May
      26,
      2006








[Name]











Dear_______:





This
      letter will confirm our understanding concerning your employment with Borders
      Group, Inc. (the “Company”). You are sometimes referred to herein as the
“Executive.”





1.  Subject
      to all of the other provisions of this agreement, if your employment with the
      Company is terminated by the Company other than for Cause or Disability, the
      Company will pay to you:





(a)  Your
      base
      salary through the month during which termination occurred, plus any other
      amount due you at the time of termination under any bonus plan of the Company;
      and





(b)  Monthly
      severance payments for the period specified in Section 6 equal to (i) your
      monthly base salary at the time of termination, plus (ii) 1/12 th of the
“target” bonus amount targeted for you for the fiscal year in which termination
      occurred.





No
      payments shall be made under this agreement if your employment with the Company
      is terminated because of your death or is terminated by the Company for Cause
      or
      Disability or if you terminate your employment for any reason.




2.  Subject
      to all of the other provisions of this agreement, if your employment is
      terminated by the Company other than for Cause or Disability during the one-year
      period following the commencement of service as chief executive officer of
      the
      Company (“CEO”) of the CEO that replaces Mr. Josefowicz; (i) the monthly
      severance payments to be made to you under Section 1(b) shall be 1.5 times
      the
      amount specified therein, and (ii) the Company will make a cash payment to
      you
      as soon as practicable following your termination of employment equal to the
      fair market value of the restricted shares (but not the restricted share units)
      awarded to you in March 2006. The fair market value of the restricted shares
      shall be based upon the closing price of the Company’s shares on the New York
      Stock Exchange on the day prior to your termination date, without any reduction
      for the restrictions.





3.  Subject
      to all of the other provisions of this agreement, if your employment is
      terminated by the Company other than for Cause or Disability during the one-year
      period following a Change in Control, the monthly severance payments to be
      made
      to you under Section 1(b) shall be for an extended period as specified in
      Section 6 and shall be based upon (a) your monthly base salary at the time
      of
      termination or immediately prior to the Change in Control, whichever base salary
      amount is greater, plus (b) 1/12 th of the
“target” bonus amount targeted for you for






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the
      fiscal year in which termination occurred or the fiscal year immediately prior
      to the Change in Control, whichever bonus amount is greater.




4.  You
      agree
      to make reasonable efforts to seek (and to immediately notify the Company of)
      other employment and to the extent that you receive compensation from other
      employment, the severance payments provided herein, other than the payment
      in
      lieu of restricted shares described in Section 2 (ii), shall be correspondingly
      reduced.




5.  All
      payments hereunder shall be subject to applicable withholding and
      deductions.




6.  Monthly
      severance payments shall commence in the month following termination and shall
      continue for twelve months or, in the case of payments under Section 3, for
      twenty-four months; provided however, that, if the monthly payment period would
      otherwise extend beyond the later of: (i) March 15 th of the
      year following the calendar year in which your termination of employment occurs,
      or (ii) 2 1/2 months following the end of the fiscal year in which your
      termination of employment occurs, an amount equal to the sum of all of the
      remaining payments that would have been made to you in monthly installments
      shall, in lieu thereof, be paid to you in one lump sum on the last day of the
      month immediately preceding the month in which the later of the dates specified
      in (i) or (ii) above falls. In calculating the amount of any lump sum payment,
      it shall be assumed that any income that you are earning from other employment
      on the payment date would continue for the remainder of the applicable period
      following your termination of employment. No repayment shall be required if
      your
      income increases after the lump-sum payment date, and no additional payments
      shall be made by the Company after the lump sum payment.




7.  Termination
      by the Company for “Cause” means termination based on (i) conduct which is a
      material violation of Company policy or which is fraudulent or unlawful or
      which
      materially interferes with your ability to perform your duties, (ii) misconduct
      which damages or injures the Company or substantially damages the Company’s
      reputation, or (iii) gross negligence in the performance of, or willful failure
      to perform, your duties and responsibilities.




8.  Termination
      by you for “Disability” means termination based on inability to perform your
      duties and responsibilities by reason of illness or incapacity for a total
      of
      180 days in any twelve-month period.





9.  A
“Change
      in Control” shall mean:





(a)  The
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      "Exchange Act") (a "Person") of beneficial ownership (within the meaning of
      Rule
      13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
      then
      outstanding shares of common stock of the Company (the "Outstanding Company
      Common Stock") or (ii) the combined voting power of the then outstanding voting
      securities of the Company entitled to vote generally in the election of
      directors (the "Outstanding Company Voting Securities"); provided, however,
      that
      for purposes of this subsection (a), the following acquisitions shall not
      constitute a Change of Control: (i) any acquisition directly from the Company,
      (ii) any acquisition by the Company, (iii) any acquisition by any employee
      benefit plan (or related trust) sponsored or maintained by the Company or any
      corporation controlled by the Company or (iv) any acquisition by any corporation
      pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
      subsection (c) of this Section 9; or




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(b)  Individuals
      who, as of the date hereof, constitute the Board (the "Incumbent Board") cease
      for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a director subsequent to the date hereof
      whose election, or nomination for election by the Company's shareholders, was
      approved by a vote of at least a majority of the directors then comprising
      the
      Incumbent Board shall be considered as though such individual were a member
      of
      the Incumbent Board, but excluding, for this purpose, any such individual whose
      initial assumption of office occurs as a result of an actual or threatened
      election contest with respect to the election or removal of directors or other
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Board; or





(c)  Consummation
      of a reorganization, merger or consolidation or sale or other disposition of
      all
      or substantially all of the assets of the Company (a "Business Combination"),
      in
      each case, unless, following such Business Combination, (i) all or substantially
      all of the individuals and entities who were the beneficial owners,
      respectively, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities immediately prior to such Business Combination beneficially
      own, directly or indirectly, more than 60% of, respectively, the then
      outstanding shares of common stock and the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election of
      directors, as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation which as a result
      of
      such transaction owns the Company or all or substantially all of the Company's
      assets either directly or through one or more subsidiaries) in substantially
      the
      same proportions as their ownership, immediately prior to such Business
      Combination of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities, as the case may be, (ii) no Person (excluding any corporation
      resulting from such Business Combination or any employee benefit plan (or
      related trust) of the Company or such corporation resulting from such Business
      Combination) beneficially owns, directly or indirectly, 20% or more of,
      respectively, the then outstanding shares of common stock of the corporation
      resulting from such Business Combination or the combined voting power of the
      then outstanding voting securities of such corporation except to the extent
      that
      such ownership existed prior to the Business Combination and (iii) at least
      a
      majority of the members of the board of directors of the corporation resulting
      from such Business Combination were members of the Incumbent Board at the time
      of the execution of the initial agreement, or of the action of the Board,
      providing for such Business Combination; or





(d)  Approval
      by the shareholders of the Company of a complete liquidation or dissolution
      of
      the Company.





10.  Payments
      shall be reduced to the extent, if any, determined in accordance with the
      following provisions:





(a)  For
      purposes of this Section 10: (i) a "Payment" shall mean any payment or
      distribution in the nature of compensation to or for the benefit of the
      Executive, whether paid or payable pursuant to this Agreement or otherwise;
      (ii)
      "Agreement Payment" shall mean a Payment paid or payable pursuant to this
      Agreement (disregarding this Section); (iii) “Net After-Tax Receipt” shall mean
      the Present






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Value
      of a
      Payment net of all taxes imposed on the Executive with respect thereto under
      Sections 1 and 4999 of the Code and under applicable state and local laws,
      determined by applying the highest marginal rate under Section 1 of the Code
      and
      under state and local laws which applied to the Executive’s taxable income for
      the immediately preceding taxable year, or such other rate(s) as the Executive
      shall certify, in the Executive’s sole discretion, as likely to apply to the
      Executive in the relevant tax year(s); (iv) "Present Value" shall mean such
      value determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4)
      of
      Code; (v) "Reduced Amount" shall mean the amount of Agreement Payments that
      (A)
      has a Present Value that is less than the Present Value of all Agreement
      Payments and (B) results in aggregate Net After-Tax Receipts for all Payments
      that are greater than the Net After-Tax Receipts for all Payments that would
      result if the aggregate Present Value of Agreement Payments were any other
      amount that is less than the Present Value of all Agreement Payments; and (vi)
      “Code” shall mean the Internal Revenue Code of 1986, as amended.





(b)  Anything
      in the Agreement to the contrary notwithstanding, in the event Ernst & Young
      or such other accounting firm as shall be designated by the Company (the
      "Accounting Firm") shall determine that receipt of all Payments would subject
      the Executive to tax under Section 4999 of the Code, the Accounting Firm shall
      determine whether some amount of Agreement Payments meets the definition of
      “Reduced Amount.” If the Accounting Firm determines that there is a Reduced
      Amount, then the aggregate Agreement Payments shall be reduced to such Reduced
      Amount.





(c) If
      the
      Accounting Firm determines that aggregate Agreement Payments should be reduced
      to the Reduced Amount, the Company shall promptly give the Executive notice
      to
      that effect and a copy of the detailed calculation thereof, and the Executive
      may then elect, in his or her sole discretion, which and how much of the
      Agreement Payments shall be eliminated or reduced (as long as after such
      election the Present Value of the aggregate Agreement Payments equals the
      Reduced Amount), and shall advise the Company in writing of his or her election
      within ten days of his or her receipt of notice. If no such election is made
      by
      the Executive within such ten-day period, the Company may elect which of such
      Agreement Payments shall be eliminated or reduced (as long as after such
      election the Present Value of the aggregate Agreement Payments equals the
      Reduced Amount) and shall notify the Executive promptly of such election. All
      determinations made by the Accounting Firm under this Section shall be binding
      upon the Company and the Executive and shall be made within 60 days of a
      termination of employment of the Executive. As promptly as practicable following
      such determination, the Company shall pay to or distribute for the benefit
      of
      the Executive such Agreement Payments as are then due to the Executive under
      this Agreement and shall promptly pay to or distribute for the benefit of the
      Executive in the future such Agreement Payments as become due to the Executive
      under this Agreement.





(d)  As
      a
      result of the uncertainty in the application of Section 4999 of the Code at
      the
      time of the initial determination by the Accounting Firm hereunder, it is
      possible that amounts will have been paid or distributed by the Company to
      or
      for the benefit of the Executive pursuant to this Agreement which should not
      have been so paid or distributed ("Overpayment") or that additional amounts
      which will have not






4




been
      paid or
      distributed by the Company to or for the benefit of the Executive pursuant
      to
      this Agreement could have been so paid or distributed ("Underpayment"), in
      each
      case, consistent with the calculation of the Reduced Amount hereunder. In the
      event that the Accounting Firm, based upon the assertion of a deficiency by
      the
      Internal Revenue Service against either the Company or the Executive which
      the
      Accounting Firm believes has a high probability of success determines that
      an
      Overpayment has been made, any such Overpayment paid or distributed by the
      Company to or for the benefit of the Executive shall be treated for all purposes
      as a loan to the Executive which the Executive shall repay to the Company
      together with interest at the applicable federal rate provided for in Section
      7872(f)(2) of the Code; provided ,
      however, that no such loan shall be deemed to have been made and no amount
      shall
      be payable by the Executive to the Company if and to the extent such deemed
      loan
      and payment would not either reduce the amount on which the Executive is subject
      to tax under Section 1 and Section 4999 of the Code or generate a refund of
      such taxes. In the event that the Accounting Firm, based upon controlling
      precedent or substantial authority, determines that an Underpayment has
      occurred, any such Underpayment shall be promptly paid by the Company to or
      for
      the benefit of the Executive together with interest at the applicable federal
      rate provided for in Section 7872(f)(2) of the Code.




(e)All
      fees and expenses of
      the Accounting Firm in implementing the provisions of this Section 10 shall
      be
      borne by the Company.




11.  The
      obligation to make the payments hereunder is conditioned upon your execution
      and
      delivery to the Company of a release, in form satisfactory to the Company,
      of
      any claims you may have as a result of your employment or termination of
      employment under any federal, state or local law, excluding any claim for
      benefits which may be due you in normal course under any employee benefit plan
      of the Company which provides benefits after termination of employment.




12.  You
      agree
      that any right to receive severance payments hereunder will cease if during
      the
      one-year period following your termination of employment you directly or
      indirectly become an employee, director, advisor of, or otherwise affiliated
      with, any other entity or enterprise whose business is in competition with
      the
      business of the Company or any of its subsidiaries or affiliates.





13.  The
      severance payments hereunder may not be transferred, assigned or encumbered
      in
      any manner, either voluntarily or involuntarily. In the event of your death
      after your employment has been terminated by the Company other than for Cause
      or
      Disability, any payments then or thereafter due hereunder will be made to your
      estate.





14.  The
      payments provided hereunder shall constitute the exclusive payments due you
      from, and the exclusive obligation of, the Company in the event of any
      termination of your employment, except for any benefits which may be due you
      in
      normal course under any employee benefit plan of the Company which provides
      benefits after termination of employment, it being understood and agreed that
      no
      severance plan shall be deemed to be an employee benefit plan for this
      purpose.





15.  Notwithstanding
      anything herein to the contrary, your employment with the Company is terminable
      at will with or without cause; subject, however, to the obligations of the
      Company under this agreement.







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16.  If
      a
      dispute arises concerning any provisions of this agreement, it shall be resolved
      by arbitration in Ann Arbor, Michigan in accordance with the rules of the
      American Arbitration Association. Judgment on the award rendered may be entered
      in any court having jurisdiction and enforced accordingly.





17.  This
      letter agreement sets forth the entire understanding with respect to the subject
      matter hereof and supersedes all prior agreements, written or oral or express
      or
      implied, between you and the Company or any subsidiary or other affiliate of
      the
      Company as to such subject matter. This letter agreement may not be amended,
      nor
      may any provision hereof be modified or waived, except by an instrument in
      writing duly signed by you and the Company.





18.  If
      any
      provision of this letter agreement, or any application thereof to any
      circumstances, is invalid, in whole or in part, such provision or application
      shall to that extent be severable and shall not affect other provisions or
      applications of this letter agreement.







Please
      indicate your agreement by signing below and retain one copy for your
      records.







Agreed
      and Accepted:  
 Sincerely,


**BORDERS
      GROUP, INC.**





By:


Name:
      Gregory P. Josefowicz


Its:
      Chairman, CEO and President







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