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Exhibit
10.30
EMPLOYMENT AGREEMENT
AGREEMENT by
and between Borders Group, Inc., a Michigan corporation (the "
Company ") and Ron Marshall (" Executive ") dated as
of the 3 rd day of January, 2009.
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 term of Executive’s employment will commence on January
5, 2009 (the " Effective Date ") and end on the third
anniversary of the Effective Date (the " Employment Period
"), unless terminated earlier pursuant to Section 3 of this
Agreement. The Employment Period shall automatically end upon
termination of Executive’s employment for any reason. 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
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(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 $750,000. 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 commencing 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 and/or such other plan as may be selected by the
Company (collectively, the " 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 100% of
Executive’s Base Salary as in effect at the beginning of the
Company’s fiscal year (the " Target Bonus "), and a
maximum Annual Bonus equal to 200% of Base Salary; provided
, however , that with respect to the Company’s 2009
fiscal year, the performance goals under the AIP applicable to
Executive shall be established by the Compensation Committee in
consultation with Executive. Each such Annual Bonus shall be paid
(x) to Executive 100% in cash and (y) no later than two and a half
months after the end of the fiscal year for which the Annual Bonus
is awarded, unless Executive shall elect to defer the receipt of
such Annual Bonus pursuant to an arrangement that meets the
requirements of Section 409A of the Internal Revenue Code of 1986,
as amended (the " Code ").
(iii) Signing Bonus . As soon as
practicable following the date hereof, the Company shall pay
Executive a signing bonus of $250,000 (the " Signing Bonus
"). In the event that Executive’s employment with the Company
terminates prior to the first anniversary of the Effective Date due
to a termination by the Company for Cause (as defined below) or by
Executive without Good Reason (as defined below), Executive shall
be required to repay the Company, within 10 business days of such
termination, the full amount of the Signing Bonus.
(iv) LTIP Option . On a date
determined by the Compensation Committee, which shall in no event
be later than February 1 2009 (the " Option Grant Date "),
the Company shall grant Executive an option (the " LTIP
Option ") pursuant to the Company’s 2004 Long-Term
Incentive Plan (the " LTIP ") to purchase 200,000 shares of
common stock of the Company (" Common Stock ") with a
per-share exercise price equal to the Fair Market Value (as defined
in the LTIP) of a share of Common Stock on the
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grant date, which LTIP Option shall
(A) be a non-qualified stock option, (B) have a seven-year term
(subject to earlier termination in accordance with Section 12 of
the LTIP) and (C) vest ratably (in equal increments) on the first
anniversary of the Option Grant Date and on the second and third
anniversaries of the Effective Date, subject to Executive’s
continued employment with the Company through the applicable
vesting date. The LTIP Option shall be subject to the terms of the
LTIP, except that the LTIP Option shall (i) not provide for
automatic vesting upon a Change of Control (as defined in the LTIP)
but shall provide for vesting upon a termination of employment
subsequent to a Change of Control that entitles Executive to
severance benefits pursuant to Section 4(a) hereof, and (ii)
provide that no acquisition by Pershing Square Capital Management
L.P. or any of its affiliates may constitute a Change of Control
for purposes of the LTIP Option. In the event that an event
described in Section 16 of the LTIP occurs prior to the grant of
the LTIP Option and awards under the LTIP are adjusted pursuant to
Section 16, the number of shares to be subject to the LTIP Option
shall be equitably adjusted consistent with the adjustment
generally made under the LTIP. Other than the LTIP Option and the
Inducement Option (as defined below), it is not anticipated that
Executive will receive any further long-term incentive awards under
the LTIP or otherwise during the Employment Period.
(v) Inducement Option . As an
inducement to Executive’s willingness to enter into this
Agreement, the Company shall, on the Option Grant Date, grant
Executive an option (the " Inducement Option ") to purchase
1,800,000 shares of Common Stock with a per-share exercise price
equal to the Fair Market Value of a share of Common Stock on the
grant date, which Inducement Option shall (A) be a non-qualified
stock option, (B) have a seven-year term (subject to earlier
termination in accordance with Section 12 of the LTIP) and (C) vest
ratably (in equal increments) on November 1, 2009 and on the second
and third anniversaries of the Effective Date, subject to
Executive’s continued employment with the Company through the
applicable vesting date. The Inducement Option shall not be granted
pursuant to the LTIP but shall be subject to the terms of the LTIP,
except that the Inducement Option shall (i) not provide for
automatic vesting upon a Change of Control (as defined in the LTIP)
but shall provide for vesting upon a termination of employment
subsequent to a Change of Control that entitles Executive to
severance benefits pursuant to Section 4(a) hereof, and (ii)
provide that no acquisition by Pershing Square Capital Management
L.P. or any of its affiliates may constitute a Change of Control
for purposes of the Inducement Option. The Company shall, as soon
as reasonably practicable following the date hereof, ensure that
the shares of Common Stock underlying the Inducement Option are
registered with the Securities and Exchange Commission. In the
event that an event described in Section 16 of the LTIP occurs
prior to the grant of the Inducement Option and awards under the
LTIP are adjusted pursuant to Section 16, the number of shares to
be subject to the Inducement Option shall be equitably adjusted
consistent with the adjustment generally made under 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.
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(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 $100,000 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 Relocation Assistance Program (Chief Executive
Officer), a copy of which will be 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 $100,000.
(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. Unvested shares of
restricted Common Stock 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
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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, "
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 material failure of the Company to
comply with any provisions of Section 2 of this Agreement, (iii) a
material reduction in Executive’s duties or status, or (iv)
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, in each case, provided that Executive
provides Notice of Termination for Good Reason within 90 days of
Executive’s knowledge of the occurrence of the event giving
rise to the claim, provides the Company at least 30 days to cure
such event and actually terminates employment, if at all, within 15
days following the end of such 30-day cure period.
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(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, and which date shall, in the case of a termination for
Good Reason, be determined consistently with the requirements of
Section 3(c)).
(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, 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. Notwithstanding the foregoing, in no event shall the
Date of Termination occur until Executive experiences a "separation
from service" within the meaning of Section 409A of the Code, and
the date on which such separation from service takes place shall be
the "Date of Termination."
4. Obligations of the Company upon
Termination . (a) Good Reason or Other than for Cause or
Disability . 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, 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 (subject to any applicable deferral elections); (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 an
aggregate severance amount equal to the product of (1) the sum of
(x) the Base Salary and (y) the Target Bonus (such sum, the "
Annualized Compensation Amount ") multiplied by (2) a
fraction, the numerator of which is the number of days from the
date following the Date of Termination through the third
anniversary of the Effective Date (provided that the numerator
shall in no event be greater than 1065), and the denominator of
which is 365, payable in monthly installments
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at a monthly rate equal to 1/12 of
the Annualized Compensation Amount, such installments to commence
at the end of the month during which occurs the 30 th
day following the Date of Termination; provided however,
that, to the extent the payment period would otherwise extend
beyond the later of: (x) March 15th of the year following the
calendar year in which the Date of Termination occurs, or (y) two
and one-half months following the end of the fiscal year in which
the Date of Termination occurs, an amount equal to the sum of all
of the remaining payments that would have been made to Executive in
monthly installments shall, in lieu thereof, be paid to Executive
in one lump sum on the last day of the month immediately preceding
the month in which the later of the dates specified in (x) or (y)
above falls; and
(iii) during the period from the Date of
Termination through the third anniversary of the Effective Date
(the " Benefit Continuation Period "), the Company shall
continue medical and dental benefits (excluding long-term
disability coverage) to Executive and, where applicable,
Executive’s dependents on the same terms (it being understood
that Executive shall only be responsible for paying the employee
portion of any premium) 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 " AWelfare 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. The Welfare
Benefits provided pursuant to this Section 4(a)(iii) that (x) are
provided following the eighteen-month period following the Date of
Termination and (y) are not non-taxable medical benefits,
"disability pay" or "death benefit" plans within the meaning of
Treasury Regulation Section 1.409A-1(a)(5) shall be treated as
follows: (A) the amount of such benefits provided during one
taxable year shall not affect the amount of such benefits provided
in any other taxable year, except that to the extent such benefits
consist of the reimbursement of expenses referred to in Section
105(b) of the Code, a limitation may be imposed on the amount of
such reimbursements over some or all of the Benefit Continuation
Period, as described in Treasury Regulation
Section 1.409A-3(i)(iv)(B), (B) to the extent that any such
benefits consist of reimbursement of eligible expenses, such
reimbursement must be made on or before the last day of the
calendar year following the calendar year in which the expense was
incurred, (C) no such benefit may be liquidated or exchanged for
another benefit and (D) in no event shall the Company’s
obligations to provide such Welfare Benefits apply later than
Executive’s remaining lifetime (or if longer, through the
20th anniversary of the Effective Date); 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 ").
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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, in the event Executive is entitled to
receive payments under Section 4(a)(ii) above following the
nine-month anniversary of the Date of Termination, subject to
Section 6, Executive agrees, during the period in which he is
entitled to receive such payments following such nine-month
anniversary (the " Mitigation Period "), 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 during the Mitigation Period, the cash severance
payments provided under Section 4(a)(ii) shall be correspondingly
reduced.
(b) 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 Employ
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