Executive Severance Agreement for Senior Officers

Exhibit (10)(e)

Executive Severance Agreement
for Senior Officers

Tier I

Contents

Article 1.		Establishment, Term, and Purpose			1
Article 2.		Definitions			2
Article 3.		Severance Benefits			7
Article 4.		Other Terminations			12
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			16
Article 9.		Miscellaneous			17

Executive Severance Agreement

     THIS EXECUTIVE 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 “Executive”).

     WHEREAS, the Board of Directors of CMS Energy Corporation has approved entering into severance 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 certain terminations of employment; 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 Executive delivers written notice six (6) months prior to the end of such term, or extended term, to the Committee, stating that the Agreement will not be extended by Executive. 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 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 (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 Executive or pursuant to a request that Executive submit a resignation as an officer. 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 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 Executive for signature.
	2.19		“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.
	2.20		“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.
	2.21		“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 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)		General Severance Benefits. The Executive shall be entitled to receive from the Employer General Severance Benefits, as described in Section 3.3 herein, if the Executive’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, Executive’s Retirement under the pension plan and SERP shall not constitute a waiver of the Executive’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 Executive.
	(c)		No Severance Benefits. Other than in a situation involving a Retirement, the Executive shall not be entitled to receive Severance Benefits if the Executive’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 Executive 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 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.
	(f)		No Duplication of Severance Benefits . If the Executive 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 Executive under the provisions of this Agreement including, but not limited to, the benefits under Section 3.3. Likewise, if the Executive 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 Executive under the provisions of this Agreement including, but not limited to, the benefits under Section 3.2. If the Executive 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 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