Exhibit 10.37**SEPARATION AGREEMENT AND GENERAL RELEASE**     Borders Group, Inc., its affiliates, subsidiaries, divisions, successors and assigns and thepast, present and future employees, officers, shareholders, directors, agents, attorneys andinsurers thereof, both individually and in their official capacities (collectively referred tothroughout this Separation Agreement and General Release as “Borders Group”) and Vincent Altruda(referred to throughout this Separation Agreement and General Release as “Altruda” and morespecifically defined in paragraph 5) agree that:     1. **Separation from Employment****.**This Separation Agreement and General Release(“Agreement”) is made by Borders Group and Altruda based on Altruda’s separation of employment withBorders Group effective February 2, 2007 (the “Effective Date”).     2. **Consideration****.**In consideration for signing this Agreement andcompliance with the promises made herein, Borders Group agrees that Altruda: (a) will continue toreceive his current salary through the Effective Date; (b) subject to the mitigation and revocationprovisions set forth below, as well as the provisions of paragraph 10 of the Executive Agreementdated August 1, 2006, will receive as severance pay, twelve (12) months salary and bonus beingeighty-four thousand three hundred seventy-five dollars ($84,375.00) per month (thirty-eightthousand nine hundred forty-two dollars and thirty-one cents ($38,942.31) per normal pay period fortwenty-six (26) periods) for the twelve (12) month period following the Effective Date minus, ineach case, the amount of applicable withholding taxes; and (c) a cash payment as soon aspracticable following Altruda’s separation from Borders Group, in an amount equal to the fairmarket value of the restricted shares (but not the restricted share units) awarded to Altruda inMarch 2006. The fair market value of the restricted shares shall be based upon the closing priceof Borders Group, Inc.’s shares on the New York stock Exchange on the day prior to Altruda’stermination date. The amount of severance described in (b) above shall be reduced by the amountthat Altruda receives from other employment during the twelve (12) month period. Altruda agrees tomake reasonable efforts to seek other employment, and to immediately notify Borders Group if heaccepts other employment and the amounts received therefrom. Except for the payments described in(a), (b) and (c) above, Altruda shall not be entitled to any payments of any nature whatsoever fromBorders Group.     3. **No Consideration Absent Execution of this Agreement****.**Borders Group andAltruda acknowledge and agree that, prior to the signing of this Agreement, Altruda did not have acontract for employment for any definite period of time. As such Altruda understands and agreesthat Borders Group would not be obligated to employ him through the Effective Date and he would notbe eligible for the payments provided for herein except for his execution of this Agreement.     4. **Revocation****.**Altruda may revoke this Agreement for a period of seven daysfollowing the day he executes this Agreement. Any revocation within this period must be submitted,in writing, to Borders Group and state, “I hereby revoke my acceptance of the Agreement.” Therevocation must be personally delivered to Daniel Smith or his designee, or mailed to Daniel Smithand postmarked within seven days of execution of this Agreement. This Agreement shall not becomeeffective or enforceable until the revocation period has expired. If the last day of therevocation period is a Saturday, Sunday, or legal holiday in Michigan, thenthe revocation period shall not expire until the next following day which is not a Saturday,Sunday, or legal holiday.
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     5. **General Release of Claims****. Altruda knowingly and voluntarily releasesand forever discharges Borders Group of and from any and all claims, known and unknown,**againstBorders Group, which Altruda, his heirs, executors, administrators, successors, and assigns(referred to collectively throughout this Agreement as “Altruda”) have or may have **as of the dateof execution of this Agreement,**including, but not limited to, any alleged violation of: **•** The National Labor Relations Act, as amended;  **•** Title VII of the Civil Rights Act of 1964, as amended;  **•** The Civil Rights Act of 1991;  **•** Sections 1981 through 1988 of Title 42 of the United States Code, as amended;  **•** The Employee Retirement Income Security Act of 1974, as amended;  **•** The Immigration Reform Control Act, as amended;  **•** The Americans with Disabilities Act of 1990, as amended;  **•** The Age Discrimination in Employment Act of 1967, as amended;  **•** The Occupational Safety and Health Act, as amended;  **•** The Fair Credit Reporting Act;  **•** The Family and Medical Leave Act of 1933;  **•** The Equal Pay Act, as amended;  **•** The Worker Adjustment and Retraining Notification Act, as amended;  **•** The Michigan Elliot-Larsen Civil Rights Act;  **•** The Michigan AIDS Testing and Confidentiality Act;  **•** The Michigan Persons with Disabilities Civil Rights Act, as amended;  **•** The Michigan Equal Pay Law;  **•** The Michigan Comp. Laws Ann. “Whistleblowers Protection Act” provision(sec. 15-361-15.369);  **•** The Michigan Comp. Laws Ann. “Workers’ Compensation: Retaliation”provision (sec. 418.301(11) and (12));  **•** Any other federal, state or local civil or human rights law or anyother local, state or federal law, regulation or ordinance;  **•** Any public policy, contract, tort, or common law; or  **•** Any allegation for costs, fees or other expenses including attorneys’fees incurred in these matters.  **•** Any claims arising from or related to tax obligations to any paymentmade hereunder, including but not limited to any acceleration of income or socialinsurance taxes, or increase in income taxes, or interest and penalties imposedwith respect to any of his severance benefits (as determined under the guidanceissued under Section 409A including, but not limited to, the plan aggregation rulesunder Section 409A).
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Without limiting the generality of the foregoing, Altruda hereby releases any and all claims he mayhave against Borders Group pertaining in any way to his employment with Borders Group or thetermination thereof, whether known or unknown at the time of this Agreement, and Altruda assumesthe risk that he might subsequently discover claims or causes of action which are presently unknownto him. Accordingly, Altruda voluntarily agrees that this release extends to all claims, whetherknown to him or unknown, existing at the time of this Agreement.Notwithstanding the foregoing or any other provision of this Agreement, Altruda is not waiving orreleasing any benefits to which he may be entitled under the Borders Group Savings Plan or anymedical or other welfare benefit plan of Borders Group.     6. **Altruda’s Acknowledgment of Tax Liability.** Altruda hereby acknowledges and agreesas follows: (a) nothing in this Agreement constitutes tax advice; (b) Borders Group does not takeany responsibility, or have any liability to Altruda with respect to his tax liability and/or hispersonal tax reporting; (c) Altruda has been given the opportunity and encouraged to consult withhis own attorney and to seek professional tax advice prior to execution of this Agreement; and (d)Altruda agrees to indemnify Borders Group 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 taxes onany amounts paid Altruda under the terms of this Agreement.     7. **Affirmations**. Altruda affirms that he has not filed, caused to be filed, orpresently is a party to any claim, complaint, or action against Borders Group in any forum or form.Altruda further affirms that he has been paid and has received all leave (paid or unpaid),vacation pay, compensation, wages and bonuses to which he may be entitled and that no other leave(paid or unpaid), vacation pay, compensation, wages or bonuses are due to him, except as providedin this Agreement. Employee furthermore affirms that he has no known workplace injuries oroccupational diseases; and has been provided and/or has not been denied any leave requested underthe Family and Medical Leave Act.     8. **Confidentiality and Return of Property**. Altruda agrees that he will maintain instrict confidence and will not, directly or indirectly, divulge, transmit, publish, release orotherwise use or cause to be used in any manner, any confidential information relating to BordersGroup, including but not limited to, clients, customers, proprietary knowledge and trade secrets,research, business plans, business methods, operating procedures or programs, merchandisingstrategies, pricing strategies, sales and financial information, 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, employeelists, customer lists, supplier lists, marketing data, personnel data, or any other information oflike nature. Altruda acknowledges that all information regarding Borders Group compiled or obtainedby, or furnished to, him in connection with his employment or association with Borders Group isconfidential information and Borders Group’s exclusive property. Upon demand by Borders Group,Altruda will surrender to Borders Group all original and facsimile records, documents and data inhis possession pertaining to Borders Group. The foregoing covenant of confidentiality has notemporal, geographical or territorial limitation.     9. **Confidentiality of this Agreement.** Altruda agrees that he will maintain in strictconfidence and will not, directly or indirectly, divulge, transmit, publish, release or otherwise
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disclose, the terms of this Agreement except to his spouse, domestic partner (as defined by BordersGroup Inc. benefits plans), tax advisor and an attorney with whom Altruda chooses to consultregarding his consideration of this Agreement, provided that said individuals agree to be bound bythe terms of this Confidentiality Clause and Altruda agrees to be liable for any breach by them.     10. **Non-Disparagement**. Altruda agrees not to defame, disparage or demean BordersGroup in any manner whatsoever.     11. **Discontinuance of Severance Payments**. Altruda agrees that any right to receiveseverance payments hereunder will cease if, during the one-year period following his termination ofemployment, he directly or indirectly becomes an employee, director, advisor of, or otherwiseaffiliated with, any other entity or enterprise whose business is in competition with the businessof Borders Group.     12. **Enforcement****.**The parties agree that in the event any dispute arises relating toor arising out of this Agreement such dispute will be resolved through arbitration conducted by theAmerican Arbitration Association in Ann Arbor, Michigan. The parties further agree that the awardin such arbitration will be binding and enforceable pursuant to the Michigan Arbitration Act andthe Federal Arbitration Act. This section will not restrict Borders Group’s right of equitablerelief in a court of law having competent jurisdiction for any breach or violation of any duty owedor obligation of non-disparagement, confidentiality, non-competition, or duty loyalty owed byAltruda to Borders Group.     13. **Governing Law and Interpretation****.**This Agreement shall be governed and conformedin accordance with the laws of the State of Michigan without regard to its conflict of lawsprovision. Should any provision of this Agreement be declared illegal or unenforceable by anycourt of competent jurisdiction or arbitrator/arbitration panel, and cannot be modified to beenforceable, excluding the general release language, such provision shall immediately become nulland void, leaving the remainder of this Agreement in full force and effect.     14. **No Admission of Wrongdoing****.**Altruda agrees that neither this Agreement nor thefurnishing of the consideration for this Release shall be deemed or construed at anytime for anypurpose as an admission by Borders Group of any liability or unlawful conduct of any kind.     15. **Amendment****.**This Agreement may not be altered, modified or changedexcept upon express written consent of both parties wherein specific reference is made to thisAgreement.     16. **Entire Agreement; Termination of Prior Agreements****.**This Agreement sets forth theentire agreement between the parties hereto, and fully supersedes any prior written or oralagreements or understandings between the parties, which are hereby terminated and of no furtherforce and effect, including but not limited to prior employment agreement(s), with the exception ofthe provisions set forth in paragraph 10 of the Executive Agreement dated August 1, 2006 (a copy ofwhich is attached hereto). Altruda acknowledges that he has not relied on any representations,promises, or agreements of any kind made to him in connection with his decision to sign thisAgreement, except for those referenced in this paragraph.     **ALTRUDA HAS BEEN ADVISED IN WRITING THAT HE HAS AT LEAST TWENTY ONE (21) CALENDARDAYS TO CONSIDER THIS AGREEMENT, IN WHICH YOU WAIVE IMPORTANT RIGHTS, INCLUDING THOSE UNDER THE AGEDISCRIMINATION IN**
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**EMPLOYMENT ACT OF 1967. WE ADVISE YOU TO CONSULT WITH AN ATTORNEY PRIOR TOEXECUTION OF THIS AGREEMENT.**     **ALTRUDA AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT DO NOTRESTART OR AFFECT IN ANY MANNER THE ORIGINAL TWENTY ONE (21) DAY CONSIDERATION PERIOD.**     **HAVING ELECTED TO EXECUTE THIS AGREEMENT, TO FULFILL THE PROMISES SET FORTH HEREIN, AND TORECEIVE THEREBY THE SUMS AND BENEFITS SET FORTH IN PARAGRAPH “2” ABOVE, ALTRUDA FREELY ANDKNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT INTENDING TO WAIVE, SETTLE ANDRELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST BORDERS GROUP.****IN WITNESS WHEREOF,**the parties hereto knowingly and voluntarily executed this Agreement as of thedate set forth below:      /S/ VINCENT ALTRUDA