EMPLOYMENT AGREEMENT
AGREEMENT
by and between Borders Group, Inc., a Michigan corporation (the “Company”)
and
Xxxxxx X. Xxxxx (“Executive”)
dated
as of the 13th
day of
July, 2006.
WHEREAS,
the Company is desirous of employing Executive in an executive capacity on
the
terms and conditions, and for the consideration, hereinafter set forth, and
Executive is desirous of being employed by the Company on such terms and
conditions and for such consideration.
NOW,
THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, the Company and Executive agree as
follows:
1. Employment
Period.
The
initial term of Executive’s employment will commence on July 17, 2006 (the
“Effective
Date”)
and
end on the third anniversary of the Effective Date (the “Initial
Employment Period”),
unless terminated earlier pursuant to Section 3 of this Agreement; provided,
however,
that as
of the expiration date of each of (a) the Initial Employment Period and (b)
if
applicable, any Renewal Period (as defined below), the Employment Period will
automatically be extended for a one-year period (each, a “Renewal
Period”),
unless either party gives at least ninety (90) days written notice prior to
such
expiration date of its intention not to renew the Employment Period (the Initial
Employment Period and each subsequent Renewal Period shall constitute the
“Employment
Period”).
The
Employment Period shall automatically end upon termination of Executive’s
employment for any reason. Notwithstanding anything to the contrary contained
herein, (i) absent the occurrence of a Change of Control (as defined below)
prior thereto, the Employment Period shall automatically terminate on the
five-year anniversary of the Effective Date, unless terminated prior thereto
pursuant to the terms hereof, and (ii) upon a Change of Control occurring prior
to the five-year anniversary of the Effective Date, the Employment Period shall
automatically be extended so as to end no earlier than the two-year anniversary
of the Change of Control. Upon Executive’s termination of employment with the
Company for any reason, he shall immediately resign all positions (including
directorships) with the Company or any of its subsidiaries or affiliates.
2. Terms
of Employment.
(a)
Position
and Duties.
(i)
During
the Employment Period, Executive shall serve as President and Chief Executive
Officer of the Company with such authority, duties and responsibilities as
are
commensurate with such position and as may be consistent with the Company’s
practices from time to time with respect to the management of its subsidiaries
and businesses, and Executive’s services shall be performed at the Company’s
headquarters in the Ann Arbor, Michigan area, subject to reasonable business
travel at the Company’s request. In addition, effective as of the Effective
Date, the Company shall cause Executive to be appointed as a member of the
Board
of Directors of the Company (the “Board
of Directors”),
and
shall nominate Executive for election and re-election to the Board of Directors
as and when Executive’s term expires while Executive remains employed under this
Agreement. Executive shall report directly to the Board of
Directors.
(ii) During
the Employment Period, and excluding any periods of vacation and sick leave
to
which Executive is entitled, Executive agrees to devote substantially all of
his
business attention and time to the business and affairs of the Company and,
to
the extent necessary to discharge the responsibilities assigned to Executive
hereunder, to use his reasonable best efforts to perform faithfully and
efficiently such responsibilities and not to engage, directly or indirectly,
in
any other business or businesses, whether or not similar to that of the Company,
except with the consent of the Board of Directors. The foregoing
notwithstanding, the parties recognize and agree that Executive may engage
in
non-profit, civic and charitable activities that do not conflict with the
business and affairs of the Company or interfere with Executive’s performance of
his duties hereunder without the necessity of obtaining the consent of the
Board
of Directors.
(b) Compensation.
(i) Base
Salary.
During
the Employment Period, Executive shall receive an annual base salary
(“Base
Salary”)
of
$775,000. The Base Salary shall be reviewed from time to time for increase
(but
not decrease) in accordance with the Company’s regular practices, and, if
increased, the term “Base
Salary”
shall
refer to such increased amount. Executive’s Base Salary shall be pro
rated
to take
into account any fiscal year of the Company during which Executive is not
employed by the Company for the entire fiscal year of the Company. Executive’s
Base Salary shall be paid in equal installments in accordance with the Company’s
standard policy regarding payment of compensation to executives.
(ii) Annual
Bonus.
With
respect to each fiscal year of the Company ending during the Employment Period,
Executive shall be eligible to receive an annual bonus (the “Annual
Bonus”)
pursuant to the terms of the Company’s Annual Incentive Bonus Plan or any
successor plan of the Company (“AIP”)
in an
amount determined by the Compensation Committee of the Board of Directors (the
“Compensation
Committee”),
based
on performance goals established by the Compensation Committee in accordance
with the terms of the AIP, and with a target Annual Bonus equal to 80% of
Executive’s Base Salary as in effect at the beginning of the Company’s fiscal
year (the “Target
Bonus”),
but
subject to a maximum Annual Bonus equal to 160% of Base Salary; provided,
however,
that
with respect to the Company’s fiscal year 2006, Executive’s Annual Bonus shall
be based on his Base Salary at the beginning of the Employment Period and shall
be pro
rated
to take
into account the fact that Executive did not commence service with the Company
until July 17, 2006, such amount to be determined by the Compensation Committee.
Pursuant to the terms of the AIP, Executive shall receive at least twenty
percent of each Annual Bonus in the form of restricted shares of common stock
of
the Company (“Restricted
Common Stock”).
Subject to the terms of the AIP and any deferral election procedures thereunder,
Executive may elect to receive up to 100% of each Annual Bonus in the form
of
Restricted Common Stock. Any Annual Bonus award made pursuant to this Section
2(b)(ii) (including any Restricted Common Stock granted in lieu of a cash
payment) shall be subject to the applicable terms of the AIP and, in the case
of
Restricted Common Stock granted in satisfaction of Annual Bonus, shall be on
similar terms and conditions as those applicable to the awards granted to
similarly situated executives of the Company in respect of the same fiscal
year
and otherwise shall be in accordance with the Company’s 2004 Long-Term Incentive
Plan or any successor plan of the Company (the “LTIP”).
(iii) Annual
LTIP Awards.
With
respect to each fiscal year of the Company ending during the Employment Period
(other than the 2006 fiscal year), Executive shall be eligible to receive an
annual long-term incentive award under the LTIP in an amount determined by
the
Compensation Committee, which award shall vest based on the achievement of
performance goals or such other criteria as established by the Compensation
Committee in accordance with the terms of the LTIP. For fiscal years of
the Company commencing after the Company’s 2006 fiscal year, the target value of
Executive’s annual LTIP award shall equal two times Executive’s Base
Salary. For
the
Company’s 2006 fiscal year, Executive shall be granted a number of restricted
share units (“2006
Restricted Share Units”)
with a
Fair Market Value (as defined in the LTIP) on the grant date equal to $1
million. The 2006 Restricted Share Units shall
be
deemed to be earned and vested on January 31, 2008, subject solely to
Executive’s continued employment with the Company through such date, and the
number of shares of Common Stock underlying the 2006 Restricted Share Units
shall not be subject to increase or decrease based on performance above or
below
target. Except as expressly provided herein, any annual long-term incentive
awards granted pursuant to this Section 2(b)(iii) shall be on similar terms
and
conditions as are applicable to annual long-term incentive awards granted to
similarly situated executives of the Company with respect to the same fiscal
year and otherwise shall be in accordance with the terms of the
LTIP.
(iv) Management
Stock Purchase Right (“MSPR”).
A. Executive
has elected to pay $1 million to purchase shares of Restricted Common Stock
for
a per share purchase price equal to 80% of the Fair Market Value of the Common
Stock on the purchase date (such shares purchased pursuant to this sentence,
the
“MSPR
Shares”),
one
hundred percent of which MSPR Shares shall vest on the three-year anniversary
of
the purchase date, subject to Executive’s continued employment with the Company
through the three-year anniversary of the purchase date. The MSPR Shares shall
otherwise be subject to the applicable terms of the LTIP and the Agreement
Regarding Restricted Shares Acquired Pursuant to Management Stock Purchase
Right
in the form previously provided to Executive.
B. In
addition, as soon as reasonably practicable after the later to occur of the
Effective Date and the date Executive purchases the MSPR Shares, the Company
shall grant to Executive an option (the “MSPR
Option”)
to
purchase a number of shares of Common Stock equal to the lesser of the number
of
MSPR Shares and 50,000 shares, with a per share exercise price equal to the
Fair
Market Value of the Common Stock on the grant date. The MSPR Option shall vest
on the three-year anniversary of the grant date, subject to Executive’s
continued employment with the Company through the three-year anniversary of
the
grant date. The MSPR Option shall otherwise be subject to the applicable terms
of the LTIP.
(v) Inducement
Option.
As an
inducement to Executive’s willingness to enter into this Agreement, as soon as
reasonably practicable after the Effective Date, the Company shall grant to
Executive an option (the “Inducement
Option”)
to
purchase 400,000 shares of Common Stock with an exercise price equal to the
Fair
Market Value of the Common Stock on the grant date, which option shall vest
ratably (in equal increments) on the first, second and third anniversaries
of
the grant date, subject to Executive’s continued employment with the Company
through the applicable vesting date. The Inducement Option shall otherwise
be
subject to the applicable terms of the LTIP.
(vi) Other
Employee Benefit Plans.
During
the Employment Period, Executive shall be eligible to participate in the
Company’s employee benefit plans, and to receive vacation and perquisites at the
same level as other senior executives of the Company.
(vii) Expenses.
Upon
presentation of appropriate documentation, Executive shall be reimbursed in
accordance with the Company’s expense reimbursement policy for all reasonable
and necessary business and entertainment expenses incurred in connection with
the performance of Executive’s duties hereunder.
(viii) Relocation
Assistance.
The
Company shall provide Executive with a relocation allowance of up to $200,000
of
documented expenses incurred by Executive in connection with the relocation
of
Executive and Executive’s family and dependents, pursuant to and in accordance
with the Company’s 2006 Relocation Assistance Program (Chief Executive Officer)
previously provided to Executive; provided
that the
individual dollar-amount limitations applicable to the categories of relocation
expenses enumerated in such program shall not apply to such relocation, subject
in all events to the aggregate allowance of $200,000.
(ix) Legal
Fees.
The
Company shall pay up to $15,000 of documented attorney’s fees incurred by
Executive in connection with the negotiation of this Agreement.
(x) Indemnification;
Insurance.
The
Company shall indemnify Executive and hold Executive harmless to the fullest
extent permitted by applicable law and under the by-laws of the Company against
and in respect to any and all actions, suits, proceedings, claims, demands,
judgments, costs, expenses (including reasonable attorneys’ fees), losses, and
damages resulting from Executive’s good faith performance of Executive’s duties
and obligations with the Company. The Company shall cover Executive under
directors and officers liability insurance during the Employment Period and
thereafter in the same amount and to the same extent as the Company covers
its
other officers and directors (if at all).
(c) Stock
Ownership Requirement.
While
employed by the Company, Executive shall generally be expected to maintain
ownership of a minimum of 200,000 shares of Common Stock in accordance with
the
guidelines as established by the Compensation Committee. Although no minimum
period of time has been established for Executive’s achievement of the foregoing
Common Stock ownership target, Executive agrees to make continuous progress
toward satisfaction of this objective via mandatory and voluntary “purchases” of
Restricted Common Stock as contemplated by the second and third sentences of
Section 2(b)(ii) and by retaining shares of Common Stock earned and/or received
upon exercise of stock options granted pursuant to the LTIP. Unvested shares
of
Restricted Common Stock (including MSPR Shares) will be credited towards this
requirement. Executive shall be required to obtain the prior approval of the
Board of Directors before selling shares of Common Stock, if the sale would
reduce Executive’s ownership below this required level.
3. Termination
of Employment.
(a) Death
or Disability.
Executive’s employment shall terminate automatically upon Executive’s death
during the Employment Period. If the Company determines in good faith that
the
Disability of Executive has occurred during the Employment Period (pursuant
to
the procedures and definition of Disability set forth below), the Company may
give to Executive written notice in accordance with Section 9(b) of this
Agreement of its intention to terminate Executive’s employment. In such event,
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by Executive (the “Disability
Effective Date”),
provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive’s duties. For purposes of this
Agreement, “Disability”
shall
mean Executive’s inability
to perform Executive’s duties and responsibilities by reason of illness or
incapacity for a total of 180 days in any twelve-month period as determined
in
writing by a qualified independent physician selected by the Company or its
insurers and reasonably acceptable to Executive or his legal representative.
If
the Company and Executive cannot agree as to a qualified independent physician,
each shall appoint such a physician and those two physicians shall select a
third who shall make such determination in writing. Such determination of
Disability shall be delivered to the Company and Executive and shall be final
and conclusive for all purposes of this Agreement.
(b) Cause.
The
Company may terminate Executive’s employment during the Employment Period for
Cause or without Cause. For purposes of this Agreement, with respect to any
award made pursuant to the LTIP, “Cause”
shall
mean (i) conduct
which is a material violation of Company policy or which is fraudulent or
unlawful or which materially interferes with Executive’s ability to perform
Executive’s duties, (ii) misconduct which damages or injures the Company or
substantially damages the Company’s reputation, or (iii) gross negligence in the
performance of, or willful failure to perform, Executive’s duties and
responsibilities. For all other purposes of this Agreement,
“Cause”
shall
mean (i) Executive’s conviction of, or plea of guilty or nolo
contendere
to a
charge of commission of, a felony, or of a misdemeanor involving the money
or
property of the Company or any subsidiary, (ii) Executive’s (x) willful and
continued failure to substantially perform the duties and responsibilities
of
his position or (y) failure to comply in all material respects with the written
policies of the Company, which failure, to the extent subject to cure, is not
remedied within twenty-one days after written notice thereof from the Company
to
Executive, (iii) Executive having willfully engaged in misconduct that
materially damages or injures the reputation of the Company or any subsidiary,
(iv) Executive having breached the provisions of Sections 6(a) or 6(b) of this
Agreement, (v) Executive’s willful breach of the confidentiality provisions of
this Agreement, or (vi) gross
negligence in the performance of Executive’s duties and
responsibilities.
For
purposes of this Section 3(b), no act or failure to act, on Executive’s part
shall be deemed to be “willful” unless done, or omitted to be done, by Executive
not in good faith and without reasonable belief that such act or omission was
in
the best interest of the Company. Any termination of Executive’s employment by
the Company for Cause shall be effective only upon delivery to Executive of
a
certified copy of a resolution of the Board of Directors, adopted by the
affirmative vote of a majority of the entire membership of the Board of
Directors (excluding Executive) following a meeting at which Executive was
given
an opportunity to be heard on at least five business days’ advance notice,
finding that Executive was guilty of the conduct constituting Cause, and
specifying the particulars thereof.
(c) Good
Reason.
Executive’s employment may be terminated by Executive for Good Reason or other
than for Good Reason. For purposes of this Agreement, “Good
Reason”
shall
mean, in the absence of a written consent of Executive: (i) the involuntary
relocation of Executive from the Ann Arbor, Michigan area, (ii) any failure
of
the Company to comply with any provisions of Section 2 of this Agreement, other
than an insubstantial and inadvertent failure remedied by the Company promptly
after receipt of notice thereof given by Executive, (iii) a reduction in
Executive’s duties or status as a result of or after a Change of Control (as
defined below), (iv) the delivery by the Company of a notice of non-renewal
pursuant to Section 1 hereof, provided
that
Executive provides Notice of Termination for Good Reason under this clause
(iv)
no later than twenty-one days following receipt of the notice of non-renewal,
or
(v) the failure of the Company to obtain a satisfactory agreement from any
successor to all or substantially all of the assets or business of the Company
to expressly assume and agree to perform this Agreement within fifteen (15)
days
after a merger, consolidation, sale or similar transaction as required by
Section 7 of this Agreement.
(d) Notice
of Termination.
Any
termination by the Company for Cause or without Cause, or by Executive for
Good
Reason or other than for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 9(b)
of
this Agreement. For purposes of this Agreement, a “Notice
of Termination”
means
a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
of
Executive’s employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty days
after the giving of such notice).
(e) Date
of Termination.
“Date
of Termination”
means
(i) if Executive’s employment is terminated by the Company for Cause or without
Cause, or by Executive for or other than for Good Reason, the date of receipt
of
the Notice of Termination or any later date specified therein within 30 days
of
such notice, as the case may be (except that in the case of a termination by
Executive other than for Good Reason, the Company may in its sole discretion
change any such later date to a date of its choosing between the date of such
receipt and such later date), and (ii) if Executive’s employment is terminated
by reason of death or Disability, the Date of Termination shall be the date
of
death of Executive or the Disability Effective Date, as the case may be. The
Employment Period shall automatically terminate on the Date of
Termination.
(f) Change
of Control.
“Change
of Control”
means:
(i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) (the
“Exchange
Act”)
(a
“Person”)
of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then outstanding shares of Common
Stock (the “Outstanding
Company Common Stock”)
or (B)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding
Company Voting Securities”);
provided,
however,
that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition directly from the Company,
(x) any acquisition by the Company, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (z) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this definition; or
(ii) Individuals
who, as of the date hereof, constitute the Board of Directors (the “Incumbent
Board”)
cease
for any reason to constitute at least a majority of the Board of Directors;
provided,
however,
that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual
or
threatened solicitation of proxies or consents by or on behalf of a Person
other
than the Board; or
(iii) Consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of the Company (a “Business
Combination”),
in
each case, unless, following such Business Combination, (A) all or substantially
all the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors,
as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that
such ownership existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company.
4. Obligations
of the Company upon Termination.
(a)
Good
Reason or Other than for Cause or Disability Prior to a Change of
Control.
Subject
to the mitigation provisions set forth below and to Executive’s compliance with
Sections 5 and 6 of this Agreement, if, during the Employment Period and prior
to and not in connection with a Change of Control, Executive’s employment with
the Company is terminated by the Company other than for Cause or Disability
or
if Executive terminates Executive’s employment with the Company for Good Reason:
(i) the
Company will pay to Executive in a lump sum (A) the Base Salary through the
Date
of Termination to the extent not previously paid; (B) accrued and unused
vacation pay; (C) any unpaid cash portion of the Annual Bonus earned with
respect to the fiscal year ending on or immediately preceding the Date of
Termination; (D) reimbursement for any unreimbursed expenses incurred through
the Date of Termination; and (E) reimbursement for any unpaid relocation
expenses in accordance with Section 2(b)(viii) (the amounts in (A), (B), (C),
(D), and (E), the “Accrued
Obligations”);
and
(ii) the
Company will pay to Executive a monthly severance payment equal to 1/18 of
the
product of (A) the sum of (1) Base Salary plus (2) Target Bonus and (B)
1.5,
such
monthly severance payments to commence in the month following the Date of
Termination (to be paid on or about the 15th day of the month) and to continue
for eighteen months; provided,
however,
that in
the event that Executive’s employment terminates solely on the basis of clause
(iv) of the definition of Good Reason, then the monthly payments contemplated
by
this Section 4(a)(ii) shall continue until the first to occur of (x) the
five-year anniversary of the Effective Date or (y) the eighteen-month
anniversary of the Termination Date (such shorter period hereinafter referred
to
as the “Non-Renewal
Severance Period”);
and
(iii) during
the eighteen-month
period following the Date of Termination (or in the event
that Executive’s employment terminates solely on the basis of clause (iv) of the
definition of Good Reason, during the Non-Renewal Severance Period),
the
Company shall continue health and welfare benefits (excluding long-term
disability coverage) to Executive and, where applicable, Executive’s dependents
on the same terms that such benefits would have been provided had Executive
continued employment with the Company in accordance with the health and welfare
benefits provided pursuant to Section 2(b)(vi) of this Agreement (the
“Welfare
Benefits”);
provided,
however,
that,
in
the event Executive becomes reemployed with another employer and is eligible
to
receive comparable medical or other welfare benefits under any employer provided
plan (determined on a benefit-by-benefit basis), the Welfare Benefits provided
herein shall cease as of the date of eligibility under such other employer’s
plans; and
(iv)
to the
extent not theretofore paid or provided, the Company shall timely pay or
provide, in accordance with the terms of the applicable plan, program, policy,
practice, or contract, to Executive any other amounts or benefits required
to be
paid or provided under any plan, program, policy, practice or contract of the
Company (other than any severance plan) through the Date of Termination (such
other amounts and benefits shall be hereinafter referred to as the “Other
Benefits”).
In
the
event of a termination of Executive’s employment upon which Executive is
entitled to severance pursuant to this Section 4(a), Executive shall have no
obligation to find new employment during the first nine months following the
Date of Termination; provided,
however,
that
following the nine-month anniversary of the Date of Termination, subject to
Section 6, Executive agrees
to
make reasonable efforts to seek (and to immediately notify the Company of his
obtaining) other employment and, to the extent that Executive receives, earns
or
is eligible to receive cash compensation from other employment, the cash
severance payments provided under Section 4(a)(ii) shall be correspondingly
reduced.
(b) Good
Reason or Other than for Cause or Disability Following a Change of
Control.
Subject
to Executive’s compliance with Sections 5 and 6 of this Agreement, if, (x)
during the twenty-four month period immediately following a Change of Control,
Executive’s employment with the Company is terminated by the Company other than
for Cause or Disability or if Executive terminates Executive’s employment with
the Company for Good Reason, or (y) during the period following the public
announcement of a definitive agreement to effectuate a transaction that if
consummated would be a Change of Control and prior to the consummation of any
such transaction, (1) Executive’s employment with the Company is terminated by
the Company other than for Cause or Disability and (2) Executive demonstrates
that such termination was at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control, then, in the case of either
clause (x) or clause (y), in lieu of any payment or benefits under Section
4(a)
of this Agreement:
(i) the
Company will pay to Executive in a lump sum in cash within 30 days after the
Date of Termination an amount equal to the sum of (A)
the
Accrued Obligations, and (B) the product of (1) the sum of (x) the Base Salary
and (y) the Target Bonus and (2) 2.5; and
(ii) during
the thirty-month period following the Date of Termination, the Company shall
continue the Welfare Benefits; provided,
however,
that,
in the event Executive becomes reemployed with another employer and is eligible
to receive comparable medical or other welfare benefits under any employer
provided plan (determined on a benefit-by-benefit basis), the Welfare Benefits
provided herein shall cease as of the date of eligibility under such other
employer’s plans.
(iii) to
the
extent not theretofore paid or provided, the Company shall timely pay or
provide, in accordance with the terms of the applicable plan, program, policy,
practice, or contract, to Executive the Other Benefits. For the avoidance of
doubt, upon a Change of Control, all unvested 2006 Restricted Share Units,
MSPR
Shares, the MSPR Option and the Inducement Option shall fully vest in accordance
with the terms of Section 14 of the LTIP.
In
the
event of a termination of Executive’s employment upon which Executive is
entitled to severance pursuant to this Section 4(b), Executive shall have no
affirmative obligation to find new employment and, in the event Executive
becomes reemployed following the Date of Termination, the amounts earned by
Executive from any such subsequent employer shall not reduce or limit
Executive’s right to receive or retain the severance payments under this Section
4(b) (except as expressly provided in Section 4(b)(iii)).
(c) Section
409A Delay.
Notwithstanding the foregoing provisions of Sections 4(a) and 4(b), to the
extent required in order to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”),
amounts and benefits to be paid or provided under Sections 4(a) and 4(b) shall
be paid or provided to Executive on the first business day after the date that
is six months following Executive’s “separation from service” within the meaning
of Section 409A of the Code. To the extent that the health care benefits to
be
provided to Executive under Section 4(a)(iii) or Section 4(b)(iii), as
applicable, are so delayed, Executive shall be entitled to COBRA continuation
coverage under Section 4980B of the Code (“COBRA
Coverage”)
during
such period of delay, and the Company shall reimburse Executive for the premiums
for such COBRA Coverage in the seventh month following Executive’s “separation
from service” within the meaning of Section 409A of the Code.
(d) Death;
Disability; Cause; Other than for Good Reason.
If
Executive’s employment is terminated by reason of Executive’s death or
Disability, by the Company for Cause or by Executive other than for Good Reason
during the Employment Period, the Employment Period shall terminate without
further obligations to Executive and his legal representatives under this
Agreement, other than for payment of Accrued Obligations and the timely payment
or provision of the Other Benefits. Accrued Obligations shall be paid to
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. Notwithstanding the foregoing provisions
of
this Section 4(d), to the extent required in order to comply with Section 409A
of the Code, amounts to be paid under this Section 4(d) shall be paid to
Executive on the first business day after the date that is six months following
Executive’s “separation from service” within the meaning of Section 409A of the
Code.
5. General
Release.
The
payments provided hereunder shall constitute the exclusive payments due
Executive from, and the exclusive obligation of, the Company in the event of
any
termination of Executive’s employment. The obligation to make the payments
hereunder is conditioned upon Executive’s execution, delivery to the Company and
non-revocation of a release, which shall be substantially in the form attached
hereto as Exhibit A (with such changes therein or additions thereto as needed
under then applicable law to give effect to its intent and purpose), of any
claims Executive may have as a result of Executive’s employment or termination
of employment under any federal, state or local law.
6. Non-Solicitation;
Non-Competition; Confidentiality; Work Product.
(a) Executive
acknowledges and agrees that any attempt to interfere with the Company’s
existing employment relationships would result in significant harm to the
Company’s interests. Accordingly, Executive agrees that while employed by the
Company and for two years following Executive’s termination of employment for
any reason (the “Restricted
Period”),
Executive shall not, without the prior written consent of the Company, directly
or indirectly, solicit, recruit, or employ (whether as an employee, officer,
director, agent, consultant or independent contractor) any person who is or
was
at any time during the previous six months an employee, representative, officer
or director of an Affiliated Entity. Further, during the Restricted Period,
Executive shall not take any action that could reasonably be expected to have
the effect of encouraging or inducing any employee, representative, officer
or
director of any member of the Affiliated Entities to cease their relationship
with any member of the Affiliated Entities for any reason. For purposes of
this
agreement, the term “Affiliated Entities” shall mean the
Company and its subsidiaries and affiliated companies. Notwithstanding anything
to the contrary contained herein, in the event that Executive’s employment
terminates solely on the basis of clause (iv) of the definition of Good Reason,
the Restricted Period shall terminate on the last day of the Non-Renewal
Severance Period. This Section 6(a) shall cease to be effective if the
Employment Period ends on the fifth anniversary of the Effective Date and the
Executive’s employment has not terminated prior thereto.
(b) Executive
agrees that, during the Restricted Period, Executive shall not, without the
prior written consent of the Company, become directly or indirectly engaged
or
involved, as an owner, principal, employee, officer, director, independent
contractor, representative, stockholder, agent, advisor, lender or in any other
capacity, of any business or entity (including any division or subsidiary of
a
larger business or entity) primarily engaged in (i) the sale of books, music,
gifts, stationary or videos directly to the public (whether through traditional
retail sales or over the Internet) or (ii) the provision of café-type services
(“Competitive
Activities”)
in any
jurisdiction in which the Company or any Affiliated Entity conducts such
Competitive Activities by selling, sending or delivering goods to customers
in
such jurisdiction or providing such services in such jurisdiction (or in any
jurisdiction in which the Company has proposed to conduct such Competitive
Activities);
provided,
however,
that in
no event shall Executive’s ownership of less than 3% of the outstanding capital
stock of any corporation, in and of itself, be deemed a Competitive Activity
if
such capital stock is listed on a national securities exchange or regularly
traded in an over-the-counter market. Executive further agrees that, during
the
Restricted Period, Executive shall not, without the prior written consent of
the
Company, directly or indirectly solicit, or cause another person to solicit,
any
person who is a customer of the businesses conducted by the Company, on behalf
of a business engaged in a Competitive Activity. This
Section 6(b) shall cease to be effective if the Employment Period ends on the
fifth anniversary of the Effective Date and the Executive’s employment has not
terminated prior thereto.
(c) While
employed by the Company and at all times thereafter, Executive shall hold in
a
fiduciary capacity for the benefit of the Affiliated Entities and shall not
disclose to others, copy, use, transmit, reproduce, summarize, quote or make
commercial, directly or indirectly, any secret or confidential information,
knowledge or data relating to any of the Affiliated Entities and their
businesses (including without limitation information about the Affiliated
Entities’ clients’ and customers’ and their proprietary knowledge and trade
secrets, software, technology, research, secret data, customer lists, investor
lists, business methods, business plans, training materials, operating
procedures or programs, pricing strategies, employee lists and other business
information) that Executive has obtained during Executive’s employment with the
Company and/or any of the other Affiliated Entities (“Confidential
Information”),
provided
that
the
foregoing shall not apply to information that is generally known to the public
other than as a result of Executive’s breach of this Agreement. Notwithstanding
the foregoing provisions, if Executive is required to disclose any such
confidential or proprietary information pursuant to applicable law or a subpoena
or court order, Executive shall promptly notify the Company in writing of any
such requirement so that the Company or the appropriate Affiliated Entity may
seek an appropriate protective order or other appropriate remedy or waive
compliance with the provisions hereof. Executive shall reasonably cooperate
with
the Affiliated Entities to obtain such a protective order or other remedy.
If
such order or other remedy is not obtained prior to the time Executive is
required to make the disclosure, or the Company waives compliance with the
provisions hereof Executive shall disclose only that portion of the confidential
or proprietary information which Executive is advised by counsel that Executive
is legally required to so disclose.
(d) Executive
acknowledges and agrees that the terms of this Section 6: (i) were agreed to
by
mutual assent of the parties hereto; (ii) are supported by adequate
consideration; (iii) are reasonable in time and scope; and (iv) serve to protect
the legitimate economic interests of the Affiliated Entities, including the
goodwill of the Affiliated Entities and the Confidential Information from
misuse. Executive further acknowledges and agrees that (x) Executive’s breach of
the provisions of this Section 6 will cause the Company irreparable harm, which
cannot be adequately compensated by money damages, and (y) if the Company elects
to prevent Executive from breaching such provisions by obtaining an injunction
against Executive, there is a reasonable probability of the Company’s eventual
success on the merits. Executive consents and agrees that if Executive commits
any such breach or threatens to commit any breach, the Company shall be entitled
to temporary and permanent injunctive relief from a court of competent
jurisdiction, without posting any bond or other security and without the
necessity of proof of actual damage, in addition to, and not in lieu of, such
other remedies as may be available to the Company for such breach, including
the
recovery of money damages. If any of the provisions of this Section 6 are
determined to be wholly or partially unenforceable, Executive hereby agrees
that
this Agreement or any provision hereof may be reformed so that it is enforceable
to the maximum extent permitted by law. If any of the provisions of this Section
6 are determined to be wholly or partially unenforceable in any jurisdiction,
such determination shall not be a bar to or in any way diminish the Company’s
right to enforce any such covenant in any other jurisdiction.
(e) Notwithstanding
anything to the contrary contained in this Agreement, the terms of this Section
6 shall survive the termination of this Agreement and of Executive’s employment
for the periods set forth therein.
7. Successors.
This
Agreement is personal to Executive and without the prior written consent of
the
Company shall not be assignable by Executive otherwise than by will or the
laws
of descent and distribution. This Agreement shall inure to the benefit of and
be
enforceable by Executive’s legal representatives. This
Agreement shall inure to the benefit of and be binding upon the Company and
its
successors and assigns. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8. Representation
By Executive.
Executive hereby represents and warrants to the Company that, as of the
Effective Date and as of the date of execution of this Agreement, Executive
is
not a party to any employment agreement with any third party which would
preclude Executive from accepting Employment with the Company and performing
Executive’s obligations under this Agreement.
9. Miscellaneous.
(a)
Construction;
Amendments.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Michigan, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall
have
no force or effect. The invalidity or unenforceability of any provision of
this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. This Agreement may not be amended or modified otherwise
than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) Notices.
All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party, by registered or certified mail,
return receipt requested, postage prepaid, or by reputable overnight courier,
charges prepaid, addressed as follows:
If
to
Executive:
To the
most recent address on file with the Company.
If
to
the Company:
Borders
Group, Inc.
000
Xxxxxxx Xxxxx
Xxx
Xxxxx, Xxxxxxxx 00000
Attention:
General Counsel
or
to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.
(c) Waiver
of Breach.
No
waiver by any party hereto of a breach of any provision of this Agreement by
any
other party, or of compliance with any condition or provision of this Agreement
to be performed by such other party, will operate or be construed as a waiver
of
any subsequent breach by such other party of any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time. The
failure of any party hereto to take any action by reason of such breach will
not
deprive such party of the right to take action at any time while such breach
continues.
(d) Tax
Withholding.
The
Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant
to
any applicable law or regulation.
(e) Section
409A.
If any
compensation or benefits provided by this Agreement may result in the
application of Section 409A of the Code, the Company shall, in consultation
with
Executive, modify the Agreement in the least restrictive manner necessary in
order to exclude such compensation from the definition of “deferred
compensation” within the meaning of such Section 409A or in order to comply with
the provisions of Section 409A.
(f) Certain
Additional Payments by the Company.
(i) Anything
in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment (as defined below) would
be
subject to the Excise Tax (as defined below), then Executive shall be entitled
to receive an additional payment (the “Gross-Up
Payment”)
in an
amount such that, after payment by Executive of all taxes (and any interest
or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, but excluding any income
taxes
and penalties imposed pursuant to Section 409A of the Code, Executive retains
an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section 9(f)(i),
if
it shall be determined that Executive is entitled to the Gross-Up Payment,
but
that the Parachute Value (as defined below) of all Payments does not exceed
115%
of the Safe Harbor Amount (as defined below), then no Gross-Up Payment shall
be
made to Executive and the amounts payable under this Agreement shall be reduced
so that the Parachute Value of all Payments, in the aggregate, equals the Safe
Harbor Amount. The reduction of the amounts payable hereunder, if applicable,
shall be made in such a manner as to maximize the Value (as defined below)
of
all Payments actually made to Executive. For purposes of reducing the Payments
to the Safe Harbor Amount, only amounts payable under this Agreement (and no
other Payments) shall be reduced. If the reduction of the amounts payable under
this Agreement would not result in a reduction of the Parachute Value of all
Payments to the Safe Harbor Amount, no amounts payable under the Agreement
shall
be reduced pursuant to this Section 9(f)(i). The Company’s obligation to make
Gross-Up Payments under this Section 9(f) shall not be conditioned upon
Executive’s termination of employment.
(ii) Subject
to the provisions of Section 9(f)(iii), all determinations required to be
made under this Section 9(f), including whether and when a Gross-Up Payment
is
required, the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by PricewaterhouseCoopers,
or
such other nationally recognized certified public accounting firm as may be
designated by the Company (the “Accounting
Firm”).
The
Accounting Firm shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the receipt of notice from
Executive that there has been a Payment or such earlier time as is requested
by
the Company. In the event that the Accounting Firm is serving as accountant
or
auditor for the individual, entity or group effecting the Change of Control,
Executive may appoint another nationally recognized accounting firm to make
the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9(f), shall be paid by the Company to Executive within
5 days of the receipt of the Accounting Firm’s determination. Any determination
by the Accounting Firm shall be binding upon the Company and Executive. As
a
result of the uncertainty in the application of Section 4999 of the Code at
the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Company
should have been made (the “Underpayment”),
consistent with the calculations required to be made hereunder. In the event
the
Company exhausts its remedies pursuant to Section 9(f)(iii) and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting
Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(iii) Executive
shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as practicable, but no later
than 10 business days after Executive is informed in writing of such claim.
Executive shall apprise the Company of the nature of such claim and the date
on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Executive in writing prior to the expiration of such period
that the Company desires to contest such claim, Executive shall:
A. give
the
Company any information reasonably requested by the Company relating to such
claim,
B. take
such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company,
C. cooperate
with the Company in good faith in order effectively to contest such claim,
and
D. permit
the Company to participate in any proceedings relating to such
claim;
provided,
however,
that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest,
and
shall indemnify and hold Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties) imposed as a result
of such representation and payment of costs and expenses. Without limitation
on
the foregoing provisions of this Section 9(f)(iii), the Company shall control
all proceedings taken in connection with such contest, and, at its sole
discretion, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the applicable taxing authority in respect of
such
claim and may, at its sole discretion, either pay the tax claimed to the
appropriate taxing authority on behalf of Executive and direct Executive to
xxx
for a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided,
however,
that,
if the Company pays such claim and directs Executive to xxx for a refund, the
Company shall indemnify and hold Executive harmless, on an after-tax basis,
from
any Excise Tax or income tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in connection
with
such payment; and provided,
further,
that
any extension of the statute of limitations relating to payment of taxes for
the
taxable year of Executive with respect to which such contested amount is claimed
to be due is limited solely to such contested amount. Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which the
Gross-Up Payment would be payable hereunder, and Executive shall be entitled
to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(iv) If,
after
the receipt by Executive of a Gross-Up Payment or payment by the Company of
an
amount on Executive’s behalf pursuant to Section 9(f)(iii), Executive
becomes entitled to receive any refund with respect to the Excise Tax to which
such Gross-Up Payment relates or with respect to such claim, Executive shall
(subject to the Company’s complying with the requirements of Section 9(f)(iii),
if applicable) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto).
If,
after payment by the Company of an amount on Executive’s behalf pursuant to
Section 9(f)(iii), a determination is made that Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify
Executive in writing of its intent to contest such denial of refund prior to
the
expiration of 30 days after such determination, then the amount of such payment
shall offset, to the extent thereof, the amount of Gross-Up Payment required
to
be paid.
(v) Notwithstanding
any other provision of this Section 9(f), the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of Executive, all or any portion
of
any Gross-Up Payment, and Executive hereby consents to such
withholding.
(vi) Definitions.
The
following terms shall have the following meanings for purposes of this Section
9(f).
A. “Excise
Tax”
shall
mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.
B. “Parachute
Value”
of
a
Payment shall mean the present value as of the date of the change of control
for
purposes of Section 280G of the Code of the portion of such Payment that
constitutes a “parachute payment” under Section 280G(b)(2), as determined by the
Accounting Firm for purposes of determining whether and to what extent the
Excise Tax will apply to such Payment.
C. A
“Payment”
shall
mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive,
whether paid or payable pursuant to this Agreement or otherwise.
D. The
“Safe
Harbor Amount”
means
2.99 times Executive’s “base amount,” within the meaning of Section 280G(b)(3)
of the Code.
E. “Value”
of
a
Payment shall mean the economic present value of a Payment as of the date of
the
change of control for purposes of Section 280G of the Code, as determined by
the
Accounting Firm using the discount rate required by Section 280G(d)(4) of the
Code.
(g) Entire
Agreement.
No
representation, promise or inducement has been made by either party that is
not
embodied in this Agreement, and neither party shall be bound by or be liable
for
any alleged representation, promise or inducement not so set forth.
(h) Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
agreement.
--
IN
WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
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BORDERS
GROUP, INC.
|
|
|
By:
|
/s/
Xxxxxxx X. Xxxxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxxxxx
|
|
|
Chairman,
President & Chief Executive Officer
|
|
|
XXXXXX
X. XXXXX
|
|
|
/s/
Xxxxxx X. Xxxxx
|
|
Exhibit
A
AGREEMENT
AND GENERAL RELEASE
Borders
Group, Inc., its affiliates, subsidiaries, divisions, successors and assigns
in
such capacity, and the current, future and former employees, officers,
directors, trustees and agents thereof (each, solely in his or her capacity
as
officer, director, trustee or agent) (collectively referred to throughout this
Agreement as “Company”) and
Xxxxxx X. Xxxxx (“Executive”)
agree:
1. Last
Day of Employment.
Executive’s last day of employment with the Company is [DATE].
In
addition, effective as of [DATE],
Executive resigns from Executive’s position as [President
and Chief Executive Officer]
of the
Company and will not be eligible for any benefits or compensation after
[DATE],
other
than as specifically provided in Section 4 of the Employment Agreement
between the Company and Executive dated as of July 13, 2006 (the
“Employment
Agreement”)
and
Executive’s right to indemnification.
2. Consideration.
The
parties acknowledge that this Agreement and General Release is being executed
in
accordance with Section 5 of the Employment Agreement. Executive hereby
acknowledges the sufficiency of the consideration being received in exchange
for
the release in this Agreement and agrees that absent signing this Agreement,
he
is not otherwise entitled to the payments and benefits under Section 4 of the
Employment Agreement.
3. Release
of Claims.
| (a) |
For
and in consideration of the payments and benefits to be made or provided
to Executive under Section 4 of the Employment Agreement and other
good
and valuable consideration, Executive, for himself and for his heirs,
dependents, executors, administrators, trustees, legal representatives
and
assigns (collectively referred to as “Releasors”),
hereby forever releases, waives and discharges (i) the Company, its
subsidiaries and affiliates, their respective employee benefit and/or
pension plans or funds, insurers, successors and assigns, (ii) all
past, present and/or future officers, directors, trustees, members,
partners, employees, fiduciaries, administrators, controlling persons
and
successors and assigns of the foregoing, and (iii) all of the past,
present and/or future agents, representatives and attorneys (including
outside legal counsel) of any of the persons or entities described
in (i)
or (ii) in this Section 3 and any of its and their successors and
assigns in all cases whether acting as agents for or with respect
to the
Company, its subsidiaries or affiliates and their respective successors
and assigns or in their individual capacities (collectively referred
to as
“Releasees”),
from any and all claims, demands, causes of action, fees and liabilities
of any kind whatsoever, whether known or unknown, which Releasors
ever had
or now have against Releasees by reason of any actual or alleged
act,
omission, transaction, practice, policy, procedure, conduct, occurrence,
or other matter up to and including the date of Executive’s execution of
this Release, including without limitation, those in connection with,
or
in any way related to or arising out of, Executive’s employment, service
as a director, service as an officer, service as a trustee, service
as a
fiduciary or termination of any of the foregoing or any other agreement,
understanding, relationship, arrangement, act, omission or occurrence,
with the Company, its subsidiaries or affiliates and their respective
successors and assigns or other claims and (x) any claim of
discrimination or retaliation under the Age Discrimination in Employment
Act (“ADEA”)
29 U.S.C. Section 621 et seq., Title VII of the Civil Rights Act, the
Americans with Disabilities Act, the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”)
or the Family and Medical Leave Act; (y) any claim under the Michigan
Xxxxxxx-Xxxxxx Civil Rights Act, as amended, the Michigan Whistle
Blowers’
Protection Act, as amended, the Michigan Persons with Disabilities
Civil
Rights Act; and (z) any claim for attorney’s fees, costs,
disbursements and the like related to any claim described in this
Section 3(a).
|
| (b) |
Adversarial
Actions.
Executive agrees that he will not, from any source or proceeding,
seek or
accept any award or settlement with respect to any claim or right
covered
by Section 3(a) above. Except as otherwise required by law, Executive
further agrees that he will not, at any time hereafter, commence,
maintain, prosecute, participate in as a party, permit to be filed
by any
other person on Executive’s behalf (to the extent it is within Executive’s
control or permitted by law), or assist in the commencement or prosecution
of as an advisor, or otherwise, any action or proceeding of any kind,
judicial or administrative (on his behalf, on behalf of any other
person
and/or on behalf of or as a member of any alleged class of persons)
in any
court, agency, investigative or administrative body against any Releasee
with respect to any actual or alleged act, omission, transaction,
practice, conduct, occurrence or any other matter up to and including
the
date of Executive’s execution of this Release which Executive released
pursuant to Section 3(a) above. Executive further represents that, as
of the date he signs this Release, he has not taken any action encompassed
by this Section 3(b). If, notwithstanding the foregoing promises,
Executive violates this Section 3(b), he will indemnify and hold
harmless Releasees from and against any and all demands, assessments,
judgments, costs, damages, losses and liabilities and attorneys’ fees and
other expenses which result from, or are incidents to, such violation.
Notwithstanding anything herein to the contrary, this Section 3(b)
will not apply to any claims that Executive may have under the ADEA
and
will not apply to the portion of the release provided for in
Section 3(a) relating to the
ADEA.
|
| (c) |
Preserved
Rights.
The sole matters to which the release and covenants in this Section 3
do not apply are: (i) Executive’s rights under Section 2(b) and
Section 4 [and
Section 9(f)]
of
the Employment Agreement, Executive’s rights of indemnification and
related rights or otherwise with regard to Executive’s service as an
officer or director of the Company (if any) and Executive’s rights under
any D&O policy maintained by or for the benefit of the Company or its
employees or directors at any time during or after the course of
Executive’s employment with the Company (if any); (ii) Executive’s
rights to contribution (if any) with regard to his service as an
officer
and director of the Company; (iii) Executive’s rights as a
shareholder of the Company (if any); and (iv) Executive’s rights to
vested benefits under any employee benefit plan of the Company. Nothing
contained herein shall relieve Executive of his continuing obligations
under Section 6 of the Employment
Agreement.
|
4. Governing
Law; Enforceability.
The
interpretation of this Release will be governed and construed in accordance
with
the laws of the State of Michigan, without reference to principles of conflict
of laws. If any provisions of this Release will be declared to be invalid or
unenforceable, in whole or in part, such invalidity or unenforceability will
not
affect the remaining provisions hereof which will remain in full force and
effect.
5. Acknowledgement.
Executive acknowledges that he has been advised by the Company in writing to
consult independent legal counsel of his choice before signing this Release.
Executive further acknowledges that he has had the opportunity to consult,
and
Executive has consulted with, independent legal counsel and to consider the
terms of this Release for a period of at least 21 days.
6. Effective
Date.
Executive further acknowledge that this Release will not become effective until
the eighth day following his execution of this Release (the “Effective
Date”),
and
that he may at any time prior to the Effective Date revoke this Release by
delivering written notice of revocation to the Company at 000 Xxxxxxx Xxxxx,
Xxx
Xxxxx, XX 00000-0000, to the attention of the General Counsel. In the event
that
Executive revokes this Release prior to the eighth day after its execution,
this
Release and the promises contained in the Agreement, will automatically be
null
and void.
7. Entire
Agreement.
Executive understands that this Release and the Agreement constitute the
complete understanding between the Company and Executive relating to the subject
matter hereof and that no other promises or agreements will be binding unless
in
writing and signed by Executive and the Company after the date
hereof.
8. Counterparts.
This
Release may be executed in several counterparts, each of which will be deemed
to
be an original but all of which together will constitute one and the same
instrument.
IN
WITNESS WHEREOF,
the
parties hereto knowingly and voluntarily executed this Agreement and General
Release as of the date set forth below:
|
/s/
Xxxxxx X. Xxxxx
Xxxxxx
X. Xxxxx
|
Borders
Group, Inc.
By:
/s/
Xxxxxxx X. Xxxxxxxxxx
Name:
Xxxxxxx X. Xxxxxxxxxx
Title:
Chairman, President & Chief Executive Officer
|
|
Date:
July 13, 2006
|
Date:
July 13, 2006
|
