Exhibit 10.36

                            OMNIBUS AMENDMENT NO. 1
                                       TO
                   AMENDED AND RESTATED GUARANTEE AGREEMENT
                                       AND
                         RULES OF USAGE AND DEFINITIONS


            THIS  OMNIBUS  AMENDMENT  NO. 1 TO AMENDED  AND  RESTATED  GUARANTEE
AGREEMENT AND RULES OF USAGE AND DEFINITIONS  (the  "Amendment") is entered into
as of the 15th day of July, 1998 by and between PNC BANK, NATIONAL  ASSOCIATION,
as  Administrative  Agent on behalf of the Lenders,  and BORDERS GROUP,  INC., a
Delaware  corporation (the "Company"),  BORDERS,  INC., a Colorado  corporation,
WALDEN BOOK COMPANY, INC., a Colorado corporation, WALDENBOOKS PROPERTIES, INC.,
a Delaware corporation, BORDERS PROPERTIES, INC., a Delaware corporation, PLANET
MUSIC,  INC., a North Carolina  corporation,  BORDERS  OUTLET,  INC., a Colorado
corporation, THE LIBRARY, LTD., a Missouri corporation,  BORDERS ONLINE, INC., a
Delaware corporation, BORDERS FULFILLMENT, INC., a Delaware corporation, and BGP
(UK) LIMITED, a United Kingdom corporation  (collectively with the Company,  the
"Guarantors").

                                   WITNESSETH:

            WHEREAS,  the Guarantors and the  Administrative  Agent have entered
into that certain Amended and Restated Guarantee  Agreement dated as of November
22,  1995 and  amended  and  restated  as of October  17,  1997 (the  "Guarantee
Agreement";  terms used but not defined  herein shall have the same  meanings as
are set forth in Appendix A (Rules of Usage and  Definitions)  to the  Guarantee
Agreement ("Rules of Usage and Definitions")); and

            WHEREAS,  the  Guarantors  have  requested  that the  Lenders  amend
certain provisions of the Guarantee Agreement, and the Lenders are willing to do
so on the terms and subject to the conditions hereinafter set forth.

            NOW,  THEREFORE,  in  consideration of the premises set forth above,
the  terms  and  conditions  contained  herein,  and  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Lenders and the Guarantors hereby agree as follows:

      1. Amendments to Agreement.  Subject to the satisfaction of the conditions
precedent set forth in Section 3 below,  the  Guarantee  Agreement is amended as
follows:

            a. The definition of "Domestic Subsidiary" in the Rules of Usage and
Definitions is hereby deleted and replaced in its entirety by the following:

            "Domestic  Subsidiary shall mean individually and Domestic
            Subsidiaries shall mean collectively,  except as otherwise
            expressly  provided in Section  12.04(j) of the  Guarantee
            Agreement,  any Subsidiary of any Borrower organized under
            the laws of any state of the United  States of America for
            the  purpose  of doing  business  primarily  in the Untied
            States of America."
<PAGE>

            b. Clause (i) of the  definition of "Permitted  Investments"  in the
Rules of Usage and Definitions is hereby deleted and replaced in its entirety by
the following:

            "(i)  Investments  in  direct  obligations  of the  United
            States  of   America   or,   with   respect   to   Foreign
            Subsidiaries,  of the central government of the applicable
            jurisdiction,  or any agency  thereof,  maturing in twelve
            months or less from the date of  acquisition  thereof  and
            which  are  backed  by the full  faith  and  credit of the
            United   States  of  America  or  such  other   applicable
            jurisdiction,  as  aforesaid,  provided  that such  direct
            obligations  of any  central  government  other  than  the
            United  States of America or of any agency of any  central
            government  other than the United  States of America  have
            ratings of at least A-1 by S&P or P-1 by  Moody's,  or the
            equivalent thereof, on the date of acquisition;"

            c. Clause (iii) of the definition of "Permitted  Investments" in the
Rules of Usage and  Definitions is hereby amended by inserting  after the phrase
"commercial bank" the following:

            "organized  under the laws of the United States of America
            or any state thereof"

            d. The definition of "Permitted  Investments"  in the Rules of Usage
and Definitions is hereby amended by adding the following new clause (vi):

            "(vi) demand  deposits,  time deposits or  certificates of
            deposit  maturing within one year issued by any commercial
            bank organized  under the laws of any  jurisdiction  other
            than the United States of America or any state thereof and
            whose  short-term  deposit  rating  at the  time  of  such
            Investment  is either of the two (2) highest  ratings then
            accorded by Moody's or another comparable rating service."

e. Clause (ii) of the definition of "Permitted  Restricted  Subsidiary Activity"
in the Rules of Usage and  Definitions  is hereby  deleted  and  replaced in its
entirety by the following:

            "(ii) any  Contingent  Obligations  of the  Company or any
            Unrestricted Subsidiary which is a Domestic Subsidiary, or
            Indebtedness of the Company or any Unrestricted Subsidiary
            which is a Domestic Subsidiary constituting  reimbursement
            obligations under letters of credit, relating to operating
            leases  executed,   as  lessee,   by  a  non-wholly  owned
            Restricted Subsidiary, provided, that, the portion of such
            Contingent Obligations and Indebtedness which constitutes

<PAGE>

            current   liabilities   determined  and   consolidated  in
            accordance   with  GAAP  is  limited  to  operating  lease
            payments  (whether  such  amounts are fixed or  percentage
            rent, fees,  costs,  accelerated  payment  requirements or
            otherwise) not in excess of an aggregate of $15,000,000 in
            any  Fiscal  Year with  respect  to all  non-wholly  owned
            Restricted Subsidiaries."

            f. The definition of "Wholly-owned Subsidiary" in the Rules of Usage
and Definitions is hereby deleted and replaced in its entirety by the following:

            "Wholly-owned   Subsidiary  shall  mean  individually  and
            Wholly-owned  Subsidiaries  shall  mean  collectively  any
            Subsidiary of the Company of which all of the  outstanding
            voting  equity  interests  and  substantially  all  of the
            equity   interests  are  owned  by  the  Company  (whether
            directly or through one or more Wholly-owned  Subsidiaries
            of the Company).

            g. Section 12.01(j) of the Guarantee Agreement is hereby deleted and
replaced in its entirety by the following:

            "(j) unsecured  Indebtedness of Foreign  Subsidiaries with
            an   aggregate    principal   Dollar   Equivalent   amount
            outstanding  not to exceed (A) $10,000,000 in the first or
            second Fiscal  Quarter or (B)  $20,000,000 in the third or
            fourth Fiscal  Quarter;  or unsecured  Indebtedness of one
            Foreign Subsidiary to another Foreign Subsidiary;"

            h. Section 12.03(j) of the Guarantee Agreement is hereby deleted and
replaced in its entirety by the following:

            "(j)   Contingent   Obligations  of  the  Company  or  any
            Unrestricted  Subsidiary which is a Domestic Subsidiary in
            respect of all obligations of any Unrestricted  Subsidiary
            which  is  a  Foreign   Subsidiary  or  any  wholly  owned
            Restricted Subsidiary which is a Foreign Subsidiary, other
            than  operating  lease  obligations,  subject  to  Section
            12.20;"

            i. Section 12.03(k) of the Guarantee Agreement is hereby deleted and
replaced in its entirety by the following:

            "(k)   Contingent   Obligations  of  the  Company  or  any
            Unrestricted  Subsidiary which is a Domestic Subsidiary in
            respect of operating lease obligations of any Unrestricted
            Subsidiary  which is a Foreign  Subsidiary  or any  wholly
            owned Restricted Subsidiary which is a Foreign Subsidiary;
            provided   that  the   portion  of  all  such   Contingent
            Obligations   which   constitutes    current   liabilities
            determined  and  consolidated  in accordance  with GAAP is
            limited to lease payments

<PAGE>

            (whether such amounts are fixed or percentage  rent, fees,
            costs, accelerated payments or otherwise) not in excess of
            an  aggregate  of  $50,000,000  in any  Fiscal  Year  with
            respect to all Unrestricted Subsidiaries which are Foreign
            Subsidiaries  and  wholly  owned  Restricted  Subsidiaries
            which are Foreign Subsidiaries; and"

            j. Section 12.04(j) of the Guarantee Agreement is hereby deleted and
replaced in its entirety by the following:

            "(j)  Investments  constituting  Permitted  Joint  Venture
            Activities,  provided  no Event of  Default  or  Potential
            Default has  occurred  and is  continuing  or would result
            therefrom and subject to Section  12.20,  and for purposes
            of  this  Section  12.04(j)  the  reference  to  "Domestic
            Subsidiary" in the  definition of Permitted  Joint Venture
            Activity shall include any Subsidiary  organized under the
            laws of Canada or any province thereof."

k. Clause (i) of Section 12.20 of the Guarantee  Agreement is hereby deleted and
replaced in its entirety by the following:

            "(i) incur any Contingent  Obligation  permitted under
            Sections  12.03(i) or (j), or"

            l. Section  12.20 of the  Guarantee  Agreement is hereby  amended by
adding to the end of such section the following:

            "For  purposes of this Section  12.20,  the term  "Foreign
            Joint  Venture"  shall not include  any such  corporation,
            partnership,  limited liability company,  joint venture or
            other  entity  organized  under  the laws of Canada or any
            province thereof."

      2. Conditions of Effectiveness.  The amendments to the Guarantee Agreement
contained  in Section 1 shall  become  effective  when and only when each of the
conditions specified in clauses (a) and (b) below has been satisfied:

            a. no Event of Default or Potential  Default shall have occurred and
be continuing on the date hereof or on the date the Amendment  becomes effective
and the  representations  and warranties made in the Guarantee  Agreement and in
Section 3 hereof  shall be true and  correct on the date  hereof and on the date
the Amendment  becomes  effective and the Guarantors shall have delivered to the
Administrative Agent for the benefit of the Lenders an officer's  certificate to
both such effects executed by an Authorized Officer;

            b. the  Administrative  Agent  shall  have  received  the  following
documents,  each  document  being  in form  and  substance  satisfactory  to the
Administrative Agent:
<PAGE>

                  (1) written Approval Memos from the Required Banks;

                  (2) this Amendment, duly executed by each Guarantor;

                  (3) the officer's  certificate  referenced in clause
                      a. above; and

                  (4) such instruments,  agreements and other items as
                      the Administrative Agent may request.

      3.  Representation and Warranties.  Each of the Guarantors  represents and
warrants as follows: (i) it has all necessary power and authority to execute and
deliver  this  Amendment  and to perform  its  obligations  hereunder;  (ii) the
execution,  delivery and performance of this Amendment have been duly authorized
by it; (iii) this  Amendment and the  Guarantee  Agreement,  as amended  hereby,
constitute  the legal,  valid and binding  obligations of such Guarantor and are
enforceable  against such Guarantor in accordance with their terms; and (iv) the
approval,  execution,  delivery and  performance  of the terms hereof and of the
Guarantee Agreement, as amended hereby, do not violate any contractual provision
to which it is a party or by which it is or its  properties are bound or any Law
applicable to it.

      4. Reference to the Effect on the Guarantee Agreement.

            a.  (i)  Each   reference  in  the  Guarantee   Agreement  to  "this
Agreement,"  "hereunder,"  "hereof," "herein" or words of like import shall mean
and be a reference to the  Guarantee  Agreement as amended  hereby and (ii) each
reference to the Guarantee Agreement in all other Operative Documents shall mean
and be a reference to the Guarantee Agreement, as amended hereby.

            b. Except as  specifically  amended above,  the Guarantee  Agreement
shall remain in full force and effect and are hereby ratified and confirmed.

            c. The execution, delivery and effectiveness of this Amendment shall
not,  except as  expressly  provided  herein,  operate  as an  amendment  to any
provision of the Guarantee  Agreement nor a waiver of any right, power or remedy
of any Lender or Agent,  nor constitute a waiver of, or consent to any departure
from, any provision of the Guarantee Agreement.

      5.  Governing  Law. This  Amendment  shall be governed by and construed in
accordance with the internal laws (as opposed to conflicts of law provisions) of
the State of New York.

      6. Headings.  Section  headings in this Amendment are included  herein for
convenience  of reference only and shall not constitute a part of this Amendment
for any other purpose.
<PAGE>

      7.  Counterparts.  This  Amendment  may be  executed by one or more of the
parties to this Amendment on any number of separate counterparts and all of said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.  Delivery of a duly executed  counterpart copy of this Amendment may
be made by telecopy.

      8. Expenses. The Guarantors will upon demand pay to each of the Agents the
amount of any and all expenses,  including the  reasonable  fees and expenses of
each  Agent's  attorneys  (which  attorneys  may be an Agent's  employees to the
extent agreed to in advance by the Guarantors) which any such Agent may incur in
connection with the  preparation,  negotiation and enforcement of this Amendment
and each of the  agreements,  instruments and other documents to be delivered to
the Agents or the Lenders in connection herewith.




<PAGE>


                                                                 AMENDMENT NO. 1



            IN WITNESS WHEREOF,  this Amendment has been duly executed as of the
day and year first above written.

                                    PNC   BANK,   NATIONAL   ASSOCIATION,   as
                                    Administrative  Agent  acting on behalf of
                                    the Lenders

                                    By:
                                    Title:


                                    BORDERS GROUP, INC.
                                    BORDERS, INC.
                                    WALDEN BOOK COMPANY, INC.
                                    BORDERS PROPERTIES, INC.
                                    WALDENBOOKS PROPERTIES, INC.
                                    PLANET MUSIC, INC.
                                    BORDERS OUTLET, INC.
                                    THE LIBRARY, LTD.


                                    By:
                                    Title:


                                    BORDERS ONLINE, INC.

                                    By:
                                    Title:

                                    BORDERS FULFILLMENT, INC.

                                    By:
                                    Title:


                                    BGP (UK) LIMITED

                                    By:
                                    Title: