Document:

exv10wxfy

 

Exhibit (10)(f)

Officer Severance Agreement

Tier II

 

 

Contents

 

	 	 	 	 	 	 	 
	Article 1.

	 	Establishment, Term, and Purpose
	 	 	1	 
	Article 2.

	 	Definitions
	 	 	2	 
	Article 3.

	 	Severance Benefits
	 	 	7	 
	Article 4.

	 	Other Terminations
	 	 	13	 
	Article 5.

	 	Noncompetition and Confidentiality
	 	 	13	 
	Article 6.

	 	Excise Tax Equalization Payment
	 	 	15	 
	Article 7.

	 	Dispute Resolution and Notice
	 	 	16	 
	Article 8.

	 	Successors and Assignment
	 	 	17	 
	Article 9.

	 	Miscellaneous
	 	 	18	 

 

 

Officer Severance Agreement

     THIS OFFICER SEVERANCE 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 “Officer”).

     WHEREAS, the Board of Directors of CMS Energy Corporation has approved entering into severance
agreements with certain key officers as being necessary and advisable for the success of CMS Energy
Corporation;

     WHEREAS, the Officer 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 Officer with a
measure of financial security in the event of certain terminations of employment; and

     WHEREAS, both the Employer and the Officer are desirous that any proposal involving Change in
Control as defined in this Agreement will be considered by the Officer 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 two (2)
full years through March ___, 2006. However, at the end of such two (2) 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 Officer, 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. If the term of this
agreement is not extended, the Employer is not obligated to pay any severance benefits under
Section 3.2 for a Change in Control that happens after the expiration of the term and is not
obligated to pay any severance benefits under Section 3.3 with respect to any other termination
that happens after the expiration of the term.

 

 

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 Officer’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
Officer 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 Officer to substantially
perform his or her duties of employment (other than any such failure resulting from
the Officer’s Disability), after a written demand for substantial performance is
delivered to the Officer that specifically identifies the manner in which the
Committee believes that the Officer has not substantially performed his or her
duties, and the Officer 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 Officer’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 Officer 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 Officer’s
part shall be considered “willful” unless done, or omitted to be done, by the Officer

 

 

not in good faith and without reasonable belief that his or her action or 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
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
Officer, due to injury, illness, disease, or bodily or mental infirmity, which causes
the Officer not to engage in the performance of a substantial or material portion of the
Officer’s usual duties of employment associated with such Officer’s 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
Officer’s express written consent, the occurrence of any one or more of the following:

	 	(a)	 	The assignment to the Officer of duties materially inconsistent with
the Officer’s position (including status, offices, titles, and reporting
requirements), authority, or responsibilities as in effect on the Effective, or
any action by the Employer which results in a diminution of the Officer’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
Officer); or
	 
	 	(b)	 	Reducing the Officer’s Base Salary; or
	 
	 	(c)	 	Reducing the Officer’s targeted annual incentive opportunity; or
	 
	 	(d)	 	Failing to maintain the Officer’s participation in a long-term
incentive plan in a manner that is consistent with the Officer’s position,
authority, or responsibilities; or
	 
	 	(e)	 	Failing to maintain the Officer’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 Officer 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 Officer to the Committee; or
	 
	 	(g)	 	Any successor company fails or refuses to assume the obligations owed
to Officer under this Agreement in their entirety, as required by Section 8.1
hereunder; or
	 
	 	(h)	 	The Officer is required to be based at a location in excess of
thirty-five (35) miles from the location of the Officer’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 Officer’s prior business travel obligations; or
	 
	 	(i)	 	The Officer ceases being an 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 Officer was an officer of a company
whose common stock was publicly owned.

For purposes of applying clauses (a) through (i) of this Agreement, the Officer’s
Retirement shall not constitute a waiver of the Officer’s rights with respect to any
circumstance constituting Good Reason, and the Officer’s continued employment shall not
constitute a waiver of the Officer’s rights with respect to any circumstance
constituting Good Reason or constitute Officer’s consent to the circumstances
constituting Good Reason unless Officer 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 Officer 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 Officer’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 Officer’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 Officer by the
Employer; or
	 
	 	(b)	 	A voluntary termination by the Officer 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 Officer.
	 
	 	(c)	 	A termination (not involving death, Disability, Retirement or
Cause), which takes place before the date of a Change in Control or after the
first twenty-four (24) months immediately following a Change in Control, pursuant
to a Notice of Termination delivered to Officer or pursuant to a request that
Officer submit a resignation as an officer. A termination for failure of the
Officer to comply in material respects with CMS Energy’s Code of Conduct and
Statement of Ethics Handbook (June 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 this clause (c).

	 	2.18	 	“Release Date” occurs after the delivery of the Notice of Termination required
by Section 2.15 and means the date on which the release contained in Exhibit A to this
Agreement is first provided to Officer for signature.
	 
	 	2.19	 	“Retirement” shall have the meanings ascribed under the terms of the pension plan
applicable to Officer 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.
	 
	 	2.20	 	“SERP” shall mean the retirement plan applicable to Officer 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.
	 
	 	2.21	 	“Severance Benefits” means the payment of Change-in-Control Severance Benefits
or General Severance Benefits as provided in Article 3 herein.

Article 3. Severance Benefits

	 	3.1	 	Right to Severance Benefits.

	 	(a)	 	Change-in-Control Severance Benefits. The Officer 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 Officer’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, Officer’s Retirement under the pension plan and SERP shall
not constitute a waiver of the Officer’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
Officer.
	 
	 	(b)	 	General Severance Benefits. The Officer shall be entitled to receive
from the Employer General Severance Benefits, as described in Section 3.3 herein,
if the Officer’s employment is terminated for reasons satisfying the definition
contained in Section 2.17(c) and such termination has occurred either before a
Change of Control of CMS Energy Corporation or during the period that begins after
the expiration of twenty-four (24) months immediately following a Change in Control
of CMS Energy Corporation. Further, Officer’s Retirement under the pension plan
and SERP shall not constitute a waiver of the Officer’s rights with respect to
receipt of General 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 General Severance Benefits owed to Officer.
	 
	 	(c)	 	No Severance Benefits. Other than in a situation involving a
Retirement, the Officer shall not be entitled to receive Severance Benefits if the
Officer’s employment with the Employer ends for reasons other than a Qualifying
Termination.
	 
	 	(d)	 	General Release. As a condition precedent to receiving Severance
Benefits under Section 3.3 herein, the Officer shall be obligated to execute
and deliver to the Employer on a timely basis duplicate originals of a general
release of claims in the form included as Exhibit A hereto.
	 
	 	(e)	 	Waiver and Release. The Officer’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 Officer 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 Officer’s employment relationship with them or the
termination of such employment relationship except for claims and rights of Officer
preserved under Section 3.2 of this Agreement and applicable rights to
indemnification.
	 
	 	(f)	 	No Duplication of Severance Benefits. If the Officer becomes entitled
to Change-in-Control Severance Benefits, the benefits provided for under Section

 

 

	 	 	 	3.2 hereunder shall be in lieu of all other benefits provided to the Officer
under the provisions of this Agreement including, but not limited to, the
benefits under Section 3.3. Likewise, if the Officer becomes entitled to General
Severance Benefits, the benefits provided under Section 3.3 hereunder shall be in
lieu of all other benefits provided to the Officer under the provisions of this
Agreement including, but not limited to, the benefits under Section 3.2. If the
Officer receives either Change-in-Control Severance Benefits under Section 3.2 or
General Severance Benefits under Section 3.3, any other severance benefits
received by employees not covered by this Agreement to which the Officer 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 Officer
becomes entitled to receive Change-in-Control Severance Benefits, as provided in Section
3.1(a) herein, the Employer shall provide the Officer with the following:

	 	(a)	 	A lump-sum amount paid within fifteen (15) calendar days following
delivery to the Employer or delivery to the Officer, as applicable, of a Notice of
Termination, equal to the sum of the Officer’s unpaid Base Salary, accrued vacation
pay, unreimbursed business expenses, and unreimbursed allowances owed to the
Officer 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 Officer, as applicable, of a Notice of
Termination, equal to one and one half (1.5) times the sum of the following: (A)
the Officer’s Base Salary and (B) the greater of the Officer’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 Officer 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 Officer, as applicable, of a Notice of
Termination, equal to the Officer’s then current target bonus opportunity
established under the bonus plan in which the Officer 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 Officer, as applicable, of a Notice of
Termination, equal to one half (0.5) times the sum of the following: (A) the
Officer’s Base Salary and (B) the greater of the Officer’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 Officer in

 

 

	 	 	 	respect of the year prior to the year in which the Qualifying Termination occurs.
Such amount shall be consideration for the Officer entering into the noncompete
agreement as described in Section 5(a).
	 
	 	(e)	 	Equivalent payment to Officer in a lump sum amount within forty-five
(45) calendar days following delivery of the Notice of Termination for continued
medical coverage for a period of twenty four (24) months. Such equivalent payment
shall be computed based on the same coverage level as in effect for Officer 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
twenty-four (24). Nothing herein amends or provides Officer any rights to health
care coverage other than as provided in the applicable group health care plan. If
the Officer 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 Officer to exercise any outstanding stock options or stock
appreciation rights granted by the Committee to Officer pursuant to said Article
VI. Otherwise, the terms of said plan shall govern and be applied.
	 
	 	(g)	 	Immediate vesting and distribution to Officer (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 Officer 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 Officer 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 Officer. For any award of restricted stock that is tenure based, the
number of shares distributed to Officer shall assume that all requirements with
respect to tenure are satisfied by Officer. Otherwise, the terms of said plan
shall govern and be applied.
	 
	 	(h)	 	For an Officer included in SERP, the Officer’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 Officer shall be provided the following: (i) an
additional twenty-four (24) 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; (ii) only the

 

 

	 	 	 	amounts paid to Officer 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 Officer Pay under SERP; and (iii) for an Officer that
receives Change-in-Control Severance Benefits under this Agreement within twenty
four (24) months prior to attaining the age of 55, Officer shall receive 65% of
Officer’s Accrued Supplemental Officer Retirement Income under SERP if Officer
elects to retire at age 55 notwithstanding the fact that the Effective Date of
Termination for Officer pursuant to this Agreement is before he or she attains
the age of 55. If it should occur that Officer retires under SERP after the age
of 55, clause (iii) of the preceding sentence and 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.
	 
	 	(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 Officer’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 Officer as of the Effective Date of Termination.

	 	3.3	 	Description of General Severance Benefits. In the event the Officer becomes
entitled to receive General Severance Benefits as provided in Section 3.1(b) herein, the
Employer shall provide the Officer with the following:

	 	(a)	 	A lump-sum amount paid within fifteen (15) calendar days following
delivery to the Officer of a Notice of Termination with respect to a Qualifying
Termination as described in Section 2.17 (c) of this Agreement, equal to the sum
of the Officer’s unpaid Base Salary, accrued vacation pay, unreimbursed business
expenses, and unreimbursed allowances owed to the Officer through and including
the Effective Date of Termination.
	 
	 	(b)	 	An amount, paid following the Release Date on an installment basis over
a period of twelve (12) months on a twice a month schedule in accordance with the
normal payroll procedures of the Employer, equal to one (1) times the sum of: (A)
the Officer’s Base Salary and (B) the greater of the Officer’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 Officer in respect of
the year prior to the year in which the Qualifying Termination occurs. The first
of the twenty-four (24) installment payments

 

 

	 	 	 	called for by this section shall be made within forty-five (45) days following
the Release Date.
	 
	 	(c)	 	A lump-sum amount, paid within forty-five (45) calendar days following
the Release Date, equal to the Officer’s then current target bonus opportunity
established under the bonus plan in which the Officer 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)	 	Equivalent payment to Officer in a lump-sum amount within forty-five
(45) days following the Release Date for continued medical coverage for a period of
twelve (12) months. Such equivalent payment shall be computed based on the same
coverage level as in effect for Officer 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 twelve (12). Nothing herein amends or
provides Officer any rights to health care coverage other than as provided in the
applicable group health care plan. If the Officer has waived coverage under the
applicable group health care plan, no equivalent payment shall be made under this
Agreement.
	 
	 	(e)	 	Outstanding stock options and stock appreciation rights previously
granted by the Committee to Officer pursuant to Article VI of the plan entitled
“CMS Energy Corporation Performance Incentive Stock Plan,” dated December 3, 1999,
as amended, shall be treated as a “termination of employment” in accordance with
Section 6.10 of Article VI, provided however that Employee will not be eligible to
seek or receive from the Committee any extensions of the period for their exercise.
For outstanding shares of restricted stock held by Officer, they shall be
forfeited to CMS Energy Corporation in accordance with the provisions of the first
sentence of Section 7.2(h) of Article VII of said plan.) For purposes of (1)
Retirement, (2) SERP and (3) benefits not expressly discussed in clauses (a)
through (d) of this Section 3.3, 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 Officer’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
(d) of this Section 3.3, those benefits are terminated for Officer as of the
Effective Date of Termination.

Article 4. Other Terminations

 

 

	 	4.1	 	Termination for Disability. If the Officer’s employment is terminated with the
Employer due to Disability, the Officer’s benefits shall be determined in accordance with
the Employer’s retirement, insurance, and other applicable plans and programs then in
effect.
	 
	 	4.2	 	Termination for Retirement or Death. If the Officer’s employment with the Employer
is terminated by reason of his or her Retirement or death, the Officer’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.
	 
	 	4.3	 	Termination for Cause or by Employer or the Officer for Other Than Good Reason. If
the Officer’s employment is terminated either: (a) by the Employer for Cause as defined
in Section 2.6 of this Agreement; or (b) voluntarily by the Officer for reasons other
than those specified in Section 2.14 herein, or (c) by the Employer for the reasons
stated in the last sentence of Section 2.17(c) of this Agreement, the Employer shall pay
the Officer the sum of any unpaid Base Salary, accrued vacation, unreimbursed business
expenses and unreimbursed allowances owed to the Officer through the effective date of
termination. The terms of the benefit plan descriptions, compensation plan descriptions
and contracts with third parties covering officers shall control the disposition to
Officer and timing of all other amounts to which the Officer may be entitled, and neither
the Employer nor CMS Energy Corporation nor any of its Affiliates shall have any further
obligations to the Officer thereunder as a result of the existence of this Agreement. No
other severance benefits of any type shall be made available to Officer. Notwithstanding
the above, if the Officer’s employment terminates pursuant to this Section 4.3, the
Officer shall be bound by the provisions contained in Article 5(a), 5(b), 5(c), 5(d), and
5(e) hereof.
	 
	 	4.4	 	Notice of Termination. Any termination of the Officer’s employment in accordance
with Section 4.3 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

     In the event the Officer becomes entitled to receive Change-in-Control Severance Benefits as
provided in Section 3.2 herein or General Severance Benefits as provided in Section 3.3 herein, the
following shall apply:

	 	(a)	 	Noncompetition. During the term of employment and for a period of
twelve (12) months after the Effective Date of Termination, the Officer shall not:
(i) directly or indirectly act in concert or conspire with any person employed by
CMS Energy Corporation or any of its Affiliates in order to engage in or prepare to
engage in or to have a financial or other interest in any business

 

 

	 	 	 	which is a Direct Competitor (as defined below); or (ii) serve as an employee,
agent, partner, shareholder, director or consultant for, or in any other capacity
participate, engage, or have a financial or other interest in any business which
is a Direct Competitor (provided, however, that notwithstanding anything to the
contrary contained in this Agreement, the Officer may own up to two percent (2%)
of the outstanding shares of the capital stock of a company whose securities are
registered under Section 12 of the Exchange Act.
	 
	 	 	 	For purposes of this Agreement, the term “Direct Competitor” shall mean any person
or entity engaged in the business of selling electric power or natural gas at
retail within the State of Michigan.
	 
	 	 	 	The Committee also reserves the right to designate, prior to the termination date
specified in a Notice of Termination, any Person that it believes, in good faith,
is a significant competitive threat to CMS Energy Corporation or its Affiliates.
	 
	 	(b)	 	Confidentiality. The Employer has advised the Officer and the Officer
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 Officer 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 Officer’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 Officer; 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 Officer from freely providing information to a
state or federal agency, legislative body or one of its committees or a court with
jurisdiction when Officer is requested or required to do so by such entity.

 

 

	 	(c)	 	Nonsolicitation. During the term of employment and for a period of
twelve (12) months after the Effective Date of Termination, the Officer shall not:
(i) employ or retain or solicit for employment or arrange to have any other person,
firm, or other entity employ or retain or solicit for employment or otherwise
participate in the employment or retention of any person who is an employee or
consultant of CMS Energy Corporation or its Affiliates; or (ii) solicit suppliers
or customers of CMS Energy Corporation or its Affiliates or induce any such person
to terminate their relationship with them.
	 
	 	(d)	 	Cooperation. Officer 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 Officer’s
employment or activities on behalf of CMS Energy Corporation and its Affiliates.
	 
	 	(e)	 	Nondisparagement. At all times, the Officer 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, Officer
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 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 Officer or otherwise make comments harmful to Officer’s
reputation. Notwithstanding the foregoing, nothing in this Section prohibits
Officer 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 Officer becomes entitled
to Severance Benefits or any other payment or benefit under this Agreement, or under any
other agreement, plan or arrangement for which Officer 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 Officer in cash an
additional amount (the “Gross-Up Payment”) such that the net amount retained by the
Officer 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 Officer within forty-five (45) calendar days following the Effective Date of
Termination.
	 
	 	 	 	For purposes of determining the amount of the Gross-Up Payment, the Officer 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 Officer’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 Officer did not receive the greatest net
benefit, the Employer shall reimburse the Officer for the full amount necessary to make
the Officer 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 Officer 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 Officer) to the
extent that such repayment results in a reduction in the Excise Tax and a
dollar-for-dollar reduction in the Officer’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
Officer 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 Officer 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 Officer of the Notice of Termination for
purposes of administering Section 3.2. Regardless of whether such agreement is
executed, this Agreement shall be binding upon any successor in accordance with the
operation of law.
	 
	 	8.2	 	Assignment by the Officer. This Agreement shall inure to the benefit of and be
enforceable by the Officer’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees, and legatees. If the Officer
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 Officer’s Beneficiary. If the Officer
has not named a Beneficiary, then such amounts shall be paid to the Officer’s devisee,
legatee, or other designee, or if there is no such designee, to the Officer’s estate.

Article 9. Miscellaneous

	 	9.1	 	Employment Status. The employment of the Officer by the Employer is “at will” and
may be terminated by either the Officer or the Employer at any time, subject to

 

 

	 	 	 	applicable law. Further, Officer 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, this Agreement completely
supersedes, cancels, voids and renders of no further force and effect any and all
employment agreements, change in control agreements, and other similar agreements,
communications, representations, promises, covenants and arrangements, whether oral or
written, between the Employer and Officer and between the Officer 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.
	 
	 	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.
	 
	 	9.5	 	Beneficiaries. The Officer 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 Officer 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 Officer 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 Officer 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 Officer should seek to bypass arbitration and
litigate about this Agreement or the subject matters addressed herein in a state or
federal court, Officer agrees (i) at least 10 days prior to filing in court to tender
back to the Employer all cash consideration paid to Officer under this Agreement prior
thereto and (ii) any payments due Officer under this Agreement after said tender shall be
suspended until said litigation is finally resolved.

 

 

	 	 	 	The Officer 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.
	 
	 	9.7	 	Contractual Rights to Benefits. Subject to approval and ratification by the
Committee, this Agreement establishes and vests in the Officer 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.

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

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	OFFICER:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	Signature:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	Its:
	 	 	 	 	 	 	 	Printed Name:	 	 
	 

	 	 	 	 

	 	 
	 	 	 	
	 	 
 

 

 

Addendum to the Officer Severance Agreement.

Whereas the Board of Directors of CMS Energy Corporation approved entering into severance
agreements with certain key employees; and

Whereas                                          and the Officer have entered into an Officer Severance Agreement (the
“Agreement”) dated                     , 2004 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 Officer Severance 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 Officer’s
express written consent, the occurrence of any one or more of the following:

	 	(a)	 	The assignment to the Officer of duties materially inconsistent with
the Officer’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
Officer’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 Officer); or
	 
	 	(b)	 	Materially reducing the Officer’s Base Salary; or
	 
	 	(c)	 	Materially reducing the Officer’s targeted annual incentive
opportunity; or
	 
	 	(d)	 	A material failure to maintain the Officer’s participation in a
long-term incentive plan in a manner that is consistent with the Officer’s
position, authority, or responsibilities; or

 

 

	 	(e)	 	A material failure to maintain the Officer’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 Officer
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 Officer to the Committee; or
	 
	 	(g)	 	Any successor company fails or refuses to assume the obligations owed
to Officer under this Agreement in their entirety, as required by Section 8.1
hereunder; or
	 
	 	(h)	 	The Officer is required to be based at a location in excess of
thirty-five (35) miles from the location of the Officer’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 Officer’s prior business travel obligations.

For purposes of applying clauses (a) through (hi) of this Agreement, the Officer’s
Retirement shall not constitute a waiver of the Officer’s rights with respect to any
circumstance constituting Good Reason, and the Officer’s continued employment shall not
constitute a waiver of the Officer’s rights with respect to any circumstance
constituting Good Reason or constitute Officer’s consent to the circumstances
constituting Good Reason unless Officer has provided express written consent to the
circumstance that would otherwise constitute Good Reason under this Agreement.
Notwithstanding the above, the Officer 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 sentences at the
end:
	 
	 	 	Notwithstanding the above, the date of the Qualifying Termination will be the date the
Officer experiences a separation from service from the Employer, as that term is defined
under Section 409A and any applicable regulations. Such Notice of Termination when provided
by the Officer for Good Reason as set forth in Section 2.14 (after the expiration

 

 

	 	 	of the 90 day notice and 30 day cure period described in Section 2.14) shall be consistent
with the requirements of Section 409A and applicable requirements. For all other Qualifying
Terminations, the Notice shall be provided not more than 10 days after the date of the
separation from service with the Employer as that term is defined under Section 409A and any
applicable regulations.
	 
	III.	 	Section 2.18 “Release Date” shall add the following sentence at the end:
	 
	 	 	In no event will a Release Date be a date that is more than 15 days following a separation
from service as that term is defined under IRC Section 409A and any applicable regulations.
	 
	IV.	 	Section 3.1(d) General Release is modified to require a general release be submitted with in
45 days as follows:

	 	(d)	 	General Release. As a condition precedent to receiving Severance Benefits
under Section 3.3 herein, the Officer shall be obligated to execute and deliver to the
Employer on a timely basis, but not more than 45 days after the Release Date, duplicate
originals of a general release of claims in the form included as Exhibit A hereto.

	V.	 	Section 3.2(c) is modified to add the following sentence at the end:
	 
	 	 	To the extent, if any, the Officer has elected to defer any bonus under the applicable bonus
plan, any payments due under this provisions corresponding to the amount of the deferral
shall be paid in accordance with the payment terms elected by the Officer under the plan
wherein the bonus is deferred.
	 
	VI.	 	Section 3.3(b) is modified to add the following sentence at the end:
	 
	 	 	Notwithstanding anything in the foregoing to the contrary, the final installment will be
paid no later than March 10 of the year following the year in which the Qualifying
Termination occurs, and such final installment will include the value of all remaining
installments under this provision.
	 
	VII.	 	Section 3.3(c) is modified to add the following sentence at the end:
	 
	 	 	To the extent, if any, the Officer has elected to defer any bonus
under the applicable bonus plan, any payments due under this
provisions corresponding to the amount of the deferral shall be paid
in accordance with the payment terms elected by the Officer under
the plan wherein the bonus is deferred.
	 
	VIII.	 	Section 6.1 shall be modified to change the final sentence of the
first paragraph to read as follows:

 

 

	 	 	Such payment shall be made by the Employer to the Officer by the end of the taxable year of
the Officer next following the taxable year in which the Officer remits the related taxes.
	 
	IX.	 	Section 6.2 shall be modified to add the following as the second sentence:
	 
	 	 	Any such reimbursement shall be paid to the Officer by the end of the taxable year of the Officer next following the
taxable year in which the Officer remits the related taxes.
	 
	X.	 	The final sentence of the first paragraph of Section 9.6 Payment Obligation Absolute shall be
amended to read as follows:
	 
	 	 	If the Officer should seek to bypass arbitration and litigate about this Agreement
or the subject matters addressed herein in a state or federal court, subject to the
requirements of Section 409A, to the extent applicable, Officer agrees (i) at least 10
days prior to filing in court to tender back to the Employer all cash consideration
paid to Officer under this Agreement prior thereto and (ii) any payments due Officer
under this Agreement after said tender shall be suspended until said litigation is
finally resolved.

	 	 	 
	Accepted by ______________________________:

	 	Accepted by Officer:
	 
	 
	 	 

	 
	Date: _____________________

	 	Date: _____________________exv10wxgy

 

Exhibit (10)(g)

Change-in-Control Agreement

Tier III

 

 

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	 

 

 

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

 

 

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

 

 

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

 

 

	 	 	 	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

 

 

	 	 	 	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

 

 

	 	 	 	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

 

 

	 		 	 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

 

 

	 	 	 	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

 

 

	 	 	 	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.

 

 

	 	(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:

 

 

	 	(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

 

 

	 	 	 	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

 

 

	 	 	 	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

 

 

	 	 	 	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.

 

 

	 	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.

 

 

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

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	EXECUTIVE:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Signature:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Its: 	 	 	 	 	 	Printed Name:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 

 

 

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:	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 

 

 

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.

 

 

	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:

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