Note

      [
        ]
        Inverse Floating Rate Note       (Fixed
        Rate Commencement Date):

      (Fixed
        Interest Rate):        (Fixed
        Interest Rate):

      [
        ] Other
        Floating Rate Note

          
        [see attached]

      

      Interest
        Rate Basis:

      [
        ] CD
        Rate            
 [
        ] Federal Funds
        Rate     [ ] Treasury
        Rate

      [
        ]
        Commercial Paper Rate      [ ] LIBOR                 
        [ ] Other

      [
        ] CMT
        Rate             
        [ ] Prime Rate

      

      If
        LIBOR,
        Designated LIBOR Page:           
        [ ]
        LIBOR Reuters, Reuters Page:

            
[
        ] LIBOR Telerate, Telerate
        Page:

      Designated
        LIBOR Currency:

      

      If
        CMT
        Rate, Designated CMT Maturity Index:

             Designated
        LIBOR Currency:

      

      Initial
        Interest Reset Date:   Spread
        (+/-)

      Interest
        Reset Dates:  
   Spread
        Multiplier:

      Interest
        Payment Dates:       Maximum
        Interest Rate:

      Index
        Maturity:           Minimum
        Interest Rate:

      

      Day
        Count
        Convention:

      [
        ]
        Actual/360 for the period from __________ to __________

      [
        ]
        Actual/Actual for the period from __________ to __________

      [
        ]
        30/360 for the period from __________ to __________

      

      Redemption:

      [
        ] The
        Notes
        cannot be redeemed prior to the Stated Maturity.

      [
        ] The
        Notes
        may be redeemed prior to Stated Maturity.

      Initial
        Redemption Date:

      Initial
        Redemption Percentage: ______%

      Annual
        Redemption Percentage Reduction: ____% until Redemption Percentage is 100%
        of
        the Principal Amount.

      

      Repayment:

      [
        ] The
        Notes
        cannot be repaid prior to the Stated Maturity.

      [
        ]The
        Notes can be repaid prior to the Stated Maturity at the option of the holder
        of
        the Notes.

      Optional
        Repayment Date(s):

      Repayment
        Price ____%

      

      Currency

      Specified
        Currency: ________ (If other than U.S. dollars, see attached)

      Minimum
        Denominations: ________ (Applicable only if Specified Currency is other than
        U.S. dollars)

      

      

      Account
        number of participant account maintained by DTC
        on
        behalf of Presenting Agent:

      

      

      Account
        number of participant account maintained by DTC
        on
        behalf of Trustee:

      

      

      Each
        Presenting Agent's name and proportionate
        amount of Global Note:

      

      

      Name
        in
        which the Note is to be registered (Registered Owner):

      

      Cede
        & Co.

      

      

      Address
        and taxpayer identification number of Registered Owner and address for
        payment:

      

      The
        Depository Trust Company

      55
        Water
        Street

      New
        York,
        NY 10041

      #13-2555119

      

      

      Yield
        of
        U.S. Treasury securities of

      comparable
        maturity maturing at ________%

      

      

      Discount
        Security: Yes___ No___

      

      Yield
        to
        Maturity: ________%

      

      Initial
        Accrual Period:___________________________________

      

      

      Account
        of Company into which net proceeds are to be deposited:
        __________________________________________________

      

      

      Any
        Other
        Book-Entry Note represented by Global
        Security (to the extent known):

      

      

      COLUMBUS
        SOUTHERN POWER COMPANY

      

      

      By:____________________________

      (President,
        Vice President, or
        Treasurer)

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