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EXHIBIT (10)(b)
[EACH EXECUTIVE OFFICER OF CMS ENERGY AND CONSUMERS ENTERS INTO AN
EMPLOYMENT AGREEMENT IN SUBSTANTIALLY THE FORM ATTACHED]
EMPLOYMENT AGREEMENT
AGREEMENT between __________________________, a Michigan corporation
(the "Company"), and _________________________ (the "Executive") dated this
_______ day of December, 1999.
Whereas the Company considers the maintenance of a vital management
essential to protecting and enhancing the best interests of the Company and its
shareholders; whereas the Company has determined to encourage the continuing
attention and dedication of the key members of its management without the
distraction arising from the possibility of a change in control;
Therefore, the parties hereto agree as follows:
1. Change of Control. As used in this Agreement, a "Change of
Control" shall occur upon the occurrence of one or more of the following events
and "Change of Control Date" shall be the date of such occurrence:
(a) A Change of Control of CMS Energy Corporation ("CMS") would be
required to be reported in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act, whether
or not CMS is then subject to such reporting requirement.
(b) Any "person" or "group" within the meaning of Sections 13(d)
and 14(d)(2) of the Exchange Act becomes the "beneficial
owner" as defined in Rule 13d-3 under the Exchange Act of more
than 30% of the then outstanding voting securities of CMS.
(c) During any period of twenty-four consecutive months the
Present Directors and/or New Directors cease to constitute a
majority of the Board of Directors of CMS. For purposes of
this subsection (c), "Present Directors" shall mean
individuals who at the beginning of such consecutive
twenty-four month period were members of the Board and "New
Directors" shall mean any director of CMS whose election by
the Board or whose nomination for election by CMS'
shareholders was approved by a vote of at least two-thirds of
CMS' Directors then still in office who were Present Directors
or New Directors.
(d) There is a sale by CMS within a three-year period of assets of
CMS with either a book value or market value of 50% or more of
the assets of CMS on a book-value or market-value basis.
(e) A bidder as defined in Rule 14D-1(b) under the Exchange Act
files a Tender Offer Statement with the Securities and
Exchange Commission and CMS.
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2. Employment. The Company hereby agrees to continue to employ and
engage the services of the Executive as _________________________________ of the
Company for the period beginning on the Change of Control Date and ending on the
earlier of the third anniversary of such date or the "Normal Retirement Date" of
the Executive under the Company's Pension Plan (hereinafter "Employment
Period"). The Executive agrees to serve the Company in such position, unless an
event such as described in Section 5 shall occur.
3. Duties. The Executive agrees during the Employment Period to devote
his full business time to the business and affairs of the Company (except for
(i) services on corporate, civic or charitable boards or committees, (ii) such
reasonable time as shall be required for the investment of the Executive's
assets, which do not significantly interfere with the performance of his
responsibilities hereunder and (iii) periods of vacation and sick leave to which
he is entitled) under the policies of the Company in effect on the Change of
Control Date and to use his best efforts to promote the interests of the Company
and to perform faithfully and efficiently the responsibilities assigned to the
Executive on the Change of Control Date.
4. Compensation and Other Terms of Employment.
(a) Base Salary. The Executive shall receive an annual salary
("Base Salary") of not less than his annual salary immediately prior to the
Change of Control Date from the Company (payable in equal semi-monthly
installments).
The Base Salary shall be reviewed and may be increased at any
time and from time to time in accordance with the Company's regular practices,
and shall be reviewed at least annually by the Organization and Compensation
Committee of the Board of Directors of CMS Energy Corporation.
(b) Incentive Compensation. As further compensation, the Executive
will be eligible for awards ("Incentive Compensation") under the Company's
Executive Incentive Compensation Plan or any comparable plan in which the
Executive participated immediately prior to the Change of Control Date.
(c) Retirement and Other Benefit Plans. In addition to Base Salary
and Incentive Compensation, the Executive shall be entitled to receive during
the employment period, at the election of the Executive, either: (i) such
retirement, supplemental retirement, health insurance, thrift plan, stock
options, and other benefits as are afforded to executives of the same rank from
time to time; or (ii) benefits of the type set forth in clause 4(c)(i) above
available to the Executive under the Company's plans and programs on the Change
of Control Date.
(d) Vacation and Employee Benefits.
(i) The Executive shall be entitled to paid vacation and other
employee benefits and perquisites, at the election of the Executive, either: (a)
in accordance with the policies of the Company in effect from time to time for
executive officers; or (b) the vacation, employee benefits and perquisites to
which he was entitled immediately prior to the Change of Control Date.
5. Termination by Death, Disability or After Change of Control.
(a) Death. This Agreement shall terminate automatically upon the
Executive's death. In the event of such termination, the Company shall pay to
the Executive's estate all benefits and compensation accrued hereunder to the
date of death, including a pro rata portion of incentive compensation.
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(b) Disability. In the event the Executive becomes unable by
reason of physical or mental disability to render the services required
hereunder and such disability continues for a continuous period of 9 months, the
employment of the Executive hereunder shall terminate unless the employment is
extended by agreement of the Company and the Executive. Commencing at the date
of termination of employment for disability, the Executive shall receive
annually a sum equal to 50% of his Base Salary at the time of termination of
employment, in monthly installments until his "Normal Retirement Date," or his
death if earlier. Disability payments hereunder shall be reduced by the amount
of other Company-sponsored disability or early retirement benefits paid to the
Executive through insurance or otherwise.
(c) Termination for Cause. The Executive's employment with the
Company may be terminated for Cause. For purposes of this Agreement, "Cause"
shall mean: (i) fraud, theft or misappropriation of property of the Company or
CMS, (ii) gross negligence in the discharge of Executive's duties or (iii)
violations by the Executive of the Company's or CMS Energy's policies regarding
sexual harassment, racial or national origin harassment, accounting controls,
foreign corrupt practices or confidentiality, and, in each case, the severity of
the act or violation shall have been sufficient to warrant termination of
employment as a disciplinary action, consistent with CMS Energy's previous
disciplinary actions. If the Executive's employment is terminated for Cause, the
Company shall pay the Executive his full accrued Base Salary through the date of
such termination at the rate in effect at the time of such termination, and the
Company shall have no further obligations to the Executive under this Agreement.
(d) Other Termination or Resignation of Executive.
(i) The Company may terminate the Executive's employment
without Cause.
(ii) In the event that the Executive determines in his sole
judgment that his position, authority, responsibilities or compensation have
been diminished or rendered less desirable following a Change of Control, the
Executive may terminate his employment with the Company upon written notice
given not later than 12 months after the Change of Control Date.
(iii) In the event of a termination of employment under this
subsection (d), the Executive shall receive a severance payment equal to three
times his Base Salary at the time of termination of employment plus either three
times the incentive compensation paid with respect to the last full calendar
year prior to the termination of employment or, if no incentive compensation was
awarded to the Executive with respect to the last full calendar year prior to
the termination of employment, three times the standard incentive award, as
defined in the Company's Executive Incentive Compensation Plan for the salary
grade of the Executive for such year. The severance payment under this
subsection 5(d)(iii) shall be paid in a lump sum payment, in cash, or as
otherwise directed by the Executive not later than 15 days from termination of
employment. In the event a severance payment is paid to the Executive and such
payment, or a portion thereof, and distributions or payments made under any
other executive compensation plan, including, but not limited to, the CMS Energy
Performance Incentive Stock Plan, are subject to any excise taxes because such
payments constitute a "parachute payment" as described in Section 280G of the
Internal Revenue Code of 1986, as amended, the Company shall pay to the
Executive an additional amount such that the net amount retained by the
Executive after deduction of any excise taxes upon such payments and any
Federal, state and local income tax and excise taxes (including FICA) upon the
additional payment shall be equal to such parachute payment. Executive shall
further be entitled to a continuation of all employee benefits to which an
executive of Executive's salary grade at the Change of Control Date is entitled
from time to time, including without
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limitation all health, dental, life and disability insurance and allowances, but
excluding only the entitlement to receive further awards of stock options, stock
appreciation rights or restricted stock for periods after the termination of
Executive's employment.
(iv) In addition to the rights of Executive set forth in the
preceding paragraph 5(d)(iii), and whether or not Executive's employment has
been terminated, upon a Change of Control shares of restricted stock awarded to
Executive under the Performance Incentive Stock Plan of CMS Energy not yet
vested at the date of the Change of Control shall thereupon vest and be
distributed as provided in that plan.
6. Termination Prior to a Change of Control. If the employment of the
Executive is terminated by the Company, other than for Cause, and there is no
Change of Control, then the Executive shall receive, in 24 equal installments as
if the Executive were an active employee, a severance payment equal to his Base
Salary at the time of termination plus either an amount equal to the incentive
compensation paid with respect to the last full calendar year prior to
termination of employment or, if no incentive compensation was awarded to the
Executive with respect to such year, an amount equal to the standard incentive
compensation award, as defined in CMS Energy's Executive Incentive Compensation
Plan, for the salary grade of the Executive, for such year. Any payment under
this provision shall be contingent upon the Executive's execution of a waiver
and release of all liability by the Company and its agents at the time of
termination. In consideration of and as a condition to the benefit to Executive
contained in this Section 6, Executive agrees for a period of one (1) year
following termination hereunder, (i) that Executive shall not disclose to any
person nor use for any purpose any Confidential Information which came into his
possession of knowledge while employed by the Company. "Confidential
Information" shall mean all information received by him in his capacity as an
employee of the Company which is not at the time of disclosure in the public
domain and (ii) that Executive will not personally participate in or assist any
direct competition with the Company or any subsidiary of the Company. As used in
clause (ii) of the foregoing sentence, the term "direct competition" shall not
be construed to prohibit employment in the energy, electric, gas, or oil
industries, but is intended to prohibit any effort to deprive CMS Energy of a
specific business opportunity known by Executive to be sought by CMS Energy and
to prohibit efforts by Executive to solicit customers doing business of any
particular type with CMS Energy at the time of the termination.
7. No Obligation to Mitigate Damages. The Executive shall not be
obligated to seek other employment in mitigation of amounts payable or
arrangements made under the provisions of this Agreement and the obtaining of
any such other employment shall in no event effect any reduction of the
Company's obligations to make the payments and arrangements required to be made
under this Agreement.
8. Indemnification. The Company shall cause the Executive to be insured
under its Directors and Officers Liability Insurance policy, if any, during his
Employment Period and for a period of not less than five years after the
termination of the Executive's employment for any reason whatsoever. In addition
to insurance and any other indemnification available to the Executive as an
Officer, the Company shall indemnify, to the extent permitted by applicable law,
the Executive for settlements, judgments and reasonable expenses in connection
with activities arising from services rendered by the Executive as a Director or
Officer of the Company or any affiliated company and shall, to the extent
permitted by law, advance to the Executive all reasonable costs and expenses in
defense of any claim or cause of action arising out of or pertaining to the
Executive's employment with CMS or the Company.
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9. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company or, in the case of the Company, Attn:
Secretary, at its principal executive offices.
10. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien or security interest upon
any amounts provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or the laws of descent
and distribution.
11. Tax Withholding. The Company may withhold from any cash amounts
payable to the Executive under this Agreement to satisfy all applicable Federal,
State, local or other income and employment withholding taxes. In the event the
Company fails to withhold such sums for any reason, or withholding is required
for any non-cash payments provided in connection with the Executive's
termination of employment, the Company may require the Executive to promptly
remit to the Company sufficient cash to satisfy all applicable income and
employment withholding taxes.
12. Claims Procedure.
(a) The administrator for purposes of this Agreement shall be the
Company whose address is c/o the Secretary, CMS Energy Corporation and whose
telephone number is 517-788-1030. The "Named Fiduciary" as defined in Section
402(a)(2) of ERISA, also shall be the Company. The Company shall have the right
to designate one or more Company employees as the Administrator and the Named
Fiduciary at any time, and to change the address and telephone number of the
same. The Company shall give the Executive written notice of any change in the
Administrator and Named Fiduciary, or in the address or telephone number of the
same.
(b) The Administrator shall make all determinations as to the
right of any person to receive benefits under the Agreement. Any denial by the
Administrator of a claim for benefits by the Executive ("the Claimant") shall be
stated in writing by the Administrator and delivered or mailed to the Executive
within ten (10) days after receipt of the claim, unless special circumstances
require an extension of time for processing the claim. If such an extension is
required, written notice of the extension shall be furnished to the Executive
prior to the termination of the initial 10-day period. In no event shall such
extension exceed a period of ten (10) days from the end of the initial period.
Any notice of denial shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of this Agreement upon which the
denial is based, a description of any additional material or information
necessary for the Executive to perfect the claim, with an explanation of why
such material or information is necessary, and any explanation of claim review
procedures, written to the best of the Administrator's ability in a manner that
may be understood without legal or actuarial counsel.
(c) A claimant whose claim for benefits has been wholly or
partially denied by the Administrator may request, within ten (10) days
following the date of such denial, in writing addressed to the Administrator, a
review of such denial. The claimant shall be entitled to submit such issues or
comments in writing or otherwise, as the claimant shall consider relevant to a
determination of the claim, and the claimant may include a request for a hearing
in person before the Administrator. Prior to submitting the request, the
claimant shall be entitled to review such documents as the Administrator shall
agree are pertinent to the claim. The claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of the claimant's choice. All
requests for review shall be promptly resolved. The Administrator's decision
with respect to any such review shall be set forth in writing and shall be
mailed
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to the claimant not later than ten (10) days following receipt by the
Administrator of the claimant's request unless special circumstances, such as
the need to hold a hearing, require an extension of time for processing, in
which case the Administrator's decision shall be so mailed not later than twenty
(20) days after receipt of such request.
(d) A claimant who has followed the procedure in paragraphs (b)
and (c) of this section, but who has not obtained full relief on the claim for
benefits, may, within sixty (60) days following the claimant's receipt of the
Administrator's written decision on review, apply in writing to the
Administrator for binding arbitration of the claim before an arbitrator mutually
acceptable to both parties, the arbitration to be held in Jackson, Michigan, in
accordance with the arbitration rules of the American Arbitration Association,
as then in effect. If the parties are unable to mutually agree upon an
arbitrator, then the arbitration proceedings shall be held before three
arbitrators, one of which shall be designated by the Company, one of which shall
be designated by the claimant and the third of which shall be designated
mutually by the first two arbitrators in accordance with the arbitration rules
referenced above. The arbitrator(s) sole authority shall be to interpret and
apply the provisions of this Agreement; the arbitrator(s) shall not change, add
to, or subtract from, any of the Agreement's provisions. The arbitrator(s) shall
have the power to compel attendance of witnesses at the hearing. Any court
having jurisdiction may enter a judgment based upon such arbitration. All
decisions of the arbitrator(s) shall be final and binding on the claimant and
the Company without appeal to any court. Upon execution of this Agreement, the
Executive shall be deemed to have waived any right to commence litigation
proceedings regarding this Agreement outside of arbitration without the express
written consent of the Company.
13. ERISA. This agreement is an unfunded compensation arrangement for a
member of a select group of the Company's management and any exceptions under
ERISA, as applicable to such an arrangement, shall be applicable to this
Agreement.
14. Reporting and Disclosure. The Company, from time to time, shall
provide government agencies with such reports concerning this Agreement as may
be required by law, and the Company shall provide the Executive with such
disclosure concerning this Agreement as may be required by law or as the Company
may deem appropriate.
15. Governing Law. To the extent not preempted by the Federal laws of
the United States, the provisions of this Agreement shall be construed in
accordance with the laws of the State of Michigan.
16. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing and, so long as the Executive lives, no
person, other than the parties hereto, shall have any rights under or interest
in this Agreement or the subject matter hereof.
17. Successor to the Company. Except as may be otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company.
18. Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
19. Prior Agreements. This Agreement supersedes and cancels any
previous Employment Agreement between the Company and the Executive.
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IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first above written.
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(name)
(company name in all caps)
By:
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(name)
Chairman of the Board
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