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EXHIBIT 4(j)
PAYMENT AND GUARANTEE AGREEMENT
THIS PAYMENT AND GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
_______________, 1995, is executed and delivered by CMS Energy Corporation, a
Michigan corporation (the "Guarantor"), for the benefit of the Holders (as
defined below) from time to time of the Series _A_ Preferred Securities (as
defined below) of CMS Energy Michigan Limited Partnership, a Michigan limited
partnership ("CMS Energy Michigan").
WHEREAS, CMS Energy Michigan is issuing on the date hereof $_______________
aggregate stated liquidation preference of limited partner interests of a
series designated the ___ % Cumulative Preferred Securities, Series _A_ (the
"Series _A_ Preferred Securities"), and the Guarantor desires to enter into
this Guarantee Agreement for the benefit of the Holders, as provided herein;
WHEREAS, CMS Energy Michigan will loan the proceeds from the issuance and
sale of the Series _A_ Preferred Securities and the related capital
contribution of the General Partner to CMS Energy Michigan (the "G.P. Capital
Contribution") to the Guarantor, and the Guarantor will issue Subordinated
Debentures in accordance with the Indenture (as such terms are defined below)
to evidence such loan; and
WHEREAS, the Guarantor desires to irrevocably and unconditionally agree to
the extent set forth herein to pay to the Holders the Guarantee Payments (as
defined below) and to make certain other undertakings on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and other consideration,
receipt of which is hereby acknowledged, the Guarantor, intending to be legally
bound hereby, agrees as follows:
ARTICLE I
As used in this Guarantee Agreement, each term set forth below shall, unless
the context otherwise requires, have the following meaning. Each capitalized
term used but not otherwise defined herein shall have the meaning assigned to
such term in the Amended and Restated Limited Partnership Agreement of CMS
Energy Michigan dated as of _______________, 1995 (the "Limited Partnership
Agreement").
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"Board Resolution" means the resolution of the committee of the Board of
Directors of the Guarantor dated ___________, 1995 relating to the Guarantor's
______% Junior Subordinated Deferrable Interest Debt Securities, Series A,
Due _______ (the "Series A Subordinated Debentures").
"Extension Period" has the meaning specified in the Board Resolution.
"Guarantee Payments" shall mean the following payments, without duplication,
to the extent not paid by CMS Energy Michigan: (i) any accrued and unpaid
dividends which are required to be paid on the Series A Preferred Securities,
to the extent CMS Energy Michigan shall have funds on hand sufficient to make
such payment and funds legally available therefor, (ii) the Redemption Price
(as defined below) payable out of funds legally available therefor with respect
to any Series A Preferred Securities called for redemption by CMS Energy
Michigan, (iii) upon a liquidation of CMS Energy Michigan, the lesser of (a)
the Liquidation Distribution (as defined below) and (b) the amount of assets of
CMS Energy Michigan available for distribution to Holders in liquidation of CMS
Energy Michigan and (iv) any Additional Amounts (as such term is defined in the
Action of the General Partner creating the Series A Preferred Securities under
the Limited Partnership Agreement) payable by CMS Energy Michigan in respect of
the Series A Preferred Securities.
"Holder" shall mean any person in whose name a Series A Preferred
Security is registered on the registration books maintained by CMS Energy
Michigan; provided, however, that in determining whether the Holders of the
requisite percentage of Series A Preferred Securities have given any
request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any entity owned more than 50% by the Guarantor, either directly
or indirectly.
"Indenture" shall mean the Indenture, dated September 15, 1992, between the
Guarantor and NBD Bank, N.A. and the Board Resolution, pursuant to which the
Guarantor has issued its Series A Subordinated Debentures in an amount equal to
the sum of the aggregate stated liquidation preference of the Series A
Preferred Securities plus the G.P. Capital Contribution.
"Liquidation Distribution" shall mean the aggregate of the stated
liquidation preference of $25 per Series A Preferred Security and all unpaid
dividends to the date of payment.
"Redemption Price" shall mean the aggregate of $25 per Series A Preferred
Security and all unpaid dividends to the date fixed for redemption.
"Special Representative" shall mean any representative of the holders of the
limited partner interests of CMS Energy
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Michigan appointed pursuant to Section 13.02(d) of the Limited Partnership
Agreement.
ARTICLE II
SECTION 2.01. The Guarantor hereby irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments, as and when due
(except to the extent paid by CMS Energy Michigan), to the fullest extent
permitted by law, regardless of any defense, right of set-off or
counterclaim which the Guarantor may have or assert against CMS Energy
Michigan or the General Partner. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment by the Guarantor to the
Holders or by payment of such amounts by CMS Energy Michigan to the Holders.
Notwithstanding anything to the contrary herein, the Guarantor retains all of
its rights under the Indenture to extend the interest payment period on the
Series _A_ Subordinated Debentures and the Guarantor shall not be obligated
hereunder to pay during an Extension Period any monthly distributions on the
Series _A_ Preferred Securities.
SECTION 2.02. The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. Except as otherwise set forth herein, the obligations,
covenants, agreements and duties of the Guarantor under this Guarantee
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by CMS Energy Michigan of any
express or implied agreement, covenant, term or condition relating to
the Series _A_ Preferred Securities to be performed or observed by CMS
Energy Michigan;
(b) the extension of time for the payment by CMS Energy
Michigan of all or any portion of the dividends (other than an
extension of time for the payment of dividends that results from the
extension of the interest payment period on the Series _A_
Subordinated Debentures), Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Series _A_ Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Series
_A_ Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
parts of the Holders or the Special Representative to
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enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders or the Special Representative pursuant to the
terms of the Series _A_ Preferred Securities, or any action on the
part of CMS Energy Michigan granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of
debt of, or other similar proceedings affecting, CMS Energy Michigan
or any of the assets of CMS Energy Michigan;
(e) any invalidity of, or defect or deficiency in, any of
the Series _A_ Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstances whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 2.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation to the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the occurrence of any of the
foregoing.
SECTION 2.04. The Guarantor expressly acknowledges that (i) this Guarantee
Agreement will be deposited with the General Partner to be held for the benefit
of the Holders; (ii) in the event of the appointment of a Special
Representative, the Special Representative may enforce this Guarantee Agreement
and may take possession of this Guarantee Agreement for such purpose; (iii) if
no Special Representative has been appointed, the General Partner has the right
to enforce this Guarantee Agreement on behalf of the Holders; (iv) the Holders
of not less than 10% in aggregate stated liquidation preference of the Series
_A_ Preferred Securities have the right to direct the time, method and place
of conducting any proceeding or any remedy available in respect of this
Guarantee Agreement including the giving of directions to the General Partner
or the Special Representative as the case may be; and (v) if the General
Partner or Special Representative fails to enforce this Guarantee Agreement as
above provided any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against CMS Energy Michigan or any other person
or entity.
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SECTION 2.05. This is a guarantee of payment and not of collection. A
Holder or the Special Representative may enforce this Guarantee Agreement
directly against the Guarantor, and the Guarantor will waive any right or
remedy to require that any action be brought against CMS Energy Michigan or any
other person or entity before proceeding against the Guarantor. The Guarantor
agrees that this Guarantee Agreement shall not be discharged except by payment
of the Guarantee Payments in full (to the extent not paid by CMS Energy
Michigan) and by complete performance of all obligations of the Guarantor
contained in this Guarantee Agreement.
SECTION 2.06. The Guarantor will be subrogated to all rights of the Holders
against CMS Energy Michigan in respect of any amounts paid to the Holders by
the Guarantor under this Guarantee Agreement and shall have the right to waive
payment by CMS Energy Michigan pursuant to Section 2.01; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts remain due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to pay over such amount to the Holders.
SECTION 2.07. The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of CMS Energy Michigan with respect to the
Series _A_ Preferred Securities and that the Guarantor shall be liable as
principal and sole debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (f), inclusive, of Section 2.03 hereof.
ARTICLE III
SECTION 3.01. So long as any Series _A_ Preferred Securities remain
outstanding, the Guarantor shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock if at such time the Guarantor shall be in default with respect to
its payment or other obligations hereunder or there shall have occurred any
event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture.
SECTION 3.02. So long as any Series _A_ Preferred Securities are
outstanding, the Guarantor agrees to maintain its corporate existence; provided
that the Guarantor may consolidate with or merge with or into, or sell, convey,
transfer or lease
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all or substantially all of its assets (either in one transaction or a series
of transactions) to, any person, corporation, partnership, limited liability
company, joint venture association, joint stock company, trust or
unincorporated association if such entity formed by or surviving such
consolidation or merger or to which such sale, conveyance, transfer or lease
shall have been made, if other than the Guarantor, (i) is organized and
existing under the laws of the United States of America or any state thereof or
the District of Columbia, and (ii) shall expressly assume all the obligations
of the Guarantor under this Agreement.
SECTION 3.03. This Guarantee Agreement will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to all other liabilities of the Guarantor, except those made pari
passu by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.
ARTICLE IV
This Guarantee Agreement shall terminate and be of no further force and
effect upon full payment of the Redemption Price of all Series _A_ Preferred
Securities or upon full payment of the amounts payable to the Holders upon
liquidation of CMS Energy Michigan; provided, however, that this Guarantee
Agreement shall continue to be effective or shall be reinstated, as the case
may be, if at any time any Holder must restore payments of any sums paid under
the Series _A_ Preferred Securities or under this Guarantee Agreement for any
reason whatsoever.
ARTICLE V
SECTION 5.01. All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
Except as provided in Section 3.02, the Guarantor may not assign its
obligations hereunder without the prior approval of the Holders of not less
than 66 2/3% of the aggregate stated liquidation preference of all Series _A_
Preferred Securities then outstanding.
SECTION 5.02. This Guarantee Agreement may only be amended by a written
instrument executed by the Guarantor; provided that, so long as any of the
Series _A_ Preferred Securities remain outstanding, any such amendment that
adversely affects the holders of Series _A_ Preferred Securities, any
termination of this Guarantee Agreement and any waiver of
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compliance with any covenant hereunder shall be effected only with the prior
approval of the holders of not less than 66 2/3% of the aggregate liquidation
preference of all Series _A_ Preferred Securities then outstanding.
SECTION 5.03. All notices, requests or other communications required or
permitted to be given hereunder to the Guarantor shall be deemed given if in
writing and delivered personally or by recognized overnight courier or express
mail service or by facsimile transmission (confirmed in writing) or by
registered or certified mail (return receipt requested), addressed to the
Guarantor at the following address (or at such other address as shall be
specified by notice to the Holders):
CMS Energy Corporation
Fairlane Plaza South
Suite 1100
330 Town Center Drive
Dearborn, Michigan 48126
Facsimile No.: (313) ________
Attention: _________
All notices, requests or other communications required or permitted to be
given hereunder to the Holders shall be deemed given if in writing and
delivered by the Guarantor in the same manner as notices sent by CMS Energy
Michigan to the Holders.
SECTION 5.04. This Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Series _A_ Preferred
Securities.
SECTION 5.05. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [MICHIGAN] WITHOUT
GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guarantee Agreement as of the day and year first above written.
CMS ENERGY CORPORATION
By:___________________________
Name:
Title:
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