Borders Group, Inc. 100 Phoenix Drive Ann Arbor, Michigan 48108
Borders Group, Inc.
000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxx 00000
000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxx 00000
March 30, 0000
Xxxxxxxx Xxxxxx Capital Management, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Managing Member
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Managing Member
Re: | Warrant Agreement |
Ladies and Gentlemen:
Reference is hereby made to the Warrant and Registration Rights Agreement dated as of April 9,
2008 by and between Borders Group, Inc. (the “Company”) and Computershare Inc. and
Computershare Trust Company, N.A., as Warrant Agent (the “Warrant Agreement”), pursuant to
which Warrants to purchase Common Stock of the Company were issued, and may in the future be
issued, to Pershing Square Capital Management, L.P., its Affiliates and certain of their respective
managed funds (collectively, “Pershing Square”). Capitalized terms used and not defined
herein shall have the meaning set forth in the Warrant Agreement.
The Company and Pershing Square hereby agree that the Warrants shall only be exercisable in
the following amounts at the following times: (i) prior to June 30, 2009, 3,675,000 Warrants, (ii)
prior to September 30, 2009, 7,350,000 Warrants and (iii) prior to December 31, 2009, 11,025,000
Warrants. For the avoidance of doubt, on or after December 31, 2009, all of the Warrants shall be
exercisable. Notwithstanding the foregoing, in the event of the earlier of (i) a Change of Control
Event, Public Stock Merger, Recapitalization Event or Reorganization Event, or (ii) the public
announcement by the Company or any other party of such person’s intent to enter into a transaction,
which if consummated would constitute a Change of Control Event, Public Stock Merger,
Recapitalization Event or Reorganization Event, all of the Warrants shall immediately become
exercisable.
The Company and Pershing Square also hereby acknowledge and agree that: (i) as a result of the
issuance of common stock to Pershing Square, L.P. pursuant to the Subscription Agreement between
Pershing Square, L.P. and the Company dated as of the same date as this letter agreement, and in
accordance with Section 5.6 of the Warrant Agreement, the Exercise Price has been adjusted to $0.65
per share, which Exercise Price shall be subject to further adjustments to be made on or prior to
the date of exercise thereof as provided and in accordance with the provisions of the Warrant
Agreement, and (ii) the requirements of Section 5.10 of the Warrant Agreement in relation to the
adjustment of the Exercise Price to $0.65 per share shall be
deemed satisfied in full, with respect to each Holder only, by this letter agreement without
any further action by the Company.
The Company and Pershing Square hereby further agree that, the Company shall comply with its
obligations under Section 4.1 of the Warrant Agreement, provided, that the reference to “October 1,
2008” in Section 4.1(a) shall be deemed “June 30, 2009”, the reference to “January 1, 2009” in
Section 4.1(a) shall be deemed “September 30, 2009”, and the term “Registrable Securities” shall be
deemed to include, in addition to all Warrants and Common Stock issuable under the Warrants, any
other shares of Common Stock owned by Pershing Square, from time to time.
This letter agreement may not be amended or any provision hereof waived or modified except by
an instrument in writing signed by each of the parties hereto. This letter agreement shall be
governed by, and construed in accordance with, the laws of the State of New York. This letter
agreement may be executed in any number of counterparts, each of which shall be an original and all
of which, when taken together, shall constitute one agreement.
Please indicate your agreement with the foregoing by executing a copy of this letter and
returning it to the undersigned.
Very truly yours, BORDERS GROUP, INC. |
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By: | /s/ Xxxx Xxxxxxx | |||
Name: | Xxxx Xxxxxxx | |||
Title: | Executive Vice President and Chief Financial Officer |
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Agreed to and accepted this
30th day of March, 0000
30th day of March, 0000
XXXXXXXX XXXXXX CAPITAL MANAGEMENT, L.P. By: PS Management GP, LLC, its General Partner |
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By: | /s/ Xxx X. Xxxxxxxxx | |||
Name: | Xxx X. Xxxxxxxxx | |||
Title: | Authorized Signatory and Chief Legal Officer | |||
By: | /s/ Xxxxxxxx Xxxxx | |||
Name: | Xxxxxxxx Xxxxx | |||
Title: | Authorized Signatory and Chief Financial Officer | |||