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.

4. 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.

5. 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:

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