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EXHIBIT 4(y)
CMS ENERGY CORPORATION
GUARANTEE AGREEMENT
CMS ENERGY TRUST III
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Dated as of August 22, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions..............................................................2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 Trust Indenture Act; Application.........................................6
SECTION 2.02 Lists of Holders of Preferred Securities.................................7
SECTION 2.03 Reports by the Guarantee Trustee.........................................7
SECTION 2.04 Periodic Reports to the Guarantee Trustee................................7
SECTION 2.05 Evidence of Compliance with Conditions Precedent.........................8
SECTION 2.06 Events of Default; Waiver................................................8
SECTION 2.07 Disclosure of Information................................................8
SECTION 2.08 Conflicting Interest.....................................................9
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.01 Powers and Duties of the Guarantee Trustee...............................9
SECTION 3.02 Certain Rights and Duties of the Guarantee Trustee......................10
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee...................13
SECTION 3.04 The Guarantee Trustee May Own Preferred Securities......................13
SECTION 3.05 Moneys Received by the Guarantee Trustee to Be Held
in Trust Without Interest...............................................13
SECTION 3.06 Compensation and Expenses of Guarantee Trustee..........................13
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 Qualifications..........................................................14
SECTION 4.02 Appointment, Removal and Resignation of the Guarantee
Trustee.................................................................15
ARTICLE V
GUARANTEE
SECTION 5.01 Guarantee...............................................................16
SECTION 5.02 Waiver of Notice........................................................16
SECTION 5.03 Obligations Not Affected................................................16
SECTION 5.04 Enforcement of Guarantee................................................18
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SECTION 5.05 Guarantee of Payment....................................................18
SECTION 5.06 Subrogation.............................................................18
SECTION 5.07 Independent Obligations.................................................19
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 Limitation of Transactions..............................................19
SECTION 6.02 Subordination...........................................................20
ARTICLE VII
TERMINATION
SECTION 7.01 Termination.............................................................21
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01 Exculpation.............................................................21
SECTION 8.02 Indemnification.........................................................22
SECTION 8.03 Survive Termination.....................................................22
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Successors and Assigns..................................................22
SECTION 9.02 Amendments..............................................................22
SECTION 9.03 Notices.................................................................23
SECTION 9.04 Genders.................................................................24
SECTION 9.05 Benefit.................................................................24
SECTION 9.06 Governing Law...........................................................24
SECTION 9.07 Counterparts............................................................24
SECTION 9.08 Exercise of Overallotment Option........................................24
SECTION 9.09 Limited Liability.......................................................24
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of August 22, 2000, is
executed and delivered by CMS Energy Corporation, a Michigan corporation (the
"Guarantor"), and The Bank of New York, a New York banking corporation, as the
initial Guarantee Trustee (as defined herein) for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of CMS Energy Trust III, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of August 22, 2000 among the trustees of the
Issuer named therein, CMS Energy Corporation, as Sponsor, and the Holders from
time to time of preferred undivided beneficial interests in the assets of the
Issuer, the Issuer may issue up to $250,000,000 aggregate liquidation amount of
its % Trust Preferred Securities (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Issuer and having
the terms set forth in the Declaration, of which $220,000,000 liquidation amount
of Preferred Securities is being issued as of the date hereof. Up to the
remaining $30,000,000 liquidation amount of Preferred Securities may be issued
by the Issuer if and to the extent that the over-allotment option granted by the
Guarantor and the Issuer pursuant to the Underwriting Agreement (as defined in
the Declaration) is exercised by the Underwriters named in the Underwriting
Agreement; and
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase by the
initial purchasers thereof of Preferred Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers
this Guarantee Agreement for the benefit of the Holders from time to time.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions.
(a) Capitalized terms used in this Guarantee Agreement but not
defined in the preamble or recitals above have the respective meanings assigned
to them in this Section 1.01.
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(b) A term defined anywhere in this Guarantee Agreement has
the same meaning throughout.
(c) All references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time.
(d) All references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified.
(e) A term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires.
(f) A reference to the singular includes the plural and vice
versa.
"Additional Amounts" has the meaning set forth in the
Indenture.
"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 purposes of this definition,
"control" of a Person shall mean 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" shall have meanings correlative to the foregoing.
"Business Day" has the meaning set forth in the Indenture.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in Article VII of the Declaration.
"Common Stock" means the common stock, $.01 par value per
share, of the Guarantor, including associated preferred share purchase rights.
"Declaration" has the meaning set forth in the recitals above.
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"Distributions" means the periodic distributions and other
payments payable to Holders in accordance with the terms of the Preferred
Securities set forth in Article VII of to the Declaration.
"Dollar" has the meaning set forth in the Indenture.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
Payment, any such default shall constitute an Event of Default only if the
Guarantor shall have received notice of such default and shall not have cured
such default within 60 days after receipt of such notice.
"Extension Period" has the meaning set forth in Section 2.8 of
the Fourth Supplemental Indenture.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by or on behalf of the Issuer: (i) any accumulated
and unpaid Distributions, any Additional Amounts payable with respect to the
Preferred Securities in accordance with the terms thereof and the Redemption
Price, including all accumulated and unpaid Distributions and Additional Amounts
to the date of redemption, with respect to the Preferred Securities to be
redeemed by the Issuer but only if and to the extent that in each case the
Guarantor has made a payment to the Property Trustee of principal of, any
premium or interest on or any Additional Amounts with respect to the Notes and
(ii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of Notes to Holders
in exchange for Preferred Securities or the redemption of the Preferred
Securities in full upon the maturity or redemption of the Notes as provided in
the Declaration), the lesser of (a) the aggregate of the liquidation amount and
all accumulated and unpaid Distributions and Additional Amounts on the Preferred
Securities to the date of payment, to the extent the Issuer has funds on hand
legally available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer as required
by applicable law.
"Guarantee Trustee" means The Bank of New York, a New York
banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee Agreement,
and thereafter means each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the
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Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, and any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Guarantee
Trustee.
"Indenture" means the Indenture dated as of June 1, 1997
between the Guarantor and The Bank of New York, as trustee, (including any
provisions of the TIA that are deemed to be incorporated therein), as the same
may be amended, modified or supplemented from time to time in accordance with
the terms thereof, pursuant to which the Notes are to be issued to the Property
Trustee.
"Majority of Outstanding Preferred Securities" means Holder(s)
of outstanding Preferred Securities, voting together as a single class, who are
the record owners of Preferred Securities representing more than 50% of the
outstanding Preferred Securities.
"Notes" means the series of unsecured subordinated notes
issued to the Property Trustee by the Guarantor under the Indenture and entitled
the " % Subordinated Deferrable Notes due 2004."
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman, the President or any Vice President (whether
or not designated by a number or numbers or a word or words added before or
after the title "Vice President") and by the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. One of the officers signing
an Officers' Certificate given pursuant to Section 2.04 shall be the principal
executive, financial or accounting officer of the Guarantor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(i) a statement that the person making such certificate has
read such covenant or condition;
(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 are based;
(iii) a statement that, in the opinion of such person, he has
made
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such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof or other entity of
any kind.
"Preferred Securities" has the meaning set forth in the
recitals above.
"Property Trustee" means the Person acting as Property Trustee
under the Declaration.
"Redemption Price" means the amount payable on redemption of
the Preferred Securities in accordance with the terms of the Preferred
Securities.
"Responsible Officer" means, when used with respect to the
Guarantee Trustee, any officer within the corporate trust department of the
Guarantee Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Guarantee Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such Person's
knowledge of and familiarity with the particular subject and, in either case,
who shall have direct responsibility for the administration of this Guarantee
Agreement.
"Senior Indebtedness" has the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as a Guarantee Trustee under
Section 4.01.
"Fourth Supplemental Indenture" has the meaning specified in
the definition of Indenture.
"Trust Enforcement Event" has the meaning specified in the
Declaration.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of
the Trust Indenture Act that are required to be part of this Guarantee Agreement
and shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(c) The application of the Trust Indenture Act to this
Guarantee Agreement shall not affect the nature of the Preferred Securities as
equity securities representing preferred undivided beneficial interests in the
assets of the Issuer.
SECTION 2.02 Lists of Holders of Preferred Securities.
(a) The Guarantor shall provide the Guarantee Trustee (unless
the Guarantee Trustee is the registrar of the Preferred Securities) (i) within
14 days after each record date for payment of Distributions, a list, in such
form as the Guarantee Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of such date, and (ii) at any other time,
within 30 days of receipt by the Guarantor of a written request for a List of
Holders as of a date no more than 15 days before such List of Holders is given
to the Guarantee Trustee; provided that in each case the Guarantor shall not be
obligated to provide such List of Holders at any time that the List of Holders
does not differ from the most recent List of Holders given to the Guarantee
Trustee by the Guarantor. The Guarantee Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in the Lists of
Holders given to it; provided that the Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Section 312(b) of the Trust Indenture Act.
SECTION 2.03 Reports by the Guarantee Trustee.
Within 60 days after June 15 of each year, commencing June 15,
2001,
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the Guarantee Trustee shall deliver to the Holders such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form, in the manner
and at the times provided by Section 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the other requirements of Section 313
of the Trust Indenture Act. A copy of each such report shall, at the time of
such transmission to the Holders, be filed by the Guarantee Trustee with the
Guarantor, with each stock exchange or quotation system upon which any Preferred
Securities are listed or traded (if so listed or traded) and also with the
Commission. The Guarantor agrees to notify the Guarantee Trustee when any
Preferred Securities become listed on any stock exchange or quotation system and
of any delisting thereof.
SECTION 2.04 Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the
Commission and the Holders, as applicable, such documents, reports and
information (if any) as required by Section 314(a)(1)-(3) of the Trust Indenture
Act and the compliance certificates required by Section 314(a)(4) and (c) of the
Trust Indenture Act, any such certificates to be provided in the form, in the
manner and at the times required by Section 314(a)(4) and (c) of the Trust
Indenture Act (provided that any certificate to be provided pursuant to Section
314(a)(4) of the Trust Indenture Act shall be provided within 120 days of the
end of each fiscal year of the Issuer). Delivery of such reports, information
and documents to the Guarantee Trustee is for informational purposes only and
the Guarantee Trustee's receipt of such shall not constitute constructive notice
of any information contained therein, including the Guarantor's compliance with
any of its covenants hereunder (as to which the Guarantee Trustee is entitled to
rely exclusively on Officers' Certificates or on certificates provided pursuant
to this Section 2.04).
SECTION 2.05 Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Guarantee Agreement which relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c) may be given in the form of an
Officers' Certificate.
SECTION 2.06 Events of Default; Waiver.
(a) The Holders of a Majority of Outstanding Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default, or
impair any right consequent thereon.
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(b) The right of any Holder to receive payment of the
Guarantee Payments in accordance with this Guarantee Agreement, or to institute
suit for the enforcement of any such payment, shall not be impaired without the
consent of each such Holder.
SECTION 2.07 Disclosure of Information.
The disclosure of information as to the names and addresses of
the Holders in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information was derived, shall not be
deemed to be a violation of any existing law, or any law hereafter enacted which
does not specifically refer to Section 312 of the Trust Indenture Act, nor shall
the Guarantee Trustee be held accountable by reason of mailing any material
pursuant to a request made under Section 312(b) of the Trust Indenture Act.
SECTION 2.08 Conflicting Interest.
(a) The Declaration shall be deemed to be specifically
described in this Guarantee Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
(b) The Guarantee Trustee shall comply with its obligations
under Sections 310(b) and 311 of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.01 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee in trust for the benefit of the Holders. The Guarantee Trustee shall not
transfer its right, title and interest in this Guarantee Agreement to any Person
except a Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Guarantee Trustee or to a Holder exercising
his or her rights pursuant to Section 5.04(iv). The right, title and interest of
the Guarantee Trustee to this Guarantee Agreement shall vest automatically in
each Person who may hereafter be appointed as Guarantee Trustee in accordance
with Article IV. Such vesting and
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cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) This Guarantee Agreement and all moneys received by the
Guarantee Trustee in respect of the Guarantee Payments will not be subject to
any right, charge, security interest, lien or claim of any kind in favor of, or
for the benefit of, the Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default actually known to a Responsible Officer of the
Guarantee Trustee, transmit by mail, first class postage prepaid, to the
Holders, as their names and addresses appear upon the List of Holders, notice of
all such Events of Default, unless such defaults shall have been cured before
the giving of such notice; provided that the Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders. The Guarantee Trustee shall
not be deemed to have knowledge of any Event of Default except any Event of
Default as to which the Guarantee Trustee shall have received written notice or
a Responsible Officer charged with the administration of this Guarantee
Agreement shall have obtained written notice of such Event of Default.
(e) The Guarantee Trustee shall continue to serve as a trustee
until a Successor Guarantee Trustee has been appointed and accepted that
appointment in accordance with Article IV.
SECTION 3.02 Certain Rights and Duties of the Guarantee Trustee.
(a) The Guarantee Trustee, before the occurrence of an Event
of Default and after the curing or waiving of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Guarantee Agreement, and no implied covenants shall be read
into this Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.06), the Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Guarantee Agreement, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own
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negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Guarantee
Trustee; and
(B) in the absence of willful misconduct on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee
and conforming to the requirements of this Guarantee Agree
ment; provided, however, that in the case of any such
certificates or opinions that by any provision hereof or the
Trust Indenture Act are specifically required to be furnished
to the Guarantee Trustee, the Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they
conform to the requirements of this Guarantee Agreement or the
Trust Indenture Act, as the case may be (but need not confirm
or investigate the accuracy of mathematical calcula tions or
other facts stated therein);
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority of
Outstanding Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee, or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the
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Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or indemnity reasonably satisfactory to it against
such risk or liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of willful
misconduct on its part, request and rely upon an Officers' Certificate,
which, upon receipt of such request, shall be promptly delivered by the
Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel (which
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees) selected by it in good faith and with due
care and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek, at the
expense of the Guarantor, instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Guarantee Trustee shall not be
responsible for any willful misconduct or negligence on the part of any
agent or attorney appointed by it in good faith and with due care;
(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have offered to the Guarantee Trustee security and indemnity
satisfactory to the Guarantee Trustee against the costs, expenses
(including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction; provided
that nothing contained in this clause (iv) shall relieve the Guarantee
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived) to exercise such of the rights and
powers vested in it by this Guarantee Agreement, and to use the same
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degree of care and skill in this exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs; and
(v) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action; and no third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act, or as
to its compliance with any of the terms and provisions of this
Guarantee Agreement, both of which shall be conclusively evidenced by
the Guarantee Trustee's or its agent's taking such action.
SECTION 3.03 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee Agreement shall be
taken as the statements of the Guarantor, and the Guarantee Trustee does not
assume any responsibil ity for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
SECTION 3.04 The Guarantee Trustee May Own Preferred Securities.
The Guarantee Trustee, in its individual or any other
capacity, may become the owner or pledgee of Preferred Securities and may
otherwise deal with the Guarantor with the same rights it would have if it were
not the Guarantee Trustee.
SECTION 3.05 Moneys Received by the Guarantee Trustee to Be Held in
Trust Without Interest.
All moneys received by the Guarantee Trustee in respect of
Guarantee Payments shall, until used or applied as herein provided, be held in
trust for the purposes for which they were received, but need not be segregated
from other funds except to the extent required by law. The Guarantee Trustee
shall be under no liability for interest on any moneys received by it hereunder
except such as it may agree in writing to pay thereon.
SECTION 3.06 Compensation and Expenses of Guarantee Trustee.
The Guarantor covenants and agrees to pay to the Guarantee
Trustee from time to time, and the Guarantee Trustee shall be entitled to, such
compensation as the Guarantor and the Guarantee Trustee shall from time to time
agree in writing (which shall not be limited by any provision of law in regard
to the compensation of a Guarantee Trustee of an express trust) for all services
rendered by it in the exercise
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and performance of any of the powers and duties hereunder of the Guarantee
Trustee, and the Guarantor will pay or reimburse the Guarantee Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Guarantee Trustee in accordance with any of the provisions of this
Guarantee Agreement (including the reasonable compensation and the reasonable
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or willful misconduct. The Guarantor also covenants to indemnify
each of the Guarantee Trustee or any predecessor Guarantee Trustee and their
officers, agents, directors and employees for, and to hold them harmless
against, any and all loss, liability, damage, claim or expense including taxes
(other than taxes based upon, measured by or determined by the income, profit,
franchise or doing business of the Guarantee Trustee) incurred without
negligence or willful misconduct on the part of the Guarantee Trustee and
arising out of or in connection with the acceptance or administration of this
trust, including the reasonable costs and expenses of defending itself against
any claim (whether asserted by the Guarantor, any Holder or any other Person) of
liability in the premises. The provisions of this Section 3.06 shall survive the
termination of this Guarantee Agreement and resignation or removal of the
Guarantee Trustee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 Qualifications.
There shall at all times be a Guarantee Trustee that shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a national banking association or corporation
organized and doing business under the laws of the United States of
America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
clause (ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
17
If at any time the Guarantee Trustee shall cease to satisfy
the require ments of clauses (i) and (ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and
the Guarantor shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
SECTION 4.02 Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 has been appointed
and has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the Guarantee
Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold
office until its successor shall have been appointed or until its removal or
resignation.
(d) The Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument (a "Resignation Request")
in writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 has been appointed
and has accepted such appointment by instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.02 within 60
days after delivery to the Guarantor of a Resignation Request or receipt of a
notice of removal by the Guarantee Trustee, the Guarantee Trustee resigning or
to be removed may, at the expense of the Guarantor petition any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon after such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
18
ARTICLE V
GUARANTEE
SECTION 5.01 Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counter claim which the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or to the
Guarantee Trustee for remittance to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.02 Waiver of Notice.
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, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands. Notwithstanding anything to the contrary herein, the
Guarantor retains all of its rights under the Indenture to extend the interest
payment period on the Notes and the Guarantor shall not be obligated hereunder
to make any Guarantee Payment during any Extension Period with respect to the
Distributions on the Preferred Securities.
SECTION 5.03 Obligations Not Affected.
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 the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions (other than an extension of time
for payment of Distributions that result from any Extension Period),
Redemption Price, Liquidation Distribution (as defined in the
Declaration) or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in
19
connection with, the Preferred Securities (other than an extension of
time for payment of Distributions that result from any Extension
Period);
(c) any failure, omission, delay or lack of diligence on the
part of the Guarantee Trustee or the Holders to enforce, assert or
exercise any right, privilege, power or remedy conferred on the
Guarantee Trustee or the Holders pursuant to the terms hereof or of the
Preferred Securities, respectively, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor with respect to the Guarantee Payments shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Guarantee Trustee or the
Holders to give notice to, or obtain consent of, the Guarantor with respect to
the happening of any of the foregoing.
SECTION 5.04 Enforcement of Guarantee.
The Guarantor and the Guarantee Trustee expressly acknowledge
and agree that (i) this Guarantee Agreement will be deposited with the Guarantee
Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee
has the right to enforce this Guarantee Agreement on behalf of the Holders;
(iii) Holders representing not less than a Majority of Outstanding Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee Agreement or exercising any trust
20
or other power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) if the Guarantee Trustee fails to enforce this Guarantee
Agreement as provided in clauses (ii) and (iii) above, 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
the Issuer, the Guarantee Trustee or any other Person. Notwithstanding the
foregoing, if the Guarantor has failed to make a Guarantee Payment, a Holder may
directly institute a proceeding against the Guarantor for enforcement of this
Guarantee Agreement for such payment without first instituting a legal
proceeding against the Issuer, the Guarantee Trustee or any other Person.
SECTION 5.05 Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and
not merely of collection. This Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer) or upon the distribution of the Notes to the
Holders as provided in the Declaration.
SECTION 5.06 Subrogation.
The Guarantor shall be subrogated to all (if any) rights of
the Holders against the Issuer in respect of any amounts paid to the Holders by
the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or 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 payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are 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 hold such amount in trust for the Holders and
to pay over such amount to the Holders or to the Guarantee Trustee for
remittance to the Holders.
SECTION 5.07 Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.03 hereof.
21
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 Limitation of Transactions.
So long as any Preferred Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock (which includes common and preferred stock), (ii)
make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Guarantor that rank pari passu
with or junior in right of payment to the Notes or (iii) make any guarantee
payments with respect to any guarantee by the Guarantor of any securities of any
subsidiary of the Guarantor if such guarantee ranks pari passu or junior in
right of payment to the Notes (other than in the case of clauses (i), (ii) and
(iii), (a) dividends or distributions in shares of, or options, warrants or
rights to subscribe for or purchase shares of, common stock of the Guarantor,
(b) any declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under this Guarantee Agreement, (d) as a result of a reclassification
of the Guarantor's capital stock solely into shares of one or more classes or
series of the Guarantor's capital stock or the exchange or the conversion of one
class or series of the Guarantor's capital stock for another class or series of
the Guarantor's capital stock, (e) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged
and (f) purchases of the Guarantor's common stock in connection with the
satisfaction by the Guarantor of its obligations (including purchases related to
the issuance of such common stock or rights) under any of the Guarantor's
benefit plans for its and its subsidiaries' directors, officers or employees or
any of the Guarantor's dividend reinvestment plans), if at such time (x) an
Event of Default, or an "Event of Default" as defined in the Indenture, shall
have occurred and be continuing or (y) the Guarantor shall have given notice of
its election of the exercise of its right to extend the interest payment period
pursuant to Section 2.8 of the Fourth Supplemental Indenture and any such
extension shall have commenced and not yet terminated.
SECTION 6.02 Subordination.
(a) The obligations of the Guarantor under this Guarantee
Agreement will constitute unsecured obligations of the Guarantor and will rank
subordinate and junior in right of payment to all present and future Senior
22
Indebtedness of the Guarantor to the extent and in the manner that the Notes are
subordinated to all present and future Senior Indebtedness pursuant to the
Indenture, it being understood that the terms of Article XII of the Indenture
shall apply to the obligations of the Guarantor under this Guarantee Agreement
as if (x) such Article XII were set forth herein in full and (y) such
obligations were substituted for the term "Securities" appearing in such Article
XII and pari passu with the Notes. The obligations of the Guarantor hereunder do
not constitute Senior Indebtedness (as defined in the Indenture) of the
Guarantor.
(b) The right of the Guarantor to participate in any
distribution of assets of any of its subsidiaries upon any such subsidiary's
liquidation or reorganization or otherwise is subject to the prior claims of
creditors of that subsidiary, except to the extent the Guarantor may itself be
recognized as a creditor of that subsidiary. Accordingly, the Guarantor's
obligations under this Guarantee Agreement will be effectively subordinated to
all existing and future liabilities of the Guarantor's subsidiaries, and
claimants should look only to the assets of the Guarantor for payments
thereunder. This Guarantee Agreement does not limit the incurrence or issuance
of other secured or unsecured debt of the Guarantor, including Senior
Indebtedness of the Guarantor, under any indenture that the Guarantor may enter
into in the future or otherwise.
(c) If an Trust Enforcement Event has occurred and is
continuing under the Declaration, the rights of holders of the Common Securities
to receive Guarantee Payments will be subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments.
ARTICLE VII
TERMINATION
SECTION 7.01 Termination.
This Guarantee Agreement shall terminate and be of no further
force and effect (i) upon full payment of the Redemption Price of all Preferred
Securities, (ii) upon the distribution of Notes to Holders and holders of Common
Securities in exchange for all of the Preferred Securities and Common Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must restore payment of any sums paid
with respect to the Preferred Securities or under this Guarantee Agreement.
23
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Holder for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee Agreement or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.02 Indemnification.
To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith in accordance with this Guarantee Agreement and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Guarantee Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of negligence or
willful misconduct with respect to such acts or omissions.
SECTION 8.03 Survive Termination.
The provisions of Sections 8.01 and 8.02 shall survive the
termination of this Guarantee Agreement or the resignation or removal of the
Guarantee Trustee.
24
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Successors and Assigns.
All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assignees, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Guarantee
Trustee and the Holders then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under
Article IX of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.02 Amendments.
Except with respect to any changes which do not adversely
affect the rights of Holders in any material respect (in which case no consent
of Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Guarantor, the Guarantee Trustee and the Holders of
not less than a Majority of Outstanding Preferred Securities. The provisions of
Section 11.2 of the Declaration concerning meetings of Holders shall apply to
the giving of such approval.
SECTION 9.03 Notices.
Any notice, request or other communication required or
permitted to be given hereunder shall be in writing, in English, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the
Holders:
CMS Energy Corporation
Fairlane Plaza South, Suite 1100
βββ ββββ ββββββ βββββ
ββββββββ, ββββββββ βββββ
Attention: General Counsel
Telecopy: (βββ) βββ-ββββ
(b) if given to the Guarantee Trustee, to the address set
forth
25
below or such other address as the Guarantee Trustee may give notice
of to the Holders:
The Bank of New York
βββ βββββββ ββββββ
ββ ββββ
βββ ββββ, βββ ββββ βββββ
Attention: Corporate Trust Trustee Administration
Facsimile: (βββ) βββ-ββββ
(c) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
(i) received in person, (ii) telecopied with receipt confirmed, or (iii) mailed
by first class mail, postage prepaid, when received, except that if a notice or
other document is refused delivery or cannot be delivered because of a changed
address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.
SECTION 9.04 Genders.
The masculine, feminine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 9.05 Benefit.
This Guarantee Agreement is solely for the benefit of the
Guarantee Trustee and the Holders and, subject to Section 3.01(a), is not
separately transferable from the Preferred Securities.
SECTION 9.06 Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCI PLES OF CONFLICTS OF LAWS).
SECTION 9.07 Counterparts.
This Guarantee Agreement may be executed in counterparts, each
of which shall be an original; but such counterparts shall together constitute
one and the same instrument.
26
SECTION 9.08 Exercise of Overallotment Option.
If and to the extent that Preferred Securities are issued by
the Issuer upon exercise of the overallotment option referred to in the first
WHEREAS clause, the Guarantor agrees to give prompt notice thereof to the
Guarantee Trustee but the failure to give such notice shall not relieve the
Guarantor of any of its obligations hereunder.
SECTION 9.09 Limited Liability.
Neither the Guarantee Trustee nor the Holders, in their
capacities as such, shall be personally liable for any liabilities or
obligations of the Guarantor arising out of this Guarantee Agreement. The
parties further hereby agree that the Holders, in their capacities as such,
shall be entitled to the same limitation of personal liability extended to the
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
27
CMS ENERGY CORPORATION
By:
-----------------------------------
Name:
------------------------------
Title:
------------------------------
THE BANK OF NEW YORK
as Guarantee Trustee
By:
-----------------------------------
Name:
------------------------------
Title:
------------------------------