**SEPARATION
      AGREEMENT AND GENERAL RELEASE**








Borders
      Group, Inc., its affiliates, subsidiaries, divisions, successors and assigns
      and
      the past, present and future employees, officers, shareholders, directors,
      agents, attorneys and insurers thereof, both individually and in their official
      capacities (collectively referred to throughout this Separation Agreement and
      General Release as “Borders Group”) and Cedric J. Vanzura (referred to
      throughout this Separation Agreement and General Release as “Vanzura” and more
      specifically defined in paragraph 6) agree that:





1.  **Separation
      from Employment** **.** This
      Separation Agreement and General Release (“Agreement”) is made by Borders Group
      and Vanzura based on Vanzura’s separation of employment with Borders Group
      effective September 5, 2007 (the “Effective Date”).





2.  **Consideration** **.** In
      consideration for signing this Agreement and compliance with the promises made
      herein, Borders Group agrees that Vanzura: (a) will continue to receive his
      current salary through the Effective Date; (b) subject to the mitigation
      provisions set forth below, the provisions of paragraph 11, Discontinuance
      of
      Severance Payments, and the provisions of paragraph 3, Timing of Severance
      Payments, as Monthly Severance Pay, after the expiration of the revocation
      period set forth in paragraph 5, Revocation and provided that no revocation
      occurs, twelve (12) months salary and bonus in the amount of eighty-four
      thousand and three hundred and seventy-five dollars and no cents ($84,375.00)
      per month (thirty-eight thousand nine hundred and forty-two dollars and
      thirty-one cents ($38,942.31) per normal bi-weekly pay period for twenty-six
      (26) periods) minus, in each case, the amount of applicable withholding taxes;
      and (c) will receive a cash payment as soon as practicable following Vanzura’s
      separation from Borders Group, in an amount equal to the Fair Market Value
      (as
      determined by the closing price for Borders Group, Inc. (“BGP”) shares on the
      New York Stock Exchange on the day prior to Vanzura’s termination date) of the
      Restricted Shares (but not the restricted share units) awarded to Vanzura in
      March 2006. The amount of severance payments described in (b) above shall be
      reduced by the amount that Vanzura receives from other employment during such
      period. Vanzura agrees to make reasonable efforts to seek other employment,
      and
      to immediately notify Borders Group if he accepts other employment and the
      amounts received therefrom. Except for the payments described in (a), (b),
      and
      (c) above, Vanzura shall not be entitled to any payments of any nature
      whatsoever from Borders Group.





3.  **Timing
      of Severance Payments** **.** Monthly
      Severance Pay, as set forth in subparagraph 2(b), Monthly Severance Pay, above,
      shall commence the month following termination and shall continue for twelve
      months, provided that however, if the monthly payment period would otherwise
      extend beyond the latter of (a) March 15, 2008, or (b) two and a half months
      following the end of the current fiscal year, an amount equal to the sum of
      the
      remaining payments that would have been made to Vanzura shall, in lieu thereof,
      be paid to him in one lump sum on the last day of the month immediately
      preceding the month in which the later of the dates specified in (a) or (b)
      above falls. In calculating the amount of any lump sum payment, it shall be
      assumed that any income Vanzura is earning from other employment on the payment
      date would continue for the remainder of the twelve-month (12) period following
      Vanzura’s separation. No repayment shall be required if Vanzura’s income
      increases after the lump sum payment date, and no additional payment shall
      be
      made by Borders Group after the lump sum payment.





4.  **No
      Consideration Absent Execution of this Agreement** **.** Vanzura
      acknowledge and agree that, prior to the signing of this Agreement, Vanzura
      did
      not have a contract for employment for any definite period of time. As such
      Vanzura understands and agrees that Borders Group would not be obligated to
      employ him through the Effective Date and he would not be eligible for the
      payments provided for herein except for his execution of this
      Agreement.





5.  **Revocation** **.** Vanzura
      may revoke this Agreement for a period of seven days following 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.” The revocation must be personally delivered to Daniel Smith or his
      designee, or mailed to Daniel Smith and postmarked within seven days of
      execution of this Agreement. This Agreement 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 Michigan, then
      the
      revocation period shall not expire until the next following day which is not
      a
      Saturday, Sunday, or legal holiday.





6.  **General
      Release of Claims** **.
      Vanzura knowingly and voluntarily releases and forever discharges Borders Group
      of and from any and all claims, known and unknown,** against
      Borders Group, which Vanzura, his heirs, executors, administrators, successors,
      and assigns (referred to collectively throughout this Agreement as “Vanzura”)
      have or may have **as
      of the date of 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 any other
              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 payment made
              hereunder, including but not limited to any acceleration of income
              or
              social insurance taxes, or increase in income taxes, or interest and
              penalties imposed with respect to any of his severance benefits (as
              determined under the guidance issued under Section 409A including,
              but not
              limited to, the plan aggregation rules under Section
              409A).
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------








Without
      limiting the generality of the foregoing, Vanzura hereby releases any and all
      claims he may have against Borders Group pertaining in any way to his employment
      with Borders Group or the termination thereof, whether known or unknown at
      the
      time of this Agreement, and Vanzura assumes the risk that he might subsequently
      discover claims or causes of action which are presently unknown to him.
      Accordingly, Vanzura voluntarily agrees that this release extends to all claims,
      whether known to him or unknown, existing at the time of this Agreement.





Notwithstanding
      the foregoing or any other provision of this Agreement, Vanzura is not waiving
      or releasing any benefits to which he may be entitled under the Borders Group
      Savings Plan or any medical or other welfare benefit plan of Borders Group.





7.  **Vanzura’s
      Acknowledgment of Tax Liability.** Vanzura
      hereby acknowledges and agrees as follows: (a) nothing in this Agreement
      constitutes tax advice; (b) Borders Group does not take any responsibility,
      or
      have any liability to Vanzura with respect to his Tax Liability and/or his
      personal tax reporting; (c) Vanzura has been given the opportunity and
      encouraged to consult with his own attorney and to seek professional tax advice
      prior to execution of this Agreement; and (d) Vanzura 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
      income taxes on any amounts paid Vanzura under the terms of this Agreement.





8.  **Affirmations** .
      Vanzura
      affirms that he has not filed, caused to be filed, or presently is a party
      to
      any claim, complaint, or action against Borders Group in any forum or form.
      Vanzura 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 provided in this Agreement. Employee
      furthermore affirms that he has no known workplace injuries or occupational
      diseases; and has been provided and/or has not been denied any leave requested
      under the Family and Medical Leave Act.




9.  **Confidentiality
      and Return of Property** .
      Vanzura
      agrees that he will 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 information relating to Borders Group
      clients, customers, proprietary knowledge and trade secrets, research, business
      plans, business methods, operating procedures or programs, 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. Vanzura
      acknowledges that all information regarding Borders Group compiled or obtained
      by, or furnished to, him in connection with his employment or association with
      Borders Group is confidential information and Borders Group's exclusive
      property. Upon demand by Borders Group, Vanzura will surrender to Borders Group
      all original and facsimile records, documents and data in his possession
      pertaining to Borders Group. The foregoing covenant of confidentiality has
      no
      temporal, geographical or territorial limitation.





10.  **Confidentiality
      of this Agreement.** Vanzura
      agrees that he 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 his spouse, domestic partner (as defined by Borders
      Group Inc. benefits plans), tax advisor and an attorney with whom Vanzura
      chooses to consult regarding his consideration of this Agreement, provided
      that
      said individuals agree to be bound by the terms of this Confidentiality Clause
      and Vanzura agrees to be liable for any breach by them.





11.  **Discontinuance
      of Severance Payments** .
      Vanzura
      agrees that any right to receive severance payments hereunder will cease if,
      during the one-year period following his termination of employment, he directly
      or indirectly becomes an employee, director, advisor of, or otherwise affiliated
      with, any other entity or enterprise whose business is in competition with
      the
      business of Borders Group.





12.  **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.





13.  **No
      Admission of Wrongdoing** **.** Vanzura
      agrees that neither this Agreement nor the furnishing of the consideration
      for
      this Release shall be deemed or construed at anytime for any purpose as an
      admission by Borders Group of any liability or unlawful conduct of any
      kind.





14.  **Amendment** **.** This
      Agreement may not be altered, modified or changed except upon express written
      consent of both parties wherein specific reference is made to this
      Agreement.





15.  **Entire
      Agreement; Termination of Prior Agreements** **.** 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 employment agreement dated August 1, 2006.
      Vanzura 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
      this
      Agreement, except for those set forth in this Agreement.





**VANZURA
      HAS BEEN ADVISED IN WRITING THAT HE HAS AT LEAST FORTY-FIVE ONE (45) CALENDAR
      DAYS TO CONSIDER THIS AGREEMENT, IN WHICH YOU WAIVE IMPORTANT RIGHTS, INCLUDING
      THOSE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967. WE ADVISE YOU
      TO
      CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS
      AGREEMENT.**





**VANZURA
      AGREES THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT
      DO
      NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL FORTY FIVE (45) DAY
      CONSIDERATION PERIOD.**





**HAVING
      ELECTED TO EXECUTE THIS AGREEMENT, TO FULFILL THE PROMISES SET FORTH HEREIN,
      AND
      TO RECEIVE THEREBY THE SUMS AND BENEFITS SET FORTH IN PARAGRAPH “2” ABOVE,
      VANZURA FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS
      AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT
      HAVE
      AGAINST BORDERS GROUP.**





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










/s/CEDRIC
      J.
      VANZURA


Cedric
      J.
      Vanzura





Date: August
      27,
      2007








**BORDERS
      GROUP, INC.**







By: 
/s/DANIEL
      SMITH








Date:
August
      27,
      2007