exv10w4






Exhibit 10.4




May 20, 2010




Borders Group, Inc.

100 Phoenix Drive

Ann Arbor, Michigan 48108




Computershare Inc.

Computershare Trust Company, N.A.

250 Royall Street

Canton, Massachusetts 02021





	 	Re: 	 	Amendment of Warrant and Registration Rights Agreement.




Ladies and Gentlemen:




     Borders Group, Inc., a Michigan corporation (the “Company”), and Computershare Inc., a
Delaware corporation, and its wholly-owned subsidiary, Computershare Trust Company, N.A., a
federally-chartered trust company (collectively, the “Warrant Agent”), are parties to a Warrant and
Registration Rights Agreement dated as of April 9, 2008, as amended (the “Warrant Agreement”).
Except as otherwise provided herein, all capitalized terms used without definition herein have the
respective meanings provided in the Warrant Agreement.



     BGP Holdings Corp., Pershing Square, L.P. and Pershing Square II, L.P. (collectively,
“Pershing Square”) are the record holders and beneficial owners of all 14,700,000 outstanding
Warrants issued pursuant to the Warrant Agreement.



     The Company proposes to enter into a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with LeBow Gamma Limited Partnership, a Delaware limited partnership (the “Purchaser”).
Pursuant to the Securities Purchase Agreement, the Company expects to issue to the Purchaser
11,111,111 shares (the “Purchaser Shares”) of the Company’s common stock, no par value per share
(“Common Shares”). Subject to approval by the shareholders of the Company in accordance with the
listing rules of the New York Stock Exchange (the “Shareholder Approval”), the Company is also
obligated pursuant to the Securities Purchase Agreement to issue to the Purchaser a stock purchase
warrant (the “Purchaser Warrant”) exercisable to acquire 35,130,000 Common Shares (as adjusted as
provided in the Purchaser Warrant, the “Purchaser Warrant Shares”). In the event that the
Shareholder Approval is not obtained, the Company will be obligated pursuant to the Securities
Purchase Agreement to issue to the Purchaser a Stock Appreciation Right (the “Purchaser Stock
Appreciation Right”). In accordance with Section 1.3(c) of the Purchaser Stock Appreciation Right,
the Purchaser may, under certain limited circumstances, elect to receive Common Shares (“Section
1.3(c) Shares”) upon its exercise of the Purchaser Stock Appreciation Right. In addition, in
accordance with Section 1.4 of the Purchaser Stock Appreciation Right, the Company has the right
under certain circumstances to replace the Purchaser Stock Appreciation Right in whole or in part
with a warrant substantially in the form of the Purchaser Warrant (the “Purchaser Substitute
Warrant”).



     Copies of the Securities Purchase Agreement, form of Purchaser Warrant and form of Purchaser
Stock Appreciation Right are attached hereto as Exhibit A.



 









 





     In order to facilitate the transactions contemplated by the Securities Purchase Agreement, the
Company, Pershing Square and the Warrant Agent hereby agree that the definition of the term “Change
of Control Event” as set forth in the Warrant Agreement is hereby amended to add the following at
the end of such definition:




     “Notwithstanding the foregoing, in accordance with the letter agreement dated
as of May 20, 2010 (the “Letter Agreement”) between and among the Company, the
Warrant Agent and BGP Holdings Corp., Pershing Square, L.P. and Pershing Square
II, L.P. (collectively, “Pershing Square”), the acquisition by the Purchaser, any
Affiliate of the Purchaser, any BSL Affiliate (in each case, and only for purposes
of this sentence, as such terms are defined in the Securities Purchase Agreement)
or any permitted transferee, successor or assignee thereof of (i) up to 11,111,111
shares of Common Stock, (ii) if the Shareholder Approval is obtained, the
Purchaser Warrant and the Purchaser Warrant Shares issuable upon the exercise of
the Purchaser Warrant, (iii) if the Shareholder Approval is not obtained, the
Purchaser Stock Appreciation Right, (iv) if the Purchaser Stock Appreciation Right
is issued, any Section 1.3(c) Shares in accordance with Section 1.3(c) of the
Purchaser Stock Appreciation Right and (v) if the Purchaser Stock Appreciation
Right is issued, any Purchaser Substitute Warrant issued in accordance with
Section 1.4 of the Purchaser Stock Appreciation Right and any Common Shares issued
upon the exercise of any Purchaser Substitute Warrant, shall not by themselves
constitute a Change of Control Event, so long as (i) the Company is in compliance
with the Warrant Agreement, as amended and supplemented from time to time, and
(ii) the Company seeks the Shareholder Approval at or prior to its next annual
general meeting of shareholders, the Company recommends the Shareholder Approval
without material qualification, and all shares of Common Stock held by Purchaser,
any Affiliate of Purchaser or any BSL Affiliate are voted in favor of the
Shareholder Approval to the fullest extent permitted by the rules of the Trading
Market and applicable law. All capitalized terms used without definition in the
preceding sentence shall have the respective meanings provided in the Letter
Agreement.”



     In accordance with Section 5.5 of the Warrant Agreement, concurrently with the issuance of the
Purchaser Shares to the Purchaser pursuant to the Securities Purchase Agreement, the Company will
cause the Warrant Agent to issue to Pershing Square such number of additional Warrants (having the
same terms as the current outstanding Warrants) that are exercisable to acquire 2,701,837 Common
Shares, at an initial exercise price, subject to adjustment as provided in the Warrant Agreement,
of $0.65 per share.



     In accordance with Section 5.5 of the Warrant Agreement, the Company will concurrently with
the issuance of the Purchaser Warrant or the Purchaser Stock Appreciation Right to the Purchaser
pursuant to the Securities Purchase Agreement cause the Warrant Agent to issue to Pershing Square
additional Warrants (having the same terms as the current outstanding Warrants) that are
exercisable to acquire 8,542,399 Common Shares at an initial exercise price, subject to adjustment
as provided in the Warrant Agreement, of $0.65 per share.



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     In the event of any amendment or modification of the Securities Purchase Agreement (or any
related document) from the forms of such documents provided to Pershing Square as of the date
hereof, as attached hereto as Exhibit A, which change affects the amount or pricing terms of any
securities issued or issuable in connection therewith, and as a condition to effecting any such
change, the Company and Pershing Square will agree upon any necessary adjustments to the Exercise
Price and the issuance of new Warrants to Pershing Square, as applicable, in each case in
accordance with and as contemplated by the Warrant Agreement.



* * * * *








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     Except as amended as expressly provided herein, the parties agree that the Warrant
Agreement will remain in full force and effect in accordance with its terms and conditions.



	 	 	 	 	 
	 	BGP HOLDINGS CORP.

 	 
	 	By:  	/s/ William A. Ackman
 	 
	 	Its:	Authorized Representative  	 
	 	 	 	 
	 
	 	PERSHING SQUARE, L.P.

 	 
	 	By:  	Pershing Square Capital Management, L.P.
 	 
	 	Its:	 Investment Manager         	 
	 	 	 	 
	 	By:  	     PS Management GP, LLC
 	 
	 	Its:	 General Partner             	 
	 	 	 	 
	 	By:  	     /s/ William A. Ackman
 	 
	 	Its:	 Managing Member           	 
	 	 	 	 
	 
	 	PERSHING SQUARE II, L.P.

 	 
	 	By:  	Pershing Square Capital Management, L.P.
 	 
	 	Its:	 Investment Manager         	 
	 	 	 	 
	 	By:  	     PS Management GP, LLC
 	 
	 	Its:	 General Partner             	 
	 
	 	By:  	     /s/ William A. Ackman
 	 
	 	Its:	 Managing Member           	 
	 	 	 	 
	 



Agreed and acknowledged

this May 20, 2010:




BORDERS GROUP, INC.




	 	 	 	 	 

	By:

	 	/s/ Mark R. Bierley	 	 
	Its:

	 	 

Executive Vice President and Chief Financial Officer
	 	 
	 
	 	 	 	 
	COMPUTERSHARE INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Neda Sheridan	 	 
	Its:

	 	 

Vice President
	 	 
	 
	 	 	 	 
	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Neda Sheridan	 	 
	Its:

	 	 

Vice President
	 	 







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EXHIBIT A





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