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                                                                   EXHIBIT 4(aa)

                             CMS ENERGY CORPORATION

                                       and

                              THE BANK OF NEW YORK,

                           as Purchase Contract Agent

                           PURCHASE CONTRACT AGREEMENT

                          Dated as of August 22, 2000.

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                                TABLE OF CONTENTS

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                                    ARTICLE 1
                   DEFINITIONS AND OTHER PROVISIONS OF GENERAL
                                  APPLICATIONS

         SECTION 1.01     Definitions..............................................................................1
         SECTION 1.02     Compliance Certificates and Opinions....................................................13
         SECTION 1.03     Form of Documents Delivered to Purchase Contract
                          Agent...................................................................................13
         SECTION 1.04     Acts of Holders; Record Dates...........................................................14
         SECTION 1.05     Notices.................................................................................16
         SECTION 1.06     Notice to Holders; Waiver...............................................................17
         SECTION 1.07     Effect of Headings and Table of Contents................................................18
         SECTION 1.08     Successors and Assigns..................................................................18
         SECTION 1.09     Separability Clause.....................................................................18
         SECTION 1.10     Benefits of Agreement...................................................................18
         SECTION 1.11     Governing Law...........................................................................18
         SECTION 1.12     Legal Holidays..........................................................................18
         SECTION 1.13     Counterparts............................................................................19
         SECTION 1.14     Inspection of Agreement.................................................................19
         SECTION 1.15     Appointment of Financial Institution as Agent for the
                          Company.................................................................................19

                                    ARTICLE 2
                                CERTIFICATE FORMS

         SECTION 2.01     Forms of Certificates Generally.........................................................20
         SECTION 2.02     Form of Purchase Contract Agent's Certificate of
                          Authentication..........................................................................21

                                    ARTICLE 3
                                 THE SECURITIES

         SECTION 3.01     Amount; Form and Denominations..........................................................21
         SECTION 3.02     Rights and Obligations Evidenced by the Certificates....................................22
         SECTION 3.03     Execution, Authentication, Delivery and Dating..........................................23
         SECTION 3.04     Temporary Certificates..................................................................24
         SECTION 3.05     Registration; Registration of Transfer and Exchange.....................................24
         SECTION 3.06     Book-entry Interests....................................................................26
         SECTION 3.07     Notices to Holders......................................................................27
         SECTION 3.08     Appointment of Successor Depositary.....................................................27

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<S>                      <C>                                                                                     <C>

         SECTION 3.09     Definitive Certificates.................................................................27
         SECTION 3.10     Mutilated, Destroyed, Lost and Stolen Certificates......................................28
         SECTION 3.11     Persons Deemed Owners...................................................................29
         SECTION 3.12     Cancellation............................................................................30
         SECTION 3.13     Creation of Treasury Peps Units by Substitution of
                          Treasury Securities.....................................................................31
         SECTION 3.14     Reestablishment of Peps Units...........................................................33
         SECTION 3.15     Transfer of Collateral upon Occurrence of Termination
                          Event...................................................................................34
         SECTION 3.16     No Consent to Assumption................................................................35

                                              ARTICLE 4
                          THE PREFERRED SECURITIES, SUBORDINATED DEFERRABLE
                               NOTES AND APPLICABLE OWNERSHIP INTEREST
                                      OF THE TREASURY PORTFOLIO

         SECTION 4.01     Interest Payments; Rights to Interest Payments
                          Preserved...............................................................................36
         SECTION 4.02     Notice and Voting.......................................................................37
         SECTION 4.03     Distribution of Subordinated Deferrable Notes...........................................38

                                    ARTICLE 5
                             THE PURCHASE CONTRACTS

         SECTION 5.01     Purchase of Shares of Common Stock......................................................40
         SECTION 5.02     Payment of Purchase Price...............................................................42
         SECTION 5.03     Issuance of Shares of Common Stock......................................................52
         SECTION 5.04     Adjustment of Settlement Rate...........................................................53
         SECTION 5.05     Notice of Adjustments and Certain Other Events..........................................60
         SECTION 5.06     Termination Event; Notice...............................................................61
         SECTION 5.07     Early Settlement........................................................................62
         SECTION 5.08     Intentionally Omitted...................................................................64
         SECTION 5.09     No Fractional Shares....................................................................64
         SECTION 5.10     Charges and Taxes.......................................................................64

                                    ARTICLE 6
                                    REMEDIES

         SECTION 6.01     Unconditional Right of Holders to Purchase Shares of
                          Common Stock............................................................................65
         SECTION 6.02     Restoration of Rights and Remedies......................................................65
         SECTION 6.03     Rights and Remedies Cumulative..........................................................65
         SECTION 6.04     Delay or Omission Not Waiver............................................................66
         SECTION 6.05     Undertaking for Costs...................................................................66
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<S>                      <C>                                                                                     <C>
         SECTION 6.06     Waiver of Stay or Extension Laws........................................................66

                                    ARTICLE 7
                           THE PURCHASE CONTRACT AGENT

         SECTION 7.01     Certain Duties and Responsibilities.....................................................67
         SECTION 7.02     Notice of Default.......................................................................68
         SECTION 7.03     Certain Rights of Purchase Contract Agent...............................................68
         SECTION 7.04     Not Responsible for Recitals or Issuance of Securities..................................70
         SECTION 7.05     May Hold Securities.....................................................................70
         SECTION 7.06     Money Held in Custody...................................................................71
         SECTION 7.07     Compensation and Reimbursement..........................................................71
         SECTION 7.08     Corporate Purchase Contract Agent Required;
                          Eligibility.............................................................................72
         SECTION 7.09     Resignation and Removal; Appointment of Successor.......................................72
         SECTION 7.10     Acceptance of Appointment by Successor..................................................74
         SECTION 7.11     Merger, Conversion, Consolidation or Succession to
                          Business................................................................................74
         SECTION 7.12     Preservation of Information; Communications to
                          Holders.................................................................................75
         SECTION 7.13     No Obligations of Purchase Contract Agent...............................................75
         SECTION 7.14     Tax Compliance..........................................................................76

                                    ARTICLE 8
                             SUPPLEMENTAL AGREEMENTS

         SECTION 8.01     Supplemental Agreements Without Consent of Holders......................................76
         SECTION 8.02     Supplemental Agreements with Consent of Holders.........................................77
         SECTION 8.03     Execution of Supplemental Agreements....................................................78

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<S>                      <C>                                                                                    <C>
         SECTION 8.04     Effect of Supplemental Agreements.......................................................79
         SECTION 8.05     Reference to Supplemental Agreements....................................................79

                                    ARTICLE 9
                     MERGER, CONSOLIDATION, SHARE EXCHANGE,
                               SALE OR CONVEYANCE

         SECTION 9.01     Covenant Not to Merge, Consolidate, Enter into a
                          Share Exchange, Sell or Convey Property Except under
                          Certain Conditions......................................................................79
         SECTION 9.02     Rights and Duties of Successor Corporation..............................................80
         SECTION 9.03     Officers' Certificate and Opinion of Counsel Given to
                          Purchase Contract Agent.................................................................81

                                   ARTICLE 10
                                    COVENANTS

         SECTION 10.01    Performance under Purchase Contracts....................................................81
         SECTION 10.02    Maintenance of Office or Agency.........................................................81
         SECTION 10.03    Company to Reserve Common Stock.........................................................82
         SECTION 10.04    Covenants as to Common Stock............................................................82
         SECTION 10.05    Statements of Officers of the Company as to Default.....................................82
         SECTION 10.06    ERISA...................................................................................83

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         PURCHASE CONTRACT AGREEMENT, dated as of August 22, 2000, between CMS
ENERGY CORPORATION, a Michigan corporation (the "COMPANY"), and THE BANK OF NEW
YORK, a New York banking corporation, acting as purchase contract agent for the
Holders of Securities (as defined herein) from time to time (the "PURCHASE
CONTRACT AGENT").

                                    RECITALS

         The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.

         All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Purchase Contract Agent, as provided in this
Agreement, the valid obligations of the Company, and to constitute these
presents a valid agreement of the Company, in accordance with its terms, have
been done. For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:

                                    ARTICLE 1
            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATIONS

         SECTION 1.01    Definitions.

         For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

         (a)  the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular, and nouns
and pronouns of the masculine gender include the feminine and neuter genders;

         (b)  all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States;

         (c)  the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;

         (d)  the following terms have the meanings given to them in the

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Declaration: (i) Applicable Ownership Interest; (ii) Applicable Principal
Amount; (iii) Cash Merger Early Redemption; (iv) Cash Merger Early Redemption
Date; (v) Guarantee; (vi) Primary Treasury Dealer; (vii) Pro Rata, (viii)
Quotation Agent; (ix) Redemption Amount; (x); Redemption Price; (xi)
Remarketing, (xii) Reset Rate, (xiii) Tax Event Redemption, (xiv) Tax Event
Redemption Date; (xv) Two-Year Benchmark Treasury Rate; and (xvi) Treasury
Portfolio; and

         (e)  the following terms have the meanings given to them in this
Section 1.01(e):

         "ACT" has the meaning, with respect to any Holder, set forth in Section
1.04.

         "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.

         "AGREEMENT" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.

         "APPLICABLE MARKET VALUE" has the meaning set forth in Section 5.01.

         "APPLICANTS" has the meaning set forth in Section 7.12(b).

         "BANKRUPTCY CODE" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.

         "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 Depositary or on the books of a Person maintaining an account
with such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).

         "BOARD OF DIRECTORS" means the board of directors of the Company or a
duly authorized committee of that board.

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         "BOARD RESOLUTION" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company, to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification and
delivered to the Purchase Contract Agent.

         "BOOK-ENTRY INTEREST" means a beneficial interest in a Global
Certificate, registered in the name of a Depositary or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Depositary as described in Section 3.06.

         "BUSINESS DAY" has the meaning set forth in the Indenture; provided
that for purposes of the second paragraph of Section 1.12 only, the term
"Business Day" shall also be deemed to exclude any day on which trading on the
New York Stock Exchange, Inc. is closed or suspended.

         "CASH SETTLEMENT" has the meaning set forth in Section 5.02(a)(i).

         "CERTIFICATE" means a PEPS Units Certificate or a Treasury PEPS Units
Certificate.

         "CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the 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 Securities.

         "CLOSING PRICE" has the meaning set forth in Section 5.01.

         "CODE" means the Internal Revenue Code of 1986, as amended.

         "COLLATERAL" has the meaning set forth in Section 1.01 of the Pledge
Agreement.

         "COLLATERAL ACCOUNT" has the meaning set forth in Section 1.01 of the
Pledge Agreement.

         "COLLATERAL AGENT" means The Chase Manhattan Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.

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         "COLLATERAL SUBSTITUTION" has the meaning set forth in Section 3.13.

         "COMMON STOCK" means the CMS Energy Corporation common stock, par value
$0.01 per share.

         "COMPANY" means the Person named as the "COMPANY" in the first
paragraph of this instrument until a successor shall have become such pursuant
to the applicable provision of this Agreement, and thereafter "Company" shall
mean such successor.

         "CONSTITUENT PERSON" has the meaning set forth in Section 5.04(b).

         "CORPORATE TRUST OFFICE" means the principal corporate trust office of
the Purchase Contract Agent at which, at any particular time, its corporate
trust business shall be administered, which office at the date hereof is located
at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attention:
Corporate Trust Trustee Administration.

         "COUPON RATE" means the percentage rate per annum at which each
Subordinated Deferrable Note will bear interest initially and, on and after
August 18, 2003, the Reset Rate.

         "CURRENT MARKET PRICE" has the meaning set forth in Section 5.04(a)(8).

         "DECLARATION" means the Amended and Restated Declaration of Trust of
CMS Energy Trust III, dated as of August 22, 2000, among the Company as sponsor,
the trustees named therein and the holders from time to time of individual
beneficial interests in the assets of the Trust.

         "DEPOSITARY" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Securities as contemplated by
Sections 3.06, 3.07, 3.08 and 3.09.

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

         "DTC" means The Depository Trust Company.

         "EARLY SETTLEMENT" has the meaning set forth in Section 5.07(a).

<PAGE>   10

         "EARLY SETTLEMENT AMOUNT" has the meaning set forth in Section 5.07(a).

         "EARLY SETTLEMENT DATE" has the meaning set forth in Section 5.07(a).

         "EARLY SETTLEMENT RATE" has the meaning set forth in Section 5.07(b).

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and any statute successor thereto, in each case as amended from time to time,
and the rules and regulations promulgated thereunder.

         "EXPIRATION DATE" has the meaning set forth in Section 1.04(e).

         "EXPIRATION TIME" has the meaning set forth in Section 5.04(a)(6).

         "FAILED REMARKETING" has the meaning set forth in Section 5.02(b).

         "FLOOR PRICE" has the meaning set forth in Section 5.01(ii).

         "GLOBAL CERTIFICATE" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Clearing Agency or a nominee
thereof.

         "HOLDER" means, with respect to a Security, the Person in whose name
the Security evidenced by a Certificate is registered in the Security Register;
provided, however, that in determining whether the Holders of the requisite
number of Securities have voted on any matter, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Security
remains in the form of one or more Global Certificates and if the Depositary
which is the registered holder of such Global Certificate has sent an omnibus
proxy assigning voting rights to the Depositary Participants to whose accounts
the Securities are credited on the record date, the term "Holder" shall mean
such Depositary Participant acting at the direction of the Beneficial Owners.

         "INDENTURE" means the Indenture, dated as of June 1, 1997, between the
Company and the Indenture Trustee (including any provisions of the TIA that are
deemed incorporated therein), as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.

         "INDENTURE TRUSTEE" means The Bank of New York, a New York banking

<PAGE>   11

corporation, as trustee under the Indenture, or any successor thereto.

         "ISSUER ORDER" or "ISSUER REQUEST" means a written order or request
signed in the name of the Company by its Chairman of the Board, its President or
one of its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Purchase Contract
Agent.

         "NON-ELECTING SHARE" has the meaning set forth in Section 5.04(b).

         "NYSE" has the meaning set forth in Section 5.01.

         "OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of
the Board, its President or one of its Vice Presidents, and by the Chief
Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company, and delivered to the Purchase Contract
Agent. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Agreement shall include:

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

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

                  (iii) a statement that, in the opinion of each such officer,
         each such officer has made such examination or investigation as 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

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

         "OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel to the Company (and who may be an employee of the Company), and who
shall be reasonably acceptable to the Purchase Contract Agent. An opinion of
counsel may rely on certificates as to matters of fact.

         "OUTSTANDING SECURITIES" means, with respect to any Security and as of
the date of determination, all Securities evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:

<PAGE>   12

                  (i) If a Termination Event has occurred, (i) Treasury PEPS
         Units and (ii) PEPS Units for which the underlying Subordinated
         Deferrable Notes have been theretofore deposited with the Purchase
         Contract Agent in trust for the Holders of such PEPS Units;

                  (ii) Securities evidenced by Certificates theretofore
         cancelled by the Purchase Contract Agent or delivered to the Purchase
         Contract Agent for cancellation or deemed cancelled pursuant to the
         provisions of this Agreement; and

                  (iii) Securities evidenced by Certificates in exchange for or
         in lieu of which other Certificates have been authenticated, executed
         on behalf of the Holder and delivered pursuant to this Agreement, other
         than any such Certificate in respect of which there shall have been
         presented to the Purchase Contract Agent proof satisfactory to it that
         such Certificate is held by a bona fide purchaser in whose hands the
         Securities evidenced by such Certificate are valid obligations of the
         Company;

provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding Securities, except that, in determining whether the Purchase
Contract Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Purchase Contract Agent knows to be so owned shall be
so disregarded. Securities so owned that have been pledged in good faith may be
regarded as Outstanding Securities if the pledgee establishes to the
satisfaction of the Purchase Contract Agent the pledgee's right so to act with
respect to such Securities and that the pledgee is not the Company or any
Affiliate of the Company.

         "PAYMENT DATE" means each August 18, November 18, February 18 and May
18 , commencing November 18, 2000.

         "PEPS UNIT" means the collective rights and obligations of a Holder of
a PEPS Units Certificate in respect of a Preferred Security, the Subordinated
Deferrable Notes or an appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, subject in each case to the Pledge thereof, and
the related Purchase Contract; provided, that the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio shall not be subject to the Pledge.

<PAGE>   13

         "PEPS UNITS CERTIFICATE" means a certificate evidencing the rights and
obligations of a Holder in respect of the number of PEPS Units specified on such
certificate.

         "PERMITTED INVESTMENTS" has the meaning set forth in Section 1.01 of
the Pledge Agreement.

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

         "PLAN" means an employee benefit plan that is subject to ERISA, a plan
or individual retirement account that is subject to Section 4975 of the Code or
any entity whose assets are considered assets of any such plan.

         "PLEDGE" means the pledge under the Pledge Agreement of the Preferred
Securities, the Subordinated Deferrable Notes, the Treasury Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, in each case constituting a
part of the Securities.

         "PLEDGE AGREEMENT" means the Pledge Agreement, dated as of August 22,
2000, among the Company, the Collateral Agent, the Securities Intermediary and
the Purchase Contract Agent, on its own behalf and as attorney-in-fact for the
Holders from time to time of the Securities.

         "PLEDGED SUBORDINATED DEFERRABLE NOTES" has the meaning set forth in
the Pledge Agreement.

         "PLEDGED PREFERRED SECURITIES" has the meaning set forth in the Pledge
Agreement.

         "PREDECESSOR CERTIFICATE" means a Predecessor PEPS Units Certificate or
a Predecessor Treasury PEPS Units Certificate.

         "PREDECESSOR PEPS UNITS CERTIFICATE" of any particular PEPS Units
Certificate means every previous PEPS Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
PEPS Units evidenced thereby; and, for the purposes of this definition, any PEPS
Units Certificate authenticated and delivered under Section 3.10 in exchange for
or in lieu of a

<PAGE>   14

mutilated, destroyed, lost or stolen PEPS Units Certificate shall be deemed to
evidence the same rights and obligations of the Company and the Holder as the
mutilated, destroyed, lost or stolen PEPS Units Certificate.

         "PREDECESSOR TREASURY PEPS UNITS CERTIFICATE" of any particular
Treasury PEPS Units Certificate means every previous Treasury PEPS Units
Certificate evidencing all or a portion of the rights and obligations of the
Company and the Holder under the Treasury PEPS Units evidenced thereby; and, for
the purposes of this definition, any Treasury PEPS Units Certificate
authenticated and delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Treasury PEPS Units Certificate shall be
deemed to evidence the same rights and obligations of the Company and the Holder
as the mutilated, destroyed, lost or stolen Treasury PEPS Units Certificate.

         "PREFERRED SECURITIES" means the Preferred Securities of the Trust,
each having a stated liquidation amount of $25, representing preferred undivided
beneficial interests in the assets of the Trust.

         "PROCEEDS" has the meaning set forth in Section 1.01 of the Pledge
Agreement.

         "PROPERTY TRUSTEE" means The Bank of New York, as initial property
trustee under the Declaration, or any successors thereto that is a financial
institution unaffiliated with the Company.

         "PURCHASE CONTRACT" means, with respect to any Security, the contract
forming a part of such Security and obligating the Company to sell, and the
Holder of such Security to purchase, shares of Common Stock on the terms and
subject to the conditions set forth in Article Five hereof.

         "PURCHASE CONTRACT AGENT" means the Person named as the "PURCHASE
CONTRACT AGENT" in the first paragraph of this Agreement until a successor
Purchase Contract Agent shall have become such pursuant to the applicable
provisions of this Agreement, and thereafter "PURCHASE CONTRACT AGENT" shall
mean such Person.

         "PURCHASE CONTRACT SETTLEMENT DATE" means August 18, 2003.

         "PURCHASE CONTRACT SETTLEMENT FUND" has the meaning set forth in
Section 5.03.

         "PURCHASE PRICE" has the meaning set forth in Section 5.01.

<PAGE>   15

         "PURCHASED SHARES" has the meaning set forth in Section 5.04(a)(6).

         "RECORD DATE" for the interest payable on any Payment Date means, as to
any Global Certificate, the Business Day next preceding such Payment Date, and
as to any other Certificate, the fifteenth Business Day prior to such Payment
Date.

         "REFERENCE DEALER" means a dealer engaged in trading of convertible
securities.

         "REFERENCE PRICE" has the meaning set forth in Section 5.01.

         "REMARKETING AGENT" has the meaning set forth in Section 5.02(b).

         "REMARKETING AGREEMENT" means the Remarketing Agreement, dated as of
August 18, 2000, between the Company and the Remarketing Agent.

         "REORGANIZATION EVENT" has the meaning set forth in Section 5.04(b).

         "RESPONSIBLE OFFICER" means, with respect to the Purchase Contract
Agent, any officer of the Purchase Contract Agent assigned by the Purchase
Contract Agent to administer this Purchase Contract Agreement.

         "SECURITIES INTERMEDIARY" means The Chase Manhattan Bank, as Securities
Intermediary under the Pledge Agreement until a successor Securities
Intermediary shall have become such pursuant to the applicable provisions of the
Pledge Agreement, and thereafter Securities Intermediary shall mean such
successor.

         "SECURITY" means a PEPS Unit or a Treasury PEPS Unit, as the case may
be.

         "SECURITY REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings set forth in Section 3.05.

         "SUBORDINATED DEFERRABLE NOTES" means the series of Subordinated
Deferrable Notes issued by the Company under the Indenture and held by the
Property Trustee.

         "SETTLEMENT RATE" has the meaning set forth in Section 5.01.

         "STATED AMOUNT" means $25.

<PAGE>   16

         "TERMINATION DATE" means the date, if any, on which a Termination Event
occurs.

         "TERMINATION EVENT" means the occurrence of any of the following
events:

                  (i) at any time on or prior to the Purchase Contract
         Settlement Date, a judgment, decree or court order shall have been
         entered granting relief under the Bankruptcy Code, adjudicating the
         Company to be insolvent, or approving as properly filed a petition
         seeking reorganization or liquidation of the Company or any other
         similar applicable Federal or State law, and, unless such judgment,
         decree or order shall have been entered within 60 days prior to the
         Purchase Contract Settlement Date, such decree or order shall have
         continued undischarged and unstayed for a period of 60 days;

                  (ii) a judgment, decree or court order for the appointment of
         a receiver or liquidator or trustee or assignee in bankruptcy or
         insolvency of the Company or of its property, or for the termination or
         liquidation of its affairs, shall have been entered, and, unless such
         judgment, decree or order shall have been entered within 60 days prior
         to the Purchase Contract Settlement Date, such judgment, decree or
         order shall have continued undischarged and unstayed for a period of 60
         days; or

                  (iii) at any time on or prior to the Purchase Contract
         Settlement Date, the Company shall file a petition for relief under the
         Bankruptcy Code, or shall consent to the filing of a bankruptcy
         proceeding against it, or shall file a petition or answer or consent
         seeking reorganization or liquidation under the Bankruptcy Code or any
         other similar applicable Federal or State law, or shall consent to the
         filing of any such petition, or shall consent to the appointment of a
         receiver or liquidator or trustee or assignee in bankruptcy or
         insolvency of it or of its property, or shall make an assignment for
         the benefit of creditors, or shall admit in writing its inability to
         pay its debts generally as they become due.

         "THRESHOLD APPRECIATION PRICE" has the meaning set forth in Section
5.01.

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

         "TRADING DAY" has the meaning set forth in Section 5.01.

         "TREASURY PEPS UNIT" means, following the substitution of Treasury

<PAGE>   17

Securities for Preferred Securities or Subordinated Deferrable Notes as
collateral to secure a Holder's obligations under the Purchase Contract, the
collective rights and obligations of a Holder of a Treasury PEPS Units
Certificate in respect of such Treasury Securities, subject to the Pledge
thereof, and the related Purchase Contract.

         "TREASURY PEPS UNITS CERTIFICATE" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Treasury PEPS
Units specified on such certificate.

         "TREASURY SECURITIES" means zero-coupon U.S. Treasury Securities (CUSIP
 No. 912820BG1) which mature on August 15, 2003.

         "TRUST" means CMS Energy Trust III, a statutory business formed under
the laws of the State of Delaware, or any successor thereto by merger or
consolidation.

         "UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated as of
August 16, 2000, between the Company, CMS Energy Trust III and the Underwriters
identified in Schedule 1 thereto.

         "VICE PRESIDENT" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."

         SECTION 1.02    Compliance Certificates and Opinions.

         Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Purchase Contract Agent to take any
action in accordance with any provision of this Agreement, the Company shall
furnish to the Purchase Contract Agent an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and, if requested by the Purchase
Contract Agent, an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Agreement shall
include:

                  (i)   a statement that each individual signing such
         certificate or opinion has read such covenant or condition and the
         definitions herein relating thereto;

<PAGE>   18

                  (ii)  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;

                  (iii) a statement that, in the opinion of each such
         individual, he or she has made such examination or investigation as is
         necessary to enable such individual to express an informed opinion as
         to whether or not such covenant or condition has been complied with;
         and

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

         SECTION 1.03    Form of Documents Delivered to Purchase Contract Agent.

         In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

         Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.

<PAGE>   19

         SECTION 1.04    Acts of Holders; Record Dates.

         (a)   Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent 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 Purchase Contract Agent and, where it is hereby expressly required, to
the Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Agreement and (subject to Section 7.01) conclusive in favor of
the Purchase Contract Agent and the Company, if made in the manner provided in
this Section.

         (b)   The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Purchase Contract
Agent deems sufficient.

         (c)   The ownership of Securities shall be proved by the PEPS Units
Register or the Treasury PEPS Units Register, as the case may be.

         (d)   Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Certificate evidencing such
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Purchase Contract Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Certificate.

         (e)   The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of the Outstanding PEPS Units and the Outstanding Treasury PEPS Units,
as the case may be, on such record date, and no other Holders, shall be entitled
to take the relevant action with respect to the PEPS Units or the Treasury PEPS
Units, as the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken prior to or on the applicable Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date. Nothing contained in this
paragraph shall be construed to prevent the

<PAGE>   20

Company from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and be of no effect), and nothing contained in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite number of
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Purchase Contract Agent in writing
and to each Holder of Securities in the manner set forth in Section 1.06.

         With respect to any record date set pursuant to this Section, the
Company may designate any date as the "EXPIRATION DATE" and from time to time
may change the Expiration Date to any earlier or later day; provided that no
such change shall be effective unless notice of the proposed new Expiration Date
is given to the Purchase Contract Agent in writing, and to each Holder of
Securities in the manner set forth in Section 1.06, prior to or on the existing
Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the Company shall be deemed to have
initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.

         SECTION 1.05   Notices.

         Any notice or communication is duly given if in writing and delivered
in Person or mailed by first-class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Purchase Contract Agent only upon receipt thereof:

         If to the Purchase Contract Agent:
                  The Bank of New York
                  101 Barclay Street
                  Floor 21 West
                  New York, New York 10286
                  Telecopier No.: (212) 815-5915
                  Attention: Corporate Trust Trustee Administration

<PAGE>   21

         If to the Company:
                  CMS Energy Corporation
                  Fairlane Plaza South, Suite 1100
                  330 Town Center Drive
                  Dearborn, Michigan 48126
                  Attention: General Counsel
                  Telecopy: (313) 436-9258

         If to the Collateral Agent:
                  Chase Manhattan Bank.
                  450 West 33rd Street, 15th Floor
                  New York, New York 10001
                  Attention: Corporate Trust Department
                  Telecopy: (212) 946-8159

         If to the Property Trustee:
                  The Bank of New York
                  101 Barclay Street
                  Floor 21 West
                  New York, New York 10286
                  Telecopier No.: (212) 815-5915
                  Attention: Corporate Trust Trustee Administration

         If to the Indenture Trustee:
                  The Bank of New York
                  101 Barclay Street
                  Floor 21 West
                  New York, New York 10286
                  Telecopier No.: (212) 815-5915
                  Attention: Corporate Trust Trustee Administration

         SECTION 1.06   Notice to Holders; Waiver.

         Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the

<PAGE>   22

equivalent of such notice. Waivers of notice by Holders shall be filed with the
Purchase Contract Agent, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver. In case by reason
of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification as
shall be made with the approval of the Purchase Contract Agent shall constitute
a sufficient notification for every purpose hereunder.

         SECTION 1.07   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 1.08   Successors and Assigns.

         All covenants and agreements in this Agreement by the Company and the
Purchase Contract Agent shall bind their respective successors and assigns,
whether so expressed or not.

         SECTION 1.09   Separability Clause.

         In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.

         SECTION 1.10   Benefits of Agreement.

         Nothing contained in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this Agreement.
The Holders from time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the Securities
evidenced by their Certificates by their acceptance of delivery of such
Certificates.

         SECTION 1.11   Governing Law.

         This Agreement and the Securities shall be governed by, and construed
in accordance with, the laws of the State of New York.

<PAGE>   23

         SECTION 1.12   Legal Holidays.

         In any case where any Payment Date, any Purchase Contract Settlement
Date or Early Settlement Date shall not be a Business Day, (notwithstanding any
other provision of this Agreement or the Securities), Purchase Contracts shall
not be performed and Early Settlement shall not be effected on such date, but
Purchase Contracts shall be performed or Early Settlement effected, as
applicable, on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, Purchase Contract Settlement Date, or Early
Settlement Date, as applicable, provided that no interest shall accrue or be
payable by the Company or to any Holder for the period from and after any such
Purchase Contract Settlement Date, or Early Settlement Date, as applicable,
except that, if such next succeeding Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day with the same force and effect as if made on such Purchase Contract
Settlement Date, or Early Settlement Date, as applicable.

         SECTION 1.13   Counterparts.

         This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.

         SECTION 1.14   Inspection of Agreement.

         A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder or Beneficial Owner.

         SECTION 1.15   Appointment of Financial Institution as Agent for the
                        Company.

         The Company may appoint a financial institution (which may be the
Collateral Agent) to.17 act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Purchase Contract
Agent and the Holders, under this Agreement and the Purchase Contracts, by
giving notice of such appointment in the manner provided in Section 1.05 hereof.
Any such appointment shall not relieve the Company in any way from its
obligations hereunder.

<PAGE>   24

                                   ARTICLE 2
                               CERTIFICATE FORMS

         SECTION 2.01   Forms of Certificates Generally.

         The Certificates (including the form of Purchase Contract forming part
of each Security evidenced thereby) shall be in substantially the form set forth
in Exhibit A hereto (in the case of Certificates evidencing PEPS Units) or
Exhibit B hereto (in the case of Certificates evidencing Treasury PEPS Units),
with such letters, numbers or other marks of identification or designation and
such legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Securities are
listed or any depositary therefor, or as may, consistently herewith, be
determined by the officers of the Company executing such Certificates, as
evidenced by their execution of the Certificates.

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

         Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:

         "THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
         PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED
         IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
         (THE "DEPOSITARY"), OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
         EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER
         THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
         DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS
         CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
         THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
         ANY CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH

<PAGE>   25

         OTHER NAME AS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITARY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
         OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
         DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
         OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
         HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

         SECTION 2.02   Form of Purchase Contract Agent's Certificate of
                        Authentication.

         The form of the Purchase Contract Agent's certificate of authentication
of the Securities shall be in substantially the form set forth on the form of
the applicable Certificates.

                                    ARTICLE 3
                                 THE SECURITIES

         SECTION 3.01   Amount; Form and Denominations.

         The aggregate number of Securities evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 8,800,000 (subject to increase up to a maximum of 10,000,000 to the
extent the over-allotment option granted to the Underwriters in the Underwriting
Agreement is exercised), except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.04, 3.05, 3.10, 3.13, 3.14, 5.07 or
8.05.

         The Certificates shall be issuable only in registered form and only in
denominations of a single PEPS Unit or Treasury PEPS Unit and any integral
multiple thereof.

         SECTION 3.02   Rights and Obligations Evidenced by the Certificates.

         Each PEPS Units Certificate shall evidence the number of PEPS Units
specified therein, with each such PEPS Unit representing (1) the ownership by
the Holder thereof of a beneficial interest in a Preferred Security, a
Subordinated Deferrable Note or the Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, subject to the Pledge of such Preferred
Security, such Subordinated Note or the Applicable Ownership Interest (as
specified in clause (A) of the definition

<PAGE>   26

of such term) of the Treasury Portfolio, as the case may be, by such Holder
pursuant to the Pledge Agreement, and (2) the rights and obligations of the
Holder thereof and the Company under one Purchase Contract. The Purchase
Contract Agent as attorney-in-fact for, and on behalf of, the Holder of each
PEPS Unit shall pledge, pursuant to the Pledge Agreement, the Preferred
Security, the Subordinated Note or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, forming a part of such PEPS Unit, to the
Collateral Agent and grant to the Collateral Agent a security interest in the
right, title and interest of such Holder in such Preferred Security, such
Subordinated Note or the Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, as the case may
be, for the benefit of the Company, to secure the obligation of the Holder under
each Purchase Contract to purchase shares of Common Stock.

         Upon the formation of a Treasury PEPS Unit pursuant to Section 3.13,
each Treasury PEPS Units Certificate shall evidence the number of Treasury PEPS
Units specified therein, with each such Treasury PEPS Unit representing (1) the
ownership by the Holder thereof of a 1/40 undivided beneficial interest in a
Treasury Security with a principal amount equal to $1,000, subject to the Pledge
of such Treasury Security by such Holder pursuant to the Pledge Agreement, and
(2) the rights and obligations of the Holder thereof and the Company under one
Purchase Contract.

         Prior to the purchase of shares of Common Stock under each Purchase
Contract, such Purchase Contracts shall not entitle the Holder of a Security to
any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as a shareholder in respect of the meetings of
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as a shareholder of the Company.

         SECTION 3.03   Execution, Authentication, Delivery and Dating.

         Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and deliver such
Certificates.

         The Certificates shall be executed on behalf of the Company by its
Chairman
<PAGE>   27

of the Board, its President or one of its Vice Presidents. The signature of any
of these officers on the Certificates may be manual or facsimile.

         Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.

         No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized signatory of the Purchase Contract Agent, as such
Holder's attorney-in-fact. Such signature by an authorized signatory of the
Purchase Contract Agent shall be conclusive evidence that the Holder of such
Certificate has entered into the Purchase Contracts evidenced by such
Certificate.

         Each Certificate shall be dated the date of its authentication.

         No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Purchase Contract Agent by manual
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

         SECTION 3.04 Temporary Certificates.

         Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall authenticate, execute on behalf of the Holders, and deliver, in lieu
of such definitive Certificates, temporary Certificates which are in
substantially the form set forth in Exhibit A or Exhibit B hereto, as the case
may be, with such letters, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange on which the
PEPS Units or Treasury PEPS Units, as the case may be, are listed, or as may,
consistently herewith, be determined by the officers of the Company executing
such Certificates, as evidenced by their execution of the Certificates.

         If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive

<PAGE>   28

Certificates upon surrender of the temporary Certificates at the Corporate Trust
Office, at the expense of the Company and without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Company shall execute and deliver to the Purchase Contract Agent, and the
Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, one or more definitive Certificates of like tenor
and denominations and evidencing a like number of Securities as the temporary
Certificate or Certificates so surrendered. Until so exchanged, the temporary
Certificates shall in all respects evidence the same benefits and the same
obligations with respect to the Securities, evidenced thereby as definitive
Certificates.

         SECTION 3.05 Registration; Registration of Transfer and Exchange.

         The Purchase Contract Agent shall keep at the Corporate Trust Office a
register (the "SECURITY REGISTER") in which, subject to such reasonable
regulations as it may prescribe, the Purchase Contract Agent shall provide for
the registration of Certificates and of transfers of Certificates (the Purchase
Contract Agent, in such capacity, the "SECURITY REGISTRAR"). The Security
Registrar shall record separately the registration and transfer of the
Certificates evidencing PEPS Units and Treasury PEPS Units.

         Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the designated transferee or transferees, and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of any
authorized denominations, like tenor, and evidencing a like number of PEPS Units
or Treasury PEPS Units, as the case may be.

         At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
PEPS Units or Treasury PEPS Units, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates
which the Holder making the exchange is entitled to receive.

         All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of PEPS Units
or Treasury PEPS Units, as the case may be, and be entitled to the same benefits
and

<PAGE>   29

subject to the same obligations, under this Agreement as the PEPS Units or
Treasury PEPS Units, as the case may be, evidenced by the Certificate
surrendered upon such registration of transfer or exchange.

         Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Purchase Contract Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Purchase Contract Agent duly executed, by
the Holder thereof or its attorney duly authorized in writing.

         No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Purchase Contract Agent may
require payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates, other than any exchanges pursuant to
Sections 3.06 and 8.05 not involving any transfer.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder
and deliver any Certificate in exchange for any other Certificate presented or
surrendered for registration of transfer or for exchange on or after the
Business Day immediately preceding the earlier of the Purchase Contract
Settlement Date, an applicable Cash Merger Early Settlement Date or the
Termination Date. In lieu of delivery of a new Certificate, upon satisfaction of
the applicable conditions specified above in this Section and receipt of
appropriate registration or transfer instructions from such Holder, the Purchase
Contract Agent shall:

                  (i) if the Purchase Contract Settlement Date or applicable
         Cash Merger Early Settlement Date has occurred, deliver the shares of
         Common Stock issuable in respect of the Purchase Contracts forming a
         part of the Securities evidenced by such other Certificate; or

                  (ii) if a Termination Event shall have occurred prior to the
         Purchase Contract Settlement Date, transfer the Preferred Securities,
         the Subordinated Deferrable Notes, the Treasury Securities, or the
         appropriate Applicable Ownership Interest of the Treasury Portfolio, as
         the case may be, evidenced thereby, in each case subject to the
         applicable conditions and in accordance with the applicable provisions
         of Article Five hereof.

<PAGE>   30

         SECTION 3.06 Book-entry Interests.

         The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary or its custodian by, or on behalf of, the Company. The Company hereby
designates DTC as the initial Depositary. Such Global Certificates shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.09. The Purchase Contract
Agent shall enter into an agreement with the Depositary if so requested by the
Company. Unless and until definitive, fully registered Certificates have been
issued to Beneficial Owners pursuant to Section 3.09:

                  (i) the provisions of this Section 3.06 shall be in full force
         and effect;

                  (ii) the Company shall be entitled to deal with the Depositary
         for all purposes of this Agreement (including receiving approvals,
         votes or consents hereunder) as the Holder of the Securities and the
         sole holder of the Global Certificates and shall have no obligation to
         the Beneficial Owners;

                  (iii) to the extent that the provisions of this Section 3.06
         conflict with any other provisions of this Agreement, the provisions of
         this Section 3.06 shall control; and

                  (iv) the rights of the Beneficial Owners shall be exercised
         only through the Depositary and shall be limited to those established
         by law and agreements between such Beneficial Owners and the Depositary
         or the Depositary Participants.

         SECTION 3.07 Notices to Holders.

         Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Securities registered in the name of the Depositary or the nominee of the
Depositary, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.

         SECTION 3.08 Appointment of Successor Depositary.

         If the Depositary elects to discontinue its services as securities
depositary with

<PAGE>   31

respect to the Securities, the Company may, in its sole discretion, appoint a
successor Depositary with respect to the Securities.

         SECTION 3.09 Definitive Certificates.

         If:
                  (i) the Depositary elects to discontinue its services as
         securities depositary with respect to the Securities and a successor
         Depositary is not appointed within 90 days after such discontinuance
         pursuant to Section 3.08; or

                  (ii) the Company elects after consultation with the Purchase
         Contract Agent to terminate the book-entry system for the Securities,

then (x) definitive Certificates shall be prepared by the Company with respect
to such Securities and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing the Securities by the
Depositary, accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in accordance with
the instructions of the Depositary. The Company shall not be liable for any
delay in delivery of such instructions and may conclusively rely on and shall be
protected in relying on, such instructions. Each definitive Certificate so
delivered shall evidence Securities of the same kind and tenor as the Global
Certificate so surrendered in respect thereof.

         SECTION 3.10 Mutilated, Destroyed, Lost and Stolen Certificates.

         If any mutilated Certificate is surrendered to the Purchase Contract
Agent, the Company shall execute and deliver to the Purchase Contract Agent, and
the Purchase Contract Agent shall authenticate, execute on behalf of the Holder,
and deliver in exchange therefor, a new Certificate, evidencing the same number
of PEPS Units or Treasury PEPS Units, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.

         If there shall be delivered to the Company and the Purchase Contract
Agent (i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity as may be required by them
to hold each of them and any agent of any of them harmless, then, in the absence
of notice to the Company or the Purchase Contract Agent that such Certificate
has been acquired by a bona fide purchaser, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver to the Holder, in
lieu of any such destroyed, lost or stolen Certificate, a

<PAGE>   32

new Certificate, evidencing the same number of PEPS Units or Treasury PEPS
Units, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.

         Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder,
and deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earlier of the Purchase Contract Settlement Date, an
applicable Cash Merger Early Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Purchase Contract Agent shall:

                  (i) if the Purchase Contract Settlement Date or the applicable
         Cash Merger Early Settlement Date has occurred, deliver the shares of
         Common Stock issuable in respect of the Purchase Contracts forming a
         part of the Securities evidenced by such Certificate; or

                  (ii) if a Termination Event shall have occurred prior to the
         Purchase Contract Settlement Date, transfer the Preferred Securities,
         the Subordinated Deferrable Notes, the Treasury Securities or the
         appropriate Applicable Ownership Interest (as specified in clause (A)
         of the definition of such term) of the Treasury Portfolio, as the case
         may be, evidenced thereby, in each case subject to the applicable
         conditions and in accordance with the applicable provisions of Article
         Five hereof.

         Upon the issuance of any new Certificate under this Section, the
Company and the Purchase Contract Agent may require the payment by the Holder 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 Purchase Contract Agent) connected therewith.

         Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.

<PAGE>   33

         The provisions of this Section are exclusive and shall preclude, to the
extent lawful, all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.

         SECTION 3.11 Persons Deemed Owners.

         Prior to due presentment of a Certificate for registration of transfer,
the Company and the Purchase Contract Agent, and any agent of the Company or the
Purchase Contract Agent, may treat the Person in whose name such Certificate is
registered as the owner of the Security evidenced thereby, for the purpose of
receiving distributions on the Preferred Securities, the Treasury Securities,
the Subordinated Deferrable Notes, or on the maturing quarterly interest strips
of the Treasury Portfolio, as applicable, performance of the Purchase Contracts
and for all other purposes whatsoever, whether or not any distributions on the
Preferred Securities, the Treasury Securities, the Subordinated Deferrable
Notes, or Treasury Portfolio, as applicable, constituting a part of the Security
evidenced thereby shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Purchase Contract Agent, nor any agent
of the Company or the Purchase Contract Agent, shall be affected by notice to
the contrary.

         Notwithstanding the foregoing, with respect to any Global Certificate,
nothing contained herein shall prevent the Company, the Purchase Contract Agent
or any agent of the Company or the Purchase Contract Agent, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary (or its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Depositary and the related Beneficial
Owner, the operation of customary practices governing the exercise of rights of
the Depositary (or its nominee) as Holder of such Global Certificate.

         SECTION 3.12 Cancellation.

         All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Preferred
Securities, Subordinated Deferrable Notes, the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of that term) of the
Treasury Portfolio or Treasury Securities, as the case may be, after the
occurrence of a Termination Event or pursuant to an Early Settlement, or upon
the registration of transfer or exchange of a Security, or a Collateral
Substitution or the reestablishment of PEPS Units shall, if surrendered to any
Person other than the Purchase Contract Agent, be delivered to the Purchase
Contract Agent and, if not already cancelled, shall be promptly cancelled by it.
The Company may at any time deliver to the Purchase Contract Agent for
cancellation any Certificates previously authenticated, executed and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Certificates so delivered shall, upon Issuer Order, be promptly cancelled by the
Purchase

<PAGE>   34

Contract Agent. No Certificates shall be authenticated, executed on behalf of
the Holder and delivered in lieu of or in exchange for any Certificates
cancelled as provided in this Section, except as expressly permitted by this
Agreement. All cancelled Certificates held by the Purchase Contract Agent shall
be disposed of in accordance with its customary practices.

         If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Purchase
Contract Agent cancelled or for cancellation.

         SECTION 3.13 Creation of Treasury Peps Units by Substitution of
                  Treasury Securities.

         Subject to the conditions set forth in this Agreement, a Holder may
separate the Preferred Securities or the Subordinated Deferrable Notes, as
applicable, from the related Purchase Contracts in respect of such Holder's PEPS
Units by substituting for such Preferred Securities or Subordinated Deferrable
Notes, as applicable, Treasury Securities in an aggregate principal amount equal
to the aggregate liquidation amount of such Preferred Securities or the
aggregate principal amount of such Subordinated Deferrable Notes, as applicable
(a "Collateral Substitution"), at any time from and after the date of this
Agreement and prior to or on the seventh Business Day immediately preceding
August 18, 2003. To effect such substitution, the Holder must:

                  (1)      deposit with the Securities Intermediary Treasury
                           Securities having an aggregate principal amount equal
                           to the aggregate liquidation amount of the Preferred
                           Securities or the aggregate principal amount of the
                           Subordinated Deferrable Notes comprising part of such
                           PEPS Units, as the case may be; and

                  (2)      transfer the related PEPS Units to the Purchase
                           Contract Agent accompanied by a notice to the
                           Purchase Contract Agent, substantially in the form of
                           Exhibit C hereto, (i) stating that the Holder has
                           transferred the relevant amount of Treasury
                           Securities to the Securities Intermediary and (ii)
                           requesting that the Purchase Contract Agent instruct
                           the Collateral Agent to release the Preferred
                           Securities or the Subordinated Deferrable Notes, as
                           the case may be, underlying such PEPS Units,

<PAGE>   35

                           whereupon the Purchase Contract Agent shall promptly
                           provide an instruction to such effect to the
                           Collateral Agent, substantially in the form of
                           Exhibit A to the Pledge Agreement.

         Upon receipt of the Treasury Securities described in clause (1) above
and the instruction described in clause (2) above, in accordance with the terms
of the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to effect the release of such Preferred Securities or the
Subordinated Deferrable Notes, as the case may be, from the Pledge, free and
clear of the Company's security interest therein, and the transfer of such
Preferred Securities or the Subordinated Deferrable Notes, as the case may be,
to the Purchase Contract Agent on behalf of the Holder. Upon receipt thereof,
the Purchase Contract Agent shall promptly:

                  (i) cancel the related PEPS Units;

                  (ii) transfer the Preferred Securities or the Subordinated
         Deferrable Notes, as the case may be, to the Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
         deliver a Treasury PEPS Units Certificate executed by the Company in
         accordance with Section 3.03 evidencing the same number of Purchase
         Contracts as were evidenced by the cancelled PEPS Units.

         Holders who elect to separate the Preferred Securities or the
Subordinated Deferrable Notes, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Preferred Securities or
the Subordinated Deferrable Notes, as the case may be, shall be responsible for
any fees or expenses payable to the Collateral Agent for its services as
Collateral Agent in respect of the substitution, and the Company shall not be
responsible for any such fees or expenses.

         Holders may make Collateral Substitutions only in integral multiples of
40 PEPS Units. If a Tax Event Redemption has occurred, Holders may no longer
convert their PEPS Units into Treasury PEPS Units.

         In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the PEPS Units or fails to
deliver PEPS Units Certificates to the Purchase Contract Agent after depositing
Treasury Securities with the Collateral Agent, any distributions on the
Preferred Securities or the Subordinated Deferrable Notes constituting a part of
such PEPS Units, as the case may be, shall be held in the name of the Purchase
Contract Agent or its nominee in trust for the benefit of such Holder, until
such PEPS Units are so transferred or the

<PAGE>   36

PEPS Units Certificate is so delivered, as the case may be, or, such Holder
provides evidence satisfactory to the Company and the Purchase Contract Agent
that such PEPS Units Certificate has been destroyed, lost or stolen, together
with any indemnity that may be required by the Purchase Contract Agent and the
Company.

         Except as described in this Section 3.13, for so long as the Purchase
Contract underlying a PEPS Unit remains in effect, such PEPS Unit shall not be
separable into its constituent parts, and the rights and obligations of the
Holder in respect of the Preferred Securities or the Subordinated Deferrable
Notes, as the case may be, and the Purchase Contract comprising such PEPS Unit
may be acquired, and may be transferred and exchanged, only as a PEPS Unit.

         SECTION 3.14 Reestablishment of Peps Units.

         Subject to the conditions set forth in this Agreement, a Holder of
Treasury PEPS Units may reestablish PEPS Units at any time (i) prior to or on
the seventh Business Day immediately preceding August 18, 2003, by:

                  (1)      depositing with the Securities Intermediary Preferred
                           Securities or Subordinated Deferrable Notes, as the
                           case may be, having an aggregate liquidation amount
                           (in the case of Preferred Securities) or aggregate
                           principal amount (in the case of Subordinated
                           Deferrable Notes), as the case may be, equal to the
                           aggregate principal amount at maturity of the
                           Treasury Securities comprising part of the Treasury
                           PEPS Units; and

                  (2)      transferring the related Treasury PEPS Units to the
                           Purchase Contract Agent accompanied by a notice to
                           the Purchase Contract Agent, substantially in the
                           form of Exhibit C hereto, (i) stating that the Holder
                           has transferred the relevant amount of Preferred
                           Securities or Subordinated Deferrable Notes, as the
                           case may be, to the Securities Intermediary and (ii)
                           requesting that the Purchase Contract Agent instruct
                           the Collateral Agent to release the Treasury
                           Securities underlying such Treasury PEPS Units,
                           whereupon the Purchase Contract Agent shall promptly
                           provide an instruction to such effect to the
                           Collateral Agent, substantially in the form of
                           Exhibit C to the Pledge Agreement.

Upon receipt of the Preferred Securities or the Subordinated Deferrable Notes,
as the case may be, described in clause (1) above and the instruction described
in clause (2)

<PAGE>   37

above, in accordance with the terms of the Pledge Agreement, the Collateral
Agent will cause the Securities Intermediary to effect the release of the
Treasury Securities having a corresponding aggregate principal amount at
maturity from the Pledge, free and clear of the Company's security interest
therein, and the transfer to the Purchase Contract Agent on behalf of the
Holder. Upon receipt thereof, the Purchase Contract Agent shall promptly:

                  (i) cancel the related Treasury PEPS Units;

                  (ii) transfer the Treasury Securities to the Holder; and

                  (iii) authenticate, execute on behalf of such Holder and
         deliver a PEPS Units Certificate executed by the Company in accordance
         with Section 3.03 evidencing the same number of Purchase Contracts as
         were evidenced by the cancelled Treasury PEPS Units.

         Holders who elect to reestablish PEPS Units shall be responsible for
any fees or expenses payable to the Collateral Agent for its services as
Collateral Agent in respect of the reestablishment, and the Company shall not be
responsible for any such fees or expenses.

         Holders of Treasury PEPS Units may only reestablish PEPS Units in
integral multiples of 40 Treasury PEPS Units. If a Tax Event Redemption has
occurred, Holders may no longer convert their Treasury PEPS Units into PEPS
Units.

         Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Treasury PEPS Unit remains in effect, such Treasury PEPS
Unit shall not be separable into its constituent parts and the rights and
obligations of the Holder of such Treasury PEPS Unit in respect of the 1/40 of a
Treasury Security and the Purchase Contract comprising such Treasury PEPS Unit
may be acquired, and may be transferred and exchanged, only as a Treasury PEPS
Unit.

         SECTION 3.15 Transfer of Collateral upon Occurrence of Termination
                  Event.

         Upon the occurrence of a Termination Event and the transfer to the
Purchase Contract Agent of the Preferred Securities, Subordinated Deferrable
Notes, the appropriate Applicable Ownership Interest of the Treasury Portfolio
or the Treasury Securities, as the case may be, underlying the PEPS Units and
the Treasury PEPS Units, as the case may be, pursuant to the terms of the Pledge
Agreement, the Purchase Contract Agent shall request transfer instructions with
respect to such

<PAGE>   38

Preferred Securities, Subordinated Deferrable Notes, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case
may be, from each Holder by written request, substantially in the form of
Exhibit D hereto, mailed to such Holder at its address as it appears in the
Security Register.

         Upon book-entry transfer of the PEPS Units or the Treasury PEPS Units
or delivery of a PEPS Units Certificate or Treasury PEPS Units Certificate to
the Purchase Contract Agent with such transfer instructions, the Purchase
Contract Agent shall transfer the Preferred Securities, Subordinated Deferrable
Notes, the appropriate Applicable Ownership Interest of the Treasury Portfolio
or Treasury Securities, as the case may be, underlying such PEPS Units or
Treasury PEPS Units, as the case may be, to such Holder by book-entry transfer,
or other appropriate procedures, in accordance with such instructions. In the
event a Holder of PEPS Units or Treasury PEPS Units fails to effect such
transfer or delivery, the Preferred Securities, Subordinated Deferrable Notes,
the appropriate Applicable Ownership Interest of the Treasury Portfolio or
Treasury Securities, as the case may be, underlying such PEPS Units or Treasury
PEPS Units, as the case may be, and any distributions thereon, shall be held in
the name of the Purchase Contract Agent or its nominee in trust for the benefit
of such Holder, until the earlier to occur of:

                  (i) the transfer of such PEPS Units or Treasury PEPS Units or
         surrender of the PEPS Units Certificate or Treasury PEPS Units
         Certificate or receipt by the Company and the Purchase Contract Agent
         from such Holder of satisfactory evidence that such PEPS Units
         Certificate or Treasury PEPS Units Certificate has been destroyed, lost
         or stolen, together with any indemnity that may be required by the
         Purchase Contract Agent and the Company; and

                  (ii) the expiration of the time period specified in the
         abandoned property laws of the relevant State.

         SECTION 3.16 No Consent to Assumption.

         Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company or its
trustee, receiver, liquidator or a person or entity performing similar functions
in the event that the Company becomes the debtor under the Bankruptcy Code or
subject to other similar state or Federal law providing for reorganization or
liquidation.

<PAGE>   39

                                    ARTICLE 4
             THE PREFERRED SECURITIES, SUBORDINATED DEFERRABLE NOTES
                        AND APPLICABLE OWNERSHIP INTEREST
                            OF THE TREASURY PORTFOLIO

         SECTION 4.01 Interest Payments; Rights to Interest Payments Preserved.

         Any distribution on any Preferred Security, any Subordinated Deferrable
Note or on the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, which is paid on any Payment Date shall, subject
to receipt thereof by the Purchase Contract Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the PEPS Units Certificate (or one or more Predecessor PEPS Units
Certificates) of which such Preferred Security, such Subordinated Deferrable
Note or the appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, is registered at the close of business on the Record Date
for such Payment Date.

         Each PEPS Units Certificate evidencing Preferred Securities,
Subordinated Deferrable Notes or the appropriate Applicable Ownership Interest
of the Treasury Portfolio delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of any other PEPS Units Certificate
shall carry the right to distributions accrued and unpaid, and to accrue
distributions interest, which were carried by the Preferred Securities,
Subordinated Deferrable Notes or the appropriate Applicable Ownership Interest
of the Treasury Portfolio underlying such other PEPS Units Certificate.

         In the case of any PEPS Units with respect to which Cash Settlement of
the underlying Purchase Contract is properly effected pursuant to Section 5.02
hereof, or with respect to which Early Settlement of the underlying Purchase
Contract is properly effected pursuant to Section 5.07 hereof, or with respect
to which a Collateral Substitution is effected, in each case on a date that is
after any Record Date and prior to or on the next succeeding Payment Date,
distributions on the Preferred Securities, Subordinated Deferrable Notes or on
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, underlying such PEPS Unit otherwise payable on such Payment Date
shall be payable on such Payment Date notwithstanding such Cash Settlement or
Early Settlement or Collateral Substitution, and such distributions shall,
subject to receipt thereof by the Purchase Contract Agent, be payable to the
Person in whose name the PEPS Units Certificate (or one or more Predecessor PEPS
Units Certificates) was registered at the close of business on the Record Date.
Except as otherwise expressly provided in the

<PAGE>   40

immediately preceding sentence, in the case of any PEPS Unit with respect to
which Cash Settlement or Early Settlement of the underlying Purchase Contract is
properly effected, or with respect to which a Collateral Substitution has been
effected, distributions on the related Preferred Securities, Subordinated
Deferrable Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that would otherwise be payable after
the Purchase Contract Settlement Date, an applicable Cash Merger Early
Settlement Date or Early Settlement Date shall not be payable hereunder to the
Holder of such PEPS Units; provided, however, that to the extent that such
Holder continues to hold separated Preferred Securities or Subordinated
Deferrable Notes that formerly comprised a part of such Holder's PEPS Unit, such
Holder shall be entitled to receive distributions on such separated Preferred
Securities or Subordinated Deferrable Notes.

         Not later than 15 calendar days nor more than 30 calendar days prior to
the Remarketing Date, the Company shall request the Depositary to notify the
Beneficial Owners or Depositary Participants holding Securities of the
procedures to be followed by Holders of Securities who intend to effect a Cash
Settlement.

         SECTION 4.02 Notice and Voting.

         Under the terms of the Pledge Agreement, except as otherwise set forth
in Section 6 of the Pledge Agreement, the Purchase Contract Agent will be
entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Preferred Securities or Pledged Subordinated Deferrable Notes. The
rights of the Purchase Contract Agent set forth in the previous sentence exist
only to the extent the Purchase Contract Agent is instructed in writing by the
Holders as described below. Except with respect to the rights retained by the
Collateral Agent described in Section 6 of the Pledge Agreement, upon receipt of
notice of any meeting at which holders of Preferred Securities or Subordinated
Deferrable Notes are entitled to vote or upon any solicitation of consents,
waivers or proxies of holders of Preferred Securities or Subordinated Deferrable
Notes, the Purchase Contract Agent shall, as soon as practicable thereafter,
mail, first class, postage pre-paid, to the Holders of PEPS Units a notice:

                  (i) containing such information as is contained in the notice
         or solicitation;

                  (ii) stating that each Holder on the record date set by the
         Purchase Contract Agent therefor (which, to the extent possible, shall
         be the same date as the record date for determining the holders of
         Preferred Securities or Subordinated Deferrable Notes, as the case may
         be, entitled to vote) shall be

<PAGE>   41

         entitled to instruct the Purchase Contract Agent as to the exercise of
         the voting rights pertaining to such Preferred Securities or
         Subordinated Deferrable Notes underlying their PEPS Units; and

                  (iii) stating the manner in which such instructions may be
         given.

Upon the written request of the Holders of PEPS Units on such record date
received by the Purchase Contract Agent at least six days prior to such meeting,
the Purchase Contract Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Preferred Securities or Subordinated Deferrable
Notes, as the case may be, as to which any particular voting instructions are
received. In the absence of specific instructions from the Holder of a PEPS
Unit, the Purchase Contract Agent shall abstain from voting the Preferred
Securities or Subordinated Deferrable Notes underlying such PEPS Unit. The
Company hereby agrees, if applicable, to solicit Holders of PEPS Units to timely
instruct the Purchase Contract Agent in order to enable the Purchase Contract
Agent to vote such Preferred Securities or Subordinated Deferrable Notes and the
Trust shall covenant to this effect in the Declaration.

         SECTION 4.03 Distribution of Subordinated Deferrable Notes; Tax Event
                 Redemption.

         Upon the dissolution and liquidation of the Trust in accordance with
the Declaration, a principal amount at maturity of Subordinated Deferrable Notes
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregate liquidation amount of the Pledged Preferred Securities
shall be delivered to the Securities Intermediary in exchange for the Pledged
Preferred Securities. Thereafter, the Subordinated Deferrable Notes will be
substituted for the Pledged Preferred Securities as the Collateral, and will be
held by the Securities Intermediary in the Collateral Account in accordance with
the terms of the Pledge Agreement to secure the obligations of each Holder of a
PEPS Unit to purchase the Common Stock of the Company under the Purchase
Contracts constituting a part of such PEPS Unit. Following the dissolution and
liquidation of the Trust, the Holders and the Collateral Agent shall have such
security interests, rights and obligations with respect to the Subordinated
Deferrable Notes as the Holders and the Collateral Agent had in respect of the
Preferred Securities subject to the Pledge thereof as provided in the Pledge
Agreement. The Company may cause to be made in any PEPS Unit Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the dissolution and liquidation of
the Trust and the substitution of Subordinated Deferrable Notes for Preferred
Securities as Collateral.

<PAGE>   42

         Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount shall be
deposited in the Collateral Account in exchange for the Pledged Preferred
Securities or the Pledged Subordinated Deferrable Notes. Thereafter, pursuant to
the terms of the Pledge Agreement, the Collateral Agent shall cause the
Securities Intermediary to apply an amount equal to the Redemption Amount of
such Redemption Price to purchase on behalf of the Holders of PEPS Units the
Treasury Portfolio and promptly remit the remaining portion of such Redemption
Price to the Purchase Contract Agent for payment to the Holders of such PEPS
Units. The Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio will be substituted as
Collateral for the Pledged Preferred Securities or the Pledged Subordinated
Deferrable Notes, as the case may be, and will be held by the Collateral Agent
in accordance with the terms of the Pledge Agreement to secure the obligation of
each Holder of a PEPS Unit to purchase the Common Stock of the Company under the
Purchase Contract constituting a part of such PEPS Unit. Following the
occurrence of a Tax Event Redemption prior to the Purchase Contract Settlement
Date, the Holders of PEPS Units and the Collateral Agent shall have such
security interest rights and obligations with respect to the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio as the Holders of PEPS Units and the Collateral Agent
had in respect of the Preferred Securities or Subordinated Deferrable Notes, as
the case may be, subject to the Pledge thereof as provided in the Pledge
Agreement, and any reference herein to the Preferred Securities or the
Subordinated Deferrable Notes shall be deemed to be reference to such Treasury
Portfolio. The Company may cause to be made in any PEPS Unit Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the liquidation of the Trust and the
substitution of the Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio for Preferred Securities
or Subordinated Deferrable Notes as Collateral.

                                    ARTICLE 5
                             THE PURCHASE CONTRACTS

         SECTION 5.01 Purchase of Shares of Common Stock.

         Each Purchase Contract shall, unless a Cash Settlement or Cash Merger
Early Settlement has occurred in accordance with Section 5.02 hereof or an Early
Settlement has occurred in accordance with Section 5.07 hereof, obligate the
Holder of the related Security to purchase, and the Company to sell, on the
Purchase

<PAGE>   43

Contract Settlement Date at a price equal to the Stated Amount (the "PURCHASE
PRICE"), a number of shares of Common Stock (subject to Section 5.09) equal to
the Settlement Rate unless, prior to or on the Purchase Contract Settlement
Date, there shall have occurred a Termination Event with respect to the Security
of which such Purchase Contract is a part. The "SETTLEMENT RATE" is equal to:

                  (i) if the Applicable Market Value (as defined below) is
         greater than or equal to $  (the "THRESHOLD APPRECIATION PRICE"),
         shares of Common Stock per Purchase Contract;

                  (ii) if the Applicable Market Value is less than $  but
         greater than $  (the "FLOOR PRICE"), the number of shares of Common
         Stock per Purchase Contract having a value, based on the Applicable
         Market Value, equal to the Stated Amount; and

                  (iii) if the Applicable Market Value is less than or equal to
         $  ,  shares of Common Stock per Purchase Contract,

in each case subject to adjustment as provided in Section 5.04 (and in each case
rounded upward or downward to the nearest 1/10,000th of a share).

         The "APPLICABLE MARKET VALUE" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "CLOSING PRICE" per share of Common Stock on any date of
determination means:

                  (i) the closing sale price as of the 4:15 p.m. close of
         trading (or, if no closing price is reported, the last reported sale
         price) per share on the New York Stock Exchange, Inc. (the "NYSE") on
         such date;

                  (ii) if the Common Stock is not listed for trading on the NYSE
         on any such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which the Common Stock is so listed;

                  (iii) if the Common Stock is not so listed on a United States
         national or regional securities exchange, the closing sale price per
         share as reported by The NASDAQ Stock Market, Inc.;

<PAGE>   44

                  (iv) if the Common Stock is not so reported, the last quoted
         bid price for the Common Stock in the over-the-counter market as
         reported by the National Quotation Bureau or similar organization; or

                  (v) if such bid price is not available, the average of the
         mid-point of the last bid and ask prices of the Common Stock on such
         date from at least three nationally recognized independent investment
         banking firms retained for this purpose by the Company.

         A "TRADING DAY" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

         Each Holder of a PEPS Unit or a Treasury PEPS Unit, by its acceptance
thereof:

                  (i) irrevocably authorizes the Purchase Contract Agent to
         enter into and perform the related Purchase Contract on its behalf as
         its attorney-in- fact (including the execution of Certificates on
         behalf of such Holder);

                  (ii) agrees to be bound by the terms and provisions thereof;

                  (iii) covenants and agrees to perform its obligations under
         such Purchase Contracts;

                  (iv) consents to the provisions hereof;

                  (v) irrevocably authorizes the Purchase Contract Agent to
         enter into and perform this Agreement and the Pledge Agreement on its
         behalf as its attorney-in-fact; and

                  (vi) consents to, and agrees to be bound by, the Pledge of the
         Preferred Securities, Subordinated Deferrable Notes, the Applicable
         Ownership Interest (as specified in clause (A) of the definition of
         such term) of the Treasury Portfolio or the Treasury Securities
         pursuant to the Pledge Agreement,

provided that upon a Termination Event, the rights of the Holder of such
Security under the Purchase Contract may be enforced without regard to any other
rights or

<PAGE>   45

obligations. Each Holder of a PEPS Unit or a Treasury PEPS Unit, by its
acceptance thereof, further covenants and agrees, that to the extent and in the
manner provided in Section 5.02 and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Preferred Securities or the
Subordinated Deferrable Notes or the proceeds from the Treasury Securities or
the Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio at maturity on the Purchase Contract
Settlement Date, as the case may be, shall be paid by the Collateral Agent to
the Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.

         Upon registration of transfer of a Certificate, the transferee shall be
bound (without the necessity of any other action on the part of such transferee)
by the terms of this Agreement, the Purchase Contracts underlying such
Certificate, the Declaration and the Pledge Agreement and the transferor shall
be released from the obligations under this Agreement, the Purchase Contracts
underlying the Certificate so transferred and the Pledge Agreement. The Company
covenants and agrees, and each Holder of a Certificate, by its acceptance
thereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.

         SECTION 5.02 Payment of Purchase Price.

         (a) (i) Unless a Tax Event Redemption has occurred or a Holder of a
PEPS Unit effects an Early Settlement of the underlying Purchase Contract in the
manner described in Section 5.07, each Holder who intends to pay in cash to
satisfy such Holder's obligations under the Purchase Contract shall notify the
Purchase Contract Agent by use of a notice in substantially the form of Exhibit
E hereto of his intention to pay in cash ("CASH SETTLEMENT") the Purchase Price
for the shares of Common Stock to be purchased pursuant to the related Purchase
Contract. In the case of a Cash Settlement that is not a Cash Merger Early
Settlement, such notice shall be given prior to 5:00 p.m. (New York City time)
on the seventh Business Day immediately preceding August 18, 2003. Prior to
11:00 a.m. (New York City time) on the next succeeding Business Day, the
Purchase Contract Agent shall notify the Collateral Agent and the Indenture
Trustee of the receipt of such notices from Holders intending to make a Cash
Settlement. In the case of a Cash Settlement that is a Cash Merger Early
Settlement, such notice shall be given prior to 5:00 p.m. (New York City time)
on the last Business Day of the applicable Early Settlement Week. Prior to 11:00
a.m. (New York City time) on the next succeeding Business Day, the Purchase
Contract Agent shall notify the Collateral Agent and the Indenture Trustee of
the receipt of such notices from Holders intending to make a Cash Settlement.

<PAGE>   46

                  (ii) A Holder of a PEPS Unit who has so notified the Purchase
         Contract Agent of his intention to effect a Cash Settlement in
         accordance with paragraph 5.02(a)(i) above that is not a Cash Merger
         Early Settlement shall pay the Purchase Price to the Securities
         Intermediary for deposit in the Collateral Account prior to 11:00 a.m.
         (New York City time) on the fifth Business Day immediately preceding
         August 18, 2003, in lawful money of the United States by certified or
         cashiers' check or wire transfer, in each case in immediately available
         funds payable to or upon the order of the Securities Intermediary. Any
         cash received by the Collateral Agent shall be invested promptly by the
         Securities Intermediary in Permitted Investments and paid to the
         Company on the Purchase Contract Settlement Date in settlement of the
         Purchase Contracts in accordance with the terms of this Agreement and
         the Pledge Agreement. Any funds received by the Securities Intermediary
         in respect of the investment earnings from such Permitted Investments
         in excess of the Purchase Price for the shares of Common Stock to be
         purchased by such Holder shall be distributed to the Purchase Contract
         Agent when received for payment to the Holder.

                  (iii) If a Holder of a PEPS Unit fails to notify the Purchase
         Contract Agent of his intention to make a Cash Settlement in accordance
         with paragraph 5.02(a)(i) above that is not a Cash Merger Early
         Settlement, or does notify the Purchase Contract Agent as provided in
         paragraph 5.02(a)(i) above of his intention to make a Cash Settlement
         that is not a Cash Merger Early Settlement, but fails to make such
         payment as required by paragraph 5.02(a)(ii) above, such Holder shall
         be deemed to have consented to the disposition of the Pledged Preferred
         Securities or the Pledged Subordinated Deferrable Notes pursuant to the
         Remarketing as described in paragraph 5.02(b) below.

                  (iv) Promptly after 11:00 a.m. (New York City time) on the
         fifth Business Day preceding the Purchase Contract Settlement Date, the
         Purchase Contract Agent, based on notices received by the Purchase
         Contract Agent pursuant to Section 5.02(a) hereof in connection with
         Cash Settlements that are not Cash Merger Early Settlements and notice
         from the Securities Intermediary regarding cash received by it prior to
         such time in connection with such Cash Settlements, shall notify the
         Collateral Agent and the Property Trustee of the aggregate number of
         Preferred Securities or Subordinated Deferrable Notes to be tendered
         for purchase in the Remarketing in a notice substantially in the form
         of Exhibit F hereto.

                  (v) A Holder of a PEPS Unit who has so notified the Purchase

<PAGE>   47

         Contract Agent of his intention to effect a Cash Settlement in
         accordance with paragraph 5.02(a)(i) above that is a Cash Merger Early
         Settlement shall pay the Purchase Price to the Securities Intermediary
         for deposit in the Collateral Account prior to 5:00 p.m. (New York City
         time) on the last Business Day of the applicable Early Settlement Week,
         in lawful money of the United States by certified or cashiers' check or
         wire transfer, in each case in immediately available funds payable to
         or upon the order of the Securities Intermediary. Any cash received by
         the Collateral Agent prior to the last day of the applicable Early
         Settlement Week shall be invested promptly by the Securities
         Intermediary in Permitted Investments and paid to the Company on the
         last day of the applicable Early Settlement Week in settlement of the
         Purchase Contracts in accordance with the terms of this Agreement and
         the Pledge Agreement. Any funds received by the Securities Intermediary
         in respect of the investment earnings from such Permitted Investments
         in excess of the Purchase Price for the shares of Common Stock to be
         purchased by such Holder shall be distributed to the Purchase Contract
         Agent when received for payment to the Holder.

                  (vi) If a Holder of a PEPS Unit notifies the Purchase Contract
         Agent as provided in paragraph 5.02(a)(i) above of his intention to
         make a Cash Settlement that is a Cash Merger Early Settlement, but
         fails to make such payment as required by paragraph 5.02(a)(v) above,
         such Holder shall be deemed to have consented to the redemption of the
         Pledged Preferred Securities or the Pledged Subordinated Deferrable
         Notes pursuant to Section 6 of the Pledge Agreement and in accordance
         with the Cash Merger Event Redemption provision of the Declaration or
         the corresponding redemption provision of the Pledged Subordinated
         Deferrable Notes, as the case may be and the application of the
         proceeds therefrom to the settlement of such Holder's obligations under
         the Purchase Contracts. All remaining amounts shall promptly be
         distributed to such Holder in accordance with the terms of the Pledge
         Agreement.

                  (vii) Promptly after 11:00 a.m. (New York City time) on the
         next Business Day immediately following the end of the Cash Merger
         Settlement Week, the Purchase Contract Agent, based on notices received
         by the Purchase Contract Agent pursuant to Section 5.02(a) hereof in
         connection with Cash Settlements that are Cash Merger Early Settlements
         and notice from the Securities Intermediary regarding cash received by
         it prior to such time in connection with such Cash Settlements, shall
         notify the Collateral Agent and the Property Trustee of the aggregate
         number of Preferred Securities or Subordinated Deferrable Notes to be
         tendered for purchase in

<PAGE>   48

         the applicable cash merger redemption in a notice substantially in the
         form of Exhibit F hereto.

                  (viii) In the event of a consolidation or merger of the
         Company with or into another Person, any merger of another Person into
         the Company (other than a merger that does not result in any
         reclassification, conversion, exchange or cancellation of outstanding
         shares of Common Stock) which closes before June 15, 2003 and in which
         30% or more of the total consideration paid to the Company's
         shareholders consists of cash or cash equivalents (the closing of such
         event, a "CASH MERGER EVENT") then a Holder of a Security may settle
         his Purchase Contract in a Cash Settlement as described in Section
         5.02(a)(i) or 5.02(d)(i) hereof (each, a "CASH MERGER EARLY
         SETTLEMENT"), as applicable, during the one week period beginning on
         the twenty-third Trading Day following the closing date of such merger
         (the "EARLY SETTLEMENT WEEK"), at the applicable Settlement Rate. For
         the purposes of this Section, the twenty-third Trading Day after the
         closing of the merger or consolidation shall be deemed to be the
         Purchase Contract Settlement Date for the purpose of determining the
         Applicable Market Value and the deadline for submitting the notice to
         settle early and the related cash payment shall be 5:00 p.m. (New York
         City time) of the last Business Day of the Early Settlement Week.

         (b) (i) In the case of Cash Settlements that are not Cash Merger Early
Settlements:

         In order to dispose of the Preferred Securities or Subordinated
Deferrable Notes, PEPS Units Holders who have not notified the Purchase Contract
Agent of their intention to effect a Cash Settlement as provided in paragraph
5.02(a)(i) above, or who have so notified the Purchase Contract Agent but failed
to make such payment as required by paragraph 5.02(a)(ii) above, the Company
shall engage Morgan Stanley & Co. Incorporated, as Remarketing Agent (the
"REMARKETING AGENT"), pursuant to the Remarketing Agreement to sell such
Preferred Securities or Subordinated Deferrable Notes. In order to facilitate
the Remarketing, the Purchase Contract Agent, based on the notices specified in
Section 5.02(a)(iv), shall notify the Remarketing Agent, promptly after 11:00
a.m. (New York City time) on the fifth Business Day immediately preceding August
18, 2003, of the aggregate number of Preferred Securities or Subordinated
Deferrable Notes that are part of PEPS Units to be remarketed. Concurrently, the
Collateral Agent, pursuant to the terms of the Pledge Agreement, shall cause
such Preferred Securities or Subordinated Deferrable Notes to be presented to
the Remarketing Agent for Remarketing.

         Upon receipt of such notice from the Purchase Contract Agent and such

<PAGE>   49

Preferred Securities or Subordinated Deferrable Notes, the Remarketing Agent
shall, on the third Business Day immediately preceding August 18, 2003, use
reasonable efforts to remarket such Preferred Securities or Subordinated
Deferrable Notes on such date at a price equal to 100.50% of the Stated Amount
($25.125) per Preferred Security or Subordinated Deferrable Note, as provided in
the Remarketing Agreement. The proceeds from the Remarketing shall be invested
by the Collateral Agent in Permitted Investments, in accordance with the Pledge
Agreement, and then applied to satisfy in full such PEPS Units Holders'
obligations to pay the Purchase Price for the shares of Common Stock under the
related Purchase Contracts on the Purchase Contract Settlement Date. In
addition, $.125 per Preferred Security or Subordinated Deferrable Note of the
proceeds shall automatically be remitted to the Remarketing Agent for services
rendered in connection with the Remarketing (the "REMARKETING FEE").

         If, in spite of using its reasonable efforts, the Remarketing Agent
cannot remarket the related Preferred Securities or Subordinated Deferrable
Notes of such Holders of PEPS Units at a price equal to 100.50% of the Stated
amount ($25.125), then the Remarketing Agent shall increase the distribution
rate on the Preferred Securities or the interest rate on the Subordinated
Deferrable Notes, as the case may be, so that the market value of such Preferred
Securities will equal $25.125. If the Remarketing Agent determines that it will
be able to remarket the related Preferred Securities or Subordinated Deferrable
Notes of such Holders of PEPS Units at a price in excess of 100.50% of the
Stated Amount ($25.125), then the Remarketing Agent shall decrease the
distribution rate on the Preferred Securities or the interest rate on the
Subordinated Deferrable Notes, as the case may be, so that the market value of
such Preferred Securities or Subordinated Deferrable Notes will be equal to
$25.125. If the Remarketing Agent cannot Remarket the Preferred Securities or
the Subordinated Deferrable Notes, as the case may be, after such increase or
decrease, the Remarketing shall be deemed to have failed (a "FAILED
REMARKETING"), an event of default shall be deemed to have occurred under this
Agreement and the Pledge Agreement and in accordance with the terms of the
Pledge Agreement, the Collateral Agent, for the benefit of the Company, shall
exercise its rights as a secured party with respect to such Preferred Securities
or Subordinated Deferrable Notes, including those actions specified in paragraph
5.02(c) below; provided, that if upon a Failed Remarketing the Collateral Agent
exercises such rights for the benefit of the Company with respect to such
Preferred Securities or Subordinated Deferrable Notes, any accrued and unpaid
distributions on such Preferred Securities or Subordinated Deferrable Notes
shall become payable by the Company to the Purchase Contract Agent for payment
to the Beneficial Owner of the PEPS Units to which such Preferred Securities or
Subordinated Deferrable Notes relate. The Company shall cause a notice of such
Failed Remarketing to be published on the second Business

<PAGE>   50

Day immediately preceding the Purchase Contract Settlement Date in a daily
newspaper in the English language of general circulation in the City of New
York, which is expected to be The Wall Street Journal, and on Bloomberg News.

                  (ii) In the case of Cash Settlements that are Cash Merger
         Early Settlements:

                  In order to dispose of the Preferred Securities or
Subordinated Deferrable Notes, at the end of the Business Day immediately
following the last day of the applicable Early Settlement Week, an event of
default shall be deemed to have occurred under this Agreement and the Pledge
Agreement and in accordance with the terms of the Pledge Agreement in respect of
PEPS Units of PEPS Units Holders who have notified the Purchase Contract Agent
of their intention to effect a Cash Settlement in respect of such PEPS Units, as
provided in paragraph 5.02(a)(i) above, but failed to make such payment as
required by paragraph 5.02(a)(v) above. The Collateral Agent, for the benefit of
the Company, shall exercise its rights as a secured party with respect to such
Preferred Securities or Subordinated Deferrable Notes, including those actions
specified in paragraph 5.02(c) below; provided, that if upon a such event of
default the Collateral Agent exercises such rights for the benefit of the
Company with respect to such Preferred Securities or Subordinated Deferrable
Notes, any accrued and unpaid distributions on such Preferred Securities or
Subordinated Deferrable Notes shall become payable by the Company to the
Purchase Contract Agent for payment to the Beneficial Owner of the PEPS Units to
which such Preferred Securities or Subordinated Deferrable Notes relate.

         (c) With respect to any Preferred Securities or Subordinated Deferrable
Notes which are subject to a Failed Remarketing or an event of default described
in Section 5.02(b)(ii) above, the Collateral Agent for the benefit of the
Company reserves all of its rights as a secured party with respect thereto and,
subject to applicable law and paragraph 5.02(g) below, may, among other things,
(i) retain the Preferred Securities or Subordinated Deferrable Notes in full
satisfaction of the Holders' obligations under the Purchase Contracts, (ii) sell
the Preferred Securities or Subordinated Deferrable Notes in one or more public
or private sales or (iii) retain any redemption proceeds therefrom to the extent
required to satisfy the Holders' obligations under the Purchase Contracts.

         (d) (i) Unless a Holder of a Treasury PEPS Units or PEPS Units (if a
Tax Event Redemption has occurred) effects an Early Settlement of the underlying
Purchase Contract through the early delivery of cash to the Purchase Contract
Agent in the manner described in Section 5.07, each Holder of a Treasury PEPS
Unit or PEPS Unit (if a Tax Event Redemption has occurred) who intends to pay in
cash shall

<PAGE>   51

notify the Purchase Contract Agent by use of a notice in substantially the form
of Exhibit E hereto of his intention to make a Cash Settlement for the shares of
Common Stock to be purchased pursuant to the related Purchase Contract. In the
case of a Cash Settlement that is not a Cash Merger Early Settlement, such
notice shall be given prior to 5:00 p.m. (New York City time) on the second
Business Day immediately preceding August 18, 2003. Prior to 11:00 a.m. (New
York City time) on the next succeeding Business Day, the Purchase Contract Agent
shall notify the Collateral Agent of the receipt of such notices from such
Holders intending to make a Cash Settlement. In the case of a Cash Settlement
that is a Cash Merger Early Settlement, such notice shall be given prior to 5:00
p.m. (New York City time) on the last Business Day of the applicable Early
Settlement Week. Prior to 11:00 a.m. (New York City time) on the next succeeding
Business Day, the Purchase Contract Agent shall notify the Collateral Agent and
the Indenture Trustee of the receipt of such notices from Holders intending to
make a Cash Settlement. Treasury PEPS Unit holders may make Cash Settlements
only in integral multiples of 40 Treasury PEPS Units.

                  (ii) A Holder of a Treasury PEPS Unit or PEPS Units (if a Tax
         Event Redemption has occurred) who has so notified the Purchase
         Contract Agent of his intention to make a Cash Settlement in accordance
         with paragraph 5.02(d)(i) above that is not a Cash Merger Early
         Settlement shall pay the Purchase Price to the Securities Intermediary
         for deposit in the Collateral Account prior to 11:00 a.m. (New York
         City time) on the Business Day immediately preceding August 18, 2003,
         in lawful money of the United States by certified or cashiers' check or
         wire transfer, in each case in immediately available funds payable to
         or upon the order of the Securities Intermediary. Any cash received by
         the Collateral Agent shall be invested promptly by the Securities
         Intermediary in Permitted Investments and paid to the Company on the
         Purchase Contract Settlement Date in settlement of the Purchase
         Contract in accordance with the terms of this Agreement and the Pledge
         Agreement. Any funds received by the Securities Intermediary in respect
         of the investment earnings from the investment in such Permitted
         Investments in excess of the Purchase Price for the shares of common
         stock to be purchased by such Holder shall be distributed to the
         Purchase Contract Agent when received for payment to the Holder.

                  (iii) If a Holder of a Treasury PEPS Unit or Holder of a PEPS
         Unit (if a Tax Event Redemption has occurred) fails to notify the
         Purchase Contract Agent of his intention to make a Cash Settlement in
         accordance with paragraph 5.02(d)(i) above that is not a Cash Merger
         Early Settlement, or does notify the Purchase Contract Agent as
         provided in paragraph 5.02(d)(i)

<PAGE>   52
         above of his intention to make a Cash Settlement that is not a Cash
         Merger Early Settlement, but fails to make such payment as required by
         paragraph 5.02(d)(ii) above, then upon the maturity of the Pledged
         Treasury Securities or the appropriate Applicable Ownership Interest
         (as specified in clause (A) of the definition of such term) of the
         Treasury Portfolio held by the Securities Intermediary on the Business
         Day immediately preceding the Purchase Contract Settlement Date, the
         principal amount of the Treasury Securities or the appropriate
         Applicable Ownership Interest (as specified in clause (A) of the
         definition of such term) of the Treasury Portfolio received by the
         Securities Intermediary shall be invested promptly in Permitted
         Investments. On the Purchase Contract Settlement Date, an amount equal
         to the Purchase Price shall be remitted to the Company as payment
         thereof without receiving any instructions from the Holder. In the
         event the sum of the proceeds from the related Pledged Treasury
         Securities or the appropriate Applicable Ownership Interest (as
         specified in clause (A) of the definition of such term) of the Treasury
         Portfolio and the investment earnings earned from such investments is
         in excess of the aggregate Purchase Price of the Purchase Contracts
         being settled thereby, the Collateral Agent shall cause the Securities
         Intermediary to distribute such excess to the Purchase Contract Agent
         for the benefit of the Holder of the related Treasury PEPS Unit or PEPS
         Unit when received.

                  (iv) A holder of a Preferred Security or Subordinated Deferred
         Note that is no longer part of a PEPS Unit may elect to have such
         Preferred Security or Subordinated Deferrable Note, as the case may be,
         remarketed. A holder making such an election must notify the Property
         Trustee prior to 11:00 a.m. (New York City time) on the fifth Business
         Day immediately preceding August 18, 2003, of the aggregate number of
         Preferred Securities or Subordinated Deferrable Notes, as the case may
         be, that are not part of PEPS Units to be remarketed. Any such notice
         will be irrevocable and may not be conditioned upon the level at which
         the Reset Rate is established in the Remarketing. Concurrently, the
         Property Trustee shall cause such Preferred Securities or Subordinated
         Deferrable Notes, as the case may be, to be presented to the
         Remarketing Agent for Remarketing.

                  (v) A Holder of a Treasury PEPS Unit or PEPS Units (if a Tax
         Event Redemption has occurred) who has so notified the Purchase
         Contract Agent of his intention to make a Cash Settlement in accordance
         with paragraph 5.02(d)(i) above that is a Cash Merger Early Settlement
         shall pay the Purchase Price to the Securities Intermediary for deposit
         in the Collateral Account prior to 5:00 p.m. (New York City time) on
         the last Business Day of

<PAGE>   53

         the applicable Early Settlement Week, in lawful money of the United
         States by certified or cashiers' check or wire transfer, in each case
         in immediately available funds payable to or upon the order of the
         Securities Intermediary. Any cash received by the Collateral Agent
         prior to the last Business Day of the applicable Early Settlement Week
         shall be invested promptly by the Securities Intermediary in Permitted
         Investments and paid to the Company on the Purchase Contract Settlement
         Date in settlement of the Purchase Contract in accordance with the
         terms of this Agreement and the Pledge Agreement. Any funds received by
         the Securities Intermediary in respect of the investment earnings from
         the investment in such Permitted Investments in excess of the Purchase
         Price for the shares of common stock to be purchased by such Holder
         shall be distributed to the Purchase Contract Agent when received for
         payment to the Holder.

                  (vi) If a Holder of a Treasury PEPS Unit or Holder of a PEPS
         Unit (if a Tax Event Redemption has occurred) notifies the Purchase
         Contract Agent of his intention to make a Cash Settlement in accordance
         with paragraph 5.02(d)(v) above that is a Cash Merger Early Settlement
         but fails to make such payment as required by paragraph 5.02(d)(ii)
         above, then no event of default under this Agreement or the Pledge
         Agreement and such Holder shall continue to own such Treasury PEPS Unit
         or PEPS Unit as if such Holder had never elected to make a Cash
         Settlement in connection with a Cash Merger Early Settlement.

         (e) Any distribution to Holders of excess funds described above shall
be payable at the office of the Purchase Contract Agent in New York City
maintained for that purpose or, at the option of the Holder, by check mailed to
the address of the Person entitled thereto at such address as it appears on the
Security Register.

         (f)      Upon Cash Settlement of any Purchase Contract:

                  (i) the Collateral Agent will in accordance with the terms of
         the Pledge Agreement cause the Pledged Preferred Securities, Pledged
         Subordinated Deferrable Notes, the appropriate Applicable Ownership
         Interest (as specified in clause (A) of the definition of such term) of
         the Treasury Portfolio or the Pledged Treasury Securities, as the case
         may be, underlying the relevant Security to be released from the
         Pledge, free and clear of any security interest of the Company, and
         transferred to the Purchase Contract Agent for delivery to the Holder
         thereof or its designee as soon as practicable; and

<PAGE>   54

                  (ii) subject to the receipt thereof, the Purchase Contract
         Agent shall, by book-entry transfer or other appropriate procedures, in
         accordance with written instructions provided by the Holder thereof,
         transfer such Preferred Securities, Subordinated Deferrable Notes, or
         the appropriate Applicable Ownership Interest (as specified in clause
         (A) of the definition of such term) of the Treasury Portfolio or such
         Treasury Securities, as the case may be (or, if no such instructions
         are given to the Purchase Contract Agent by the Holder, the Purchase
         Contract Agent shall hold such Preferred Securities, Subordinated
         Deferrable Notes, or the appropriate Applicable Ownership Interest (as
         specified in clause (A) of the definition of such term) of the Treasury
         Portfolio or such Treasury Securities, as the case may be, and any
         interest payment thereon, in the name of the Purchase Contract Agent or
         its nominee in trust for the benefit of such Holder until the
         expiration of the time period specified in the abandoned property laws
         of the relevant state).

         (g) The obligations of the Holders to pay the Purchase Price are
non-recourse obligations and, except to the extent satisfied by Early Settlement
or Cash Settlement, are payable solely out of the proceeds of any Collateral
pledged to secure the obligations of the Holders and in no event will Holders be
liable for any deficiency between the proceeds of the disposition of Collateral
and the Purchase Price.

         (h) The Company shall not be obligated to issue any shares of Common
Stock in respect of a Purchase Contract or deliver any certificates thereof to
the Holder of the related Security unless the Company shall have received
payment in full for the aggregate purchase price for the Common Stock to be
purchased thereunder in the manner herein set forth.

         SECTION 5.03               Issuance of Shares of Common Stock.

         (a) Unless a Termination Event, Cash Merger Early Settlement or an
Early Settlement shall have occurred, subject to Section 5.04(b), on the
Purchase Contract Settlement Date upon receipt of the aggregate Purchase Price
payable on all Outstanding Securities, the Company shall issue and deposit with
the Purchase Contract Agent, for the benefit of the Holders of the Outstanding
Securities, one or more certificates representing the shares of Common Stock
registered in the name of the Purchase Contract Agent (or its nominee) as
custodian for the Holders (such certificates for shares of Common Stock,
together with any dividends or distributions for which a record date and payment
date for such dividend or distribution has occurred after the Purchase Contract
Settlement Date, being hereinafter referred to as the "PURCHASE CONTRACT
SETTLEMENT FUND") to which the Holders are entitled hereunder.

<PAGE>   55

         Subject to the foregoing, upon surrender of a Certificate to the
Purchase Contract Agent on or after the Purchase Contract Settlement Date,
together with settlement instructions thereon duly completed and executed, the
Holder of such Certificate shall be entitled to receive forthwith in exchange
therefor a certificate representing that number of whole shares of Common Stock
which such Holder is entitled to receive pursuant to the provisions of this
Article Five (after taking into account all Securities then held by such
Holder), together with cash in lieu of fractional shares as provided in Section
5.09 and any dividends or distributions with respect to such shares constituting
part of the Purchase Contract Settlement Fund, but without any interest thereon,
and the Certificate so surrendered shall forthwith be cancelled. Such shares
shall be registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder to the Purchase
Contract Agent. If any shares of Common Stock issued in respect of a Purchase
Contract are to be registered to a Person other than the Person in whose name
the Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Certificate evidencing such
Purchase Contract or has established to the satisfaction of the Company that
such tax either has been paid or is not payable.

         (b)      [Reserved]

         SECTION 5.04               Adjustment of Settlement Rate.

         (a)      Adjustments for Dividends, Distributions, Stock Splits, Etc.

         (1) In case the Company shall pay or make a dividend or other
distribution on Common Stock in Common Stock, the Settlement Rate in effect at
the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which:

                  (i) the numerator shall be the number of shares of Common
         Stock outstanding at the close of business on the date fixed for such
         determination; and

                  (ii) the denominator shall be the sum of such number of shares
         and the total number of shares constituting such dividend or other
         distribution,

<PAGE>   56

such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company shall not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.

         (2) In case the Company shall issue rights, warrants or options to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of shareholders entitled to receive such
rights, warrants or options, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of Common
Stock on the date fixed for the determination of shareholders entitled to
receive such rights, warrants or options the Settlement Rate in effect at the
opening of business on the day following the date fixed for such determination
shall be increased by dividing such Settlement Rate by a fraction of which:

                  (i) the numerator shall be the number of shares of Common
         Stock outstanding at the close of business on the date fixed for such
         determination plus the number of shares of Common Stock which the
         aggregate of the offering price of the total number of shares of Common
         Stock so offered for subscription or purchase would purchase at such
         Current Market Price; and

                  (ii) the denominator shall be the number of shares of Common
         Stock outstanding at the close of business on the date fixed for such
         determination plus the number of shares of Common Stock so offered for
         subscription or purchase,

such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (2), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company agrees that it shall not issue
any such rights, warrants or options in respect of shares of Common Stock held
in the treasury of the Company.

<PAGE>   57

         (3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.

         (4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights, warrants or options referred to
in paragraph (2) of this Section 5.04(a), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 5.04(a)), the Settlement Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by a
fraction of which:

                  (i) the numerator shall be the Current Market Price per share
         of Common Stock on the date fixed for such determination less the then
         fair market value (as reasonably determined by the Board of Directors,
         whose determination shall be conclusive and the basis for which shall
         be described in a Board Resolution) of the portion of the assets or
         evidences of indebtedness so distributed applicable to one share of
         Common Stock; and

                  (ii) the denominator shall be such Current Market Price per
         share of Common Stock,

such adjustment to become effective immediately prior to the opening of business
on the day following the date fixed for the determination of shareholders
entitled to receive such distribution. In any case in which this paragraph (4)
is applicable, paragraph (2) of this Section 5.04(a) shall not be applicable. In
the event that such dividend or distribution is not so paid or made, the
Settlement Rate shall again be adjusted to be the Settlement Rate which would
then be in effect if such dividend or distribution had not been declared.

         (5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding:

<PAGE>   58

                  (i) any quarterly cash dividend on Common Stock to the extent
         that the aggregate cash dividend per share of Common Stock in any
         fiscal quarter does not exceed $.365 per share (the "Dividend
         Threshold"), and

                  (ii) any dividend or distribution in connection with the
         liquidation, dissolution or termination of the Company, whether
         voluntary or involuntary),

then, in such case, the Settlement Rate shall be increased so that the same
shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on such record date by a fraction of
which:

                  (i) the numerator shall be the Current Market Price of Common
         Stock on the record date less the amount of cash so distributed (and
         not excluded as provided above) applicable to one share of Common
         Stock; and

                  (ii) the denominator shall be the Current Market Price of
         Common Stock,

such increase to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price per share of Common Stock on the
record date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each holder of a Security shall have the right to receive upon
settlement of the Securities the amount of cash such Holder would have received
had such Holder settled each Security on the record date. In the event that such
dividend or distribution is not so paid or made, the Settlement Rate shall again
be adjusted to be the Settlement Rate which would then be in effect if such
dividend or distribution had not been declared. If any adjustment is required to
be made as set forth in this Section 5.04(a)(5) as a result of a distribution
that is a quarterly dividend, such adjustment shall be based upon the amount by
which such distribution exceeds the amount of the Dividend Threshold. If an
adjustment is required to be made as set forth in this Section 5.04(a)(5) above
as a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution. The Dividend Threshold
shall be adjusted to give effect to any exchange or conversion of Common Stock
into the capital stock of a successor entity by multiplying the Dividend
Threshold by the quotient of one dividend by the rate at which the Common Stock
is to be exchanged or converted into such successor entity's capital stock.

         (6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of Common Stock shall expire
and such tender or exchange offer (as amended upon the expiration thereof) shall
require

<PAGE>   59

the payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of Purchased Shares as
herein defined) of an aggregate consideration having a fair market value (as
reasonably determined by the Board of Directors, whose determination shall be
conclusive and the basis for which shall be described in a Board Resolution)
that combined together with the aggregate of the cash plus the fair market value
(as reasonably determined by the Board of Directors, whose determination shall
be conclusive and the basis for which shall be described in a Board Resolution),
as of the expiration of such tender or exchange offer, of consideration payable
in respect of any other tender or exchange offer, by the Company or any
subsidiary of the Company for all or any portion of Common Stock expiring within
the 12 months preceding the expiration of such tender or exchange offer and in
respect of which no adjustment pursuant to this paragraph (6) has been made, and
(II) the aggregate amount of any distributions to all holders of Common Stock
made exclusively in cash within the 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (6) has been made, exceeds 15% of the product of the Current Market
Price per share of Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate immediately
prior to the close of business on the date of the Expiration Time by a fraction:

                  (i) the numerator of which shall be equal to (A) the product
         of (I) the Current Market Price per share of Common Stock on the date
         of the Expiration Time and (II) the number of shares of Common Stock
         outstanding (including any tendered shares) on the Expiration Time less
         (B) the amount of cash plus the fair market value (determined as
         aforesaid) of the aggregate consideration payable to shareholders based
         on the transactions described in clauses (I) and (II) above (assuming
         in the case of clause (I) the acceptance, up to any maximum specified
         in the terms of the tender or exchange offer, of Purchased Shares); and

                  (ii) the denominator of which shall be equal to the product of
         (A) the Current Market Price per share of Common Stock as of the
         Expiration Time and (B) the number of shares of Common Stock
         outstanding (including any tendered shares) as of the Expiration Time
         less the number of all shares validly tendered and not withdrawn as of
         the Expiration Time (the shares deemed so accepted, up to any such
         maximum, being referred to as the

<PAGE>   60

"Purchased Shares").

         (7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.04(b) applies) shall be deemed to
involve:

                  (i) a distribution of such securities other than Common Stock
         to all holders of Common Stock (and the effective date of such
         reclassification shall be deemed to be "the date fixed for the
         determination of shareholders entitled to receive such distribution"
         and the "date fixed for such determination" within the meaning of
         paragraph (4) of this Section); and

                  (ii) a subdivision, split or combination, as the case may be,
         of the number of shares of Common Stock outstanding immediately prior
         to such reclassification into the number of shares of Common Stock
         outstanding immediately thereafter (and the effective date of such
         reclassification shall be deemed to be "the day upon which such
         subdivision or split becomes effective" or "the day upon which such
         combination becomes effective", as the case may be, and "the day upon
         which such subdivision, split or combination becomes effective" within
         the meaning of paragraph (3) of this Section).

         (8) The "Current Market Price" per share of Common Stock on any date of
determination means the average of the daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than 30
Trading Days before, and ending not later than, the earlier of such date of
determination and the day before the "ex date" with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "ex date," when used with respect to any issuance or distribution, shall
mean the first date on which Common Stock trades on such exchange or in such
market without the right to receive such issuance or distribution.

         (9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.04(a), an adjustment shall
also be made to the Applicable Market Value solely to determine which
of clauses (i), (ii) or (iii) of the definition of

<PAGE>   61

Settlement Rate in Section 5.01 will apply on the Purchase Contract Settlement
Date. Such adjustment shall be made by multiplying the Applicable Market Value
by a fraction of which the numerator shall be the Settlement Rate immediately
after such adjustment pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or
(10) of this Section 5.04(a) and the denominator shall be the Settlement Rate
immediately prior to such adjustment; provided, however, that if such adjustment
to the Settlement Rate is required to be made pursuant to the occurrence of any
of the events contemplated by paragraph (1), (2), (3), (4), (5), (6), (7) or
(10) of this Section 5.04(a) during the period taken into consideration for
determining the Applicable Market Value, appropriate and customary adjustments
shall be made to the Settlement Rate.

         (10) The Company may, but shall not be required to, make such increases
in the Settlement Rate, in addition to those required by this Section, as it
considers to be advisable in order to avoid or diminish any income tax to any
holders of shares of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes or for any other reason.

         (b)      Adjustment for Consolidation, Merger or Other Reorganization
                  Event.

         (1)      In the event of:

                  (i) any consolidation or merger of the Company with or into
         another Person (other than a merger or consolidation in which the
         Company is the continuing corporation and in which the shares of Common
         Stock outstanding immediately prior to the merger or consolidation are
         not exchanged for cash, securities or other property of the Company or
         another corporation);

                  (ii) any sale, transfer, lease or conveyance to another Person
         of the property of the Company as an entirety or substantially as an
         entirety;

                  (iii) any statutory share exchange of the Company with another
         Person (other than in connection with a merger or acquisition);

                  (iv) any liquidation, dissolution or termination of the
         Company other than as a result of or after the occurrence of a
         Termination Event, (any such event, a "REORGANIZATION EVENT").

the Settlement Rate will be adjusted to provide that each Holder of Securities
will be entitled to receive on the Purchase Contract Settlement Date or in
respect of an

<PAGE>   62

applicable Early Settlement or applicable Cash Merger Early Settlement, with
respect to each Purchase Contract forming a part thereof, the kind and amount of
securities, cash and other property receivable upon such Reorganization Event
(without any interest thereon, and without any right to dividends or
distribution thereon which have a record date that is prior to the Purchase
Contract Settlement Date) by a Holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date or applicable Early Settlement Date had occurred immediately
prior to such Reorganization Event, assuming such Holder of Common Stock is not
a Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be (any such Person, a "CONSTITUENT PERSON"), or an Affiliate of a
Constituent Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of the Company and
non-affiliates and such Holder failed to exercise his rights of election, if
any, as to the kind or amount of securities, cash and other property receivable
upon such Reorganization Event (provided that if the kind or amount of
securities, cash and other property receivable upon such Reorganization Event is
not the same for each share of Common Stock held immediately prior to such
Reorganization Event by other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised
("NON-ELECTING SHARE"), then for the purpose of this Section the kind and amount
of securities, cash and other property receivable upon such Reorganization Event
by each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares).

         In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation, dissolution or termination of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Purchase Contract Agent an agreement
supplemental hereto providing that each Holder of an Outstanding Security shall
have the rights provided by this Section 5.04(b). Such supplemental agreement
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The above
provisions of this Section shall similarly apply to successive Reorganization
Events.

         (c) All calculations and determinations pursuant to this Section 5.04
shall be made by the Company or its agent and the Purchase Contract Agent shall
have no responsibility with respect thereto.

<PAGE>   63

         SECTION 5.05           Notice of Adjustments and Certain Other Events.

         (a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:

                  (i) forthwith compute the adjusted Settlement Rate in
         accordance with Section 5.04 and prepare and transmit to the Purchase
         Contract Agent an Officers' Certificate setting forth the Settlement
         Rate, the method of calculation thereof in reasonable detail, and the
         facts requiring such adjustment and upon which such adjustment is
         based; and

                  (ii) within 10 Business Days following the occurrence of an
         event that requires an adjustment to the Settlement Rate pursuant to
         Section 5.04 (or if the Company is not aware of such occurrence, as
         soon as practicable after becoming so aware), provide a written notice
         to the Holders of the Securities of the occurrence of such event and a
         statement in reasonable detail setting forth the method by which the
         adjustment to the Settlement Rate was determined and setting forth the
         adjusted Settlement Rate.

         (b) The Purchase Contract Agent shall not at any time be under any duty
or responsibility to any Holder of Securities to determine whether any facts
exist which may require any adjustment of the Settlement Rate, or with respect
to the nature or extent or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Purchase Contract Agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at the time be issued or delivered with respect to any Purchase Contract;
and the Purchase Contract Agent makes no representation with respect thereto.
The Purchase Contract Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock pursuant to a
Purchase Contract or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article.

         SECTION 5.06           Termination Event; Notice.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, and the rights and obligations of Holders to
purchase Common Stock, shall immediately and automatically terminate, without
the necessity of any notice or action by any Holder, the Purchase Contract Agent
or the Company, if, prior to or on the Purchase Contract Settlement Date, a
Termination Event shall have occurred.

<PAGE>   64

         Upon and after the occurrence of a Termination Event, the Securities
shall thereafter represent the right to receive the Preferred Securities, the
Subordinated Deferrable Notes, the Treasury Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
forming part of such Securities, in accordance with the provisions of Section
5.02 of the Pledge Agreement. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register.

         SECTION 5.07               Early Settlement.

         (a) Subject to and upon compliance with the provisions of this Section
5.07, at the option of the Holder thereof, Purchase Contracts underlying
Securities may be settled early ("EARLY SETTLEMENT") on or prior to 5:00 p.m.
(New York City time) on the seventh Business Day immediately preceding the
Purchase Contract Settlement Date. Holders of Treasury PEPS Units may only
settle the related Purchase Contracts in integral multiples of 40 Purchase
Contracts. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
Securities shall deliver to the Purchase Contract Agent at the Corporate Trust
Office an Election to Settle Early form (on the reverse side of the Certificate)
and any other documents requested by the Purchase Contract Agent and accompanied
by payment (payable to the Company in immediately available funds) in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to the product of (A) the Stated Amount
times (B) the number of Purchase Contracts with respect to which the Holder has
elected to effect Early Settlement.

                  Except as provided in the immediately preceding sentence, no
payment shall be made upon Early Settlement of any Purchase Contract on account
of any dividends on the Common Stock issued upon such Early Settlement. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying any Securities prior to or at 5:00 p.m. (New York City time) on a
Business Day, such day shall be the "EARLY SETTLEMENT DATE" with respect to such
Securities and if such requirements are first satisfied after 5:00 p.m. (New
York City time) on a Business Day or on a day that is not a Business Day, the
"EARLY SETTLEMENT DATE" with respect to such Securities shall be the next
succeeding Business Day.

         (b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled to
receive  shares of Common Stock on account of each Purchase Contract as to
which Early Settlement is effected (the "EARLY SETTLEMENT RATE"). The Early
Settlement Rate

<PAGE>   65

shall be adjusted in the same manner and at the same time as the Settlement Rate
is adjusted.

         (c) No later than the third Business Day after the applicable Early
Settlement Date, the Company shall cause:

                  (i) the shares of Common Stock issuable upon Early Settlement
         of Purchase Contracts to be issued and delivered, together with payment
         in lieu of any fraction of a share, as provided in Section 5.09; and

                  (ii) the related Preferred Securities, Subordinated Deferrable
         Notes or the appropriate Applicable Ownership Interest (as specified in
         clause (A) of the definition of such term) of the Treasury Portfolio,
         in the case of PEPS Units, or the related Treasury Securities or the
         appropriate Applicable Ownership Interest (as specified in clause (A)
         of the definition of such term) of the Treasury Portfolio, in the case
         of Treasury PEPS Units, to be released from the Pledge by the
         Collateral Agent and transferred, in each case, to the Purchase
         Contract Agent for delivery to the Holder thereof or its designee.

         (d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Preferred Securities,
Subordinated Deferrable Notes, the appropriate Applicable Ownership Interest as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, or Treasury Securities, as the case may be, from the Securities
Intermediary, as applicable, the Purchase Contract Agent shall, in accordance
with the instructions provided by the Holder thereof on the Election to Settle
Early form (on the reverse of the Certificate evidencing the related
Securities):

                  (i) transfer to the Holder the Preferred Securities,
         Subordinated Deferrable Notes, the appropriate Applicable Ownership
         Interest (as specified in clause (A) of the definition of such term) of
         the Treasury Portfolio or Treasury Securities, as the case may be,
         forming a part of such Securities; and

                  (ii) deliver to the Holder a certificate or certificates for
         the full number of shares of Common Stock issuable upon such Early
         Settlement, together with payment in lieu of any fraction of a share,
         as provided in Section 5.09.

         (e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the
Purchase Contract Agent shall

<PAGE>   66

authenticate, countersign and deliver to the Holder thereof, at the expense of
the Company, a Certificate evidencing the Securities as to which Early
Settlement was not effected.

         (f) A Holder of a Security who effects Early Settlement may elect to
have the Preferred Securities or Subordinated Deferrable Notes, as the case may
be, no longer a part of a PEPS Unit, or Treasury PEPS Unit, as the case may be,
remarketed. A Holder making such an election must notify the Property Trustee
prior to 11:00 a.m. (New York City time) on the fifth Business Day immediately
preceding August 18, 2003, of the aggregate number of Preferred Securities or
Subordinated Deferrable Notes that are not part of PEPS Units or Treasury PEPS
Units, as the case may be, to be remarketed. Any such notice will be irrevocable
and may not be conditioned upon the level at which the Reset Rate is established
in the Remarketing. Concurrently, the Property Trustee shall cause such
Preferred Securities or Subordinated Deferrable Notes, as the case may be, to be
presented to the Remarketing Agent for Remarketing.

         SECTION 5.08               Intentionally Omitted.

         SECTION 5.09               No Fractional Shares.

         No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Cash Merger Early Settlement or Early Settlement of any
Purchase Contracts. If Certificates evidencing more than one Purchase Contract
shall be surrendered for settlement at one time by the same Holder, the number
of full shares of Common Stock which shall be delivered upon settlement shall be
computed on the basis of the aggregate number of Purchase Contracts evidenced by
the Certificates so surrendered. Instead of any fractional share of Common Stock
which would otherwise be deliverable upon settlement of any Purchase Contracts
on the Purchase Contract Settlement Date or upon Cash Merger Early Settlement or
Early Settlement, the Company, through the Purchase Contract Agent, shall make a
cash payment in respect of such fractional interest in an amount equal to the
value of such fractional shares times the Applicable Market Value. The Company
shall provide the Purchase Contract Agent from time to time with sufficient
funds to permit the Purchase Contract Agent to make all cash payments required
by this Section 5.09 in a timely manner.

         SECTION 5.10               Charges and Taxes.

         The Company will pay all stock transfer and similar taxes attributable
to the

<PAGE>   67

initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Purchase Contract Agent, as custodian for such Holder,
and the Company shall not be required to issue or deliver such share
certificates or Certificates unless or until the Person or Persons requesting
the transfer or issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.

                                    ARTICLE 6
                                    REMEDIES

         SECTION 6.01               Unconditional Right of Holders to Purchase
                   Shares of Common Stock.

         Each Holder of a Security shall have the right, which is absolute and
unconditional, to purchase shares of Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the enforcement of the
right to purchase shares of Common Stock, and such rights shall not be impaired
without the consent of such Holder.

         SECTION 6.02               Restoration of Rights and Remedies.

         If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.

         SECTION 6.03               Rights and Remedies Cumulative.

         Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent

<PAGE>   68

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.

         SECTION 6.04               Delay or Omission Not Waiver.

         No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.

         SECTION 6.05               Undertaking for Costs.

         All parties to this Agreement agree, and each Holder of a Security, by
its acceptance of such Security 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 Agreement, or in any suit against the Purchase Contract Agent
for any action taken, suffered or omitted by it as Purchase Contract Agent, 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 and costs 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; provided that the provisions of this
Section shall not apply to any suit instituted by the Purchase Contract Agent,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of distributions on any Preferred Securities
or interest on any Subordinated Deferrable Notes on or after the respective
Payment Date therefor in respect of any Security held by such Holder, or for
enforcement of the right to purchase shares of Common Stock under the Purchase
Contracts constituting part of any Security held by such Holder.

         SECTION 6.06               Waiver of Stay or Extension Laws.

         The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
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 Agreement; and the Company (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

<PAGE>   69

not hinder, delay or impede the execution of any power herein granted to the
Purchase Contract Agent or the Holders, but will suffer and permit the execution
of every such power as though no such law had been enacted.

                                    ARTICLE 7
                           THE PURCHASE CONTRACT AGENT

         SECTION 7.01               Certain Duties and Responsibilities.

         (a) The Purchase Contract Agent:

         (1) undertakes to perform, with respect to the Securities, such duties
and only such duties as are specifically set forth in this Agreement and the
Pledge Agreement, and no implied covenants or obligations shall be read into
this Agreement or the Pledge Agreement against the Purchase Contract Agent; and

         (2) in the absence of bad faith or gross negligence on its part, may,
with respect to the Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Purchase Contract Agent and conforming
to the requirements of this Agreement or the Pledge Agreement, as applicable,
but in the case of any certificates or opinions which by any provision hereof
are specifically required to be furnished to the Purchase Contract Agent, the
Purchase Contract Agent shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement or the Pledge
Agreement, as applicable (but need not confirm or investigate the accuracy of
the mathematical calculations or other facts stated therein).

         (b) No provision of this Agreement or the Pledge Agreement shall be
construed to relieve the Purchase Contract Agent from liability for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that:

         (1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;

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

         (3) no provision of this Agreement or the Pledge Agreement shall
require

<PAGE>   70

the Purchase Contract Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties hereunder, or in
the exercise of any of its rights or powers, if indemnity satisfactory to the
Purchase Contract Agent is not provided to it.

         (4) the Purchase Contract Agent 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 a majority in principal amount of the Outstanding
Securities.

         (c) Whether or not therein expressly so provided, every provision of
this Agreement and the Pledge Agreement relating to the conduct or affecting the
liability of or affording protection to the Purchase Contract Agent shall be
subject to the provisions of this Section.

         (d) The Purchase Contract Agent is authorized to execute and deliver
the Pledge Agreement in its capacity as Purchase Contract Agent.

         SECTION 7.02               Notice of Default.

         Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Purchase Contract Agent has
actual knowledge, the Purchase Contract Agent shall transmit by mail to the
Company and the Holders of Securities, as their names and addresses appear in
the Security Register, notice of such default hereunder, unless such default
shall have been cured or waived.

         SECTION 7.03               Certain Rights of Purchase Contract Agent.

         Subject to the provisions of Section 7.01:

         (1) the Purchase Contract Agent 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, Subordinated Note, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

         (2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;

<PAGE>   71

         (3) whenever in the administration of this Agreement or the Pledge
Agreement the Purchase Contract Agent shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any action
hereunder, the Purchase Contract Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part,
conclusively rely upon an Officers' Certificate of the Company;

         (4) the Purchase Contract Agent may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;

         (5) the Purchase Contract Agent 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 Purchase Contract Agent, in its discretion, and at the expense
of the Company, may make reasonable further inquiry or investigation into such
facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Purchase Contract Agent shall
determine to make such further inquiry or investigation, it shall be given a
reasonable opportunity to examine the relevant books, records and premises of
the Company, personally or by agent or attorney and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;

         (6) the Purchase Contract Agent may execute any of the powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or an Affiliate and the Purchase Contract Agent shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney or an Affiliate appointed with due care by it hereunder;

         (7) the Purchase Contract Agent shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request or direction of any of the Holders pursuant to this Agreement, unless
such Holders shall have offered to the Purchase Contract Agent security or
indemnity satisfactory to the Purchase Contract Agent against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;

         (8) the Purchase Contract Agent shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;

<PAGE>   72

         (9) the Purchase Contract Agent shall not be deemed to have notice of
any Default or Event of Default unless a Responsible Officer of the Purchase
Contract Agent has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Purchase Contract Agent
at the Corporate Trust Office of the Purchase Contract Agent, and such notice
references the Securities and this Agreement;

         (10) the Purchase Contract Agent may request that the Company deliver
an Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Agreement, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded; and

         (11) the rights, privileges, protections, immunities and benefits given
to the Purchase Contract Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Purchase Contract
Agent in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder.

         SECTION 7.04               Not Responsible for Recitals or Issuance of
Securities.

         The recitals contained herein and in the Certificates shall be taken as
the statements of the Company, and the Purchase Contract Agent assumes no
responsibility for their accuracy. The Purchase Contract Agent makes no
representations as to the validity or sufficiency of either this Agreement or of
the Securities, or of the Pledge Agreement or the Pledge. The Purchase Contract
Agent shall not be accountable for the use or application by the Company of the
proceeds in respect of the Purchase Contracts.

         SECTION 7.05               May Hold Securities.

         Any Security Registrar or any other agent of the Company, or the
Purchase Contract Agent and its Affiliates, in their individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, the Collateral Agent or any other Person with the same rights
it would have if it were not Security Registrar or such other agent, or the
Purchase Contract Agent. The Company may become the owner or pledgee of
Securities.

<PAGE>   73

         SECTION 7.06               Money Held in Custody.

         Money held by the Purchase Contract Agent in custody hereunder need not
be segregated from the other funds except to the extent required by law or
provided herein. The Purchase Contract Agent shall be under no obligation to
invest or pay interest on any money received by it hereunder except as otherwise
provided hereunder agreed in writing with the Company.

         SECTION 7.07               Compensation and Reimbursement.

         The Company agrees:

         (1) to pay to the Purchase Contract Agent compensation for all services
rendered by it hereunder and under the Pledge Agreement as the Company and the
Purchase Contract Agent shall from time to time agree in writing;

         (2) except as otherwise expressly provided for herein, to reimburse the
Purchase Contract Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Purchase Contract Agent in
accordance with any provision of this Agreement and the Pledge Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance as may be
attributable to its gross negligence or willful misconduct; and

         (3) to indemnify the Purchase Contract Agent and any predecessor
Purchase Contract Agent for, and to hold it harmless against, any loss,
liability or expense incurred without gross negligence or willful misconduct on
its part, arising out of or in connection with the acceptance or administration
of its duties hereunder, including the costs and expenses of defending itself
against any claim (whether asserted by the Company, a Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder.

         SECTION 7.08               Corporate Purchase Contract Agent Required;
Eligibility.

         There shall at all times be a Purchase Contract Agent hereunder which
shall be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having (or being a member of
a bank holding company having) a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by Federal or State authority
and having a corporate trust office in the Borough of Manhattan, New York City,
if there be such a corporation in

<PAGE>   74

the Borough of Manhattan, New York City, qualified and eligible under this
Article and willing to act on reasonable terms. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Purchase Contract Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.

         SECTION 7.09         Resignation and Removal; Appointment of Successor.

         (a) No resignation or removal of the Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 7.10.

         (b) The Purchase Contract Agent may resign at any time by giving
written notice thereof to the Company 60 days prior to the effective date of
such resignation. If the instrument of acceptance by a successor Purchase
Contract Agent required by Section 7.10 shall not have been delivered to the
Purchase Contract Agent within 30 days after the giving of such notice of
resignation, the resigning Purchase Contract Agent may petition, at the expense
of the Company, any court of competent jurisdiction for the appointment of a
successor Purchase Contract Agent.

         (c) The Purchase Contract Agent may be removed at any time by Act of
the Holders of a majority in number of the Outstanding Securities delivered to
the Purchase Contract Agent and the Company.

         (d) If at any time:

                  (1) the Purchase Contract Agent fails to comply with Section
         310(b) of the TIA, as if the Purchase Contract Agent were an indenture
         trustee under an indenture qualified under the TIA, after written
         request therefor by the Company or by any Holder who has been a bona
         fide Holder of a Security for at least six months;

                  (2) the Purchase Contract Agent shall cease to be eligible
         under Section 7.08 and shall fail to resign after written request
         therefor by the Company or by any such Holder; or

<PAGE>   75

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

         then, in any such case, (i) the Company by a Board Resolution may
remove the Purchase Contract Agent, or (ii) any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Purchase Contract Agent and the appointment of a successor
Purchase Contract Agent.

         (e) If the Purchase Contract Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Purchase
Contract Agent for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 7.10. If no successor Purchase Contract Agent shall have
been so appointed by the Company and accepted appointment in the manner required
by Section 7.10, any Holder who has been a bona fide Holder of a Security for at
least six months, on behalf of itself and all others similarly situated, or the
Purchase Contract Agent may petition at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Purchase Contract
Agent.

         (f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the applicable
Register. Each notice shall include the name of the successor Purchase Contract
Agent and the address of its Corporate Trust Office.

         SECTION 7.10               Acceptance of Appointment by Successor.

         (a) In case of the appointment hereunder of a successor Purchase
Contract Agent, every such successor Purchase Contract Agent so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Purchase
Contract Agent an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Purchase Contract Agent shall become
effective and such successor Purchase Contract Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, agencies
and duties of the retiring Purchase Contract Agent; but, on the request of the
Company or the successor Purchase

<PAGE>   76

Contract Agent, such retiring Purchase Contract Agent shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Purchase Contract Agent all the rights, powers and trusts of the retiring
Purchase Contract Agent and shall duly assign, transfer and deliver to such
successor Purchase Contract Agent all property and money held by such retiring
Purchase Contract Agent hereunder.

         (b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph 7.10(a) of this Section.

         (c) No successor Purchase Contract Agent shall accept its appointment
unless at the time of such acceptance such successor Purchase Contract Agent
shall be qualified and eligible under this Article.

         SECTION 7.11               Merger, Conversion, Consolidation or
               Succession to Business.

         Any corporation into which the Purchase Contract 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 the Purchase Contract
Agent shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Purchase Contract Agent, shall be the
successor of the Purchase Contract Agent hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article, with the execution
or filing of any paper or any further act on the part of any of the parties
hereto. In case any Certificates shall have been authenticated and executed on
behalf of the Holders, but not delivered, by the Purchase Contract Agent then in
office, any successor by merger, conversion or consolidation to such Purchase
Contract Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect as if such
successor Purchase Contract Agent had itself authenticated and executed such
Securities.

         SECTION 7.12               Preservation of Information; Communications
              to Holders.

         (a) The Purchase Contract Agent shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Security Registrar.

<PAGE>   77

         (b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Purchase Contract Agent, and furnish to the Purchase Contract
Agent reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Purchase Contract Agent shall mail to
all the Holders copies of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Purchase Contract Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.

         SECTION 7.13               No Obligations of Purchase Contract Agent.

         Except to the extent otherwise expressly provided in this Agreement,
the Purchase Contract Agent assumes no obligations and shall not be subject to
any liability under this Agreement, the Pledge Agreement or any Purchase
Contract in respect of the obligations of the Holder of any Security thereunder.
The Company agrees, and each Holder of a Certificate, by his acceptance thereof,
shall be deemed to have agreed, that the Purchase Contract Agent's execution of
the Certificates on behalf of the Holders shall be solely as agent and attorney-
in-fact for the Holders, and that the Purchase Contract Agent shall have no
obligation to perform such Purchase Contracts on behalf of the Holders, except
to the extent expressly provided in Article Five hereof. Anything contained in
this Agreement to the contrary notwithstanding, in no event shall the Purchase
Contract Agent or its officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Purchase Contract Agent,
incurred without any act or deed that is found to be attributable to gross
negligence or willful misconduct on the part of the Purchase Contract Agent.

         SECTION 7.14               Tax Compliance.

         (a) The Company and the Purchase Contract Agent will comply with all
applicable certification, information reporting and withholding (including
"backup" withholding) requirements imposed by applicable tax laws, regulations
or administrative practice with respect to (i) any payments made with respect to
the Securities or (ii) the issuance, delivery, holding, transfer, redemption or
exercise of rights under the Securities. Such compliance shall include, without
limitation, the preparation and timely filing of required returns and the timely
payment of all amounts required to be withheld to the appropriate taxing
authority or its designated agent.
<PAGE>   78

         (b) The Purchase Contract Agent shall comply in accordance with the
terms hereof with any written direction received from the Company with respect
to the execution or certification of any required documentation and the
application of such requirements to particular payments or Holders or in other
particular circumstances, and may for purposes of this Agreement conclusively
rely on any such direction in accordance with the provisions of Section
7.01(a)(2) hereof.

         (c) The Purchase Contract Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or its authorized representative
within a reasonable period of time after receipt of such request.

                                    ARTICLE 8
                             SUPPLEMENTAL AGREEMENTS

         SECTION 8.01 Supplemental Agreements Without Consent of Holders.

         Without the consent of any Holders, the Company and the Purchase
Contract Agent, at any time and from time to time, may enter into one or more
agreements supplemental hereto, in form satisfactory to the Company and the
Purchase Contract Agent, to:

                  (1) evidence the succession of another Person to the Company,
         and the assumption by any such successor of the covenants of the
         Company herein and in the Certificates;

                  (2) evidence and provide for the acceptance of appointment
         hereunder by a successor Purchase Contract Agent;

                  (3) add to the covenants of the Company for the benefit of the
         Holders, or surrender any right or power herein conferred upon the
         Company;

                  (4) make provision with respect to the rights of Holders
         pursuant to the requirements of Section 5.04(b); or

                  (5) except as provided for in Section 5.04, cure any
         ambiguity, correct or supplement any provisions herein which may be
         inconsistent with any other provisions herein, or make any other
         provisions with respect to such matters or questions arising under this
         Agreement, provided such action shall

<PAGE>   79

         not adversely affect the interests of the Holders.

                  SECTION 8.02 Supplemental Agreements with Consent of Holders.

         With the consent of the Holders of not less than a majority of the
outstanding Securities voting together as one class, by Act of said Holders
delivered to the Company and the Purchase Contract Agent, the Company, when
authorized by a Board Resolution, and the Purchase Contract Agent may enter into
an agreement or agreements supplemental hereto for the purpose of modifying in
any manner the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities; provided,
however, that, except as contemplated herein, no such supplemental agreement
shall, without the unanimous consent of the Holders of each outstanding Purchase
Contract affected thereby,

                  (1) change any Payment Date;

                  (2) change the amount or the type of Collateral required to be
         Pledged to secure a Holder's obligations under the Purchase Contract,
         impair the right of the Holder of any Purchase Contract to receive
         distributions on the related Collateral (except for the rights of
         Holders of PEPS Units to substitute Treasury Securities for the Pledged
         Preferred Securities or Pledged Subordinated Deferrable Notes or the
         Applicable Ownership Interest of the Treasury Portfolio or the rights
         of Holders or Treasury PEPS Units to substitute Preferred Securities,
         Subordinated Deferrable Notes or the Applicable Ownership Interest of
         the Treasury Portfolio for the Pledged Treasury Securities) or
         otherwise adversely affect the Holder's rights in or to such Collateral
         or adversely alter the rights in or to such Collateral;

                  (3) impair the right to institute suit for the enforcement of
         any Purchase Contract;

                  (4) reduce the number of shares of Common Stock to be
         purchased pursuant to any Purchase Contract, increase the price to
         purchase shares of Common Stock upon settlement of any Purchase
         Contract or change the Purchase Contract Settlement Date; or

                  (5) reduce the percentage of the outstanding Purchase
         Contracts the consent of whose Holders is required for any such
         supplemental agreement;

provided that if any amendment or proposal referred to above would adversely
affect

<PAGE>   80

only the PEPS Units or the Treasury PEPS Units, then only the affected class of
Holders as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or proposal
shall not be effective except with the consent of Holders of not less than a
majority of such class; and provided, further, that the unanimous consent of the
Holders of each outstanding Purchase Contract of such class affected thereby
shall be required to approve any amendment or proposal specified in clauses (1)
through (5) above.

         It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.

         SECTION 8.03 Execution of Supplemental Agreements.

         In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Purchase Contract Agent shall be
provided, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement. The Purchase Contract Agent may, but shall not be obligated to, enter
into any such supplemental agreement which affects the Purchase Contract Agent's
own rights, duties or immunities under this Agreement or otherwise.

         SECTION 8.04 Effect of Supplemental Agreements.

         Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder, shall be bound thereby.

         SECTION 8.05 Reference to Supplemental Agreements.

         Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent as to any matter
provided for in such supplemental agreement. If the Company shall so determine,
new Certificates so modified as to conform, in the opinion of the Purchase
Contract Agent and the Company, to any such supplemental agreement may be
prepared and executed by the Company and

<PAGE>   81

authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent in exchange for outstanding Certificates.

                                    ARTICLE 9
                     MERGER, CONSOLIDATION, SHARE EXCHANGE,
                               SALE OR CONVEYANCE

         SECTION 9.01 Covenant Not to Merge, Consolidate, Enter into a Share
                 Exchange, Sell or Convey Property Except under Certain
                 Conditions.

         The Company covenants that it will not merge, consolidate or enter into
a share exchange with any other Person or sell, assign, transfer, lease or
convey all or substantially all of its properties and assets to any Person or
group of affiliated Persons in one transaction or a series of related
transactions, unless:

                  (i) either the Company shall be the continuing corporation, or
         the successor (if other than the Company) shall be a corporation
         organized and existing under the laws of the United States of America
         or a State thereof or the District of Columbia and such corporation
         shall expressly assume all the obligations of the Company under the
         Purchase Contracts, this Agreement and the Pledge Agreement by one or
         more supplemental agreements in form reasonably satisfactory to the
         Purchase Contract Agent and the Collateral Agent, executed and
         delivered to the Purchase Contract Agent and the Collateral Agent by
         such corporation; and

                  (ii) the Company or such successor corporation, as the case
         may be, shall not, immediately after such merger, consolidation or
         share exchange, or such sale, assignment, transfer, lease or
         conveyance, be in default in the performance of any covenant or
         condition hereunder, under any of the Securities or under the Pledge
         Agreement.

         SECTION 9.02 Rights and Duties of Successor Corporation.

         In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor corporation in accordance with Section 9.01, such successor
corporation shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own name or in the
name of CMS Energy

<PAGE>   82

Corporation, any or all of the Certificates evidencing Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Purchase Contract Agent; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms, conditions
and limitations in this Agreement prescribed, the Purchase Contract Agent shall
authenticate and execute on behalf of the Holders and deliver any Certificates
which previously shall have been signed and delivered by the officers of the
Company to the Purchase Contract Agent for authentication and execution, and any
Certificate evidencing Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Purchase Contract Agent for that
purpose. All the Certificates issued shall in all respects have the same legal
rank and benefit under this Agreement as the Certificates theretofore or
thereafter issued in accordance with the terms of this Agreement as though all
of such Certificates had been issued at the date of the execution hereof.

         In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.

         SECTION 9.03 Officers' Certificate and Opinion of Counsel Given to
                 Purchase Contract Agent.

         The Purchase Contract Agent, subject to Sections 7.01 and 7.03, shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance, and any such assumption, complies with the
provisions of this Article and that all conditions precedent to the consummation
of any such merger, consolidation, share exchange, sale, assignment, transfer,
lease or conveyance have been met.

                                   ARTICLE 10
                                    COVENANTS

         SECTION 10.01 Performance under Purchase Contracts.

         The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.

<PAGE>   83

         SECTION 10.02 Maintenance of Office or Agency.

         The Company will maintain in the Borough of Manhattan, New York City an
office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
on the Purchase Contract Settlement Date or in connection with a Cash Merger
Early Settlement or an Early Settlement and for transfer of Collateral upon
occurrence of a Termination Event, where Certificates may be surrendered for
registration of transfer or exchange, for a Collateral Substitution or
reestablishment of PEPS Units and where notices and demands to or upon the
Company in respect of the Securities and this Agreement may be served. The
Company will give prompt written notice to the Purchase Contract Agent of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Purchase Contract Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Purchase Contract
Agent as its agent to receive all such presentations, surrenders, notices and
demands.

         The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, New York City for such purposes. The Company will give
prompt written notice to the Purchase Contract Agent of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby designates as the place of payment for the Securities the
Corporate Trust Office and appoints the Purchase Contract Agent at its Corporate
Trust Office as paying agent in such city.

         SECTION 10.03 Company to Reserve Common Stock.

         The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.

         SECTION 10.04 Covenants as to Common Stock.

         The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a

<PAGE>   84

part of the Outstanding Securities will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.

         SECTION 10.05 Statements of Officers of the Company as to Default.

         The Company will deliver to the Purchase Contract Agent, within 140
days after the end of each fiscal year of the Company (which as of the date
hereof is December 31) ending after the date hereof, an Officers' Certificate
(one of the signers of which shall be the principal executive officer, principal
financial officer or principal accounting officer of the Company), stating
whether or not to the knowledge of the signers thereof the Company is in default
in the performance and observance of any of the terms, provisions and conditions
hereof, and if the Company shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge.

         SECTION 10.06 ERISA.

         Each Holder from time to time of the Securities that is a Plan hereby
represents that its acquisition of the PEPS Units and the holding of the same
satisfies the applicable fiduciary requirements of ERISA and that it is entitled
to exemption relief from the prohibited transaction provisions of ERISA and the
Code in accordance with one or more prohibited transaction exemptions or
otherwise will not result in a nonexempt prohibited transaction.

                       [SIGNATURES ON THE FOLLOWING PAGE]

<PAGE>   85

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                  CMS ENERGY CORPORATION

                                  By:
                                     --------------------------------------
                                     Name:  Alan M. Wright
                                     Title: Senior Vice President and Chief
                                               Financial Officer

                                  THE BANK OF NEW YORK,
                                  as Purchase Contract Agent

                                  By:
                                     --------------------------------------
                                     Name:
                                     Title:

<PAGE>   86

                                                                       EXHIBIT A

                         FACE OF PEPS UNITS CERTIFICATE

         [THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"),
OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT
AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS
CERTIFICATE 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

                                                      No.[   ]Cusip No.
                                                                       --------
[Number of PEPS Units]

                             CMS ENERGY CORPORATION
                              CMS Energy Trust III
                                   PEPS UNITS

         This PEPS Units Certificate certifies that Cede & Co. is the registered
Holder of the number of PEPS Units set forth above. Each PEPS Unit consists of
(i) either (a) the beneficial ownership by the Holder of one Preferred Security
(the "PREFERRED

<PAGE>   87

SECURITY") of CMS Energy Trust III, a Delaware statutory business trust (the
"TRUST"), having a stated liquidation amount of $25, subject to the Pledge of
such Preferred Security by such Holder pursuant to the Pledge Agreement, or (b)
upon the occurrence of a Tax Event Redemption prior to the Purchase Contract
Settlement Date, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio by such
Holder pursuant to the Pledge Agreement, and (ii) the rights and obligations of
the Holder under one Purchase Contract with CMS Energy Corporation, a Delaware
corporation (the "COMPANY"). All capitalized terms used herein which are defined
in the Purchase Contract Agreement (as defined on the reverse hereof) have the
meaning set forth therein.

         Pursuant to the Pledge Agreement, the Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be,
constituting part of each PEPS Unit evidenced hereby has been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising part of such PEPS Unit. The
Pledge Agreement provides that all payments of the liquidation amount with
respect to any of the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, or cash distributions on any
Pledged Preferred Securities (as defined in the Pledge Agreement) or the
appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be,
constituting part of the PEPS Units received by the Securities Intermediary
shall be paid by wire transfer in same day funds (i) in the case of (A) cash
distributions with respect to Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, and (B) any payments
of the liquidation amount with respect to any Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, that
have been released from the Pledge pursuant to the Pledge Agreement, to the
Purchase Contract Agent to the account designated by the Purchase Contract
Agent, no later than 2:00 p.m., New York City time, on the Business Day such
payment is received by the Securities Intermediary (provided that in the event
such payment is received by the Securities Intermediary on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business Day, then
such payment shall be made no later than 10:30 a.m., New York City time, on the
next succeeding Business Day) and (ii) in the case of payments of the
liquidation or redemption amount with respect to any of the Pledged Preferred
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition

<PAGE>   88

of such term) of the Treasury Portfolio, to the Company on the Purchase Contract
Settlement Date (as described herein) in accordance with the terms of the Pledge
Agreement, in full satisfaction of the respective obligations of the Holders of
the PEPS Units of which such Pledged Preferred Securities or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, are a part under the Purchase
Contracts forming a part of such PEPS Units. Distributions on any Preferred
Security or the appropriate Applicable Ownership Interest (as specified in
clause (B) of the definition of such term) of the Treasury Portfolio, as the
case may be, forming part of a PEPS Unit evidenced hereby, which are payable
quarterly in arrears on August 18, November 18, February 18 and May 18 of each
year, commencing November 18, 2000 (a "PAYMENT DATE"), shall, subject to receipt
thereof by the Purchase Contract Agent from the Securities Intermediary, be paid
to the Person in whose name this PEPS Unit Certificate (or a Predecessor PEPS
Unit Certificate) is registered at the close of business on the Record Date for
such Payment Date.

         Each Purchase Contract evidenced hereby obligates the Holder of this
PEPS Units Certificate to purchase, and the Company to sell, on August 18, 2003
(the "PURCHASE CONTRACT SETTLEMENT DATE"), at a price equal to $25 (the "STATED
AMOUNT"), a number of shares of Common Stock, $0.01 par value ("COMMON STOCK"),
of the Company, equal to the Settlement Rate, unless on or prior to the Purchase
Contract Settlement Date there shall have such occurred a Termination Event or a
Cash Merger Early Settlement or an Early Settlement with respect to the PEPS
Unit of which such Purchase Contract is a part, all as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. The purchase
price (the "PURCHASE PRICE") for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid
on the Purchase Contract Settlement Date by application of payment received in
respect of the liquidation amount with respect to any Pledged Preferred
Securities pursuant to the Remarketing or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, pledged to secure the obligations under
such Purchase Contract of the Holder of the PEPS Unit of which such Purchase
Contract is a part.

         Distributions on the Preferred Securities and the Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) will be
payable at the office of the Purchase Contract Agent in New York City or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto as such address appears on the PEPS Units Register.

         Reference is hereby made to the further provisions set forth on the
reverse

<PAGE>   89

hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Purchase Contract Agent by manual signature, this PEPS Units Certificate
shall not be entitled to any benefit under the Pledge Agreement or the Purchase
Contract Agreement or be valid or obligatory for any purpose.

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

                                  CMS ENERGY CORPORATION

                                  By:
                                     --------------------------------------
                                     Name:  Alan M. Wright
                                     Title: Senior Vice President and Chief
                                               Financial Officer

                                  HOLDER SPECIFIED ABOVE (as to
                                  obligations of such Holder under the
                                  Purchase Contracts)

                                  By: THE BANK OF NEW YORK, not
                                  individually but solely as Attorney-in-Fact
                                  of such Holder

                                  By:
                                     --------------------------------------
                                     Name:
                                     Title:

DATED:  August 22, 2000

<PAGE>   90

                          CERTIFICATE OF AUTHENTICATION
                           OF PURCHASE CONTRACT AGENT

         This is one of the PEPS Units Certificates referred to in the within
mentioned Purchase Contract Agreement.

                                  By: THE BANK OF NEW YORK, as
                                  Purchase Contract Agent

                                  By:
                                      -------------------------------------
                                            Authorized Signatory

Dated: August 22, 2000

<PAGE>   91

                   (FORM OF REVERSE OF PEPS UNITS CERTIFICATE)

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of August 22, 2000 (as may be supplemented from
time to time, the "PURCHASE CONTRACT AGREEMENT"), between the Company and The
Bank of New York, as Purchase Contract Agent (including its successors
hereunder, the "PURCHASE CONTRACT AGENT"), to which Purchase Contract Agreement
and supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the PEPS Units Certificates are, and are to
be, executed and delivered.

         Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this PEPS Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE"), a
number of shares of Common Stock equal to the Settlement Rate, unless, prior to
or on the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part or an Early Settlement shall have occurred. The "SETTLEMENT RATE" is
equal to:

                  (1) if the Applicable Market Value (as defined below) is
         greater than or equal to $ (the "THRESHOLD APPRECIATION PRICE"),
         shares of Common Stock per Purchase Contract;

                  (2) if the Applicable Market Value is less than the Threshold
         $ but greater than $ (the "FLOOR PRICE"), the number of shares of
         Common Stock per Purchase Contract having a value, based on the
         Applicable Market Value, equal to $25; and

                  (3) if the Applicable Market Value is less than or equal to $
         shares of Common Stock per Purchase Contract,

in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).

         No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

         Each Purchase Contract evidenced hereby, which is settled either
through

<PAGE>   92

Early Settlement or Cash Settlement, shall obligate the Holder of the related
PEPS Unit to purchase at the Purchase Price, and the Company to sell, a number
of shares of Common Stock equal to the Early Settlement Rate or the Settlement
Rate, as applicable.

         The "APPLICABLE MARKET VALUE" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "CLOSING PRICE" per share of Common Stock on any date of
determination means:

                  (1) the closing sale price (or, if no closing price is
         reported, the last reported sale price) per share on the New York Stock
         Exchange, Inc. (the "NYSE") on such date;

                  (2) if Common Stock is not listed for trading on the NYSE on
         any such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which Common Stock is so listed;

                  (3) if Common Stock is not so listed on a United States
         national or regional securities exchange, the closing sale price per
         share as reported by The NASDAQ Stock Market, Inc.;

                  (4) if Common Stock is not so reported, the last quoted bid
         price for Common Stock in the over-the-counter market as reported by
         the National Quotation Bureau or similar organization; or

                  (5) if such bid price is not available, the average of the
         mid-point of the last bid and ask prices of Common Stock on such date
         from at least three nationally recognized independent investment
         banking firms retained for this purpose by the Company.

         A "TRADING DAY" means a day on which Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of Common
Stock.

<PAGE>   93

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this PEPS Units Certificate may pay the Purchase Price for the shares
of Common Stock purchased pursuant to each Purchase Contract evidenced hereby by
effecting a Cash Settlement or an Early Settlement or from the proceeds of the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or a Remarketing or redemption of the
related Pledged Preferred Securities. A Holder of PEPS Units who does not
effect, on or prior to 11:00 a.m. (New York City time) on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date (or in the event a
Tax Event Redemption has occurred, the Business Day prior to the Purchase
Contract Settlement Date), an effective Cash Settlement not in connection with a
Cash Merger Early Settlement, or, who does not effect on or prior to 5:00 p.m.
(New York City time) on the seventh Business Day prior to the Purchase Contract
Settlement Date, an effective Early Settlement, shall pay the Purchase Price for
the shares of Common Stock to be delivered under the related Purchase Contract
from the proceeds of the sale of the related Pledged Preferred Securities held
by the Collateral Agent. Such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement on the third Business Day
prior to the Purchase Contract Settlement Date. If, as provided in the Purchase
Contract Agreement, upon the occurrence of a Failed Remarketing, the Collateral
Agent, for the benefit of the Company, exercises its rights as a secured
creditor with respect to the Pledged Preferred Securities related to this PEPS
Units certificate, any accrued and unpaid distributions on such Pledged
Preferred Securities will become payable by the Company to the holder of this
PEPS Units Certificate in the manner provided for in the Purchase Contract
Agreement. A Holder of PEPS Units who does not effect, on or prior to 5:00 p.m.
(New York City time) on the last Business Day of the applicable Early Settlement
Week, an effective Cash Settlement in connection with a Cash Merger Early
Settlement, shall pay the Purchase Price for the shares of Common Stock to be
delivered under the related Purchase Contract from the proceeds of the Cash
Merger Early Redemption of the related Pledged Preferred Securities held by the
Collateral Agent. All amounts in excess of those required to settle such
Holder's obligations under the Purchase Contracts that are in default, including
Cash Merger Early Redemption amounts in excess of the stated liquidation amount
of the Pledged Preferred Securities and any accrued and unpaid distributions on
such Pledged Preferred Securities, will become payable by the Company to the
holder of this PEPS Units Certificate in the manner provided for in the Purchase
Contract Agreement.

         The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.

<PAGE>   94

         Each Purchase Contract evidenced hereby and all obligations and rights
of the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the PEPS Unit Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Preferred Security or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio forming a part of each PEPS Unit from the Pledge. A PEPS Unit shall
thereafter represent the right to receive the Preferred Security or the
appropriate Applicable Ownership Interest of the Treasury Portfolio forming a
part of such PEPS Unit in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement.

         Under the terms of the Pledge Agreement, except as otherwise set forth
therein, the Purchase Contract Agent will be entitled to exercise the voting and
any other consensual rights pertaining to the Pledged Preferred Securities.
Except as otherwise set forth in the Pledge Agreement, upon receipt of notice of
any meeting at which holders of Preferred Securities are entitled to vote or
upon the solicitation of consents, waivers or proxies of holders of Preferred
Securities, the Purchase Contract Agent shall, as soon as practicable
thereafter, mail to the PEPS Units Holders a notice:

                  (1) containing such information as is contained in the notice
         or solicitation;

                  (2) stating that each PEPS Unit Holder on the record date set
         by the Purchase Contract Agent therefor (which, to the extent possible,
         shall be the same date as the record date for determining the holders
         of Preferred Securities entitled to vote) shall be entitled to instruct
         the Purchase Contract Agent as to the exercise of the voting rights
         pertaining to the Preferred Securities constituting a part of such
         Holder's PEPS Unit; and

                  (3) stating the manner in which such instructions may be
         given.

Upon the written request of the PEPS Unit Holders on such record date, the
Purchase Contract Agent shall endeavor insofar as practicable to vote or cause
to be voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of a PEPS Unit, the Purchase Contract Agent shall abstain from voting the
Preferred Security evidenced by such

<PAGE>   95

PEPS Unit.

         Upon the dissolution and liquidation of the Trust, a principal amount
of the Subordinated Deferrable Notes constituting the assets of the Trust and
underlying the Preferred Securities equal to the aggregate liquidation amount of
the Pledged Preferred Securities shall be delivered to the Securities
Intermediary in exchange for the Pledged Preferred Securities. Thereafter, the
Subordinated Deferrable Notes shall be held by the Securities Intermediary to
secure the obligations of each Holder of PEPS Units to purchase shares of Common
Stock under the Purchase Contracts constituting a part of such PEPS Units.
Following the dissolution and liquidation of the Trust, the Holders and the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Subordinated Deferrable Notes as the Holders and the Collateral
Agent had in respect of the Pledged Preferred Securities, any reference herein
to the Preferred Securities shall be deemed to be a reference to the
Subordinated Deferrable Notes and any reference herein to the liquidation amount
of the Preferred Securities shall be deemed to be a reference to the principal
amount of the Subordinated Deferrable Notes.

         Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Subordinated
Deferrable Notes shall be delivered to the Securities Intermediary in exchange
for the Pledged Preferred Securities. Thereafter, pursuant to the terms of the
Pledge Agreement, the Securities Intermediary will apply an amount equal to the
Redemption Amount of such Redemption Price to purchase on behalf of the Holders
of PEPS Units, the Treasury Portfolio and promptly (a) transfer the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio to the Collateral Account to secure the obligations of
each Holder of PEPS Units to purchase shares of Common Stock under the Purchase
Contracts constituting a part of such PEPS Units, (b) transfer the Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio to the Purchase Contract Agent for the benefit of the
Holders of such PEPS Units and (C) remit the remaining portion of such
Redemption Price to the Purchase Contract Agent for payment to the Holders of
such PEPS Units.

         Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Holders of PEPS Units and the Collateral
Agent shall have such security interest rights and obligations with respect to
the Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio as the Holder of PEPS Units and the
Collateral Agent had in respect of the Preferred Securities or Subordinated
Deferrable Notes, as the case may

<PAGE>   96

be, subject to the Pledge thereof as provided in the Pledge Agreement and any
reference herein to the Preferred Securities shall be deemed to be a reference
to such Treasury Portfolio.

         The PEPS Certificates are issuable only in registered form and only in
denominations of a single PEPS Unit and any integral multiple thereof. The
transfer of any PEPS Units Certificate will be registered and PEPS Units
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The PEPS Units Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Purchase Contract
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A Holder who elects to
substitute a Treasury Security for Preferred Securities, thereby creating
Treasury PEPS Units, shall be responsible for any fees or expenses payable in
connection therewith. Except as provided in the Purchase Contract Agreement, for
so long as the Purchase Contract underlying a PEPS Unit remains in effect, such
PEPS Unit shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such PEPS Unit in respect of the Preferred
Securities and Purchase Contract constituting such PEPS Unit may be transferred
and exchanged only as a PEPS Unit.

         The Holder of PEPS Units may substitute for the Pledged Preferred
Securities securing such Holder's obligations under the related Purchase
Contracts Treasury Securities in an aggregate principal amount equal to the
aggregate liquidation amount of the Pledged Preferred Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, each Security for which such Pledged
Treasury Securities secures the Holder's obligation under the Purchase Contract
shall be referred to as a "TREASURY PEPS UNIT". A Holder may make such
Collateral Substitution only in integral multiples of 40 PEPS Units for 40
Treasury PEPS Units.

         A Holder of Treasury PEPS Units may recreate PEPS Units by delivering
to the Securities Intermediary Preferred Securities equal to the aggregate
principal amount of the Pledged Treasury Securities in exchange for the release
of such Pledged Treasury Securities in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. A Holder may recreate PEPS Units in
integral multiples of 40 Treasury PEPS Units for 40 PEPS Units.

         If a Tax Event Redemption has occurred, a PEPS Unit Holder may not
create Treasury PEPS Units, and a Treasury PEPS Unit Holder may not recreate a
PEPS

<PAGE>   97

Unit.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Purchase
Contract Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Purchase Contract Agent, the
Collateral Agent and the Holders, at their addresses as they appear in the PEPS
Units Register. Upon and after the occurrence of a Termination Event, the
Collateral Agent shall release the Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, from the Pledge in
accordance with the provisions of the Pledge Agreement.

         Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("EARLY SETTLEMENT") as provided in
the Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this PEPS Units
Certificate, the Holder of this PEPS Units Certificate shall deliver to the
Purchase Contract Agent at the Corporate Trust Office an Election to Settle
Early form set forth below and any other documents requested by the Purchase
Contract Agent duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to the product of (A) $25 times (B) the
number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement.

         Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, underlying such Securities shall
be released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a PEPS Unit as to which Early Settlement
is effected equal to shares of Common Stock per Purchase Contract (the "EARLY
SETTLEMENT RATE"). The Early Settlement Rate shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as provided in
the Purchase Contract Agreement.

         Upon registration of transfer of this PEPS Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such

<PAGE>   98

transferee, except as may be required by the Purchase Contract Agent pursuant to
the Purchase Contract Agreement), under the terms of the Purchase Contract
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
PEPS Units Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.

         The Holder of this PEPS Units Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the PEPS Units evidenced hereby on its behalf
as its attorney-in-fact, expressly withholds any consent to the assumption
(i.e., affirmance) of the Purchase Contracts by the Company or its trustee in
the event that the Company becomes the subject of a case under the Bankruptcy
Code, agrees to be bound by the terms and provisions thereof, covenants and
agrees to perform his obligations under such Purchase Contracts, consents to the
provisions of the Purchase Contract Agreement, authorizes the Purchase Contract
Agent to enter into and perform the Purchase Contract Agreement and the Pledge
Agreement on its behalf as its attorney-in-fact, and consents to the Pledge of
the Preferred Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, underlying this PEPS Units Certificate pursuant
to the Pledge Agreement. The Holder further covenants and agrees that, to the
extent and in the manner provided in the Purchase Contract Agreement and the
Pledge Agreement, but subject to the terms thereof, payments in respect to the
aggregate liquidation amount of the Pledged Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, on the
Purchase Contract Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.

         Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

         The Purchase Contracts shall be governed by, and construed in
accordance with, the laws of the State of New York.

         The Company, the Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract Agent may treat the Person in
whose name this PEPS Units Certificate is registered as the owner of the PEPS
Units evidenced

<PAGE>   99

hereby for the purpose of receiving payments of distributions payable quarterly
on the Preferred Securities, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Purchase Contract Agent nor any such agent shall be affected by notice to
the contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Purchase Contract Agent.

<PAGE>   100

                                  ABBREVIATIONS

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

TEN COM:                 as tenants in common

UNIF GIFT MIN ACT:                             Custodian
                         ---------------------           ------------------
                                (cust)                        (minor)

                         Under Uniform Gifts to Minors Act of
                                                              -------------
TENANT:                  as tenants by the entireties

JT TEN:                  as joint tenants with right of survivorship and not as
                    tenants in common

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

<PAGE>   101
         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

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

------------------------------------------------------
(Please insert Social Security or Tazpayer I.D. or other Identifying Number of
Assignee)

------------------------------------------------------------------------------
--
(Please Print or type Name and Address Including Postal Zip code of Assignee)

the within PEPS Units Certificates and all rights thereunder, hereby irrevocably
constituting and appointing attorney           , to transfer side PEPS Units
Certificates on the books of CMAS Energy Corporation and CMS Energy Trust III
with full power of substitution in the premises.

Dated:
          ------------------
Signaure:
          -------------------

                           NOTICE: The signature to this assignment must
                           correspond with the name as it appears upon the face
                           of the within PEPS Units Certificates in every
                           particular, without alteration or enlargement or any
                           charge whatsoever.

               Signature Guarantee:
                                   -----------------------------------
<PAGE>   102
                             SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of PEPS Units evidenced by
this PEPS Units Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

Dated:
      --------------------------

Signature
          -------------------------------

Signature Guarantee:
                     ------------------------------
                     (if assigned to another person)

If shares are to be registered in the name of
and delivered to a Person other than the        REGISTERED HOLDER
Holder, please (i) print such Person's name
and address and (ii) provide a guarantee of     Please print name and address
your signature:                                 of Register Holder:

---------------------------------               --------------------------------
Name                                            Name

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

---------------------------------
Address                                         Address

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

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

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

Social Security or other
Taxpayer Identification
Number, if any

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

<PAGE>   103

                             SETTLEMENT INSTRUCTIONS

         In connection with the Cash Merger Event dated              ,     , the
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the settlement date in respect of the
corresponding Cash Merger Early Settlement of the Purchase Contracts underlying
the number of PEPS Units evidenced by this PEPS Units Certificate specified
below be registered in the name of, and delivered, together with a check in
payment for any fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated below. If shares
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.

Dated:
      -----------------------------

Signature:
          ---------------------------------

Signature Guarantee:
                    -------------------------------
                    (if assigned to another person)

Number of Securities evidenced hereby as to which Cash Merger Early Settlement
is being elected:

If shares are to be registered in the name of
and delivered to a Person other than the        REGISTERED HOLDER
Holder, please (i) print such Person's name
and address and (ii) provide a guarantee of     Please print name and address
your signature:                                 of Register Holder:

---------------------------------               --------------------------------
Name                                            Name

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

---------------------------------
Address                                         Address

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

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

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

<PAGE>   104

Social Security or other
Taxpayer Identification
Number, if any                         ---------------------------------

Transfer Instructions for Pledged Preferred Securities or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, transferable
upon such Cash Merger Early Settlement:

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

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

--------------------------------------------------------------------------------
<PAGE>   105

                            ELECTION TO SETTLE EARLY

         The undersigned Holder of this PEPS Units Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of PEPS Units evidenced by this PEPS Units
Certificate specified below. The undersigned Holder directs that a certificate
for shares of Common Stock deliverable upon such Early Settlement be registered
in the name of, and delivered, together with a check in payment for any
fractional share and any PEPS Units Certificate representing any PEPS Units
evidenced hereby as to which Early Settlement of the related Purchase Contracts
is not effected, to the undersigned at the address indicated below unless a
different name and address have been indicated below. Pledged Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, deliverable upon such Early Settlement will be
transferred in accordance with the transfer instructions set forth below. If
shares are to be registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident thereto.

Dated:
      -----------------------

Signature
         ---------------------------------

Signature Guarantee:
                    -------------------------------

<PAGE>   106

Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
                                            -----------------------------------

If shares of Common Stock or PEPS Units                       REGISTERED HOLDER
Certificates are to be registered in the name
of and delivered to and Pledged Preferred
Securities, or the Applicable Ownership
Interest of the Treasury Portfolio, as the case
may be, are to be transferred to a Person
other than the Holder, please print such
Person's name and address:

                                              Please print name and address of
                                              Registered Holder:

----------------------------------            ----------------------------------
Name                                          Name

----------------------------------            ----------------------------------
Address                                       Address

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

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

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

Social Security or other
Taxpayer Identification
Number, if any                                ----------------------------------

Transfer Instructions for Pledged Preferred Securities or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, transferable
upon Early Settlement or a Termination Event:

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

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

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

<PAGE>   107

                     [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

The following increases or decreases in this Global Certificate have been made:

================================================================================
<TABLE>
<CAPTION>

                                                                     Number of PEPS
                 Amount of increase in    Amount of decrease in      Units evidenced by           Signature of
                 Number of PEPS Units     Number of PEPS Units       this Global Certificate      authorized officer of
                 evidenced by the Global  evidenced by the Global    following such               Trustee or Securities
Date             Certificate              Certificate                decrease or increase         Custodian
<S>              <C>                      <C>                        <C>                          <C>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>   108

                                                                       EXHIBIT B

                        FACE OF TREASURY PEPS CERTIFICATE

         [THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"),
OR A NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR
CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT
AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS
CERTIFICATE 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 CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

                                                            No.[ ]Cusip No.
                                                                           -----
[Number of Treasury PEPS Units]

                             CMS ENERGY CORPORATION
                              CMS ENERGY TRUST III
                               TREASURY PEPS UNITS

         This Treasury PEPS Units Certificate certifies that Cede & Co. is the
registered Holder of the number of Treasury PEPS Units set forth above. Each

<PAGE>   109

Treasury PEPS Unit consists of (i) a 1/40 undivided beneficial ownership
interest of a Treasury Security having a principal amount at maturity equal to
$1,000, subject to the Pledge of such Treasury Security by such Holder pursuant
to the Pledge Agreement, and (ii) the rights and obligations of the Holder under
one Purchase Contract with CMS Energy Corporation, a Delaware corporation (the
"COMPANY"). All capitalized terms used herein which are defined in the Purchase
Contract Agreement (as defined on the reverse hereof) have the meaning set forth
therein.

         Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Treasury PEPS Unit evidenced hereby have been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising part of such Treasury PEPS
Unit. Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury PEPS Units Certificate to purchase, and the Company, to sell, on August
18, 2003, at a price equal to $25 (the "STATED AMOUNT"), a number of shares of
Common Stock, $0.01 par value ("COMMON STOCK"), of the Company, equal to the
Settlement Rate, unless prior to or on the Purchase Contract Settlement Date
there shall have occurred a Termination Event, a Cash Merger Early Settlement or
an Early Settlement with respect to the Treasury PEPS Unit of which such
Purchase Contract is a part, all as provided in the Purchase Contract Agreement
and more fully described on the reverse hereof. The purchase price (the
"PURCHASE PRICE") for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of the proceeds from the
Treasury Securities at maturity pledged to secure the obligations of the Holder
under such Purchase Contract of the Treasury PEPS Unit of which such Purchase
Contract is a part.

         Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

         Unless the certificate of authentication hereon has been executed by
the Purchase Contract Agent by manual signature, this Treasury PEPS Units
Certificate shall not be entitled to any benefit under the Pledge Agreement or
the Purchase Contract Agreement or be valid or obligatory for any purpose.

<PAGE>   110

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

                                   CMS ENERGY CORPORATION

                                   By:___________________________________
                                      Name:  Alan M. Wright
                                      Title: Senior Vice President and Chief
                                             Financial Officer

                                   HOLDER SPECIFIED ABOVE (as to
                                   obligations of such Holder under the
                                   Purchase Contracts)

                                   By:THE BANK OF NEW YORK, not
                                      individually but solely as Attorney-in-
                                      Fact of such Holder

                                   By:___________________________________
                                      Name:
                                      Title:

Dated:  August 22, 2000

<PAGE>   111

                        CERTIFICATE OF AUTHENTICATION OF
                            PURCHASE CONTRACT AGENT

         This is one of the Treasury PEPS Units referred to in the
within-mentioned Purchase Contract Agreement.

                                   By: THE BANK OF NEW YORK, as
                                       Purchase Contract Agent

                                   By:___________________________________
                                              Authorized Signatory

Dated: August 22, 2000

<PAGE>   112

                  (REVERSE OF TREASURY PEPS UNITS CERTIFICATE)

         Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of August 22, 2000 (as may be supplemented from
time to time, the "PURCHASE CONTRACT AGREEMENT") between the Company and The
Bank of New York, as Purchase Contract Agent (including its successors
thereunder, herein called the "PURCHASE CONTRACT AGENT"), to which the Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Purchase Contract Agent, the Company and
the Holders and of the terms upon which the Treasury PEPS Units Certificates
are, and are to be, executed and delivered.

         Unless a Cash Settlement or an Early Settlement has occurred, each
Purchase Contract evidenced hereby obligates the Holder of this Treasury PEPS
Units Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE") a
number of shares of Common Stock equal to the Settlement Rate, unless prior to
the Purchase Contract Settlement Date, there shall have occurred a Termination
Event with respect to the Security of which such Purchase Contract is a part or
a Cash Merger Early Settlement or an Early Settlement shall have occurred. The
"SETTLEMENT RATE" is equal to:

                  (1) if the Applicable Market Value (as defined below) is
         greater than or equal to $ (the "THRESHOLD APPRECIATION PRICE"), shares
         of Common Stock per Purchase Contract;

                  (2) if the Applicable Market Value is less than the Threshold
         $ but greater than $ (the "FLOOR PRICE"), the number of shares of
         Common Stock per Purchase Contract having a value, based on the
         Applicable Market Value, equal to $25; and

                  (3) if the Applicable Market Value is less than or equal to $
         , then  shares of Common Stock per Purchase Contract,

in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).

         No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.

<PAGE>   113

         Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Treasury PEPS Unit to purchase at the Purchase Price for cash, and the
Company to sell, a number of shares of Common Stock equal to the Early
Settlement Rate or the Settlement Rate, as applicable.

         The "APPLICABLE MARKET VALUE" means the average of the Closing Prices
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date.

         The "CLOSING PRICE" per share of Common Stock on any date of
determination means the:

                  (1) closing sale price (or, if no closing price is reported,
         the last reported sale price) per share on the New York Stock Exchange,
         Inc. (the "NYSE") on such date;

                  (2) if the Common Stock is not listed for trading on the NYSE
         on any such date, the closing sale price per share as reported in the
         composite transactions for the principal United States securities
         exchange on which the Common Stock is so listed;

                  (3) if the Common Stock is not so listed on a United States
         national or regional securities exchange, the closing sale price per
         share as reported by The NASDAQ Stock Market, Inc.;

                  (4) if the Common Stock is not so reported, the last quoted
         bid price for the Common Stock in the over-the-counter market as
         reported by the National Quotation Bureau or similar organization; or

                  (5) if such bid price is not available, the average of the
         mid-point of the last bid and ask prices of the Common Stock on such
         date from at least three nationally recognized independent investment
         banking firms retained for this purpose by the Company.

         A "TRADING DAY" means a day on which the Common Stock (1) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (2) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.

<PAGE>   114

         In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Treasury PEPS Unit shall pay the Purchase Price for the shares of
the CommonStock purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement or an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged Treasury
Securities underlying such Holder's Treasury PEPS Unit equal to the Stated
Amount of such Purchase Contract to the purchase of the Common Stock. In the
case of a Cash Settlement that is not a Cash Merger Early Settlement, a Holder
of Treasury PEPS Unit who does not effect, prior to or on 11:00 a.m. (New York
City time) on the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, an effective Cash Settlement or who does not effect on or prior
to 5:00 p.m. (New York City time) on the seventh Business Day prior to the
Purchase Contract Settlement Date an effective Early Settlement, shall pay the
Purchase Price for the shares of Common Stock to be issued under the related
Purchase Contract from the proceeds of the Pledged Treasury Securities. In the
case of a Cash Settlement that is a Cash Merger Early Settlement, a Holder who
does not effect, prior to 5:00 p.m. (New York City time) on the last Business
Day of the applicable Early Settlement Week, an effective Cash Settlement, shall
not be in default and shall continue to hold such Treasury PEPS Unit as if such
Holder had not elected to make such Cash Merger Early Settlement.

         The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.

         Each Purchase Contract evidenced hereby and all obligations and rights
of the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the Treasury PEPS Units Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Treasury Securities (as defined in the Pledge Agreement) forming a part
of each Treasury PEPS Unit. A Treasury PEPS Unit shall thereafter represent the
right to receive the interest in the Treasury Security forming a part of such
Treasury PEPS Unit, in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement.

         The Treasury PEPS Units Certificates are issuable only in registered
form and only in denominations of a single Treasury PEPS and any integral
multiple thereof. The transfer of any Treasury PEPS Certificate will be
registered and Treasury PEPS Certificates may be exchanged as provided in the
Purchase Contract Agreement. The

<PAGE>   115

Treasury PEPS Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Purchase Contract
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A Holder who elects to
substitute Preferred Securities or Subordinated Deferrable Notes, for Treasury
Securities, thereby recreating PEPS Units, shall be responsible for any fees or
expenses associated therewith. Except as provided in the Purchase Contract
Agreement, for so long as the Purchase Contract underlying a Treasury PEPS Unit
remains in effect, such Treasury PEPS Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder of such Treasury
PEPS Unit in respect of the Treasury Security and the Purchase Contract
constituting such Treasury PEPS Unit may be transferred and exchanged only as a
Treasury PEPS Unit.

         A Holder of Treasury PEPS Units may recreate PEPS Units by delivering
to the Collateral Agent, Preferred Securities or Subordinated Deferrable Notes
with a liquidation amount, in the case of such Preferred Securities or with a
principal amount in the case of such Subordinated Deferrable Notes, equal to the
aggregate principal amount at maturity of the Pledged Treasury Securities in
exchange for the release of such Pledged Treasury Securities in accordance with
the terms of the Purchase Contract Agreement and the Pledge Agreement. From and
after such substitution, the Holder's Security shall be referred to as a "PEPS
UNIT". Any such creation of PEPS Units may be effected in multiples of 40
Treasury PEPS Units for 40 PEPS Units.

         A Holder of PEPS Units may recreate Treasury PEPS Units by delivering
to the Collateral Agent Treasury Securities in an aggregate principal amount
equal to the aggregate liquidation amount of the Pledged Preferred Securities or
the aggregate principal amount at maturity of the Pledged Subordinated
Deferrable Notes, as the case may be, in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement. Any such recreation of
Treasury PEPS Units may be effected only in multiples of 40 PEPS Units for 40
Treasury PEPS Units.

         If a Tax Event Redemption has occurred, a Treasury PEPS Unit Holder may
not recreate Peps Units, and a PEPS Unit Holder may not create a Treasury PEPS
Unit.

         The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Purchase
Contract Agent or the

<PAGE>   116

Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Treasury PEPS Units Register.
Upon and after the occurrence of a Termination Event, the Collateral Agent shall
release the Treasury Securities from the Pledge in accordance with the
provisions of the Pledge Agreement. A Treasury PEPS Unit shall thereafter
represent the right to receive the interest in the Treasury Security forming a
part of such Treasury PEPS Unit, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement.

         Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, at the option of the Holder thereof, Purchase Contracts
underlying Securities may be settled early ("EARLY SETTLEMENT") as provided in
the Purchase Contract Agreement. In order to exercise the right to effect Early
Settlement with respect to any Purchase Contracts evidenced by this Treasury
PEPS Unit, the Holder of this Treasury PEPS Units Certificate shall deliver to
the Purchase Contract Agent at the Corporate Trust Office an Election to Settle
Early form set forth below and any other documents requested by the Purchase
Contract Agent duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company in an amount
(the "EARLY SETTLEMENT AMOUNT") equal to the product of (A) $25 times (B) the
number of Purchase Contracts with respect to which the Holder has elected to
effect Early Settlement.

         Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Treasury Securities underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Treasury PEPS Unit as to which Early
Settlement is effected equal to  shares of Common Stock per Purchase Contract
(the "EARLY SETTLEMENT RATE"). The Early Settlement Rate shall be adjusted in
the same manner and at the same time as the Settlement Rate is adjusted as
provided in the Purchase Contract Agreement.

         Upon registration of transfer of this Treasury PEPS Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Purchase Contract Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by this Treasury PEPS Units

<PAGE>   117

Certificate. The Company covenants and agrees, and the Holder, by its acceptance
hereof, likewise covenants and agrees, to be bound by the provisions of this
paragraph.

         The Holder of this Treasury PEPS Units Certificate, by its acceptance
hereof, authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts forming part of the Treasury PEPS Units evidenced
hereby on its behalf as its attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the Company or
its trustee in the event that the Company becomes the subject of a case under
the Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities underlying this Treasury PEPS
Units Certificate pursuant to the Pledge Agreement. The Holder further covenants
and agrees, that, to the extent and in the manner provided in the Purchase
Contract Agreement and the Pledge Agreement, but subject to the terms thereof,
payments in respect to the aggregate principal amount of the Pledged Treasury
Securities on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.

         Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.

         The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.

         The Company, the Purchase Contract Agent and its Affiliates and any
agent of the Company or the Purchase Contract Agent may treat the Person in
whose name this Treasury PEPS Units Certificate is registered as the owner of
the Treasury PEPS Units evidenced hereby for the purpose of receiving payments
of interest on the Treasury Securities, performance of the Purchase Contracts
and for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Purchase Contract Agent nor any such agent shall be affected by
notice to the contrary.

         The Purchase Contracts shall not, prior to the settlement thereof,
entitle the

<PAGE>   118

Holder to any of the rights of a holder of shares of Common Stock.

         A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Purchase Contract Agent.

<PAGE>   119

                                  ABBREVIATIONS

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

TEN COM:                        as tenants in common

UNIF GIFT MIN ACT:                                        Custodian
                                   -----------------------
                               (cust)                     (minor)
                                  Under Uniform Gifts to Minors Act of

TENANT:                        as tenants by the entireties

JT TEN:                        as joint tenants with right of survivorship and
                               not as tenants in common

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

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

         FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto

(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)

  (Please Print or Type Name and Address Including Postal Zip Code of Assignee)

the within Treasury PEPS Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing                 attorney to transfer
said Treasury PEPS Units Certificates on the books of CMS Energy Corporation.
and CMS Energy Trust III with full power of substitution in the premises.

                                                     Dated:
                                            Signature

                                            NOTICE: The signature to this
                                            assignment must correspond with the
                                            name as it appears upon the face of
                                            the within Treasury PEPS Units
                                            Certificates in every particular,
                                            without alteration or enlargement or
                                            any change whatsoever.

                                                            Signature Guarantee:

<PAGE>   120

                             SETTLEMENT INSTRUCTIONS

         The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Treasury PEPS Units
evidenced by this Treasury PEPS Units Certificate be registered in the name of,
and delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.

                                                 Dated:

                                                 Signature

                                                 Signature Guarantee:
                                                 (if assigned to another person)

If shares are to be registered in the           REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please (i) print
such Person's name and address and              Please print name and address of
(ii) provide a guarantee of your                Registered Holder:
signature:

Name                                            Name

Address                                         Address

Social Security or other
Taxpayer Identification
Number, if any

<PAGE>   121

                             SETTLEMENT INSTRUCTIONS

         In connection with the Cash Merger Event dated          ,     , the
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the settlement date in respect of the
applicable Cash Merger Early Settlement of the Purchase Contracts underlying the
number of Treasury PEPS Units evidenced by this Treasury PEPS Units Certificate
specified below be registered in the name of, and delivered, together with a
check in payment for any fractional share, to the undersigned at the address
indicated below unless a different name and address have been indicated below.
If shares are to be registered in the name of a Person other than the
undersigned, the undersigned will pay any transfer tax payable incident thereto.

                                                Dated:

                                                Signature

                                                Signature Guarantee:
                                                (if assigned to another person)

Number of Securities evidenced hereby as to which such Cash Merger Early
Settlement of the related Purchase Contracts is being elected:

If shares are to be registered in the           REGISTERED HOLDER
name of and delivered to a Person
other than the Holder, please (i) print         Please print name and address of
such Person's name and address and              Registered Holder:
(ii) provide a guarantee of your signature:

                                                Name
Name

                                                Address
Address

Social Security or other
Taxpayer Identification
Number, if any

Transfer Instructions for Pledged Treasury Securities Transferable Upon
Early Settlement or a Termination Event:

<PAGE>   122

                            ELECTION TO SETTLE EARLY

         The undersigned Holder of this Treasury PEPS Units Certificate
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Treasury PEPS Units evidenced by this
Treasury PEPS Units Certificate specified below. The option to effect Early
Settlement may be exercised only with respect to Purchase Contracts underlying
Treasury PEPS with an aggregate Stated Amount equal to $1,000 or an integral
multiple thereof. The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon such Early Settlement be registered in the name
of, and delivered, together with a check in payment for any fractional share and
any Treasury PEPS Units Certificate representing any Treasury PEPS Units
evidenced hereby as to which Early Settlement of the related Purchase Contracts
is not effected, to the undersigned at the address indicated below unless a
different name and address have been indicated below. Pledged Treasury
Securities deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.

                                    Dated:

                                    Signature

                                    Signature Guarantee:

<PAGE>   123

Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:

If shares are to be registered in the              REGISTERED HOLDER
name of and delivered to a Person other
than the Holder, please (i) print such
Person's name and address and (ii)                 Please print name and address
provide a guarantee of your signature:             of Registered Holder:

               Name                                             Name

               Address                                          Address

Social Security or other
Taxpayer Identification
Number, if any

Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:

<PAGE>   124

                     [TO BE ATTACHED TO GLOBAL CERTIFICATES]

            SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

The following increases or decreases in this Global Certificate have been made:

<TABLE>
<CAPTION>
================================================================================================================================
     Date          Amount of increase in          Amount of decrease in          Number of Treasury       Signature of authorized
                    Number of Treasury            Number of Treasury           PEPS Units evidenced       officer of Trustee or
                   PEPS Units evidenced          PEPS Units evidenced            by this Global           Securities Custodian
                      by the Global                 by the Global              Certificate following
                      Certificate                    Certificate                 such decrease or
                                                                                    increase
<S>                <C>                           <C>                           <C>                       <C>
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   125

                                                                       EXHIBIT C

                     INSTRUCTION TO PURCHASE CONTRACT AGENT

Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Attention:  Corporate Trust Trustee Administration

         Re:      [_______ PEPS Units] [_______ Treasury PEPS Units] of CMS
                  Energy Corporation, a Delaware corporation (the "Company") and
                  CMS Energy Trust III.

         The undersigned Holder hereby notifies you that it has delivered to The
Chase Manhattan Bank, as Securities Intermediary, for credit to the Collateral
Account, $       aggregate [principal] [liquidation] amount of [Preferred
Securities] [Subordinated Deferrable Notes] [Treasury Securities] in exchange
for the [Pledged Preferred Securities] [Pledged Subordinated Deferrable Notes]
[Pledged Treasury Securities] held in the Collateral Account, in accordance with
the Pledge Agreement, dated as of August 22, 2000 (the "Pledge Agreement";
unless otherwise defined herein, terms defined in the Pledge Agreement are used
herein as defined therein), between you, the Company, the Collateral Agent and
the Securities Intermediary. The undersigned Holder has paid all applicable fees
relating to such exchange. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Preferred Securities] [Pledged Subordinated Deferrable
Notes] [Pledged Treasury Securities] related to such [PEPS Units] [Treasury PEPS
Units].

                                    Date:

                                    Signature

                                    Signature Guarantee:

<PAGE>   126

Please print name and address of Registered Holder:

Name                                        Social Security or other Taxpayer
                                            Identification Number, if any

Address

<PAGE>   127

                                                                       EXHIBIT D

                       NOTICE FROM PURCHASE CONTRACT AGENT
                                   TO HOLDERS
         (Transfer of Collateral upon Occurrence of a Termination Event)

[HOLDER]
---------------------------------
---------------------------------
Attention:
Telecopy:

         Re:      [             PEPS Units] [              Treasury PEPS Units]
                  of CMS Energy Corporation, a Delaware corporation (the
                  "COMPANY") and CMS Energy Trust III

         Please refer to the Purchase Contract Agreement, dated as of August 22,
2000 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of PEPS Units and Treasury PEPS Units from time
to time.

         We hereby notify you that a Termination Event has occurred and that
[the Subordinated Deferrable Notes][the Treasury Securities] underlying your
ownership interest in       [PEPS Units] [Treasury PEPS Units] have been
released and are being held by us for your account pending receipt of transfer
instructions with respect to such [Subordinated Deferrable Notes][Treasury
Securities] (the "RELEASED SECURITIES").

         Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby
request written transfer instructions with respect to the Released Securities.
Upon receipt of your instructions and upon transfer to us of your [PEPS
Units][Treasury PEPS Units] effected through book-entry or by delivery to us of
your [PEPS Units Certificate][Treasury PEPS Units Certificate], we shall
transfer the Released Securities by book-entry transfer or other appropriate
procedures, in accordance with your instructions. In the event you fail to
effect such transfer or delivery, the Released Securities and any distributions
thereon, shall be held in our name, or a nominee in trust for your benefit,
until such time as such [PEPS Units][Treasury PEPS Units] are transferred or
your [PEPS Units Certificate] [Treasury PEPS Units Certificate] is surrendered
or satisfactory evidence is provided that such [PEPS Units Certificate][Treasury
PEPS Units Certificate] has been destroyed, lost or stolen, together with any
indemnification that we or the Company may require.

<PAGE>   128

Date:                                       By:  THE BANK OF NEW YORK

                                            Name:
                                            Title:    Authorized Signatory

<PAGE>   129

                                                                       EXHIBIT E

                            NOTICE TO SETTLE BY CASH

The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Attention:  Corporate Trust Trustee Administration

         Re:      [            PEPS Units] [Treasury PEPS Units] of CMS Energy
                  Corporation, a Delaware corporation (the "COMPANY") and CMS
                  Energy Trust III

         The undersigned Holder hereby irrevocably notifies you in accordance
with Section 5.02 of the Purchase Contract Agreement, dated as of August 22,
2000 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and you, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Securities Intermediary for deposit in the Collateral Account, prior to
[or on 11:00 a.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date] [prior to 5:00 p.m. (New York
City time) on the last Business Day of the applicable Early Settlement Week] (in
lawful money of the United States by certified or cashiers' check or wire
transfer, in immediately available funds), $       as the Purchase Price for the
shares of Common Stock issuable to such Holder by the Company under the related
Purchase Contracts on the [Purchase Contract Settlement Date] [the settlement
date applicable to pending Cash Merger Early Settlement]. The undersigned Holder
hereby instructs you to notify promptly the Collateral Agent of the undersigned
Holders' election to make such cash settlement with respect to the Purchase
Contracts related to such Holder's [PEPS Units] [Treasury PEPS Units].

                                    Date:

                                    Signature

                                    Signature Guarantee:

Please print name and address of Registered Holder:

<PAGE>   130

                                                                       EXHIBIT F

                       NOTICE FROM PURCHASE CONTRACT AGENT
                    TO COLLATERAL AGENT AND INDENTURE TRUSTEE
      (Settlement of Purchase Contract through [Remarketing] [Redemption])

The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York  10001
Attention:  Corporate Trust Department
Telecopy:  (212) 946-8159

The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Attention:  Corporate Trust Trustee Administration
Telecopy:  (212) 815-5915

         Re:                 PEPS Units of CMS Energy Corporation, a Delaware
                  corporation (the "COMPANY") and CMS Energy Trust III

         Please refer to the Purchase Contract Agreement, dated as of August 22,
2000 (the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the Holders of PEPS Units from time to time.

         In accordance with Section 5.02 of the Purchase Contract Agreement and,
based on instructions and Cash Settlements received from Holders of PEPS Units
as of 11:00 a.m. (New York City time), [the fifth Business Day preceding the
Purchase Contract Settlement Date][the Business Day immediately following the
end of the Cash Settlement Week], we hereby notify you that ______ [Preferred
Securities] [Subordinated Deferrable Notes] are to be [tendered for purchase in
the Remarketing] [redeemed pursuant to Section 6 of the Pledge Agreement and in
accordance with the terms of the [Preferred Securities] [Subordinated Deferrable
Notes]].

Date:                                       By:  THE BANK OF NEW YORK

                                            Name:
                                            Title:    Authorized Officer<PAGE>   1
                                                         EXHIBIT 4 (bb)

                              REMARKETING AGREEMENT

                                                                 August 22, 2000

MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York  10036

Ladies and Gentlemen:

                  Morgan Stanley & Co. Incorporated is undertaking to remarket
the % Trust Preferred Securities due August 18, 2004 (the "Trust Preferred
Securities"), issued by CMS Energy Trust III, a Delaware business trust (the
"Trust"), pursuant to Fourth Amended and Restated Declaration of Trust (the
"Amended Declaration"), dated as of August 22, 2000 by and among CMS Energy
Corporation, a Michigan corporation (the "Company"), as Sponsor, Alan M. Wright
and Thomas A. McNish as the initial Regular Trustees, The Bank of New York, as
the initial Property Trustee, and The Bank of New York (Delaware), as the
initial Delaware Trustee, not in their individual capacities but solely as
Trustees, and the Holders, from time to time, of the Securities representing
undivided beneficial ownership interests in the assets of the Trust to be issued
pursuant to the Amended Declaration.

                  The Remarketing (as defined below) of the Trust Preferred
Securities is provided for in the Amended Declaration, the Pledge Agreement and
the Purchase Contract Agreement (as defined below).

                  If a liquidation and dissolution of the Trust shall have
occurred prior to the Purchase Contract Settlement Date and the Subordinated
Deferrable Notes have been distributed to the holders of the Trust Preferred
Securities all references herein to "Trust Preferred Securities" shall instead
be references to "Subordinated Deferrable Notes" and references to "Remarketed
Trust Preferred Securities" shall instead be references to "Remarketed
Subordinated Deferrable Notes", unless the context otherwise requires.

<PAGE>   2

                  Section 1.        Definitions.

                  (a)     Capitalized terms used and not defined in this
Agreement shall have the meanings set forth in the Purchase Contract Agreement,
dated as of August 22, 2000 (the "Purchase Contract Agreement"), between the
Company and The Bank of New York, as Purchase Contract Agent (the "Purchase
Contract Agent").

                  (b)     As used in this Agreement, the following terms have
the following meanings:

                  "Guarantee Agreement" means the guarantee agreement dated
August 22, 2000 between the Company and The Bank of New York.

                  "Remarketed Trust Preferred Securities" means the Trust
Preferred Securities subject to the Remarketing, as identified to the
Remarketing Agent by the Purchase Contract Agent after 11:00 a.m., New York City
time, on the fifth Business Day immediately preceding August 18, 2003;

                  "Remarketing Procedures" means the procedures in connection
with the Remarketing of the Trust Preferred Securities described in the Purchase
Contract Agreement, the Pledge Agreement and the Amended Declaration, as the
case may be; and

                  "Remarketing" means the remarketing of the Remarketed Trust
Preferred Securities pursuant to the Remarketing Procedures.

                  "Transaction Documents" means the Purchase Contract Agreement,
the Pledge Agreement and the Amended Declaration, collectively.

                  Section 2.        Appointment and Obligations of the
Remarketing Agent.

                  (a)     The Company hereby appoints Morgan Stanley & Co.
Incorporated as exclusive remarketing agent (the "Remarketing Agent"), and
Morgan Stanley & Co. Incorporated hereby (1) accepts appointment as Remarketing
Agent, for the purpose of (a) Remarketing Remarketed Trust Preferred Securities
on behalf of the holders thereof and (b) performing such other duties as are
assigned to the Remarketing Agent in the Remarketing Procedures, all in
accordance with and pursuant to the Remarketing Procedures, and (2) accepts and
will perform all obligations of the Remarketing Agent set forth in the Amended
Declaration, the

<PAGE>   3

Pledge Agreement and the Purchase Contract Agreement.

                  (b)     The Remarketing Agent agrees to (1) use reasonable
efforts to remarket the Remarketed Trust Preferred Securities tendered or deemed
tendered to the Remarketing Agent in the Remarketing, (2) notify the Company,
the Depositary and the Indenture Trustee promptly of the Reset Rate and (3)
carry out such other duties as are assigned to the Remarketing Agent in the
Remarketing Procedures, all in accordance with the provisions of the Remarketing
Procedures.

                  (c)     On the third Business Day immediately preceding the
Purchase Contract Settlement Date (the "Remarketing Date"), the Remarketing
Agent shall use reasonable efforts to remarket the Trust Preferred Securities
tendered or deemed tendered for purchase at a price equal to 100.50% of the
aggregate stated liquidation amount thereof.

                  (d)     If, as a result of the efforts described in 2(c), the
Remarketing Agent has determined that it will be able to remarket all of the
Preferred Securities tendered or deemed tendered for purchase at a price of
100.50% of the aggregate stated liquidation amount of such Preferred Securities,
the Remarketing Agent shall determine the Reset Rate, which shall be the rate
per annum (rounded to the nearest one-thousandth (0.001) of one percent per
annum), sufficient to cause the then-current aggregate market value of the
Preferred Securities to be equal to 100.50% of the aggregate stated liquidation
amount of such Preferred Securities, that the Remarketing Agent determines, in
its sole reasonable judgment, to be the lowest rate per annum that will enable
it to remarket all of the Preferred Securities tendered or deemed tendered for
Remarketing.

                  (e)     If none of the Holders of the Preferred Securities or
the holders of the PEPS Units elect to have Preferred Securities remarketed in
the Remarketing, the Reset Rate shall be the rate determined by the Remarketing
Agent, in its sole reasonable discretion, as the rate that would have been
established had a Remarketing been held on the Remarketing Date.

                  (f)     Upon receipt of the proceeds from the Remarketing, the
Remarketing Agent shall: (1) retain $0.125 per Remarketed Trust Preferred
Security as a remarketing fee for the performance of its services as Remarketing
Agent hereunder; and (2) remit to the Collateral Agent all other proceeds of the
Remarketed Trust Preferred Securities subject to the Pledge Agreement.

                  (g)     If, by 4:00 p.m., New York City time, on the
Remarketing Date, the Remarketing Agent is unable to remarket all of the Trust
Preferred Securities tendered or deemed tendered for purchase pursuant to the
terms and conditions hereof, a Failed Remarketing shall be deemed to have
occurred, and the Remarketing Agent shall so advise by telephone the Depositary,
the Property Trustee,

<PAGE>   4

the Trust and the Company. In the event of a Failed Remarketing, the Reset Rate
shall equal the Two Year Benchmark Treasury Rate plus the Applicable Margin.

                  (h)     By approximately 4:30 p.m., New York City time, on the
Remarketing Date (provided there has not been a Failed Remarketing), the
Remarketing Agent shall advise, by telephone:

                          (1)      the Depositary, the Property Trustee, the
         Indenture Trustee, the Trust and the Company of the Reset Rate
         determined in the Remarketing and the number of Remarketed Trust
         Preferred Securities sold in the Remarketing;

                          (2)      each purchaser (or the Depositary
         Participant thereof) of Remarketed Trust Preferred Securities of the
         Reset Rate and the number of Remarketed Trust Preferred Securities such
         purchaser is to purchase; and

                          (3)      each purchaser to give instructions to its
         Depositary Participant to pay the purchase price on the Purchase
         Contract Settlement Date in same day funds against delivery of the
         Remarketed Trust Preferred Securities purchased through the facilities
         of the Depositary.

                  Section 3.       Representations and Warranties of the
Company and the Trust.

                  The Company and the Trust jointly and severally represent and
warrant (i) on and as of the date hereof, (ii) on and as of the date the
Prospectus or other Remarketing Materials (each as defined in Section 3(a)
below) are first distributed in connection with the Remarketing (the
"Commencement Date"), (iii) on and as of the Remarketing Date, and (iv) on and
as of the Purchase Contract Settlement Date that:

                  (a)     A registration statement on Form S-3, as amended
(Registration Nos. 333-68937 and 333-68937-01) (the "Initial Registration
Statement") in respect of the initial offering of the Trust Preferred
Securities, the Subordinated Deferrable Notes and the Guarantee, has been filed
with the Securities and Exchange Commission (the "Commission"); a registration
statement on Form S-3, if required in connection with this Agreement also may be
prepared by the Company; the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered or to be
delivered to the Representatives and, excluding exhibits to such registration
statement, but including

<PAGE>   5

all documents incorporated by reference in the prospectus included therein, to
the Representatives for each of the other Underwriters, have been declared
effective by the Commission in such form; other than a registration statement,
if any, increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of 1933, as
amended (the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement or document incorporated by
reference therein has heretofore been filed, or transmitted for filing, with the
Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules
and regulations of the Commission under the Act each in the form heretofore
delivered to the Representatives); no stop order suspending the effectiveness of
the Initial Registration Statement is in effect and no proceedings for such
purposes are pending before or, to the knowledge of the Company, threatened by
the Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) under the Act, is
hereinafter called a "Preliminary Prospectus"); the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all exhibits thereto and the documents incorporated by reference in
the prospectus contained in the Initial Registration Statement at the time such
part of the registration statement became effective or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes effective,
each as amended at the time such part of the registration statement became
effective, are hereinafter collectively called the "Registration Statement"; the
prospectus relating to the Trust Preferred Securities, in the form in which it
has most recently been filed, or transmitted for filing, with the Commission on
or prior to the date of this Agreement, is hereinafter called the "Prospectus";
any reference herein to any Preliminary Prospectus, the Prospectus or any other
information furnished by the Company to the Remarketing Agent for distribution
to investors in connection with the Remarketing (the "Remarketing Materials")
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to the applicable form under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus, the Prospectus or the
Remarketing Materials shall be deemed to refer to and include any documents
filed after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any report of the
Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act after the
effective date of the Initial Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the Prospectus as
amended or supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the Securities in the form in which it is filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with Section
5(a) hereof, including any documents incorporated by reference therein as of the
date of such filing;

<PAGE>   6

                  (b)     The documents incorporated by reference in the
Registration Statement and the Prospectus, when they became effective or were
filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder, and none
of such documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and any further documents so filed and incorporated by reference
in the Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the case may be,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance upon
and in conformity with information relating to the Remarketing Agent furnished
in writing to the Company by the Remarketing Agent or its counsel expressly for
use in the Prospectus;

                  (c)     The Registration Statement conforms (and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform) in all material respects to the
requirements of the Securities Act and the rules and regulations promulgated
thereunder, and the Registration Statement, the Prospectus and the Remarketing
Materials (and any amendment or supplement thereto) as of their respective
effective or filing dates and as of the Commencement Date, Remarketing Date and
Purchase Contract Settlement Date do not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;

                  (d)     The Trust has no subsidiaries. There has not been any
material and adverse change in the business, properties or financial condition
of the Company and its Subsidiaries (as defined in Rule 405 under the Act, and
hereinafter called the "Subsidiaries"), taken as a whole, from that set forth in
the Registration Statement and the Prospectus (other than changes referred to in
or contemplated by the Registration Statement or the Prospectus);

<PAGE>   7

                  (e)     The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Michigan and has all requisite authority to own or lease its properties and
conduct its business as described in the Prospectus and to consummate the
transactions contemplated hereby, and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business as
described in the Prospectus or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole; each significant subsidiary (as defined in
Rule 405 under the Act, and hereinafter called a "Significant Subsidiary") of
the Company has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has all
requisite authority to own or lease its properties and conduct its business as
described in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business as
described in the Prospectus or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole;

                  (f)     Except for any securities issued after the date of
this Agreement and except for the outstanding shares of preferred stock of
Consumers Energy Company, the 8.36% Trust Originated Preferred Securities of
Consumers Power Company Financing I, the 8.20% Trust Originated Preferred
Securities of Consumers Energy Financing II, the 9-1/4% Trust Originated
Preferred Securities of Consumers Energy Financing III, the 7.75% Convertible
Quarterly Income Preferred Securities of CMS Energy Trust I, the 8.750%
Adjustable Convertible Trust Securities of CMS Energy Trust II, the % Preferred
Securities of CMS Energy Trust III, and the Redeemable Hybrid Income Overnight
Shares of CMS RHINOS Trust (except to the extent any of the foregoing securities
have been redeemed, repaid or repurchased), all of the outstanding capital stock
of each of Consumers Energy Company and CMS Enterprises Company is owned
directly or indirectly by the Company, free and clear of any Lien, and there are
no outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire, or instruments convertible into or exchangeable
for, any shares of capital stock or other equity interest in any of Consumers
Energy Company and CMS Enterprises Company or any contract, commitment,
agreement, understanding or arrangement of any kind relating to the issuance of
any such capital stock, any such convertible or exchangeable securities or any
such rights, warrants or options;

<PAGE>   8

                  (g)     The Trust Preferred Securities have been duly and
validly authorized by the Trust, and, when the Trust Preferred Securities are
issued and delivered, such Trust Preferred Securities will be validly issued,
fully paid and non-assessable undivided beneficial interests in the assets of
the Trust; the Trust Preferred Securities will conform in all material respects
to the description thereof contained in the Prospectus; the issuance of the
Trust Preferred Securities is not subject to any preemptive or other similar
rights; the Trust Preferred Securities will have the rights set forth in the
Amended Declaration, and the terms of the Trust Preferred Securities are valid
and binding on the Trust;

                  (h)     The Trust Common Securities have been duly and validly
authorized by the Trust and upon delivery by the Trust to the Company against
payment therefor as described in the Prospectus, will be duly and validly issued
undivided beneficial interests in the assets of the Trust and will conform in
all material respects to the description thereof contained in the Prospectus;
the issuance of the Trust Common Securities is not subject to preemptive or
other similar rights;

                  (i)     Each of the Company and its Significant Subsidiaries
has all necessary consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license and use
its properties and assets and to conduct its business in the manner described in
the Prospectus, except to the extent that the failure to obtain or file would
not have a material adverse effect on the Company and its Subsidiaries, taken as
a whole;

                  (j)     No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and no filing, recording, publication or
registration in any public office or any other place, was or is now required to
be obtained by the Company to authorize its execution or delivery of, or the
performance of its obligations under, this Agreement, except such as have been
obtained or may be required under state securities or Blue Sky laws or as
referred to in the Prospectus in connection with the purchase and distribution
of the Trust Preferred Securities, in connection with the execution, delivery or
performance of the Purchase Contract Agreement, the Pledge Agreement, the
Guarantee, the Amended Declaration, the Indenture and the Underwriting
Agreement, or to issue, sell and deliver the Purchase Contracts, Subordinated
Deferrable Notes and the Purchase Contract Shares;

<PAGE>   9

                  (k)     No order, license, consent, authorization or approval
of, or exemption by, or the giving of notice to, or the registration with any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, and no filing, recording, publication or
registration in any public office or any other place, was or is now required to
be obtained by the Trust to authorize its execution or delivery of, or the
performance of its obligations under, this Agreement, except such as have been
obtained or may be required under state securities or Blue Sky laws or as
referred to in the Prospectus in connection with the purchase and distribution
of the Trust Preferred Securities, in connection with the execution, delivery or
performance of the Amended Declaration and the Underwriting Agreement, or to
issue, sell and deliver the Trust Preferred Securities and the Trust Common
Securities;

                  (l)     The execution and delivery by the Trust of this
Agreement and the Underwriting Agreement, the compliance by the Trust with all
of the provisions of this Agreement, the Underwriting Agreement, the issuance
and sale of the Trust Preferred Securities and the Trust Common Securities by
the Trust, the purchase of the Subordinated Deferrable Notes by the Trust, the
distribution of the Subordinated Deferrable Notes by the Trust in the
circumstances contemplated by the Amended Declaration, the performance of this
Agreement, the Amended Declaration and the Underwriting Agreement, and the
consummation of each of the transactions contemplated thereby did not and will
not conflict with, result in a breach of any of the terms or provisions of, or
constitute a default or require the consent of any party under the Amended
Declaration, any material terms or provisions of any material agreement or
instrument to which the Trust is a party, any existing material applicable law,
rule or regulation or any judgment, order or decree of any governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Trust or any of its properties or assets, or did or will result in the creation
or imposition of any Lien on the Trust's properties or assets;

                  (m)     The execution and delivery by the Company of this
Agreement, the Purchase Contracts, the Purchase Contract Agreement, the Pledge
Agreement, the Guarantee, the Amended Declaration, the Indenture and the
Underwriting Agreement, the compliance by the Company with all of the provisions
of this Agreement, the Purchase Contracts, the Purchase Contract Agreement, the
Pledge Agreement, the Guarantee, the Amended Declaration, the Indenture and the
Underwriting Agreement, the entry into the Purchase Contracts by the Company,
the issuance and sale of the Trust Preferred Securities and the Trust Common
Securities by the Trust, the sale of the Subordinated Deferrable Notes by the
Company to the Trust, the distribution of the Subordinated Deferrable Notes by
the Trust in the circumstances contemplated by

<PAGE>   10

the Amended Declaration, the issuance and sale by the Company of the Purchase
Contract Shares, the performance of this Agreement, the Purchase Contracts, the
Purchase Contract Agreement, the Pledge Agreement, the Guarantee, the Amended
Declaration, the Indenture and the Underwriting Agreement, and the consummation
of each of the transactions contemplated thereby, did not and will not conflict
with, result in a breach of any of the terms or provisions of, or constitute a
default or require the consent of any party under the Company's Articles of
Incorporation or by-laws, any material terms or provisions of any material
agreement or instrument to which the Company is a party, any existing material
applicable law, rule or regulation or any judgment, order or decree of any
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or assets, or did or will result in
the creation or imposition of any Lien on the Company's properties or assets;

                  (n)     Except as disclosed in the Prospectus, there is no
action, suit, proceeding, inquiry or investigation (at law or in equity or
otherwise) pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary by any governmental authority that (i) questions the
validity, enforceability or performance of this Agreement or the Trust Preferred
Securities or (ii) if determined adversely, is likely to have a material adverse
effect on the business or financial condition of the Company and its
Subsidiaries, taken as a whole, or materially adversely affect the ability of
the Company to perform its obligations hereunder or the consummation of the
transactions contemplated by this Agreement;

                  (o)     Except as set forth in the Prospectus, no event or
condition exists that constitutes, or with the giving of notice or lapse of time
or both would constitute, a default or any breach or failure to perform by the
Company or any of its Significant Subsidiaries in any material respect under any
indenture, mortgage, loan agreement, lease or other material agreement or
instrument to which the Company or any of its Significant Subsidiaries is a
party or by which it or any of its Significant Subsidiaries, or any of their
respective properties, may be bound;

                  (p)     Neither the Company, the Trust nor any of the
Subsidiaries is, after giving effect to the offering and sale of the Trust
Preferred Securities, will be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"). The
Trust is not required to be registered under the Investment Company Act;

                  (q)     The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the Business Trust
Act of the State of Delaware (the "Delaware Business Trust Act") with the trust
power and authority to own property and conduct its business as described in the
Prospectus, and has conducted and will conduct no business other than the
transactions contemplated by this Agreement and described in the Prospectus; the
Trust is not a party to or bound

<PAGE>   11

by any agreement or instrument other than this Agreement, the Amended
Declaration and the Underwriting Agreement and the agreements and instruments
contemplated by the Amended Declaration and described in the Prospectus; based
on expected operations and current law, the Trust is not and will not be
classified as an association taxable as a corporation for United States federal
income tax purposes; and, to the knowledge of each of the Company and the Trust,
the Trust is not a party to or subject to any action, suit or proceeding of any
nature;

                  (r)     The Guarantee, the Subordinated Deferrable Notes, the
Amended Declaration and the Indenture have each been duly authorized and when
validly executed and delivered by the Company and, in the case of the Guarantee,
by the Guarantee Trustee and, in the case of the Amended Declaration, by the CMS
Trustees and, in the case of the Indenture, by the Debenture Trustee, and, in
the case of the Subordinated Deferrable Notes, when validly authenticated and
delivered by the Debenture Trustee and, in the case of the Guarantee, upon due
execution, authentication and delivery of the Subordinated Deferrable Notes and
upon payment therefor, will constitute valid and binding obligations of the
Company, enforceable in accordance with their respective terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles of
equity (regardless of whether enforcement is considered in a proceeding at law
or in equity); the Subordinated Deferrable Notes are entitled to the benefits of
the Indenture; the Amended Declaration, the Indenture and the Guarantee have
been duly qualified under the Trust Indenture Act;

                  (s)     This Agreement has been duly authorized, executed and
delivered by each of the Company and the Trust, and this Agreement conforms to
the description thereof in the Transaction Documents;

                  (t)     Each of the Amended Declaration, the Guarantee, the
Indenture, and the Subordinated Deferrable Notes will conform in all material
respects to the description thereof contained in the Prospectus; and

                  (u)     The certificate delivered pursuant to paragraph (e) of
Section 6 hereof and all other documents delivered by the Company or its
representatives in connection with the issuance and sale of the Remarketed Trust
Preferred Securities were on the dates on which they were delivered, or will be
on the dates on which they are to be delivered, in all material respects true
and complete.

<PAGE>   12

                  Section 4.        Fees.

                  For the performance of its services as Remarketing Agent
hereunder, the Remarketing Agent shall retain from the proceeds of the
Remarketing an amount equal to 0.5% of the $25 Stated Amount of all Remarketed
Trust Preferred Securities.

                  Section 5.        Covenants of the Company.

                  The Company covenants and agrees as follows:

                  (a)      (1)      To prepare any registration statement or the
Prospectus, if required in connection with the Remarketing, in a form approved
by the Remarketing Agent and to file any such prospectus pursuant to the
Securities Act within the period required by the Securities Act and the rules
and regulations thereunder;

                           (2)      to advise the Remarketing Agent, promptly
         after it receives notice thereof, of the time when any amendment to the
         Registration Statement has been filed or becomes effective or any
         supplement to the Prospectus or any amended Prospectus has been filed
         and to furnish the Remarketing Agent with copies thereof;

                           (3)      to file promptly all reports and any
         definitive proxy or information statements required to be filed by the
         Company with the Commission pursuant to Section 13(a), 13(c), 14 or
         15(d) of the Exchange Act subsequent to the date of the Prospectus and
         for so long as the delivery of a prospectus is required in connection
         with the offering or sale of the Remarketed Trust Preferred Securities;

                           (4)      to advise the Remarketing Agent, promptly
         after it receives notice thereof, of the issuance by the Commission of
         any stop order or of any order preventing or suspending the use of the
         Prospectus, of the suspension of the qualification of any of the
         Remarketed Trust Preferred Securities for offering or sale in any
         jurisdiction, of the initiation or threatening of any proceeding for
         any such purpose, or of any request by the Commission for the amending
         or supplementing of the Registration Statement or the Prospectus or for
         additional information, and, in the event of the issuance of any stop
         order or of any order preventing or suspending the use of any
         Prospectus or suspending any such qualification, to use promptly its
         best efforts to obtain its withdrawal.

                  (b)      To furnish promptly to the Remarketing Agent and to
counsel to the Remarketing Agent a conformed copy of the Registration Statement
as originally filed with the Commission, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith.

<PAGE>   13

                  (c)      To furnish to the Remarketing Agent in New York City
such copies of the following documents as the Remarketing Agent shall reasonably
request: (1) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits); (2) the Prospectus and any amended or supplemented Prospectus; (3)
any document incorporated by reference in the Prospectus (excluding exhibits
thereto); and (4) any Remarketing Materials; and, if the delivery of a
prospectus is required at any time in connection with the Remarketing and if at
such time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or if for any other reason it
shall be necessary during such same period to amend or supplement the Prospectus
or to file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Securities Act or the Exchange Act, to
notify the Remarketing Agent and, upon its request, to file such document and to
prepare and furnish without charge to the Remarketing Agent and to any dealer in
securities as many copies as the Remarketing Agent may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such statement or omission or effect such compliance.

                  (d)      To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Remarketing Agent, be
required by the Securities Act or requested by the Commission.

                  (e)      Prior to filing with the Commission (1) any amendment
to the Registration Statement or supplement to the Prospectus or (2) any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Remarketing Agent and counsel to the Remarketing Agent; and not
to file any such amendment or supplement which shall be reasonably disapproved
by the Remarketing Agent promptly after reasonable notice.

                  (f)      As soon as practicable, but in any event not later
than eighteen months, after the Effective Date of the Registration Statement, to
make "generally available to its security holders" an "earnings statement" of
the Company and its Subsidiaries complying with (which need not be audited)
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158). The terms "generally available to its
security holders" and

<PAGE>   14

"earnings statement" shall have the meanings set forth in Rule 158 of the Rules
and Regulations.

                  (g)      To take such action as the Remarketing Agent may
reasonably request in order to qualify the Remarketed Trust Preferred Securities
for offer and sale under the securities or "blue sky" laws of such jurisdictions
as the Remarketing Agent may reasonably request; provided that in no event shall
the Company be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction.

                  (h)      To pay: (1) the costs incident to the preparation and
printing of the Registration Statement, Prospectus and any Remarketing Materials
and any amendments or supplements thereto; (2) the costs of distributing the
Registration Statement, Prospectus and any Remarketing Materials and any
amendments or supplements thereto; (3) the fees and expenses of qualifying the
Remarketed Trust Preferred Securities under the securities laws of the several
jurisdictions as provided in Section 5(g) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Remarketing Agent); (4) all other costs and expenses incident to
the performance of the obligations of the Company, hereunder; and (5) the
reasonable fees and expenses of counsel to the Remarketing Agent in connection
with their duties hereunder.

                  Section 6.        Conditions to the Remarketing Agent's
Obligations.

                  The obligations of the Remarketing Agent hereunder are subject
to the following conditions:

                  (a)      The Prospectus shall have been timely filed with the
Commission; no stop order suspending the effectiveness of the Registration
Statement or any part thereof or suspending the qualification of the Indenture
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of the Commission
for inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.

                  (b)      The Remarketing Agent shall not have discovered and
disclosed to the Company prior to or on the Remarketing Date that the
Prospectus, the Registration Statement, or the Remarketing Materials or any
amendment or supplement thereto contains any untrue statement of a fact which,
in the opinion of counsel for the Remarketing Agent, is material or omits to
state any fact which, in the

<PAGE>   15

opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.

                  (c)      Since the respective dates as of which information is
given in the Remarketing Materials (1) trading generally shall not have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange or the National Association of
Securities Dealers, Inc., (2) trading of any securities of the Company shall not
have been suspended on any exchange or in any over-the-counter market, (3) a
general moratorium on commercial banking activities in New York shall not have
been declared by either federal or New York State authorities or (4) there shall
not have occurred any outbreak or escalation of hostilities or any change in
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and in the case of any of the events specified in clauses (1), (2),
(3) and (4), such event, singly or together with any other such event, makes it,
in the judgment of the Remarketing Agent, impracticable to proceed with the
Remarketing on the terms and in the manner contemplated in the Prospectus and in
the Remarketing Materials.

                  (d)      The representations and warranties of the Company
contained herein shall be true and correct in all material respects on and as of
the Remarketing Date, and the Company shall have performed in all material
respects all covenants and agreements herein contained to be performed on its
part at or prior to the Remarketing Date.

                  (e)      The Company shall have furnished to the Remarketing
Agent a certificate, dated the Remarketing Date, of the Chief Executive Officer
and the Treasurer satisfactory to the Remarketing Agent stating that: (1) no
order suspending the effectiveness of the Registration Statement or prohibiting
the sale of the Remarketed Trust Preferred Securities is in effect, and no
proceedings for such purpose are pending before or, to the knowledge of such
officers, threatened by the Commission; (2) the representations and warranties
of the Company in Section 3 are true and correct on and as of the Remarketing
Date and the Company has performed in all material respects all covenants and
agreements contained herein to be performed on its part at or prior to the
Remarketing Date; (3) the Registration Statement, as of its Effective Date, and
the Remarketing Materials, as of their respective dates, did not contain any
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and the Prospectus did not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

                  (f)      On the Remarketing Date, the Remarketing Agent shall
have received a letter addressed to the Remarketing Agent and dated such date,
in form

<PAGE>   16

and substance satisfactory to the Remarketing Agent, of Arthur Andersen LLP,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" with respect to certain financial information
contained in the Prospectus and in the Remarketing Materials.

                  (g)       Michael D. Van Hemert, Assistant General Counsel to
the Company and the Trust, shall have furnished to the Remarketing Agent his
written opinion or opinions addressed to the Remarketing Agent and dated the
Remarketing Date, in form and substance reasonably satisfactory to the
Remarketing Agent addressing such matters as are set forth in such counsels'
opinion or opinions furnished pursuant to Section 6(c) of the Underwriting
Agreement dated August 16, 2000 among the Company, the Trust and the
underwriters named therein relating to up to 10,000,000 % Premium Equity
Participating Securities Units - PEPS(SM) Units, adapted as necessary to relate
to the securities being remarketed hereunder and to the Remarketing Materials;

                  (h)      Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the Remarketing Agent, shall have furnished to the Remarketing Agent its
opinion, addressed to the Remarketing Agent and dated the Remarketing Date, in
form and substance satisfactory to the Remarketing Agent;

                  (i)      Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not indicate an
improvement, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act.

                  Section 7.        Indemnification.

                  (a)      The Trust and the Company, jointly and severally,
will, to the extent permitted by law, indemnify and hold harmless the
Remarketing Agent against any losses, claims, damages or liabilities, joint or
several, to which the Remarketing Agent may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other Remarketing Materials, or arise out of or
are based upon the omission or alleged omission to state

<PAGE>   17

therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Remarketing Agent for
any legal or other expenses reasonably incurred by the Remarketing Agent in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that neither the Trust nor the Company
shall be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other Remarketing Materials in
reliance upon and in conformity with written information furnished to the Trust
and the Company by the Remarketing Agent expressly for use therein, and except
that this indemnity shall not inure to the benefit of the Remarketing Agent (or
any person controlling the Remarketing Agent) on account of any losses, claims,
damages, liabilities or actions, suits or proceedings arising from the sale of
the Remarketed Trust Preferred Securities to any person if a copy of the
Prospectus, as the same may then be supplemented or amended (excluding, however,
any document then incorporated or deemed incorporated therein by reference), was
not sent or given by or on behalf of the Remarketing Agent to such person (i)
with or prior to the written confirmation of sale involved or (ii) as soon as
available after such written confirmation, relating to an event occurring prior
to the payment for and delivery to such person of the Remarketed Trust Preferred
Securities involved in such sale, and the omission or alleged omission or untrue
statement or alleged untrue statement was corrected in the Prospectus as
supplemented or amended at such time.

                  (b)      The Remarketing Agent will indemnify and hold
harmless the Trust and the Company against any losses, claims, damages or
liabilities to which the Trust and the Company may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, any preliminary prospectus supplement, the Registration Statement,
the Prospectus as amended or supplemented and any other Remarketing Materials,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Preliminary Prospectus, any preliminary
prospectus supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other Remarketing Materials in reliance upon and in
conformity with written information furnished to the Trust and the Company by
the Remarketing Agent expressly for use therein; and will reimburse the Trust
and the Company for any legal or other expenses reasonably incurred by the Trust
and the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.

<PAGE>   18

                  (c)      If a claim is made or an action, suit or proceeding
(including governmental investigations) is commenced or threatened against any
person as to which indemnity may be sought under subsection (a) or (b), such
person (the "Indemnified Person") shall notify the person against whom such
indemnity may be sought (the "Indemnifying Person"), promptly after any
assertion of such claim threatening to institute an action, suit or proceeding
or if such an action, suit or proceeding is commenced against such Indemnified
Person, promptly after such Indemnified Person shall have been served with a
summons or other first legal process, giving information as to the nature and
basis of the claim. Failure to so notify the Indemnifying Person shall not,
however, relieve the Indemnifying Person from any liability which it may have on
account of the indemnity under subsection (a) or (b) if the Indemnifying Person
has not been prejudiced in any material respect by such failure. Subject to the
immediately succeeding sentence, the Indemnifying Person shall assume the
defense of any such litigation or proceeding, including the employment of
counsel and the payment of all expenses, with such counsel being designated,
subject to the immediately succeeding sentence, in writing by the Remarketing
Agent in the case of parties indemnified pursuant to subsection (b) and by the
Company in the case of parties indemnified pursuant to subsection (a). Any
Indemnified Person shall have the right to participate in such litigation or
proceeding and to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include (x) the Indemnifying Person and (y)
the Indemnified Person and, in the written opinion of counsel to such
Indemnified Person, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, in
either of which cases the reasonable fees and expenses of counsel (including
disbursements) for such Indemnified Person shall be reimbursed by the
Indemnifying Person to the Indemnified Person. If there is a conflict as
described in clause (ii) above, and the Indemnified Persons have participated in
the litigation or proceeding utilizing separate counsel whose fees and expenses
have been reimbursed by the Indemnifying Person and the Indemnified Persons, or
any of them, are found to be solely liable, such Indemnified Persons shall repay
to the Indemnifying Person such fees and expenses of such separate counsel as
the Indemnifying Person shall have reimbursed. It is understood that the
Indemnifying Person shall not, in connection with any litigation or proceeding
or related litigation or proceedings in the same jurisdiction as to which the
Indemnified Persons are entitled to such separate representation, be liable
under this Agreement for the reasonable fees and out-of-pocket expenses for more
than one separate firm (together with not more than

<PAGE>   19

one appropriate local counsel) for all such Indemnified Persons. Subject to the
next paragraph, all such fees and expenses shall be reimbursed by payment to the
Indemnified Persons of such reasonable fees and expenses of counsel promptly
after payment thereof by the Indemnified Persons.

         In furtherance of the requirement above that fees and expenses of any
separate counsel for the Indemnified Persons shall be reasonable, the
Remarketing Agent and the Company agree that the Indemnifying Person's
obligations to pay such fees and expenses shall be conditioned upon the
following:

                           (i)   in case separate counsel is proposed to be
         retained by the Indemnified Persons pursuant to clause (ii) of the
         preceding paragraph, the Indemnified Persons shall in good faith fully
         consult with the Indemnifying Person in advance as to the selection of
         such counsel;

                           (ii)  reimbursable fees and expenses of such separate
         counsel shall be detailed and supported in a manner reasonably
         acceptable to the Indemnifying Person (but nothing herein shall be
         deemed to require the furnishing to the Indemnifying Person of any
         information, including without limitation, computer print-outs of
         lawyers' daily time entries, to the extent that, in the judgment of
         such counsel, furnishing such information might reasonably be expected
         to result in a waiver of any attorney-client privilege); and

                           (iii) the Company and the Remarketing Agent shall
         cooperate in monitoring and controlling the fees and expenses of
         separate counsel for Indemnified Persons for which the Indemnifying
         Person is liable hereunder, and the Indemnified Person shall use every
         reasonable effort to cause such separate counsel to minimize the
         duplication of activities as between themselves and counsel to the
         Indemnifying Person.

         The Indemnifying Person shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Person, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees, subject to the
provisions of this Section 7, to indemnify the Indemnified Person from and
against any loss, damage, liability or expenses by reason of such settlement or
judgment. The Indemnifying Person shall not, without the prior written consent
of the Indemnified Persons, effect any settlement of any pending or threatened
litigation, proceeding or claim in respect of which indemnity has been properly
sought by the Indemnified Persons hereunder, unless such settlement includes an
unconditional release by the claimant of all Indemnified Persons from all
liability with respect to claims which are the subject matter of such
litigation, proceeding or claim.

<PAGE>   20

                  Section 8.        Contribution.

                  (a)      If the indemnification provided for in Section 7(a)
or 7(b) is unavailable to or insufficient to hold harmless an indemnified party
in respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Company on the one hand and the Remarketing Agent on the other
from the offering of the Remarketed Trust Preferred Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under Section 7 (c) above and such failure resulted in the indemnifying party
being prejudiced in a material way, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Trust and the Company on the one hand and the
Remarketing Agent on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Trust and the Company on the one hand and the
Remarketing Agent on the other shall be deemed to be in the same proportion as
the total net proceeds from such offering (before deducting expenses) received
by the Trust and the Company bear to the total placement fees received by the
Remarketing Agent. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Trust and the Company on the one hand or the
Remarketing Agent on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

                  (b)      The Trust, the Company and the Remarketing Agent
agree that it would not be just and equitable if contributions pursuant to this
Section 8 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 8. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Section 8 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim, provided
that the provisions of Section 8 have been complied with (in all material
respects) in respect of any separate counsel for such indemnified party.

<PAGE>   21

Notwithstanding the provisions of this Section 8, the Remarketing Agent shall
not be required to contribute any amount greater than the excess of (i) the
total price at which the Trust Preferred Securities placed by it and distributed
to the public were offered to the public over (ii) the amount of any damages
which the Remarketing Agent has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligations of the Remarketing Agent in
this Section 8 to contribute are several in proportion to their respective
placement fees and not joint.

                  Section 9.        Resignation and Removal of the Remarketing
Agent.

                  The Remarketing Agent may resign and be discharged from its
duties and obligations hereunder, and the Company or the Trust may remove the
Remarketing Agent, by giving 60 days' prior written notice, in the case of a
resignation, to the Company, the Depository, the Property Trustee, the Trust and
the Indenture Trustee and, in the case of a removal, the removed Remarketing
Agent, the Depository, the Property Trustee, the Trust and the Indenture
Trustee; provided, however, that:

                  (a)      the Company may not remove the Remarketing Agent
unless (1) the Remarketing Agent becomes involved as a debtor in a bankruptcy,
insolvency or similar proceeding, (2) the Remarketing Agent shall not be among
the 15 underwriters with the largest volume underwritten in dollars, on a lead
or co-managed basis, of U.S. domestic debt securities during the twelve-month
period ended as of the last calendar quarter preceding the Remarketing Date, (3)
the Remarketing Agent shall be subject to one or more legal restrictions
preventing the performance of its obligations hereunder, or (4) the Remarketing
Agent shall determine that (i) the Company has not met its obligation under
Section 6(d) or (ii) using its reasonable efforts, the Remarketing Agent would
be unable to consummate the Remarketing on the terms and in the manner
contemplated in the Prospectus and the Remarketing Materials;

                  (b)      the Remarketing Agent may not resign without
reasonable cause; and

                  (c)      no such resignation nor any such removal shall become
effective until the Company shall have appointed at least one nationally
recognized broker-dealer as successor Remarketing

<PAGE>   22

Agent and such successor Remarketing Agent shall have entered into a remarketing
agreement with the Company and the Trust, in which it shall have agreed to
conduct the Remarketing in accordance with the Remarketing Procedures in all
material respects.

In any such case, the Company will use its reasonable efforts to appoint a
successor Remarketing Agent and enter into such a remarketing agreement with
such person as soon as reasonably practicable. The provisions of Sections 7 and
8 shall survive the resignation or removal of any Remarketing Agent pursuant to
this Agreement.

                  Section 10.       Dealing in the Remarketed Trust Preferred
Securities.

                  The Remarketing Agent, when acting as a Remarketing Agent or
in its individual or any other capacity, may, to the extent permitted by law,
buy, sell, hold and deal in any of the Remarketed Trust Preferred Securities.
The Remarketing Agent may exercise any vote or join in any action which any
beneficial owner of Remarketed Trust Preferred Securities may be entitled to
exercise or take pursuant to the Amended Declaration with like effect as if it
did not act in any capacity hereunder. The Remarketing Agent, in its individual
capacity, either as principal or agent, may also engage in or have an interest
in any financial or other transaction with the Company as freely as if it did
not act in any capacity hereunder.

                  Section 11.       Remarketing Agent's Performance; Duty of
Care.

                  The duties and obligations of the Remarketing Agent shall be
determined solely by the express provisions of this Agreement, the Amended
Declaration, the Pledge Agreement and the Purchase Contract Agreement. No
implied covenants or obligations of or against the Remarketing Agent shall be
read into this Agreement, the Amended Declaration, the Pledge Agreement or the
Purchase Contract Agreement. In the absence of bad faith on the part of the
Remarketing Agent, the Remarketing Agent may conclusively rely upon any document
furnished to it, as to the truth of the statements expressed in any of such
documents. The Remarketing Agent shall be protected in acting upon any document
or communication reasonably believed by it to have been signed, presented or
made by the proper party or parties except as otherwise set forth herein. The
Remarketing Agent, acting under this Agreement, shall incur no liability to the
Company, the Trust or to any holder of Remarketed Trust Preferred Securities in
its individual capacity or as Remarketing Agent for any action or failure to
act, on its part in connection with a Remarketing or otherwise, except if such
liability is judicially determined to have resulted from its failure to comply
with the material terms of this Agreement or the gross negligence or willful
misconduct on its part.

                  Section 12.       Termination.

                  This Agreement shall terminate as to the Remarketing Agent on
the

<PAGE>   23

effective date of the resignation or removal of the Remarketing Agent pursuant
to Section 9. In addition, this Agreement may be terminated (a) by the Company
or the Trust by notifying the Remarketing Agent at any time before the time when
the Remarketed Trust Preferred Securities are first generally offered by the
Remarketing Agent to dealers by letter or telegram, or (b) by the Remarketing
Agent by notifying the Company and the Trust at or prior to 10:00 a.m. (New York
City time) five business days prior to the Remarketing Date by letter or
telegram if any of the conditions described in Section 6 are not satisfied.

                  If this Agreement is terminated pursuant to any of the
provisions hereof, except as otherwise provided herein, the Company shall not be
under any liability to the Remarketing Agent and the Remarketing Agent shall not
be under any liability to the Company, except that (a) if this Agreement is
terminated by the Remarketing Agent because of any failure or refusal on the
part of the Company to comply with the terms or to fulfill any of the conditions
of this Agreement, the Company will reimburse the Remarking Agent for all of its
out-of-pocket expenses (including the fees and disbursements of its counsel)
reasonably incurred by it, and (b) if the Remarketing Agent failed or refused to
purchase the Remarketed Trust Preferred Securities hereunder, without some
reason sufficient hereunder to justify the cancellation or termination of if
obligations hereunder, the Remarketing Agent shall not be relieved of liability
to the Company for damages occasioned by its default.

                  Section 13.       Notices.

                  All statements, requests, notices and agreements hereunder
shall be in writing, and:

                  (a)      if to the Remarketing Agent, shall be delivered or
sent by mail, telex or facsimile transmission to Morgan Stanley & Co.
Incorporated, 1585 Broadway, New York, New York 10036, Attention: David Ballard
(fax: 212-761-0538);

                  (b)      if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to Fairlane Plaza South, Suite 1100, 330
Town Center Drive, Dearborn, Michigan 48126, Attention: General Counsel,
Telecopy: (313) 436-9258;

                  (c)      if to the Trust, shall be delivered or sent by mail,
telex or facsimile transmission to Fairlane Plaza South, Suite 1100, 330 Town
Center Drive, Dearborn, Michigan 48126, Attention: General Counsel, Telecopy:
(313) 436-9258.

<PAGE>   24

Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.

                  Section 14.       Persons Entitled to Benefit of Agreement.

                  This Agreement shall inure to the benefit of and be binding
upon the Remarketing Agent, the Company, the Trust and their respective
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (x) the representations, warranties,
indemnities and agreements of the Company contained in this Agreement shall also
be deemed to be for the benefit of the Remarketing Agent and the person or
persons, if any, who control the Remarketing Agent within the meaning of Section
15 of the Securities Act and (y) the indemnity agreement of the Remarketing
Agent contained in Section 7(b) of this Agreement shall be deemed to be for the
benefit of the Company's and the Trust's directors, officers and Trustees who
sign the Registration Statement and any person controlling the Company or the
Trust within the meaning of Section 15 of the Securities Act. Nothing contained
in this Agreement is intended or shall be construed to give any person, other
than the persons referred to herein, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.

                  Section 15.       Survival.

                  The respective indemnities, representations, warranties and
agreements of the Company and the Remarketing Agent contained in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement, shall
survive the Remarketing and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.

                  Section 16.       Governing Law.

                  This Agreement shall be governed by, and construed in
accordance with, the laws of New York.

                  Section 17.       Counterparts.

                  This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original but all such counterparts shall together
constitute one and the same instrument.

                  Section 18.       Headings.

                  The headings herein are inserted for convenience of reference
only and

<PAGE>   25

are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.

If the foregoing correctly sets forth the agreement between the Company, the
Trust and the Remarketing Agent, please indicate your acceptance in the space
provided for that purpose below.

                       [SIGNATURES ON THE FOLLOWING PAGE]

<PAGE>   26

                                       Very truly yours,

                                       CMS ENERGY CORPORATION

                                       By:
                                          --------------------------------------
                                           Name:
                                           Title:

                                       CMS ENERGY TRUST III

                                       By: CMS Energy Corporation,
                                           as Sponsor

                                       By:
                                          --------------------------------------
                                           Name:
                                           Title:

Accepted:

MORGAN STANLEY & CO. INCORPORATED

By:
   ------------------------------------
     Name:
     Title:

<PAGE>   27

                                Table of Contents

                                                                          Page

Section 1.   Definitions                                                     1

Section 2.   Appointment and Obligations of the Remarketing Agent            2

Section 3.   Representations and Warranties of the Company and the Trust     4

Section 4.   Fees                                                           11

Section 5.   Covenants of the Company                                       11

Section 6.   Conditions to the Remarketing Agent's Obligations              14

Section 7.   Indemnification                                                16

Section 8.   Contribution                                                   19

Section 9.   Resignation and Removal of the Remarketing Agent               20

Section 10.  Dealing in the Remarketed Trust Preferred Securities           21

Section 11.  Remarketing Agent's Performance; Duty of Care                  22

Section 12.  Termination                                                    22

Section 13.  Notices                                                        23

Section 14.  Persons Entitled to Benefit of Agreement                       23

Section 15.  Survival                                                       23

Section 16.  Governing Law                                                  24

Section 17.  Counterparts                                                   24

Section 18.  Headings                                                       24

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