CMS ENERGY CORP
ACKNOWLEDGEMENT OF RESIGNATION - TAMELA W. PALLAS
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<TYPE>EX-10.(A)
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<FILENAME>k71197exv10wxay.txt
<DESCRIPTION>ACKNOWLEDGEMENT OF RESIGNATION - TAMELA W. PALLAS
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                                                                   EXHIBIT 10(a)



May 16, 2002



Ms. Tamela W. Pallas
402 West Cowan
Houston, TX 77007

         Re:  Acknowledgement of Resignation

Dear Tami:

The purpose of this letter is to acknowledge and accept your resignation of
employment with CMS Marketing, Services and Trading Company ("CMS MS&T")
effective May 16, 2002 and to terminate your Employment Agreement with CMS MS&T
dated December 22, 1999 (the "Employment Agreement") effective May 16, 2002. We
also acknowledge and accept your resignation effective May 16, 2002 of your
position as President and Chief Executive Officer of CMS MS&T and any and all
other offices and directorships which you may hold with CMS Energy Corporation,
CMS MS&T, and any other company or partnership in which such corporations or
their subsidiaries has an interest (collectively, "CMS"). The Employment
Agreement is hereby terminated effective May 16, 2002, including any provisions
in the Employment Agreement that would otherwise survive termination, and the
Employment Agreement shall thereafter have no force or effect. This agreement
shall constitute the sole agreement between you and CMS from this date forward.

By signing this letter, you and CMS agree to all terms set forth herein, and
acknowledge that the below-referenced benefits are all the benefits that you are
entitled to receive from CMS by reason of the termination of your employment or
otherwise, including without limitation under the Employment Agreement and the
CMS MS&T Incentive Compensation Plan.

Benefits

     -   CMS shall pay to you, in 24 equal installments on the 15th and the last
         day of each calendar month commencing May 31, 2002, a severance payment
         equal to $2,028,000, less state, federal, FICA and other applicable
         withholding and authorized deductions.


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     -   CMS shall pay you on or before May 31, 2002, $15,710 for unused
         vacation pay, less state, federal, FICA and other applicable
         withholding and authorized deductions.

     -   CMS shall cause you to be insured under all CMS' Directors and Officers
         Liability insurance policies for your actions as an employee of CMS,
         for a period of not less than five years from the date of this letter,
         on the same basis as current officers and directors of CMS, to the
         extent such coverage is available from any insurer.

     -   CMS shall indemnify you to the full extent permitted by law (including
         your estate, heirs and legal representatives in the event of your
         death, incompetency, insolvency or bankruptcy) against all liability,
         costs, expenses, including reasonable attorneys' fees, judgments,
         penalties, fines and amounts paid in settlement, incurred by or imposed
         upon you in connection with or resulting from any claim or any
         threatened, pending or completed action, suit or proceeding whether
         civil, criminal, administrative, investigative or of whatever nature
         (collectively, a "Proceeding") arising from your service or capacity
         as, or by reason of the fact that you were, a director, officer,
         partner, trustee, employee or agent of CMS or served at the request of
         CMS as a director, officer, partner, trustee, employee or agent of
         another corporation, partnership, joint venture, trust or other
         enterprise.

     -   CMS shall, from time to time, advance to you funds necessary for
         payment of reasonable expenses (including without limitation reasonable
         attorneys' fees and disbursements) incurred or to be incurred in
         connection with any Proceeding, to the full extent permitted by law
         (including without limitation provisions of the Michigan Business
         Corporation Act, codified at Mich. Comp. Laws Ann. Sections
         450.1561-450-1569 (2001) which, among other things, requires you to
         agree to repay all such advances if it is ultimately determined that
         you did not act in good faith and in a manner you believed to be in the
         best interests of CMS, or in the case of a criminal action, you had
         cause to believe your action was unlawful).

     -   The right to indemnification and advancement of expenses provided by
         this letter shall not be deemed exclusive of any other rights to which
         you may be entitled under statute, by-law, agreement, vote of
         shareholder or otherwise.


Covenants and Obligations

By signing this letter, you and CMS also agree to the following:

     -   You shall return all computers, electronic devices, recording equipment
         or other equipment that contain any form of information related to CMS
         and you will not delete any information contained on any such
         equipment. You may copy and retain any information recorded on any CMS
         equipment only to the extent such






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         information is unrelated to CMS. CMS will have two representatives, Ms.
         Karyl Lawson and a CMS IT professional, present at the time you copy
         information you believe to be unrelated to CMS and they will be
         permitted to review such information to determine if such information
         is unrelated to CMS. Any such information so determined to be unrelated
         to CMS shall be copied by such CMS representatives and deleted from the
         computer. CMS shall keep all such information strictly confidential in
         the possession of Belinda Foxworth and such information shall not be
         disclosed, except as required in any Investigation or Proceeding.

     -   CMS shall allow you or your designee (Miroslava Massar) to obtain from
         CMS' offices on or before May 24, 2002, copies of your address book and
         card files maintained electronically or otherwise at CMS. CMS shall
         allow you or your designee (Miroslava Massar) reasonable access to CMS'
         offices to obtain such information.

     -   You shall return to CMS and shall not take or copy in any form or
         manner or dispose or destroy any materials or information related to
         CMS, including documents or information maintained in electronic form.
         You acknowledge that by reason of your position with CMS you have been
         given access to confidential materials or information respecting CMS's
         business affairs. By signing the acknowledgement below, you are
         representing that you have held all such information confidential and
         will continue to do so, and that you will not use such information for
         any business (which term herein includes a partnership, firm,
         corporation or any other entity) without the prior written consent of
         CMS except as required by law, as required to cooperate with any
         Investigation, or as required in any Proceeding in which you may be a
         party or witness. "Materials or information" includes, by way of
         example and not limitation, notes, letters, internal memoranda,
         records, reports, recordings, records of conversations and other
         information concerning CMS's business affairs which you have obtained
         by virtue of your position with CMS and which was not disseminated to
         the public during the term of your employment. You further agree not to
         testify or act in any capacity as a paid or unpaid expert witness,
         advisor or consultant on behalf of any person, individual, partnership,
         firm, corporation or any other person or entity that has or may have
         any claim, demand, action, suit, cause of action, or judgment against
         CMS except to the extent required by law.


     -   You agree that the terms and conditions of your resignation shall
         remain confidential and that you shall not disclose them to any other
         person other than immediate family members, governmental or regulatory
         bodies, and financial and legal advisors under a duty of
         confidentiality, and except to the extent required by law or as
         required in connection with any Investigation. You will not respond to
         or in any way participate in or contribute to any public discussion,
         notice or other publicity concerning or in any way relating to the
         facts and circumstances surrounding your resignation or the terms and
         conditions of this letter, except to the extent required in connection
         with any Investigation. However, you may




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         disclose privately the facts and circumstances surrounding your
         resignation to any person with whom you are seeking employment or
         business affiliation and who is informed of the confidential nature of
         this information. You shall not disclose information regarding this
         letter to any current or former employee of CMS.

     -   You acknowledge and agree that money damages would not be a sufficient
         remedy for any breach by you of the confidentiality provisions stated
         immediately above, and CMS will be entitled to specific performance and
         injunctive relief as remedies for any such breach. These remedies will
         not be deemed to be the exclusive remedies for a breach but will be in
         addition to all other remedies available at law or in equity to CMS.

     -   CMS agrees that the terms and conditions of your resignation shall
         remain confidential and that CMS shall not disclose them to any person
         other than the CMS board of directors, CMS officers and employees who
         have or will participate in preparation of this letter or who are
         responsible for responding to any Investigation, governmental or
         regulatory bodies, financial advisors, and legal advisors, and except
         to the extent required by law or as may be required in connection with
         any Investigation. CMS shall not respond to or in any way participate
         in or contribute to any public discussion, notice or other publicity
         concerning or in any way relating to the facts and circumstances
         surrounding your resignation or the terms and conditions of this
         letter, except to the extent required in connection with any
         Investigation.

     -   The invalidity or unenforceability of any provision of this letter
         shall not affect the validity or enforceability of any other provision
         of this letter.

     -   To the extent not preempted by the Federal laws of the United States,
         the provisions of this letter shall be construed in accordance with the
         laws of the State of Michigan. You and CMS agree that any claim or
         dispute arising out of or related to this agreement shall be resolved
         by binding arbitration before an arbitrator mutually acceptable to both
         parties, the arbitration to be held in Detroit, 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 CMS, one of which
         shall be designated by you 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 letter; the
         arbitrator(s) shall not change, add to, or subtract from, any of this
         letter'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 you and CMS without appeal
         to any court. You shall be deemed to have waived any right to commence
         litigation proceedings regarding this letter outside of arbitration
         without the express written consent of CMS. In any





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         arbitration, the prevailing party may recover all reasonable attorneys'
         fees, court costs, reasonable travel costs, and arbitration fees.

I wish you luck in your future endeavors.


Very Truly Yours,



ACKNOWLEDGEMENT:

By signing below, we acknowledge and agree to the terms set forth in this
letter.


/s/ Tamela W. Pallas
--------------------------------
Tamela W. Pallas



CMS ENERGY CORPORATION


By  /s/ David W. Joos
   ---------------------------------
     David W. Joos
     President and Chief Operating Officer


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