Document:

exv10w35

 

EXHIBIT
10.35

Borders Group

100 Phoenix Drive

Ann Arbor, MI 48108

t: 734-477-1798

f: 734-477-4943

January 8, 2007

Rob Gruen

4313 W. Woodmere Rd.

Tampa, FL 33609

Dear Rob:

Congratulations and welcome to Borders! We believe that with your talent and experience you will
make a significant contribution to the success of the Borders team.

This letter (as supplemented by the attached “Proposed Offer Sheet”) is to confirm our offer and
your acceptance of employment as the Executive Vice President, Merchandising and Marketing,
reporting to George Jones. As discussed, your start date will be February 5, 2007, and your
biweekly salary will be $18,269.24. Your performance and salary will be reviewed annually with
your next performance review occurring in 2008.

You will receive a signing bonus of $50,000 (minus the amount of applicable withholding taxes) and
relocation assistance as provided in the attached description. In exchange, you agree that if you
voluntarily terminate your employment with Borders Group, Inc. (BGI) in one year or less, other
than for “good reason” (as defined below), you will repay the full amount of $50,000 (minus the
amount of applicable withholding taxes) plus the amount of relocation assistance received. As used
in this agreement, “good reason” means termination of your employment because of any of the
following events, if it takes place without your advance written consent, which may be granted or
withheld in your sole and absolute discretion:

	 	(1)	 	a diminution in your title or duties;
	 
	 	(2)	 	a reduction in your salary, compensation or benefits;
	 
	 	(3)	 	the requirement that you relocate your residence outside of the metropolitan
Ann Arbor, Michigan area; or
	 
	 	(4)	 	BGI’s breach of this agreement or any other agreement between you and BGI.

An annual incentive bonus plan will supplement your base salary with a target bonus potential of
80% of your base salary and a maximum potential bonus of 160% of your base salary. Payouts under
this plan are based on the financial performance of you and BGI. For fiscal 2007, $190,000 (50%
of target bonus) will be guaranteed and will be payable at the time 2007 bonuses are paid.

You will also be a participant in the Borders Group, Inc. 2004 Long-Term Incentive Plan (the
“Plan”). Under this Plan you will be eligible for the following:

	 	§	 	You will be issued a restricted stock share grant for 12,500 shares of Borders
Group, Inc. stock on the first business day of the calendar month following your start
date.
	 
	 	§	 	You will be issued a non-statutory stock option grant for 30,000 options and a
restricted share grant for 7,500 shares of Borders Group, Inc. stock on the date that
annual grants for Officers are made in 2007 (approximately the first business day in
April).

 

Rob Gruen

Page 2

	 	•	 	You will be given the opportunity to make a one-time restricted stock purchase
of up to $1 million at a 20% discount to the Fair Market Value of BGI stock on your
hire date. You will receive a tandem stock option grant if you purchase stock. You
will be granted one option for every share purchased up to a maximum of 25,000 options.
	 
	 	•	 	Annually, the Management Stock Purchase Right under the Plan allows you to use up to
100% of your annual incentive bonus (with a minimum purchase requirement of 20% of your
bonus) to make a restricted stock purchase. The discount on this purchase is 20%, 30%
or 40% depending on the number of years (2, 3, or 4 years respectively) from the
purchase date that you choose to have the shares restricted.

In the event of any conflicts between the preceding information and the terms of the Borders Group,
Inc. 2004 Long-Term Incentive Plan or the Borders Group, Inc., Annual Incentive Bonus Plan, the
terms of these plans will prevail.

Please refer to the enclosed relocation summary for details of your relocation coverage.

As an officer of the Company, you will be covered by a severance agreement in the attached hereto.

Vacation: The Vacation Plan Year begins February 1 and ends January 31. As an officer you will be
eligible for four (4) weeks vacation in the 2007 Vacation Plan Year.

Please refer to the Corporate Office Employee Handbook and the Benefit Plans Plan Document for
further details regarding policies and benefits. If there is a conflict or discrepancy between
this document and the Corporate Office Employee Handbook and/or the Benefit Plans Plan document,
the above-mentioned documents will prevail.

As discussed, you should feel free to have this complete package looked at by the attorney of your
choosing, and we will reimburse the cost of that review upon submission of receipts. If you have
any questions, please contact me at (734) 477-1798.

Sincerely,

Dan Smith

Sr. Vice President, Human Resources

Enclosures to follow by mail:

Non-Qualified Deferred Compensation Plan

Prospectus for Long-Term Incentive Plan

Summary of Management Stock Purchase Right

Benefits information

My signature below indicates acceptance of employment as outlined in this letter.

	 	 	 
	 
	 	 
	 

	 	 
	NAME

	 	DATE

 

 

Rob Gruen

Page 3

2007 Relocation Assistance Program

Executive Vice President,

Merchandising and Marketing

 

 

Rob Gruen

Page 4

Relocation Assistance Program For Vice President Level Employees

Table of Contents

	 	 	 	 	 
	Section I.
	 	Eligibility	 	3
	 
	 	 	 	 
	Section II.
	 	Policy Components	 	4
	 
	 	 	 	 
	Section III.
	 	Home Sale Assistance	 	5-6
	 
	 	 	 	 
	Section IV.
	 	Destination Assistance	 	7-8
	 
	 	 	 	 
	Section V.
	 	Moving and Storing Household	 	9
	 
	 	Belongings	 	 
	 
	 	 	 	 
	Section VI.
	 	Miscellaneous Expense	 	10
	 
	 	Allowance	 	 
	 
	 	 	 	 
	Section VII.
	 	General Information	 	11
	 
	 	 	 	 
	Section VIII.
	 	Relocation Agreement	 	12

 

 

Rob Gruen

Page 5

Section I. Eligibility

The relocation assistance program is intended to assist you and your family who currently reside at
your primary residence with you, and will continue to live with you at your new residence. The
assistance will provide help with the financial costs and personal inconvenience that can result
from a move, but the assistance offered is not an entitlement.

If you and a family member currently living with you both receive an offer to work in the same new
location, relocation assistance will be offered and paid to one member of the family, only.

Relocation assistance will be applicable to current and new Borders Group Inc. employees who meet
all of the following requirements:

     * You are relocating at the request of management. Relocations due to requests by you are
not eligible for this program.

     * You have not received BGI relocation assistance within the last
full 12 months.

     * You have received the Relocation Policy, and have signed and
returned the enclosed Relocation Agreement.

     * The relocation results in a change in your primary residence. This change in residence
must be a reasonable distance from, and significantly improve your commute to, the new location. In
addition, the relocation must meet the Internal Revenue Service (IRS) 50-mile rule, which requires
that the distance from your old residence to your new work location be at least 50 miles greater
than the distance from your old residence to the old work location.

The benefit provisions contained in this relocation policy are valid for a period of six months
from the effective date of your acceptance (to relocate to the new location.) Expenses incurred in
2007 must be submitted by January 1, 2008 for reimbursement. All expenses must be submitted within
30 days of your six (6) month anniversary date.

In addition, you must submit evidence that the relocation has resulted in a change in your
primary residence (e.g. a deed, lease or other evidence satisfactory to BGI), within thirty (30)
days of your six (6) month anniversary date. In the event that you are unable to submit
satisfactory evidence of your relocation, you may be required to reimburse BGI for all or a portion
of your BGI relocation assistance, at BGI’s sole discretion.

 

 

Rob Gruen

Page 6

Section II. Policy Components

Policy Components – Vice President Level Employees

	I.	 	Home Sale Program (Existing Location)

	 	A.	 	Realtor referrals available
	 
	 	B.	 	Coverage of reasonable closing costs — capped at $60,000 to help offset the
following expenses

	 	1.	 	Real estate sales commission
	 
	 	2.	 	Attorney’s fees
	 
	 	3.	 	Title fees, title policy, escrow fees, when required of the seller
	 
	 	4.	 	Mortgage prepayment penalties
	 
	 	5.	 	State and federal transfer fees and/or stamps
	 
	 	6.	 	Document preparation

	II.	 	Home Purchase (New Location)

	 	A.	 	Realtor referrals available
	 
	 	B.	 	Closing costs capped at $10,000

	 	1.	 	Up to 2 discount points, including buyer loan origination fee
	 
	 	2.	 	Appraisal report, credit report, and survey fees
	 
	 	3.	 	Escrow fee, excluding insurance deposit
	 
	 	4.	 	Mortgagee’s title policy, abstract, or title guarantee
	 
	 	5.	 	Recording of mortgage and deed
	 
	 	6.	 	State transfer tax
	 
	 	7.	 	Attorney’s fee, notary fees, and document preparation fees
	 
	 	8.	 	Pest inspection fees
	 
	 	9.	 	Endorsement fees

	III.	 	Lump Sum Allowance

	 	A.	 	$75,000 (less taxes) will be provided to help you and your family with the
following expenses:

	 	1.	 	Homefinding trips (i.e., meals, hotel, mileage, etc.)
	 
	 	2.	 	Temporary living expenses, (i.e., rental car, babysitter)
	 
	 	3.	 	Rental and lease termination assistance
	 
	 	4.	 	Move-related expenses (i.e., boxes, blankets, etc.)
	 
	 	5.	 	Additional home disposition and acquisition expenses.

	IV.	 	Household Goods Move and Storage

	 	A.	 	All coverage capped at $20,000

	 	1.	 	Includes packing, shipping, storage and unpacking of fragile items

	 
	 	2.	 	Relocation Department to select van line

Total cap: $165,000*

*If costs exceed total cap of $165,000, receipts will be considered for reimbursement based on
individual caps mentioned above.

 

 

Rob Gruen

Page 7

Section III. Home Sale Assistance

..

Selling your home in a timely fashion at the best possible price is a relocation priority. To
help you accomplish this goal, a home sale assistance program has been designed to assist you with
all aspects of the home sale process. The objective of the home sale assistance is to help you
realize the most value from the sale of your home in a reasonable period of time, enabling you and
your family to purchase or rent a home in the new location.

The first step in selling your home is to contact the Borders Group Relocation Department as soon
as possible. By talking with the company’s Relocation Specialist, you can obtain referrals for
realtors who are members of the multiple-listing service in your area, who will help you market
your home effectively.

A. Home Sale Assistance Eligibility

To be eligible for home sale assistance services described, the property must be your principal
residence. Second homes, mobile homes, farms, properties with excess acreage for the area,
investment or commercial property, and multifamily homes of more than two units are not eligible.

If your home falls into any of the excluded categories, or if you have tenants on your property,
please contact the Borders Group Relocation Department. Alternative assistance options may be
available.

B. Listing Your Home For Sale

A vital aspect of selling your home is listing it with a qualified realtor as soon as possible. The
Relocation Department will work with you to recommend and select a qualified professional who is a
member of the multiple listing service in your area, who can market your home aggressively and show
it to as many potential buyers as possible.

 

 

Rob Gruen

Page 8

Section III. Home Sale Assistance continued...

C. Completing the Sale

Once you close on the sale of the home, Borders Group will reimburse you up to $60,000 for eligible
closing costs. Payment will be made as a reimbursement, based on the HUD Statement from closing,
which should be forwarded to the Relocation Specialist for processing. The payment will be issued
grossed up, through Payroll, along with the next payrun. It is taxable for all income/FICA taxes
and the taxes due will be paid by the Company.

The following expenses may be used as a general guideline of what will be covered,
as long as it falls within $60,000 (please note that all eligible items may not appear below):

	 	*	 	Real estate sales commission
	 
	 	*	 	Reasonable attorney’s fees
	 
	 	*	 	Title fees, title policy, escrow fees, when required
	 
	 		 	of the seller
	 
	 	*	 	Mortgage prepayment penalties
	 
	 	*	 	State and federal transfer fees and/or stamps
	 
	 	*	 	Document preparation

The following expenses may be used as a general guideline of what will not be covered
(please note that all ineligible items may not appear below):

	 	*	 	Taxes
	 
	 	*	 	Insurance
	 
	 	*	 	Interest
	 
	 	*	 	Amounts toward the loan payoff
	 
	 	*	 	Escrow amounts

 

 

Rob Gruen

Page 9

Section IV. Destination Assistance

A. Home Finding Assistance

Carefully selected real estate professionals are available to review your housing needs and assist
you in the selection of a rental or real estate agent. In addition, they will provide you with
information regarding places of worship, health services, recreational activities, and community
organizations. The rental and real estate professionals are recommended based on their knowledge of
the market and proven past performance. They can save you valuable time by focusing their
experience on your needs and preferences.

Internet search results and referrals to local realtors (provided by The Employee Relocation
Council (ERC) Directory) are available from the Relocation Specialist, if you are relocating to a
new position outside of the Ann Arbor, MI area.

These services can be initiated immediately after your acceptance of the new position to help you
with questions regarding the new location.

The BGI Relocation Specialist is able to provide resources for all relocating employees to utilize
to locate their new home, but does not actually locate the new home for you. Borders Group does not
co-sign any lease or purchase agreement for any reason.

B. Closing Assistance

If you are currently a homeowner eligible for home sale assistance, and purchase a primary
residence in the new location, Borders Group will reimburse you up to $10,000 for eligible closing
costs. The HUD Statement from closing should be forwarded to the Relocation Specialist for
processing. The payment due will be issued grossed up (with the exception of discount points and
origination fees) with the Company paying all taxes due. Reimbursement of discount points and
origination fees is taxable to the employee, and will be reimbursed, less taxes due. Payment will
be issued along with the next payrun.

 

 

Rob Gruen

Page 10

Section IV. Destination Assistance continued...

The following expenses may be used as a general guideline of which closing costs
will be covered, as long as they do not exceed $10,000 (please note that all eligible items
may not appear below):

	 	*	 	Up to 2 discount points, including buyer loan
origination fee, will be reimbursed
provided they are required to obtain a mortgage.
	 
	 	*	 	Appraisal report, credit report and survey fees, when
required by law, custom or mortgagee
	 
	 	*	 	Escrow fee
	 
	 	*	 	Mortgagee’s title policy, abstract or title guarantee
	 
	 	*	 	Recording of mortgage and deed
	 
	 	*	 	State transfer tax
	 
	 	*	 	Attorney’s fee, notary fees and document
preparation fees
	 
	 	*	 	Home, pest and radon inspection fees
	 
	 	*	 	Endorsement fees

The following expenses may be used as a general guideline of what will not be covered
(please note that all ineligible items may not appear below):

	 	*	 	Taxes
	 
	 	*	 	Insurance
	 
	 	*	 	Interest
	 
	 	*	 	Escrow amounts

 

 

Rob Gruen

Page 11

Section V. Moving and Storing your Household Belongings

Van-Line Move and Storage

Borders Group will pay up to $20,000 for moving and storage services provided by selected vendors.
Services will include packing, loading, and transporting your belongings from your old principal
residence or from a storage location, and unloading and unpacking fragile items at your new
principal residence. If you are required to vacate your former residence for contractual reasons,
or if you are unable to occupy your home immediately upon arrival at your new location, storage
will also be covered, as long as your total moving and storage costs do not exceed $20,000.

Packing and delivery will be scheduled during normal working hours (not weekends or holidays) to
avoid overtime expenses. Charges for dismantling equipment will not be covered. At least two weeks
lead time will ensure a higher likelihood of securing your move date with the contracted moving
companies.

Special Moving Requirements:

Please be sure to discuss special moving requirements with the Relocation Department. Advance plans
need to be made in order to move unique or oversized possessions not excluded below. You will also
be advised about the best way to move any valuables, such as currency, antiques, jewelry, art
objects, and other items not usually suited for van transport.

Borders Group will not reimburse you for insurance, storage, packing, shipment, unpacking,
or assembly of the following items: recreational motor vehicles, airplanes or boats; patio slate,
fertilizer, cement, firewood, lumber or other building materials; sand, animals, portable swimming
pools, playhouse or other buildings; radio or TV towers, antennas, paint, volatile materials,
explosives of any kind, inks, dyes, items that may cause damage to the shipment; illegal items
(either illegal to move interstate commerce or possession of which is illegal in the state where
you are moving), special electrical or plumbing connections, or cabinet work.

 

 

Rob Gruen

Page 12

Section VI. Miscellaneous Expense Allowance

In addition to the items specifically provided for in the relocation assistance program, a variety
of other relocation expenses may be incurred, which differ in kind from one employee to another.
Therefore, you will receive a lump sum allowance of $75,000 less taxes, once you sign and return
the relocation agreement. The lump sum payment will be issued through Payroll, along with the next
payrun.

If you are new to the company, please ask your Hiring Manager (Field) or HR Representative (Home
Office) to expedite your new hire paperwork. Receipt of this paperwork by HR Administration /
Payroll enables the processing of your relocation lump sum allowance. Once the paperwork is
received, all efforts will be made to provide your lump sum allowance to you prior to your move
date.

These payments are intended to provide assistance with some or all of the following:

	 	a)	 	Home search expenses, including but not limited to:
airfare, rental car, meals, hotel, mileage, baby-sitter, etc.
	 
	 	 	 	(Please Note: travel arrangements must be paid out of your lump sum.
Navigant Travel (or other vendor) cannot direct-bill to the Relocation
Department.)
	 
	 	b)	 	Reimbursement of any closing costs which were not
specifically covered in part by another part of the relocation

policy
	 
	 	c)	 	Lease cancellation fees (please note that if an employee must
cancel their lease to relocate, the cancellation of the lease and any costs
beyond the regular relocation policy coverage remain the employee’s own
responsibility), duplicate rental assistance, security deposit, utility
hook-up or cancellation fees
	 
	 	d)	 	Temporary living expenses, included but not limited to:
interim living facility, transportation to the new location, etc.
	 
	 	e)	 	Move-related expenses, including but not limited to:
boxes, blankets, etc.

 

 

Rob Gruen

Page 13

Section VII. General Information

	•	 	The IRS will regard some of the reimbursements and allowances
provided to you by the relocation assistance program as taxable
income.

	•	 	If your relocation involves a transfer within the company, you are
eligible for up to 3-5 (paid) Relocation Days. Please contact your
hiring manager (Field) / HR representative (Home Office) if you
need to utilize any relocation time during your move.

 

 

Rob Gruen

Page 14

Two-Year Relocation Agreement

In recognition of the expense that Borders Group, Inc. (BGI) will incur by moving you, you are
required to sign this Relocation Agreement and return it to the Corporate Relocation Specialist.
Completion of this document will be required as part of your acceptance of a position with the
Borders Group division of BGI and prior to receiving any benefits derived from the Relocation
Assistance Program.

Voluntary Termination

Should you resign, take a voluntary demotion (unless the voluntary demotion is taken in response to
the elimination of your position within BGI) or be terminated for gross misconduct anytime prior to
the one (1) year anniversary of your first relocation payment, you will be required to reimburse
BGI for those expenses incurred by the Company as set forth in the Relocation Assistance Program.

	1.	 	As of the effective date of this Agreement, Borders Group, Inc. (BGI) has or will spend a sum
of money for the purpose of reassigning you and your eligible household members to your new
work location.

	2.	 	Prior to the effective date of this Agreement, you were given a Relocation Policy, which is
incorporated herein by reference. This Policy sets forth those items which BGI will either pay
on your behalf or reimburse to you, including, but not limited to, those expenses associated
with the sale and purchase of your primary residence, homefinding trips, renter’s expenses,
final move travel expenses, movement of household goods, temporary living expenses, automobile
expenses, miscellaneous relocation allowance, and tax treatment.

	3.	 	Since both parties agree that your employment with BGI is one of at will and is not bound by
any written or formal agreement, it is agreed that should you voluntarily (or involuntarily
due to gross misconduct) terminate your employment with Borders Group within two (2) years of
receiving relocation benefits, as outlined in the Relocation Policy, you agree to repay
reimbursements in accordance with the following schedule:

	 	 	 	 	 
	Position Start Date	 	Amount
	Up to 1 year
	 	 	100	%
	After 1 year and before 2 years
	 	 	50	%
	After 2 years
	 	 	0	%

	 	 	An individual release of liability may be granted at the discretion of the company. A
release can be granted when someone demonstrates sufficient information necessitating a
relocation for purposes of a family illness, death, or other hardship. All cases must be
presented to and approved by the President of BGI.
	 
	4.	 	The Company may withhold from salary or other monies due you all advances either not
reconciled within 30 days or due as a result of voluntary resignation or termination for gross
misconduct within twenty-four (24) months after you are assigned to commence working in the
new location.
	 
	5.	 	Further, I confirm that neither I nor any other household member is receiving relocation
benefits from any other source. I acknowledge that relocation benefits paid by the Company
would be subject to reduction, if benefits were also paid by another source.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Employee Name:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Social Security Number:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Effective Date of Job Assignment:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Department:	 	 	 	 	 	 	 	Reports To:	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	This Agreement is effective as of the first payment of relocation benefits. It is between BGI (“Employer”)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	and you,

	 	 	 	 	 	 	 	 	 	 	.	 
	 	 	 
	 	 	 	 	Employee Signature	 	Date

Please return one copy of this agreement to Stephanie Gillett in the Human Resources Department
prior to receiving any benefits derived from the Relocation Assistance Program. Fax: 734 477-4943.exv10w36

 

EXHIBIT
10.36

Second Amendment to the

Borders Group, Inc.

2004 Long-Term Incentive Plan

     The Borders Group, Inc. 2004 Long-Term Incentive Plan (the “Plan”), which was approved by the
shareholders of Borders Group, Inc. (the “Company”) on May 20, 2004, and was amended by the Board
of Directors effective as of such date pursuant to the terms of the Plan, is hereby further amended
in the following particulars to reflect the revised formula for Awards for the non-employee
directors approved by the Board of Directors for calendar 2006 and thereafter:

	1.	 	Paragraph 9 (e) of the Plan is hereby amended in its entirety to read as
follows:

     “(e) Awards to Non-employee Directors. Notwithstanding any other provision of the Plan,
Awards shall be made to non-employee directors in the form of: (i) Restricted Shares or Restricted
Share Units, as determined by the Compensation Committee, having a Fair Market Value equal to one
third of the standard annual retainer fees to be paid for the applicable year, and (ii) Options
having a Black-Scholes or similar value, as determined by the Committee, equal to one third of the
standard annual retainer fees to be paid for the applicable year. In addition, any Awards made to
the Non-Executive Chairman of the Board shall be in the same forms and proportions as annual
retainer fees. If new members are added to the Board during the year, any Awards made shall be on
the same basis (except prorated) as Awards are made to continuing directors.

Except as here amended, the Plan shall remain in full force and effect.

	 	 	 	 	 
	March 30, 2007	Borders Group, Inc.

 	 
	 	By:  	/s/ EDWARD W. WILHELM
 	 
	 	 	Edward W. Wilhelm

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