Exhibit (10)(h)
PERFORMANCE INCENTIVE STOCK PLAN
The CMS Energy Corporation Performance Incentive Stock Plan, first effective
February 3, 1988, is hereby set forth as amended and restated effective June 1,
2004, and as further amended effective April 1, 2006 to ensure compliance with
the requirements of Internal Revenue Code Section 409A.
Article I. Purpose
The CMS Energy Corporation Performance Incentive Stock Plan (hereinafter called
the “Plan”) is a Plan to provide incentive compensation to Eligible Persons,
based upon such Eligible Persons’ individual contributions to the long-term
growth and profitability of the Corporation, and in order to encourage such
Eligible Persons to identify with shareholder concerns and their current and
continuing interest in the development and financial success of the Corporation.
Because it is expected that the efforts of the key employees, Directors or
advisors selected for participation in the Plan will have a significant impact
on the results of the Corporation’s operations in future years, the Plan is
intended to assist the Corporation in attracting and retaining as key employees,
Directors or advisors individuals of superior ability and in motivating their
activities on behalf of the Corporation.
Article II. Definitions

2.1   Definitions: When used in the Plan, the following words and phrases shall
have the following meanings:

  a.   “Award Period” means the period or periods of time relating to any
restrictions imposed by the Committee with respect to Common Stock awarded under
Article VII. Such period of time shall extend for a period of at least twelve
months from and after the date of the award.     b.   “Beneficiary” means the
beneficiary or beneficiaries designated to receive the amount, if any, payable
under the Plan upon the death of a Participant.     c.   “Board” means the Board
of Directors of the Corporation.     d.   “Change in Control” means, for
individuals who have a written agreement including a change in control
provision, whatever meaning was given in such agreement. For other individuals,
the phrase shall have the meaning shown on Attachment A.     e.   “Committee”
means the Compensation and Human Resources Committee of the Board, which shall
be comprised in such a manner to comply with the requirements, if any, of the
New York Stock Exchange or other applicable stock markets, Rule 16b-3 (or any
successor rule) under the Securities Exchange Act of 1934, as amended, and
Section 162(m) of the Internal Revenue Code of 1986, as amended.     f.  
“Common Stock” means the Common Stock of the Corporation as authorized for
issuance in its Articles of Incorporation at the time of an award or grant under
this Plan.     g.   “Corporation” means CMS Energy Corporation, its successors
and assigns, and each of its Subsidiaries, or any of them individually.     h.  
“Director” means any person who is a member of the Board of Directors of the
Corporation or a Subsidiary.     i.   “Eligible Person” means a key employee,
non-employee Director or advisor. A key employee must at the end of the fiscal
year be a regular full-time salaried employee of the Corporation or a
Subsidiary, or, to the extent the Committee may determine, a person whose
services to the Corporation terminated before the end of the fiscal year, who,
in the opinion of the Committee, made a significant contribution to the
Corporation or a Subsidiary.     j.   “Incentive Option” means an option to
purchase Common Stock of the Corporation which meets the requirements set forth
in the Plan and also meets the definition of an Incentive Stock Option set forth
in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

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  k.   “Non-Employee Director” means a member of the Board of Directors of the
Corporation or a Subsidiary who is not currently an employee of the Corporation
or a Subsidiary and has not been an employee of the Corporation or a Subsidiary
within the preceding 3 years.     l.   “Nonqualified Option” means an option to
purchase Common Stock of the Corporation which meets the requirements set forth
in the Plan but does not meet the definition of an Incentive Stock Option set
forth in Section 422 of the Code.     m.   “Officers Incentive Compensation
Plan” means the incentive compensation plan, including any amendments thereto,
authorized and approved by the Board to provide incentive compensation to the
Officers of the Corporation or a Subsidiary.     n.   “Optionee” means any
person to whom an option or right has been granted or who becomes a holder of an
option or right under Article VI of the Plan.     o.   “Participant” means a
person to whom a grant or award has been made which has not been paid,
forfeited, or otherwise terminated or satisfied under the Plan, or a person
included under the Management Stock Purchase Plan.     p.   “Performance
Criteria” are the factors used by the Committee to establish goals to track
business measures such as net earnings; operating earnings or income; earnings
growth; net income (absolute or competitive growth rates comparative); cash flow
(including operating cash flow, free cash flow, discounted cash flow return on
investment, and cash flow in excess of cost of capital); earnings per share;
stock price (absolute or peer-group comparative); total shareholder return;
absolute and/or relative return on common shareholders equity; return on
shareholders equity (absolute or peer-group comparative); absolute and/or
relative return on capital; absolute and/or relative return on assets; economic
value added (income in excess of cost of capital); customer satisfaction;
expense reduction; sales; or ratio of operating expenses to operating revenues.
    q.   “Performance Unit” means a contractual right granted to a Participant
pursuant to Article VIII to receive a designated dollar value equal to the value
established by the Committee and subject to such terms and conditions as are set
forth in this Plan and the applicable grant.     r.   “Phantom Share” means a
contractual right granted to a Participant pursuant to Article VIII to receive
an amount equal to the Appreciation Value at such time, and subject to such
terms and conditions as are set forth in this Plan and the applicable grant.    
s.   “Restricted Common Stock” means Common Stock delivered subject to the
restrictions described in Article VII.     t.   “Restrictions” for purposes of
Article VII includes any time based and/or performance based conditions on
vesting.     u.   “Shareholders” means the shareholders of the Corporation.    
v.   “Stock Appreciation Right” shall mean a right, granted in conjunction with
a Stock Option, to surrender the Stock Option and receive the appreciation in
value of the optioned shares over the option price.     w.   “Stock Option”
means an option to purchase shares of Common Stock, granted pursuant to this
Plan.     x.   “Subsidiary” means a corporation, domestic or foreign, 50 percent
or more of the voting stock of which is owned directly or indirectly by the
Corporation.

Article III. Effective Date, Duration, Scope and Administration of the Plan

3.1   This Plan shall be effective June 1, 2004, conditioned upon approval of
the shareholders of the Corporation, and shall continue until May 31, 2009.  
3.2   The Committee shall have full power and authority to construe, interpret
and administer the Plan. All decisions, actions or interpretations of the
Committee shall be final, conclusive and binding upon all parties. If any
Participant or Optionee objects to any such interpretation or action formally or
informally, the expenses of the Committee and its agents and counsel shall be
chargeable against any amounts otherwise payable under the Plan to or on account
of the Participant or Optionee.

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3.3   No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by him or on his behalf in his capacity as
a member of the Committee nor for any mistake of judgment made in good faith,
and the Corporation shall indemnify and hold harmless each member of the
Committee and each other officer, employee or director of the Corporation to
whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim with
the approval of the Board) arising out of any act or omission to act in
connection with the Plan unless arising out of such person’s own fraud or bad
faith.

Article IV. Participation, Awards and Grants

4.1   Each year the Committee shall designate as Participants and/or Optionees
in the Plan those Eligible Persons who, in the opinion of the Committee, have
significantly contributed to the Corporation.

4.2   Each year, the Committee may award shares of Common Stock, and/or may
grant Phantom Shares, Performance Units, Stock Options which qualify as
“Incentive Stock Options” within the meaning of Section 422 of the Code or Stock
Options which do not qualify as Incentive Stock Options and/or Stock
Appreciation Rights for use in connection with Stock Options to each Eligible
Person whom it has designated as an Optionee or Participant for such year. No
Incentive Stock Option will be granted to an Eligible Person who is not a full
or part-time employee of the Corporation or a subsidiary of the Corporation.

4.3   Awards of Common Stock and grants of Stock Options (with or without Stock
Appreciation Rights), Phantom Shares or Performance Units may be made, without
amending the Plan, to Eligible Persons who are foreign nationals or employed
outside the United States or both, on such terms and conditions different from
those specified in the Plan as may, in the judgment of the Committee, be
necessary or desirable to further the purposes of the Plan or to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or alternative versions of the Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of the Plan as in effect for any other purpose; provided, however, no
such supplement or alternative version shall: (a) increase the number of
available shares of Common Stock under Section 5.1; or (b) increase the
limitations contained in Section 5.3.

Article V. Shares Reserved Under the Plan

5.1   There is hereby reserved for award under this Plan 6 million whole shares
of Common Stock, less the number of shares awarded, granted or purchased under
the provisions of this Plan which have not been forfeited. To the extent
permitted by law or the rules and regulations of any stock exchange on which the
Common Stock is listed, shares of Common Stock with respect to which payment or
exercise is in cash as well as any shares or options which are forfeited may
thereafter again be awarded or made subject to grant under the Plan. The number
of shares made available for option and sale under Article VI of this Plan plus
the number of shares awarded under Article VII of this Plan plus the number of
shares awarded or purchased under Article VIII of this Plan will not exceed, at
any time, the number of shares of Common Stock reserved pursuant to this
Article V.

5.2   If a dividend shall be declared upon the Common Stock payable in shares of
Common Stock, the number of shares of Common Stock then subject to any such
option and the number of shares reserved for issuance pursuant to the Plan but
not yet covered by an option shall be adjusted by adding to each such option or
share the number of shares which would be distributable thereon if such share
had been outstanding on the date fixed for determining the shareholders entitled
to receive such stock dividend. In the event that the outstanding shares of the
Common Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of CMS Energy Corporation or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation or otherwise, then there shall be
substituted for each share of Common Stock subject to any such option and for
each share of Common Stock reserved for issuance pursuant to the Plan but not
yet covered by an option, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall be so changed
or for which each such share shall be exchanged. In the event there shall be any
change, other than as specified above in this Section 5.2, in the number or kind
of outstanding shares of Common Stock of the Corporation or of any stock or
other securities into which such Common Stock shall have been changed or for
which it shall have been exchanged, then if the Committee shall in its sole
discretion determine that such change equitably requires an adjustment in the
number or kind of shares theretofore reserved for issuance pursuant to the Plan
but not yet covered by an option and of the shares then subject to an option or
options, such adjustment shall be made by the Committee and shall be effective
and binding for all purposes of the Plan and each Stock Option agreement. In the
ease of any such substitution or adjustment as provided for in this paragraph,
the option price in each Stock Option agreement for each share covered thereby
prior to such substitution or adjustment will be the option price for all shares
of stock or other securities which shall have been substituted for such share or
to which such share shall have been adjusted pursuant to this section. No
adjustment or substitution provided for in this Section 5.2 shall require the
Corporation

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    in any Stock Option agreement to sell a fractional share, and the total
substitution or adjustment with respect to each Stock Option agreement shall be
limited accordingly.   5.3   Individual Grant Limit: The combined maximum shares
awarded or granted for any one Eligible Person for any one year under this Plan,
excluding any Performance Units awarded under Section 8.2, will not exceed
250,000 shares of Common Stock.

Article VI. Stock Options and Stock Appreciation Rights

6.1   The Committee may from time to time provide for the option and sale of
shares of Common Stock, which may consist in whole or in part of the authorized
and unissued Common Stock of the Corporation.   6.2   Optionees: The Committee
shall determine and designate from time to time, in its discretion, those
Eligible Persons to whom Stock Options and Stock Appreciation Rights are to be
granted and who thereby become Optionees under the Plan.   6.3   Allotment of
Shares: The Committee shall determine and fix the number of shares of Common
Stock subject to options to be offered to each Optionee.   6.4   Option Price:
The Committee shall establish the option price at the time any option is granted
at not less than 100% of the fair market value of the stock on the date on which
such option is granted; provided, however, that with respect to an Incentive
Option granted to an employee who at the time of the grant owns (after applying
the attribution rules of Section 425(d) of the Code) more than 10% of the total
combined voting stock of the Corporation or of any parent or Subsidiary, the
option price shall not be less than 110% of the fair market value of the stock
subject to the Incentive Option on the date such option is granted. In no event
shall Options previously granted under this Plan be re-priced by reducing the
exercise price thereof, nor shall Options previously granted under this Plan be
cancelled and replaced by a subsequent re-grant under this Plan of Options
having an exercise price lower than the options so cancelled.

6.5   Stock Appreciation Rights: At the discretion of the Committee, any Stock
Option granted under this Plan may, at the time of such grant, include a Stock
Appreciation Right. A Stock Appreciation Right shall pertain to, and be granted
only in conjunction with, a related underlying Stock Option, and shall be
exercisable only at the time and to the extent the related underlying Stock
Option is exercisable and only if the fair market value of the Common Stock of
the Corporation exceeds the Stock Option price in the related underlying Stock
Option. An Optionee who is granted a Stock Appreciation Right may elect to
surrender the related underlying Stock Option with respect to all or part of the
number of shares subject to the related underlying Stock Option and exercise in
lieu thereof the Stock Appreciation Right with respect to the number of shares
as to which the Stock Option is surrendered.

The exercise of the underlying Stock Option shall terminate the related Stock
Appreciation Right to the extent of the number of shares purchased upon exercise
of the underlying Stock Option. The exercise of a Stock Appreciation Right shall
terminate the related underlying Stock Option to the extent of the number of
shares with respect to which the Stock Appreciation Right is exercised. Upon
exercise of a Stock Appreciation Right, an Optionee shall be entitled to
receive, without payment to the Company (except for applicable withholding
taxes), an amount equal to the excess of (i) the then aggregate fair market
value of the number of shares with respect to which the Optionee exercises the
Stock Appreciation Right, over (ii) the aggregate Stock Option price per share
for such number of shares. Such amount may be paid by the Corporation, at the
election of the Optionee, in cash, Common Stock of the Corporation or any
combination thereof; provided, however, that the Committee shall have sole
discretion to approve or disapprove an election of an Optionee to receive cash
upon exercise of a Stock Appreciation Right.

6.6   Granting and Exercise of Stock Options and Stock Appreciation Rights: The
granting of Stock Options and Stock Appreciation Rights hereunder shall be
effected in accordance with determinations made by the Committee pursuant to the
provisions of the Plan, by execution of instruments in writing in form approved
by the Committee. The Committee may grant Stock Options that provide for the
grant of a subsequent restoration Stock Option if the exercise price has been
paid for by tendering shares to the Company. Any restoration Stock Option shall
be for the number of shares tendered in exercising the predecessor option. The
restoration Stock Option exercise price shall be the then-current Fair Market
Value, and the term of such restoration option may not extend beyond the
remaining term of the original option.       Each Stock Option and Stock
Appreciation Right granted hereunder shall be exercisable at any such time or
times or in any such installments as may be determined by the Committee at the
time of the grant, subject to the limitation that for each Incentive Option and
related Stock Appreciation Right granted, a maximum of $100,000 (based on the
price at the date of grant) may be exercised per year, plus any unused
carry-over from a previous year(s).

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6.7   Payment of Stock Option Price: At the time of the exercise in whole or in
part of any Stock Option granted hereunder, payment of the option price in full
in cash or in Common Stock of the Corporation shall be made by the Optionee for
all shares so purchased. No Optionee shall have any of the rights of a
Shareholder of the Corporation under any such Stock Option until the actual
issuance of shares to said Optionee, and prior to such issuance no adjustment
shall be made for dividends, distributions or other rights in respect of such
shares, except as provided in Section 5.2.

6.8   Nontransferability of Stock Options and Stock Appreciation Rights: No
Stock Option or Stock Appreciation Right granted under the Plan to an Optionee
shall be transferable by such Optionee otherwise than by will, pursuant to a
valid Domestic Relations Order which limits the rights of the alternate payee to
those available to the Optionee, or by the laws of descent and distribution
except that the Optionee may transfer to an immediate family member or a family
trust for estate planning purposes, and such Stock Option and Stock Appreciation
Right shall be exercisable, during the lifetime of the Optionee, only by the
Optionee or by a member of such Optionee’s immediate family or by the family
trust.

6.9   Term of Stock Options and Stock Appreciation Rights: If not sooner
terminated, each Stock Option and Stock Appreciation Right granted hereunder
shall expire not more than ten years from the date of the granting thereof;
provided, that with respect to an Incentive Option and a related Stock
Appreciation Right granted to an Optionee who, at the time of the grant, owns
(after applying the attribution rules of Section 425(d) of the Code) more than
10% of the total combined voting stock of all classes of stock of the
Corporation or of any parent or Subsidiary, such Incentive Option and Stock
Appreciation Right shall expire not more than five years after the date of
granting thereof.

6.10   Termination of Employment: If the employment of an Optionee by the
Corporation shall be terminated due to either the voluntary resignation of the
employee or for cause, any outstanding Stock Option or Stock Appreciation Right
granted to such Optionee shall terminate. If the employment of an Optionee shall
be terminated due to the Optionee’s death, any Stock Option or Stock
Appreciation Right, transferred to a family trust or by will or by the laws of
descent and distribution, may be exercised for one year following the date of
the Optionee’s death. If the employment of an Optionee shall otherwise terminate
such as due to dismissal, a reorganization, retirement from active employment or
service with the Corporation after age 55, or the disability of the Optionee,
the Optionee may exercise any outstanding Stock Option or Stock Appreciation
Right for one year following the date of the termination of employment. In such
event, except upon the disability of the Optionee, any outstanding Incentive
Option or related Stock Appreciation Right may be exercised for only three
months following an Optionee’s termination of employment. Notwithstanding the
foregoing, any Stock Option, Incentive Stock Option or Stock Appreciation Right,
the exercise of which has been extended pursuant to this Section 6.10, shall
immediately terminate upon the Optionee’s acceptance of an offer of employment
with a competitor of the Corporation as determined by the Committee in its sole
discretion. In no event, however, shall a Stock Option or Stock Appreciation
Right be exercisable subsequent to its expiration date and, furthermore, a Stock
Option or Stock Appreciation Right may only be exercised after termination of an
Optionee’s employment to the extent exercisable on the date of termination of
employment.

6.11   Termination of Service: If a Non-Employee Director ceases to be a member
of the Board for any reason, or if an advisor no longer provides service to the
Corporation, the Non-Employee Director or advisor may exercise any Option or
related Stock Appreciation Right for one year following such termination of
service. In no event, however, shall a Stock Option or Stock Appreciation Right
be exercisable subsequent to its expiration date and, furthermore, a Stock
Option or Stock Appreciation Right may only be exercised after termination of an
Optionee’s service to the extent exercisable on the date of termination of
service.

6.12   Investment Purpose: Any shares of Common Stock subject to option under
the Plan may be made subject to such other restrictions as the Committee deems
advisable, including without limitation provisions to comply with Federal and
state securities laws. In making determinations of legal requirements the
Committee shall rely on an opinion of counsel for the Corporation.

6.13   Withholding Payments: If upon the exercise of a Nonqualified Option
and/or a Stock Appreciation Right or as a result of a disqualifying disposition
(within the meaning of Section 422 of the Code) of shares acquired upon exercise
of an Incentive Option, there shall be payable by the Corporation any amount for
income tax withholding, either the Corporation shall appropriately reduce the
amount of stock or cash to be paid to the Optionee or the Optionee shall pay
such amount to the Corporation to reimburse it for such income tax withholding.

6.14   Restrictions on Sale of Shares: If, at the time of exercise of any Stock
Option or Stock Appreciation Right granted hereunder, the Corporation is
precluded by any legal, regulatory or contractual restriction from selling
and/or delivering shares pursuant to the terms of such Stock Option or Stock
Appreciation Right, the sale and delivery of the shares may be delayed until the
restrictions

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    are resolved and only cash may be paid upon exercise of the Stock
Appreciation Right. At any time during such delay, the Committee, in its
discretion, may permit the Optionee to revoke a Stock Option exercise, in which
event any corresponding Stock Appreciation Right shall be reinstated.   6.15  
Compliance With Rule 16b-3: Notwithstanding any other provision of the Plan to
the contrary, the administration of the Plan and the grant, exercise and terms
of Stock Appreciation Rights hereunder shall comply with Rule 16b-3, or any
successor rule, under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).

Article VII. Restricted Common Stock

7.1   Awards: The Committee may from time to time award restricted shares of
Common Stock to any Eligible Person it has designated as a Participant for such
year. Awards shall be made to Eligible Persons in accordance with such rules as
the Committee may prescribe. The Committee may also award restricted shares of
Common Stock conditioned on the attainment of a performance goal that relates to
Shareholder return, measured by Performance Criteria as determined by the
Committee as set forth in the award.

7.2   Restrictions:

  a.   Award Period. Any shares of Common Stock awarded or issued under the Plan
may be made subject to such other restrictions as the Committee deems advisable,
including without limitation provisions to comply with Federal and state
securities laws. In making determinations of legal requirements the Committee
may rely on an opinion of counsel for the Corporation. Except for any recoupment
set forth in Article X.2, after shares are awarded under the Plan, the Committee
may not, at a later date, add additional restrictions or extend the length of
the Award Period. Notwithstanding the foregoing, the restrictions shall
terminate upon the death of the Participant.     b.   Stock Certificates.
Whenever shares of Common Stock are awarded to a Participant, such shares shall
be outstanding, and stock certificates shall be issued in the name of the
Participant, which certificates may bear a legend stating that the shares are
issued subject to the restrictions set forth in the Plan. All certificates
issued for shares of Common Stock awarded under the Plan shall be deposited for
the benefit of the Participant with the Secretary of the Corporation as
custodian until such time as the shares are vested and transferable.     c.  
Voting Rights. A Participant who is awarded shares of Common Stock under the
Plan shall have full voting rights on such shares, whether or not the shares are
vested or transferable.     d.   Dividend Rights. Shares of Common Stock awarded
to a Participant under the Plan, whether or not vested or transferable, may have
full dividend rights as determined by the Committee. However, if shares or
securities are issued as a result of a merger, consolidation or similar event,
such shares shall be issued in the same manner, and subject to the same deposit
requirements, vesting provisions and transferability restrictions as the shares
of Common Stock which have been awarded.     e.   Delivery. Deliveries of
Restricted Common Stock by the Corporation may consist in whole or in part of
the authorized and unissued Common Stock of the Corporation (at such time or
times and in such manner as it may determine). The Restricted Common Stock shall
be paid and delivered as soon as practicable after the Award Period in
accordance with Section 7.3.     f.   Transferability. The shares may not be
sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of by
the Participant until their release. However, nothing herein shall preclude a
Participant from making a gift of any shares of Restricted Common Stock to a
spouse, child, stepchild, grandchild, parent or sibling, or legal dependent of
the Participant or to a trust of which the beneficiary or beneficiaries of the
corpus and the income shall be either such a person or the Participant; provided
that, the Restricted Common Stock so given shall remain subject to the
restrictions, obligations and conditions described in this Article VII.     g.  
Vesting. If a Participant has received an award pursuant to the provisions of
the Plan, is employed by the Corporation or remains a Non-Employee Director or
is an advisor at the end of the Award Period and the performance goals have been
met, then the Participant shall be fully vested, at the end of the Award Period,
in the shares of Common Stock awarded to the Participant for that Award Period.

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  h.   Termination of Employment. In the event of termination of employment of
an employee Participant or termination of service of a Non-Employee Director or
advisor prior to the last day of an Award Period for any reason other than
Participant’s death, retirement of a Participant from active employment or
service with the Corporation after age 55 (“Retirement”), or disability of a
Participant., all rights to any shares of Restricted Common Stock held in a
deposit account with respect to such award, including any additional shares
issued with respect to such shares as described in subsection 7.2d above shall
be forfeited to the Corporation. However, the Committee may, if the Committee
determines that circumstances warrant such action, vest all or a portion of such
outstanding awards and approve the immediate distribution of all vested Common
Stock that would otherwise be forfeited. Alternatively, the Committee may, if
the Committee determines that circumstances warrant such action, instruct that
such shares of Restricted Common Stock shall continue to be held by the
Corporation in a deposit account until any performance restrictions have been
satisfied or the shares are forfeited for failure to satisfy such performance
restrictions.     i.   Exchange of Shares .In the event the Common Stock shall
be changed into or exchanged for a different number or kind of shares of stock
or other securities of CMS Energy Corporation or of another corporation, whether
through reorganization, recapitalization, stock split-up, combination of shares,
merger or consolidation or otherwise, then there shall be substituted for each
share of stock awarded pursuant to this Article VII the number and kind of
shares of stock or other securities into which each outstanding share Common
Stock shall be so changed or for which each such share shall be exchanged. In
the event the Common Stock shall be exchanged for a cash payment, in whole or in
part, whether through reorganization, recapitalization, merger or consolidation
or otherwise, then any shares awarded pursuant to this Article VII shall also be
exchanged for a similar cash and/or stock payment. At the time of any such
change or exchange, whether for stock or for cash or a combination of stock and
cash, any restrictions, other than time based vesting, shall be removed and such
stock and/or cash as substituted for the shares awarded to the Participant shall
continue to be considered an award of shares of Restricted Common Stock under
this Plan. Nothing in this provision permits or requires the Corporation to sell
a fractional share. Any such exchange for cash will be structured in such a
manner as to be exempt from Section 409A or alternatively, to comply with
Section 409A.

7.3   Distribution of Restricted Common Stock

  a.   Distribution After Award Period: Except as otherwise provided,
distribution of vested awards of Common Stock shall be made as soon as
practicable after the last day of the applicable Award Period in the form of
full shares of Common Stock, with fractional shares, if any, being awarded in
cash.     b.   Distribution After Death of Participant: Upon the death of the
Participant, either before or after retirement, any shares of Restricted Common
Stock then held shall, subject to this Article VII, be delivered within a
reasonable time under the circumstances to Participant’s Beneficiary or, in the
absence of an appropriate Beneficiary designation to the Participant’s estate,
in such one or more installments as the Committee may then determine.     c.  
Distribution After Retirement or Disability: Upon termination of a Participant
due to Retirement or disability, any shares awarded not less than 12 months
prior to termination shall continue to be held by the Corporation in a deposit
account until any performance restrictions have been satisfied or the shares are
forfeited for failure to satisfy such performance restrictions. The Committee
may, at its discretion and in exceptional circumstances, waive the requirement
that the shares be awarded not less than 12 months prior to such termination. If
such outstanding shares awarded to the Participant are subject only to time
based vesting and not to any additional performance criteria, then such shares
shall be delivered to the Participant as soon as practicable after such
termination. Notwithstanding the above, if an employee Participant accepts an
offer of employment with a competitor of the Corporation as determined by the
Committee in its sole discretion, all shares that have not been distributed as
of that date shall terminate and be forfeited by the Participant.

7.4   Designation of Beneficiaries

If a Participant dies prior to the receipt in full of any award under the Plan
to which the Participant is entitled, the award shall be distributed to the
Participant’s Beneficiary or, in the absence of a Beneficiary designation, to
the Participant’s estate. The designation of a Beneficiary shall be made in
writing on a form prescribed by and filed with the Committee prior to the
Participant’s death. If the Committee is in doubt as to the right of any person
to receive such amount, the Committee may retain such amount, without liability
for any interest thereon, until the rights thereto are determined, or the
Committee may pay such amount into any court of appropriate jurisdiction and
such payment shall be a complete discharge of the liability of the Plan and the
Corporation therefor.

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7.5   Transferability: Subject to the provision of this Article VII, shares of
Common Stock awarded to a Participant will become freely transferable by the
Participant only at the end of the Award Period established with respect to such
shares.   7.6   Distribution to Person Other Than Employee: If the Committee
shall find that any person to whom any award is payable under this Article VII
of the Plan is unable to care for such person’s affairs because of illness or
accident, or is a minor, or has died, then any payment due Participant or
Participant’s estate (unless a prior claim therefor has been made by a duly
appointed legal representative), may, if the Committee so directs the
Corporation, be paid to Participant’s spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Committee and the Corporation therefor.   7.7   Restricted
Common Stock for employee Participants is intended to constitute an unfunded
deferred compensation arrangement for a select group of management or highly
compensated personnel.   7.8   A forfeiture of shares of Common Stock pursuant
to subsection 7.2h of the Plan shall effect a complete forfeiture of voting
rights, dividend rights and all other rights relating to the award or grant as
of the date of forfeiture.   7.9   Each distribution of Common Stock under this
Article VII of the Plan shall be made subject to such federal, state and local
tax withholding requirements as apply on the distribution date. For this
purpose, the Committee may provide for the withholding of shares of Common Stock
or allow a Participant to pay to the Corporation funds sufficient to satisfy
such withholding requirements.

Article VIII. Phantom Shares and Performance Units.

8.1   Phantom Shares.

  a.   Grants of Phantom Shares. The Committee may from time to time grant
Phantom Shares, the value of which is determined by reference to a share of
Common Stock on terms and conditions as the Committee, in its discretion, may
from time to time determine. Each grant of Phantom Shares shall specify the
number of Phantom Shares granted, the Initial Value of such Phantom shares which
shall not be less than 100% of the Fair Market Value of the Common Stock as of
the date of grant, the Valuation Dates, the number of Phantom Shares whose
appreciation value shall be determined on each such Valuation Date, any
applicable vesting schedule for such Phantom Shares, and any applicable
limitation on payment for such Phantom Shares.

  b.   Appreciation Value.

  (i)   Valuation Dates; Measurement of Appreciation Value. The Committee shall
provide for one or more Valuation Dates on which the Appreciation Value of the
Phantom Shares granted shall be measured and fixed, and shall designate the
number of such Phantom Shares whose Appreciation Value is to be calculated on
each such Valuation Date.     (ii)   Payment of Appreciation Value. Except as
otherwise provided in this Section 8.1, the Appreciation Value of a Phantom
Share shall be paid to a Participant in cash in a lump sum as soon as
practicable following the Valuation Date applicable to such Phantom Share. The
Committee may in its discretion, establish and set forth a maximum dollar amount
payable under the Plan for each Phantom Share granted.     (iii)   The Committee
may, in its discretion, provide that Phantom Shares shall vest (subject to such
terms and conditions as the Committee may provide in the award) over such period
of time, from the date of grant, as may be specified in a vesting schedule
contained in the grant.     (iv)   Termination. In the event of termination of
employment of an employee Participant or termination of service of a
non-Employee Director or advisor prior to one or more Valuation Dates, unless
the Committee in its discretion determines otherwise, the Appreciation Value for
any Phantom Share to which the Participant’s Rights are vested, shall be the
lesser of the Appreciation Value as of the termination date or the Appreciation
Value of such Phantom Share calculated as of the originally scheduled Valuation
Date applicable thereto in accordance with Section 8.1(b)(i). Except as
otherwise provided in the grant agreement, the Appreciation Value so determined
for each such vested outstanding Phantom Share shall then be payable to the
Participant or the Participant’s estate following the originally scheduled
Valuation Date applicable thereto in accordance with Section 8.1(b)(ii). Upon a
termination as described in this Section 8.1(b)(iv), all rights with respect to
Phantom Shares that are not vested as of such date will be relinquished.

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8.2   Performance Units. The Committee may, in its discretion, grant Performance
Units to Eligible Persons. Each Performance Unit will have an initial value that
is established by the Committee at the time of grant and credited to a
bookkeeping account established for the Participant, but no Participant shall be
granted Performance Units during any one fiscal year with an initial value in
excess of $2.5 million. The Committee will set performance periods and
objectives and other terms and conditions of the grant based upon Performance
Criteria as determined by the Committee that, depending upon the extent to which
they are met, will determine the value of Performance Units that will be paid
out to the Participant. The Committee may pay earned Performance Units in cash,
Common Stock or a combination thereof.       Unless otherwise set forth in the
grant, in the event the employment of an employee Participant is terminated
during a performance period due to death, disability or retirement under the
provisions of the Pension Plan the Participant will receive a prorated payout of
Performance Units. In the event the employment is terminated for any other
reason, then all Performance Units will be forfeited. If the service of a
Non-Employee Director or advisor is terminated during a performance period, the
Participant will receive a prorated payout of Performance Units. Notwithstanding
the above, no payouts will be made to the extent that objectives other than the
duration of the performance period have not been met except to the extent that
the Committee in its discretion decides to waive any such other achievement or
objectives.   8.3   Grant Terms. The terms of any award granted under this
Article VIII shall be set forth in a separate grant agreement. Any such award
either shall be structured in such a manner as to be exempt from the
requirements of Code section 409A or shall be structured to meet the
requirements of such provision.

Article IX. Amendment, Duration and Termination of the Plan

9.1   Duration of Plan. No grants or awards may be made under this Plan after
May 31, 2009. Any grant or award effective on or prior to May 31, 2009 will
continue to vest and otherwise be effective after the expiration of this Plan in
accordance with the terms and conditions of this Plan as well as any
requirements set forth in the grant or award.

9.2   Right To Amend, Suspend or Terminate Plan: Except as provided in
Section 9.5 below, the Board reserves the right at any time to amend, suspend or
terminate the Plan in whole or in part and for any reason and without the
consent of any Optionee, Participant or Beneficiary; provided, that no such
amendment shall:

  a.   Change the Stock Option price or adversely affect any Stock Option or
Stock Appreciation Right outstanding under the Plan on the effective date of
such amendment or termination, or     b.   Adversely affect any award or grant
then in effect or rights to receive any amount to which Participants or
Beneficiaries have become entitled prior to such amendment, or     c.   Unless
approved by the Shareholders of the Corporation, increase the aggregate number
of shares of Common Stock reserved for award or grant under the Plan, change the
group of Eligible Persons under the Plan or materially increase benefits to
Eligible Persons under the Plan.

9.3   Periodic Review of Plan: In order to assure the continued realization of
the purposes of the Plan, the Committee shall periodically review the Plan, and
the Committee may suggest amendments to the Board as it may deem appropriate.

9.4   Amendments May Be Retroactive: Subject to Section 9.1 above, any
amendment, modification, suspension or termination of any provisions of the Plan
may be made retroactively.

9.5   Change in Control Under an Agreement: Notwithstanding any other provisions
in the Plan, in the event of a Change in Control as defined under any written
employment contract or agreement between the Corporation or a subsidiary and an
Officer of the Corporation or a subsidiary, awards of Common Stock granted under
this Plan, as well as grants of any Performance Units and the Appreciation Value
of Phantom Shares, shall vest to the extent, if any, provided for in the written
employment agreement or contract or in such separate contractual arrangement
relating to such an award or grant as may exist from time to time.
Notwithstanding any other provisions of the Plan, the provisions of this
Section 9.5 may not be amended after the date a Change in Control occurs.

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9.6   Change in Control Without an Agreement: Except as otherwise may be
provided by the Committee, in the event of a change in control, a Participant
not covered by a written employment contract or agreement or agreement
containing a change in control provision will have any portion of an Award based
on absolute total shareholder return vest (for purposes of the performance-based
restriction) at the target, and continue to be subject to time based
restrictions. The portion of any Award based on relative total shareholder
return will vest (for purposes of the performance-based restriction) on a pro
rata basis to the change in control date using the target number of shares as
the basis for the pro ration and continue to be subject to time based
restrictions.

Article X. General Provisions

10.1   Rights to Continued Employment, Award or Option: Nothing contained in the
Plan or in any grant or award under this Plan shall give any employee the right
to be retained in the employment of the Corporation or affect the right of the
Corporation to terminate the employee’s employment at any time. The adoption of
the Plan shall not constitute a contract between the Corporation and any
employee. No Eligible Person who is an employee shall receive any right to be
granted an option, right or award hereunder nor shall any such option, right or
award be considered as compensation under any employee benefit plan of the
Corporation.

10.2   Recoupment. Any Awards or Grants under this Plan is also subject to
recoupment under the CMS Energy Recoupment Policy Relating to Financial
Restatements.

10.3   Governing Law: The provisions of this Plan and all rights thereunder
shall be governed by and construed in accordance with the laws of the State of
Michigan.

IN WITNESS WHEREOF, execution is hereby effected.

         
ATTEST:
  CMS ENERGY CORPORATION    
 
       
/s/
  By: /s/    
 
 
 
   
Secretary
         Chief Executive Officer    

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Attachment A
Page 1 of 2
“Change in Control” means a change in control of CMS Energy Corporation, and
shall be deemed to have occurred upon the first to occur of any of the following
events:

(a)   Any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of CMS Energy Corporation (not including securities beneficially
owned by such Person any securities acquired directly from CMS Energy
Corporation or its Affiliates) representing twenty-five percent (25%) or more of
the combined voting power of CMS Energy Corporation’s then outstanding
securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (i) of paragraph (c) below; or

(b)   The following individuals cease for any reason to constitute a majority of
directors then serving: individuals who, on the Effective Date, constitute the
Board and any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of directors
of CMS Energy Corporation) whose appointment or election by the Board or
nomination for election by CMS Energy Corporation’s stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or recommended;
or

(c)   The consummation of a merger or consolidation of CMS Energy Corporation or
any direct or indirect subsidiary of CMS Energy Corporation with any other
corporation or other entity, other than: (i) any such merger or consolidation
which involves either CMS Energy Corporation or any such subsidiary and would
result in the voting securities of CMS Energy Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of CMS Energy
Corporation or its Affiliates, at least sixty percent (60%) of the combined
voting power of the voting securities of CMS Energy Corporation or the surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation and immediately following which the individuals who comprise the
Board immediately prior thereto constitute at least a majority of the board of
directors of CMS Energy Corporation, the entity surviving such merger or
consolidation or, if CMS Energy Corporation or the entity surviving such merger
is then a subsidiary, the ultimate parent thereof; or (ii) a merger or
consolidation effected to implement a recapitalization of CMS Energy Corporation
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of CMS Energy Corporation (not including
in the securities beneficially owned by such Person any securities acquired
directly from CMS Energy Corporation or its Affiliates) representing twenty-five
percent (25%) or more of the combined voting power of CMS Energy Corporation’s
then outstanding securities; or

(d)   Either (1) the stockholders of CMS Energy Corporation approve a plan of
complete liquidation or dissolution of CMS Energy Corporation, or (2) there is
consummated an agreement for the sale, transfer or disposition by CMS Energy
Corporation of all or substantially all of CMS Energy Corporation’s assets (or
any transaction having a similar effect). For purposes of clause (d)(2), (i) the
sale, transfer or disposition of a majority of the shares of common stock of
Consumers Energy Company shall constitute a sale, transfer or disposition of
substantially all of the assets of CMS Energy Corporation and (ii) the sale,
transfer or disposition of subsidiaries or affiliates of CMS Energy Corporation,
singly or in combinations, or their assets, only qualifies as a Change in
Control if it satisfies the substantiality test contained in that clause and the
Board of CMS Energy Corporation’s determination in that regard is final. In
addition, for purposes of clause (d)(2), the sale, transfer or disposition of
assets has to be in a transaction or series of transactions closing within six
months after the closing of the first transaction in the series, other than with
an

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Attachment A
Page 2 of 2
entity in which at least 60% of the combined voting power of the voting
securities is owned by stockholders of CMS Energy Corporation in substantially
the same proportions as their ownership of CMS Energy Corporation immediately
prior to such transaction or transactions and immediately following which the
individuals who comprise the Board immediately prior thereto constitute at least
a majority of the board of directors of the entity to which such assets are
sold, transferred or disposed or, if such entity is a subsidiary, the ultimate
parent thereof.
Notwithstanding the foregoing clauses (a), (c) and (d), a “Change in Control”
shall not be deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions closing within six months after
the closing of the first transaction in the series immediately following which
the record holders of the common stock of CMS Energy Corporation immediately
prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns all or
substantially all of the assets of CMS Energy Corporation immediately following
such transaction or series of transactions.

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