Document:

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                                                                  EXECUTION COPY

                                                                     EXHIBIT 4-6

                          FIFTH SUPPLEMENTAL INDENTURE

                                      FROM

                        MICHIGAN CONSOLIDATED GAS COMPANY

                                       TO

                                 CITIBANK, N.A.

                                     TRUSTEE

                           Dated as of October 1, 2004

                             SUPPLEMENT TO INDENTURE

                            Dated as of June 1, 1998

                                  Providing for

                   5.00% Senior Notes, 2004 Series E due 2019

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      This FIFTH SUPPLEMENTAL INDENTURE is made as of the 1st day of October,
2004, by and between MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly
organized and existing under the laws of the State of Michigan (the "Company"),
and CITIBANK, N.A., a national banking association incorporated and existing
under and by virtue of the laws of the United States of America, as trustee (the
"Trustee").

                            RECITALS OF THE COMPANY:

      WHEREAS, the Company has heretofore executed and delivered to the Trustee
an Indenture, dated as of June 1, 1998 (the "Original Indenture"), as amended,
supplemented and modified (as so amended, supplemented and modified, the
"Indenture"), providing for the issuance by the Company from time to time of its
senior debt securities (the "Securities"); and

      WHEREAS, the Company desires to provide for the issuance of a series of
its Securities pursuant to the Indenture; and

      WHEREAS, the Company, in the exercise of the power and authority conferred
upon and reserved to it under the provisions of the Original Indenture,
including Section 10.1 thereof, and pursuant to appropriate resolutions of the
Board of Directors, has duly determined to make, execute and deliver to the
Trustee this Supplemental Indenture to the Original Indenture as permitted by
Section 2.1 and Section 3.1 of the Original Indenture in order to establish the
form or terms of, and to provide for the creation and issue of, a series of its
Securities under the Original Indenture, which shall be known as the "5.00%
Senior Notes, 2004 Series E due 2019" (the "Senior Notes"); and

      WHEREAS, all things necessary to make such Securities, when executed by
the Company and authenticated and delivered by the Trustee or any Authenticating
Agent and issued upon the terms and subject to the conditions hereinafter and in
the Original Indenture set forth against payment therefor, the valid, binding
and legal obligations of the Company and to make this Supplemental Indenture a
valid, binding and legal agreement of the Company, have been done;

      NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE that, in order to establish
the terms of a series of Securities, and for and in consideration of the
premises and of the covenants contained in the Original Indenture and in this
Supplemental Indenture and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, it is mutually covenanted and
agreed as follows:

                                    Article I
                       RELATION TO INDENTURE; DEFINITIONS

      Section 1.01.

      This Supplemental Indenture constitutes an integral part of the Indenture.

      Section 1.02.

      For all purposes of this Supplemental Indenture:

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      (a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to such terms in the Indenture;

      (b) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Supplemental
Indenture; and

      (c) The terms "hereof," "herein," "hereby," "hereto," "hereunder," and
"herewith" refer to this Supplemental Indenture.

                                   Article II
                                 THE SECURITIES

      This Supplemental Indenture hereby establishes a series of Securities,
known as and entitled "5.00% Senior Notes, 2004 Series E due 2019." The
aggregate principal amount of the Securities shall be limited initially to One
Hundred Twenty Million Dollars ($120,000,000) (except for Senior Notes
authenticated and delivered upon transfer of, or in exchange for, or in lieu of,
other Senior Notes); provided that the Company may, without the consent of the
Holders, "reopen" the series of Senior Notes so as to increase the aggregate
principal amount of the Senior Notes in compliance with the procedures set forth
in the Original Indenture, including Section 3.1 and Section 3.3 thereof, and
subject to limitations, if any, on the Company's ability to issue Collateral
Bonds securing the additional Senior Notes, so long as (i) any such additional
Senior Notes have the same tenor and terms as the Senior Notes then Outstanding
(ii) the Insurer shall have consented and (iii) the Insurer shall have issued a
replacement policy reflecting the increase in principal amount of Senior Notes.

      The Senior Notes are not subject to repayment at the option of Holders
thereof and are not subject to any sinking fund. As provided in the form of
Senior Notes attached hereto as Appendix I, the Senior Notes are subject to
optional redemption, as a whole or in part, by the Company prior to the Stated
Maturity of the principal thereof on the terms set forth therein. Except as
modified in the form of the Senior Notes, redemptions shall be effected in
accordance with Article Twelve of the Original Indenture.

      The Senior Notes shall have such other terms and provisions as are set
forth in the form of the Senior Notes attached hereto as Appendix I (which is
incorporated by reference in and made a part of this Supplemental Indenture as
if set forth in full at this place).

      The Senior Notes shall be issuable only in fully registered form and, as
permitted by Section 3.1 and Section 3.2 of the Original Indenture, in
denominations of $1,000 and integral multiples thereof. The Senior Notes will
initially be issued in global form (the "Global Notes") under a book-entry
system, registered in the name of The Depository Trust Company, as depository
("DTC"), or its nominee, which is hereby designated as "U.S. Depositary" under
the Indenture.

      If (i) the U.S. Depositary notifies the Company that it is unwilling or
unable to continue as U.S. Depositary for such Global Note or if at any time
such U.S. Depositary ceases to be a clearing agency registered under the
Securities Exchange act of 1934, and, in either such case, the Company does not
appoint a successor U.S. Depositary within 90 days thereafter, or (ii) there
shall occurred and be continuing a Event of Default or an event which, with the
giving of notice

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or lapse of time, or both, would constitute an Event of Default, certificates
for the Senior Notes will be registered and delivered to Holders of record. Upon
receipt of a withdrawal request from the Company, the U.S. Depositary will
notify its participants of the receipt of a withdrawal request from the Company
and notify its participants that they may utilize the U.S. Depositary's
withdrawal procedures if they wish to withdraw their securities from the U.S.
Depositary. To the extent that the book-entry system is discontinued or, if the
Company fails to appoint a successor U.S. Depositary, certificates for Senior
Notes will be registered and delivered to Holders of record.

                                   Article III
                    DELIVERY AND TRANSFER OF COLLATERAL BONDS

      The Company hereby issues, delivers and transfers to the Trustee in
connection with the issuance of the Senior Notes, One Hundred Twenty Million
Dollars ($120,000,000) aggregate principal amount of a related issue of
Collateral Bonds of the Company designated "First Mortgage Bonds, 2004 Series E
Collateral Bonds" (the "Related Issue of Collateral Bonds" and, together with
all other First Mortgage Bonds issued under the First Mortgage Indenture as
security for Securities issued under the Indenture, "Collateral Bonds"), which
has been fully registered in the name of the Trustee in such capacity, to be
held in trust for the benefit of the Holders from time to time of the Senior
Notes as security for any and all obligations of the Company in respect of the
Senior Notes of this series under the Indenture, this Supplemental Indenture and
the Senior Notes, including but not limited to (1) the full and prompt payment
of the interest on, principal of, and premium, if any, on the Senior Notes when
and as the same shall become due and payable in accordance with the terms and
provisions of the Indenture and this Supplemental Indenture and the Senior
Notes, either at the Stated Maturity, upon acceleration of the maturity or upon
redemption of the Senior Notes, and (2) the full and prompt payment of any
interest on the Senior Notes when and as the same shall become due and payable
in accordance with the terms and provisions of the Indenture and this
Supplemental Indenture and the Senior Notes. The Trustee shall enforce all of
its rights under the First Mortgage Indenture as a holder of the Related Issue
of Collateral Bonds transferred to it as provided in this Article III for the
benefit of the Insurer and the Holders of the Senior Notes and the proceeds of
the enforcement of such rights shall be applied by the Trustee to satisfy the
Company's obligations under the Indenture, this Supplemental Indenture and the
Senior Notes.

      The Company shall make payments of the principal of, and premium or
interest on, the Related Issue of Collateral Bonds to the Trustee, which
payments shall be applied by the Trustee in satisfaction of all obligations then
due on the Senior Notes.

      The Related Issue of Collateral Bonds shall not be sold or transferred by
the Trustee until the earlier of the Release Date or the prior retirement of the
Senior Notes through redemption, repurchase or otherwise. The "Release Date"
shall be the date that all First Mortgage Bonds of the Company issued and
outstanding under the First Mortgage Indenture, other than the Collateral Bonds,
have been retired (at, before or after the maturity thereof) through payment,
redemption or otherwise, provided that no Default or Event of Default has
occurred and, at such time, is continuing under the Indenture.

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                                   Article IV
                                   COVENANTS

      Section 4.01.

      The covenant set forth in Section 11.10 of the Indenture shall apply to
the Senior Notes only from and after the Release Date (unless Substituted
Collateral Bonds are issued to secure the Senior Notes from and after the
Release Date in which case such covenant shall not apply); provided, that, in
any case, the Company may issue, assume or guarantee Indebtedness secured by a
Lien not otherwise permitted under Section 11.10 so long as it effectively
secures the Senior Notes equally and ratably with such Indebtedness.

      Section 4.02.

      The covenant set forth in Section 11.11 of the Indenture shall apply to
the Senior Notes only from and after the Release Date (unless Substituted
Collateral Bonds are issued to secure the Senior Notes from and after the
Release Date in which case such covenant shall not apply).

                                   Article V
                                 MISCELLANEOUS

      Section 5.01.

      The Trustee has accepted the amendment of the Indenture effected by this
Supplemental Indenture and agrees to execute the trust created by the Indenture
as hereby amended, but only upon the terms and conditions set forth in the
Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner
whatsoever for or with respect of any of the recitals or statements contained
herein, all of which recitals or statements are made solely by the Company, or
for or with respect to (a) the validity or sufficiency of this Supplemental
Indenture or any of the terms or provisions hereof, (b) the proper authorization
hereof by the Company by corporate action or otherwise, and (c) the due
execution hereof by the Company.

      Section 5.02.

      This Supplemental Indenture and the Senior Notes shall be construed in
connection with and as a part of the Indenture and shall be governed by the laws
(other than the choice of law provisions) of the State of New York.

      Section 5.03.

      (a) If any provision of this Supplemental Indenture conflicts with another
provision of the Indenture required to be included in indentures qualified under
the Trust Indenture Act of 1939, as amended (as enacted prior to the date of
this Supplemental Indenture), by any of the provisions of Section 310 to 317,
inclusive, of said act, such required provision shall control.

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      (b) In case any one or more of the provisions contained in this
Supplemental Indenture or in the Senior Notes issued hereunder should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected, impaired, prejudiced or disturbed thereby.

      Section 5.04.

      Whenever in this Supplemental Indenture either of the parties hereto is
named or referred to, such name or reference shall be deemed to include the
successors or assigns of such party, and all the covenants and agreements
contained in this Supplemental Indenture by or on behalf of the Company or by or
on behalf of the Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.

      Section 5.05.

      (a) This Supplemental Indenture may be simultaneously executed in several
counterparts, and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.

      (b) The descriptive headings of the several Articles of this Supplemental
Indenture were formulated, used and inserted in this Supplemental Indenture for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.

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      IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
Supplemental Indenture to be executed by its duly authorized Officer and its
corporate seal to be hereunto affixed, and CITIBANK, N.A., as Trustee as
aforesaid, has caused this Supplemental Indenture to be executed by one of its
authorized signatories, as of October 1, 2004.

                                             MICHIGAN CONSOLIDATED GAS COMPANY

[Corporate Seal]                             By: ______________________________
                                                 N.A. Khouri
                                                 Vice President and Treasurer

                                             CITIBANK, N.A., as Trustee

                                             By: ___________________________
                                                 Wafaa Orfy
                                                 Vice President

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CUSIP: 594457BU6                                                      APPENDIX I

No. R-1                                                             $120,000,000

      THIS NOTE IS IN GLOBAL FORM WITHIN THE MEANING OF THE SENIOR INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A U.S. DEPOSITARY OR A
NOMINEE OF A U.S. DEPOSITARY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN
PART FOR A NOTE IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE U.S. DEPOSITARY TO A NOMINEE OF THE U.S. DEPOSITARY OR BY A
NOMINEE OF THE U.S. DEPOSITARY TO THE U.S. DEPOSITARY OR ANOTHER NOMINEE OF THE
U.S. DEPOSITARY OR BY THE U.S. DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY.

      Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.

                        MICHIGAN CONSOLIDATED GAS COMPANY

                               5.00% Senior Notes
                             2004 Series E due 2019

Principal Amount: $120,000,000

Authorized Denomination: $1,000

Regular Record Date: close of business on the 15th calendar day (whether or
not a Business Day) prior to the relevant Interest Payment Date

Original Issue Date: October 4, 2004

Stated Maturity: October 1, 2019

Interest Payment Dates: April 1 and October 1 of each year, commencing April
1, 2005

Interest Rate: 5.00%  per annum

      MICHIGAN CONSOLIDATED GAS COMPANY, a corporation duly organized and
existing under the laws of the State of Michigan (the "Company", which term
includes any successor corporation under the Senior Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co. or
registered assigns, at the office or agency of the

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Company in The City of New York, New York, the principal sum of ONE HUNDRED
TWENTY MILLION DOLLARS ($120,000,000) on October 1, 2019 (the "Stated
Maturity"), in the coin or currency of the United States, and to pay interest
thereon from the Original Issue Date shown above, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on each Interest Payment Date as specified above,
commencing on April 1, 2005 and on the Stated Maturity at the rate per annum
shown above (the "Interest Rate") until the principal hereof is paid or made
available for payment and on any overdue principal and premium and on any
overdue installment of interest. The interest so payable, and punctually paid or
duly provided for, on any Interest Payment Date will, as provided in the Senior
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date as specified above next preceding such Interest Payment Date;
provided that any interest payable at Stated Maturity or on a Redemption Date
will be paid to the Person to whom principal is payable. Except as otherwise
provided in the Senior Indenture, any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Senior Note is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Senior Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange,
if any, on which the Securities of this series shall be listed, and upon such
notice as may be required by any such exchange, all as more fully provided in
the Senior Indenture.

      Payments of interest on this Senior Note will include interest accrued to
but excluding the respective Interest Payment Dates. Interest payments for this
Senior Note shall be computed and paid on the basis of a 360-day year consisting
of twelve 30-day months. The Company shall pay interest on overdue principal and
premium, if any, and, to the extent lawful, on overdue installments of interest
at the rate per annum borne by this Senior Note. In the event that any Interest
Payment Date, Redemption Date or Maturity Date is not a Business Day, then the
required payment of principal, premium, if any, and interest will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay). "Business Day" means any day other than a
day on which banking institutions in the State of New York or the State of
Michigan are authorized or obligated pursuant to law or executive order to
close.

      Payment of principal of, premium, if any, and interest on the Securities
of this series shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payments of principal of, premium, if any, and interest on
Securities of this series represented by a Global Security shall be made by wire
transfer of immediately available funds to the Holder of such Global Security,
provided that, in the case of payments of principal and premium, if any, such
Global Security is first surrendered to the Paying Agent (as defined in the
Senior Indenture). If any of the Securities of this series are no longer
represented by a Global Security, (i) payments of principal, premium, if any,
and interest due at the Stated Maturity or earlier redemption of such Securities
shall be made at the office of the Paying Agent upon surrender of such
Securities to the Paying Agent, and (ii) payments of interest shall be made, at
the option of the Company, subject to such surrender where applicable, (A) by
check mailed to the address of the Person entitled thereto as such

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address shall appear in the Security Register or (B) by wire transfer at such
place and to such account at a banking institution in the United States as may
be designated in writing to the Senior Trustee at least fourteen (14) days prior
to the date for payment by the Person entitled thereto.

      UNTIL THE RELEASE DATE (AS DEFINED ON THE REVERSE HEREOF), THIS SENIOR
NOTE SHALL BE SECURED BY FIRST MORTGAGE BONDS (THE "FIRST MORTGAGE BONDS")
ISSUED AND DELIVERED BY THE COMPANY TO THE SENIOR TRUSTEE (AS DEFINED ON THE
REVERSE HEREOF) UNDER THE COMPANY'S TWENTY-NINTH SUPPLEMENTAL INDENTURE DATED AS
OF JULY 15, 1989, PROVIDING FOR THE RESTATEMENT OF THE INDENTURE OF MORTGAGE AND
DEED OF TRUST DATED AS OF MARCH 1, 1944 BETWEEN THE COMPANY AND CITIBANK, N.A.
(THE "MORTGAGE TRUSTEE") which became effective April 1, 1994, AS SUPPLEMENTED
BY THE THIRTY-EIGHTH SUPPLEMENTAL INDENTURE (AS SO SUPPLEMENTED, THE "MORTGAGE
INDENTURE"). ON THE RELEASE DATE, THE SENIOR NOTES SHALL CEASE TO BE SECURED BY
SUCH FIRST MORTGAGE BONDS AND, AT THE COMPANY'S OPTION, EITHER (i) SHALL BECOME
UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (ii) SHALL BE SECURED BY FIRST
MORTGAGE BONDS UNDER A SECURED MORTGAGE INDENTURE OTHER THAN THE MORTGAGE
INDENTURE.

      Reference is made to the further provisions of this Senior Note set forth
herein. Such further provisions shall for all purposes have the same effect as
though fully set forth at this place.

      This Senior Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Senior Trustee under the Senior Indenture referred to on the reverse
hereof.

      IN WITNESS WHEREOF, MICHIGAN CONSOLIDATED GAS COMPANY has caused this
instrument to be duly executed under its corporate seal.

Dated: October 4, 2004

                                           MICHIGAN CONSOLIDATED GAS COMPANY

                                           By: ______________________________
                                               N.A. Khouri
                                               Vice President and Treasurer

Attest:

By: ______________________________________
    Susan M. Beale
    Vice President and Corporate Secretary

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                         CERTIFICATION OF AUTHENTICATION

Dated: October 4, 2004

      This is one of the Securities of the series designated therein referred to
in the within-mentioned Senior Indenture.

                                              CITIBANK, N.A., as Trustee

                                              By: ______________________________
                                                  Authorized Officer

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                        MICHIGAN CONSOLIDATED GAS COMPANY

                               5.00% Senior Notes
                             2004 Series E due 2019

      1. Senior Indenture. (a) This Senior Note is one of the duly authorized
issue of Securities of the Company (hereinafter called the "Securities") of the
series hereinafter specified, all issued or to be issued under and pursuant to
an Indenture, dated as of June 1, 1998, as supplemented by the First
Supplemental Indenture, dated as of June 18, 1998, the Second Supplemental
Indenture, dated as of June 9, 1999, the Third Supplemental Indenture, dated as
of August 15, 2001 and, Fourth Supplemental Indenture dated as of February 15,
2003, and the Fifth Supplemental Indenture dated as of October 1, 2004 between
the Company and the Trustee (as so supplemented, the "Senior Indenture"), duly
executed and delivered by the Company to Citibank, N.A., as Trustee (herein
called the "Senior Trustee," which term includes any successor trustee under the
Senior Indenture), to which Senior Indenture reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Senior Trustee, the Company and the Holders of the
Securities. The Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions (if any) and may be subject to different
sinking, purchase or analogous funds (if any) and may otherwise vary as provided
in the Senior Indenture. This Security is one of the series designated as the
"5.00% Senior Notes, 2004 Series E due 2019" (the "Senior Notes") of the
Company.

            (b) The Senior Indenture contains provisions for defeasance at any
time of the entire indebtedness of the Senior Notes or certain covenants with
respect thereto upon compliance by the Company with certain conditions set forth
therein.

      2. Defined Terms. The following defined terms used herein shall, unless
the context otherwise requires, have the meanings specified below. Capitalized
terms used herein for which no definition is provided herein shall have the
meanings set forth in the Senior Indenture.

      "Insurance Paying Agent" means U.S. Bank Trust National Association, New
York, New York, or any successor thereto, as the Fiscal Agent under the Policy.

      "Insurer" means MBIA Insurance Corporation, a New York-domiciled stock
insurance corporation.

      "Policy" means the financial guaranty insurance policy issued by the
Insurer with respect to regularly scheduled payments due for principal of and
interest on the Senior Notes as provided in such policy.

      3. Transfer. No service charge will be made for any transfer or exchange
of Senior Notes, but payment will be required of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.

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      The Company shall not be required (a) to issue, transfer or exchange any
Senior Notes except to the Insurer during a period beginning at the opening of
business fifteen (15) days before the day of the mailing of a notice pursuant to
Section 12.4 of the Indenture identifying the serial numbers of the Senior Notes
to be called for redemption, and ending at the close of business on the day of
the mailing, or (b) to transfer or exchange any Senior Notes theretofore
selected for redemption in whole or in part, except the unredeemed portion of
any Senior Note redeemed in part.

      4. Redemption at the Company's Option. The Senior Notes shall be subject
to redemption at the option of the Company, in whole at any time or in part from
time to time (any such date of optional redemption, a "Redemption Date" for
purposes of the Indenture), at an optional redemption price (which shall be a
"Redemption Price" for purposes of the Indenture) equal to the greater of (a)
100% of the principal amount of the Senior Notes to be redeemed on the
Redemption Date and (b) the sum of the present values of the remaining scheduled
payments of principal and interest on the Senior Notes to be redeemed on that
Redemption Date (exclusive of interest accrued to the related Redemption Date)
until Stated Maturity, in each case discounted from their respective scheduled
payment dates to such Redemption Date on a semiannual basis (assuming a 360-day
year consisting of 30-day months) at the Adjusted Treasury Rate (as defined
below) plus 15 basis points as determined by the Reference Treasury Dealer,
plus, in each case, accrued and unpaid interest thereon to the Redemption Date.

      "Adjusted Treasury Rate" means, with respect to any Redemption Date, the
rate per annum equal to the semiannual yield to maturity of the Comparable
Treasury Issue, calculated on the third Business Day preceding such Redemption
Date, using a price for the Comparable Treasury Issue (expressed as a percentage
of its principal amount) equal to the Comparable Treasury Price for such
Redemption Date.

      "Comparable Treasury Issue" means the United States Treasury security
determined by the Reference Treasury Dealer selected by the Company as having a
maturity comparable to the remaining term of the Senior Notes to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the remaining term of the Senior Notes.

      "Comparable Treasury Price" means, with respect to any Redemption Date,
(a) the average of the Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the Senior Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such quotations, or (c) if only
one Reference Treasury Dealer Quotation is received, such quotation.

      "Reference Treasury Dealer" means each of: (a) UBS Securities LLC (or its
affiliates which are Primary Treasury Dealers), and its successors; provided,
however, that if UBS Securities LLC shall cease to be a primary U.S. Government
securities dealer in the United Stated (a "Primary Treasury Dealer"), the
Company shall substitute therefore another Primary Treasury Dealer; and (b) any
other Primary Treasury Dealer(s) selected by the Senior Trustee after
consultation with the Company.

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      "Reference Treasury Dealer Quotation" means, with respect to each
Reference Treasury Dealer and any optional Redemption Date, the average, as
determined by the Senior Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Senior Trustee by such Reference Treasury Dealer at
5:00 p.m. (New York City time) on the third Business Day preceding such
Redemption Date.

      Unless the Company defaults in payment of the applicable Redemption Price,
on and after the applicable Redemption Date interest will cease to accrue on the
principal amount of the Senior Notes called for redemption.

      If money sufficient to pay the applicable Redemption Price with respect to
the principal amount of and accrued interest on the principal amount of the
Senior Notes to be redeemed on the applicable Redemption Date is deposited with
the Senior Trustee or Paying Agent on or before the related Redemption Date and
certain other conditions are satisfied, then on or after such date, interest
will cease to accrue on the principal amount of the Senior Notes called for
redemption.

      If the Company elects to redeem all or a portion of the Senior Notes, the
redemption will be conditional upon receipt by the Paying Agent or the Senior
Trustee of monies sufficient to pay the Redemption Price. If the Senior Notes
are only partially redeemed by the Company, the Senior Trustee shall select
which Senior Notes are to be redeemed in a manner it deems fair and appropriate
in accordance with the terms of the Indenture.

      In the event of redemption of the Senior Notes in part only, a new Senior
Note or Notes for the unredeemed portion will be issued in the name or names of
the Holders thereof upon the surrender thereof.

      The Senior Notes will not have a sinking fund.

      Notice of redemption shall be given as provided in Section 12.4 of the
Indenture.

      Any redemption of less than all of the Senior Notes shall, with respect to
the principal thereof, be divisible by $1,000.

      5. Special Insurance Provisions.

      (a) Supplemental Indentures. The consent of the Insurer shall be required
with respect to any indenture or indentures supplemental to the Indenture
requiring the consent of the Holders of the Senior Notes pursuant to Section
10.2 of the Senior Indenture.

      (b) Events of Default and Remedies. So long as the Special Insurance
Provisions of this paragraph 5 are applicable, an event of default under the
Reimbursement and Indemnity Agreement between the Insurer and the Company, dated
October 1, 2004, will constitute an Event of Default under the Senior Indenture.
Subject to Section 1.7 of the Senior Indenture and to the Trust Indenture Act,
including, without limitation, Sections 316(a)(1) and 317(a) thereof, if an
Event of Default with respect to the Senior Notes occurs and is continuing, the
Insurer shall be entitled to control and direct the enforcement of all rights
and remedies granted to the Holders

                                      I-7
<PAGE>

of the Senior Notes or the Senior Trustee for the benefit of the Holders of the
Senior Notes under the Senior Indenture, including, without limitation, (i) the
right to accelerate the principal of the Senior Notes as provided in Section 6.2
of the Indenture and (ii) the right to annul any such declaration of
acceleration, and the Insurer shall also be entitled to approve any waiver of an
Event of Default with respect to the Senior Notes, the obligation of the Senior
Trustee to comply with any direction to be subject to compliance with the
conditions set forth in Sections 7.3(e) of the Senior Indenture (as if
references in those Sections to Holders were references to the Insurer) and the
protections provided to the Senior Trustee by Sections 315(d)(3) of the Trust
Indenture Act shall be applicable with respect to any direction from the Insurer
given pursuant thereto (as if references in said Section to Holders were
references to the Insurer).

      (c) Insurance Policy Payment Procedures.

            (1) In the event that, on the second Business Day, and again on the
Business Day, prior to the payment date on the Senior Notes, the Senior Trustee
has not received sufficient moneys to pay all principal of and interest on the
Senior Notes due on the second following or following, as the case may be,
Business Day, the Senior Trustee shall immediately notify the Insurer or its
designee on the same Business Day by telephone or telegraph, confirmed in
writing by registered or certified mail, of the amount of the deficiency.

            (2) If the deficiency is made up in whole or in part prior to or on
the payment date, the Senior Trustee shall so notify the Insurer or its
designee.

            (3) In addition, if the Senior Trustee has notice that any Holder
has been required to disgorge payments of principal or interest on the Senior
Notes to a trustee in bankruptcy or creditors or others pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such Holder within the meaning of any applicable
bankruptcy laws, then the Senior Trustee shall notify the Insurer or its
designee of such fact by telephone or telegraphic notice, confirmed in writing
by registered or certified mail.

            (4) The Senior Trustee is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for Holders of the Senior
Notes as follows:

               (i) If and to the extent there is a deficiency in amounts
      required to pay interest on the Senior Notes, the Senior Trustee shall (x)
      execute and deliver to the Insurance Paying Agent, in form satisfactory to
      the Insurance Paying Agent, an instrument appointing the Insurer as agent
      for such Holders in any legal proceeding related to the payment of such
      interest and an assignment to the Insurer of the claims for interest to
      which such deficiency relates and which are paid by the Insurer, (y)
      receive as designee of the respective Holders (and not as Senior Trustee)
      in accordance with the tenor of the Policy payment from the Insurance
      Paying Agent with respect to the claims for interest so assigned, and (z)
      disburse the same to such respective Holders; and

               (ii) If and to the extent there is a deficiency in amounts
      required to pay principal of the Senior Notes, the Senior Trustee shall
      (x) execute and deliver to the Insurance Paying Agent in form satisfactory
      to the Insurance Paying Agent an

                                      I-8
<PAGE>

      instrument appointing the Insurer as agent for such Holders in any legal
      proceeding relating to the payment of such principal and an assignment to
      the Insurer of any of the Senior Notes surrendered to the Insurance Paying
      Agent to the extent of the principal amount thereof as has not previously
      been paid or for which moneys are not held by the Senior Trustee and
      available for such payment (but such assignment shall be delivered only if
      payment from the Insurance Paying Agent is received), (y) receive as
      designee of the respective Holders (and not as Senior Trustee) in
      accordance with the tenor of the Policy payment therefor from the
      Insurance Paying Agent, and (z) disburse the same to such Holders.

      (5) Payments with respect to claims for interest on and principal of
Senior Notes disbursed by the Senior Trustee from proceeds of the Policy shall
not be considered to discharge the obligation of the Company with respect to
such Senior Notes, and the Insurer shall become the owner of such Senior Notes
and claims for the interest thereon in accordance with the tenor of the
assignment made to it under the provisions of this subsection or otherwise.

      (6) Irrespective of whether any such assignment is executed and delivered,
the Company and the Senior Trustee hereby agree for the benefit of the Insurer
that,

               (i) They recognize that to the extent the Insurer makes payments,
      directly or indirectly (as by paying through the Senior Trustee), on
      account of principal of or interest on the Senior Notes, the Insurer will
      be subrogated to the rights of such Holders to receive the amount of such
      principal and interest from the Company, with respect thereon as provided
      and solely from the sources stated in the Senior Indenture and the Senior
      Notes; and

               (ii) They will accordingly pay to the Insurer the amount of such
      principal and interest (including principal and interest recovered under
      subparagraph (ii) of the first paragraph of the Policy, which principal
      and interest shall be deemed past due and not to have been paid), with
      interest thereon as provided in the Senior Indenture and the Senior Notes,
      but only from the sources and in the manner provided herein for the
      payment of principal of and interest on the Senior Notes of Holders, and
      will otherwise treat the Insurer as the owner of such rights to the extent
      of the amount of such principal and interest.

      (7) In connection with the issuance of additional Senior Notes, the
Company shall deliver to the Insurer a copy of the disclosure document, if any,
circulated with respect to such additional Senior Notes.

      (8) Copies of any amendments made to the documents executed in connection
with the issuance of the Senior Notes which are consented to by the Insurer
shall be sent to Standard & Poor's Corporation.

      (9) The Insurer shall receive notice of the resignation or removal of the
Senior Trustee and the appointment of a successor thereto.

                                      I-9
<PAGE>

      (d) Application of Term "Outstanding" to Senior Notes. In the event that
the principal and/or interest due on the Senior Notes shall be paid by the
Insurer pursuant to the Policy, the Senior Notes shall remain Outstanding for
all purposes of the Senior Indenture, not be considered defeased or otherwise
satisfied and not be considered paid by the Company, and the Senior Indenture
and all covenants, agreements and other obligations of the Company to the
Holders of Senior Notes shall continue to exist and such covenants, agreements
and other obligations shall run to the benefit of the Insurer, and the Insurer
shall be subrogated to the rights of such Holders to the extent of such payment.

      (e) Insurer as Third Party Beneficiary. The Insurer is hereby explicitly
recognized as being a third-party beneficiary hereunder.

      (f) Notices. Any notice that is required to be given to a Holder of the
Senior Notes or to the Senior Trustee pursuant to the Senior Indenture shall
also be provided to the Insurer. All notices required to be given to the Insurer
under the Senior Indenture shall be in writing and shall be sent by registered
or certified mail addressed to MBIA Insurance Corporation, 113 King Street,
Armonk, New York 10504, Attention: IPM-PCF.

      (g) Application of Special Insurance Provisions. These Special Insurance
Provisions shall apply notwithstanding anything in the Senior Indenture to the
contrary, but only so long as the Policy shall be in full force and effect and
the Insurer is not in default thereunder or the subject of bankruptcy,
insolvency or similar proceedings except that the Insurer's subrogation rights
shall continue to apply to the extent of any payments made by the Insurer under
the Policy.

      (h) Amendments or Supplements. The Senior Trustee, in determining whether
any amendments or supplements to the Senior Indenture may be made without the
consent of the Holders, or in determining whether any action should be taken,
shall consider the effect of such action on the rights of the Holders as if the
Policy were not in effect.

      6. Security; Release Date. Prior to the Release Date (as hereinafter
defined), the Senior Notes shall be secured by First Mortgage Bonds designated
as 2004 Series E Collateral Bonds (the "Collateral Bonds"), delivered by the
Company to the Senior Trustee for the benefit of the Holders of the Senior
Notes. Prior to the Release Date, the Company shall make payments of the
principal of, and premium, if any, and or interest on, the Collateral Bonds to
the Senior Trustee, which payments shall be applied by the Senior Trustee to
satisfaction of all obligations then due on the Senior Notes. Reference is made
to the Mortgage Indenture and the Senior Indenture for a description of the
rights of the Senior Trustee as holder of the Collateral Bonds, the property
mortgaged and pledged under the Mortgage Indenture and the rights of the Company
and of the Mortgage Trustee in respect thereof, the duties and immunities of the
Mortgage Trustee and the terms and conditions upon which the Collateral Bonds
are secured and the circumstances under which additional First Mortgage Bonds
may be issued.

      FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN
COLLATERAL BONDS) ISSUED UNDER THE MORTGAGE INDENTURE HAVE BEEN RETIRED THROUGH
PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE OR AFTER THE MATURITY THEREOF (THE
"RELEASE DATE"), THE COLLATERAL BONDS SHALL CEASE TO SECURE THE SENIOR NOTES IN
ANY MANNER

                                      I-10
<PAGE>

PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND AT SUCH TIME IS
CONTINUING UNDER THE SENIOR INDENTURE. IN CERTAIN CIRCUMSTANCES PRIOR TO THE
RELEASE DATE AS PROVIDED IN THE SENIOR INDENTURE, THE COMPANY IS PERMITTED TO
REDUCE THE AGGREGATE PRINCIPAL AMOUNT OF A SERIES OF COLLATERAL BONDS HELD BY
THE SENIOR TRUSTEE, BUT IN NO EVENT PRIOR TO THE RELEASE DATE TO AN AMOUNT LESS
THAN THE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE SERIES OF SENIOR NOTES
INITIALLY ISSUED CONTEMPORANEOUSLY WITH SUCH COLLATERAL BONDS.

      7. Effect of Event of Default. In case an Event of Default with respect to
the Senior Notes shall occur and be continuing, the unpaid principal of the
Senior Notes may, subject to the Special Insurance Provisions, be declared due
and payable, in the manner, with the effect and subject to the conditions
provided in the Senior Indenture.

      8. Amendments and Waivers. The Senior Indenture may be modified by the
Company and the Senior Trustee without consent of any Holder with respect to
certain matters as described in the Indenture. So long as the Policy shall be in
full force and effect and the Insurer is not in default thereunder or the
subject to bankruptcy, insolvency or similar proceedings, the Insurer must
consent to any such amendment which impacts the Senior Notes insured. In
addition, the Senior Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Senior Indenture at any time by the Company
and the Senior Trustee with the consent of (a) the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected and (b) so long as the Special Insurance Provisions of paragraph 5
above are applicable, the Insurer. The Senior Indenture also contains provisions
permitting the Holders of a majority in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Senior Indenture and certain past defaults under the Senior Indenture and
their consequences. Any such consent or waiver by the Holder of this Senior Note
shall bind such Holder and all future Holders of this Senior Note and of any
note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Senior Note.

      9. Obligations of Company. No reference herein to the Senior Indenture and
no provision of this Senior Note or of the Senior Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of and any premium, if any, and interest on this Senior Note
at the time, place, and rate and in the coin or currency herein prescribed.

      10. Denominations, Transfer and Exchange. (a) The Senior Notes are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Senior Indenture and subject
to certain limitations therein set forth, Senior Notes of this series are
exchangeable for a like aggregate principal amount of Senior Notes of this
series of a different authorized denomination, as requested by the Holder
surrendering the same.

                                      I-11
<PAGE>

      (b) As provided in the Senior Indenture and subject to certain limitations
therein set forth, the transfer of this Senior Note is registrable in the
Security Register, upon surrender of this Senior Note for registration of
transfer at the office or agency of the Company in any place where the principal
of (and premium, if any) and interest on this Senior Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Senior Notes of this series, and of like tenor, of authorized
denominations and for the same maturity and aggregate principal amount, shall be
issued to the designated transferee or transferees.

      (c) No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Prior to
due presentment of this Senior Note for registration of transfer, the Company,
the Senior Trustee and any agent of the Company or the Senior Trustee may treat
the Person in whose name this Senior Note is registered as the owner hereof for
all purposes, whether or not this Senior Note be overdue, and neither the
Company, the Senior Trustee nor any such agent shall be affected by notice to
the contrary.

      11. No Liability of Certain Persons. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under this Senior Note or the Senior Indenture or for
any claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder, by accepting a Senior Note, waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of this Senior Note.

      12. Governing Law. The Senior Indenture and this Senior Note shall for all
purposes be governed by, and construed in accordance with, the internal laws of
the State of New York.

                             STATEMENT OF INSURANCE

      The Insurer has issued a financial guarantee insurance policy (the
"Policy") containing the following provisions, such policy being on file at
Citibank, N.A., New York, New York:

      The Insurer, in consideration of the payment of the premium and subject to
the terms of the Policy, hereby unconditionally and irrevocably guarantees to
any owner, as hereinafter defined, of the following described Obligations, the
full and complete payment required to be made by or on behalf of the Company to
Citibank, N.A., or its successor (the "Paying Agent"), of an amount equal to (i)
the principal of (either at the stated maturity or by any advancement of
maturity pursuant to a mandatory sinking fund payment) and interest on, the
Obligations (as that term is defined below) as such payments shall become due
but shall not be so paid (except that in the event of any acceleration of the
due date of such principal by reason of mandatory or optional redemption or
acceleration resulting from default or otherwise, other than any advancement of
maturity pursuant to a mandatory sinking fund payment, the payments guaranteed
hereby shall be made in such amounts and at such times as such payments of
principal would have been due had there not been any such acceleration); and
(ii) the reimbursement of any such payment which is subsequently recovered from
any owner pursuant to a final judgment by a court of competent

                                      I-12
<PAGE>

jurisdiction that such payment constitutes an avoidable preference to such owner
within the meaning of any applicable bankruptcy law. The amounts referred to in
clauses (i) and (ii) of the preceding sentence shall be referred to herein
collectively as the "Insured Amounts." "Obligations" shall mean:

                                  $120,000,000
                        Michigan Consolidated Gas Company
                   5.00% Senior Notes, 2004 Series E Due 2019

      Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer from the Paying Agent or
any owner of an Obligation the payment of an Insured Amount for which is then
due, that such required payment has not been made, the Insurer on the due date
of such payment or within one business day after receipt of notice of such
nonpayment, whichever is later, will make a deposit of funds, in an account with
U.S. Bank Trust National Association, in New York, New York, or its successor,
sufficient for the payment of any such Insured Amounts which are then due. Upon
presentment and surrender of such Obligations or presentment of such other proof
of ownership of the Obligations, together with any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due on the
Obligations as are paid by the Insurer and appropriate instruments to effect the
appointment of the Insurer as agent for such owners of the Obligations in any
legal proceeding related to payment of Insured Amounts on the Obligations, such
instruments being in a form satisfactory to U.S. Bank Trust National
Association, U.S. Bank Trust National Association shall disburse to such owners
or the Paying Agent payment of the Insured Amounts due on such Obligations, less
any amount held by the Paying Agent for the payment of such Insured Amounts and
legally available therefor. The Policy does not insure against loss of any
prepayment premium which may at any time be payable with respect to any
Obligation.

      As used herein, the term "owner" shall mean the registered owner of any
Obligation as indicated in the books maintained by the Paying Agent, the
Company, or any designee of the Company for such purpose. The term "owner" shall
not include the Company or any party whose agreement with the Company
constitutes the underlying security for the Obligations.

      Any service of process on the Insurer may be made to the Insurer at its
offices located at 113 King Street, Armonk, New York 10504 and such service of
process shall be valid and binding.

      This Policy is non-cancellable for any reason. The premium on this Policy
is not refundable for any reason including the payment prior to maturity of the
Obligations.

                                      I-13
<PAGE>

      THE FOLLOWING ABBREVIATIONS SHALL BE CONSTRUED AS THOUGH THE WORDS SET
FORTH BELOW OPPOSITE EACH ABBREVIATION WERE WRITTEN OUT IN FULL WHERE SUCH
ABBREVIATION APPEARS:

TEN COM -- as tenants in common   (Name) CUST (Name) UNIF -- (Name) as Custodian
TEN ENT -- as tenants by the      GIFT MIN ACT (state) for (name) under the
           entirety                     (State) Uniform Gifts to Minors Act
JF TEN -- as joint tenants with
          right of survivorship
          and not as tenants
          in common

ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.

                 ______________________________________________

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

_______________________________________________________________________________

             (Insert assignee's social security or tax I.D. number)

_______________________________________________________________________________
              (Print or type assignee's name, address and zip code)

and irrevocably appoint ______________________________ agent to  transfer
this Note on the books of the Company. The agent may substitute another to act
for him.

Dated: ________________          Your Signature: _______________________________
                                                 (Sign exactly as your name
                                                 appears on the other side of
                                                 this Note)

Signature Guarantee: ___________________________________________________________
                     (Signatures must be guaranteed by an "eligible guarantor
                     institution" meeting the requirements of the Transfer
                     Agent, which requirements will include membership or
                     participation in STAMP or such other "signature guarantee
                     program" as may be determined by the Transfer Agent in
                     addition to, or in substitution for, STAMP, all in
                     accordance with the Exchange Act.)

Social Security Number or Taxpayer Identification
Number: ____________________________________________

                                      I-14exv10w1

 

EXHIBIT 10.1

Borders Group, Inc.

Non-Qualified

Deferred Compensation Plan

Effective as of January 1, 2005

 

 

	 	 	 
	Article I
	 	 
	Establishment and Purpose
	 	Page 3
	Article II
	 	 
	Definitions
	 	Page 3
	Article III
	 	 
	Eligibility and Participation
	 	Page 8
	Article IV
	 	 
	Deferral Elections, Company Contributions, Account Valuation
	 	Page 9
	Article V
	 	 
	Distributions and Withdrawals
	 	Page 14
	Article VI
	 	 
	Administration
	 	Page 16
	Article VII
	 	 
	Amendment and Termination
	 	Page 17
	Article VIII
	 	 
	Informal Funding
	 	Page 18
	Article IX
	 	 
	Claims
	 	Page 19
	Article X
	 	 
	General Conditions
	 	Page 23

 

 

ARTICLE I

Establishment and Purpose

The Borders Group, Inc. Non-Qualified Deferred Compensation Plan (the “Plan”)
has been established by Borders Group, Inc., a Michigan Corporation (the
“Company”), effective as of January 1, 2005 (the “Effective Date”), with
respect to Eligible Employees (as defined in Section 2.21). The purpose of the
Plan is to provide certain Eligible Employees with an opportunity to defer the
receipt and income taxation of a portion of such employees’ annual
compensation. The Plan is intended to be an unfunded arrangement maintained
primarily for the purpose of providing deferred compensation to a select group
of management or highly compensated employees of the Company. The Plan is
intended to be exempt from the requirements of Parts 2, 3 and 4 of Title I of
ERISA as a “top hat” plan, and to be eligible for the alternative method of
compliance for reporting and disclosure available for unfunded “top hat” plans.
The Plan is also intended to comply with the requirements of Code Section 409A
so that all compensation deferred under the Plan for any taxable year shall not
be includible in gross income for such taxable year.

ARTICLE II

Definitions

	2.1	 	Account. Account means a bookkeeping account maintained by the Company to
record deferrals allocated to it by the Participant, Company Contributions
(if any), Deemed Investments, distributions, and such other transactions,
if any, that may be required to properly administer the Plan. An Account
shall be utilized solely as a device for the measurement of the value of
the Account Balance to be paid to the Participant under the Plan. The
Account shall not constitute or be treated as an escrow, trust fund, or
any other type of funded account for Code or ERISA purposes and amounts
credited thereto shall not be considered “plan assets” for federal income
tax or ERISA purposes.
	 
	2.2	 	Account Balance. Account Balance means, with respect to the Deferred
Compensation Account or any component Account, the total value of all the
Investment Options in which the Participant deferrals, and Company
Contributions (if any), have been Deemed Invested as of a specific date,
taking into account the value of all distributions from that Account.
	 
	2.3	 	Allocation Election. Allocation Election means a choice by a Participant
of one or more Investment Options, and the allocation among them, in which
future Participant deferrals and/or existing Account Balances are Deemed
Invested for purposes of determining earnings in a particular Account.
	 
	2.4	 	Annual Valuation Date. Annual Valuation Date means the anniversary of the
Termination Valuation Date or In Service Valuation Date utilized to
determine the amount of an annual installment payment.

-3-

 

	2.5	 	Beneficiary. Beneficiary means a natural person, estate, or trust
designated by a Participant to receive benefits to which a Beneficiary is
entitled in accordance with provisions of the Plan. The Participant’s
spouse, if living, otherwise the Participant’s estate, shall be the
Beneficiary if:

	(a)	 	the Participant has not designated a natural person or trust
as Beneficiary, or
	 
	(b)	 	the designated Beneficiary(ies) has/have all predeceased the
Participant.

	2.6	 	Change in Control. Change in Control means a “change in ownership or
effective control” as such phrase is defined in guidance issued by the
Secretary of the Treasury in accordance with Section 409A(e) of the Code.
	 
	2.7	 	Code. Code means the Internal Revenue Code of 1986, as amended from time
to time.
	 
	2.8	 	Company. Company means Borders Group, Inc.
	 
	2.9	 	Company Contributions. Company Contributions means all Company Matching
and Discretionary Contributions made with respect to a Participant.
	 
	2.10	 	Company Discretionary Contribution. Company Discretionary Contribution
means a credit to a Participant’s Retirement Account by the Company or a
Participating Employer at a time and in an amount determined in the sole
discretion of the Company or the Participating Employer.
	 
	2.11	 	Company Matching Contribution. Company Matching Contribution means a
credit to a Participant’s Deferred Compensation Account (or Account) by
the Company or a Participating Employer calculated by the Plan
Administrator to be a pre-set fraction or multiple of the amount of a
Participant’s deferral in accordance with the provisions of Section 4.3 of
this Plan.
	 
	2.12	 	Compensation. Compensation means, for purposes of the Plan:

	(a)	 	the Participant’s annual base salary from his Employer for
the Plan Year paid or payable in a regular salary paycheck while an
active Participant in the Plan, including any amounts deferred under
the Plan or any other nonqualified deferred compensation plan and
any amounts contributed by the Employer on the Participant’s behalf
pursuant to a salary deferral agreement which amounts are not
includible in the Participant’s income under Code Section 125,
132(f)(4) or 402(g)(3); and
	 
	(b)	 	the Participant’s variable compensation, if any, from his
Employer for services performed during the Plan Year, including, but
not limited to, bonus amounts and management incentive compensation
for service performed while an active Participant in the Plan.

	2.13	 	Compensation Deferral Agreement. Compensation Deferral Agreement means
the written deferral election form furnished by the Plan Administrator, or
the screen or screens on the

-4-

 

	 	 	Participant website approved by the Plan Administrator, on which a
Participant agrees to participate in the Plan, be bound by the provisions
of the Plan document, and elects: (a) the amount of deferral and type of
Compensation to be deferred beginning the first day of the following Plan
Year; (b) any In Service Distribution Dates for that year’s, or a portion
of that year’s, deferrals; and (c) the Participant’s Payment Schedule
election for the Retirement Benefit and for In Service Distributions.
	 
	2.14	 	Death Benefit. Death Benefit shall mean a distribution of the total
amount of the Participant’s Deferred Compensation Account Balance,
including any remaining unpaid In Service Account balances, to the
Participant’s Beneficiary(ies) in accordance with Article V of the Plan.
	 
	2.15	 	Deemed Investment. A Deemed Investment (or “Deemed Invested”) means the
conversion of a dollar amount of deferred Compensation and Company
Contributions (if any) credited to a Participant’s Deferred Compensation
Account into notional shares or units or ownership (or a fraction of such
measures of ownership, if applicable) of a security (e.g., mutual fund or
other investment) which is referred to by the Investment Option(s)
selected by the Participant. The conversion shall occur as if shares (or
units) of the designated investment were being purchased (or sold, in the
case of a distribution) at the purchase price as of the close of business
of the day on which the Deemed Investment occurs. At no time shall a
Participant have any real or beneficial ownership in the actual security
to which the Investment Option refers, irrespective of whether such a
Deemed Investment is mirrored by an actual identical investment by the
Company or a trustee acting on behalf of the Company.
	 
	2.16	 	Deferred Compensation Account. Deferred Compensation Account means the
Account that records the total amount of liability of the Company to the
Participant at any point in time, and includes all In Service Accounts,
the Retirement Account, and any other Account maintained by the Plan
Administrator (e.g., a separate Company Contribution Account) to properly
administer the Plan.
	 
	2.17	 	Disability. Disability means that a Participant: (i) is unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or can be expected to last for a continuous period of not less
than twelve months; or, (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than twelve
months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of
the Participant’s Employer.
	 
	2.18	 	Disability Benefit. Disability Benefit shall mean a payment by the
Company or Participating Employer of the Participant’s Deferred
Compensation Account Balance, including all unpaid In Service Account
Balances, to the Participant in a single lump sum.
	 
	2.19	 	Eligible Employee. Eligible Employee means, for a Plan Year or portion of
a Plan Year, an individual:

-5-

 

	(a)	 	who is an employee of an Employer, exclusive of any employee
who provides services to an Employer under a contract or arrangement
with either the individual or with an agency or leasing organization
that treats the individual as either an individual contractor or an
employee of such agency or leasing organization, even if such
individual is later determined to have been a common law employee of
the Employer rather than an independent contractor or an employee of
such agency or leasing organization;
	 
	(b)	 	who is a member of a select group of management or highly
compensated employees; and
	 
	(c)	 	either (i) who, for such Plan Year, has satisfied such
minimum compensation or other classification requirements
established from time to time by the Plan Administrator, or (ii) who
otherwise is designated by the Plan Administrator, in its sole
discretion, as eligible to elect to participate in the Plan.

	2.20	 	Employee. Employee means a full-time salaried employee of the Company or
a Participating Employer.
	 
	2.21	 	ERISA. ERISA means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
	 
	2.22	 	In Service Distribution. In Service Distribution means a payment by the
Company or a Participating Employer to the Participant following a date
elected by the Participant (the In Service Distribution Date) of the
amount represented by the Account Balance in the In Service Account
pertaining to that In Service Distribution. In Service Distributions shall
be made in accordance with the Participant’s In Service Distribution
Payment Schedule election.
	 
	2.23	 	In Service Account. In Service Account means a separate Account of the
Deferred Compensation Account, created whenever a Participant elects a new
In Service Distribution Date (not already established with an Account)
with respect to a portion, or all, of his or her deferred Compensation, to
which such portion of deferral specified by the Participant is credited
and Deemed Invested in accordance with the Participant’s Allocation
Election.
	 
	2.24	 	In Service Distribution Date. In Service Distribution Date means the date
during the first quarter of the year selected by the Participant on which
the In Service Distribution Account Balance shall be distributed in
accordance with the Participant’s In Service Distribution Payment Schedule
election.
	 
	2.25	 	In Service Valuation Date. In Service Valuation Date means January 15 of
the year of distribution.
	 
	2.26	 	Investment Option. Investment Option means a notional security such as a
mutual fund, life insurance policy separate account, or other investment
approved by the Plan Administrator for use as part of an Investment Option
menu, which a Participant may

-6-

 

	 	 	elect as a measuring device to determine Deemed Investment earnings
(positive or negative) to be valued in the Participant’s Account(s). The
Participant has no real or beneficial ownership in the security or other
investment represented by the Investment Option.
	 
	2.27	 	Participant. Participant means any Eligible Employee who has been
admitted to, and has not been removed from, participation in the Plan
pursuant to Article III.
	 
	2.28	 	Participating Employer. Participating Employer means a subsidiary or
affiliate of the Company that has adopted the Plan for Eligible Employees
that it employs and that assumes responsibility for payment of benefits to
its Participant Employees in accordance with the terms of the Plan. The
Company and Participating Employers are sometimes referred to herein
collectively as the “Employers” and individually as an “Employer”.
	 
	2.29	 	Payment Schedule. Payment Schedule means the method and timing of a
distribution (e.g., single lump sum or installment payments) as elected by
the Participant for distributions that permit Payment Schedule elections
under the Plan.
	 
	2.30	 	Plan. Plan means the Borders Group, Inc. Non-Qualified Deferred
Compensation Plan, as may be amended from time to time.

	2.31	 	Plan Administrator. Plan Administrator means the Company, or such
organization or person(s) appointed by the Board of Directors of the
Company to administer the Plan.
	 
	2.32	 	Plan Year. Plan Year means January 1 through December 31.
	 
	2.33	 	Retirement. Retirement shall mean the voluntary termination of employment
with the Company or a Participating Employer upon reaching age 62, or
after reaching age 55 with at least ten (10) years of service with the
Company or a Participating Employer.
	 
	2.34	 	Retirement Benefit. Retirement Benefit shall mean a payment by the
Company or Participating Employer of the Participant’s Deferred
Compensation Account Balance, including all unpaid In Service Account
Balances, to the Participant in accordance with the Participant’s Payment
Schedule election or as otherwise specified in Article V of the Plan.
	 
	2.35	 	Retirement Account. Retirement Account shall mean that portion of the
Deferred Compensation Account not allocated to In Service Accounts.
	 
	2.36	 	Termination Benefit. Termination Benefit shall mean a payment by the
Company or Participating Employer of the Participant’s Deferred
Compensation Account Balance, including all unpaid In Service Account
Balances, to the Participant in a single lump sum.
	 
	2.37	 	Termination of Employment. Termination of Employment shall mean the
termination of a Participant’s employment with the Company (or
Participating Employer that is the Participant’s employer), for any
reason. The foregoing notwithstanding, as determined in

-7-

 

	 	 	the sole discretion of the Plan Administrator, if a Participant transfers
to the employ of a Participating Employer (or the Company) after
terminating employment with another Participating Employer (or the
Company), no Termination of Employment shall be deemed to have occurred
for purposes of this Plan.
	 
	2.38	 	Termination Valuation Date. Termination Valuation Date shall mean the
last day of the calendar quarter in which Termination of Employment
occurs. The foregoing notwithstanding, in the event a Participant is a
“key employee” as defined in Code Section 416(i) at the time of such
Participant’s Termination of Employment, then Termination Valuation Date
shall mean the last day of the calendar quarter that is at least six (6)
months after the date of Termination of Employment.

ARTICLE III

Eligibility and Participation

	3.1	 	Eligibility and Participation. Each Employee shall become an Eligible
Employee as of the date he is notified by the Plan Administrator or its
delegate that he has been selected to become an Eligible Employee. The
Plan Administrator shall determine such factors as it, in its sole
discretion, considers pertinent in selecting Eligible Employees. Each
Eligible Employee may irrevocably elect to have deferrals made on his
behalf for a Plan Year, or a portion of a Plan Year, pursuant to Section
4.1 and thereby become a Plan Participant. A Participant must complete
such forms and provide such data in a timely manner as is required by the
Plan Administrator. Such forms and data may include, without limitation,
his acceptance of the terms and conditions of the Plan and his designation
of a Beneficiary to receive any Death Benefits hereunder.
	 
	3.2	 	Duration. Once an Employee becomes a Participant, such Employee shall
continue to be a Participant so long as he or she is entitled to receive
benefits hereunder, notwithstanding any subsequent Termination of
Employment.
	 
	3.3	 	Revocation of Future Participation. Notwithstanding the provisions of
Section 3.2, the Plan Administrator may revoke such Participant’s
eligibility to make future deferrals under this Plan. Such revocation will
not affect in any manner a Participant’s Deferred Compensation Account or
other terms of this Plan.
	 
	3.4	 	Notification. Each newly Eligible Employee shall be notified by the Plan
Administrator, in writing, of his or her eligibility to participate in
this Plan.
	 
	3.5	 	Application of ERISA. It is the intent of the Company that the Plan be
exempt from Parts 2, 3, and 4 of Subtitle B of Title I of ERISA as an
unfunded plan that is maintained by the Company primarily for the purpose
of providing deferred compensation for a select group of management or
highly compensated employees (the “ERISA exemption”). Notwithstanding
anything to the contrary in this Article III or in any other provision of
the Plan, the Plan Administrator may in its sole discretion exclude any
one or more

-8-

 

	 	 	Eligible Employees from eligibility to participate or from participation
in the Plan, may exclude any Participant from continued participation in
the Plan, and may take any further action it considers necessary or
appropriate if the Plan Administrator reasonably determines in good faith
that such exclusion or further action is necessary in order for the Plan
to qualify for, or to continue to qualify for, the ERISA exemption.

ARTICLE IV

Deferral Elections, Company Contributions, and Participant Account Valuation

	4.1	 	Deferral Elections, generally

	(a)	 	A Participant shall make deferral elections by completing and
submitting to the Plan Administrator the Compensation Deferral
Agreement (or by completing and electronically submitting the
deferral election screen on the Participant website, when made
available by the Plan Administrator). Deferral elections pertaining
to base salary shall be made within the time period prescribed by
the Plan Administrator, but before the first day of the Plan Year
for which the base salary to be deferred is payable. Deferral
elections for bonuses which qualify as “performance-based
compensation” based on services performed over a period of at least
twelve months under Code Section 409A (and regulations and other
published governmental guidance with regard thereto) shall be made
no later than six (6) months prior to the end of the period over
which performance is evaluated in order to determine the amount of
the bonus. Deferral elections pertaining to other bonuses shall be
made no later than the close of the taxable year prior to the
beginning of the period during which services are performed upon
which the bonus is determined.
	 
	(b)	 	Notwithstanding the foregoing, a newly Eligible Employee who
becomes eligible to be a Participant during December of any Plan
Year may make deferral elections with respect to Compensation which
will be earned during the portion of the following Plan Year which
is after such election, within 30 days of the date of notification
of eligibility as required in Section 3.4 of the Plan.
	 
	(c)	 	Deferral elections pertaining to base salary shall be for an
entire Plan Year and will remain in effect only during the Plan Year
to which they refer. New deferral elections pertaining to base
salary must be made prior to each Plan Year in order to defer base
salary during such Plan Year. Such new deferral elections shall
become effective on the first day of the Plan Year following the
date of the election. Deferral elections pertaining to bonus shall
be for bonuses payable with respect to a particular performance
period and will remain in effect only for the particular bonus and
performance period to which they refer.
	 
	(d)	 	A deferral election shall designate the amount of
Compensation to be deferred in a dollar amount or in whole
percentages, as determined by the Plan Administrator

-9-

 

	 	 	from time to time. The Plan Administrator may establish a maximum
deferral amount for each component of Compensation, may permit
separate elections for each component of Compensation, and may
change the maximum prospectively.
	 
	(e)	 	The foregoing paragraphs under this Section 4.1
notwithstanding, a Participant’s deferral election shall be reduced
by the Plan Administrator, in its sole discretion, to the extent
necessary to provide the Participant with sufficient Compensation to
satisfy his employment tax deductions, wage withholding and any
other payroll deductions.
	 
	(f)	 	Deferrals pertaining to base salary shall be deducted on a
pro rata basis from a Participant’s base salary on each payday
during the Plan Year (the “deferral date”). Deferrals pertaining to
other components of Compensation (e.g., bonuses) shall be deducted
from the Participant’s Compensation on the date such component of
Compensation is (or would otherwise be) paid (the “deferral date”).
All deferrals shall be credited to the appropriate Account and a
Deemed Investment shall be made in the investment(s) represented by
the Investment Option(s) elected by the Participant as of the close
of business on the deferral date or as otherwise provided by the
Plan Administrator.
	 
	(g)	 	A Participant may not modify or revoke a deferral election
during a Plan Year or with respect to a bonus performance period by
changing the amount of the Compensation deferral.
	 
	(h)	 	The Compensation Deferral Agreement (or Participant website
screen) shall indicate the Participant’s election of a Payment
Schedule for a Participant’s Retirement Benefit. As may be
determined from time to time by the Plan Administrator in its sole
discretion, permissible Payment Schedule elections for the
Retirement Benefit include: (a) a portion, or all, in a single lump
sum payable within 30 days following the Termination Valuation Date;
and (b) the balance (if any) in up to ten (10) annual installment
payments payable at the time described in Section 5.4. An election
of a Retirement Benefit Payment Schedule shall pertain to the entire
Retirement Benefit Account Balance. A Participant shall be permitted
to change his or her Retirement Benefit Payment Schedule election at
any time by filing a new Compensation Deferral Agreement (or by
following such procedures as are set by the Plan Administrator
regarding using the Participant website, when available), provided
such election is made at least thirteen (13) months prior to the
Participant’s date of Retirement, and provided further that any such
change does not accelerate the time or schedule of any payment under
the Plan except as provided in Treasury Regulations. Any Payment
Schedule election made within thirteen months of Retirement shall be
null and void, and the most recent valid Payment Schedule election
which is dated at least thirteen months prior to Retirement shall be
deemed to be in effect. In the event a Participant has not made a
valid Payment Schedule election, the Retirement Benefit will be paid
in a single lump sum.

-10-

 

	4.2	 	In Service Distribution Date Election.

	(a)	 	The Compensation Deferral Agreement (or Participant website
screen) shall also indicate the Participant’s election of In Service
Distribution Date(s) (if any). An In Service Distribution Date must
be at least one (1) full year from the end of the Plan Year during
which deferrals will be credited to the corresponding In Service
Account.
	 
	(b)	 	An In Service Distribution election shall pertain to such
portion of deferred Compensation for the Plan Year as elected by the
Participant. The Plan Administrator shall create an In Service
Account for each unique In Service Distribution Date, unless such
Account already exists, to which such portion of deferred
Compensation shall be credited. In the event an In Service Account
has already been established for the In Service Distribution Date
referred to in the deferral election, such portion of deferred
Compensation shall be credited to the existing In Service Account.
	 
	(c)	 	A Participant may maintain up to five (5) In Service Accounts
at any one point in time.
	 
	(d)	 	A Participant may change or cancel an In Service Distribution
Date, as follows:

	(i)	 	An In Service Distribution Date change (including
a cancellation) may be made by submitting a new Compensation
Deferral Agreement or such other form as may be provided for
In Service Distribution Date changes by the Plan Administrator
(or completing and electronically submitting the appropriate
screen on the Participant website, when available) at any
time, provided that the date that such form is submitted to
the Plan Administrator is at least thirteen (13) months prior
to the In Service Distribution Date being changed, and
provided further that any such change does not accelerate the
time or schedule of any payment under the Plan except as
provided in Treasury Regulations;
	 
	(ii)	 	The In Service Distribution Date may be extended
to a subsequent year (and must be extended by at least five
full years). If the new date corresponds to an existing In
Service Distribution Date, the In Service Accounts will be
combined into one In Service Account. In Service Distribution
Dates may not be accelerated;
	 
	(iii)	 	The In Service Distribution Date may be
cancelled, even after a change. A cancellation of an In
Service Distribution Date shall cause the In Service Account
associated with it to be merged into the Retirement Account;
	 
	(iv)	 	Making an In Service Distribution Date change or
cancellation in accordance with the Plan must pertain to the
entire In Service Account Balance. Such a modification is
specific to the In Service Distribution to

-11-

 

	 	 	which it refers, and shall not affect other In Service
Distributions (except as provided in (ii) herein) or the
ability of the Participant to make new In Service
Distribution elections with respect to new deferral
contributions so long as the total number of In Service
Distribution Dates does not exceed three (3), or the maximum
set by the Plan Administrator if greater.

	(e)	 	Any portion of a deferral not credited to an In Service
Distribution Account will be credited to the Retirement Account.
	 
	(f)	 	The Compensation Deferral Agreement shall also indicate the
Participant’s Payment Schedule election for each In Service
Distribution Date. Permissible Payment Schedules for In Service
Distributions are: (a) a single lump sum or (b) from two (2) to
five (5) annual installment payments. A Participant shall be
permitted to change his or her In Service Payment Schedule election
at any time by filing a new Compensation Deferral Agreement (or by
following such procedures as are set by the Plan Administrator
regarding using the Participant website, when available), provided
such election is made at least thirteen (13) months prior to the In
Service Distribution Date, and provided further that any such change
does not accelerate the time or schedule of any payment under the
Plan except as provided in Treasury Regulations.

	4.3	 	Company Contributions and Vesting

	(a)	 	Company Matching Contributions. The Company or a
Participating Employer may, in its sole discretion, elect to make
Company Matching Contributions. Unless otherwise communicated to
Participants, the Company Matching Contribution formula is $.50 for
each $1.00 of Compensation deferred by a Participant, with a maximum
contribution of $3,000 per Plan Year. The Company Matching
Contribution shall be credited to the account of a Participant only
if such Participant is employed by his Employer on the last day of
the Plan Year. The Company Matching Contribution shall be credited
to the Participant’s Account(s) in the same proportion as the
Participant has elected for his or her Compensation that is being
matched. Such credit shall be made on the last day of the Plan
Year, unless otherwise specified in the Company Matching
Contribution formula. Contribution formulas may be changed for
future Plan Years, but may not be changed during a Plan Year.
Company Matching Contributions are immediately 100% vested.
	 
	(b)	 	Company Discretionary Contributions. The Company or a
Participating Employer may, in its sole and absolute discretion,
make Company Discretionary Contributions to one, some, or all
Participant(s) by crediting to said Participants’ Retirement Account
an amount determined in the sole and absolute discretion of the
Company. The Company or a Participating Employer shall be under no
obligation to make Company Discretionary Contributions. When made,
Company Discretionary Contributions are immediately 100% vested.

-12-

 

	(c)	 	Deemed Investments of Company Contributions shall be made in
the same manner as for deferrals (Section 4.4 of the Plan) on the
date the Company Contribution is credited to the Participant’s
Account.

	4.4	 	Allocation Elections and Valuation of Accounts

	(a)	 	A Participant shall elect Investment Options from a menu
provided by the Plan Administrator. The initial election shall be
made on the Allocation Election form approved by the Plan
Administrator (or Allocation Election Screen on the Participant
website approved by the Plan Administrator) and shall specify the
allocations among the Investment Options elected. A Participant may
make different Allocation Elections for each Account. A
Participant’s Accounts shall be valued as the sum of the value of
all Deemed Investments minus any withdrawals or distributions from
said Account. Investment Options shall be utilized to determine the
earnings attributable to the Account. Elections of Investment
Options do not represent actual ownership of, nor ownership rights
in or to, the securities or other investments to which the
Investment Options refer, nor are the Employers in any way bound or
directed to make actual investments corresponding to Deemed
Investments.
	 
	(b)	 	The Plan Administrator, in its sole discretion, shall be
permitted to add or remove Investment Options provided that any such
additions or removals of Investment Options shall not be effective
with respect to any period prior to the effective date of such
change. Any unallocated portion of an Account or any unallocated
portion of new deferrals shall be Deemed Invested in an Investment
Option referring to a money market based fund.
	 
	(c)	 	A Participant may make a new Allocation Election with respect
to future deferrals or current Account Balances (or both), provided
that such new allocations shall be made on the Allocation Election
form approved by the Plan Administrator (or Allocation Election
Screen on the Participant website approved by the Plan
Administrator) and shall specify the allocations among the
Investment Options elected. A Participant may make a different
Allocation Election for each Account Balance. Subject to
restrictions on the timing and number of permitted changes to
Allocation Elections within certain time periods (if any)
established by the Plan Administrator, new Allocation Elections may
be made on any business day, and will become effective on the same
business day or, in the case of Allocation Elections received after
a cut-off time established by the Plan Administrator, the following
business day.
	 
	(d)	 	Notwithstanding anything in this Section to the contrary, the
Employers shall have the sole and exclusive authority to invest any
or all amounts deferred in any manner, regardless of any Allocation
Elections by any Participant. A Participant’s Allocation Election
shall be used solely for purposes of determining the value of

-13-

 

	 	 	such Participant’s Account Balances and the amount of the
corresponding liability of the Company in accordance with this
Plan.
	 
	(e)	 	If an error or omission is discovered in the Account Balance
of a Participant, in the amount of a Participant’s deferrals, or the
amount of Company Contributions credited to the Participant’s
Account, the Plan Administrator, in its sole discretion, shall cause
appropriate equitable adjustments to be made as soon as
administratively practicable following the discovery of such error
or omission.

ARTICLE V

Distributions and Withdrawals

	5.1	 	In Service Distributions.

	(a)	 	Each In Service Distribution shall be paid in accordance with
the Payment Schedule election made with respect thereto, beginning
within 30 days following the In Service Distribution Date. The In
Service Distribution amount shall be determined as of the In Service
Valuation Date. In the event a Participant has elected installment
payments for an In Service Distribution, the installment payments
shall be determined as set forth in Section 5.4 of the Plan.
	 
	(b)	 	Notwithstanding a Participant’s election to receive an In
Service Distribution, all In Service Account Balances shall be
distributable as part of a Retirement, Termination, Disability, or
Death Benefit if the triggering date for such Benefit occurs prior
to the completion of payment(s) elected in connection with any In
Service Distribution Date.

	5.2	 	Retirement Benefit Distribution. In the event that a Participant
experiences a Retirement, the Retirement Benefit will be paid to such
Participant in accordance with such Participant’s Retirement Benefit
Payment Schedule election. The Retirement Benefit will be paid (or the
first payment will be made) by the Company or Participating Employer
within 30 days following the Termination Valuation Date.
	 
	5.3	 	Termination Benefit Distribution. In the event that a Participant
experiences a Termination of Employment that does not qualify as a
Retirement, death or Disability, the Termination Benefit will be paid to
such Participant in a single lump sum within 30 days following the
Termination Valuation Date.
	 
	5.4	 	Installment Payments. If the Participant has elected installment payments
for such Participant’s Retirement Benefit distribution or an In Service
Distribution, annual cash payments will be made beginning within 30 days
following the applicable Valuation Date (Termination or In Service) or, in
the event of a partial lump sum election, following the first anniversary
of the partial lump sum payment made following Retirement. Such payments
shall continue annually on or about the anniversary of the previous
installment

-14-

 

	 	 	payment until the number of installment payments elected has been paid.
The installment payment amount shall be determined annually as the result
of a calculation, performed on the Annual Valuation Date, where (a) is
divided by (b):

	(a)	 	equals the value of the applicable Account on the Annual
Valuation Date; and
	 
	(b)	 	equals the remaining number of installment payments.

	5.5	 	Small Account Balance Lump Sum Payment. Anything to the contrary in this
Plan notwithstanding, in the event that a Participant’s Retirement Account
Balance is less than $25,000 on the initial Termination Valuation Date,
the Retirement Benefit shall be paid in a single lump sum and any form of
payment election to the contrary shall be null and void.
	 
	5.6	 	Disability Benefit. In the event a Participant suffers a Disability, the
Disability Benefit shall be paid by the Company or Participating Employer
within 30 days following the Valuation Date, which, for purposes of the
Disability Benefit, shall be the end of the calendar quarter in which the
onset of Disability occurs.
	 
	5.7	 	Death Benefit. In the event of a Participant’s death either before
Termination of Employment or before complete distribution of any In
Service Distribution or Retirement Benefit, such Participant’s
Beneficiary, named on the most recently filed Beneficiary Designation
Form, shall be paid a Death Benefit in the amount of the remaining
Deferred Compensation Account Balance in a single lump sum within 30 days
following the Valuation Date which, for purposes of determining the Death
Benefit, shall be the last day of the calendar quarter in which the
Participant’s death occurs.
	 
	5.8	 	Unforeseeable Emergency. A Participant may request, in writing to the
Plan Administrator, a withdrawal from his or her Deferred Compensation
Account if the Participant experiences an “unforeseeable emergency”. An
unforeseeable emergency is a severe financial hardship to the participant
resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Code Section 152(a))
of the Participant, loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the participant. The Plan
Administrator, in its sole discretion, shall determine whether a
Participant has experienced an unforeseeable emergency. Withdrawals of
amounts because of an unforeseeable emergency are limited to the amounts
necessary to satisfy such emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution after taking into
account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation
of the participant’s assets (to the extent the liquidation of such assets
would not itself cause severe financial hardship). The amount of such
unforeseeable emergency withdrawal shall be subtracted first from the
vested portion of the Participant’s Retirement Account until depleted and
then from the In Service Distribution Accounts (if any) beginning with the
most distant. Values for purposes of administering this Section shall be
determined on the date the Plan Administrator approves the amount of the

-15-

 

	 	 	unforeseeable emergency withdrawal, or such other date determined by the
Plan Administrator.
	 
	5.09	 	Court Order. In the event a Court of competent jurisdiction orders a
distribution of part, or all, of a Participant’s Account pursuant to a
valid judgment or court order, the Plan Administrator shall, to the extent
permitted under Code Section 409A (and regulations and other published
governmental guidance with regard thereto), make a distribution to the
Participant or other recipient named in the judgment or court order in the
amount necessary to satisfy the judgment or court order.
	 
	5.10	 	Change in Control. Notwithstanding any other provision of the Plan to the
contrary, a Participant may elect on his Compensation Deferral Agreement,
upon a Change in Control, to receive a distribution of the total Account
Balance, determined as of the date of the Change in Control. Such
distribution shall be made in a lump sum payment within 30 days of the
date on which a Change in Control occurs. The amount of such distribution
shall reduce the Participant’s Account Balance as provided in Section 4.4.
	 
	5.11	 	Deductible Limit. Notwithstanding anything in the Plan to the contrary
other than a distribution made pursuant to a Change in Control under
Section 5.10, the distribution of a Participant’s benefit hereunder shall
be limited to an amount that would not cause the Participant to receive
compensation that the Plan Administrator determines would not be
deductible under Code Section 162(m). Any amount of the Participant’s
Account Balance that is not distributed to the Participant pursuant to the
preceding sentence shall be distributed to the Participant within 30 days
after the Plan Administrator determines that such distribution would be
permissible under the terms and conditions of the preceding sentence.

ARTICLE VI

Administration

	6.1	 	Plan Administration. The Plan shall be administered by the Plan
Administrator, which shall have discretionary authority to make, amend,
interpret and enforce all appropriate rules and regulations for the
administration of this Plan and to utilize its discretion to decide or
resolve any and all questions, including but not limited to eligibility
for benefits and interpretations of this Plan and its terms, as may arise
in connection with the Plan. Claims for benefits shall be filed with the
Plan Administrator and resolved in accordance with the claims procedures
in Article IX.
	 
	6.2	 	Withholding. The Employer shall have the right to withhold from any
payment made under the Plan (or any amount deferred into the Plan) any
taxes required by law to be withheld in respect of such payment (or
deferral).
	 
	6.3	 	Indemnification. The Company shall indemnify and hold harmless each
Employee, former Employee, officer, director, agent or organization, to
whom or to which is

-16-

 

	 	 	delegated duties, responsibilities, and authority with respect to
administration of the Plan, against all claims, liabilities, fines and
penalties, and all expenses reasonably incurred by or imposed upon him or
it (including but not limited to reasonable attorney fees) which arise as
a result of his or its actions or failure to act in connection with the
operation and administration of the Plan to the extent lawfully allowable
and to the extent that such claim, liability, fine, penalty, or expense
is not paid for by liability insurance purchased or paid for by the
Employer. Notwithstanding the foregoing, the Company shall not indemnify
any person or organization if his or its actions or failure to act are
due to gross negligence or willful misconduct or for any such amount
incurred through any settlement or compromise of any action unless the
Company consents in writing to such settlement or compromise.
	 
	6.4	 	Expenses. The expenses of administering the Plan shall be paid by the
Company.
	 
	6.5	 	Delegation of Authority. In the administration of this Plan, the Plan
Administrator may, from time to time, employ agents and delegate to them
such administrative duties as it sees fit, and may from time to time
consult with legal counsel who may be legal counsel to the Company.
	 
	6.6	 	Binding Decisions or Actions. The decision or action of the Plan
Administrator in respect of any question arising out of or in connection
with the administration, interpretation and application of the Plan and
the rules and regulations thereunder shall be final and conclusive and
binding upon all persons having any interest in the Plan.

ARTICLE VII

Amendment and Termination

	7.1	 	Amendment and Termination.

	(a)	 	The Plan is intended to be permanent, but the Plan
Administrator may at any time modify, amend, or terminate the Plan,
provided that such modification, amendment or termination shall not
cancel, reduce, or otherwise adversely affect the amount of benefits
of any Participant accrued (and any form of payment elected) as of
the date of any such modification, amendment, or termination,
without the consent of the Participant.
	 
	(b)	 	Upon a Change in Control of the Company, the successor to the
Company shall have the authority to designate one or more persons to
exercise the authority of the Plan Administrator with respect to
this Section 7.1, and such amendment powers shall be construed to
include the power to merge this Plan into any plan of deferred
compensation sponsored by such successor or its subsidiaries,
subject to the limitations set forth above.

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	(c)	 	On termination of the Plan, to the extent permitted under
Code Section 409A (and regulations and other published governmental
guidance with regard thereto), each affected Participant’s Account
Balances shall be distributed in a lump sum payment within 30 days
after the date the Plan is terminated. The amount of any such
distribution shall be determined as of the business day on which
such distribution is processed. For purposes of this Section, the
“business day on which such distribution is processed” refers to the
business day established for such purpose by administrative
practice, even if actual payment is made at a later date due to
delays in valuation, administration or any other procedure. Such
determination shall be binding on all Participants and
Beneficiaries.

	7.2	 	Adverse Income Tax Determination. Notwithstanding anything to the
contrary in the Plan, if any Participant receives a deficiency notice from
the United States Internal Revenue Service asserting constructive receipt
of amounts payable under the Plan or current income taxation of deferred
amounts, Company contributions, and/or the investment earnings attributed
thereto, the Plan Administrator, in its sole discretion, may terminate the
Plan or such Participant’s participation in the Plan, and/or may declare
null and void any Plan provision with respect to affected Participants, or
take any other actions that the Plan Administrator reasonably determines
in good faith that will best carry out the purposes and intent of the
Plan. In addition, it is intended that this Plan comply with all
provisions of the Internal Revenue Code and regulations and rulings in
effect from time to time regarding the permissible deferral of
compensation and taxes thereon, and it is understood that this Plan does
so comply. If the laws of the United States or of any relevant state are
amended or construed in such a way as to make this Plan (or its intended
deferral of compensation and taxes) in whole or in part void, then the
Plan Administrator, in its sole discretion, may choose to terminate the
Plan or it may (to the extent it deems practicable) give effect to the
Plan in such a manner as it deems will best carry out the purposes and
intentions of this Plan.

ARTICLE VIII

Informal Funding

	8.1	 	General Assets. All benefits in respect of a Participant under this Plan
shall be paid directly from the general funds of the Employer, or a Rabbi
Trust created by the Company and funded by the Employers for the purpose
of informally funding the Plan, and other than such Rabbi Trust, if
created, no special or separate fund shall be established and no other
segregation of assets shall be made to assure payment. No Participant,
spouse or Beneficiary shall have any right, title or interest whatever in
or to any investments which an Employer may make to aid the Employer in
meeting its obligation hereunder. Nothing contained in this Plan, and no
action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the
Employer or any if its subsidiaries or affiliated companies and any
Employee, spouse, or Beneficiary. To the extent that any person acquires a
right to

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	 	 	receive payments from the Employer hereunder, such rights are no greater
than the right of an unsecured general creditor of the Employer.
	 
	8.2	 	Rabbi Trust. The Company may, at its sole discretion, establish a grantor
trust, commonly known as a Rabbi Trust, as a vehicle for accumulating the
assets needed to pay the promised benefit, but the Company shall be under
no obligation to establish any such trust or any other informal funding
vehicle.

ARTICLE IX

Claims

	9.1	 	A Participant who believes he is entitled to any benefit under the Plan
(a “Claimant”) may file a claim with the Plan Administrator. The Plan
Administrator shall review the claim itself or appoint an individual or an
entity to review the claim.

	(a)	 	If the claim is for a benefit other than a Disability
Benefit, the Claimant shall be notified within 90 days after the
claim is filed whether the claim is allowed or denied, unless the
Claimant receives written notice from the Plan Administrator or
appointee of the Plan Administrator prior to the end of the 90 day
period stating that special circumstances require an extension of
the time for decision. Such extension shall not extend beyond the
day which is 180 days after the day the initial claim is filed.
	 
	(b)	 	In the case of a benefits claim that requires an independent
determination by the Plan Administrator of a Participant’s
Disability status, the Plan Administrator shall notify the Claimant
of the Plan’s benefit determination within a reasonable period of
time, but not later than 45 days after receipt of the claim. If,
due to matters beyond the control of the Plan, the Plan
Administrator needs additional time to process a disability claim,
the Claimant will be notified, within 45 days after the Plan
Administrator receives the claim, of those circumstances and of when
the Plan Administrator expects to make its decision but not beyond
75 days after the day the initial disability claim is filed. If,
prior to the end of the extension period, due to matters beyond the
control of the Plan, a decision cannot be rendered within that
extension period, the period for making the determination may be
extended for up to 105 days after the day the initial disability
claim is filed, provided that the Plan Administrator notifies the
Claimant of the circumstances requiring the extension and the date
as of which the Plan expects to render a decision. The extension
notice shall specifically explain the standards on which entitlement
to a Disability Benefit is based, the unresolved issues that prevent
a decision on the claim and the additional information needed to
resolve those issues, and the Claimant shall be afforded at least 45
days within which to provide the specified information.

	9.2	 	If the Plan Administrator denies a claim, it must provide to the
Claimant, in writing or by

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	 	 	electronic communication:

	(a)	 	The specific reasons for the denial;
	 
	(b)	 	A reference to the Plan provision upon which the denial is
based;
	 
	(c)	 	A description of any additional information or material that
the Claimant must provide in order to perfect the claim;
	 
	(d)	 	An explanation of why such additional material or information
is necessary;
	 
	(e)	 	Notice that the Claimant has a right to request a review of
the claim denial and information on the steps to be taken if the
Claimant wishes to request a review of the claim denial; and
	 
	(f)	 	A statement of the Participant’s right to bring a civil
action under ERISA Section 502(a) following a denial on review of
the initial denial.

	 	 	In addition, in the case of a denial of a Disability Benefit on the basis
of the Plan Administrator’s independent determination of the
Participant’s Disability status, the Plan Administrator will provide a
copy of any rule, guideline, protocol, or other similar criterion relied
upon in making the adverse determination (or a statement that the same
will be provided upon request by the Claimant and without charge).
	 
	9.3	 	Except for claims requiring the Plan Administrator’s independent
determination of a Participant’s Disability status, a request for review
of a denied claim must be made in writing to the Plan Administrator within
60 days after receiving notice of denial. The decision upon review will
be made within 60 days after the Plan Administrator’s receipt of a request
for review, unless special circumstances require an extension of time for
processing, in which case a decision will be rendered not later than 120
days after receipt of a request for review. A notice of such an extension
shall be provided to the Claimant within the initial 60 days period and
shall explain the special circumstances and provide an expected date of
decision.
	 
	 	 	The reviewer shall afford the Claimant an opportunity to review and
receive, without charge, all relevant documents, information and records
and to submit issues and comments in writing to the Plan Administrator.
The reviewer shall take into account all comments, documents, records and
other information submitted by the Claimant relating to the claim
regardless of whether the information was submitted or considered in the
initial benefit determination. If the Plan is administered by a
committee or a board of trustees (hereinafter collectively referred as
the “Committee”) that holds regularly scheduled meetings at least
quarterly, the Committee shall instead make a benefit determination no
later than the date of the first meeting of such Committee that
immediately follows the Plan’s receipt of a request for review, unless
the request for review is filed within 30 days preceding the date of such
meeting. In this case, a benefit determination may be made by no later
than the date of the second meeting following the

-20-

 

	 	 	Plan’s receipt of the request for review, unless special circumstances
require an extension of time for processing, in which case a decision
will be rendered not later than the third meeting following the Plan’s
receipt of the request for review. If such an extension of time for
review is require due to special circumstances, the Plan Administrator
shall provide the Claimant with written notice of the extension,
describing the special circumstances and the date as of which the benefit
determination will be made, prior to the commencement of the extension.
The Plan Administrator shall notify the Claimant, of the benefit
determination as soon as possible, but not later than five (5) days after
the benefit determination is made by the Committee.
	 
	9.4	 	In addition to having the right to review documents and submit comments
as described in Section 9.3 above, a Claimant whose claim for a Disability
Benefit requires an independent determination by the Plan Administrator of
the Participant’s Disability status has at least 180 days following
receipt of a notification of an adverse benefit determination within which
to request a review of the initial determination. In such cases, the
review will meet the following requirements:

	(a)	 	The Plan will provide a review that does not afford deference
to the initial adverse benefit determination and that is conducted
by an appropriate named fiduciary of the Plan who did not make the
initial determination that is the subject of the appeal, nor is a
subordinate of the individual who made the determination
(“Fiduciary”).
	 
	(b)	 	The appropriate Fiduciary will consult with a health
professional who has appropriate training and experience in the
field of medicine involved in the medical judgment before making a
decision on review of any adverse initial determination based in
whole or in part on a medical judgment. The professional engaged
for purposes of a consultation in the preceding sentence shall not
be an individual who was consulted in connection with the initial
determination that is the subject of the appeal or the subordinate
of any such individual.
	 
	(c)	 	The Plan will identify to the Claimant the medical or
vocational experts whose advice was obtained on behalf of the Plan
in connection with the review, without regard to whether the advice
was relied upon in making the benefit review determination.
	 
	(d)	 	The decision on review will be made within 45 days after the
Plan Administrator’s receipt of a request for review, unless special
circumstances require an extension of time for processing, in which
case a decision will be rendered not later than 90 days after
receipt of a request for review. A notice of such an extension must
be provided to the Claimant within the initial 45 day period and
must explain the special circumstances and provide an expected date
of decision.

	9.5	 	Upon completion of its review of an adverse initial claim determination,
the Plan Administrator will give the Claimant, in writing or by electronic
notification, a notice

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	 	 	containing:

	(a)	 	its decision;
	 
	(b)	 	the specific reasons for the adverse decision;
	 
	(c)	 	the relevant Plan provisions on which its decision is based;
	 
	(d)	 	a statement that the Claimant is entitled to receive, upon
request and without charge, reasonable access to, and copies of, all
documents, records and other information in the Plan’s files which
is relevant to the Claimant’s claim for benefits;
	 
	(e)	 	a statement describing the Claimant’s right to bring an
action for judicial review under ERISA Section 502(a);
	 
	(f)	 	if an internal rule, guideline, protocol or other similar
criterion was relied upon in making the adverse determination on
review, a statement that a copy of the rule, guideline, protocol or
other similar criterion will be provided without charge to the
Claimant upon request; and
	 
	(g)	 	a statement regarding other dispute resolution rights, if
applicable.

	9.6	 	For purposes of this Article IX, the period of time during which a
benefit determination is required to be made begins at the time a claim is
filed in accordance with these procedures without regard to whether all
the information necessary to make a decision accompanies the claim. If a
period of time is extended due to a Claimant’s failure to submit all
information necessary, the period for making the determination shall be
tolled from the date the notification is sent to the Claimant until the
date the Claimant responds.

	9.7	 	Satisfaction of Claims. Any payment to a Participant or Beneficiary
shall to the extent thereof be in full satisfaction of all Claims
hereunder against the Plan Administrator and the Company, either of whom
may require such Participant or Beneficiary, as a condition to such
payment, to execute a receipt and release therefor in such form as shall
be determined by the Plan Administrator or the Company. If receipt and
release is required but the Participant or Beneficiary (as applicable)
does not provide such receipt and release in a timely enough manner to
permit a timely distribution in accordance with the general timing of
distribution provisions in the Plan, the payment of any affected
distribution may be delayed until the Plan Administrator or the Company
receives a proper receipt and release.

-22-

 

ARTICLE X

General Conditions

	10.1	 	Anti-assignment Rule. The rights or interests of any Participant, spouse
or Beneficiary to any benefits or future payments under the Plan shall not
be subject to attachment or garnishment or other legal process by any
creditor of any such Participant, spouse or Beneficiary, nor shall any
such Participant, spouse or Beneficiary have any right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or
rights which he may expect to receive under the Plan, except as may be
required by the tax withholding provisions of the Code or a state’s income
tax act.
	 
	10.2	 	No Legal or Equitable Rights or Interest. No Participant or other person
shall have any legal or equitable rights or interest in this Plan that are
not expressly granted in this Plan. Participation in this Plan does not
give any person any right to be retained in the service of the Company or
any of its subsidiaries or affiliated companies. The right and power of
the Company (or any of its subsidiaries or affiliated companies that is
the Employee’s employer) to dismiss or discharge an Employee is expressly
reserved.
	 
	10.3	 	No Employment Contract. Nothing contained herein shall be construed to
constitute a contract of employment between an Employee and the Company or
any of its subsidiaries or affiliated companies.
	 
	10.4	 	Headings. The headings of Articles and Sections are included solely for
convenience of reference, and if there is any conflict between such
headings and the text of this Plan, the text shall control.
	 
	10.5	 	Invalid or Unenforceable Provisions. If any provision of this Plan shall
be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Plan Administrator
may elect in its sole discretion to construe such invalid or unenforceable
provisions in a manner that conforms to applicable law or as if such
provisions, to the extent invalid or unenforceable, had not been included.
	 
	10.6	 	Governing Law. To the extent not preempted by ERISA, the laws of the
State of Michigan shall govern the construction and administration of the
Plan.
	 
	10.7	 	Notices. Unless the Plan provides otherwise, any notice or document
relating to the Plan required to be given to or filed with the Plan
Administrator or the Company shall be considered as given or filed at such
time and in such form as required or permitted in accordance with uniform
procedures adopted by the Plan Administrator.
	 
	10.8	 	Litigation. In any action or proceeding regarding any Plan benefits or
the administration of the Plan, Employees or former Employees, their
Beneficiaries and any other persons claiming to have an interest in the
Plan shall not be necessary parties and shall not be

-23-

 

	 	 	entitled to any notice of process. Any final judgment which is not
appealed or appealable and which may be entered in any such action or
proceeding shall be binding and conclusive on the parties hereto and on
all persons having or claiming to have any interest in the Plan.
Acceptance of participation in the Plan shall constitute a release of the
Company, the Plan Administrator and its agents from any and all liability
and obligation not involving willful misconduct or gross neglect.
	 
	10.9	 	Effect on Other Employee Benefit Plans. Any benefit paid or payable
under this Plan shall not be included in a Participant’s or Employee’s
compensation for purposes of computing benefits under any employee benefit
plan maintained or contributed to by an Employer except as may otherwise
be required under the terms of such employee benefit plan.

-24-

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