Document:

Exhibit 10.29 Summary of Employment Agreement between Mr. Jones and the Company

    Borders
      Group/George Jones 

    Employment
      Agreement

    

    Summary
      of Key Terms

    

    
      	
               

              Term

               

            	
               

              Discussion

               

            
	
               

              Position

               

            	
               

              President,
                Chief Executive Officer and member of the Board of Directors

               

              Prior
                approval by Board needed to serve on boards of for-profit business
                corporations (no approval needed for non-profit, charitable and civic
                organizations)

               

            
	
               

              Start
                Date

               

            	
               

              July
                17, 2006

               

            
	
               

              Term
                

               

            	
               

              Initial
                three-year term with automatic one-year extensions commencing at
                expiration of original term unless notice is given by either party
                90 days
                prior to termination of current term

               

              Agreement
                expires in any event on five-year anniversary of start date

               

            
	
               

              Base
                Salary

               

            	
               

              $775,000
                (pro rated for partial years)

               

              Reviewed
                from time to time for increase (but not decrease) in accordance with
                the
                Company’s regular practices

               

            
	
               

              Annual
                Bonus

               

            	
               

              Eligible
                to receive an annual bonus (“Annual Bonus”) pursuant to the terms of the
                Company’s Annual Incentive Bonus Plan (“AIP”), with a target award equal
                to 80% of base salary, for full-year target of $620,000 (pro rated
                for
                2006; assuming 6/12ths
                =
                $310,000), with actual bonus amount to be determined by the Compensation
                Committee consistent with the terms of the AIP 

               

              Maximum
                Annual Bonus equal to 160% of base salary ($1,240,000) 

               

              Executive
                to receive at least 20% of each Annual Bonus in the form of Restricted
                Shares

               

              Executive
                may elect to receive up to 100% of each Annual Bonus in the form
                of
                Restricted Shares

               

              Restricted
                Shares granted in connection with the Annual Bonus will be based
                on a
                discounted purchase price ranging from 20% - 40% depending on restriction
                period of 2 to 4 years on the same terms as similarly situated
                executives

               

            
	
               

              Long-Term
                Incentive Opportunity

               

            	
               

              Long-Term
                Incentive (“LTI”) award will be on similar terms and conditions as are
                applicable to annual LTI awards granted to similarly situated executives
                of the Company under the Company Long Term Incentive Plan
                (“LTIP”)

               

              Fiscal
                2006:
                

               

              Restricted
                share units with a fair market value equal to $1 million 

               

              Restricted
                share units vest on January 31, 2008, subject solely to Executive’s
                continued employment with the Company through that date

               

              After
                Fiscal 2006:

               

              Awards
                with a target value equal to two times Executive’s base salary
                ($1,550,000)

               

            
	
               

              Inducement
                Option

               

            	
               

              Option
                to purchase 400,000 shares of Common Stock with a per share exercise
                price
                equal to the fair market value of the Common Stock on the grant
                date

               

              Option
                vests ratably on the first, second and third anniversaries of the
                grant
                date, subject to Executive’s continued employment with the Company through
                each of the vesting dates

               

            
	
               

              MSPR
                Shares/

              MSPR
                Option 

               

            	
               

              MSPR
                Shares:

               

              Executive
                may elect to pay up to $1 million to purchase shares of Restricted
                Common
                Stock for a per share purchase price equal to 80% of the Fair Market
                Value
                of the Common Stock on the purchase date 

               

              MSPR
                Shares vest on the three-year anniversary of the purchase date, subject
                to
                Executive’s continued employment with the Company through the three-year
                anniversary of the purchase date 

               

              MSPR
                Option:

               

              The
                Company will grant to Executive an option to purchase a number of
                shares
                of Common Stock equal to the number of MSPR Shares (subject to a
                cap of
                50,000 shares), with a per share exercise price equal to the fair
                market
                value of the Common Stock on the grant date

               

              Option
                vests on the three-year anniversary of the grant date, subject to
                Executive’s continued employment with the Company through the three-year
                anniversary of the grant date

               

            
	
               

              Additional
                Matters

               

            	
               

              ·  $200,000
                relocation allowance

               

              ·  Reimbursement
                for up to $15,000 in legal fees in connection with negotiation of
                the
                Agreement

               

              ·  Indemnification
                for liabilities resulting from Executive’s good faith performance of
                Executive’s duties

               

              ·  Participation
                in Company benefit plans on the same basis as similarly situated
                executives of the Company

               

            
	
               

              Severance

               

               

               

               

            	
               

              Involuntary
                Termination without Cause 

              or
                Voluntary Termination with Good Reason:
                

               

              Prior
                to a Change of Control:

               

              ·  1.5x
                base salary plus target bonus ($2,092,500 total) payable monthly
                in 18
                equal installments; provided
                that on a termination for Good Reason due to non-renewal of the Agreement
                by the Company, Executive is entitled to severance for the lesser
                of 18
                months following the termination date and the period until the fifth
                anniversary of the effective date 

               

              ·  No
                obligation to seek other employment during first nine months, but
                must use
                “reasonable efforts” to seek other employment during second nine months;
                if subsequent employment is obtained, cash severance reduced by the
                compensation received from the other employer

               

              ·  Continuation
                of health and welfare benefits during the eighteen-month payment
                period,
                subject to cessation if Executive is eligible for comparable benefits
                from
                a subsequent employer

               

              During
                the Two-Year Period Following (or prior to and in connection with)
                a
                Change of Control

               

              ·  Lump-sum
                payment equal to 2.5x base salary and target bonus ($3,487,500
                total)

               

              ·  Continuation
                of health and welfare benefits during the thirty-month period following
                termination, subject to cessation if eligible for comparable benefits
                from
                a subsequent employer

               

              ·  Vesting
                of all unvested 2006 restricted share units, MSPR Shares, the MSPR
                Option
                and the Inducement Option 

               

              ·  Protection
                covers the twenty-four month period following a Change in Control
                

               

              ·  Executive
                is entitled to a gross-up for excise tax on excess parachute payments,
                subject to a 15% “cut-back” (i.e.,
                change in control payments will be reduced below the 280G safe harbor
                if
                the total payments are less than 15% in excess of the 280G safe
                harbor)

               

              Death,
                Disability, Voluntary Termination Without 

              Good
                Reason, Termination for “Cause” or Retirement:
                

               

              ·  Accrued
                obligations but no severance benefits

               

            
	
               

              Miscellaneous

               

            	
               

              ·  Severance
                benefits are conditioned upon the execution of a general release
                of
                claims

               

              ·  Executive
                to maintain ownership of a minimum of 200,000 shares of Common Stock
                (unvested shares of Restricted Common Stock credited towards this
                requirement)

               

              ·  Definitions
                of “Change of Control” and “Cause” (for LTIP awards) are generally
                consistent with Border’s plans and agreements; solely for purposes of the
                severance benefits under the agreement (not LTIP awards) the definition
                of
                “Cause” is slightly more restrictive 

               

              ·  “Good
                Reason” (not relevant for LTIP awards) generally means: involuntary
                relocation from the Ann Arbor, Michigan area; failure of the Company
                to
                comply with the compensation provisions of the Agreement; a reduction
                in
                Executive’s duties or status as
                a result of a
                Change of Control;
                the Company’s non-renewal of the Agreement; or failure to have a successor
                assume the agreement

               

              ·  In
                general, Executive is subject to restrictive covenants relating to
                confidentiality (while employed and thereafter) and non-solicitation
                of
                employees and non-competition (during the term of the Agreement and
                during
                the two year period following termination of employment; provided
                that on a termination for Good Reason due to non-renewal of the Agreement
                by the Company, the non-compete will not extend beyond the fifth
                anniversary of the effective date) 

               

              ·  Governed
                by the laws of the State of MichiganExhibit 10.30 Employment Agreement between Mr. Jones and the Company

    EMPLOYMENT
      AGREEMENT

     

    AGREEMENT
      by and between Borders Group, Inc., a Michigan corporation (the “Company”)
      and
      George L. Jones (“Executive”)
      dated
      as of the 13th
      day of
      July, 2006.

     

    WHEREAS,
      the Company is desirous of employing Executive in an executive capacity on
      the
      terms and conditions, and for the consideration, hereinafter set forth, and
      Executive is desirous of being employed by the Company on such terms and
      conditions and for such consideration.

     

    NOW,
      THEREFORE, for and in consideration of the mutual promises, covenants and
      obligations contained herein, the Company and Executive agree as
      follows:

     

    1.  Employment
      Period.
      The
      initial term of Executive’s employment will commence on July 17, 2006 (the
“Effective
      Date”)
      and
      end on the third anniversary of the Effective Date (the “Initial
      Employment Period”),
      unless terminated earlier pursuant to Section 3 of this Agreement; provided,
      however,
      that as
      of the expiration date of each of (a) the Initial Employment Period and (b)
      if
      applicable, any Renewal Period (as defined below), the Employment Period will
      automatically be extended for a one-year period (each, a “Renewal
      Period”),
      unless either party gives at least ninety (90) days written notice prior to
      such
      expiration date of its intention not to renew the Employment Period (the Initial
      Employment Period and each subsequent Renewal Period shall constitute the
“Employment
      Period”).
      The
      Employment Period shall automatically end upon termination of Executive’s
      employment for any reason. Notwithstanding anything to the contrary contained
      herein, (i) absent the occurrence of a Change of Control (as defined below)
      prior thereto, the Employment Period shall automatically terminate on the
      five-year anniversary of the Effective Date, unless terminated prior thereto
      pursuant to the terms hereof, and (ii) upon a Change of Control occurring prior
      to the five-year anniversary of the Effective Date, the Employment Period shall
      automatically be extended so as to end no earlier than the two-year anniversary
      of the Change of Control. Upon Executive’s termination of employment with the
      Company for any reason, he shall immediately resign all positions (including
      directorships) with the Company or any of its subsidiaries or affiliates.

     

    2.  Terms
      of Employment.
      

     

    (a)
      Position
      and Duties.
      

        

        (i)
      During
      the Employment Period, Executive shall serve as President and Chief Executive
      Officer of the Company with such authority, duties and responsibilities as
      are
      commensurate with such position and as may be consistent with the Company’s
      practices from time to time with respect to the management of its subsidiaries
      and businesses, and Executive’s services shall be performed at the Company’s
      headquarters in the Ann Arbor, Michigan area, subject to reasonable business
      travel at the Company’s request. In addition, effective as of the Effective
      Date, the Company shall cause Executive to be appointed as a member of the
      Board
      of Directors of the Company (the “Board
      of Directors”),
      and
      shall nominate Executive for election and re-election to the Board of Directors
      as and when Executive’s term expires while Executive remains employed under this
      Agreement. Executive shall report directly to the Board of
      Directors.

     

    (ii)  During
      the Employment Period, and excluding any periods of vacation and sick leave
      to
      which Executive is entitled, Executive agrees to devote substantially all of
      his
      business attention and time to the business and affairs of the Company and,
      to
      the extent necessary to discharge the responsibilities assigned to Executive
      hereunder, to use his reasonable best efforts to perform faithfully and
      efficiently such responsibilities and not to engage, directly or indirectly,
      in
      any other business or businesses, whether or not similar to that of the Company,
      except with the consent of the Board of Directors. The foregoing
      notwithstanding, the parties recognize and agree that Executive may engage
      in
      non-profit, civic and charitable activities that do not conflict with the
      business and affairs of the Company or interfere with Executive’s performance of
      his duties hereunder without the necessity of obtaining the consent of the
      Board
      of Directors.

     

    (b)  Compensation.

     

    (i)  Base
      Salary.
      During
      the Employment Period, Executive shall receive an annual base salary
      (“Base
      Salary”)
      of
      $775,000. The Base Salary shall be reviewed from time to time for increase
      (but
      not decrease) in accordance with the Company’s regular practices, and, if
      increased, the term “Base
      Salary”
shall
      refer to such increased amount. Executive’s Base Salary shall be pro
      rated
      to take
      into account any fiscal year of the Company during which Executive is not
      employed by the Company for the entire fiscal year of the Company. Executive’s
      Base Salary shall be paid in equal installments in accordance with the Company’s
      standard policy regarding payment of compensation to executives.

     

    (ii)  Annual
      Bonus.
      With
      respect to each fiscal year of the Company ending during the Employment Period,
      Executive shall be eligible to receive an annual bonus (the “Annual
      Bonus”)
      pursuant to the terms of the Company’s Annual Incentive Bonus Plan or any
      successor plan of the Company (“AIP”)
      in an
      amount determined by the Compensation Committee of the Board of Directors (the
      “Compensation
      Committee”),
      based
      on performance goals established by the Compensation Committee in accordance
      with the terms of the AIP, and with a target Annual Bonus equal to 80% of
      Executive’s Base Salary as in effect at the beginning of the Company’s fiscal
      year (the “Target
      Bonus”),
      but
      subject to a maximum Annual Bonus equal to 160% of Base Salary; provided,
      however,
      that
      with respect to the Company’s fiscal year 2006, Executive’s Annual Bonus shall
      be based on his Base Salary at the beginning of the Employment Period and shall
      be pro
      rated
      to take
      into account the fact that Executive did not commence service with the Company
      until July 17, 2006, such amount to be determined by the Compensation Committee.
      Pursuant to the terms of the AIP, Executive shall receive at least twenty
      percent of each Annual Bonus in the form of restricted shares of common stock
      of
      the Company (“Restricted
      Common Stock”).
      Subject to the terms of the AIP and any deferral election procedures thereunder,
      Executive may elect to receive up to 100% of each Annual Bonus in the form
      of
      Restricted Common Stock. Any Annual Bonus award made pursuant to this Section
      2(b)(ii) (including any Restricted Common Stock granted in lieu of a cash
      payment) shall be subject to the applicable terms of the AIP and, in the case
      of
      Restricted Common Stock granted in satisfaction of Annual Bonus, shall be on
      similar terms and conditions as those applicable to the awards granted to
      similarly situated executives of the Company in respect of the same fiscal
      year
      and otherwise shall be in accordance with the Company’s 2004 Long-Term Incentive
      Plan or any successor plan of the Company (the “LTIP”).
      

     

    (iii)  Annual
      LTIP Awards.
      With
      respect to each fiscal year of the Company ending during the Employment Period
      (other than the 2006 fiscal year), Executive shall be eligible to receive an
      annual long-term incentive award under the LTIP in an amount determined by
      the
      Compensation Committee, which award shall vest based on the achievement of
      performance goals or such other criteria as established by the Compensation
      Committee in accordance with the terms of the LTIP.  For fiscal years of
      the Company commencing after the Company’s 2006 fiscal year, the target value of
      Executive’s annual LTIP award shall equal two times Executive’s Base
      Salary. For
      the
      Company’s 2006 fiscal year, Executive shall be granted a number of restricted
      share units (“2006
      Restricted Share Units”)
      with a
      Fair Market Value (as defined in the LTIP) on the grant date equal to $1
      million. The 2006 Restricted Share Units shall
      be
      deemed to be earned and vested on January 31, 2008, subject solely to
      Executive’s continued employment with the Company through such date, and the
      number of shares of Common Stock underlying the 2006 Restricted Share Units
      shall not be subject to increase or decrease based on performance above or
      below
      target. Except as expressly provided herein, any annual long-term incentive
      awards granted pursuant to this Section 2(b)(iii) shall be on similar terms
      and
      conditions as are applicable to annual long-term incentive awards granted to
      similarly situated executives of the Company with respect to the same fiscal
      year and otherwise shall be in accordance with the terms of the
      LTIP.

     

    (iv)  Management
      Stock Purchase Right (“MSPR”).
      

     

    A.  Executive
      has elected to pay $1 million to purchase shares of Restricted Common Stock
      for
      a per share purchase price equal to 80% of the Fair Market Value of the Common
      Stock on the purchase date (such shares purchased pursuant to this sentence,
      the
“MSPR
      Shares”),
      one
      hundred percent of which MSPR Shares shall vest on the three-year anniversary
      of
      the purchase date, subject to Executive’s continued employment with the Company
      through the three-year anniversary of the purchase date. The MSPR Shares shall
      otherwise be subject to the applicable terms of the LTIP and the Agreement
      Regarding Restricted Shares Acquired Pursuant to Management Stock Purchase
      Right
      in the form previously provided to Executive. 

     

    B.  In
      addition, as soon as reasonably practicable after the later to occur of the
      Effective Date and the date Executive purchases the MSPR Shares, the Company
      shall grant to Executive an option (the “MSPR
      Option”)
      to
      purchase a number of shares of Common Stock equal to the lesser of the number
      of
      MSPR Shares and 50,000 shares, with a per share exercise price equal to the
      Fair
      Market Value of the Common Stock on the grant date. The MSPR Option shall vest
      on the three-year anniversary of the grant date, subject to Executive’s
      continued employment with the Company through the three-year anniversary of
      the
      grant date. The MSPR Option shall otherwise be subject to the applicable terms
      of the LTIP.

     

    (v)  Inducement
      Option.
      As an
      inducement to Executive’s willingness to enter into this Agreement, as soon as
      reasonably practicable after the Effective Date, the Company shall grant to
      Executive an option (the “Inducement
      Option”)
      to
      purchase 400,000 shares of Common Stock with an exercise price equal to the
      Fair
      Market Value of the Common Stock on the grant date, which option shall vest
      ratably (in equal increments) on the first, second and third anniversaries
      of
      the grant date, subject to Executive’s continued employment with the Company
      through the applicable vesting date. The Inducement Option shall otherwise
      be
      subject to the applicable terms of the LTIP. 

     

    (vi)  Other
      Employee Benefit Plans.
      During
      the Employment Period, Executive shall be eligible to participate in the
      Company’s employee benefit plans, and to receive vacation and perquisites at the
      same level as other senior executives of the Company. 

     

    (vii)  Expenses.
      Upon
      presentation of appropriate documentation, Executive shall be reimbursed in
      accordance with the Company’s expense reimbursement policy for all reasonable
      and necessary business and entertainment expenses incurred in connection with
      the performance of Executive’s duties hereunder.

     

    (viii)  Relocation
      Assistance.
      The
      Company shall provide Executive with a relocation allowance of up to $200,000
      of
      documented expenses incurred by Executive in connection with the relocation
      of
      Executive and Executive’s family and dependents, pursuant to and in accordance
      with the Company’s 2006 Relocation Assistance Program (Chief Executive Officer)
      previously provided to Executive; provided
      that the
      individual dollar-amount limitations applicable to the categories of relocation
      expenses enumerated in such program shall not apply to such relocation, subject
      in all events to the aggregate allowance of $200,000. 

     

    (ix)  Legal
      Fees.
      The
      Company shall pay up to $15,000 of documented attorney’s fees incurred by
      Executive in connection with the negotiation of this Agreement. 

     

    (x)  Indemnification;
      Insurance.
      The
      Company shall indemnify Executive and hold Executive harmless to the fullest
      extent permitted by applicable law and under the by-laws of the Company against
      and in respect to any and all actions, suits, proceedings, claims, demands,
      judgments, costs, expenses (including reasonable attorneys’ fees), losses, and
      damages resulting from Executive’s good faith performance of Executive’s duties
      and obligations with the Company. The Company shall cover Executive under
      directors and officers liability insurance during the Employment Period and
      thereafter in the same amount and to the same extent as the Company covers
      its
      other officers and directors (if at all).

     

    (c)  Stock
      Ownership Requirement.
      While
      employed by the Company, Executive shall generally be expected to maintain
      ownership of a minimum of 200,000 shares of Common Stock in accordance with
      the
      guidelines as established by the Compensation Committee. Although no minimum
      period of time has been established for Executive’s achievement of the foregoing
      Common Stock ownership target, Executive agrees to make continuous progress
      toward satisfaction of this objective via mandatory and voluntary “purchases” of
      Restricted Common Stock as contemplated by the second and third sentences of
      Section 2(b)(ii) and by retaining shares of Common Stock earned and/or received
      upon exercise of stock options granted pursuant to the LTIP. Unvested shares
      of
      Restricted Common Stock (including MSPR Shares) will be credited towards this
      requirement. Executive shall be required to obtain the prior approval of the
      Board of Directors before selling shares of Common Stock, if the sale would
      reduce Executive’s ownership below this required level. 

     

    3.  Termination
      of Employment.

     

    (a)  Death
      or Disability.
      Executive’s employment shall terminate automatically upon Executive’s death
      during the Employment Period. If the Company determines in good faith that
      the
      Disability of Executive has occurred during the Employment Period (pursuant
      to
      the procedures and definition of Disability set forth below), the Company may
      give to Executive written notice in accordance with Section 9(b) of this
      Agreement of its intention to terminate Executive’s employment. In such event,
      Executive’s employment with the Company shall terminate effective on the 30th
      day after receipt of such notice by Executive (the “Disability
      Effective Date”),
      provided that, within the 30 days after such receipt, Executive shall not have
      returned to full-time performance of Executive’s duties. For purposes of this
      Agreement, “Disability”
shall
      mean Executive’s inability
      to perform Executive’s duties and responsibilities by reason of illness or
      incapacity for a total of 180 days in any twelve-month period as determined
      in
      writing by a qualified independent physician selected by the Company or its
      insurers and reasonably acceptable to Executive or his legal representative.
      If
      the Company and Executive cannot agree as to a qualified independent physician,
      each shall appoint such a physician and those two physicians shall select a
      third who shall make such determination in writing. Such determination of
      Disability shall be delivered to the Company and Executive and shall be final
      and conclusive for all purposes of this Agreement. 

     

    (b)  Cause.
      The
      Company may terminate Executive’s employment during the Employment Period for
      Cause or without Cause. For purposes of this Agreement, with respect to any
      award made pursuant to the LTIP, “Cause”
shall
      mean (i) conduct
      which is a material violation of Company policy or which is fraudulent or
      unlawful or which materially interferes with Executive’s ability to perform
      Executive’s 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, Executive’s duties and
      responsibilities. For all other purposes of this Agreement,
      “Cause”
shall
      mean (i) Executive’s conviction of, or plea of guilty or nolo
      contendere
      to a
      charge of commission of, a felony, or of a misdemeanor involving the money
      or
      property of the Company or any subsidiary, (ii) Executive’s (x) willful and
      continued failure to substantially perform the duties and responsibilities
      of
      his position or (y) failure to comply in all material respects with the written
      policies of the Company, which failure, to the extent subject to cure, is not
      remedied within twenty-one days after written notice thereof from the Company
      to
      Executive, (iii) Executive having willfully engaged in misconduct that
      materially damages or injures the reputation of the Company or any subsidiary,
      (iv) Executive having breached the provisions of Sections 6(a) or 6(b) of this
      Agreement, (v) Executive’s willful breach of the confidentiality provisions of
      this Agreement, or (vi) gross
      negligence in the performance of Executive’s duties and
      responsibilities.
      For
      purposes of this Section 3(b), no act or failure to act, on Executive’s part
      shall be deemed to be “willful” unless done, or omitted to be done, by Executive
      not in good faith and without reasonable belief that such act or omission was
      in
      the best interest of the Company. Any termination of Executive’s employment by
      the Company for Cause shall be effective only upon delivery to Executive of
      a
      certified copy of a resolution of the Board of Directors, adopted by the
      affirmative vote of a majority of the entire membership of the Board of
      Directors (excluding Executive) following a meeting at which Executive was
      given
      an opportunity to be heard on at least five business days’ advance notice,
      finding that Executive was guilty of the conduct constituting Cause, and
      specifying the particulars thereof.

     

    (c)  Good
      Reason.
      Executive’s employment may be terminated by Executive for Good Reason or other
      than for Good Reason. For purposes of this Agreement, “Good
      Reason”
shall
      mean, in the absence of a written consent of Executive: (i) the involuntary
      relocation of Executive from the Ann Arbor, Michigan area, (ii) any failure
      of
      the Company to comply with any provisions of Section 2 of this Agreement, other
      than an insubstantial and inadvertent failure remedied by the Company promptly
      after receipt of notice thereof given by Executive, (iii) a reduction in
      Executive’s duties or status as a result of or after a Change of Control (as
      defined below), (iv) the delivery by the Company of a notice of non-renewal
      pursuant to Section 1 hereof, provided
      that
      Executive provides Notice of Termination for Good Reason under this clause
      (iv)
      no later than twenty-one days following receipt of the notice of non-renewal,
      or
      (v) the failure of the Company to obtain a satisfactory agreement from any
      successor to all or substantially all of the assets or business of the Company
      to expressly assume and agree to perform this Agreement within fifteen (15)
      days
      after a merger, consolidation, sale or similar transaction as required by
      Section 7 of this Agreement. 

     

    (d)  Notice
      of Termination.
      Any
      termination by the Company for Cause or without Cause, or by Executive for
      Good
      Reason or other than for Good Reason, shall be communicated by Notice of
      Termination to the other party hereto given in accordance with Section 9(b)
      of
      this Agreement. For purposes of this Agreement, a “Notice
      of Termination”
means
      a
      written notice which (i) indicates the specific termination provision in this
      Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
      detail the facts and circumstances claimed to provide a basis for termination
      of
      Executive’s employment under the provision so indicated and (iii) if the Date of
      Termination (as defined below) is other than the date of receipt of such notice,
      specifies the termination date (which date shall be not more than thirty days
      after the giving of such notice). 

     

    (e)  Date
      of Termination.
      “Date
      of Termination”
means
      (i) if Executive’s employment is terminated by the Company for Cause or without
      Cause, or by Executive for or other than for Good Reason, the date of receipt
      of
      the Notice of Termination or any later date specified therein within 30 days
      of
      such notice, as the case may be (except that in the case of a termination by
      Executive other than for Good Reason, the Company may in its sole discretion
      change any such later date to a date of its choosing between the date of such
      receipt and such later date), and (ii) if Executive’s employment is terminated
      by reason of death or Disability, the Date of Termination shall be the date
      of
      death of Executive or the Disability Effective Date, as the case may be. The
      Employment Period shall automatically terminate on the Date of
      Termination.

     

    (f)  Change
      of Control.
      “Change
      of Control”
means:
      

     

    (i)  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 (A) the then outstanding shares of Common
      Stock (the “Outstanding
      Company Common Stock”)
      or (B)
      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 (i), the following acquisitions shall not
      constitute a Change of Control: (w) any acquisition directly from the Company,
      (x) any acquisition by the Company, (y) any acquisition by any employee benefit
      plan (or related trust) sponsored or maintained by the Company or any
      corporation controlled by the Company or (z) any acquisition by any corporation
      pursuant to a transaction which complies with clauses (A), (B) and (C) of
      subsection (iii) of this definition; or 

     

    (ii)  Individuals
      who, as of the date hereof, constitute the Board of Directors (the “Incumbent
      Board”)
      cease
      for any reason to constitute at least a majority of the Board of Directors;
      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 

     

    (iii)  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, (A) all or substantially
      all 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, (B) 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 (C) 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 

     

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

     

    4.  Obligations
      of the Company upon Termination.
      (a)
Good
      Reason or Other than for Cause or Disability Prior to a Change of
      Control.
      Subject
      to the mitigation provisions set forth below and to Executive’s compliance with
      Sections 5 and 6 of this Agreement, if, during the Employment Period and prior
      to and not in connection with a Change of Control, Executive’s employment with
      the Company is terminated by the Company other than for Cause or Disability
      or
      if Executive terminates Executive’s employment with the Company for Good Reason:

     

    (i)  the
      Company will pay to Executive in a lump sum (A) the Base Salary through the
      Date
      of Termination to the extent not previously paid; (B) accrued and unused
      vacation pay; (C) any unpaid cash portion of the Annual Bonus earned with
      respect to the fiscal year ending on or immediately preceding the Date of
      Termination; (D) reimbursement for any unreimbursed expenses incurred through
      the Date of Termination; and (E) reimbursement for any unpaid relocation
      expenses in accordance with Section 2(b)(viii) (the amounts in (A), (B), (C),
      (D), and (E), the “Accrued
      Obligations”);
      and

     

    (ii)  the
      Company will pay to Executive a monthly severance payment equal to 1/18 of
      the
      product of (A) the sum of (1) Base Salary plus (2) Target Bonus and (B)
      1.5,
      such
      monthly severance payments to commence in the month following the Date of
      Termination (to be paid on or about the 15th day of the month) and to continue
      for eighteen months; provided,
      however,
      that in
      the event that Executive’s employment terminates solely on the basis of clause
      (iv) of the definition of Good Reason, then the monthly payments contemplated
      by
      this Section 4(a)(ii) shall continue until the first to occur of (x) the
      five-year anniversary of the Effective Date or (y) the eighteen-month
      anniversary of the Termination Date (such shorter period hereinafter referred
      to
      as the “Non-Renewal
      Severance Period”);
      and

     

    (iii)  during
      the eighteen-month
      period following the Date of Termination (or in the event
      that Executive’s employment terminates solely on the basis of clause (iv) of the
      definition of Good Reason, during the Non-Renewal Severance Period),
      the
      Company shall continue health and welfare benefits (excluding long-term
      disability coverage) to Executive and, where applicable, Executive’s dependents
      on the same terms that such benefits would have been provided had Executive
      continued employment with the Company in accordance with the health and welfare
      benefits provided pursuant to Section 2(b)(vi) of this Agreement (the
“Welfare
      Benefits”);
      provided,
      however,
      that,
      in
      the event Executive becomes reemployed with another employer and is eligible
      to
      receive comparable medical or other welfare benefits under any employer provided
      plan (determined on a benefit-by-benefit basis), the Welfare Benefits provided
      herein shall cease as of the date of eligibility under such other employer’s
      plans; and

     

    (iv)  
      to the
      extent not theretofore paid or provided, the Company shall timely pay or
      provide, in accordance with the terms of the applicable plan, program, policy,
      practice, or contract, to Executive any other amounts or benefits required
      to be
      paid or provided under any plan, program, policy, practice or contract of the
      Company (other than any severance plan) through the Date of Termination (such
      other amounts and benefits shall be hereinafter referred to as the “Other
      Benefits”).

     

    In
      the
      event of a termination of Executive’s employment upon which Executive is
      entitled to severance pursuant to this Section 4(a), Executive shall have no
      obligation to find new employment during the first nine months following the
      Date of Termination; provided,
      however,
      that
      following the nine-month anniversary of the Date of Termination, subject to
      Section 6, Executive agrees
      to
      make reasonable efforts to seek (and to immediately notify the Company of his
      obtaining) other employment and, to the extent that Executive receives, earns
      or
      is eligible to receive cash compensation from other employment, the cash
      severance payments provided under Section 4(a)(ii) shall be correspondingly
      reduced. 

    

    (b)  Good
      Reason or Other than for Cause or Disability Following a Change of
      Control.
      Subject
      to Executive’s compliance with Sections 5 and 6 of this Agreement, if, (x)
      during the twenty-four month period immediately following a Change of Control,
      Executive’s employment with the Company is terminated by the Company other than
      for Cause or Disability or if Executive terminates Executive’s employment with
      the Company for Good Reason, or (y) during the period following the public
      announcement of a definitive agreement to effectuate a transaction that if
      consummated would be a Change of Control and prior to the consummation of any
      such transaction, (1) Executive’s employment with the Company is terminated by
      the Company other than for Cause or Disability and (2) Executive demonstrates
      that such termination was at the request of a third party that has taken steps
      reasonably calculated to effect a Change of Control, then, in the case of either
      clause (x) or clause (y), in lieu of any payment or benefits under Section
      4(a)
      of this Agreement:

     

    (i)  the
      Company will pay to Executive in a lump sum in cash within 30 days after the
      Date of Termination an amount equal to the sum of (A)
      the
      Accrued Obligations, and (B) the product of (1) the sum of (x) the Base Salary
      and (y) the Target Bonus and (2) 2.5; and

     

    (ii)  during
      the thirty-month period following the Date of Termination, the Company shall
      continue the Welfare Benefits; provided,
      however,
      that,
      in the event Executive becomes reemployed with another employer and is eligible
      to receive comparable medical or other welfare benefits under any employer
      provided plan (determined on a benefit-by-benefit basis), the Welfare Benefits
      provided herein shall cease as of the date of eligibility under such other
      employer’s plans. 

     

    (iii)  to
      the
      extent not theretofore paid or provided, the Company shall timely pay or
      provide, in accordance with the terms of the applicable plan, program, policy,
      practice, or contract, to Executive the Other Benefits. For the avoidance of
      doubt, upon a Change of Control, all unvested 2006 Restricted Share Units,
      MSPR
      Shares, the MSPR Option and the Inducement Option shall fully vest in accordance
      with the terms of Section 14 of the LTIP. 

     

    In
      the
      event of a termination of Executive’s employment upon which Executive is
      entitled to severance pursuant to this Section 4(b), Executive shall have no
      affirmative obligation to find new employment and, in the event Executive
      becomes reemployed following the Date of Termination, the amounts earned by
      Executive from any such subsequent employer shall not reduce or limit
      Executive’s right to receive or retain the severance payments under this Section
      4(b) (except as expressly provided in Section 4(b)(iii)).

     

    (c)  Section
      409A Delay.
      Notwithstanding the foregoing provisions of Sections 4(a) and 4(b), to the
      extent required in order to comply with Section 409A of the Internal Revenue
      Code of 1986, as amended (the “Code”),
      amounts and benefits to be paid or provided under Sections 4(a) and 4(b) shall
      be paid or provided to Executive on the first business day after the date that
      is six months following Executive’s “separation from service” within the meaning
      of Section 409A of the Code. To the extent that the health care benefits to
      be
      provided to Executive under Section 4(a)(iii) or Section 4(b)(iii), as
      applicable, are so delayed, Executive shall be entitled to COBRA continuation
      coverage under Section 4980B of the Code (“COBRA
      Coverage”)
      during
      such period of delay, and the Company shall reimburse Executive for the premiums
      for such COBRA Coverage in the seventh month following Executive’s “separation
      from service” within the meaning of Section 409A of the Code. 

     

    (d)  Death;
      Disability; Cause; Other than for Good Reason.
      If
      Executive’s employment is terminated by reason of Executive’s death or
      Disability, by the Company for Cause or by Executive other than for Good Reason
      during the Employment Period, the Employment Period shall terminate without
      further obligations to Executive and his legal representatives under this
      Agreement, other than for payment of Accrued Obligations and the timely payment
      or provision of the Other Benefits. Accrued Obligations shall be paid to
      Executive’s estate or beneficiary, as applicable, in a lump sum in cash within
      30 days of the Date of Termination. Notwithstanding the foregoing provisions
      of
      this Section 4(d), to the extent required in order to comply with Section 409A
      of the Code, amounts to be paid under this Section 4(d) shall be paid to
      Executive on the first business day after the date that is six months following
      Executive’s “separation from service” within the meaning of Section 409A of the
      Code. 

     

    5.  General
      Release.
      The
      payments provided hereunder shall constitute the exclusive payments due
      Executive from, and the exclusive obligation of, the Company in the event of
      any
      termination of Executive’s employment. The obligation to make the payments
      hereunder is conditioned upon Executive’s execution, delivery to the Company and
      non-revocation of a release, which shall be substantially in the form attached
      hereto as Exhibit A (with such changes therein or additions thereto as needed
      under then applicable law to give effect to its intent and purpose), of any
      claims Executive may have as a result of Executive’s employment or termination
      of employment under any federal, state or local law. 

     

    6.  Non-Solicitation;
      Non-Competition; Confidentiality; Work Product.
      

     

    (a)  Executive
      acknowledges and agrees that any attempt to interfere with the Company’s
      existing employment relationships would result in significant harm to the
      Company’s interests. Accordingly, Executive agrees that while employed by the
      Company and for two years following Executive’s termination of employment for
      any reason (the “Restricted
      Period”),
      Executive shall not, without the prior written consent of the Company, directly
      or indirectly, solicit, recruit, or employ (whether as an employee, officer,
      director, agent, consultant or independent contractor) any person who is or
      was
      at any time during the previous six months an employee, representative, officer
      or director of an Affiliated Entity. Further, during the Restricted Period,
      Executive shall not take any action that could reasonably be expected to have
      the effect of encouraging or inducing any employee, representative, officer
      or
      director of any member of the Affiliated Entities to cease their relationship
      with any member of the Affiliated Entities for any reason. For purposes of
      this
      agreement, the term “Affiliated Entities” shall mean the
      Company and its subsidiaries and affiliated companies. Notwithstanding anything
      to the contrary contained herein, in the event that Executive’s employment
      terminates solely on the basis of clause (iv) of the definition of Good Reason,
      the Restricted Period shall terminate on the last day of the Non-Renewal
      Severance Period. This Section 6(a) shall cease to be effective if the
      Employment Period ends on the fifth anniversary of the Effective Date and the
      Executive’s employment has not terminated prior thereto. 

     

    (b)  Executive
      agrees that, during the Restricted Period, Executive shall not, without the
      prior written consent of the Company, become directly or indirectly engaged
      or
      involved, as an owner, principal, employee, officer, director, independent
      contractor, representative, stockholder, agent, advisor, lender or in any other
      capacity, of any business or entity (including any division or subsidiary of
      a
      larger business or entity) primarily engaged in (i) the sale of books, music,
      gifts, stationary or videos directly to the public (whether through traditional
      retail sales or over the Internet) or (ii) the provision of café-type services
      (“Competitive
      Activities”)
      in any
      jurisdiction in which the Company or any Affiliated Entity conducts such
      Competitive Activities by selling, sending or delivering goods to customers
      in
      such jurisdiction or providing such services in such jurisdiction (or in any
      jurisdiction in which the Company has proposed to conduct such Competitive
      Activities);
      provided,
      however,
      that in
      no event shall Executive’s ownership of less than 3% of the outstanding capital
      stock of any corporation, in and of itself, be deemed a Competitive Activity
      if
      such capital stock is listed on a national securities exchange or regularly
      traded in an over-the-counter market. Executive further agrees that, during
      the
      Restricted Period, Executive shall not, without the prior written consent of
      the
      Company, directly or indirectly solicit, or cause another person to solicit,
      any
      person who is a customer of the businesses conducted by the Company, on behalf
      of a business engaged in a Competitive Activity. This
      Section 6(b) shall cease to be effective if the Employment Period ends on the
      fifth anniversary of the Effective Date and the Executive’s employment has not
      terminated prior thereto. 

     

    (c)  While
      employed by the Company and at all times thereafter, Executive shall hold in
      a
      fiduciary capacity for the benefit of the Affiliated Entities and shall not
      disclose to others, copy, use, transmit, reproduce, summarize, quote or make
      commercial, directly or indirectly, any secret or confidential information,
      knowledge or data relating to any of the Affiliated Entities and their
      businesses (including without limitation information about the Affiliated
      Entities’ clients’ and customers’ and their proprietary knowledge and trade
      secrets, software, technology, research, secret data, customer lists, investor
      lists, business methods, business plans, training materials, operating
      procedures or programs, pricing strategies, employee lists and other business
      information) that Executive has obtained during Executive’s employment with the
      Company and/or any of the other Affiliated Entities (“Confidential
      Information”),
      provided
      that
      the
      foregoing shall not apply to information that is generally known to the public
      other than as a result of Executive’s breach of this Agreement. Notwithstanding
      the foregoing provisions, if Executive is required to disclose any such
      confidential or proprietary information pursuant to applicable law or a subpoena
      or court order, Executive shall promptly notify the Company in writing of any
      such requirement so that the Company or the appropriate Affiliated Entity may
      seek an appropriate protective order or other appropriate remedy or waive
      compliance with the provisions hereof. Executive shall reasonably cooperate
      with
      the Affiliated Entities to obtain such a protective order or other remedy.
      If
      such order or other remedy is not obtained prior to the time Executive is
      required to make the disclosure, or the Company waives compliance with the
      provisions hereof Executive shall disclose only that portion of the confidential
      or proprietary information which Executive is advised by counsel that Executive
      is legally required to so disclose.

     

    (d)  Executive
      acknowledges and agrees that the terms of this Section 6: (i) were agreed to
      by
      mutual assent of the parties hereto; (ii) are supported by adequate
      consideration; (iii) are reasonable in time and scope; and (iv) serve to protect
      the legitimate economic interests of the Affiliated Entities, including the
      goodwill of the Affiliated Entities and the Confidential Information from
      misuse. Executive further acknowledges and agrees that (x) Executive’s breach of
      the provisions of this Section 6 will cause the Company irreparable harm, which
      cannot be adequately compensated by money damages, and (y) if the Company elects
      to prevent Executive from breaching such provisions by obtaining an injunction
      against Executive, there is a reasonable probability of the Company’s eventual
      success on the merits. Executive consents and agrees that if Executive commits
      any such breach or threatens to commit any breach, the Company shall be entitled
      to temporary and permanent injunctive relief from a court of competent
      jurisdiction, without posting any bond or other security and without the
      necessity of proof of actual damage, in addition to, and not in lieu of, such
      other remedies as may be available to the Company for such breach, including
      the
      recovery of money damages. If any of the provisions of this Section 6 are
      determined to be wholly or partially unenforceable, Executive hereby agrees
      that
      this Agreement or any provision hereof may be reformed so that it is enforceable
      to the maximum extent permitted by law. If any of the provisions of this Section
      6 are determined to be wholly or partially unenforceable in any jurisdiction,
      such determination shall not be a bar to or in any way diminish the Company’s
      right to enforce any such covenant in any other jurisdiction. 

     

    (e)  Notwithstanding
      anything to the contrary contained in this Agreement, the terms of this Section
      6 shall survive the termination of this Agreement and of Executive’s employment
      for the periods set forth therein.

     

    7.  Successors.
      This
      Agreement is personal to Executive and without the prior written consent of
      the
      Company shall not be assignable by Executive otherwise than by will or the
      laws
      of descent and distribution. This Agreement shall inure to the benefit of and
      be
      enforceable by Executive’s legal representatives.  This
      Agreement shall inure to the benefit of and be binding upon the Company and
      its
      successors and assigns. The Company will require any successor (whether direct
      or indirect, by purchase, merger, consolidation or otherwise) to all or
      substantially all of the business and/or assets of the Company to assume
      expressly and agree to perform this Agreement in the same manner and to the
      same
      extent that the Company would be required to perform it if no such succession
      had taken place. As used in this Agreement, “Company” shall mean the Company as
      hereinbefore defined and any successor to its business and/or assets as
      aforesaid which assumes and agrees to perform this Agreement by operation of
      law, or otherwise.

     

    8.  Representation
      By Executive.
      Executive hereby represents and warrants to the Company that, as of the
      Effective Date and as of the date of execution of this Agreement, Executive
      is
      not a party to any employment agreement with any third party which would
      preclude Executive from accepting Employment with the Company and performing
      Executive’s obligations under this Agreement.

     

    9.  Miscellaneous.
      (a)
Construction;
      Amendments.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Michigan, without reference to principles of conflict of laws. The
      captions of this Agreement are not part of the provisions hereof and shall
      have
      no force or effect. The invalidity or unenforceability of any provision of
      this
      Agreement shall not affect the validity or enforceability of any other provision
      of this Agreement. This Agreement may not be amended or modified otherwise
      than
      by a written agreement executed by the parties hereto or their respective
      successors and legal representatives. 

     

    (b)  Notices.
      All
      notices and other communications hereunder shall be in writing and shall be
      given by hand delivery to the other party, by registered or certified mail,
      return receipt requested, postage prepaid, or by reputable overnight courier,
      charges prepaid, addressed as follows:

     

    If
      to
      Executive:
      To the
      most recent address on file with the Company.

     

    If
      to
      the Company:

    

    Borders
      Group, Inc.

    100
      Phoenix Drive

    Ann
      Arbor, Michigan 48108

    Attention:
      General Counsel

     

    or
      to
      such other address as either party shall have furnished to the other in writing
      in accordance herewith. Notice and communications shall be effective when
      actually received by the addressee.

     

    (c)  Waiver
      of Breach.
      No
      waiver by any party hereto of a breach of any provision of this Agreement by
      any
      other party, or of compliance with any condition or provision of this Agreement
      to be performed by such other party, will operate or be construed as a waiver
      of
      any subsequent breach by such other party of any similar or dissimilar
      provisions and conditions at the same or any prior or subsequent time. The
      failure of any party hereto to take any action by reason of such breach will
      not
      deprive such party of the right to take action at any time while such breach
      continues.

     

    (d)  Tax
      Withholding.
      The
      Company may withhold from any amounts payable under this Agreement such Federal,
      state, local or foreign taxes as shall be required to be withheld pursuant
      to
      any applicable law or regulation. 

     

    (e)  Section
      409A.
      If any
      compensation or benefits provided by this Agreement may result in the
      application of Section 409A of the Code, the Company shall, in consultation
      with
      Executive, modify the Agreement in the least restrictive manner necessary in
      order to exclude such compensation from the definition of “deferred
      compensation” within the meaning of such Section 409A or in order to comply with
      the provisions of Section 409A. 

     

    (f)  Certain
      Additional Payments by the Company.
      

     

    (i)  Anything
      in this Agreement to the contrary notwithstanding and except as set forth below,
      in the event it shall be determined that any Payment (as defined below) would
      be
      subject to the Excise Tax (as defined below), then Executive shall be entitled
      to receive an additional payment (the “Gross-Up
      Payment”)
      in an
      amount such that, after payment by Executive of all taxes (and any interest
      or
      penalties imposed with respect to such taxes), including, without limitation,
      any income taxes (and any interest and penalties imposed with respect thereto)
      and Excise Tax imposed upon the Gross-Up Payment, but excluding any income
      taxes
      and penalties imposed pursuant to Section 409A of the Code, Executive retains
      an
      amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
      Payments. Notwithstanding the foregoing provisions of this Section 9(f)(i),
      if
      it shall be determined that Executive is entitled to the Gross-Up Payment,
      but
      that the Parachute Value (as defined below) of all Payments does not exceed
      115%
      of the Safe Harbor Amount (as defined below), then no Gross-Up Payment shall
      be
      made to Executive and the amounts payable under this Agreement shall be reduced
      so that the Parachute Value of all Payments, in the aggregate, equals the Safe
      Harbor Amount. The reduction of the amounts payable hereunder, if applicable,
      shall be made in such a manner as to maximize the Value (as defined below)
      of
      all Payments actually made to Executive. For purposes of reducing the Payments
      to the Safe Harbor Amount, only amounts payable under this Agreement (and no
      other Payments) shall be reduced. If the reduction of the amounts payable under
      this Agreement would not result in a reduction of the Parachute Value of all
      Payments to the Safe Harbor Amount, no amounts payable under the Agreement
      shall
      be reduced pursuant to this Section 9(f)(i). The Company’s obligation to make
      Gross-Up Payments under this Section 9(f) shall not be conditioned upon
      Executive’s termination of employment.

     

    (ii)  Subject
      to the provisions of Section 9(f)(iii), all determinations required to be
      made under this Section 9(f), including whether and when a Gross-Up Payment
      is
      required, the amount of such Gross-Up Payment and the assumptions to be utilized
      in arriving at such determination, shall be made by PricewaterhouseCoopers,
      or
      such other nationally recognized certified public accounting firm as may be
      designated by the Company (the “Accounting
      Firm”).
      The
      Accounting Firm shall provide detailed supporting calculations both to the
      Company and Executive within 15 business days of the receipt of notice from
      Executive that there has been a Payment or such earlier time as is requested
      by
      the Company. In the event that the Accounting Firm is serving as accountant
      or
      auditor for the individual, entity or group effecting the Change of Control,
      Executive may appoint another nationally recognized accounting firm to make
      the
      determinations required hereunder (which accounting firm shall then be referred
      to as the Accounting Firm hereunder). All fees and expenses of the Accounting
      Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined
      pursuant to this Section 9(f), shall be paid by the Company to Executive within
      5 days of the receipt of the Accounting Firm’s determination. Any determination
      by the Accounting Firm shall be binding upon the Company and Executive. 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 Gross-Up Payments that will not have been made by the Company
      should have been made (the “Underpayment”),
      consistent with the calculations required to be made hereunder. In the event
      the
      Company exhausts its remedies pursuant to Section 9(f)(iii) and Executive
      thereafter is required to make a payment of any Excise Tax, the Accounting
      Firm
      shall determine the amount of the Underpayment that has occurred and any such
      Underpayment shall be promptly paid by the Company to or for the benefit of
      Executive.

     

    (iii)  Executive
      shall notify the Company in writing of any claim by the Internal Revenue Service
      that, if successful, would require the payment by the Company of the Gross-Up
      Payment. Such notification shall be given as soon as practicable, but no later
      than 10 business days after Executive is informed in writing of such claim.
      Executive shall apprise the Company of the nature of such claim and the date
      on
      which such claim is requested to be paid. Executive shall not pay such claim
      prior to the expiration of the 30-day period following the date on which
      Executive gives such notice to the Company (or such shorter period ending on
      the
      date that any payment of taxes with respect to such claim is due). If the
      Company notifies Executive in writing prior to the expiration of such period
      that the Company desires to contest such claim, Executive shall:

     

    A.  give
      the
      Company any information reasonably requested by the Company relating to such
      claim,

     

    B.  take
      such
      action in connection with contesting such claim as the Company shall reasonably
      request in writing from time to time, including, without limitation, accepting
      legal representation with respect to such claim by an attorney reasonably
      selected by the Company,

     

    C.  cooperate
      with the Company in good faith in order effectively to contest such claim,
      and

     

    D.  permit
      the Company to participate in any proceedings relating to such
      claim;

     

    provided,
      however,
      that
      the Company shall bear and pay directly all costs and expenses (including
      additional interest and penalties) incurred in connection with such contest,
      and
      shall indemnify and hold Executive harmless, on an after-tax basis, for any
      Excise Tax or income tax (including interest and penalties) imposed as a result
      of such representation and payment of costs and expenses. Without limitation
      on
      the foregoing provisions of this Section 9(f)(iii), the Company shall control
      all proceedings taken in connection with such contest, and, at its sole
      discretion, may pursue or forgo any and all administrative appeals, proceedings,
      hearings and conferences with the applicable taxing authority in respect of
      such
      claim and may, at its sole discretion, either pay the tax claimed to the
      appropriate taxing authority on behalf of Executive and direct Executive to
      sue
      for a refund or contest the claim in any permissible manner, and Executive
      agrees to prosecute such contest to a determination before any administrative
      tribunal, in a court of initial jurisdiction and in one or more appellate
      courts, as the Company shall determine; provided,
      however,
      that,
      if the Company pays such claim and directs Executive to sue for a refund, the
      Company shall indemnify and hold Executive harmless, on an after-tax basis,
      from
      any Excise Tax or income tax (including interest or penalties) imposed with
      respect to such payment or with respect to any imputed income in connection
      with
      such payment; and provided,
      further,
      that
      any extension of the statute of limitations relating to payment of taxes for
      the
      taxable year of Executive with respect to which such contested amount is claimed
      to be due is limited solely to such contested amount. Furthermore, the Company’s
      control of the contest shall be limited to issues with respect to which the
      Gross-Up Payment would be payable hereunder, and Executive shall be entitled
      to
      settle or contest, as the case may be, any other issue raised by the Internal
      Revenue Service or any other taxing authority.

    

    (iv)  If,
      after
      the receipt by Executive of a Gross-Up Payment or payment by the Company of
      an
      amount on Executive’s behalf pursuant to Section 9(f)(iii), Executive
      becomes entitled to receive any refund with respect to the Excise Tax to which
      such Gross-Up Payment relates or with respect to such claim, Executive shall
      (subject to the Company’s complying with the requirements of Section 9(f)(iii),
      if applicable) promptly pay to the Company the amount of such refund (together
      with any interest paid or credited thereon after taxes applicable thereto).
      If,
      after payment by the Company of an amount on Executive’s behalf pursuant to
      Section 9(f)(iii), a determination is made that Executive shall not be entitled
      to any refund with respect to such claim and the Company does not notify
      Executive in writing of its intent to contest such denial of refund prior to
      the
      expiration of 30 days after such determination, then the amount of such payment
      shall offset, to the extent thereof, the amount of Gross-Up Payment required
      to
      be paid.

     

    (v)  Notwithstanding
      any other provision of this Section 9(f), the Company may, in its sole
      discretion, withhold and pay over to the Internal Revenue Service or any other
      applicable taxing authority, for the benefit of Executive, all or any portion
      of
      any Gross-Up Payment, and Executive hereby consents to such
      withholding.

     

    (vi)  Definitions.
      The
      following terms shall have the following meanings for purposes of this Section
      9(f).

     

    A.  “Excise
      Tax”
shall
      mean the excise tax imposed by Section 4999 of the Code, together with any
      interest or penalties imposed with respect to such excise tax.

     

    B.  “Parachute
      Value”
of
      a
      Payment shall mean the present value as of the date of the change of control
      for
      purposes of Section 280G of the Code of the portion of such Payment that
      constitutes a “parachute payment” under Section 280G(b)(2), as determined by the
      Accounting Firm for purposes of determining whether and to what extent the
      Excise Tax will apply to such Payment.

     

    C.  A
      “Payment”
shall
      mean any payment or distribution in the nature of compensation (within the
      meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive,
      whether paid or payable pursuant to this Agreement or otherwise.

     

    D.  The
      “Safe
      Harbor Amount”
means
      2.99 times Executive’s “base amount,” within the meaning of Section 280G(b)(3)
      of the Code.

     

    E.  “Value”
of
      a
      Payment shall mean the economic present value of a Payment as of the date of
      the
      change of control for purposes of Section 280G of the Code, as determined by
      the
      Accounting Firm using the discount rate required by Section 280G(d)(4) of the
      Code.

     

    (g)  Entire
      Agreement.
      No
      representation, promise or inducement has been made by either party that is
      not
      embodied in this Agreement, and neither party shall be bound by or be liable
      for
      any alleged representation, promise or inducement not so set forth.

     

    (h)  Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      agreement.

     

    
      
        --

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to
      the authorization from its Board of Directors, the Company has caused these
      presents to be executed in its name on its behalf, all as of the day and year
      first above written.

     

    
      	
              BORDERS
                GROUP, INC.

            
	
              By:

            	
              /s/
                Gregory P. Josefowicz

            
	 	
              Gregory
                P. Josefowicz

            
	 	
              Chairman,
                President & Chief Executive Officer

            
	 
	 
	
              GEORGE
                L. JONES

            
	 
	 
	 	
              /s/
                George L. Jones

            
	 
	 
	 
	 
	 

    

    

     

    

     

    

    
      
        
           

           

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Exhibit
      A

     

    AGREEMENT
      AND GENERAL RELEASE

     

    Borders
      Group, Inc., its affiliates, subsidiaries, divisions, successors and assigns
      in
      such capacity, and the current, future and former employees, officers,
      directors, trustees and agents thereof (each, solely in his or her capacity
      as
      officer, director, trustee or agent) (collectively referred to throughout this
      Agreement as “Company”) and
      George L. Jones (“Executive”)
      agree:

     

    1.  Last
      Day of Employment.
      Executive’s last day of employment with the Company is [DATE].
      In
      addition, effective as of [DATE],
      Executive resigns from Executive’s position as [President
      and Chief Executive Officer]
      of the
      Company and will not be eligible for any benefits or compensation after
[DATE],
      other
      than as specifically provided in Section 4 of the Employment Agreement
      between the Company and Executive dated as of July 13, 2006 (the
“Employment
      Agreement”)
      and
      Executive’s right to indemnification.

     

    2.  Consideration.
      The
      parties acknowledge that this Agreement and General Release is being executed
      in
      accordance with Section 5 of the Employment Agreement. Executive hereby
      acknowledges the sufficiency of the consideration being received in exchange
      for
      the release in this Agreement and agrees that absent signing this Agreement,
      he
      is not otherwise entitled to the payments and benefits under Section 4 of the
      Employment Agreement. 

     

    3.  Release
      of Claims.
      

     

    
      	(a)  	
              For
                and in consideration of the payments and benefits to be made or provided
                to Executive under Section 4 of the Employment Agreement and other
                good
                and valuable consideration, Executive, for himself and for his heirs,
                dependents, executors, administrators, trustees, legal representatives
                and
                assigns (collectively referred to as “Releasors”),
                hereby forever releases, waives and discharges (i) the Company, its
                subsidiaries and affiliates, their respective employee benefit and/or
                pension plans or funds, insurers, successors and assigns, (ii) all
                past, present and/or future officers, directors, trustees, members,
                partners, employees, fiduciaries, administrators, controlling persons
                and
                successors and assigns of the foregoing, and (iii) all of the past,
                present and/or future agents, representatives and attorneys (including
                outside legal counsel) of any of the persons or entities described
                in (i)
                or (ii) in this Section 3 and any of its and their successors and
                assigns in all cases whether acting as agents for or with respect
                to the
                Company, its subsidiaries or affiliates and their respective successors
                and assigns or in their individual capacities (collectively referred
                to as
                “Releasees”),
                from any and all claims, demands, causes of action, fees and liabilities
                of any kind whatsoever, whether known or unknown, which Releasors
                ever had
                or now have against Releasees by reason of any actual or alleged
                act,
                omission, transaction, practice, policy, procedure, conduct, occurrence,
                or other matter up to and including the date of Executive’s execution of
                this Release, including without limitation, those in connection with,
                or
                in any way related to or arising out of, Executive’s employment, service
                as a director, service as an officer, service as a trustee, service
                as a
                fiduciary or termination of any of the foregoing or any other agreement,
                understanding, relationship, arrangement, act, omission or occurrence,
                with the Company, its subsidiaries or affiliates and their respective
                successors and assigns or other claims and (x) any claim of
                discrimination or retaliation under the Age Discrimination in Employment
                Act (“ADEA”)
                29 U.S.C. Section 621 et seq., Title VII of the Civil Rights Act, the
                Americans with Disabilities Act, the Employee Retirement Income Security
                Act of 1974, as amended (“ERISA”)
                or the Family and Medical Leave Act; (y) any claim under the Michigan
                Elliott-Larsen Civil Rights Act, as amended, the Michigan Whistle
                Blowers’
                Protection Act, as amended, the Michigan Persons with Disabilities
                Civil
                Rights Act; and (z) any claim for attorney’s fees, costs,
                disbursements and the like related to any claim described in this
                Section 3(a).

            

    

     

    
      	(b)  	
              Adversarial
                Actions.
                Executive agrees that he will not, from any source or proceeding,
                seek or
                accept any award or settlement with respect to any claim or right
                covered
                by Section 3(a) above. Except as otherwise required by law, Executive
                further agrees that he will not, at any time hereafter, commence,
                maintain, prosecute, participate in as a party, permit to be filed
                by any
                other person on Executive’s behalf (to the extent it is within Executive’s
                control or permitted by law), or assist in the commencement or prosecution
                of as an advisor, or otherwise, any action or proceeding of any kind,
                judicial or administrative (on his behalf, on behalf of any other
                person
                and/or on behalf of or as a member of any alleged class of persons)
                in any
                court, agency, investigative or administrative body against any Releasee
                with respect to any actual or alleged act, omission, transaction,
                practice, conduct, occurrence or any other matter up to and including
                the
                date of Executive’s execution of this Release which Executive released
                pursuant to Section 3(a) above. Executive further represents that, as
                of the date he signs this Release, he has not taken any action encompassed
                by this Section 3(b). If, notwithstanding the foregoing promises,
                Executive violates this Section 3(b), he will indemnify and hold
                harmless Releasees from and against any and all demands, assessments,
                judgments, costs, damages, losses and liabilities and attorneys’ fees and
                other expenses which result from, or are incidents to, such violation.
                Notwithstanding anything herein to the contrary, this Section 3(b)
                will not apply to any claims that Executive may have under the ADEA
                and
                will not apply to the portion of the release provided for in
                Section 3(a) relating to the
                ADEA.

            

    

     

    
      	(c)  	
              Preserved
                Rights.
                The sole matters to which the release and covenants in this Section 3
                do not apply are: (i) Executive’s rights under Section 2(b) and
                Section 4 [and
                Section 9(f)]
                of
                the Employment Agreement, Executive’s rights of indemnification and
                related rights or otherwise with regard to Executive’s service as an
                officer or director of the Company (if any) and Executive’s rights under
                any D&O policy maintained by or for the benefit of the Company or its
                employees or directors at any time during or after the course of
                Executive’s employment with the Company (if any); (ii) Executive’s
                rights to contribution (if any) with regard to his service as an
                officer
                and director of the Company; (iii) Executive’s rights as a
                shareholder of the Company (if any); and (iv) Executive’s rights to
                vested benefits under any employee benefit plan of the Company. Nothing
                contained herein shall relieve Executive of his continuing obligations
                under Section 6 of the Employment
                Agreement.

            

    

     

    4.  Governing
      Law; Enforceability.
      The
      interpretation of this Release will be governed and construed in accordance
      with
      the laws of the State of Michigan, without reference to principles of conflict
      of laws. If any provisions of this Release will be declared to be invalid or
      unenforceable, in whole or in part, such invalidity or unenforceability will
      not
      affect the remaining provisions hereof which will remain in full force and
      effect.

     

    5.  Acknowledgement.
      Executive acknowledges that he has been advised by the Company in writing to
      consult independent legal counsel of his choice before signing this Release.
      Executive further acknowledges that he has had the opportunity to consult,
      and
      Executive has consulted with, independent legal counsel and to consider the
      terms of this Release for a period of at least 21 days.

     

    6.  Effective
      Date.
      Executive further acknowledge that this Release will not become effective until
      the eighth day following his execution of this Release (the “Effective
      Date”),
      and
      that he may at any time prior to the Effective Date revoke this Release by
      delivering written notice of revocation to the Company at 100 Phoenix Drive,
      Ann
      Arbor, MI 48108-2202, to the attention of the General Counsel. In the event
      that
      Executive revokes this Release prior to the eighth day after its execution,
      this
      Release and the promises contained in the Agreement, will automatically be
      null
      and void.

     

    7.  Entire
      Agreement.
      Executive understands that this Release and the Agreement constitute the
      complete understanding between the Company and Executive relating to the subject
      matter hereof and that no other promises or agreements will be binding unless
      in
      writing and signed by Executive and the Company after the date
      hereof.

     

    8.  Counterparts.
      This
      Release may be executed in several counterparts, each of which will be deemed
      to
      be an original but all of which together will constitute one and the same
      instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto knowingly and voluntarily executed this Agreement and General
      Release as of the date set forth below:

     

    
      	
               

               

              /s/
                George L. Jones 

              George
                L. Jones

               

            	
              Borders
                Group, Inc.

               

              By:
                /s/
                Gregory P. Josefowicz  

              Name:
                Gregory P. Josefowicz 

              Title:
                Chairman, President & Chief Executive Officer 

               

            
	
              Date:
                July 13, 2006

               

            	
              Date:
                July 13, 2006

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