CONSUMERS POWER CO
S-3, 1995-11-03
ELECTRIC & OTHER SERVICES COMBINED
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<PAGE>   1
 
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 3, 1995
 
                                                   REGISTRATION NOS. 33-
                                                                     33-     -01
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                         ------------------------------
 
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                         ------------------------------
 
<TABLE>
<S>                                              <C>
          CONSUMERS POWER COMPANY                CONSUMERS POWER COMPANY FINANCING I
 (Exact name of registrant as specified in           (Exact name of registrant as
                 its charter)                         specified in its charter)
                  MICHIGAN                                     DELAWARE
      (State or other jurisdiction of              (State or other jurisdiction of
        incorporation or organization)              incorporation or organization)
                 38-0442310                                   38-6660663
    (I.R.S. Employer Identification No.)         (I.R.S. Employer Identification No.)
</TABLE>
 
                            212 WEST MICHIGAN AVENUE
                            JACKSON, MICHIGAN 49201
                                 (517) 788-0550
  (Address, including zip code, and telephone number, including area code, of
                   registrants' principal executive offices)
                         ------------------------------
 
                                 ALAN M. WRIGHT
                             SENIOR VICE PRESIDENT
                          AND CHIEF FINANCIAL OFFICER
                            212 WEST MICHIGAN AVENUE
                            JACKSON, MICHIGAN 49201
                                 (517) 788-0351
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
                         ------------------------------
 
  It is respectfully requested that the Commission send copies of all notices,
                         orders and communications to:
 
<TABLE>
<S>                                              <C>
           DENISE M. STURDY, ESQ.                     THOMAS J. IGOE, JR., ESQ.
          CONSUMERS POWER COMPANY                         REID & PRIEST LLP
          212 WEST MICHIGAN AVENUE                       40 WEST 57TH STREET
          JACKSON, MICHIGAN 49201                      NEW YORK, NEW YORK 10019
</TABLE>
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
                         ------------------------------
 
    If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / /
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
 
                        CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
 
                                                                              PROPOSED MAXIMUM
          TITLE OF EACH CLASS                              PROPOSED MAXIMUM       AGGREGATE
             OF SECURITIES                 AMOUNT TO BE     OFFERING PRICE        OFFERING          AMOUNT OF
           TO BE REGISTERED                 REGISTERED      PER UNIT(2)(3)       PRICE(2)(3)    REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>                <C>                <C>
Preferred Securities of Consumers Power
  Company Financing I..................      4,000,000          $25.00          $100,000,000       $34,482.76
Subordinated Deferrable Interest Notes
  of Consumers Power Company(1)(4).....
Guarantee of Preferred Securities of
  Consumers Power Company Financing I
  by Consumers Power Company...........
Total..................................                                         $100,000,000       $34,482.76
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
 
(1) The Subordinated Deferrable Interest Notes will be purchased by, and
    constitute assets of, Consumers Power Company Financing I.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for Consumers Power Company's
    Subordinated Deferrable Interest Notes or its Guarantee.
                         ------------------------------
 
    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
     Information contained herein is subject to completion or amendment. A
     registration statement relating to these securities has been filed with the
     Securities and Exchange Commission. These securities may not be sold nor
     may offers to buy be accepted prior to the time the registration statement
     becomes effective. This prospectus shall not constitute an offer to sell or
     the solicitation of an offer to buy nor shall there be any sale of these
     securities in any jurisdiction in which such offer, solicitation or sale
     would be unlawful prior to registration or qualification under the
     securities laws of any such jurisdiction.
 
                 PRELIMINARY PROSPECTUS DATED NOVEMBER 3, 1995
PROSPECTUS (SUBJECT TO COMPLETION)
 
                         4,000,000 PREFERRED SECURITIES
                      CONSUMERS POWER COMPANY FINANCING I
               % TRUST ORIGINATED PREFERRED SECURITIES(SM) ("TOPRS(SM)")
                (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
                  GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
                            CONSUMERS POWER COMPANY
                            ------------------------
 
     The    % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby evidence preferred undivided beneficial interests in the assets
of Consumers Power Company Financing I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"). Consumers Power Company, a
Michigan corporation ("Consumers" or the "Company"), will own all the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing common undivided beneficial interests in
the assets of the Trust. The Trust exists for the sole purpose of issuing the
Trust Securities and investing the proceeds thereof in an equivalent principal
amount of    % Subordinated Deferrable Interest Notes due 2035 (the
"Subordinated Notes") of Consumers. The Subordinated Notes will be unsecured
obligations of Consumers and will be subordinate and junior in right of payment
to certain other indebtedness of Consumers, as described herein. Upon an event
of default under the Declaration (as defined herein), the holders of the
Preferred Securities will have a preference over the holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption and otherwise.
                                                        (continued on next page)
 
     SEE "RISK FACTORS" COMMENCING ON PAGE 5 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
 
     An application will be filed to list the Preferred Securities on the New
York Stock Exchange, Inc. (the "New York Stock Exchange"). If such application
is approved, trading of the Preferred Securities on the New York Stock Exchange
is expected to commence within a 30-day period after the initial delivery of the
Preferred Securities. See "Underwriting."
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
    EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
       SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
       COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
         PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
           OFFENSE.
 
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
                                               INITIAL PUBLIC        UNDERWRITING          PROCEEDS TO
                                              OFFERING PRICE(1)      COMMISSION(2)         TRUST(3)(4)
- -----------------------------------------------------------------------------------------------------------
<S>                                         <C>                  <C>                  <C>
Per Preferred Security......................           $                  (3)                   $
- -----------------------------------------------------------------------------------------------------------
Total.......................................       $                      (3)              $
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
 
(1) Plus accrued distributions, if any, from             , 1995.
 
(2) Consumers and the Trust have agreed to indemnify the several Underwriters
    against certain liabilities, including liabilities under the Securities Act
    of 1933, as amended. See "Underwriting."
 
(3) In view of the fact that the proceeds of the sale of the Preferred
    Securities will be invested in Subordinated Notes, Consumers has agreed to
    pay to the Underwriters as compensation for their arranging the investment
    therein of such proceeds, $       per Preferred Security (or $       in the
    aggregate); provided, that such compensation for sales of 10,000 or more
    Preferred Securities to a single purchaser will be      per Preferred
    Security. Therefore, to the extent of such sales, the actual amount of
    Underwriters' compensation will be less than the aggregate amount specified
    in the preceding sentence. See "Underwriting."
 
(4) Expenses of the offering which are payable by Consumers are estimated to be
    $            .
                            ------------------------
 
     The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about             ,
1995.
                            ------------------------
MERRILL LYNCH & CO.
               DEAN WITTER REYNOLDS INC.
                               A.G. EDWARDS & SONS, INC.
                                            FIRST OF MICHIGAN CORPORATION
                                                                     RONEY & CO.
                            ------------------------
 
               The date of this Prospectus is             , 1995.
 
(SM) "TRUST ORIGINATED PREFERRED SECURITIES" AND "TOPRS" ARE SERVICE MARKS OF
                           MERRILL LYNCH & CO., INC.
<PAGE>   3
 
(continued from previous page)
 
     Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of    % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on December 31, March 31, June 30 and September 30 of each
year commencing December 31, 1995 ("distributions"). The payment of
distributions out of moneys held by the Trust, and payments on liquidation of
the Trust or the redemption of Preferred Securities, as set forth below, are
guaranteed by Consumers (the "Preferred Securities Guarantee") to the extent the
Trust has funds available therefor as described under "Description of the
Preferred Securities Guarantee." The obligations of Consumers under the
Preferred Securities Guarantee are subordinate and junior in right of payment to
all other liabilities of Consumers and will rank pari passu with the most senior
preferred stock issued by Consumers. The obligations of Consumers under the
Subordinated Notes are subordinate and junior in right of payment to all present
and future Senior Indebtedness (as defined herein) of Consumers. The Senior
Indebtedness of Consumers aggregated approximately $2,456 million at June 30,
1995.
 
     The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and interest and other
payment dates on the Subordinated Notes, which will be the sole assets of the
Trust. As a result, if principal or interest is not paid on the Subordinated
Notes, no amounts will be paid on the Preferred Securities. If Consumers does
not make principal or interest payments on the Subordinated Notes, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Preferred Securities Guarantee will not apply to
such distributions until the Trust has sufficient funds available therefor.
 
     Consumers has the right to defer payments of interest on the Subordinated
Notes by extending the interest payment period on the Subordinated Notes, at any
time, for up to 20 consecutive quarters (each, an "Extension Period"). If
interest payments are so deferred, distributions on the Trust Securities will
also be deferred. Despite such deferral, distributions will continue to accrue
with interest thereon (to the extent permitted by applicable law) at an annual
rate of    % per annum, compounded quarterly, and during any Extension Period,
holders of Preferred Securities will be required to include deferred interest
income in their gross income for United States federal income tax purposes in
advance of receipt of the cash interest payments attributable to such deferred
income. There could be multiple Extension Periods of varying lengths throughout
the term of the Subordinated Notes. See "Description of the Subordinated Notes
- -- Option to Extend Interest Payment Period," "Risk Factors -- Option to Extend
Interest Payment Period" and "Certain Federal United States Income Tax
Consequences -- Original Issue Discount, Premium and Market Discount." In the
event of any such deferral, the holders of the Preferred Securities will not
have the right to appoint a special representative or trustee or otherwise act
to protect their interests.
 
     The Subordinated Notes are redeemable by Consumers (in whole or in part)
from time to time, on or after December 31, 2000 or at any time in certain
circumstances upon the occurrence of a Special Event (as defined herein). If
Consumers redeems Subordinated Notes, the Trust must redeem Trust Securities
having an aggregate liquidation amount equal to the aggregate principal amount
of the Subordinated Notes so redeemed at $25 per Trust Security plus accrued and
unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities -- Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity of the
Subordinated Notes. The Subordinated Notes mature on December 31, 2035. In
addition, upon the occurrence of a Special Event arising from a change in law or
a change in legal interpretation, unless the Subordinated Notes are redeemed in
the limited circumstances described below, the Trust shall be terminated with
the result that the Subordinated Notes will be distributed to the holders of the
Preferred Securities, on a pro rata basis, in lieu of any cash distribution. In
the case of the occurrence of a Special Event, Consumers will have the right in
certain circumstances to redeem the Subordinated Notes, which would result in
the redemption by the Trust of the Trust Securities in the same amount on a pro
rata basis. If the Subordinated Notes are distributed to the holders of the
Preferred Securities, Consumers will use its best efforts to have the
Subordinated Notes listed on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Subordinated Notes."
 
     In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, winding-up or
termination the Subordinated Notes are distributed to the holders of the
Preferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution."
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
 
                                        2
<PAGE>   4
 
                             AVAILABLE INFORMATION
 
     Consumers and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Subordinated Notes, the Preferred
Securities and the Preferred Securities Guarantee offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. Statements or extracts presented in this
Prospectus from financial statements, contracts, agreements or other documents
included as exhibits to the Registration Statement are not necessarily complete.
With respect to each such financial statement, contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is hereby
made to the exhibit for a more complete description of the matter involved.
 
     Consumers is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, information statements and other information with the
Commission. Such reports, information statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Such reports, information
statements and other information concerning Consumers may also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, the securities exchange on which certain of Consumers' securities are
listed.
 
     No separate financial statements of the Trust are included herein.
Consumers and the Trust do not consider that such financial statements would be
material to holders of the Preferred Securities because the Trust is a newly
formed special purpose entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than as set forth below. See "Consumers Power Company Financing
I."
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents filed by Consumers with the Commission (File No.
1-5611) are incorporated in this Prospectus by reference and made a part hereof:
 
          (i) Consumers' Annual Report on Form 10-K for the year ended December
     31, 1994;
 
          (ii) Consumers' Quarterly Reports on Form 10-Q for the quarterly
     periods ended March 31, 1995 and June 30, 1995; and
 
          (iii) Consumers' Current Reports on Form 8-K dated January 10, 1995,
     dated February 2, 1995 and dated September 11, 1995.
 
     All documents subsequently filed by Consumers pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated into
this Prospectus by reference and to be a part hereof from the respective dates
of filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference in this Prospectus shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
 
     Consumers will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated in this Prospectus by reference, other than certain exhibits
to such documents. Such requests should be directed to Consumers Power Company
at its principal executive offices located at 212 West Michigan Avenue, Jackson,
Michigan 49201 Attention: Senior Vice President and Chief Financial Officer;
telephone: (517) 788-0550.
 
                                        3
<PAGE>   5
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus.
 
     Preferred Securities Offered. 4,000,000      % Trust Originated Preferred
Securities evidencing preferred undivided beneficial interests in the assets of
the Trust are offered hereby. Holders of the Preferred Securities are entitled
to receive cumulative cash distributions at an annual rate of      % of the
liquidation amount of $25 per Preferred Security, accruing from the date of
original issuance and payable quarterly in arrears on December 31, March 31,
June 30 and September 30 of each year commencing on December 31, 1995. The
distribution rate and the distribution and other payment dates for the Preferred
Securities will correspond to the interest rate and interest and other payment
dates on the Subordinated Notes, which will be the sole assets of the Trust. As
a result, if principal or interest is not paid on the Subordinated Notes, no
amounts will be paid on the Preferred Securities. See "Description of the
Preferred Securities."
 
     Subordinated Notes. The Trust will invest the proceeds from the issuance of
the Preferred Securities and Common Securities in an equivalent amount of      %
Subordinated Deferrable Interest Notes due 2035 of Consumers. The Subordinated
Notes will be subordinate and junior in right of payment to all Senior
Indebtedness of Consumers. See "Description of Subordinated Notes --
Subordination."
 
     Preferred Securities Guarantee. Payment of distributions out of moneys held
by the Trust, and payments on liquidation of the Trust or the redemption of
Preferred Securities are guaranteed by Consumers to the extent the Trust has
funds available therefor. If Consumers does not make principal or interest
payments on the Subordinated Notes, the Trust will not have sufficient funds to
make distributions on the Preferred Securities, in which event the Preferred
Securities Guarantee will not apply to such distributions until the Trust has
sufficient funds available therefor. See "Description of Preferred Securities
Guarantee" and "Effect of Obligations under the Subordinated Notes and the
Preferred Securities Guarantee" herein. The obligations of Consumers under the
Preferred Securities Guarantee are subordinate and junior in right of payment to
all other liabilities of Consumers and will rank pari passu with the most senior
preferred stock issued by Consumers. See "Risk Factors -- Ranking of Preferred
Securities Guarantee and Subordinated Notes" and "Description of the Preferred
Securities Guarantee."
 
     Interest Deferral. Consumers has the right to defer payments of interest on
the Subordinated Notes by extending the interest payment period on the
Subordinated Notes, at any time, for up to 20 consecutive quarters. If interest
payments on the Subordinated Notes are so deferred, distributions on the
Preferred Securities will also be deferred. During any deferral, distributions
will continue to accrue with interest thereon (to the extent permitted by law)
as described herein. There could be multiple Extension Periods of varying
lengths throughout the term of the Subordinated Notes. During an Extension
Period, holders of Preferred Securities will be required to include deferred
interest income in their gross income in advance of receipt of the cash interest
payments attributable thereto. See "Description of the Subordinated Notes --
Option to Extend Interest Payment Period" and "Certain United States Federal
Income Tax Consequences -- Original Issue Discount, Premium and Market
Discount."
 
     Redemption. The Subordinated Notes are redeemable by Consumers (in whole or
in part) from time to time, on or after December 31, 2000, or at any time in
certain circumstances upon the occurrence of a Special Event. If the
Subordinated Notes are redeemed, the Trust must redeem Trust Securities having
an aggregate liquidation amount equal to the aggregate principal amount of
Subordinated Notes so redeemed. The Preferred Securities will be redeemed upon
maturity of the Subordinated Notes. See "Description of the Preferred Securities
- -- Mandatory Redemption."
 
                                        4
<PAGE>   6
 
                                  RISK FACTORS
 
     Prospective purchasers of Preferred Securities should carefully review the
information contained or incorporated by reference elsewhere in this Prospectus
and should particularly consider the following matters:
 
RANKING OF PREFERRED SECURITIES GUARANTEE AND SUBORDINATED NOTES
 
     Consumers' obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of Consumers and
pari passu with the most senior preferred stock now or hereafter issued by
Consumers and with any guarantee now or hereafter entered into by Consumers in
respect of any preferred stock of any affiliate of Consumers. The obligations of
Consumers under the Subordinated Notes are subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined herein) of
Consumers. No payment of principal of (including redemption payments, if any),
premium, if any, or interest on, the Subordinated Notes may be made if (a) any
Senior Indebtedness of Consumers is not paid when due, or (b) the maturity of
any Senior Indebtedness has been accelerated because of a default. At June 30,
1995, Senior Indebtedness of Consumers aggregated approximately $2,456 million.
There are no terms in the Preferred Securities, the Subordinated Notes or the
Preferred Securities Guarantee that limit Consumers' ability to incur additional
indebtedness, including indebtedness that ranks senior to the Subordinated Notes
or the Preferred Securities Guarantee. See "Description of the Preferred
Securities Guarantee" and "Description of the Subordinated Notes --
Subordination."
 
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
 
     The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent the
Trust shall have funds available therefor, (ii) the Redemption Price, including
all accrued and unpaid distributions, to the date of the redemption, to the
extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Notes to the holders of
Preferred Securities) the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of payment therefor and (b) the amount of assets of the Trust remaining
available for distribution to holders of Preferred Securities in liquidation of
the Trust. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee Trustee (as
defined herein) or to direct the exercise of any trust or power conferred upon
the Preferred Guarantee Trustee under the Preferred Securities Guarantee. If the
Preferred Guarantee Trustee fails to enforce the Preferred Securities Guarantee,
any holder of Preferred Securities may institute a legal proceeding directly
against Consumers to enforce the Preferred Guarantee Trustee's rights under the
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Trust, the Preferred Guarantee Trustee or any other person or
entity. If Consumers were to default in its obligation to pay amounts payable on
the Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Preferred Securities Guarantee for payment of such
amounts. Instead, holders of the Preferred Securities would rely on the
enforcement by the Property Trustee (as defined herein) of its rights as
registered holder of the Subordinated Notes against Consumers, pursuant to the
terms of the Subordinated Notes. See "Description of the Preferred Securities
Guarantee -- Status of the Preferred Securities Guarantee" and "Description of
the Subordinated Notes -- Indenture Events of Default." The Declaration (as
defined herein) provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Preferred Securities Guarantee and the
Indenture (as defined herein).
 
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
 
     If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as a holder of the
 
                                        5
<PAGE>   7
 
Subordinated Notes against Consumers. In addition, the holders of a majority in
aggregate liquidation amount of the Preferred Securities will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Declaration, including the
right to direct the Property Trustee to exercise the remedies available to it as
a holder of the Subordinated Notes. If the Property Trustee fails to enforce its
rights under the Subordinated Notes to the fullest extent permitted by law, a
holder of Preferred Securities may institute a legal proceeding directly against
Consumers to enforce the Property Trustee's rights under the Subordinated Notes
without first instituting any legal proceeding against the Property Trustee or
any other person or entity, including the Trust.
 
OPTION TO EXTEND INTEREST PAYMENT PERIOD
 
     Consumers has the right under the Indenture to defer payments of interest
on the Subordinated Notes by extending the interest payment period at any time,
and from time to time, on the Subordinated Notes. As a consequence of such an
extension, quarterly distributions on the Preferred Securities would be deferred
(but despite such deferral would continue to accrue with interest thereon
compounded quarterly) by the Trust during any such extended interest payment
period. Such right to extend the interest payment period for the Subordinated
Notes is limited to a period not exceeding 20 consecutive quarters for any such
extension. In the event that Consumers exercises this right to defer payments of
interest, then (a) Consumers shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase or make a liquidation payment
with respect to, any of its capital stock, (b) Consumers shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Consumers which rank
pari passu with or junior to the Subordinated Notes and (c) Consumers shall not
make any guarantee payments with respect to the foregoing (other than pursuant
to the Preferred Securities Guarantee), provided, however, Consumers may declare
and pay a stock dividend where the dividends stock is the same stock as that on
which the dividend is being paid. Prior to the termination of any such Extension
Period, Consumers may further defer payments of interest by further extending
the interest payment period, provided that such Extension Period, together with
all such previous and further extensions thereof, may not exceed 20 consecutive
quarters or extend beyond the maturity of the Subordinated Notes. Upon the
termination of any Extension Period and the payment of all amounts then due,
Consumers may select a new Extension Period, as if no Extension Period had
previously been declared, subject to the above requirements. See "Description of
the Preferred Securities -- Distributions" and "Description of the Subordinated
Notes -- Option to Extend Interest Payment Period."
 
     Because Consumers has the right to extend the interest payment period for
the Subordinated Notes, the Subordinated Notes will be treated as having been
issued with original issue discount ("OID") for United States federal income tax
purposes. Should Consumers exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income (as OID) for United States federal income tax purposes
in respect of the deferred interest allocable to its Preferred Securities. As a
result, holders of Preferred Securities will recognize income for United States
federal income tax purposes in advance of the receipt of cash, regardless of the
holders' regular method of accounting, and will not receive cash from the Trust
related to such income if such holder disposes of its Preferred Securities prior
to the record date for the date on which distributions of such amounts are made.
Consumers has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Subordinated Notes.
However, should Consumers determine to exercise such right in the future, the
market price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
Consumers' right to defer interest payments, the market price of the Preferred
Securities (which represent an undivided beneficial interest in the Subordinated
Notes) may be more volatile than other securities on which OID accrues that are
not subject to such rights. In addition, if the issue price of the Subordinated
Notes at the time of the issuance of the Preferred Securities is less than their
stated principal amount, the difference will be additional OID, a pro rata share
of which will be includible in the gross income of the holders of the
 
                                        6
<PAGE>   8
 
Preferred Securities over the term of the Preferred Securities. See "Certain
United States Federal Income Tax Consequences -- Original Issue Discount,
Premium and Market Discount."
 
SPECIAL EVENT DISTRIBUTION
 
     In the case of a Special Event, in certain circumstances Consumers shall
have the right to redeem the Subordinated Notes, in whole or in part, in which
event the Trust will redeem the Trust Securities on a pro rata basis to the same
extent as the Subordinated Notes are redeemed. Otherwise, upon the occurrence of
a Special Event, the Trust will be terminated, with the result that the
Subordinated Notes would be distributed to the holders of the Trust Securities
in connection with the liquidation of the Trust. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and "Certain
United States Federal Income Tax Consequences."
 
     There can be no assurance as to the market prices at such time for the
Preferred Securities or the Subordinated Notes that may be distributed in
exchange for Preferred Securities if a termination or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Subordinated Notes that the investor may receive on termination
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Subordinated Notes upon the
occurrence of a Special Event, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Subordinated Notes and
should carefully review all the information regarding the Subordinated Notes
contained herein. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution" and "Description of the Subordinated Notes."
 
LIMITED VOTING RIGHTS
 
     Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Consumers Trustees (as defined herein), which voting
rights are vested exclusively in Consumers as the holder of the Common
Securities. See "Description of the Preferred Securities -- Voting Rights."
 
TRADING PRICE OF PREFERRED SECURITIES
 
     The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying
Subordinated Notes. A holder who disposes of his Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest on the Subordinated Notes through the date of
disposition in income as ordinary income (i.e., OID), and to add such amount to
its adjusted tax basis in its pro rata share of the underlying Subordinated
Notes deemed disposed of. To the extent the selling price is less than the
holder's adjusted tax basis (which will include, in the form of OID, all accrued
but unpaid interest), a holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "Certain United States
Federal Income Tax Consequences -- Original Issue Discount, Premium and Market
Discount" and "-- Sale of Preferred Securities."
 
                            CONSUMERS POWER COMPANY
 
     Consumers is a public utility serving almost six million of Michigan's nine
million residents in 68 counties in Michigan's Lower Peninsula. Consumers
conducts its principal operations through two business segments: electric
operations and gas operations. The electric operations include the generation,
purchase, transmission and distribution of electricity serving 62 of the 68
counties in the Lower Peninsula of Michigan. The gas operations include the
production, purchase, storage, transmission and distribution of gas serving 45
of the 68 counties in the Lower Peninsula of Michigan. Consumers' principal
executive offices are located at 212 West Michigan Avenue, Jackson, Michigan
49201, telephone (517) 788-0550.
 
                                        7
<PAGE>   9
 
                      CONSUMERS POWER COMPANY FINANCING I
 
     The Trust is a statutory business trust formed under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
October 30, 1995. The Trust's business is defined in a Declaration of Trust,
executed by Consumers, as sponsor (the "Sponsor"), and the Consumers Trustees.
The Declaration of Trust will be amended and restated in its entirety (as so
amended and restated, the "Declaration") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities.
Consumers will acquire all of the Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Trust exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Subordinated Notes and (iii) engaging in
only those other activities necessary appropriate, convenient or incidental
thereto. The Trust has a term of approximately 45 years, but may terminate
earlier as provided in the Declaration.
 
     The Trust's business and affairs will be conducted by the trustees (the
"Consumers Trustees") appointed by Consumers, as holder of the Common
Securities. The duties and obligations of the Consumers Trustees shall be
governed by the Declaration. Pursuant to the Declaration, the number of
Consumers Trustees will initially be five. Three of the Consumers Trustees (the
"Regular Trustees") will be persons who are employees or officers of, or
affiliated with, Consumers. The fourth trustee will be a financial institution
unaffiliated with Consumers which maintains a principal place of business in the
State of Delaware (the "Delaware Trustee"). The Bank of New York (Delaware),
will act as the Delaware Trustee until removed or replaced by the holder of the
Common Securities. The fifth trustee will serve as property trustee under the
Declaration and as indenture trustee for purposes of the Trust Indenture Act
(the "Property Trustee"). The Bank of New York will act as the Property Trustee
until removed or replaced by the holder of the Common Securities. The Bank of
New York will also act as indenture trustee under the Preferred Securities
Guarantee (the "Preferred Guarantee Trustee"). See "Description of the Preferred
Securities Guarantee."
 
     The Property Trustee will hold title to the Subordinated Notes for the
benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers and privileges under the Indenture (as defined
herein) as the holder of the Subordinated Notes. In addition, the Property
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Subordinated Notes for the benefit of the holders of the Trust Securities.
The Property Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Preferred Guarantee Trustee will hold
the Preferred Securities Guarantee for the benefit of the holders of the
Preferred Securities. Consumers, as the holder of all the Common Securities,
will have the right to appoint, remove or replace any Consumers Trustee and to
increase the number of Consumers Trustees, provided that the number of Consumers
Trustees shall be at least five, a majority of which shall be Regular Trustees.
Consumers will pay all fees and expenses related to the Trust, the offering of
the Trust Securities and the issuance of the Subordinated Notes. See
"Description of the Subordinated Notes -- Miscellaneous."
 
     The rights of the holders of the Preferred Securities, including rights to
information and voting rights, are as set forth in the Declaration, the Delaware
Business Trust Act, as amended (the "Trust Act"), and the Trust Indenture Act.
See "Description of the Preferred Securities."
 
     The principal place of business of the Trust shall be c/o Consumers Power
Company, 212 West Michigan Avenue, Jackson, Michigan 49201 (telephone number
(517) 788-0550).
 
                                        8
<PAGE>   10
 
           SELECTED FINANCIAL INFORMATION OF CONSUMERS POWER COMPANY
 
     The following information is qualified in its entirety by the information
appearing elsewhere in this Prospectus and by the information and financial
statements incorporated in this Prospectus by reference.
 
<TABLE>
<CAPTION>
                                                                      
                                                           
                                                            
                                          TWELVE MONTHS    
                                           ENDED JUNE                 YEAR ENDED DECEMBER 31,
                                               30,         ----------------------------------------------
                                              1995          1994      1993      1992      1991      1990
                                          -------------    ------    ------    ------    ------    ------
                                           (UNAUDITED)
<S>                                        <C>            <C>       <C>        <C>      <C>       <C>
Operating Revenue (in millions)..........    $ 3,331       $3,356    $3,243    $2,978    $2,908    $2,968
Net Income (Loss) (in millions)(a).......    $   235       $  226    $  198    $ (244)   $ (235)   $ (382)
Net Income (Loss) after Preferred
  Dividends (in millions)................    $   207       $  202    $  187    $ (255)   $ (260)   $ (393)
Ratios of Earnings to:
  Fixed Charges..........................       2.86         2.94      2.52        (b)       (c)       (d)
  Fixed Charges & Preferred Dividends....       2.29         2.40      2.31        (e)       (f)       (g)
</TABLE>
 
- -------------------------
(a) 1991 excludes an extraordinary after-tax loss of $14 million.
 
(b) For the year ended December 31, 1992, fixed charges exceeded earnings by
    $360 million. Earnings as defined include a $520 million pre-tax loss on the
    settlement of cost recovery issues relating to power purchases from the MCV
    Partnership partially offset by $(15) million for potential customer refunds
    and other reserves related to 1992 but recorded in 1991. The ratio of
    earnings to fixed charges would have been 1.81 excluding these amounts.
 
(c) For the year ended December 31, 1991, fixed charges exceeded earnings by
    $309 million. Earnings as defined include $398 million of pre-tax
    write-downs and reserve amounts related to the abandoned Midland project and
    $44 million for potential customer refunds and other reserves recorded in
    1991 but related to 1992 and 1990. The ratio of earnings to fixed charges
    would have been 1.40 excluding these amounts.
 
(d) For the year ended December 31, 1990, fixed charges exceeded earnings by
    $228 million. Earnings as defined include $716 million of pre-tax
    write-downs and reserve amounts related to the abandoned Midland project and
    $(29) million for potential customer refunds and other reserves related to
    1990 but recorded in 1991. The ratio of earnings to fixed charges would have
    been 2.46 excluding these amounts.
 
(e) For the year ended December 31, 1992, fixed charges and preferred dividends
    exceeded earnings by $377 million. Earnings as defined include a $520
    million pre-tax loss on the settlement of cost recovery issues relating to
    power purchases from the MCV Partnership partially offset by $(15) million
    for potential customer refunds and other reserves related to 1992 but
    recorded in 1991. The ratio of earnings to fixed charges and preferred
    dividends would have been 1.65 excluding these amounts.
 
(f) For the year ended December 31, 1991, fixed charges and preferred dividends
    exceeded earnings by $324 million. Earnings as defined include $398 million
    of pre-tax write-downs and reserve amounts related to the abandoned Midland
    project and $44 million for potential customer refunds and other reserves
    recorded in 1991 but related to 1992 and 1990. The ratio of earnings to
    fixed charges and preferred dividends would have been 1.34 excluding these
    amounts.
 
(g) For the year ended December 31, 1990, fixed charges and preferred dividends
    exceeded earnings by $245 million. Earnings as defined include $716 million
    of pre-tax write-downs and reserve amounts related to the abandoned Midland
    project and $(29) million for potential customer refunds and other reserves
    related to 1990 but recorded in 1991. The ratio of earnings to fixed charges
    and preferred dividends would have been 2.33 excluding these amounts.
 
                                        9
<PAGE>   11
 
                   CAPITALIZATION OF CONSUMERS POWER COMPANY
 
     The following table sets forth the unaudited consolidated capitalization of
Consumers at June 30, 1995, and as adjusted to reflect the sale of the Preferred
Securities offered hereby and the application of the estimated net proceeds from
such sale. See "Use of Proceeds." The table should be read in conjunction with
Consumers' consolidated financial statements and notes thereto included in the
documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."
 
<TABLE>
<CAPTION>
                                                                               AT JUNE 30, 1995
                                                                               ----------------
                                                                                           AS
                                                                               ACTUAL    ADJUSTED
                                                                               ------    ------
                                                                                 IN MILLIONS
                                                                                 (UNAUDITED)
<S>                                                                            <C>       <C>
Short-term debt (includes notes payable and current portion of long-term
  debt and capital leases)..................................................   $  358    $  258
                                                                               ======    ======
Non-current portion of capital leases.......................................   $  109    $  109
Long-term debt (excluding current maturities)...............................    1,955     1,955
Company-obligated mandatorily redeemable preferred securities of Consumers
  Power Company Financing I(1)..............................................       --       100
Preferred Stock with no mandatory redemption................................      356       356
Common stockholders' equity.................................................    1,487     1,487
                                                                               ------    ------
     Total stockholders' equity.............................................    1,843     1,943
                                                                               ------    ------
Total Capitalization........................................................   $3,907    $3,907
                                                                               ======    ======
</TABLE>
 
- -------------------------
(1) As described in this Prospectus, the sole assets of the Trust will be the
      % Subordinated Deferrable Interest Notes due 2035 of Consumers with a
    principal amount of $103,092,784, and upon redemption of such debt, the
    Preferred Securities will be mandatorily redeemable.
 
                              ACCOUNTING TREATMENT
 
     The financial statements of the Trust will be consolidated with Consumers'
financial statements, with the Preferred Securities shown on Consumers'
consolidated financial statements as mandatorily redeemable preferred
securities. Note disclosures will discuss the Consumers' Guarantee of Consumers
Power Company Financing I Preferred Securities.
 
                                USE OF PROCEEDS
 
     The proceeds of the sale of the Preferred Securities will be invested by
the Trust in the Subordinated Notes of Consumers. Consumers will use the net
proceeds from the sale of such Subordinated Notes to provide a portion of the
funds required for Consumers' capital expenditures (acquiring property,
constructing, completing, extending, and improving facilities) and for general
corporate purposes. Initially, such proceeds will be used to repay a portion of
Consumers' short-term debt, which had an aggregate amount outstanding of
approximately $358 million at June 30, 1995. The short-term debt bears interest
at rates ranging from           to           .
 
                                       10
<PAGE>   12
 
                    DESCRIPTION OF THE PREFERRED SECURITIES
 
     The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee will act as the indenture trustee for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of the principal terms and provisions of the Preferred Securities does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement, of which this Prospectus is a part, the Trust Act and
the Trust Indenture Act.
 
GENERAL
 
     The Declaration authorizes the Regular Trustees, on behalf of the Trust, to
issue the Preferred Securities, which represent preferred undivided beneficial
interests in the assets of the Trust, and the Common Securities, which represent
common undivided beneficial interests in the assets of the Trust. All of the
Common Securities will be owned by Consumers. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the Preferred
Securities, except that upon the occurrence and during the continuation of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights to payment of the
holders of the Preferred Securities. The Declaration does not permit the
incurrence of any indebtedness by the Trust or the issuance by the Trust of any
securities other than the Trust Securities. Pursuant to the Declaration, the
Property Trustee will hold legal title to the Subordinated Notes for the Trust
and for the benefit of the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by
Consumers to the extent described under "Description of the Preferred Securities
Guarantee." The Preferred Guarantee Trustee will hold the Preferred Securities
Guarantee for the benefit of the holders of the Preferred Securities. The
Preferred Securities Guarantee does not cover payment of distributions on the
Preferred Securities when the Trust does not have sufficient available funds in
the Property Account to make such distributions.
 
DISTRIBUTIONS
 
     Distributions on the Preferred Securities will be fixed at a rate per annum
of   % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears will bear interest at such rate per annum (to the
extent permitted by applicable law). The term "distributions" as used herein
includes any such interest payable unless otherwise stated.
 
     Distributions on the Preferred Securities will be cumulative, will accrue
from           , 1995 and will be payable quarterly in arrears on December 31,
March 31, June 30 and September 30 of each year to the holders of record on the
applicable record date, commencing December 31, 1995 when, as and if available
for payment by the Property Trustee, except as otherwise described below. The
amount of distributions payable for any full quarterly period will be computed
on the basis of a 360-day year of twelve 30-day months, and for any period
shorter than a full quarter, on the basis of the actual number of days elapsed
in such a 90-day quarter.
 
     Consumers has the right under the Indenture to defer payments of interest
on the Subordinated Notes by extending the interest payment period from time to
time on the Subordinated Notes which, if exercised, would defer quarterly
distributions on the Preferred Securities (though such distributions would
continue to accrue interest since interest would continue to accrue on the
Subordinated Notes) during any such extended interest payment period. In the
event that Consumers exercises this right, then (a) Consumers shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (b) Consumers shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by Consumers which rank pari passu with or junior
to the Subordinated Notes, and (c) Consumers shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities
 
                                       11
<PAGE>   13
 
Guarantee), provided, however, Consumers may declare and pay a stock dividend
where the dividend stock is the same stock as that on which the dividend is
being paid. Prior to the termination of any such Extension Period, Consumers may
further extend the interest payment period, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarters or extend beyond the maturity of the Subordinated Notes.
Upon the termination of any Extension Period and the payment of all amounts then
due, Consumers may select a new Extension Period as if no Extension Period had
previously been declared, subject to the above requirements. See "Description of
the Subordinated Notes -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Preferred Securities,
if funds are available therefor, as they appear on the books and records of the
Trust on the record date next following the termination of such Extension
Period.
 
     Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Subordinated Notes. See "Description of the
Subordinated Notes." The payment of distributions out of moneys held by the
Trust is guaranteed by Consumers to the extent set forth under "Description of
the Preferred Securities Guarantee."
 
     Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined herein) prior to the relevant
payment dates, which payment dates correspond to the interest payment dates on
the Subordinated Notes. Such distributions will be paid through the Property
Trustee, who will hold amounts received in respect of the Subordinated Notes in
the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "-- Book-Entry
Only Issuance -- The Depository Trust Company" below. In the event the Preferred
Securities shall not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select relevant record dates which shall be at
least one Business Day, but less than 60 Business Days, prior to the relevant
payment dates. In the event that any date on which distributions are to be made
on the Preferred Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a day on which banking institutions in
Delaware or New York, New York are authorized or required by law to close.
 
MANDATORY REDEMPTION
 
     The Subordinated Notes will mature on December 31, 2035 and may be
redeemed, in whole or in part, at any time on or after December 31, 2000, or at
any time in certain circumstances upon the occurrence of a Special Event. Upon
the repayment of the Subordinated Notes, whether at maturity or upon
acceleration, redemption or otherwise, the proceeds from such repayment or
payment shall simultaneously be applied to redeem Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Notes so repaid or redeemed at the Redemption Price; provided that,
except in the case of payments upon maturity, holders of Trust Securities shall
be given not less than 30 nor more than 60 days' notice of such redemption. See
"Description of the Subordinated Notes." In the event that fewer than all of the
outstanding Preferred Securities are to be redeemed, the Preferred Securities
will be redeemed pro rata as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
 
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
 
     "Tax Event" means that the Regular Trustees shall have received an opinion
from independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
 
                                       12
<PAGE>   14
 
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, which amendment or
change is enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of this Prospectus, there is more than an insubstantial risk
that (i) the Trust would be subject to United States federal income tax with
respect to interest accrued or received on the Subordinated Notes, (ii) interest
payable to the Trust on the Subordinated Notes would not be deductible in whole
or in part by Consumers for United States federal income tax purposes or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the date of this Prospectus.
 
     "Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the "1940 Act") to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" which is required to be registered under the 1940 Act.
 
     If, at any time, a Tax Event or an Investment Company Event (each, as
defined above, a "Special Event") shall occur and be continuing, the Trust
shall, except in the circumstances described below, be terminated with the
result that, after satisfaction of liabilities to creditors, Subordinated Notes
with an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
accrued and unpaid interest equal to accrued and unpaid distributions on, the
Trust Securities would be distributed to the holders of the Trust Securities, in
liquidation of such holders' interests in the Trust on a pro rata basis, within
90 days following the occurrence of such Special Event; provided, however, that
in the case of the occurrence of a Tax Event, as a condition of such termination
and distribution, the Regular Trustees shall have received a No Recognition
Opinion (as defined below); and, provided, further, that, if at the time there
is available to the Trust the opportunity to eliminate, within such 90-day
period, the Special Event by taking some ministerial action which has no adverse
effect on the Trust, Consumers or the holders of the Trust Securities, the Trust
will pursue such measure in lieu of dissolution.
 
     Furthermore, (i) if a Tax Event has occurred and, (a) Consumers has
received a Redemption Tax Opinion or (b) the Regular Trustees shall have been
informed by independent tax counsel that a No Recognition Opinion cannot be
delivered, or (ii) if an Investment Company Event has occurred, then Consumers
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Subordinated Notes in whole or in part for cash within 90 days
following the occurrence of such Tax Event or Investment Company Event, as the
case may be, and, following such redemption, Trust Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Notes so redeemed shall be redeemed by the Trust at the Redemption Price on a
pro rata basis; provided, however, that, if at the time there is available to
Consumers or the Trust the opportunity to eliminate, within such 90-day period,
such Tax Event or Investment Company Event by taking some ministerial action
which has no adverse effect on the Trust, Consumers or the holders of the Trust
Securities, Consumers or the Trust will pursue such measure in lieu of
redemption.
 
     "No Recognition Opinion" means an opinion from independent tax counsel
experienced in such matters to the effect that the holders of the Trust
Securities will not recognize any gain or loss for United States federal income
tax purposes as a result of a dissolution of the Trust and the distribution of
the Subordinated Notes. "Redemption Tax Opinion" means an opinion from
independent tax counsel experienced in such matters to the effect that, as a
result of a Tax Event, there is more than an insubstantial risk that Consumers
would be precluded from deducting the interest on the Subordinated Notes for
United States income tax purposes even after the Subordinated Notes were
distributed to the holders of the Trust Securities.
 
                                       13
<PAGE>   15
 
     If Subordinated Notes are distributed to the holders of the Preferred
Securities, Consumers will use its best efforts to have the Subordinated Notes
listed on the New York Stock Exchange or on such other exchange, on which the
Preferred Securities are then listed.
 
     After the date for any distribution of Subordinated Notes upon termination
of the Trust, (i) the Preferred Securities and Preferred Securities Guarantee
will no longer be deemed to be outstanding, (ii) the depositary or its nominee,
as the record holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Notes to be
delivered upon such distribution and (iii) any certificates representing
Preferred Securities and Preferred Securities Guarantee not held by the
depositary or its nominee will be deemed to represent Subordinated Notes having
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, such Preferred
Securities, until such certificates are presented to Consumers or its agent for
transfer or reissuance.
 
     There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Notes that may be distributed in exchange for the
Preferred Securities if a termination and liquidation of the Trust were to
occur. Accordingly, the Preferred Securities that an investor may purchase, or
the Subordinated Notes that the investor may receive on termination and
liquidation of the Trust, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby.
 
REDEMPTION PROCEDURES
 
     The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Trust Securities for all quarterly distribution periods terminating on or prior
to the date of redemption.
 
     If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Consumers has paid to the
Property Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Subordinated Notes, the Trust will irrevocably
deposit with the depositary funds sufficient to pay the applicable Redemption
Price and will give the depositary irrevocable instructions and authority to pay
the Redemption Price to the holders of the Preferred Securities. See "--
Book-Entry Only Issuance -- The Depository Trust Company." If notice of
redemption shall have been given and funds deposited as required, then
immediately prior to the close of business on the date of such deposit,
distributions will cease to accrue and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day. In
the event that payment of the Redemption Price in respect of Preferred
Securities is improperly withheld or refused and not paid either by the Trust or
by Consumers pursuant to the Preferred Securities Guarantee, distributions on
such Preferred Securities will continue to accrue, from the original redemption
date to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
 
     In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata as
described under "-- Book-Entry Only Issuance -- The Depository Trust Company"
below.
 
     Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Consumers or its affiliates
may, at any time and from time to time, purchase outstanding Preferred
Securities by tender, in the open market or by private agreement.
 
                                       14
<PAGE>   16
 
LIQUIDATION DISTRIBUTION UPON TERMINATION
 
     In the event of any voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Preferred Securities at that time
will be entitled to receive out of the assets of the Trust, after satisfaction
of liabilities to creditors, distributions in an amount equal to the aggregate
of the stated liquidation amount of $25 per Preferred Security plus accrued and
unpaid distributions thereon to the date of payment (the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Subordinated Notes in an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distributions on, the Preferred Securities have been distributed on a pro
rata basis to the holders of Preferred Securities in exchange for such Preferred
Securities.
 
     If, upon any such dissolution, winding-up or termination the Liquidation
Distribution can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Preferred Securities shall be paid
on a pro rata basis. The holders of the Common Securities will be entitled to
receive distributions upon any such dissolution, winding-up or termination pro
rata with the holders of the Preferred Securities, except that if a Declaration
Event of Default has occurred and is continuing, the Preferred Securities shall
have a preference over the Common Securities.
 
     Pursuant to the Declaration, the Trust shall terminate (i) on
              , 2040, the expiration of the term of the Trust, (ii) upon the
bankruptcy of Consumers, (iii) upon the filing of a certificate of dissolution
or its equivalent with respect to Consumers, or the revocation of the charter of
Consumers and the expiration of 90 days after the date of revocation without a
reinstatement thereof, (iv) upon the distribution of the Subordinated Notes
following the occurrence of a Special Event, (v) upon the entry of a decree of a
judicial dissolution of Consumers or the Trust or (vi) upon the redemption of
all of the Trust Securities.
 
DECLARATION EVENTS OF DEFAULT
 
     An event of default under the Indenture (an "Indenture Event of Default")
(see "Description of the Subordinated Notes -- Indenture Events of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"), provided that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities or its
consequences until all Declaration Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until such
Declaration Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee will be deemed to
be acting solely on behalf of the holders of the Preferred Securities and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee with respect to certain matters under the Declaration, and
therefore the Indenture.
 
     Upon the occurrence of a Declaration Event of Default, the Property
Trustee, as the sole holder of the Subordinated Notes, will have the right under
the Indenture to declare the principal of, and interest on, the Subordinated
Notes to be immediately due and payable.
 
VOTING RIGHTS
 
     Except as provided below, under the Trust Act, the Trust Indenture Act and
under "Description of the Preferred Securities Guarantee -- Amendments and
Assignment" and as otherwise required by law, the holders of the Preferred
Securities will have no voting rights. In the event Consumers elects to defer
payments of interest on the Subordinated Notes as described above under "--
Distributions," the holders of the Preferred Securities do not have the right to
appoint a special representative or trustee or otherwise act to protect their
interests.
 
     The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
 
                                       15
<PAGE>   17
 
Declaration, including the right to direct the Property Trustee, as the holder
of the Subordinated Notes, to (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debt Trustee (as
hereinafter defined) under the Indenture with respect to the Subordinated Notes,
(ii) waive any past Indenture Event of Default which is waivable under the Base
Indenture (as defined herein), or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Notes shall be due and
payable. If the Property Trustee fails to enforce its rights under the
Declaration to the fullest extent permitted by law, a holder of Preferred
Securities may institute a legal proceeding directly against any person to
enforce the Property Trustee's rights under the Declaration without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Debt Trustee with respect
to the Subordinated Notes. Such notice shall state that such Indenture Event of
Default also constitutes a Declaration Event of Default. The Property Trustee
shall not take any action described in clauses (i), (ii), (iii) or (iv) above
unless the Property Trustee has obtained an opinion of independent tax counsel
to the effect that, as a result of such action, the Trust will not be classified
as other than a grantor trust for United States federal income tax purposes.
 
     In the event the consent of the Property Trustee, as the holder of the
Subordinated Notes, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Property Trustee
shall request the direction of the holders of the Trust Securities with respect
to such amendment, modification or termination. The Property Trustee shall vote
with respect to such amendment, modification or termination as directed by a
majority in liquidation amount of the Preferred Securities and, if no
Declaration Event of Default has occurred and is continuing, a majority in
liquidation amount of the Common Securities, voting together as, provided that
where a consent under the Indenture would require the consent of more than a
majority of the holders in principal amount of Subordinated Notes affected
thereby (a "Super-Majority"), the Property Trustee may only give such consent at
the direction of the holders of at least the proportion in liquidation amount of
the Preferred Securities and Common Securities, respectively, which the relevant
Super-Majority represents of the aggregate principal amount of the Subordinated
Notes outstanding. The Property Trustee shall not take any such action in
accordance with the directions of the holders of the Trust Securities unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that, as a result of such action, the Trust will not be classified as
other than a grantor trust for United States federal income tax purposes.
 
     A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
 
     Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Preferred
Securities will be required for the Trust to redeem and cancel Preferred
Securities or distribute Subordinated Notes in accordance with the Declaration.
 
     Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Consumers or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, Consumers shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
 
     The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company."
 
                                       16
<PAGE>   18
 
     Holders of the Preferred Securities will have no rights to appoint or
remove the Consumers Trustees, who may be appointed, removed or replaced solely
by Consumers, as the direct or indirect holder of all the Common Securities.
 
MODIFICATION OF THE DECLARATION
 
     The Declaration may be amended or modified if approved and executed by a
majority of the Regular Trustees (and in certain circumstances the Property
Trustee or the Delaware Trustee), provided that if any proposed amendment
provides for, or the Regular Trustees otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise or (ii) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the Trust
Securities will be entitled to vote as a single class on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of at least a majority in liquidation amount of the Trust Securities
affected thereby, provided that a reduction of the principal amount or the
distribution rate, or a change in the payment dates or maturity of the Preferred
Securities, shall not be permitted without the consent of each holder of
Preferred Securities. In the event any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
 
     Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed to be an "investment
company" which is required to be registered under the 1940 Act.
 
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
 
     The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any business trust or other business entity (as
defined in the Trust Act), except as described below. The Trust may, with the
consent of a majority of the Regular Trustees and without the consent of the
holders of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, a trust organized as such under the laws of any State; provided,
that (i) such successor entity either (x) expressly assumes all of the
obligations of the Trust with respect to the Trust Securities or (y) substitutes
for the Trust Securities other securities having substantially the same terms as
the Trust Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Trust Securities rank in priority with respect
to distributions and payments upon liquidation, redemption, maturity and
otherwise, (ii) Consumers expressly acknowledges a trustee of such successor
entity which possesses the same powers and duties as the Property Trustee as the
holder of the Subordinated Notes, (iii) the Preferred Securities or any
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, (iv) such
merger, consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the
material rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, Consumers has
received an opinion from independent counsel to the Trust experienced in such
matters to the effect that (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the material rights, preferences and
privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution of
the holders' interest in the new entity), (B) following such merger,
consolidation, amalgamation or replacement, neither the Trust nor such successor
entity will be required to
 
                                       17
<PAGE>   19
 
register as an investment company under the 1940 Act and (C) following such
merger, consolidation, amalgamation or replacement, the Trust (or the successor
entity) will continue to be classified as a grantor trust for United States
federal income tax purposes, and (viii) Consumers guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified for United States federal income tax purposes as other
than a grantor trust.
 
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
 
     The Depository Trust Company ("DTC") will act as securities depository for
the Preferred Securities. The Preferred Securities will be issued only as fully
registered securities registered in the name of Cede & Co. (DTC's partnership
nominee). One or more fully registered Preferred Securities certificates will be
issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC.
 
     The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in a global Preferred
Security.
 
     DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
 
     Purchases of Preferred Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
 
     To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
 
                                       18
<PAGE>   20
 
     Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
 
     Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in the Preferred Securities to be
redeemed in accordance with its procedures.
 
     Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will consent or
vote with respect to Preferred Securities. Under its usual procedures, DTC would
mail an Omnibus Proxy to the Trust as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Preferred Securities are credited on
the record date (identified in a listing attached to the Omnibus Proxy).
 
     Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and will be the responsibility of such Participant and not of DTC, the Trust,
any trustee, the underwriters or Consumers, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
distributions to DTC is the responsibility of the Trust, disbursement of such
payments to Direct Participants is the responsibility of DTC, and disbursement
of such payments to the Beneficial Owners is the responsibility of Direct and
Indirect Participants.
 
     Except as provided below, a Beneficial Owner in a Preferred Security will
not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
 
     DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depository is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
Consumers) may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depository) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered.
 
     The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources, including DTC, that Consumers and the Trust
believe to be reliable, but Consumers and the Trust take no responsibility for
the accuracy thereof.
 
INFORMATION CONCERNING THE PROPERTY TRUSTEE
 
     The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Property Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Property Trustee, upon the
occurrence of a Declaration Event of Default, from exercising the rights and
powers vested in it by the Declaration. The Property Trustee also serves as
trustee under the Preferred Securities Guarantee.
 
                                       19
<PAGE>   21
 
REGISTRAR AND TRANSFER AGENT
 
     In the event that the Preferred Securities do not remain in book-entry only
form, the Property Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of the
Trust, but upon payment (with the giving of such indemnity as the Regular
Trustees may require) in respect of any tax or other government charges which
may be imposed in relation to it. The Trust will not be required to register or
cause to be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.
 
GOVERNING LAW
 
     The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
 
MISCELLANEOUS
 
     The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Consumers is
authorized and directed to conduct its affairs so that the Subordinated Notes
will be treated as indebtedness of Consumers for United States federal income
tax purposes. In this connection, the Regular Trustees and Consumers are
authorized to take any action, not inconsistent with applicable law, and the
restated articles of incorporation of Consumers, that each of the Regular
Trustees and Consumers determines in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the holders of the Preferred Securities.
 
               DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
 
     Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Consumers for the
benefit of the holders from time to time of the Preferred Securities. The
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. The Bank of New York will act as the Preferred Guarantee Trustee.
The terms of the Preferred Securities Guarantee will be those set forth therein
and those made part thereof by the Trust Indenture Act. The following summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Preferred Securities
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act. The Preferred
Securities will be held by the Preferred Guarantee Trustee for the benefit of
the holders of the Preferred Securities.
 
GENERAL
 
     Pursuant to the Preferred Securities Guarantee, Consumers will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full to
the holders of the Preferred Securities the Guarantee Payments (as defined
herein) (without duplication of amounts theretofore paid by the Trust), to the
extent not paid by the Trust, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid or
made by the Trust (the "Guarantee Payments") will be subject to the Preferred
Securities Guarantee (without duplication): (i) any accrued and unpaid
distributions that are required to be paid on the Preferred Securities, to the
extent the Trust has funds available therefor, (ii) the Redemption Price,
including all accrued and unpaid distributions to the date of the redemption, to
the extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Subordinated Notes to the holders of
Preferred Securities in exchange for Preferred Securities), the lesser of (a)
the aggregate of the liquidation amount and all accrued and unpaid distributions
on the Preferred
 
                                       20
<PAGE>   22
 
Securities to the date of payment and (b) the amount of assets of the Trust
remaining available for distribution to holders of Preferred Securities in
liquidation of the Trust. Consumers' obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by Consumers to the
holders of Preferred Securities or by causing the Trust to pay such amounts to
such holders.
 
     The Preferred Securities Guarantee will be a full and unconditional
guarantee of the Guarantee Payments with respect to the Preferred Securities
from the time of issuance of the Preferred Securities, but will not apply to the
payment of distributions and other payments on the Preferred Securities when the
Property Trustee does not have sufficient funds in the Property Account to make
such distributions or other payments. If Consumers does not make interest
payments on the Subordinated Notes held by the Property Trustee, the Trust will
not make distributions on the Preferred Securities issued by the Trust and will
not have funds available therefor. See "Description of the Subordinated Notes --
Certain Covenants."
 
     Consumers will also agree separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Preferred
Securities Guarantee, except that upon the occurrence and during the
continuation of an Indenture Event of Default, holders of Preferred Securities
shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
 
CERTAIN COVENANTS OF CONSUMERS
 
     In the Preferred Securities Guarantee, Consumers will covenant that, so
long as the Preferred Securities remain outstanding, if there shall have
occurred and is continuing any event that would constitute an event of default
under the Preferred Securities Guarantee or the Declaration, then (a) Consumers
shall not declare or pay any dividend on, or make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock, and (b) Consumers shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by Consumers which rank pari passu
with or junior to the Subordinated Notes or (c) Consumers shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee); provided, however, Consumers may declare and
pay a stock dividend where the dividend stock is the same stock as that on which
the dividend is being paid.
 
AMENDMENTS AND ASSIGNMENT
 
     Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Preferred Securities Guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the outstanding
Preferred Securities. The manner of obtaining any such approval of holders of
the Preferred Securities is set forth under "Description of the Preferred
Securities -- Voting Rights." All guarantees and agreements contained in the
Preferred Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of Consumers and shall inure to the benefit of the
Preferred Guarantee Trustee and the holders of the Preferred Securities then
outstanding.
 
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
 
     The Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities upon full payment of the
Redemption Price of all Preferred Securities, or upon distribution of the
Subordinated Notes to the holders of the Preferred Securities, and will
terminate completely upon full payment of the amounts payable upon liquidation
of the Trust. See "Description of the Subordinated Notes -- Indenture Events of
Default" for a description of the events of default and enforcement rights of
the holders of Subordinated Notes. The Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must repay to the Trust or Consumers, or
their successors, any sums paid to them under such Preferred Securities or the
Preferred Securities Guarantee.
 
                                       21
<PAGE>   23
 
EVENTS OF DEFAULT
 
     An event of default under the Preferred Securities Guarantee will occur
upon the failure of Consumers to perform any of its payment or other obligations
thereunder.
 
     The holders of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Preferred Guarantee Trustee in respect of the
Preferred Securities Guarantee or to direct the exercise of any trust or power
conferred upon the Preferred Guarantee Trustee under the Preferred Securities
Guarantee. If the Preferred Guarantee Trustee fails to enforce the Preferred
Securities Guarantee, any holder of Preferred Securities may institute a legal
proceeding directly against Consumers to enforce the Preferred Guarantee
Trustee's rights under the Preferred Securities Guarantee, without first
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee or any other person or entity.
 
STATUS OF THE PREFERRED SECURITIES GUARANTEE
 
     Consumers' obligations under the Preferred Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Consumers and will
rank (i) subordinate and junior in right of payment to all other liabilities of
Consumers, including the Subordinated Notes, except those liabilities of
Consumers made pari passu or subordinate by their terms, (ii) pari passu with
the most senior preferred stock now or hereafter issued by Consumers and with
any guarantee now or hereafter entered into by Consumers in respect of any
preferred stock of any affiliate of Consumers, and (iii) senior to Consumers'
common stock. The terms of the Preferred Securities provide that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
 
     The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). The Preferred Securities Guarantee will be deposited with the Preferred
Guarantee Trustee to be held for the benefit of the holders of the Preferred
Securities. Except as otherwise noted herein, the Preferred Guarantee Trustee
has the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. The Preferred Securities Guarantee will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Trust).
 
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
 
     The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to the Preferred Securities Guarantee and after the curing of all such
defaults that may have occurred, undertakes to perform only such duties as are
specifically set forth in the Preferred Securities Guarantee and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Preferred
Guarantee Trustee is under no obligation to exercise any of the powers vested in
it by the Preferred Securities Guarantee at the request of any holder of
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the foregoing
shall not relieve the Preferred Guarantee Trustee, upon the occurrence of an
event of default under the Preferred Securities Guarantee, from exercising the
rights and powers vested in it by the Preferred Securities Guarantee. The
Preferred Guarantee Trustee also serves as Property Trustee.
 
GOVERNING LAW
 
     The Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of Michigan.
 
                                       22
<PAGE>   24
 
                     DESCRIPTION OF THE SUBORDINATED NOTES
 
     Set forth below is a description of the terms of the Subordinated Notes.
The following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Indenture (the "Base
Indenture"), dated as of November   , 1995, between Consumers and Bank of New
York as Trustee (the "Debt Trustee"), as supplemented by a First Supplemental
Indenture, dated as of           , 1995 (the Base Indenture, as so supplemented,
is hereinafter referred to as the "Indenture"), the forms of which are filed as
an exhibit to the Registration Statement of which this Prospectus forms a part.
The terms of the Subordinated Notes will include those stated in the Indenture
and those made a part of the Indenture by reference to the Trust Indenture Act.
Certain capitalized terms used herein are defined in the Indenture.
 
     Under certain circumstances involving the termination of the Trust
following the occurrence of a Special Event, Subordinated Notes may be
distributed to the holders of Trust Securities in liquidation of the Trust. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
 
     If the Subordinated Notes are distributed to the holders of the Trust
Securities, Consumers will use its best efforts to have the Subordinated Notes
listed on the New York Stock Exchange or on such other exchange on which the
Preferred Securities are then listed.
 
GENERAL
 
     The Subordinated Notes will be issued as a series of unsecured subordinated
debt securities under the Indenture. The Subordinated Notes will be limited in
aggregate principal amount to approximately $103.1 million, such amount being
the sum of the aggregate stated liquidation amount of the Preferred Securities
and the capital contributed by Consumers in exchange for the Common Securities
(the "Payment").
 
     The Subordinated Notes are not entitled to the benefit of any sinking fund.
Unless redeemed earlier, the entire principal amount of the Subordinated Notes
will mature and become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest (as defined herein), if any, on
          , 2035.
 
     If Subordinated Notes are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in the Trust, it is
anticipated that such distribution would occur in book-entry form and that DTC,
or any successor depository for the Preferred Securities, would act as
depository for the Subordinated Notes and that the depository arrangements for
the Subordinated Notes would be substantially identical to those in effect for
the Preferred Securities. For a description of DTC and the terms of the
depository arrangements relating to payments, transfers, voting rights,
redemption and other notices and other matters, see "Description of the
Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company."
 
     Except under certain limited circumstances as described under "Description
of the Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company" for delivery of certificates evidencing beneficial ownership in
Preferred Securities, the Subordinated Notes would not be issuable as, or
exchangeable for, Subordinated Notes in definitive certificated form. In the
event Subordinated Notes are issued in certificated form, such Subordinated
Notes will be in denominations of $25 and integral multiples thereof, and
principal and interest will be payable, the transfer of the Subordinated Notes
will be registrable and Subordinated Notes will be exchangeable for Subordinated
Notes of authorized denominations of a like aggregate principal amount as
described under "Exchange and Transfer" and "Payment" below.
 
SUBORDINATION
 
     The Indenture provides (and each holder of Subordinated Notes by acceptance
thereof agrees) that the Subordinated Notes will be subordinated and junior in
right of payment to the prior payment in full of all Senior Indebtedness of
Consumers. No payment on account of principal of, premium, if any, or interest
on the Subordinated Notes and no acquisition of, or payment on account of any
sinking fund for, the Subordinated Notes may be made unless full payment of
amounts then due for principal, premium, if any, and interest then due on all
Senior Indebtedness by reason of the maturity thereof (by lapse of time,
acceleration or otherwise) has been made or duly provided for in cash in a
manner satisfactory to the holders of such Senior
 
                                       23
<PAGE>   25
 
Indebtedness. In addition, the Indenture provides that upon the happening and
during the continuation of any default in payment of the principal of, premium,
if any, or interest on any Senior Indebtedness when the same becomes due and
payable or in the event any judicial proceeding shall be pending with respect to
any such default, then unless and until such default shall have been cured or
waived or shall have ceased to exist, no payment shall be made by Consumers with
respect to the principal of, premium, if any, or interest on Subordinated Notes
or to acquire any Subordinated Notes or on account of any sinking fund provision
applicable to Subordinated Notes. Consumers shall give prompt written notice to
the Debt Trustee of any default under any Senior Indebtedness or under any
agreement pursuant to which Senior Indebtedness may have been issued. The
Indenture provisions described in this paragraph, however, do not prevent
Consumers from making a sinking fund payment with Subordinated Notes acquired
prior to the maturity of Senior Indebtedness. Upon any distribution of its
assets in connection with any dissolution, winding-up, liquidation or
reorganization of Consumers, whether voluntary, or involuntary, in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise, all Senior Indebtedness must be paid in full before the
holders of the Subordinated Notes are entitled to any payments whatsoever. Any
payment or distribution, whether in cash, securities or other property, which
would otherwise (but for the subordination provisions) be payable or deliverable
in respect of the Subordinated Notes shall be paid or delivered directly to the
holders of such Senior Indebtedness (or their representative or trustee) in
accordance with the priorities then existing among such holders until all Senior
Indebtedness shall have been paid in full before any payment or distribution is
made to the holders of Subordinated Notes. In the event that notwithstanding
such subordination provisions any payment or distribution of assets of any kind
or character is made on the Subordinated Notes before all Senior Indebtedness is
paid in full, the Debt Trustee or the holders of Subordinated Notes receiving
such payment will be required to pay over such payment or distribution to the
holders of such Senior Indebtedness. The rights of the holders of the
Subordinated Notes will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Notes are paid in full.
As a result of these subordination provisions, in the event of Consumers'
insolvency, holders of the Subordinated Notes may recover ratably less than
senior creditors of Consumers.
 
     "Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of the
Indenture or thereafter incurred, created or assumed: (i) indebtedness of
Consumers for money borrowed by Consumers (including purchase money obligations)
or evidenced by debentures (other than the Subordinated Notes), notes, bankers'
acceptances or other corporate debt securities or similar instruments issued by
Consumers; (ii) all capital lease obligations of Consumers; (iii) all
obligations of Consumers issued or assumed as the deferred purchase price of
property, all conditional sale obligations of Consumers and all obligations of
Consumers under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) obligations with
respect to letters of credit; (v) all indebtedness of others of the type
referred to in the preceding clauses (i) through (iv) assumed by or guaranteed
in any manner by Consumers or in effect guaranteed by Consumers; or; (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of Consumers (whether or
not such obligation is assumed by Consumers), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Notes, as the case may be, including all other debt securities and
guarantees in respect of those debt securities, issued to any other trusts,
partnerships or other entities affiliated with Consumers which act as a
financing vehicle of Consumers in connection with the issuance of preferred
securities by such entity or other securities which rank pari passu with, or
junior to, the Preferred Securities, and (2) any indebtedness between or among
Consumers and its affiliates and (vii) renewals, extensions or refunding of any
of the indebtedness referred to in the preceding clauses unless, in the case of
any particular indebtedness, renewal, extension or refunding, under the express
provisions of the instrument creating or evidencing the same or the assumption
or guarantee of the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal, extension or refunding thereof is not superior in
right of payment to the Subordinated Notes.
 
     The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. As of June 30, 1995, Senior Indebtedness of Consumers
aggregated approximately $2,456 million.
 
                                       24
<PAGE>   26
 
CERTAIN COVENANTS
 
     If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Consumers shall be in default with respect to
its payment of any obligations under the Preferred Securities Guarantee or the
Common Securities Guarantee, then (a) Consumers shall not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or make
a liquidation payment with respect to, any of its capital stock, (b) Consumers
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities (including guarantees) issued by
Consumers which rank pari passu with or junior to the Subordinated Notes and (c)
Consumers shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Preferred Securities Guarantee).
 
     If Consumers shall have given notice of its election of an Extension Period
as provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) Consumers shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (b) Consumers shall not make
any payment of interest, principal or premium, if any, on or repay, repurchase
or redeem any debt securities (including guarantees) issued by Consumers which
rank pari passu with or junior to the Subordinated Notes and (c) Consumers shall
not make any guarantee payments with respect to the foregoing (other than
pursuant to the Preferred Securities Guarantee) provided, however, Consumers may
declare and pay a stock dividend where the dividend stock is the same stock as
that on which the dividend is being paid. Any Extension Period with respect to
payment of interest on the Subordinated Notes will also apply to distributions
with respect to the Preferred Securities.
 
     For so long as the Trust Securities remain outstanding, Consumers will
covenant (i) to maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of
Consumers under the Indenture may succeed to Consumers' ownership of such Common
Securities, (ii) not to cause, as sponsor of the Trust, or to permit, as holder
of the Common Securities, the dissolution, winding-up or termination of the
Trust, except in connection with a distribution of the Subordinated Notes as
provided in the Declaration and in connection with certain mergers,
consolidations or amalgamations and (iii) to use its reasonable efforts to cause
the Trust (a) to remain a statutory business trust, except in connection with
the distribution of Subordinated Notes to the holders of Trust Securities in
liquidation of the Trust, the redemption of all of the Trust Securities of the
Trust, or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration, and (b) to otherwise continue to be classified as a grantor
trust for United States federal income tax purposes.
 
OPTIONAL REDEMPTION
 
     Consumers shall have the right to redeem the Subordinated Notes, in whole
or in part, from time to time, on or after December 31, 2000, or at any time in
certain circumstances upon the occurrence of a Special Event as described under
"Description of the Preferred Securities -- Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days' notice, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
redemption date. If a partial redemption of the Preferred Securities resulting
from a partial redemption of the Subordinated Notes would result in the
delisting of the Preferred Securities, Consumers may only redeem the
Subordinated Notes in whole.
 
INTEREST
 
     Each Subordinated Note shall bear interest at the rate of   % per annum
from the original issue date, payable quarterly in arrears on December 31, March
31, June 30 and September 30 of each year (each, an "Interest Payment Date"),
commencing December 31, 1995, to the person in whose name such Subordinated Note
is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. In the event the
Subordinated Notes shall not continue to remain in book-entry only form the
relevant record dates shall be the fifteenth day prior to each of the month in
which the applicable Interest Payment Date occurs.
 
                                       25
<PAGE>   27
 
     The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period will be computed on the basis of
the actual number of days elapsed in such 90-day quarter. In the event that any
date on which interest is payable on the Subordinated Notes is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
 
OPTION TO EXTEND INTEREST PAYMENT PERIOD
 
     Consumers shall have the right at any time, and from time to time, during
the term of the Subordinated Notes to defer payments of interest by extending
the interest payment period for a period not exceeding 20 consecutive quarters,
at the end of which Extension Period, Consumers shall pay all interest then
accrued and unpaid (including any Additional Interest, together with interest
thereon at the rate specified for the Subordinated Notes to the extent permitted
by applicable law); provided, that, during any such Extension Period, (a)
Consumers shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock, (b) Consumers shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by Consumers which rank pari passu with
or junior to the Subordinated Notes and (c) Consumers shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee), provided, however, Consumers may declare and
pay a stock dividend where the dividend stock is the same stock as that on which
the dividend is being paid. Prior to the termination of any such Extension
Period, Consumers may further defer payments of interest by extending the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity of the Subordinated Notes. Upon the
termination of any Extension Period and the payment of all amounts then due,
Consumers may select a new Extension Period, as if no Extension Period had
previously been declared, subject to the above requirements. No interest during
an Extension Period shall be due and payable, except at the end thereof.
Consumers has no present intention of exercising its rights to defer payments of
interest by extending the interest payment period on the Subordinated Notes. If
the Property Trustee shall be the sole registered holder of the Subordinated
Notes, Consumers shall give the Regular Trustees and the Property Trustee notice
of its election of such Extension Period one Business Day prior to the earlier
of (i) the next succeeding date on which distributions on the Preferred
Securities are payable or (ii) the date the Trust is required to give notice to
the New York Stock Exchange or other applicable self-regulatory organization or
to holders of the Preferred Securities of the record date or the date such
distribution is payable, but in any event not less than one Business Day prior
to such record date. The Regular Trustees shall give notice of Consumers'
selection of such Extension Period to the holders of the Preferred Securities.
If the Property Trustee shall not be the sole holder of the Subordinated Notes,
Consumers shall give the holders of the Subordinated Notes notice of its
selection of such Extension Period ten Business Days prior to the earlier of (i)
the Interest Payment Date or (ii) the date Consumers is required to give notice
to the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Subordinated Notes of the record or payment date of such
related interest payment, but in any event at least two Business Days before
such record date.
 
ADDITIONAL INTEREST
 
     If at any time the Trust or the Property Trustee shall be required to pay
any taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States, or any other taxing
authority, then, in any such case, Consumers will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by the Trust and the Property Trustee after
paying any such taxes, duties, assessments or other governmental charges will be
equal to the amounts the Trust and the Property Trustee would have received had
no such taxes, duties, assessments or other governmental charges been imposed.
 
                                       26
<PAGE>   28
 
INDENTURE EVENTS OF DEFAULT
 
     The occurrence of any of the following events will constitute an "Indenture
Event of Default" with respect to the Subordinated Notes: (a) default for 30
days in the payment of any interest on any of the Subordinated Notes (including
any Additional Interest) provided, however, that a valid extension of the
interest payment period as described above shall not constitute a default in the
payment of interest for this purpose; (b) default in the payment when due of any
of the principal of or the premium, if any, on any of the Subordinated Notes,
whether at maturity, upon redemption, acceleration or otherwise; (c) default in
the deposit or payment of any sinking fund or analogous payment in respect of
any Subordinated Notes; (d) default for 60 days by Consumers in the observance
or performance of any other covenant or agreement contained in the Subordinated
Notes or the Indenture after written notice thereof as provided in the
Indenture; (e) certain events of bankruptcy, insolvency or reorganization
relating to Consumers; (f) the voluntary or involuntary dissolution, winding-up
or termination of the Trust, except in connection with the distribution of
Subordinated Notes to the holders of Preferred Securities in liquidation of the
Trust, the redemption of all outstanding Trust Securities of the Trust and
certain mergers, consolidations or amalgamations permitted by the Declaration.
 
     If an Indenture Event of Default on Subordinated Notes shall have occurred
and be continuing, either the Debt Trustee or the holders of not less than 25%
in aggregate principal amount of the Subordinated Notes then outstanding may
declare the principal of all Subordinated Notes and the interest, if any,
accrued thereon to be due and payable immediately. Accordingly, the Property
Trustee, as the holder of the Subordinated Notes, will have the right to declare
the principal of and the interest on the Subordinated Notes (including any
Additional Interest, if any) and any other amounts payable under the Indenture
to be forthwith due and payable and to enforce its other rights as a creditor
with respect to the Subordinated Notes.
 
     Upon certain conditions, any such declarations may be rescinded and
annulled if all Indenture Events of Default, other than the nonpayment of
accelerated principal, with respect to the Subordinated Notes of all such and
Securities of other affected series then outstanding under the Indenture shall
have been cured or waived as provided in the Indenture by the holders of a
majority in aggregate principal amount of the Subordinated Notes and Securities
of other affected series then outstanding under the Indenture.
 
     The Indenture provides that, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of the holders of the Subordinated Notes, unless such holders shall
have offered to the Debt Trustee reasonable indemnity. Subject to such
provisions for indemnity and certain other limitations contained in the
Indenture, the holders of a majority in aggregate principal amount of the
Subordinated Notes of each affected series then outstanding (voting as one
class) will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or exercising any
trust or power conferred on the Debt Trustee, with respect to the Subordinated
Notes of such affected series.
 
     The Indenture provides that no holder of Subordinated Notes may institute
any action against Consumers under the Indenture (except actions for payment of
overdue principal, premium or interest) unless such holder previously shall have
given to the Debt Trustee written notice of default and continuance thereof and
unless the holders of not less than 25% in aggregate principal amount of the
Subordinated Notes and Securities of other affected series then outstanding
under the Indenture (voting as one class) shall have requested the Debt Trustee
to institute such action and shall have offered the Debt Trustee reasonable
indemnity, the Debt Trustee shall not have instituted such action within 60 days
of such request and the Debt Trustee shall not have received direction
inconsistent with such request by the holders of a majority in aggregate
principal amount of the Subordinated Notes and Securities of other affected
series then outstanding under the Indenture (voting as one class).
 
     The Indenture requires Consumers to furnish to the Debt Trustee annually a
statement as to Consumers' compliance with all conditions and covenants under
the Indenture. The Indenture provides that the Debt Trustee may withhold notice
to the holders of the Subordinated Notes of any series of any default affecting
such series (except defaults as to payment of principal, premium or interest on
the Subordinated Notes of
 
                                       27
<PAGE>   29
 
such series) if it considers such withholding to be in the interests of the
holders of the Subordinated Notes of such series.
 
EXCHANGE AND TRANSFER
 
     If the book-entry only system is not in effect, Subordinated Notes may be
presented for exchange and registered Subordinated Notes may be presented for
registration of transfer at the office or agency of the Debt Trustee subject to
the restrictions set forth therein, without service charge, but upon payment of
any taxes or other governmental charges due in connection therewith, subject to
any applicable limitations contained in the Indenture.
 
PAYMENT
 
     If the book-entry only system is not in effect, payment of the principal of
and the premium and interest, if any, on all Subordinated Notes will be made at
the office or agency of the Debt Trustee in the Borough of Manhattan, the City
of New York except that, at the option of Consumers, payment of any interest may
be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or (ii) by wire transfer to
an account maintained by the Person entitled thereto as specified in the
Security Register. Payment of any interest due on Subordinated Notes in
registered form will be made to the Persons in whose name such Subordinated
Notes are registered at the close of business on the record date for such
interest payments.
 
MODIFICATION OF THE INDENTURE
 
     The Indenture permits Consumers and the Debt Trustee to enter into
supplemental indentures thereto without the consent of the holders of the
Subordinated Notes to: (a) secure the Subordinated Notes, (b) evidence the
assumption by a successor corporation of the obligations of Consumers under the
Indenture and the Subordinated Notes then outstanding, (c) add covenants for the
protection of the holders of the Subordinated Notes, (d) cure any ambiguity or
correct any inconsistency in the Indenture, (e) establish the form and terms of
any series of securities under the Indenture and (f) evidence the acceptance of
appointment by a successor Debt Trustee.
 
     The Indenture also permits Consumers and the Debt Trustee, with the consent
of the holders of not less than a majority in aggregate principal amount of the
Subordinated Notes and other Indenture securities of all series then outstanding
and affected (voting as one class), to add any provisions to, or change in any
manner or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of the holders of the Subordinated Notes and other Indenture
Securities; provided, however, that Consumers and the Debt Trustee may not,
without the consent of the holder of each such security then outstanding and
affected thereby: (a) change the time of payment of the principal (or any
installment) of any such security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or or impair
the right to institute suit for the enforcement of any payment on any
Subordinated Note when due or (b) reduce the percentage in principal amount of
the Indenture securities, the consent of whose holders is required for any such
modification or for any waiver provided for in the Indenture.
 
     Prior to the acceleration of the maturity of any Subordinated Note or other
securities outstanding under the Indenture, the holders of a majority in
aggregate principal amount of Subordinated Notes and other securities
outstanding under the Indenture with respect to which a default or an Event of
Default shall have occurred and be continuing (voting as one class) may on
behalf of the holders of all such affected securities (including the
Subordinated Notes) waive any past default or Event of Default and its
consequences, except a default or an Event of Default in respect of a covenant
or provision of the Indenture or of any Subordinated Note or other Indenture
security which cannot be modified or amended without the consent of the holder
of each Subordinated Note or other Indenture security affected.
 
                                       28
<PAGE>   30
 
CONSOLIDATION, MERGER OR SALE OF ASSETS
 
     The Indenture provides that Consumers may consolidate with or merge into,
or sell, lease or convey its property as an entirety or substantially as an
entirety to, any other corporation if such corporation assumes the obligations
of Consumers under the Subordinated Notes and the Indenture and is organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia.
 
DEFEASANCE AND DISCHARGE
 
     The Indenture provides that, at the option of Consumers: Consumers will be
discharged from any and all obligations in respect of the Subordinated Notes
(except for certain obligations to register the transfer of or exchange the
Subordinated Notes of such series, to replace stolen, lost or mutilated
Subordinated Notes, to maintain paying agencies and to maintain the trust
described below), if Consumers irrevocably deposits in trust with the Debt
Trustee money, and/or securities backed by the full faith and credit of the
United States which, through the payment of the principal thereof and the
interest thereon in accordance with their terms, will provide money in an amount
sufficient to pay all the principal of and premium, if any, and interest on the
Subordinated Notes of such series on the stated maturity of such Subordinated
Notes (which may include one or more redemption dates designated by Consumers)
in accordance with the terms thereof. If such deposit occurs more than one year
prior to the stated maturity or redemption date of such Subordinated Notes,
Consumers is required, among other things, to deliver to the Debt Trustee an
opinion of independent counsel to the effect that the exercise of such option
would not cause the holders of the Subordinated Notes to recognize income, gain
or loss for United States federal income tax purposes as a result of such
defeasance, and such holders will be subject to United States federal income tax
on the same amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred.
 
     Consumers may also obtain a discharge of the Indenture with respect to all
securities then outstanding under the Indenture including Subordinated Notes
(except for certain obligations to register the transfer of or exchange such
Subordinated Notes to replace stolen, lost or mutilated Subordinated Notes, to
maintain paying agencies and to maintain the trust described below) by
irrevocably depositing in trust with the Debt Trustee money, and/or securities
backed by the full faith and credit of the United States which, through the
payment of the principal thereof and the interest thereon in accordance with
their terms, will provide money in an amount sufficient to pay all the principal
of and premium, if any, and interest on the Subordinated Notes on the stated
maturities thereof (including one or more redemption dates), provided that such
Subordinated Notes are by their terms due and payable, or are to be called for
redemption, within one year.
 
GOVERNING LAW
 
     The Indenture and Subordinated Notes will be governed by, and construed in
accordance with, the laws of the State of Michigan; provided, however, that the
rights, duties and obligations of the Trustee are governed and constructed in
accordance with the laws of the State of New York.
 
MISCELLANEOUS
 
     The Indenture will provide that Consumers will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Subordinated Notes,
(ii) the organization, maintenance and dissolution of the Trust, (iii) the
retention of the Consumers Trustees and (iv) the enforcement by the Property
Trustee of the rights of holders of Preferred Securities.
 
               EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED NOTES
                     AND THE PREFERRED SECURITIES GUARANTEE
 
     As set forth in the Declaration, the sole purposes of the Trust are to (i)
issue Trust Securities, (ii) invest the proceeds thereof in the Subordinated
Notes and (iii) engage in only those other activities necessary or incidental
thereto.
 
                                       29
<PAGE>   31
 
     As long as payments of interest and other payments are made when due on the
Subordinated Notes, such payments will be sufficient to cover distributions and
payments due on the Trust Securities primarily because (i) the aggregate
principal amount of Subordinated Notes will be equal to the sum of the aggregate
stated liquidation amount of the Trust Securities; (ii) the interest rate and
interest and other payment dates on the Subordinated Notes will match the
distribution rate and distribution and other payment dates for the Preferred
Securities; (iii) Consumers shall pay for all costs and expenses of the Trust;
and (iv) the Declaration provides that the Consumers Trustees shall not cause or
permit the Trust to, among other things, engage in any activity that is not
consistent with the purposes of the Trust.
 
     Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by Consumers as and to the extent set forth under
"Description of the Preferred Securities Guarantee". If Consumers does not make
interest payments on the Subordinated Notes purchased by the Trust, it is
expected that the Trust will not have sufficient funds to pay distributions on
the Preferred Securities. The Preferred Securities Guarantee is a full and
unconditional guarantee from the time of its issuance, but does not apply to any
payment of distributions unless and until the Trust has sufficient funds for the
payment of such distributions.
 
     If Consumers fails to make interest or other payments on the Subordinated
Notes when due (taking into account any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Voting
Rights," may direct the Property Trustee to enforce its rights under the
Subordinated Notes, including proceeding directly against Consumers to enforce
the Subordinated Notes. If the Property Trustee fails to enforce its rights
under the Subordinated Notes, to the fullest extent permitted by law, a holder
of Preferred Securities may, after a period of 30 days has elapsed from such
holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against Consumers to enforce the Property
Trustee's rights under the Subordinated Notes without first instituting any
legal proceeding against the Property Trustee or any other person or entity,
including the Trust.
 
     If Consumers fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Preferred Guarantee Trustee
to enforce its rights thereunder. If the Preferred Guarantee Trustee fails to
enforce the Preferred Securities Guarantee, any holder of Preferred Securities
may institute a legal proceeding directly against Consumers to enforce the
Preferred Guarantee Trustee's rights under the Preferred Securities Guarantee,
without first instituting a legal proceeding against the Trust, the Preferred
Guarantee Trustee or any other person or entity.
 
     The above mechanisms and obligations, taken together, are equivalent to a
full and unconditional guarantee by Consumers of payments due on the Preferred
Securities. See "Description of the Preferred Securities Guarantees -- General."
 
             CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
 
     The following summary of certain of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities to a holder that is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized under
the laws of the United States or any state thereof or the District of Columbia
or an estate or trust the income of which is subject to United States federal
income taxation regardless of its source (a "Holder") represents the opinion of
Reid & Priest LLP, special tax counsel to Consumers and the Trust. Investors
should be aware that the opinion of Reid & Priest LLP does not address any other
issue and is not binding on the Internal Revenue Service (the "Service") or the
courts. This summary does not address the United States federal income tax
consequences to persons other than Holders.
 
     This summary is based on the United States federal income tax laws,
regulations and rulings and decisions now in effect, all of which are subject to
change, possibly on a retroactive basis. This summary does not address the tax
consequences applicable to investors that may be subject to special tax rules
such as banks,
 
                                       30
<PAGE>   32
 
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt investors
or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a Holder. Further, it
does not include any description of any alternative minimum tax consequences or
the tax laws of any state or local government or of any foreign government that
may be applicable to a Holder.
 
CLASSIFICATION OF THE SUBORDINATED NOTES
 
     In connection with the issuance of the Subordinated Notes, Reid & Priest
LLP, special tax counsel to Consumers and the Trust, will render its opinion
generally to the effect that, although not entirely free from doubt, under then
current law and assuming full compliance with the terms of the Indenture (and
certain other documents), and based on certain facts and assumptions contained
in such opinion, the Subordinated Notes held by the Trust will be classified for
United States federal income tax purposes as indebtedness of Consumers.
 
CLASSIFICATION OF CONSUMERS POWER COMPANY FINANCING I
 
     Reid & Priest LLP, special tax counsel to Consumers and to the Trust, is of
the opinion that, under current law and assuming full compliance with the terms
of the Indenture and the Declaration (and certain other documents), the Trust
will be classified as a "grantor trust" for federal income tax purposes and will
not be classified as an association taxable as a corporation. Each Holder will
be treated as owning an undivided beneficial interest in the Subordinated Notes.
Accordingly, each Holder will be required to include in its gross income the OID
accrued with respect to its allocable share of Subordinated Notes.
 
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
 
     Because of the option that Consumers has, under the terms of the
Subordinated Notes, to defer payments of interest by extending interest payment
periods for up to not more than 20 consecutive quarters, the Subordinated Notes
will be treated as issued with OID in an amount equal to all of the stated
interest payments on the Subordinated Notes. Holders must include the OID
attributable to the Subordinated Notes in income on an economic accrual basis
before the receipt of cash attributable to the interest, regardless of their
method of tax accounting. The amount of OID that accrues in any month will
approximately equal the amount of the interest that accrues in that month at the
stated interest rate. In the event that the interest payment period is extended,
Holders will continue to accrue OID approximately equal to the amount of the
interest payment due at the end of the extended interest payment period on an
economic accrual basis over the length of the extended interest period.
Corporate Holders will not be entitled to a dividends-received deduction with
respect to any income earned with respect to the Preferred Securities.
 
     In addition, the amount of OID will be increased or decreased if the issue
price of the Subordinated Notes (offering price of the Preferred Securities at
the time of the issuance) is less than or greater than their stated principal
amount. It is anticipated that the issue price of the Subordinated Notes will
equal or exceed their stated principal amount. In the event that the issue price
of the Subordinated Notes is less than their stated principal amount, however,
the Treasury Regulations may be read to require a recalculation of the amount of
OID for each period that Consumers does not exercise its right to extend the
interest payment period. This recalculation could result in minor adjustments to
the amount of OID taxable to the Holders for such period. To the extent a
subsequent Holder acquires its Preferred Securities at a price that is greater
or less than the adjusted issue price of such Holder's share of Subordinated
Notes (the offering price of the Preferred Securities, adjusted for the accrual
of OID and interest payments), the Holder will be deemed to have acquired its
interest in the Preferred Securities with acquisition premium or with market
discount, as the case may be. A subsequent Holder acquiring Preferred Securities
at a premium will be permitted to reduce the amount of OID required to be
included in income to reflect the acquisition premium. A subsequent Holder
 
                                       31
<PAGE>   33
 
acquiring Preferred Securities at a market discount will also include the amount
of such discount in income in accordance with the market discount rules
described below.
 
     A subsequent Holder acquiring Preferred Securities at a market discount
generally will be required to recognize ordinary income to the extent of accrued
market discount upon the retirement of the underlying Subordinated Notes or, to
the extent of any gain, upon the disposition of the Preferred Securities. Such
market discount would accrue ratably, or, at the election of the Holder, under a
constant yield method over the remaining term of the Subordinated Notes. A
Holder will also be required to defer the deduction of a portion of the interest
paid or accrued on indebtedness incurred to purchase or carry Preferred
Securities acquired with market discount. In lieu of the foregoing, a Holder may
elect to include market discount in income currently as it accrues on all market
discount instruments acquired by such Holder in the taxable year of the election
or thereafter, in which case the interest deferral rule will not apply. A Holder
may elect, in lieu of applying the market discount or premium rules described
above, to account for all income under the Preferred Securities as if it were
OID.
 
RECEIPT OF SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
 
     Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution,"
Subordinated Notes may be distributed to Holders in exchange for the Preferred
Securities and in liquidation of the Trust. Such a distribution would be treated
as a non-taxable event to each Holder and each Holder would receive an aggregate
tax basis in the Subordinated Notes equal to such Holder's aggregate tax basis
in the Preferred Securities. A Holder's holding period in the Subordinated Notes
so received in liquidation of the Trust would include the period for which the
Preferred Securities were held by such Holder.
 
RECEIPT OF CASH UPON LIQUIDATION OF THE TRUST
 
     Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution," the
Subordinated Notes may be redeemed for cash and the proceeds of such redemption
distributed to Holders in redemption of the Preferred Securities. Under current
law, such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the Preferred Securities, and a Holder would
recognize gain or loss as if such Holder had sold such redeemed Preferred
Securities. See "Sale of Preferred Securities."
 
SALE OF PREFERRED SECURITIES
 
     A Holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale. A Holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by original
issue discount previously includible in such Holder's gross income to the date
of disposition (and the accrual of market discount, if any) and decreased by any
amortized premium, if any, or cash payments received on the Preferred
Securities. Subject to the market discount rules described above, any such gain
or loss generally will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale the Preferred Securities have been held for
more than one year.
 
     The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Notes. A Holder disposing of its Preferred Securities between
record dates for payments of distributions thereon will be required to include
accrued but unpaid interest through the date of disposition in income as
ordinary income (i.e. OID), and to add such amount to its adjusted tax basis in
its Preferred Securities. To the extent the selling price is less than the
Holder's adjusted tax basis (which will include, in the form of OID, all accrued
but unpaid interest), a Holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
 
                                       32
<PAGE>   34
 
INFORMATION REPORTING TO HOLDERS
 
     Subject to the qualifications discussed below, income on the Preferred
Securities will be reported to Holders on Form 1099, which forms should be
mailed to Holders of Preferred Securities by January 31 following each calendar
year.
 
     The Trust will be obligated to report annually to Cede & Co., as Holder of
record of the Preferred Securities, the OID with respect to the Preferred
Securities that accrued during that year. The Trust currently intends to report
such information on Form 1099 prior to January 31 following each calendar year
even though the Trust is not legally required to report to record Holders until
April 15 following each calendar year. The Underwriters have indicated to the
Trust that, to the extent that they hold Preferred Securities as nominees for
beneficial Holders, they currently expect to report the OID that accrued during
the calendar year on such Preferred Securities to such beneficial Holders on
Forms 1099 by January 31 following each calendar year. Under current law,
Holders of Preferred Securities who hold as nominees for beneficial Holders will
not have any obligation to report information regarding the beneficial Holders
to the Trust. The Trust, moreover, will not have any obligation to report to
beneficial Holders who are not also record holders. Thus, beneficial Holders of
Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their Preferred
Securities from such nominee Holders rather than the Trust.
 
BACKUP WITHHOLDING
 
     Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the Holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the Holder's federal income tax, provided that required
information is provided to the Service.
 
     THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
 
                                  UNDERWRITING
 
     Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as
representative (the "Representative"), has severally agreed to purchase the
number of Preferred Securities set forth opposite its name below. In the
Underwriting Agreement, the several Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased. In
the event of default by an Underwriter, the Underwriting
 
                                       33
<PAGE>   35
 
Agreement provides that, in certain circumstances, the purchase commitments of
the nondefaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.
 
<TABLE>
<CAPTION>
                                                                             NUMBER OF
                                 UNDERWRITER                            PREFERRED SECURITIES
        --------------------------------------------------------------  --------------------
        <S>                                                             <C>
        Merrill Lynch, Pierce, Fenner & Smith Incorporated............
        Dean Witter Reynolds Inc. ....................................
        A.G. Edwards & Sons, Inc. ....................................
        First of Michigan Corporation.................................
        Roney & Co....................................................
                                                                                 ------
               Total..................................................
                                                                                 ======
</TABLE>
 
     The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such price
less a concession of $       per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $       per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representative.
 
     In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Notes of Consumers, the
Underwriting Agreement provides that Consumers will agree to pay as compensation
("Underwriters' Compensation") to the Underwriters for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $       per Preferred Security (or $       in
the aggregate) for the accounts of the several Underwriters, provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $       per Preferred Security. Therefore, to the extent of
such sales, the actual amount of Underwriters' Compensation will be less than
the aggregate amount specified in the preceding sentence.
 
     During a period of 30 days from the date of the pricing of the Preferred
Securities, neither the Trust nor Consumers will, without the prior written
consent of the Representative, directly or indirectly, sell, offer to sell,
contract to sell, grant any option for the sale of, or otherwise dispose of, any
Preferred Securities, any security convertible into or exchangeable into or
exercisable for Preferred Securities or the Subordinated Notes or any debt
securities substantially similar to the Subordinated Notes or any equity
securities substantially similar to the Preferred Securities (except for the
Subordinated Notes and the Preferred Securities offered hereby).
 
     An application will be filed with the New York Stock Exchange for the
listing of the Preferred Securities, subject to official notice of issuance. If
approved for listing, trading of the Preferred Securities on the New York Stock
Exchange is expected to commence within a 30 day period after the initial
delivery of the Preferred Securities. The Representative has advised the Trust
that the Underwriters intend to make a market in the Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The Underwriters
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
 
     Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
 
     Consumers and the Trust have agreed to indemnify the Underwriters against,
or to contribute to payments that the Underwriters may be required to make in
respect of, certain liabilities, including liabilities under the Securities Act.
 
     Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Consumers in the ordinary course of business.
 
                                       34
<PAGE>   36
 
                                 LEGAL MATTERS
 
     Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Consumers and the Trust by Richards,
Layton & Finger, P.A., special Delaware counsel to Consumers and the Trust. The
validity of the Subordinated Notes, the Preferred Securities Guarantee and
certain matters relating thereto will be passed upon on behalf of Consumers by
Denise M. Sturdy, Esq, Assistant General Counsel for Consumers. Certain legal
matters will be passed upon on behalf of the Underwriters by Reid & Priest LLP.
Certain United States federal income taxation matters will be passed upon for
Consumers and the Trust by Reid & Priest LLP.
 
                                    EXPERTS
 
     The consolidated financial statements and schedule of Consumers as of
December 31, 1994 and 1993, and for each of the three years in the period ended
December 31, 1994 included or incorporated by reference in this Prospectus have
been audited by Arthur Andersen LLP (formerly Arthur Andersen & Co.),
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
 
     With respect to the unaudited interim consolidated financial information
for the periods ended March 31 and June 30, 1995 and 1994, Arthur Andersen LLP
have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report thereon states that
they did not audit and they did not express an opinion on that interim
consolidated financial information. Accordingly, the degree of reliance on their
report on that information should be restricted in light of the limited nature
of the review procedures applied. In addition, the accountants are not subject
to the liability provisions of Section 11 of the Securities Act for their report
on the unaudited interim consolidated financial information because that report
is not a "report" or "part" of the registration statement prepared or certified
by the accountants within the meanings of Sections 7 and 11 of the Securities
Act.
 
                                       35
<PAGE>   37
 
             ------------------------------------------------------
             ------------------------------------------------------
 
     NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CONSUMERS POWER COMPANY,
CONSUMERS POWER COMPANY FINANCING I OR THE UNDERWRITERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CONSUMERS POWER
COMPANY OR CONSUMERS POWER COMPANY FINANCING I, SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                         PAGE
                                         ----
<S>                                      <C>
Available Information...................   3
Incorporation of Certain Documents by
  Reference.............................   3
Prospectus Summary......................   5
Risk Factors............................   6
Consumers Power Company.................   7
Consumers Power Company Financing I.....   8
Selected Financial Information of
  Consumers Power Company...............   9
Capitalization of Consumers Power
  Company...............................  10
Accounting Treatment....................  10
Use of Proceeds.........................  10
Description of the Preferred
  Securities............................  11
Description of the Preferred Securities
  Guarantee.............................  20
Description of the Subordinated Notes...  23
Effect of Obligations Under the
  Subordinated Notes and the Preferred
  Securities Guarantee..................  29
Certain United States Federal Income
  Tax Consequences......................  30
Underwriting............................  33
Legal Matters...........................  34
Experts.................................  34
</TABLE>
 
             ------------------------------------------------------
             ------------------------------------------------------


             ------------------------------------------------------
             ------------------------------------------------------
 
                                   4,000,000
                              PREFERRED SECURITIES
 
                      CONSUMERS POWER COMPANY FINANCING I
 
                                  % TRUST ORIGINATED
                           PREFERRED SECURITIES SM
                                 ("TOPRS SM")
                          GUARANTEED TO THE EXTENT SET
                                  FORTH HEREIN
 
                            CONSUMERS POWER COMPANY
 
                          ---------------------------
 
                                   PROSPECTUS
                          ---------------------------
 
                              MERRILL LYNCH & CO.
                           DEAN WITTER REYNOLDS INC.
                           A.G. EDWARDS & SONS, INC.
                         FIRST OF MICHIGAN CORPORATION
                                  RONEY & CO.
 
                                           , 1995
 
             ------------------------------------------------------
             ------------------------------------------------------
<PAGE>   38
 
                PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
<TABLE>
<CAPTION>
                                                                              AMOUNT
                                                                            -----------
        <S>                                                                 <C>
        Securities and Exchange Commission filing fee....................   $ 34,482.76
        New York Stock Exchange listing fee..............................     22,150.00
        Rating Agency fees...............................................     83,000.00
        Trustees expenses................................................     15,000.00
        Printing and engraving fees......................................    200,000.00
        Accounting fees and expenses.....................................      5,000.00
        Legal fees and expenses..........................................     35,000.00
        Miscellaneous....................................................     10,500.00
                                                                            -----------
             Total.......................................................   $405,132.76
                                                                            ===========
</TABLE>
 
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The following resolution was adopted by the Board of Directors of Consumers
on May 6, 1987:
 
          RESOLVED: That effective March 1, 1987 the Company shall indemnify to
     the full extent permitted by law every person (including the estate, heirs
     and legal representatives of such person in the event of the decease,
     incompetency, insolvency or bankruptcy of such person) who is or was a
     director, officer, partner, trustee, employee or agent of the Company, or
     is or was serving at the request of the Company as a director, officer,
     partner, trustee, employee or agent of another corporation, partnership,
     joint venture, trust or other enterprise, against all liability, costs,
     expenses, including attorneys' fees, judgments, penalties, fines and
     amounts paid in settlement, incurred by or imposed upon the person in
     connection with or resulting from any claim or any threatened, pending or
     completed action, suit or proceeding whether civil, criminal,
     administrative, investigative or of whatever nature, arising from the
     person's service or capacity as, or by reason of the fact that the person
     is or was, a director, officer, partner, trustee, employee or agent of the
     Company or is or was serving at the request of the Company as a director,
     officer, partner, trustee, employee or agent of another corporation,
     partnership, joint venture, trust or other enterprise. Such right of
     indemnification shall not be deemed exclusive of any other rights to which
     the person may be entitled under statute, bylaw, agreement, vote of
     shareholders or otherwise.
 
     Article V of the Restated Articles of Incorporation reads:
 
          A director shall not be personally liable to the Company or its
     shareholders for monetary damages for breach of duty as a director except
     (i) for a breach of the director's duty of loyalty to the Company or its
     shareholders, (ii) for acts or omissions not in good faith or that involve
     intentional misconduct or a knowing violation of law, (iii) for a violation
     of Section 551(1) of the Michigan Business Corporation Act, and (iv) any
     transaction from which the director derived an improper personal benefit.
     No amendment to or repeal of this Article V, and no modification to its
     provisions by law, shall apply to, or have any effect upon, the liability
     or alleged liability of any director of the Company for or with respect to
     any acts or omissions of such director occurring prior to such amendment,
     repeal or modification.
 
     Article VI of the Restated Articles of Incorporation reads:
 
          Each director and each officer of the Company shall be indemnified by
     the Company to the fullest extent permitted by law against expenses
     (including attorneys' fees), judgments, penalties, fines and amounts paid
     in settlement actually and reasonably incurred by him or her in connection
     with the defense of any proceeding in which he or she was or is a party or
     is threatened to be made a party by reason of being or having been a
     director or an officer of the Company. Such right of indemnification is not
     exclusive of any other rights to which such director or officer may be
     entitled under any now or thereafter existing statute, any other provision
     of these Articles, bylaw, agreement, vote of shareholders or otherwise. If
     the Business Corporation Act of the State of Michigan is amended after
     approval by the
 
                                      II-1
<PAGE>   39
 
     shareholders of this Article VI to authorize corporate action further
     eliminating or limiting the personal liability of directors, then the
     liability of a director of the Company shall be eliminated or limited to
     the fullest extent permitted by the Business Corporation Act of the State
     of Michigan, as so amended. Any repeal or modification of this Article VI
     by the shareholders of the Company shall not adversely affect any right or
     protection of a director of the Company existing at the time of such repeal
     or modification.
 
Sections 561 through 571 of the Michigan Business Corporation Act provides as
follows:
 
          Sec. 561. A corporation has the power to indemnify a person who was or
     is a party or is threatened to be made a party to a threatened, pending, or
     completed action, suit, or proceeding, whether civil, criminal,
     administrative, or investigative and whether formal or informal, other than
     an action by or in the right of the corporation, by reason of the fact that
     he or she is or was a director, officer, employee, or agent of the
     corporation, or is or was serving at the request of the corporation as a
     director, officer, partner, trustee, employee, or agent of another foreign
     or domestic corporation, partnership, joint venture, trust, or other
     enterprise, whether for profit or not, against expenses, including
     attorneys' fees, judgments, penalties, fines, and amounts paid in
     settlement actually and reasonably incurred by him or her in connection
     with the action, suit, or proceeding, if the person acted in good faith and
     in a manner he or she reasonably believed to be in or not opposed to the
     best interests of the corporation or its shareholders, and with respect to
     a criminal action or proceeding, if the person had no reasonable cause to
     believe his or her conduct was unlawful. The termination of an action,
     suit, or proceeding by judgment, order, settlement, conviction, or upon a
     plea of nolo contendere or its equivalent, does not, of itself, create a
     presumption that the person did not act in good faith and in a manner which
     he or she reasonably believed to be in or not opposed to the best interests
     of the corporation or its shareholders, and, with respect to a criminal
     action or proceeding, had reasonable cause to believe that his or her
     conduct was unlawful.
 
          Sec. 562. A corporation has the power to indemnify a person who was or
     is a party or is threatened to be made a party to a threatened, pending, or
     completed action or suit by or in the right of the corporation to procure a
     judgment in its favor by reason of the fact that he or she is or was a
     director, officer, employee, or agent of the corporation, or is or was
     serving at the request of the corporation as a director, officer, partner,
     trustee, employee, or agent of another foreign or domestic corporation,
     partnership, joint venture, trust, or other enterprise, whether for profit
     or not, against expenses, including attorneys' fees, and amounts paid in
     settlement actually and reasonably incurred by the person in connection
     with the action or suit, if the person acted in good faith and in a manner
     the person reasonably believed to be in or not opposed to the best
     interests of the corporation or its shareholders. Indemnification shall not
     be made for a claim, issue, or matter in which the person has been found
     liable to the corporation except to the extent authorized in section 564c.
 
          Sec. 563. To the extent that a director, officer, employee, or agent
     of a corporation has been successful on the merits or otherwise in defense
     of an action, suit, or proceeding referred to in section 561 or 562, or in
     defense of a claim, issue, or matter in the action, suit, or proceeding, he
     or she shall be indemnified against actual and reasonable expenses,
     including attorneys' fees, incurred by him or her in connection with the
     action, suit, or proceeding and an action, suit, or proceeding brought to
     enforce the mandatory indemnification provided in this section.
 
          Sec. 564a. (1) An indemnification under section 561 or 562, unless
     ordered by the court, shall be made by the corporation only as authorized
     in the specific case upon a determination that indemnification of the
     director, officer, employee, or agent is proper in the circumstances
     because he or she has met the applicable standard of conduct set forth in
     sections 561 and 562 and upon an evaluation of the reasonableness of
     expenses and amounts paid in settlement. This determination and evaluation
     shall be made in any of the following ways:
 
             (a) By a majority vote of a quorum of the board consisting of
        directors who are not parties or threatened to be made parties to the
        action, suit, or proceeding.
 
                                      II-2
<PAGE>   40
 
             (b) If a quorum cannot be obtained under subdivision (a), by
        majority vote of a committee duly designated by the board and consisting
        solely of 2 of more directors not at the time parties or threatened to
        be made parties to the action, suit, or proceeding.
 
             (c) By independent legal counsel in a written opinion, which
        counsel shall be selected in 1 of the following ways:
 
                (i) By the board or its committee in the manner prescribed in
           subdivision (a) or (b).
 
                (ii) If a quorum of the board cannot be obtained under
           subdivision (a) and a committee cannot be designated under
           subdivision (b), by the board.
 
             (d) By all independent directors who are not parties or threatened
        to be made parties to the action, suit, or proceeding.
 
             (e) By the shareholders, but shares held by directors, officers,
        employees, or agents who are parties or threatened to be made parties of
        the action, suit, or proceeding may not be voted.
 
          (2) In the designation of a committee under subsection (1)(b) or in
     the selection of independent legal counsel under subsection (1)(c)(ii), all
     directors may participate.
 
          (3) If a person is entitled to indemnification under section 561 or
     562 for a portion of expenses, including reasonable attorneys' fees,
     judgments, penalties, fines, and amounts paid in settlement, but not for
     the total amount, the corporation may indemnify the person for the portion
     of the expenses, judgments, penalties, fines, or amounts paid in settlement
     for which the person is entitled to be indemnified.
 
          Sec. 564b. (1) A corporation may pay or reimburse the reasonable
     expenses incurred by a director, officer, employee, or agent who is a party
     or threatened to be made a party to an action, suit, or proceeding in
     advance of final disposition of the proceeding if all of the following
     apply:
 
             (a) The person furnishes the corporation a written affirmation of
        his or her good faith belief that he or she has met the applicable
        standard of conduct set forth in sections 561 and 562.
 
             (b) The person furnishes the corporation a written undertaking,
        executed personally or on his or her behalf, to repay the advance if it
        is ultimately determined that he or she did not meet the standard of
        conduct.
 
             (c) A determination is made that the facts then known to those
        making the determination would not preclude indemnification under this
        act.
 
          (2) The undertaking required by subsection (1)(b) must be an unlimited
     general obligation of the person but need not be secured.
 
          (3) Determinations and evaluations under this section shall be made in
     the manner specified in section 564a.
 
          Sec. 564c. A director, officer, employee, or agent of the corporation
     who is a party or threatened to be made a party to an action, suit, or
     proceeding may apply for indemnification to the court conducting the
     proceeding or to another court of competent jurisdiction. On receipt of an
     application, the court after giving any notice it considers necessary may
     order indemnification if it determines that the person is fairly and
     reasonably entitled to indemnification in view of all the relevant
     circumstances, whether or not he or she met the applicable standard of
     conduct set forth in sections 561 and 562 or was adjudged liable as
     described in section 562, but if he or she was adjudged liable, his or her
     indemnification is limited to reasonable expenses incurred.
 
          Sec. 565. (1) The indemnification or advancement of expenses provided
     under sections 561 to 564c is not exclusive of other rights to which a
     person seeking indemnification or advancement of expenses may be entitled
     under the articles of incorporation, bylaws, or a contractual agreement.
     The total amount
 
                                      II-3
<PAGE>   41
 
     of expenses advanced or indemnified from all sources combined shall not
     exceed the amount of actual expenses incurred by the person seeking
     indemnification or advancement of expenses.
 
          (2) The indemnification provided for in sections 561 to 565 continues
     as to a person who ceases to be a director, officer, employee, or agent and
     shall inure to the benefit of the heirs, personal representatives, and
     administrators of the person.
 
          Sec. 567. A corporation shall have power to purchase and maintain
     insurance on behalf of any person who is or was a director, officer,
     employee, or agent of the corporation, or is or was serving at the request
     of the corporation as a director, officer, partner, trustee, employee, or
     agent of another corporation, partnership, joint venture, trust, or other
     enterprise against any liability asserted against him or her and incurred
     by him or her in any such capacity or arising out of his or her status as
     such, whether or not the corporation would have power to indemnify him or
     her against liability under sections 561 to 565.
 
          Sec. 569. For purposes of sections 561 to 567, "corporation" includes
     all constituent corporations absorbed in a consolidation or merger and the
     resulting or surviving corporation, so that a person who is or was a
     director, officer, partner, trustee, employee, or agent of the constituent
     corporation or is or was serving at the request of the constituent
     corporation as a director, officer, employee, or agent of another foreign
     or domestic corporation, partnership, joint venture, trust, or other
     enterprise whether for profit or not shall stand in the same position under
     the provisions of this section with respect to the resulting or surviving
     corporation as the person would if he or she had served the resulting or
     surviving corporation in the same capacity.
 
        Sec. 571. For the purposes of sections 561 to 567:
 
             (a) "Fines" shall include any excise taxes assessed on a person
        with respect to an employee benefit plan.
 
             (b) "Other enterprises" shall include employee benefit plans.
 
             (c) "Serving at the request of the corporation" shall include any
        service as a director, officer, employee, or agent of the corporation
        which imposes duties on, or involves services by, the director, officer,
        employee, or agent with respect to an employee benefit plan, its
        participants, or its beneficiaries.
 
             (d) A person who acted in good faith and in a manner he or she
        reasonably believed to be in the interest of the participants and
        beneficiaries of an employee benefit plan shall be considered to have
        acted in a manner "not opposed to the best interests of the corporation
        or its shareholders" as referred to in sections 561 and 562.
 
     Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of Consumers or of Consumers' subsidiaries and
Consumers' officers and directors are indemnified against such losses by reason
of their being or having been directors of officers of another corporation,
partnership, joint venture, trust or other enterprise at Consumers' request. In
addition, Consumers has indemnified each of its present directors by contracts
that contain affirmative provisions essentially similar to those in sections 561
through 571 of the Michigan Business Corporation Act cited above.
 
     Section 10.4 of the Declaration of Trust provides that:
 
          (a)(i) Consumers shall indemnify, to the full extent permitted by law,
     any Company Indemnified Person (as defined therein) who was or is a party
     or is threatened to be made a party to any threatened, pending or completed
     action, suit or proceeding, whether civil, criminal, administrative or
     investigative (other than an action by or in the right of the Trust) by
     reason of the fact that he is or was a Company Indemnified Person against
     expenses (including attorneys' fees), judgments, fines and amounts paid in
     settlement actually and reasonably incurred by him in connection with such
     action, suit or proceeding if he acted in good faith and in a manner he
     reasonably believed to be in or not opposed to the best interests
 
                                      II-4
<PAGE>   42
 
     of the Trust, and, with respect to any criminal action or proceeding, had
     no reasonable cause to believe his conduct was unlawful. The termination of
     any action, suit or proceeding by judgment, order, settlement, conviction,
     or upon a plea of nolo contendere or its equivalent, shall not, of itself,
     create a presumption that the Company Indemnified Person did not act in
     good faith and in a manner which he reasonably believed to be in or not
     opposed to the best interests of the Trust, and, with respect to any
     criminal action or proceeding, had reasonable cause to believe that his
     conduct was unlawful.
 
          (ii) Consumers shall indemnify, to the full extent permitted by law,
     any Company Indemnified Person who was or is a party or is threatened to be
     made a party to any threatened, pending or completed action or suit by or
     in the right of the Trust to procure a judgment in its favor by reason of
     the fact that he is or was a Company Indemnified Person against expenses
     (including attorneys' fees) actually and reasonably incurred by him in
     connection with the defense or settlement of such action or suit if he
     acted in good faith and in a manner he reasonably believed to be in or not
     opposed to the best interests of the Trust and except that no such
     indemnification shall be made in respect of any claim, issue or matter as
     to which such Company Indemnified Person shall have been adjudged to be
     liable to the Trust unless and only to the extent that the Court of
     Chancery of the State of Delaware or the court in which such action or suit
     was brought shall determine upon application that, despite the adjudication
     of liability but in view of all the circumstances of the case, such person
     is fairly and reasonably entitled to indemnity for such expenses which such
     Court of Chancery or such other court shall deem proper.
 
          (iii) To the extent that a Company Indemnified Person shall be
     successful on the merits or otherwise (including dismissal of an action
     without prejudice or the settlement of an action without admission of
     liability) in defense of any action, suit or proceeding referred to in
     paragraphs (i) and (ii) of Section 10.4(a), or in defense of any claim,
     issue or matter therein, he shall be indemnified, to the full extent
     permitted by law, against expenses (including attorneys' fees) actually and
     reasonably incurred by him in connection therewith.
 
          (iv) Any indemnification under paragraphs (i) and (ii) of Section
     10.4(a) (unless ordered by a court) shall be made by Consumers only as
     authorized in the specific case upon a determination that indemnification
     of the Company Indemnified Person is proper in the circumstances because he
     has met the applicable standard of conduct set forth in paragraphs (i) and
     (ii). Such determination shall be made (1) by the Regular Trustees by a
     majority vote of a quorum consisting of such Regular Trustees who were not
     parties to such action, suit or proceeding, (2) if such a quorum is not
     obtainable, or, even if obtainable, if a quorum of disinterested Regular
     Trustees so directs, by independent legal counsel in a written opinion, or
     (3) by the Common Security Holder of the Trust.
 
          (v) To the fullest extent permitted by applicable law, expenses
     (including attorneys' fees) incurred by a Company Indemnified Person in
     defending a civil, criminal, administrative or investigative action, suit
     or proceeding referred to in paragraphs (i) and (ii) of Section 10.4(a)
     shall be paid by Consumers in advance of the final disposition of such
     action, suit or proceeding upon receipt of an undertaking by or on behalf
     of such Company Indemnified Person to repay such amount if it shall
     ultimately be determined that he is not entitled to be indemnified by
     Consumers as authorized in Section 10.4(a). Notwithstanding the foregoing,
     no advance shall be made by Consumers if a determination is reasonably and
     promptly made (i) by the Regular Trustees by a majority vote of a quorum of
     disinterested Regular Trustees, (ii) if such a quorum is not obtainable,
     or, even if obtainable, if a quorum of disinterested Regular Trustees so
     directs, by independent legal counsel in a written opinion or (iii) the
     Common Security Holder of the Trust, that, based upon the facts known to
     the Regular Trustees, counsel or the Common Security Holder at the time
     such determination is made, such Company Indemnified Person acted in bad
     faith or in a manner that such person did not believe to be in or not
     opposed to the best interests of the Trust, or, with respect to any
     criminal proceeding, that such Company Indemnified Person believed or had
     reasonable cause to believe his conduct was unlawful. In no event shall any
     advance be made in instances where the Regular Trustees, independent legal
     counsel or Common Security Holder reasonably determine that such person
     deliberately breached his duty to the Trust or its Common or Preferred
     Security Holders.
 
                                      II-5
<PAGE>   43
 
          (vi) The indemnification and advancement of expenses provided by, or
     granted pursuant to, the other paragraphs of Section 10.4(a) shall not be
     deemed exclusive of any other rights to which those seeking indemnification
     and advancement of expenses may be entitled under any agreement, vote of
     stockholders or disinterested directors of Consumers or Preferred Security
     Holders of the Trust or otherwise, both as to action in his official
     capacity and as to action in another capacity while holding such office.
     All rights to indemnification under Section 10.4(a) shall be deemed to be
     provided by a contract between Consumers and each Company Indemnified
     Person who serves in such capacity at any time while Section 10.4(a) is in
     effect. Any repeal or modification of Section 10.4(a) shall not affect any
     rights or obligations then existing.
 
          (vii) Consumers or the Trust may purchase and maintain insurance on
     behalf of any person who is or was a Company Indemnified Person against any
     liability asserted against him and incurred by him in any such capacity, or
     arising out of his status as such, whether or not Consumers would have the
     power to indemnify him against such liability under the provisions of
     Section 10.4(a).
 
          (viii) For purposes of Section 10.4(a), references to "the Trust"
     shall include, in addition to the resulting or surviving entity, any
     constituent entity (including any constituent of a constituent) absorbed in
     a consolidation or merger, so that any person who is or was a director,
     trustee, officer or employee of such constituent entity, or is or was
     serving at the request of such constituent entity as a director, trustee,
     officer, employee or agent of another entity, shall stand in the same
     position under the provisions of Section 10.4(a) with respect to the
     resulting or surviving entity as he would have with respect to such
     constituent entity if its separate existence had continued.
 
          (ix) The indemnification and advancement of expenses provided by, or
     granted pursuant to, Section 10.4(a) shall, unless otherwise provided when
     authorized or ratified, continue as to a person who has ceased to be a
     Company Indemnified Person and shall inure to the benefit of the heirs,
     executors and administrators of such a person.
 
          (b) Consumers agrees to indemnify the (i) Property Trustee, (ii) the
     Delaware Trustee, (iii) any affiliate of the Property Trustee and the
     Delaware Trustee, and (iv) any officers, directors, shareholders, members,
     partners, employees, representatives, custodians, nominees or agents of the
     Property Trustee and the Delaware Trustee (each of the Persons in (i)
     through (iv) being referred to as a "Fiduciary Indemnified Person") for,
     and to hold each Fiduciary Indemnified Person harmless against, any loss,
     liability or expense incurred without negligence or bad faith on its part,
     arising out of or in connection with the acceptance or administration of
     the trust or trusts hereunder, including the costs and expenses (including
     reasonable legal fees and expenses) of defending itself against or
     investigating any claim or liability in connection with the exercise or
     performance of any of its powers or duties hereunder. The obligation to
     indemnify as set forth in Section 10.4(b) shall survive the satisfaction
     and discharge of this Declaration.
 
                                      II-6
<PAGE>   44
 
ITEM 16. EXHIBITS.
 
     The following exhibits are filed herewith.
 
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                      DESCRIPTION OF DOCUMENT
- -------        ----------------------------------------------------------------------------------
<S>      <C>   <C>
 (1)      --   Form of Underwriting Agreement (to be filed as an Exhibit to a report on Form 8-K
               which shall be incorporated herein by reference).
 (4)-1    --   Certificate of Trust of the Trust.
 (4)-2    --   Form of Amended and Restated Declaration of Trust.
 (4)-3    --   Form of Indenture between Consumers and The Bank of New York, as Trustee.
 (4)-4    --   Form of Supplemental Indenture to Indenture to be used in connection with the
               issuance of Subordinated Notes.
 (4)-5    --   Form of Preferred Security (included in (4)-2).
 (4)-6    --   Form of Subordinated Note Security (included in (4)-4).
 (4)-7    --   Form of Preferred Securities Guarantee Agreement.
 (5)-1    --   Opinion re legality of Preferred Securities.
 (5)-2    --   Opinion re legality of Subordinated Notes and the Preferred Securities Guarantee.
 (8)      --   Opinion re tax matters.
(12)      --   Statement re Computation of Ratios of Earnings to Fixed Charges and Ratios of
               Earnings to Fixed Charges and Preferred and Preference Stock Dividend
               Requirements.
(15)      --   Letter re unaudited interim financial information
(23)-1    --   Consent of Richards, Layton & Finger, P.C. (included in (5)-1).
(23)-2    --   Consent of Denise M. Sturdy, Esq. (included in (5)-2).
(23)-3    --   Consent of Reid & Priest LLP (included in (8)).
(23)-4    --   Consent of Arthur Andersen LLP.
(24)      --   Powers of attorney of Directors whose names are signed to this registration
               statement pursuant to such powers and resolution.
(25)-1    --   Statement of Eligibility of Property Trustee.
(25)-2    --   Statement of Eligibility of Debt Trustee.
(25)-3    --   Statement of Eligibility of Preferred Guarantee Trustee.
</TABLE>
 
ITEM 17.  UNDERTAKINGS.
 
The Undersigned Registrants Hereby Undertake:
 
          (1) That, for purposes of determining any liability under the
     Securities Act, each filing of the registrant's annual report pursuant to
     section 13(a) or section 15(d) of the Exchange Act that is incorporated by
     reference in the registration statement shall be deemed to be a new
     registration statement relating to the securities offered therein, and the
     offering of such securities at that time shall be deemed to be the initial
     bona fide offering thereof.
 
          (2) That for purposes of determining any liability under the
     Securities Act, the information omitted from the form of prospectus filed
     as part of this registration statement in reliance upon Rule 430A and
     contained in a form of prospectus filed by the registrants pursuant to Rule
     424(b)(1) or (4) under the Securities Act shall be deemed to be part of
     this registration statement as of the time it was declared effective.
 
          (3) That for purposes of determining any liability under the
     Securities Act, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
          (4) Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the registrants pursuant to the provisions described in Item 15
     above, or otherwise, the registrants have been advised that in the opinion
     of the Commission such
 
                                      II-7
<PAGE>   45
 
     indemnification is against public policy as expressed in the Act and is,
     therefore, unenforceable. In the event that a claim for indemnification
     against such liabilities (other than the payment by a registrant of
     expenses incurred or paid by a director, officer or controlling person of
     such registrant in the successful defense of any action, suit or
     proceeding) is asserted by such director, officer or controlling person in
     connection with the securities being registered, such registrant will,
     unless in the opinion of its counsel the matter has been settled by
     controlling precedent, submit to a court of appropriate jurisdiction the
     question whether such indemnification by it is against public policy as
     expressed in the Act and will be governed by the final adjudication of such
     issue.
 
          (5) The undersigned Trust registrant hereby undertakes to provide to
     the underwriters at the closing specified in the underwriting agreement
     certificates in such denominations and registered in such names as required
     by the underwriters to permit prompt delivery to each purchaser.
 
                                      II-8
<PAGE>   46
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jackson, and State of Michigan, on the 31st day of
October, 1995.
 
                                            CONSUMERS POWER COMPANY
 
                                            By:         /s/ A. M. WRIGHT
                                              ----------------------------------
                                                         A. M. Wright
                                                    Senior Vice President
                                                 and Chief Financial Officer
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the 31st day of October, 1995.
 
<TABLE>
<CAPTION>
                    NAME                                                  TITLE
- ---------------------------------------------               ----------------------------------
<S>                                                         <C>
(i) Principal executive officer:

/s/ MICHAEL G. MORRIS                                       President and
- ---------------------------------------------               Chief Executive Officer
    Michael G. Morris

(ii) Principal financial officer:

/s/ A M WRIGHT                                              Senior Vice President and
- ---------------------------------------------               Chief Financial Officer
    Alan M. Wright

(iii) Controller or principal
     accounting officer:

/s/ DENNIS DAPRA                                            Vice President and
- ---------------------------------------------               Controller
    Dennis DaPra
</TABLE>
 
                                      II-9
<PAGE>   47
 
<TABLE>
<CAPTION>
                    NAME                                                  TITLE
                    ----                                                  -----
<S>                                                         <C>
                                                            Director
- ---------------------------------------------
    (James J. Duderstadt)
*                                                           Director
- ---------------------------------------------
    (Kathleen R. Flaherty)
*                                                           Director
- ---------------------------------------------
    (Victor J. Fryling)
*                                                           Director
- ---------------------------------------------
    (Earl D. Holton)
*                                                           Director
- ---------------------------------------------
    (Lois A. Lund)
*                                                           Director
- ---------------------------------------------
    (Frank H. Merlotti)
*                                                           Director
- ---------------------------------------------
    (William T. McCormick, Jr.)
*                                                           Director
- ---------------------------------------------
    (William U. Parfet)
*                                                           Director
- ---------------------------------------------
    (Percy A. Pierre)
*                                                           Director
- ---------------------------------------------
    (S. Kinnie Smith, Jr.)
*                                                           Director
- ---------------------------------------------
    (Kenneth Whipple)
*                                                           Director
- ---------------------------------------------
    (John B. Yasinsky)
</TABLE>
 
*By /s/ A M WRIGHT
    -----------------------------------------
         Alan M. Wright
         Attorney-in-fact
 
                                      II-10
<PAGE>   48
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, Consumers Power
Company Financing I certifies that is has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jackson, State of Michigan, on the 31st day of
October, 1995.
 
                                          CONSUMERS POWER COMPANY FINANCING I
 
                                          By /s/ A. M. WRIGHT
                                            ------------------------------------
                                            Trustee
 
                                          By /s/ THOMAS A. MCNISH
                                            ------------------------------------
                                            Trustee
 
                                          By /s/ DORIS F. GALVIN
                                            ------------------------------------
                                            Trustee
 
                                      II-11
<PAGE>   49
 
                                 EXHIBIT INDEX
 
     The following exhibits are filed herewith.
 
<TABLE>
<CAPTION>
                                                                                      SEQUENTIALLY
EXHIBIT                                                                                NUMBERED
NUMBER                               DESCRIPTION OF DOCUMENT                             PAGE
- -------      ------------------------------------------------------------------------ ----------
<S>     <C>  <C>                                                                      <C>
 (1)    --   Form of Underwriting Agreement (to be filed as an Exhibit to a report on
             Form 8-K which shall be incorporated herein by reference).
 (4)-1  --   Certificate of Trust of the Trust.
 (4)-2  --   Form of Amended and Restated Declaration of Trust.
 (4)-3  --   Form of Indenture between Consumers and The Bank of New York, as
             Trustee.
 (4)-4  --   Form of Supplemental Indenture to Indenture to be used in connection
             with the issuance of Subordinated Notes.
 (4)-5  --   Form of Preferred Security (included in (4)-2).
 (4)-6  --   Form of Subordinated Note Security (included in (4)-4).
 (4)-7  --   Form of Preferred Securities Guarantee Agreement.
 (5)-1  --   Opinion re legality of Preferred Securities.
 (5)-2  --   Opinion re legality of Subordinated Notes and the Preferred Securities
             Guarantee.
 (8)    --   Opinion re tax matters.
(12)    --   Statement re Computation of Ratios of Earnings to Fixed Charges and
             Ratios of Earnings to Fixed Charges and Preferred and Preference Stock
             Dividend Requirements.
(15)    --   Letter re unaudited interim financial information.
(23)-1  --   Consent of Richards, Layton & Finger, P.C. (included in (5)-1).
(23)-2  --   Consent of Denise M. Sturdy, Esq. (included in (5)-2).
(23)-3  --   Consent of Reid & Priest LLP (included in (8)).
(23)-4  --   Consent of Arthur Andersen LLP.
(24)    --   Powers of attorney of Directors whose names are signed to this
             registration statement pursuant to such powers.
(25)-1  --   Statement of Eligibility of Property Trustee.
(25)-2  --   Statement of Eligibility of Debt Trustee.
(25)-3  --   Statement of Eligibility of Preferred Guarantee Trustee.
</TABLE>

<PAGE>   1
                                                                   EXHIBIT (4)-1




                              CERTIFICATE OF TRUST

                 The undersigned, constituting all of the trustees of Consumers
Power Company Financing I, desiring to form a business trust pursuant to
Delaware Business Trust Act, 12 Del. C. Section 3801, et seq., hereby certify
as follows:

                 i.       Name.  The name of the business trust being formed
                          hereby (the "Trust") is "Consumers Power Company
                          Financing I."

                 ii.      Delaware Trustee.  The name and business address of
                          the trustee of the Trust which has its principal
                          place of business in the State of Delaware is as
                          follows:

                          The Bank of New York (Delaware),
                            a Delaware Banking corporation
                          White Clay Center, Route 273
                          Newark, Delaware 19711

                 iii.     Effective Date.  This Certificate of Trust shall be
                          effective as of the date of filing.


Dated:  October 30, 1995
<PAGE>   2
                 IN WITNESS WHEREOF, the undersigned, being the sole Trustees
of the Trust, have executed this Certificate of Trust as of the date first
above written.


                                  /s/ Alan M. Wright
                                  --------------------------------
                                  Alan M. Wright, as
                                        Regular Trustee


                                  /s/ Thomas A. McNish
                                  --------------------------------
                                  Thomas A. McNish, as
                                        Regular Trustee


                                  /s/ Doris F. Galvin
                                  --------------------------------
                                  Doris F. Galvin, as
                                        Regular Trustee


                                  The Bank of New York (Delaware), as
                                        Delaware Trustee


                                  By: /s/ Joseph F. Leary
                                     ---------------------------
                                        Name: Joseph F. Leary
                                        Title: Vice President

                   
                                  The Bank of New York, as 
                                        Property Trustee


                                  By: /s/ Paul J. Schmalzel
                                     ---------------------------
                                        Name: Paul J. Schmalzel
                                        Title: Assistant Treasurer






                                      2

<PAGE>   1

                                                                   EXHIBIT (4)-2





                        AMENDED AND RESTATED DECLARATION

                                    OF TRUST


                      CONSUMERS POWER COMPANY FINANCING I


                         Dated as of November __, 1995
 




                      ====================================
<PAGE>   2
                              TABLE OF CONTENTS(1) 
<TABLE>
<CAPTION>
                                                                                                      Page     
                                                                                                      ----     
                                                                                                               
         <S>               <C>                                                                           <C>   
                                                              ARTICLE I                                        
                                                    INTERPRETATION AND DEFINITIONS                             
         SECTION 1.1       Definitions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2    
                                                                                                               
                                                              ARTICLE II                                       
                                                         TRUST INDENTURE ACT                                   
                                                                                                               
         SECTION 2.1       Trust Indenture Act; Application   . . . . . . . . . . . . . . . . . . . . .   6    
                                                                                                               
         SECTION 2.2       Lists of Holders of Securities   . . . . . . . . . . . . . . . . . . . . . .   7    
                                                                                                               
         SECTION 2.3       Reports by the Property Trustee  . . . . . . . . . . . . . . . . . . . . . .   7    
                                                                                                               
         SECTION 2.4       Periodic Reports to Property Trustee   . . . . . . . . . . . . . . . . . . .   7    
                                                                                                               
         SECTION 2.5       Evidence of Compliance with Conditions Precedent   . . . . . . . . . . . . .   7    
                                                                                                               
         SECTION 2.6       Events of Default; Waiver  . . . . . . . . . . . . . . . . . . . . . . . . .   8    
                                                                                                               
         SECTION 2.7       Event of Default; Notice   . . . . . . . . . . . . . . . . . . . . . . . . .   9    
                                                                                                               
                                                             ARTICLE III                                       
                                                             ORGANIZATION                                      
         SECTION 3.1       Name   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   9    
                                                                                                               
         SECTION 3.2       Office   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10    
                                                                                                               
         SECTION 3.3       Purpose  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10    
                                                                                                               
         SECTION 3.4       Authority  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10    
                                                                                                               
         SECTION 3.5       Title to Property of the Trust   . . . . . . . . . . . . . . . . . . . . . .  10    
                                                                                                               
         SECTION 3.6       Powers and Duties of the Regular Trustees  . . . . . . . . . . . . . . . . .  10    
                                                                                                               
         SECTION 3.7       Prohibition of Actions by the Trust and the Trustees   . . . . . . . . . . .  12    
                                                                                                               
         SECTION 3.8       Powers and Duties of the Property Trustee  . . . . . . . . . . . . . . . . .  13    
                                                                                                               
         SECTION 3.9       Certain Duties and Responsibilities of the Property Trustee  . . . . . . . .  15    
                                                                                                               
         SECTION 3.10      Certain Rights of Property Trustee  . . . . . . . . . . . . . . . . . . ....  16    
                                                                                                               
         SECTION 3.11      Delaware Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18    
                                                                                                               
         SECTION 3.12      Execution of Documents   . . . . . . . . . . . . . . . . . . . . . . . . . .  18    
                                                                                                               
         SECTION 3.13      Not Responsible for Recitals or Issuance of Securities   . . . . . . . . . .  18    
                                                                                                               
         SECTION 3.14      Duration of Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18    
                                                                                                               
         SECTION 3.15      Mergers  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18    
                                                                                                               
                                                              ARTICLE IV                                       
                                                               SPONSOR                                         
         SECTION 4.1       Sponsor's Purchase of Common Securities  . . . . . . . . . . . . . . . . . .  20    
                                                                                                               
         SECTION 4.2       Responsibilities of the Sponsor  . . . . . . . . . . . . . . . . . . . . . .  20    
                                                                                                               
                                                              ARTICLE V                                        
                                                               TRUSTEES                                        
         SECTION 5.1       Number of Trustees   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20    
                                                                                                               
         SECTION 5.2       Delaware Trustee   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21    
                                                                                                               
         SECTION 5.3       Property Trustee; Eligibility  . . . . . . . . . . . . . . . . . . . . . . .  21    
                                                                                                               
         SECTION 5.4       Qualifications of Regular Trustees and Delaware Trustee Generally  . . . . .  22    
                                                                                                               
         SECTION 5.5       Initial Trustees   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22    
                                                                                                               
         SECTION 5.6       Appointment, Removal and Resignation of Trustees   . . . . . . . . . . . . .  22    
                                                                                                               
         SECTION 5.7       Vacancies Among Trustees   . . . . . . . . . . . . . . . . . . . . . . . . .  23    
                                                                                                               
         SECTION 5.8       Effect of Vacancies  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23    

</TABLE>
         (1)  This Table of Contents does not constitute part of the Amended 
              and Restated Declaration and shall not affect the interpretation
              of any of its terms or provisions.

                                      i
<PAGE>   3

<TABLE>
         <S>               <C>                                                                           <C>   
         SECTION 5.9       Meetings   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24    
                                                                                                               
         SECTION 5.10      Delegation of Power  . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24    
                                                                                                               
         SECTION 5.11      Merger, Conversion, Consolidation or Succession to Business  . . . . . . . .  24    
                                                                                                               
                                                              ARTICLE VI                                       
                                                            DISTRIBUTIONS                                      
         SECTION 6.1       Distributions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25    
                                                                                                               
                                                             ARTICLE VII                                       
                                                        ISSUANCE OF SECURITIES                                 
         SECTION 7.1       General Provisions Regarding Securities  . . . . . . . . . . . . . . . . . .  25    
                                                                                                               
                                                             ARTICLE VIII                                      
                                                         TERMINATION OF TRUST                                  
         SECTION 8.1       Termination of Trust   . . . . . . . . . . . . . . . . . . . . . . . . . . .  26    
                                                                                                               
                                                              ARTICLE IX                                       
                                                        TRANSFER OF INTERESTS                                  
                                                                                                               
         SECTION 9.1       Transfer of Securities   . . . . . . . . . . . . . . . . . . . . . . . . . .  26    
                                                                                                               
         SECTION 9.2       Transfer of Certificates   . . . . . . . . . . . . . . . . . . . . . . . . .  27    
                                                                                                               
         SECTION 9.3       Deemed Security Holders  . . . . . . . . . . . . . . . . . . . . . . . . . .  27    
                                                                                                               
         SECTION 9.4       Book Entry Interests   . . . . . . . . . . . . . . . . . . . . . . . . . . .  27    
                                                                                                               
         SECTION 9.5       Notices to Clearing Agency   . . . . . . . . . . . . . . . . . . . . . . . .  28    
                                                                                                               
         SECTION 9.6       Appointment of Successor Clearing Agency   . . . . . . . . . . . . . . . . .  28    
                                                                                                               
         SECTION 9.7       Definitive Preferred Security Certificates   . . . . . . . . . . . . . . . .  28    
                                                                                                               
         SECTION 9.8       Mutilated, Destroyed, Lost or Stolen Certificates  . . . . . . . . . . . . .  29    
                                                                                                               
                                                              ARTICLE X                                        
                                                      LIMITATION OF LIABILITY OF                               
                                              HOLDERS OF SECURITIES, TRUSTEES OR OTHERS                        
                                                                                                               
         SECTION 10.1      Liability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29    
                                                                                                               
         SECTION 10.2      Exculpation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30    
                                                                                                               
         SECTION 10.3      Fiduciary Duty   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30    
                                                                                                               
         SECTION 10.4      Indemnification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31    
                                                                                                               
         SECTION 10.5      Outside Businesses   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33    
                                                                                                               
                                                              ARTICLE XI                                       
                                                              ACCOUNTING                                       
                                                                                                               
         SECTION 11.1      Fiscal Year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34    
                                                                                                               
         SECTION 11.2      Certain Accounting Matters   . . . . . . . . . . . . . . . . . . . . . . . .  34    
                                                                                                               
         SECTION 11.3      Banking  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34    
                                                                                                               
         SECTION 11.4      Withholding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34    
                                                                                                               
                                                             ARTICLE XII                                       
                                                       AMENDMENTS AND MEETINGS                                 
                                                                                                               
         SECTION 12.1      Amendments   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35    
                                                                                                               
         SECTION 12.2      Meetings of the Holders of Securities; Action by Written Consent   . . . . .  36    

</TABLE>





                                       ii
<PAGE>   4
<TABLE>
<S>                        <C>                                                                         <C>
                                                             ARTICLE XIII                             
                                      REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE        
                                                                                                      
         SECTION 13.1      Representations and Warranties of Property Trustee   . . . . . . . . . . . .  38
         SECTION 13.2      Representations and Warranties of Delaware Trustee   . . . . . . . . . . . .  39
                                                                                                      
                                                             ARTICLE XIV                              
                                                            MISCELLANEOUS                             
                                                                                                      
         SECTION 14.1      Notices  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

         SECTION 14.2      Governing Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

         SECTION 14.3      Intention of the Parties   . . . . . . . . . . . . . . . . . . . . . . . . .  40

         SECTION 14.4      Headings   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40

         SECTION 14.5      Successors and Assigns   . . . . . . . . . . . . . . . . . . . . . . . . . .  40

         SECTION 14.6      Partial Enforceability   . . . . . . . . . . . . . . . . . . . . . . . . . .  40

         SECTION 14.7      Counterparts   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
                                                                                                      
                                                                                                      
ANNEX I                    TERMS OF SECURITIES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
EXHIBIT A-1                FORM OF PREFERRED SECURITY                                                 
                             CERTIFICATE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  A1-1
EXHIBIT A-2                FORM OF COMMON SECURITY CERTIFICATE  . . . . . . . . . . . . . . . . . . .  A2-1
EXHIBIT B                  SPECIMEN OF DEBENTURE  . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C                  UNDERWRITING AGREEMENT   . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

</TABLE>




                                      iii
<PAGE>   5
                             CROSS-REFERENCE TABLE*


<TABLE>
<CAPTION>
         Section of
Trust Indenture Act                                                          Section of
of 1939, as amended                                                          Declaration
- -------------------                                                          -----------
<S>                                                                          <C>
310(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5.3(a)
310(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Inapplicable
311(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Inapplicable
312(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2.2(a)
312(b)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2.3
314(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2.4
314(b)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Inapplicable
314(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2.5
314(d)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Inapplicable
314(f)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Inapplicable
315(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3.9(b)
315(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3.9(a)
315(d)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3.9(a)
316(a)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      Annex I
316(c)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      3.6(e)

</TABLE>
- --------------- 

*        This Cross-Reference Table does not constitute part of the Declaration
         and shall not affect the interpretation of any of its terms or
         provisions.





                                       iv
<PAGE>   6
                              AMENDED AND RESTATED
                              DECLARATION OF TRUST
                                       OF
                      CONSUMERS POWER COMPANY FINANCING I

                               ____________, 1995



                 AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration")
dated and effective as of November __, 1995, by the Trustees (as defined
herein), the Sponsor (as defined herein) and by the holders, from time to time,
of undivided beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration;

                 WHEREAS, the Regular Trustees, the Delaware Trustee and the
Sponsor established Consumers Power Company Financing I (the "Trust"), a
statutory business trust under the Business Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of October 30, 1995 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on October 30, 1995 (the "Certificate of Trust"), for the
sole purpose of issuing and selling certain securities representing undivided
beneficial interests in the assets of the Trust and investing the proceeds
thereof in certain Debentures of the Debenture Issuer;

                 WHEREAS, as of the date hereof, no interests in the Trust have
been issued;

                 WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and

                 NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
<PAGE>   7
                                   ARTICLE I
                         INTERPRETATION AND DEFINITIONS

SECTION 1.1      Definitions.

                 Unless the context otherwise requires:

                 (a)      Capitalized terms used in this Declaration but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;

                 (b)      a term defined anywhere in this Declaration has the
same meaning throughout;

                 (c)      all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supplemented or amended from
time to time;

                 (d)      all references in this Declaration to Articles,
Sections, Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified, and all references in
this Declaration to the "terms of the Securities" are to the terms of the
Securities as set forth in Annex I hereto;

                 (e)      a term defined in the Trust Indenture Act has the
same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and

                 (f)      a reference to the singular includes the plural and 
vice versa.

                 "Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.

                 "Authorized Officer" of a Person means any Person that is
authorized to bind such Person.

                 "Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.

                 "Business Day" means any day other than a day on which banking
institutions in New York, New York or Delaware are authorized or required by 
law to close.

                 "Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et seq., as it may be amended from time
to time, or any successor legislation.

                 "Certificate" means a Common Security Certificate or a
Preferred Security Certificate.

                 "Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.

                 "Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities
deposited with the Clearing Agency.





                                       2
<PAGE>   8
                 "Closing Date" means ____________, 1995.

                 "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.

                 "Commission" means the Securities and Exchange Commission.

                 "Common Securities Guarantee" means the guarantee agreement to
be dated as of ___________, 1995 of the Sponsor in respect of the Common
Securities.

                 "Common Security" has the meaning specified in Section 7.1.

                 "Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.

                 "Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.

                 "Corporate Trust Office" means the office of the Property
Trustee at which the corporate trust business of the Preferred Guarantee
Trustee shall, at any particular time, be principally administered, which
office at the date of execution of this Agreement is located at 101 Barclay,
New York, New York 10286.

                 "Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the
Trust or (ii) the Trust's Affiliates; and (b) any Holder of Securities.

                 "Debenture Issuer" means Consumers Power Company in its
capacity as issuer of the series of Debentures to be acquired by the Trust.

                 "Debenture Trustee" means The Bank of New York, as trustee 
under the Indenture until a successor is appointed thereunder, and thereafter 
means such successor trustee.

                 "Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being Exhibit B.

                 "Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.

                 "Delaware Trustee" has the meaning set forth in Section 5.2.

                 "Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.

                 "DTC" means The Depository Trust Company, the initial 
Clearing Agency.

                 "Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.

                 "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.





                                       3
<PAGE>   9
                 "Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).

                 "Global Certificate" has the meaning set forth in Section 9.4.

                 "Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.

                 "Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.

                 "Indenture" means the Indenture dated as of _______, 1995,
between the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.

                 "Investment Company" means an investment company as defined in
the Investment Company Act.

                 "Investment Company Act"  means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.

                 "Investment Company Event" has the meaning set forth in
Section 4(c) of Annex I hereto.

                 "Legal Action" has the meaning set forth in Section 3.6(g).

                 "Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of more than 50% of the aggregate liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all outstanding Securities of the
relevant class.

                 "Ministerial Action" has the meaning set forth in Section 4(c)
of Annex I.

                 "Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person.  Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:

                 (a)      a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;

                 (b)      a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;

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

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





                                       4
<PAGE>   10
                 "Paying Agent" has the meaning specified in Section 3.8(i).

                 "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

                 "Preferred Guarantee Trustee" means The Bank of New York, as
trustee under the Preferred Securities Guarantee until a successor is appointed
thereunder, and thereafter means such successor trustee.

                 "Preferred Securities Guarantee" means the guarantee agreement
to be dated as of ______, 1995, of the Sponsor in respect of the Preferred
Securities.

                 "Preferred Security" has the meaning specified in Section 7.1.

                 "Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).

                 "Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.

                 "Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.

                 "Property Trustee" means the Trustee meeting the eligibility   
requirements set forth in Section 5.3.
        
                 "Property Trustee Account" has the meaning set forth in 
Section 3.8(c).

                 "Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them, or if there is only one Regular
Trustee, such Regular Trustee.

                 "Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.

                 "Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.

                 "Responsible Officer" means, with respect to the Property
Trustee, any officer within the Corporate Trust Office of the Property Trustee,
including any vice-president, any assistant vice-president, any assistant
treasurer or other officer of the Corporate Trust Office of the Property
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

                 "Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

                 "Securities" means the Common Securities and the Preferred 
Securities.





                                       5
<PAGE>   11
                 "Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.

                 "Special Event" has the meaning set forth in Section 4(c) of 
Annex I.

                 "Sponsor" means Consumers Power Company, a Michigan
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.

                 "Successor Property Trustee" has the meaning set forth in 
Section 5.6.

                 "Super Majority" has the meaning set forth in Section
2.6(a)(ii).

                 "Tax Event" has the meaning set forth in Section 4(c) of Annex
I.

                 "10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holder(s) of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities voting separately as a class, who are
the record owners of 10% or more of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant
class.

                 "Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

                 "Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

                 "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.

                 "Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C
including any Pricing Agreement as contemplated therein.


                                   ARTICLE II
                              TRUST INDENTURE ACT

SECTION 2.1      Trust Indenture Act; Application.

                 (a)      This Declaration is subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.

                 (b)      The Property Trustee shall be the only Trustee which
is a trustee for the purposes of the Trust Indenture Act.





                                       6
<PAGE>   12
                 (c)      If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by Section
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.

                 (d)      The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.

SECTION 2.2      Lists of Holders of Securities.

                 (a)      Each of the Sponsor and the Regular Trustees, on
behalf of the Trust, shall provide the Property Trustee (i) within 14 days
after each record date for payment of Distributions, a list, in such form as
the Property Trustee may reasonably require, of the names and addresses of the
Holders of the Securities ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Regular Trustees, on behalf of the Trust,
shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by the Sponsor and the Regular Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Property Trustee.  The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it or which it receives in
the capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.

                 (b)      The Property Trustee shall comply with its
obligations under Section Section 311(a), 311(b) and 312(b) of the Trust
Indenture Act.

SECTION 2.3      Reports by the Property Trustee.

                 Within 60 days after May 1 of each year, the Property Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act.  The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.

SECTION 2.4      Periodic Reports to Property Trustee.

                 Each of the Sponsor and the Regular Trustees, on behalf of the
Trust, shall provide to the Property Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.

SECTION 2.5      Evidence of Compliance with Conditions Precedent.

                 Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Declaration that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.





                                       7
<PAGE>   13
SECTION 2.6      Events of Default; Waiver.

                 (a)      The Holders of a Majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the Holders of all of the
Preferred Securities, waive any past Event of Default in respect of the
Preferred Securities and its consequences, provided that, if the underlying
Event of Default under the Indenture:

                          (i)     is not waivable under the Indenture, the
         Event of Default under the Declaration shall also not be waivable; or

                          (ii)    requires the consent or vote of greater than
         a majority in principal amount of the holders of the Debentures (a
         "Super Majority") to be waived under the Indenture, the Event of
         Default under the Declaration may only be waived by the vote of the
         Holders of at least the proportion in liquidation amount of the
         Preferred Securities that the relevant Super Majority represents of
         the aggregate principal amount of the Debentures outstanding.

The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.  Upon such waiver, any
such default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon.  Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the Holders
of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.

                 (b)      The Holders of a Majority in liquidation amount of
the Common Securities may, by vote, on behalf of the Holders of all of the
Common Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:

                          (i)     is not waivable under the Indenture, except
         where the Holders of the Common Securities are deemed to have waived
         such Event of Default under the Declaration as provided below in this
         Section 2.6(b), the Event of Default under the Declaration shall also
         not be waivable; or

                          (ii)    requires the consent or vote of a Super
         Majority to be waived, except where the Holders of the Common
         Securities are deemed to have waived such Event of Default under the
         Declaration as provided below in this Section 2.6(b), the Event of
         Default under the Declaration may only be waived by the vote of the
         Holders of at least the proportion in liquidation amount of the Common
         Securities that the relevant Super Majority represents of the
         aggregate principal amount of the Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated,
and until such Events of Default have been so cured, waived or otherwise
eliminated, the Property Trustee will be deemed to be acting solely on behalf
of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in





                                       8
<PAGE>   14
accordance with the terms of the Securities.  The foregoing provisions of this
Section 2.6(b) shall be in lieu of Section Section 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Section Section 316(a)(1)(A)
and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.

                 (c)      A waiver of an Event of Default under the Indenture
by the Property Trustee at the direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event of Default under
this Declaration.  The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.

SECTION 2.7      Event of Default; Notice.

                 (a)      The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including
any periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in
the payment of any sinking fund installment established for the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Property Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the
Securities.

                 (b)      The Property Trustee shall not be deemed to have
knowledge of any default except:

                          (i)     a default under Sections 5.1(a) and 5.1(b) of
         the Indenture; or

                          (ii)    any default as to which the Property Trustee
         shall have received written notice or of which a Responsible Officer
         of the Property Trustee charged with the administration of the
         Declaration shall have actual knowledge.


                                  ARTICLE III
                                  ORGANIZATION

SECTION 3.1      Name.

                 The Trust is named "Consumers Power Company Financing I," as
such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities.  The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.





                                       9
<PAGE>   15
SECTION 3.2      Office.

                 The address of the principal office of the Trust is c/o
Consumers Power Company, 212 West Michigan Avenue, Jackson, Michigan 49201.  On
ten Business Days' prior written notice to the Holders of Securities, the
Regular Trustees may designate another principal office.

SECTION 3.3      Purpose.

                 The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary, appropriate, convenient or incidental thereto.  The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, pledge any of its assets, or otherwise undertake (or permit to be
undertaken) any activity that would cause the Trust not to be classified for
United States federal income tax purposes as a grantor trust.

SECTION 3.4      Authority.

                 Subject to the limitations provided in this Declaration and to
the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust.  An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust.  In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust.  Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.

SECTION 3.5      Title to Property of the Trust.

                 Legal title to all assets of the Trust shall be vested in the
Property Trustee and shall be administered by the Property Trustee the Trust 
for the benefit of the Holders in accordance with this Declaration.  The
Holders shall not have legal title to any part of the assets of the Trust, but
shall have an undivided beneficial interest in the assets of the Trust.

SECTION 3.6      Powers and Duties of the Regular Trustees.

                 The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

                 (a)      to issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, that there shall
be no interests in the Trust other than the Securities, and the issuance of
Securities shall be limited to a one-time, simultaneous issuance of both the
Preferred Securities and Common Securities on the Closing Date;

                 (b)      in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:

                          (i)     execute and file with the Commission the
         registration statement on Form S-3 prepared by the Sponsor, including
         any amendments thereto, pertaining to, among other securities, the
         Preferred Securities;





                                       10
<PAGE>   16
                          (ii)    execute and file any documents prepared by
         the Sponsor, or take any acts as determined by the Sponsor to be
         necessary, appropriate, convenient or advisable in order to qualify or
         register all or part of the Preferred Securities in any State in which
         the Sponsor has determined to qualify or register such Preferred
         Securities for sale;

                          (iii)   execute and file an application, prepared by
         the Sponsor, to the New York Stock Exchange or any other national
         stock exchange or the Nasdaq Stock Market for listing upon notice of
         issuance of any Preferred Securities;

                          (iv)    execute and file with the Commission a
         registration statement on Form 8-A, including any amendments thereto,
         prepared by the Sponsor, relating to the registration of the Preferred
         Securities under Section 12(b) of the Exchange Act; and

                          (v)     execute and enter into the Underwriting
         Agreement providing for the sale of the Preferred Securities;

                 (c)      to acquire the Debentures with the proceeds of the
sale of the Preferred Securities and the Common Securities; provided, however,
that the Regular Trustees shall cause legal title to the Debentures to be held
of record in the name of the Property Trustee for the benefit of the Holders of
the Preferred Securities and the Holders of the Common Securities;

                 (d)      to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any Ministerial Action in relation to a Special
Event;

                 (e)      to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including and with respect to, for the purposes of  Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and exchanges, and to
issue relevant notices to the Holders of Preferred Securities and Holders of
Common Securities as to such actions and applicable record dates;

                 (f)      to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the Securities;

                 (g)      to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the
Property Trustee has the exclusive power to bring such Legal Action;

                 (h)      to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such services;

                 (i)      to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;

                 (j)      to give the certificate required by Section 314(a)(4)
of the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;

                 (k)      to incur expenses that are necessary, appropriate,
convenient or incidental to carry out any of the purposes of the Trust;





                                       11
<PAGE>   17
                 (l)      to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities;

                 (m)      to give prompt written notice to the Holders of the
Securities of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;

                 (n)      to take all action that may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust
under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of
the Preferred Securities or to enable the Trust to effect the purposes for
which the Trust was created;

                 (o)      to take any action, not inconsistent with this
Declaration or with applicable law, that the Regular Trustees determine in
their discretion to be necessary, desirable, convenient or incidental in
carrying out the activities of the Trust as set out in this Section 3.6,
including, but not limited to:

                          (i)     causing the Trust not to be deemed to be an
         Investment Company required to be registered under the Investment
         Company Act;

                          (ii)    causing the Trust to be classified for United
         States federal income tax purposes as a grantor trust; and

                          (iii)   cooperating with the Debenture Issuer to 
         ensure that the Debentures will be treated as indebtedness of the 
         Debenture Issuer for United States federal income tax purposes, 
         provided that such action does not materially adversely affect the 
         interests of Holders;

                 (p)      to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the Regular Trustees, on
behalf of the Trust; and

                 (q)      to execute all documents or instruments, perform all
duties and powers, and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing.

                 The Regular Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust
set forth in Section 3.3.

                 Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.

                 Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.

SECTION 3.7      Prohibition of Actions by the Trust and the Trustees.   

                The Trust shall not, and the Trustees (including the Property 
Trustee) shall not, engage in any activity other than as required or 
authorized by this Declaration.  In particular, the Trust shall not and the 
Trustees (including the Property Trustee) shall cause the Trust not to:





                                       12
<PAGE>   18
                 (a)      invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the Securities;

                 (b)      acquire any assets other than as expressly provided
herein;

                 (c)      possess Trust property for other than a Trust
purpose;

                 (d)      make any loans or incur any indebtedness other than
loans represented by the Debentures;

                 (e)      possess any power or otherwise act in such a way as
to vary the Trust assets or the terms of the Securities in any way whatsoever;

                 (f)      issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Securities;
or

                 (g)      other than as provided in this Declaration or Annex
I, (A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures, (B) waive
any past default that is waivable under the Indenture, (C) exercise any right
to rescind or annul any declaration that the principal of all the Debentures
shall be due and payable, or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received an opinion of counsel to the
effect that such modification will not cause more than an insubstantial risk
that for United States federal income tax purposes the Trust will not be
classified as a grantor trust.

SECTION 3.8      Powers and Duties of the Property Trustee.

                 (a)      The legal title to the Debentures shall be owned by
and held of record in the name of the Property Trustee in trust for the benefit
of the Holders of the Securities.  The right, title and interest of the
Property Trustee to the Debentures shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.

                 (b)      The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).

                 (c)      The Property Trustee shall:

                          (i)     establish and maintain a segregated
         non-interest bearing trust account (the "Property Trustee Account") in
         the name of and under the exclusive control of the Property Trustee on
         behalf of the Holders of the Securities and, upon the receipt of
         payments of funds made in respect of the Debentures held by the
         Property Trustee, deposit such funds into the Property Trustee Account
         and make payments to the Holders of the Preferred Securities and
         Holders of the Common Securities from the Property Trustee Account in
         accordance with Section 6.1.  Funds in the Property Trustee Account
         shall be held uninvested until disbursed in accordance with this
         Declaration.  The Property Trustee Account shall be an account that is
         maintained with a banking institution the rating on whose long-term
         unsecured indebtedness is at least equal to the rating assigned to the
         Preferred Securities by a "nationally recognized statistical





                                       13
<PAGE>   19
         rating organization", as that term is defined for purposes of Rule
         436(g)(2) under the Securities Act;

                          (ii)    engage in such ministerial activities as
         shall be necessary, appropriate, convenient or incidental to effect
         the redemption of the Preferred Securities and the Common Securities
         to the extent the Debentures are redeemed or mature; and

                          (iii)   upon written notice of distribution issued by
         the Regular Trustees in accordance with the terms of the Securities,
         engage in such ministerial activities as shall be necessary or
         appropriate to effect the distribution of the Debentures to Holders of
         Securities upon the occurrence of certain special events (as may be
         defined in the terms of the Securities) arising from a change in law
         or a change in legal interpretation or other specified circumstances
         pursuant to the terms of the Securities.

                 (d)      The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of the Securities.

                 (e)      The Property Trustee shall hold the Preferred
Securities Guarantee and the Common Securities Guarantee, for the benefit of
the Holders of the Preferred Securities and the Common Securities,
respectively.

                 (f)      The Property Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Declaration or the Trust
Indenture Act.

                 (g)      The Property Trustee shall not resign as a Trustee
unless either:

                          (i)     the Trust has been completely liquidated and
         the proceeds of the liquidation distributed to the Holders of
         Securities pursuant to the terms of the Securities; or

                          (ii)    a Successor Property Trustee has been
         appointed and has accepted that appointment in accordance with Section
         5.6.

                 (h)      The Property Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a holder of Debentures
under the Indenture and, if an Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.

                 (i)      The Property Trustee may authorize one or more
Persons (each, a "Paying Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to all Securities, and
any such Paying Agent shall comply with Section 317(b) of the Trust Indenture
Act.  Any Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any time
by the Property Trustee.

                 (j)      Subject to this Section 3.8, the Property Trustee
shall have none of the duties, liabilities, powers or the authority of the
Regular Trustees set forth in Section 3.6.

                 The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property





                                       14
<PAGE>   20
Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.

SECTION 3.9      Certain Duties and Responsibilities of the Property Trustee.

                 (a)      The Property Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and no implied covenants shall be read into this
Declaration against the Property Trustee.  In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Property Trustee has actual knowledge, the Property
Trustee shall exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.

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

                          (i)     prior to the occurrence of an Event of
         Default and after the curing or waiving of all such Events of Default
         that may have occurred:

                                  (A)      the duties and obligations of the
                 Property Trustee shall be determined solely by the express
                 provisions of this Declaration and the Property Trustee shall
                 not be liable except for the performance of such duties and
                 obligations as are specifically set forth in this Declaration,
                 and no implied covenants or obligations shall be read into
                 this Declaration against the Property Trustee; and

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

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

                          (iii)   the Property Trustee shall not be liable with
         respect to any action taken or omitted to be taken by it in good faith
         in accordance with the direction of the Holders of not less than a
         Majority in liquidation amount of the Securities relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Property Trustee, or exercising any trust or power conferred
         upon the Property Trustee under this Declaration;

                          (iv)    no provision of this Declaration shall
         require the Property Trustee to expend or risk its own funds or
         otherwise incur personal financial liability in the performance of any
         of its duties or in the exercise of any of its rights or powers, if it
         shall have reasonable grounds for believing that the repayment of such
         funds or liability is not reasonably assured to it





                                       15
<PAGE>   21
         under the terms of this Declaration or indemnity reasonably
         satisfactory to the Property Trustee against such risk or liability is
         not reasonably assured to it;
 
                          (v)     the Property Trustee's sole duty with respect
         to the custody, safe keeping and physical preservation of the
         Debentures and the Property Trustee Account shall be to deal with such
         property in a similar manner as the Property Trustee deals with
         similar property for its own account, subject to the protections and
         limitations on liability afforded to the Property Trustee under this
         Declaration and the Trust Indenture Act;

                          (vi)    the Property Trustee shall have no duty or
         liability for or with respect to the value, genuineness, existence or
         sufficiency of the Debentures or the payment of any taxes or
         assessments levied thereon or in connection therewith;

                          (vii)   the Property Trustee shall not be liable for
         any interest on any money received by it except as it may otherwise
         agree with the Sponsor.  Money held by the Property Trustee need not
         be segregated from other funds held by it except in relation to the
         Property Trustee Account maintained by the Property Trustee pursuant
         to Section 3.8(c)(i) and except to the extent otherwise required by
         law; and

                          (viii)   the Property Trustee shall not be
         responsible for monitoring the compliance by the Regular Trustees or
         the Sponsor with their respective duties under this Declaration, nor
         shall the Property Trustee be liable for any default or misconduct of
         the Regular Trustees or the Sponsor.

SECTION 3.10     Certain Rights of Property Trustee.

                 (a)      Subject to the provisions of Section 3.9:

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

                          (ii)    any direction or act of the Sponsor or the
         Regular Trustees contemplated by this Declaration shall be
         sufficiently evidenced by an Officers' Certificate;

                          (iii)   whenever in the administration of this
         Declaration, the Property Trustee shall deem it desirable that a
         matter be proved or established before taking, suffering or omitting
         any action hereunder, the Property Trustee (unless other evidence is
         herein specifically prescribed) may, in the absence of bad faith on
         its part, request and conclusively rely upon an Officers' Certificate
         which, upon receipt of such request, shall be promptly delivered by
         the Sponsor or the Regular Trustees;

                          (iv)    the Property Trustee shall have no duty to
         see to any recording, filing or registration of any instrument
         (including any financing or continuation statement or any filing under
         tax or securities laws) or any rerecording, refiling or registration
         thereof;

                          (v)     the Property Trustee may consult with counsel
         or other experts and the advice or opinion of such counsel and experts
         with respect to legal matters or advice within the scope of such
         experts' area of expertise shall be full and complete authorization
         and protection in





                                       16
<PAGE>   22
         respect of any action taken, suffered or omitted by it hereunder in
         good faith and in accordance with such advice or opinion, such counsel
         may be counsel to the Sponsor or any of its Affiliates, and may
         include any of its employees.  The Property Trustee shall have the
         right at any time to seek instructions concerning the administration
         of this Declaration from any court of competent jurisdiction;

                          (vi)    the Property Trustee shall be under no
         obligation to exercise any of the rights or powers vested in it by
         this Declaration at the request or direction of any Holder, unless
         such Holder shall have provided to the Property Trustee security and
         indemnity, reasonably satisfactory to the Property Trustee, against
         the costs, expenses (including attorneys' fees and expenses and the
         expenses of the Property Trustee's agents, nominees or custodians) and
         liabilities that might be incurred by it in complying with such
         request or direction, including such reasonable advances as may be
         requested by the Property Trustee provided, that, nothing contained in
         this Section 3.10(a)(vi) shall be taken to relieve the Property
         Trustee, upon the occurrence of an Event of Default, of its obligation
         to exercise the rights and powers vested in it by this Declaration;

                          (vii)   the Property Trustee shall not be bound to
         make any investigation into the facts or matters stated in any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, direction, consent, order, bond, debenture, note,
         other evidence of indebtedness or other paper or document, but the
         Property Trustee, in its discretion, may make such further inquiry or
         investigation into such facts or matters as it may see fit;

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

                          (ix)    any action taken by the Property Trustee or
         its agents hereunder shall bind the Trust and the Holders of the
         Securities, and the signature of the Property Trustee or its agents
         alone shall be sufficient and effective to perform any such action and
         no third party shall be required to inquire as to the authority of the
         Property Trustee to so act or as to its compliance with any of the
         terms and provisions of this Declaration, both of which shall be
         conclusively evidenced by the Property Trustee's or its agent's taking
         such action;

                          (x)     whenever in the administration of this
         Declaration the Property Trustee shall deem it desirable to receive
         instructions with respect to enforcing any remedy or right or taking
         any other action hereunder, the Property Trustee (i) may request
         instructions from the Holders of the Securities which instructions may
         only be given by the Holders of the same proportion in liquidation
         amount of the Securities as would be entitled to direct the Property
         Trustee under the terms of the Securities in respect of such remedy,
         right or action, (ii) may refrain from enforcing such remedy or right
         or taking such other action until such instructions are received, and
         (iii) shall be protected in conclusively relying on or acting in or
         accordance with such instructions; and

                          (xi)    except as otherwise expressly provided by
         this Declaration, the Property Trustee shall not be under any
         obligation to take any action that is discretionary under the
         provisions of this Declaration.

                 (b)      No provision of this Declaration shall be deemed to
impose any duty or obligation on the Property Trustee to perform any act or
acts or exercise any right, power, duty or





                                       17
<PAGE>   23
obligation conferred or imposed on it, in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or acts, or to
exercise any such right, power, duty or obligation.  No permissive power or
authority available to the Property Trustee shall be construed to be a duty.

SECTION 3.11     Delaware Trustee.

                 Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration.  Except as set forth in Section 5.2, the Delaware Trustee
shall be a Trustee for the sole and limited purpose of fulfilling the
requirements of Section 3807 of the Business Trust Act.

SECTION 3.12     Execution of Documents.

                 Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act, a majority of or, if
there are only two, both Regular Trustees or, if there is only one, such Regular
Trustee is authorized to execute on behalf of the Trust any documents that the
Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided that, the registration statement referred to in Section
3.6(b)(i), including any amendments thereto, shall be signed by all of the
Regular Trustees.

SECTION 3.13     Not Responsible for Recitals or Issuance of Securities.

                 The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness.  The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.

SECTION 3.14     Duration of Trust.

                 The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence for forty-five (45) years from the
Closing Date.

SECTION 3.15     Mergers.

                 (a)      The Trust may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any business trust or other business
entity (as defined in the Business Trust Act), except as described in Section
3.15(b) and (c).

                 (b)      The Trust may, with the consent of the Regular
Trustees or, if there are more than two, a majority of the Regular Trustees and
without the consent of the Holders of the Securities, the Delaware Trustee or
the Property Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:

                          (i)     such successor entity (the "Successor
         Entity") either:

                                  (A)      expressly assumes all of the 
                 obligations of the Trust under the Securities; or





                                       18
<PAGE>   24
                                  (B)      substitutes for the Securities other
                 securities having substantially the same terms as the
                 Preferred Securities (the "Successor Securities") so long as
                 the Successor Securities rank the same as the Preferred
                 Securities rank with respect to Distributions and payments
                 upon liquidation, redemption and otherwise;

                          (ii)    the Debenture Issuer expressly acknowledges a
         trustee of the Successor Entity that possesses the same powers and
         duties as the Property Trustee as the Holder of the Debentures;

                          (iii)   the Preferred Securities or any Successor
         Securities are listed, or any Successor Securities will be listed upon
         notification of issuance, on any national securities exchange or with
         any other organization on which the Preferred Securities are then
         listed or quoted;

                          (iv)    such merger, consolidation, amalgamation or
         replacement does not cause the Preferred Securities (including any
         Successor Securities) to be downgraded by any nationally recognized
         statistical rating organization;

                          (v)     such merger, consolidation, amalgamation or
         replacement does not adversely affect the material rights, preferences
         and privileges of the Holders of the  Securities (including any
         Successor Securities) in any material respect (other than with respect
         to any dilution of such Holders' interests in the Preferred Securities
         as a result of such merger, consolidation, amalgamation or
         replacement);

                          (vi)    such Successor Entity has a purpose identical
         to that of the Trust;

                          (vii)   prior to such merger, consolidation,
         amalgamation or replacement, the Sponsor has received an opinion of a
         nationally recognized independent counsel to the Trust experienced in
         such matters to the effect that:

                                  (A)      such merger, consolidation,
                 amalgamation or replacement does not adversely affect the
                 material rights, preferences and privileges of the Holders of
                 the Securities (including any Successor Securities) in any
                 material respect (other than with respect to any dilution of
                 the Holders' interest in the new entity); and

                                  (B)      following such merger,
                 consolidation, amalgamation or replacement, neither the Trust
                 nor the Successor Entity will be required to register as an
                 Investment Company; and

                                  (C)      following such merger,
                 consolidation, amalgamation or replacement, the Trust (or the
                 Successor Entity) will continue to be classified as a grantor
                 trust for United States federal income tax purposes; and

                          (viii)  the Sponsor guarantees the obligations of
         such Successor Entity under the Successor Securities at least to the
         extent provided by the Preferred Securities Guarantee.

                 (c)      Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or





                                       19
<PAGE>   25
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.


                                   ARTICLE IV
                                    SPONSOR

SECTION 4.1      Sponsor's Purchase of Common Securities.

                 On the Closing Date the Sponsor will purchase all of the
Common Securities issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Preferred Securities are sold.

SECTION 4.2      Responsibilities of the Sponsor.

                 In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:

                 (a)      to prepare for filing by the Trust with the
Commission a registration statement on Form S-3 in relation to, among other
securities, the Preferred Securities, including any amendments thereto;

                 (b)      to determine the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and to do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for execution
and filing any documents to be executed and filed by the Trust, as the Sponsor
deems necessary or advisable in order to comply with the applicable laws of any
such States;

                 (c)      to prepare for filing by the Trust an application to
the New York Stock Exchange or any other national stock exchange or the Nasdaq
National Market for listing upon notice of issuance of any Preferred
Securities;

                 (d)      to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the registration of
the Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and

                 (e)      to negotiate the terms of the Underwriting Agreement
and Pricing Agreement providing for the sale of the Preferred Securities.


                                   ARTICLE V
                                    TRUSTEES

SECTION 5.1      Number of Trustees.

                 The number of Trustees initially shall be five (5), and:

                 (a)      at any time before the issuance of any Securities,
the Sponsor may, by written instrument, increase or decrease the number of
Trustees; and





                                       20
<PAGE>   26
                 (b)      after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities,

provided that, in any case, the number of Trustees shall at least be five (5)
unless the Trustee that acts as the Property Trustee also acts as Delaware
Trustee pursuant to Section 5.2, in which case the number of Trustees, shall be
at least three (3).

SECTION 5.2      Delaware Trustee.

                 If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:

                 (a)      a natural person who is a resident of the State of 
Delaware; or

                 (b)      if not a natural person, an entity which has its
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,

provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.

SECTION 5.3      Property Trustee; Eligibility.

                 (a)      There shall at all times be one Trustee which shall
act as Property Trustee which shall:

                          (i)     not be an Affiliate of the Sponsor; and

                          (ii)    be a corporation organized and doing business
         under the laws of the United States of America or any State or
         Territory thereof or of the District of Columbia, or a corporation or
         other Person permitted by the Commission to act as an institutional
         trustee under the Trust Indenture Act, authorized under such laws to
         exercise corporate trust powers, having a combined capital and surplus
         of at least 50 million U.S. dollars ($50,000,000), and subject to
         supervision or examination by Federal, State, Territorial or District
         of Columbia authority.  If such corporation or other Person publishes
         reports of condition at least annually, pursuant to law or to the
         requirements of the supervising or examining authority referred to
         above, then for the purposes of this Section 5.3(a)(ii), the combined
         capital and surplus of such corporation or other Person shall be
         deemed to be its combined capital and surplus as set forth in its most
         recent report of condition so published.

                 (b)      If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c).

                 (c)      If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities (as
if it were the obligor referred to in Section 310(b) of the Trust Indenture
Act) shall in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.





                                       21
<PAGE>   27
                 (d)      The Preferred Securities Guarantee shall be deemed to
be specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.

SECTION 5.4      Qualifications of Regular Trustees and Delaware Trustee
Generally.

                 Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.

SECTION 5.5      Initial Trustees.

                 The initial Regular Trustees shall be:

                     Alan M. Wright                    Thomas A. McNish
                     212 West Michigan Avenue          212 West Michigan Avenue
                     Jackson, Michigan  49201          Jackson, Michigan  49201

                                                       Doris F. Galvin
                                                       212 West Michigan Avenue
                                                       Jackson, Michigan  49201

                 The initial Delaware Trustee shall be:

                     The Bank of New York (Delaware)
                     White Clay Center
                     Route 273
                     Newark, Delaware 19711

                 The initial Property Trustee shall be:

                     The Bank of New York
                     101 Barclay
                     New York, New York 10286

SECTION 5.6      Appointment, Removal and Resignation of Trustees.

                 (a)      Subject to Section 5.6(b), Trustees may be appointed
or removed without cause at any time:

                          (i)     until the issuance of any Securities, by 
         written instrument executed by the Sponsor; and

                          (ii)    after the issuance of any Securities, by vote
         of the Holders of a Majority in liquidation amount of the Common
         Securities voting as a class at a meeting of the Holders of the Common
         Securities.

                 (b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as property Trustee under Section 5.4 (a "Successor   
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor; and (ii) the Trustee that acts as
Delaware Trustee shall not be removed in accordance with this Section 5.6(a)
until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument executed by
such Successor Delaware Trustee and delivered to the Regular Trustees and the
Sponsor.





                                       22
<PAGE>   28
                 (c)      A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation.  Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
             
                          (i)     No such resignation of the Trustee that acts
         as the Property Trustee shall be effective:

                                  (A)      until a Successor Property Trustee
                 has been appointed and has accepted such appointment by
                 instrument executed by such Successor Property Trustee and
                 delivered to the Trust, the Sponsor and the resigning Property
                 Trustee; or

                                  (B)      until the assets of the Trust have
                 been completely liquidated and the proceeds thereof
                 distributed to the Holders of the Securities; and

                          (ii)    no such resignation of the Trustee that acts
         as the Delaware Trustee shall be effective until a Successor Delaware
         Trustee has been appointed and has accepted such appointment by
         instrument executed by such Successor Delaware Trustee and delivered
         to the Trust, the Sponsor and the resigning Delaware Trustee.

                 (d)      The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee as the case may be if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.6.

                 (e)      If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and shall have accepted such
appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning
Property Trustee or Delaware Trustee, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee.  Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Property Trustee or
Successor Delaware Trustee, as the case may be.

                 (f)      No Property Trustee or Delaware Trustee shall be
liable for the acts or omissions to act of any Successor Property Trustee or
Successor Delaware Trustee, as the case may be.

SECTION 5.7      Vacancies among Trustees.

                 If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur.  A
resolution certifying the existence of such vacancy by the Regular Trustee, if
there is one, or by each of the Regular Trustees, if there are two or, if there
are more than two, a majority of the Regular Trustees, shall be conclusive
evidence of the existence of such vacancy.  The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.

SECTION 5.8      Effect of Vacancies.

                 The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust.  Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the





                                       23
<PAGE>   29
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed upon
the Regular Trustees by this Declaration.

SECTION 5.9      Meetings.

                 If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee.  Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees.  Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting.  Notice of any telephonic meetings of
the Regular Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting.  Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting.  The presence (whether in person or by telephone) of a Regular Trustee
at a meeting shall constitute a waiver of notice of such meeting except where a
Regular Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been
lawfully called or convened.  Unless provided otherwise in this Declaration,
any action of the Regular Trustees may be taken at a meeting by vote of a
majority of the Regular Trustees present (whether in person or by telephone)
and eligible to vote with respect to such matter, provided that a Quorum is
present, or without a meeting, by the unanimous written consent of the Regular
Trustees.  In the event there is only one Regular Trustee, any and all action
of such Regular Trustee shall be evidenced by a written consent of such Regular
Trustee.

SECTION 5.10     Delegation of Power.

                 (a)      Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or amendment
thereto filed with the Commission, or making any other governmental filing; and

                 (b)      the Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.

SECTION 5.11     Merger, Conversion, Consolidation or Succession to Business.

         Any Person into which the Property Trustee or the Delaware Trustee, as
the case may be, may be merged or converted or with which either may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such Person shall
be otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.





                                       24
<PAGE>   30
                                   ARTICLE VI
                                 DISTRIBUTIONS

SECTION 6.1      Distributions.

                 Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities.  Distributions shall be
made on the Preferred Securities and the Common Securities in accordance with
the preferences set forth in their respective terms.  If and to the extent that
the Debenture Issuer makes a payment of interest (including Compounded Interest
(as defined in the Indenture) and Additional Interest (as defined in the
Indenture)), premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of the Payment Amount to
Holders.


                                  ARTICLE VII
                             ISSUANCE OF SECURITIES

SECTION 7.1      General Provisions Regarding Securities.

                 (a)      The Regular Trustees shall, on behalf of the Trust,
issue one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Preferred Securities") and one class of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I (the "Common Securities.")  The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Preferred Securities and the Common Securities.

                 (b)      The Certificates shall be signed on behalf of the
Trust by the Regular Trustee (or, if there are more than two Regular Trustees,
by any two of the Regular Trustees).  Any such signature shall be the manual
signature of any present or any future Regular Trustee.  In case any Regular
Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be delivered by
the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee.  Certificates shall
be printed, lithographed or engraved or may be produced in any other manner as
is reasonably acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or
with any rule or regulation of any stock exchange on which the Securities may
be listed, or to conform to usage.

                 (c)      The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of
the Trust and shall not constitute a loan to the Trust.

                 (d)      Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable subject to Section 10.1(b) with respect to the
Common Securities.

                 (e)      Every Person, by virtue of having become a Holder or
a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly





                                       25
<PAGE>   31
assented and agreed to the terms of, and shall be bound by, this Declaration,
the Preferred Securities Guarantee and the Indenture.


                                  ARTICLE VIII
                              TERMINATION OF TRUST

SECTION 8.1      Termination of Trust.

                 (a)      The Trust shall terminate:

                          (i)     upon the bankruptcy of the Holder of the 
         Common Securities or the Sponsor;

                          (ii)    upon the filing of a certificate of
         dissolution or its equivalent with respect to the Holder of the Common
         Securities or the Sponsor or the revocation of the Charter of the
         Holder of the Common Securities, or the Sponsor's charter and the
         expiration of 90 days after the date of revocation without a
         reinstatement thereof;

                          (iii)   upon the entry of a decree of judicial
         dissolution of the Holder of the Common Securities, the Sponsor or the
         Trust;

                          (iv)    when all of the Securities shall have been
         called for redemption and the amounts necessary for redemption thereof
         shall have been paid to the Holders in accordance with the terms of
         the Securities;

                          (v)     upon the occurrence and continuation of a
         Special Event pursuant to which the Trust shall have been dissolved in
         accordance with the terms of the Securities and all of the Debentures
         endorsed thereon shall have been distributed to the Holders of
         Securities in exchange for all of the Securities;

                          (vi)    before the issuance of any Securities, with
         the consent of all of the Regular Trustees and the Sponsor; or

                          (vii)   upon the expiration of the term of the Trust
         as set forth in Section 3.14.

                 (b)      After the occurrence of an event referred to in
Section 8.1(a) and upon the completion of winding-up of the Trust and its
termination, the Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.

                 (c)      The provisions of Section 3.9 and Article X shall
survive the termination of the Trust.


                                   ARTICLE IX
                             TRANSFER OF INTERESTS

SECTION 9.1      Transfer of Securities.

                 (a)      Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities.  Any transfer or





                                       26
<PAGE>   32
purported transfer of any Security not made in accordance with this
Declaration, and the terms of the Securities shall be null and void.

                 (b)      Subject to this Article IX, Preferred Securities
shall be freely transferable.

                 (c)      Subject to this Article IX, the Sponsor and any
Related Party may only transfer Common Securities to the Sponsor or a Related
Party of the Sponsor; provided that, any such transfer is subject to the
condition precedent that the transferor obtain the written opinion of
nationally recognized independent counsel experienced in such matters that such
transfer would not cause more than an insubstantial risk that:

                          (i)     the Trust would not be classified for United
         States federal income tax purposes as a grantor trust; and

                          (ii)    the Trust would be an Investment Company or 
         the transferee would become an Investment Company.

SECTION 9.2      Transfer of Certificates.

                 The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other governmental charges that may be
imposed in relation to it.  Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to
be issued in the name of the designated transferee or transferees.  Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees
duly executed by the Holder or such Holder's attorney duly authorized in
writing.  Each Certificate surrendered for registration of transfer shall be
canceled by the Regular Trustees.  A transferee of a Certificate shall be
entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate.  By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.  In the event that the Preferred Securities do not remain in
book-entry only form, the Property Trustee will act as paying agent and may
designate an additional or substitute paying agent at any time.

SECTION 9.3      Deemed Security Holders.

                 The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities represented
by such Certificate on the part of any Person, whether or not the Trust shall
have actual or other notice thereof.

SECTION 9.4      Book Entry Interests.

                 Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will
be issued in the form of one or more, fully registered, global Preferred
Security Certificates (each a "Global Certificate"), to be delivered to DTC,
the initial Clearing Agency, by, or on behalf of, the Trust.  Such Global
Certificate(s) shall initially be registered on the books and records of the
Trust in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such
Global Certificate(s), except as provided in Section 9.7.  Unless and until
definitive, fully registered Preferred Security Certificates (the "Definitive





                                       27
<PAGE>   33
Preferred Security Certificates") have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:

                 (a)      the provisions of this Section 9.4 shall be in full
         force and effect;

                 (b)      the Trust and the Trustees shall be entitled to deal
         with the Clearing Agency for all purposes of this Declaration
         (including the payment of Distributions on the Global Certificate(s)
         and receiving approvals, votes or consents hereunder) as the Holder of
         the Preferred Securities and the sole holder of the Global
         Certificate(s) and shall have no notice obligation to the Preferred
         Security Beneficial Owners;

                 (c)      to the extent that the provisions of this Section 9.4
         conflict with any other provisions of this Declaration, the provisions
         of this Section 9.4 shall control; and

                 (d)      the rights of the Preferred Security Beneficial
         Owners shall be exercised only through the Clearing Agency and shall
         be limited to those established by law and agreements between such
         Preferred Security Beneficial Owners and the Clearing Agency and/or
         the Clearing Agency Participants.  DTC will make book entry transfers
         among the Clearing Agency Participants and receive and transmit
         payments of Distributions on the Global Certificates to such Clearing
         Agency Participants.

SECTION 9.5      Notices to Clearing Agency.

                 Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, unless and until
Definitive Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7, the Regular
Trustees shall give all such notices and communications specified herein to be
given to the Preferred Security Holders to the Clearing Agency, and shall have
no notice obligations to the Preferred Security Beneficial Owners.

SECTION 9.6      Appointment of Successor Clearing Agency.

                 If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred Securities.

SECTION 9.7      Definitive Preferred Security Certificates.

                 If:

                 (a)      a Clearing Agency elects to discontinue its services
as securities depositary with respect to the Preferred Securities and a
successor Clearing Agency is not appointed within 90 days after such
discontinuance pursuant to Section 9.6; or

                 (b)      the Regular Trustees elect after consultation with
the Sponsor to terminate the book entry system through the Clearing Agency with
respect to the Preferred Securities,

then:

                          (i)     Definitive Preferred Security Certificates
         shall be prepared by the Regular Trustees on behalf of the Trust with
         respect to such Preferred Securities; and





                                       28
<PAGE>   34
                          (ii)    upon surrender of the Global Certificate(s)
         by the Clearing Agency, accompanied by registration instructions, the
         Regular Trustees shall cause Definitive Preferred Security
         Certificates to be delivered to Preferred Security Beneficial Owners
         in accordance with the instructions of the Clearing Agency.  Neither
         the Trustees nor the Trust shall be liable for any delay in delivery
         of such instructions and each of them may conclusively rely on and
         shall be protected in relying on, said instructions of the Clearing
         Agency.  The Definitive Preferred Security Certificates shall be
         printed, lithographed or engraved or may be produced in any other
         manner as is reasonably acceptable to the Regular Trustees, as
         evidenced by their execution thereof, and may have such letters,
         numbers or other marks of identification or designation and such
         legends or endorsements as the Regular Trustees may deem appropriate,
         or as may be required to comply with any law or with any rule or
         regulation made pursuant thereto or with any rule or regulation of any
         stock exchange on which Preferred Securities may be listed, or to
         conform to usage.

SECTION 9.8      Mutilated, Destroyed, Lost or Stolen Certificates.

                 If:

                 (a)      any mutilated Certificates should be surrendered to
the Regular Trustees, or if the Regular Trustees shall receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate; and

                 (b)      there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep each of them harmless,

then, in the absence of notice that such Certificate shall have been acquired
by a bona fide purchaser, any Regular Trustee on behalf of the Trust shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like denomination.
In connection with the issuance of any new Certificate under this Section 9.8,
the Regular Trustees may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Certificate issued pursuant to this Section 9.8 shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.


                                   ARTICLE X
                           LIMITATION OF LIABILITY OF
                   HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 10.1     Liability.

                 (a)      Except as expressly set forth in this Declaration,
the Preferred Securities Guarantee, the Common Securities Guarantee and the
terms of the Securities, the Sponsor shall not be:

                          (i)     personally liable for the return of any
         portion of the capital contributions (or any return thereon) of the
         Holders of the Securities which shall be made solely from assets of
         the Trust; and

                          (ii)    required to pay to the Trust or to any Holder
         of Securities any deficit upon dissolution of the Trust or otherwise.





                                       29
<PAGE>   35
                 (b)      The Holder of the Common Securities shall be liable
for all of the debts and obligations of the Trust (other than with respect to
the Securities) to the extent not satisfied out of the Trust's assets.

                 (c)      Pursuant to Section 3803(a) of the Business Trust
Act, the Holders of the Preferred Securities shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware.

SECTION 10.2     Exculpation.

                 (a)      No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Declaration or by
law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's gross
negligence or willful misconduct with respect to such acts or omissions.

                 (b)      An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person [reasonably] believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be
paid.

SECTION 10.3     Fiduciary Duty.

                 (a)      To the extent that, at law or in equity, an
Indemnified Person has duties (including fiduciary duties) and liabilities
relating thereto to the Trust or to any other Covered Person, an Indemnified
Person acting under this Declaration shall not be liable to the Trust or to any
other Covered Person for its good faith reliance on the provisions of this
Declaration.  The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of an Indemnified Person otherwise existing
at law or in equity (other than the duties imposed on the Property Trustee
under the Trust Indenture Act), are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.

                 (b)      Unless otherwise expressly provided herein:

                          (i)     whenever a conflict of interest exists or 
         arises between any Covered Persons; or

                          (ii)    whenever this Declaration or any other
         agreement contemplated herein or therein provides that an Indemnified
         Person shall act in a manner that is, or provides terms that are, fair
         and reasonable to the Trust or any Holder of Securities,

the Indemnified Person shall resolve such conflict of interest, take such
action or provide such terms, considering in each case the relative interest of
each party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable
generally accepted accounting practices or principles.  In the absence of bad
faith by the Indemnified Person, the resolution, action or term so made, taken
or





                                       30
<PAGE>   36
provided by the Indemnified Person shall not constitute a breach of this
Declaration or any other agreement contemplated herein or of any duty or
obligation of the Indemnified Person at law or in equity or otherwise.

                 (c)      Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:

                          (i)     in its "discretion" or under a grant of
         similar authority, the Indemnified Person shall be entitled to
         consider such interests and factors as it desires, including its own
         interests, and shall have no duty or obligation to give any
         consideration to any interest of or factors affecting the Trust or any
         other Person; or

                          (ii)    in its "good faith" or under another express
         standard, the Indemnified Person shall act under such express standard
         and shall not be subject to any other or different standard imposed by
         this Declaration or by applicable law.

SECTION 10.4     Indemnification.

                 (a)(i)   The Debenture Issuer shall indemnify, to the full
         extent permitted by law, any Company Indemnified Person who was or is
         a party or is threatened to be made a party to any threatened, pending
         or completed action, suit or proceeding, whether civil, criminal,
         administrative or investigative (other than an action by or in the
         right of the Trust) by reason of the fact that he is or was a Company
         Indemnified Person against expenses (including attorneys' fees),
         judgments, fines and amounts paid in settlement actually and
         reasonably incurred by him in connection with such action, suit or
         proceeding if he acted in good faith and in a manner he reasonably
         believed to be in or not opposed to the best interests of the Trust,
         and, with respect to any criminal action or proceeding, had no
         reasonable cause to believe his conduct was unlawful.  The termination
         of any action, suit or proceeding by judgment, order, settlement,
         conviction, or upon a plea of nolo contendere or its equivalent, shall
         not, of itself, create a presumption that the Company Indemnified
         Person did not act in good faith and in a manner which he reasonably
         believed to be in or not opposed to the best interests of the Trust,
         and, with respect to any criminal action or proceeding, had reasonable
         cause to believe that his conduct was unlawful.

                          (ii)    The Debenture Issuer shall indemnify, to the
         full extent permitted by law, any Company Indemnified Person who was
         or is a party or is threatened to be made a party to any threatened,
         pending or completed action or suit by or in the right of the Trust to
         procure a judgment in its favor by reason of the fact that he is or
         was a Company Indemnified Person against expenses (including
         attorneys' fees) actually and reasonably incurred by him in connection
         with the defense or settlement of such action or suit if he acted in
         good faith and in a manner he reasonably believed to be in or not
         opposed to the best interests of the Trust and except that no such
         indemnification shall be made in respect of any claim, issue or matter
         as to which such Company Indemnified Person shall have been adjudged
         to be liable to the Trust unless and only to the extent that the Court
         of Chancery of the State of Delaware or the court in which such action
         or suit was brought shall determine upon application that, despite the
         adjudication of liability but in view of all the circumstances of the
         case, such person is fairly and reasonably entitled to indemnity for
         such expenses which such Court of Chancery or such other court shall
         deem proper.

                          (iii)   To the extent that a Company Indemnified
         Person shall be successful on the merits or otherwise (including
         dismissal of an action without prejudice or the settlement of an





                                       31
<PAGE>   37
         action without admission of liability) in defense of any action, suit
         or proceeding referred to in paragraphs (i) and (ii) of this Section
         10.4(a), or in defense of any claim, issue or matter therein, he shall
         be indemnified, to the full extent permitted by law, against expenses
         (including attorneys' fees) actually and reasonably incurred by him in
         connection therewith.

                          (iv)    Any indemnification under paragraphs (i) and
         (ii) of this Section 10.4(a) (unless ordered by a court) shall be made
         by the Debenture Issuer only as authorized in the specific case upon a
         determination that indemnification of the Company Indemnified Person
         is proper in the circumstances because he has met the applicable
         standard of conduct set forth in paragraphs (i) and (ii).  Such
         determination shall be made (1) by the Regular Trustees by a majority
         vote of a quorum consisting of such Regular Trustees who were not
         parties to such action, suit or proceeding, (2) if such a quorum is
         not obtainable, or, even if obtainable, if a quorum of disinterested
         Regular Trustees so directs, by independent legal counsel in a written
         opinion, or (3) by the Common Security Holder of the Trust.

                          (v)     To the fullest extent permitted by applicable
         law, expenses (including attorneys' fees) incurred by a Company
         Indemnified Person in defending a civil, criminal, administrative or
         investigative action, suit or proceeding referred to in paragraphs (i)
         and (ii) of this Section 10.4(a) shall be paid by the Debenture Issuer
         in advance of the final disposition of such action, suit or proceeding
         upon receipt of an undertaking by or on behalf of such Company
         Indemnified Person to repay such amount if it shall ultimately be
         determined that he is not entitled to be indemnified by the Debenture
         Issuer as authorized in this Section 10.4(a).  Notwithstanding the
         foregoing, no advance shall be made by the Debenture Issuer if a
         determination is reasonably and promptly made (i) by the Regular
         Trustees by a majority vote of a quorum of disinterested Regular
         Trustees, (ii) if such a quorum is not obtainable, or, even if
         obtainable, if a quorum of disinterested Regular Trustees so directs,
         by independent legal counsel in a written opinion or (iii) the Common
         Security Holder of the Trust, that, based upon the facts known to the
         Regular Trustees, counsel or the Common Security Holder at the time
         such determination is made, such Company Indemnified Person acted in
         bad faith or in a manner that such person did not believe to be in or
         not opposed to the best interests of the Trust, or, with respect to
         any criminal proceeding, that such Company Indemnified Person believed
         or had reasonable cause to believe his conduct was unlawful.  In no
         event shall any advance be made in instances where the Regular
         Trustees, independent legal counsel or Common Security Holder
         reasonably determine that such person deliberately breached his duty
         to the Trust or its Common or Preferred Security Holders.

                          (vi)    The indemnification and advancement of
         expenses provided by, or granted pursuant to, the other paragraphs of
         this Section 10.4(a) shall not be deemed exclusive of any other rights
         to which those seeking indemnification and advancement of expenses may
         be entitled under any agreement, vote of stockholders or disinterested
         directors of the Debenture Issuer or Preferred Security Holders of the
         Trust or otherwise, both as to action in his official capacity and as
         to action in another capacity while holding such office.  All rights
         to indemnification under this Section 10.4(a) shall be deemed to be
         provided by a contract between the Debenture Issuer and each Company
         Indemnified Person who serves in such capacity at any time while this
         Section 10.4(a) is in effect.  Any repeal or modification of this
         Section 10.4(a) shall not affect any rights or obligations then
         existing.

                          (vii)   The Debenture Issuer or the Trust may
         purchase and maintain insurance on behalf of any person who is or was
         a Company Indemnified Person against any liability asserted against
         him and incurred by him in any such capacity, or arising out of his
         status as





                                       32
<PAGE>   38
         such, whether or not the Debenture Issuer would have the power to
         indemnify him against such liability under the provisions of this
         Section 10.4(a).

                          (viii)  For purposes of this Section 10.4(a),
         references to "the Trust" shall include, in addition to the resulting
         or surviving entity, any constituent entity (including any constituent
         of a constituent) absorbed in a consolidation or merger, so that any
         person who is or was a director, trustee, officer or employee of such
         constituent entity, or is or was serving at the request of such
         constituent entity as a director, trustee, officer, employee or agent
         of another entity, shall stand in the same position under the
         provisions of this Section 10.4(a) with respect to the resulting or
         surviving entity as he would have with respect to such constituent
         entity if its separate existence had continued.

                          (ix)    The indemnification and advancement of
         expenses provided by, or granted pursuant to, this Section 10.4(a)
         shall, unless otherwise provided when authorized or ratified, continue
         as to a person who has ceased to be a Company Indemnified Person and
         shall inure to the benefit of the heirs, executors and administrators
         of such a person.

                 (b)      The Debenture Issuer agrees to indemnify the (i)
Property Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the
Property Trustee and the Delaware Trustee, and (iv) any officers, directors,
shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Property Trustee and the Delaware Trustee (each of
the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified
Person") for, and to hold each Fiduciary Indemnified Person harmless against,
any loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.  The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the satisfaction
and discharge of this Declaration.

SECTION 10.5     Outside Businesses.

                 Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper.  No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity.  Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Sponsor or its Affiliates.





                                       33
<PAGE>   39
                                   ARTICLE XI
                                   ACCOUNTING

SECTION 11.1     Fiscal Year.

                 The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.

SECTION 11.2     Certain Accounting Matters.

                 (a)      At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail,
each transaction of the Trust.  The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied.  The Trust shall use the accrual method of
accounting for United States federal income tax purposes.  The books of account
and the records of the Trust shall be examined by and reported upon as of the
end of each Fiscal Year of the Trust by a firm of independent certified public
accountants selected by the Regular Trustees.

                 (b)      The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end of
each Fiscal Year of the Trust, annual financial statements of the Trust,
including a balance sheet of the Trust as of the end of such Fiscal Year, and
the related statements of income or loss.

                 (c)      The Regular Trustees shall cause to be duly prepared
and delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations.  Notwithstanding any right under the
Code to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.

                 (d)      The Regular Trustees shall cause to be duly prepared
and filed with the appropriate taxing authority, an annual United States
federal income tax return, on a Form 1041 or such other form required by United
States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or
local taxing authority.

SECTION 11.3     Banking.

                 The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account.  The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.

SECTION 11.4     Withholding.

                 The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law.  The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with





                                       34
<PAGE>   40
respect to each Holder, and any representations and forms as shall reasonably
be requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations.  The Regular Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions.  To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder.  In the event of any claimed over withholding, Holders shall be limited
to an action against the applicable jurisdiction.  If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.


                                  ARTICLE XII
                            AMENDMENTS AND MEETINGS

SECTION 12.1     Amendments.

                 (a)      Except as otherwise provided in this Declaration or
by any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:

                          (i)     the Regular Trustees (or, if there are more
         than two Regular Trustees a majority of the Regular Trustees);

                          (ii)    if the amendment affects the rights, powers,
         duties, obligations or immunities of the Property Trustee, the
         Property Trustee; and

                          (iii)   if the amendment affects the rights, powers,
         duties, obligations or immunities of the Delaware Trustee, the
         Delaware Trustee.

                 (b)      No amendment shall be made, and any such purported
amendment shall be void and ineffective:

                          (i)     unless, in the case of any proposed
         amendment, the Property Trustee shall have first received an Officers'
         Certificate from each of the Trust and the Sponsor that such amendment
         is permitted by, and conforms to, the terms of this Declaration
         (including the terms of the Securities);

                          (ii)    unless, in the case of any proposed amendment
         which affects the rights, powers, duties, obligations or immunities of
         the Property Trustee, or the Delaware Trustee, the Property Trustee or
         Delaware Trustee, as the case may be, shall have first received:

                                  (A)      an Officers' Certificate from each
                 of the Trust and the Sponsor that such amendment is permitted
                 by, and conforms to, the terms of this Declaration (including
                 the terms of the Securities); and

                                  (B)      an opinion of counsel (who may be
                 counsel to the Sponsor or the Trust) that such amendment is
                 permitted by, and conforms to, the terms of this Declaration
                 (including the terms of the Securities); and

                          (iii)   to the extent the result of such amendment
         would be to:





                                       35
<PAGE>   41
                                  (A)      cause the Trust to fail to continue
                 to be classified for purposes of United States federal income
                 taxation as a grantor trust;

                                  (B)      reduce or otherwise adversely affect
                 the powers of the Property Trustee in contravention of the
                 Trust Indenture Act; or

                                  (C)      cause the Trust to be deemed to be
                 an Investment Company required to be registered under the
                 Investment Company Act;

                 (c)      At such time after the Trust has issued any
Securities that remain outstanding, any amendment that would adversely affect
the rights, privileges or preferences of any Holder of Securities may be
effected only with such additional requirements as may be set forth in the
terms of such Securities;

                 (d)      Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the Securities;

                 (e)      Article IV shall not be amended without the consent
of the Holders of a Majority in liquidation amount of the Common Securities;

                 (f)      The rights of the holders of the Common Securities
under Article V to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and

                 (g)      Notwithstanding Section 12.1(c), this Declaration may
be amended without the consent of the Holders of the Securities to:

                          (i)     cure any ambiguity;

                          (ii)    correct or supplement any provision in this
         Declaration that may be defective or inconsistent with any other
         provision of this Declaration;

                          (iii)   add to the covenants, restrictions or
         obligations of the Sponsor; or

                          (iv)    to conform to any change in Rule 3a-5 or
         written change in interpretation or application of Rule 3a-5 by any
         legislative body, court, government agency or regulatory authority
         which amendment does not have a material adverse effect on the rights,
         preferences or privileges of the Holders of the Preferred Securities.

SECTION 12.2     Meetings of the Holders of Securities; Action by Written
Consent.

                 (a)      Meetings of the Holders of any class of Securities
may be called at any time by the Regular Trustees (or as provided in the terms
of the Securities) to consider and act on any matter on which Holders of such
class of Securities are entitled to act under the terms of this Declaration,
the terms of the Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading.  The Regular Trustees
shall call a meeting of the Holders of such class if directed to do so by the
Holders of at least 10% in liquidation amount of such class of Securities.
Such direction shall be given by delivering to the Regular Trustees one or more
calls in writing stating that the signing





                                       36
<PAGE>   42
Holders of Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called.  Any Holders of
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of Securities exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.

                 (b)      Except to the extent otherwise provided in the terms
of the Securities, the following provisions shall apply to meetings of Holders
of Securities:

                          (i)     notice of any such meeting shall be given to
         all the Holders of Securities having a right to vote thereat at least
         7 days and not more than 60 days before the date of such meeting.
         Whenever a vote, consent or approval of the Holders of Securities is
         permitted or required under this Declaration or the rules of any stock
         exchange on which the Preferred Securities are listed or admitted for
         trading, such vote, consent or approval may be given at a meeting of
         the Holders of Securities.  Any action that may be taken at a meeting
         of the Holders of Securities may be taken without a meeting if a
         consent in writing setting forth the action so taken is signed by the
         Holders of Securities owning not less than the minimum amount of
         Securities in liquidation amount that would be necessary to authorize
         or take such action at a meeting at which all Holders of Securities
         having a right to vote thereon were present and voting.  Prompt notice
         of the taking of action without a meeting shall be given to the
         Holders of Securities entitled to vote who have not consented in
         writing.  The Regular Trustees may specify that any written ballot
         submitted to the Security Holder for the purpose of taking any action
         without a meeting shall be returned to the Trust within the time
         specified by the Regular Trustees;

                          (ii)    each Holder of a Security may authorize any
         Person to act for it by proxy on all matters in which a Holder of
         Securities is entitled to participate, including waiving notice of any
         meeting, or voting or participating at a meeting.  No proxy shall be
         valid after the expiration of 11 months from the date thereof unless
         otherwise provided in the proxy.  Every proxy shall be revocable at
         the pleasure of the Holder of Securities executing it.  Except as
         otherwise provided herein, all matters relating to the giving, voting
         or validity of proxies shall be governed by the General Corporation
         Law of the State of Delaware relating to proxies, and judicial
         interpretations thereunder, as if the Trust were a Delaware
         corporation and the Holders of the Securities were stockholders of a
         Delaware corporation;

                          (iii)   each meeting of the Holders of the Securities
         shall be conducted by the Regular Trustees or by such other Person
         that the Regular Trustees may designate; and

                          (iv)    unless the Business Trust Act, this
         Declaration, the terms of the Securities, the Trust Indenture Act or
         the listing rules of any stock exchange on which the Preferred
         Securities are then listed or trading, otherwise provides, the Regular
         Trustees, in their sole discretion, shall establish all other
         provisions relating to meetings of Holders of Securities, including
         notice of the time, place or purpose of any meeting at which any
         matter is to be voted on by any Holders of Securities, waiver of any
         such notice, action by consent without a meeting, the establishment of
         a record date, quorum requirements, voting in person or by proxy or
         any other matter with respect to the exercise of any such right to
         vote.





                                       37
<PAGE>   43
                                  ARTICLE XIII
            REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE

SECTION 13.1     Representations and Warranties of Property Trustee.

                 The Trustee that acts as initial Property Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Property Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:

                 (a)      the Property Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in good
standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Declaration;

                 (b)      the execution, delivery and performance by the
Property Trustee of the Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee.  The Declaration has been
duly executed and delivered by the Property Trustee, and it constitutes a
legal, valid and binding obligation of the Property Trustee, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);

                 (c)      the execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or constitute a
breach of the Articles of Organization or By-laws of the Property Trustee; and

                 (d)      no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority is
required for the execution, delivery or performance by the Property Trustee, of
the Declaration.

SECTION 13.2     Representations and Warranties of Delaware Trustee.

                 The Trustee that acts as initial Delaware Trustee represents
and warrants to the Trust and to the Sponsor at the date of this Declaration,
and each Successor Delaware Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:

                 (a)      the Delaware Trustee is a Delaware banking
corporation with trust powers, duly organized, validly existing and in good
standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Declaration.

                 (b)      the Delaware Trustee has been authorized to perform
its obligations under the Declaration.  The Declaration under Delaware law
constitutes a legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors' rights generally and to general principles of equity and
the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).





                                       38
<PAGE>   44
                 (c)      no consent, approval or authorization of, or
registration with or notice to, any State or Federal banking authority is
required for the execution, delivery or performance by the Delaware Trustee, of
the Declaration.

                 (d)      the Delaware Trustee is a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware.


                                  ARTICLE XIV
                                 MISCELLANEOUS

SECTION 14.1     Notices.

                 All notices provided for in this Declaration shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

                 (a)      if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other address
as the Trust may give notice of to the Holders of the Securities):

                          Consumers Power Company Financing I
                          c/o Consumers Power Company
                              212 West Michigan Avenue
                              Jackson, Michigan  49201
                          Attention:  Alan M. Wright, Senior Vice President and
                                       Chief Financial Officer

                 (b)      if given to the Delaware Trustee, at the mailing
         address set forth below (or such other address as Delaware Trustee may
         give notice of to the Holders of the Securities):

                          The Bank of New York (Delaware)
                          White Clay Center
                          Route 473
                          Newark, Delaware 19711

                 (c)      if given to the Property Trustee, at its Corporate
         Trust Office to the attention of the Administrator (or such other
         address as the Property Trustee may give notice of to the Holders of
         the Securities):

                          The Bank of New York
                          101 Barclay
                          New York, New York 10286

                 (d)      if given to the Holder of the Common Securities, at
         the mailing address of the Sponsor set forth below (or such other
         address as the Holder of the Common Securities may give notice to the
         Trust):





                                       39
<PAGE>   45
                          Consumers Power Company
                          212 West Michigan Avenue
                          Jackson, Michigan  49201
                          Attention:  Thomas A. McNish, Vice President and
Secretary

                 (e)      if given to any other Holder, at the address set
         forth on the books and records of the Trust.

                 All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

SECTION 14.2     Governing Law.

                 This Declaration and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.

SECTION 14.3     Intention of the Parties.

                 It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust.
The provisions of this Declaration shall be interpreted to further this
intention of the parties.

SECTION 14.4     Headings.

                 Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.

SECTION 14.5     Successors and Assigns

                 Whenever in this Declaration any of the parties hereto is
named or referred to, the successors and assigns of such party shall be deemed
to be included, and all covenants and agreements in this Declaration by the
Sponsor and the Trustees shall bind and inure to the benefit of their
respective successors and assigns, whether so expressed.

SECTION 14.6     Partial Enforceability.

                 If any provision of this Declaration, or the application of
such provision to any Person or circumstance, shall be held invalid, the
remainder of this Declaration, or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.

SECTION 14.7     Counterparts.

                 This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each party hereto to one of such counterpart signature pages.  All
of such counterpart signature pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a single
signature page.





                                       40
<PAGE>   46
                 IN WITNESS WHEREOF, the undersigned have caused these presents
to be executed as of the day and year first above written.



                                     -----------------------------------
                                     Alan M. Wright, as Regular  Trustee
                                     
                                     -----------------------------------
                                     
                                     Thomas A. McNish, as Regular Trustee
                                     
                                     -----------------------------------
                                     
                                     Doris F. Galvin, as Regular Trustee
                                     
                                     
                                     The Bank of New York (Delaware),
                                     as Delaware Trustee
                                     
                                     
                                     
                                     By:                            
                                        --------------------------------
                                          Name:
                                          Title:
                                     
                                     
                                     
                                     The Bank of New York, as Property Trustee
                                     
                                     By:                              
                                        --------------------------------
                                          Name:
                                          Title:
                                     
                                     
                                     Consumers Power Company, as Sponsor
                                     
                                     
                                     
                                     By:                            
                                        --------------------------------
                                          Name:
                                          Title:





                                       41
<PAGE>   47
                                    ANNEX I



                                    TERMS OF
                   ___% TRUST ORIGINATED PREFERRED SECURITIES
                    ___% TRUST ORIGINATED COMMON SECURITIES



                 Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of November ___, 1995 (as amended from time to
time, the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not defined
herein has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):

                 1.       Designation and Number.

                 (a)      Preferred Securities.  4,000,000 Preferred Securities
of the Trust with an aggregate liquidation amount with respect to the assets of
the Trust of one hundred million dollars ($100,000,000) and a liquidation
amount with respect to the assets of the Trust of $25 per preferred security,
are hereby designated, for the purposes of identification only, as "_____%
Trust Originated Preferred Securities(SM) ('TOPrS'(SM))" (the "Preferred
Securities").  The Preferred Security Certificates evidencing the Preferred
Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Preferred Securities are listed.

                 (b)      Common Securities.  123,711 Common Securities of the
Trust with an aggregate liquidation amount with respect to the assets of the 
Trust of three million, ninety-two thousand seven hundred eighty-four dollars
($3,092,784) and a liquidation amount with respect to the assets of the Trust
of $25 per common security, are hereby designated, for the purposes of
identification only, as "______% Trust Originated Common Securities" (the
"Common Securities").  The Common Security Certificates evidencing the Common
Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.

                 2.       Distributions.

                 (a)      Distributions payable on each Security will be fixed
at a rate per annum of ______% (the "Coupon Rate") of the stated liquidation
amount of $25 per Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee.  Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law).  The term
"Distributions" as used herein includes such cash distributions and any such
interest payable unless otherwise stated.  A Distribution is payable only to
the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor.  The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which





                                       1
<PAGE>   48
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.

                 (b)      Distributions on the Securities will be cumulative,
will accrue from December __, 1995, and will be payable quarterly in arrears,
on December 31, March 31, June 30 and September 30 of each year, commencing on
December 31, 1995, except as otherwise described below.  The Debenture
Issuer has the right under the Indenture to defer payments of interest by
extending the interest payment period from time to time on the Debentures for a
period not exceeding 20 consecutive quarters (each an "Extension Period"),
during which Extension Period no interest shall be due and payable on the
Debentures, provided that no Extension Period shall last beyond the date of
maturity of the Debentures.  As a consequence of such deferral, Distributions
will also be deferred.  Despite such deferral, quarterly Distributions will
continue to accrue with interest thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded quarterly during any such Extension Period. 
Prior to the termination of any such Extension Period, the Debenture Issuer may
further extend such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed
20 consecutive quarters.  Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first
record date after the end of the Extension Period.  Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period, subject to the above requirements.

                 (c)      Distributions on the Securities will be payable to
the Holders thereof as they appear on the books and records of the Trust on the
relevant record dates.  While the Preferred Securities remain in book-entry
only form, the relevant record dates shall be one Business Day prior to the
relevant payment dates which payment dates correspond to the interest payment
dates on the Debentures.  Subject to any applicable laws and regulations and
the provisions of the Declaration, each such payment in respect of the
Preferred Securities will be made as described under the heading "Description
of the Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company" in the Prospectus dated __________, 1995 (the "Prospectus"), of the
Trust included in the Registration Statement on Form S-3 of the Sponsor and the
Trust.  The relevant record dates for the Common Securities shall be the same
record date as for the Preferred Securities.  If the Preferred Securities shall
not continue to remain in book-entries only form, the relevant record dates for
the Preferred Securities shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Debentures.  Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with the Indenture.  If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.

                 (d)      In the event that there is any money or other
property held by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein) among the Holders of
the Securities.





                                       2
<PAGE>   49
                 3.       Liquidation Distribution Upon Dissolution.

                 In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the Securities on the
date of the dissolution, winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities to creditors an
amount equal to the aggregate of the stated liquidation amount of $25 per
Security plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, winding-up or termination, after satisfaction of liabilities
to creditors of the Trust, Debentures in an aggregate principal amount equal to
the aggregate stated liquidation amount of such Securities, with an interest
rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an
amount equal to the accrued and unpaid Distributions on, such Securities, shall
be distributed on a Pro Rata basis to the Holders of the Securities in exchange
for such Securities.

                 If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.

                 4.       Redemption and Distribution.

                 (a)      Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at the option of the
Debenture Issuer or pursuant to a Tax Event as described below), the proceeds
from such repayment or payment shall be simultaneously applied to redeem
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at a redemption price
of $25 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the redemption, payable in cash (the "Redemption
Price").  Holders will be given not less than 30 nor more than 60 days notice
of such redemption, except in the case of payments upon maturity.

                 (b)      If fewer than all the outstanding Securities are to
be so redeemed, the Common Securities and the Preferred Securities will be
redeemed Pro Rata and the Preferred Securities to be redeemed will be as
described in Section 4(f)(ii) below.

                 (c)      If a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing the
Regular Trustees shall, except in certain limited circumstances in relation to
a Tax Event described in this Section 4(c), dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee,
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued
and unpaid interest equal to accrued and unpaid Distributions on, and having
the same record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the Holders of the Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the dissolution of the Trust and the distribution of Debentures, and
provided, further, that, if at the time there is available to the Trust the
opportunity to eliminate, within the 90 Day Period, the Special Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure that has





                                       3
<PAGE>   50
no adverse effect on the Trust, the Debenture Issuer, the Sponsor or the
Holders of the Securities ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.

                 If (a) a Tax Event has occurred and is continuing, (i) the
Debenture Issuer has received an opinion (a "Redemption Tax Opinion") of a
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that the   
Debenture Issuer would be precluded from deducting the interest on the
Debentures for United States federal income tax purposes even if the Debentures
were distributed to the Holders of Securities in liquidation of such Holders'
interests in the Trust as described in this Section 4(c), or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, (b) or if an Investment Company Event
has occurred and is continuing, the Debenture Issuer shall have the right at 
any time, upon not less than 30 nor more than 60 days notice, to redeem the 
Debentures in whole or in part for cash within 90 days following the 
occurrence of such Tax Event, or Investment Company Event, as the case may be
and, following such redemption, Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so redeemed shall be
redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to the Trust the opportunity
to eliminate, within such 90 day period, such Special Event by taking some
Ministerial Action, the Trust or the Debenture Issuer will pursue such
Ministerial Action in lieu of redemption.

                 "Tax Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Tax Event Opinion") to the effect that on or
after the date of the Prospectus, as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority therefor or therein, or (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or announced or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of the Prospectus, there is more than
an insubstantial risk that (i) the Trust is or will be within 90 days of the
date thereof, subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges, or (iii) interest payable by the
Debenture Issuer to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible, in whole or in part, by the Debenture
Issuer for United States federal income tax purposes.

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

                 On and from the date fixed by the Regular Trustees for any
distribution of Debentures and dissolution of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) The Depository Trust Company
(the "Depository") or its nominee (or any successor Clearing Agency or its
nominee), as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Preferred Securities held by
the Depository or its nominee (or any successor Clearing Agency or its
nominee), will be deemed to represent beneficial





                                       4
<PAGE>   51
interests in the Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
Coupon Rate of, and accrued and unpaid interest equal to accrued and unpaid
Distributions on such Securities until such certificates are presented to the
Debenture Issuer or its agent for transfer or reissue.

                 (d)      The Trust may not redeem fewer than all the
outstanding Securities unless all accrued and unpaid Distributions have been
paid on all Securities for all quarterly Distribution periods terminating on or
before the date of redemption.

                 (e)      If the Debentures are distributed to holders of the
Securities, pursuant to the terms of the Indenture, the Debenture Issuer will
use its best efforts to have the Debentures listed on the New York Stock
Exchange or on such other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.

                 (f)      "Redemption or Distribution Procedures."

                 (i)      Notice of any redemption of, or notice of
         distribution of Debentures in exchange for the Securities (a
         "Redemption/Distribution Notice") will be given by the Trust by mail
         to each Holder of Securities to be redeemed or exchanged not fewer
         than 30 nor more than 60 days before the date fixed for redemption or
         exchange thereof which, in the case of a redemption, will be the date
         fixed for redemption of the Debentures.  For purposes of the
         calculation of the date of redemption or exchange and the dates on
         which notices are given pursuant to this Section 4(f)(i), a
         Redemption/ Distribution Notice shall be deemed to be given on the day
         such notice is first mailed by first-class mail, postage prepaid, to
         Holders of Securities.  Each Redemption/Distribution Notice shall be
         addressed to the Holders of Securities at the address of each such
         Holder appearing in the books and records of the Trust.  No defect in
         the Redemption/Distribution Notice or in the mailing of either thereof
         with respect to any Holder shall affect the validity of the redemption
         or exchange proceedings with respect to any other Holder.

                 (ii)     In the event that fewer than all the outstanding
         Securities are to be redeemed, the Securities to be redeemed shall be
         redeemed Pro Rata from each Holder of Preferred Securities, it being
         understood that, in respect of Preferred Securities registered in the
         name of and held of record by the Depository or its nominee (or any
         successor Clearing Agency or its nominee) or any nominee, the
         distribution of the proceeds of such redemption will be made to each
         Clearing Agency Participant (or Person on whose behalf such nominee
         holds such securities) in accordance with the procedures applied by
         such agency or nominee.

                 (iii)    If Securities are to be redeemed and the Trust gives
         a Redemption/Distribution Notice, which notice may only be issued if
         the Debentures are redeemed as set out in this Section 4 (which notice
         will be irrevocable), then (A) while the Preferred Securities are in
         book-entry only form, with respect to the Preferred Securities, by
         12:00 noon, New York City time, on the redemption date, provided that
         the Debenture Issuer has paid the Property Trustee a sufficient amount
         of cash in connection with the related redemption or maturity of the
         Debentures, the Property Trustee will deposit irrevocably with the
         Depository or its nominee (or successor Clearing Agency or its
         nominee) funds sufficient to pay the applicable Redemption Price with
         respect to the Preferred Securities and will give the Depository
         irrevocable instructions and authority to pay the Redemption Price to
         the Holders of the Preferred Securities, and (B) with respect to
         Preferred Securities issued in definitive form and Common Securities,
         provided that the Debenture Issuer has paid the Property Trustee a
         sufficient amount of cash in connection with the related redemption or
         maturity of the Debentures, the Property Trustee will





                                       5
<PAGE>   52
         pay the relevant Redemption Price to the Holders of such Securities by
         check mailed to the address of the relevant Holder appearing on the
         books and records of the Trust on the redemption date.  If a
         Redemption/Distribution Notice shall have been given and funds
         deposited as required, if applicable, then immediately prior to the
         close of business on the date of such deposit, or on the redemption
         date, as applicable, distributions will cease to accrue on the
         Securities so called for redemption and all rights of Holders of such
         Securities so called for redemption will cease, except the right of
         the Holders of such Securities to receive the Redemption Price, but
         without interest on such Redemption Price.  Neither the Regular
         Trustees nor the Trust shall be required to register or cause to be
         registered the transfer of any Securities that have been so called for
         redemption.  If any date fixed for redemption of Securities is not a
         Business Day, then payment of the Redemption Price payable on such
         date will be made on the next succeeding day that is a Business Day
         (and without any interest or other payment in respect of any such
         delay) except that, if such Business Day falls in the next calendar
         year, such payment will be made on the immediately preceding Business
         Day, in each case with the same force and effect as if made on such
         date fixed for redemption.  If payment of the Redemption Price in
         respect of any Securities is improperly withheld or refused and not
         paid either by the Property Trustee or by the Sponsor as guarantor
         pursuant to the relevant Securities Guarantee, Distributions on such
         Securities will continue to accrue from the original redemption date
         to the actual date of payment, in which case the actual payment date
         will be considered the date fixed for redemption for purposes of
         calculating the Redemption Price.

                 (iv)     Redemption/Distribution Notices shall be sent by the
         Regular Trustees on behalf of the Trust to (A) in respect of the
         Preferred Securities, the Depository or its nominee (or any successor
         Clearing Agency or its nominee) if the Global Certificate(s) have been
         issued or, if Definitive Preferred Security Certificates have been
         issued, to the Holder thereof, and (B) in respect of the Common
         Securities to the Holder thereof.

                 (v)      Subject to the foregoing and applicable law
         (including, without limitation, United States federal securities
         laws), provided the acquiror is not the Holder of the Common
         Securities or the obligor under the Indenture, the Sponsor or any of
         its subsidiaries may at any time and from time to time purchase
         outstanding Preferred Securities by tender, in the open market or by
         private agreement.

                 5.       Voting Rights - Preferred Securities.

                 (a)      Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.

                 (b)      Subject to the requirements set forth in this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class may direct the time, method, and place
of conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under the
Declaration, including (i) directing the time, method, place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 5.10 of the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable.





                                       6
<PAGE>   53
The Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities.  Other than with
respect to directing the time, method and place of conducting any remedy
available to the Property Trustee or the Debenture Trustee as set forth
above, the Property Trustee shall not take any action in accordance with the
directions of the Holders of the Preferred Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust on account of such action.  If
the Property Trustee fails to enforce its rights under the Declaration to the
fullest extent permitted by law, any Holder of Preferred Securities may,
institute a legal proceeding directly against any Person to enforce the
Property Trustee's rights under the Declaration without first instituting a
legal proceeding against the Property Trustee or any other Person.

                 Any approval or direction of Holders of Preferred Securities
may be given at a separate meeting of Holders of Preferred Securities convened
for such purpose, at a meeting of all of the Holders of Securities in the Trust
or pursuant to written consent.  The Regular Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote, or
of any matter upon which action by written consent of such Holders is to be
taken, to be mailed to each Holder of record of Preferred Securities.  Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.

                 No vote or consent of the Holders of the Preferred Securities
will be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.

                 Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Sponsor or any Affiliate of
the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.

                 6.       Voting Rights - Common Securities.

                 (a)      Except as provided under Sections 6(b), (c) and 7 and
as otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.

                 (b)      The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.

                 (c)      Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under the Declaration, including (i) directing the
time, method, place of conducting any proceeding for any remedy available to
the Debenture Trustee, or exercising any trust or power conferred on the
Debenture Trustee with respect to the Debentures, (ii) waive any past default
and its consequences that is waivable under Section 5.10 of the Indenture, or
(iii) exercise any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable, provided that, where a consent
or action under the Indenture would require the consent or





                                       7
<PAGE>   54
act of the Holders of greater than a majority in principal amount of Debentures
affected thereby (a "Super Majority"), the Property Trustee may only give such
consent or take such action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the
Debentures outstanding.  Pursuant to this Section 6(c), the Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities.  Other than with respect to directing the
time, method and place of conducting any remedy available to the Property
Trustee or the Debenture Trustee as set forth above, the Property Trustee shall
not take any action in accordance with the directions of the Holders of the
Common Securities under this paragraph unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.  If the Property Trustee fails to enforce its
rights under the Declaration to the fullest extent permitted by applicable law,
any Holder of Common Securities may, institute a legal proceeding directly
against any Person to enforce the Property Trustee's rights under the
Declaration, without first instituting a legal proceeding against the Property
Trustee or any other Person.

                 Any approval or direction of Holders of Common Securities may
be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent.  The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities.  Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.

                 No vote or consent of the Holders of the Common Securities
will be required for the Trust to redeem and cancel Common Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.

                 7.       Amendments to Declaration and Indenture.

                 (a)      In addition to any requirements under Section 12.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities; and, provided further, that no such amendment or proposal which
would reduce the principal amount or the distribution rate or change the
payment dates or maturity of the Preferred Securities shall be permitted
without the consent of each holder of Preferred Securities.

                 (b)      In the event the consent of the Property Trustee as
the holder of the Debentures is required under the Indenture with respect to
any amendment, modification or termination on the Indenture or the Debentures,
the Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and
shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the





                                       8
<PAGE>   55
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of the holders of greater
than a majority in aggregate principal amount of the Debentures (a "Super
Majority"), the Property Trustee may only give such consent at the direction of
the Holders of at least the proportion in liquidation amount of the Securities
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding; provided, further, that the Property Trustee
shall not take any action in accordance with the directions of the Holders of
the Securities under this Section 7(b) unless the Property Trustee has obtained
an opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.

                 8.       Pro Rata.

                 A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate liquidation
amount of all Securities outstanding unless, in relation to a payment, an Event
of Default under the Declaration has occurred and is continuing, in which case
any funds available to make such payment shall be paid first to each Holder of
the Preferred Securities pro rata according to the aggregate liquidation amount
of Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant Holder relative to
the aggregate liquidation amount of all Common Securities outstanding.

                 9.       Ranking.

                 The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Preferred Securities.

                 10.      Listing.

                 The Regular Trustees shall use their best efforts to cause the
Preferred Securities to be listed for quotation on the New York Stock Exchange.

                 11.      Acceptance of Securities Guarantee and Indenture.

                 Each Holder of Preferred Securities and Common Securities, by
the acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture
including the subordination provisions therein.

                 12.      No Preemptive Rights.

                 The Holders of the Securities shall have no preemptive rights
to subscribe for any additional securities.





                                       9
<PAGE>   56
                 13.      Miscellaneous.

                 These terms constitute a part of the Declaration.

                 The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.





                                       10
<PAGE>   57
                                  EXHIBIT A-1

                     FORM OF PREFERRED SECURITY CERTIFICATE



                 [IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.

                 Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]

Certificate Number
                                                  Number of Preferred Securities

                                                  CUSIP NO. [           ]


                 Certificate Evidencing Preferred Securities

                                       of

                      Consumers Power Company Financing I


        ____% Trust Originated Preferred Securities(SM) ("TOPrS"(SM))
                (liquidation amount $25 per Preferred Security)

                 Consumers Power Company Financing I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that ______________ (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided beneficial interests
in the assets of the Trust designated the _____% Trust Originated Preferred
Securities(SM) (liquidation amount $25 per Preferred Security) (the "Preferred
Securities").  The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer.
The designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities represented hereby are issued and
shall in all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of _______, 1995, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Preferred Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration.  The Holder is entitled to the benefits of the Preferred
Securities Guarantee to the extent





                                      A1-1
<PAGE>   58
provided therein.  The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.

                 Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

                 By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Debentures.

                 IN WITNESS WHEREOF, the Trust has executed this certificate
this ___ day of ____________, 199__.


                                       -----------------------------------
                                       [Name of Regular Trustee]
                                       
                                       
                                       -----------------------------------
                                       [Name of Regular Trustee]
                                       
                                       
                                       -----------------------------------
                                       [Name of Regular Trustee]
                                       




                                     A1-2


<PAGE>   59

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



                                   ASSIGNMENT


FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
_______________________________________________________________________________
_______________________________________________________________________________
_________________
        (Insert assignee's social security or tax identification number)

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
                  (Insert address and zip code of assignee)


and irrevocably appoints                                         
_______________________________________________________________________________
_______________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the 
Trust.  The agent may substitute another to act for him or her.


Date: 
      -----------------------

Signature: 
           ------------------
(Sign exactly as your name appears on the other side of this Preferred Security
Certificate)





                                      A1-3
<PAGE>   60
                                  EXHIBIT A-2

                      FORM OF COMMON SECURITY CERTIFICATE


Certificate Number                                   Number of Common Securities


                    Certificate Evidencing Common Securities

                                       of

                      Consumers Power Company Financing I


                   ______% Trust Originated Common Securities
                  (liquidation amount $25 per Common Security)


                 Consumers Power Company Financing I, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that _________________ (the "Holder") is the registered owner of
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the  ______% Trust Originated Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities").  The Common Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of
this certificate duly endorsed and in proper form for transfer.  The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of _______, 1995, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Common Securities as set forth in Annex I to the Declaration.
Capitalized terms used herein but not defined shall have the meaning given them
in the Declaration.  The Holder is entitled to the benefits of the Common
Securities Guarantee to the extent provided therein.  The Sponsor will provide
a copy of the Declaration, the Common Securities Guarantee and the Indenture to
a Holder without charge upon written request to the Sponsor at its principal
place of business.

                 Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.

                 By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.





                                      A2-1
<PAGE>   61
         IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of ____________, 199__.



                                             -----------------------------------
                                                   [Name of Regular Trustee]




                                             -----------------------------------
                                                   [Name of Regular Trustee]



                                             -----------------------------------
                                                   [Name of Regular Trustee]





                                      A2-2
<PAGE>   62


                                   ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to: _______________________________________________________________
_______________________________________________________________________________
_________________________
(Insert assignee's social security or tax identification number)

_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Insert address and zip code of assignee)

and irrevocably appoints ______________________________________________________
_______________________________________________________________________________
agent to transfer this Common Security Certificate on the books of the Trust.  
The agent may substitute another to act for him or her.

Date: 
      -----------------------

Signature: 
           -----------------------------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)





                                      A2-3
<PAGE>   63
                                   EXHIBIT B

                             SPECIMEN OF DEBENTURE





                                      B-1
<PAGE>   64





                                   EXHIBIT C

                             UNDERWRITING AGREEMENT





                                      B-1

<PAGE>   1



                                                                   EXHIBIT (4)-3


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



                        Consumers Power Company, Issuer


                                      and


                         The Bank of New York, Trustee


                                   INDENTURE



                         Dated as of November___, 1995


                          Subordinated Debt Securities



===============================================================================
<PAGE>   2
                             CROSS REFERENCE SHEET

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


                 Provisions of Trust Indenture Act of 1939 and Indenture to be
dated as of ____________, 1995 between Consumers Power Company and The
Bank of New York: 


<TABLE>
<CAPTION>
Section of the Act                 Section of Indenture
- ------------------                 --------------------
<S>                               <C>
310(a)(1) and (2).............    6.9
310(a)(3) and (4).............    Inapplicable
310(b)........................    6.8 and 6.10(a), (b) and (d)
310(c)........................    Inapplicable
311(a)........................    6.13(a) and (c)(1) and (2)
311(b)........................    6.13(b)
311(c)........................    Inapplicable
312(a)........................    4.1 and 4.2(a)
312(b)........................    4.2(a) and (b)(i) and (ii)
312(c)........................    4.2(c)
313(a)........................    4.4(a)
313(b)(1).....................    Inapplicable
313(b)(2).....................    4.4(b)
313(c)........................    4.4(c)
313(d)........................    4.4(d)
314(a)........................    4.3
314(b)........................    Inapplicable
314(c)(1) and (2).............    13.5
314(c)(3).....................    Inapplicable
314(d)........................    Inapplicable
314(e)........................    13.5
314(f)........................    Inapplicable
315(a), (c) and (d)...........    6.1
315(b)........................    5.11
315(e)........................    5.12
316(a)(1).....................    5.9
316(a)(2).....................    Not required
316(a) (last sentence)........    7.4
316(b)........................    5.7
316(c)........................    Not required
317(a)........................    5.2
317(b)........................    3.4(a) and (b)
318(a)........................    13.7
</TABLE>

- ----------------
* This Cross Reference Sheet is not part of the Indenture.
<PAGE>   3
                               TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
                                                                    Page
                                                                    ----
<S>                                                                   <C>
PARTIES....................................................           1

RECITALS

         Authorization of Indenture........................           1
         Compliance with Legal Requirements................           1
         Purpose of and Consideration for Indenture........           1
</TABLE>


<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                              <C>  
                                 ARTICLE ONE

                                 DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1

Section 1.1  Certain Terms Defined  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
                 Affiliate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Common Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
                 Common Securities Guarantee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Consumers Trust  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Declaration  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
                 "Holder", "Holder of Securities", "Securityholder" . . . . . . . . . . . . . . . . . . . . .    4
                 Indenture  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Interest Payment Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Issuer Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Officers' Certificate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
                 Outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
                 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Preferred Securities Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Principal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Record Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 Responsible Officer  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
                 "Security" or "Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                 "Security Register" and "Security Registrar" . . . . . . . . . . . . . . . . . . . . . . . .    7
                 Senior Indebtedness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
</TABLE>                                              
                                                      
                                                      
                                                      
                                                      
                                                      
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                 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                 Stated Maturity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                 "Trust Indenture Act of 1939" or "Trust Indenture Act" . . . . . . . . . . . . . . . . . . .    7
                 Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                 Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7

                                 ARTICLE TWO
                                 SECURITIES   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                                                                                                              
Section 2.1  Forms Generally  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
                                                                                                              
Section 2.2  Form of Trustee's Certificate of Authentication  . . . . . . . . . . . . . . . . . . . . . . . .    8
                                                                                                              
Section 2.3  Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
                                                                                                              
Section 2.4  Authentication and Delivery of Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
                                                                                                              
Section 2.5  Execution of Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
                                                                                                              
Section 2.6  Certificate of Authentication  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
                                                                                                              
Section 2.7  Denomination of Securities; Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . .   16
                                                                                                              
Section 2.8  Registration, Transfer and Exchange  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
                                                                                                              
Section 2.9  Mutilated, Defaced, Destroyed, Lost and Stolen Securities  . . . . . . . . . . . . . . . . . . .   19
                                                                                                              
Section 2.10 Cancellation of Securities; Destruction Thereof  . . . . . . . . . . . . . . . . . . . . . . . .   21
                                                                                                              
Section 2.11 Temporary Securities   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
                                                                                                              
Section 2.12 Computation of Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21

                                ARTICLE THREE

                          COVENANTS OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
                                                                                                              
Section 3.1  Payment of Principal and Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
                                                                                                              
Section 3.2  Offices for Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
                                                                                                              
Section 3.3  Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . . . .   23
                                                                                                              
Section 3.4  Paying Agents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23
</TABLE>                                 
                                         
                                         
                                         
                                         
                                         
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Section 3.5 Limitation on Dividends; Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . .   24
                                                                                                              
Section 3.6 Covenants as to Consumers Trust   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25

                                 ARTICLE FOUR

                  SECURITYHOLDERS LISTS AND REPORTS BY THE                       
                         ISSUER AND THE TRUSTEE             . . . . . . . . . . . . . . . . . . . . . . . . .   25
                                                                                                              
Section 4.1  Issuer to Furnish Trustee Names and Addresses of Securityholders . . . . . . . . . . . . . . . .   25
                                                                                                              
Section 4.2  Preservation and Disclosure of Securityholders Lists . . . . . . . . . . . . . . . . . . . . . .   26
                                                                                                              
Section 4.3  Reports by the Issuer  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
                                                                                                              
Section 4.4  Reports by the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   28

                                 ARTICLE FIVE
                 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                              ON EVENT OF DEFAULT             . . . . . . . . . . . . . . . . . . . . . . . .   30
                                                                                                              
Section 5.1  Event of Default Defined; Acceleration of Maturity; Waiver of Default  . . . . . . . . . . . . .   30
                                                                                                              
Section 5.2  Collection of Indebtedness by Trustee; Trustee May Prove Debt  . . . . . . . . . . . . . . . . .   33
                                                                                                              
Section 5.3  Application of Proceeds  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   36
                                                                                                              
Section 5.4  Suits for Enforcement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   37
                                                                                                              
Section 5.5  Restoration of Rights on Abandonment of Proceedings  . . . . . . . . . . . . . . . . . . . . . .   37
                                                                                                              
Section 5.6  Limitations on Suits by Securityholders  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   37
                                                                                                              
Section 5.7  Unconditional Right of Securityholders to Receive Principal and Interest and to Institute 
               Certain Suits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   38

Section 5.8  Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default  . . . . . . . . . . . .   38
                                                                                                              
Section 5.9  Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   39
                                                                                                              
Section 5.10  Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   39
</TABLE>                                                                  
                                                                          
                                                                          
                                                                          
                                                                          
                                                                          
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Section 5.11  Trustee to Give Notice of Default, But May Withhold in Certain Circumstances  . . . . . . . . .   40
                                                                                                              
Section 5.12  Right of Court to Require Filing of Undertaking to Pay Costs  . . . . . . . . . . . . . . . . .   40
                                                                                                              
Section 5.13  Waiver of Stay or Extension Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   41
                                                                                                              
                                 ARTICLE SIX

                            CONCERNING THE TRUSTEE  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   41
                                                                                                              
Section 6.1  Duties and Responsibilities of the Trustee; During Default; Prior to Default . . . . . . . . . .   41
                                                                                                              
Section 6.2  Certain Rights of the Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   42
                                                                                                              
Section 6.3  Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds       
               Thereof  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   44              
                                                                                                              
Section 6.4  Trustee and Agents May Hold Securities; Collections, etc.  . . . . . . . . . . . . . . . . . . .   44
                                                                                                              
Section 6.5  Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   44
                                                                                                              
Section 6.6  Compensation and Indemnification of Trustee and Its Prior Claim  . . . . . . . . . . . . . . . .   44
                                                                                                              
Section 6.7  Right of Trustee to Rely on Officers' Certificate, etc.  . . . . . . . . . . . . . . . . . . . .   45
                                                                                                              
Section 6.8  Qualification of Trustee; Conflicting Interests  . . . . . . . . . . . . . . . . . . . . . . . .   45
                                                                                                              
Section 6.9  Persons Eligible for Appointment as Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . .   46
                                                                                                              
Section 6.10 Resignation and Removal; Appointment of Successor Trustee  . . . . . . . . . . . . . . . . . . .   46
                                                                                                              
Section 6.11 Acceptance of Appointment by Successor Trustee   . . . . . . . . . . . . . . . . . . . . . . . .   48
                                                                                                              
Section 6.12 Merger, Conversion, Consolidation or Succession to Business of Trustee   . . . . . . . . . . . .   48
                                                                                                              
Section 6.13 Preferential Collection of Claims Against the Issuer   . . . . . . . . . . . . . . . . . . . . .   49
                                                                                                              
Section 6.14 Appointment of Authenticating Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   49
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                                ARTICLE SEVEN
<S>                                                                                                             <C>
                        CONCERNING THE SECURITYHOLDERS  . . . . . . . . . . . . . . . . . . . . . . . . . . .   51
                                                                                                              
Section 7.1  Evidence of Action Taken by Securityholders  . . . . . . . . . . . . . . . . . . . . . . . . . .   51
                                                                                                              
Section 7.2  Proof of Execution of Instruments and of Holding of Securities . . . . . . . . . . . . . . . . .   51
                                                                                                              
Section 7.3  Holders to Be Treated as Owners  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   51
                                                                                                              
Section 7.4  Securities Owned by Issuer Deemed Not Outstanding  . . . . . . . . . . . . . . . . . . . . . . .   52
                                                                                                              
Section 7.5  Right of Revocation of Action Taken  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   53
                                                                                                              
                                ARTICLE EIGHT
                                                                                                              
                           SUPPLEMENTAL INDENTURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   53
                                                                                                              
Section 8.1  Supplemental Indentures Without Consent of Securityholders . . . . . . . . . . . . . . . . . . .   53
                                                                                                              
Section 8.2  Supplemental Indentures With Consent of Securityholders  . . . . . . . . . . . . . . . . . . . .   55
                                                                                                              
Section 8.3  Effect of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   56
                                                                                                              
Section 8.4  Documents to Be Given to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   57
                                                                                                              
Section 8.5  Notation on Securities in Respect of Supplemental Indentures . . . . . . . . . . . . . . . . . .   57
                                                                                                              
                                 ARTICLE NINE
                                                                                                              
                   CONSOLIDATION, MERGER, SALE OR CONVEYANCE  . . . . . . . . . . . . . . . . . . . . . . . .   57
                                                                                                              
Section 9.1  Covenant of Issuer Not to Merge, Consolidate, Sell or Convey Property Except Under Certain       
               Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   57
                                                                                                              
Section 9.2  Successor Corporation Substituted for Issuer . . . . . . . . . . . . . . . . . . . . . . . . . .   58
                                                                                                              
Section 9.3  Opinion of Counsel Delivered to Trustee  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
                                                                                                              
                                 ARTICLE TEN
                                                                                                              
                   SATISFACTION AND DISCHARGE OF INDENTURE;                       
                               UNCLAIMED MONEYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
                                                                                                               
Section 10.1 Satisfaction and Discharge of Indenture  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   59
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Section 10.2  Application by Trustee of Funds Deposited for Payment of Securities . . . . . . . . . . . . . .   62
                                                                                                              
Section 10.3  Repayment of Moneys Held by Paying Agent  . . . . . . . . . . . . . . . . . . . . . . . . . . .   62
                                                                                                              
Section 10.4  Return of Moneys Held by Trustee and Paying Agent Unclaimed for Three Years . . . . . . . . . .   62
                                                                                                              
Section 10.5  Indemnity for Government Obligations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   63
                                                                                                              
                                ARTICLE ELEVEN

                 REDEMPTION OF SECURITIES AND SINKING FUNDS . . . . . . . . . . . . . . . . . . . . . . . . .   63
                                                                                                              
Section 11.1  Applicability of Article  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   63
                                                                                                              
Section 11.2  Notice of Redemption; Partial Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . .   63
                                                                                                              
Section 11.3  Payment of Securities Called for Redemption . . . . . . . . . . . . . . . . . . . . . . . . . .   65
                                                                                                              
Section 11.4  Exclusion of Certain Securities from Eligibility for Selection for Redemption . . . . . . . . .   65
                                                                                                              
Section 11.5  Mandatory and Optional Sinking Funds  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   66
                                                                                                              
                                ARTICLE TWELVE
                                                                                                              
                                SUBORDINATION   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   68
                                                                                                               
Section 12.1  Applicability of Article; Securities Subordinated to Senior Indebtedness  . . . . . . . . . . .   68
                                                                                                              
Section 12.2  Issuer Not to Make Payments with Respect to Subordinated Securities in Certain                  
                Circumstances   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   70                 
                                                                                                              
Section 12.3  Subordinated Securities Subordinated to Prior Payment of All Senior Indebtedness on             
                Dissolution, Liquidation or Reorganization of Issuer  . . . . . . . . . . . . . . . . . . . .   71
                                                                                                              
Section 12.4  Holders of Subordinated Securities to be Subrogated to Right of Holders of Senior               
                Indebtedness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   73                
                                                                                                              
Section 12.5  Obligation of the Issuer Unconditional  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   73
                                                                                                              
Section 12.6  Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice . . . . . . . . . . . .   74
                                                                                                              
Section 12.7  Application by Trustee of Monies or Government Obligations Deposited with It  . . . . . . . . .   75
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Section 12.8  Subordination Rights Not Impaired by Acts or Omissions of Issuer or Holders of                  
                Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   75              
                                                                                                              
Section 12.9  Securityholders Authorize Trustee to Effectuate Subordination of Securities . . . . . . . . . .   76
                                                                                                              
Section 12.10 Right of Trustee to Hold Senior Indebtedness  . . . . . . . . . . . . . . . . . . . . . . . . .   76
                                                                                                              
Section 12.11 Article Twelve Not to Prevent Events of Defaults  . . . . . . . . . . . . . . . . . . . . . . .   76
                                                                                                              
                               ARTICLE THIRTEEN
                                                                                                              
                           MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   76
                                                                                                              
Section 13.1  Incorporators, Stockholders, Officers and Directors of Issuer Exempt from Individual            
                Liability   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   76                
                                                                                                              
Section 13.2  Provisions of Indenture for the Sole Benefit of Parties and Holders of Securities . . . . . . .   77
                                                                                                              
Section 13.3  Successors and Assigns of Issuer Bound by Indenture . . . . . . . . . . . . . . . . . . . . . .   77
                                                                                                              
Section 13.4  Notices and Demands on Issuer, Trustee and Holders of Securities  . . . . . . . . . . . . . . .   77
                                                                                                              
Section 13.5  Officers' Certificates and Opinions of Counsel; Statements to be Contained Therein  . . . . . .   78
                                                                                                              
Section 13.6  Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . . . . . . . . .   79
                                                                                                              
Section 13.7  Conflict of any Provision of Indenture with Trust Indenture Act of 1939 . . . . . . . . . . . .   79
                                                                                                              
Section 13.8  Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   79
                                                                                                              
Section 13.9  Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80
                                                                                                              
Section 13.10 Effect of Headings and Table of Contents  . . . . . . . . . . . . . . . . . . . . . . . . . . .   80
                                                                                                              
Section 13.11 Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   80
</TABLE>





                                      vii
<PAGE>   10
                 THIS INDENTURE dated as of November ___, 1995 between
Consumers Power Company, a Michigan corporation (the "Issuer"), and The Bank of
New York, organized under the laws of the United States, as trustee (the
"Trustee").


                             W I T N E S S E T H :


                 WHEREAS, the Issuer has duly authorized the issue from time to
time of its debentures, notes, bonds or other evidences of indebtedness to be
issued in one or more series (the "Securities") up to such principal amount or
amounts as may from time to time be authorized in accordance with the terms of
this Indenture;

                 WHEREAS, the Issuer has duly authorized the execution and
delivery of this Indenture to provide, among other things, for the
authentication, delivery and administration of the Securities; and

                 WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;

                 NOW, THEREFORE:

                 In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually covenant
and agree for the equal and proportionate benefit of the respective holders
from time to time of the Securities as follows:


                                  ARTICLE ONE

                                  DEFINITIONS

                 Section 1.1  Certain Terms Defined.  The following terms
(except as otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section.  All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939, including terms defined therein by reference to the Securities Act of
1933, as amended (except as herein otherwise expressly provided or unless the
context otherwise requires), shall have the meanings assigned to such terms in
said Trust Indenture Act and in said Securities Act as in force at the date of
this Indenture.  All accounting terms used herein and not expressly defined
shall have the meanings assigned to such terms in accordance with generally
accepted accounting principles, and the term "generally accepted accounting
principles" means such





                                       1
<PAGE>   11
accounting principles as are generally accepted in the United States of America
at the time of any computation.  References to any statute mean such statute as
amended at the time and includes any successor legislation.  The words
"herein", "hereof" and "hereunder" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision.  The terms defined in this Article include the plural as well as
the singular.

                 "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person.  For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

                 "Authenticating Agent" shall have the meaning set forth in
Section 6.14.

                 "Board of Directors" means either the Board of Directors of
the Issuer or any committee of such Board duly authorized to act on its behalf.

                 "Board Resolution" means a copy of one or more resolutions,
certified by the secretary or an assistant secretary of the Issuer to have been
duly adopted or consented to by the Board of Directors and to be in full force
and effect, and delivered to the Trustee.

                 "Business Day" means, a day on which banking institutions in 
New York, New York or Delaware are not authorized or required by law or 
regulation to close.

                 "Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution and delivery of this Indenture
such Commission is not existing and performing the duties now assigned to it
under the Trust Indenture Act of 1939, then the body performing such duties at
such time.

                 "Common Securities" means undivided beneficial interests in
the assets of a Consumers Trust which rank pari passu with Preferred Securities
issued by such trust; provided, however, that upon the occurrence of an Event
of Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and





                                      -2-
<PAGE>   12
maturity are subordinated to the rights of holders of Preferred Securities.

                 "Common Securities Guarantee"  means any guarantee that the
Issuer may enter into that operates directly or indirectly for the benefit of
holders of Common Securities of Consumers Trust.

                 "Consumers Trust" means a Delaware business trust formed by
the Issuer for the purpose of purchasing the Securities of the Issuer.

                 "Corporate Trust Office" means the office of the Trustee at
which the corporate trust business of the Trustee shall, at any particular
time, be principally administered, which office is, at the date as of which
this Indenture is dated, located at 101 Barclay St., New York, New York 10286.

                 "Declaration"  means, in respect of a Consumers Trust, the
amended and restated declaration of trust of such Consumers Trust or any other
governing instrument of such Trust.

                 "Depository" means, with respect to the Securities of any
series issuable or issued in the form of one or more Global Securities, the
Person designated as Depository by the Issuer pursuant to Section 2.3, which
must be a clearing agency registered under the Securities Exchange Act of 1934,
as amended, and any other applicable statute or regulation, until a successor
Depository shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Depository" shall mean each Person who is then a
Depository hereunder; and if at any time there is more than one such Person,
"Depository" as used with respect to the Securities of any such series shall
mean each Depository with respect to the Global Securities of such series.

                 "Event of Default" means any event or condition specified as
such in Section 5.1.

                 "Government Obligations" means direct obligations of the
United States for the payment of which its full faith and credit is pledged, or
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is
unconditionally guaranteed by the United States, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such Government Obligation or a specific payment of interest on or
principal of any such Government Obligation held by such custodian for the
account of a holder of a depository receipt; provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the custodian in respect of the Government





                                      -3-
<PAGE>   13
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt.

                 "Holder", "Holder of Securities", "Securityholder" or other
similar terms mean the Person in whose name such Security is registered in the
Security Register kept by the Issuer for that purpose in accordance with the
terms hereof.

                 "Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as provided hereunder.

                 "Interest Payment Date" means (a) the date or dates, if any,
on which interest is to be paid on any Security as established pursuant to
Section 2.3(f), (b) the date of maturity or redemption of such Security, and
(c) only with respect to defaulted interest on such Security, the date
established for the payment of such defaulted interest pursuant to Section 2.7
hereof.

                 "Issuer" means (except as otherwise provided in Article Six)
Consumers Power Company, a Michigan corporation, and, subject to Article Nine,
its successors and assigns.

                 "Issuer Order" means a written statement, request or order of
the Issuer signed in its name by the Chairman, the President or any Vice
President (whether or not designated by a number or numbers or a word or words
added before or after the title "Vice President") or by the Treasurer of the
Issuer.

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

                 "Officers' Certificate" means a certificate signed by the
Chairman, the President or any Vice President (whether or not designated by a
number or numbers or a word or words added before or after the title "Vice
President"), and by the Chief Financial Officer, Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary, of the Issuer and
delivered to the Trustee.  Except as otherwise provided herein, each such
certificate shall include the statements provided for in Section 14.5.

                 "Opinion of Counsel" means an opinion in writing signed by the
counsel of the Issuer as designated by the Board of Directors or by such other
legal counsel who may be an employee of or regular counsel to the Issuer and
who shall be satisfactory to the Trustee.  Each such opinion shall include the
statements





                                      -4-
<PAGE>   14
provided for in Section 13.5, if and to the extent required thereby.

                 "Outstanding" (except as otherwise provided in Section 6.8),
when used with reference to Securities, shall, subject to the provisions of
Section 7.4, mean, as of any particular time, all Securities theretofore
authenticated and delivered by the Trustee under this Indenture, except:

                 (a)  Securities theretofore cancelled by the Trustee or
         delivered to the Trustee for cancellation;

                 (b)  Securities, or portions thereof, for the payment or
         redemption of which moneys or Government Obligations (as provided for
         in Section 10.1) in the necessary amount shall have been theretofore
         deposited in trust with the Trustee or with any paying agent (other
         than the Issuer) or shall have been set aside, segregated and held in
         trust by the Issuer for the Holders of such Securities (if the Issuer
         shall act as its own paying agent), provided that if such Securities,
         or portions thereof, are to be redeemed prior to the Maturity thereof,
         notice of such redemption shall have been given as herein provided, or
         provision satisfactory to the Trustee shall have been made for giving
         such notice; and

                 (c)  Securities which shall have been paid or in substitution
         for which other Securities shall have been authenticated and delivered
         pursuant to the terms of Section 2.9 (except with respect to any such
         Security as to which proof satisfactory to the Trustee is presented
         that such Security is held by a Person in whose hands such Security is
         a legal, valid and binding obligation of the Issuer).

                 In determining whether the Holders of the requisite principal
amount of Outstanding Securities of any or all series have given any request,
demand, authorization, direction, notice, consent or waiver hereunder
Securities owned by the Issuer or any other obligor upon the Securities of any
Affiliate of the Issuer or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee knows
to be so owned shall be so disregarded.  Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Issuer or any other obligor
upon the Securities or an Affiliate of the Issuer or of such other obligor.





                                      -5-
<PAGE>   15
                 "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.

                 "Preferred Securities"  means undivided beneficial interests
in the assets of a Consumers Trust which rank pari passu with Common Securities
issued by such trust; provided however, that upon the occurrence of an Event of
Default, the rights of holders of Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of Preferred Securities.

                 "Preferred Securities Guarantee"  means any guarantee that the
Issuer may enter into that operates directly or indirectly for the benefit of
holders of Preferred Securities of a Consumers Trust.

                 "principal" means the amount (including, without limitation,
if and to the extent applicable, any premium) that is payable with respect to a
Security as of any date and for any purpose (including, without limitation, in
connection with any sinking fund, upon any redemption at the option of the
Issuer, upon any purchase or exchange at the option of the Issuer or the Holder
of such Security and upon any acceleration of the Maturity of such Security).

                 "Property Trustee"  means the entity performing the functions
of the Property Trustee of a Consumers Trust under the applicable Declaration
of such Consumers Trust.

                 "Record Date" shall have the meaning set forth in Section 2.7.

                 "Responsible Officer", when used with respect to the Trustee,
means the chairman of the board of directors, any vice chairman of the board of
directors, the chairman of the trust committee, the chairman of the executive
committee, any vice chairman of the executive committee, the president, any
vice president (whether or not designated by numbers or words added before or
after the title "vice president"), the cashier, the secretary, the treasurer,
any trust officer, any assistant trust officer, any assistant vice president,
any assistant cashier, any assistant secretary, any assistant treasurer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.





                                      -6-
<PAGE>   16
                 "Security" or "Securities" (except as otherwise provided in
Section 6.8) shall have the meaning stated in the first recital of this
Indenture and, more particularly, any Securities that have been authenticated
and delivered under this Indenture.

                 "Security Register" and "Security Registrar" shall have the
respective meanings set forth in Section 2.8.

                 "Senior Indebtedness" shall have the meaning set forth in
Section 12.1(b).

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

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

                 "Trust Indenture Act of 1939" or "Trust Indenture Act" (except
as otherwise provided in Sections 8.1 and 8.2) means the Trust Indenture Act of
1939 as in force at the date as of which this Indenture was originally
executed.

                 "Trust Securities"  means Common Securities and Preferred
Securities.

                 "Trustee" means the Person identified as the "Trustee" in the
first paragraph hereof and, subject to the provisions of Article Six, shall
also include any successor trustee.  "Trustee" shall also mean or include each
Person who is then a trustee hereunder; and if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any series
shall mean the trustee with respect to the Securities of such series.


                                  ARTICLE TWO

                                   SECURITIES

                 Section 2.1  Forms Generally.  The Securities of each series
shall be substantially in such form (not inconsistent with this Indenture) as
shall be established by or pursuant to one or more Board Resolutions (as set
forth in a Board Resolution or, to





                                      -7-
<PAGE>   17
the extent established pursuant to rather than set forth in a Board Resolution,
an Officers' Certificate detailing such establishment) or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have imprinted or otherwise reproduced thereon such
letters, numbers or other marks of identification and such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities as
evidenced by their execution of such Securities.

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

                 Section 2.2  Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:

                 "This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.



                                                                            ,
                                          ----------------------------------
                                            as Trustee
                                    
                                    
                                          By
                                            -----------------------
                                              Authorized Officer"
                                    

                 If at any time there shall be an Authenticating Agent
appointed with respect to any series of Securities, then the Trustee's
certificate of authentication to be borne by the Securities of each such series
shall be substantially as follows:





                                      -8-
<PAGE>   18
                 "This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.


                                                                  ,
                                         -------------------------
                                          as Authenticating Agent
                                         
                                         
                                         By
                                           -----------------------
                                             Authorized Officer"


                 Section 2.3  Amount Unlimited; Issuable in Series.

                 (a)  The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.

                 (b)  The Securities may be issued in one or more series and
shall be direct obligations of the Issuer.

                 (c)  Each Security shall be dated and issued as of the date of
its authentication by the Trustee.

                 (d)  Each Security shall bear interest from the later of its
original date of authentication or the most recent Interest Payment Date to
which interest has been paid or duly provided for with respect to such
Security until the principal of such Security is paid or made available for
payment, and interest on each Security shall be payable on each Interest
Payment Date after the date of such Security.

                 (e) Each Security shall mature on a date specified in the
Security and the principal amount of each outstanding Security shall be payable
on the Maturity specified therein.

                 (f)  There shall be established in or pursuant to one or more
Board Resolutions (and, to the extent established pursuant to rather than set
forth in a Board Resolution, in an Officers' Certificate detailing such
establishment) or established in one or more indentures supplemental hereto,
prior to the initial issuance of Securities of any series:

                 (1)  the designation of the Securities of such series, which
         shall distinguish the Securities of such series from the Securities of
         all other series;

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





                                      -9-
<PAGE>   19
         lieu of, other Securities of such series pursuant to Section 2.8, 2.9,
         2.11, 8.5 or 11.3);

                 (3)  subject to Section 2.3(e), the date or dates (and whether
         fixed or extendible) on which the principal of the Securities of such
         series is payable;

                 (4)  the date from which interest on the Securities of such
         series shall begin to accrue, the rate or rates at which the
         Securities of such series shall bear interest, if any, the Interest
         Payment Date or Dates for the Securities of such series and the Record
         Date for interest payable on any Interest Payment Date;

                 (5)  the place or places where the principal of and any
         interest on Securities of such series shall be payable and where such
         Securities may be registered or transferred (if in addition to, or
         other than, as provided in Section 3.2);

                 (6)  the right, if any, of the Issuer to redeem or purchase
         Securities of such series, in whole or in part, at its option and the
         period or periods within which, the price or prices at which and any
         terms and conditions upon which Securities of such series may be so
         redeemed;

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

                 (8)  if other than denominations of $25 and any integral
         multiple thereof, the denominations in which Securities of such series
         shall be issuable;






                                     -10-
<PAGE>   20
                 (9)  whether the Securities of such series will be
         subordinated to the payment of Senior Indebtedness on the terms and
         conditions set forth in Article Twelve and whether such subordination
         shall be subject to any provisions in addition to or in lieu of those
         set forth in Article Twelve;

                 (10)  whether the Securities of such series will be issuable
         as Global Securities;

                 (11)  whether and under what circumstances the Issuer will pay
         additional amounts on the Securities of such series held by a person
         who is not a U.S. Person in respect of any tax, assessment or
         governmental charge withheld or deducted and, if so, whether the
         Issuer will have the option to redeem such Securities rather than pay
         such additional amounts;

                 (12)  if the Securities of such series are to be issuable in
         definitive form (whether upon original issue or upon exchange of a
         temporary Security of such series) only upon receipt of certain
         certificates or other documents or satisfaction of other conditions,
         and the form and terms of any such certificates, documents or
         conditions;

                 (13)  any trustees, depositaries, authenticating or paying
         agents, transfer agents, conversion agents or registrars or any other
         agents with respect to the Securities of such series;

                 (14)  any events of default or covenants with respect to the
         Securities of such series other than those specified herein;

                 (15)  the Person to whom any interest on a Security of such
         series shall be payable, if other than the Person in whose name the
         Security (or one or more predecessor Securities) is registered at the
         close of business on the Record Date for such interest;

                 (16)  if the Securities of such series shall be issued in
         whole or in part in the form of one or more Securities, whether
         beneficial owners of interests in any such Global Security may 
         exchange such interests for Securities of such series of like tenor 
         and of authorized form and denomination and the circumstances





                                     -11-
<PAGE>   21
         under which any such changes may occur, if other than in the manner
         provided in Section 2.8;

                 (17)  the right of the Issuer, if any, to defer any payment
         of principal of or interest on the Securities of such series, and the
         maximum length of any such deferral period;

                 (18)  whether any property will be pledged to secure the
         Securities; and

                 (19)  any other terms of such series (which terms shall not be
         inconsistent with the provisions of this Indenture).

                 All Securities of any one series shall be substantially
identical, except as to denomination and except as may otherwise be
provided by or pursuant to the Board Resolution or Officers' Certificate
referred to above or as set forth in any indenture supplemental hereto referred
to above.  All Securities of any one series need not be issued at the same time
and may be issued from time to time, consistent with the terms of this
Indenture, if so provided by or pursuant to such Board Resolution, such
Officers' Certificate or in any such indenture supplemental hereto.

                 Section 2.4  Authentication and Delivery of Securities.  The
Issuer may from time to time deliver Securities of any series, executed by the
Issuer to the Trustee for authentication, together with the applicable
documents referred to below in this Section, and the Trustee shall thereupon
authenticate and deliver such Securities to or upon the order of the Issuer
(contained in the Issuer Order referred to below in this Section) or pursuant
to such procedures acceptable to the Trustee and to such recipients as may be
specified from time to time by an Issuer Order.  If so provided in the Board
Resolution, Officers' Certificate or supplemental indenture establishing the
Securities of any series, the maturity date, interest accrual date, interest
rate, Interest Payment Date or Dates and any other terms of any or all of the
Securities of such series may be determined by or pursuant to such Issuer Order
and procedures.  If provided for in such procedures, such Issuer Order may
authorize authentication and delivery pursuant to instructions (from the Issuer
or its duly authorized agent) in writing, by facsimile or any other method
mutually agreed upon by the Issuer and Trustee.  In authenticating the
Securities of a series and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive (but, in the case of subparagraphs 2, 3 and 4 below, only at or before
the time of the first request of the Issuer to the Trustee to authenticate
Securities of such series, however, any request after the first shall be deemed
to include the representation of





                                     -12-
<PAGE>   22
the Issuer that the document previously delivered pursuant to subparagraphs 2,
3 and 4 below are still true and in effect) and (subject to Section 6.1) shall
be fully protected in relying upon, unless and until such documents have been
superseded or revoked:

                 (1)  an Issuer Order requesting such authentication and
         setting forth delivery instructions if the Securities are not to be
         delivered to the Issuer.

                 (2)  any Board Resolution, Officers' Certificate and/or
         executed supplemental indenture referred to in Sections 2.1 and 2.3 by
         or pursuant to which the forms and terms of the Securities of such
         series were established;

                 (3)  an Officers' Certificate setting forth the form or forms
         and terms of the Securities of such series stating (a) that such form
         or forms and terms have been established pursuant to Sections 2.1 and
         2.3 and comply with this Indenture, (b) the aggregate principal amount
         of all of the Securities outstanding under this Indenture and (c) the
         aggregate amount of interest paid with respect to such outstanding
         Securities on the most recent Interest Payment Date and covering such
         other matters as the Trustee may reasonably request; and

                 (4)  at the option of the Issuer, either an Opinion of
         Counsel, or a letter addressed to the Trustee permitting it to rely on
         an Opinion of Counsel, substantially to the effect that:

                          (a)  the forms of the Securities of such series have
                 been duly authorized and established in conformity with the
                 provisions of this Indenture;

                          (b)  the terms of the Securities of such series have
                 been duly authorized and established in conformity with the
                 provisions of this Indenture;

                          (c)  when the Securities of such series have been
                 executed by the Issuer and authenticated by the Trustee in
                 accordance with the provisions of this Indenture and delivered
                 to and duly paid for by the purchasers thereof, they will have
                 been duly issued under this Indenture and will be valid and
                 legally binding obligations of the Issuer, enforceable in
                 accordance with their





                                     -13-
<PAGE>   23
                 respective terms, subject to bankruptcy, insolvency,
                 reorganization and other laws of general applicability
                 relating to or affecting the enforcement of creditors' rights
                 and to general principles of equity, and will be entitled to
                 the benefits of this Indenture;

                          (d)  the Indenture has been duly authorized, executed
                 and delivered by the Issuer and constitutes a legal, valid and
                 binding agreement of the Issuer, enforceable in accordance
                 with its terms, subject to bankruptcy, insolvency,
                 reorganization and other laws of general applicability
                 relating to or affecting the enforcement of creditors' rights
                 and to general principles of equity;

                          (e)  the issuance of the Securities will not result
                 in any default under this Indenture, or any other contract,
                 indenture, loan agreement or other instrument to which the
                 Issuer is a party or by which it or any of its property is
                 bound; and

                          (f)  no consent, approval, authorization, order,
                 registration or qualification of or with any governmental
                 agency or body having jurisdiction over the Issuer is required
                 for the execution and delivery of the Securities of such
                 series by the Issuer, except such as have been obtained
                 (except that no opinion need be expressed as to state
                 securities or Blue Sky laws).

                 The Trustee shall have the right to decline to authenticate
and deliver any Securities of any series under this Section (other than
Securities the forms and terms of which shall have been established by
supplemental indenture) if the Trustee, being advised by counsel, determines
that such action may not lawfully be taken by the Issuer or if the Trustee in
good faith by its board of directors or board of trustees, executive committee
or a trust committee of directors, trustees or Responsible Officers shall
determine that such action would expose the Trustee to personal liability to
existing Holders or would affect the Trustee's rights, duties or immunities
under the Securities of any such series, this Indenture or otherwise.

                 If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section and the Issuer





                                     -14-
<PAGE>   24
Order with respect to such series, authenticate and deliver one or more Global
Securities that (i) shall be in an aggregate amount equal to the aggregate
principal amount specified in such Issuer Order, (ii) shall be registered in
the name of the Depository therefor or its nominee, (iii) shall be delivered by
the Trustee to such Depository or pursuant to such Depository's instructions
and (iv) shall bear a legend substantially to the following effect:  "Unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, this Security may not be transferred except as a whole by the
Depository to the nominee of the Depository or by a nominee of the Depository
to the Depository or another nominee of the Depository or by the Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository."

                 Section 2.5  Execution of Securities.  The Securities shall be
signed on behalf of the Issuer by both (a) its Chairman, its President or any
Vice President (whether or not designated by a number or numbers or a word or
words added before or after the title "Vice President"), under its corporate
seal reproduced thereon, which need not be attested and (b) by its Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary.  Such signatures may be the manual or facsimile signatures
of such officers.  Typographical and other minor errors or defects in any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.

                 In case any officer of the Issuer who shall have so signed any
of the Securities shall cease to be such officer before the Security so signed
shall be authenticated and delivered by the Trustee or disposed of by the
Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Security had not ceased to be
such officer of the Issuer; and any Security may be so signed on behalf of the
Issuer by such persons as, at the actual date of the execution of such
Security, shall be the proper officers of the Issuer, although at the date of
the execution and delivery of this Indenture any such person was not such an
officer.

                 Section 2.6  Certificate of Authentication.  Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee by the manual
signature of one of its authorized officers, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose.  The execution of
such certificate by the Trustee upon any Security executed by the Issuer shall
be conclusive evidence that the Security so authenticated has been duly
authenticated and delivered hereunder and that the Holder is entitled to the
benefits of this Indenture.  Notwithstanding the foregoing, if any Security
shall





                                     -15-
<PAGE>   25
have been authenticated and delivered hereunder but never issued and sold by
the Issuer, and the Issuer shall deliver such Security to the Trustee for
cancellation as provided in Section 2.10, together with a written statement
(which need not comply with Section 14.5 and need not be accompanied by an
Opinion of Counsel) stating that such Security has never been issued and sold
by the Issuer, for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.

                 Section 2.7  Denomination of Securities; Payments of Interest.
The Securities of each series shall be issuable in registered form in
denominations established as contemplated by Section 2.3.  The Securities of
each series shall be numbered, lettered or otherwise distinguished in such
manner or in accordance with such plan as the officers of the Issuer executing
the same may determine with the approval of the Trustee, as evidenced by the
execution and authentication thereof.

                 The Securities of each series shall bear interest from the
date, and such interest shall be payable on the Interest Payment Dates,
established as contemplated by Section 2.3.

                 The Person in whose name any Security of any series
is registered at the close of business on any Record Date applicable to such
series with respect to any Interest Payment Date for such series shall be
entitled to receive the interest, if any, payable on such Interest Payment Date 
notwithstanding any transfer or exchange of such Security subsequent to the
Record Date and prior to such Interest Payment Date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
Interest Payment Date, in which case such defaulted interest shall be paid to
the Persons in whose names Outstanding Securities of such series are registered
at the close of business on a subsequent Record Date (which shall be not less
than five Business Days prior to the date of payment of such defaulted
interest) established by notice given by mail by or on behalf of the Issuer to
the Holders of Securities of such series not less than 15 days preceding such
subsequent Record Date.  The term "Record Date", as used with respect to any
Interest Payment Date (except a date for payment of defaulted interest) for the
Securities of any series, shall mean the date specified as such in the terms of
the Securities of such series established as contemplated by Section 2.3.

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





                                     -16-
<PAGE>   26
                 Section 2.8  Registration, Transfer and Exchange.  The Issuer
will keep, or cause to be kept, at the Corporate Trust Office and at each other
office or agency to be maintained for the purpose as provided in Section 3.2
for each series of Securities a register or registers (collectively, the
"Security Register") in which, subject to such reasonable regulations as it may
prescribe, it will provide for the registration of Securities of such series
and the registration of transfer of Securities of such series.  The Security
Register shall be in written form in the English language or in any other form
capable of being converted into such form within a reasonable time.  At all
reasonable times such register or registers not maintained by the Trustee shall
be open for inspection by the Trustee.  Unless and until otherwise determined
by the Issuer pursuant to Section 2.3, the Security Register with respect to
each series of Securities shall be kept solely at the Corporate Trust Office
and, for this purpose, the Trustee shall be designated the "Security
Registrar."

                 Upon due presentation for registration of transfer of any
Security of any series at any such office or agency, the Issuer shall execute
and the Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Security or Securities of the same series, maturity date and
interest rate in authorized denominations for a like aggregate principal
amount.

                 At the option of the Holder thereof, Securities of any series
(other than a Global Security, except as set forth below) may be exchanged for
one or more Securities of such series in authorized denominations for a like
aggregate principal amount, upon surrender of such Securities to be exchanged
at the office or agency to be maintained for such purpose in accordance with
Section 3.2 and upon payment, if the Issuer shall so require, of the charges
hereinafter provided.  Whenever any Securities are so surrendered for exchange,
the Issuer shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.  All
Securities surrendered upon any exchange or transfer provided for in this
Indenture shall be promptly cancelled and disposed of by the Trustee and the
Trustee will deliver a certificate of disposition thereof to the Issuer.

                 All Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee duly
executed by, the Holder or his attorney duly authorized in writing.

                 The Issuer may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in





                                     -17-
<PAGE>   27
connection with any exchange or registration of transfer of Securities, other
than exchanges pursuant to Sections 2.11, 8.5 and 11.2 not involving any
transfer.  No service charge shall be made for any such transaction.

                 The Issuer shall not be required to (a) issue, exchange or
register a transfer of any Securities of any series for a period of 15 days
next preceding the first mailing or publication of notice of redemption of
Securities of such series to be redeemed or (b) exchange or register the
transfer of any Securities selected, called or being called for redemption, in
whole or in part, except, in the case of any Security to be redeemed in part,
the portion thereof not so to be redeemed.

                 Notwithstanding any other provision of this Section, unless
and until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depository for such Global Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository or by such Depository or any such nominee to a successor Depository
for such Global Security or a nominee of such successor Depository.

                 If at any time a Depository for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depository for such Securities or if at any
time any such Depository shall no longer be eligible as a Depository, the
Issuer shall appoint a successor Depository with respect to the Securities held
by such Depository.  If a successor Depository is not appointed by the Issuer
within 90 days after the Issuer receives such notice or becomes aware of such
ineligibility, the Securities of such series shall no longer be represented by
one or more Global Securities held by such Depository, and the Issuer shall
execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of definitive Securities of such series, shall
authenticate and deliver Securities of such series in definitive registered
form without coupons, in any authorized denominations and in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities held by such Depository in exchange for such Global Security or
Securities.

                 The Issuer may at any time and in its sole discretion
determine that the Securities of a particular series shall no longer be
represented by a Global Security or Securities.  In such event, the Issuer
shall execute, and the Trustee, upon receipt of an Issuer Order for the
authentication and delivery of definitive Securities of such series, shall
authenticate and deliver, Securities of such series in definitive registered
form





                                     -18-
<PAGE>   28
in any authorized denominations and in an aggregate principal amount equal to
the principal amount of the Global Security or Securities representing
Securities of such series in exchange for such Global Security or Securities.

                 If so specified by the Issuer pursuant to Section 2.3 with
respect to Securities of a particular series represented by a Global Security,
the Depository for such Global Security may surrender such Global Security in
exchange in whole or in part for Securities of such series in definitive
registered form on such terms as are acceptable to the Issuer and such
Depository.  Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver:

                 (i)  to each Person specified by such Depository a new
         Security or Securities of such series, in any authorized denominations
         requested by such Person, in an aggregate principal amount equal to,
         and in exchange for, such Person's beneficial interest in the Global
         Security; and

                 (ii)  to such Depository a new Global Security in a
         denomination equal to the difference between the principal amount of
         the surrendered Global Security and the aggregate principal amount of
         Securities authenticated and delivered pursuant to clause (i) above.

                 Upon the exchange of any Global Security for Securities in
definitive registered form in authorized denominations, such Global Security
shall be cancelled by the Trustee or an agent of the Issuer or the Trustee.
Securities in definitive registered form without coupons issued in exchange for
a Global Security pursuant to this Section shall be registered in such names
and in such authorized denominations as the Depository for such Global
Security, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee or an agent of the Issuer or the Trustee.
The Trustee or such agent shall deliver such Securities to or as directed by
the Persons in whose names such Securities are so registered.

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

                 Section 2.9  Mutilated, Defaced, Destroyed, Lost and Stolen
Securities.  In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon receipt of an Issuer Order, the Trustee shall
authenticate and deliver a new





                                     -19-
<PAGE>   29
Security of the same series, maturity date and interest rate, bearing a number
or other distinguishing symbol not contemporaneously outstanding, in exchange
and substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen.  In every case the
applicant for a substitute Security shall furnish to the Issuer and to the
Trustee or any agent of the Issuer or the Trustee such security or indemnity as
may be required by them to indemnify and defend and to save each of them and
any agent of either of them harmless and, in every case of destruction, loss or
theft, evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof and, in the case of mutilation or
defacement, shall surrender the Security to the Trustee or such agent.

                 Upon the issuance of any substitute Security the Issuer may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee or its agent) connected
therewith.  In case any Security which has matured or is about to mature or has
been called for redemption in full shall become mutilated or defaced or be
destroyed, lost or stolen, the Issuer may, instead of issuing a substitute
Security, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated or defaced Security), if the applicant for
such payment shall furnish to the Issuer and to the Trustee or any agent of the
Issuer or the Trustee such security or indemnity as may be required by them to
save each of them harmless, and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such
Security and of the ownership thereof.

                 Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Issuer, whether or not the destroyed, lost or stolen Security shall be
at any time enforceable by anyone and shall be entitled to all the benefits of
(but shall be subject to all the limitations of rights set forth in) this
Indenture equally and proportionately with any and all other Securities of such
series duly authenticated and delivered hereunder.  All Securities shall be
held and owned upon the express condition that, to the extent permitted by law,
the foregoing provisions are exclusive with respect to the replacement or
payment of mutilated, defaced, destroyed, lost or stolen Securities and shall
preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.





                                     -20-
<PAGE>   30
                 Section 2.10  Cancellation of Securities; Destruction Thereof.
All Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or any
agent of the Trustee, shall be delivered to the Trustee or its agent for
cancellation or, if surrendered to the Trustee, shall be cancelled by it; and
no Securities shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture.  The Trustee or its agent shall
dispose of cancelled Securities held by it and deliver a certificate of
disposition to the Issuer.  If the Issuer or its agent shall acquire any of the
Securities, such acquisition shall not operate as a redemption or satisfaction
of the indebtedness represented by such Securities unless and until the same
are delivered to the Trustee or its agent for cancellation.

                 Section 2.11  Temporary Securities.  Pending the preparation
of definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee).  Temporary Securities of any series shall be      
issuable as registered Securities of any authorized denomination, and
substantially in the form of the definitive Securities of such series but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee as evidenced by the execution and authentication thereof.  Temporary
Securities may contain such references to any provisions of this Indenture as
may be appropriate.  Every temporary Security shall be executed by the Issuer
and be authenticated by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Securities.  Without unreasonable delay the Issuer shall execute and shall
furnish definitive Securities of such series and thereupon temporary Securities
of such series may be surrendered in exchange for such definitive Securities in
registered form without charge at each office or agency to be maintained for
such purpose in accordance with Section 3.2 and the Trustee shall authenticate
and deliver in exchange for such temporary Securities of such series an equal
aggregate principal amount of definitive Securities of the same series in
authorized denominations.  Until so exchanged, the temporary Securities of any
series shall be entitled to the same benefits under this Indenture as
definitive Securities of such series, unless otherwise established pursuant to
Section 2.3.  The provisions of this Section are subject to any restrictions or
limitations on the issue and delivery of temporary Securities of any series
that may be established pursuant to Section 2.3.

                 Section 2.12  Computation of Interest.  Except as otherwise
specified as contemplated by Section 2.3 for Securities





                                     -21-
<PAGE>   31
of any series, interest, if any, on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.


                                 ARTICLE THREE

                            COVENANTS OF THE ISSUER

                 Section 3.1  Payment of Principal and Interest.  The Issuer
covenants and agrees for the benefit of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, premium, and
interest, if any, on, each of the Securities of such series (together with
any additional amounts payable pursuant to the terms of such Securities) at the
place or places, at the respective times and in the manner provided in such
Securities and in this Indenture.  The interest on Securities (together with
any additional amounts payable pursuant to the terms of such Securities) shall
be payable only to or upon the written order of the Holders thereof and, at the
option of the Issuer, may be paid by wire transfer or by mailing checks for
such interest payable to or upon the written order of such Holders at their
last addresses as they appear on the registry books of the Issuer.

                 Section 3.2  Offices for Payments, etc.  So long as any
Securities are outstanding hereunder, the Issuer will maintain in The City of
New York, State of New York an office or agency where the Securities of each
series may be presented for payment, where the Securities of each series may be
presented for exchange as in this Indenture provided, and where the Securities 
of each series may be presented for registration of transfer as in this 
Indenture provided.

                 The Issuer will maintain in The City of New York an office or
agency where notices and demands to or upon the Issuer in respect of the
Securities of any series, or this Indenture may be served.

                 The Issuer will give to the Trustee prompt written notice of
the location of each such office or agency and of any change of location
thereof.  In case the Issuer shall fail to maintain any office or agency
required by this Section to be located in The City of New York, State of New
York or shall fail to give such notice of the location or of any change in the
location of any of the above offices or agencies, presentations and demands may
be made and notices may be served at the Corporate Trust Office of the Trustee,
and, in such event, the Trustee shall act as the Issuer's agent to receive all
such presentations, surrenders, notices and demands.





                                     -22-
<PAGE>   32
                 The Issuer may from time to time designate one or more
additional offices or agencies where the Securities of any series may be
presented for payment, where the Securities of such series may be presented for
exchange as in this Indenture provided, where the Securities of such series may
be presented for registration of transfer as in this Indenture provided and the
Issuer may from time to time rescind any such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Issuer
of its obligation to maintain any office or agency provided for in this
Section.  The Issuer will give to the Trustee prompt written notice of any such
designation or rescission thereof and of change in the location of any such
other office or agency.

                 Section 3.3  Appointment to Fill a Vacancy in Office of
Trustee.  The Issuer, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee with respect to each
series of Securities hereunder.

                 Section 3.4  Paying Agents.  Whenever the Issuer shall appoint
a paying agent other than the Trustee with respect to the Securities of any
series, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:

                 (a)  that such paying agent will hold all sums received by it
         as such agent for the payment of the principal of or interest, if any,
         on the Securities of such series (whether such sums have been paid to
         it by the Issuer or by any other obligor on the Securities of such
         series) in trust for the benefit of the Holders of the Securities of
         such series entitled thereto or of the Trustee until such sums shall
         be paid to such Holders or otherwise disposed of as herein provided;

                 (b)  that such paying agent will give the Trustee notice of
         any failure by the Issuer (or by any other obligor on the Securities
         of such series) to make any payment of the principal of or interest on
         the Securities of such series when the same shall be due and payable;
         and

                 (c)  at any time during the continuance of any such failure,
         upon the written request of the Trustee, forthwith pay to the Trustee
         all sums so held in trust by such paying agent.

                 The Issuer will, on or prior to each due date of the principal
of or interest, if any, on the Securities of any





                                     -23-
<PAGE>   33
series, deposit with the paying agent a sum sufficient to pay such principal or
interest so becoming due, such sum to be held in trust for the benefit of the
Holders of the Securities of such series entitled to such principal or
interest, and (unless such paying agent is the Trustee) the Issuer will
promptly notify the Trustee of any failure to take such action.

                 If the Issuer shall act as its own paying agent with respect
to the Securities of any series, it will, on or before each due date of the
principal of or interest, if any, on the Securities of such series, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities of
such series a sum sufficient to pay such principal or interest, if any, so
becoming due until such sums shall be paid to such Holders or otherwise
disposed of as herein provided.  The Issuer will promptly notify the Trustee of
any failure to take such action.

                 Anything in this section to the contrary notwithstanding, but
subject to Section 10.1, the Issuer may at any time, for the purpose of
obtaining a satisfaction and discharge with respect to one or more or all
series of Securities hereunder, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust for any such series by the Issuer or
any paying agent hereunder, as required by this Section, such sums to be held
by the Trustee upon the trusts herein contained, and, upon such payment by any
paying agent to the Trustee, such paying agent shall be released from all
further liability with respect to such money.

                 Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Sections 10.3 and 10.4.

                 Section 3.5 Limitation on Dividends; Transactions with
Affiliates.  (a) If Securities are issued to a Consumer's Trust or a trustee of
such trust in connection with the issuance of Trust Securities by such
Consumers Trust and (i) there shall have occurred any event that would
constitute an Event of Default or (ii) the Company shall be in default with
respect to its payment or any obligations under the Preferred Securities
Guarantee or Common Securities Guarantee relating to such Trust Securities,
then (x) the Company shall not declare or pay any dividend on , make any
distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (y) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company which rank pari passu with or junior to such Securities and (z) the
Company shall not make guarantee payments with respect to the foregoing (other
than pursuant to the Preferred Securities Guarantee).





                                     -24-
<PAGE>   34
                 (b)      If Securities are issued to a Consumers Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
such Consumers Trust and the Company shall have given notice of its election to
defer payments of interest on such Securities by extending the interest payment
period as provided in any indenture supplemental hereto and such period, or any
extension thereof, shall be continuing, then (i) the Company shall not declare
or pay any dividend, or make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (ii) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company which rank pari passu with or
junior to such Securities and (iii) the Company shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Preferred
Securities Guarantee), provided, however, the Company may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the
dividend is being paid.

                 Section 3.6      Covenants as to Consumers Trust.  In the
event Securities are issued to a Consumers Trust or a trustee of such trust, in
connection with the issuance of Trust Securities by such trust, for so long as
such trust Securities remain outstanding, the Company will (i) maintain 100%
direct or indirect ownership of the Common Securities of such trust; provided,
however, that ny permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities, (ii) not cause, as
sponsor of such trust, or permit, as holder of Common Securities of such trust,
the dissolution, winding-up or termination of such trust, except in connection
with a distribution of Securities as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations permitted by
the Declaration and (iii) use its reasonable efforts to cause such trust (a) to
remain a business trust, except in connection with a distribution of
Securities, the redemption of all of the Trust Securities of such Consumers
Trust or certain mergers, consolidations or amalgamations, each as permitted by
the Declaration of such Consumers Trust, and (b) to otherwise continue to be
classified for United States federal income tax purposes as a grantor trust.


                                  ARTICLE FOUR

                    SECURITYHOLDERS LISTS AND REPORTS BY THE
                          ISSUER AND THE TRUSTEE             

                 Section 4.1  Issuer to Furnish Trustee Names and Addresses of
Securityholders.  The Issuer and any other obligor on the Securities covenant
and agree that they will furnish or cause to be furnished to the Trustee a list
in such form as the





                                     -25-
<PAGE>   35
Trustee may reasonably require of the names and addresses of the Holders of the
Securities of each series:

                 (a)  semi-annually and not more than 15 days after each Record
         Date for the payment of interest on such Securities, as of such Record
         Date and on dates to be determined pursuant to Section 2.3 for
         non-interest bearing Securities, in each year; and

                 (b)  at such other times as the Trustee may request in
         writing, within 30 days after receipt by the Issuer of any such
         request, as of a date not more than 15 days prior to the time such
         information is furnished;

provided that if and so long as the Trustee shall be the Security Registrar for
such series such list shall not be required to be furnished.

                 Section 4.2  Preservation and Disclosure of Securityholders
Lists.  (a)  The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to it
as provided in Section 4.1, (ii) received by it in the capacity of Security
Registrar for such series, if so acting, and (iii) filed with it within the two
preceding years pursuant to Section 4.4(c)(ii).  The Trustee may destroy any
list furnished to it as provided in Section 4.1 upon receipt of a new list so
furnished.

                 (b)  In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Securities of a particular series (in which case the applicants must all
hold Securities of such series) or with Holders of all Securities with respect
to their rights under this Indenture or under such Securities and such
application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either

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





                                     -26-
<PAGE>   36
                 (ii)  inform such applicants as to the approximate number of
         Holders of Securities of such series or of all Securities, as the case
         may be, whose names and addresses appear in the information preserved
         at the time by the Trustee, in accordance with the provisions of such
         subsection (a) and as to the approximate cost of mailing to such
         Holders the form of proxy or other communication, if any, specified in
         such application.

                 If the Trustee shall elect not to afford to such applicants
access to such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder of such series or all Holders of Securities,
whose name and address appears in the information preserved at the time by the
Trustee in accordance with the provisions of such subsection (a) a copy of the
form of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable expenses
of mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion
of the Trustee, such mailing would be contrary to the best interests of the
Holders of Securities of such series or of all Securities, as the case may be,
or would be in violation of applicable law.  Such written statement shall
specify the basis of such opinion.  If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections
so sustained have been met, and shall enter an order so declaring, the Trustee
shall mail copies of such material to all such Holders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.

                 (c)  Each and every Holder of Securities by receiving and
holding the same, agrees with the Issuer and the Trustee that neither the
Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with the provisions of
subsection (b) of this Section, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under such subsection
(b).

                 Section 4.3  Reports by the Issuer.  The Issuer covenants:





                                     -27-
<PAGE>   37
                 (a)  to file with the Trustee, within 15 days after the Issuer
         is required to file the same with the Commission, copies of the annual
         reports and of the information, documents and other reports (or copies
         of such portions of any of the foregoing as the Commission may from
         time to time by rules and regulations prescribe) which the Issuer may
         be required to file with the Commission pursuant to Section 13 or
         Section 15(d) of the Securities Exchange Act of 1934; or if the Issuer
         is not required to file information, documents or reports pursuant to
         either of such Sections, then to file with the Trustee and the
         Commission, in accordance with rules and regulations prescribed from
         time to time by the Commission, such of the supplementary and periodic
         information, documents, and reports which may be required pursuant to
         Section 13 of the Securities Exchange Act of 1934 in respect of a debt
         security listed and registered on a national securities exchange as
         may be prescribed from time to time in such rules and regulations;

                 (b)  to file with the Trustee and the Commission, in
         accordance with rules and regulations prescribed from time to time by
         the Commission, such additional information, documents and reports
         with respect to compliance by the Issuer with the conditions and
         covenants provided for in this Indenture as may be required from time
         to time by such rules and regulations;

                 (c)  to transmit by mail to the Holders of Securities within
         30 days after the filing thereof with the Trustee, in the manner and
         to the extent provided in Section 4.4(c), such summaries of any
         information, documents and reports required to be filed by the Issuer
         pursuant to subsections (a) and (b) of this Section as may be required
         to be transmitted to such Holders by rules and regulations prescribed
         from time to time by the Commission; and

                 (d)  to furnish to the Trustee, not less often than annually,
         a brief certificate from the principal executive officer, principal
         financial officer or principal accounting officer as to his or her
         knowledge of the Issuer's compliance with all conditions and covenants
         under this Indenture (such compliance to be determined without regard
         to any period of grace or requirement of notice provided under this
         Indenture).

                 Section 4.4  Reports by the Trustee.  (a)  Annually, not later
         than 60 days after May 15 of each year, the Trustee shall transmit to
         the Holders and the Commission a report with respect to events
         described in Section 313(a) of the Trust Indenture Act, in such manner
         and to the extent revised thereunder.





                                     -28-
<PAGE>   38

                 (i)  any change to its eligibility under Section 6.9 and its
         qualification under Section 6.8;

                 (ii)  the creation of or any material change to a relationship
         contemplated by Section 6.8;

                 (iii)  the character and amount of any advances (and if the
         Trustee elects so to state, the circumstances surrounding the making
         thereof) made by the Trustee (as such) which remain unpaid on the date
         of such report and for the reimbursement of which it claims or may
         claim a lien or charge, prior to that of the Securities of such
         series, on any property or funds held or collected by it as Trustee,
         except that the Trustee shall not be required (but may elect) to
         report such advances if such advances so remaining unpaid aggregate
         not more than 1/2 of 1% of the principal amount of the Securities of
         such series Outstanding on the date of such report;

                 (iv)  any change to the amount, interest rate and maturity
         date of all other indebtedness owing by the Issuer (or by any other
         obligor on the Securities) to the Trustee in its individual capacity
         on the date of such report, with a brief description of any property
         held as collateral security therefor, except any indebtedness based
         upon a creditor relationship arising in any manner described in
         Section 6.13(b)(2),(3),(4) or (6);

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

                 (vi)  any release, or release and substitution of property
         subject to the lien of the Indenture (and the consideration therefor,
         if any) which the Trustee has not previously reported;

                 (vii)  any additional issue of Securities which the Trustee
         has not previously reported; and

                 (viii)  any action taken by the Trustee in the performance of
         its duties under this Indenture which it has not previously reported
         and which in its opinion materially affects the Securities of such
         series,





                                     -29-
<PAGE>   39
         except action in respect of a default, notice of which has been or is
         to be withheld by it in accordance with the provisions of Section
         5.11.

                 (b)  The Trustee shall transmit to the Holders of each series,
as provided in subsection (c) of this Section, a brief report with respect to
the character and amount of any advances (and if the Trustee elects so to
state, the circumstances surrounding the making thereof) made by the Trustee,
as such, since the date of the last report transmitted pursuant to the
provisions of subsection (a) of this Section (or if no such report has yet been
so transmitted, since the date of this Indenture) for the reimbursement of
which it claims or may claim a lien or charge, prior to that of the Securities
of such series, on property or funds held or collected by it as Trustee and
which it has not previously reported pursuant to this subsection (b), except
that the Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Securities of such series outstanding at such time,
such report to be transmitted within 90 days after such time.

                 (c)  Reports pursuant to this Section shall be transmitted by
mail to all Holders of Securities, as the names and addresses of such Holders
appear upon the Security Register;

                 (d)  A copy of each such report shall, at the time of such
transmission to the Holders, be furnished to the Issuer and be filed by the
Trustee with each stock exchange, if any, upon which the Securities of any
series are listed and also with the Commission.  The Issuer agrees to notify
the Trustee when and as the Securities of such series become admitted to
trading on any national securities exchange.


                                  ARTICLE FIVE

                  REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
                              ON EVENT OF DEFAULT            

                 Section 5.1  Event of Default Defined; Acceleration of
Maturity; Waiver of Default.  "Event of Default" with respect to Securities of
any series, wherever used herein, means each of the following events which
shall have occurred and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

                 (a)  default in the payment of any installment of interest
         upon any of the Securities of such series as





                                     -30-
<PAGE>   40
         and when the same shall become due and payable, (whether or not
         payment is prohibited by the provisions of Article 12 hereof), and
         continuance of such default for a period of 30 days; provided,
         however, that if the Issuer is permitted by the terms of the
         Securities of such series to defer the payment in question, the date
         on which such payment is due and payable shall be the date on which
         the Issuer is required to make payment following such deferral, if
         such deferral has been elected pursuant to the terms of the
         Securities; or

                 (b)  default in the payment of all or any part of the
         principal of or premium on any of the Securities of such series as and
         when the same shall become due and payable (whether or not payment is
         prohibited by the provisions of Article 12 hereof), whether at
         Maturity, upon purchase by the Issuer at the option of the Holder,
         upon any redemption, by declaration or otherwise; 

                 (c)  default in the deposit or payment of any sinking fund or
         analogous payment (whether or not payment is prohibited by the
         provisions of Article 12 hereof) for the benefit of the Securities of 
         such series as and when the same shall become due and payable; or

                 (d)  failure on the part of the Issuer duly to observe or
         perform any other of the covenants or agreements on the part of the
         Issuer in the Securities of such series or in this Indenture contained
         (other than a covenant or agreement expressly included herein solely
         for the benefit of Securities of other series) for a period of 60 days
         after the date on which written notice specifying such failure,
         stating that such notice is a "Notice of Default" hereunder and
         demanding that the Issuer remedy the same, shall have been given by
         registered or certified mail, return receipt requested, to the Issuer
         by the Trustee, or to the Issuer and the Trustee by the Holders of not
         less than 25% in aggregate principal amount of the Outstanding
         Securities of all series affected thereby; or

                 (e)  a court having jurisdiction in the premises shall enter a
         decree or order for relief in respect of the Issuer in an involuntary
         case under any applicable bankruptcy, insolvency or other similar law
         now or hereafter in effect, adjudging the Issuer a bankrupt or





                                     -31-
<PAGE>   41
         insolvent, or approving as properly filed a petition seeking
         reorganization, arrangement, adjustment or composition of or in
         respect of the Issuer under any applicable law, or appointing a
         receiver, liquidator, assignee, custodian, trustee or sequestrator (or
         similar official) of the Issuer or for any substantial part of the
         property of the Issuer, or ordering the winding up or liquidation of
         the affairs of the Issuer, and such decree or order shall remain
         unstayed and in effect for a period of 60 consecutive days; or

                 (f)  the Issuer shall commence a voluntary case or proceeding
         under any applicable bankruptcy, insolvency or other similar law now
         or hereafter in effect or any other case or proceeding to be
         adjudicated a bankrupt or insolvent, or consent to the entry of a
         decree or order for relief in an involuntary case under any such law,
         or to the commencement of any bankruptcy or insolvency case or
         proceeding against it, or the filing by it of a petition or answer or
         consent seeking reorganization or relief under any applicable law, or
         consent to the filing of such petition or to the appointment or taking
         possession by a receiver, liquidator, assignee, custodian, trustee or
         sequestrator (or similar official) of the Issuer or for any
         substantial part of the property of the Issuer, or make any general
         assignment for the benefit of creditors, or the notice by it in
         writing of its inability to pay its debts generally as they become
         due, or the taking of any corporate action by the Issuer in
         furtherance of any such action; or

                 (i)      in the event Securities are issued to a Consumers
         Trust or the trustee of such trust of the Company in connection with
         the issuance of Trust Securities by such trust, such trust shall have
         voluntarily or involuntarily dissolved, wound-up its business or
         otherwise terminated its existence except in connection with (i) the
         distribution of Securities to holders of Trust Securities in
         liquidation of their interests in such trust, (ii) the redemption of
         all outstanding Trust Securities of such trust, and (iii) mergers,
         consolidations or amalgamations, each as permitted by the Declaration
         of such trust;

then, unless the principal of all the Securities shall have already become due
and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of all the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given by
such Holders), may declare the entire principal of all the Securities of such
series then Outstanding and interest accrued thereon, if any, to be due





                                     -32-
<PAGE>   42
and payable immediately, and upon any such declaration the same shall become
immediately due and payable.

                 The foregoing paragraph, however, is subject to the condition
that if, at any time after the principal of the Securities of one or more
series shall have been so declared due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the
Securities of such series and the principal of all Securities of such series
which shall have become due otherwise than by acceleration (with interest upon
such principal and, to the extent that payment of such interest is enforceable
under applicable law, on overdue installments of interest at the same rate as
the rate of interest specified in the Securities of such series, to the date of
such payment or deposit) and such amount as shall be sufficient to cover
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee except as a result of negligence or bad faith, and if any and all
Events of Default under this Indenture with respect to such series, other than
the non-payment of the principal of Securities of such series which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided herein - then, and in every such case, the Holders of a majority in
aggregate principal amount of all the Securities of such affected series then
Outstanding by written notice to the Issuer and to the Trustee, may direct the
Trustee to waive all defaults with respect to such series and rescind and annul
such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.

                 Section 5.2  Collection of Indebtedness by Trustee; Trustee
May Prove Debt.  The Issuer covenants that (a) in case default shall be made in
the payment of any installment of interest on any of the Securities of any
series when such interest shall have become due and payable, and such default
shall have continued for a period of 30 days, or (b) in case default shall be
made in the payment of all or any part of the principal of any of the
Securities of any series when the same shall have become due and payable,
whether at Maturity, upon redemption, by declaration or otherwise -- then, upon
demand of the Trustee, the Issuer will pay to the Trustee for the benefit of
the Holders of the Securities of such series the whole amount that then shall
have become due and payable on all Securities of such series for principal or
interest, as the case may be (with interest to the date of such payment upon
the overdue principal and, to the extent that payment of such interest is
enforceable under applicable law, on overdue installments of interest at the
same rate as the rate of interest specified in the Securities of





                                     -33-
<PAGE>   43
such series); and in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation to the Trustee, its agents, attorneys and counsel, and any
expenses and liabilities incurred by such parties, and all advances made by the
Trustee except as a result of its negligence or bad faith.

                 Until such demand is made by the Trustee, the Issuer may pay
the principal of and interest on the Securities of such series to the Holders,
whether or not the Securities of such series be overdue.

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

                 In case there shall be pending proceedings relative to the
Issuer or any other obligor upon the Securities of any series under Title 11 of
the United States Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the Issuer or its property
or such other obligor, or in case of any other comparable judicial proceedings
relative to the Issuer or such other obligor, or to the creditors or property
of the Issuer or such other obligor, the Trustee, irrespective of whether the
principal of the Securities of any series shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand pursuant to the provisions of this
Section, shall be entitled and empowered, by intervention in such proceedings
or otherwise:

                 (a)  to file and prove a claim or claims for the whole amount
         of the principal and interest owing and unpaid in respect of the
         Securities of each series, and to file such other papers or documents
         as may be necessary or advisable in order to have the claims of the
         Trustee (including any claim for reasonable compensation to the
         Trustee and its agents, attorneys and counsel, and for reimbursement
         of all expenses and liabilities incurred, and all advances made, by
         the Trustee, except as a result of negligence or bad faith) and of the
         Securityholders allowed in any judicial





                                     -34-
<PAGE>   44
         proceedings relative to the Issuer or such other obligor, or to the
         creditors or property of the Issuer or such other obligor;

                 (b)  unless prohibited by applicable law and regulations, to
         vote on behalf of the Holders of the Securities of each series in any
         election of a trustee or a standby trustee in arrangement,
         reorganization, liquidation or other bankruptcy or insolvency
         proceedings or person performing similar functions in comparable
         proceedings; and

                 (c)  to collect and receive any moneys or other property
         payable or deliverable on any such claims, and to distribute all
         amounts received with respect to the claims of the Securityholders and
         of the Trustee on their behalf; and any trustee, receiver, liquidator,
         custodian or other similar official is hereby authorized by each of
         the Securityholders to make payments to the Trustee, and, in the event
         that the Trustee shall consent to the making of payments directly to
         the Securityholders, to pay to the Trustee such amounts as shall be
         sufficient to cover reasonable compensation to the Trustee, and its
         agents, attorneys and counsel, and all other expenses and liabilities
         incurred, and all advances made, by the Trustee except, in each case,
         as a result of negligence or bad faith.

                 Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities of any series or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding except, as aforesaid, to vote for the election of a trustee in
bankruptcy or similar person.

                 All rights of action and of asserting claims under this
Indenture, or under any of the Securities of any series may be prosecuted and
enforced by the Trustee without the possession of any of the Securities of such 
series or the production thereof at any trial or other proceedings relative
thereto, and any such action or proceedings instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee and its agents, attorneys and counsel, shall be for
the ratable benefit of the Holders of the Securities in respect of which such
action was taken.

                 In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this





                                     -35-
<PAGE>   45
Indenture to which the Trustee shall be a party), the Trustee shall be held to
represent all the Holders of the Securities in respect to which action was
taken, and it shall not be necessary to make any Holders of such Securities
parties to any such proceedings.

                 Section 5.3  Application of Proceeds.  Any moneys collected by
the Trustee pursuant to this Article in respect of the Securities of any series
shall be applied in the following order at the date or dates fixed by the
Trustee and, in case of the distribution of such moneys on account of principal
or interest, upon presentation of the several Securities in respect of which
moneys have been collected and stamping (or otherwise noting) thereon the
payment, and upon surrender thereof if fully paid, or issuing Securities of the
same series in reduced principal amounts in exchange for the presented
Securities if only partially paid, or upon surrender thereof if fully paid:

                 FIRST:  To the payment of costs and expenses of collection
         applicable to such series, including reasonable compensation to the
         Trustee and its agents, attorneys and counsel and of all expenses and
         liabilities incurred, and all advances made, by the Trustee except as
         a result of negligence or bad faith;

                 SECOND:  In case the principal of the Securities of such
         series in respect of which moneys have been collected shall not have
         become and be then due and payable, to the payment of interest, if
         any, on the Securities of such series in default in the order of the
         maturity of the installments of such interest, with interest (to the
         extent that such interest has been collected by the Trustee and to the
         extent permitted by law) upon the overdue installments of interest at
         the same rate as the rate of interest specified in such Securities,
         such payments to be made ratably to the Persons entitled thereto,
         without discrimination or preference;

                 THIRD:  In case the principal of the Securities of such series
         in respect of which moneys have been collected shall have become and
         be then due and payable, to the payment of the whole amount then owing
         and unpaid upon all the Securities of such series for principal and
         interest, if any, with interest upon the overdue principal, and (to
         the extent that such interest has been collected by the Trustee and to
         the extent permitted by law) upon overdue installments of interest at
         the same rate as the rate of interest specified in the Securities of
         such series; and in case such moneys shall be insufficient to pay in
         full the whole amount so due and unpaid upon the Securities of





                                     -36-
<PAGE>   46
         such series, then to the payment of such principal and interest,
         without preference or priority of principal over interest, or of
         interest over principal, or of any installment of interest over any
         other installment of interest, or of any Security of such series over
         any other Security of such series, ratably to the aggregate of such
         principal and accrued and unpaid interest; and

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

                 Section 5.4  Suits for Enforcement.  In case an Event of
Default has occurred, has not been waived and is continuing, the Trustee may in
its discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.

                 Section 5.5  Restoration of Rights on Abandonment of
Proceedings.  In case the Trustee or any Holder shall have proceeded to enforce
any right under this Indenture and such proceedings shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then, and in every such case, the
Issuer, the Trustee and the Holders shall be restored respectively to their
former positions and rights hereunder, and all rights, remedies and powers of
the Issuer, the Trustee and the Holders shall continue as though no such
proceedings had been taken.

                 Section 5.6  Limitations on Suits by Securityholders.  No
Holder of any Security of any series shall have any right by virtue or by
availing of any provision of this Indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to this Indenture, or for the appointment of a trustee, receiver,
liquidator, custodian or other similar official or for any other remedy
hereunder, unless such Holder previously shall have given to the Trustee
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of not less than 25% in aggregate
principal amount of the Securities of each affected series then Outstanding
(determined as provided herein and voting as one class) shall have made written
request upon the Trustee to institute such action or proceedings in its own
name as trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby





                                     -37-
<PAGE>   47
and the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity shall have failed to institute any such action or proceeding and
no direction inconsistent with such written request shall have been given to
the Trustee pursuant to Section 5.9; it being understood and intended, and
being expressly covenanted by the taker and Holder of every Security with every
other taker and Holder and the Trustee, that no one or more Holders of
Securities of any series shall have any right in any manner whatever by virtue
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holder of Securities or to obtain or seek to
obtain priority over or preference to any other such Holder or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all Holders of Securities of the affected
series.  For the protection and enforcement of the provisions of this Section,
each and every Securityholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.

                 Section 5.7  Unconditional Right of Securityholders to Receive
Principal and Interest and to Institute Certain Suits.  Notwithstanding any
other provision in this Indenture and any provision of any Security, the right
of any Holder of any Security to receive payment of the principal of and
interest, if any, on such Security on or after the respective due dates
expressed in such Security or any date fixed for redemption, or to institute
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.

                 Section 5.8  Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default.  Except as provided in Section 5.6, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders of
Securities is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise.  The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

                 No delay or omission of the Trustee or of any Holder of
Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.6, every right and power given
by this Indenture or by law to the Trustee or to the Holders of Securities may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Holders of Securities, as the case may be.





                                     -38-
<PAGE>   48
                 Section 5.9  Control by Holders of Securities.  The Holders of
a majority in aggregate principal amount of the Securities of each series
affected at the time Outstanding (determined as provided herein and voting as
one class) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee with respect to the
Securities of such affected series by this Indenture; provided that such
direction shall not be otherwise than in accordance with law and the provisions
of this Indenture; and provided further that (subject to the provisions of
Section 6.1) the Trustee shall have the right to decline to follow any such
direction if the Trustee, being advised by counsel, shall determine that the
action or proceeding so directed may not lawfully be taken or if the Trustee in
good faith by its board of directors, its executive committee or a trust
committee of directors or Responsible Officers of the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in
personal liability or that the actions or forbearances specified in or pursuant
to such direction would be unduly prejudicial to the interests of Holders of
the Securities of all affected series not joining in the giving of said
direction, it being understood that (subject to Section 6.1) the Trustee shall
have no duty to ascertain whether or not such actions or forbearances are
unduly prejudicial to such Holders.

                 Nothing in this Indenture shall impair the right of the
Trustee in its discretion to take any action deemed proper by the Trustee and
which is not inconsistent with such direction or directions by Securityholders.

                 Section 5.10  Waiver of Past Defaults.  Prior to the
declaration of acceleration of the Maturity of any Securities as provided in
Section 5.1, the Holders of a majority in aggregate principal amount of the
Securities of all series at the time Outstanding with respect to which a
default or an Event of Default shall have occurred and be continuing
(determined as provided herein and voting as one class) may on behalf of the
Holders of all such affected Securities waive any past default or Event of
Default described in Section 5.1 and its consequences, except a default or an
Event of Default (i) in the payment of the principal of or interest, if any, on
any Security of such series, or (ii) in respect of a covenant or provision
hereof or of any Security which cannot be modified or amended without the
consent of the Holder of each Security affected.  In the case of any such
waiver, the Issuer, the Trustee and the Holders of all such affected Securities
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other default or impair
any right consequent thereon.





                                     -39-
<PAGE>   49
                 Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have occurred
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

                 Section 5.11  Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances.  The Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to such series known to the Trustee to all
Holders of Securities of such series in the manner and to the extent provided
in Section 4.4(c), unless in each case such defaults shall have been cured
before the mailing or publication of such notice (the term "default" for the
purpose of this Article being hereby defined to mean any event or condition
which is, or with notice or lapse of time or both would become, an Event of
Default); provided that, except in the case of default in the payment of the
principal of or the interest, if any, on any of the Securities of such series,
or in the payment of any sinking fund installment or analogous payment on such
series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders of such series.

                 Section 5.12  Right of Court to Require Filing of Undertaking
to Pay Costs.  All parties to this Indenture agree, and each Holder of any
Security by his or her acceptance thereof shall be deemed to have agreed, that
any court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Securityholder or
group of Securityholders of any series holding in the aggregate more than 10%
in aggregate principal amount of the Securities of such series, or, in the case
of any suit relating to or arising under clause (d) or (g) of section 5.1 (if
the suit relates to the Securities of more than one but less than all series),
10% in aggregate principal amount of the Securities then Outstanding and
affected thereby, or, in the case of any suit relating to or arising under
clause (d) or (g) (if the suit relates to all the Securities then





                                     -40-
<PAGE>   50
Outstanding), 10% in aggregate principal amount of all Securities then
Outstanding, or to any suit instituted by any Securityholder for the
enforcement of the payment of the principal of or the interest on any Security
on or after the due date expressed in such Security or any date fixed for
redemption.

                 Section 5.13  Waiver of Stay or Extension Laws.  The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.


                                  ARTICLE SIX

                             CONCERNING THE TRUSTEE

                 Section 6.1  Duties and Responsibilities of the Trustee;
During Default; Prior to Default.  The Trustee, prior to the occurrence of an
Event of Default with respect to the Securities of a particular series and
after the curing or waiving of all Events of Default which may have occurred
with respect to such series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture.  In case an Event of
Default with respect to the Securities of a particular series has occurred
(which has not been cured or waived), the Trustee shall exercise with respect
to such series such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.

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

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

                      (i)  the duties and obligations of the Trustee with 
                 respect to the Securities of





                                     -41-
<PAGE>   51
                 such series shall be determined solely by the express
                 provisions of this Indenture, and the Trustee shall not be
                 liable except for the performance of such duties and
                 obligations as are specifically set forth in this Indenture,
                 and no implied covenants or obligations shall be read into
                 this Indenture against the Trustee; and

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

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

                 (c)  the Trustee shall not be liable with respect to any
         action taken or omitted to be taken by it in good faith in accordance
         with an appropriate direction of the Holders pursuant to Section 5.9
         relating to the time, method and place of conducting any proceeding
         for any remedy available to the Trustee, or exercising any trust or
         power conferred upon the Trustee, under this Indenture.

                 None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable grounds for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.

                 Section 6.2  Certain Rights of the Trustee.  Subject to
Section 6.1:

                 (a)  the Trustee may rely and shall be protected in acting or
         refraining from acting upon any resolution, Officers' Certificate or
         other certificate,





                                     -42-
<PAGE>   52
         statement, instrument, opinion, report, notice, request, consent,
         order, bond, debenture, note, security or other paper or document
         believed by it to be genuine and to have been signed or presented by
         the proper party or parties;

                 (b)  any request, direction, order or demand of the Issuer
         mentioned herein shall be sufficiently evidenced by an Officers'
         Certificate (unless other evidence in respect thereof be herein
         specifically prescribed); and any resolution of the Board of Directors
         may be evidenced to the Trustee by a copy thereof certified by the
         secretary or an assistant secretary of the Issuer;

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

                 (d)  the Trustee shall be under no obligation to exercise any
         of the trusts or powers vested in it by this Indenture at the request,
         order or direction of any of the Holders pursuant to the provisions of
         this Indenture, unless such Holders shall have offered to the Trustee
         reasonable indemnity against the costs, expenses and liabilities which
         might be incurred therein or thereby;

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

                 (f)  prior to the occurrence of an Event of Default with
         respect to the Securities of any series and after the curing or
         waiving of all such Events of Default, the Trustee shall not be bound
         to make any investigation into the facts or matters stated in any
         resolution, certificate, statement, instrument, opinion, report,
         notice, request, consent, order, approval, appraisal, bond, debenture,
         note, security or other paper or document unless requested in writing
         so to do by the Holders of not less than a majority in aggregate
         principal amount of the Securities of all affected series then
         Outstanding; provided that, if the payment within a reasonable time to
         the Trustee of the costs, expenses or liabilities likely to be
         incurred by it in the making of such investigation is, in the





                                     -43-
<PAGE>   53
         opinion of the Trustee, not reasonably assured to the Trustee by the
         security afforded to it by the terms of this Indenture, the Trustee
         may require reasonable indemnity against such costs, expenses or
         liabilities as a condition to proceeding; the reasonable expenses of
         every such investigation shall be paid by the Issuer or, if paid by
         the Trustee, shall be repaid by the Issuer upon demand; and

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

                 Section 6.3  Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.  The recitals contained
herein and in the Securities, except the Trustee's certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same.  The Trustee makes
no representation as to the validity or sufficiency of this Indenture or of the
Securities, other than as to the due execution and delivery of the Indenture by
the Trustee.  The Trustee shall not be accountable for the use or application
by the Issuer of any of the Securities or of the proceeds thereof.

                 Section 6.4  Trustee and Agents May Hold Securities;
Collections, etc.  The Trustee or any agent of the Issuer or the Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities with the same rights it would have if it were not the Trustee or
such agent and, subject to Sections 6.8 and 6.13, may otherwise deal with the
Issuer and receive, collect, hold and retain collections from the Issuer with
the same rights it would have if it were not the Trustee or such agent.

                 Section 6.5  Moneys Held by Trustee.  Subject to the
provisions of Section 10.4, all moneys received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law.  Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest on
any moneys received by it hereunder.

                 Section 6.6  Compensation and Indemnification of Trustee and
Its Prior Claim.  The Issuer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited





                                     -44-
<PAGE>   54
by any provision of law in regard to the compensation of a trustee of an
express trust), and the Issuer covenants and agrees to pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by or on behalf of it in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all agents and other persons
not regularly in its employ) except any such expense, disbursement or advance
as may arise from its negligence or bad faith.  The Issuer also covenants to
indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on the part of the Trustee
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and the Trustee's duties hereunder, including
the costs and expenses of defending itself against or investigating any claim
of liability in the premises.  The obligations of the Issuer under this Section
to compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of this Indenture.
Such additional indebtedness shall not be deemed to be Subordinated Securities,
as that term is defined in Section 12.1, and shall be a senior claim to that of
the Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the Holders of particular
Securities, and the Securities are hereby subordinated to such senior claim.
When the Trustee incurs expenses after the occurrence of a default, the
expenses are intended to constitute expenses of administration under any
bankruptcy law.

                 Section 6.7  Right of Trustee to Rely on Officers'
Certificate, etc.  Subject to Sections 6.1 and 6.2, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officers' Certificate delivered to
the Trustee, and such certificate, in the absence of negligence or bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken, suffered or omitted by it under the provisions of this Indenture in
reliance thereon.

                 Section 6.8  Qualification of Trustee; Conflicting Interests.
If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.





                                     -45-
<PAGE>   55
                 Section 6.9  Persons Eligible for Appointment as Trustee.
There shall at all times be a Trustee hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State thereof or the District of Columbia having a combined capital and
surplus of at least $5,000,000, and which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal, State or District of Columbia authority.  Such corporation shall have
its principal place of business in The City of New York, if there be such a
corporation in such location willing to act upon reasonable and customary terms
and conditions.  If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then, for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.  In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.

                 Section 6.10  Resignation and Removal; Appointment of
Successor Trustee.  (a)  The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign and be discharged of the trusts created by
this Indenture by giving written notice of resignation to the Issuer and by
mailing notice of such resignation to the Holders of the then Outstanding
Securities at their addresses as they shall appear on the Security registry
books.  Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor trustee or trustees with respect to the applicable series
by written instrument, in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees.  If no successor
trustee shall have been so appointed with respect to any series and shall have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Holder who has
been a bona fide Holder of a Security or Securities of such series for at least
six months may, subject to the provisions of Section 5.12, on behalf of such
Holder and all others similarly situated, petition any such court for the
appointment of a successor trustee.  Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.

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

                 (i)  the Trustee shall fail to comply with the provisions of 
         Section 6.8 after written request





                                     -46-
<PAGE>   56
         therefor by the Issuer or by any Holder who has been a bona fide
         Holder of a Security or Securities of such series for at least six
         months; or

                 (ii)  the Trustee shall cease to be eligible in accordance
         with the provisions of Section 6.9 and shall fail to resign after
         written request therefor by the Issuer or by any Holder; or

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

then, in any such case, the Issuer may remove the Trustee with respect to the
Securities of any or all series, as appropriate, and appoint a successor
trustee for such series by written instrument, in duplicate, executed by order
of the Board of Directors, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee or trustees, or,
subject to the provisions of Section 5.12, any Holder who has been a bona fide
Holder of a Security or Securities of such series for at least six months may,
on behalf of such Holder and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor trustee.  Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.

                 (c)  The Holders of a majority in aggregate principal amount
of the Securities at the time Outstanding may at any time remove the Trustee
and appoint a successor trustee by delivering to the Trustee so removed, to the
successor trustee so appointed and to the Issuer the evidence provided for in
Section 7.1 of the action in that regard taken by the Holders.

                 (d)  Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 6.11.

                 (e)  Except in the case of a default in the payment of the
principal of or interest on any Security, or in the payment of any sinking or
purchase fund installment, the Trustee shall not be required to resign as
provided by Section 6.8 if the Trustee shall have sustained the burden of
proving, on application to the Commission and after opportunity for hearing
thereon, that:





                                     -47-
<PAGE>   57
                 (i)  the default under this Indenture may be cured or waived
         during a reasonable period and under the procedures described in such
         application; and

                 (ii)  a stay of the Trustee's duty to resign will not be
         inconsistent with the interests of the Securityholders.

                 Section 6.11  Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 6.10 shall execute,
acknowledge and deliver to the Issuer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, trusts and duties of its predecessor hereunder, with like
effect as if originally named as trustee hereunder; but, nevertheless, on the
written request of the Issuer or of the successor Trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4,
pay over and transfer to the successor Trustee all moneys and property at the
time held by it hereunder and shall execute, acknowledge and deliver an
instrument transferring to such successor Trustee all such rights, powers,
trusts and duties.  Upon request of any such successor Trustee, the Issuer
shall execute and acknowledge any and all instruments in writing for more fully
and certainly vesting in and confirming to such successor Trustee all such
money, property, rights, powers and trusts.  Any Trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such Trustee for the benefit of such applicable series to secure any amounts
then due it pursuant to the provisions of Section 6.6.

                 No successor Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 6.8 and eligible under the
provisions of Section 6.9.

                 Upon acceptance of appointment by any successor Trustee as
provided in this Section, the Issuer shall give notice thereof to the Holders
of Securities, by mailing such notice to such Holders at their addresses as
they shall appear on the Security registry books.  If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 6.10.  If the Issuer fails to give such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Issuer.

                 Section 6.12  Merger, Conversion, Consolidation or Succession
to Business of Trustee.  Any corporation into which





                                     -48-
<PAGE>   58
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

                 In case at the time of such succession to the Trustee any of
the Securities of any series shall have been authenticated but not delivered,
any such successor Trustee may adopt the certificate of authentication of any
predecessor Trustee and deliver the Securities so authenticated; and, in case
at that time any of the Securities of any series shall not have been
authenticated, any successor Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of such successor Trustee;
and in all such cases such certificate of authentication shall have the full
force which is anywhere in the Securities of such series or in this Indenture
provided that the certificate of authentication of the Trustee shall have;
provided that the right to adopt the certification of any predecessor Trustee
or to authenticate Securities of any series in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.

                 Section 6.13  Preferential Collection of Claims Against the
Issuer.  The Trustee shall comply with its obligations under the applicable
provisions of Section 311 the Trust Indenture Act.

                 Section 6.14  Appointment of Authenticating Agent.  As long as
any Securities of a series remain Outstanding, the Trustee may, by an
instrument in writing, appoint with the approval of the Issuer an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of, but subject to the direction of, the Trustee to authenticate
and deliver Securities of such series, including Securities issued upon
exchange, registration of transfer, partial redemption or pursuant to Section
2.9.  Securities of such series so authenticated and delivered shall be
entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee.  Whenever reference is
made in this Indenture to the authentication and delivery of Securities of any
series by the Trustee or to the Trustee's certificate of authentication, such
reference shall be





                                     -49-
<PAGE>   59
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent for such series and a certificate of authentication
executed on behalf of the Trustee by such Authenticating Agent.  Such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States of America or of any State thereof
or of the District of Columbia authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $5,000,000
(determined as provided in Section 6.9 with respect to the Trustee) and subject
to supervision or examination by Federal or State authority.

                 Any corporation into which any Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of any Authenticating Agent, shall
be the successor to such Authenticating Agent with respect to all series of
Securities for which it served as Authenticating Agent without the execution or
filing of any paper or any further act on the part of the Trustee or such
Authenticating Agent.

                 Any Authenticating Agent may at any time, and if it shall
cease to be eligible hereunder shall, resign by giving written notice of
resignation to the Trustee and to the Issuer.  The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Issuer.  Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall upon receipt of an Issuer Order
appoint a successor Authenticating Agent and shall provide notice of such
appointment to all Holders of Securities affected thereby in the manner and to
the extent provided in Section 6.11 with respect to the appointment of a
successor trustee.  Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers and duties of
its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent.  The Authenticating Agent for the Securities of any
series shall have no responsibility or liability for any action taken by it as
such at the direction of the Trustee.

                 Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any
Authenticating Agent.





                                     -50-
<PAGE>   60
                                 ARTICLE SEVEN

                         CONCERNING THE SECURITYHOLDERS

                 Section 7.1  Evidence of Action Taken by Securityholders.  Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in aggregate principal amount of the Holders of one or more series
of Securities may be evidenced (i) by one or more instruments of substantially
similar tenor signed by such specified percentage of Holders in person or by an
agent or proxy duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee; (ii) by the record of such specified
percentage of Holders voting in favor thereof at any meeting of such Holders
duly called and held by the Trustee; and (iii) by a combination of such
instrument or instruments and any such record of a meeting.

                 Section 7.2  Proof of Execution of Instruments and of Holding
of Securities.  Subject to Sections 6.1 and 6.2, the execution of any
instrument by a Holder or his agent or proxy and proof of the holding by any
Person of any of the Securities of any series shall be sufficient if made in
the following manner:

                 (a)  The fact and date of the execution by any such Person of
         any instrument may be proved by the certificate of any notary public
         or other officer of any jurisdiction authorized to take
         acknowledgments of deeds or administer oaths that the Person executing
         such instrument acknowledged to him the execution thereof, or by an
         affidavit of a witness to such execution sworn to before any such
         notary or other such officer.  Where such execution is by or on behalf
         of any legal entity other than an individual, such certificate or
         affidavit shall also constitute sufficient proof of the authority of
         the Person executing the same.

                 (b)  The ownership of Securities shall be proved by the 
         Security Register or by a certificate of the Security Registrar.

                 Section 7.3  Holders to Be Treated as Owners.  The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security of any series shall be registered upon the
Security Register for such series as the absolute owner of such Security
(whether or not such Security shall be overdue and notwithstanding any notation
of ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal of and, sub-





                                     -51-
<PAGE>   61
ject to the provisions of Section 2.7 of this Indenture, interest, if any, on
such Security and for all other purposes; and none of the Issuer, the Trustee
and any agent of the Issuer or the Trustee shall be affected by any notice to
the contrary.  All such payments so made to any such Person, or upon his order,
shall be valid, and, to the extent of the sum or sums so paid, effectual to
satisfy and discharge the liability for moneys payable upon any such Security.

                 No holder of any beneficial interest in any Global Security
held on its behalf by a Depository shall have any rights under this Indenture
with respect to such Global Security, and such Depository may be treated by the
Issuer, the Trustee, and any agent of the Issuer or the Trustee as the owner of
such Global Security for all purposes whatsoever.  Notwithstanding the
foregoing, nothing herein shall impair, as between a Depository and such
holders of beneficial interests, the operation of customary practices governing
the exercise of the rights of the Depository as holder of any Security.

                 Section 7.4  Securities Owned by Issuer Deemed Not
Outstanding.  In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of one or more series have concurred
in any direction, consent or waiver under this Indenture, Securities which are
owned by the Issuer or any other obligor on the Securities with respect to
which such determination is being made or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Issuer or any other obligor on the Securities with respect to which such
determination is being made shall be disregarded and deemed not to be
Outstanding for the purposes of any such determination, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, consent or waiver, only Securities which the Trustee knows are
so owned shall be so disregarded.  Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon
such Securities or any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Issuer or any other
obligor on such Securities.  In case of a dispute as to such right, the advice
of counsel shall be full protection in respect of any decision made by the
Trustee in accordance with such advice.  Upon request of the Trustee, the
Issuer shall furnish to the Trustee promptly an Officers' Certificate listing
and identifying all Securities, if any, known by the Issuer to be owned or held
by or for the account of any of the above described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not





                                     -52-
<PAGE>   62
listed therein are Outstanding for the purposes of any such determination.

                 Section 7.5  Right of Revocation of Action Taken.  At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
7.1, of the taking of any action by the Holders of the requisite percentage in
aggregate principal amount of the Securities of one or more series, as the case
may be, specified in this Indenture in connection with such action, any Holder
of a Security the serial number of which is shown by the evidence to be
included among the serial numbers of the Securities the Holders of which have
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of ownership as provided in Section 7.2, revoke such
action so far as concerns such Security.  Except as aforesaid, any such action
taken by the Holder of any Security of any series shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities of such series issued in exchange or
substitution therefor or on registration of transfer thereof, irrespective of
whether or not any notation in regard thereto is made upon any such Security.
Any action taken by the Holders of the requisite percentage in aggregate
principal amount of the Securities of one or more series, as the case may be,
specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities of such series.


                                 ARTICLE EIGHT

                            SUPPLEMENTAL INDENTURES

                 Section 8.1  Supplemental Indentures Without Consent of
Securityholders.  The Issuer, when authorized by a resolution of the Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of the execution thereof) for one
or more of the following purposes:

                 (a)  to convey, transfer, assign, mortgage or pledge to the
         Trustee as security for the Securities of one or more series any
         property or assets;

                 (b)  to evidence the succession of another corporation to the
         Issuer, or successive successions, and the assumption by the successor
         corporation of the





                                     -53-
<PAGE>   63
         covenants, agreements and obligations of the Issuer pursuant to
         Article Nine;

                 (c)  to add to the covenants of the Issuer for the benefit of
         the Holders of all or any series of Securities (and if such covenants
         are to be for the benefit of less than all series of Securities,
         stating that such covenants are expressly being included solely for
         the benefit of such series) such further covenants, restrictions,      
         conditions or provisions as the Issuer and the Trustee shall consider
         to be for the protection of the Holders of Securities of any series
         and to make the occurrence, or the occurrence and continuance, of a
         default in complying with any such additional covenant, restriction,
         condition or provision an Event of Default permitting the enforcement
         of all or any of the several remedies provided in this Indenture as
         herein set forth; in respect of any such additional covenant,
         restriction, condition or provision, such supplemental indenture may
         provide for a particular period of grace after default (which period
         may be shorter or longer than that allowed in the case of other
         defaults) or may provide for an immediate enforcement upon such an
         Event of Default or may limit the remedies available to the Trustee
         upon such an Event of Default or may limit the right of the Holders of
         a majority in aggregate principal amount of the Securities of such
         series to waive such an Event of Default;

                 (d)  to cure any ambiguity or to correct or supplement any
         provision contained herein or in any supplemental indenture which may
         be defective or inconsistent with any other provision contained herein
         or in any supplemental indenture, or to make such other provisions as
         the Issuer may deem necessary or desirable, with respect to matters or
         questions arising under this Indenture, provided that no such action
         shall adversely affect the interests of the Holders of the Securities
         of any series appertaining thereto;

                 (e)  to establish the form and terms of the Securities of any
         series as permitted by Sections 2.1 and 2.3; and

                 (f)  to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to the Securities and to
         add to or change any of the provisions of this Indenture as shall be
         necessary to provide for or facilitate the administration of the
         trusts hereunder by more than one trustee, all as provided in Section
         6.11.





                                     -54-
<PAGE>   64
                 The Trustee is hereby authorized to join with the Issuer in
the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage or pledge of any property
or assets thereunder, but the Trustee shall not be obligated to enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

                 Any supplemental indenture authorized by the provisions of
this Section may be executed without the consent of the Holders of any of the
Securities at the time Outstanding, notwithstanding any of the provisions of
Section 8.2.

                 Section 8.2  Supplemental Indentures With Consent of
Securityholders.  With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the    
Securities of all series at the time Outstanding affected by such supplemental
indenture (voting as one class), the Issuer, when authorized by a resolution of
the Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order),
and the Trustee may, from time to time and at any time, enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act of 1939 as in force at the date of execution thereof) for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders of the
Securities of each such series; provided that no such supplemental indenture
shall (a) change the time of payment of the principal, or any installment of
the principal, of any Security or reduce the principal amount thereof, or
reduce the rate or change the time of payment of interest, if any, thereon, or
reduce any amount payable on the redemption thereof, or make the principal
thereof or the interest thereon payable in any coin or currency other than that
provided in such Security in accordance with the terms thereof or impair or
affect the right to institute suit for the payment thereof when due, or, if
such Security shall so provide, any right of repayment at the option of the
Holder, in each case without the consent of the Holder of each Security so
affected, (b) reduce the percentage in principal amount of the Outstanding
Securities of the affected series, the consent of whose Holders is required for
any such supplemental indenture or for any waiver provided for in this
Indenture, without the consent of the Holders of each Security so affected or
(c) without the consent of the Holders of each Security so affected, modify any
of the provisions of this Section or Section 5.10, except to increase any such
percentage or to provide that certain other provisions of this Indenture cannot
be





                                     -55-
<PAGE>   65
modified or waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section, or the
deletion of this proviso, in accordance with the requirements of Sections 6.11
and 8.1(f).

                 A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of one or more series of Securities, or which modifies
the rights of the Holders of Securities of such series appertaining to such
Securities with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.

                 Upon the request of the Issuer, accompanied by a Board
Resolution complying with the first paragraph of this Section and evidence of
the consent of the Holders of the Securities as aforesaid and such other
documents, if any, as may be required by Section 7.1, the Trustee shall join
with the Issuer in the execution of such supplemental indenture unless such
supplemental indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.

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

                 Promptly after the execution by the Issuer and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall give notice thereof to the Holders of then Outstanding Securities
of each series affected thereby, by mailing a notice thereof by first-class
mail to such Holders at their addresses as they shall appear on the Security
Register, and in each case such notice shall set forth in general terms the
substance of such supplemental indenture.  Any failure of the Issuer to give
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.

                 Section 8.3  Effect of Supplemental Indenture.  Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Issuer and the Holders
of Securities of each series affected thereby shall thereafter be





                                     -56-
<PAGE>   66
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.

                 Section 8.4  Documents to Be Given to Trustee.  The Trustee,
subject to the provisions of Sections 6.1 and 6.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article complies with the
applicable provisions of this Indenture.

                 Section 8.5  Notation on Securities in Respect of Supplemental
Indentures.  Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee as to any matter
provided for by such supplemental indenture.  If the Issuer or the Trustee
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may be prepared and
executed by the Issuer, authenticated by the Trustee and delivered in exchange
for the Securities of such series then Outstanding.


                                  ARTICLE NINE

                   CONSOLIDATION, MERGER, SALE OR CONVEYANCE

                 Section 9.1  Covenant of Issuer Not to Merge, Consolidate,
Sell or Convey Property Except Under Certain Conditions.  Nothing contained in
this Indenture or in any of the Securities shall prevent any consolidation of
the Issuer with, or merger of the Issuer into, any other corporation or
corporations (whether or not affiliated with the Issuer), or successive
consolidations or mergers to which the Issuer or its successor or successors
shall be a party or parties, shall prevent any sale, lease or conveyance of the
property of the Issuer as an entirety or substantially as an entirety, shall
prevent any consolidation of any Person with, or the merger of any Person into,
the Issuer or shall prevent any sale, lease or conveyance of the property of
any Person as an entirety or substantially as an entirety to the Issuer;
provided, that, and the Issuer hereby covenants and agrees, upon any such
consolidation, merger, sale, lease or conveyance, the due and punctual payment
of the principal of and interest, if any, on all the Securities, according to
their tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by the
Issuer, shall be expressly assumed, by supplemental indenture satisfactory in
form to the Trustee,





                                     -57-
<PAGE>   67
executed and delivered to the Trustee by the corporation formed by such
consolidation, or into which the Issuer shall have been merged, or which shall
have acquired such property; provided, further, that the corporation formed by
such consolidation or into which the Issuer merged or the Person which acquired
by conveyance or sale, or which leases, the properties and assets of the Issuer
as an entirety or substantially as an entirety shall be a corporation organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia; provided, further, that immediately after giving
effect to such transaction, and treating any indebtedness which becomes an
obligation of the Issuer or a Subsidiary as a result of such transaction as
having been incurred by the Issuer or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing; provided, further, if, as a result of any such consolidation or
merger or such conveyance, transfer or lease, properties or assets of the
Issuer would become subject to a mortgage, pledge, lien, security interest or
other encumbrance which would not be permitted by this Indenture, the Issuer or
such successor corporation or Person, as the case may be, shall take such steps
as shall be necessary effectively to secure the Securities equally and ratably
with (or prior to) all indebtedness secured thereby.

                 Section 9.2  Successor Corporation Substituted for Issuer.  In
case of any consolidation, merger, sale, lease or conveyance referred to in,
and in accordance with, Section 9.1, and following such an assumption by the
successor corporation, such successor corporation shall succeed to and be
substituted for the Issuer, with the same effect as if it had been named herein
as Issuer.

                 Such successor corporation may cause to be signed, and may
issue either in its own name or in the name of the Issuer prior to such
succession, any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Issuer and delivered to the Trustee; and,
upon the order of such successor corporation, instead of the Issuer, and
subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver any Securities
which previously shall have been signed and delivered by the officers of the
Issuer to the Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee for that purpose.  All of the Securities so issued shall in all
respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of
this indenture as though all of such Securities had been issued at the date of
the execution hereof.





                                     -58-
<PAGE>   68
                 In case of any such consolidation, merger, sale, lease or
conveyance such changes in phraseology and form (but not in substance) may be
made in the Securities thereafter to be issued as may be appropriate.

                 In the event of any such sale or conveyance (other than a
conveyance by way of lease), the Issuer or any successor corporation which
shall theretofore have become such in the manner described in this Article
shall be discharged from all obligations and covenants under this Indenture and
the Securities and may be liquidated and dissolved.

                 Section 9.3  Opinion of Counsel Delivered to Trustee.  The
Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease or conveyance, and any such assumption, and any such liquidation or
dissolution, complies with the applicable provisions of this Indenture and that
all conditions precedent herein provided for relating to such transactions have
been complied with.


                                  ARTICLE TEN

                    SATISFACTION AND DISCHARGE OF INDENTURE;
                                UNCLAIMED MONEYS             

                 Section 10.1  Satisfaction and Discharge of Indenture.  (A)
If at any time (a) the Issuer shall have paid or caused to be paid the  
principal of and, premium and interest, if any, on all the Securities of each
series theretofore authenticated, (other than Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.9), in accordance with the terms of this Indenture and such
Securities or (b) as to Securities not so paid, the Issuer shall have delivered
to the Trustee for cancellation all Securities of each series theretofore
authenticated (other than any Securities which shall have been destroyed, 
lost or stolen and which shall have been replaced or paid as provided in 
Section 2.9) or (c) as to Securities not so paid or delivered for cancellation,
(i) all the Securities of such series shall have become due and payable, or are
by their terms to become due and payable within one year or are to be called 
for redemption within one year under arrangements satisfactory to the Trustee 
for the giving of notice of redemption, and (ii) the Issuer shall have 
irrevocably deposited or caused to be deposited with the Trustee as trust 
funds money in an amount (other than moneys repaid by the Trustee or any paying
agent to the Issuer in accordance with Section 10.4) or Government Obligations,
maturing as to principal and interest at such times and in such amounts as will
insure the availability of money, or a combination thereof, sufficient in the
opinion of a nationally recognized firm of independent public





                                     -59-
<PAGE>   69
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal, and premium and interest, if any, on all 
Securities of such series on each date that such principal, and premium or 
interest, if any, is due and payable and (B) any mandatory sinking fund or 
analogous payments on the dates on which such payments are due and payable in 
accordance with the terms of this Indenture and the Securities of such series; 
and if, in any such case, the Issuer shall also pay or cause to be paid all 
other sums payable hereunder by the Issuer then this Indenture shall cease to 
be of further effect (except as to (i) rights of registration of transfer and 
exchange of Securities, (ii) substitution of mutilated, defaced, destroyed, 
lost or stolen Securities, (iii) the rights of Holders of Securities to 
receive payments of principal thereof, and premium and interest, if any, 
thereon, upon the original stated due dates therefor or any date of redemption 
(but not upon acceleration), and remaining rights of such Holders to receive 
mandatory sinking fund or analogous payments, if any, (iv) the rights, 
obligations, duties and immunities of the Trustee hereunder, (v) the rights of 
Holders of Securities as beneficiaries hereof with respect to the property so 
deposited with the Trustee and payable to all or any of them and (vi) the 
obligations of the Issuer under Section 3.2) and the Trustee, on demand of the 
Issuer accompanied by an Officers' Certificate and an Opinion of Counsel, each 
stating that all conditions precedent herein provided for relating to the 
satisfaction and discharge of this Indenture have been complied with, and at 
the cost and expense of the Issuer, shall execute proper instruments 
acknowledging such satisfaction and discharge of this Indenture, provided that 
the rights of Holders of the Securities to receive amounts in respect of 
principal of and interest on the Securities held by them shall not be delayed 
longer than required by then - applicable mandatory rules or policies of any 
national securities exchange upon which the Securities are listed.  The Issuer 
agrees to reimburse the Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Securities.

                 (B)  The following provisions shall apply to the Securities of
each series unless specifically otherwise provided in the Board Resolution,
Officers' Certificate or supplemental indenture relating thereto provided
pursuant to Section 2.3.  In addition to discharge of this Indenture pursuant
to the next preceding paragraph (A) the Issuer shall be deemed to have paid and
discharged the entire indebtedness on all the Securities of such series on the
91st day after the date of making the deposit referred to in clause (a), and
the provisions of this Indenture with respect to the Securities of such series
shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Securities of such series, (ii) substitution of
mutilated, defaced, destroyed, lost or





                                     -60-
<PAGE>   70
stolen Securities, (iii) the rights of Holders of Securities of such series
appertaining thereto to receive payments of principal thereof and interest, if
any, thereon, upon the original stated due dates therefor or any date of
redemption (but not upon acceleration), and remaining rights of such Holders to
receive mandatory sinking fund or analogous payments, if any, solely from the
trust fund referred to in subparagraph (a) below, (iv) the rights, obligations,
duties and immunities of the Trustee hereunder, (v) the rights of Holders of
Securities of such series as beneficiaries hereof with respect to the property
so deposited with the Trustee and payable to all or any of them and (vi) the
obligations of the Issuer under Section 3.2), and the Trustee, at the cost and
expense of the Issuer, shall, at the Issuer's request, execute proper
instruments acknowledging the same, if:

                 (a)  the Issuer shall have irrevocably deposited or caused to
         be irrevocably deposited with the Trustee as a trust fund specifically
         pledged as security for, and dedicated solely to, the benefit of the
         Holders of the Securities of such series (i) money in an amount, or
         (ii) Government Obligations, maturing as to principal and interest at  
         such times and in such amounts as will insure the availability of
         money, or (iii) a combination thereof, sufficient in the opinion of a
         nationally recognized firm of independent public accountants expressed
         in a written certification thereof delivered to the Trustee, to pay
         (A) the principal, premium and interest, if any, on all Securities of
         such series on each date that such principal, premium or interest, if
         any, is due and payable and (B) any mandatory sinking fund or
         analogous payments on the dates on which such payments are due and
         payable in accordance with the terms of this Indenture and the
         Securities of such series;

                 (b)  no Event of Default or event which, with notice or lapse
         of time or both, would become an Event of Default with respect to the
         Securities of such series shall have occurred and be continuing on the
         date of such deposit or at any time during the period ending on the
         91st day after the date of such deposit (it being understood that this
         condition shall not be deemed satisfied until the expiration of such
         period);

                 (c)  such deposit shall not result in a breach or violation
         of, or constitute a default under, this Indenture or any other
         material agreement or instrument to which the Issuer is a party or by
         which it is bound;

                 (d)  such deposit shall not cause any Securities of such
         series then listed on any national securities





                                     -61-
<PAGE>   71
         exchange registered under the Securities Exchange Act of 1934, as
         amended, to be delisted;

                 (e)  the Issuer shall have delivered to the Trustee an Opinion
         of Counsel to the effect that (i) if such deposits shall include
         Government Obligations in respect of any government other than the
         United States of America, such deposit shall not result in the Issuer,
         the Trustee or such trust constituting an "investment company" under
         the Investment Company Act of 1940, as amended, and (ii) the Holders
         of the Securities of such series then Outstanding will not recognize
         income, gain or loss for Federal income tax purposes as a result of
         such deposit, defeasance and discharge and will be subject to Federal
         income tax on the same amounts, in the same manner and at the same
         times as would have been the case if such deposit, defeasance and
         discharge had not occurred; and

                 (f)  the Issuer shall have delivered to the Trustee an
         Officers' Certificate and an Opinion of Counsel, each stating that all
         conditions precedent herein provided for relating to the defeasance
         contemplated by this paragraph have been complied with.

                 Section 10.2  Application by Trustee of Funds Deposited for
Payment of Securities.  Subject to Section 10.4, all moneys and Government
Obligations deposited with the Trustee (or other trustee), and all money
received by the Trustee in respect of Government Obligations deposited with the
Trustee, pursuant to Section 10.1 in respect of the Outstanding Securities of a
particular series shall be held in trust and applied by it to the payment,
either directly or through any paying agent (including the Issuer acting as its
own paying agent), to the Holders of such Securities of all sums due and to
become due thereon for principal and interest, if any; but such money need not
be segregated from other funds except to the extent required by law.

                 Section 10.3  Repayment of Moneys Held by Paying Agent.  In
connection with the satisfaction and discharge of this Indenture with respect
to the Securities of any series, all moneys then held by any paying agent under
the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Issuer, be repaid to it or paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.

                 Section 10.4  Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Three Years.  Any moneys deposited with or paid to the
Trustee or any paying agent for the payment of the principal of or interest, if
any, on any Security of any series and not applied but remaining unclaimed for
three years





                                     -62-
<PAGE>   72
after the date upon which such principal or interest shall have become due and
payable, shall, upon the written request of the Issuer and unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property law, be repaid to the Issuer by the Trustee or such paying
agent, and any Holder of the Securities of such series shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Issuer for any payment
which such Holder may be entitled to collect, and all liability of the Trustee
or any paying agent with respect to such moneys shall thereupon cease;
provided, however, that the Trustee or such paying agent, before being required
to make any such repayment with respect to moneys deposited with it for any
payment shall at the expense of the Issuer, mail by first-class mail to Holders
of such Securities at their addresses as they shall appear on the Security
Register for the Securities of such series, notice that such moneys remain and
that, after a date specified therein, which shall not be less than 30 days from
the date of such mailing any unclaimed balance of such moneys then remaining
will be repaid to the Issuer.

                 Section 10.5  Indemnity for Government Obligations.  The
Issuer shall pay and indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against the Government Obligations deposited pursuant to
Section 10.1 or the principal or interest received in respect of such
Government Obligations, other than any such tax, fee or other charge which by
law is for the account of the Holders of the Securities for whose benefit such
Government Obligations are held.


                                 ARTICLE ELEVEN

                   REDEMPTION OF SECURITIES AND SINKING FUNDS

                 Section 11.1  Applicability of Article.  The provisions of
this Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any Securities of a series which have
the benefit of a sinking fund, except as otherwise specified as contemplated by
Section 2.3 for Securities of any series.

                 Section 11.2  Notice of Redemption; Partial Redemptions.
Notice of redemption to the Holders of Securities of any series to be redeemed
as a whole or in part shall be given by mailing notice of such redemption by
first class mail, postage prepaid, at least 30 days and not more than 60 days
prior to the date fixed for redemption, to such Holders at their last addresses
as they shall appear upon the registry books for such Securities.  Any notice
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives the notice.  Failure
to give





                                     -63-
<PAGE>   73
notice by mail, or any defect in the notice to the Holder of any Security of
any series designated for redemption as a whole or in part, shall not affect
the validity of the proceedings for the redemption of any other Security of
such series.

                 The notice of redemption to each such Holder shall specify (a)
the principal amount of each Security of such series held by such Holder to be
redeemed, (b) the date fixed for redemption, (c) the redemption price, (d) that
such redemption is pursuant to the mandatory or optional sinking or other
analogous fund, or both, if such be the case, (e) that interest accrued to the
date fixed for redemption will be paid as specified in such notice and (f) that
on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue.  In case any Security is to be redeemed in part
only, the notice of redemption shall state the portion of the principal amount
thereof to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of
such series in authorized denominations for an aggregate principal amount equal
to the unredeemed portion thereof will be issued.

                 The notice of redemption of Securities of any series to be
redeemed at the option of the Issuer shall be given by the Issuer or, at the
Issuer's request, by the Trustee in the name and at the expense of the Issuer.

                 On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with the
Trustee or with one or more paying agents (or, if the Issuer is acting as its
own paying agent, set aside, segregate and hold in trust as provided in Section
3.4) an amount of money sufficient to redeem on the redemption date all the
Securities of any series so called for redemption at the applicable redemption
price, together with accrued interest to the date fixed for redemption.  The
Issuer will deliver to the Trustee at least 60 days prior to the date fixed for
redemption an Officers' Certificate stating such date, the aggregate principal
amount of Securities of each series to be redeemed and that no Events of
Default with respect to the Securities of such series have occurred (which have
not been waived or cured).  In case of a redemption at the option of the Issuer
prior to the expiration of any restriction on such redemption, the Issuer shall
deliver to the Trustee, prior to the giving of any notice of redemption to
Holders pursuant to this Section, an Officers' Certificate stating that such
restriction has been complied with.  If less than all the Securities of any
series are to be redeemed, the Trustee shall select, in such manner as it shall
deem appropriate and fair, Securities of such series to be redeemed in whole or
in part.  Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee





                                     -64-
<PAGE>   74
shall promptly notify the Issuer in writing of the Securities of such series
selected for redemption and, in the case of any Securities of such series
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.

                 Section 11.3  Payment of Securities Called for Redemption.  If
notice of redemption has been given as provided in Section 11.2, the Securities
or portions of Securities specified in such notice shall become due and payable
on the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the applicable redemption price, together with interest accrued
to said date) interest on the Securities or portions of Securities so called
for redemption shall cease to accrue and, except as provided in Sections 6.5
and 10.4, such Securities shall cease from and after the date fixed for
redemption to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Securities except
the right to receive the applicable redemption price thereof and unpaid
interest to the date fixed for redemption.  On presentation and surrender
of such Securities at a place of payment specified in said notice, redemption,
such Securities or the specified portions thereof shall be paid and redeemed by
the Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption.

                 If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest borne by such Security.

                 Upon presentation of any Security redeemed in part only, the
Issuer shall execute and the Trustee shall authenticate and deliver to or on
the order of the Holder thereof, at the expense of the Issuer, a new Security
or Securities of such series, of authorized denominations, in principal amount
equal to the unredeemed portion of the Security so presented.

                 Section 11.4  Exclusion of Certain Securities from Eligibility
for Selection for Redemption.  Securities shall be excluded from eligibility
for selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 60 days





                                     -65-
<PAGE>   75
prior to the last date on which notice of redemption may be given as being
owned of record and beneficially by, and not pledged or hypothecated by either
(a) the Issuer or (b) an entity specifically identified in such Officers'
Certificate as an Affiliate of the Issuer.

                 Section 11.5  Mandatory and Optional Sinking Funds.  The
minimum amount of any sinking fund payment provided for by the terms of the
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of the Securities of any series is herein referred to as an "optional
sinking fund payment".  The date on which a sinking fund payment is to be made
is herein referred to as the "sinking fund payment date".

                 In lieu of making all or any part of any mandatory sinking
fund payment with respect to any series of Securities in cash, the Issuer may
at its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise acquired
(except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section or (c)
receive credit for Securities of such series (not previously so credited)
redeemed by the Issuer through any optional redemption provision contained in
the terms of such series.  Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.

                 On or before the 60th day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officers' Certificate (which need not contain the statements required by
Section 14.5) (a) specifying the portion of the mandatory sinking fund payment
due on such date to be satisfied by payment of cash and the portion to be
satisfied by credit of Securities of such series and the basis for such credit,
(b) stating that none of the Securities of such series to be so credited has
theretofore been so credited, (c) stating that no defaults in the payment of
interest or Events of Default with respect to such series have occurred and are
continuing (which have not been waived or cured) and (d) stating whether or not
the Issuer intends to exercise its right to make an optional sinking fund
payment on such date with respect to such series and, if so, specifying the
amount of such optional sinking fund payment which the Issuer intends to pay on
or before the next succeeding sinking fund payment date.  Any Securities of
such series to be so credited and required to be delivered to the Trustee in
order





                                     -66-
<PAGE>   76
for the Issuer to be entitled to credit therefor as aforesaid which have not
theretofore been delivered to the Trustee shall be delivered for cancellation
pursuant to Section 2.10 to the Trustee with such Officers' Certificate (or
reasonably promptly thereafter if acceptable to the Trustee).  Such Officers'
Certificate shall be irrevocable, and upon its receipt by the Trustee the
Issuer shall become unconditionally obligated to make all the cash payments or
other deliveries therein referred to, if any, on or before the next succeeding
sinking fund payment date.  Failure of the Issuer, on or before any such 60th
day, to deliver such Officers' Certificate and securities specified in this
paragraph, if any, shall not constitute a default but shall constitute, on and
as of such 60th day, the irrevocable election of the Issuer that (i) the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) the
Issuer will make no optional sinking fund payment with respect to such series
on such date as provided in this Section.

                 If the sinking fund payment or payments (mandatory or optional
or both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 and if the Issuer shall so request with respect to the
Securities of any particular series, such cash shall be applied on the next
succeeding sinking fund payment date to the redemption of Securities of such
series at the applicable sinking fund redemption price, together with accrued
interest to the date fixed for redemption.  If such amount shall be $50,000 or
less and the Issuer makes no such request, then such amount shall be carried
over until a sum in excess of $50,000 is available.  The Trustee shall select,
in the manner provided in Section 11.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected.  Securities shall be excluded from
eligibility for redemption under this Section if they are identified by
registration and certificate number in an Officers' Certificate delivered to
the Trustee at least 40 days prior to the sinking fund payment date as being
owned of record and beneficially by, and not pledged or hypothecated by either
(a) the Issuer or (b) an entity specifically identified in such Officers'
Certificate as an Affiliate of the Issuer.  The Trustee, in the name and at the
expense of the Issuer (or the Issuer, if it shall so request the Trustee in
writing), shall cause notice of redemption of the Securities of such series to
be given in substantially the manner provided in Section 11.2 (and with the
effect provided in Section 11.3) for the redemption of Securities of such
series in part at the option of the Issuer.  The amount of any sinking fund





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<PAGE>   77
payments not so applied or allocated to the redemption of Securities of such
series shall be added to the next cash sinking fund payment for such series
and, together with such payment, shall be applied in accordance with the
provisions of this Section.  Any and all sinking fund moneys held on the stated
maturity date of the Securities of a particular series (or earlier, if such
maturity is accelerated), which are not held for the payment or redemption of
particular Securities of such series, shall be applied, together with other
moneys, if necessary, sufficient for the purpose, to the payment of the
principal of and interest on the Securities of such series at maturity.

                 Unless otherwise provided for, on or before each sinking fund
payment date, the Issuer shall pay to the Trustee in cash or shall otherwise
provide for the payment of all interest accrued to the date fixed for
redemption on Securities to be redeemed on such sinking fund payment date.

                 The Trustee shall not redeem or cause to be redeemed
Securities of any series with sinking fund moneys or give any notice of
redemption of Securities of such series by operation of the sinking fund for
such series during the continuance of any Event of Default with respect to such
series except that, if notice of redemption of any Securities of such series
shall theretofore have been given, the Trustee shall redeem or cause to be
redeemed such Securities, provided that the Trustee or one or more paying
agents shall have received from the Issuer a sum sufficient for such
redemption.  Except as aforesaid, any moneys in the sinking fund for such
series at the time when any such Event of Default shall occur, and any moneys
thereafter paid into the sinking fund, shall, during the continuance of such
Event of Default, be deemed to have been collected under Article Five and held
for the payment of all Securities of such series.  In case such Event of
Default shall have been waived as provided in Section 5.10 or such Event of
Default cured on or before the 60th day preceding any sinking fund payment
date, such moneys shall thereafter be applied on the next succeeding sinking
fund payment date in accordance with this Section to the redemption of
Securities of such series.



                                 ARTICLE TWELVE

                                 SUBORDINATION

                 Section 12.1  Applicability of Article; Securities
Subordinated to Senior Indebtedness.  (a)  This Article Twelve shall apply only
to the Securities of any series which, pursuant to Section 2.3, are expressly
made subject to this Article.  Such





                                     -68-
<PAGE>   78
Securities are referred to in this Article Twelve as "Subordinated Securities."

                 (b)  The Issuer covenants and agrees, and each Holder of
Subordinated Securities by his acceptance thereof likewise covenants and
agrees, that the indebtedness represented by the Subordinated Securities and
the payment of the principal, premium and interest, if any, on the Subordinated
Securities is subordinated and subject in right, to the extent and in the
manner provided in this Article, to the prior payment in full of all Senior
Indebtedness.

                 "Senior Indebtedness" means the principal of and premium, if
any, and interest on the following, whether outstanding on the date hereof or
thereafter incurred, created or assumed:  (i) indebtedness of the Issuer for    
money borrowed by the Issuer (including purchase money obligations or evidenced
by debentures (other than the Subordinated Securities), notes, bankers'
acceptances or other corporate debt securities, or similar instruments issued
by the Issuer); (ii) all capital lease obligations of Consumers; (iii) all
obligations of Consumers issued or assumed as the deferred purchase price of
property, all conditional sale obligations of Consumers and all obligations of
Consumers under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) obligations with
respect to letters of credit; (v) all indebtedness of others of the type
referred to in the preceding clauses (i) through (iv) assumed by or guaranteed
in any manner by the Issuer or in effect guaranteed by the Issuer; (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of Consumers (whether or
not such obligation is assumed by Consumers), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Subordinated Notes, as the case may be, including all other debt securities,
issued to any other trusts, partnerships or other entities affiliated with
Consumers which act as a financing vehicle of Consumers in connection with the
issuance of preferred securities by such entity or other securities which rank
pari passu with, or junior to, the Preferred Securities, and (2) any
indebtedness between or among Consumers and its affiliates and/or (vii)
renewals, extensions or refundings of any of the indebtedness referred to in
the preceding clauses unless, in the case of any particular indebtedness,
renewal, extension or refunding, under the express provisions of the instrument
creating or evidencing the same or the assumption or guarantee of the same, or
pursuant to which the same is outstanding such indebtedness or such renewal,
extension or refunding thereof is not superior in right of payment to the
Subordinated Securities.





                                     -69-
<PAGE>   79
                 This Article shall constitute a continuing obligation to all
Persons who, in reliance upon such provisions become holders of, or continue to
hold, Senior Indebtedness, and such provisions are made for the benefit of the
holders of Senior Indebtedness, and such holders are made obligees hereunder
and they and/or each of them may enforce such provisions.

                 Section 12.2  Issuer Not to Make Payments with Respect to
Subordinated Securities in Certain Circumstances.  (a) Upon the maturity of any
Senior Indebtedness by lapse of time, acceleration or otherwise, all principal
thereof, premium thereon and interest thereon shall first be paid in full, or
such payment duly provided for in cash in a manner satisfactory to the holders
of such Senior Indebtedness, before any payment is made on account of the
principal of or premium or interest on Subordinated Securities or to acquire
any Subordinated Securities or on account of any sinking fund provisions of any
Subordinated Securities (except payments made in capital stock of the Issuer or
in warrants, rights or options to purchase or acquire capital stock of the
Issuer, sinking fund payments made in Subordinated Securities acquired by the
Issuer before the maturity of such Senior Indebtedness, and payments made
through the exchange of other debt obligations of the Issuer for such
Subordinated Securities in accordance with the terms of such Subordinated
Securities, provided that such debt obligations are subordinated to Senior
Indebtedness at least to the extent that the Subordinated Securities for which
they are exchanged are so subordinated pursuant to this Article Twelve).

                 (b)  Upon the happening and during the continuation of any
default in payment of the principal of, premium, if any, or interest on any
Senior Indebtedness when the same becomes due and payable or in the event any
judicial proceeding shall be pending with respect to any such default, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment shall be made by the Issuer with respect to the
principal of or premium or interest on Subordinated Securities or to acquire
any Subordinated Securities or on account of any sinking fund provisions of
Subordinated Securities (except payments made in capital stock of the Issuer or
in warrants, rights, or options to purchase or acquire capital stock of the
Issuer, sinking fund payments made in Subordinated Securities acquired by the
Issuer before such default and notice thereof, and payments made through the
exchange of other debt obligations of the Issuer for such Subordinated
Securities in accordance with the terms of such Subordinated Securities,
provided that such debt obligations are subordinated to Senior Indebtedness at
least to the extent that the Subordinated Securities for which they are
exchanged are so subordinated pursuant to this Article Twelve).

                 (c) In the event that, notwithstanding the provisions of this
Section 12.2, the Issuer shall make any payment to the





                                     -70-
<PAGE>   80
Trustee on account of the principal of or interest on Subordinated Securities,
or on account of any sinking fund provisions of such Securities, after the
maturity of any Senior Indebtedness as described in Section 12.2(a) above or
after the happening of a default in payment of the principal of or interest on
any Senior Indebtedness as described in Section 12.2(b) above, then, unless and
until all Senior Indebtedness which shall have matured, and all premium and
interest thereon, shall have been paid in full (or the declaration of
acceleration thereof shall have been rescinded or annulled), or such default
shall have been cured or waived or shall have ceased to exist, such payment
(subject to the provisions of Sections 12.6 and 12.7) shall be held by the
Trustee, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of such Senior Indebtedness (pro rata as to each of
such holders on the basis of the respective amounts of Senior Indebtedness held
by them) or their representative or the trustee under the indenture or other
agreement (if any) pursuant to which such Senior Indebtedness may have been
issued, as their respective interests may appear, for application to the
payment of all such Senior Indebtedness remaining unpaid to the extent
necessary to pay the same in full in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.  The Issuer shall give prompt written notice to the
Trustee of any default in the payment of principal of or interest on any Senior
Indebtedness.

                 Section 12.3  Subordinated Securities Subordinated to Prior
Payment of All Senior Indebtedness on Dissolution, Liquidation or
Reorganization of Issuer.  Upon any distribution of assets of the Issuer in any
dissolution, winding up, liquidation or reorganization of the Issuer (whether
voluntary or involuntary, in bankruptcy, insolvency or receivership proceedings
or upon an assignment for the benefit of creditors or otherwise):

                 (a)  the holders of all Senior Indebtedness shall first be
         entitled to receive payments in full of the principal thereof and
         premium and interest due thereon, or provision shall be made for such
         payment, before the Holders of Subordinated Securities are entitled to
         receive any payment on account of the principal of or premium or
         interest on such Securities;

                 (b)  any payment or distribution of assets of the Issuer of
         any kind or character, whether in cash, property or securities (other
         than securities of the Issuer as reorganized or readjusted or
         securities of the Issuer or any other corporation provided for by a
         plan or reorganization or readjustment the payment of which is
         subordinate, at least to the extent provided in this Article Twelve
         with respect to Subordinated





                                     -71-
<PAGE>   81
         Securities, to the payment in full without diminution or modification
         by such plan of all Senior Indebtedness), to which the Holders of
         Subordinated Securities or the Trustee on behalf of the Holders of
         Subordinated Securities would be entitled except for the provisions of
         this Article Twelve shall be paid or delivered by the liquidating
         trustee or agent or other person making such payment or distribution
         directly to the holders of Senior Indebtedness or their
         representative, or to the trustee under any indenture under which
         Senior Indebtedness may have been issued (pro rata as to each such
         holder, representative or trustee on the basis of the respective
         amounts of unpaid Senior Indebtedness held or represented by each), to
         the extent necessary to make payment in full of all Senior
         Indebtedness remaining unpaid, after giving effect to any concurrent
         payment or distribution or provision thereof to the holders of such
         Senior Indebtedness; and

                 (c) in the event that notwithstanding the foregoing provisions
         of this Section 12.3, any payment or distribution of assets of the
         Issuer of any kind or character, whether in cash, property or
         securities (other than securities of the Issuer as reorganized or
         readjusted or securities of the Issuer or any other corporation
         provided for by a plan of reorganization or readjustment the payment
         of which is subordinate, at least to the extent provided in this
         Article Twelve with respect to Subordinated Securities, to the payment
         in full without diminution or modification by such plan of all Senior
         Indebtedness), shall be received by the Trustee or the Holders of the
         Subordinated Securities on account of principal of or premium or
         interest on the Subordinated Securities before all Senior Indebtedness
         is paid in full, or effective provision made for its payment, such
         payment or distribution (subject to the provisions of Section 12.6 and
         12.7) shall be received and held in trust for and shall be paid over
         to the holders of the Senior Indebtedness remaining unpaid or
         unprovided for or their representative, or to the trustee under any
         indenture under which such Senior Indebtedness may have been issued
         (pro rata as provided in subsection (b) above), for application to the
         payment of such Senior Indebtedness until all such Senior Indebtedness
         shall have been paid in full, after giving effect to any concurrent
         payment or distribution or provision therefor to the holders of such
         Senior Indebtedness.

                 The Issuer shall give prompt written notice to the Trustee of
any dissolution, winding up, liquidation or reorganization of the Issuer.





                                     -72-
<PAGE>   82
                 The consolidation of the Issuer with, or the merger of the
Issuer into, another corporation or the liquidation or dissolution of the
Issuer following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article Nine hereof shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 12.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated such in
Article Nine.

                 Section 12.4  Holders of Subordinated Securities to be
Subrogated to Right of Holders of Senior Indebtedness.  Subject to the payment
in full of all Senior Indebtedness, the Holders of Subordinated Securities
shall be subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Issuer applicable to the
Senior Indebtedness until all amounts owing on Subordinated Securities shall be
paid in full, and for the purposes of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Issuer or by or on behalf of the Holders of Subordinated Securities by virtue
of this Article Twelve which otherwise would have been made to the Holders of
Subordinated Securities shall, as between the Issuer, its creditors other than
holders of Senior Indebtedness and the Holders of Subordinated Securities, be
deemed to be payment by the Issuer to or on account of the Senior Indebtedness,
it being understood that the provisions of this Article Twelve are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Subordinated Securities, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.

                 Section 12.5  Obligation of the Issuer Unconditional.  Nothing
contained in this Article Twelve or elsewhere in this Indenture or in any
Subordinated Security is intended to or shall impair, as among the Issuer, its
creditors other than holders of Senior Indebtedness and the Holders of
Subordinated Securities, the obligation of the Issuer, which is absolute and
unconditional, to pay to the Holders of Subordinated Securities the principal
of and premium (if any) interest on Subordinated Securities as and when the
same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders of Subordinated
Securities and creditors of the Issuer other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
Holder of any Subordinated Security from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Twelve of the holders of Senior Indebtedness
in respect of cash, property or securities of the Issuer received upon the
exercise of any such remedy.  Upon any payment or distribution of assets of the
Issuer referred to in this Article Twelve, the Trustee and Holders of
Subordinated Securities shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or, subject to the
provisions of Section 6.1 and 6.2, a certificate of the receiver, trustee in
bankruptcy, liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or the Holders of  Subordinated Securities, for the
purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Issuer, the amount thereof or payable





                                     -73-
<PAGE>   83
thereon, the amount or amounts paid or distributed therein and all other facts
pertinent thereto or to this Article Twelve.

                 Nothing contained in this Article Twelve or elsewhere in this
Indenture or in any Subordinated Security is intended to or shall affect the
obligation of the Issuer to make, or prevent the Issuer from making, at any
time except during the pendency of any dissolution, winding up, liquidation or
reorganization proceeding, and, except as provided in subsections (a) and (b)
of Section 12.2, payments at any time of the principal of, premium, if any, or
interest on Subordinated Securities.

                 Section 12.6  Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice.  The Issuer shall give prompt written notice
to the Trustee of any fact known to the Issuer which would prohibit the making
of any payment or distribution to or by the Trustee in respect of the
Subordinated Securities.  Notwithstanding the provisions of this Article Twelve
or any provision of this Indenture, the Trustee shall not at any time be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment or distribution to or by the Trustee, unless at least two
Business Days prior to the making of any such payment, the Trustee shall have
received written notice thereof from the Issuer or from one or more holders of
Senior Indebtedness or from any representative thereof or from any trustee
therefor, together with proof satisfactory to the Trustee of such holding of
Senior Indebtedness or of the authority of such representative or trustee; and,
prior to the receipt of any such written notice, the Trustee, subject to the
provisions of Sections 6.1 and 6.2, shall be entitled to assume conclusively
that no such facts exist.  The Trustee shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness (or a representative or trustee on behalf of the
holder) to establish that such notice has been given by a holder of Senior
Indebtedness (or a representative of or trustee on behalf of any such holder).
In the event that the Trustee determines, in good faith, that further evidence
is required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payments or distribution pursuant of this
Article Twelve, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, as to the extent to which such Person is entitled to
participate in such payment or distribution, and as to other facts pertinent to
the rights of such Person under this Article Twelve, and if such evidence is
not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and nothing in this Article Twelve shall apply
to





                                     -74-
<PAGE>   84
claims of, or payments to, the Trustee under or pursuant to Section 6.6.

                 Section 12.7  Application by Trustee of Monies or Government
Obligations Deposited with It.  Money or Government obligations deposited in
trust with the Trustee pursuant to and in accordance with Section 10.1 shall be
for the sole benefit of Securityholders and, to the extent allocated for the
payment of Subordinated Securities, shall not be subject to the subordination
provisions of this Article Twelve, if the same are deposited in trust prior to
the happening of any event specified in Section 12.2.  Otherwise, any deposit
of monies or Government Obligations by the Issuer with the Trustee or any
paying agent (whether or not in trust) for the payment of the principal of,
premium, if any, or interest on any Subordinated Securities shall be subject to
the provisions of Section 12.1, 12.2 and 12.3 except that, if prior to the date
on which by the terms of this Indenture any such monies may become payable for
any purposes (including, without limitation, the payment of the principal of,
premium, if any, or the interest, if any, on any Subordinated Security) the
Trustee shall not have received with respect to such monies the notice provided
for in Section 12.6, then the Trustee or the paying agent shall have full power
and authority to receive such monies and Government Obligations and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such
date.  This Section 12.7 shall be construed solely for the benefit of the
Trustee and paying agent and, as to the first sentence hereof, the
Securityholders, and shall not otherwise effect the rights of holders of Senior
Indebtedness.


                 Section 12.8  Subordination Rights Not Impaired by Acts or
Omissions of Issuer or Holders of Senior Indebtedness.  No rights of any
present or future holders of any Senior Indebtedness to enforce subordination
as provided herein shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Issuer or by any act or failure to
act, in good faith, by any such holders or by any noncompliance by the Issuer
with the terms of this Indenture, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with.

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

                 Section 12.9  Securityholders Authorize Trustee to





                                     -75-
<PAGE>   85
Effectuate Subordination of Securities.  Each Holder of Subordinated Securities
by his acceptance thereof authorizes and expressly directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article Twelve and appoints the Trustee his
attorney-in-fact for such purpose, including in the event of any dissolution,
winding up, liquidation or reorganization of the Issuer (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise) the immediate filing of a claim for the unpaid balance
of his Subordinated Securities in the form required in said proceedings and
causing said claim to be approved.  If the Trustee does not file a proper claim
or proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then the
holders of Senior Indebtedness have the right to file and are hereby authorized
to file an appropriate claim for and on behalf of the Holders of said
Securities.

                 Section 12.10  Right of Trustee to Hold Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all of the rights
set forth in this Article Twelve in respect of any Senior Indebtedness at any
time held by it to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall be construed to deprive the Trustee of any
of its rights as such holder.

                 With respect to the holders of Senior Indebtedness of the
Issuer, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article Twelve,
and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee.  The
Trustee shall not be deemed to owe any fiduciary duty to the holders of such
Senior Indebtedness and, subject to the provisions of Sections 12.2 and 12.3,
the Trustee shall not be liable to any holder of such Senior Indebtedness if it
shall pay over or deliver to Holders of Subordinated Securities, the Issuer or
any other Person money or assets to which any holder of such Senior
Indebtedness shall be entitled by virtue of this Article Twelve or otherwise.

                 Section 12.11  Article Twelve Not to Prevent Events of
Defaults.  The failure to make a payment on account of principal, premium, if
any, or interest by reason of any provision in this Article Twelve shall not be
construed as preventing the occurrence of an Event of Default under Section
5.1.



                                ARTICLE THIRTEEN

                            MISCELLANEOUS PROVISIONS


                 Section 13.1  Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability.  No recourse under or
upon any obligation, covenant or agreement contained in this Indenture or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such, or against any past, present or future
stockholder, officer or director, as such, of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities





                                     -76-
<PAGE>   86
appertaining thereto by the Holders thereof and as part of the consideration
for the issue of the Securities appertaining thereto.

                 Section 13.2  Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities.  Nothing in this Indenture, in the
Securities expressed or implied, shall give or be construed to give to any
Person other than the parties hereto and their successors and the Holders of
the Securities, any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the Holders of the Securities.

                 Section 13.3  Successors and Assigns of Issuer Bound by
Indenture.  All the covenants, stipulations, promises and agreements in this
Indenture made by or on behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.

                 Section 13.4  Notices and Demands on Issuer, Trustee and
Holders of Securities.  Any notice, direction, request or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by any Holder of Securities of any series or upon the Issuer
shall be deemed to have been sufficiently given or served by being deposited
postage prepaid in the United States mail, first-class mail (except as
otherwise specifically provided herein), addressed (until another address of
the Issuer is filed by the Issuer with the Trustee) to Consumers Power Company,
212 West Michigan Avenue, Jackson, Michigan 49201, Attention: Secretary.  Any
notice, direction, request or demand by the Issuer or any Holder of Securities
of any series or upon the Trustee shall be deemed to have been sufficiently
given or served by being deposited postage prepaid in the United States mail,
first-class mail (except as otherwise specifically provided herein), addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to The Bank of New York, 101 Barclay New York, New York 10286. Any notice 
required or permitted to be given or served by the Issuer or by the Trustee to
or upon any Holders of Securities of any series shall be deemed to have been 
sufficiently given or served by being deposited in the United States mail, 
first-class mail (except as otherwise specifically provided herein), addressed
at their addresses as they shall appear on the Security Register.

                 In any case where notice to the Holders of Securities is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.  Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to





                                     -77-
<PAGE>   87
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.

                 In case, by reason of the suspension of or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail notice when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
reasonably satisfactory to the Trustee shall be deemed to be a sufficient
giving of such notice.

                 Section 13.5  Officers' Certificates and Opinions of Counsel;
Statements to be Contained Therein.  Except as otherwise expressly provided by
this Indenture, upon any application or demand by the Issuer to the Trustee to
take any action under any of the provisions of this Indenture, the Issuer shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.

                 Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture (other than certificates provided
pursuant to Section 4.3(d) or Section 11.5) shall include (a) a statement that
the individual signing such certificate or opinion has read such covenant or
condition and the definitions herein relating thereto, (b) a brief statement as
to the nature and scope of the examination or investigation upon which the
statements or opinions contained in such certificate or opinion are based, (c)
a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
individual, such condition or covenant has been complied with.

                 Any certificate, statement or opinion of an officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of or representations by counsel, unless such officer knows that the
certificate or opinion of or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are





                                     -78-
<PAGE>   88
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.  Any such certificate, statement or Opinion of Counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer, upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer, unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.

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

                 Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.

                 Section 13.6  Payments Due on Saturdays, Sundays and Holidays.
If the date of maturity of interest on or principal of the Securities of any
series or the date fixed for redemption or repayment of any such Security shall
not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of such interest or principal need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the date of maturity or the date fixed
for redemption or repayment, and no interest shall accrue for the period from
and after such date except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.

                 Section 13.7  Conflict of any Provision of Indenture with
Trust Indenture Act of 1939.  If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with any provision set forth in
Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, that impose
duties on any person, such provision of the Trust Indenture Act of 1939 shall
control.

                 Section 13.8  Governing Law. This Indenture and each
Security shall be governed by and deemed to be a contract under, and construed
in accordance with, the laws of the





                                     -79-
<PAGE>   89
State of Michigan, and for all purposes shall be construed in accordance with
the laws of such State, except as may otherwise be required by mandatory
provisions of law, provided, however, that the rights, duties and obligations
of the Trustee are governed and construed in accordance with the laws of the 
State of New York.

                 Section 13.9  Counterparts.  This Indenture may be executed in
any number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.

                 Section 13.10  Effect of Headings and Table of Contents.  The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

                 Section 13.11  Separability Clause.  In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.





                                     -80-
<PAGE>   90
                 IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of ___________, 1995.


                                         Consumers Power Company
                                      
                                      
                                         By                            
                                           ----------------------------
                                           Title:
                                      


[CORPORATE SEAL]

Attest:


By                      
  ----------------------
  Title:



                                         THE BANK OF NEW YORK,TRUSTEE



                                         By                            
                                           ----------------------------
                                           Title:

[CORPORATE SEAL]

Attest:


By                          
  --------------------------
  Title:





                                     -81-

<PAGE>   1





                                                                   EXHIBIT (4)-4


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


                          FIRST SUPPLEMENTAL INDENTURE

                                    between

                            CONSUMERS POWER COMPANY

                                      and

                              THE BANK OF NEW YORK

                        Dated as of  __________, 1995


                      ====================================
<PAGE>   2
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                             Page
                                                                                             ----
<S>                 <C>                                                                       <C>
                                                        ARTICLE I.
                                                       DEFINITIONS

SECTION 1.1.        Definition of Terms   . . . . . . . . . . . . . . . . . . . . . . . . .    1

                                                       ARTICLE II.
                                        GENERAL TERMS AND CONDITIONS OF THE NOTES

SECTION 2.1.        Designation and Principal Amount  . . . . . . . . . . . . . . . . . . .    3
SECTION 2.2.        Maturity  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
SECTION 2.3.        Form and Payment  . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
SECTION 2.4.        Global Note   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
SECTION 2.5.        Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5

                                                       ARTICLE III.
                                                 REDEMPTION OF THE NOTES

SECTION 3.1.        Special Event Redemption  . . . . . . . . . . . . . . . . . . . . . . .    5
SECTION 3.2.        Optional Redemption by Issuer . . . . . . . . . . . . . . . . . . . . .    6
SECTION 3.3.        No Sinking Fund   . . . . . . . . . . . . . . . . . . . . . . . . . . .    6

                                                       ARTICLE IV.
                                           EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 4.1.        Extension of Interest Payment Period  . . . . . . . . . . . . . . . . .    7
SECTION 4.2.        Notice of Extension   . . . . . . . . . . . . . . . . . . . . . . . . .    7

                                                        ARTICLE V.
                                                         EXPENSES

SECTION 5.1.        Payment of Expenses   . . . . . . . . . . . . . . . . . . . . . . . . .    8
SECTION 5.2.        Payment Upon Resignation or Removal   . . . . . . . . . . . . . . . . .    8

                                                       ARTICLE VI.
                                                      SUBORDINATION

SECTION 6.1.        Agreement to Subordinate  . . . . . . . . . . . . . . . . . . . . . . .    9
</TABLE>





                                       i
<PAGE>   3
<TABLE>
<S>                 <C>                                                                       <C>
                                                       ARTICLE VII.
                                               COVENANT TO LIST ON EXCHANGE

SECTION 7.1.        Listing on an Exchange  . . . . . . . . . . . . . . . . . . . . . . . .   13

                                                      ARTICLE VIII.
                                                      FORM OF NOTES

SECTION 8.1.        Form of Note  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13

                                                       ARTICLE IX.
                                                 ORIGINAL ISSUE OF NOTES

SECTION 9.1.        Original Issue of Notes   . . . . . . . . . . . . . . . . . . . . . . .   18

                                                        ARTICLE X.
                                                      MISCELLANEOUS

SECTION 10.1        Ratification of Indenture   . . . . . . . . . . . . . . . . . . . . . .   18
SECTION 10.2.       Trustee Not Responsible for Recitals  . . . . . . . . . . . . . . . . .   18
SECTION 10.3.       Governing Law   . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
SECTION 10.4.       Separability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
SECTION 10.5.       Counterparts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
</TABLE>





                                       ii
<PAGE>   4
           FIRST SUPPLEMENTAL INDENTURE, dated as of ____________, 1995 (the
"First Supplemental Indenture"), between Consumers Power Company, a Michigan
Corporation (the "Issuer"), and The Bank of New York, as trustee (the
"Trustee") under the Indenture dated as of ______________, 1995 between the
Issuer and the Trustee (the "Indenture").

           WHEREAS, the Issuer executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Issuer's Securities to be
issued from time to time in one or more series as might be determined by the
Issuer under the Indenture, in an unlimited aggregate principal amount which
may be authenticated and delivered as provided in the Indenture;

           WHEREAS, Section 2.3 of the Indenture permits the terms of any
series of Securities to be established in an indenture supplemental to the
Indenture;

           WHEREAS, Section 8.1(e) of the Indenture provides that a
supplemental indenture may be entered into by the Issuer and the Trustee
without the consent of any Holders of the Securities to establish the form and
terms of the Securities of any series;

           WHEREAS, pursuant to the terms of the Indenture, the Issuer desires
to provide for the establishment of a new series of its Securities to be known
as its ___% Subordinated Deferrable Interest Notes due 2035 (the "Notes"), the
form and substance of such Notes and the terms, provisions and conditions
thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture;

           WHEREAS, Consumers Power Company Financing I, a Delaware statutory
business trust (the "Trust"), has offered to the public $100 million aggregate
liquidation amount of its ___% Trust Originated Preferred Securities (the
"Preferred Securities"), representing undivided beneficial interests in the
assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Issuer
of $3,092,784  aggregate liquidation amount of its __ % Trust Originated Common
Securities, in $103,092,784 aggregate principal amount of the Notes; and

           WHEREAS, the Issuer has requested that the Trustee execute and
deliver this First Supplemental Indenture and all requirements necessary to
make this First Supplemental Indenture a valid instrument in accordance with
its terms, and to make the Notes, when executed by the Issuer and authenticated
and delivered by the Trustee, the valid obligations of the Issuer, have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects.

           NOW THEREFORE, in consideration of the purchase and acceptance of
the Notes by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Notes and the terms,
provisions and conditions thereof, the Issuer covenants and agrees with the
Trustee as follows:


                                   ARTICLE I.
                                  DEFINITIONS

SECTION 1.1.     Definition of Terms.

           Unless the context otherwise requires:
<PAGE>   5
           (a)   a term defined in the Indenture has the same meaning when used
in this First Supplemental Indenture;

           (b)   a term defined anywhere in this First Supplemental Indenture
has the same meaning throughout;

           (c)   the singular includes the plural and vice versa;

           (d)   a reference to a Section or Article is to a Section or Article
of this First Supplemental Indenture;

           (e)   headings are for convenience of reference only and do not
affect interpretation;

           (f)   the following terms have the meanings given to them in the
Declaration:  (i) Clearing Agency; (ii) Delaware Trustee; (iii) Redemption Tax
Opinion; (iv) No Recognition Opinion; (v) Preferred Security Certificate; (vi)
Property Trustee; (vii) Regular Trustees; (viii) Special Event (ix) Tax Event;
(x) Underwriting Agreement; (xi) Investment Company Event; and 
(xii) Distribution;

           (g)   the following terms have the meanings given to them in this
Section 1.1(g):

           "Additional Interest" shall have the meaning set forth in Section
2.5.

           "Compounded Interest" shall have the meaning set forth in Section
4.1.

           "Coupon Rate" shall have the meaning set forth in Section 2.5.

           "Declaration" means the Amended and Restated Declaration of Trust of
Consumers Power Company Financing I, a Delaware statutory business trust, dated
as of ____________, 1995.

           "Deferred Interest" shall have the meaning set forth in Section 4.1.

           "Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance
with the Declaration, and the Notes held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Declaration.

           "Extended Interest Payment Period" shall have the meaning set forth
in Section 4.1.

           "Global Note" shall have the meaning set forth in Section 2.4.

           "Non Book-Entry Preferred Securities" shall have the meaning set
forth in Section 2.4.

           "Optional Redemption Price" shall have the meaning set forth in
Section 3.2.





                                       2
<PAGE>   6
                                  ARTICLE II.
                   GENERAL TERMS AND CONDITIONS OF THE NOTES

SECTION 2.1.     Designation and Principal Amount.

           There is hereby authorized and established a series of unsecured
Securities designated the "___% Subordinated Deferrable Interest Notes due
2035", limited in aggregate principal amount to $103,092,784, (except as
contemplated in Section 2(f)(2) of the Indenture).

SECTION 2.2.     Maturity.

           The Maturity Date of the notes is          , 2035.

SECTION 2.3.     Form and Payment.

           The Notes shall be issued in fully registered form without interest
coupons.  Principal and interest on the Notes issued in certificated form will
be payable, the transfer of such Notes will be registrable and such Notes will
be exchangeable for Notes bearing identical terms and provisions, at the office
or agency of the Trustee in the Borough of Manhattan, the City of New York;
provided, however, that payment of interest may be made at the option of the
Issuer by check mailed to the Holder at such address as shall appear in the
Security Register or by wire transfer to an account maintained by the Holder.
Notwithstanding the foregoing, so long as the Holder of any Notes is the
Property Trustee, the payment of the principal of and interest (including
Compounded Interest and Additional Interest, if any) on such Notes held by the
Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.

SECTION 2.4.     Global Note.

           (a)  In connection with a Dissolution Event,

                 (i)      the Notes may be presented to the Trustee by the
      Property Trustee in exchange for a global Note in an aggregate principal
      amount equal to the aggregate principal amount of all outstanding Notes
      (a "Global Note"), to be registered in the name of the Clearing Agency,
      or its nominee, and delivered by the Trustee to the Clearing Agency for
      crediting to the accounts of its participants pursuant to the
      instructions of the Regular Trustees and the Clearing Agency will act as
      Depository for the Notes.  The Issuer upon any such presentation, shall
      execute a Global Note in such aggregate principal amount and deliver the
      same to the Trustee for authentication and delivery in accordance with
      the Indenture and this First Supplemental Indenture.  Payments on the
      Notes issued as a Global Note will be made to the Depository; and

                 (ii)     if any Preferred Securities are held in non
      book-entry certificated form, the Notes may be presented to the Trustee
      by the Property Trustee and any Preferred Security Certificate which
      represents Preferred Securities other than Preferred Securities held by
      the Clearing Agency or its nominee ("Non Book-Entry Preferred
      Securities") will be deemed to represent beneficial interests in Notes
      presented to the Trustee by the Property Trustee having an aggregate
      principal amount equal to the aggregate liquidation amount of the Non
      Book-Entry Preferred Securities until such Preferred Security
      Certificates are presented to the Security Registrar for transfer or
      reissuance at which time such Preferred Security Certificates will be
      cancelled and a Note, registered in the name of the holder of the
      Preferred Security Certificate or the transferee of the holder of such
      Preferred Security





                                       3
<PAGE>   7
      Certificate, as the case may be, with an aggregate principal amount equal
      to the aggregate liquidation amount of the Preferred Security Certificate
      cancelled, will be executed by the Issuer and delivered to the Trustee
      for authentication and delivery in accordance with the Indenture and this
      First Supplemental Indenture.

           (b)   Except as provided in (c) below, a Global Note may be
transferred, in whole but not in part, only to another nominee of the
Depository, or to a successor Depository selected or approved by the Issuer or
to a nominee of such successor Depository.

           (c)   If at any time the Depository notifies the Issuer that it is
unwilling or unable to continue as Depository or if at any time the Depository
for such series shall no longer be registered or in good standing under the
Securities Exchange Act of 1934, as amended, or other applicable statute or
regulation, and a successor Depository for such series is not appointed by the
Issuer within 90 days after the Issuer receives such notice or becomes aware of
such condition, as the case may be, the Issuer will execute, and, subject to
Section 2.8 of the Indenture, the Trustee, upon written notice from the Issuer,
will authenticate and deliver the Notes in definitive registered form, in
authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global Note.  In
addition, the Issuer may at any time determine that the Notes shall no longer
be represented by a Global Note.  In such event the Issuer will execute, and
subject to Section 2.8 of the Indenture, the Trustee, upon receipt of an
Officers' Certificate evidencing such determination by the Issuer, will
authenticate and deliver the Notes in definitive registered form, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Note in exchange for such Global Note.  Upon the exchange
of the Global Note for such Notes in definitive registered form, in authorized
denominations, the Global Note shall be cancelled by the Trustee.  Such Notes
in definitive registered form issued in exchange for the Global Note shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Trustee.  The Trustee shall deliver such Notes
to the Depository for delivery to the Persons in whose names such Notes are so
registered.

SECTION 2.5.     Interest.

           (a)   Each Note will bear interest at the rate of ___% per annum
(the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest, at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on
December 31, March 31, June 30 and September 30 of each year (each, an
"Interest Payment Date," commencing on December 31, 1995), to the Person in
whose name such Note or any predecessor Note is registered, at the close of
business on the regular record date for such interest installment, which, in
respect of any Notes of which the Property Trustee is the Holder of a Global
Note, shall be the close of business on the Business Day next preceding that
Interest Payment Date.  Notwithstanding the foregoing sentence, if the
Preferred Securities are no longer in book-entry only form or, except if the
Notes are held by the Property Trustee, the Notes are not represented by a
Global Note, the regular record date for such interest installment shall be the
fifteenth day of the month in which the applicable Interest Payment Date
occurs.

           (b)   The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months.  Except as provided in
the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed
on the basis of the actual number of days elapsed in such a 90-day period.  In
the event that any date on which





                                       4
<PAGE>   8
interest is payable on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.

           (c)   If, at any time while the Property Trustee is the Holder of
any Notes, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Issuer will pay as additional interest ("Additional
Interest") on the Notes held by the Property Trustee, such additional amounts
as shall be required so that the net amounts received and retained by the Trust
and the Property Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the Property
Trustee would have received had no such taxes, duties, assessments or other
governmental charges been imposed.


                                  ARTICLE III.
                            REDEMPTION OF THE NOTES

SECTION 3.1.     Special Event Redemption.

           If (a) a Tax Event has occurred and is continuing and (i) the Issuer
has received a Redemption Tax Opinion, or (ii) the Regular Trustees shall have
been informed by tax counsel that a No Recognition Opinion cannot be delivered 
to the Trust; or (b) an Investment Company Event has occurred and is 
continuing, then, notwithstanding Section 3.2(a) but subject to Section 3.2(b)
and Article Eleven of the Indenture, the Issuer shall have the right upon not
less than 30 days' nor more than 60 days notice to the Holders of the Notes to
redeem the Notes, in whole or in part, for cash within 90 days following the
occurrence of such Tax Event (the "90 Day Period") at a redemption price equal
to 100% of the principal amount to be redeemed plus any accrued and unpaid
interest thereon to the date of such redemption (the "Redemption Price"),
provided that if at the time there is available to the Issuer or the Trust the
opportunity to eliminate, within the 90 Day Period, the Tax Event by taking
some ministerial action ("Ministerial Action"), such as filing a form or making
an election, or pursuing some other similar reasonable measure which has no
adverse effect on the Issuer, the Trust or the Holders of the Trust Securities
issued by the Trust, the Issuer shall pursue such Ministerial Action in lieu of
redemption, and, provided, further, that the Issuer shall have no right to
redeem the Notes while the Trust is pursuing any Ministerial Action pursuant to
its obligations under the Declaration.  The Redemption Price shall be paid
prior to 12:00 noon, New York time, on the date of such redemption or such
earlier time as the Issuer determines, and the Issuer shall deposit with the
Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New
York time, on the date such Redemption Price is to be paid.

SECTION 3.2.     Optional Redemption by Issuer.

           (a)   Subject to the provisions of Section 3.2(b) and to the
provisions of Article Eleven of the Indenture, the Issuer shall have the right 
to redeem the Notes, in whole or in part, from time to time, on or after
December 31, 2000, at a redemption price equal to 100% of the principal amount
to be redeemed plus any accrued and unpaid interest thereon to the date of such
redemption (the "Optional Redemption Price").  Any redemption pursuant





                                       5
<PAGE>   9
to this paragraph will be made upon not less than 30 days nor more than 60
days' notice to the Holder of the Notes, at the Optional Redemption Price.  If
the Notes are only partially redeemed pursuant to this Section 3.2, the Notes
will be redeemed on a pro rata basis providing that if at the time of
redemption the Notes are registered as a Global Note, the Depository shall
determine, in accordance with its procedures, the principal amount of such
Notes held by each Holder of Notes to be redeemed.  The Optional Redemption 
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or at such earlier time as the Issuer determines and the
Issuer shall deposit with the Trustee an amount sufficient to pay the Optional
Redemption Price by 10:00 a.m., New York time, on the date such Optional
Redemption Price is to be paid.

           (b)   If a partial redemption of the Notes would result in the
delisting of the Preferred Securities from any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Issuer shall not be permitted to effect such partial redemption and may only
redeem the Notes in whole.

SECTION 3.3.     No Sinking Fund.

           The Notes are not entitled to the benefit of any sinking fund.


                                  ARTICLE IV.
                      EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 4.1.     Extension of Interest Payment Period.

           The Issuer shall have the right, at any time and from time to time
during the term of the Notes, to defer payments of interest by extending the
interest payment period of such Notes for a period not exceeding 20 consecutive
quarters (the "Extended Interest Payment Period"), during which Extended
Interest Payment Period no interest shall be due and payable; provided that no
Extended Interest Payment Period may extend beyond the Maturity Date.  To the
extent permitted by applicable law, interest, the payment of which has been
deferred because of the extension of the interest payment period pursuant to
this Section 4.1, will bear interest thereon at the Coupon Rate compounded
quarterly for each quarter of the Extended Interest Payment Period ("Compounded
Interest").  At the end of the Extended Interest Payment Period, the Issuer
shall pay all interest accrued and unpaid on the Notes, including any
Additional Interest and Compounded Interest (together, "Deferred Interest")
that shall be payable to the Holders of the Notes in whose names the Notes are
registered in the Security Register on the first record date after the end of
the Extended Interest Payment Period.  Prior to the termination of any Extended
Interest Payment Period, the Issuer may further extend such period, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters.  Upon the termination of any Extended Interest
Payment Period and upon the payment of all Deferred Interest then due, the
Issuer may commence a new Extended Interest Payment Period, subject to the
foregoing requirements.  No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof, but the Issuer may
prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.

           The limitations set forth in Section 3.5 of the Indenture shall
apply during any Extended Interest Payment Period.

SECTION 4.2.     Notice of Extension.

           (a)   If the Property Trustee is the only registered Holder of the
Notes at the time the Issuer elects an Extended Interest Payment Period, the
Issuer shall give written notice to the Regular Trustees, the Property Trustee
and the Trustee of its election of such Extended Interest Payment Period one
Business





                                       6
<PAGE>   10
Day before the earlier of (i) the next succeeding date on which Distributions
on the Trust Securities issued by the Trust are payable, or (ii) the date the
Trust is required to give notice of the record date, or the date such
Distributions are payable, to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities, but in
any event at least one Business Day before such record date.

           (b)   If the Property Trustee is not the only Holder of the Notes at
the time the Issuer elects an Extended Interest Payment Period, the Issuer
shall give the Holders of the Notes and the Trustee written notice of its
election of such Extended Interest Payment Period ten Business Days before the
earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the
Issuer is required to give notice of the record or payment date of such
interest payment to the New York Stock Exchange or other applicable
self-regulatory organization or to Holders of the Notes.

           (c)   The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period permitted
under Section 4.1.


                                   ARTICLE V.
                                    EXPENSES

SECTION 5.1.     Payment of Expenses.

           In connection with the offering, sale and issuance of the Notes to
the Property Trustee and in connection with the sale of the Trust Securities by
the Trust, the Issuer, in its capacity as borrower with respect to the Notes,
shall:

           (a)   pay all costs and expenses relating to the offering, sale and
issuance of the Notes, including commissions to the underwriters payable
pursuant to the Underwriting Agreement and the Pricing Agreement compensation
of the Trustee under the Indenture in accordance with the provisions of
Section 6.6 of the Indenture;

           (b)   pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities (including commissions to
the underwriters in connection therewith), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets);

           (c)   be primarily liable for any indemnification obligations
arising with respect to the Declaration; and

           (d)   pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.





                                       7
<PAGE>   11
SECTION 5.2.     Payment Upon Resignation or Removal.

           Upon termination of this First Supplemental Indenture or the
Indenture or the removal or resignation of the Trustee pursuant to Section 6.10
of the Indenture, the Issuer shall pay to the Trustee all amounts accrued to
the date of such termination, removal or resignation.  Upon termination of the
Declaration or the removal or resignation of the Delaware Trustee or the
Property Trustee, as the case may be, pursuant to Section 5.6 of the
Declaration, the Issuer shall pay to the Delaware Trustee or the Property
Trustee, as the case may be, all amounts accrued to the date of such
termination, removal or resignation.


                                  ARTICLE VI.
                                 SUBORDINATION

SECTION 6.1.     Agreement to Subordinate.

           The Issuer covenants and agrees, and each Holder of Notes issued
hereunder, by such Holder's acceptance thereof likewise covenants and agrees,
that pursuant to Section 2.3(f)(11) of the Indenture all Notes shall be issued
as Subordinated Securities subject to the provisions of Article Twelve of the
Indenture and this Article VI; and each Holder of a Note by its acceptance
thereof, accepts and agrees to be bound by such provisions.


                                  ARTICLE VII.
                          COVENANT TO LIST ON EXCHANGE

SECTION 7.1.     Listing on an Exchange.

           In connection with the distribution of the Notes to the holders of
the Preferred Securities upon a Dissolution Event, the Issuer will use its best
efforts to list such Notes on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed.


                                 ARTICLE VIII.
                                 FORM OF NOTES

SECTION 8.1.     Form of Note.

           The Notes and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms and the Notes
shall have such additional terms as may be set forth in such form:

                             (FORM OF FACE OF NOTE)

           [IF THE NOTE IS TO BE A GLOBAL NOTES, INSERT - This Note is a Global
Note within the meaning of the Indenture hereinafter referred to and is
registered in the name of a Depository or a nominee of a Depository.  This Note
is exchangeable for Notes registered in the name of a person other than the
Depository or its nominee only in the limited circumstances described in the
Indenture, and no transfer of this Note (other than a transfer of this Note as
a whole by the Depository to a nominee of the Depository





                                       8
<PAGE>   12
or by a nominee of the Depository to the Depository or another nominee of the
Depository) may be registered except in limited circumstances.

           Unless this Note 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 Note
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.]

No.                                                                            $


CUSIP NO.


                            CONSUMERS POWER COMPANY

                  ___% SUBORDINATED DEFERRABLE INTEREST NOTES
                                    DUE 2035

           Consumers Power Company, a Michigan corporation (the "Issuer", which
term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ______________, or
registered assigns, the principal sum of _____________ Dollars ($___________)
on _________, ____, and to pay interest on said principal sum from ___________,
1995, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on December 31,
March 31, June 30 and September 30 of each year commencing ________________,
at the rate of ___% per annum until the principal hereof shall have become due
and payable, and on any overdue principal and premium, if any, and (without
duplication and to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at the same rate
per annum compounded quarterly.  The amount of interest payable on any Interest
Payment Date shall be computed on the basis of a 360-day year of twelve 30-day
months.  In the event that any date on which interest is payable on this Note
is not a Business Day, then payment of interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date.  The interest installment so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Note (or
one or more Predecessor Securities, as defined in said Indenture) is registered
at the close of business on the regular record date for such interest
installment, which shall be the close of business on the business day next
preceding such Interest Payment Date.   [IF PURSUANT TO THE PROVISIONS OF THE
INDENTURE THE NOTES ARE NO LONGER REPRESENTED BY A GLOBAL NOTE -- which shall
be the close of business on the 15th day of the month in which such
Interest Payment Date occurs.]  If and to the extent the Company shall default
in the payment of the interest due on such Interest Payment Date, interest
shall be paid to this Note which is registered at the close of business on a
subsequent record date (which shall not be less than five Business Days prior
to the date of payment of such defaulted interest) established by notice given
by mail by or on behalf of the Company to the Holders of this Note not less
than 15 days preceding such subsequent Record Date.  The principal of (and
premium, if any) and the interest on this Note shall





                                       9
<PAGE>   13
be payable at the office or agency of the Trustee in the Borough of Manhattan,
the City of New York maintained for that purpose in any coin or currency of the
United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that payment of
interest may be made at the option of the Issuer by check mailed to the
registered Holder at such address as shall appear in the Security Register or
by wire transfer to an account maintained by the Holder.  Notwithstanding the
foregoing, so long as the Holder of this Note is the Property Trustee, the
payment of the principal of (and premium, if any) and interest on this Note
will be made at such place and to such account as may be designated by the
Property Trustee.

           The indebtedness evidenced by this Note is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Note is issued subject to
the provisions of the Indenture with respect thereto.  Each Holder of this
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes.  Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Indebtedness, whether now outstanding or hereafter incurred, and
waives reliance by each such holder upon said provisions.

           This 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 provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.

           IN WITNESS WHEREOF, the Issuer has caused this instrument to be
executed.

Dated

                                        Consumers Power Company

                                        By:
                                        Name:
                                        Title


Attest:

By:
Name:
Title:





                                       10
<PAGE>   14
                    (FORM OF CERTIFICATE OF AUTHENTICATION)

                         CERTIFICATE OF AUTHENTICATION

           This is one of the Securities of the series of Securities described
in the within-mentioned Indenture.


- ---------------
as Trustee


By
  Authorized Officer


                          (FORM OF REVERSE OF NOTE)

           This Note is one of a duly authorized series of Securities of the
Issuer (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 _______, 1995, duly executed and delivered between
the Issuer and The Bank of New York, as Trustee (the "Trustee"), as
supplemented by the First Supplemented Indenture dated as of _______, 1995,
between the Issuer and the Trustee (the Indenture as so supplemented, the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Issuer and the Holders of the Notes.  By the terms of the Indenture, the Notes
are issuable in series that may vary as to amount, date of maturity, rate of
interest and in other respects as provided in the Indenture.  This series of
Notes is limited in aggregate principal amount as specified in said First
Supplemental Indenture.

           The Issuer shall have the right to redeem this Note at the option of
the Issuer, without premium or penalty, in whole or in part at any time on or
after ____________, 2000, or at any time in certain circumstances upon the
occurrence of a Special Event, at a redemption price equal to 100% of the
principal amount plus any accrued but unpaid interest, to the date of
such redemption. Any redemption pursuant to this paragraph will be made upon
not less than 30 days nor more than 60 days' notice.  If the Notes are only
partially redeemed by the Issuer pursuant to an Optional Redemption, the Notes
will be redeemed pro rata.

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

           In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the 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 permitting the Issuer and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes and other Indenture securities of each
series affected at the time Outstanding and affected (voting as one class), as
defined in the Indenture, to execute supplemental indentures for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in





                                       11
<PAGE>   15
any manner the rights of the Holders of the Notes; provided, however, that the
Company and the Trustee may not, without the consent of the Holder of each Note
then Outstanding and affected thereby:  (a) change the time of payment of the   
principal (or any installment) of any Note, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon,
or impair the right to institute suit for the enforcement of any payment on any
Note when due or (b) reduce the percentage in principal amount of the Notes,
the consent of whose Holders is required for any such modification or for any
waiver provided for in the Indenture.  The Indenture also contains provisions
providing that prior to the acceleration of the maturity of any Note or other
securities outstanding under the Indenture, the Holders of a majority in
aggregate principal amount of Notes of and other Securities Outstanding under
the Indenture with respect to which a default or/an Event of Default shall have
occurred and be continuing (voting as one class) may on behalf of the Holders
of all such affected Securities (including the Notes) waive any past default
and its consequences, except a default or an Event of Default in respect of a
covenant or provision of the Indenture or of any Note or other Security which
cannot be modified or amended without the consent of the Holder of each Note or
other Security affected.  Any such consent or waiver by the registered Holder
of this Note (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such Holder and upon all future Holders and owners of this
Note and of any Note issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Note.

           No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.

           The Issuer shall have the right at any time during the term of the
Notes and from time to time to extend the interest payment period of such Notes
for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at
the end of which period the Issuer shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the Notes to
the extent that payment of such interest is enforceable under applicable law).
Before the termination of any such Extended Interest Payment Period, the Issuer
may further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters.  At the termination of any
such Extended Interest Payment Period and upon the payment of all accrued and
unpaid interest and any additional amounts then due, the Issuer may commence a
new Extended Interest Payment Period.

           As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the Security Register of the Issuer, upon surrender of this Note for
registration of transfer at the office or agency of the Trustee in the City and
State of New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Issuer or the Trustee duly executed by the
registered Holder hereof or his 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 Issuer 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 Issuer, the Trustee, any paying agent and the Security Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Note shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of





                                       12
<PAGE>   16
or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Issuer nor the Trustee nor
any paying agent nor any Security Registrar shall be affected by any notice to
the contrary.

           No recourse shall be had for the payment of the principal of or the
interest on this 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
Issuer 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.

           Notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof.  As provided
in the Indenture and subject to certain limitations herein and therein set
forth, Notes of this series so issued are exchangeable for a like aggregate
principal amount of Notes of this series in authorized denominations, as
requested by the Holder surrendering the same.

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



                                  ARTICLE IX.
                            ORIGINAL ISSUE OF NOTES

SECTION 9.1.  Original Issue of Notes.

           Notes in the aggregate principal amount of $103,092,784 may, upon
execution of this First Supplemental Indenture, be executed by the Issuer and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Issuer,
in accordance with Section 2.4 of the Indenture.

                                   ARTICLE X.
                                 MISCELLANEOUS

SECTION 10.1  Ratification of Indenture.

           The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.

SECTION 10.2. Trustee Not Responsible for Recitals.

           The recitals herein contained are made by the Issuer and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.





                                       13
<PAGE>   17
SECTION 10.3.  Governing Law.

           This First Supplemental Indenture and each Note shall be deemed to
be a contract made under the laws of the State of Michigan, and for all
purposes shall be construed in accordance with the laws of said State,
provided, however, that the rights, duties and obligations of the Trustee are
governed and construed in accordance with the laws of the State of New York.

SECTION 10.4.  Separability.

           In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Notes, but this First Supplemental Indenture
and the Notes shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.

SECTION 10.5.  Counterparts.

           This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.





                                       14
<PAGE>   18
           IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgements and as of the day and year first above written.

                                                         Consumers Power Company


                                                      By
                                                   Name:
                                                    Title:


[Seal]
Attest:


By:
   ----------------------


                                                          [Name of Debt Trustee]
                                                                      as Trustee


                                                      By
                                                   Name:
                                                    Title:

Attest:

By:
   --------------------





                                       15


<PAGE>   1

                                                                   EXHIBIT (4)-7



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


                    PREFERRED SECURITIES GUARANTEE AGREEMENT


                      CONSUMERS POWER COMPANY FINANCING I


                          Dated as of November __, 1995


                      ====================================
<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>              <C>                                                                                       <C>
                                                     ARTICLE I.
                                           DEFINITIONS AND INTERPRETATION

SECTION 1.1      Definitions and Interpretation  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2

                                                    ARTICLE II.
                                                TRUST INDENTURE ACT

SECTION 2.1      Trust Indenture Act; Application  . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
SECTION 2.2      Lists of Holders of Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
SECTION 2.3      Reports by the Preferred Guarantee Trustee  . . . . . . . . . . . . . . . . . . . . . .    5
SECTION 2.4      Periodic Reports to Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . .    5
SECTION 2.5      Evidence of Compliance with Conditions Precedent  . . . . . . . . . . . . . . . . . . .    5
SECTION 2.6      Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
SECTION 2.7      Event of Default; Notice  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
SECTION 2.8      Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6

                                                    ARTICLE III.
                                            POWERS, DUTIES AND RIGHTS OF
                                            PREFERRED GUARANTEE TRUSTEE

SECTION 3.1      Powers and Duties of the Preferred Guarantee Trustee  . . . . . . . . . . . . . . . . .    6
SECTION 3.2      Certain Rights of Preferred Guarantee Trustee . . . . . . . . . . . . . . . . . . . . .    7
SECTION 3.3      Not Responsible for Recitals or Issuance of Guarantee . . . . . . . . . . . . . . . . .    9

                                                    ARTICLE IV.
                                            PREFERRED GUARANTEE TRUSTEE

SECTION 4.1      Preferred Guarantee Trustee; Eligibility  . . . . . . . . . . . . . . . . . . . . . . .    9
SECTION 4.2      Appointment, Removal and Resignation of Preferred Guarantee Trustees  . . . . . . . . .   10

                                                     ARTICLE V.
                                                     GUARANTEE

SECTION 5.1      Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
SECTION 5.2      Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
SECTION 5.3      Obligations Not Affected  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
SECTION 5.4      Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
SECTION 5.5      Guarantee of Payment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
SECTION 5.6      Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
SECTION 5.7      Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
</TABLE>



                                      ii
<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>              <C>                                                                                       <C>


                                                    ARTICLE VI.
                                     LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1      Limitation of Transactions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
SECTION 6.2      Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13

                                                    ARTICLE VII.
                                                    TERMINATION

SECTION 7.1      Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13

                                                   ARTICLE VIII.
                                                  INDEMNIFICATION

SECTION 8.1      Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
SECTION 8.2      Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14

                                                    ARTICLE IX.
                                                   MISCELLANEOUS

SECTION 9.1      Successors and Assigns  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
SECTION 9.2      Amendments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
SECTION 9.3      Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
SECTION 9.4      Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
SECTION 9.5      Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
</TABLE>





                                       ii
<PAGE>   4
                    PREFERRED SECURITIES GUARANTEE AGREEMENT


                 This GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of November __, 1995, is executed and delivered by
Consumers Power Company, a Michigan corporation (the "Guarantor"), and Bank of
New York, as trustee (the "Preferred Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Preferred Securities
(as defined herein) of Consumers Power Company Financing I, a Delaware
statutory business trust (the "Issuer").

                 WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of November __, 1995, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof 4,000,000 preferred securities, having an
aggregate liquidation amount of $100,000,000 designated the _____% Trust
Originated Preferred Securities (the "Preferred Securities");

                 WHEREAS, as incentive for the Holders to purchase the
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to pay
to the Holders of the Preferred Securities the Guarantee Payments (as defined
herein) and to make certain other payments on the terms and conditions set
forth herein.

                 WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") in substantially
identical terms to this Preferred Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event
of Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.

                 NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Preferred
Securities Guarantee for the benefit of the Holders.
<PAGE>   5
                                   ARTICLE I.
                         DEFINITIONS AND INTERPRETATION

SECTION 1.1      Definitions and Interpretation

                 In this Preferred Securities Guarantee, unless the context
otherwise requires:

                 (a)      Capitalized terms used in this Preferred Securities
                          Guarantee but not defined in the preamble above have
                          the respective meanings assigned to them in this
                          Section 1.1;

                 (b)      a term defined anywhere in this Preferred Securities
                          Guarantee has the same meaning throughout;

                 (c)      all references to "the Preferred Securities
                          Guarantee" or "this Preferred Securities Guarantee"
                          are to this Preferred Securities Guarantee as
                          modified, supplemented or amended from time to time;

                 (d)      all references in this Preferred Securities Guarantee
                          to Articles and Sections are to Articles and Sections
                          of this Preferred Securities Guarantee, unless
                          otherwise specified;

                 (e)      a term defined in the Trust Indenture Act has the
                          same meaning when used in this Preferred Securities
                          Guarantee, unless otherwise defined in this Preferred
                          Securities Guarantee or unless the context otherwise
                          requires; and

                 (f)      a reference to the singular includes the plural and
                          vice versa.

                 "Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule
thereunder.

                 "Business Day" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by
any applicable law to close.

                 "Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer.

                 "Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at
101 Barclay Street, New York, New York 10286.

                 "Covered Person" means any Holder or beneficial owner of
Preferred Securities.

                 "Debentures" means the series of junior subordinated debt
securities of the Guarantor designated the ___% Subordinated Deferrable
Interest Notes due 2035 held by the Property Trustee (as defined in the
Declaration) of the Issuer.

                 "Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Preferred Securities Guarantee.





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<PAGE>   6
                 "Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer:  (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Preferred Securities to the extent the Issuer shall have funds available
therefor, (ii) the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price") to the extent
the Issuer has funds available therefor, with respect to any Preferred
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accrued and unpaid Distributions on
the Preferred Securities to the date of payment, to the extent the Issuer shall
have funds available therefor, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
(in either case, the "Liquidation Distribution").  If an event of default under
the Indenture has occurred and is continuing, the rights of holders of the
Common Securities to receive payments under the Common Securities Guarantee
Agreement are subordinated to the rights of Holders of Preferred Securities to
receive Guarantee Payments.

                 "Holder" shall mean any holder, as registered on the books and
records of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any Affiliate of the Guarantor.

                 "Indemnified Person" means the Preferred Guarantee Trustee,
any Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.

                 "Indenture" means the Indenture dated as of November ___, 1995,
between the Guarantor (the "Debenture Issuer") and Bank of New York, as
trustee, and any indenture supplemental thereto pursuant to which certain
subordinated debt securities of the Debenture Issuer are to be issued to the
Property Trustee of the Issuer.

                 "Majority in liquidation amount of the Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all Preferred Securities.

                 "Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person.  Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:

                 (a)      a statement that each officer signing the Officers'
         Certificate has read the covenant or condition and the definition 
         relating thereto;

                 (b)      a brief statement of the nature and scope of the
         examination or investigation undertaken by each officer in rendering
         the Officers' Certificate;

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





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<PAGE>   7
                 (d)      a statement as to whether, in the opinion of each
         such officer, such condition or covenant has been complied with.

                 "Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.

                 "Preferred Guarantee Trustee" means Bank of New York, until a
Successor Preferred Guarantee Trustee has been  appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.

                 "Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice-president, any assistant
vice-president, any assistant secretary, the treasurer, any assistant treasurer
or other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.

                 "Successor Preferred Guarantee Trustee" means a successor
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.

                 "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.


                                  ARTICLE II.
                              TRUST INDENTURE ACT

SECTION 2.1      Trust Indenture Act; Application

                 (a)      This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and

                 (b)      if and to the extent that any provision of this
Preferred Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.

SECTION 2.2      Lists of Holders of Securities

                 (a)      The Guarantor shall provide the Preferred Guarantee
Trustee with a list, in such form as the Preferred Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Preferred
Securities ("List of Holders") as of such date, (i) within 14 Business Day
after January 1 and June 30 of each year, and (ii) at any other time within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Preferred Guarantee Trustee provided, that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the





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<PAGE>   8
Preferred Guarantee Trustee by the Guarantor.  The Preferred Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.

                 (b)      The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and 312(b) of the Trust
Indenture Act.

SECTION 2.3      Reports by the Preferred Guarantee Trustee

                 Within 60 days after May 15 of each year, the Preferred
Guarantee Trustee shall provide to the Holders of the Preferred Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

SECTION 2.4      Periodic Reports to Preferred Guarantee Trustee

                 The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.

SECTION 2.5      Evidence of Compliance with Conditions Precedent

                 The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act.  Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given
in the form of an Officers' Certificate.

SECTION 2.6      Events of Default; Waiver

                 The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences.  Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.

SECTION 2.7      Event of Default; Notice

                 (a)      The Preferred Guarantee Trustee shall, within 90 days
after the occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders of the Preferred Securities, notices of all
Events of Default actually known to a Responsible Officer of the Preferred
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided, that, the Preferred Guarantee Trustee shall be protected
in withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.

                 (b)      The Preferred Guarantee Trustee shall not be deemed
to have knowledge of any Event of Default unless the Preferred Guarantee
Trustee shall have received written notice, or a 





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<PAGE>   9
Responsible Officer of the Preferred Guarantee Trustee charged with the
administration of the Declaration shall have obtained actual knowledge.

SECTION 2.8      Conflicting Interests

                 The Declaration shall be deemed to be specifically described
in this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.

                                  ARTICLE III.
                          POWERS, DUTIES AND RIGHTS OF
                          PREFERRED GUARANTEE TRUSTEE

SECTION 3.1      Powers and Duties of the Preferred Guarantee Trustee

                 (a)      This Preferred Securities Guarantee shall be held by
the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder of Preferred
Securities exercising his or her rights pursuant to Section 5.4(b) or to a
Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred
Guarantee Trustee of its appointment to act as Successor Preferred Guarantee
Trustee.  The right, title and interest of the Preferred Guarantee Trustee
shall automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.

                 (b)      If an Event of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee has occurred and is
continuing, the Preferred Guarantee Trustee shall enforce this Preferred
Securities Guarantee for the benefit of the Holders of the Preferred
Securities.

                 (c)      The Preferred Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Preferred Securities Guarantee, and no
implied covenants shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee.  In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Preferred Securities Guarantee, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.

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

                          (i)     prior to the occurrence of any Event of
                 Default and after the curing or waiving of all such Events of
                 Default that may have occurred:

                                  (A)      the duties and obligations of the
                          Preferred Guarantee Trustee shall be determined
                          solely by the express provisions of this Preferred
                          Securities Guarantee, and the Preferred Guarantee
                          Trustee shall not be liable except for the




                                       6
<PAGE>   10
                          performance of such duties and obligations as are
                          specifically set forth in this Preferred Securities
                          Guarantee, and no implied covenants or obligations
                          shall be read into this Preferred Securities
                          Guarantee against the Preferred Guarantee Trustee;
                          and

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

                          (ii)    the Preferred Guarantee Trustee shall not be
                 liable for any error of judgment made in good faith by a
                 Responsible Officer of the Preferred Guarantee Trustee, unless
                 it shall be proved that the Preferred Guarantee Trustee was
                 negligent in ascertaining the pertinent facts upon which such
                 judgment was made;

                          (iii) the Preferred Guarantee Trustee shall not be
                 liable with respect to any action taken or omitted to be taken
                 by it in good faith in accordance with the direction of the
                 Holders of not less than a Majority in liquidation amount of
                 the Preferred Securities relating to the time, method and
                 place of conducting any proceeding for any remedy available to
                 the Preferred Guarantee Trustee, or exercising any trust or
                 power conferred upon the Preferred Guarantee Trustee under
                 this Preferred Securities Guarantee; and

                          (iv)    no provision of this Preferred Securities
                 Guarantee shall require the Preferred Guarantee Trustee to
                 expend or risk its own funds or otherwise incur personal
                 financial liability in the performance of any of its duties or
                 in the exercise of any of its rights or powers, if the
                 Preferred Guarantee Trustee shall have reasonable grounds for
                 believing that the repayment of such funds or liability is not
                 reasonably assured to it under the terms of this Preferred
                 Securities Guarantee or indemnity, reasonably satisfactory to
                 the Preferred Guarantee Trustee, against such risk or
                 liability is not reasonably assured to it.

SECTION 3.2      Certain Rights of Preferred Guarantee Trustee

                 (a)      Subject to the provisions of Section 3.1:

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

                          (ii)    Any direction or act of the Guarantor
                 contemplated by this Preferred Securities Guarantee shall be
                 sufficiently evidenced by an Officers' Certificate.




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<PAGE>   11
                          (iii) Whenever, in the administration of this
                 Preferred Securities Guarantee, the Preferred Guarantee
                 Trustee shall deem it desirable that a matter be proved or
                 established before taking, suffering or omitting any action
                 hereunder, the Preferred Guarantee Trustee (unless other
                 evidence is herein specifically prescribed) may, in the
                 absence of bad faith on its part, request and conclusively
                 rely upon an Officers' Certificate which, upon receipt of such
                 request, shall be promptly delivered by the Guarantor.

                          (iv)    The Preferred Guarantee Trustee shall have no
                 duty to see to any recording, filing or registration of any 
                 instrument (or any rerecording, refiling or registration 
                 thereof).

                          (v)     The Preferred Guarantee Trustee may consult
                 with counsel, and the written advice or opinion of such
                 counsel with respect to legal matters shall be full and
                 complete authorization and protection in respect of any action
                 taken, suffered or omitted by it hereunder in good faith and
                 in accordance with such advice or opinion.  Such counsel may
                 be counsel to the Guarantor or any of its Affiliates and may
                 include any of its employees.  The Preferred Guarantee Trustee
                 shall have the right at any time to seek instructions
                 concerning the administration of this Preferred Securities
                 Guarantee from any court of competent jurisdiction.

                          (vi)    The Preferred Guarantee Trustee shall be
                 under no obligation to exercise any of the rights or powers
                 vested in it by this Preferred Securities Guarantee at the
                 request or direction of any Holder, unless such Holder shall
                 have provided to the Preferred Guarantee Trustee such security
                 and indemnity, reasonably satisfactory to the Preferred
                 Guarantee Trustee, against the costs, expenses (including
                 attorneys' fees and expenses and the expenses of the Preferred
                 Guarantee Trustee's agents, nominees or custodians) and
                 liabilities that might be incurred by it in complying with
                 such request or direction, including such reasonable advances
                 as may be requested by the Preferred Guarantee Trustee;
                 provided that, nothing contained in this Section 3.2(a)(vi)
                 shall be taken to relieve the Preferred Guarantee Trustee,
                 upon the occurrence of an Event of Default, of its obligation
                 to exercise the rights and powers vested in it by this
                 Preferred Securities Guarantee.

                          (vii)   The Preferred Guarantee Trustee shall not be
                 bound to make any investigation into the facts or matters
                 stated in any resolution, certificate, statement, instrument,
                 opinion, report, notice, request, direction, consent, order,
                 bond, debenture, note, other evidence of indebtedness or other
                 paper or document, but the Preferred Guarantee Trustee, in its
                 discretion, may make such further inquiry or investigation
                 into such facts or matters as it may see fit.

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

                          (ix)    Any action taken by the Preferred Guarantee
                 Trustee or its agents hereunder shall bind the Holders of the
                 Preferred Securities, and the signature of the Preferred
                 Guarantee Trustee or its agents alone shall be sufficient and
                 effective to perform any such action.  No third party shall be
                 required to inquire as to the authority of the Preferred




                                       8
<PAGE>   12
                 Guarantee Trustee to so act or as to its compliance with any
                 of the terms and provisions of this Preferred Securities
                 Guarantee, both of which shall be conclusively evidenced by
                 the Preferred Guarantee Trustee's or its agent's taking such
                 action.

                          (x)     Whenever in the administration of this
                 Preferred Securities Guarantee the Preferred Guarantee Trustee
                 shall deem it desirable to receive instructions with respect
                 to enforcing any remedy or right or taking any other action
                 hereunder, the Preferred Guarantee Trustee (i) may request
                 instructions from the Holders of a Majority in liquidation
                 amount of the Preferred Securities, (ii) may refrain from
                 enforcing such remedy or right or taking such other action
                 until such instructions are received, and (iii) shall be
                 protected in conclusively relying on or acting in accordance
                 with such instructions.

                 (b)      No provision of this Preferred Securities Guarantee
shall be deemed to impose any duty or obligation on the Preferred Guarantee
Trustee to perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Preferred Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation.  No permissive power
or authority available to the Preferred Guarantee Trustee shall be construed to
be a duty.

SECTION 3.3.     Not Responsible for Recitals or Issuance of Guarantee

                 The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not
assume any responsibility for their correctness.  The Preferred Guarantee
Trustee makes no representation as to the validity or sufficiency of this
Preferred Securities Guarantee.


                                  ARTICLE IV.
                          PREFERRED GUARANTEE TRUSTEE

SECTION 4.1      Preferred Guarantee Trustee; Eligibility

                 (a)      There shall at all times be a Preferred Guarantee
Trustee which shall:

                          (i)     not be an Affiliate of the Guarantor; and

                          (ii)    be a corporation organized and doing business
                 under the laws of the United States of America or any State or
                 Territory thereof or of the District of Columbia, or a
                 corporation or Person permitted by the Securities and Exchange
                 Commission to act as an institutional trustee under the Trust
                 Indenture Act, authorized under such laws to exercise
                 corporate trust powers, having a combined capital and surplus
                 of at least 50 million U.S. dollars ($50,000,000), and subject
                 to supervision or examination by Federal, State, Territorial
                 or District of Columbia authority.  If such corporation
                 publishes reports of condition at least annually, pursuant to
                 law or to the requirements of the supervising or examining
                 authority referred to above, then, for the purposes of this
                 Section 4.1(a)(ii), the combined capital and surplus of such
                 corporation shall be deemed to be its combined capital and
                 surplus as set forth in its most recent report of condition so
                 published.




                                       9
<PAGE>   13
                 (b)      If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).

                 (c)      If the Preferred Guarantee Trustee has or shall
acquire  any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2      Appointment, Removal and Resignation of Preferred Guarantee
Trustees

                 (a)      Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the Guarantor.

                 (b)      The Preferred Guarantee Trustee shall not be removed
in accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.

                 (c)      The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have been
appointed or until its removal or resignation.  The Preferred Guarantee Trustee
may resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Preferred Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a Successor
Preferred Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor Preferred
Guarantee Trustee and delivered to the Guarantor and the resigning Preferred
Guarantee Trustee.

                 (d)      If no Successor Preferred Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of resignation,
the resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee.  Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.

                 (e)      No Preferred Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Preferred Guarantee Trustee.

                 (f)      Upon termination of this Preferred Securities
Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant
to this Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee
all amounts accrued to the date of such termination, removal or resignation.


                                   ARTICLE V.
                                   GUARANTEE

SECTION 5.1      Guarantee

                 The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert.  The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required




                                       10
<PAGE>   14
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.  Notwithstanding anything to the contrary herein, the
Guarantor retains all of its rights under the Indenture to extend the interest  
payment period on the Debentures and the Guarantor shall not be obligated
hereunder to pay during an Extension Period (as  defined in the Indenture) any
monthly distributions on the Preferred Securities.

SECTION 5.2      Waiver of Notice and Demand

                 The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.

SECTION 5.3      Obligations Not Affected

                 Except as otherwise provided herein, the obligations,
covenants, agreements and duties of the Guarantor under this Preferred
Securities Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:

                 (a)      the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;

                 (b)      the extension of time for the payment by the Issuer
of all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Preferred Securities (other
than an extension of time for payment of Distributions, Redemption Price,
Liquidation Distribution or other sum payable that results from the extension
of any interest payment period on the Debentures or any extension of the
maturity date of the Debentures permitted by the Indenture);

                 (c)      any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;

                 (d)      the voluntary or involuntary liquidation,
dissolution, sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;

                 (e)      any invalidity of, or defect or deficiency in, the
Preferred Securities;

                 (f)      the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or

                 (g)      any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.





                                       11
<PAGE>   15
                 There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.

SECTION 5.4      Rights of Holders

                 (a)      The Holders of a Majority in liquidation amount of
the Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or
exercising any trust or power conferred upon the Preferred Guarantee Trustee
under this Preferred Securities Guarantee.

                 (b)      If the Preferred Guarantee Trustee fails to enforce
this Preferred Securities Guarantee, any Holder of Preferred Securities may
institute a legal proceeding directly against the Guarantor to enforce its
rights under this Preferred Securities Guarantee, without first instituting a
legal proceeding against the Issuer, the Preferred Guarantee Trustee or any
other Person.

SECTION 5.5      Guarantee of Payment

                 This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.

SECTION 5.6      Subrogation

                 The Guarantor shall be subrogated to all (if any) rights of
the Holders of Preferred Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Preferred Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under
this Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Preferred Securities Guarantee.  If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.

SECTION 5.7      Independent Obligations

                 The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.


                                  ARTICLE VI.
                   LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1      Limitation of Transactions

                 So long as any Preferred Securities remain outstanding, if
there shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, (b) the
Guarantor shall not make any payment of interest,




                                       12
<PAGE>   16
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Guarantor which rank pari passu
with or junior to the Debentures or (c) the Guarantor shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Preferred Securities Guarantee Agreement); provided, however, the Guarantor may
declare and pay a stock dividend where the dividend stock is the same stock as
that on which the dividend is being paid.

SECTION 6.2      Ranking

                 This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor including the
Debentures, except those liabilities of the Guarantor made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.


                                  ARTICLE VII.
                                  TERMINATION

SECTION 7.1      Termination

                 This Preferred Securities Guarantee shall terminate upon (i)
full payment of the Redemption Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon liquidation of the Issuer.  Notwithstanding the foregoing,
this Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.


                                 ARTICLE VIII.
                                INDEMNIFICATION

SECTION 8.1      Exculpation

                 (a)      No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.

                 (b)      An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the




                                       13
<PAGE>   17
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of Preferred
Securities might properly be paid.

SECTION 8.2      Indemnification

                 The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees
and expenses) of defending itself against, or investigating, any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder.  The obligation to indemnify as set forth in this Section
8.2 shall survive the termination of this Preferred Securities Guarantee.


                                  ARTICLE IX.
                                 MISCELLANEOUS

SECTION 9.1      Successors and Assigns

                 All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding.

SECTION 9.2      Amendments

                 Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Preferred Securities Guarantee may only be amended with the
prior approval of the Holders of at least a Majority in liquidation amount
(including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the
voting percentages are determined) of all the outstanding Preferred Securities.
The provisions of Section 12.2 of the Declaration with respect to meetings of
Holders of the Securities apply to the giving of such approval.

SECTION 9.3      Notices

                 All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:

                 (a)      If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders of
the Preferred Securities):

                          The Bank of New York
                          101 Barclay Street
                          New York, New York 10286
                          Attention:  Administrator





                                       14
<PAGE>   18
                 (b)      If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Preferred Securities):

                          Consumers Power Company
                          212 West Michigan Avenue
                          Jackson, Michigan  49201
                          Attention: Alan M. Wright,
                                     Senior Vice President and
                                     Chief Financial Officer

                 (c)      If given to any Holder of Preferred Securities, at
the address set forth on the books and records of the Issuer.

                 All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.

SECTION 9.4      Benefit

                 This Preferred Securities Guarantee is solely for the benefit
of the Holders of the Preferred Securities and, subject to Section 3.1(a), is
not separately transferable from the Preferred Securities.

SECTION 9.5      Governing Law

                 THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MICHIGAN.





                                       15
<PAGE>   19
                 THIS PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.

                                   Consumers Power Company,
                                   as Guarantor



                                   By:
                                      ------------------------------------
                                      Name: Alan M. Wright
                                      Title: Senior Vice President and
                                               Chief Financial Officer


                                   The Bank of New York, as Preferred
                                   Guarantee Trustee



                                   By:
                                      ------------------------------------
                                      Name:
                                      Title:




                                       16

<PAGE>   1
                                                                 
                                                                 Exhibit (5)-1


                           Richards, Layton & Finger
                               One Rodney Square
                                  P.O. Box 551
                          Wilmington, Delaware  19899

                              November 2, 1995


Consumers Power Company Financing I
c/o Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201

     Re:  Consumers Power Company Financing I

Ladies and Gentlemen:

         We have acted as special Delaware counsel for Consumers Power Company,
a Michigan corporation (the "Company"), and Consumers Power Company Financing
I, a Delaware business trust (the "Trust"), in connection with the matters set
forth herein.  At your request, this opinion is being furnished to you.

         For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:

         (a)     The Certificate of Trust of the Trust, dated October 30, 1995
         (the "Certificate"), as filed in the office of the Secretary of State
         of the State of Delaware (the "Secretary of State") on October 30,
         1995;

         (b)     The Declaration of Trust of the Trust, dated as of October 
         30, 1995, among the Company, as Sponsor, and the trustees of the
         Trust named therein;

         (c)     The Registration Statement (the "Registration Statement") on
         Form S-3, including a preliminary prospectus (the "Prospectus") 
         relating to the __% Trust Originated Preferred Securities of the 
         Trust representing preferred undivided beneficial interests in the 
         assets of the Trust (each, a "Preferred Security" and collectively, 
         the "Preferred Securities"), as proposed to be filed by the Company 
         and the Trust with the Securities and Exchange Commission on or about 
         November 2, 1995;

         (d)     A form of Amended and Restated Declaration of Trust of the
         Trust, to be entered into among the Company, as Sponsor, the trustees
         of the Trust named therein and holders,
<PAGE>   2
         from time to time, of undivided beneficial interests in the assets of
         the Trust (including Annex I and Exhibits A-1 and A-2 thereto) (the
         "Trust Agreement"), attached as an exhibit to the Registration
         Statement; and

         (e)     A Certificate of Good Standing for the Trust, dated November 
         2, 1995, obtained from the Secretary of State.

         Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.

         For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above.  In particular,
we have not reviewed any document (other than the documents listed in
paragraphs (a) through (e) above) that is referred to in or incorporated by
reference into the documents reviewed by us.  We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent
with the opinions stated herein.  We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.

         With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.

         For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the       
receipt by each Person to whom a Preferred Security is to be issued by the
Trust (collectively, the "Preferred Security Holders") of a Preferred
Security Certificate for such Preferred Security and the payment for the
Preferred Security acquired by it, in accordance with the Trust Agreement and
the Registration Statement, and (vii) that the Preferred Securities are issued
and sold to the Preferred Security Holders in accordance with the Trust
Agreement and Registration Statement. We have not participated in the
preparation of the Registration Statement and assume no responsibility for its
contents.

         This opinion is limited to the laws of the State of Delaware
(excluding the securities
<PAGE>   3
laws of the State of Delaware), and we have not considered and express no
opinion on the laws of any other jurisdiction, including federal laws and rules
and regulations relating thereto.  Our opinions are rendered only with respect
to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.

         Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:

         1.      The Trust has been duly created and is validly existing in
         good standing as a business trust under the Business Trust Act.

         2.      The Preferred Securities will represent valid and, subject to
         the qualifications set forth in paragraph 3 below, fully paid and
         nonassessable undivided beneficial interests in the assets of the
         Trust.

         3.      The Preferred Security Holders, as beneficial owners of the
         Trust, will be entitled to the same limitation of personal liability
         extended to stockholders of private corporations for profit organized
         under the General Corporation Law of the State of Delaware.  We note
         that the Preferred Security Holders may be obligated to make payments
         as set forth in the Trust Agreement.

         We consent to the filing of this opinion with the Securities and       
Exchange Commission as an exhibit to the Registration Statement.  In addition,
we hereby consent to the use of our name under the heading "Legal Matters" in
the Prospectus.  In giving the foregoing consents, we do not thereby admit that
we come within the category of Persons whose consent is required under Section
7 of the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder.  Except as stated above,
without our prior written consent, this opinion may not be furnished or quoted
to, or relied upon by, any other Person for any purpose.

Very truly yours,

Richards, Layton & Finger

<PAGE>   1
                                        Exhibit (5)-2


                                        November 2, 1995


Consumers Power Company Financing I
c/o Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201

          Re:  Consumers Power Company Financing I
               ___% Trust Originated
               Preferred Securities ("TOPrS")


Ladies and Gentlemen:

         I refer to the Registration Statement on Form S-3 (the "Registration
Statement") being filed by Consumers Power Company (the "Company") and
Consumers Power Company Financing I (the "Trust") with the Securities and
Exchange Commission (the "SEC") under the Securities Act of 1933, as amended    
(the "Securities Act"), relating to the registration of (i) not to exceed
$100,000,000 of __% Trust Originated Preferred Securities ($25 liquidation
amount) (the "Preferred Securities") of the Trust, (ii) the guarantee of the
Preferred Securities by the Company (the "Preferred Securities Guarantee") and
(iii) % Subordinated Debt Securities (the "Debt Securities") of the Company.
The Preferred Securities Guarantee is to be issued pursuant to the Preferred
Securities Guarantee Agreement (the "Preferred Securities Guarantee Agreement")
to be entered into among the Company and The Bank of New York, as trustee (the
"Agreement Trustee").  The Debt Securities are to be issued under an Indenture
to be entered into among the Company and The Bank of New York, as trustee (the
"Indenture Trustee"), and a supplemental indenture thereto (collectively, the
"Indenture").  I am familiar with the proceedings to date with respect to the
proposed execution and delivery of the Preferred Securities Guarantee and the
proposed issuance and sale of the Debt Securities and have examined such
records, documents and questions of law, and satisfied myself as to such
matters of fact, as I have considered relevant and necessary as a basis for
this opinion.

         Based on the foregoing, I am of the opinion that:

         1.      The Company is duly incorporated and validly existing under
the laws of the State of Michigan.

         2.      The Company has corporate power and authority to execute and
deliver the Preferred Securities Guarantee Agreement and the Indenture and to
authorize and sell the Debt Securities.
<PAGE>   2
         3.      The Preferred Securities Guarantee will be a legally issued
and binding obligation of the Company (except to the extent enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws affecting the enforcement of
creditors' rights generally and by the effect of general principles of equity,
regardless of whether enforceability is considered in a proceeding in equity or
at law) when (i) the Registration Statement, as finally amended, shall have
become effective under the Securities Act; (ii) the Preferred Securities
Guarantee Agreement shall have been qualified under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and duly executed and delivered
by the Company and the Agreement Trustee; (iii) the Preferred Securities shall
have been legally issued, as contemplated by paragraph 4 below; and (iv) the
Preferred Securities Guarantees shall have been duly executed and delivered as
provided in the Preferred Securities Guarantee Agreement.

         4.      The Debt Securities will be legally issued and binding
obligations of the Company (except to the extent enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws affecting the enforcement of creditors' rights
generally and by the effect of general principles of equity, regardless of
whether enforceability is considered in a proceeding in equity or at law) when
(i) the Registration Statement, as finally amended, shall have become effective
under the Securities Act; (ii) the Indenture shall have been qualified under
the Trust Indenture Act and duly executed and delivered by the Company and the
Indenture Trustee; (iii) the Company's Board of Directors or duly authorized
officers of the Company shall have duly adopted final resolutions authorizing
the issuance and sale of the Debt Securities, as contemplated by the
Registration Statement and the Indenture; and (iv) the Debt Securities shall
have been duly executed and authenticated as provided in the Indenture and
shall have been duly delivered to the purchasers thereof against payment of the
agreed consideration therefor.

         I do not find it necessary for the purposes of this opinion to cover,
and accordingly I express no opinion as to, the application of the securities
or blue sky laws of the various states to the execution and delivery of the
Preferred Securities Guarantee or the sale of the Debt Securities.

         I am a member of the bar of the State of Michigan and I express no
opinion as to the law of any jurisdiction other than the State of Michigan and,
to the extent pertinent, the federal law of the United States of America.  I
note that the rights, duties and obligations of the Indenture Trustee under the
Indenture are stated to be governed and construed in accordance with the laws
of the State of New York.  However, for purposes of paragraph 4 above, I have
assumed that the Indenture, as to the rights, duties and obligations of the
Indenture Trustee, is stated to be governed by the laws of the State of
Michigan.

         I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to me included in or made a part of
the Registration Statement.

Very truly yours,


/s/ Denise M. Sturdy




<PAGE>   1


                                                                       EXHIBIT 8


                               REID & PRIEST LLP
              A New York Registered Limited Liability Partnership
                              40 West 57th Street
                         New York, New York 10019-4097
                             Telephone 212 603-2000
                                Fax 212 603-2298



                                                            New York, New York
                                                            October 27, 1995


Consumers Power Company
212 West Michigan Avenue
Jackson, Michigan 49201

Ladies and Gentlemen:

                 Reference is made to the prospectus, (the "Prospectus"), which
constitutes part of the registration statement on Form S-3 ("Registration
Statement"), to be filed by Consumers Power Company and Consumers Power Company
Financing I with the Securities and Exchange Commission on or about the date
hereof pursuant to the Securities Act of 1933, as amended, for the registration
of, among other things, Trust Originated Preferred Securities ("Preferred
Securities") of Consumers Power Company Financing I.

                 We are of the opinion that the statements set forth under the
caption "Certain United States Federal Income Tax Consequences" in the
Prospectus constitute an accurate description, in general terms, of certain
United States federal income tax considerations that may be relevant to the
prospective purchasers of the Preferred Securities.

                 We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the references to us in the Prospectus
under the caption "Certain United States Federal Income Tax Consequences."

                                        Very truly yours,



                                        REID & PRIEST LLP

<PAGE>   1
                                                                    EXHIBIT (12)

                           CONSUMERS POWER COMPANY
          Ratio of Earnings to Fixed Charges and Preferred Dividends
                            (Millions of Dollars)




<TABLE>
<CAPTION>
                                                               Twelve Months 
                                                                       Ended                    Years Ended December 31
                                                               June 30, 1995        1994       1993       1992     1991      1990
                                                              ---------------       ----       ----       ----     ----      ----
                                                                                                           (b)    (c)(d)      (e)

<S>                                                           <C>                  <C>        <C>        <C>      <C>       <C>
Earnings as defined (a)
Net Income (Loss) after
  dividends on preferred stock                                        $ 207        $ 202      $ 187      $(255)   $(245)    $(393)
Income taxes (benefits)                                                 115          107         91       (127)     (75)      190
Exclude equity basis subsidiaries                                       (32)         (16)        (6)        12        2        -
Fixed charges as defined, adjusted to 
  exclude capitalized interest of $1,
  $1, $1, $1, $1, and $36 million and 
  preferred stock dividend tax effect 
  of $15, $13, $6, $6, $5, and $6 for 
  the twelve months ended June 30, 1995 
  and for the years ended December 31, 
  1994, 1993, 1992, 1991 and 1990, 
  respectively                                                          197          186        195        189      338       290 
                                                              -------------------------------------------------------------------
Earnings as defined                                                   $ 487        $ 479      $ 467      $(181)   $  20     $  87
                                                              ===================================================================

Fixed charges as defined (a)
Interest on long-term debt                                            $ 139        $ 136      $ 152      $ 150    $ 249     $ 268
Estimated interest portion of lease rental                               10           10         11         14       16        16
Other interest charges                                                   21           17         22         15       64        31
Preferred stock dividend requirement                                     43           37         17         17       15        17
                                                              -------------------------------------------------------------------
Fixed charges as defined                                              $ 213        $ 200      $ 202      $ 196    $ 344     $ 332 
                                                              ===================================================================
Ratio of earnings to fixed charges 
  and preferred dividends                                              2.29         2.40       2.31         -        -         -  
                                                              ===================================================================

</TABLE>


NOTES:
(a)     Earnings and fixed charges and preferred dividends as defined in 
        instructions for Item 503 of Regulation S-K. 

(b)     For the year ended December 31, 1992, fixed charges and preferred
        dividends exceeded earnings by $377 million. Earnings as defined include
        a $520 million pre-tax loss on the settlement of cost recovery issues
        relating to power purchases from the MCV Partnership partially offset
        by $(15) million for potential customer refunds and other reserves 
        related to 1992 but recorded in 1991. The ratio of earnings to fixed
        charges and preferred dividends would have been 1.65 excluding these 
        amounts. 

(c)     Excludes an extraordinary after-tax loss of $14 million. 

(d)     For the year ended December 31, 1991, fixed charges and preferred
        dividends exceeded earnings by $324 million. Earnings as defined include
        $398 million of pre-tax write-downs and reserve amounts related to the 
        abandoned Midland project and $44 million for potential customer refunds
        and other reserves recorded in 1991 but related to 1992 and 1990. The 
        ratio of earnings to fixed charges and preferred dividends would have 
        been 1.34 excluding these amounts. 

(e)     For the year ended December 31, 1990, fixed charges and preferred 
        dividends exceeded earnings by $245 million. Earnings as defined include
        $716 million of pre-tax write-downs and reserve amounts related to the 
        abandoned Midland project and $(29) million for potential customer 
        refunds and other reserves related to 1990 but recorded in 1991. The 
        ratio of earnings to fixed charges and preferred dividends would have 
        been 2.33 excluding these amounts. 




<PAGE>   2
                                                                    EXHIBIT (12)


                           CONSUMERS POWER COMPANY
                      Ratio of Earnings to Fixed Charges
                            (Millions of Dollars)


<TABLE>
<CAPTION>
                                                               Twelve Months
                                                                       Ended                    Years Ended December 31 
                                                               June 30, 1995       1994        1993       1992      1991      1990 
                                                               -------------       ----        ----       ----      ----      ----
                                                                                                           (b)     (c)(d)      (e) 
<S>                                                            <C>                <C>         <C>        <C>       <C>       <C>
Earnings as defined (a)
Net Income (Loss)                                                    $ 235        $ 226       $ 198      $(244)    $(235)    $(382)
Income taxes (benefits)                                                115          107          91       (127)      (75)      190
Exclude equity basis subsidiaries                                      (32)         (16)         (6)        12         2        -
Fixed charges as defined, adjusted to 
  exclude capitalized interest of $1, 
  $1, $1, $1, $1, and $36 million for 
  the twelve months ended June 30, 1995 
  and for the years ended December 31, 
  1994, 1993, 1992, 1991 and 1990, 
  respectively                                                         169          162         184        178       328       279
                                                               -------------------------------------------------------------------
Earnings as defined                                                  $ 487        $ 479       $ 467      $(181)    $  20     $  87
                                                               ===================================================================

Fixed charges as defined (a)
Interest on long-term debt                                           $ 139        $ 136       $ 152      $ 150     $ 249     $ 268
Estimated interest portion of lease rental                              10           10          11         14        16        16
Other interest charges                                                  21           17          22         15        64        31
                                                               -------------------------------------------------------------------
Fixed charges as defined                                             $ 170        $ 163       $ 185      $ 179     $ 329     $ 315
                                                               ===================================================================
Ratio of earnings to fixed charges                                    2.86         2.94        2.52          -        -         - 
                                                               ===================================================================
</TABLE>


NOTES:

(a)     Earnings and fixed charges as defined instructions for Item 503 of 
        Regulation S-K.

(b)     For the year ended December 31, 1992, fixed charges exceeded earnings by
        $360 million. Earnings as defined include a $520 million pre-tax loss on
        the settlement of cost recovery issues relating to power purchases from 
        the MCV Partnership partially offset by $(15) million for potential 
        customer refunds and other reserves related to 1992 but recorded in 
        1991. The ratio of earnings to fixed charges would have been 1.81 
        excluding these amounts. 

(c)     Excludes an extraordinary after-tax loss of $14 million. 

(d)     For the year ended December 31, 1991, fixed charges exceeded earnings by
        $309 million. Earnings as defined include $398 million of pre-tax 
        write-downs and reserve amounts related to the abandoned Midland project
        and $44 million for potential customer refunds and other reserves 
        recorded in 1991 but related to 1992 and 1990. The ratio of earnings to 
        fixed charges would have been 1.40 excluding these amounts. 

(e)     For the year ended December 31, 1990, fixed charges exceeded earnings by
        $228 million. Earnings as defined include $716 million of pre-tax 
        write-downs and reserve amounts related to the abandoned Midland project
        and $(29) million for potential customer refunds and other reserves 
        related to 1990 but recorded in 1991. The ratio of earnings to fixed 
        charges would have 2.46 excluding these amounts. 


<PAGE>   1

                                                                    Exhibit (15)
                              ARTHUR ANDERSEN LLP



To Consumers Power Company:

         We are aware that Consumers Power Company has incorporated by
reference in this registration statement its Form 10-Q for the quarter ended
March 31, 1995 and its Form 10-Q for the quarter ended June 30, 1995, which
includes our report dated May 8, 1995 and August 9, 1995, respectively, covering
the unaudited interim financial information contained therein.  Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered a
part of the registration statement prepared or certified by our Firm or a
report prepared or certified by our Firm within the meaning of Sections 7 and
11 of the Act.

Arthur Andersen LLP

Detroit, Michigan,
  November 2, 1995


<PAGE>   1


                                                                  Exhibit (23)-4
                              ARTHUR ANDERSEN LLP




                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
January 31, 1995 (except with respect to certain matters discussed in Notes 2,
3, 7 and 13 to the consolidated financial statements as to which the date is
March 1, 1995) included or incorporated by reference in Consumers Power
Company's Form 10-K for the year ended December 31, 1994, and to all references
to our Firm included in this registration statement.


Arthur Andersen LLP

Detroit, Michigan,
  November 2, 1995

<PAGE>   1
                                                                      EXHIBIT 24

August 26, 1995


Mr. Alan M. Wright and
Mr. Thomas A. McNish
Consumers Power Company
212 West Michigan Avenue
Jackson, MI 49201

We hereby make, constitute and appoint each of you our true and lawful attorney
for each of us and in each of our names, places and steads to sign and cause to
be filed with the Securities and Exchange Commission registration statement(s)
and/or any amendment or amendments thereto, including post-effective amendment
or amendments, to be accompanied in each case by a prospectus or supplemental
prospectus and any necessary exhibits with respect to the issue and sale of up
to $100 million aggregate principal amount of the Company's Preferred
Securities.

Very truly yours,


<TABLE>
<S>                                                    <C>
  /s/ William T. McCormick, Jr.                          /s/ Frank H. Merlotti
- -------------------------------------                  ------------------------------------
William T. McCormick, Jr.                              Frank H. Merlotti



                                                         /s/ W. U. Parfet
- -------------------------------------                  ------------------------------------
James J. Duderstadt                                    William U. Parfet



  /s/ K. R. Flaherty                                     /s/  Percy Pierre
- --------------------------------------                 ------------------------------------
Kathleen R. Flaherty                                   Percy A. Pierre



  /s/ Victor J. Fryling                                  /s/  S. Kinnie Smith, Jr.
- --------------------------------------                 ------------------------------------
Victor J. Fryling                                      S. Kinnie Smith, Jr.



  /s/  Earl D. Holton                                    /s/  K. Whipple
- --------------------------------------                 ------------------------------------
Earl D. Holton                                         Kenneth Whipple



  /s/  Lois L. Lund                                      /s/  John B. Yasinsky
- --------------------------------------                 ------------------------------------
Lois A. Lund                                           John B. Yasinsky
</TABLE>





<PAGE>   2
Extract from minutes of a meeting of the Board of Directors of Consumers Power
Company (the "Company") held on August 26, 1995.

                              - - - - - - - - - -

Proposed Issue and Sale of Securities

              In order to provide a portion of the funds required for the
Company's capital expenditures (acquiring property, constructing, completing,
extending, and improving public utility facilities), to reduce the level of the
Company's short-term debt, and for general corporate purposes, management of
the Company recommends that the Company issue and sell at such time or times,
at private placement or public sale, in one or more series or issues, for the
best price or terms obtainable in the judgment of a Special Committee of the
Board of Directors appointed for such purposes, up to $100 million aggregate
principal amount of a series of deferrable interest subordinated debentures
issued solely  in connection with the sale of preferred securities either in
the form of stock or trust receipts issued in one or more series, representing
limited partnership interests issued by a Michigan special purpose limited
partnership in which the Company would be the general partner (the "Preferred
Securities") and the Company's guarantee thereof.  Authority to issue such
securities was approved by the Michigan Public Service Commission on April 13,
1995 in Case No. U-10748.  The matter was discussed fully.

              Upon motion duly made and seconded, the following resolutions
were thereupon unanimously adopted:

                     RESOLVED:  That the Board of Directors approves the issue
       and sale, from time to time, at private placement or public sale, of up
       to $100 million aggregate principal amount of Preferred Securities, and
       the issuance by the Company of unsecured subordinated debt securities
       consisting of debentures, notes or other unsecured evidence of
       indebtedness relating thereto, and the Company's guarantee of the
       Preferred Securities, or any combination of the foregoing, as discussed
       at the meeting, with such sale to be at the best price and on the best
       terms obtainable in the judgment of a Special Committee of the Board of
       Directors appointed for such purposes; and

                     RESOLVED FURTHER:  That Mr. Victor J. Fryling with Mr. S.
       Kinnie Smith, Jr., as alternate, is appointed to a Special Committee of
       the Board of Directors, which shall have the full authority to act on
       behalf of the Board for the purposes stated in the foregoing resolution
       with respect to the issue and sale, from time to time, at private
       placement or public sale, of up to $100 million aggregate principal
       amount of Preferred Securities; and

                     RESOLVED FURTHER:  That the officers of the Company, and
       each of them, in their discretion on its behalf, are authorized to
       execute and file (a) a Registration Statement on Form S-3 with the
       Securities and Exchange Commission under the Securities Act of 1933, as
       amended, with respect to the issue and sale of not more than $100
       million aggregate principal amount of subordinated debt securities, the
       Preferred Securities, and the Company's guarantee of the Preferred
       Securities, in such form as may be approved by the officers executing
       the same, and to do all other things necessary to make such registration
       effective, including the execution and filing of any necessary or
       appropriate amendments, including post-effective amendments; and

                     RESOLVED FURTHER:  That, it may be desirable for the
       securities to be qualified or registered for sale in various
       jurisdictions; therefore, the officers of the Company, and each of them,
       are authorized and directed to determine the jurisdictions in which
       appropriate action shall be taken to qualify or register for sale all or
       such part of the securities of the Company as they may deem advisable;
       to perform on behalf of the Company any and all such acts as they may
       deem necessary or advisable in order to comply with the applicable laws
       of any such jurisdictions, and in connection therewith, to execute and
       file all requisite papers and documents, including but not limited to,
       applications, reports, surety bonds, irrevocable consents and
       appointments of attorneys for service of process; and the execution by
       such officers or any of them of any such paper or document or the doing
       by them of any act in connection with the foregoing matters shall
       conclusively establish their authority therefor from the Company; and

                     RESOLVED FURTHER:  That the officers of the Company, and
       each of them, in their discretion and on its behalf, are authorized and
       empowered to execute one or more underwriting agreements as they may
       deem appropriate for the proposed sale of the aforementioned securities;
       and

                     RESOLVED FURTHER:  That the officers of the Company, and
       each of them, are authorized to cause the Company to make application to
       the New York Stock Exchange, or on such other exchange as the officers
       may decide, for the listing on such Exchange, upon notice of issuance,
       of not more than $100 million aggregate principal amount of Preferred
       Securities or unsecured subordinated debt securities of the Company;
       that Messrs. Alan M. Wright and Thomas A. McNish are, and each of them
       is, designated to represent the Company in connection with any
       application or applications for listing and to appear on behalf of the
       Company before such official or body of said Exchange as may be
       appropriate, with authority to make such changes, upon the advice of
       counsel, in said application(s) or in any agreements or other papers
       relating thereto as may be necessary or appropriate to confirm with the
       requirements for listing; and

                     RESOLVED FURTHER:  That the officers of the Company, and
       each of them, are authorized and empowered to execute and deliver all
       other documents, papers, applications, agreements and instruments by or
       on behalf of the Company and to do all acts and things they deem
       necessary or appropriate and as counsel may advise to carry out the
       intent and purpose of the foregoing resolutions.

                              - - - - - - - - - -





<PAGE>   3
I, Joyce H. Norkey, Assistant Secretary of Consumers Power Company, certify
that the foregoing is a true and correct copy of resolutions duly and regularly
adopted at a meeting of the Board of Directors of Consumers Power Company duly
held on August 26, 1995, at which a quorum was in attendance and voting
throughout, and that said resolutions have not since been rescinded but are
still in full force and effect.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 4th day of October 1995.



                                                  /s/Joyce H. Norkey 
                                                ------------------------     
                                                     Joyce H. Norkey
                                                   Assistant Secretary
       ( SEAL )





<PAGE>   4
Extract from minutes of a meeting of the Board of Directors of Consumers Power
Company (the "Company") held on October 27, 1995.


Proposed Issue and Sale of Securities -
Amended Resolutions

        At a meeting of the Board of Directors of the Company held on August
26, 1995, resolutions were adopted authorizing the Company to issue and sell
from time to time up to $100 million aggregate principal amount of preferred
securities of limited partnership interests issued by a partnership in which the
Company would be the general partner (the "Preferred Securities"). Under the
Internal Revenue Code, income from limited partnership interests must be
reported on a Form K-1 rather than on the Form 1099 customarily used to report
investment income. This not only potentially adds another reporting obligation
to the investor (thus decreasing the product's attractiveness in the market
place) but increases the costs of administering the program (thus increasing
the underwriting costs and decreasing the net proceeds to the Company).
Therefore, it was recommended that in connection with the proposed sale of the
Preferred Securities by the Company, the special purpose entity created to
issue securities to the public be a business trust of which the Company would
be the sponsor, rather than a limited partnership as originally proposed, and
that the resolutions adopted by the Board on August 26, 1995 be amended to
reflect such change. The matter was discussed fully.

        Upon motion duly made and seconded, the following resolutions were
thereupon unanimously adopted:

                RESOLVED: That the resolutions adopted by the Board of
        Directors on August 26, 1995 with respect to the Michigan special 
        purpose limited partnership, in which the Company would be general
        partner, are amended to reflect that the sale of Preferred Securities
        either in the form of stock or trust receipts issued in one or more
        series, will represent interests issued by a business trust of which the
        Company would be the sponsor. All other resolutions adopted by the Board
        at the August 26, 1995 meeting with respect to the proposed issue and
        sale of securities remain in full force and effect; and

                RESOLVED FURTHER: That Messrs. Alan M. Wright, Thomas A. McNish
        and Mrs. Doris F. Galvin (or successor(s) appointed, in writing, by the
        Chairman of the Board, Vice Chairman of the Board or the President of
        the Company, and filed in the Corporate Secretary's office) are
        appointed to serve, at the Company's request, and are authorized and
        empowered, for and on behalf of the Company, to act as the Company's
        Trustees in accordance with the Declaration of Trust, and any amendments
        thereto, of a statutory business trust; and

<PAGE>   5
          RESOLVED FURTHER:   That the above-designated Company Trustees, and
    each of them, are authorized and empowered, to execute and deliver all      
    documents, papers, applications, agreements and instruments, including but
    not limited to, the Declaration of Trust, and any amendments thereto, and
    to do all acts and things they deem necessary or appropriate and as counsel
    may advise to carry out the intent and purpose of the foregoing
    resolutions.

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

I, Joyce H. Norkey, Assistant Secretary of Consumers Power Company, certify
that the foregoing is a true and correct copy of resolutions duly and regularly
adopted at a meeting of the Board of Directors of Consumers Power Company duly
held on October 27, 1995, at which a quorum was in attendance and voting
throughout, and that said resolutions have not since been rescinded but are
still in full force and effect.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Company this 2nd day of November 1995.


                                         /s/ Joyce H. Norkey
                                         ------------------------
                                             Joyce H. Norkey
                                           Assistant Secretary

<PAGE>   1
                                                              EXHIBIT (25)-1

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


                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

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

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

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

                              THE BANK OF NEW YORK
              (Exact name of trustee as specified in its charter)


       New York                                         13-5160382
       (State of incorporation                          (I.R.S. employer
       if not a U.S. national bank)                     identification no.)

       48 Wall Street, New York, N.Y.                   10286
       (Address of principal executive offices)         (Zip code)


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


                      CONSUMERS POWER COMPANY FINANCING I
              (Exact name of obligor as specified in its charter)


       Delaware                                         38-6660663
       (State or other jurisdiction of                  (I.R.S. employer
       incorporation or organization)                   identification no.)

       212 West Michigan Avenue
       Jackson, Michigan                                49201
       (Address of principal executive offices)         (Zip code)


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

                              Preferred Securities
                      (Title of the indenture securities)

 =============================================================================
<PAGE>   2



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

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

<TABLE>
<CAPTION>
      --------------------------------------------------------------------------------
                        Name                                        Address           
      --------------------------------------------------------------------------------
         <S>                                         <C>                             

         Superintendent of Banks of the State of     2 Rector Street, New York,
         New York                                    N.Y.  10006, and Albany,
                                                     N.Y. 12203

         Federal Reserve Bank of New York            33 Liberty Plaza, New York,
                                                     N.Y.  10045
                                                           
         Federal Deposit Insurance Corporation       Washington, D.C.  20429

         New York Clearing House Association         New York, New York

</TABLE>

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

         Yes.

2.       AFFILIATIONS WITH OBLIGOR.  

         IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH 
         AFFILIATION.

         None.  (See Note on page 3.)

16.      LIST OF EXHIBITS.

         EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE
         COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO,
         PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE
         "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE.

         1.      A copy of the Organization Certificate of The Bank of New York
                 (formerly Irving Trust Company) as now in effect, which
                 contains the authority to commence business and a grant of
                 powers to exercise corporate trust powers.  (Exhibit 1 to
                 Amendment No. 1 to Form T-1 filed with Registration
                 Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
                 with Registration Statement No. 33-21672 and Exhibit 1 to Form
                 T-1 filed with Registration Statement No. 33-29637.)

         4.      A copy of the existing By-laws of the Trustee.  (Exhibit 4 to 
                 Form T-1 filed with Registration Statement No. 33-31019.)


                                      -2-
<PAGE>   3

         6.      The consent of the Trustee required by Section 321(b) of the 
                 Act.  (Exhibit 6 to Form T-1 filed with Registration Statement
                 No. 33-44051.)

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


                                      NOTE


        Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

        Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.

                                     -3-
<PAGE>   4





                                   SIGNATURE



        Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 1st day of November, 1995.


                                     THE BANK OF NEW YORK



                                     By:     /s/ ROBERT F. McINTYRE
                                        ---------------------------------
                                         Name:   ROBERT F. McINTYRE
                                         Title:  Assistant Vice President

                                     -4-
<PAGE>   5





                                                                       EXHIBIT 7



                      Consolidated Report of Condition of

                              THE BANK OF NEW YORK

        of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic
Subsidiaries, a member of the Federal Reserve System, at the close of business
June 30, 1995, published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal Reserve Act.

<TABLE>
<CAPTION>
                                                             Dollar Amounts
       ASSETS                                                 in Thousands
       <S>                                                     <C>
       Cash and balances due from depos-              
         itory institutions:                          
         Noninterest-bearing balances and             
         currency and coin ..................                  $ 3,025,419
         Interest-bearing balances ..........                      881,413
       Securities:                                    
         Held-to-maturity securities ........                    1,242,368
         Available-for-sale securities ......                    1,774,079
       Federal funds sold in domestic                 
         offices of the bank ................                    5,503,445
       Securities purchased under agree-              
         ments to resell ....................                      200,634
       Loans and lease financing                      
         receivables:                                 
         Loans and leases, net of unearned            
           income .................26,599,533         
         LESS: Allowance for loan and                 
           lease losses ..............516,283         
           Loans and leases, net of unearned          
           income and allowance                                 26,083,250
       Assets held in trading accounts ......                    1,455,639
       Premises and fixed assets (including           
         capitalized leases) ................                      612,547
       Other real estate owned ..............                       79,667
       Investments in unconsolidated                  
         subsidiaries and associated                  
         companies ..........................                      198,737
       Customers' liability to this bank on           
         acceptances outstanding ............                    1,111,464
       Intangible assets ....................                      105,263
       Other assets .........................                    1,237,264
                                                               -----------
       Total assets .........................                  $43,511,189
                                                               ===========
                                                      
       LIABILITIES                                    
       Deposits:                                      
         In domestic offices ................                  $19,233,885
         Noninterest-bearing .......7,677,954         
         Interest-bearing .........11,555,931         
         In foreign offices, Edge and                 
         Agreement subsidiaries, and IBFs ...                   12,641,676
         Noninterest-bearing ..........72,479         
         Interest-bearing .........12,569,197         
        Federal funds purchased and secu-             
         rities sold under agreements to re-          
         purchase in domestic offices of              
         the bank and of its Edge and                 
         Agreement subsidiaries, and in               
         IBFs:                                        
         Federal funds purchased ............                    1,747,659
         Securities sold under agreements             
           to repurchase ....................                       73,553
       Demand notes issued to the U.S.                
         Treasury ...........................                      300,000
       Trading liabilities ..................                      738,317
       Other borrowed money:                          
         With original maturity of one year           
           or less ..........................                    1,586,443
         With original maturity of more than          
           one year .........................                      220,877
       Bank's liability on acceptances exe-           
         cuted and outstanding ..............                    1,113,102
       Subordinated notes and debentures ....                    1,053,860
       Other liabilities ....................                    1,489,252
                                                               -----------
       Total liabilities ....................                   40,198,624
                                                               -----------
                                                      
       EQUITY CAPITAL                                 
       Common stock ........................                       942,284
       Surplus .............................                       525,666
       Undivided profits and capital                  
         reserves ..........................                     1,849,221
       Net unrealized holding gains                   
         (losses) on available-for-sale               
         securities ........................                   (      662)
       Cumulative foreign currency transla-           
         tion adjustments ..................                   (    3,944)
                                                               -----------
       Total equity capital ................                     3,312,565
                                                               -----------
       Total liabilities and equity                   
         capital ...........................                   $43,511,189
                                                               ===========
</TABLE>


        I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.

                                                           Robert E. Keilman

        We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

                   J. Carter Bacot      }
                   Thomas A. Renyi      }    Directors
                   Samuel F. Chevalier  }

<PAGE>   1
                                                                 EXHIBIT (25)-2

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


                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

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

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

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

                              THE BANK OF NEW YORK
              (Exact name of trustee as specified in its charter)


       New York                                          13-5160382
       (State of incorporation                           (I.R.S. employer
       if not a U.S. national bank)                      identification no.)

       48 Wall Street, New York, N.Y.                    10286
       (Address of principal executive offices)          (Zip code)


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

                            CONSUMERS POWER COMPANY
              (Exact name of obligor as specified in its charter)

                                                         
       Michigan                                          38-0442310
       (State or other jurisdiction of                   (I.R.S. employer
       incorporation or organization)                    identification no.)
       
       212 West Michigan Avenue
       Jackson, Michigan                                 49201
       (Address of principal executive offices)          (Zip code)

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

                     Subordinated Deferrable Interest Notes
                      (Title of the indenture securities)

================================================================================
<PAGE>   2


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

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

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
                     Name                                        Address           
- -------------------------------------------------------------------------------------
        <S>                                         <C>                             

         Superintendent of Banks of the State of     2 Rector Street, New York,
         New York                                    N.Y.   10006, and  Albany,
                                                     N.Y. 12203

         Federal Reserve Bank of New York            33 Liberty Plaza, New York,
                                                     N.Y.  10045

         Federal Deposit Insurance Corporation       Washington, D.C.  20429

         New York Clearing House Association         New York, New York
</TABLE>

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

         Yes.

2.       AFFILIATIONS WITH OBLIGOR.

         IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH 
         AFFILIATION.

         None.  (See Note on page 3.)

16.      LIST OF EXHIBITS.

         EXHIBITS IDENTIFIED IN  PARENTHESES BELOW, ON  FILE    WITH  THE
         COMMISSION, ARE  INCORPORATED HEREIN  BY REFERENCE AS AN EXHIBIT 
         HERETO, PURSUANT TO  RULE 7a-29 UNDER  THE TRUST INDENTURE  ACT OF 
         1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE.

         1.      A copy  of  the Organization  Certificate  of The Bank  of 
                 New  York  (formerly Irving Trust Company) as now in effect, 
                 which  contains the authority to commence  business and a grant
                 of powers  to exercise corporate trust powers.  (Exhibit 1 to 
                 Amendment No. 1 to Form T-1 filed with  Registration Statement 
                 No.  33-6215, Exhibits  1a  and 1b  to Form  T-1  filed  with
                 Registration Statement  No.  33-21672  and  Exhibit 1  to Form 
                 T-1 filed  with  Registration Statement No. 33-29637.)

         4.      A  copy  of  the existing  By-laws  of  the Trustee.    
                 (Exhibit 4  to  Form  T-1 filed with Registration Statement  
                 No. 33-31019.)

                                      -2-
<PAGE>   3





         6.      The consent of  the Trustee required by Section 321(b) of the 
                 Act.   (Exhibit 6 to Form T-1 filed with Registration Statement
                 No. 33-44051.)

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


                                      NOTE


        Inasmuch as  this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

        Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.


                                     -3-
<PAGE>   4





                                   SIGNATURE



        Pursuant to the requirements of the  Act, the Trustee, The Bank  of New
York, a corporation  organized and existing  under the laws of  the State of 
New York, has duly caused this statement  of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized,  all in The City of New
York,  and State of New York, on the 1st day of November, 1995.


                                        THE BANK OF NEW YORK



                                        By:  /s/ ROBERT F. McINTYRE
                                           ----------------------------------
                                            Name:   ROBERT F. McINTYRE
                                            Title:  Assistant Vice President


                                     -4-
<PAGE>   5





                                                                       EXHIBIT 7



                      Consolidated Report of Condition of

                              THE BANK OF NEW YORK

        of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic
Subsidiaries, a member of the Federal Reserve System, at the close of business
June 30, 1995, published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal Reserve Act.

<TABLE>
<CAPTION>
                                                                    Dollar Amounts
       ASSETS                                                       in Thousands
       <S>                                                           <C>
       Cash and balances due from depos-               
         itory institutions:                           
         Noninterest-bearing balances and              
         currency and coin ..................                        $ 3,025,419
         Interest-bearing balances ..........                            881,413
       Securities:                                     
         Held-to-maturity securities ........                          1,242,368
         Available-for-sale securities ......                          1,774,079
       Federal funds sold in domestic                  
         offices of the bank ................                          5,503,445
       Securities purchased under agree-               
         ments to resell ....................                            200,634
       Loans and lease financing                       
         receivables:                                  
         Loans and leases, net of unearned             
           income .................26,599,533          
         LESS: Allowance for loan and                  
           lease losses ..............516,283          
           Loans and leases, net of unearned           
           income and allowance                                       26,083,250
       Assets held in trading accounts ......                          1,455,639
       Premises and fixed assets (including            
         capitalized leases) ................                            612,547
       Other real estate owned ..............                             79,667
       Investments in unconsolidated                   
         subsidiaries and associated                   
         companies ..........................                            198,737
       Customers' liability to this bank on            
         acceptances outstanding ............                          1,111,464
       Intangible assets ....................                            105,263
       Other assets .........................                          1,237,264
                                                                     -----------
       Total assets .........................                        $43,511,189
                                                                     ===========
                                                       
       LIABILITIES                                     
       Deposits:                                       
         In domestic offices ................                        $19,233,885
         Noninterest-bearing .......7,677,954          
         Interest-bearing .........11,555,931          
         In foreign offices, Edge and                  
         Agreement subsidiaries, and IBFs ...                         12,641,676
         Noninterest-bearing ..........72,479          
         Interest-bearing .........12,569,197          
        Federal funds purchased and secu-              
         rities sold under agreements to re-           
         purchase in domestic offices of               
         the bank and of its Edge and                  
         Agreement subsidiaries, and in                
         IBFs:                                         
         Federal funds purchased ............                          1,747,659
         Securities sold under agreements              
           to repurchase ....................                             73,553
       Demand notes issued to the U.S.                 
         Treasury ...........................                            300,000
       Trading liabilities ..................                            738,317
       Other borrowed money:                           
         With original maturity of one year            
           or less ..........................                          1,586,443
         With original maturity of more than           
           one year .........................                            220,877
       Bank's liability on acceptances exe-            
         cuted and outstanding ..............                          1,113,102
       Subordinated notes and debentures ....                          1,053,860
       Other liabilities ....................                          1,489,252
                                                                     -----------
       Total liabilities ....................                         40,198,624
                                                                     -----------
                                                       
       EQUITY CAPITAL                                  
       Common stock ........................                             942,284
       Surplus .............................                             525,666
       Undivided profits and capital                   
         reserves ..........................                           1,849,221
       Net unrealized holding gains                    
         (losses) on available-for-sale                
         securities ........................                         (      662)
       Cumulative foreign currency transla-            
         tion adjustments ..................                         (    3,944)
                                                                     -----------
       Total equity capital ................                           3,312,565
                                                                     -----------
       Total liabilities and equity                    
         capital ...........................                         $43,511,189
                                                                     ===========
</TABLE>


        I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.

                                                         Robert E. Keilman

        We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

                   J. Carter Bacot      }
                   Thomas A. Renyi      }     Directors
                   Samuel F. Chevalier  }

<PAGE>   1
                                                                  EXHIBIT (25)-3

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


                                    FORM T-1

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

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

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

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

                              THE BANK OF NEW YORK
              (Exact name of trustee as specified in its charter)


         New York                                   13-5160382
         (State of incorporation                    (I.R.S. employer
         if not a U.S. national bank)               identification no.)

         48 Wall Street, New York, N.Y.             10286
         (Address of principal executive offices)   (Zip code)

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

                            CONSUMERS POWER COMPANY
              (Exact name of obligor as specified in its charter)


         Michigan                                   38-0442310
         (State or other jurisdiction of            (I.R.S. employer
         incorporation or organization)             identification no.)

         212 West Michigan Avenue
         Jackson, Michigan                          49201
         (Address of principal executive offices)   (Zip code)

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

                       Guarantee of Preferred Securities
                      (Title of the indenture securities)


================================================================================
<PAGE>   2



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

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

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
                    Name                                        Address           
- ----------------------------------------------------------------------------------------
         <S>                                         <C>                             

         Superintendent of Banks of the State of     2 Rector Street, New York,
         New York                                    N.Y.   10006, and  Albany,
                                                     N.Y. 12203

         Federal Reserve Bank of New York            33 Liberty Plaza, New York,
                                                     N.Y.  10045

         Federal Deposit Insurance Corporation       Washington, D.C.  20429

         New York Clearing House Association         New York, New York
</TABLE>

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

         Yes.

2.       AFFILIATIONS WITH OBLIGOR.

         IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH 
         AFFILIATION.

         None.  (See Note on page 3.)

16.      LIST OF EXHIBITS.

         EXHIBITS IDENTIFIED IN  PARENTHESES BELOW, ON  FILE    WITH  THE
         COMMISSION, ARE  INCORPORATED HEREIN  BY REFERENCE AS AN EXHIBIT 
         HERETO, PURSUANT TO  RULE 7a-29 UNDER  THE TRUST INDENTURE  ACT OF 
         1939 (THE "ACT") AND RULE 24 OF THE COMMISSION'S RULES OF PRACTICE.


         1.      A copy  of  the Organization  Certificate  of The Bank  of 
                 New  York  (formerly Irving Trust Company) as now in effect, 
                 which contains the authority to commence  business and a
                 grant of powers  to exercise corporate trust powers.  (Exhibit
                 1 to  Amendment No. 1 to Form T-1 filed with  Registration
                 Statement  No.  33-6215, Exhibits  1a  and 1b  to Form  T-1 
                 filed  with Registration Statement  No.  33-21672  and  Exhibit
                 1  to Form  T-1 filed  with  Registration Statement No.
                 33-29637.)

          4.     A  copy  of  the existing  By-laws  of  the Trustee. 
                 (Exhibit 4  to  Form  T-1 filed with Registration Statement 
                 No. 33-31019.)

                                     -2-
<PAGE>   3





          6.     The consent of  the Trustee required by Section 321(b) of  
                 the Act.   (Exhibit 6 to Form T-1 filed with Registration 
                 Statement No. 33-44051.)

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


                                      NOTE


        Inasmuch as  this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.

        Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.

                                     -3-
<PAGE>   4





                                   SIGNATURE



        Pursuant to the requirements of the  Act, the Trustee, The Bank  of New
York, a corporation  organized and existing  under the laws of  the State of 
New York, has duly caused this statement  of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized,  all in The City of New
York,  and State of New York, on the 1st day of November, 1995.


                                          THE BANK OF NEW YORK



                                          By: /s/ ROBERT F. McINTYRE
                                             ----------------------------------
                                              NAME:   ROBERT F. McINTYRE
                                              TITLE:  Assistant Vice President

                                     -4-
<PAGE>   5





                                                                       EXHIBIT 7


                      Consolidated Report of Condition of

                              THE BANK OF NEW YORK

        of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic
Subsidiaries, a member of the Federal Reserve System, at the close of business
June 30, 1995, published in accordance with a call made by the Federal Reserve
Bank of this District pursuant to the provisions of the Federal Reserve Act.

<TABLE>
<CAPTION>
                                                                 Dollar Amounts
      ASSETS                                                       in Thousands
      <S>                                                           <C>
      Cash and balances due from depos-                      
        itory institutions:                                  
        Noninterest-bearing balances and                     
        currency and coin ..................                        $ 3,025,419
        Interest-bearing balances ..........                            881,413
      Securities:                                            
        Held-to-maturity securities ........                          1,242,368
        Available-for-sale securities ......                          1,774,079
      Federal funds sold in domestic                         
        offices of the bank ................                          5,503,445
      Securities purchased under agree-                      
        ments to resell ....................                            200,634
      Loans and lease financing                              
        receivables:                                         
        Loans and leases, net of unearned                    
          income .................26,599,533                 
        LESS: Allowance for loan and                         
          lease losses ..............516,283                 
          Loans and leases, net of unearned                  
          income and allowance                                       26,083,250
      Assets held in trading accounts ......                          1,455,639
      Premises and fixed assets (including                   
        capitalized leases) ................                            612,547
      Other real estate owned ..............                             79,667
      Investments in unconsolidated                          
        subsidiaries and associated                          
        companies ..........................                            198,737
      Customers' liability to this bank on                   
        acceptances outstanding ............                          1,111,464
      Intangible assets ....................                            105,263
      Other assets .........................                          1,237,264
                                                                    -----------
      Total assets .........................                        $43,511,189
                                                                    ===========
                                                             
      LIABILITIES                                            
      Deposits:                                              
        In domestic offices ................                        $19,233,885
        Noninterest-bearing .......7,677,954                 
        Interest-bearing .........11,555,931                 
        In foreign offices, Edge and                         
        Agreement subsidiaries, and IBFs ...                         12,641,676
        Noninterest-bearing ..........72,479                 
        Interest-bearing .........12,569,197                 
       Federal funds purchased and secu-                     
        rities sold under agreements to re-                  
        purchase in domestic offices of                      
        the bank and of its Edge and                         
        Agreement subsidiaries, and in                       
        IBFs:                                                
        Federal funds purchased ............                          1,747,659
        Securities sold under agreements                     
          to repurchase ....................                             73,553
      Demand notes issued to the U.S.                        
        Treasury ...........................                            300,000
      Trading liabilities ..................                            738,317
      Other borrowed money:                                  
        With original maturity of one year                   
          or less ..........................                          1,586,443
        With original maturity of more than                  
          one year .........................                            220,877
      Bank's liability on acceptances exe-                   
        cuted and outstanding ..............                          1,113,102
      Subordinated notes and debentures ....                          1,053,860
      Other liabilities ....................                          1,489,252
                                                                    -----------
      Total liabilities ....................                         40,198,624
                                                                    -----------
                                                             
      EQUITY CAPITAL                                         
      Common stock ........................                             942,284
      Surplus .............................                             525,666
      Undivided profits and capital                          
        reserves ..........................                           1,849,221
      Net unrealized holding gains                           
        (losses) on available-for-sale                       
        securities ........................                         (      662)
      Cumulative foreign currency transla-                   
        tion adjustments ..................                         (    3,944)
                                                                    -----------
      Total equity capital ................                           3,312,565
                                                                    -----------
      Total liabilities and equity                           
        capital ...........................                         $43,511,189
                                                                    ===========
</TABLE>


        I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.

                                                             Robert E. Keilman

        We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

                   J. Carter Bacot       } 
                   Thomas A. Renyi       }    Directors
                   Samuel F. Chevalier   }


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