AGREEMENT AND GENERAL RELEASE
          Borders Group, Inc., its affiliates, subsidiaries, divisions,
successors and assigns and the past, present and future employees, officers,
employee benefit plans, fiduciaries, shareholders, directors, agents, attorneys
and insurers thereof, both individually and in their official capacities
(collectively referred to throughout this Agreement and General Release as
“Borders” or “Employer”) and Kenneth H. Armstrong (referred to throughout this
Agreement and General Release as “Employee” and more specifically defined in
paragraph 6) agree that:
     1. Last Day of Employment. Employee’s last day of full-time employment with
Borders Group, Inc. is February 6, 2009. Employee’s employment will continue
with current pay and benefits through February 28, 2009 (the Effective Date), it
being understood that responsibilities in the interim will be limited to such
transition services as may be requested by Borders.
     2. Eligibility Requirements. In order to be eligible to participate in the
2009 Corporate Reorganization Program (“Program”), Eligible Employees have been
selected for separation from their employment based on Employer’s Business
needs, including but not limited to, the need to reduce payroll expense,
anticipation of future business needs, and consideration of one or more of the
criteria as listed on Exhibit A to this Agreement and General Release.
     3. Consideration. In consideration for signing this Agreement and
compliance with the promises made herein, Borders agrees that Employee: (a) will
continue to receive Employee’s current salary through the Effective Date;
(b) will receive as severance pay, six (6) months salary and bonus in the amount
of three hundred forty-six thousand five hundred dollars ($346,500.00) minus the
amount of applicable withholding taxes; and (c) will be entitled to the Enhanced
Bonus Program payment in the amount of three hundred and eight thousand dollars
($308,000.00) minus the amount of applicable withholding taxes. Subject to the
provisions of paragraph, 12, Return of Property, and paragraph 18, Revocation,
such payments will be made in a lump sum within twenty-one (21) days after
Employee signs and returns this Agreement and General Release. Except for the
payments described in (a), (b) and (c) above, Employee shall not be entitled to
any payments of any nature whatsoever from Borders Group, including but not
limited to the Borders Severance Pay Policy.
     5. No Consideration Absent Execution of this Agreement. Employee
understands and agrees that Employee would not receive the monies and/or
benefits specified in paragraph “3” above, except for Employee’s execution of
this Agreement and General Release and the fulfillment of the promises contained
herein.
     6. General Release of All Claims. Employee knowingly and voluntarily
releases and forever discharges Borders of and from any and all claims, known
and unknown, against Borders, which Employee, Employee’s heirs, executors,
administrators, successors, and assigns (referred to collectively throughout
this Agreement as “Employee”) has or may have as

 

--------------------------------------------------------------------------------

 

of the date of execution of this Agreement, including, but not limited to, any
alleged violation of:
Title VII of the Civil Rights Act of 1964;
Civil Rights Act of 1991;
Sections 1981 through 1988 of Title 42 of the United States Code;
The Employee Retirement Income Security Act of 1974 (“ERISA”) (except for any
vested benefits under any tax qualified benefit plan);as amended
The Immigration Reform and Control Act; as amended
The Americans with Disabilities Act of 1990;as amended
The Family Medical Leave Act; as amended
The Age Discrimination in Employment Act of 1967 (“ADEA”);as amended
The Worker Adjustment and Retraining Notification Act; as amended
The Occupational Health and Safety Act, as amended
The Fair Credit Reporting Act, as amended;
Michigan Elliott-Larsen Civil Rights Act – Mich. Comp. Laws §37-2101 et seq.
Michigan Persons with Disabilities Civil Rights Act – Mich. Comp. Laws §37.1101
et seq.
Michigan Whistleblower Protection Act – Mich. Comp. Laws §15.361 et seq.
Michigan Statutory Provision Regarding Retaliation/Discrimination for Filing a
Worker’s Compensation Claim – Mich. Comp. Laws §418.301 (11) et seq.
Michigan AIDS Testing and Confidentiality Act – Mich. Comp. Laws §333.5131 et
seq.
Michigan Equal Pay Law – Mich. Comp. Laws §408.381 et seq.
Michigan State Wage Payment and Work Hour Laws, as amended
Michigan Occupational Safety and Health Act – Pub. Acts 154
any other federal, state or local law, rule, regulation, or ordinance;

Page 1 of 6

--------------------------------------------------------------------------------

 

any public policy, contract, tort, or common law; or
any basis for recovering costs, fees, or other expenses including attorneys’
fees incurred in these matters.
     7. Employee’s Acknowledgment of Tax Liability. Employee hereby acknowledges
and agrees as follows: (a) nothing in this Agreement constitutes tax advice;
(b) Borders does not take any responsibility, or have any liability to Employee
with respect to Employee’s Tax Liability and/or Employee’s personal tax
reporting; (c) Employee has been given the opportunity and encouraged to consult
with Employee’s own attorney and to seek professional tax advice prior to
execution of this Agreement; and (d) Employee agrees to indemnify Borders and
hold it harmless from any liability for income taxes, interest or penalties that
may be imposed as a result of under-payment or non-payment of income taxes on
any amounts paid Employee under the terms of this Agreement.
     8. Affirmations. Employee affirms that Employee has not filed, caused to be
filed, or presently is not a party to any claim, complaint or action against
Borders in any forum or form. Employee also affirms that Employee has been paid
and/or has received all leaves (paid or unpaid), compensation, wages, bonuses,
commissions, and/or benefits to which Employee may be entitled and that no other
leave (paid or unpaid), compensation, wages, bonuses, commissions, and/or
benefits are due to Employee except as provided in this Agreement and General
Release.
     Employee further affirms that Employee has no known workplace injuries or
occupational diseases that have not been previously reported to Employer; and
Employee affirms that Employee has been granted any leave to which Employee was
entitled under the Family and Medical Leave Act or related state or local leave
or disability accommodation laws.
     Employee further affirms that Employee has not been retaliated against for
reporting any allegations of wrongdoing by Employer or its officers, including
any allegations of corporate fraud. Both Parties acknowledge that this Agreement
does not limit either party’s right, where applicable, to file or participate in
an investigative proceeding of the Equal Employment Opportunity Commission or
any federal, state or local governmental agency. To the extent permitted by law,
Employee agrees that if such an administrative claim is made, Employee shall not
be entitled to recover any individual monetary relief or other individual
remedies.
     9. Non-Disparagement. Employee agrees not to defame, disparage or demean
Borders in any manner whatsoever.
     10. Applicable Data. Attached as Exhibit “B” is a list of the job titles
and ages of all individuals eligible and selected for the 2009 Corporate
Reorganization Program as of February 4, 2009. Attached as Exhibit “C” is a list
of the job titles and ages of all individuals ineligible and not selected for
reduction in the 2009 Corporate Reorganization Program as of February 4, 2009.

Page 2 of 6

--------------------------------------------------------------------------------

 

     11. Confidentiality. Employee agrees that Employee will continue to
maintain in strict confidence and will not, directly or indirectly, divulge,
transmit, publish, release or otherwise use or cause to be used in any manner,
any confidential or proprietary information relating to Employer’s clients,
customers, proprietary knowledge and trade secrets, research, business plans,
business methods, operating procedures, processes or programs, records and
reports, marketing information, merchandising strategies, pricing strategies,
technology, software systems, operations, processes, computer programs and data
bases, records, development data and reports, store designs, quality control
specifications, cost analysis, flow charts, know-how, employee lists, customer
lists, supplier lists, marketing data, personnel data, or any other information
of like nature. Employee acknowledges that all information regarding Employer
compiled or obtained by, or furnished to, Employee in connection with Employer’s
employment or association with Employer is confidential information and
Employer’s exclusive property. 
     Employee affirms that Employee has not divulged any proprietary or
confidential information of Borders.
     The foregoing covenant of confidentiality has no temporal, geographical or
territorial limitation.
     12. Return of Property. Employee affirms that Employee has returned; 1) all
Employer property in Employee’s possession, including but not limited to,
company issued vehicle, lap top computer, Blackberry, cell phone, printer, as
well as any other electronic, computer and office equipment, in working order
and without excessive damage; and 2) company identification badges, Purchasing
cards, building access cards, business documents and files of any kind and in
any form, including but not limited to any and all confidential information in
Employee’s possession or control. Employee also affirms that Employee is in
possession of all of Employee’s property that Employee had at Employer’s
premises and that Employer is not in possession of any of Employee’s property.
     13. Confidentiality of this Agreement. Employ agrees that Employee will
maintain in strict confidence and will not, directly or indirectly, divulge,
transmit, publish, release or otherwise disclose, the terms of this Agreement
except to Employee’s spouse, domestic partner (as defined by Borders Group Inc.
benefits plans), tax advisor and an attorney with whom Employee chooses to
consult regarding Employee’s consideration of this Agreement, provided that said
individuals agree to be bound by the terms of this Confidentiality Clause and
Employee agrees to be liable for any breach by them.
     14. Governing Law and Interpretation. This Agreement shall be governed and
conformed in accordance with the laws of the State of Michigan without regard to
its conflict of laws provision. Should any provision of this Agreement be
declared illegal or unenforceable by any court of competent jurisdiction and
cannot be modified to be enforceable, excluding the general release language,
such provision shall immediately become null and void, leaving the remainder of
this Agreement in full force and effect. In the event of a breach of any
provision of this Agreement and General Release, either party may institute an
action specifically to enforce any term or terms of this Agreement and General
Release and/or to seek any damages for breach.

Page 3 of 6

--------------------------------------------------------------------------------

 

     15. Nonadmission of Wrongdoing. The Parties agree that neither this
Agreement and General Release nor the furnishing of the consideration for this
Agreement and General Release shall be deemed or construed at any time for any
purpose as an admission by Borders of wrongdoing or evidence of any liability or
unlawful conduct of any kind.
     16. Amendment. This Agreement and General Release may not be modified,
altered or changed except in writing and signed by both parties wherein specific
reference is made to this Agreement and General Release.
     17. Revocation. Employee may revoke this Agreement and General Release for
a period of seven (7) calendar days following the day Employee executes this
Agreement and General Release. Any revocation within this period must be
submitted, in writing, to Borders Group Inc. Attention: Compensation Department,
100 Phoenix Drive, Ann Arbor, MI 48108 and state, “I hereby revoke my acceptance
of our Agreement and General Release.” The revocation must be personally
delivered to Borders Compensation Department or a named designee, or mailed to
Borders Group Inc., Compensation Department and postmarked within seven
(7) calendar days of execution of this Agreement and General Release. This
Agreement and General Release shall not become effective or enforceable until
the revocation period has expired. If the last day of the revocation period is a
Saturday, Sunday, or legal holiday in the state in which Employee was employed
at the time of Employee’s last day of employment, then the revocation period
shall not expire until the next following day which is not a Saturday, Sunday,
or legal holiday.
     18. Entire Agreement; Termination of Prior Agreements. Subject only to the
provision specifically set forth below regarding the Noncompetition Agreement,
this Agreement sets forth the entire agreement between the parties hereto, and
fully supersedes any prior written or oral agreements or understandings between
the parties, which are hereby terminated and of no further force and effect,
including but not limited to the agreement dated April 29, 2008. Without
limiting the generality of the foregoing, the payments described herein are in
lieu of, and constitute full satisfaction of, the payments contemplated by the
April 29, 2008 agreement. Employee acknowledges that notwithstanding the
foregoing, the Noncompetition Agreement dated May 29, 2007, remains in full
force and effect and binding on Employee. Employee acknowledges that Employee
has not relied on any representations, promises, or agreements of any kind made
to Employee in connection with Employee’s decision to sign this Agreement,
except for those set forth in this Agreement.
          EMPLOYEE IS ADVISED THAT EMPLOYEE HAS FORTY-FIVE (45) CALENDAR DAYS TO
CONSIDER THIS AGREEMENT AND GENERAL RELEASE, IN WHICH EMPLOYEE WAIVES IMPORTANT
RIGHTS, INCLUDING THOSE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967.
BORDERS ADVISES EMPLOYEE TO CONSULT WITH AN ATTORNEY PRIOR TO EMPLOYEE’S SIGNING
OF THIS AGREEMENT AND GENERAL RELEASE.
          EMPLOYEE AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO
THIS AGREEMENT AND GENERAL RELEASE, DO NOT

Page 4 of 6

--------------------------------------------------------------------------------

 

RESTART OR AFFECT IN ANY MANNER THE ORIGINAL FORTY-FIVE (45) CALENDAR DAY
CONSIDERATION PERIOD.
          HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO
FULFILL THE PROMISES AND TO RECEIVE THE SUMS AND BENEFITS IN PARAGRAPH “3”
ABOVE, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO
THIS AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE ALL
CLAIMS EMPLOYEE HAS OR MIGHT HAVE AGAINST BORDERS.
          The parties knowingly and voluntarily sign this Agreement and General
Release as of the date(s) set forth below:

                      Borders Group, Inc.
 
           
By:
  /s/ KENNETH H. ARMSTRONG   By:   /s/ DANIEL T. SMITH
 
  Kenneth H. Armstrong       Daniel T. Smith
 
          Chief Administrative Officer
 
            Date: February 6, 2009   Date: February 6, 2009

Page 5 of 6