PERFORMANCE INCENTIVE STOCK PLAN
 
 
The CMS Energy Corporation Performance Incentive Stock Plan, first effective
February 3, 1988, is hereby set forth as amended and restated effective June 1,
2004.
 
 
 
                               Article I. Purpose
 
 
 
The CMS Energy Corporation Performance Incentive Stock Plan (hereinafter called
the "Plan") is a Plan to provide incentive compensation to Eligible Persons,
based upon such Eligible Persons' individual contributions to the long-term
growth and profitability of the Corporation, and in order to encourage such
Eligible Persons to identify with shareholder concerns and their current and
continuing interest in the development and financial success of the Corporation.
Because it is expected that the efforts of the key employees, Directors or
advisors selected for participation in the Plan will have a significant impact
on the results of the Corporation's operations in future years, the Plan is
intended to assist the Corporation in attracting and retaining as key employees,
Directors or advisors individuals of superior ability and in motivating their
activities on behalf of the Corporation.
 
 
 
                            Article II. Definitions
 
 
 
 2.1 Definitions: When used in the Plan, the following words and phrases shall
have the following meanings:
 
 
 
     a.  "Beneficiary" means the beneficiary or beneficiaries designated to
         receive the amount, if any, payable under the Plan upon the death of a
         Participant.
 
 
 
     b.  "Board" means the Board of Directors of the Corporation.
 
 
 
     c.  "Committee" means the Organization and Compensation Committee of the
         Board, which shall be comprised in such a manner to comply with the
         requirements, if any, of the New York Stock Exchange or other
         applicable stock markets, Rule 16b-3 (or any successor rule) under the
         Securities Exchange Act of 1934, as amended, and Section 162(m) of the
         Internal Revenue Code of 1986, as amended.
 
 
 
     d.  "Common Stock" means the Common Stock of the Corporation as authorized
         for issuance in its Articles of Incorporation at the time of an award
         or grant under this Plan.
 
 
 
     e.  "Corporation" means CMS Energy Corporation, its successors and assigns,
         and each of its Subsidiaries, or any of them individually.
 
 
 
     f.   "Director" means any person who is a member of the Board of Directors
          of the Corporation or a Subsidiary.
 
 
 
     g.  "Eligible Person" means a key employee, non-employee Director or
         advisor. A key employee must at the end of the fiscal year be a regular
         full-time salaried employee of the Corporation or a Subsidiary, or, to
         the extent the Committee may determine, a person whose services to the
         Corporation terminated before the end of the fiscal year, who, in the
         opinion of the Committee, made a significant contribution to the
         Corporation or a Subsidiary.
 
 
     h.  "Incentive Option" means an option to purchase Common Stock of the
         Corporation which meets the requirements set forth in the Plan and also
         meets the definition of an Incentive Stock Option set forth in Section
         422 of the Internal Revenue Code of 1986, as amended (the "Code").
 
 
 
     i.   "Non-Employee Director" means a member of the Board of Directors of
          the Corporation or a Subsidiary who is not currently an employee of
          the Corporation or a Subsidiary and has not been an employee of the
          Corporation or a Subsidiary within the preceding 3 years.
 
 
 
     j.   "Nonqualified Option" means an option to purchase Common Stock of the
          Corporation which meets the requirements set forth in the Plan but
          does not meet the definition of an Incentive Stock Option set forth in
          Section 422 of the Code.
 
 
     k.  "Officers Incentive Compensation Plan" means the incentive compensation
         plan, including any amendments thereto, authorized and approved by the
         Board to provide incentive compensation to the Officers of the
         Corporation or a Subsidiary.
 
     l.   "Optionee" means any person to whom an option or right has been
          granted or who becomes a holder of an option or right under Article VI
          of the Plan.
 
     m.  "Participant" means a person to whom a grant or award has been made
         which has not been paid, forfeited, or otherwise terminated or
         satisfied under the Plan, or a person included under the Management
         Stock Purchase Plan.
 
     n.  "Performance Criteria" are the factors used by the Committee to
         establish goals to track business measures such as net earnings;
         operating earnings or income; earnings growth; net income (absolute or
         competitive growth rates comparative); cash flow (including operating
         cash flow, free cash flow, discounted cash flow return on investment,
         and cash flow in excess of cost of capital); earnings per share; stock
         price (absolute or peer-group comparative); total shareholder return;
         absolute and/or relative return on common shareholders equity; return
         on shareholders equity (absolute or peer-group comparative); absolute
         and/or relative return on capital; absolute and/or relative return on
         assets; economic value added (income in excess of cost of capital);
         customer satisfaction; expense reduction; sales; or ratio of operating
         expenses to operating revenues.
 
     o.  "Performance Unit" means a contractual right granted to a Participant
         pursuant to Article VIII to receive a designated dollar value equal to
         the value established by the Committee and subject to such terms and
         conditions as are set forth in this Plan and the applicable grant.
 
     p.  "Phantom Share" means a contractual right granted to a Participant
         pursuant to Article VIII to receive an amount equal to the Appreciation
         Value at such time, and subject to such terms and conditions as are set
         forth in this Plan and the applicable grant.
 
     q.  "Restricted Common Stock" means Common Stock delivered subject to the
         restrictions described in Article VII.
 
 
     r.   "Restricted Stock Unit" means a bookkeeping account established
          pursuant to a matching grant to a Participant, as described in Article
          VIII, that is (a) credited with amounts equal to Shares or some other
          unit of measurement specified in the award, (b) subject to
          restrictions and (c) payable in cash or shares.
 
 
     s.  "Shareholders" means the shareholders of the Corporation.
 
 
     t.   "Stock Appreciation Right" shall mean a right, granted in conjunction
          with a Stock Option, to surrender the Stock Option and receive the
          appreciation in value of the optioned shares over the option price.
 
     u.  "Stock Option" means an option to purchase shares of Common Stock,
         granted pursuant to this Plan.
 
     v.  "Subsidiary" means a corporation, domestic or foreign, 50 percent or
         more of the voting stock of which is owned directly or indirectly by
         the Corporation.
 
 
  Article III. Effective Date. Duration, Scope and Administration of the Plan
 
 
 3.1 This Plan shall be effective June 1, 2004, conditioned upon approval of the
     shareholders of the Corporation, and shall continue until May 31, 2009.
 
 3.2 The Committee shall have full power and authority to construe, interpret
     and administer the Plan. All decisions, actions or interpretations of the
     Committee shall be final, conclusive and binding upon all parties. If any
     person objects to any such interpretation or action formally or informally,
     the expenses of the Committee and its agents and counsel shall be
     chargeable against any amounts otherwise payable under the Plan to or on
     account of the Participant or Optionee.
 
 3.3 No member of the Committee shall be personally liable by reason of any
     contract or other instrument executed by him or on his behalf in his
     capacity as a member of the Committee nor for any mistake of judgment made
     in good faith, and the Corporation shall indemnify and hold harmless each
     member of the Committee and each other officer, employee or director of the
     Corporation to whom any duty or power relating to the administration or
     interpretation of the Plan may be allocated or delegated, against any cost
     or expense (including counsel fees) or liability (including any sum paid in
     settlement of a claim with the approval of the Board) arising out of any
     act or omission to act in connection with the Plan unless arising out of
     such person's own fraud or bad faith.
 
 
                  Article IV. Participation, Awards and Grants
 
 
 4.1 Each year the Committee shall designate as Participants and/or Optionees in
     the Plan those Eligible Persons who, in the opinion of the Committee, have
     significantly contributed to the Corporation.
 
 4.2 Each year, the Committee may award shares of Common Stock, Restricted Stock
     Units, and/or may grant Phantom Shares, Performance Units, Stock Options
     which qualify as "Incentive Stock Options" within the meaning of Section
     422 of the Code or Stock Options which do not qualify as Incentive Stock
     Options and/or Stock Appreciation Rights for use in connection with Stock
     Options to each Eligible Person whom it has designated as an Optionee or
     Participant for such year. No Incentive Stock Option will be granted to an
     Eligible Person who is not a full or part-time employee of the Corporation
     or a subsidiary of the Corporation.
 
 
 4.3 Awards of Common Stock or Restricted Stock Units and grants of Stock
     Options (with or without Stock Appreciation Rights), Phantom Shares or
     Performance Units may be made, without amending the Plan, to Eligible
     Persons who are foreign nationals or employed outside the United States or
     both, on such terms and conditions different from those specified in the
     Plan as may, in the judgment of the Committee, be necessary or desirable to
     further the purposes of the Plan or to accommodate differences in local
     law, tax policy or custom. Moreover, the Committee may approve such
     supplements to or alternative versions of the Plan as it may consider
     necessary or appropriate for such purposes without thereby affecting the
     terms of the Plan as in effect for any other purpose; provided, however, no
     such supplement or alternative version shall: (a) increase the
 
 
     number of available shares of Common Stock under Section 5.1; or (b)
     increase the limitations contained in Section 5.3.
 
 
                   Article V. Shares Reserved Under the Plan
 
 
 5.1 There is hereby reserved for award under this Plan 6 million whole shares
     of Common Stock, less the number of shares awarded, granted or purchased
     under the provisions of this Plan which have not been forfeited. To the
     extent permitted by law or the rules and regulations of any stock exchange
     on which the Common Stock is listed, shares of Common Stock with respect to
     which payment or exercise is in cash as well as any shares or options which
     are forfeited may thereafter again be awarded or made subject to grant
     under the Plan. The number of shares made available for option and sale
     under Article VI of this Plan plus the number of shares awarded under
     Article VII of this Plan plus the number of shares awarded or purchased
     under Article VIII of this Plan will not exceed, at any time, the number of
     shares of Common Stock reserved pursuant to this Article V.
 
 
 5.2 If a dividend shall be declared upon the Common Stock payable in shares of
     Common Stock, the number of shares of Common Stock then subject to any such
     option and the number of shares reserved for issuance pursuant to the Plan
     but not yet covered by an option shall be adjusted by adding to each such
     option or share the number of shares which would be distributable thereon
     if such share had been outstanding on the date fixed for determining the
     shareholders entitled to receive such stock dividend. In the event that the
     outstanding shares of the Common Stock shall be changed into or exchanged
     for a different number or kind of shares of stock or other securities of
     CMS Energy Corporation or of another corporation, whether through
     reorganization, recapitalization, stock split-up, combination of shares,
     merger or consolidation or otherwise, then there shall be substituted for
     each share of Common Stock subject to any such option and for each share of
     Common Stock reserved for issuance pursuant to the Plan but not yet covered
     by an option, the number and kind of shares of stock or other securities
     into which each outstanding share of Common Stock shall be so changed or
     for which each such share shall be exchanged. In the event there shall be
     any change, other than as specified above in this Section 5.2, in the
     number or kind of outstanding shares of Common Stock of the Corporation or
     of any stock or other securities into which such Common Stock shall have
     been changed or for which it shall have been exchanged, then if the
     Committee shall in its sole discretion determine that such change equitably
     requires an adjustment in the number or kind of shares theretofore reserved
     for issuance pursuant to the Plan but not yet covered by an option and of
     the shares then subject to an option or options, such adjustment shall be
     made by the Committee and shall be effective and binding for all purposes
     of the Plan and each Stock Option agreement. In the ease of any such
     substitution or adjustment as provided for in this paragraph, the option
     price in each Stock Option agreement for each share covered thereby prior
     to such substitution or adjustment will be the option price for all shares
     of stock or other securities which shall have been substituted for such
     share or to which such share shall have been adjusted pursuant to this
     section. No adjustment or substitution provided for in this Section 5.2
     shall require the Corporation in any Stock Option agreement to sell a
     fractional share, and the total substitution or adjustment with respect to
     each Stock Option agreement shall be limited accordingly.
 
 
 5.3 Individual Grant Limit: The combined maximum shares awarded or granted for
     any one Eligible Person for any one year under this Plan, excluding (a) any
     shares or Restricted Share Units purchased or awarded under the Management
     Stock Purchase Plan in Section 8.3 and (b) any Performance Units awarded
     under Section 8.2, will not exceed 250,000 shares of Common Stock.
 
 
            Article VI. Stock Options and Stock Appreciation Rights
 
 
 6.1 The Committee may from time to time provide for the option and sale of
     shares of Common Stock, which may consist in whole or in part of the
     authorized and unissued Common Stock of the Corporation.
 
 
 6.2 Optionees: The Committee shall determine and designate from time to time,
     in its discretion, those Eligible Persons to whom Stock Options and Stock
     Appreciation Rights are to be granted and who thereby become Optionees
     under the Plan.
 
 
 6.3 Allotment of Shares: The Committee shall determine and fix the number of
     shares of Common Stock subject to options to be offered to each Optionee.
 
 6.4 Option Price: The Committee shall establish the option price at the time
     any option is granted at not less than 100% of the fair market value of the
     stock on the date on which such option is granted; provided, however, that
     with respect to an Incentive Option granted to an employee who at the time
     of the grant owns (after applying the attribution rules of Section 425(d)
     of the Code) more than 10% of the total combined voting stock of the
     Corporation or of any parent or Subsidiary, the option price shall not be
     less than 110% of the fair market value of the stock subject to the
     Incentive Option on the date such option is granted. In no event shall
     Options previously granted under this Plan be re-priced by reducing the
     exercise price thereof, nor shall Options previously granted under this
     Plan be cancelled and replaced by a subsequent re-grant under this Plan of
     Options having an exercise price lower than the options so cancelled.
 
 6.5 Stock Appreciation Rights: At the discretion of the Committee, any Stock
     Option granted under this Plan may, at the time of such grant, include a
     Stock Appreciation Right. A Stock Appreciation Right shall pertain to, and
     be granted only in conjunction with, a related underlying Stock Option, and
     shall be exercisable only at the time and to the extent the related
     underlying Stock Option is exercisable and only if the fair market value of
     the Common Stock of the Corporation exceeds the Stock Option price in the
     related underlying Stock Option. An Optionee who is granted a Stock
     Appreciation Right may elect to surrender the related underlying Stock
     Option with respect to all or part of the number of shares subject to the
     related underlying Stock Option and exercise in lieu thereof the Stock
     Appreciation Right with respect to the number of shares as to which the
     Stock Option is surrendered.
 
     The exercise of the underlying Stock Option shall terminate the related
     Stock Appreciation Right to the extent of the number of shares purchased
     upon exercise of the underlying Stock Option. The exercise of a Stock
     Appreciation Right shall terminate the related underlying Stock Option to
     the extent of the number of shares with respect to which the Stock
     Appreciation Right is exercised. Upon exercise of a Stock Appreciation
     Right, an Optionee shall be entitled to receive, without payment to the
     Company (except for applicable withholding taxes), an amount equal to the
     excess of (i) the then aggregate fair market value of the number of shares
     with respect to which the Optionee exercises the Stock Appreciation Right,
     over (ii) the aggregate Stock Option price per share for such number of
     shares. Such amount may be paid by the Corporation, at the election of the
     Optionee, in cash, Common Stock of the Corporation or any combination
     thereof; provided, however, that the Committee shall have sole discretion
     to approve or disapprove an election of an Optionee to receive cash upon
     exercise of a Stock Appreciation Right.
 
 6.6 Granting and Exercise of Stock Options and Stock Appreciation Rights: The
     granting of Stock Options and Stock Appreciation Rights hereunder shall be
     effected in accordance with determinations made by the Committee pursuant
     to the provisions of the Plan, by execution of instruments in writing in
     form approved by
 
 
     the Committee. The Committee may grant Stock Options that provide for the
     grant of a subsequent restoration Stock Option if the exercise price has
     been paid for by tendering shares to the Company. Any restoration Stock
     Option shall be for the number of shares tendered in exercising the
     predecessor option. The restoration Stock Option exercise price shall be
     the then-current Fair Market Value, and the term of such restoration option
     may not extend beyond the remaining term of the original option.
 
     Each Stock Option and Stock Appreciation Right granted hereunder shall be
     exercisable at any such time or times or in any such installments as may be
     determined by the Committee at the time of the grant, subject to the
     limitation that for each Incentive Option and related Stock Appreciation
     Right granted, a maximum of $100,000 (based on the price at the date of
     grant) may be exercised per year, plus any unused carry-over from a
     previous year(s). Except as provided in Section 6.10, Stock Options and
     Stock Appreciation Rights may be exercised only while the Optionee is an
     employee, Non-Employee Director or advisor of the Corporation.
 
     Successive Stock Options and Stock Appreciation Rights may be granted to
     the same Optionee, whether or not the Stock Option(s) and Stock
     Appreciation Right(s) previously granted to such Optionee remain
     unexercised. An Optionee may exercise a Nonqualified Option or related
     Stock Appreciation Right, if then exercisable, notwithstanding that Stock
     Options and Stock Appreciation Rights previously granted to such Optionee
     remain unexercised.
 
 6.7 Payment of Stock Option Price: At the time of the exercise in whole or in
     part of any Stock Option granted hereunder, payment of the option price in
     full in cash or in Common Stock of the Corporation shall be made by the
     Optionee for all shares so purchased. No Optionee shall have any of the
     rights of a Shareholder of the Corporation under any such Stock Option
     until the actual issuance of shares to said Optionee, and prior to such
     issuance no adjustment shall be made for dividends, distributions or other
     rights in respect of such shares, except as provided in Section 5.2.
 
 6.8 Nontransferability of Stock Options and Stock Appreciation Rights: No Stock
     Option or Stock Appreciation Right granted under the Plan to an Optionee
     shall be transferable by such Optionee otherwise than by will, pursuant to
     a valid Domestic Relations Order which limits the rights of the alternate
     payee to those available to the Optionee, or by the laws of descent and
     distribution except that the Optionee may transfer to an immediate family
     member or a family trust for estate planning purposes, and such Stock
     Option and Stock Appreciation Right shall be exercisable, during the
     lifetime of the Optionee, only by the Optionee or by a member of such
     Optionee's immediate family or by the family trust.
 
 6.9 Term of Stock Options and Stock Appreciation Rights: If not sooner
     terminated, each Stock Option and Stock Appreciation Right granted
     hereunder shall expire not more than ten years from the date of the
     granting thereof; provided, that with respect to an Incentive Option and a
     related Stock Appreciation Right granted to an Optionee who, at the time of
     the grant, owns (after applying the attribution rules of Section 425(d) of
     the Code) more than 10% of the total combined voting stock of all classes
     of stock of the Corporation or of any parent or Subsidiary, such Incentive
     Option and Stock Appreciation Right shall expire not more than five years
     after the date of granting thereof.
 
6.10 Termination of Employment: If the employment of an Optionee by the
     Corporation shall be terminated due to a reason other than the Optionee's
     death, the Committee may, in its discretion, permit the exercise of Stock
     Options and Stock Appreciation Rights granted to such Optionee for a period
     not to exceed one year following such termination of employment or three
     years following termination of employment upon the Optionee's
 
     disability as determined by the Committee or retirement in accordance with
     a pension plan of the Corporation; provided, however, that no Incentive
     Option or related Stock Appreciation Right may be exercised after three
     months following an Optionee's termination of employment, unless such
     termination of employment is due to the Optionee's death or disability. If
     the termination is due to the Optionee's disability, the Committee may
     permit the Incentive Option and related Stock Appreciation Right to be
     exercised for one year following the Optionee's termination of employment.
     If the employment of an Optionee by the Corporation shall be terminated due
     to the Optionee's death, any Stock Option, or related Stock Appreciation
     Right, transferred to a family trust or by will or by the laws of descent
     and distribution, may be exercised for one year following the Optionee's
     death. In no event, however, shall a Stock Option or Stock Appreciation
     Right be exercisable subsequent to its expiration date and, furthermore, a
     Stock Option or Stock Appreciation Right may only be exercised after
     termination of an Optionee's employment to the extent exercisable on the
     date of termination of employment. Upon the termination of employment of an
     Optionee by the Corporation, every Stock Option and related Stock
     Appreciation Right shall terminate, except as otherwise specifically
     provided in this Plan. Further, no Stock Option or related Stock
     Appreciation Right may be exercised after such termination of employment,
     except within a time period provided in this Section 6.10.
 
6.11 Termination of Service: If a Non-Employee Director ceases to be a member of
     the Board for any reason, or if an advisor no longer provides service to
     the Corporation, the Non-Employee Director or advisor may exercise any
     Option or related Stock Appreciation Right for one year following such
     termination of service. In no event, however, shall a Stock Option or Stock
     Appreciation Right be exercisable subsequent to its expiration date and,
     furthermore, a Stock Option or Stock Appreciation Right may only be
     exercised after termination of an Optionee's service to the extent
     exercisable on the date of termination of service. Further, no Stock Option
     or related Stock Appreciation Right may be exercised after such termination
     of service, except within a time period provided in this Section 6.11.
 
6.12 Investment Purpose: Any shares of Common Stock subject to option under the
     Plan may be made subject to such other restrictions as the Committee deems
     advisable, including without limitation provisions to comply with Federal
     and state securities laws. In making determinations of legal requirements
     the Committee shall rely on an opinion of counsel for the Corporation.
 
6.13 Withholding Payments: If upon the exercise of a Nonqualified Option and/or
     a Stock Appreciation Right or as a result of a disqualifying disposition
     (within the meaning of Section 422 of the Code) of shares acquired upon
     exercise of an Incentive Option, there shall be payable by the Corporation
     any amount for income tax withholding, either the Corporation shall
     appropriately reduce the amount of stock or cash to be paid to the Optionee
     or the Optionee shall pay such amount to the Corporation to reimburse it
     for such income tax withholding.
 
6.14 Restrictions on Sale of Shares: If, at the time of exercise of any Stock
     Option or Stock Appreciation Right granted hereunder, the Corporation is
     precluded by any legal, regulatory or contractual restriction from selling
     and/or delivering shares pursuant to the terms of such Stock Option or
     Stock Appreciation Right, the sale and delivery of the shares may be
     delayed until the restrictions are resolved and only cash may be paid upon
     exercise of the Stock Appreciation Right. At any time during such delay,
     the Committee, in its discretion, may permit the Optionee to revoke a Stock
     Option exercise, in which event any corresponding Stock Appreciation Right
     shall be reinstated.
 
 
6.15 Compliance With Rule 16b-3: Notwithstanding any other provision of the Plan
     to the contrary, the administration of the Plan and the grant, exercise and
     terms of Stock Appreciation Rights hereunder shall comply with Rule 16b-3,
     or any successor rule, under the Securities Exchange Act of 1934, as
     amended (the "Exchange Act").
 
 
                        Article VII. Restricted Common Stock
 
 
 7.1 Awards: The Committee may from time to time award restricted shares of
     Common Stock to any Eligible Person it has designated as a Participant for
     such year. Awards shall be made to Eligible Persons in accordance with such
     rules as the Committee may prescribe. The Committee may also award
     restricted shares of Common Stock conditioned on the attainment of a
     performance goal that relates to Shareholder return, measured by
     Performance Criteria as determined by the Committee as set forth in the
     award.
 
 7.2 Restrictions:
 
 
     a.  Any shares of Common Stock awarded or issued under the Plan may be made
         subject to such other restrictions as the Committee deems advisable,
         including without limitation provisions to comply with Federal and
         state securities laws. In making determinations of legal requirements
         the Committee shall rely on an opinion of counsel for the Corporation.
         The restrictions with respect to the Common Stock awarded will extend
         for such period, or periods, of at least twelve months from and after
         the date of the award, as may be determined for each award by the
         Committee (the Award Period). Notwithstanding the foregoing, the
         restrictions shall terminate upon the death of the Participant or,
         within the discretion of the Committee, upon Participant's retirement
         pursuant to a pension plan of the Corporation on or after Participant's
         62nd birthday, except as may otherwise be determined to be necessary or
         desirable in the opinion of the Committee, to comply with the law or to
         prevent Restricted Common Stock from being subject to Federal income
         tax prior to the termination of restrictions.
 
 
 
     b.  Whenever shares of Common Stock are awarded to a Participant, such
         shares shall be outstanding, and stock certificates shall be issued in
         the name of the Participant, which certificates may bear a legend
         stating that the shares are issued subject to the restrictions set
         forth in the Plan. All certificates issued for shares of Common Stock
         awarded under the Plan shall be deposited for the benefit of the
         Participant with the Secretary of the Corporation as custodian until
         such time as the shares are vested and transferable.
 
 
 
     c.  A Participant who is awarded shares of Common Stock under the Plan
         shall have full voting rights on such shares, whether or not the shares
         are vested or transferable.
 
 
 
     d.  Shares of Common Stock awarded to a Participant under the Plan, whether
         or not vested or transferable, may have full dividend rights as
         determined by the Committee. However, if shares or securities are
         issued as a result of a merger, consolidation or similar event, such
         shares shall be issued in the same manner, and subject to the same
         deposit requirements, vesting provisions and transferability
         restrictions as the shares of Common Stock which have been awarded.
 
 
 
     e.  Deliveries of Restricted Common Stock by the Corporation may consist in
         whole or in part of the authorized and unissued Common Stock of the
         Corporation (at such time or times and in such manner as it may
         determine). The Restricted Common Stock shall be paid and delivered as
         soon as practicable after the award period in accordance with Section
         7.3.
 
     f.   The shares may not be sold, exchanged, transferred, pledged,
          hypothecated, or otherwise disposed of by the Participant until their
          release. However, nothing herein shall preclude a Participant from
          making a gift of any shares of Restricted Common Stock to a spouse,
          child, stepchild, grandchild, parent or sibling, or legal dependent of
          the Participant or to a trust of which the beneficiary or
          beneficiaries of the corpus and the income shall be either such a
          person or the Participant; provided that, the Restricted Common Stock
          so given shall remain subject to the restrictions, obligations and
          conditions described in this Article VII.
 
     g.  If a Participant has received an award pursuant to the provisions of
         the Plan, is employed by the Corporation or remains a Non-Employee
         Director or is an advisor at the end of the award period and the
         performance goals have been met, then the Participant shall be fully
         vested, at the end of the award period, in the shares of Common Stock
         awarded to the Participant for that award period.
 
     h.  In the event of termination of employment of an employee Participant or
         termination of service of a Non-Employee Director or advisor prior to
         the last day of an award period for any reason other than Participant's
         death, all rights to any shares of Restricted Common Stock held in a
         deposit account with respect to such award, including any additional
         shares delivered with respect to such shares as described in subsection
         7.2d above shall be forfeited to the Corporation. However, the
         Committee may, if the Committee determines that the circumstances
         warrant such action, approve the distribution of all or any part of the
         Restricted Common Stock which would otherwise be forfeited.
 
 7.3 Distribution of Restricted Common Stock
 
     a.  Distribution After Award Period: Except as otherwise provided,
         distribution of vested awards of Common Stock shall be made as soon as
         practicable after the last day of the applicable award period in the
         form of full shares of Common Stock, with fractional shares, if any,
         being awarded in cash.
 
     b.  Distribution After Death of Participant: Upon the death of the
         Participant, either before or after retirement, any shares of
         Restricted Common Stock then held shall, subject to this Article VII,
         be delivered within a reasonable time under the circumstances to
         Participant's Beneficiary or, in the absence of an appropriate
         Beneficiary designation to the Participant's estate, in such one or
         more installments as the Committee may then determine.
 
 7.4 Designation of Beneficiaries
 
     If a Participant dies prior to the receipt in full of any award under the
     Plan to which the Participant is entitled, the award shall be distributed
     to the Participant's Beneficiary or, in the absence of a Beneficiary
     designation, to the Participant's estate. The designation of a Beneficiary
     shall be made in writing on a form prescribed by and filed with the
     Committee prior to the Participant's death. If the Committee is in doubt as
     to the right of any person to receive such amount, the Committee may retain
     such amount, without liability for any interest thereon, until the rights
     thereto are determined, or the Committee may pay such amount into any court
     of appropriate jurisdiction and such payment shall be a complete discharge
     of the liability of the Plan and the Corporation therefor.
 
 7.5 Transferability: Subject to the provision of this Article VII, shares of
     Common Stock awarded to a Participant will become freely transferable by
     the Participant only at the end of the award period established with
     respect to such shares.
 
 7.6 Distribution to Person Other Than Employee: If the Committee shall find
     that any person to whom any award is payable under this Article VII of the
     Plan is unable to care for such person's affairs because of illness or
     accident, or is a minor, or has died, then any payment due Participant or
     Participant's estate (unless a prior claim therefor has been made by a duly
     appointed legal representative), may, if the Committee so directs the
     Corporation, be paid to Participant's spouse, a child, a relative, an
     institution maintaining or having custody of such person, or any other
     person deemed by the Committee to be a proper recipient on behalf of such
     person otherwise entitled to payment. Any such payment shall be a complete
     discharge of the liability of the Committee and the Corporation therefor.
 
 
 7.7 Restricted Common Stock for employee Participants is intended to constitute
     an unfunded deferred compensation arrangement for a select group of
     management or highly compensated personnel.
 
 7.8 A forfeiture of shares of Common Stock pursuant to subsection 7.2h of the
     Plan shall effect a complete forfeiture of voting rights, dividend rights
     and all other rights relating to the award or grant as of the date of
     forfeiture.
 
 
 7.9 Each distribution of Common Stock under this Article VII of the Plan shall
     be made subject to such federal, state and local tax withholding
     requirements as apply on the distribution date. For this purpose, the
     Committee may provide for the withholding of shares of Common Stock or
     allow a Participant to pay to the Corporation funds sufficient to satisfy
     such withholding requirements.
 
 
 
  Article VIII. Phantom Shares, Performance Units, Restricted Stock Units and
                         Management Stock Purchase Plan
 
 
 8.1 Phantom Shares.
 
 
     a.  Grants of Phantom Shares. The Committee may from time to time grant
         Phantom Shares, the value of which is determined by reference to a
         share of Common Stock on terms and conditions as the Committee, in its
         discretion, may from time to time determine. Each grant of Phantom
         Shares shall specify the number of Phantom Shares granted, the Initial
         Value of such Phantom shares which shall not be less than 100% of the
         Fair Market Value of the Common Stock as of the date of grant, the
         Valuation Dates, the number of Phantom Shares whose appreciation value
         shall be determined on each such Valuation Date, any applicable vesting
         schedule for such Phantom Shares, and any applicable limitation on
         payment for such Phantom Shares.
 
 
 
     b.  Appreciation Value.
 
 
        (i) Valuation Dates; Measurement of Appreciation Value. The Committee
            shall provide for one or more Valuation Dates on which the
            Appreciation Value of the Phantom Shares granted shall be measured
            and fixed, and shall designate the number of such Phantom Shares
            whose Appreciation Value is to be calculated on each such Valuation
            Date.
 
        (ii) Payment of Appreciation Value. Except as otherwise provided in this
             Section 8.1, the Appreciation Value of a Phantom Share shall be
             paid to a Participant in cash in a lump sum as soon as practicable
             following the Valuation Date applicable to such Phantom Share. The
             Committee may in its discretion, establish and set forth a maximum
             dollar amount payable under the Plan for each Phantom Share
             granted.
 
 
        (iii) The Committee may, in its discretion, provide that Phantom Shares
              shall vest (subject to such terms and conditions as the Committee
              may provide in the award) over such period of time, from the date
              of grant, as may be specified in a vesting schedule contained in
              the grant.
 
        (iv) Termination. In the event of termination of employment of an
             employee Participant or termination of service of a non-Employee
             Director or advisor prior to one or more Valuation Dates, unless
             the Committee in its discretion determines otherwise, the
             Appreciation Value for any Phantom Share to which the Participant's
             Rights are vested, shall be the lesser of the Appreciation Value as
             of the termination date or the Appreciation Value of such Phantom
             Share calculated as of the originally scheduled Valuation Date
             applicable thereto in accordance with Section 8.1(b)(i). Unless the
             Committee, in its discretion determines otherwise, the Appreciation
             Value so determined for each such vested outstanding Phantom Share
             shall then be payable to the Participant or the Participant's
             estate following the originally scheduled Valuation Date applicable
             thereto in accordance with Section 8.1(b)(ii). Upon a termination
             as described in this Section 8.1(b)(iv), all rights with respect to
             Phantom Shares that are not vested as of such date will be
             relinquished.
 
 8.2 Performance Units. The Committee may, in its discretion, grant Performance
     Units to Eligible Persons. Each Performance Unit will have an initial value
     that is established by the Committee at the time of grant and credited to a
     bookkeeping account established for the Participant, but no Participant
     shall be granted Performance Units during any one fiscal year with an
     initial value in excess of $2.5 million. The Committee will set performance
     periods and objectives and other terms and conditions of the grant based
     upon Performance Criteria as determined by the Committee that, depending
     upon the extent to which they are met, will determine the value of
     Performance Units that will be paid out to the Participant. The Committee
     may pay earned Performance Units in cash, Common Stock or a combination
     thereof.
 
     Unless otherwise set forth in the grant, in the event the employment of an
     employee Participant is terminated during a performance period due to
     death, disability or retirement under the provisions of the Pension Plan
     the Participant will receive a prorated payout of Performance Units. In the
     event the employment is terminated for any other reason, then all
     Performance Units will be forfeited. If the service of a Non-Employee
     Director or advisor is terminated during a performance period, the
     Participant will receive a prorated payout of Performance Units.
     Notwithstanding the above, no payouts will be made to the extent that
     objectives other than the duration of the performance period have not been
     met except to the extent that the Committee in its discretion decides to
     waive any such other achievement or objectives.
 
 
 8.3 Management Stock Purchase Plan. The Committee may permit select employee
     Participants to elect to receive all or a portion of their incentive
     payment under the Officer's Incentive Compensation Plan in the form of
     cash, shares of Restricted Common Stock, shares of Restricted Stock Units
     or a combination of these and any such election of Restricted Common Stock
     and/or Restricted Stock Units shall be referred to for purposes of this
     Plan as a purchase. The Committee may also award additional shares of
     Restricted Common Stock or Restricted Stock Units to such select
     Participants who elect to receive their incentive payment in the form of
     Common Stock or Restricted Stock Units, provided that the value of all such
     additional Common Stock and Restricted Stock Units awarded to any one
     Participant will not exceed $2.5 million for any fiscal year. Shares of
     Common Stock and Restricted Stock Units will be granted under and governed
     by the terms and conditions of this Plan (other than the limitations with
     respect to maximum shares under Section 5.3) as well as any terms of the
     grant. Each grant will set forth the extent to which the Participant has
     the right to retain unvested Restricted Common Stock or Restricted Stock
     Units after his or her termination of employment with the Corporation or a
 
 
     Subsidiary. These terms will be determined by the Committee in its sole
     discretion, need not be uniform among all grants, and may reflect, among
     other things, distinctions based on the reasons for termination of
     employment.
 
 
          Article IX. Amendment, Duration and Termination of the Plan
 
 
 
 9.1 Duration of Plan. No grants or awards may be made under this Plan after May
     31, 2009. Any grant or award effective on or prior to May 31, 2009 will be
     continue to vest and otherwise be effective after the expiration of this
     Plan in accordance with the terms and conditions of this Plan as well as
     any requirements set forth in the grant or award.
 
 
 
 9.2 Right To Amend, Suspend or Terminate Plan: Except as provided in Section
     9.5 below, the Board reserves the right at any time to amend, suspend or
     terminate the Plan in whole or in part and for any reason and without the
     consent of any Optionee, Participant or Beneficiary; provided, that no such
     amendment shall:
 
 
 
     a. Change the Stock Option price or adversely affect any Stock Option or
        Stock Appreciation Right outstanding under the Plan on the effective
        date of such amendment or termination, or
 
 
 
     b. Adversely affect any award or grant then in effect or rights to receive
        any amount to which Participants or Beneficiaries have become entitled
        prior to such amendment, or
 
 
 
     c. Unless approved by the Shareholders of the Corporation, increase the
        aggregate number of shares of Common Stock reserved for award or grant
        under the Plan, change the group of Eligible Persons under the Plan or
        materially increase benefits to Eligible Persons under the Plan.
 
 
 
 9.3 Periodic Review of Plan: In order to assure the continued realization of
     the purposes of the Plan, the Committee shall periodically review the Plan,
     and the Committee may suggest amendments to the Board as it may deem
     appropriate.
 
 
 
 9.4 Amendments May Be Retroactive: Subject to Section 9.1 above, any amendment,
     modification, suspension or termination of any provisions of the Plan may
     be made retroactively.
 
 
 
 9.5 Change in Control: Notwithstanding any other provisions in the Plan, in the
     event of a Change in Control as defined under any written employment
     contract or agreement between the Corporation or a subsidiary and an
     Officer of the Corporation or a subsidiary, awards of Common Stock granted
     under this Plan, as well as grants of any Performance Units, Restricted
     Stock Units and the Appreciation Value of Phantom Shares, shall vest to the
     extent, if any, provided for in the written employment agreement or
     contract or in such separate contractual arrangement relating to such an
     award or grant as may exist from time to time. Notwithstanding any other
     provisions of the Plan, the provisions of this Section 9.5 may not be
     amended after the date a Change in Control occurs.
 
 
 
                         Article X. General Provisions
 
 
 
10.1 Rights to Continued Employment, Award or Option: Nothing contained in the
     Plan or in any grant or award under this Plan shall give any employee the
     right to be retained in the employment of the Corporation or affect the
     right of the Corporation to terminate the employee's employment at any
     time. The adoption of the Plan shall not constitute a contract between the
     Corporation and any employee. No Eligible Person who is an employee
 
 
     shall receive any right to be granted an option, right or award hereunder
     nor shall any such option, right or award be considered as compensation
     under any employee benefit plan of the Corporation.
 
 
10.2 Governing Law: The provisions of this Plan and all rights thereunder shall
     be governed by and construed in accordance with the laws of the State of
     Michigan.
 
 
IN WITNESS WHEREOF, execution is hereby effected.
 
 
ATTEST:
 
 
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                                   Secretary
 
 
CMS ENERGY CORPORATION
 
 
 
By:
 
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                      Chairman and Chief Executive Officer