Officer Separation
Agreement
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Establishment,
Term, and Purpose
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1
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Definitions
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2
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Severance
Benefits
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5
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Notice of
Termination; Resignation As Officer and Director
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7
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Restrictive
Covenants and Clawback
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7
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Dispute
Resolution and Notice
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10
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Successors and
Assignment
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11
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Miscellaneous
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11
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General Release
Agreement
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15
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Officer Separation
Agreement
THIS OFFICER
SEPARATION AGREEMENT (“Agreement”) is made, entered
into, and effective as of
(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, a Michigan corporation
(hereinafter referred to as “CMS Energy Corporation”)
has approved entering into severance agreements with certain
officers as being necessary and advisable for the success of CMS
Energy Corporation; and
WHEREAS, the
Officer is currently employed at
, by the Employer in a key management position as
;
NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and
agreements of the Officer and the Employer and of other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Officer and the Employer, intending 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
until December 31, 2010. However, at December 31, 2010, 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 (as defined in
Section 2.9 herein) delivers 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. If the term of this Agreement is not extended,
the Employer is not obligated to pay any severance benefits under
Section 3.2 herein for a Qualifying Termination that happens
after the expiration of the term of this Agreement. Notwithstanding
the above, the Officer acknowledges that this Agreement will expire
on the first of the month following his or her 65
th birthday to the extent that it is permitted
under Section 631(c) of the Age Discrimination in Employment Act,
and the Officer agrees to submit a resignation to the Committee not
less than six (6) months prior to his or her 65
th birthday to be effective the first of the month
following the Officer’s 65 th birthday. In addition, notwithstanding the
above, any obligation of the Employer arising during the term of
this Agreement shall survive the termination of this Agreement
until paid in full, provided that the Officer has received a Notice
of Termination under 2.18 herein. Notwithstanding the forgoing, the
obligations of the Officer under Article 5 herein shall
continue in effect and survive the expiration of the term of this
Agreement.
1
Whenever used in
this Agreement, the following terms shall have the meanings set
forth below:
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2.1
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“Affiliate”
has the meaning set
forth in Rule 12b-2 under of the Exchange Act.
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2.2
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“Agreement”
means this agreement,
including the “whereas” clauses and
Exhibit A.
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2.3
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“Base Annual
Salary” means the Officer’s full
annual salary, whether or not any portion thereof is paid on a
deferred basis, at the Effective Date of Termination. 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.
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2.4
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“Beneficiary”
means the persons or
Entities designated by the Officer pursuant to
Section 8.5.
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2.5
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“Benefit plan clawback
provision” has the meaning set forth in
Section 5.1(g) herein.
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2.6
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“Board”
means the Board of
Directors of CMS Energy Corporation.
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2.7
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“Cause”
is determined solely by
the Committee in the exercise of good faith and reasonable
judgment, and means the occurrence of any one or more of the
following:
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(a)
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The
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 demand for
substantial performance is delivered to the Officer that 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
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(b)
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The
Officer’s (i) indictment for a felony or (ii) a
conviction for a misdemeanor involving fraud, embezzlement, theft,
misappropriation or failure to be truthful; or
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(c)
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The
Officer’s (i) gross negligence, (ii) failure or
refusal, on request or demand by the Employer or any governmental
authority, to provide testimony to or cooperate with any
governmental regulatory authority, or any other similar
non-cooperation by the Officer, (iii) willful engaging in
misconduct materially or demonstrably injurious to the business or
reputation (by adverse publicity or otherwise) of CMS Energy
Corporation or its Affiliates, monetarily or otherwise, or
(iv) violation of a material provision of the Employer’s
code of conduct and code of ethics, including but not limited to
violations of the Employer’s policies relating to substance
abuse and discrimination; or
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(d)
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The
Officer’s breach of the terms of Article 5
herein.
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However, for
purposes of clause (c), no act or failure to act on the
Officer’s part shall be considered “willful” if
done, or omitted to be done, by the Officer (i) in good faith
and (ii) with reasonable belief that his or her action or
omission was in the best interest of CMS Energy Corporation or its
Affiliates.
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2.8
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“Code”
means the United States
Internal Revenue Code of 1986, as amended, and any successors
thereto.
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2.9
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“Committee”
means the Compensation
and Human Resources Committee of the Board or any other committee
appointed by the Board to perform the functions of the Compensation
and Human Resources Committee. The Committee is responsible for the
administration of this Agreement and shall interpret and apply the
provisions of this Agreement. Notwithstanding the above, the
Committee may obtain and rely upon advice from consultants,
attorneys and advisors of its choice in making determinations
concerning this Agreement.
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2.10
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“Direct
Competitor” has the meaning set forth in
Section 5.1(a) herein.
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2.11
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“Disability”
means a determination by
the insurer or third-party administrator under an individual and/or
group disability policy covering the Officer that the Officer is
totally and permanently disabled as defined in the policy, or if
there is no such coverage, then a disability that satisfies the
requirements of total and permanent disability under Section 22(e)
of the Code.
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2.12
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“Effective
Date” means the date of this Agreement set
forth in the first paragraph of this Agreement.
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2.13
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“Effective Date of
Termination” means the first day of any month
following the date on which a Qualifying Termination occurs, as
provided under Section 2.21 herein, which triggers the payment
of Severance Benefits hereunder. Such first day of such month shall
be specified in the Notice of Termination If the Officer is
otherwise eligible for retirement, he or she may elect to retire on
the Effective Date of Termination without waiving Severance
Benefits to which he or she may be entitled pursuant to this
Agreement.
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2.14
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“Employer”
means the corporation
named in the first paragraph of this Agreement as the
Employer.
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2.15
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“Entity”
means any corporation,
partnership, limited liability company, joint venture, sole
proprietorship or firm.
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2.16
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“Exchange
Act” means the United States Securities
Exchange Act of 1934, as amended.
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2.17
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“Exempt
Person” has the meaning set forth in
Section 5.1(b) herein.
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2.18
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“Notice of
Termination” shall be provided for a Qualifying
Termination and shall mean a notice which shall provide a specific
date (i) on which a Qualifying Termination will occur and
(ii) designated as the Effective Date of
Termination.
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2.19
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“Officer”
means the individual
named in the first paragraph of this Agreement.
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2.20
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“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).
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2.21
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“Qualifying
Termination” means a termination (not involving
death, Disability, Retirement or Cause), pursuant to a Notice of
Termination delivered to the Officer by the Employer or pursuant to
a request that the Officer submit a resignation as an officer and
employee (other than as provided for in Article 1
herein).
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2.22
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“ Release” means
the signed release of claims and resignation of all positions as an
officer or director of the Employer and any company affiliated with
Employer, which shall be substantially in the form attached hereto
as Exhibit A.
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2.23
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“Section 409A”
means Section 409A
of the Code and applicable Treasury Regulations, and their
successors.
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2.24
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“SERP”
means the retirement
plan applicable to the Officer and entitled “Supplemental
Executive Retirement Plan for the Employees of CMS Energy/Consumers
Energy Company” dated December 1, 2007, as amended or
under the successor or replacement of such retirement plan if it is
no longer in effect. [For Officers covered under the defined
contribution supplemental executive retirement plan, the following
definition shall be used: “means the retirement plan
applicable to the Officer and entitled “Defined Contribution
Supplemental Executive Retirement Plan” dated
December 1, 2007, as amended or under the successor or
replacement of such retirement plan if it is then no longer in
effect.].
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2.25
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“Severance
Benefits” has the meaning set forth in
Article 3 herein.
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Article 3. Severance
Benefits
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(a)
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Right to Severance
Benefits .
The Officer shall be entitled to receive from the Employer
Severance Benefits, as described in Section 3.2 herein, if a
Qualifying Termination of the Officer’s employment satisfying
the definition contained in Section 2.21 has occurred.
Benefits received by the Officer under the pension plan and SERP
(or any replacement or successor plans thereto) shall not be used
as an offset to the level of Severance Benefits owed to the
Officer. The Effective Date of Termination will be the date the
Officer experiences a separation from service with the service
recipient, as those terms are defined under
Section 409A.
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(b)
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No Severance Benefits
. The Officer shall not
be entitled to receive Severance Benefits under this Agreement if
the Officer’s employment with the Employer ends for reasons
other than a Qualifying Termination.
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(c)
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Waiver and Release
. The Officer shall sign
and return to the Employer a Release to be eligible for payment of
Severance Benefits under Section 3.2 herein. Attached hereto
as Exhibit A and incorporated by reference in this Agreement
is the form of release the Officer shall sign and return to qualify
for Severance Benefits under this Agreement. No payment will be
made until the seven (7) day right to revocation of the
Release has elapsed.
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(d)
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No Duplication of Severance
Benefits .
If the Officer receives Severance Benefits, any other severance
benefits received by employees not covered by this Agreement, if
any, to which the Officer is entitled shall be reduced on a
dollar-for-dollar basis with respect to Severance Benefits paid
pursuant to this Agreement so that there is no duplication of
severance benefits.
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3.2
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Description of Severance
Benefits. In
the event the Officer becomes entitled to receive Severance
Benefits as provided in Section 3.1(a) herein, the Employer
(subject to Section 3.1(c)) shall provide the Officer with the
following:
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(a)
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A
lump-sum amount paid within thirty (30) calendar days
following the Effective Date of Termination equal to the sum of the
Officer’s unpaid salary, unreimbursed business expenses, and
unreimbursed allowances owed to the Officer through and including
the Effective Date of Termination. In the event the Officer is
terminated following a performance year under the Officer Incentive
Compensation Plan but prior to the payment of a bonus for such
year, the Officer will not forfeit such bonus but shall receive any
payment when the same is paid to active employees. To the extent,
if any, the Officer has elected to defer any bonus, any payments
due under this provision corresponding to the amount of the
deferral shall be paid or deferred in
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accordance with the terms elected by
the Officer with respect to said plan under which the bonus is
deferred.
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(b)
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A
lump-sum amount, paid within thirty (30) calendar days
following return of the signed Release (but not prior to the lapse
of the seven (7) day revocation period), which shall be
provided not more than fifteen (15) days after delivery to the
Officer of a Notice of Termination, equal to [insert applicable
amount based upon salary grade from the following: for E-3 through
E-7 1.50 times Base Annual Salary; for E-8 and above 1.75 times
Base Annual Salary].
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(c)
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The
Officer’s termination of employment pursuant to the Notice of
Termination shall be treated as a resignation under the applicable
bonus plan and the Officer shall be entitled to consideration for a
pro-rata bonus to the extent provided for in the bonus
plan.
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(d)
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Outstanding stock options and stock
appreciation rights previously granted by the Committee to the
Officer pursuant to Article VI of the plan entitled “CMS
Energy Corporation Performance Incentive Stock Plan,” dated
December 3, 1999, as amended, or any replacement thereof,
shall be treated in accordance with applicable provisions of the
plan. Restricted Stock awarded to the Officer shall not be
forfeited, but rather shall immediately vest and be paid out if
subject only to a time based vesting requirement, and otherwise
shall continue to be subject to any applicable performance based
vesting requirement and shall be paid out in the future in
conformance therewith.
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(e)
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If
the Officer is a participant in the 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.
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(f)
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For
purposes of (1) the Officer’s retirement, (2) the
SERP and (3) benefits not expressly discussed in clauses
(a) through (e) 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 the Officer’s treatment under those plans
and contracts. All rights of the Officer to indemnification as an
officer or an employee will be determined under any applicable
indemnification policy in effect at the time the matter giving rise
to the need for indemnification is alleged to have occurred. For
any other benefits only available to officers, if those benefits
are not expressly discussed in clauses (a) through (e) of
this Section 3.2, those benefits are terminated for the
Officer as of the Effective Date of Termination.
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Article 4. Notice of Termination;
Resignation as Officer and Director
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4.1
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Any
Qualifying Termination of the Officer’s employment shall be
communicated by a Notice of Termination which shall provide a
specific date (i) on which a Qualifying Termination has
occurred or will occur, and (ii) that is designated as the
Effective Date of Termination.
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4.2
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On
or before the Effective Date of Termination, the Officer shall
submit to the Employer his or her written resignation as
(i) an officer of the Employer and of all Affiliates and
(ii) a member of the board of directors of the Employer and of
all Affiliates.
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Article 5. Restrictive Covenants and
Clawback
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5.1
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The
following shall apply after any termination (including without
limitation due to retirement, disability or resignation for any
reason) of the Officer’s employment:
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(a)
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Noncompetition:
During the term of
employment and for a period of twelve (12) months after the
date of the termination of the Officer’s employment, the
Officer shall not: (i) directly or indirectly, separately or
acting or conspiring with any Person or Entity whether or not
employed by CMS Energy Corporation or any of its Affiliates, engage
in or prepare to engage in or 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, member,
shareholder, director or consultant, or in any other capacity
whatsoever 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 m
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