Exhibit 10.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND
SUCH OTHER APPLICABLE LAWS. THE TRANSFER OF THIS WARRANT AND SUCH SECURITIES ARE
SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT
BETWEEN THE COMPANY AND THE PURCHASER OF SUCH SECURITIES. THE COMPANY AND ITS
TRANSFER AGENT WILL NOT BE OBLIGATED TO RECOGNIZE OR GIVE EFFECT TO ANY TRANSFER
MADE IN VIOLATION OF SUCH RESTRICTIONS. A COPY OF SUCH RESTRICTIONS MAY BE
OBTAINED FROM THE COMPANY UPON WRITTEN REQUEST.
STOCK PURCHASE WARRANT

      Date of Issuance:                     , 2010   Certificate
No. W-                    

     FOR VALUE RECEIVED, Borders Group, Inc., a Michigan corporation (the
“Company”), hereby grants to LeBow Gamma Limited Partnership, a Delaware limited
partnership, and its successors and permitted assigns (the “Holder”), the right
to purchase from the Company 35,130,000 Warrant Shares at a price per share of
$2.25 (as adjusted from time to time hereunder, the “Exercise Price”). The
amount and kind of securities purchasable hereunder and the purchase price for
such securities are subject to adjustment pursuant to the provisions contained
in this Warrant.
     This Warrant was issued pursuant to that certain Securities Purchase
Agreement dated as of                     , 2010 (the “Securities Purchase
Agreement”) by and between the Company and the Holder. For the avoidance of
doubt, this Warrant is the “Warrant” referred to in the Securities Purchase
Agreement and the “Warrant Shares” (as further defined herein) are the Warrant
Shares referred to in the Securities Purchase Agreement. The Securities Purchase
Agreement contains terms and conditions governing the rights of the Holder with
respect to this Warrant, and all provisions of the Securities Purchase Agreement
are hereby incorporated herein in full by reference.
     Certain capitalized terms used in this Warrant are defined in Section 5.
Unless otherwise indicated herein, capitalized terms used in this Warrant have
the same meanings set forth in the Securities Purchase Agreement.

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     This Warrant is subject to the following provisions:
     Section 1. Exercise of Warrant.
     1.1 Exercise Period. The Holder may exercise the purchase rights
represented by this Warrant in accordance with Sections 1.2 and 1.3 hereof at
any time and from time to time after the first anniversary of the Date of
Issuance to and including the fifth anniversary of the Date of Issuance (the
“Exercise Period”).
     1.2 Exercise of Warrant.
     (a) The Holder may exercise the purchase rights represented by this Warrant
in whole or in part (but not as to any fractional Warrant Shares) pursuant to
this Section 1.2.
     (b) This Warrant will be deemed to have been exercised when the Company has
received all of the following items (the “Exercise Time”):
     (i) a completed Exercise Notice in substantially the form attached as
Exhibit I (an “Exercise Notice”) executed by the Person exercising all or part
of the purchase rights represented by this Warrant (the “Purchaser”);
     (ii) this Warrant;
     (iii) if this Warrant is not registered in the name of the Purchaser,
subject to compliance with Section 7, an Assignment in substantially the form
attached as Exhibit II evidencing the assignment of this Warrant to the
Purchaser; and
     (iv) subject to the net exercise of this Warrant pursuant to Section 1.5
hereof, a wire transfer of immediately available funds to the account of the
Company set forth on Exhibit I (or such other account as the Company may have
advised the Holder in writing prior to the Exercise Time) in an amount equal to
the product of the Exercise Price multiplied by the number of Warrant Shares
being purchased upon such exercise (the “Aggregate Exercise Price”).
     1.3 Exercise Procedures.
     (a) Certificates for Warrant Shares purchased upon the exercise of this
Warrant will be delivered by the Company to the Purchaser within three Business
Days after the date of the Exercise Time. Unless this Warrant has expired or all
of the purchase rights represented hereby have been exercised or converted, the
Company will prepare a new Warrant, substantially identical hereto, representing
the rights formerly represented by this Warrant which have not expired or been
exercised and will, within such three Business Day period, deliver such new
Warrant to the Person designated for delivery in the Exercise Notice.
     (b) The Warrant Shares issuable upon the exercise of this Warrant will be
deemed to have been issued to the Purchaser, and the Purchaser will be deemed
for all purposes to have become the record holder and beneficial owner of such
Warrant Shares, at the Exercise Time.
     (c) The issuance of certificates for Warrant Shares upon the exercise of
this Warrant will be made without charge to the Holder or the Purchaser for any
issuance tax in respect thereof or other cost incurred by the Company in
connection with such exercise and the related issuance

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of Warrant Shares. Each Warrant Share issuable upon the exercise of this Warrant
will, when issued in accordance with this Warrant, be fully paid and
non-assessable and free from all Encumbrances (other than the restrictions on
transfer set forth in the Securities Purchase Agreement or arising under
applicable securities laws).
     (d) The Company will not close its books against the transfer of this
Warrant or of any Warrant Share issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this Warrant.
The Company will from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares acquirable
upon the exercise of this Warrant is at all times equal to or less than the
Exercise Price then in effect.
     (e) The Company will reasonably assist and cooperate with the Holder or
Purchaser with respect to any governmental filings or governmental approvals
required to be made or obtained prior to or in connection with any exercise of
this Warrant (including making any filings and obtaining any approvals required
to be made or obtained by the Company).
     (f) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a public offering, the
exercise may, at the election of the Purchaser, be conditioned upon the
consummation of the public offering in which case such exercise will not be
deemed to be effective until the consummation of the public offering.
     (g) The Company will at all times reserve and keep available out of its
authorized but unissued Warrant Shares, solely for the purpose of issuance upon
the exercise of this Warrant, such number of Warrant Shares issuable upon the
exercise of this Warrant. The Company will take all such actions as may be
necessary to assure that all such Warrant Shares issuable upon exercise of the
Warrant may be so issued without violation of any applicable law or governmental
regulation or any requirements of the Trading Market upon which the Warrant
Shares may be listed (except for official notice of issuance, which will be
promptly delivered by the Company upon each such issuance).
     1.4 Fractional Shares. If a fractional Warrant Share would, but for the
provisions of Sections 1.2 and 1.3, be issuable upon the exercise of this
Warrant, the Company will, within three Business Days after the date of the
Exercise Time deliver to the Purchaser a check payable to the Purchaser in lieu
of such fractional share in an amount equal to the difference between the Fair
Market Value of such fractional share as of the Exercise Time and the Exercise
Price of such fractional share.
     1.5 Net Exercise. The Holder may elect to convert all or any portion of
this Warrant into Warrant Shares, the aggregate value of which Warrant Shares
will be equal to the value of this Warrant or the portion thereof being
converted (the “Conversion Right”). The Conversion Right may be exercised by the
Holder by delivery to the Company of the Exercise Notice, together with notice
of the holder’s intention to exercise the Conversion Right. Upon exercise of the
Conversion Right, the Company will issue to the Holder a number of Warrant
Shares computed using the following formula:
X = Y(A - B)
     A

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  Where  X =     The number of Warrant Shares to be issued to the Holder upon
exercise of its Conversion Right.       Y =     The number of Warrant Shares
with respect to which the Conversion Right is being exercised.       A =    The
Fair Market Value of one Warrant Share, as determined at the time the Conversion
Right is exercised pursuant to this Section 1.5.       B =     The Exercise
Price (as adjusted to the date of such calculation).

     1.6 Automatic Conversion. Notwithstanding anything to the contrary herein,
if all or any portion of this Warrant has not been exercised or converted in
accordance with the terms of this Warrant prior to the day immediately preceding
the fifth anniversary of the Date of Issuance (the “Automatic Conversion Date”),
and if as of such date, the Fair Market Value of one Common Share exceeds the
Exercise Price, then the then-unexercised portion of this Warrant will be
automatically converted into, and the Company will issue to the Holder, a number
of Warrant Shares computed using the formula set forth in Section 1.5.
     Section 2. Adjustment of Exercise Price and Number of Warrant Shares.
     2.1 Stock Dividends and Other Transactions. In case the Company (a) pays a
dividend in Common Shares or make a distribution in Common Shares to holders of
its outstanding Common Shares, (b) subdivides its outstanding Common Shares into
a greater number of shares, (c) combines its outstanding Common Shares into a
smaller number of Common Shares or (d) issues any shares of its capital stock in
a reclassification of the Common Shares, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto will be
adjusted so that the Holder will be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which it would have owned or
have been entitled to receive had such Warrant been exercised in advance
thereof. Upon each such adjustment pursuant to this Section 2.1 of the kind and
number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the Exercise Price will be adjusted by multiplying the
Exercise Price in effect immediately prior to such adjustment by a fraction, the
numerator of which will be the number of Warrant Shares purchasable pursuant
hereto immediately before such adjustment and the denominator of which will be
the number of Warrant Shares purchasable pursuant hereto immediately after such
adjustment. An adjustment made pursuant to this Section 2.1 will become
effective at the close of business on the date such event becomes effective.
     2.2 Issuance of Rights. Except in connection with the Rights Offering (in
accordance with the terms and conditions set forth in Section 6.5 of the
Securities Purchase Agreement), if and whenever on or after the Date of Issuance
of this Warrant the Company issues rights, options or warrants to purchase
Common Shares to all or substantially all of the holders of Common Shares (such
rights, options or warrants being herein called “Rights”) providing for an
exercise or conversion price per share less than the then-current Fair Market
Value (the “Base Price”), then immediately upon such issuance, the Exercise
Price will be reduced to the Exercise Price determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (a) the number of Common
Shares Deemed Outstanding immediately prior to such issuance multiplied by the
Base Price, plus (b) the consideration, if any, received by the Company upon
such issuance, and the denominator of which will be the product derived by
multiplying the Base Price times the number of shares of Common Shares Deemed
Outstanding immediately after such issuance or sale. Upon each such adjustment
of the Exercise Price pursuant to this Section 2.2, the number of Warrant Shares
acquirable

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upon the exercise of this Warrant will be the number of Warrant Shares
acquirable upon the exercise of this Warrant immediately prior to such
adjustment multiplied by a fraction, the numerator of which will be the Exercise
Price in effect immediately before such adjustment and the denominator of which
will be the Exercise Price in effect immediately after such adjustment.
     2.3 Dividends and Distributions. If the Company fixes a record date for the
payment of a dividend or the making of a distribution with respect to all or
substantially all of its Common Shares of securities, evidences of indebtedness,
assets, cash or rights (other than (i) a dividend or distribution covered by
Section 2.1(a) or (ii) in connection with an Exempt Issuance), the Exercise
Price to be in effect after the record date for such dividend or distribution
will be determined by multiplying (a) the Exercise Price in effect immediately
prior to such record date by (b) a fraction, the numerator of which will be the
Fair Market Value per Common Share as of the last trading day before the date
(the “ex-date”) on which the Common Shares first trade without the right to
receive such dividend or distribution less the Fair Market Value of the cash,
securities (other than Common Shares) or other property paid per share in such
dividend or distribution, and the denominator of which will be the Fair Market
Value per Common Share as of the last trading day before the ex-date. Upon any
adjustment of the Exercise Price pursuant to this Section 2.3, the total number
of Warrant Shares purchaseable upon the exercise of this Warrant will be such
number of shares purchaseable pursuant to this Warrant immediately prior to such
adjustment multiplied by a fraction, the numerator of which will be the Exercise
Price in effect immediately before such adjustment and the denominator of which
will be the Exercise Price in effect immediately after such adjustment.
     2.4 Tender Offers. If a publicly-announced tender offer made by the Company
or any of its Subsidiaries for all or any portion of the Common Shares expires
and tendering holders of Common Shares are paid aggregate consideration when
paid which exceeds the aggregate Fair Market Value based on the Fair Market
Value of the Common Shares acquired in such tender offer as of the last trading
date before the date on which such tender offer is first publicly announced
(such excess, the “Excess Tender Amount”), then the Exercise Price to be in
effect after the tender offer expires will be determined by multiplying (a) the
Exercise Price in effect immediately prior to such adjustment by (b) a fraction,
the numerator of which will be the Fair Market Value per Common Share as of the
last trading day before the date on which such tender offer is first publicly
announced less the Excess Per Pro Forma Share, and the denominator of which will
be the Fair Market Value per Common Share as of the last trading day before the
date on which such tender offer is first publicly announced. As used herein,
“Excess Per Pro Forma Share” means (i) the Excess Tender Amount divided by
(ii) the number of Common Shares outstanding at expiration of the tender offer
after giving pro forma effect to the purchase of shares in the tender offer.
Upon any adjustment of the Exercise Price pursuant to this Section 2.4, the
total number of Common Shares purchaseable upon the exercise of this Warrant
will be such number of shares purchaseable pursuant to this Warrant immediately
prior to such adjustment multiplied by a fraction, the numerator of which will
be the Exercise Price in effect immediately before such adjustment and the
denominator of which will be the Exercise Price in effect immediately after such
adjustment.
     2.5 Notice of Adjustment. Whenever the number of Warrant Shares or number
or kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, as herein provided, the Company will
promptly mail by registered or certified mail, return receipt requested, to the
Holder notice of such adjustment or adjustments setting forth the number of
Warrant Shares (and other securities or property) purchasable upon the exercise
of this Warrant and the Exercise Price of such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made. Such notice, in the absence of manifest error,
will be conclusive evidence of the correctness of such adjustment.

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     Section 3. Reorganization Event, Change of Control, Public Stock Merger.
     3.1 Consolidation, Merger or Sale. Subject to Sections 3.2 and 3.3, if any
consolidation, merger or similar extraordinary transaction of the Company with
another entity, or the sale of all or substantially all of its assets, other
than in any such case a Recapitalization Event, will be effected (a
“Reorganization Event”), and in connection with such Reorganization Event, the
Common Shares will be converted into or exchanged for or become the right to
receive cash, securities or other property, then, as a condition of such
Reorganization Event, lawful and adequate provisions will be made by the Company
whereby the Holder of this Warrant will hereafter have the right to purchase and
receive on exercise of the Warrant, for an aggregate price equal to the
aggregate Exercise Price for all of the Warrant Shares underlying the Warrant as
in effect immediately before such transaction (subject to adjustment thereafter
as contemplated by the succeeding sentence), the same kind and amount of cash,
securities or other property as it would have had the right to receive if it had
exercised the Warrant immediately before such transaction and been entitled to
participate therein. In the event of any such Reorganization Event, the Company
will make appropriate provision to ensure that applicable provisions of this
Warrant and the Securities Purchase Agreement (including the provisions of
Section 2 and Section 3 hereunder and Article 5 of the Securities Purchase
Agreement) will thereafter be binding on the other party to such transaction (or
the successor in such transaction) and applicable to any securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
such Reorganization Event unless, prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such Reorganization
Event or the entity purchasing such assets will assume by written instrument
reasonably satisfactory in form and substance to the Holder, executed and mailed
or delivered to the Holder at the last address of the Holder appearing on the
books of the Company, the obligation to deliver to the cash, securities or
property deliverable upon exercise of Warrant (or the cash payment under
Section 3.2). The Company will notify the Holder of any such proposed
Reorganization Event reasonably prior to the consummation thereof so as to
provide such Holder with a reasonable opportunity prior to such consummation to
exercise the Warrant in accordance with the terms and conditions hereof;
provided that in the case of a transaction which requires notice to be given to
the holders of Common Shares of the Company, the Holder will be provided the
same notice given to the holders of Common Shares of the Company.
     3.2 Mandatory Redemption. Upon the occurrence of a Change of Control Event
(other than a Public Stock Merger), at the election of the Holder in its sole
discretion exercised by written notice to the Company or the successor to the
Company on or prior to the Exercise Date, the Company will pay to the Holder as
of the date of such Change of Control Event, an amount in cash in immediately
available funds equal to the Cash Redemption Value for this Warrant, not later
than the date which is 10 Business Days after such Change of Control Event and
this Warrant will thereafter be extinguished. For purposes of this Section 3.2,
the Exercise Date will mean (a) if the Company entered into a definitive
agreement with respect to a Change of Control Event and has provided to the
Holder notice of the Change in Control Event at least 20 Business Days prior to
the effectiveness of such event, the tenth Business Day prior to such event and
(b) otherwise, the fifth Business Day following the effectiveness of the Change
of Control Event. The “Cash Redemption Value” for this Warrant will equal the
fair value of this Warrant as of the date of such Change of Control Event as
determined by an Independent Financial Expert plus interest thereon from such
date to the payment date at the rate of 10% per annum. The Independent Financial
Expert will determine Cash Redemption Value using standard option pricing models
for American style options, such as the Cox-Rubinstein binomial model, assuming
for this purpose that the Change of Control Event had not occurred and making
sure to take into account the intrinsic and option value of this Warrant, but
assuming annualized volatility of 35% over this Warrant’s remaining term. The
Cash Redemption Value of this Warrant will be due and payable not later than the
tenth Business Day after the date of the applicable Change of Control Event. If
the Holder does not exercise the right provided by this Section 3.2, this
Warrant will remain outstanding as adjusted pursuant to the provisions of
Section 3.1.

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     3.3 Public Stock Merger.
     (a) In the case of a Public Stock Merger, the Company may by written notice
to the Holder not more than 60 nor less than 30 days prior to the effective date
of such Public Stock Merger elect to have all of the unexercised portion of this
Warrant remain outstanding after the Public Stock Merger, in which case such
unexercised portion of this Warrant will remain outstanding as adjusted pursuant
to Section 3.1.
     (b) In the case of any Public Stock Merger with respect to which the
Company does not make a timely election as contemplated by Section 3.3(a), the
Company will pay on the effective date of such Public Merger, to the Holder as
of the effective date of such Public Stock Merger, an amount in cash in
immediately available funds equal to the Cash Redemption Value for the
unexercised portion of this Warrant determined in accordance with Section 3.2
and this Warrant will thereafter be extinguished.
     Section 4. Notice of Corporate Action. If at any time:
     (a) the Company takes a record of the holders of its Common Shares for the
purpose of entitling them to receive a dividend or other distribution, or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other securities or property, or to receive any
other right,
     (b) there is a Change of Control Event, or
     (c) there is a voluntary or involuntary dissolution, liquidation or winding
up of the Company;
     then, in any one or more of such cases, the Company will give to the
Holder, if lawful and practicable to do so, at least 10 days’ prior written
notice of the date on which a record date will be selected for such dividend,
distribution or right or for determining rights to vote in respect of any such
Change of Control Event, at least 10 days’ prior written notice of the date when
the same will take place. Such notice in accordance with the foregoing clause
also will specify (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, the date on which the holders
of Common Shares will be entitled to any such dividend, distribution or right,
and the amount and character thereof and (ii) the date on which any such Change
of Control Event is to take place and the time, if any such time is to be fixed,
as of which the holders of Common Shares will be entitled to exchange their
Common Shares for securities or other property deliverable upon such
disposition, dissolution, liquidation or winding up. Each such written notice
will be sufficiently given if addressed to the Holder at the last address of the
Holder appearing on the books of the Company and delivered in accordance with
Section 10.
     Section 5. Definitions. The following terms have meanings set forth below:
     “Change of Control Event” means an event or series of events constituting
or resulting in a “change in control” as defined in the Loan Documents as then
in effect (including any amendments thereto), or as defined in any successor
definitive documentation that is entered into by the Company in connection with
any refinancing thereof.
     “Common Shares” means the common shares of the Company, no par value per
share.

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     “Common Shares Deemed Outstanding” means, at any given time, the number of
Common Shares actually outstanding at such time, plus the number of Common
Shares deemed to be outstanding pursuant to Section 2.2, regardless of whether
the Rights are actually exercisable at such time, but excluding any Warrant
Shares issuable upon the exercise of this Warrant.
     “Fair Market Value” means:
     (a) in the case of the Common Shares, the closing price of the Common
Shares on the Trading Market on the immediately preceding Business Day of the
event in question;
     (b) in the case of cash, the amount thereof; and
     (c) in the case of any property other than Common Shares or cash, the value
of such property as determined in good faith by the Board of Directors of the
Company.
     If at any time the Common Shares are not listed on any Trading Market, the
“Fair Market Value” will be the fair market value thereof determined jointly by
the Company and the Holder. If the parties are unable to reach agreement within
a reasonable period of time, such Fair Market Value will be determined by an
appraiser jointly selected by the Company and the Holder. The determination of
such appraiser will be final and binding upon the parties, and the fees and
expenses of such appraiser will be borne equally by the Company and the Holder.
     “Independent Financial Expert” means a nationally recognized investment
banking firm mutually agreed by the Company and the Holder, which firm does not
have a material financial interest or other material economic relationship with
either the Company or any of its Subsidiaries, on the one hand, or the Holder or
its Affiliates or any BSL Affiliate, on the other hand.
     “Public Stock Merger” means an event described in clause (iii) of the
definition of Change of Control Event pursuant to which all of the outstanding
Common Shares of the Company are exchanged for, converted into or constitute
solely (except to the extent of applicable appraisal rights) the right to
receive common stock listed on a recognized national securities exchange, and
with respect to which the Warrant will be exercisable into such common stock.
     “Recapitalization Event” means any consolidation, merger or similar
extraordinary transaction, or any recapitalization or reclassification of the
Common Shares, which in any such event does not constitute a Change of Control
Event.
     “Warrant Shares” means the Company’s Common Shares issuable upon exercise
of this Warrant in accordance with the terms hereof; provided that if there is a
change such that the securities issuable upon the exercise of this Warrant are
issued by an entity other than the Company or there is a change in the class of
securities so issuable, then the term “Warrant Shares” will mean one share of
the securities issuable upon the exercise of this Warrant if such securities is
issuable in shares, or will mean the smallest unit in which such securities is
issuable if such securities is not issuable in shares.
     Section 6. No Voting Rights; Limitations of Liability. This Warrant will
not entitle the Holder to any voting rights or other rights as a shareholder of
the Company. No provision hereof, in the absence of affirmative action by the
Holder to purchase or acquire the Warrant Shares, and no enumeration herein of
the rights or privileges of the Holder, will give rise to any liability of the
Holder for the Exercise Price of Warrant Shares acquirable by exercise of this
Warrant or as a shareholder of the Company.

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     Section 7. Warrant Transferable; Restrictions. Subject to the transfer
conditions and restrictions referred to in the legend endorsed hereon and in
Section 6.4 of the Securities Purchase Agreement, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the Holder,
upon surrender of this Warrant with a properly executed Assignment in
substantially the form of Exhibit II at the principal office of the Company. The
Holder acknowledges and agrees that the Warrant and the Warrant Shares acquired
upon exercise of this Warrant, if not registered, will have the restrictions
upon resale imposed by state and federal securities laws and each Warrant
exchangeable in accordance with Section 8 and each certificate representing
Warrant Shares will bear a legend in the following form:
     “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER JURISDICTIONS, AND IN THE
CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES
NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE
LAWS. THE TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS SET FORTH IN A SECURITIES PURCHASE AGREEMENT BETWEEN THE
COMPANY AND THE PURCHASER OF SUCH SECURITIES. THE COMPANY AND ITS TRANSFER AGENT
WILL NOT BE OBLIGATED TO RECOGNIZE OR GIVE EFFECT TO ANY TRANSFER MADE IN
VIOLATION OF SUCH RESTRICTIONS. A COPY OF SUCH RESTRICTIONS MAY BE OBTAINED FROM
THE COMPANY UPON WRITTEN REQUEST.”
     Section 8. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants will represent such
portion of such rights as is designated by the Holder at the time of such
surrender. The date the Company initially issues this Warrant will be deemed to
be the “Date of Issuance” hereof regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant are issued.
     Section 9. Replacement of Securities. If any certificate or instrument
evidencing the Warrant or the Warrant Shares received upon exercise of this
Warrant is mutilated, lost, stolen or destroyed, the Company will issue or cause
to be issued in exchange and substitution for and upon cancellation thereof (in
the case of mutilation), or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction, including an
affidavit of loss and indemnity, which will not include a requirement to post
bond. The applicant for a new certificate or instrument under such circumstances
will also pay any reasonable third-party costs associated with the issuance of
such replacement securities.
     Section 10. Notices. All notices referred to in this Warrant will be in
writing and will be deemed to have been given when delivered in the manner and
to the addresses provided in Section 7.3 of the Securities Purchase Agreement.

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     Section 11. Amendments; Waivers. No provision of this Warrant may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Holder or, in the case of a
waiver, by the party against whom enforcement of any such waived provision is
sought. Subject to applicable law and the rules of the Trading Market, the
Company and the Holder may at any time amend this Warrant. No waiver of any
default with respect to any provision, condition or requirement of this Warrant
will be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement
hereof, nor will any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such right.
     Section 12. Headings. The headings herein are for convenience only, do not
constitute a part of this Warrant and will not be deemed to limit or affect any
of the provisions hereof.
     Section 13. Governing Law and Venue. The Michigan Business Corporation Act
will govern all questions concerning the due authorization and issuance of the
Warrant Shares issuable upon the exercise of this Warrant. All other questions
concerning the construction, validity, enforcement and interpretation of this
Warrant will be governed by and construed and enforced in accordance with the
internal procedural and substantive laws of the State of New York, without
regard to the principles of conflicts of law thereof. All legal proceedings
concerning the construction, validity, enforcement and interpretation of this
Warrant (whether brought against the Company or the Holder or their respective
Affiliates, directors, officers, shareholders, employees or agents) will be
commenced exclusively (a) in the United States District Court for the state of
New York located in the Southern District of New York and (b) in a state court
of the State of New York located in the county of New York. Each party hereby
irrevocably and unconditionally submits to the exclusive jurisdiction of the
foregoing courts for the adjudication of any dispute arising in connection with
this Warrant for the adjudication of any dispute arising in connection with this
Warrant and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding. The Company and, by its
acceptance of this Warrant, the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under the Securities Purchase Agreement and agrees that
such service will constitute good and sufficient service of process and notice
thereof. Nothing contained herein will be deemed to limit in any way any right
to serve process in any other manner permitted by law.
     Section 14. WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE COMPANY AND, BY
ITS ACCEPTANCE OF THIS WARRANT, THE HOLDER EACH KNOWINGLY AND INTENTIONALLY, TO
THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,
UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
     Section 15. Successors and Assigns. This Warrant will be binding upon the
parties and their respective successors and assigns. The Company may not assign
or delegate this Warrant or any rights or obligations hereunder without the
consent of the Holder.
* * * * *

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     IN WITNESS WHEREOF, the Company has executed and delivered this Warrant on
                    , 2010.

          BORDERS GROUP, INC.
      By:           Name:           Title:        

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EXHIBIT I
FORM OF EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
To BORDERS GROUP, INC.:
     The undersigned registered holder of the attached Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder,
                     Warrant Shares and herewith makes payment of
$                     therefor, and requests that the certificates for such
shares be issued in the name of, and delivered to _______________, whose address
is_____________________.
Dated:

                                    (Street Address)                 
(City)          (State)          (Zip Code)           

     The Company hereby acknowledges this Notice and hereby directs [TRANSFER
AGENT] to issue the above indicated number of                      Warrant
Shares, in accordance with the Transfer Agent Instructions dated
_______________,                      from the Company and acknowledged and
agreed to by [TRANSFER AGENT].

            BORDERS GROUP, INC.
      By:           Name:           Title:      

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EXHIBIT II
FORM OF ASSIGNMENT
To BORDERS GROUP, INC.:
     FOR VALUE RECEIVED, the undersigned registered holder of the attached
Warrant hereby sells, assigns and transfers unto ____________ the rights
represented by such Warrant to purchase                      Warrant Shares of
Borders Group, Inc. to which and such Warrant relates, and appoints ____________
Attorney to make such transfer on the books of Borders Group, Inc. maintained
for such purpose, with full power of substitution in the premises.
Dated:

                                    (Street Address)                 
(City)          (State)          (Zip Code)           

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