Exhibit (10)(g)
Change-in-Control Agreement
Tier III

 

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Contents

               
 
           
Article 1.
  Establishment, Term, and Purpose     1  
 
           
Article 2.
  Definitions     2  
 
           
Article 3.
  Severance Benefits     8  
 
           
Article 4.
  Other Terminations     11  
 
           
Article 5.
  Noncompetition and Confidentiality     11  
 
           
Article 6.
  Excise Tax Equalization Payment     13  
 
           
Article 7.
  Dispute Resolution and Notice     14  
 
           
Article 8.
  Successors and Assignment     14  
 
           
Article 9.
  Miscellaneous     15  

 

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Change-in-Control Agreement
     THIS CHANGE-IN-CONTROL AGREEMENT (“Agreement”) is made, entered into, and
is effective as of                    , 2004 (hereinafter referred to as the
“Effective Date”), by and between                                        , a
Michigan corporation, (hereinafter referred to as the “Employer”)
and                                         (hereinafter referred to as the
“Executive”).
     WHEREAS, the Board of Directors of CMS Energy Corporation has approved
entering into change-in-control agreements with certain key executives as being
necessary and advisable for the success of CMS Energy Corporation;
     WHEREAS, the Executive is currently employed
at                                        , by the Employer in a key management
position as                                         ;
     WHEREAS, the Board of Directors of CMS Energy Corporation wants to provide
the Executive with a measure of financial security in the event of a change in
control of CMS Energy Corporation; and
     WHEREAS, both the Employer and the Executive are desirous that any proposal
involving Change in Control as defined in this Agreement will be considered by
the Executive objectively and with reference only to the business interests of
CMS Energy Corporation and its shareholders.
     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intended to be legally bound, agree as
follows:
Article 1. Establishment, Term, and Purpose
     This Agreement will commence on the Effective Date and shall continue in
effect for three (3) full years through March ___, 2007. However, at the end of
such three (3) year period and, if extended, at the end of each additional year
thereafter, the term of this Agreement shall be extended automatically for one
(1) additional year, unless the Committee delivers written notice six (6) months
prior to the end of such term, or extended term, to the Executive, stating that
the Agreement will not be extended. In such case, the Agreement will terminate
at the end of the term, or extended term, then in progress. However, in the
event of a Change in Control (as defined in Section 2.7 herein) of CMS Energy
Corporation, the term of this Agreement shall automatically be extended for two
(2) years from the date of the Change in Control if the current term of the
Agreement has less than two (2) full years remaining until its expiration.
Notwithstanding the foregoing, this Agreement shall automatically terminate and
thereafter be of no force and effect at the same time that the First Amended and
Restated Employment Agreement, dated as of September 1, 2003, between Executive
and CMS Energy Corporation (“Employment Agreement”) is terminated pursuant to
its Section 6. If the term of this Agreement is not extended or if the Agreement
is terminated, the Employer is not obligated to pay any severance benefits under
Section 3.2 for a Change in Control that happens after the

 

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expiration of the term or after the termination of this Agreement.
Article 2. Definitions
     Whenever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized.

  2.1   “Affiliate” shall have the meaning set forth in Rule 12B-2 promulgated
under Section 12 of the Exchange Act.     2.2   “Base Salary” means the greater
of the Executive’s full annual rate of salary, whether or not any portion
thereof is paid on a deferred basis, at: (i) the Effective Date of Termination,
or (ii) at the date of the Change in Control. It does not include any incentive
compensation in any form, bonuses of any type or any other form of monetary or
nonmonetary compensation other than salary.     2.3   “Beneficial Owner” shall
have the meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.     2.4   “Beneficiary” means the persons or
entities designated or deemed designated by the Executive pursuant to
Section 9.5 herein.     2.5   “Board” means the Board of Directors of CMS Energy
Corporation.     2.6   “Cause” shall be determined solely by the Committee in
the exercise of good faith and reasonable judgment, and shall mean the
occurrence of any one or more of the following:

  (a)   The willful and continued failure by the Executive to substantially
perform his or her duties of employment (other than any such failure resulting
from the Executive’s Disability), after a written demand for substantial
performance is delivered to the Executive that specifically identifies the
manner in which the Committee believes that the Executive has not substantially
performed his or her duties, and the Executive has failed to remedy the
situation within a reasonable period of time specified by the Committee which
shall not be less than 30 days; or     (b)   The Executive’s arrest for
committing an act of fraud, embezzlement, theft, or other act constituting a
felony involving moral turpitude; or     (c)   The willful engaging by the
Executive in misconduct materially and demonstrably injurious to CMS Energy
Corporation or its Affiliates, monetarily or otherwise.

However, for purposes of clauses (a) and (c), no act or failure to act on the
Executive’s part shall be considered “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
or her action or

 

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omission was in the best interest of CMS Energy Corporation or its Affiliates.

  2.7   “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 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, 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

 

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      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 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.

  2.8   “Code” means the United States Internal Revenue Code of 1986, as
amended, and any successors thereto.     2.9   “Committee” means the
Organization and Compensation Committee of the Board of CMS Energy Corporation
or any other committee appointed by the Board of CMS Energy Corporation to
perform the functions of the Organization and Compensation Committee.     2.10  
“Disability” means for all purposes of this Agreement, the incapacity of the
Executive, due to injury, illness, disease, or bodily or mental infirmity, which
causes the Executive not to engage in the performance of a substantial or
material portion of the Executive’s usual duties of employment associated with
such Executive’s

 

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      position. Such Disability shall be determined based on competent medical
advice.

  2.11   “Effective Date” means the date of this Agreement as specified in the
opening sentence of this Agreement.     2.12   “Effective Date of Termination”
means the date on which a Qualifying Termination occurs, as provided under
Section 2.17 hereunder, which triggers the payment of Severance Benefits
hereunder.     2.13   “Exchange Act” means the United States Securities Exchange
Act of 1934, as amended.     2.14   “Good Reason” exists only on the date of a
Change in Control or during the twenty-four (24) months which follow a Change in
Control and shall mean, without the Executive’s express written consent, the
occurrence of any one or more of the following:

  (a)   The assignment to the Executive of duties materially inconsistent with
the Executive’s position (including status, offices, titles, and reporting
requirements), authority, or responsibilities as in effect on the Effective
Date, or any action by the Employer which results in a diminution of the
Executive’s position, authority, duties, or responsibilities as constituted as
of the Effective Date (excluding an isolated, insubstantial, and inadvertent
action which is remedied by the Employer promptly after receipt of notice
thereof given by the Executive); or     (b)   Reducing the Executive’s Base
Salary; or     (c)   Reducing the Executive’s targeted annual incentive
opportunity; or     (d)   Failing to maintain the Executive’s participation in a
long-term incentive plan in a manner that is consistent with the Executive’s
position, authority, or responsibilities; or     (e)   Failing to maintain the
Executive’s amount of benefits under or relative level of participation in
employee benefit or retirement plans, policies, practices, or arrangements of a
material nature available to employees of CMS Energy Corporation and its
Affiliates and in which the Executive participates as of the Effective Date; or
    (f)   A material breach of this Agreement by the Employer which is not
remedied by the Employer within ten (10) business days of receipt of written
notice of such breach delivered by the Executive to the Committee; or     (g)  
Any successor company fails or refuses to assume the obligations owed to
Executive under this Agreement in their entirety, as required by Section 8.1
hereunder; or     (h)   The Executive is required to be based at a location in
excess of thirty-five (35) miles from the location of the Executive’s principal
job location or office

 

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      immediately prior to a Change in Control except for required travel on the
Employer’s or CMS Energy Corporation’s business to an extent substantially
consistent with the Executive’s prior business travel obligations; or     (i)  
The Executive ceases being an executive officer of a company (other than by
reason of death, Disability or Cause) whose common stock is publicly owned if
immediately prior to the Change in Control the Executive was an executive
officer of a company whose common stock was publicly owned.

For purposes of applying clauses (a) through (i) of this Agreement, the
Executive’s Retirement shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason, and the Executive’s
continued employment shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason or constitute
Executive’s consent to the circumstances constituting Good Reason unless
Executive has provided express written consent to the circumstance that would
otherwise constitute Good Reason under this Agreement. Finally, for purposes of
implementing this Agreement, any claim by Executive that Good Reason exists
shall be presumed to be correct unless the Committee determines by clear and
convincing evidence that Good Reason does not exist, which evidence shall be
presented by the person disputing the claim that Good Reason exists.

  2.15   “Notice of Termination” shall be provided for a Qualifying Termination
and shall mean a written notice which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated. The notice shall
provide a specific date on which a Qualifying Termination has occurred and is
effective for purposes of this Agreement.     2.16   “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, including a “group” as provided in
Section 13(d).     2.17   “Qualifying Termination” means:

  (a)   An involuntary termination of the Executive’s employment by the Employer
on the date of a Change in Control or during the twenty-four (24) months which
follow a Change in Control for reasons other than death, Disability, Retirement,
or Cause pursuant to a Notice of Termination delivered to the Executive by the
Employer; or     (b)   A voluntary termination by the Executive for Good Reason
on the date of a Change in Control or during the twenty-four (24) months which
follow a Change in Control pursuant to a Notice of Termination delivered to the
Employer by the Executive.     (c)   A termination for failure of the Executive
to comply in material respects with CMS Energy’s Code of Conduct and Statement
of Ethics Handbook (June

 

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    2003 edition) or other corporate policies, as the handbook and those
documents may be amended from time to time, does not satisfy the definition of a
Qualifying Termination under clauses (a) and (b).

  2.18   “Retirement” shall have the meanings ascribed under the terms of the
pension plan applicable to Executive and entitled “Pension Plan for Employees of
Consumers Energy Company,” dated September 1, 2000, as amended, other than under
Section 7 thereof, or under the successor or replacement of such pension plan if
it is then no longer in effect.     2.19   “SERP” shall mean the retirement plan
applicable to Executive and entitled “Supplemental Executive Retirement Plan for
Employees of CMS Energy/Consumers Energy Company,” dated May 1, 1998, as
amended, or under the successor or replacement of such retirement plan if it is
then no longer in effect.     2.20   “Severance Benefits” means the payment of
Change-in-Control Severance Benefits as provided in Article 3 herein.

Article 3. Severance Benefits

  3.1   Right to Change-in-Control Severance Benefits.

  (a)   Change-in-Control Severance Benefits. The Executive shall be entitled to
receive from the Employer Change-in-Control Severance Benefits, as described in
Section 3.2 herein, if a Qualifying Termination of the Executive’s employment
satisfying the definitions contained in Section 2.17(a) or (b) has occurred on
the date of a Change in Control of CMS Energy Corporation or within twenty-four
(24) months immediately following a Change in Control of CMS Energy Corporation.
Further, Executive’s Retirement under the pension plan and SERP shall not
constitute a waiver of the Executive’s rights with respect to receipt of
Change-in-Control Severance Benefits. Nor shall benefits received for Retirement
under the pension plan and SERP (or any replacement or successor plans thereto)
be used as an offset to the level of Change-in-Control Severance Benefits owed
to Executive.     (b)   No Severance Benefits. Other than in a situation
involving a Retirement, the Executive shall not be entitled to receive Severance
Benefits pursuant to this Agreement if the Executive’s employment with the
Employer ends for reasons other than a Qualifying Termination.     (c)   Waiver
and Release. The Executive’s act of accepting payment of Severance Benefits
payable under Section 3.2 of this Agreement shall constitute and is deemed an
express waiver, release and discharge by Executive of any and all claims for
damages or other remedies, regardless of when they arose or when they are
discovered, against CMS Energy Corporation and its Affiliates arising out of or
in any way connected with Executive’s employment relationship with them or the
termination of such employment relationship except for claims and

 

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      rights of Executive preserved under Section 3.2 of this Agreement and
applicable rights to indemnification.     (d)   No Duplication of Severance
Benefits. If the Executive receives Change-in-Control Severance Benefits under
Section 3.2, any other severance benefits received by employees not covered by
this Agreement to which the Executive is entitled will be subtracted from the
Severance Benefits paid pursuant to this Agreement.

  3.2   Description of Change-in-Control Severance Benefits. In the event the
Executive becomes entitled to receive Change-in-Control Severance Benefits, as
provided in Section 3.1(a) herein, the Employer shall provide the Executive with
the following:

  (a)   A lump-sum amount paid within fifteen (15) calendar days following
delivery to the Employer or delivery to the Executive, as applicable, of a
Notice of Termination, equal to the sum of the Executive’s unpaid Base Salary,
accrued vacation pay, unreimbursed business expenses, and unreimbursed
allowances owed to the Executive through and including the Effective Date of
Termination.     (b)   A lump-sum amount, paid within fifteen (15) calendar days
following delivery to the Employer or delivery to the Executive, as applicable,
of a Notice of Termination, equal to two (2) times the sum of the following:
(A) the Executive’s Base Salary and (B) the greater of the Executive’s:
(i) annual target bonus opportunity in the year in which the Qualifying
Termination occurs or (ii) the actual annual bonus payment paid or due to be
paid the Executive in respect of the year prior to the year in which the
Qualifying Termination occurs.     (c)   A lump-sum amount, paid within fifteen
(15) calendar days following delivery to the Employer or delivery to the
Executive, as applicable, of a Notice of Termination, equal to the Executive’s
then current target bonus opportunity established under the bonus plan in which
the Executive is then participating, for the plan year in which the Qualifying
Termination occurs, adjusted on a pro rata basis for the number of days that
have elapsed to the Effective Date of Termination during the bonus plan year in
which the Qualifying Termination occurs.     (d)   A lump-sum amount, paid
within fifteen (15) calendar days following delivery to the Employer or delivery
to the Executive, as applicable, of a Notice of Termination, equal to one
(1) times the sum of the following: (A) the Executive’s Base Salary and (B) the
greater of the Executive’s: (i) annual target bonus opportunity in the year in
which the Qualifying Termination occurs or (ii) the actual annual bonus payment
paid or due to be paid the Executive in respect of the year prior to the year in
which the Qualifying Termination occurs. Such amount shall be consideration for
the Executive entering into the noncompete agreement as described in
Section 5(a).     (e)   Equivalent payment to Executive in a lump sum amount
within forty-five (45) calendar days following delivery of the Notice of
Termination for continued

 

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      medical coverage for a period of thirty-six (36) months. Such equivalent
payment shall be computed based on the same coverage level as in effect for
Executive under the general health care plan available to all employees on the
Effective Date of Termination by providing a lump sum payment of the Employer’s
portion of the monthly COBRA premium in effect on the Effective Date of
Termination times thirty-six (36). Nothing herein amends or provides Executive
any rights to health care coverage other than as provided in the applicable
group health care plan. If the Executive has waived coverage under the
applicable group health care plan, no equivalent payment shall be made under
this Agreement.     (f)   Immediate extension (as allowable by Section 6.10 of
Article VI of the plan entitled “CMS Energy Corporation Performance Incentive
Stock Plan,” dated December 3, 1999, as amended) by one year after the Effective
Date of Termination of the period for Executive to exercise any outstanding
stock options or stock appreciation rights granted by the Committee to Executive
pursuant to said Article VI. Otherwise, the terms of said plan shall govern and
be applied.     (g)   Immediate vesting and distribution to Executive (as
allowable by the second sentence of Section 7.2(h) of Article VII of the plan
entitled “CMS Energy Corporation Performance Incentive Stock Plan,” dated
December 3, 1999, as amended) within forty-five (45) days after delivery of the
Notice of Termination of all outstanding shares of restricted stock previously
awarded to Executive pursuant to said Article VII. For any award of restricted
stock to which there are future performance goals attached, the number of shares
distributed to Executive shall assume that the goals have been achieved in full
and the award fully earned based on target performance without deductions or
additions to the number of shares then held by Executive. For any award of
restricted stock that is tenure based, the number of shares distributed to
Executive shall assume that all requirements with respect to tenure are
satisfied by Executive. Otherwise, the terms of said plan shall govern and be
applied.     (h)   For an Executive included in SERP, the Executive’s retirement
benefits under the SERP will become fully vested as of the Effective Date of
Termination and shall not be subject to further vesting requirements or to any
forfeiture provisions. In addition, said Executive shall be provided the
following: (i) an additional thirty-six (36) months of Preference Service (as
defined in SERP) for purposes of the SERP in accordance with Section III(1) of
SERP, subject, however, to the total of Preference Service plus Accredited
Service being limited to a maximum of thirty-five (35) years under SERP, and
(ii) only the amounts paid to Executive pursuant to clauses (a), (b), (c) and
(d) of this Section 3.2 shall be considered a “severance payment under an
employment agreement” for purposes of computing Final Executive Pay under SERP.
Since the Executive is over the age of 55, the provisions of the last complete
paragraph of Section V(3) of SERP shall not be operative. The enhanced SERP
benefits under this Section 3.2(h) shall be in lieu of any Change-in-Control
enhancements provided for in the SERP.

 

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  (i)   For purposes of (1) Retirement, (2) SERP and (3) benefits not expressly
discussed in clauses (a) through (h) of this Section 3.2, but which are
available to the general employee population or available only to officers and
implemented with contracts with third parties, the benefit plan descriptions
covering all employees and the retirement plan and SERP plan descriptions and
contracts with third parties covering officers in place at the time of the
Effective Date of Termination control Executive’s treatment under those plans
and contracts. For any other benefits only available to officers, if those
benefits are not expressly discussed in clauses (a) through (h) of this
Section 3.2, those benefits are terminated for Executive as of the Effective
Date of Termination.

Article 4. Other Terminations

  4.1   Termination for Retirement. If the Executive’s employment with the
Employer is terminated by reason of his Retirement, the Executive’s benefits
shall be determined in accordance with the Employer’s retirement and SERP plans,
survivor’s benefits, insurance, and other applicable programs then in effect.  
  4.2   Termination for Cause Under this Agreement or Pursuant to Section 6 of
the Employment Agreement or by Employer or the Executive for Other Than Good
Reason. If the Executive’s employment is terminated either: (a) by the Employer
for Cause as defined in Section 2.6 of this Agreement; or (b) under the
circumstances specified in Section 6 of the Employment Agreement, the Employer
shall pay the Executive the compensation provided in Section 7 of the Employment
Agreement. The terms of the benefit plan descriptions, compensation plan
descriptions and contracts with third parties covering officers shall control
the disposition to Executive and timing of all other amounts to which the
Executive may be entitled, and neither the Employer nor CMS Energy Corporation
nor any of its Affiliates shall have any further obligations to the Executive
thereunder as a result of the existence of this Agreement. No other severance
benefits of any type shall be made available to Executive. Notwithstanding the
above, if the Executive’s employment terminates pursuant to this Section 4.2,
the Executive shall be bound by the provisions contained in Article 5(a), 5(b),
5(c), 5(d), and 5(e) hereof.     4.3   Notice of Termination. Any termination of
the Executive’s employment in accordance with Section 4.2 of this Agreement
shall be communicated by Notice of Termination delivered to the other party,
which shall include a specific date on which the termination has occurred and is
effective.

Article 5. Noncompetition and Confidentiality
     During the term of this Agreement and also in the event the Executive
becomes entitled to receive Change-in-Control Severance Benefits as provided in
Section 3.2 herein, the following shall apply:

 

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  (a)   Section 8 of the Employment Agreement. All the provisions of Section 8
of the Employment Agreement shall apply.     (b)   Confidentiality. In addition
to the confidentiality provisions contained in Section 8(c) of the Employment
Agreement, the Employer has advised the Executive and the Executive acknowledges
that it is the policy of CMS Energy Corporation and its Affiliates to maintain
as secret and confidential all Protected Information (as defined below), and
that Protected Information has been and will be developed at substantial cost
and effort to CMS Energy Corporation and its Affiliates. The Executive shall not
at any time, directly or indirectly, divulge, furnish, or make accessible to any
person, firm, corporation, association, or other entity (other than as may be
required in the regular course of the Executive’s employment), nor use in any
manner, either during the term of employment or after termination, for any
reason, any Protected Information, or cause any such information of CMS Energy
Corporation and its Affiliates to enter the public domain.         For purposes
of this Agreement, “Protected Information” means trade secrets, confidential and
proprietary business information of CMS Energy Corporation and its Affiliates
and any other information of CMS Energy Corporation and its Affiliates,
including, but not limited to, customer lists (including potential customers),
sources of supply, processes, plans, materials, pricing information, internal
memoranda, marketing plans, internal policies, and products and services which
may be developed from time to time by CMS Energy Corporation and its Affiliates
and their agents or employees, including the Executive; provided, however, that
information that is in the public domain (other than as a result of a breach of
this Agreement), approved for release by CMS Energy Corporation or its
Affiliates or lawfully obtained from third parties who are not bound by a
confidentiality agreement with CMS Energy Corporation or its Affiliates, is not
Protected Information. Notwithstanding the foregoing, nothing in this subsection
is to be construed as prohibiting Executive from freely providing information to
a state or federal agency, legislative body or one of its committees or a court
with jurisdiction when Executive is requested or required to do so by such
entity.     (c)   Cooperation. Executive agrees to fully and unconditionally
cooperate with CMS Energy Corporation and its Affiliates and their attorneys in
connection with any and all lawsuits, claims, investigations, or similar
proceedings that have been or could be asserted at any time arising out of or
related in any way to Executive’s employment or activities on behalf of CMS
Energy Corporation and its Affiliates.     (d)   Nondisparagement. At all times,
the Executive agrees not to disparage CMS Energy Corporation or its Affiliates
or otherwise make comments harmful to their reputations. While receiving any
payments pursuant to this Agreement or the Employment Agreement, Executive
further agrees not to testify or act in any capacity as a paid or unpaid expert
witness, advisor or consultant on behalf of any person, individual, partnership,
firm, corporation or any other person or entity that has or may have any claim,
demand, action, suit, cause of action, or

 

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      judgment against CMS Energy Corporation or its Affiliates, or from
agreeing to do so after the payments under this Agreement have ceased. Further,
CMS Energy Corporation and its Affiliates agree not to disparage Executive or
otherwise make comments harmful to Executive’s reputation. Notwithstanding the
foregoing, nothing in this Section prohibits Executive or representatives of CMS
Energy Corporation or its Affiliates from testifying truthfully under oath in
any judicial, administrative or legislative proceedings or in any arbitration,
mediation or other similar proceedings.

Article 6. Excise Tax Equalization Payment

  6.1   Excise Tax Equalization Payment. In the event that the Executive becomes
entitled to Severance Benefits or any other payment or benefit under this
Agreement, or under the Employment Agreement, or under any other agreement, plan
or arrangement for which Executive is eligible with (1) the Employer, (2) any
Person whose actions result in a Change in Control, or (3) CMS Energy
Corporation or any of its Affiliates (all of such payments and benefits
collectively referred to as the “Total Payments”), and if all or any part of the
Total Payments will be subject to the tax (the “Excise Tax”) imposed by
Sections 280G and 4999 of the Code (or any similar tax that may hereafter be
imposed), the Employer shall pay to the Executive in cash an additional amount
(the “Gross-Up Payment”) such that the net amount retained by the Executive
after deduction of any Excise Tax upon the Total Payments and any federal,
state, and local income tax, penalties, interest, and Excise Tax upon the
Gross-Up Payment provided for by this Section 6.1 (including FICA and FUTA),
shall be equal to the Total Payments. Such payment shall be made by the Employer
to the Executive within forty-five (45) calendar days following the Effective
Date of Termination.         For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made, and state and local income taxes at
the highest marginal rate of taxation in the state and locality of the
Executive’s residence on the Effective Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes.     6.2   Subsequent Recalculation. In the event the
Internal Revenue Service adjusts the computation under Section 6.1 herein so
that the Executive did not receive the greatest net benefit, the Employer shall
reimburse the Executive for the full amount necessary to make the Executive
whole, plus interest on the reimbursed amount at 120% of the rate provided in
section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is finally
determined to be less than the amount taken into account hereunder in
calculating the Gross-Up Payment, the Executive shall repay the Employer within
thirty (30) business days following the time that the amount of such reduction
in the Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the Executive)
to the extent that such repayment

 

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      results in a reduction in the Excise Tax and a dollar-for-dollar reduction
in the Executive’s taxable income and wages for purposes of federal, state and
local income and employment taxes, plus interest on the amount of such repayment
at 120% of the rate provided in section 1274(b)(2)(B) of the Code.

Article 7. Dispute Resolution and Notice

  7.1   Dispute Resolution. Any dispute or controversy between the parties
arising under or in connection with this Agreement shall be settled by final and
binding arbitration after first being submitted in writing to the Committee for
attempted resolution. If that does not result in mutually agreeable resolution,
the arbitration proceeding shall be conducted before a single arbitrator
selected by the parties to be conducted in Jackson, Michigan. The arbitration
will be conducted in accordance with the rules of the American Arbitration
Association then in effect and be finished within ninety (90) days after the
selection of the arbitrator. The arbitrator shall not have authority to fashion
a remedy that includes consequential, exemplary or punitive damages of any type
whatsoever, and the arbitrator is hereby prohibited from awarding injunctive
relief of any kind, whether mandatory or prohibitory. Judgment may be entered on
the award of the arbitrators in any court having competent jurisdiction. The
parties shall share equally the cost of the arbitrator and of conducting the
arbitration proceeding, but each party shall bear the cost of its own legal
counsel and experts and other out-of-pocket expenditures.     7.2   Notice. Any
notices, requests, demands, or other communications provided for by this
Agreement shall be in writing and sent by registered or certified mail to the
Executive at the last address he or she has filed in writing with the Employer
or, in the case of the Employer, at One Energy Plaza, Jackson, Michigan 49201,
Attention: Corporate Secretary. Notices, requests, demands or other
communications may also be delivered by messenger, courier service or other
electronic means and are sufficient if actually received by the party for whom
it is intended.

Article 8. Successors and Assignment

  8.1   Successors. Any successor (whether direct or indirect, by purchase,
merger, reorganization, consolidation, acquisition of property or stock,
liquidation, or otherwise) to the business of CMS Energy Corporation or
purchaser of all or substantially all of the assets of CMS Energy Corporation
shall be required to expressly assume and agree to perform under this Agreement
in the same manner and to the same extent that the Employer would be required to
perform if no such succession had taken place. Failure to obtain such assumption
and agreement prior to the effectiveness of any such succession or asset sale
shall entitle the Executive to the Change-in-Control Severance Benefits
specified in Section 3.2 of this Agreement. The effective date of the succession
or the sale shall be deemed the date of delivery to Executive of the Notice of
Termination for purposes of administering Section 3.2. Regardless of whether
such agreement is executed, this Agreement shall be binding

 

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      upon any successor in accordance with the operation of law.

  8.2   Assignment by the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amount would still be payable to him
or her hereunder had he or she continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s Beneficiary. If the Executive has not named a
Beneficiary, then such amounts shall be paid to the Executive’s devisee,
legatee, or other designee, or if there is no such designee, to the Executive’s
estate.

Article 9. Miscellaneous

  9.1   Employment Status. The employment of the Executive by the Employer is
“at will” and may be terminated by either the Executive or the Employer at any
time, subject to applicable law. Further, Executive has no right to be an
officer of CMS Energy Corporation or any of its Affiliates and serves as an
officer entirely at the discretion of the Board.     9.2   Entire Agreement.
This Agreement supersedes any prior agreements or understandings, oral or
written, between the parties hereto, with respect to the subject matter hereof,
and constitutes the entire agreement of the parties with respect thereto.
Without limiting the generality of the foregoing sentence, and except for the
Employment Agreement which remains in full force and effect unless expressly
modified or amended herein, this Agreement completely supersedes, cancels, voids
and renders of no further force and effect any and all other employment
agreements, change in control agreements, and other similar agreements,
communications, representations, promises, covenants and arrangements, whether
oral or written, between the Employer and Executive and between the Executive
and CMS Energy Corporation or any of its Affiliates that may have taken place or
been executed prior to the Effective Date of this Agreement and which may
address the subject matters contained herein. Executive expressly agrees that
only the first two sentences of Section 9 of the Employment Agreement shall
survive the execution of this Agreement and the balance of Section 9 after those
first two sentences is superseded in its entirety by this Agreement and no
longer has any legal force and effect whatsoever. Executive forever releases the
Employer, CMS Energy Corporation, and its affiliates from the duty to comply
with the superseded provisions of Section 9.     9.3   Severability. In the
event that any provision or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect.
    9.4   Tax Withholding. The Employer may withhold from any benefits payable
under this Agreement any authorized deductions and all federal, state, city, or
other taxes as may be required pursuant to any law or governmental regulation or
ruling.

 

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  9.5   Beneficiaries. The Executive may designate one (1) or more persons or
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such designation must be in the form of a signed
writing on a form provided by the Employer. The Executive may make or change
such designation at any time.     9.6   Payment Obligation Absolute. Except as
provided in the last sentence of this paragraph, the Employer’s and CMS Energy
Corporation’s obligations to make the payments and provide the benefits to
Executive specified herein shall be absolute and unconditional, and shall not be
affected by any circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense, or other right which the Employer, CMS Energy
Corporation or any of its Affiliates may have against the Executive or anyone
else. All amounts payable by the Employer hereunder shall be paid without notice
or demand. Each and every payment made hereunder by the Employer shall be final,
but subject to the provisions of the next sentence. If the Executive should seek
to bypass arbitration and litigate about this Agreement or the subject matters
addressed herein in a state or federal court, Executive agrees (i) at least
10 days prior to filing in court to tender back to the Employer all cash
consideration paid to Executive under this Agreement and the Employment
Agreement prior thereto and (ii) any payments due Executive under this Agreement
and the Employment Agreement after said tender shall be suspended until said
litigation is finally resolved.         The Executive shall not be obligated to
seek other employment in mitigation of the amounts payable or arrangements made
under any provision of this Agreement, and the obtaining of any such other
employment shall in no event effect any reduction of the Employer’s obligations
to make the payments and arrangements required to be made under this Agreement
and the Employment Agreement.     9.7   Contractual Rights to Benefits. Subject
to approval and ratification by the Committee, this Agreement establishes and
vests in the Executive a contractual right to the benefits to which he or she is
entitled hereunder. However, nothing herein contained shall require or be deemed
to require, or prohibit or be deemed to prohibit, the Employer to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.     9.8
  Modification. This Agreement shall not be varied, altered, modified, canceled,
changed, or in any way amended except by mutual agreement of the parties in a
written instrument executed by the parties hereto or their legal
representatives.     9.9   Counterparts. This Agreement may be executed in one
(1) or more counterparts, each of which shall be deemed to be an original, but
all of which together will constitute one and the same Agreement. Signatures
transmitted via facsimile shall be regarded by the parties as original
signatures.     9.10   Applicable Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Michigan, without regard
to its conflicts of laws principles.

 

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of this ___
day of                      , 2004.

                         
 
          EXECUTIVE:            
 
                       
By:
          Signature:                                   Its:            Printed
Name:        
 
                       

 

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Addendum to Tier III Change-in-Control Agreement.
Whereas the Board of Directors of CMS Energy Corporation approved entering into
change in control agreements with certain key employees; and
Whereas                      and the Executive have entered into a
Change-in-Control (the “Agreement”) dated                      , 200___ pursuant
to that authority; and
Whereas the Agreement requires that any modification or alteration may only be
made by mutual agreement of the parties in a written instrument executed by the
parties or their legal representatives; and
Whereas the parties mutually agree to modify the Agreement to comply with
Internal Revenue Code Section 409A (“Code Section 409A”) under the short term
deferral rules.
Now Therefore the parties agree to modify the Change-in-Control Agreement to
comply with the requirements of Section 409A to qualify as a short term deferral
by making the following changes to the Agreement:
I. Section 2.14 “Good Reason” is modified as follows:
“Good Reason” exists only on the date of a Change in Control or during the
twenty-four (24) months which follow a Change in Control and shall mean, without
the Executive’s express written consent, the occurrence of any one or more of
the following:

  (a)   The assignment to the Executive of duties materially inconsistent with
the Executive’s position (including status, offices, titles, and reporting
requirements), authority, or responsibilities as in effect on the Effective
Date, or any action by the Employer which results in a material diminution of
the Executive’s position, authority, duties, or responsibilities as constituted
as of the Effective Date (excluding an isolated, insubstantial, and inadvertent
action which is remedied by the Employer promptly after receipt of notice
thereof given by the Executive); or     (b)   Materially reducing the
Executive’s Base Salary; or     (c)   Materially reducing the Executive’s
targeted annual incentive opportunity; or     (d)   A material failure to
maintain the Executive’s participation in a long-term incentive plan in a manner
that is consistent with the Executive’s position, authority, or
responsibilities; or

 

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

 

  (e)   A material failure to maintain the Executive’s amount of benefits under,
or relative level of participation in, employee benefit or retirement plans,
policies, practices, or arrangements of a material nature available to employees
of CMS Energy Corporation and its Affiliates and in which the Executive
participates as of the date of a Change in Control, provided however that any
such change must result in a material negative change to the employee in the
employment relationship; or     (f)   A material breach of this Agreement by the
Employer which is not remedied by the Employer after receipt of written notice
of such breach delivered by the Executive to the Committee; or     (g)   Any
successor company fails or refuses to assume the obligations owed to Executive
under this Agreement in their entirety, as required by Section 8.1 hereunder; or
    (h)   The Executive is required to be based at a location in excess of
thirty-five (35) miles from the location of the Executive’s principal job
location or office immediately prior to a Change in Control except for required
travel on the Employer’s or CMS Energy Corporation’s business to an extent
substantially consistent with the Executive’s prior business travel obligations.

For purposes of applying clauses (a) through (hi) of this Agreement, the
Executive’s Retirement shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason, and the Executive’s
continued employment shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason or constitute
Executive’s consent to the circumstances constituting Good Reason unless
Executive has provided express written consent to the circumstance that would
otherwise constitute Good Reason under this Agreement. Notwithstanding the
above, the Executive must provide notice to the Employer of the existence of
Good Reason not more than 90 days after the initial existence of the
circumstance that constitutes Good Reason as set forth above and provide a
period of 30 days for the Employer to remedy the circumstance giving rise to
Good Reason and thus not have to pay the Change in control severance benefits as
provided for under Section 3.2. All provisions and interpretations relating to
good Reason are to be applied consistent with Section 409A and the applicable
Treasury regulations at Section 1.409A-1(n)(2) or its successor.

 

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

 

II.   Section 2.15 “Notice of Termination” shall be amended to add the following
sentence at the end:

Notwithstanding the above, the date of the Qualifying Termination will be the
date the Executive experiences a separation from service with the service
recipient, as that term is defined under IRC Section 409A and any applicable
regulations.

                              Accepted by Company:           Accepted by
Executive:        
 
                           
 
                                         
 
                           
Date:
              Date:            
 
                           

 

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Addendum to Tier III (DC SERP)Change-in-Control Agreement.
Whereas the Board of Directors of CMS Energy Corporation approved entering into
change in control agreements with certain key employees; and
Whereas                      and the Executive have entered into a
Change-in-Control (the “Agreement”) dated                      , 200___ pursuant
to that authority; and
Whereas the Agreement requires that any modification or alteration may only be
made by mutual agreement of the parties in a written instrument executed by the
parties or their legal representatives; and
Whereas the parties mutually agree to modify the Agreement to comply with
Internal Revenue Code Section 409A (“Code Section 409A”) under the short term
deferral rules.
Now Therefore the parties agree to modify the Change-in Control Agreement to
comply with the requirements of Section 409A to qualify as a short term deferral
by making the following changes to the Agreement:

I.   Section 2.14 “Good Reason” is modified as follows:

“Good Reason” exists only on the date of a Change in Control or during the
twenty-four (24) months which follow a Change in Control and shall mean, without
the Executive’s express written consent, the occurrence of any one or more of
the following:

  (a)   The assignment to the Executive of duties materially inconsistent with
the Executive’s position (including status, offices, titles, and reporting
requirements), authority, or responsibilities as in effect on the Effective
Date, or any action by the Employer which results in a material diminution of
the Executive’s position, authority, duties, or responsibilities as constituted
as of the Effective Date (excluding an isolated, insubstantial, and inadvertent
action which is remedied by the Employer promptly after receipt of notice
thereof given by the Executive); or     (b)   Materially reducing the
Executive’s Base Salary; or     (c)   Materially reducing the Executive’s
targeted annual incentive opportunity; or     (d)   A material failure to
maintain the Executive’s participation in a long-term incentive plan in a manner
that is consistent with the Executive’s position, authority, or
responsibilities; or

 

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

 

  (e)   A material failure to maintain the Executive’s amount of benefits under,
or relative level of participation in, employee benefit or retirement plans,
policies, practices, or arrangements of a material nature available to employees
of CMS Energy Corporation and its Affiliates and in which the Executive
participates as of the date of a Change in Control, provided however that any
such change must result in a material negative change to the employee in the
employment relationship; or     (f)   A material breach of this Agreement by the
Employer which is not remedied by the Employer after receipt of written notice
of such breach delivered by the Executive to the Committee; or     (g)   Any
successor company fails or refuses to assume the obligations owed to Executive
under this Agreement in their entirety, as required by Section 8.1 hereunder; or
    (h)   The Executive is required to be based at a location in excess of
thirty-five (35) miles from the location of the Executive’s principal job
location or office immediately prior to a Change in Control except for required
travel on the Employer’s or CMS Energy Corporation’s business to an extent
substantially consistent with the Executive’s prior business travel obligations.

For purposes of applying clauses (a) through (h) of this Agreement, the
Executive’s Retirement shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason, and the Executive’s
continued employment shall not constitute a waiver of the Executive’s rights
with respect to any circumstance constituting Good Reason or constitute
Executive’s consent to the circumstances constituting Good Reason unless
Executive has provided express written consent to the circumstance that would
otherwise constitute Good Reason under this Agreement. Notwithstanding the
above, the Executive must provide notice to the Employer of the existence of
Good Reason not more than 90 days after the initial existence of the
circumstance that constitutes Good Reason as set forth above and provide a
period of 30 days for the Employer to remedy the circumstance giving rise to
Good Reason and thus not have to pay the Change in control severance benefits as
provided for under Section 3.2. All provisions and interpretations relating to
good Reason are to be applied consistent with Section 409A and the applicable
Treasury regulations at Section 1.409A-1(n)(2) or its successor.

 

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II.   Section 2.15 “Notice of Termination” shall be amended to add the following
sentence at the end:       Notwithstanding the above, the date of the Qualifying
Termination will be the date the Executive experiences a separation from service
with the service recipient, as that term is defined under IRC Section 409A and
any applicable regulations.   III.   Section 3.2(h) shall be amended as follows:

  (h)   For an Executive included in DC SERP, the Executive’s retirement
benefits under the DC SERP will become fully vested as of the Effective Date of
Termination and shall not be subject to further vesting requirements or to any
forfeiture provisions. In addition, said Executive shall be provided an
additional contribution to the DC SERP equal to three times the amount the
Company would contribute on behalf of the Executive to the Deferred Company
Contribution Plan and the DC SERP Plan for the current year based on the base
salary and bonus as determined pursuant to clause (b) of this Section 3.2.

                              Accepted by Company:           Accepted by
Executive:        
 
                           
 
                                         
 
                           
Date: 
              Date: