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CHANGE-IN-CONTROL SEVERANCE AGREEMENT

Termination Severance Agreement

CHANGE-IN-CONTROL SEVERANCE AGREEMENT | Document Parties: DTE Energy Company You are currently viewing:
This Termination Severance Agreement involves

DTE Energy Company

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Title: CHANGE-IN-CONTROL SEVERANCE AGREEMENT
Governing Law: Michigan     Date: 11/9/2007
Industry: Electric Utilities     Sector: Utilities

CHANGE-IN-CONTROL SEVERANCE AGREEMENT, Parties: dte energy company
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Exhibit 10-71
CHANGE-IN-CONTROL SEVERANCE AGREEMENT
This CHANGE-IN-CONTROL SEVERANCE AGREEMENT (the “Agreement”) is entered into as of  November  8,  2007 (the “Effective Date”) between DTE Energy Company, a Michigan corporation (the “Company”), and                                           (the “Executive”).
RECITALS
A. The Executive is an executive or a key employee of the Company or one or more of its Subsidiaries and has made and is expected to continue to make major contributions to the short- and long-term profitability, growth and financial strength of the Company.
B. The Company recognizes that, as is the case for most publicly held companies, the possibility of a Change-in-Control exists and that potential employment uncertainty resulting from a Change-in-Control may distract management from conducting the Company’s business or cause management employees to leave the Company’s employ.
C. The Company wants to provide security to its senior executives and key employees to enable them to discharge their duties during the consideration and consummation of a Change-in-Control in order to preserve the value of the Company for its shareholders.
In consideration of these objectives, the Company and the Executive agree as follows:
1. Term of Agreement. The term of this Agreement (the “Term”) begins on the Effective Date and ends on the earlier of:
(a) the later of:
(1) the Agreement Expiration Date; or
(2) the last day of the Severance Period.
or
(b) the date prior to a Change-in-Control on which the Executive ceases for any reason to be an employee of the Company and any Subsidiary. For purposes of this Section 1(b), the Executive does not cease to be an employee of the Company and any Subsidiary if the Executive’s employment is transferred between the Company and any Subsidiary, or among any Subsidiaries.
2. Right to Receive Severance Benefits and Other Consideration. The Executive will become entitled to the severance benefits and other consideration provided under this Agreement if the Executive’s employment is terminated because of a Qualifying Termination.
3. Severance Benefits and Other Consideration.
(a) Severance Benefits . The Severance Benefits payable under this Agreement are all of the following:

 


 
(1) A lump sum payment equal to the sum of:
(A) Base Pay; plus
(B) the greater of:
(i) the Annual Bonus for the year in which the Change-in-Control occurs; or
(ii) the Annual Bonus for the year in which the Termination Date occurs,
in either case based on the assumption that target performance goals for the applicable year would be met and the Executive was employed for the entire year or until any later date required to receive the payment;
multiplied by:
(C) the lesser of:
(i) 200%; or
(ii) 200% multiplied by a fraction, the numerator of which is the number of full calendar months from the Executive’s Termination Date to the Executive’s 65 th birthday, and the denominator of which is 36.
(2) A lump sum payment equal to:
(A) the greater of:
(i) the Annual Bonus for the year in which the Change-in-Control occurs; or
(ii) the Annual Bonus for the year in which the Termination Date occurs,
in either case calculated based on the assumption that target performance goals for the applicable year would be met and the Executive was employed for the entire year or until any later date required to receive such payment,
(B) multiplied by the following fraction:

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(i) the numerator is the number of days prior to the Executive’s Termination Date during the calendar year in which the Termination Date occurs; and
(ii) the denominator is 365,
(C) then reduced by the Annual Bonus for the year in which the Termination Date occurs that is payable to the Executive under the terms of the Annual Plan because the Executive has attained age 55 and completed 10 years of service with the Company and all Subsidiaries.
(3) For Welfare Benefits provided to the Executive immediately prior to the Executive’s Termination Date (or, if greater, immediately prior to reduction, termination, or denial), a lump sum payment equal to the present value of the cost of coverage for the Benefit Continuation Period. The cost of coverage will be determined at rates in effect as of the Termination Date. The present value of the cost will be determined using an interest rate equal to the composite prime rate in effect as of the Termination Date in the Northeast Edition of The Wall Street Journal .
(4) Additional age, service, and compensation credit for the length of the Benefit Continuation Period for determining the Executive’s benefits under the following plans (or any successors to these plans):
(A) DTE Energy Company Supplemental Retirement Plan; and
(B) DTE Energy Company Executive Supplemental Retirement Plan (including the Management Supplemental Benefit Plan, if applicable to the Executive).
If the Executive’s Qualifying Termination was for Good Reason as described in Section 18(m)(4), the Executive’s benefits under the above plans will be the greater of the Executive benefits under the terms of the plans as of the Executive’s Termination Date or before the termination, denial, or material reduction.
(5) Outplacement services by a firm selected by the Executive, at a cost to the Company in an amount up to 15% of the Executive’s Base Pay. No payments by the Company for outplacement services will be made after December 31 st of the calendar year following the calendar year including the Termination Date.
(6) An excise tax gross-up payment as determined under Section 19.
(b) Other Consideration . The consideration for the restrictive covenant in Section 9(d) (Competitive Activity) is a lump sum payment equal to:
(1) the sum of:

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(A) Base Pay; plus
(B) the greater of:
(i) the Annual Bonus for the year in which the Change-in-Control occurs; or
(ii) the Annual Bonus for the year in which the Termination Date occurs,
in either case based on the assumption that target performance goals for the applicable year would be met and the Executive was employed for the entire year or until any later date required to receive the payment;
multiplied by
(C) the lesser of:
(i) 100%; or
(ii) 100% multiplied by a fraction, the numerator of which is the number of full calendar months from the Executive’s Termination Date to the Executive’s 65 th birthday, and the denominator of which is 36.
4. Timing of Payments.
(a) Payments under the following Sections will be paid on the later of 60 days after the Executive’s Termination Date or any later date required by Code Section 409A or any other law:
(1) Section 3(a)(1);
(2) Section 3(a)(2);
(3) Section 3(a)(3);
(4) Section 3(a)(6); and
(5) Section 3(b).
(b) Withholding of Taxes . The Company will withhold from any amounts payable under this Agreement all federal, state, city or other taxes that the Company is required to withhold under any law or government regulation or ruling.

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(c) Interest . If the Company fails to make any payment or provide any benefit required to be made or provided under this Agreement on a timely basis, the Company will pay interest on the amount or value at an annualized rate of interest equal to the composite prime rate as quoted from time to time during the relevant period in the Northeast Edition of The Wall Street Journal . The interest is payable as it accrues on demand, but the Company is not required to pay interest more frequently than monthly. Any change in the prime rate will be effective on and as of the date of the change.
5. Non-Duplication of Severance Benefits and Other Consideration.
(a) Qualifying Termination During Concurrent Severance Periods . If the Executive experiences a Qualifying Termination when two or more Severance Periods are running concurrently (because two or more Changes-in-Control have occurred), the Executive will have a Qualifying Termination with respect to each Severance Period. A determination of the payments and benefits to be provided under the Agreement will be made for each Qualifying Termination. However, the Executive will receive only:
(1) the greatest lump sum payment under Section 3(a)(1) payable for any Qualifying Termination;
(2) the greatest lump sum payment under Section 3(a)(2) for any Qualifying Termination;
(3) the greatest lump sum payment under Section 3(a)(3) for any Qualifying Termination;
(4) the greatest benefits under Section 3(a)(4) for any Qualifying Termination; and
(5) the greatest lump sum payment under Section 3(b) for any Qualifying Termination.
(b) Effect on Other Employee Benefits . The Executive’s Qualifying Termination will not affect any rights the Executive may have under any agreement, policy, plan, program or arrangement of the Company or Subsidiary providing Employee Benefits (other than Severance Pay), which rights are governed by the terms of the agreement, policy, plan, program or arrangement. The benefits received by an Executive under this Agreement because of a Qualifying Termination supersede and are in lieu of any other Severance Pay to which the Executive may be entitled.
6. Mitigation. The Company acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date. Accordingly, the Company acknowledges that payment of the severance compensation by the Company to the Executive under this Agreement is reasonable. The Executive is not required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. No profits, income, earnings or other benefits from any source will create any mitigation, offset, reduction or other obligation on the part of the Executive, except as

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may have been otherwise paid to the Executive by the Company or a Subsidiary in connection with or in consideration of Executive’s release and settlement of any claims arising out of the Executive’s employment or the termination of the Executive’s employment.
7. Arbitration; Legal Fees and Expenses.
(a) Except for legal proceedings brought by the Executive or the Company for injunctive relief, any dispute or claim involving this Agreement will be submitted to final and binding arbitration. The arbitration will take place in Oakland County, Michigan before a single neutral arbitrator under the then-current National Rules for the Resolution of Employment Disputes of the American Arbitration Association. The arbitrator will issue a written opinion and will not have authority to render an award beyond the scope and specific terms of this Agreement. Judgment upon the arbitrator’s award may be entered in any court of competent jurisdiction. Any demand for arbitration must be made within 30 days of when the party knew or should have known of the alleged dispute or claim. Failure to timely demand arbitration makes the dispute or claim non-arbitrable. The Executive and the Company expressly waive their rights to institute or prosecute any lawsuits or other court proceedings and waive their right to a jury trial, except for the legal proceedings excluded above.
(b) It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of Executive’s rights under this Agreement because the legal fees and related expenses would substantially detract from the benefits intended to be extended to the Executive under this Agreement.
(c) If it appears to the Executive that the Company has failed to comply with any of its obligations under this Agreement or if the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive under this Agreement, the Company irrevocably authorizes the Executive to retain counsel of Executive’s choice, at the expense of the Company as provided in this Section 7, to advise and represent the Executive in connection with any interpretation, enforcement or defense of the Executive’s rights under this Agreement.
(d) The Executive may pursue any legal defense of the Executive’s rights under this Agreement whether by or against the Company or any Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction.
(e) Whether or not the Executive prevails in connection with any defense of the Executive’s rights under this Agreement, the Company will pay and be solely financially responsible for reasonable hourly attorneys’ fees and related fees and expenses incurred by the Executive under this Section 7, but only if the arbitrator determines the Executive’s claim was brought in good faith and was not frivolous. If the Executive’s request for injunctive

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relief is denied and the Executive does not timely demand arbitration for the dispute or claim underlying the Executive’s request for injunctive relief, the Executive’s request for injunctive relief is deemed to be frivolous and not brought in good faith for purposes of this Section 7(e).
(f) The Company’s payment of the Executive’s legal fees and expenses under this Section 7 following termination of the Executive’s employment (whether or not in a Qualifying Termination) will be made during the first calendar year beginning after the date the Executive’s employment terminated.
8. Survival of Rights and Obligations. The rights and obligations of the Executive and the Company under the following Sections will survive the termination or expiration of this Agreement and the termination of the Executive’s employment after a Change-in-Control for any reason:
(a) Section 3 (Severance Benefits and Other Consideration);
(b) Section 4 (Timing of Payments);
(c) Section 5 (Non-Duplication of Severance Benefits and Other Consideration);
(d) Section 6 (Mitigation); and
(e) Section 7 (Legal Fees).
9. Confidential Information; Non-Disparagement; Non-Solicitation; Competitive Activity.
(a) Confidential Information . At all times following the Termination Date, the Executive will not, without the prior written consent of the Company, either directly or indirectly use, appropriate, or disseminate, disclose, or communicate to any person or entity any confidential information of the Company or any Subsidiary that is now known or later becomes known to the Executive because of the Executive’s employment with the Company or any Subsidiary, unless the disclosure is required by a valid subpoena or order issued by a court or governmental body.
(1) For purposes of this Section 9(a), “confidential information” is any confidential, proprietary, or trade secret information, including concepts, ideas, information, and materials related to the Company or any Subsidiary, customer records, customer lists, economic and financial analyses, financial data, customer contracts, marketing plans, notes, memoranda, lists, books, correspondence, manuals, reports or research, whether developed by the Company or a Subsidiary or developed by the Executive while employed by the Company or a Subsidiary.
(2) This Section 9(a) does not apply to any confidential information that becomes publicly disseminated by means other than a breach of this provision.
(b) Non-Disparagement . The Executive will not make any verbal or written comments to any third party that are defamatory, disparaging, or critical of the Company

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or any Subsidiary or its products, management, employees, officers or operations or that would otherwise adversely affect the finances or business reputation of the Company or any Subsidiary.
(c) Non-Solicitation .
(1) For a period of two years after the Termination Date, the Executive will not solicit, divert, take away, or attempt to take away any customer of the Company or any Subsidiary or the business of any customer of the Company or any Subsidiary.
(A) A “customer” of the Company or any Subsidiary is any person or other entity to which the Company or any Subsidiary has sold services or products during the 24-month period immediately preceding the Termination Date, any person or other entity that the Company or any Subsidiary is in the process of selling services or products, or any person or other entity to which the Company or any Subsidiary has submitted or is in the process of submitting a bid to sell services or products. `
(2) For a period of two years after the Termination Date, the Executive will not solicit, attempt to employ, or employ any individual who is an employee, consultant, or agent of the Company or any Subsidiary.
(d) Competitive Activity . For a period of one year following the Termination Date, the Executive will not engage in any Competitive Activity. If the Executive engages in any Competitive Activity earlier than one year following the Termination Date, the Executive must repay to the Company the consideration paid to the Executive under Section 3(b).
10. Employment Rights. Nothing in this Agreement creates any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Subsidiary prior to or following any Change-in-Control.
11. Successors and Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform it if the succession had not taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any person acquiring directly or indirectly all or substantially all of the business or assets of the Company by purchase, merger, consolidation, reorganization or otherwise, with the successor thereafter deemed to be the “Company” for the purposes of this Agreement. Other than as permitted under this Section 11(a), this Agreement is not assignable, transferable or delegable by the Company.

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(b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties may, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 11(a) and 11(b). The Executive’s right to receive payments under the Agreement is not assignable, transferable or delegable, including by pledge, creation of a security interest, or otherwise, other than by a transfer by Executive’s will or by the laws of descent and distribution. If any assignment or transfer not permitted by this Section 11(c) is attempted, the Company will have no liability to pay any amount attempted to be assigned, transferred or delegated.
12. Notices.
(a) All communications, including notices, consents, requests or approvals, required or permitted to be given under this Agreement must be in writing.
(b) All notices must be provided by:
(1) hand delivery (deemed provided when delivered);
(2) electronic facsimile transmission, with verbal confirmation of receipt (deemed provided when transmitted);
(3) United States registered or certified mail, return receipt requested, postage prepaid (deemed provided five business days after mailing); or
(4) a nationally recognized overnight courier service such as Federal Express or UPS (deemed provided three business days after deposit with courier service).
(c) Notices to the Company must be addressed to the attention of the Vice President – Human Resources of the Company at the Company’s principal executive office.
(d) Notices to the Executive must be addressed to the Executive at the Executive’s principal residence.
(e) The Company or the Executive can change the address to which notices to that party are to be addressed by providing notice to the other party as required under this Section 12, except that notices of changes of address are effective only upon actual receipt.
13. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Michigan, without gi

 
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