Document:

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                                                                   EXHIBIT 10.42

                                                            MBR&M DRAFT 6/12/02

                                OMNIBUS AMENDMENT

         This OMNIBUS AMENDMENT, dated as of June 21, 2002 (this
"Amendment"), is among BORDERS GROUP, INC. (the "Company"), BORDERS, INC.
("Borders"), WALDEN BOOK COMPANY, INC. ("Walden"), WALDENBOOKS PROPERTIES, INC.
("WPI"), BORDERS PROPERTIES, INC. ("BPI"), WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly stated herein, but solely as Owner
Trustee ("Owner Trustee"), SAM PROJECT FUNDING CORP. I, as Investor
("Investor"), PNC BANK, NATIONAL ASSOCIATION, as former Administrative Agent,
BANK ONE, NA (f/k/a The First National Bank of Chicago), as former Syndication
Agent, DEUTSCHE BANK TRUST COMPANY AMERICAS (as successor to Bankers
Trust Company), as former Real Estate Administrative Agent, SUNTRUST BANK, as
Co-Arranger, Administrative Agent ("Administrative Agent"), Real Estate
Administrative Agent ("Real Estate Administrative Agent") and Documentation
Agent ("Documentation Agent"), FLEET NATIONAL BANK, as Co-Arranger (together
with SunTrust Bank, each a "Co-Arranger" and collectively, "Co-Arrangers") and
Syndication Agent ("Syndication Agent"), and the Lenders party thereto (the
"Lenders").

                                   BACKGROUND

         1. The Company, Borders, Walden, WPI, BPI, Owner Trustee, Investor,
former Administrative Agent, former Syndication Agent, former Real Estate
Administrative Agent and certain of the Lenders are parties to that certain
Participation Agreement, dated as of November 22, 1995, which was Amended and
Restated October 17, 1997 (the "Participation Agreement").

         2. Owner Trustee, as Borrower, former Administrative Agent, former
Syndication Agent and former Real Estate Administrative Agent are parties to
that certain Credit Agreement, dated as of November 22, 1995, which was Amended
and Restated as of October 17, 1997 (the "Credit Agreement").

         3. The parties hereto desire to amend the Participation Agreement, the
Credit Agreement and certain other Operative Agreements (as defined below) in
order to extend the Maturity Date of the facility, to decrease the facility
provided thereunder, to add certain new Lenders and certain new Guarantors and
in certain other respects as set forth herein.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

         Section 1. Definitions. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meanings assigned thereto in the
Participation Agreement.

         Section 2. Agent Roles. (a) PNC Bank, National Association, hereby
resigns as Administrative Agent. Bank One, NA, hereby resigns as Syndication
Agent. Bankers Trust Company hereby resigns as Real Estate Administrative Agent.
SunTrust Bank is hereby
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designated as Co-Arranger, Documentation Agent, Administrative Agent, Real
Estate Administrative Agent and Agent. Fleet National Bank is hereby designated
as Co-Arranger and Syndication Agent.

         (b) Each party hereto acknowledges and agrees that neither SunTrust
Bank nor Fleet National Bank (collectively, the "New Agents"), individually or
in any of their respective agent capacities, makes any representations or
warranties regarding the status of perfection of any security interest in any
collateral granted under the Operative Agreements and that neither New Agent
shall bear any responsibility for obtaining or maintaining the perfection of any
such security interest.

         Section 3. Certain Definitions. (a) Appendix A is hereby amended by
deleting the definitions "Affiliate", "Aggregate Commitment Amount", "Authorized
Officer", "Capitalized Lease", "Change in Control", "Consolidated Net Income",
"Consolidated Tangible Net Worth", "Corporate Credit Agreement",
"Distributions", "Financed Lease", "Fiscal Quarter", "Fiscal Year", "Fixed
Charge Coverage Ratio", "Foreign Subsidiary", "GAAP", "Governmental Authority",
"Indebtedness", "Investment", "Kmart Agreements", "Kmart Indemnity", "Kmart
Intercompany Agreement", "Kmart Registration Rights Agreement", "Kmart Tax
Agreement", "Leverage Ratio", "Lien", "Material Adverse Effect", "Maturity
Date", "Multiemployer Plan", "Permitted Joint Venture Activity", "Principal
Office", "Rent Expense", "Solvent", "Subsidiary", "Tranche A Maximum Amount",
"Tranche B Maximum Amount", and "Wholly-Owned Subsidiary".

         (b) Appendix A is hereby amended by inserting the following new
definitions in alphabetical order as follows:

                  "Accounts Receivable" shall mean all rights of the Company or
         any of its Subsidiaries to payment for goods sold, leased or otherwise
         marketed in the ordinary course of business and all rights of the
         Company or any of its Subsidiaries to payment for services rendered in
         the ordinary course of business and all sums of money or other proceeds
         due thereon pursuant to transactions with account debtors, except for
         that portion of the sum of money or other proceeds due thereon that
         relate to sales, use or property taxes in conjunction with such
         transactions, recorded on books of account in accordance with GAAP.

                  "Acquisition" shall mean any transaction, or any series of
         related transactions, consummated on or after the date of the Omnibus
         Amendment, by which the Company or any of its Subsidiaries (a) acquires
         any ongoing business or all or substantially all of the assets of any
         Person or division thereof, whether through purchase of assets, merger
         or otherwise, or (b) directly or indirectly acquires (in one
         transaction or as the most recent transaction in a series of
         transactions) a majority of the securities of a corporation, which
         securities have ordinary voting power for the election of directors
         (other than securities having such power only by reason of the
         happening of a contingency) or a majority (by percentage and voting
         power) of the outstanding partnership interests of a partnership or
         membership interests of a limited liability company.

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                  "Adjustment Date" shall mean the first day of the month in
         which a Compliance Certificate is to be delivered by the Guarantors
         pursuant to Section 11.04 of the Guarantee.

                  "Affiliate" shall mean any Person which, directly or
         indirectly, controls, is controlled by or is under common control with
         any of the Lessees or such Guarantor. "Control" of a Lessee or a
         Guarantor means the power, directly or indirectly, (a) to vote five
         percent (5%) or more of the Capital Stock (on a fully diluted basis) of
         such Lessee or such Guarantor having ordinary voting power for the
         election of directors, managing members or general partners (as
         applicable); or (b) to direct or cause the direction of the management
         and policies of such Lessee or such Guarantor (whether by contract or
         otherwise).

                  "Agree Litigation" shall mean Borders, Inc. et al v. Agree
         Limited Partnership et al, Washtenaw Circuit Court Case Number
         01-833-CZ and Court of Appeals Number 238628.

                  "Aggregate Commitment Amount" shall mean $100,000,000, as such
         amount may be increased or decreased pursuant to the Credit Agreement.

                  "Applicable Pension Legislation" shall mean at any time, any
         pension or retirement benefits legislation (be it national, federal,
         provincial, territorial or otherwise) then applicable to any Lessee,
         any Guarantor or any of their Subsidiaries.

                  "Authorized Officers" shall mean the President, Senior Vice
         President - Finance and Chief Financial Officer, Vice President -
         Financial Planning and Reporting, Vice President - Finance and Asset
         Protection or Treasurer of any Lessee or any Guarantor.

                  "Balance Sheet Date" shall mean January 27, 2002.

                  "BPI" shall mean Borders Properties, Inc., a Delaware
         corporation.

                  "Capital Assets" shall mean fixed assets, both tangible (such
         as land, buildings, fixtures, machinery and equipment) and intangible
         (such as patents, copyrights, trademarks, franchises and good will);
         provided that Capital Assets shall not include any item customarily
         charged directly to expense or depreciated over a useful life of twelve
         (12) months or less in accordance with GAAP.

                  "Capital Expenditures" shall mean amounts paid or Indebtedness
         incurred by the Company or any of its Subsidiaries in connection with
         the purchase or lease by the Company or any of its Subsidiaries of
         Capital Assets that would be required to be capitalized and shown on
         the balance sheet of such Person in accordance with GAAP, provided that
         Capital Expenditures shall not include any expenditures made (a) to
         effect any Acquisition, (b) with respect to the Existing Synthetic
         Lease Facility and the New

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         Synthetic Lease Facility in the event either or both facilities are
         recharacterized as Capitalized Leases or (c) to acquire property out of
         the Existing Synthetic Lease Facility.

                  "Capital Stock" shall mean any and all shares, interests,
         participations or other equivalents (however designated) of capital
         stock of a corporation, any and all equivalent ownership interests in a
         Person (other than a corporation) and any and all warrants, rights or
         options to purchase any of the foregoing.

                  "Capitalized Leases" shall mean leases under which the Company
         or any of its Subsidiaries is the lessee or obligor, the discounted
         future rental payment obligations under which are required to be
         capitalized on the balance sheet of the lessee or obligor in accordance
         with GAAP.

                  "CA-Property" shall mean any and all property, whether real,
         personal, tangible, intangible or mixed, both owned and leased pursuant
         to Capitalized Leases, of any Person.

                  "Change of Control" shall mean an event or series of events by
         which any person or group of persons (within the meaning of Section 13
         or 14 of the Securities Exchange Act of 1934) shall have acquired
         beneficial ownership (within the meaning of Rule 13d-3 promulgated by
         the Securities and Exchange Commission under said Act), directly or
         indirectly, of thirty-five percent (35%) or more of the outstanding
         shares of Capital Stock of the Company; or, during any period of twelve
         consecutive calendar months, individuals who were directors of the
         Company on the first day of such period (together with any new
         directors whose election by the Board of Directors of BGI was approved
         by a vote of sixty-six and two-thirds percent (66 2/3%) of the
         directors then still in office who were either directors at the
         beginning of such period or whose election was previously so approved)
         shall cease to constitute a majority of the board of directors of the
         Company.

                   "Compliance Certificate" is defined in Section 11.04(c) of
         the Guarantee.

                  "Consolidated or consolidated" shall mean, with reference to
         any term defined herein, shall mean that term as applied to the
         accounts of the Company and its Subsidiaries, consolidated in
         accordance with GAAP.

                  "Consolidated EBITDA" shall mean with respect to any period,
         an amount equal to the sum of (a) Consolidated Net Income of the
         Company and its Subsidiaries for such period, (excluding (i) all
         extraordinary nonrecurring items of income, but not losses (except to
         the extent such extraordinary losses are offset by such extraordinary
         income) and (ii) income or loss of any Joint Venture to which the
         Company or any of its Subsidiaries is a party), plus (b) in each case
         to the extent deducted in the calculation of such Person's Consolidated
         Net Income and without duplication, (i) depreciation and amortization
         for such period, plus (ii) income tax expense for such period, plus
         (iii) Consolidated Total Interest Expense paid or accrued during such
         period, all as determined in accordance with GAAP; provided, however,
         that there shall be excluded in calculating

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         Consolidated Net Income for purposes of this definition any losses
         attributable to the use of a fair value methodology for recognition and
         measurement of impairment of goodwill not identified with impaired
         assets in accordance with Accounting Principles Board Opinion No. 142.

                  "Consolidated Excess Cash Flow" shall mean, with respect to
         the Company and its Subsidiaries and any particular period, an amount
         equal to (a) Consolidated EBITDA for such period plus if applicable,
         in-flows resulting from Net Working Capital Changes for such period
         minus (b) the sum of, in each case for such period, (i) if applicable,
         out-flows resulting from Net Working Capital Changes, (ii) to the
         extent not already deducted in the determination of Consolidated
         EBITDA, Capital Expenditures, (iii) any Restricted Payment Amount, (iv)
         cash payments for all taxes paid during such period and (v) any
         mandatory repayments (whether scheduled or otherwise) of principal on
         any Indebtedness of the Company or any of its Subsidiaries paid or due
         and payable during such period.

                  "Consolidated Fixed Charges" shall mean, with respect to the
         Company and its Subsidiaries and for any period, the sum, without
         duplication, of (a) Consolidated Total Interest Expense for such
         period, plus (b) Rent Expense, plus (c) Lease Financing Rent Expense,
         plus (d) any and all scheduled repayments of principal during such
         period in respect of Indebtedness that becomes due and payable or that
         are to become due and payable during such period pursuant to any
         agreement or instrument to which any Lessee, any Guarantor or any of
         their Subsidiaries is a party relating to (i) the borrowing of money or
         the obtaining of credit, including the issuance of notes or bonds, (ii)
         the deferred purchase price of assets (other than trade payables
         incurred in the ordinary course of business), (iii) in respect of any
         Capitalized Leases, and (iv) Indebtedness of the type referred to above
         of another Person guaranteed by the Company or any of its Subsidiaries.
         Demand obligations shall be deemed to be due and payable during any
         fiscal period during which such obligations are outstanding.

                  "Consolidated Free Cash Flow" shall mean, with respect to any
         period, an amount equal to (a) net cash provided by operations of a
         Person and its Subsidiaries for such period (as set forth as a line
         item on such Person's consolidated statement of cash flows in
         accordance with GAAP) minus (b) Capital Expenditures made by such
         Person and its Subsidiaries during such period.

                  "Consolidated Net Income (or Deficit)" shall mean the
         consolidated net income (or deficit) of the Company and its
         Subsidiaries, after deduction of all expenses, taxes, and other proper
         charges, determined in accordance with GAAP.

                  "Consolidated Operating Cash Flow" shall mean for any period,
         an amount equal to the sum of (a) Consolidated EBITDA plus (b) Rent
         Expense and (c) Lease Financing Rent Expense, in each case of the
         Company and its Subsidiaries for such period determined in accordance
         with GAAP.

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                  "Consolidated Tangible Net Worth" shall mean the excess of
         Consolidated Total Assets over Consolidated Total Liabilities, and less
         the sum of:

                  (a) the total book value of all assets of the Company and its
         Subsidiaries properly classified as intangible assets under GAAP,
         including such items as good will, the purchase price of acquired
         assets in excess of the fair market value thereof, trademarks, trade
         names, service marks, brand names, copyrights, patents and licenses,
         and rights with respect to the foregoing; plus

                  (b) all amounts representing any write-up in the book value of
         any assets of the Company or its Subsidiaries resulting from a
         revaluation thereof subsequent to the Balance Sheet Date, excluding
         adjustments to translate foreign assets and liabilities for changes in
         foreign exchange rates made in accordance with Financial Accounting
         Standards Board Statement No. 52; plus

                  (c) to the extent otherwise includable in the computation of
         Consolidated Tangible Net Worth, any subscriptions receivable.

                  "Consolidated Total Assets" shall mean the sum of (a) all
         assets ("consolidated balance sheet assets") of the Company and its
         Subsidiaries determined on a consolidated basis in accordance with
         GAAP, plus (b) without duplication, all sold receivables referred to in
         clause (g) of the definition of the term "Indebtedness" to the extent
         that such receivables would have been consolidated balance sheet assets
         had they not been sold.

                  "Consolidated Total Funded Debt" shall mean with respect to
         the Company and its Subsidiaries, the sum, without duplication, of (a)
         the aggregate amount of Indebtedness of the Company and its
         Subsidiaries, on a consolidated basis, relating to or in respect of (i)
         the borrowing of money or the obtaining of credit, including the
         issuance of notes or bonds but excluding letters of credit outstanding,
         (ii) the deferred purchase price of assets (other than trade payables
         incurred in the ordinary course of business), and (iii) any Synthetic
         Leases or any Capitalized Leases, plus (b) Indebtedness of the type
         referred to in clause (a) of another Person guaranteed by any Lessee,
         the Company or any of their Subsidiaries.

                  "Consolidated Total Interest Expense" shall mean for any
         period, the aggregate amount of interest required to be paid or accrued
         by the Company and its Subsidiaries during such period on all
         Indebtedness of the Company and its Subsidiaries outstanding during all
         or any part of such period, whether such interest was or is required to
         be reflected as an item of expense or capitalized, including payments
         consisting of interest in respect of any Capitalized Lease or any
         Synthetic Lease, and including commitment fees, agency fees, facility
         fees, balance deficiency fees and similar fees or expenses in
         connection with the borrowing of money.

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           "Consolidated Total Liabilities" shall mean all liabilities of the
   Company and its Subsidiaries determined on a consolidated basis in accordance
   with GAAP and classified as such on the consolidated balance sheet of the
   Company and its Subsidiaries.

           "Distribution" shall mean the declaration or payment of any dividend
   on or in respect of any shares of any class of Capital Stock of a Person,
   other than dividends payable solely in shares of common stock of such Person;
   the purchase, redemption, defeasance, retirement or other acquisition of any
   shares of any class of Capital Stock of a Person, directly or indirectly
   through a Subsidiary of such Person or otherwise (including the setting apart
   of assets for a sinking or other analogous fund to be used for such purpose);
   the return of capital by a Person to its shareholders as such; or any other
   distribution on or in respect of any shares of any class of Capital Stock of
   such Person.

           "Dollars" or "$" Means Dollars in lawful currency of the United
   States of America.

           "Dollar Equivalent" means, on any particular date, with respect to
   any amount denominated in Dollars, such amount in Dollars, and with respect
   to any amount denominated in currency other than Dollars, the amount (as
   conclusively ascertained by the Administrative Agent absent manifest error)
   of Dollars which could be purchased by the Administrative Agent (in
   accordance with its normal banking practices) in the London foreign currency
   deposit market with such amount of such currency at the Exchange Rate on such
   date.

           "Domestic Subsidiary" means any Subsidiary of the Company organized
   under the laws of the United States of America, any state or territory
   thereof or the District of Columbia.

           "Employee Benefit Plan" shall mean any employee benefit plan within
   the meaning of Section 3(3) of ERISA maintained or contributed to by any
   Lessee, any Guarantor or any ERISA Affiliate, other than a Guaranteed Pension
   Plan or a Multiemployer Plan.

           "ERISA Affiliate" shall mean any Person which is treated as a single
   employer with any of the Lessees or the Guarantors under Section 414 of the
   Code.

           "ERISA Reportable Event" shall mean a reportable event with respect
   to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
   the regulations promulgated thereunder.

           "Exchange Rate" means, with respect to any Optional Currency, at any
   date of determination thereof, the spot rate of exchange in London that
   appears on the display page applicable to such Optional Currency on the
   Reuters System (or such other page as may replace such page on such service
   for the purpose of displaying the spot rate of exchange in London) for the
   conversion of such Optional Currency into Dollars; provided, however, that if
   there shall at any time no longer exist such a

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         page on such service, the Exchange Rate shall be determined by
         reference to another similar rate publishing service selected by the
         Administrative Agent.

                  "Financed Lease" shall mean a lease of real property,
         improvements on real property or real property and improvements thereon
         by the Company or any of its Subsidiaries entered into pursuant to the
         Participation Agreement or the New Master Agreement, as applicable.

                  "Financial Affiliate" shall mean a Subsidiary of the bank
         holding company controlling any Lender, which Subsidiary is engaging in
         any of the activities permitted by Section 4(e) of the Bank Holding
         Company Act of 1956 (12 U.S.C. Section 1843).

                  "Fiscal Quarter" shall mean the 13/14 week period commencing
         on the day after the last day of the preceding Fiscal Quarter and
         ending on the Sunday (except with respect to Walden, on the Saturday)
         preceding the last Wednesday in each of April (first), July (second),
         October (third) and January (fourth) of each Fiscal Year. As used
         herein, "FQ1 2xxx" refers to the first Fiscal Quarter of the 2xxx
         Fiscal Year, "FQ2 2xxx" refers to the second Fiscal Quarter of the 2xxx
         Fiscal Year and so on.

                  "Fiscal Year" shall mean the 52/53 week period commencing on
         the day after the last day of the preceding Fiscal Year and ending on
         the Sunday (except with respect to Walden, on the Saturday) preceding
         the last Wednesday in January. By way of illustration, the Company's
         2001 Fiscal Year ended January 27, 2002.

                  "Fixed Charge Coverage Ratio" shall mean as of any date of
         determination, the ratio of (a) Consolidated Operating Cash Flow for
         the Reference Period most recently ended to (b) Consolidated Fixed
         Charges for such Reference Period.

                  "Foreign Subsidiary" shall mean any Subsidiary of the Company
         organized under the laws of any jurisdiction other than the United
         States of America, any state or territory thereof or the District of
         Columbia.

                  "GAAP" or "generally accepted accounting principles" shall
         mean (a) when used in Sections 12.15 through 12.18 of the Guarantee,
         whether directly or indirectly through reference to a capitalized term
         used therein, means (i) principles that are consistent with the
         principles promulgated or adopted by the Financial Accounting Standards
         Board and its predecessors, in effect for the fiscal year ended on the
         Balance Sheet Date, and (ii) to the extent consistent with such
         principles, the accounting practice of the Company reflected in its
         financial statements for the year ended on the Balance Sheet Date
         (unless otherwise agreed to by the parties hereto), and (b) when used
         in general, other than as provided above, means principles that are (i)
         consistent with the principles promulgated or adopted by the Financial
         Accounting Standards Board and its predecessors, as in effect from time
         to time, and (ii) consistently applied with past financial statements
         of the Company adopting the same principles, provided that in each case
         referred to in this definition of "GAAP" a certified public accountant
         would, insofar as the use of such accounting principles is pertinent,
         be in a position to deliver an unqualified opinion (other

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      than a qualification regarding changes in GAAP) as to financial statements
      in which such principles have been properly applied.

            "Governing Documents" shall mean with respect to any Person, its
      certificate or articles of incorporation or organization, its by-laws, or,
      as the case may be, its certificate of formation, limited partnership
      certificate, operating agreement, limited partnership agreement or other
      constitutive documents and all shareholder agreements, voting trusts and
      similar arrangements applicable to any of its Capital Stock.

            "Governmental Authority" shall mean any foreign, federal, state,
      regional, local, municipal or other government, or any department,
      commission, board, bureau, agency, public authority or instrumentality
      thereof, or any court or arbitrator.

            "Guaranteed Pension Plan" shall mean any employee pension benefit
      plan within the meaning of Section 3(2) of ERISA maintained or contributed
      to by any Lessee, any Guarantor or any ERISA Affiliate the benefits of
      which are guaranteed on termination in full or in part by the PBGC
      pursuant to Title IV of ERISA, other than a Multiemployer Plan.

            "Indebtedness" shall mean as to any Person and whether recourse is
      secured by or is otherwise available against all or only a portion of the
      assets of such Person and whether or not contingent, but without
      duplication:

            (a) every obligation of such Person for money borrowed,

            (b) every obligation of such Person evidenced by bonds, debentures,
      notes or other similar instruments, including obligations incurred in
      connection with the acquisition of property, assets or businesses,

            (c) every reimbursement obligation of such Person with respect to
      letters of credit, bankers' acceptances or similar facilities issued for
      the account of such Person,

            (d) every obligation of such Person issued or assumed as the
      deferred purchase price of property or services (including securities
      repurchase agreements but excluding trade accounts payable or accrued
      liabilities arising in the ordinary course of business which are not
      overdue or which are being contested in good faith),

            (e) every obligation of such Person under any Capitalized Lease,

            (f) every obligation of such Person under any Synthetic Lease,

            (g) all sales by such Person of (i) accounts or general intangibles
      for money due or to become due, (ii) chattel paper, instruments or
      documents creating or evidencing a right to payment of money or (iii)
      other receivables (collectively "receivables"), whether pursuant to a
      purchase facility or otherwise, other than in connection with the
      disposition of the business operations of such Person relating thereto or
      a disposition of defaulted

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      receivables for collection and not as a financing arrangement, and
      together with any obligation of such Person to pay any discount, interest,
      fees, indemnities, penalties, recourse, expenses or other amounts in
      connection therewith,

            (h) every obligation of such Person (an "equity related purchase
      obligation") to purchase, redeem, retire or otherwise acquire for value
      any shares of Capital Stock issued by such Person or any rights measured
      by the value of such Capital Stock,

            (i) every obligation of such Person under any forward contract,
      futures contract, swap, option or other financing agreement or arrangement
      (including, without limitation, caps, floors, collars and similar
      agreements), the value of which is dependent upon interest rates, currency
      exchange rates, commodities or other indices (a "derivative contract"),

            (j) every obligation in respect of Indebtedness of any other entity
      (including any partnership in which such Person is a general partner) to
      the extent that such Person is liable therefor as a result of such
      Person's ownership interest in or other relationship with such entity,
      except to the extent that the terms of such Indebtedness provide that such
      Person is not liable therefor and such terms are enforceable under
      applicable law,

            (k) every obligation, contingent or otherwise, of such Person
      guaranteeing, or having the economic effect of guarantying or otherwise
      acting as surety for, any obligation of a type described in any of clauses
      (a) through (j) (the "primary obligation") of another Person (the "primary
      obligor"), in any manner, whether directly or indirectly, and including,
      without limitation, any obligation of such Person (i) to purchase or pay
      (or advance or supply funds for the purchase of) any security for the
      payment of such primary obligation, (ii) to purchase property, securities
      or services for the purpose of assuring the payment of such primary
      obligation, or (iii) to maintain working capital, equity capital or other
      financial statement condition or liquidity of the primary obligor so as to
      enable the primary obligor to pay such primary obligation.

            The "amount" or "principal amount" of any Indebtedness at any time
      of determination represented by (t) any Indebtedness, issued at a price
      that is less than the principal amount at maturity thereof, shall be the
      amount of the liability in respect thereof determined in accordance with
      GAAP, (u) any Capitalized Lease shall be the principal component of the
      aggregate of the rentals obligation under such Capitalized Lease payable
      over the term thereof that is not subject to termination by the lessee,
      (v) any sale of receivables shall be the amount of unrecovered capital or
      principal investment of the purchaser (other than the Company or any of
      its Wholly-owned Subsidiaries) thereof, excluding amounts representative
      of yield or Interest earned on such investment, (w) any Synthetic Lease
      shall be the stipulated loss value, termination value or other equivalent
      amount, (x) any derivative contract shall be the maximum amount of any
      termination or loss payment required to be paid by such Person if such
      derivative contract were, at the time of determination, to be terminated
      by reason of any event of default or early termination event thereunder,
      whether or not such event of default or early termination event has in
      fact occurred, (y) any equity related purchase obligation shall be the

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      maximum fixed redemption or purchase price thereof inclusive of any
      accrued and unpaid dividends to be comprised in such redemption or
      purchase price and (z) any guaranty or other contingent liability referred
      to in clause (k) shall be an amount equal to the stated or determinable
      amount of the primary obligation in respect of which such guaranty or
      other contingent obligation is made or, if not stated or determinable, the
      maximum reasonably anticipated liability in respect thereof (assuming such
      Person is required to perform thereunder) as determined by such Person in
      good faith.

            "Investments" shall mean all expenditures made and all liabilities
      incurred (contingently or otherwise) for the acquisition of stock or
      Indebtedness of, or for loans, advances, capital contributions or
      transfers of property to, or in respect of any guaranties (or other
      commitments as described under Indebtedness), or obligations of, any
      Person. In determining the aggregate amount of Investments outstanding at
      any particular time: (a) the amount of any Investment represented by a
      guaranty shall be taken at not less than the principal amount of the
      obligations guaranteed and still outstanding; (b) there shall be deducted
      in respect of each such Investment any amount received as a return of
      capital (but only by repurchase, redemption, retirement, repayment,
      liquidating dividend or liquidating distribution); (c) there shall not be
      deducted in respect of any Investment any amounts received as earnings on
      such Investment, whether as dividends, interest or otherwise; (d) there
      shall not be deducted from the aggregate amount of Investments any
      decrease in the value thereof; and (e) the amount of any Investment made
      by a transfer of property shall be valued at the fair market value of such
      transferred property at the time of such transfer.

            "Joinder Agreements" shall mean joinder agreements in substantially
      the form of Exhibit B to the Guarantee pursuant to which Subsidiaries of
      the Company become parties to and agree to be bound by the provisions of
      the Guarantee as a Guarantor.

            "Joint Venture" shall mean any corporation, partnership, limited
      liability company, joint venture or other entity in which the Company and
      its Subsidiaries own not more than 50% of the capital stock, partnership
      interests, membership interests or other ownership interests and which
      does not meet the definition of "Subsidiary" herein.

            "Kmart Agreements" shall mean the Kmart Indemnity and the Kmart Tax
      Agreement.

            "Kmart Indemnity" shall mean that certain Lease Guaranty,
      Indemnification and Reimbursement Agreement, dated May 24, 1995, as
      amended, among the Company, one or more of the Lessees and Kmart.

            "Kmart Tax Agreement" shall mean that certain Tax Allocation and
      Indemnification Agreement, dated May 24, 1995, between the Company and
      Kmart.

            "Lease Financing Rent Expense" shall mean all Basic Rent (as defined
      herein) and Basic Rent (as defined in the New Master Agreement) payable by
      the Company and its Subsidiaries, as lessee or sublessee under a Financed
      Lease and any rent payable by

                                       11
<PAGE>
      the Company and its Subsidiaries under Ground Leases (as defined in each
      of the Credit Agreement and the New Master Agreement).

            "Leverage Ratio" shall mean as at any date of determination, the
      ratio of (a) Consolidated Total Funded Debt outstanding on such date to
      (b) Consolidated EBITDA for the Reference Period ending on such date.

            "Library" shall mean the Library, Ltd., a Missouri corporation.

            "Lien" shall mean any mortgage, deed of trust, security interest,
      pledge, hypothecation, assignment, attachment, deposit arrangement,
      encumbrance, lien (statutory, judgment or otherwise, but excluding any
      right of set off pursuant to agreements entered into in the ordinary
      course of business), or other security agreement or preferential
      arrangement of any kind or nature whatsoever (including any conditional
      sale or other title retention agreement, any Capitalized Lease, any
      Synthetic Lease, any financing lease involving substantially the same
      economic effect as any of the foregoing and the filing of any financing
      statement under the UCC or comparable law of any jurisdiction).

            "MARGIN STOCK" MEANS "MARGIN STOCK" AS DEFINED IN REGULATION U OF
      THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

            "Material Adverse Effect" shall mean with respect to any event or
      occurrence of whatever nature (including any adverse determination in any
      litigation, arbitration or governmental investigation or proceeding):

            (a) a material adverse effect on the business, properties,
      prospects, condition (financial or otherwise), assets, operations or
      income of any of the Lessees or the Guarantors, individually or the
      Lessees, the Guarantors and their Subsidiaries, taken as a whole;

            (b) a material adverse effect on the ability of any of the Lessees,
      any of the Guarantors or any of their Subsidiaries, individually and taken
      as a whole, to perform any of their respective Obligations under any of
      the Operative Agreements to which it is a party; or

            (c) any impairment of the validity, binding effect or enforceability
      of any of the Operative Agreements or any impairment of the rights,
      remedies or benefits available to any Agent or any Lender under any
      Operative Agreement.

            "Maturity Date" shall mean June 20, 2004 unless, no later than
      [sixty (60)] days prior to such day, the Company shall have delivered to
      the Lenders and the Administrative Agent a written statement certified by
      an Authorized Officer representing to the facts that either (a) a final
      non-appealable judgment or settlement has been reached in the Agree
      Litigation and the Agree Project Loans have been repaid in full, or (b)
      the Agree Litigation is continuing but the outstanding principal balance
      of the

                                       12
<PAGE>
      Revolving Credit Loans as of such date is less than $10,000,000, in which
      case the Maturity Date shall mean June 20, 2005. In the event that the
      Company delivers written notice to the Lenders and the Administrative
      Agent that the Agree Litigation is continuing as of the date which is
      [sixty (60)] days prior to the then Maturity Date and has further
      requested that nonetheless the Lenders agree to an extension of the then
      Maturity Date to June 20, 2005, the Company shall promptly provide the
      Lenders and the Administrative Agent with such further information
      regarding the Agree Litigation as any Lender or the Administrative Agent
      may request. Each Lender may, in its sole discretion, consent to the
      proposed extension of the then Maturity Date by notifying the
      Administrative Agent of such determination by the thirtieth day prior to
      the then Maturity Date. If all the Lenders consent to the extension by so
      notifying the Administrative Agent in writing by the thirtieth day prior
      to the then Maturity Date, the then Maturity Date shall be extended to
      June 20, 2005 and the "Maturity Date" shall mean June 20, 2005 for all
      purposes hereof.

            "Multiemployer Plan" shall mean any multiemployer plan within the
      meaning of Section 3(37) of ERISA maintained or contributed to by any
      Lessee, any Guarantor or any ERISA Affiliate.

            "Net Working Capital Changes" shall mean with respect to the Company
      and its Subsidiaries, for any fiscal period and without duplication, the
      difference (expressed as a positive or a negative number) of (a) the sum
      of (i) both billed and unbilled Accounts Receivable plus (ii) inventory of
      the Company and its Subsidiaries and other current assets considered part
      of working capital in accordance with GAAP, minus (iii) current accounts
      payable of the Company and its Subsidiaries, minus (iv) current accruals
      and accretions (exclusive of interest accruals and accretions) of the
      Company and its Subsidiaries, in each case, for such fiscal period, minus
      (b) the sum of (i) both billed and unbilled Accounts Receivable, plus,
      (ii) inventory of the Company and its Subsidiaries and other current
      assets considered part of working capital in accordance with GAAP, minus
      (iii) current accounts payable of the Company and its Subsidiaries, minus
      (iv) current accruals and accretions (exclusive of interest accruals and
      accretions) of the Company and its Subsidiaries, in each case, for the
      fiscal period of equal duration immediately prior to such fiscal period.

            "New Lease Guaranty" shall mean the Guaranty Agreement dated as of
      June 21, 2002 entered into by the Company and certain Subsidiaries of the
      Company in favor of the lenders parties to the New Lease Loan Agreement
      and SunTrust Bank as agent for such lenders and in form and substance
      satisfactory to the Syndication Agent.

            "New Lease Loan Agreement" shall mean the Loan Agreement dated as of
      June 21, 2002 among Atlantic Financial Group, Ltd., the lenders party
      thereto and SunTrust Bank as agent for such lenders and in form and
      substance satisfactory to the Syndication Agent.

                                       13
<PAGE>
            "New Master Agreement" shall mean the Master Agreement dated as of
      June 21, 2002 by and among Borders and certain of the Company's other
      Subsidiaries, as lessees, the Company and certain of its Subsidiaries, as
      guarantors, Atlantic Financial Group, Ltd., as lessor, the lenders parties
      to the New Lease Loan Agreement, Fleet National Bank, as co-arranger and
      syndication agent, and SunTrust, as co-arranger, documentation agent and
      agent for such lenders and in form and substance satisfactory to the
      Syndication Agent.

            "New Synthetic Lease" shall mean the Lease Agreement, dated as of
      June 21, 2002, among Atlantic Financial Group, Ltd., as lessor, and
      Borders, Inc., and certain other subsidiaries of the Company, as lessees.

            "New Synthetic Lease Documents" shall mean the New Lease Loan
      Agreement, the New Lease Guaranty, the New Master Agreement and the other
      Operative Agreements as defined therein, each in form and substance
      satisfactory to the Syndication Agent.

            "New Synthetic Lease Facility" shall mean the Synthetic Lease
      facility agented by SunTrust Bank to be entered into by the Company and
      certain of its Subsidiaries on June 21, 2002 pursuant to the New Synthetic
      Lease Documents with a total facility amount not to exceed $75,000,000.

            "Obligor Group" shall mean collectively, the Company, the Lessees
      and the Guarantors (including any Subsidiary of the Company which as of
      any date of determination has become a Guarantor pursuant to the
      provisions of the Guarantee).

            "Obligor Group Requirement" shall mean the requirement that
      Consolidated Free Cash Flow of the Obligor Group for each Reference Period
      shall not be less than 85% of Consolidated Free Cash Flow of the Company
      and its Subsidiaries for such Reference Period.

            "Omnibus Amendment Effective Date" shall mean June 21, 2002.

            "Online" shall mean Borders Online, LLC, a Delaware limited
      liability company.

            "Optional Currency" means each of the following types of currency:
      Euros, Australian Dollars ("AUD"), British Pounds Sterling ("GBP"),
      Canadian Dollars ("CAD"), Japanese Yen ("JPY"), New Zealand Dollars
      ("NZD"), or Singaporean Dollars ("SGD").

            "Outlet" shall mean Borders Outlet, Inc., a Colorado corporation.

            "Permitted Joint Venture Activity" shall mean any Investment by the
      Company or any Subsidiary of the Company in any Joint Venture provided
      that (a) the aggregate amount of all such Investments does not at any time
      exceed 15% of Consolidated Tangible Net Worth, determined as of the last
      day of the Fiscal Quarter most recently

                                       14
<PAGE>
      ended and (b) both before and after giving effect to such Investment, the
      Lessees and the Company are in compliance with the Obligor Group
      Requirement.

            "Permitted Liens" shall mean Liens permitted by Section 12.02 of the
      Guarantee.

            "Principal Office" shall mean             .

            "Real Estate" shall mean all real property at any time owned or
      leased (as lessee or sublessee) by the Company or any of its Subsidiaries.

            "Reference Period" shall mean as of any date of determination, the
      period of four (4) consecutive fiscal quarters of the Company and its
      Subsidiaries ending on such date, or if such date is not a fiscal quarter
      end date, the period of four (4) consecutive fiscal quarters most recently
      ended (in each case treated as a single accounting period).

            "Rent Expense" shall mean all fixed rents payable by the Company and
      its Subsidiaries, as lessee or sublessee under a lease of CA-Property
      (other than rents payable under Financed Leases), exclusive of any amounts
      required to be paid by the Company and its Subsidiaries (whether or not
      designated as rents or additional rents) on account of maintenance,
      repairs, insurance, taxes, assessments, utilities, operating and labor
      costs, and similar charges. Fixed rents under any so-called "percentage
      leases" shall be computed based on the actual amount of rent paid, and not
      on the basis of the minimum rents, if any, required to be paid by the
      lessee regardless of sales volume or gross revenues. The term Rent Expense
      shall exclude any payments made in respect of any Capitalized Lease.

            "Restricted Payment" shall mean in relation to the Company and its
      Subsidiaries, any (a) Distribution, or (b) derivatives or other
      transactions with any financial institution, commodities or stock exchange
      or clearinghouse (a "Derivatives Counterparty") obligating the Company or
      any of its Subsidiaries to make payments to such Derivatives Counterparty
      as a result of any change in market value of any Capital Stock of the
      Company or such Subsidiary.

            "Restricted Payment Amount" means (a) an amount not to exceed
      $100,000,000 in aggregate amount over the term of the Lease and the sum of
      $50,000,000 in any Fiscal Year plus (b) the aggregate amount paid to the
      Company (whether in cash or in shares of the Company's stock), from time
      to time and at any time since the Omnibus Amendment Effective Date, by
      officers, employees or directors of the Company or any of its Subsidiaries
      in connection with the exercise of options to purchase shares of the
      Company's stock, plus (c) the realized tax benefit (as calculated by the
      Company in a manner satisfactory to the Administrative Agent, for tax
      years ending after the Omnibus Amendment Effective Date resulting from the
      exercise of such options or resulting from the lapse of restrictions on
      (and vesting of rights in) certain shares of the Company's stock subject
      to the Management Stock Purchase Plan or any similar successor plan from
      time to time and at any time since January 28, 2002. For purposes of
      calculating the

                                       15
<PAGE>
      Restricted Payment Amount, to the extent shares of the Company's stock are
      delivered to the Company in payment of the exercise price of options, or
      in payment of taxes associated with the exercise of options or the vesting
      of restricted shares, such delivered shares are deemed to be repurchased
      by the Company at fair market value (as defined in the Company's stock
      option plan) on the date of delivery to the Company. Such delivered share
      repurchases will serve to reduce the available Restricted Payment Amount.

            "Revolving Credit Agreement" means the Multicurrency Revolving
      Credit Agreement, dated as of June 21, 2002, among BGI, Borders, Walden
      Book Company, Inc., BGP (UK) Limited, Borders (UK), Limited, Borders
      Australia Pty., Ltd., the lenders listed on Schedule 1 thereto, PNC Bank,
      National Association, as administrative agent, Fleet National Bank, as
      syndication agent, Wachovia Bank, National Association, as co-syndication
      agent, Bank One, NA (Main Office Chicago), as documentation agent, with
      Fleet Securities, Inc., having acted as arranger.

            "Solvent" shall mean with respect to any Person on a particular
      date, that on such date (a) the fair value of the CA-Property of such
      Person is greater than the total amount of liabilities, including, without
      limitation, contingent liabilities, of such Person, (b) the present fair
      saleable value of the assets of such Person is not less than the amount
      that will be required to pay the probable liability of such Person on its
      debts as they become absolute and matured, (c) such Person is able to
      realize upon its assets and pay its debts and other liabilities,
      contingent obligations and other commitments as they mature in the normal
      course of business, (d) such Person does not intend to, and does not
      believe that it will, incur debts or liabilities beyond such Person's
      ability to pay as such debts and liabilities mature, and (e) such Person
      is not engaged in business or a transaction, and is not about to engage in
      business or a transaction, for which such Person's property would
      constitute unreasonably small capital after giving due consideration to
      the prevailing practice in the industry in which such Person is engaged.
      In computing the amount of contingent liabilities at any time, it is
      intended that such liabilities will be computed at the amount which, in
      light of all the facts and circumstances existing at such time, represents
      the amount that can reasonably be expected to become an actual or matured
      liability.

            "Subsidiary" shall mean with respect to any Person (the "parent") at
      any date, any corporation, limited liability company, partnership,
      association or other entity the accounts of which would be consolidated
      with those of the parent in the parent's consolidated financial statements
      if such financial statements were prepared in accordance with GAAP as of
      such date, as well as any other corporation, limited liability company,
      partnership, association or other entity (a) of which securities or other
      ownership interests representing more than 50% of the equity or more than
      50% of the ordinary voting power or, in the case of a partnership, more
      than 50% of the general partnership interests are, as of such date, owned,
      controlled or held, or (b) that is, as of

                                       16
<PAGE>
      such date, otherwise controlled, by the parent or one or more subsidiaries
      of the parent or by the parent and one or more subsidiaries of the parent.

            "SunTrust" shall mean SunTrust Bank, a Georgia banking corporation.

            "SunTrust Commitment Termination Date" shall mean the date that is
      three months after the Omnibus Amendment Effective Date.

            "Synthetic Lease" shall mean any lease of goods or other property,
      whether real or personal, which is treated as an operating lease under
      GAAP and as a loan or financing for U.S. income tax purposes.

            "Wholly-owned Subsidiary" shall mean any Subsidiary of the Company
      of which all of the outstanding shares of capital stock or other equity
      interests are owned by the Company (whether directly or through one or
      more Wholly-owned Subsidiaries of the Company) except for directors'
      qualifying shares in jurisdictions where such qualifying shares are
      required.

            "WPI" shall mean Waldenbooks Properties, Inc., a Delaware
      corporation.

      (c) The definition of "Agents" is hereby amended by inserting the phrase
"the Documentation Agent" after the phrase "the Syndication Agent" where it
appears in the first line thereof.

      Section 4. Aggregate Limit on Loans. (a) Section 2.01 of the Participation
Agreement is hereby amended by deleting the number "$250,000,000" where it
appears in clause (a) of the first sentence thereof and substituting therefor
the number "$100,000,000".

      (b) Section 2.02 of the Participation Agreement is hereby amended by
deleting the number "$250,000,000" where it appears in the third line thereof
and substituting therefor the number "$100,000,000. Section 2.02 of the
Participation Agreement is hereby further amended by inserting the following
provisos at the end of the first sentence thereof:

      "; provided that it is expressly understood and agreed that the amount set
      forth in this sentence shall not be reinstated to the extent of any
      principal repayment of the Loans to the Lenders; provided, further, that
      on and after the Omnibus Amendment Effective Date, only SunTrust shall be
      obligated to make loans to the Owner Trustee up to its Commitment in
      accordance with the Credit Agreement, which commitment shall terminate on
      the SunTrust Commitment Termination Date"

      Section 5. Swing Loans. Article III of the Participation Agreement is
hereby deleted.

      Section 6. Project Loan Percentage of Total Costs. Section 2.03(a) of the
Participation Agreement is hereby amended by deleting the percentage "89%" where
it appears in the seventh line thereof and substituting therefor the percentage
"95%".

                                       17
<PAGE>
      Section 7. Representations and Warranties. Section 7.03 of the
Participation Agreement is hereby deleted in its entirety and the following
Section 7.03 is hereby substituted therefor:

            7.03 Representations and Warranties of the Guarantors and the
      Lessees. Each of the Guarantors and the Lessees jointly and severally
      represents and warrants to each of the other parties as follows:

            (a) Corporate Authority.

                  (i) Incorporation; Good Standing. Each of the Guarantors, the
            Lessees and their Subsidiaries (a) is a corporation (or similar
            business entity) duly organized, validly existing and in good
            standing under the laws of its jurisdiction of incorporation or
            formation, (b) has all requisite corporate (or the equivalent
            company) power to own its property and conduct its business as now
            conducted and as presently contemplated, and (c) is in good standing
            as a foreign corporation (or similar business entity) and is duly
            authorized to do business in each jurisdiction where such
            qualification is necessary except where a failure to be so qualified
            would not have a Material Adverse Effect.

                  (ii) Authorization. The execution, delivery and performance of
            this Participation Agreement and the other Operative Agreements to
            which any of the Lessees, the Guarantors or any of their
            Subsidiaries is or is to become a party and the transactions
            contemplated hereby and thereby (a) are within the corporate (or the
            equivalent company) authority of such Person, (b) have been duly
            authorized by all necessary corporate (or the equivalent company)
            proceedings, (c) do not and will not conflict with or result in any
            breach or contravention of any provision of law, statute, rule or
            regulation to which any of the Lessees, the Guarantors or any of
            their Subsidiaries is subject or any judgment, order, writ,
            injunction, license or permit applicable to any of the Lessees, the
            Guarantors or any of their Subsidiaries and (d) do not conflict with
            any provision of the Governing Documents of, or any agreement or
            other instrument binding upon, any of the Lessees, the Guarantors or
            any of their Subsidiaries.

                  (iii) Enforceability. The execution and delivery of this
            Participation Agreement and the other Operative Agreements to which
            any of the Lessees, the Guarantors or any of their Subsidiaries is
            or is to become a party will result in valid and legally binding
            obligations of such Person enforceable against it in accordance with
            the respective terms and provisions hereof and thereof, except as
            enforceability is limited by bankruptcy, insolvency, reorganization,
            moratorium or other laws relating to or affecting generally the
            enforcement of creditors' rights and except to the extent that
            availability of the remedy of specific performance or

                                       18
<PAGE>
            injunctive relief is subject to the discretion of the court before
            which any proceeding therefor may be brought.

            (b) Governmental Approvals. The execution, delivery and performance
      by any of the Lessees, the Guarantors and any of their Subsidiaries of
      this Participation Agreement and the other Operative Agreements to which
      any of the Lessees, the Guarantors or any of their Subsidiaries is or is
      to become a party and the transactions contemplated hereby and thereby do
      not require the approval or consent of, or filing with, any governmental
      agency or authority other than those already obtained.

            (c) Title to Properties; Leases. Except as indicated on Schedule
      7.03(c) hereto, the Lessees, the Guarantors and their Subsidiaries own all
      of the assets reflected in the consolidated balance sheet of the Lessees,
      the Guarantors and their Subsidiaries as at the Balance Sheet Date or
      acquired since that date (except property and assets sold or otherwise
      disposed of in the ordinary course of business since that date), subject
      to no Liens or other rights of others, except Permitted Liens.

            (d) Fiscal Year; Financial Statements and Projections.

                  (i) Fiscal Year. Each of the Lessees, the Guarantors and each
            of their Subsidiaries has a Fiscal Year which is the 52/53 week
            period ending on the Sunday (except with respect to Walden, on the
            Saturday) preceding the last Wednesday in January. The Fiscal
            Quarters and Fiscal Year of the Lessees, the Guarantors and their
            Subsidiaries are accurately described in the definitions thereof.

                  (ii) Financial Statements. There has been furnished to each of
            the Lenders (a) a consolidated balance sheet of Lessees, the
            Guarantors and its Subsidiaries as at the Balance Sheet Date, and
            consolidated statements of income and cash flow of the Lessees, the
            Guarantors and their Subsidiaries for the Fiscal Year then ended,
            certified by Ernst & Young LLP. Such balance sheet and statements of
            income and cash flow have been prepared in accordance with GAAP and
            fairly present the financial condition of Lessees, the Guarantors
            and its Subsidiaries as at the close of business on the date thereof
            and the results of operations for the fiscal year then ended. There
            are no contingent liabilities of any Lessee, the any Guarantor or
            any of their Subsidiaries as of such date involving material
            amounts, known to the officers of the Lessees or the Guarantors,
            which were not disclosed in such balance sheet and the notes related
            thereto.

                  (iii) Projections. The projections of the annual operating
            budgets of the Company and its Subsidiaries on a consolidated basis,
            balance sheets and cash flow statements for the period from January
            28,

                                       19
<PAGE>
            2002 through January 23, 2005, copies of which have been delivered
            to each Lender, disclose all assumptions made with respect to
            general economic, financial and market conditions used in
            formulating such projections. To the knowledge of any of the
            Lessees, the Guarantors or any of their Subsidiaries, no facts exist
            that (individually or in the aggregate) would result in any material
            change in any of such projections. The projections are based upon
            reasonable estimates and assumptions, have been prepared on the
            basis of the assumptions stated therein and reflect the reasonable
            estimates of the Company and its Subsidiaries of the results of
            operations and other information projected therein.

            (e) No Material Adverse Changes, etc. Since the Balance Sheet Date
      there has been no event or occurrence which has had a Material Adverse
      Effect. Since the Balance Sheet Date, none of the Lessees or the
      Guarantors have made any Restricted Payment except as set forth in
      Schedule 7.03(e) hereto.

            (f) Franchises, Patents, Copyrights, etc. The Company and each of
      its Subsidiaries possesses all franchises, patents, copyrights,
      trademarks, trade names, licenses and permits, and rights in respect of
      the foregoing, adequate for the conduct of its business substantially as
      now conducted without known conflict with any rights of others.

            (g) Litigation. Except as set forth in Schedule 7.03(g) hereto,
      there are no actions, suits, proceedings or investigations of any kind
      pending or threatened against the Company or any of its Subsidiaries
      before any Governmental Authority, that, (a) might reasonably be expected
      to, either in any case or in the aggregate, (i) have a Material Adverse
      Effect or (ii) materially impair the right of Lessees, the Guarantors and
      its Subsidiaries, considered as a whole, to carry on business
      substantially as now conducted by them, or result in any substantial
      liability not adequately covered by insurance, or for which adequate
      reserves are not maintained on the consolidated balance sheet of the
      Company and its Subsidiaries, or (b) question the validity of this
      Participation Agreement or any of the other Operative Agreements, or any
      action taken or to be taken pursuant hereto or thereto.

            (h) No Materially Adverse Contracts, etc. None of the Lessees, the
      Guarantors or any of their Subsidiaries is subject to any Governing
      Document or other legal restriction, or any judgment, decree, order, law,
      statute, rule or regulation that has or is expected in the future to have
      a Material Adverse Effect. None of the Lessees, the Guarantors or any of
      their Subsidiaries is a party to any contract or agreement that has or is
      expected, in the judgment of the Lessees' and the Guarantors' officers, to
      have any Material Adverse Effect.

            (i) Compliance with Other Instruments, Laws, etc. None of the
      Lessees, the Guarantors or any of their Subsidiaries is in violation of
      any provision of its Governing Documents, or any agreement or instrument
      to which it

                                       20
<PAGE>
      may be subject or by which it or any of its properties may be bound or any
      decree, order, judgment, statute, license, rule or regulation, in any of
      the foregoing cases in a manner that could result in the imposition of
      substantial penalties or have a Material Adverse Effect.

            (j) Tax Status. Each of the Lessees, the Guarantors and their
      Subsidiaries (i) has made or filed all federal, state and foreign income
      and all other tax returns, reports and declarations required by any
      jurisdiction to which it is subject where, in the cases of state or
      foreign tax returns, failure to make such filing could have a Material
      Adverse Effect, (ii) has paid all taxes and other governmental assessments
      and charges shown or determined to be due on such returns, reports and
      declarations, except those being contested in good faith and by
      appropriate proceedings and (iii) has set aside on its books provisions
      reasonably adequate for the payment of all taxes for periods subsequent to
      the periods to which such returns, reports or declarations apply. There
      are no unpaid taxes in any material amount claimed to be due by the taxing
      authority of any jurisdiction, and none of the officers of any Lessee or
      any Guarantor know of any basis for any such claim.

            (k) No Event of Default. No Default or Event of Default has occurred
      and is continuing.

            (l) Holding Company and Investment Company Acts. None of the
      Lessees, the Guarantors or any of their Subsidiaries is a "holding
      company", or a "subsidiary company" of a "holding company", or an
      "affiliate" of a "holding company", as such terms are defined in the
      Public Utility Holding Company Act of 1935; nor is it an "investment
      company", or an "affiliated company" or a "principal underwriter" of an
      "investment company", as such terms are defined in the Investment Company
      Act of 1940.

            (m) Absence of Financing Statements, etc. Except with respect to
      Permitted Liens, there is no financing statement, security agreement,
      chattel mortgage, real estate mortgage or other document filed or recorded
      with any filing records, registry or other public office, that purports to
      cover, affect or give notice of any present or possible future Lien on any
      assets or property of any Lessee, any Guarantor or any of their
      Subsidiaries or any rights relating thereto.

            (n) Certain Transactions. Except as set forth on Schedule 7.03(n),
      none of the officers, directors, or employees of any Lessee, any Guarantor
      or any of their Subsidiaries is presently a party to any transaction with
      any Lessee, any Guarantor or any of their Subsidiaries (other than for
      services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or by, providing for rental of real or personal property to or from, or
      otherwise requiring payments to or from any officer, director or such
      employee or, to the knowledge of the Lessees or the Guarantors, any
      corporation, partnership, trust or other entity in which any officer,

                                       21
<PAGE>
      director, or any such employee has a substantial interest or is an
      officer, director, trustee or partner.

            (o) Employee Benefit Plans.

                  (i) In General. Each Employee Benefit Plan and each Guaranteed
            Pension Plan has been maintained and operated in compliance in all
            material respects with the provisions of ERISA and all Applicable
            Pension Legislation and, to the extent applicable, the Code,
            including but not limited to the provisions thereunder respecting
            prohibited transactions and the bonding of fiduciaries and other
            persons handling plan funds as required by ss. 412 of ERISA. The
            Lessees and the Guarantors have heretofore delivered to the
            Administrative Agent the most recently completed annual report, Form
            5500, with all required attachments, and actuarial statement
            required to be submitted under ss. 103(d) of ERISA, with respect to
            each Guaranteed Pension Plan.

                  (ii) Terminability of Welfare Plans. No Employee Benefit Plan,
            which is an employee welfare benefit plan within the meaning of ss.
            3(1) or ss. 3(2)(B) of ERISA, provides benefit coverage subsequent
            to termination of employment, except as required by Title I, Part 6
            of ERISA or the applicable state insurance laws, provided, however,
            that any Lessee(s) or any Guarantor(s) may include retirees in its
            employee welfare plans and pay a portion of the cost of such
            coverage so long as (a) the premium based cost of the coverage does
            not exceed, in the aggregate $2,000,000 and (b) such coverage is
            terminable at any time by the applicable Lessee(s) or the
            Guarantor(s). The Lessees or the Guarantors may terminate each such
            Plan at any time (or at any time subsequent to the expiration of any
            applicable bargaining agreement) in the discretion of the Lessees or
            the Guarantors without liability to any Person other than for claims
            arising prior to termination.

                  (iii) Guaranteed Pension Plans. Each contribution required to
            be made to a Guaranteed Pension Plan, whether required to be made to
            avoid the incurrence of an accumulated funding deficiency, the
            notice or lien provisions of ss. 302(f) of ERISA, or otherwise, has
            been timely made. No waiver of an accumulated funding deficiency or
            extension of amortization periods has been received with respect to
            any Guaranteed Pension Plan, and none of the Lessees, the Guarantors
            or any ERISA Affiliate is obligated to or has posted security in
            connection with an amendment to a Guaranteed Pension Plan pursuant
            to ss. 307 of ERISA or ss. 401(a)(29) of the Code. No liability to
            the PBGC (other than required insurance premiums, all of which have
            been paid) has been incurred by any Lessee, the Guarantor or any
            ERISA Affiliate with respect to any Guaranteed Pension Plan and
            there has not been any ERISA Reportable

                                       22
<PAGE>
            Event (other than an ERISA Reportable Event as to which the
            requirement of 30 days notice has been waived), or any other event
            or condition which presents a material risk of termination of any
            Guaranteed Pension Plan by the PBGC. Based on the latest valuation
            of each Guaranteed Pension Plan (which in each case occurred within
            twelve months of the date of this representation), and on the
            actuarial methods and assumptions employed for that valuation, the
            aggregate benefit liabilities of all such Guaranteed Pension Plans
            within the meaning of ss. 4001 of ERISA did not exceed the aggregate
            value of the assets of all such Guaranteed Pension Plans,
            disregarding for this purpose the benefit liabilities and assets of
            any Guaranteed Pension Plan with assets in excess of benefit
            liabilities.

                  (iv) Multiemployer Plans. None of the Lessees, the Guarantors
            or any ERISA Affiliate has incurred any material liability
            (including secondary liability) to any Multiemployer Plan as a
            result of a complete or partial withdrawal from such Multiemployer
            Plan under ss. 4201 of ERISA or as a result of a sale of assets
            described in ss. 4204 of ERISA. None of the Lessees, the Guarantors
            or any ERISA Affiliate has been notified that any Multiemployer
            Plan is in reorganization or insolvent under and within the meaning
            of ss. 4241 or ss. 4245 of ERISA or is at risk of entering
            reorganization or becoming insolvent, or that any Multiemployer
            Plan intends to terminate or has been terminated under ss. 4041A
            of ERISA.

            (p) Use of Proceeds.

                  (i) General. The proceeds of the Loans shall be used for the
            acquisition and construction of the Properties in accordance with
            this Participation Agreement.

                  (ii) Regulations U and X. No portion of any Loan is to be
            used, and no portion of any Letter of Credit is to be obtained, for
            the purpose of purchasing or carrying any "margin security" or
            "margin stock" as such terms are used in Regulations U and X of the
            Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
            221 and 224.

            (q) Environmental Compliance. The Lessees and the Guarantors have
      taken all appropriate inquiry into the previous ownership of the Real
      Estate consistent with good commercial or customary practice and, based
      upon such diligent investigation, has determined that, to the best of the
      Lessees' and the Guarantors' knowledge:

                  (i) none of the Lessees, the Guarantors, their Subsidiaries or
            any operator of the Real Estate or any operations thereon is in
            violation, or alleged violation, of any judgment, decree, order,
            law, license, rule or regulation pertaining to environmental
            matters, including, without limitation, those arising under the
            Resource Conservation and Recovery

                                       23
<PAGE>
            Act ("RCRA"), the Comprehensive Environmental Response, Compensation
            and Liability Act of 1980 as amended ("CERCLA"), the Superfund
            Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
            Clean Water Act, the Federal Clean Air Act, the Toxic Substances
            Control Act, or any state, local or foreign law, statute,
            regulation, ordinance, order or decree relating to health, safety or
            the environment (hereinafter "Environmental Laws"), which violation
            would have a material adverse effect on the environment or a
            Material Adverse Effect;

                  (ii) none of the Lessees, the Guarantors or any of their
            Subsidiaries has received notice from any third party including,
            without limitation, any Governmental Authority, (A) that any one of
            them has been identified by the United States Environmental
            Protection Agency ("EPA") as a potentially responsible party under
            CERCLA with respect to a site listed on the National Priorities
            List, 40 C.F.R. Part 300 Appendix B; (B) that any hazardous waste,
            as defined by 42 U.S.C. ss. 6903(5), any hazardous substances as
            defined by 42 U.S.C. ss. 9601(14), any pollutant or contaminant as
            defined by 42 U.S.C. ss. 9601(33) and any toxic substances, oil or
            hazardous materials or other chemicals or substances regulated by
            any Environmental Laws ("Hazardous Substances") which any one of
            them has generated, transported or disposed of has been found at any
            site at which a Governmental Authority has conducted or has ordered
            that any Lessee, any Guarantor or any of their Subsidiaries conduct
            a remedial investigation, removal or other response action pursuant
            to any Environmental Law; or (C) that it is or shall be a named
            party to any claim, action, cause of action, complaint, or legal or
            administrative proceeding (in each case, contingent or otherwise)
            arising out of any third party's incurrence of costs, expenses,
            losses or damages of any kind whatsoever in connection with the
            release of Hazardous Substances;

                  (iii) except as set forth on Schedule 7.03(q) attached hereto:
            (A) no portion of the Real Estate has been used for the handling,
            processing, storage or disposal of Hazardous Substances except in
            accordance with applicable Environmental Laws; and no underground
            tank or other underground storage receptacle for Hazardous
            Substances is located on any portion of the Real Estate; (B) in the
            course of any activities conducted by the Lessees, the Guarantors,
            their Subsidiaries or operators of its properties, no Hazardous
            Substances have been generated or are being used on the Real Estate
            except in accordance with applicable Environmental Laws; (C) there
            have been no releases (i.e., any past or present releasing,
            spilling, leaking, pumping, pouring, emitting, emptying,
            discharging, injecting, escaping, disposing or dumping) or
            threatened releases of Hazardous Substances on, upon, into or from
            the properties of the Lessees, the Guarantors or their Subsidiaries,
            which releases would have a material adverse effect on the value of
            any of the Real Estate or

                                       24
<PAGE>
            adjacent properties or the environment; (D) to the best of the
            Lessees' and the Guarantors' knowledge, there have been no releases
            on, upon, from or into any real property in the vicinity of any of
            the Real Estate which, through soil or groundwater contamination,
            may have come to be located on, and which would have a material
            adverse effect on the value of, the Real Estate; and (E) in
            addition, any Hazardous Substances that have been generated on any
            of the Real Estate have been transported offsite only by carriers
            having an identification number issued by the EPA (or the equivalent
            thereof in any foreign jurisdiction), treated or disposed of only by
            treatment or disposal facilities maintaining valid permits as
            required under applicable Environmental Laws, which transporters and
            facilities have been and are, to the best of the Lessees' and the
            Guarantors' knowledge, operating in compliance with such permits and
            applicable Environmental Laws; and

                  (iv) none of the Lessees, the Guarantors or any of their
            Subsidiaries, or any of the Real Estate is subject to any applicable
            Environmental Law requiring the performance of Hazardous Substances
            site assessments, or the removal or remediation of Hazardous
            Substances, or the giving of notice to any Governmental Authority or
            the recording or delivery to other Persons of an environmental
            disclosure document or statement by virtue of the transactions set
            forth herein and contemplated hereby, or to the effectiveness of any
            other transactions contemplated hereby.

            (r) Subsidiaries. Schedule 7.03(r), as the same may be updated
      pursuant to Section 7.03(v) hereof, states the name of each of the
      Company's Subsidiaries and Joint Ventures and, in each case, such entity's
      jurisdiction of incorporation, outstanding shares (referred to herein as
      the "Subsidiary Shares") and the owners thereof if it is a corporation,
      such entity's outstanding partnership interests (the "Partnership
      Interests") if it is a partnership and such entity's outstanding
      membership interests (the "Membership Interests") if it is a limited
      liability company. The Company and each of its Subsidiaries has good and
      marketable title to all of the Subsidiary Shares, Partnership Interests,
      and Membership Interests it purports to own, free and clear in each case
      of any Lien. All Subsidiary Shares, Partnership Interests and Membership
      Interests have been validly issued and all Subsidiary Shares are fully
      paid and nonassessable. All capital contributions and other consideration
      required to be made or paid in connection with the issuance of the
      Partnership Interests or Membership Interests have been made or paid, as
      the case may be. There are no options, warrants or other rights
      outstanding to purchase any such Subsidiary Shares, Partnership Interests
      or Membership Interests except as indicated on Schedule 7.03(r).

            (s) Disclosure. None of this Participation Agreement or any of the
      other Operative Agreements contains any untrue statement of a material
      fact or

                                       25
<PAGE>
      omits to state a material fact (known to any of the Lessees, any of the
      Guarantors or any of their Subsidiaries in the case of any document or
      information not furnished by it or any of their Subsidiaries) necessary in
      order to make the statements herein or therein not misleading. There is no
      fact known to any of the Lessees, any of the Guarantors or any of their
      Subsidiaries which has a Material Adverse Effect, or which is reasonably
      likely in the future to have a Material Adverse Effect, exclusive of
      effects resulting from changes in general economic conditions, legal
      standards or regulatory conditions.

            (t) Senior Debt Status. The Obligations of each Lessee and each
      Guarantor under this Participation Agreement and each of the other
      Operative Agreements to which it is a party do rank and will rank at least
      pari passu in priority of payment with all other Indebtedness of such
      Lessee or such Guarantor except Indebtedness of such Lessee or such
      Guarantor to the extent secured by Permitted Liens. There is no Lien upon
      or with respect to any of the properties or income of any Lessee, any
      Guarantor or any of their Subsidiaries which secures Indebtedness or other
      obligations of any Person except for Permitted Liens.

            (u) Solvency. After giving effect to each incurrence of Indebtedness
      hereunder, and the payment of all Fees, costs and expenses payable by each
      of the Lessees and the Guarantors hereunder, each of the Lessees and the
      Guarantors is Solvent.

            (v) Updates to Schedules. Should any of the information or
      disclosures provided on any of the Schedules attached hereto become
      outdated or incorrect in any material respect, the Company shall promptly
      provide the Administrative Agent in writing with such revisions or updates
      to such Schedule as may be necessary or appropriate to update or correct
      same; provided that, except for the amendment of Schedule 7.03(r) in
      connection with any new Subsidiary of the Company as permitted herein, no
      Schedule shall be deemed to have been amended, modified or superseded by
      any such correction or update, nor shall any breach of warranty or
      representation resulting from the inaccuracy or incompleteness of any such
      Schedule be deemed to have been cured thereby, unless and until the
      Syndication Agent (which may request the consent of the Required Lenders)
      shall have accepted in writing such revisions or updates to such Schedule.

      Section 8. Representations of the Company on Project Closing Dates.
Section 8.01(e) of the Participation Agreement is hereby amended by deleting the
phrases "the Lease," and "the Reassignment of Leases" where they appear therein.

      Section 9. Non-Revolving Loans.

      (a) Section 2.1(a) of the Credit Agreement is hereby amended by inserting
the following proviso at the end of the first sentence thereof:

                                       26
<PAGE>
      ; provided that on and after the Omnibus Amendment Effective Date, only
      SunTrust shall make Revolving Credit Loans to the Borrower up to its
      Commitment, which commitment shall terminate on the SunTrust Commitment
      Termination Date.

      (b) Section 2.1(a) of the Credit Agreement is hereby further amended by
deleting the last sentence thereof and substituting therefor the following
sentence:

      Within such limits of time and amount and subject to the other provisions
      of this Agreement, the Borrower may borrow and repay pursuant to this
      Section 2.1; provided that the Borrower may not reborrow to the extent of
      any principal repayment of the Revolving Credit Loans to any of the
      Lenders.

      Section 10. Outstanding Revolving Credit Loans. Paragraph (b) of Section
2.1 of the Credit Agreement is hereby deleted in its entirety and the following
paragraph (b) is substituted therefor:

            (b) Prior Revolving Credit Loans. Schedule 2.01(b) lists the
      Revolving Credit Loans outstanding for each Lender under the Agreement
      after giving effect to the Omnibus Amendment and the Revolving Credit
      Loans to be outstanding for each Lender hereunder as of such date.

      Section 11. Notes. Section 2.04 of the Credit Agreement is hereby deleted
in its entirety and the following Section 2.04 is substituted therefor:

      2.04 Notes.

            The Revolving Credit Loans made by the Lenders shall be evidenced by
      a promissory note of the Borrower, substantially in the form of Exhibit
      A-1, in the case of Tranche A Loans (each, a "Tranche A Note"), or Exhibit
      A-2, in the case of Tranche B Loans (each, a "Tranche B Note"), with
      appropriate insertions as to payee, date and principal amount, payable to
      the order of the Administrative Agent for the ratable benefit of the
      Lenders and in a principal amount equal to the lesser of (a) the initial
      aggregate Commitments of the Lenders and (b) the aggregate unpaid
      principal amount of all Tranche A Loans or Tranche B Loans, as the case
      may be, made by the Lenders. The Administrative Agent is hereby authorized
      to record the date, the Borrowing Tranche and amount of the Revolving
      Credit Loans made by the Lenders, each continuation thereof, each
      conversion of all or a portion thereof to another Borrowing Tranche, the
      date and amount of each payment or prepayment of principal thereof and, in
      the case of Revolving Credit Loans with Euro-Rate Option, the length of
      each Interest Period with respect thereto, on the schedule annexed to and
      constituting a part of its Note, and any such recordation shall constitute
      prima facie evidence of the accuracy of the information so recorded,
      provided, that the failure to make any such recordation or any error in
      such recordation shall not affect the Borrower's obligations hereunder or
      under such Note. Each Note shall (i) be dated the Omnibus Amendment
      Effective Date, (ii) be stated to

                                       27
<PAGE>
      mature on the Maturity Date and (iii) provide for the payment of interest
      in accordance with Section 4.1.

      Section 12. Facility Fee. Section 2.7(a) of the Credit Agreement is hereby
deleted in its entirety and the following Section 2.7(a) is substituted
therefor:

            (a) The Borrower agrees to pay to the Administrative Agent for the
      accounts of the Lenders on a pro rata basis a facility fee (the "Facility
      Fee") determined on a daily basis with respect to the period from the
      Omnibus Amendment Effective Date to the Maturity Date (or to the date of
      termination in full of the Commitments if earlier) at the annual rate
      equal to the Facility Fee Rate as in effect from time to time, calculated
      on the Aggregate Commitment Amount. The Facility Fee shall be payable
      quarterly in arrears on the first day of each calendar quarter for the
      immediately preceding calendar quarter commencing on the first such date
      following the Omnibus Amendment Effective Date, with a final payment on
      the Maturity Date or any earlier date on which the Commitments shall
      terminate; provided, that it is understood and agreed the Facility Fee
      payable under the Credit Agreement for the portion of the calendar quarter
      occurring prior to the Omnibus Amendment Effective Date shall be paid in
      accordance with the Credit Agreement without giving effect to the Omnibus
      Amendment.

      Section 13. Application of Prepayments. Section 5.02 of the Credit
Agreement is hereby amended by inserting the following proviso at the end of the
first sentence thereof:

      ; provided that, (i) the foregoing notwithstanding, each payment or
      prepayment by the Borrower with respect to principal with respect to the
      Revolving Credit Loans shall be applied to reduce the principal amount of
      the outstanding Revolving Credit Loans made by SunTrust Bank until such
      time as the aggregate outstanding Revolving Credit Loans made by the
      Lenders shall have been reduced to $75,000,000, and (ii) after such time
      as the aggregate outstanding Revolving Credit Loans shall have been so
      reduced, each payment or prepayment by the Borrower with respect to
      principal shall be applied as set forth in this Section 5.02; provided,
      further, that the aggregate outstanding Revolving Credit Loans shall be
      reduced to $75,000,000 no later than November 1, 2002.

      Section 14. Events of Default. (a) Paragraph (a) of Article IX of the
Credit Agreement is hereby amended by deleting the number "five" where it
appears in clause (ii) of paragraph (a) thereof and substituting the number
"three" therefor and inserting the phrase "to any Lender or any Agent" after the
word "hereunder" in clause (ii), and a new clause (iii) is inserted as follows:

            "(iii) default, and such default shall continue for five or more
      days, in the payment when due of any amount owing hereunder or under any
      other Credit Document to which it is a party to any Person other than a
      Lender or an Agent."

      (b) Paragraph (d) of Article IX of the Credit Agreement is hereby deleted
in its entirety and the following paragraph (d) is substituted therefor:

                                       28
<PAGE>
            (d) any of the Guarantors or the Lessees shall fail to comply with
      any of its covenants contained in Section 11.01, Section 11.04,
      Section 11.05(a), the first sentence of Section 11.06, Section 11.12,
      Section 11.14 through Section 11.16, Section 12.01 through Section 12.18
      (other than Sections 12.07 and 12.09) of the Guarantee; and (ii) any of
      the Guarantors or the Lessees or any of their Subsidiaries shall fail to
      perform any term, covenant or agreement contained herein or in any of the
      other Operative Agreements (other than those specified elsewhere in this
      Article IX) for thirty (30) days after written notice of such failure has
      been given to the Guarantors and the Lessees by the Administrative Agent
      (such grace period to be applicable only in the event such Default can be
      remedied by corrective action of the Guarantors and the Lessees as
      determined by the Administrative Agent in its sole discretion);

      (c) Paragraphs (h) through (s) of Article IX of the Credit Agreement are
hereby deleted in their entirety and the following paragraphs (h) through (t)
are substituted therefor:

            (h) any Guarantor, any Lessee or any of their Subsidiaries shall
      fail to pay at maturity, or within any applicable period of grace, any
      obligation for Indebtedness with an aggregate outstanding principal amount
      in excess of $25,000,000, or fail to observe or perform any material term,
      covenant or agreement contained in any agreement by which it is bound,
      evidencing or securing Indebtedness with an aggregate outstanding
      principal amount in excess of $25,000,000 for such period of time as would
      permit (assuming the giving of appropriate notice if required) the holder
      or holders thereof or of any obligations issued thereunder to accelerate
      the maturity thereof, or any such holder or holders shall rescind or shall
      have a right to rescind the purchase of any such obligations;

            (i) the Borrower or the Investor shall make an assignment for the
      benefit of creditors, or admit in writing its inability to pay or
      generally fail to pay its debts as they mature or become due, or shall
      petition or apply for the appointment of a trustee or other custodian,
      liquidator or receiver of the Borrower or the Investor or of any
      substantial part of the assets of the Borrower or the Investor or shall
      commence any case or other proceeding relating to the Borrower or the
      Investor under any bankruptcy, reorganization, arrangement, insolvency,
      readjustment of debt, dissolution or liquidation or similar law of any
      jurisdiction, now or hereafter in effect, or shall take any action to
      authorize or in furtherance of any of the foregoing, or if any such
      petition or application shall be filed or any such case or other
      proceeding shall be commenced against the Borrower or the Investor and the
      Borrower or the Investor shall indicate its approval thereof, consent
      thereto or acquiescence therein or such petition or application shall not
      have been dismissed within forty-five (45) days following the filing
      thereof;

            (j) a decree or order is entered appointing any such trustee,
      custodian, liquidator or receiver or adjudicating any Guarantor, any
      Lessee or any of their Subsidiaries, the Borrower or the Investor bankrupt
      or insolvent, or approving a petition in any such case or other
      proceeding, or a decree or order for relief is entered in respect of any
      Guarantor, any Lessee or any of their Subsidiaries, the Borrower or the
      Investor in an involuntary case under federal bankruptcy laws as now or
      hereafter constituted;

                                       29
<PAGE>
                  (k) there shall remain in force, undischarged, unsatisfied and
         unstayed, for more than sixty days, whether or not consecutive, any
         final judgment against any Guarantor, any Lessee or any of their
         Subsidiaries that, with other outstanding final judgments,
         undischarged, against any Guarantor, any Lessee or any of their
         Subsidiaries exceeds in the aggregate $25,000,000;

                  (l) there shall remain in force, undischarged, unsatisfied and
         unstayed, for more than thirty days, whether or not consecutive, any
         final judgment against the Borrower or the Investor that, with other
         outstanding final judgments, undischarged, against the Borrower or the
         Investor exceeds in the aggregate $100,000;

                  (m) if any of the Operative Agreements shall be cancelled,
         terminated, revoked or rescinded, in each case otherwise than in
         accordance with the terms thereof or with the express prior written
         agreement, consent or approval of the Lenders, or any action at law,
         suit or in equity or other legal proceeding to cancel, revoke or
         rescind any of the Operative Agreements shall be commenced by or on
         behalf of any Guarantor, any Lessee, any of their Subsidiaries, the
         Borrower or the Investor party thereto or any of their respective
         stockholders, or any court or any other governmental or regulatory
         authority or agency of competent jurisdiction shall make a
         determination that, or issue a judgment, order, decree or ruling to the
         effect that, any one or more of the Operative Agreements is illegal,
         invalid or unenforceable in accordance with the terms thereof;

                  (n) any Guarantor, any Lessee or any ERISA Affiliate incurs
         any liability to the PBGC or a Guaranteed Pension Plan pursuant to
         Title IV of ERISA in an aggregate amount exceeding $25,000,000, or any
         Guarantor, any Lessee or any ERISA Affiliate is assessed withdrawal
         liability pursuant to Title IV of ERISA by a Multiemployer Plan
         requiring aggregate annual payments exceeding $25,000,000, or any of
         the following occurs with respect to a Guaranteed Pension Plan: (i) an
         ERISA Reportable Event, or a failure to make a required installment or
         other payment (within the meaning of ss. 302(f)(1) of ERISA),
         provided that the Administrative Agent determines in their reasonable
         discretion that such event (A) could be expected to result in liability
         of any Guarantor, any Lessee or any of their Subsidiaries to the PBGC
         or such Guaranteed Pension Plan in an aggregate amount exceeding
         $25,000,000 and (B) could constitute grounds for the termination of
         such Guaranteed Pension Plan by the PBGC, for the appointment by the
         appropriate United States District Court of a trustee to administer
         such Guaranteed Pension Plan or for the imposition of a lien in favor
         of such Guaranteed Pension Plan; or (ii) the appointment by a United
         States District Court of a trustee to administer such Guaranteed
         Pension Plan; or (iii) the institution by the PBGC of proceedings to
         terminate such Guaranteed Pension Plan;

                  (o) any Guarantor, any Lessee or any of their Subsidiaries
         shall be enjoined, restrained or in any way prevented by the order of
         any Governmental Authority from conducting any material part of its
         business and such order shall continue in effect for more than thirty
         (30) days and such restraint or enjoinment or similar restriction by
         any Governmental Authority would have a Material Adverse Effect;

                                       30
<PAGE>
                  (p) there shall occur the loss, suspension or revocation of,
         or failure to renew, any license or permit now held or hereafter
         acquired by any Guarantor, any Lessee or any of their Subsidiaries if
         such loss, suspension, revocation or failure to renew would have a
         Material Adverse Effect;

                  (q) an Event of Default shall have occurred under the Kmart
         Indemnity such that Kmart shall have the right thereunder to exercise
         the rights granted to it pursuant to Sections 3(c)(ii) or Sections
         3(c)(iii) thereof in respect of more than two (2) Premises (as such
         term is defined therein);

                  (r) any matured default shall have occurred under the
         Revolving Credit Agreement, the New Lease Loan Agreement or any
         Financed Lease, whether or not any obligations thereunder have been
         accelerated;

                  (s) a Change of Control shall occur; or

                  (t) the Company and its Subsidiaries at any time shall not be
         in compliance with the Obligor Group Requirement and such failure
         continues for thirty (30) days;

         (d) The paragraph at the end of Article IX of the Credit Agreement is
hereby deleted in its entirety and the following paragraph is substituted
therefor:

         then, and in any such event, (A) if such event is an Event of Default
         specified in paragraphs (in), (i) or (j) above, automatically the
         Commitments shall immediately terminate and the Loans hereunder (with
         accrued interest thereon) and all other amounts owing under this
         Agreement and the Notes shall immediately become due and payable, and
         (B) if such event is any other Event of Default, either or both of the
         following actions may be taken: (i) with the consent of the Required
         Lenders, the Administrative Agent may, or upon the request of the
         Required Lenders, the Administrative Agent shall, by notice to the
         Borrower declare the Commitments to be terminated forthwith, whereupon
         the Commitments shall immediately terminate; and (ii) with the consent
         of the Required Lenders, the Administrative Agent may, or upon the
         request of the Required Lenders, the Administrative Agent shall, by
         notice to the Borrower, declare the Loans hereunder (with accrued
         interest thereon) and all other amounts owing under this Agreement and
         the Notes to be due and payable forthwith, whereupon the same shall
         immediately become due and payable (any of the foregoing occurrences or
         actions referred to in clause (A) or (B) above, an "Acceleration").
         Except as expressly provided above in this Article IX, presentment,
         demand, protest and all other notices of any kind are hereby expressly
         waived.

         Section 15. Agents (a) Section 10.01 of the Credit Agreement is amended
by inserting the words ", the Documentation Agent" after the words "the
Syndication Agent" where they appear in the second line thereof.

                                       31
<PAGE>
         (b) Section 10.3 of the Credit Agreement is hereby amended by inserting
a new clause (c) at the end of the first sentence thereof as follows:

                  (c) responsible in any manner to any of the Lenders for the
         recording or filing of any real estate document or financing statement
         or for obtaining or maintaining, or failing to obtain or maintain, a
         perfected security interest in any collateral in which a security
         interest has been granted under any Operative Agreement.

         Section 16. Amendment of Commitments.(a) Section 12.01 of the Credit
Agreement is hereby amended by deleting the amount "$250,000,000" where it
appears in clause (ii) of the second sentence thereof and substituting therefor
the number $100,000,000.

         (b) Section 12.01 of the Credit Agreement is hereby further amended by
inserting the phrase "or waive an Event of Default under paragraph (d) of
Article IX arising from a failure to comply with Section 11.16 of the Guarantee"
at the end thereof.

         Section 17. Applicable Margin/Facility Fee Rate. Schedule 1.01(A) to
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor Schedule 1.01(A) attached hereto.

         Section 18. Commitments; New Lenders; Departing Lenders. Schedule II to
the Credit Agreement is hereby amended by deleting it in its entirety and
substituting therefor Schedule II attached hereto. Each of the financial
institutions that is a party to this Amendment that was not a party to the
Credit Agreement previously (the "New Lenders") is hereby made a party to the
Participation Agreement and the Credit Agreement, and shall have all the rights
and obligations of a "Lender" under the Participation Agreement, the Credit
Agreement and the other Operative Agreements as if it were an original signatory
thereto to the extent of its Commitment. Each of the New Lenders agrees to be
bound by the terms and conditions applicable to a "Lender" set forth in the
Participation Agreement, the Credit Agreement and the other Operative Agreements
as if it were an original signatory thereto. Each of the New Lenders hereby
acknowledges and confirms that it has received a copy of each of the Operative
Agreements and that in becoming a Lender and in making its Commitment and
Revolving Credit Loans under the Credit Agreement, such actions have and will be
made without recourse to, or representation or warranty by, the Administrative
Agent, the Co-Arrangers, the Documentation Agent, the Real Estate Administrative
Agent, the Syndication Agent or any other Lender. The Guarantor, each Lessee and
the Administrative Agent hereby consent to the addition of the New Lenders. On
the date hereof, the New Lenders shall make payments to the Administrative
Agent, who shall distribute such payments to the other Lenders (including the
Departing Lenders) as prepayments of the principal of such other Lenders'
Revolving Credit Loans and Swing Loans, such that, after giving effect to such
payment and distributions, (i) each Lender's outstanding Revolving Credit Loans
(other than SunTrust Bank) shall be equal to the product of (A) $75,000,000
times (B) such Lender's Ratable Share, and (ii) SunTrust Bank's outstanding
Revolving Credit Loans shall be equal to (A) the aggregate outstanding principal
amount of all Revolving Credit Loans on such date minus (B) the aggregate amount
of all other Lenders' Revolving Credit Loans, as calculated pursuant to clause
(i). Such payment shall be made in immediately available funds to

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such account as the Administrative Agent shall specify to the Lenders. Each of
the financial institutions that was party to the Participation Agreement and the
Credit Agreement but is designated on the signature pages hereto as a "Departing
Lender" hereby acknowledges receipt as of the date hereof of the amounts
distributable to it pursuant to this Section, and in connection therewith each
such Departing Lender's Notes shall hereby be deemed cancelled and such
Departing Lender shall have no further rights or obligations under the Operative
Agreements, except that all claims of the Departing Lenders pertaining to the
representations, warranties, covenants and indemnities of the Borrower, the
Guarantors and the Lessees under the Operative Agreements (without giving effect
to this Amendment) shall survive in accordance with the terms of the Operative
Agreements (without giving effect to this Amendment) to the extent such claims
arose out of events occurring prior to the date hereof.

         Section 19. New Guarantors. Each of the entities designated as
"Guarantors" on the signature pages hereto that were not party to the Guarantee
prior to the date hereof hereby agree to become party to the Guarantee and the
Participation Agreement as a Guarantor (each an "Additional Guarantor"). Each
Additional Guarantor agrees that it shall be bound by all terms and provisions
of, and shall be deemed a party to (as if it were an original signatory thereto)
each of the Participation Agreement and the Guarantee. Each Additional Guarantor
hereby acknowledges that it has received copies of the Operative Agreements.

         Section 20. Guarantors' Affirmative Covenants. Sections 11.01 through
11.12 of the Guarantee are hereby deleted in their entirety and the following
Sections 11.01 through 11.16 are substituted therefor:

                  11.01 Punctual Payment. Each Guarantor will, and will cause
         each of the Lessees to, duly and punctually pay or cause to be paid
         Rent, the Facility Fees and all other amounts provided for in the
         Operative Agreements, all in accordance with the terms of the Operative
         Agreements. The Guarantors will duly and punctually pay or cause to be
         paid the Obligations and all other amounts provided for in this
         Guarantee and the other Operative Agreements

                  11.02 Maintenance of Office. Each of the Guarantors and the
         Lessees will maintain its chief executive office at 100 Phoenix Drive,
         Ann Arbor, Michigan or at such other place in the United States of
         America as such Guarantor or Lessee shall designate upon written notice
         to the Administrative Agent, where notices, presentations and demands
         to or upon such Guarantor or Lessee in respect of the Operative
         Agreements to which such Guarantor or Lessee is a party may be given or
         made.

                  11.03 Records and Accounts. Each of the Guarantors and the
         Lessees will (a) keep, and cause each of its Subsidiaries to keep, true
         and accurate records and books of account in which full, true and
         correct entries will be made in accordance with GAAP, (b) maintain
         adequate accounts and reserves for all taxes (including income taxes),
         depreciation, depletion, obsolescence and amortization of its
         properties and the properties of its Subsidiaries, contingencies, and
         other reserves, and (c) at all times engage Ernst & Young LLP or other
         independent

                                       33
<PAGE>
         certified public accountants satisfactory to the Administrative Agent
         as the independent certified public accountants of the Guarantors, the
         Lessees and their Subsidiaries and will not permit more than thirty
         (30) days to elapse between the cessation of such firm's (or any
         successor firm's) engagement as the independent certified public
         accountants of the Guarantors, the Lessees and their Subsidiaries and
         the appointment in such capacity of a successor firm as shall be
         satisfactory to the Administrative Agent.

                  11.04 Financial Statements, Certificates and Information. The
         Guarantors will deliver to each of the Lenders:

                  (a) as soon as practicable, but in any event not later than
         ninety (90) days after the end of each fiscal year of the Guarantors
         and the Lessees, the consolidated balance sheet of the Company and its
         Subsidiaries as at the end of such year, and the related consolidated
         statement of income and consolidated statement of cash flow for such
         year, each setting forth in comparative form the figures for the
         previous fiscal year and all such consolidated statements to be in
         reasonable detail, prepared in accordance with GAAP, and certified,
         without qualification and without an expression of uncertainty as to
         the ability of the Company or any of its Subsidiaries to continue as
         going concerns, by Ernst & Young LLP or by other independent certified
         public accountants satisfactory to the Administrative Agent, together
         with a written statement from such accountants to the effect that they
         have read a copy of the Operative Agreements, and that, in making the
         examination necessary to said certification, they have obtained no
         knowledge of any Default or Event of Default, or, if such accountants
         shall have obtained knowledge of any then existing Default or Event of
         Default they shall disclose in such statement any such Default or Event
         of Default; provided that such accountants shall not be liable to the
         Lenders for failure to obtain knowledge of any Default or Event of
         Default;

                  (b) as soon as practicable, but in any event not later than
         forty-five (45) days after the end of each of the first three fiscal
         quarters of the Guarantors and the Lessees, copies of the unaudited
         consolidated balance sheet of the Company and its Subsidiaries as at
         the end of such quarter, and the related consolidated statement of
         income and consolidated statement of cash flow for the portion of the
         Guarantors' and the Lessees' fiscal year then elapsed, all in
         reasonable detail and prepared in accordance with GAAP, together with a
         certification by the principal financial or accounting officer of the
         Company that the information contained in such financial statements
         fairly presents the financial position of the Company and its
         Subsidiaries on the date thereof (subject to year-end adjustments);

                  (c) simultaneously with the delivery of the financial
         statements referred to in subsections (a) and (b) above, a statement
         certified by the principal financial or accounting officer of the
         Guarantors and the Lessees in substantially

                                       34
<PAGE>
         the form of Exhibit A hereto (a "Compliance Certificate") and setting
         forth in reasonable detail computations evidencing compliance with the
         covenants contained in Sections 12.15 through 12.18, the calculation of
         the Obligor Group Requirement and (if applicable) reconciliations to
         reflect changes in GAAP since the Balance Sheet Date;

                  (d) contemporaneously with the filing or mailing thereof,
         copies of all material of a financial nature filed with the Securities
         and Exchange Commission or sent to the stockholders of any of the
         Guarantors or Lessees;

                  (e) from time to time upon request of the Administrative
         Agent, projections of the Company and its Subsidiaries updating those
         projections delivered to the Lenders and referred to in Section
         7.03(d)(iii) of the Participation Agreement or, if applicable, updating
         any later such projections delivered in response to a request pursuant
         to this Section 11.04(e); and

                  (f) from time to time such other financial data and
         information (including accountants management letters) as the
         Administrative Agent or any Lender may reasonably request.

                  11.05 Notices.

                  (a) Defaults. Each of the Guarantors and the Lessees will
         promptly notify the Administrative Agent and each of the Lenders in
         writing of the occurrence of any Default or Event of Default, together
         with a reasonably detailed description thereof, and the actions the
         Guarantors and the Lessees propose to take with respect thereto. If any
         Person shall give any notice or take any other action in respect of a
         claimed default (whether or not constituting an Event of Default) under
         any Operative Agreement or any other note, evidence of indebtedness,
         indenture or other obligation to which or with respect to which the
         Company or any of its Subsidiaries is a party or obligor, whether as
         principal, guarantor, surety or otherwise, the Guarantors and the
         Lessees shall forthwith give written notice thereof to the
         Administrative Agent and each of the Lenders, describing the notice or
         action and the nature of the claimed default.

                  (b) Environmental Events. The Guarantors and the Lessees will
         promptly give notice to the Administrative Agent and each of the
         Lenders (i) of any violation of any Environmental Law that any of the
         Guarantors, the Lessees or any of their Subsidiaries reports in writing
         or is reportable by such Person in writing (or for which any written
         report supplemental to any oral report is made) to any Governmental
         Authority and (ii) upon becoming aware thereof, of any inquiry,
         proceeding, investigation, or other action, including a notice from any
         agency of potential environmental liability, of any Governmental
         Authority that could have a Material Adverse Effect.

                                       35
<PAGE>
                  (c) Notice of Litigation and Judgments. Each of the Guarantors
         and the Lessees will, and will cause each of its Subsidiaries to, give
         notice to the Administrative Agent and each of the Lenders in writing
         within fifteen (15) days of becoming aware of any litigation or
         proceedings threatened in writing or any pending litigation and
         proceedings affecting any of the Guarantors, the Lessees or any of
         their Subsidiaries or to which any of the Guarantors, the Lessees or
         any of their Subsidiaries is or becomes a party involving an uninsured
         claim against any of the Guarantors, the Lessees or any of their
         Subsidiaries that could reasonably be expected to have a Material
         Adverse Effect on any of the Guarantors, the Lessees or any of their
         Subsidiaries and stating the nature and status of such litigation or
         proceedings. The Guarantors, the Lessees will, and will cause each of
         its Subsidiaries to, give notice to the Administrative Agent and each
         of the Lenders, in writing, in form and detail satisfactory to the
         Administrative Agent, within ten (10) days of any judgment not covered
         by insurance, final or otherwise, against the Guarantors, the Lessees
         or any of their Subsidiaries in an amount in excess of $15,000,000.

                  (d) Notice Regarding Certain Events. The Guarantors and the
         Lessees will furnish or cause to be furnished to the Administrative
         Agent and the Lenders written notice of (a) promptly after the adoption
         thereof, any amendment to the organizational documents of any Guarantor
         or Lessee; and (b) promptly, the enactment or adoption of any law which
         could reasonably be expected to have a Material Adverse Effect.

                  11.06 Legal Existence; Maintenance of Properties. Each of the
         Guarantors and the Lessees will do or cause to be done all things
         necessary to preserve and keep in full force and effect its legal
         existence, rights and franchises and those of its Subsidiaries and will
         not, and will not cause or permit any of its Subsidiaries to, convert
         to a limited liability company or a limited liability partnership. It
         (a) will cause all of its properties and those of its Subsidiaries used
         or useful in the conduct of its business or the business of its
         Subsidiaries to be maintained and kept in good condition, repair and
         working order and supplied with all necessary equipment, (b) will cause
         to be made all necessary repairs, renewals, replacements, betterments
         and improvements thereof, all as in the judgment of such Guarantor or
         Lessee may be necessary so that the business carried on in connection
         therewith may be properly and advantageously conducted at all times,
         (c) will maintain in full force and effect all patents, trademarks,
         trade names, copyrights, licenses, permits and other authorizations
         necessary for the ownership and operation of its properties and
         business, and (d) will, and will cause each of its Subsidiaries to,
         continue to engage primarily in the businesses now conducted by them
         and in related businesses; provided that nothing in this Section
         11.06 shall prevent any of the Guarantors or the Lessees from
         discontinuing the operation and maintenance of any of its properties or
         any of those of its Subsidiaries, including the existence of any
         Subsidiary of the Company or the conversions of any Subsidiary of the
         Company to a limited

                                       36
<PAGE>
         liability company or limited liability partnership, if such
         discontinuance or conversion is, in the judgment of such Guarantor or
         Lessee, desirable in the conduct of its or their business and that do
         not in the aggregate have a Material Adverse Effect and, with respect
         to the conversions of a Lessee or a Guarantor to a limited liability
         company or limited liability partnership, simultaneously with such
         conversion, such Lessee or Guarantor shall have executed and delivered
         to the Administrative Agent all documentation which the Administrative
         Agent reasonably determine is necessary to continue such Lessee's or
         such Guarantor's obligations in respect of Operative Agreements.

                  11.07 Insurance. Each of the Guarantors and the Lessees will,
         and will cause each of its Subsidiaries to, maintain with financially
         sound and reputable insurers insurance with respect to its properties
         and business against such casualties and contingencies as shall be in
         accordance with the general practices of businesses engaged in similar
         activities in similar geographic areas and in amounts, containing such
         terms, in such forms and for such periods as may be reasonable and
         prudent, including self-insurance to the extent customary, all as
         reasonably determined by the Administrative Agent. At the request of
         the Administrative Agent, the Company shall deliver from time to time a
         summary schedule indicating all insurance then in force with respect to
         each of the Guarantors and the Lessees.

                  11.08 Taxes. Each of the Guarantors and the Lessees will, and
         will cause each of its Subsidiaries to, duly pay and discharge, or
         cause to be paid and discharged, before the same shall become overdue,
         all taxes, assessments and other governmental charges imposed upon it
         and its Real Estate, sales and activities, or any part thereof, or upon
         the income or profits therefrom, as well as all claims for labor,
         materials, or supplies that if unpaid might by law become a Lien or
         charge upon any of its property; provided that any such tax,
         assessment, charge, levy or claim need not be paid if the validity or
         amount thereof shall currently be contested in good faith by
         appropriate proceedings and if such Guarantor or Lessee or such
         Subsidiary shall have set aside on its books adequate reserves with
         respect thereto; and provided further that each of the Guarantors and
         the Lessees and each of their Subsidiaries will pay all such taxes,
         assessments, charges, levies or claims forthwith upon the commencement
         of proceedings to foreclose any Lien that may have attached as security
         therefor.

                  11.09 Inspection of Properties. Each of the Guarantors and the
         Lessees shall permit the Lenders, through the Administrative Agent or
         any of the Lenders' other designated representatives, to visit and
         inspect any of the properties of such Guarantor, Lessee or any of its
         Subsidiaries, to examine the books of account of such Guarantor, Lessee
         and its Subsidiaries (and to make copies thereof and extracts
         therefrom), and to discuss the affairs, finances and accounts of such
         Guarantor, Lessee and its Subsidiaries with, and to be advised as to
         the same by, its and their officers, all at such reasonable times and
         intervals as the

                                       37
<PAGE>
         Administrative Agent or any Lender may reasonably request. At the
         request of the Administrative Agent, but not more frequently than once
         a year, the Guarantors and the Lessees and their respective Authorized
         Officers shall hold a meeting of the Lenders, at which the Guarantors
         and the Lessees will present an analysis of the financial performance
         of the Company and its Subsidiaries during the previous Fiscal Year and
         a discussion of the expected results of operations for the then current
         Fiscal Year.

                  11.10 Compliance with Laws, Contracts, Licenses, and Permits.
         Each of the Guarantors and the Lessees will, and will cause each of its
         Subsidiaries to, comply with (a) the applicable laws and regulations
         wherever its business is conducted, including all Environmental Laws,
         (b) the provisions of its Governing Documents, (c) all agreements and
         instruments by which it or any of its properties may be bound and (d)
         all applicable decrees, orders, and judgments, where, with respect to
         clauses (a), (c) and (d) only, failure to so comply could have a
         Material Adverse Effect. If any authorization, consent, approval,
         permit or license from any officer, agency or instrumentality of any
         government shall become necessary or required in order that any of the
         Guarantors, any of the Lessees or any of their Subsidiaries may fulfill
         any of its obligations hereunder or any of the other Operative
         Agreements to which such Guarantor, such Lessee or such Subsidiary is a
         party, such Guarantor, such Lessee will, or (as the case may be) will
         cause such Subsidiary to, immediately take or cause to be taken all
         reasonable steps within the power of such Guarantor or such Lessee or
         such Subsidiary to obtain such authorization, consent, approval, permit
         or license and furnish the Administrative Agent and the Lenders with
         evidence thereof.

                  11.11 Employee Benefit Plans. The Guarantors and the Lessees
         will (a) promptly upon filing the same with the Department of Labor or
         Internal Revenue Service upon request of the Administrative Agent,
         furnish to the Administrative Agent a copy of the most recent actuarial
         statement required to be submitted under ss. 103(d) of ERISA and
         Annual Report, Form 5500, with all required attachments, in respect of
         each Guaranteed Pension Plan, (b) promptly upon receipt or dispatch,
         furnish to the Administrative Agent any notice, report or demand sent
         or received in respect of a Guaranteed Pension Plan under ss. ss. 302,
         4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of
         a Multiemployer Plan, under ss. ss. 4041A, 4202, 4219, 4242, or 4245 of
         ERISA and (c) promptly furnish to the Administrative Agent a copy of
         all actuarial statements required to be submitted under all Applicable
         Pension Legislation.

                  11.12 Use of Proceeds. The Borrower and the Lessor will use
         the proceeds of the Loans solely for the purposes set forth in Section
         7.03(p) of the Participation Agreement.

                  11.13 Subsequent Credit Terms. The Guarantors shall notify the
         Administrative Agent in writing not less than ten (10) Business Days
         prior to any

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<PAGE>
         Guarantor or Lessee entering into any credit agreement or any amendment
         or modification to any existing credit agreement in either case as
         otherwise permitted hereunder, pursuant to which any Guarantor or
         Lessee agrees to representations, warranties or covenants which are
         more restrictive, as determined in the sole discretion of the
         Administrative Agent, than the representations, warranties or covenants
         hereof (the "More Restrictive Provisions"). Upon the execution of such
         new credit agreement, amendment or modification, the corresponding
         covenants, terms and conditions of this Guarantee and the Participation
         Agreement shall be and shall be deemed to be automatically and
         immediately amended to conform with and to include the applicable More
         Restrictive Provisions of such new credit agreement, amendment or
         modification; provided that the foregoing shall not be applicable to or
         be deemed to affect any provision of this Guarantee and the
         Participation Agreement if any new credit agreement, amendment or
         modification is less restrictive. Each of the Guarantors hereby agrees
         promptly to execute and deliver, and to cause each of the Lessees
         promptly to execute and deliver, any and all such documents and
         instruments and to take all such further actions as the Administrative
         Agent may, in its sole discretion, deem necessary or appropriate to
         effectuate the provisions of this Section 11.13.

                  11.14 Subsidiary Guaranties. If, with respect to any of the
         Company's Domestic Subsidiaries which are not members of the Obligor
         Group, (a) any such Domestic Subsidiary's total assets determined in
         accordance with GAAP at the end of any Fiscal Quarter constitute more
         than 10% of Consolidated Tangible Net Worth determined at the end of
         such Fiscal Quarter or (b) any such Domestic Subsidiary's net income
         determined in accordance with GAAP for any rolling four Fiscal Quarter
         period exceeds 10% of Consolidated Net Income for such four Fiscal
         Quarters, the Company shall cause such Domestic Subsidiary to become a
         Guarantor and agree to be bound by the provisions hereof, to execute a
         Joinder Agreement and to deliver such legal opinions and other
         documents and instruments as the Administrative Agent may request.

                  11.15 Further Assurances. Each of the Guarantors and the
         Lessees will, and will cause each of its Subsidiaries to, cooperate
         with the Lenders and the Administrative Agent and execute such further
         instruments and documents as the Lenders or the Administrative Agent
         shall reasonably request to carry out to their satisfaction the
         transactions contemplated by the Operative Agreements.

                  11.16 Mortgage Recording. Each of the Guarantors that is also
         a Lessee will execute and deliver to the Real Estate Administrative
         Agent a mortgage or deed of trust, as applicable, in the form of
         Exhibit C, and appropriate UCC financing statements (including fixture
         filings) for each Property that is leased by such Guarantor, and will
         cause each such mortgage or deed of trust to be recorded in the
         appropriate recording office(s) in the applicable jurisdictions within
         60 days of the Omnibus Amendment Effective Date. Each such Guarantor
         will also deliver, or cause to be delivered, to the Real Estate
         Administrative Agent within

                                       39
<PAGE>
         60 days of the Omnibus Amendment Effective Date a title search report
         with respect to each Property leased by it indicating that no prior
         liens exist with respect to such Property (other than customary
         easements and similar liens and encumbrances on title, or liens in
         favor of the Lenders, the Real Estate Administrative Agent or the
         Borrower).

         Section 21. Guarantors' Negative Covenants. Sections 12.01 through
12.21 of the Guarantee are hereby deleted in their entirety and the following
Sections 12.01 through 12.18 are substituted therefor:

                  12.01 Restrictions on Indebtedness. None of the Guarantors and
         the Lessees will, nor will permit any of its Subsidiaries to, create,
         incur, assume, guarantee or be or remain liable, contingently or
         otherwise, with respect to any Indebtedness other than:

                  (a) Indebtedness to the Lenders and the Agents arising under
         any of the Operative Agreements and Indebtedness arising under the
         Revolving Credit Agreement and the loan documents referred to therein;

                  (b) endorsements for collection, deposit or negotiation and
         warranties of products or services, in each case incurred in the
         ordinary course of business;

                  (c) Indebtedness incurred in connection with the acquisition
         after the Omnibus Amendment Effective Date of any CA-Property (and in
         any event not more than ninety (90) days from the date of such
         acquisition) by such Guarantor, such Lessee or such Subsidiary as
         contemplated by Section 12.02(ix);

                  (d) obligations under or guaranties of Capitalized Leases;

                  (e) Indebtedness in respect of Hedging Agreements entered into
         for hedging purposes only and not for speculation;

                  (f) Indebtedness existing on the Omnibus Amendment Effective
         Date and listed and described on Schedule 12.01(f) hereto including any
         extensions or refinancings thereof on substantially similar terms as
         the Indebtedness being refinanced and provided there is no increase in
         the amount thereof;

                  (g) unsecured Indebtedness of any of the Company's
         Subsidiaries to, or in respect of Obligations of, the Company or
         another Subsidiary of the Company consisting of intercompany loans and,
         if no Default or Event of Default shall have occurred and be continuing
         at the time such Indebtedness is incurred, any other Investments;

                  (h) unsecured Indebtedness of the Company to, or in respect of
         obligations of, a Subsidiary of the Company consisting of intercompany
         loans

                                       40
<PAGE>
         and, if no Default or Event of Default shall have occurred and be
         continuing at the time such Indebtedness is incurred, any other
         Investments;

                  (i) Indebtedness of Foreign Subsidiaries (other than
         Indebtedness permitted under clause (g) hereof) with an aggregate
         principal Dollar Equivalent amount outstanding not to exceed
         $30,000,000;

                  (j) Indebtedness of the Guarantors and the Lessee in respect
         of the Operative Agreements and the New Synthetic Lease Facility,
         provided, however, that the aggregate amount of Indebtedness permitted
         thereunder (i) on and after the Closing Date through October 31, 2002
         shall not exceed $100,000,000 and (ii) on and after November 1, 2002
         shall not exceed $75,000,000;

                  (k) Indebtedness in respect of Permitted Joint Venture
         Activity, provided that no Default or Event of Default has occurred and
         is continuing or would result therefrom;

                  (l) unsecured Indebtedness of the Company in respect of the
         private placement offering of debt securities to be made after the
         Omnibus Amendment Effective Date in an aggregate principal amount
         outstanding not to exceed $50,000,000 at any time; and

                  (m) Indebtedness of the Company and its Domestic Subsidiaries
         in addition to Indebtedness otherwise permitted by clause (a) to (l)
         above with an aggregate principal Dollar Equivalent amount outstanding
         not to exceed 20% of Consolidated Tangible Net Worth (determined as of
         the last day of the Fiscal Quarter most recently ended), provided that
         at the time of incurrence of such Indebtedness no Default or Event of
         Default has occurred and is continuing or would result therefrom.

                  12.02 Restrictions on Liens. None of the Guarantors or Lessees
         will, nor will permit any of its Subsidiaries to, (a) create or incur
         or suffer to be created or incurred or to exist any Lien upon any of
         its property or assets of any character whether now owned or hereafter
         acquired, or upon the income or profits therefrom; (b) transfer any of
         such property or assets or the income or profits therefrom for the
         purpose of subjecting the same to the payment of Indebtedness or
         performance of any other obligation in priority to payment of its
         general creditors; (c) acquire, or agree to acquire, any property or
         assets upon conditional sale or other title retention or purchase money
         security agreement, device or arrangement; (d) suffer to exist for a
         period of more than thirty (30) days after the same shall have been
         incurred any Indebtedness or claim or demand against it that if unpaid
         might by law or upon bankruptcy or insolvency, or otherwise, be given
         any priority whatsoever over its general creditors; or (e) sell,
         assign, pledge or otherwise transfer any "receivables" as defined in
         clause (g) of the definition of the term "Indebtedness," with or
         without recourse; provided that any Lessee, the

                                       41
<PAGE>
         Company or any of their Subsidiaries may create or incur or suffer to
         be created or incurred or to exist:

                           (i) Liens in favor of such Guarantor or Lessee on all
                  or part of the assets of Subsidiaries of such Guarantor or
                  Lessee securing Indebtedness owing by Subsidiaries of such
                  Guarantor or Lessee to such Guarantor or Lessee;

                           (ii) Liens to secure taxes, assessments and other
                  government charges in respect of obligations and Liens to
                  secure claims for labor, material or supplies, in each case in
                  respect of obligations not overdue or which are being
                  contested in good faith and by appropriate proceedings and for
                  which such Guarantor, such Lessee or such Subsidiary has set
                  aside on its books adequate reserves with respect thereto;

                           (iii) deposits or pledges made in connection with, or
                  to secure payment of, workmen's compensation, unemployment
                  insurance, old age pensions or other social security
                  obligations;

                           (iv) Liens on properties in respect of judgments or
                  awards that have been in force for less than the applicable
                  period for taking an appeal so long as execution is not levied
                  thereunder or in respect of which such Guarantor, such Lessee
                  or such Subsidiary shall at the time in good faith be
                  prosecuting an appeal or proceedings for review and in respect
                  of which a stay of execution shall have been obtained pending
                  such appeal or review;

                           (v) Liens of carriers, warehousemen, mechanics and
                  materialmen, and other like Liens, securing obligations
                  incurred in the ordinary course of business, in respect of
                  obligations not overdue or which in the aggregate do not have
                  a Material Adverse Effect;

                           (vi) encumbrances on Real Estate consisting of
                  easements, rights of way, zoning restrictions, restrictions on
                  the use of real property and defects and irregularities in the
                  title thereto, landlord's or lessor's liens and other minor
                  Liens, provided that none of such Liens (A) interferes
                  materially with the use of the property affected in the
                  ordinary conduct of the business of the Guarantors, the
                  Lessees and their Subsidiaries, and (B) individually or in the
                  aggregate have a Material Adverse Effect;

                           (vii) pledges or deposits made in the ordinary course
                  of business to secure performance of bids, tenders, contracts
                  (other than for the repayment of Indebtedness) or leases, not
                  in excess of the aggregate amount due thereunder, or to secure
                  statutory obligations, or surety,

                                       42
<PAGE>
                  appeal, indemnity, performance or other similar bonds required
                  in the ordinary course of business;

                           (viii) Liens existing on the Omnibus Amendment
                  Effective Date and listed on Schedule 12.02 hereto, provided
                  that the principal amount secured thereby is not thereafter
                  increased and no additional assets become subject to such
                  Lien;

                           (ix) purchase money security interests in or purchase
                  money mortgages on CA-Property acquired after the Omnibus
                  Amendment Effective Date to secure purchase money Indebtedness
                  of the type and amount permitted by Section 12.01(c), incurred
                  in connection with the acquisition of such CA-Property and in
                  any event not more than ninety (90) days from the date of such
                  acquisition, which security interests or mortgages cover only
                  the CA-Property so acquired;

                           (x) Liens in respect of the interests of lessors
                  under Capitalized Leases and Synthetic Leases permitted under
                  this Guarantee securing obligations of the Company or its
                  Subsidiaries to the lessor under such Capitalized Leases or
                  such Synthetic Leases;

                           (xi) Liens on assets of Foreign Subsidiaries securing
                  Indebtedness permitted under Section 12.01(i);

                           (xii) Liens granted to the Agents, the Lenders and
                  the Issuing Bank (each as defined in the Revolving Credit
                  Agreement) pursuant to Section 16.1 of the Revolving Credit
                  Agreement; and

                           (xiii) Liens on assets of the Company and its
                  Subsidiaries not otherwise permitted by clauses (i) through
                  (xii) above, so long as any Indebtedness secured thereby is
                  permitted under the terms of Section 12.01, and the aggregate
                  fair market value of all property secured by such Liens does
                  not at any time exceed 5% of Consolidated Tangible Net Worth
                  (determined as of the last day of the Fiscal Quarter most
                  recently ended).

                  12.03 Restrictions on Investments. None of the Guarantors or
         the Lessees will, nor will such party permit any of its Subsidiaries
         to, make or permit to exist or to remain outstanding any Investment
         except Investments in:

                  (a) marketable direct or guaranteed obligations of the United
         States of America (or any agency thereof to the extent such obligations
         are backed by the full faith and credit of the United States of
         America) that mature within one (1) year from the date of purchase by
         such Guarantor or such Lessee;

                                       43
<PAGE>
                  (b) demand deposits, certificates of deposit, bank acceptances
         and time deposits maturing within 180 days from the date of purchase
         thereof of (i) United States banks having total assets in excess of
         $1,000,000,000 or (ii) a commercial bank organized under the laws of
         any other country which is a member of the Organization for Economic
         Cooperation and Development (the "OECD"), or a political subdivision of
         such country, and having total assets in excess of $1,000,000,000,
         provided that such bank is acting through a branch or agency located in
         the country in which it is organized or another country which is a
         member of the OECD;

                  (c) securities commonly known as "commercial paper"
         denominated in Dollars maturing within 180 days from the date of
         purchase thereof that at the time of purchase have been rated and the
         ratings for which are not less than "P 1" if rated by Moody's, and not
         less than "A 1" if rated by S&P;

                  (d) money market mutual funds denominated in an Optional
         Currency in countries in which the Company or any of its Subsidiaries
         operates a business provided that (i) each such fund in which the
         Company or any of its Subsidiaries makes an Investment has assets of
         not less than $50,000,000 and (ii) the proportional Investment in each
         such fund by the Company or such Subsidiary does not exceed five
         percent (5%) of the aggregate amount of all Investments in such fund;

                  (e) Investments existing on the Omnibus Amendment Effective
         Date and listed on Schedule 12.03 hereto;

                  (f) Investments consisting of loans and advances to employees
         (i) for moving, entertainment, travel and other similar expenses in the
         ordinary course of business and (ii) for any other purpose, with such
         Investments under this clause (ii) not to exceed $10,000,000 in the
         aggregate principal amount at any time outstanding;

                  (g) trade credit extended on usual and customary terms in the
         ordinary course of business;

                  (h) Investments by the Company in any Subsidiary of the
         Company or by any Subsidiary of the Company in the Company or another
         Subsidiary of the Company, provided (i) any loans or advances are
         unsecured and are evidenced by intercompany notes and (ii) before and
         after giving effect to such Investment, the Guarantors or the Lessees
         are in compliance with the Obligor Group Requirement;

                  (i) Acquisitions provided (i) no Default or Event of Default
         has occurred and is continuing or would result therefrom, (ii) the
         assets or business subject to such Acquisition are in substantially the
         same or a similar type of business as the Company and its Subsidiaries,
         (iii) the Board of Directors and (if

                                       44
<PAGE>
         required by applicable law) the shareholders of any Person to be
         acquired have approved the terms of the Acquisition, and (iv) the
         Company delivers to the Lenders on or before the date on which it or
         any of its Subsidiaries agrees to or consummates any Acquisition a
         Compliance Certificate and pro forma financial statements, in form and
         substance satisfactory to the Administrative Agent, showing that on a
         pro forma basis no Default or Event of Default will occur under any of
         Section 12.15 through 12.18 or with respect to the Obligor Group
         Requirement over the 12 month period following the effective date of
         the Acquisition, based on reasonable projections of the financial
         performance of the Guarantors or the Lessees;

                  (j) Investments constituting Permitted Joint Venture Activity,
         provided no Default or Event of Default has occurred and is continuing
         or would result therefrom;

                  (k) repurchases of the Company's common stock in accordance
         with Section 12.04;

                  (l) guarantees of any obligations of landlords of a Guarantor
         or a Lessee to the extent that the obligations relate to funds arranged
         by a Guarantor or a Lessee and used to finance or refinance any stores
         of a Guarantor or a Lessee and such funds are intended to be a repaid
         through lease payments of a Guarantor or a Lessee; and

                  (m) Investments in respect of Hedging Agreements entered into
         for hedging purposes only and not for speculation.

                  12.04 Restricted Payments. None of the Guarantors or the
         Lessees will, nor will permit any of its Subsidiaries to, make any
         Restricted Payments except that, so long as no Default or Event of
         Default then exists or would result from such payment and the Company
         delivers to the Lenders prior to the date of any Restricted Payment
         contemplated under paragraphs (a), (d), (e) or (f) hereof a certificate
         in form and substance satisfactory to the Administrative Agent
         calculating the Leverage Ratio on a pro forma basis, including the
         impact of the contemplated Distribution in the calculation of
         Consolidated Total Funded Debt:

                  (a) The Company may make (i) repurchases of shares of its
         common stock at prices not exceeding the then existing market price,
         and it may receive shares of its common stock as payment of the
         exercise price of options, or as payment of taxes associated with the
         exercise of options or the vesting of restricted shares, which such
         delivered shares are deemed to be repurchased by the Company at fair
         market value (as defined in the Company's stock option plan) on the
         date of delivery to the Company and (ii) other Restricted Payments so
         long as the aggregate amount paid by the Company with respect to all
         such repurchases

                                       45
<PAGE>
         (including all such deemed repurchases) and other Restricted Payments
         does not at any time exceed the Restricted Payment Amount in effect
         from time to time;

                  (b) The Company may engage in stock splits (including reverse
         stock splits);

                  (c) Wholly-owned Subsidiaries may make Distributions to the
         Company or another Wholly-owned Subsidiary;

                  (d) Subsidiaries other than Wholly-owned Subsidiaries may make
         Distributions so long as (i) the aggregate amount of Distributions made
         by any such Subsidiary to any Person other than the Company or a
         Subsidiary of the Company in any Fiscal Year does not exceed 50% of
         such Person's pro rata share (based on the percentage of stock or other
         equity interests owned by such Person) of such Subsidiary's net income
         for such Fiscal Year as determined in accordance with GAAP and (ii) no
         later than ten (10) days prior to any such Distribution, the Company
         shall have given written notice to the Lenders and the Administrative
         Agent thereof, together with calculations demonstrating that such
         Distribution complies with this paragraph (d); and

                  (e) The Company may pay dividends on its preferred stock so
         long as the dividend rate on such preferred stock (after taking into
         account all other fees and amounts payable on such preferred stock) is
         less than the interest rate payable on the Loans.

                  12.05 Merger, Consolidation, Disposition of Assets and Sale
         Leaseback Transactions.

                  (a) Mergers and Consolidations. None of the Guarantors or the
         Lessees will, nor will permit any of its Subsidiaries to, become a
         party to any merger, amalgamation or consolidation, except, so long as
         no Default or Event of Default shall have occurred and be continuing or
         would result therefrom, (i) any Guarantor or Lessee (other than the
         Company) may merge or consolidate into another Guarantor or Lessee,
         (ii) any Subsidiary of the Company may consolidate or merge into any
         Lessee, a Guarantor or any Wholly-owned Subsidiary of a Guarantor or a
         Lessee provided a Lessee, a Guarantor or the Wholly-owned Subsidiary is
         the surviving corporation of such consolidation or merger, (c) any
         Subsidiary of the Company (other than a Lessee or Guarantor) may
         consolidate or merge into any other Subsidiary of the Company (other
         than a Lessee or Guarantor) and (d) any Guarantor or Lessee (other than
         the Company) or Subsidiary of the Company may merge or consolidate into
         another Person so long as both before and after giving effect to such
         merger or consolidation the Guarantors and the Lessees are in
         compliance with the Obligor Group Requirement and (i) the disposition
         of the assets of such Borrower or such Subsidiary would have been
         permitted under Section 12.02(b) or (ii) (A) the surviving entity,
         immediately after giving effect to such merger or consolidation,

                                       46
<PAGE>
         is or becomes a Lessee or a Guarantor by executing and delivering to
         the Administrative Agent a Joinder Agreement and the documents referred
         to therein and (B) such transaction, if it had been structured as an
         Acquisition by any Guarantor, any Lessee or Subsidiary of the Company,
         would not have been prohibited under Section 12.06.

                  (b) Disposition of Assets. None of the Guarantors or the
         Lessees will, nor will such party permit any of its Subsidiaries to,
         become a party to or agree to or effect any disposition of assets,
         other than:

                           (i) the sale of inventory, the licensing of
                  intellectual property and the disposition of obsolete assets,
                  in each case in the ordinary course of business consistent
                  with past practices;

                           (ii) any sale, transfer, assignment or lease of
                  CA-Property, including without limitation any store closures,
                  in the ordinary course of business which are no longer
                  necessary or required in the conduct of such Borrower's or
                  Subsidiary's business;

                           (iii) any sale or transfer of any CA-Property owned
                  by any Guarantor, any Lessee or any of their Subsidiaries in
                  order then or thereafter to lease such CA-Property or lease
                  other CA-Property that any Guarantor, any Lessee or any of
                  their Subsidiaries intends to use for substantially the same
                  purpose as the property being sold or transferred (a
                  "sale-leaseback transaction") in the ordinary course of
                  business and provided that no Default or Event of Default
                  shall have occurred and be continuing or would result
                  therefrom;

                           (iv) any sale, transfer or lease of CA-Property by
                  the Company to any Subsidiary of the Company or by any
                  Subsidiary of the Company to the Company or another Subsidiary
                  of the Company provided before and after giving effect to such
                  sale, transfer or lease, the Guarantors and the Lessees are in
                  compliance with the Obligor Group Requirement;

                           (v) any sale, transfer or lease of CA-Property in the
                  ordinary course of business which is replaced by substitute
                  CA-Property;

                           (vi) any transfers to Kmart of "Premises" pursuant to
                  the Kmart Indemnity (as such term is defined therein) if and
                  to the extent that any such transfer does not cause an Event
                  of Default under paragraph (q) of Article IX of the Credit
                  Agreement;

                           (vii) any sale, transfer or lease of property by the
                  Company or any of its Subsidiaries constituting all or a
                  portion of a Permitted Joint Venture Activity; and

                                       47
<PAGE>
                           (viii) other dispositions of assets that do not have
                  a Material Adverse Effect, provided that (i) the aggregate net
                  book value of the assets to be sold plus the net book value of
                  all other assets of the Guarantors, the Lessees and their
                  Subsidiaries sold or otherwise disposed of under this clause
                  (viii) during the period of time from the Closing Date through
                  the date of such sale does not, at the time of such sale or
                  other disposition, exceed 15% of the Consolidated Total Assets
                  of the Guarantors, the Lessees and their Subsidiaries, (ii)
                  such assets are sold or otherwise disposed of in an arm's
                  length transaction for fair market value (after giving effect
                  to all tax benefits, if any, associated with such sale or
                  other disposition), (iii) no Default or an Event of Default
                  exists or would result from such sale and (iv) before and
                  after giving effect to such disposition, the Guarantors and
                  the Lessees are in compliance with the Obligor Group
                  Requirement.

                  12.06 Acquisitions. None of the Guarantors or the Lessees
         will, nor will permit any of its Subsidiaries to, enter into any stock
         or asset acquisitions (other than the acquisition of assets in the
         ordinary course of such Person's business, and Acquisitions permitted
         under Section 12.03(i) or become or agree to become a general or
         limited partner, joint venturer or member in any partnership, joint
         venture or limited liability company, as the case may be, provided
         that, so long as no Default or Event of Default shall have occurred and
         be continuing or would result therefrom, the Company or any of its
         Subsidiaries may own or create (a) any Subsidiary so long as both
         before and after giving effect thereto the Guarantors and the Lessees
         are in compliance with the Obligor Group Requirement or (b) any Joint
         Venture so long as any Investment with respect thereto would constitute
         a Permitted Joint Venture Activity.

                  12.07 Compliance with Environmental Laws. None of the
         Guarantors or the Lessees will, nor will permit any of its Subsidiaries
         to, (a) use any of the Real Estate or any portion thereof for the
         handling, processing, storage or disposal of Hazardous Substances, (b)
         cause or permit to be located on any of the Real Estate any underground
         tank or other underground storage receptacle for Hazardous Substances,
         (c) generate any Hazardous Substances on any of the Real Estate, (d)
         conduct any activity at any Real Estate or use any Real Estate in any
         manner so as to cause a release (i.e., releasing, spilling, leaking,
         pumping, pouring, emitting, emptying, discharging, injecting, escaping,
         leaching, disposing or dumping) or threatened release of Hazardous
         Substances on, upon or into the Real Estate or (e) otherwise conduct
         any activity at any Real Estate or use any Real Estate in any manner
         that would violate any Environmental Law or bring such Real Estate in
         violation of any Environmental Law.

                  12.08 Modifications of Other Documents. None of the Guarantors
         or the Lessees will, nor will permit any of its Subsidiaries to, permit
         or otherwise consent to any amendment to or modification of any of the
         Kmart Agreements,

                                       48
<PAGE>
         the Credit Agreement, the Guarantee, the Participation Agreement, any
         Financed Lease or any other Operative Agreement (as defined in the
         Credit Agreement), the New Lease Loan Agreement, the New Lease
         Guaranty, the New Master Agreement, or any other Operative Agreement
         (as defined in the New Master Agreement) which could reasonably be
         expected to have a Material Adverse Effect, which would have the effect
         of materially increasing the obligations of or burdens on the Borrowers
         or any of their Subsidiaries thereunder or which would have the effect
         of shortening or deleting any notice or cure period provided for
         therein.

                  12.09 Employee Benefit Plans. None of the Guarantors, the
         Lessees nor any ERISA Affiliate will:

                  (a) engage in any "prohibited transaction" within the meaning
         of ss. 406 of ERISA or ss. 4975 of the Code which could result in a
         material liability for any of the Guarantors, the Lessees or any of
         their Subsidiaries; or

                  (b) permit any Guaranteed Pension Plan to incur an
         "accumulated funding deficiency", as such term is defined in ss. 302 of
         ERISA, whether or not such deficiency is or may be waived; or

                  (c) fail to contribute to any Guaranteed Pension Plan to an
         extent which, or terminate any Guaranteed Pension Plan in a manner
         which, could result in the imposition of a lien or encumbrance on the
         assets of any of the Guarantors, the Lessees or any of their
         Subsidiaries pursuant to ss. 302(f) or ss. 4068 of ERISA; or

                  (d) amend any Guaranteed Pension Plan in circumstances
         requiring the posting of security pursuant to ss. 307 of ERISA or ss.
         401(a)(29) of the Code; or

                  (e) permit or take any action which would result in the
         aggregate benefit liabilities (with the meaning of ss. 4001 of
         ERISA) of all Guaranteed Pension Plans exceeding the value of the
         aggregate assets of such Plans, disregarding for this purpose the
         benefit liabilities and assets of any such Plan with assets in excess
         of benefit liabilities; or

                  (f) permit or take any action which would contravene any
         Applicable Pension Legislation.

                  12.10. Business Activities. None of the Guarantors or the
         Lessees will, nor will permit any of its Subsidiaries to, engage
         directly or indirectly (whether through Subsidiaries or otherwise) in
         any type of business other than (a) with respect to the Guarantors and
         the Lessees, the businesses conducted by them on the effective date of
         the Omnibus Amendment, substantially as conducted and operated by such
         Person as of such date and (b) with respect to any Subsidiary of a
         Guarantor or a Lessee, substantially as conducted and operated by a
         Guarantor

                                       49
<PAGE>
         or a Lessee on the effective date of the Omnibus Amendment or in
         businesses reasonably incidental and complementary thereto.

                  12.11 Fiscal Year. None of the Guarantors or the Lessees will,
         nor will such party permit any of its Subsidiaries to, change its
         Fiscal Quarter or change its Fiscal Year.

                  12.12. Transactions with Affiliates. None of the Guarantors or
         the Lessees will, nor will such party permit any of its Subsidiaries
         to, engage in any transaction with any Affiliate (other than for
         services as employees, officers and directors), including any contract,
         agreement or other arrangement providing for the furnishing of services
         to or by, providing for rental of real or personal property to or from,
         or otherwise requiring payments to or from any such Affiliate or, to
         the knowledge of any of the Guarantors and the Lessees, any
         corporation, partnership, trust or other entity in which any such
         Affiliate has a substantial interest or is an officer, director,
         trustee or partner, on terms more favorable to such Person than would
         have been obtainable on an arm's-length basis in the ordinary course of
         business and provided such transaction is not otherwise prohibited by
         the Operative Agreements.

                  12.13 Changes in Governing Documents. None of the Guarantors
         or the Lessees will, nor will permit any of its Subsidiaries to, amend
         in any respect its Governing Documents in the event such change would
         be adverse to the Lenders.

                  12.14. Inconsistent Agreements. Each of the Guarantors and the
         Lessees shall not, and shall not permit any of its Subsidiaries to,
         enter into or become or remain subject to any restriction on the
         ability of such Guarantor, such Lessee or such Subsidiary to make
         dividends or distributions in cash or kind to such Guarantor, such
         Lessee or such Subsidiary, to make loans, advances or other payments of
         whatsoever nature to such Guarantor, such Lessee or such Subsidiary, or
         to make transfers or distributions of all or any part of its assets to
         such Guarantor, such Lessee or such Subsidiary either in its Governing
         Documents or in any agreement or contract to which it is a party (other
         than restrictions in this Guarantee, the other Operating Agreements,
         the New Master Agreement and the Revolving Credit Agreement), nor shall
         any of them enter into any indenture, agreement, instrument or other
         arrangement which, (a) directly or indirectly prohibits or restrains,
         or has the effect of prohibiting or restraining, or could reasonably be
         expected to impose materially adverse conditions upon, the incurrence
         of the Obligations under the Operating Agreements, any provisions of
         the Operative Agreements or the amending of any of the Operative
         Agreements, (b) contains any provision which would be violated or
         breached by the making of Loans to the Borrower or any Lessee, the
         incurrence of Indebtedness by any Guarantor or Lessee hereunder, or by
         the performance by any Guarantor or Lessee or any of its Subsidiaries
         of any of its obligations under any Operative Agreement or (c) directly
         or indirectly prohibits any of the Guarantors or the Lessees or any

                                       50
<PAGE>
         of its Subsidiaries from creating, assuming or incurring any Lien upon
         its properties, revenues or assets or those of any of its Subsidiaries
         whether now owned or hereafter acquired, other than (i) restrictions on
         specific assets which assets are the subject of purchase money security
         interests to the extent permitted under Section 12.02, (ii) customary
         anti-assignment provisions contained in leases and licensing agreements
         entered into by such Guarantor, such Lessee or such Subsidiary in the
         ordinary course of its business, and (iii) restrictions in the
         Revolving Credit Agreement, the other Loan Documents (as defined in the
         Revolving Credit Agreement), this Guarantee and the New Master
         Agreement.

                  12.15. Fixed Charge Coverage Ratio. The Guarantors and the
         Lessees will not permit the Fixed Charge Coverage Ratio for any Fiscal
         Quarter ending during any period described in the table set forth below
         to be less than the ratio set forth opposite such period in such table:

<TABLE>
<CAPTION>
                          Period                             Ratio
                          ------                             -----
<S>                                                          <C>
                          FQ4 2001 - FQ4 2002                1.6:1.0
                          FQ1 2003 - thereafter              1.7:1.0
</TABLE>

                  12.16. Leverage Ratio. The Guarantors and the Lessees will not
         permit the Leverage Ratio at the end of any Fiscal Quarter to exceed
         1.5:1.0.

                  12.17. Consolidated Tangible Net Worth. The Guarantors and the
         Lessees will not permit Consolidated Tangible Net Worth to be less than
         the sum of (a) $800,000,000 plus, (b) on a cumulative basis, fifty
         percent (50%) of positive Consolidated Net Income for each Fiscal Year
         subsequent to the Omnibus Amendment Effective Date plus (c) one hundred
         percent (100%) of the proceeds of any sale by the Guarantors and the
         Lessees of (i) equity securities issued by any Guarantor or any Lessee
         or (ii) warrants or subscription rights for equity securities issued by
         any Guarantor or Lessee.

                  12.18. Capital Expenditures. The Guarantors and the Lessees
         will not make or permit any Subsidiary of a Guarantor or a Lessee to
         make, Capital Expenditures in any Fiscal Year described in the table
         below that exceed, in the aggregate the amount set forth opposite such
         Fiscal Year in the table below:

<TABLE>
<CAPTION>
                          Fiscal Year                        Amount
                          -----------                        ------
<S>                                                          <C>
                          Fiscal Year 2002                   $150,000,000
                          Fiscal Year 2003                   $158,000,000
                          Fiscal Year 2004                   $148,000,000
                          Fiscal Year 2005                   $139,000,000
</TABLE>

         provided, however, that (a) in addition to the amounts described above,
         the Guarantors and the Lessees may increase Capital Expenditures during
         any Fiscal Year described in the table above by an amount equal to
         twenty-five percent (25%) of Consolidated Excess Cash Flow for the
         immediately preceding Fiscal Year and (b) if during any Fiscal Year the
         amount of Capital Expenditures

                                       51
<PAGE>
              permitted under the table above and clause (a) hereof (the
              "Permitted Amount") for that Fiscal Year is not so utilized, the
              lesser of (i) one hundred percent (100%) of such unutilized amount
              and (ii) fifty percent (50%) of the Permitted Amount for that
              Fiscal Year may be utilized in the next succeeding Fiscal Year
              (prior to the Permitted Amount for such succeeding Fiscal Year
              being used) but not in any subsequent Fiscal Year.

         Section 22. Grant of Security Interest. A new Article XXVI of the
Guarantee is hereby inserted immediately after Article XXV of the Guarantee as
follows:

                  ARTICLE XXVI. Granting Clause. In order to secure the
         obligations of the Guarantors under this Guarantee and each other
         Operative Agreement, each of the Guarantors that is also a Lessee, as
         grantor, hereby (i) grants, mortgages and warrants to the Real Estate
         Administrative Agent for the benefit of the Lenders, as mortgagee or
         beneficiary and secured party, or any successor thereto, a first and
         paramount Lien on such Guarantor's interest in each Property in which
         such Guarantor has an interest, (ii) represents that the Real Estate
         Administrative Agent shall have, as a result of such determination, all
         of the rights, powers and remedies of a mortgagee, deed of trust
         beneficiary or secured party available under applicable law to take
         possession of and sell (whether by foreclosure or otherwise) such
         Guarantor's interest in any such Property. The effective date of such
         mortgage, security deed or deed of trust shall be the effective date of
         this Guarantee.

         Section 23. Notes. The Notes issued by the Borrower on the Effective
Date to each of the Lenders (including any Departing Lender) (the "Original
Notes") shall be replaced with Tranche A Note and Tranche B Note issued by the
Borrower to the Administrative Agent for the benefit of the Lenders (including
the New Lenders); upon such replacement, such Original Notes shall be deemed to
be cancelled. Any reference to the Notes in the Operative Agreements shall be
deemed to refer to such replacement Notes.

         Section 24. Guarantee; Representations. The Guarantors hereby affirm
their obligations under the Guarantee after giving effect to this Amendment.
Each Guarantor and each Lessee hereby represents and warrants that, after giving
effect to this Amendment, (i) no Lease Event of Default, Event of Default, Lease
Default or Default has occurred and is continuing or will result from this
Amendment, (ii) there shall not have occurred any event that could reasonably be
expected to have a Material Adverse Effect since the Balance Sheet Date, and
(iii) each representation and warranty of each Guarantor and each Lessee
contained in the Participation Agreement and the other Operative Agreements is
true and correct in all material respects on the date hereof as though made on
and as of the date hereof, except to the extent such representations or
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date.

         Section 25. Conditions. The effectiveness of this Amendment shall be
conditioned upon the receipt by the Administrative Agent of the following
documents, each of which shall be satisfactory in form and substance to the
Administrative Agent: (i) the replacement Notes

                                       52
<PAGE>
referred to in Section 23 of this Amendment executed by the Borrower; (ii) a
certificate of the Secretary or an Assistant Secretary of each Guarantor and
each Lessee attaching to it and certifying as to (A) the Board of Directors' (or
appropriate committee's) resolution duly authorizing the execution, delivery and
performance by it of this Amendment, (B) the incumbency and signatures of
persons authorized to execute and deliver this Amendment on its behalf and (C)
its articles of incorporation and bylaws; (iii) the opinions of in-house counsel
to the Lessees and the Guarantors and Dickenson Wright PLLC, substantially in
the form set forth in Exhibit A hereto, and (iv) receipt by the Departing
Lenders of the prepayment amounts of Revolving Credit Loans and Swing Loans
described in Section 18 hereof, together with the payment of all costs, expenses
and fees of the Departing Lenders in accordance with the Operative Agreements
(including their pro rata share of the Facility Fee due June 2002).

         Section 26. Miscellaneous. This Amendment shall be governed by, and
construed in accordance with, the laws of the state of New York. This Amendment
may be executed by the parties hereto and separate counterparts, (including by
facsimile), each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one in the same agreement.
The Operative Agreements, as amended hereby, remain in full force and effect and
are hereby ratified by each of the parties hereto. Any reference to any
Operative Agreement from and after the date hereof shall be deemed to refer to
such Operative Agreements as amended hereby, unless otherwise expressly stated.
The Company hereby agrees to promptly pay, or reimburse the Administrative Agent
and the Lenders for all costs and expenses, including reasonable legal fees and
disbursements, incurred by such Person in connection with this Amendment.

         Section 27. Instruction to Owner Trustee. The undersigned Investor,
being the sole Investor under the Trust Agreement, by executing its counterpart
of this Amendment hereby authorizes and instructs the Owner Trustee to execute
and deliver this Amendment pursuant to Section 4.2 of the Trust Agreement. The
undersigned Investor hereby certifies that it has reviewed and approved of this
Amendment, and this instruction and such action by the Owner Trustee pursuant to
this instruction are not contrary to any obligation of the Owner Trustee, and
are consistent with, permitted by and in compliance with each of the Operative
Agreements and any applicable law. In order to induce the Owner Trustee to take
the foregoing actions, the Investor hereby agrees to indemnify Wilmington Trust
Company, its directors, officers, employees, and agents (each, an "Indemnitee")
for, and agrees to hold each Indemnitee harmless against, any liability, loss or
expense (including, without limitation, legal and other professional fees and
expenses) incurred by an Indemnitee in connection with or arising out of the
taking by Wilmington Trust Company, as Owner Trustee, of the foregoing actions.
In addition, the undersigned Lessees hereby consent to the taking by the Owner
Trustee of the foregoing actions.

                                       53

<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the year first above
written.

                                    BORDERS GROUP, INC., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title: Senior Vice President and Chief
                                    Financial Officer

                                    BORDERS, INC., as a Lessee and a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title: Senior Vice President and Treasurer

                                    WALDEN BOOK COMPANY, INC., as a Lessee
                                    and a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                    WALDENBOOKS PROPERTIES, INC., as a
                                    Lessee and a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                      S-1
<PAGE>
                                    BORDERS PROPERTIES, INC., as a Lessee and a
                                    Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                    PLANET MUSIC, INC., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                    BORDERS ONLINE, LLC., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                    BORDERS OUTLET, INC., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                    BORDERS FULFILLMENT, INC., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                      S-2
<PAGE>
                                    THE LIBRARY, LTD., as a Guarantor

                                    By: /s/ Edward W. Wilhelm
                                        ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                      S-3
<PAGE>
                                    BORDERS ONLINE, INC., as a Guarantor

                                    By: /S/ Edward W. Wilhelm
                                       ----------------------------------------
                                    Name Printed:  Edward W. Wilhelm
                                    Title:  Senior Vice President and Treasurer

                                      S-4
<PAGE>
                                    WILMINGTON TRUST COMPANY, not in its
                                    individual capacity, but solely as Owner
                                    Trustee

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-5
<PAGE>
                                    SAM PROJECT FUNDING CORP. I

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-6
<PAGE>
                                    SUNTRUST BANK, as Co-Arranger,
                                    Documentation Agent, Administrative Agent
                                    and a Lender

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-7
<PAGE>
                                    FLEET NATIONAL BANK, as Co-Arranger,
                                    Syndication Agent, and a Lender

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-8
<PAGE>
                                    PNC BANK NATIONAL ASSOCIATION, as
                                    former Administrative Agent and as a Lender

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-9
<PAGE>
                                    BANK ONE, NA, as former Syndication Agent
                                    and as a Departing Lender

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-10
<PAGE>
                                    DEUTSCHE BANK TRUST COMPANY AMERICAS, as
                                    former Real Estate Administrative Agent and
                                    as a Departing Lender

                                    By: ________________________________________
                                    Name Printed: ______________________________
                                    Title: _____________________________________

                                      S-11
<PAGE>
                                        MIZUHO CORPORATE BANK, LIMITED, as a
                                        Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-12
<PAGE>
                                        KEYBANK, NATIONAL ASSOCIATION, as a
                                        Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-13
<PAGE>
                                        COMERICA BANK, as a Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-14
<PAGE>
                                        JP MORGAN CHASE BANK, as a Departing
                                        Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-15
<PAGE>
                                        UNION BANK OF CALIFORNIA, N.A., as a
                                        Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-16
<PAGE>
                                        BNP PARIBAS, as a Departing Lender

                                        By:_______________________________
                                        Name Printed:_____________________
                                        Title:____________________________

                                      S-17
<PAGE>
                                        HIBERNIA NATIONAL BANK, as a Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-18
<PAGE>
                                        THE NORTHERN TRUST COMPANY, as a
                                        Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-19
<PAGE>
                                        THE BANK OF NEW YORK, as a Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-20
<PAGE>
                                        U.S. BANK NATIONAL ASSOCIATION, as
                                        a Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-21
<PAGE>
                                        GENERAL ELECTRIC CAPITAL CORPORATION,
                                        as a Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-22
<PAGE>
                                        FIRST HAWAIIAN BANK, as a Departing
                                        Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-23
<PAGE>
                                        BANK OF SCOTLAND, as a Departing Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-24
<PAGE>
                                        WACHOVIA BANK, NATIONAL
                                        ASSOCIATION, as a Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-25
<PAGE>
                                        NATIONAL CITY BANK, as a New Lender

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-26
<PAGE>
                                        LORD SECURITIES, INC., AS INVESTOR

                                        By:_____________________________________
                                        Name Printed:___________________________
                                        Title:__________________________________

                                      S-27

<PAGE>
                                SCHEDULE 1.01(A)

              Euro-Rate Margin, Base Rate Margin, Facility Fee Rate

      For each period commencing on an Adjustment Date through the date
immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the Base Rate Margin, Euro-Rate Margin and Facility Fee Rate shall be
the applicable margin set forth below with respect to the Fixed Charge Coverage
Ratio, as determined for the Reference Period of the Guarantors, the Lessees and
their Subsidiaries ending with the Fiscal Quarter ended immediately prior to the
applicable Rate Adjustment Period.

<TABLE>
<CAPTION>
            Fixed Charge           Base Rate    Euro-Rate      Facility
Level       Coverage Ratio          Margin       Margin        Fee Rate
-----       --------------          ------       ------        --------
<S>         <C>                    <C>          <C>            <C>
  I         Greater than or equal      0%        0.950%         0.175%
            to 2.25:1.00

  II        Less than 2.25:1.00        0%        1.175%         0.200%
            but greater than or
            equal to 2.00:1.00

 III        Less than 2.00:1.00        0%        1.375%         0.250%
            but greater than or
            equal to 1.75:1.00

  IV        less than 1.75:1.00        0%        1.500%         0.375%
</TABLE>

      Notwithstanding the foregoing, (a) for the Revolving Credit Loans
outstanding and the Facility Fee payable during the period commencing on the
Omnibus Amendment Effective Date through the date immediately preceding the
first Adjustment Date to occur after the date that is six months after the
Omnibus Amendment Effective Date, the Base Rate Margin, Euro-Rate Margin and
Facility Fee Rate shall be the applicable margin set forth in Level III above,
and (b) if the Guarantors fail to deliver any Compliance Certificate pursuant to
Section 11.04(c) of the Guarantee then, for the period commencing on the next
Adjustment Date to occur subsequent to such failure through the date immediately
following the date on which such Compliance Certificate is delivered, the Base
Rate Margin, Euro-Rate Margin and Facility Fee Rate shall be the highest
applicable margin set forth above.

<PAGE>

                                   SCHEDULE II

                             Commitments of Lenders

<TABLE>
<CAPTION>
                                                   Amount of
Name of Lender          Address for Notices        Commitment      Ratable Share(1)
--------------          -------------------        ----------      ----------------
<S>                     <C>                        <C>             <C>
SunTrust Bank           303 Peachtree Street
                        Atlanta, GA 30308          $39,000,000(2)
                        Attention: Jonathan Simon  $14,000,000(3)  18.6667%

Fleet National Bank                                  $5,000,000     6.6667%

PNC Bank                                            $13,000,000    17.3333%

Comerica Bank                                        $5,000,000     6.6667%

Hibernia National Bank                               $5,000,000     6.6667%

The Bank of New York                                 $5,000,000     6.6667%

US Bank                                             $10,000,000    13.3333%

Wachovia Bank                                       $13,000,000    17.3333%

National City Bank                                   $5,000,000     6.6667%
</TABLE>

(1) Ratable Share is calculated as of the date that the aggregate outstanding
    principal amount of all Revolving Credit Loans shall be reduced to
    $75,000,000.

(2) SunTrust Commitment prior to the aggregate outstanding principal amount of
    all Revolving Credit Loans being reduced to $75,000,000.

(3) SunTrust Commitment on and after the date that the aggregate outstanding
    principal amount of all Revolving Credit Loans is reduced to $75,000,000.<PAGE>
                                                                   EXHIBIT 10.43

                                                                  EXECUTION COPY

================================================================================

                                MASTER AGREEMENT

                            Dated as of June 21, 2002

                                      among

                            BORDERS GROUP, INC., AND
                            CERTAIN SUBSIDIARIES OF
                              BORDERS GROUP, INC.,
                THAT ARE, OR MAY HEREAFTER BECOME, PARTY HERETO,
                                 as Guarantors,

                               BORDERS, INC., AND
                         CERTAIN OTHER SUBSIDIARIES OF
                              BORDERS GROUP, INC.,
                     THAT MAY HEREAFTER BECOME PARTY HERETO,
                                   as Lessees

                   ATLANTIC FINANCIAL GROUP, LTD., as Lessor,

                 CERTAIN FINANCIAL INSTITUTIONS PARTIES HERETO,
                                   as Lenders

                              FLEET NATIONAL BANK,
                      as Co-Arranger and Syndication Agent

                                       and

                                 SUNTRUST BANK,
                  as Co-Arranger, Documentation Agent and Agent

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                 Page
<S>                                                                                                              <C>
ARTICLE I.          DEFINITIONS; INTERPRETATION ................................................................   2

ARTICLE II.         ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS;
                    NATURE OF TRANSACTION ......................................................................   2
         SECTION 2.1     Agreement to Acquire, Construct, Fund and Lease .......................................   2
         SECTION 2.2     Fundings of Purchase Price and Construction Costs .....................................   3
         SECTION 2.3     Funded Amounts and Interest and Yield Thereon; Facility Fee ...........................   6
         SECTION 2.4     Lessee Owner ..........................................................................   7

ARTICLE III.        CONDITIONS PRECEDENT; DOCUMENTS ............................................................   7
         SECTION 3.1     Conditions to the Obligations of the Funding Parties on each Closing
                         Date ..................................................................................   7
         SECTION 3.2     Additional Conditions for the Documentation Date ......................................  12
         SECTION 3.3     Conditions to the Obligations of Lessee ...............................................  13
         SECTION 3.4     Conditions to the Obligations of the Funding Parties on Each Funding
                         Date ..................................................................................  14
         SECTION 3.5     Completion Date Conditions ............................................................  15
         SECTION 3.6     Addition of Lessees ...................................................................  16

ARTICLE IV.         REPRESENTATIONS ............................................................................  17
         SECTION 4.1     Representations of Guarantors, Borders and other Lessees ..............................  17
         SECTION 4.2     Survival of Representations and Effect of Fundings ....................................  27
         SECTION 4.3     Representations of the Lessor .........................................................  27
         SECTION 4.4     Representations of each Lender ........................................................  29

ARTICLE V.          COVENANTS OF GUARANTORS, BORDERS, THE OTHER LESSEES
                    AND THE LESSOR .............................................................................  29
         SECTION 5.1     Punctual Payment ......................................................................  29
         SECTION 5.2     Maintenance of Office .................................................................  29
         SECTION 5.3     Records and Accounts ..................................................................  30
         SECTION 5.4     Financial Statements, Certificates and Information ....................................  30
         SECTION 5.5     Notices ...............................................................................  31
         SECTION 5.6     Legal Existence; Maintenance of Properties ............................................  32
         SECTION 5.7     Insurance .............................................................................  33
         SECTION 5.8     Taxes .................................................................................  33
         SECTION 5.9     Inspection of Properties ..............................................................  33
         SECTION 5.10    Compliance with Laws, Contracts, Licenses, and Permits ................................  33
         SECTION 5.11    Employee Benefit Plans ................................................................  34
         SECTION 5.12    Use of Proceeds .......................................................................  34
</Table>

                                       -i-

<PAGE>

<Table>
<S>                                                                                                              <C>
         SECTION 5.13    Subsequent Credit Terms ...............................................................  34
         SECTION 5.14    Subsidiary Guaranties .................................................................  35
         SECTION 5.15    Further Assurances ....................................................................  35
         SECTION 5.16    Restrictions on Indebtedness ..........................................................  35
         SECTION 5.17    Restrictions on Liens .................................................................  36
         SECTION 5.18    Restrictions on Investments ...........................................................  38
         SECTION 5.19    Restricted Payments ...................................................................  40
         SECTION 5.20    Merger, Consolidation, Disposition of Assets and Sale Leaseback
                         Transactions ..........................................................................  41
         SECTION 5.21    Acquisitions ..........................................................................  43
         SECTION 5.22    Compliance with Environmental Laws ....................................................  43
         SECTION 5.23    Modifications of Other Documents ......................................................  43
         SECTION 5.24    Employee Benefit Plans ................................................................  43
         SECTION 5.25    Business Activities ...................................................................  44
         SECTION 5.26    Fiscal Year ...........................................................................  44
         SECTION 5.27    Transactions with Affiliates ..........................................................  44
         SECTION 5.28    Changes in Governing Documents ........................................................  45
         SECTION 5.29    Inconsistent Agreements ...............................................................  45
         SECTION 5.30    Fixed Charge Coverage Ratio ...........................................................  45
         SECTION 5.31    Leverage Ratio ........................................................................  46
         SECTION 5.32    Consolidated Tangible Net Worth .......................................................  46
         SECTION 5.33    Capital Expenditures ..................................................................  46
         SECTION 5.34    Further Assurances ....................................................................  46
         SECTION 5.35    Additional Required Appraisals ........................................................  46
         SECTION 5.36    Lessor's Covenants ....................................................................  47

ARTICLE VI.         TRANSFERS BY LESSOR AND LENDERS;
                    DISTRIBUTION OF PAYMENTS AND PROCEEDS ......................................................  48
         SECTION 6.1     Lessor Transfers ......................................................................  48
         SECTION 6.2     Lender Transfers ......................................................................  48
         SECTION 6.3     Distribution and Application of Rent Payments .........................................  50
         SECTION 6.4     Distribution and Application of Purchase Payment ......................................  50
         SECTION 6.5     Distribution and Application to Funding Party Balances of Lessee
                         Payment of Construction Failure Payment ...............................................  50
         SECTION 6.6     Distribution and Application to Funding Party Balances of Sale Proceeds
                         of Leased Property ....................................................................  51
         SECTION 6.7     Distribution and Application of Payments Received When an Event of
                         Default Exists or Has Ceased to Exist Following Rejection of the Lease ................  51
         SECTION 6.8     Distribution of Other Payments ........................................................  52
         SECTION 6.9     Timing of Agent Distributions .........................................................  52
         SECTION 6.10    Release of Leased Properties ..........................................................  52

</Table>

                                      -ii-

<PAGE>

<Table>
<S>                                                                                                              <C>
ARTICLE VII.        INDEMNIFICATION ............................................................................  53
         SECTION 7.1     General Indemnification ...............................................................  53
         SECTION 7.2     Environmental Indemnity ...............................................................  55
         SECTION 7.3     Proceedings in Respect of Claims ......................................................  56
         SECTION 7.4     General Tax Indemnity .................................................................  58
         SECTION 7.5     Increased Costs, etc. .................................................................  64

ARTICLE VIII.       MISCELLANEOUS ..............................................................................  68
         SECTION 8.1     Survival of Agreements ................................................................  68
         SECTION 8.2     Documentary Conventions ...............................................................  68
         SECTION 8.3     Expenses ..............................................................................  68
         SECTION 8.4     Liabilities of the Funding Parties; Sharing of Payments ...............................  68
         SECTION 8.5     Liabilities of the Agent ..............................................................  69

APPENDIX A               Definitions and Interpretation
</Table>

                                    SCHEDULES

SCHEDULE 2.2                 Commitments/Maximum Commitments
SCHEDULE 4.1(c)              Title to Properties; Leases
SCHEDULE 4.1(e)              Restricted Payments
SCHEDULE 4.1(g)              Litigation
SCHEDULE 4.1(h)              Transactions with Affiliates
SCHEDULE 4.1(q)              Environmental Compliance
SCHEDULE 4.1(r)              Subsidiaries, Etc.
SCHEDULE 5.16                Existing Indebtedness
SCHEDULE 5.17                Existing Liens
SCHEDULE 5.18                Existing Investments

                                    EXHIBITS

EXHIBIT A                    Form of Funding Request
EXHIBIT B                    Form of Assignment of Lease and Rents
EXHIBIT C                    Form of Security Agreement and Assignment
EXHIBIT D                    Form of Mortgage
EXHIBIT E                    Form of Joinder Agreement
EXHIBIT F                    Form of Assignment and Acceptance Agreement
EXHIBIT G                    Forms of Opinions of Counsel
EXHIBIT H                    Form of Certification of Construction Completion
EXHIBIT I                    Form of Payment Date Notice
EXHIBIT J                    Form of Compliance Certificate

                                      -iii-

<PAGE>

                                MASTER AGREEMENT

         THIS MASTER AGREEMENT, dated as of June 21, 2002 (as it may be amended
or modified from time to time in accordance with the provisions hereof, this
"Master Agreement"), is among BORDERS GROUP, INC., a Michigan corporation
("BGI"), and certain Subsidiaries of BGI that are, or may hereafter become
parties hereto as guarantors pursuant to Section 5.14 (individually, a
"Guarantor" and collectively, the "Guarantors"), as Guarantors, BORDERS, INC., a
Colorado corporation ("Borders"), and certain other Subsidiaries of BGI that may
hereafter become parties hereto as lessees pursuant to Section 3.6
(individually, a "Lessee" and, collectively, the "Lessees"), as Lessees,
ATLANTIC FINANCIAL GROUP, LTD., a Texas limited partnership (the "Lessor"),
certain financial institutions parties hereto as lenders (together with any
other financial institution that becomes a party hereto as a lender,
collectively referred to as "Lenders" and individually as a "Lender"), FLEET
NATIONAL BANK, as Co-Arranger and Syndication Agent, and SUNTRUST BANK, a
Georgia state banking corporation, as agent for the Lenders (in such capacity,
the "Agent"), Co-Arranger and Documentation Agent.

                             PRELIMINARY STATEMENT

         In accordance with the terms and provisions of this Master Agreement,
the Lease, the Loan Agreement and the other Operative Documents, (i) the Lessor
contemplates acquiring Land or a leasehold interest in Land and, in certain
cases, the Buildings on such Land identified by Borders from time to time, and
leasing such Land and Buildings thereon to a Lessee, (ii) Borders, as
Construction Agent for the Lessor, wishes, in certain instances, to arrange for
the construction of Buildings on Land for the Lessor and, when completed, the
related Lessee wishes to lease such Buildings from the Lessor as part of the
Leased Properties under the Lease, (iii) Borders, in carrying out its duties as
Construction Agent, wishes to obtain from Lessor, and the Lessor is willing to
provide, funding for the acquisition of the Land (or a leasehold interest
therein) and Buildings, or, in certain instances, the construction of Buildings,
and (iv) the Lessor wishes to obtain, and Lenders are willing to provide, from
time to time, financing of a portion of the funding of the acquisition of the
Land (or a leasehold interest therein) and Buildings and, if applicable, the
construction of the Buildings.

         In consideration of the mutual agreements contained in this Master
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

                                       1

<PAGE>

                                   ARTICLE I.
                          DEFINITIONS; INTERPRETATION

         Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix A
hereto shall apply to this Master Agreement.

                                  ARTICLE II.
                 ACQUISITION, CONSTRUCTION AND LEASE; FUNDINGS;
                              NATURE OF TRANSACTION

         SECTION 2.1 Agreement to Acquire, Construct, Fund and Lease.

                  (a) Land. Subject to the terms and conditions of this Master
Agreement, with respect to each parcel of Land identified by a Lessee, on the
related Closing Date (i) the Lessor agrees to acquire such interest in the
related Land, and any Building thereon, from the applicable Seller as is
transferred, sold, assigned and conveyed to the Lessor pursuant to the
applicable Purchase Agreement or to lease such interest in the related Land, and
any Building thereon, from the applicable Ground Lessor as is leased to the
Lessor pursuant to the applicable Ground Lease, as the case may be, (ii) the
Lessor hereby agrees to lease, or sublease, as the case may be, such Land and
any Building thereon to the related Lessee pursuant to the Lease, and (iii) the
related Lessee hereby agrees to lease, or sublease, as the case may be, such
Land, and any Building thereon, from the Lessor pursuant to the Lease. With
respect to each IDB Property, (i) the applicable Authority may acquire such
interest in the related Land from the applicable Seller as is transferred, sold,
assigned and conveyed to the Authority pursuant to the applicable Purchase
Agreement, (ii) the applicable Authority will lease such Land to the Lessor
pursuant to the related IDB Lease, and (iii) the related Lessee hereby agrees to
sublease such Land from the Lessor pursuant to the Lease (it being understood
that any reference in the Operative Documents to the lease by a Lessee of an IDB
Property shall be deemed to refer to the sublease thereof pursuant to the Lease,
if title to such IDB Property is held by the related Authority).

                  (b) Building. With respect to each parcel of Land on which a
Building is to be constructed, subject to the terms and conditions of this
Master Agreement, from and after the Closing Date relating to such Land (i) the
Construction Agent agrees, pursuant to the terms of the Construction Agency
Agreement, to construct and install the Building on such Land for the Lessor
prior to the Scheduled Construction Termination Date, (ii) the Funding Parties
agree to fund the Construction Costs with respect to such Building, (iii) the
Lessor shall lease, or sublease, as the case may be, such Building as part of
such Leased Property to the related Lessee pursuant to the Lease, and (iv) the
related Lessee shall lease, or sublease, as the case may be, such Building from
the Lessor pursuant to the Lease.

                                       2

<PAGE>

         SECTION 2.2 Fundings of Purchase Price and Construction Costs.

                  (a) Initial Funding and Payment of Purchase Price for Land and
Development Costs on Closing Date. Subject to the terms and conditions of this
Master Agreement, on the Closing Date for any Land, and any Building thereon,
each Lender shall make available, or arrange to make available, to the Lessor
its initial Loan with respect to such Land, and any Building thereon, in an
amount equal to the product of such Lender's Commitment Percentage times the
purchase price or the ground rent for such Land, and any Building thereon, and
the Construction Costs incurred by the Construction Agent, as agent, through
such Closing Date, which funds the Lessor shall use, together with the Lessor's
own funds in an amount equal to the product of the Lessor's Commitment
Percentage times the purchase price or ground rent for the related Land and any
Building thereon, and the Construction Costs incurred by the Construction Agent,
as agent for the Lessor, through such Closing Date, to purchase such Land, and
any Building thereon, from the applicable Seller pursuant to the applicable
Purchase Agreement or lease the Land and any Building thereon, from the
applicable Ground Lessor pursuant to the applicable Ground Lease, as the case
may be, and to pay (or reimburse itself for) the amount of such Construction
Costs, and the Lessor shall lease, or sublease, as the case may be, such Land to
the related Lessee pursuant to the Lease.

                  (b) Subsequent Fundings and Payments of Construction Costs
during Construction Term. Subject to the terms and conditions of this Master
Agreement, if a Building is to be constructed on Land, on each Funding Date
following the Closing Date for such parcel of Land until the related
Construction Term Expiration Date, (i) each Lender shall make available, or
arrange to make available, to the Lessor a Loan in an amount equal to the
product of such Lender's Commitment Percentage times the amount of Funding
requested by the Construction Agent for such Funding Date, which funds the
Lessor hereby directs each Lender to pay over, or cause to be paid over, to the
Agent, for distribution to the Construction Agent, as agent for the Lessor, as
set forth in paragraph (d), and (ii) the Lessor shall pay over to the Agent, for
distribution to the Construction Agent, as agent for the Lessor, its own funds
(which shall constitute a part of, and an increase in, the Lessor's Invested
Amount with respect to such Leased Property) in an amount equal to the product
of the Lessor's Commitment Percentage times the amount of Funding requested by
the Construction Agent for such Funding Date.

                  (c) Aggregate Limits on Funded Amounts. The aggregate amount
that the Funding Parties shall be committed to provide, or cause to be provided,
as Funded Amounts under this Master Agreement and the Loan Agreement shall not
exceed (x) with respect to each Leased Property, the costs of purchase (or
ground lease, as the case may be) and construction of such Leased Property and
the related Construction Costs, or (y) in the aggregate for all Leased
Properties, the amount equal to (i) $75,000,000 minus (ii) the outstanding
Revolving Credit Loans. The aggregate amount that any Funding Party shall be
committed to fund, or cause to be funded, under this Master Agreement and the
Loan Agreement shall not exceed the lesser of (i) such Funding Party's
Commitment and (ii) such Funding Party's Commitment Percentage of the aggregate
Fundings requested under this Master Agreement. Notwithstanding anything in

                                       3

<PAGE>

this Section to the contrary, no Funding Party's Commitment shall exceed its
Maximum Commitment.

                  (d) Notice, Time and Place of Fundings. (i) With respect to
each Funding, a Lessee or the Construction Agent, as the case may be, shall give
the Lessor and the Agent an irrevocable prior telephone (followed within one
Business Day with written) or written notice not later than 11:00 a.m., Atlanta,
Georgia time, at least three Business Days prior to the proposed Closing Date or
other Funding Date, as the case may be, pursuant, in each case, to a Funding
Request in the form of Exhibit A (a "Funding Request"), specifying the Closing
Date or subsequent Funding Date, as the case may be, the amount of Funding
requested, the Leased Property to which such Funding relates, whether such
Funding shall be a LIBOR Advance or a Base Rate Advance or a combination thereof
and the Rent Period(s) therefor. Following the Agent's receipt of a Funding
Request, the Agent shall give each Lender a written notice not later than 5:00
p.m., Atlanta, Georgia time on the date such Funding Request is received by the
Agent (unless such Funding Request is received after 11:00 a.m., Atlanta,
Georgia time, in which case such notice shall be given not later than 5:00 p.m.,
Atlanta, Georgia time on the next Business Day), specifying the Closing Date or
subsequent Funding Date, as the case may be, the amount of to be funded by such
Lender, whether such Funding shall be a LIBOR Advance or a Base Rate Advance or
a combination thereof and the Rent Period(s) therefor. All documents and
instruments required to be delivered on such Closing Date pursuant to this
Master Agreement shall be delivered at the offices of Mayer, Brown, Rowe & Maw,
190 South LaSalle Street, Chicago, Illinois 60603, or at such other location as
may be determined by the Lessor, the Construction Agent and the Agent. Each
Funding shall occur on a Business Day and shall be in an amount equal to
$500,000 or an integral multiple of $10,000 in excess thereof, with the
exception of the final draw, which may be for such lesser amount as may be due
and owing to fund the balance of the Construction Costs for the related Leased
Property. All remittances made by, or caused to be made by, each Lender and the
Lessor for any Funding shall be made in immediately available funds by wire
transfer to, or as is directed by, the Construction Agent, with receipt by the
Construction Agent not later than 12:00 noon, Atlanta, Georgia time, on the
applicable Funding Date, upon satisfaction or waiver of the conditions precedent
to such Funding set forth in Article III. The Agent shall, to the extent it has
received funds from the Funding Parties except as set forth in clause (ii)
below, remit the amount of any Funding in immediately available funds by wire
transfer to, or as is directed by, the related Lessee or the Construction Agent,
with receipt by the related Lessee or the Construction Agent, as applicable, not
later than 12:00 noon, Atlanta, Georgia time, on the applicable Funding Date;
such funds shall (1) in the case of the initial Funding on a Closing Date, be
used to pay the purchase price to the applicable Seller, or ground rent to the
applicable Ground Lessor, for the related Land and any Building thereon and pay
Construction Costs related to such Land, and (2) in the case of each subsequent
Funding be paid to the Construction Agent, as agent for the Lessor, for the
payment or reimbursement of Construction Costs incurred through such Funding
Date and not previously paid or reimbursed.

                                       4

<PAGE>

                  (ii) Unless the Agent shall have received notice from a
Funding Party prior to 11:00 a.m. (Atlanta, Georgia time) on any proposed
Closing Date or Funding Date that the Funding Party will not make available to
the Agent the amount of that Funding Party's Funded Amounts, the Agent may
assume that each Funding Party has made such amount available to the Agent on
such Closing Date or Funding Date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to the applicable
Lessee or the Construction Agent on such date a corresponding amount. If and to
the extent any Funding Party shall not have made the full amount of its Funded
Amount available to the Agent, and the Agent in such circumstances has made
available to the applicable Lessee or the Construction Agent the corresponding
amount, that Funding Party shall on the next Business Day following such Closing
Date or Funding Date make such amount available to the Agent. If such amount is
so made available, such payment to the Agent shall constitute such Funding
Party's Funding as of the date such amount is so made available for all purposes
of this Agreement. Upon receipt by the Agent of Basic Rent from the Lessee, the
Agent shall be entitled to that portion of such Basic Rent for the period that
the Agent funded such Funding Party's Funded Amount, and such Funding Party
shall be entitled to that portion of Basic Rent for the period that such Funding
Party funded its Funded Amount. In the event that such Funding Party has not
made such amount available to the Agent within two (2) Business Days after the
date that the Agent made such amount available to the related Lessee or the
Construction Agent, such Lessee or the Construction Agent, as applicable, shall
return such amount by wire transfer in immediately available funds to the Agent
immediately upon notice by the Agent.

                  (e) Lessee's Deemed Representation for Each Funding. Each
Funding Request by a Lessee or the Construction Agent shall be deemed a
reaffirmation of each Guarantor's and each Lessee's indemnity obligations in
favor of the Indemnitees under the Operative Documents and a representation and
warranty to the Lessor, the Agent and the Lenders that on the proposed Closing
Date or Funding Date, as the case may be, (i) the amount of Funding requested
represents amounts owing in respect of the purchase price or ground rent of the
related Land, and any Building thereon, and Construction Costs in respect of the
Leased Property (in the case of the initial Funding on a Closing Date) or
amounts that are then due to third parties in respect of the Construction, or
amounts paid by the Construction Agent, as agent for the Lessor, to third
parties for which the Construction Agent has not previously been reimbursed by a
Funding (in the case of any Funding), (ii) no Event of Default or Potential
Event of Default exists, and (iii) the representations and warranties of each
Guarantor and each Lessee set forth in Section 4.1 are true and correct in all
material respects as though made on and as of such Funding Date, except to the
extent such representations or warranties relate solely to an earlier date, in
which case such representations and warranties shall have been true and correct
in all material respects on and as of such earlier date.

                  (f) Not Joint Obligations. Notwithstanding anything to the
contrary set forth herein or in the other Operative Documents, each Lender's and
the Lessor's commitments shall be several, and not joint. In no event shall any
Funding Party be obligated to fund, or cause to be funded, an amount in excess
of such Funding Party's Commitment Percentage of any Funding, or

                                       5

<PAGE>

to fund, or cause to be funded, amounts in the aggregate in excess of such
Funding Party's Commitment.

                  (g) Non-Pro Rata Fundings. Notwithstanding anything to the
contrary set forth in this Master Agreement, but subject to Section 2.2(f)
above, at the Agent's option, Fundings may be made by drawing on the Lessor's
Commitment until such Commitment is fully funded before drawing on the Lenders'
Commitments. In such event, when the Lessor's Commitment is fully funded, the
Lenders will fund, or cause to be funded, on a pro rata basis as among
themselves, 100% of the amount of the Fundings thereafter, provided that, in no
event will the Lessor's Invested Amount be less than 5% of the aggregate Funded
Amounts.

         SECTION 2.3 Funded Amounts and Interest and Yield Thereon; Facility
Fee.

                  (a) The Lessor's Invested Amount for any Leased Property
outstanding from time to time shall accrue yield ("Yield") at the Lessor Rate,
computed using the actual number of days elapsed and a 360 day year. If all or a
portion of the principal amount of or Yield on the Lessor's Invested Amounts
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall, without limiting the rights of the Lessor
under the Lease, to the maximum extent permitted by law, accrue yield at the
Overdue Rate, from the date of nonpayment until paid in full (both before and
after judgment).

                  (b) Each Lender's Funded Amount for any Leased Property
outstanding from time to time shall accrue interest as provided in the Loan
Agreement.

                  (c) During the Construction Term for any Construction Land
Interest, in lieu of the payment of accrued interest, on each Payment Date, the
related Lessee may elect to capitalize interest related to such Leased Property,
by delivering a written notice of such election at the time that the initial
Funding Request is given for such Leased Property. If such an election is made,
each Lender's Funded Amount in respect of such Construction Land Interest shall
automatically be increased by the amount of interest accrued and unpaid on the
related Loans pursuant to the Loan Agreement during the Rent Period ending on
such Payment Date (except to the extent that at any time such increase would
cause such Lender's Funded Amount to exceed such Lender's Commitment, in which
event the related Lessee shall pay such excess amount to such Lender in
immediately available funds on such Payment Date). Similarly, in lieu of the
payment of accrued Yield, on each Payment Date, the Lessor's Invested Amount in
respect of such Construction Land Interest shall automatically be increased by
the amount of Yield accrued on the Lessor's Invested Amount in respect of such
Leased Property during the Rent Period ending immediately prior to such Payment
Date (except to the extent that at any time such increase would cause the
Lessor's Invested Amount to exceed the Lessor's Commitment, in which event the
related Lessee shall pay such excess amount to the Lessor in immediately
available funds on such Payment Date). Such increases in Funded Amounts shall
occur without any disbursement of funds by the Funding Parties, and without the
need for delivery of a Funding Request.

                                       6

<PAGE>

                  (d) Three Business Days prior to the last day of each Rent
Period, Borders shall deliver (which delivery may be by facsimile) to the Lessor
and the Agent a notice substantially in the form of Exhibit I (each, a "Payment
Date Notice"), appropriately completed, specifying the allocation of the Funded
Amounts related to such Rent Period to LIBOR Advances and Base Rate Advances and
the Rent Periods therefor, provided that no such allocation to LIBOR Advances
shall be in an amount less than $1,000,000. Each such Payment Date Notice shall
be irrevocable. If no such notice is given, the Funded Amounts in excess of
$1,000,000 shall be allocated to a LIBOR Advance with a Rent Period of three (3)
months; any Funded Amounts of $1,000,000 or less shall be allocated to a Base
Rate Advance.

                  (e) Borders agrees to pay to the Agent, for the pro rata
benefit of the Funding Parties, a facility fee (the "Facility Fee") for each day
from the date hereof until the Lease Termination Date equal to (i) the
Applicable Margin applicable to the Facility Fee times (ii) the aggregate
Commitments on such day, times (iii) 1/360. Such fees shall be payable in
arrears on each Quarterly Payment Date and, prior to the Funding Termination
Date, shall be paid with the proceeds of Advances (which Advances shall be made
automatically and without the necessity of the delivery of a Funding Request).

         SECTION 2.4 Lessee Owner. With respect to each Leased Property, it is
the intent of the Lessees, the Guarantors and the Funding Parties that for
accounting purposes, federal, state and local tax purposes and commercial and
bankruptcy law purposes the Lease shall be treated as the repayment and security
provisions of a loan by the Funding Parties to the Lessees, and that the related
Lessee shall be treated as the legal and beneficial owner entitled to any and
all benefits of ownership of such Leased Property, and all payments of Basic
Rent during the Lease Term shall be treated as payments of interest.
Nevertheless, each Guarantor and each Lessee acknowledge and agree that neither
the Agent, nor any Funding Party, nor any other Person has made any
representations or warranties concerning the tax, financial, accounting or legal
characteristics or treatment of the Operative Documents and that each Guarantor
and each Lessee have obtained and relied solely upon the advice of its own tax,
accounting and legal advisors concerning the Operative Documents and the
accounting, tax, financial and legal consequences of the transactions
contemplated therein.

                                  ARTICLE III.
                        CONDITIONS PRECEDENT; DOCUMENTS

         SECTION 3.1 Conditions to the Obligations of the Funding Parties on
each Closing Date. The obligations of each Funding Party to carry out its
respective obligations under Article II of this Master Agreement to be performed
on the Closing Date with respect to any Land and any Building thereon shall be
subject to the fulfillment to the satisfaction of, or waiver by, each such party
hereto (acting directly or through its counsel), on or prior to such Closing
Date of the following conditions precedent, provided that the obligations of any
Funding Party shall not be

                                       7

<PAGE>

subject to any conditions contained in this Section 3.1 which are required to be
performed by such Funding Party:

                  (a) Documents. The following documents shall have been
executed and delivered by the respective parties thereto:

                           (i) Deed and Purchase Agreement; Ground Lease. The
                  related original Deed duly executed by the applicable Seller
                  in favor of the Lessor and in recordable form, and copies of
                  the related Purchase Agreement, assigned to the Lessor (unless
                  Lessor is the original party thereto), shall each have been
                  delivered to the Agent by Borders or the related Lessee, or
                  the related Ground Lease, duly assigned to the Lessor (unless
                  Lessor is the original party thereto), shall have been
                  delivered to the Agent, as applicable (it being understood,
                  that each Purchase Agreement and each Ground Lease shall be
                  reasonably satisfactory in form and substance to the Agent).

                           (ii) Lease Supplement. The original of the related
                  Lease Supplement, duly executed by the related Lessee and the
                  Lessor and in recordable form, shall have been delivered to
                  the Agent by such Lessee.

                           (iii) Mortgage and Assignment of Lease and Rents.
                  Counterparts of the Mortgage (substantially in the form of
                  Exhibit D attached hereto, with such changes as may be
                  required to conform to applicable local law), duly executed by
                  the Lessor and in recordable form, shall have been delivered
                  to the Agent (which Mortgage shall secure all of the
                  obligations of the Lessor under the Operative Documents to the
                  Agent unless such mortgage is subject to a tax based on the
                  amount of indebtedness secured thereby, in which case the
                  amount secured will be limited to debt of the Lessor in an
                  amount equal to 125% of the projected cost of acquisition and
                  construction of such Leased Property); and the Assignment of
                  Lease and Rents (substantially in the form of Exhibit B
                  attached hereto) in recordable form, duly executed by the
                  Lessor, shall have been delivered to the Agent by the Lessor.

                           (iv) Security Agreement and Assignment. If such
                  Leased Property is a Construction Land Interest, counterparts
                  of the Security Agreement and Assignment (substantially in the
                  form of Exhibit C attached hereto), duly executed by the
                  Construction Agent, with an acknowledgment and consent thereto
                  satisfactory to the Lessor and the Agent duly executed by the
                  related General Contractor and the related Architect or
                  Engineer, as applicable, and complete copies of the related
                  Construction Contract and the related Architect's Agreement or
                  Engineer's Agreement certified by the Construction Agent,
                  shall have been delivered to the Lessor and the Agent (it
                  being understood and agreed that if no related Construction
                  Contract, Architect's Agreement or Engineer's Agreement

                                       8

<PAGE>

                  exists on such Closing Date, such delivery shall not be a
                  condition precedent to the Funding on such Closing Date, and
                  in lieu thereof the Construction Agent shall deliver complete
                  executed copies of such Security Agreement and Assignment and
                  consents concurrently with the Construction Agent's entering
                  into such contracts). If such Leased Property is a
                  Construction Land Interest, counterparts of the supplement to
                  the Construction Agency Agreement for such Leased Property,
                  duly executed by the Construction Agent and the Lessor, shall
                  have been delivered to the Agent.

                           (v) Survey. The related Lessee shall have delivered,
                  or shall have caused to be delivered, to the Lessor and the
                  Agent, at such Lessee's expense, an accurate survey certified
                  to the Lessor and the Agent in a form reasonably satisfactory
                  to the Lessor and the Agent and showing no state of facts
                  unsatisfactory to the Lessor or the Agent and prepared within
                  ninety (90) days of such Closing Date (or such other time
                  period agreed to by the Lessor and the Agent) by a Person
                  reasonably satisfactory to the Lessor and the Agent. Such
                  survey shall (1) be acceptable to the Title Insurance Company
                  for the purpose of providing extended coverage to the Lessor
                  and a lender's comprehensive endorsement to the Agent, (2)
                  show no encroachments on such Land by structures owned by
                  others, and no encroachments from any part of such Leased
                  Property onto any land owned by others, and (3) disclose no
                  state of facts reasonably objectionable to the Lessor, the
                  Agent or the Title Insurance Company.

                           (vi) Title and Title Insurance. On such Closing Date,
                  the Lessor shall receive from a title insurance company
                  reasonably acceptable to the Lessor and the Agent an ALTA
                  Owner's Policy of Title Insurance issued by such title
                  insurance company and the Agent shall receive from such title
                  insurance company an ALTA Mortgagee's Policy of Title
                  Insurance issued by such title insurance company, in each
                  case, in the amount of the projected cost of acquisition and
                  construction of such Leased Property, reasonably acceptable in
                  form and substance to the Lessor and the Agent, respectively
                  (collectively, the "Title Policy"). The Title Policy shall be
                  dated as of such Closing Date, and, to the extent permitted
                  under Applicable Law, shall include such affirmative
                  endorsements as the Lessor or the Agent shall reasonably
                  request.

                           (vii) Appraisal. Each Funding Party shall have
                  received a report of the Appraiser (an "Appraisal"), paid for
                  by any Guarantor or the related Lessee, for the first Leased
                  Property for which the Closing Date, shall occur and for every
                  third Leased Property for which a Closing Date shall occur
                  (i.e., Appraisals shall be required for the first, fourth,
                  seventh, tenth, etc. . . ., Leased Property to become subject
                  to the Lease); provided that, notwithstanding the foregoing,
                  an Appraisal must be delivered for any Leased Property that is
                  not substantially similar in business purpose to the Leased
                  Properties then subject to the Lease. Each

                                       9
<PAGE>

                  Appraisal shall meet the requirements of the Financial
                  Institutions Reform, Recovery and Enforcement Act of 1989,
                  shall be satisfactory to such Funding Party and shall state in
                  a manner satisfactory to such Funding Party the estimated "as
                  vacant" value of such Land and existing Buildings or any
                  Building to be constructed thereon. Such Appraisal must show
                  that the "as vacant" value of such Leased Property (if a
                  Building is to be constructed on the Land, determined as if
                  the Building had already been completed in accordance with the
                  related Plans and Specifications) is at least 45% of the total
                  cost of such Leased Property, including the cost of the trade
                  fixtures, equipment and personal property related to such
                  Leased Property and to be funded by the Funding Parties.

                           (viii) Environmental Audit and related Reliance
                  Letter. The Lessor and the Agent shall have received an
                  Environmental Audit for such Leased Property, which shall be
                  conducted in accordance with ASTM standards and shall not
                  include a recommendation for further investigation and is
                  otherwise satisfactory to the Lessor and the Agent; and the
                  firm that prepared the Environmental Audit for such Leased
                  Property shall have delivered to the Lessor and the Agent a
                  letter stating that the Agent and the Funding Parties may rely
                  upon such firm's Environmental Audit of such Land, it being
                  understood that the Lessor's and the Agent's acceptance of any
                  such Environmental Audit shall not release or impair any
                  Guarantor's or any Lessee's obligations under the Operative
                  Documents with respect to any environmental liabilities
                  relating to such Leased Property.

                           (ix) Evidence of Insurance. The Lessor and the Agent
                  shall have received from the related Lessee certificates of
                  insurance evidencing compliance with the provisions of Article
                  VIII of the Lease (including the naming of the Lessor, the
                  Agent and the Lenders as additional insured or loss payee with
                  respect to such insurance, as their interests may appear), in
                  form and substance reasonably satisfactory to the Lessor and
                  the Agent.

                           (x) UCC Financing Statement; Recording Fees; Transfer
                  Taxes. The Agent shall have received satisfactory evidence of
                  (i) the execution (if required pursuant to the applicable UCC)
                  and delivery to Agent of a UCC-1 and, if required by
                  applicable law, UCC-2 financing statement to be filed with the
                  Secretary of State of the applicable State (or other
                  appropriate filing office) and the county where the related
                  Land is located, respectively, and such other Uniform
                  Commercial Code financing statements as any Funding Party
                  deems necessary or desirable in order to perfect such Funding
                  Party's or the Agent's interests and (ii) the payment of all
                  recording and filing fees and taxes with respect to any
                  recordings or filings made of the related Deed, the Ground
                  Lease or a memorandum thereof (if applicable), the related
                  Lease Supplement, the related Mortgage and the related
                  Assignment of Lease and Rents.

                                       10

<PAGE>

                           (xi) Opinions. An opinion of local counsel for the
                  related Lessee qualified in the jurisdiction in which such
                  Leased Property is located, substantially in the form set
                  forth in Exhibit G attached hereto, and containing such other
                  matters as the parties to whom it is addressed shall
                  reasonably request, shall have been addressed to each of the
                  Agent and each Funding Party, and delivered to the Agent. To
                  the extent reasonably requested by the Agent, opinions
                  supplemental to those delivered under Section 3.2(vi) and
                  reasonably satisfactory to the Agent shall have been addressed
                  to each of the Agent and each Funding Party, and delivered to
                  the Agent.

                           (xii) Good Standing Certificates. The Agent shall
                  have received good standing certificates for the Lessor and
                  the related Lessee from the appropriate offices of the state
                  where the related Land is located.

                           (xiii) IDB Property. If such Leased Property is an
                  IDB Property or is otherwise subject to industrial development
                  or revenue bonds, the IDB Documentation shall have been
                  executed by the parties thereto, and shall be in form and
                  substance reasonably acceptable to the Agent, the Lessor and
                  the Lenders.

                  (b) Litigation. No action or proceeding shall have been
instituted or, to the knowledge of any Funding Party, threatened nor shall any
governmental action, suit, proceeding or investigation be instituted or
threatened before any Governmental Authority, nor shall any order, judgment or
decree have been issued or proposed to be issued by any Governmental Authority,
to set aside, restrain, enjoin or prevent the performance of this Master
Agreement or any transaction contemplated hereby or by any other Operative
Document or which is reasonably likely to materially adversely affect any Leased
Property or any transaction contemplated by the Operative Documents or which
would reasonably be expected to result in a Material Adverse Effect.

                  (c) Legality. In the opinion of such Funding Party or its
counsel, the transactions contemplated by the Operative Documents shall not
violate any Applicable Law, and no change shall have occurred or been proposed
in Applicable Law that would make it illegal for such Funding Party to
participate in any of the transactions contemplated by the Operative Documents.

                  (d) No Events. (i) No Event of Default, Potential Event of
Default, Event of Loss or Event of Taking relating to such Leased Property shall
have occurred and be continuing, (ii) no action shall be pending or threatened
by a Governmental Authority to initiate a Condemnation or an Event of Taking,
and (iii) there shall not have occurred any event that would reasonably be
expected to have a Material Adverse Effect since January 27, 2002.

                                       11

<PAGE>

                  (e) Representations. Each representation and warranty of the
parties hereto or to any other Operative Document contained herein or in any
other Operative Document shall be true and correct in all material respects as
though made on and as of such Closing Date, except to the extent such
representations or warranties relate solely to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date.

                  (f) Cutoff Date. No Closing Date shall occur after the Funding
Termination Date.

                  (g) Approval. The Required Lenders shall have approved such
Leased Property for inclusion in the Lease by written notice to the related
Lessee.

         SECTION 3.2 Additional Conditions for the Documentation Date. The
obligations of each Funding Party to carry out its respective obligations under
Article II of this Master Agreement to be performed on the Documentation Date
shall be subject to the satisfaction of, or waiver by, each such party hereto
(acting directly or through its counsel), on or prior to the Documentation Date
of the following conditions precedent in addition to those set forth in Section
3.1, provided that the obligations of any Funding Party shall not be subject to
any conditions contained in this Section 3.2 which are required to be performed
by such Funding Party:

                           (i) Loan Agreement; Guaranty Agreement, etc.
                  Counterparts of the Loan Agreement, duly executed by the
                  Lessor, the Agent and each Lender shall have been delivered to
                  each of the Lessor and the Agent. An A Note and a B Note, duly
                  executed by the Lessor, shall have been delivered to the
                  Agent. The Guaranty Agreement, duly executed by each
                  Guarantor, shall have been delivered to the Agent. The Agent's
                  Fee Letter, duly executed by Borders and BGI, and the
                  Disbursement Agreement, duly executed by Borders, shall have
                  been delivered to the Agent.

                           (ii) Master Agreement. Counterparts of this Master
                  Agreement, duly executed by the parties hereto, shall have
                  been delivered to each of the parties hereto.

                           (iii) Construction Agency Agreement. Counterparts of
                  the Construction Agency Agreement, duly executed by the
                  parties thereto shall have been delivered to each of the
                  parties hereto.

                           (iv) Lease. Counterparts of the Lease, duly executed
                  by the Lessees party to this Master Agreement on the
                  Documentation Date, and the Lessor, shall have been delivered
                  to each Funding Party and the original, chattel paper copy of
                  the Lease shall have been delivered to the Agent.

                                       12

<PAGE>

                           (v) Lessee's Resolutions and Incumbency Certificate,
                  etc. Each of the Agent and the Lessor shall have received (x)
                  a certificate of the Secretary or an Assistant Secretary of
                  each Guarantor, Borders and each other Lessee party hereto on
                  the Documentation Date, attaching and certifying as to (i) the
                  Board of Directors' (or appropriate committee's) resolution
                  duly authorizing for the execution, delivery and performance
                  by it of each Operative Document to which it is or will be a
                  party, (ii) the incumbency and signatures of persons
                  authorized to execute and deliver such documents on its
                  behalf, (iii) its articles or certificate of incorporation,
                  certified as of a recent date by the Secretary of State of the
                  state of its incorporation and (iv) its by-laws, and (y) good
                  standing or active status certificates for each Guarantor and
                  each Lessee party hereto on the Documentation Date from the
                  appropriate offices of the states of such Guarantor's or such
                  Lessee's organization and principal place of business.

                           (vi) Opinions of Counsel. The opinions of in-house
                  counsel for the Lessees and the Guarantors and Dickinson
                  Wright PLLC, dated the Documentation Date, containing such
                  matters as the parties to whom it is addressed shall
                  reasonably request, shall have been addressed to each of the
                  Agent and each Funding Party and delivered to the Agent. The
                  opinion of Brown McCarroll LLP, dated the Documentation Date,
                  containing such matters as the parties to whom it is addressed
                  shall reasonably request, shall have been addressed and
                  delivered to each of the Agent, the Lenders, the Guarantors
                  and Borders.

                           (vii) Good Standing Certificate. The Agent and
                  Borders shall have received a good standing certificate for
                  the Lessor and the General Partner from the appropriate office
                  of the State of Texas.

                           (viii) Lessor's Consents and Incumbency Certificate,
                  etc. The Agent and Borders shall have received a certificate
                  of the Secretary or an Assistant Secretary of the General
                  Partner of the Lessor attaching and certifying as to (i) the
                  consents of the partners of the Lessor duly authorizing the
                  execution, delivery and performance by it of each Operative
                  Document to which it is or will be a party, (ii) the
                  incumbency and signatures of persons authorized to execute and
                  deliver such documents on its behalf, and (iii) the
                  Partnership Agreement.

                           (ix) Omnibus Amendment. Counterparts of the Omnibus
                  Amendment, duly executed by the parties hereto, shall have
                  been delivered to the Agent.

         SECTION 3.3 Conditions to the Obligations of Lessee. The obligations of
any Lessee to lease a Leased Property from the Lessor are subject to the
fulfillment on the related Closing Date to the satisfaction of, or waiver by,
such Lessee (such satisfaction or waiver to be conclusively evidenced by
delivery of the Lease Supplement by such Lessee), of the following conditions
precedent:

                                       13

<PAGE>

                  (a) General Conditions. The conditions set forth in Sections
3.1 and 3.2 that require fulfillment by the Lessor or the Lenders shall have
been satisfied.

                  (b) Legality. In the opinion of such Lessee or its counsel,
the transactions contemplated by the Operative Documents shall not violate any
Applicable Law, and no change shall have occurred or been proposed in Applicable
Law that would make it illegal for such Lessee to participate in any of the
transactions contemplated by the Operative Documents.

                  (c) Purchase Agreement; Ground Lease. The Purchase Agreement
and, if applicable, the Ground Lease and all documents to be delivered under the
Purchase Agreement or Ground Lease, including title insurance, survey and
environmental audit, shall be reasonably satisfactory to such Lessee.

         SECTION 3.4 Conditions to the Obligations of the Funding Parties on
Each Funding Date. The obligations of each Funding Party to carry out its
respective obligations under Article II of this Master Agreement to be performed
on each Funding Date shall be subject to the fulfillment to the satisfaction of,
or waiver by, each such party hereto (acting directly or through their
respective counsel) on or prior to each such Funding Date of the following
conditions precedent, provided that the obligations of any Funding Party shall
not be subject to any conditions contained in this Section 3.4 which are
required to be performed by such Funding Party:

                  (a) Funding Request. The Lessor and the Agent shall have
received from the Construction Agent or a Lessee the Funding Request therefor
pursuant to Section 2.2(d).

                  (b) Condition Fulfilled. As of such Funding Date, the
conditions set forth in Sections 3.1(c) and (d) shall have been satisfied.

                  (c) Representations. As of such Funding Date, both before and
after giving effect to the Funding requested by the Construction Agent or a
Lessee on such date, the representations and warranties that the Construction
Agent or such Lessee is deemed to make pursuant to Section 2.2(e) shall be true
and correct in all material respects on and as of such Funding Date as though
made on and as of such Funding Date, except to the extent such representations
or warranties relate solely to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such earlier date.

                  (d) No Bonded Stop Notice or Filed Mechanics Lien. As of such
Funding Date, and as to any Funded Amount requested for any Leased Property on
such Funding Date, (i) none of the Agent or any Funding Party has received (with
respect to such Leased Property) a bonded notice to withhold Loan funds that has
not been discharged by the related Lessee or the Construction Agent, and (ii) no
mechanic's liens or materialman's liens have been filed against

                                       14

<PAGE>

such Leased Property that have not been discharged by the related Lessee, bonded
over in a manner reasonably satisfactory to the Agent or insured over by the
Title Insurance Company.

                  (e) Lease Supplement. If the Funding relates to a Building
that will be leased under a Lease Supplement separate from the Lease Supplement
for the related Land, the original of such separate Lease Supplement, duly
executed by the related Lessee and the Lessor and in recordable form, shall have
been delivered to the Agent.

         SECTION 3.5 Completion Date Conditions. The occurrence of the
Completion Date with respect to any Leased Property shall be subject to the
fulfillment to the satisfaction of, or waiver by, each party hereto (acting
directly or through its counsel) of the following conditions precedent:

                  (a) Certificate of Occupancy. The Construction Agent shall
have furnished to the Agent copies of a certificate or certificates of occupancy
for such Leased Property or other legally equivalent permission to occupy such
Leased Property.

                  (b) Construction Completion. Any related Construction shall
have been completed substantially in accordance with the related Plans and
Specifications (subject to punch list requirements), the related Deed and all
Applicable Laws, and such Leased Property shall be ready for occupancy and
operation. All fixtures, equipment and other property contemplated under the
Plans and Specifications to be incorporated into or installed in such Leased
Property shall have been substantially incorporated or installed, free and clear
of all Liens except for Permitted Liens.

                  (c) Construction Agent Certification. The Construction Agent
shall have furnished the Agent and each Funding Party with a certification of
the Construction Agent (substantially in the form of Exhibit H) that:

                           (i) all amounts owing to third parties for the
         related Construction have been paid in full (other than contingent
         obligations for which the Construction Agent, as agent for the Lessor,
         has made adequate reserves), and no litigation or proceedings are
         pending, or to the best of the Construction Agent's knowledge, are
         threatened, against such Leased Property or the Construction Agent or
         the related Lessee which could reasonably be expected to have a
         Material Adverse Effect;

                           (ii) all material consents, licenses and permits and
         other governmental authorizations or approvals required for such
         Construction and operation of such Leased Property have been obtained
         and are in full force and effect;

                           (iii) such Leased Property has available all services
         of public facilities and other utilities necessary for use and
         operation of such Leased Property for its intended purposes including,
         without limitation, adequate water, gas and electrical supply, storm

                                       15

<PAGE>

         and sanitary sewerage facilities, telephone, other required public
         utilities and means of access between the related Building and public
         highways for pedestrians and motor vehicles;

                           (iv) all material agreements, easements and other
         rights, public or private, which are necessary to permit the lawful use
         and operation of such Leased Property as the related Lessee intends to
         use such Leased Property under the Lease and which are necessary to
         permit the lawful intended use and operation of all then intended
         utilities, driveways, roads and other means of egress and ingress to
         and from the same have been obtained and are in full force and effect
         and neither the Construction Agent nor the related Lessee has any
         knowledge of any pending modification or cancellation of any of the
         same; and the use of such Leased Property does not depend on any
         variance, special exception or other municipal approval, permit or
         consent that has not been obtained and is in full force and effect for
         its continuing legal use;

                           (v) all of the requirements and conditions set forth
         in Section 3.5(b) hereof have been completed and fulfilled with respect
         to such Leased Property and the related Construction; and

                           (vi) such Leased Property is in compliance in all
         material respects with all applicable zoning laws and regulations.

         SECTION 3.6 Addition of Lessees. After the date hereof, additional
Subsidiaries of BGI may become Lessees hereunder and under the other Operative
Documents upon satisfaction of the following conditions precedent:

                  (a) such Subsidiary and the Guarantors shall have executed and
delivered to the Agent and the Lessor a Joinder Agreement, substantially in the
form of Exhibit E;

                  (b) such Subsidiary shall have delivered to each of the Agent
and the Lessor (x) a certificate of the Secretary or an Assistant Secretary of
such Subsidiary, attaching and certifying as to (i) the Board of Directors'
resolution serving as authority for the execution, delivery and performance by
it of each Operative Document to which it is or will be a party, (ii) the
incumbency and signatures of persons authorized to execute and deliver such
documents on its behalf, (iii) its articles or certificate of incorporation,
certified as of a recent date by the Secretary of State of its incorporation and
(iv) its by-laws, and (y) good standing or active status certificates from the
appropriate offices of the States of such Subsidiary's incorporation and
principal place of business;

                  (c) such Subsidiary shall have delivered an opinion of
Dickenson Wright PLLC and in-house counsel of BGI, or other counsel to such
Subsidiary reasonably acceptable to the Agent, addressed to each of the Lessor,
the Agent and the Lenders, substantially in the form

                                       16

<PAGE>

of the opinion delivered by counsel to the Lessees and the Guarantors and
in-house counsel of BGI on the Documentation Date; and

                  (d) the Agent and the Funding Parties shall have received such
other documents, certificates and information as any of them shall have
reasonably requested.

                                  ARTICLE IV.
                                REPRESENTATIONS

         SECTION 4.1 Representations of Guarantors, Borders and other Lessees.
Effective as of the date of execution hereof, as of each Closing Date and as of
each Funding Date, each of the Guarantors, Borders and each other Lessee
represents and warrants to each of the other parties hereto as follows:

                  (a) Corporate Authority.

                           (i) Incorporation; Good Standing. Each of BGI and its
                  Subsidiaries (a) is a corporation (or similar business entity)
                  duly organized, validly existing and in good standing under
                  the laws of its jurisdiction of incorporation or formation,
                  (b) has all requisite corporate (or the equivalent company)
                  power to own its property and conduct its business as now
                  conducted and as presently contemplated, and (c) is in good
                  standing as a foreign corporation (or similar business entity)
                  and is duly authorized to do business in each jurisdiction
                  where such qualification is necessary except where a failure
                  to be so qualified would not have a Material Adverse Effect.
                  Each Lessee is a Subsidiary of BGI.

                           (ii) Authorization. The execution, delivery and
                  performance of this Master Agreement and the other Operative
                  Documents to which any of the Lessees, any Guarantor or any of
                  their Subsidiaries is or is to become a party and the
                  transactions contemplated hereby and thereby (a) are within
                  the corporate (or the equivalent company) authority of such
                  Person, (b) have been duly authorized by all necessary
                  corporate (or the equivalent company) proceedings, (c) do not
                  and will not conflict with or result in any breach or
                  contravention of any provision of law, statute, rule or
                  regulation to which any of the Lessees, any Guarantor or any
                  of their Subsidiaries is subject or any judgment, order, writ,
                  injunction, license or permit applicable to any of the
                  Lessees, any Guarantor or any of their Subsidiaries and (d) do
                  not conflict with any provision of the Governing Documents of,
                  or any agreement or other instrument binding upon, any of the
                  Lessees, any Guarantor or any of their Subsidiaries.

                           (iii) Enforceability. The execution and delivery of
                  this Master Agreement and the other Operative Documents to
                  which any of the Lessees, any Guarantor or

                                       17

<PAGE>

                  any of their Subsidiaries is or is to become a party will
                  result in valid and legally binding obligations of such Person
                  enforceable against it in accordance with the respective terms
                  and provisions hereof and thereof, except as enforceability is
                  limited by bankruptcy, insolvency, reorganization, moratorium
                  or other laws relating to or affecting generally the
                  enforcement of creditors' rights and except to the extent that
                  availability of the remedy of specific performance or
                  injunctive relief is subject to the discretion of the court
                  before which any proceeding therefor may be brought.

                  (b) Governmental Approvals. The execution, delivery and
performance by any of the Guarantors, the Lessees and any of their Subsidiaries
of this Master Agreement and the other Operative Documents to which any of the
Guarantors, the Lessees or any of their Subsidiaries is or is to become a party
and the transactions contemplated hereby and thereby do not require the approval
or consent of, or filing with, any governmental agency or authority other than
those already obtained.

                  (c) Title to Properties; Leases. Except as indicated on
Schedule 4.1(c) hereto, the Guarantors, the Lessees and their Subsidiaries own
all of the assets reflected in the consolidated balance sheet of the Guarantors,
the Lessees and their Subsidiaries as at the Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no Liens or other
rights of others, except Permitted Encumbrances.

                  (d) Fiscal Year; Financial Statements and Projections.

                           (i) Fiscal Year. Each of the Lessees, the Guarantors
                  and each of their Subsidiaries has a Fiscal Year which is the
                  52/53 week period ending on the Sunday (except with respect to
                  Walden, on the Saturday) preceding the last Wednesday in
                  January. The Fiscal Quarters and Fiscal Year of the
                  Guarantors, the Lessees and their Subsidiaries are accurately
                  described in Appendix A hereto.

                           (ii) Financial Statements. There has been furnished
                  to each of the Funding Parties (A) a consolidated balance
                  sheet of BGI and its Subsidiaries as at the Balance Sheet
                  Date, and consolidated statements of income and cash flow of
                  the Lessees and their Subsidiaries for the Fiscal Year then
                  ended, certified by Ernst & Young LLP. Such balance sheet and
                  statements of income and cash flow have been prepared in
                  accordance with GAAP and fairly present the financial
                  condition of BGI and its Subsidiaries as at the close of
                  business on the date thereof and the results of operations for
                  the fiscal year then ended. There are no contingent
                  liabilities of any Lessee, any Guarantor or any of their
                  Subsidiaries as of such date involving material amounts, known
                  to the officers of BGI, which were not disclosed in such
                  balance sheet and the notes related thereto.

                                       18

<PAGE>

                           (iii) Projections. The projections of the annual
                  operating budgets of BGI and its Subsidiaries on a
                  consolidated basis, balance sheets and cash flow statements
                  for the period from January 28, 2002 through January 23, 2005,
                  copies of which have been delivered to each Funding Party,
                  disclose all assumptions made with respect to general
                  economic, financial and market conditions used in formulating
                  such projections. To the knowledge of any of the Lessees, the
                  Guarantors or any of their Subsidiaries, no facts exist that
                  (individually or in the aggregate) would result in any
                  material change in any of such projections. The projections
                  are based upon reasonable estimates and assumptions, have been
                  prepared on the basis of the assumptions stated therein and
                  reflect the reasonable estimates of BGI and its Subsidiaries
                  of the results of operations and other information projected
                  therein.

                  (e) No Material Adverse Changes, etc. Since the Balance Sheet
Date there has been no event or occurrence which has had a Material Adverse
Effect. Since the Balance Sheet Date, the Guarantors and the Lessees have not
made any Restricted Payment except as set forth in Schedule 4.1(e) hereto.

                  (f) Franchises, Patents, Copyrights, etc. BGI and each of its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.

                  (g) Litigation. Except as set forth in Schedule 4.1(g) hereto,
there are no actions, suits, proceedings or investigations of any kind pending
or threatened against BGI or any of its Subsidiaries before any Governmental
Authority, that, (i) might reasonably be expected to, either in any case or in
the aggregate, (A) have a Material Adverse Effect or (B) materially impair the
right of BGI and its Subsidiaries, considered as a whole, to carry on business
substantially as now conducted by them, or result in any substantial liability
not adequately covered by insurance, or for which adequate reserves are not
maintained on the consolidated balance sheet of BGI and its Subsidiaries, or
(ii) which question the validity of this Master Agreement or any of the other
Operative Documents, or any action taken or to be taken pursuant hereto or
thereto.

                  (h) No Materially Adverse Contracts, etc. Neither BGI nor any
of its Subsidiaries is subject to any Governing Document or other legal
restriction, or any judgment, decree, order, law, statute, rule or regulation
that has or is expected in the future to have a Material Adverse Effect. Neither
BGI nor any of its Subsidiaries is a party to any contract or agreement that has
or is expected, in the judgment of the Guarantors' and Lessees' officers, to
have any Material Adverse Effect.

                  (i) Compliance with Other Instruments, Laws, etc. Neither BGI
nor any of its Subsidiaries is in violation of any provision of its Governing
Documents, or any agreement or instrument to which it may be subject or by which
it or any of its properties may be bound or any

                                       19

<PAGE>

decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of substantial
penalties or have a Material Adverse Effect.

                  (j) Tax Status. Each of BGI and its Subsidiaries (i) has made
or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
where, in the cases of state or foreign tax returns, failure to make such filing
could have a Material Adverse Effect, (ii) has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (iii) has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and none of the officers of any Lessee or any Guarantor know
of any basis for any such claim.

                  (k) No Event of Default. No Default or Event of Default has
occurred and is continuing.

                  (l) Holding Company and Investment Company Acts. None of the
Guarantors, the Lessees nor any of their Subsidiaries is a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935; nor is it an "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are defined in
the Investment Company Act of 1940.

                  (m) Absence of Financing Statements, etc. Except with respect
to Permitted Encumbrances, there is no financing statement, security agreement,
chattel mortgage, real estate mortgage or other document filed or recorded with
any filing records, registry or other public office, that purports to cover,
affect or give notice of any present or possible future Lien on any assets or
property of any Lessee, any Guarantor or any of their Subsidiaries or any rights
relating thereto.

                  (n) Certain Transactions. Except as set forth on Schedule
4.1(n), none of the officers, directors, or employees of BGI or any of its
Subsidiaries is presently a party to any transaction with BGI or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Lessees or the Guarantors,
any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

                                       20

<PAGE>

                  (o) Employee Benefit Plans.

                           (i) In General. Each Employee Benefit Plan and each
                  Guaranteed Pension Plan has been maintained and operated in
                  compliance in all material respects with the provisions of
                  ERISA and all Applicable Pension Legislation and, to the
                  extent applicable, the Code, including but not limited to the
                  provisions thereunder respecting prohibited transactions and
                  the bonding of fiduciaries and other persons handling plan
                  funds as required by ss. 412 of ERISA. The Lessees and the
                  Guarantors have heretofore delivered to the Agent the most
                  recently completed annual report, Form 5500, with all required
                  attachments, and actuarial statement required to be submitted
                  under ss. 103(d) of ERISA, with respect to each Guaranteed
                  Pension Plan.

                           (ii) Terminability of Welfare Plans. No Employee
                  Benefit Plan, which is an employee welfare benefit plan within
                  the meaning of ss. 3(1) or ss. 3(2)(B) of ERISA, provides
                  benefit coverage subsequent to termination of employment,
                  except as required by Title I, Part 6 of ERISA or the
                  applicable state insurance laws, provided, however, that any
                  Lessee(s) or any Guarantor(s) may include retirees in its
                  employee welfare plans and pay a portion of the cost of such
                  coverage so long as (A) the premium based cost of the coverage
                  does not exceed, in the aggregate $2,000,000 and (B) such
                  coverage is terminable at any time by the applicable Lessee(s)
                  or Guarantor(s). The Lessees and the Guarantors may terminate
                  each such Plan at any time (or at any time subsequent to the
                  expiration of any applicable bargaining agreement) in the
                  discretion of the Lessees and the Guarantors without liability
                  to any Person other than for claims arising prior to
                  termination.

                           (iii) Guaranteed Pension Plans. Each contribution
                  required to be made to a Guaranteed Pension Plan, whether
                  required to be made to avoid the incurrence of an accumulated
                  funding deficiency, the notice or lien provisions of ss.
                  302(f) of ERISA, or otherwise, has been timely made. No waiver
                  of an accumulated funding deficiency or extension of
                  amortization periods has been received with respect to any
                  Guaranteed Pension Plan, and none of the Lessees, the
                  Guarantors or any ERISA Affiliate is obligated to or has
                  posted security in connection with an amendment to a
                  Guaranteed Pension Plan pursuant to ss. 307 of ERISA or ss.
                  401(a)(29) of the Code. No liability to the PBGC (other than
                  required insurance premiums, all of which have been paid) has
                  been incurred by any Lessee, any Guarantor or any ERISA
                  Affiliate with respect to any Guaranteed Pension Plan and
                  there has not been any ERISA Reportable Event (other than an
                  ERISA Reportable Event as to which the requirement of 30 days
                  notice has been waived), or any other event or condition which
                  presents a material risk of termination of any Guaranteed
                  Pension Plan by the PBGC. Based on the latest valuation of
                  each Guaranteed Pension Plan (which in each case occurred
                  within twelve months of

                                       21

<PAGE>

                  the date of this representation), and on the actuarial methods
                  and assumptions employed for that valuation, the aggregate
                  benefit liabilities of all such Guaranteed Pension Plans
                  within the meaning of ss. 4001 of ERISA did not exceed the
                  aggregate value of the assets of all such Guaranteed Pension
                  Plans, disregarding for this purpose the benefit liabilities
                  and assets of any Guaranteed Pension Plan with assets in
                  excess of benefit liabilities.

                           (iv) Multiemployer Plans. None of the Lessees, the
                  Guarantors nor any ERISA Affiliate has incurred any material
                  liability (including secondary liability) to any Multiemployer
                  Plan as a result of a complete or partial withdrawal from such
                  Multiemployer Plan under ss. 4201 of ERISA or as a result of a
                  sale of assets described in ss. 4204 of ERISA. None of the
                  Lessees, the Guarantors nor any ERISA Affiliate has been
                  notified that any Multiemployer Plan is in reorganization or
                  insolvent under and within the meaning of ss. 4241 or ss. 4245
                  of ERISA or is at risk of entering reorganization or becoming
                  insolvent, or that any Multiemployer Plan intends to terminate
                  or has been terminated under ss. 4041A of ERISA.

                  (p) Use of Proceeds.

                           (i) General. The proceeds of the Fundings shall be
                  used to acquire, construct or renovate the Leased Properties.

                           (ii) Regulations U and X. No portion of any Funding
                  is to be used, and no portion of any Letter of Credit is to be
                  obtained, for the purpose of purchasing or carrying any
                  "margin security" or "margin stock" as such terms are used in
                  Regulations U and X of the Board of Governors of the Federal
                  Reserve System, 12 C.F.R. Parts 221 and 224.

                  (q) Environmental Compliance. The Lessees and the Guarantors
have taken all appropriate inquiry into the previous ownership of the Real
Estate consistent with good commercial or customary practice and, based upon
such diligent investigation, has determined that, to the best of the Guarantors'
and the Lessees' knowledge:

                           (i) none of the Lessees, the Guarantors, their
                  Subsidiaries or any operator of the Real Estate or any
                  operations thereon is in violation, or alleged violation, of
                  any judgment, decree, order, law, license, rule or regulation
                  pertaining to environmental matters, including, without
                  limitation, those arising under the Resource Conservation and
                  Recovery Act ("RCRA"), the Comprehensive Environmental
                  Response, Compensation and Liability Act of 1980 as amended
                  ("CERCLA"), the Superfund Amendments and Reauthorization Act
                  of 1986 ("SARA"), the Federal Clean Water Act, the Federal
                  Clean Air Act, the Toxic Substances Control Act, or any state,
                  local or foreign law, statute, regulation,

                                       22

<PAGE>

                  ordinance, order or decree relating to health, safety or the
                  environment (hereinafter "Environmental Laws"), which
                  violation would have a material adverse effect on the
                  environment or a Material Adverse Effect;

                           (ii) none of the Lessees, the Guarantors nor any of
                  their Subsidiaries has received notice from any third party
                  including, without limitation, any Governmental Authority, (A)
                  that any one of them has been identified by the United States
                  Environmental Protection Agency ("EPA") as a potentially
                  responsible party under CERCLA with respect to a site listed
                  on the National Priorities List, 40 C.F.R. Part 300 Appendix
                  B; (B) that any hazardous waste, as defined by 42 U.S.C. ss.
                  6903(5), any hazardous substances as defined by 42 U.S.C. ss.
                  9601(14), any pollutant or contaminant as defined by 42 U.S.C.
                  ss. 9601(33) and any toxic substances, oil or hazardous
                  materials or other chemicals or substances regulated by any
                  Environmental Laws ("Hazardous Substances") which any one of
                  them has generated, transported or disposed of has been found
                  at any site at which a Governmental Authority has conducted or
                  has ordered that any Lessee, any Guarantor or any of their
                  Subsidiaries conduct a remedial investigation, removal or
                  other response action pursuant to any Environmental Law; or
                  (C) that it is or shall be a named party to any claim, action,
                  cause of action, complaint, or legal or administrative
                  proceeding (in each case, contingent or otherwise) arising out
                  of any third party's incurrence of costs, expenses, losses or
                  damages of any kind whatsoever in connection with the release
                  of Hazardous Substances;

                           (iii) except as set forth on Schedule 4.1(q) attached
                  hereto: (A) no portion of the Real Estate has been used for
                  the handling, processing, storage or disposal of Hazardous
                  Substances except in accordance with applicable Environmental
                  Laws; and no underground tank or other underground storage
                  receptacle for Hazardous Substances is located on any portion
                  of the Real Estate; (B) in the course of any activities
                  conducted by the Lessees, the Guarantors, their Subsidiaries
                  or operators of their properties, no Hazardous Substances have
                  been generated or are being used on the Real Estate except in
                  accordance with applicable Environmental Laws; (C) there have
                  been no releases (i.e., any past or present releasing,
                  spilling, leaking, pumping, pouring, emitting, emptying,
                  discharging, injecting, escaping, disposing or dumping) or
                  threatened releases of Hazardous Substances on, upon, into or
                  from the properties of the Lessees, the Guarantors or their
                  Subsidiaries, which releases would have a material adverse
                  effect on the value of any of the Real Estate or adjacent
                  properties or the environment; (D) to the best of the Lessees'
                  and the Guarantors' knowledge, there have been no releases on,
                  upon, from or into any real property in the vicinity of any of
                  the Real Estate which, through soil or groundwater
                  contamination, may have come to be located on, and which would
                  have a material adverse effect on the value of, the Real
                  Estate; and (E) in addition, any Hazardous Substances that
                  have been generated on any of the Real Estate have been
                  transported offsite only

                                       23

<PAGE>

                  by carriers having an identification number issued by the EPA
                  (or the equivalent thereof in any foreign jurisdiction),
                  treated or disposed of only by treatment or disposal
                  facilities maintaining valid permits as required under
                  applicable Environmental Laws, which transporters and
                  facilities have been and are, to the best of the Lessees' and
                  the Guarantors' knowledge, operating in compliance with such
                  permits and applicable Environmental Laws; and

                           (iv) none of the Lessees, the Guarantors nor any of
                  their Subsidiaries, or any of the Real Estate is subject to
                  any applicable Environmental Law requiring the performance of
                  Hazardous Substances site assessments, or the removal or
                  remediation of Hazardous Substances, or the giving of notice
                  to any Governmental Authority or the recording or delivery to
                  other Persons of an environmental disclosure document or
                  statement by virtue of the transactions set forth herein and
                  contemplated hereby, or to the effectiveness of any other
                  transactions contemplated hereby.

                  (r) Subsidiaries. Schedule 4.1(r), as the same may be updated
pursuant to Section 4.1(v) hereof, states the name of each of BGI's Subsidiaries
and Joint Ventures and, in each case, such entity's jurisdiction of
incorporation, authorized capital stock, the issued and outstanding shares
(referred to herein as the "Subsidiary Shares") and the owners thereof if it is
a corporation, such entity's outstanding partnership interests (the "Partnership
Interests") if it is a partnership and such entity's outstanding membership
interests (the "Membership Interests") if it is a limited liability company. BGI
and each of its Subsidiaries has good and marketable title to all of the
Subsidiary Shares, Partnership Interests, and Membership Interests it purports
to own, free and clear in each case of any Lien. All Subsidiary Shares,
Partnership Interests and Membership Interests have been validly issued and all
Subsidiary Shares are fully paid and nonassessable. All capital contributions
and other consideration required to be made or paid in connection with the
issuance of the Partnership Interests have been made or paid, as the case may
be. There are no options, warrants or other rights outstanding to purchase any
such Subsidiary Shares, Partnership Interests or Membership Interests except as
indicated on Schedule 4.1(r).

                  (s) Disclosure. None of this Master Agreement or any of the
other Operative Documents contains any untrue statement of a material fact or
omits to state a material fact (known to any of the Lessees, the Guarantors or
any of their Subsidiaries in the case of any document or information not
furnished by it or any of their Subsidiaries) necessary in order to make the
statements herein or therein not misleading. There is no fact known to any of
the Lessees, the Guarantors or any of their Subsidiaries which has a Material
Adverse Effect, or which is reasonably likely in the future to have a Material
Adverse Effect, exclusive of effects resulting from changes in general economic
conditions, legal standards or regulatory conditions.

                  (t) Senior Debt Status. The Obligations of each Lessee and
each Guarantor under this Master Agreement and each of the other Operative
Documents to which it is a party do rank and will rank at least pari passu in
priority of payment with all other Indebtedness of such

                                       24

<PAGE>

Lessee or such Guarantor except Indebtedness of such Lessee or such Guarantor to
the extent secured by Permitted Encumbrances. There is no Lien upon or with
respect to any of the properties or income of any Lessee, any Guarantor or any
of their Subsidiaries which secures Indebtedness or other obligations of any
Person except for Permitted Encumbrances.

                  (u) Solvency. After giving effect to each incurrence of
Indebtedness hereunder, and the payment of all Fees, costs and expenses payable
by each of the Lessees and the Guarantors hereunder, each Lessee and each
Guarantor is Solvent.

                  (v) Updates to Schedules. Should any of the information or
disclosures provided on any of the Schedules attached hereto (other than
Schedule 2.2) become outdated or incorrect in any material respect, BGI shall
promptly provide the Agent in writing with such revisions or updates to such
Schedule as may be necessary or appropriate to update or correct same; provided
that, except for the amendment of Schedule 4.1(r) in connection with any new
Subsidiary of BGI as permitted herein, no Schedule shall be deemed to have been
amended, modified or superseded by any such correction or update, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Administrative Agent (which may request the consent of the
Required Funding Parties) shall have accepted in writing such revisions or
updates to such Schedule.

                  (w) Hazardous Materials - Leased Properties.

                           (i) To the best knowledge of the related Lessee,
                  except as described in the related Environmental Audit, on the
                  Closing Date for each Leased Property, there are no Hazardous
                  Materials present at, upon, under or within such Leased
                  Property or released or transported to or from such Leased
                  Property (except in compliance in all material respects with
                  all Applicable Law).

                           (ii) On the related Closing Date, no Governmental
                  Actions have been taken or are in process or have been
                  threatened, which could reasonably be expected to subject such
                  Leased Property or any Funding Party to any material Claims or
                  Liens with respect to such Leased Property under any
                  Environmental Law or would otherwise have a Material Adverse
                  Effect.

                           (iii) The related Lessee has, or will obtain on or
                  before the date required by Applicable Law, all Environmental
                  Permits necessary to operate each Leased Property, if any, in
                  accordance with Environmental Laws and is complying with and
                  has at all times complied with all such Environmental Permits,
                  except to the extent the failure to obtain such Environmental
                  Permits or to so comply would not have a Material Adverse
                  Effect.

                                       25

<PAGE>

                           (iv) Except as set forth in the related Environmental
                  Audit or in any notice subsequently furnished by the related
                  Lessee to the Agent and approved by the Agent in writing prior
                  to the respective times that the representations and
                  warranties contained herein are made or deemed made hereunder,
                  no notice, notification, demand, request for information,
                  citations, summons, complaint or order has been issued or
                  filed to or with respect to the related Lessee, no penalty has
                  been assessed on the related Lessee and no investigation or
                  review is pending or, to its best knowledge, threatened by any
                  Governmental Authority or other Person in each case relating
                  to any Leased Property with respect to any alleged material
                  violation or liability of the related Lessee under any
                  Environmental Law. To the best knowledge of the related
                  Lessee, no material notice, notification, demand, request for
                  information, citations, summons, complaint or order has been
                  issued or filed to or with respect to any other Person, no
                  material penalty has been assessed on any other Person and no
                  investigation or review is pending or threatened by any
                  Governmental Authority or other Person relating to any Leased
                  Property with respect to any alleged material violation or
                  liability under any Environmental Law by any other Person.

                           (v) Each Leased Property and each portion thereof are
                  presently in compliance in all material respects with all
                  Environmental Laws, and, to the best knowledge of the related
                  Lessee, there are no present or past facts, circumstances,
                  activities, events, conditions or occurrences regarding such
                  Leased Property (including without limitation the release or
                  presence of Hazardous Materials) that would reasonably be
                  anticipated to (A) form the basis of a material Claim against
                  such Leased Property, any Funding Party or the related Lessee,
                  (B) cause such Leased Property to be subject to any material
                  restrictions on ownership, occupancy, use or transferability
                  under any Environmental Law, (C) require the filing or
                  recording of any notice or restriction relating to the
                  presence of Hazardous Materials in the real estate records in
                  the county or other appropriate municipality in which such
                  Leased Property is located, other than notices filed in the
                  ordinary cause of business, or (D) prevent or materially
                  interfere with the continued operation and maintenance of such
                  Leased Property as contemplated by the Operative Documents.

                  (x) Leased Property. The present condition of each Leased
Property conforms in all material respects with all conditions or requirements
of all existing permits and approvals issued with respect to such Leased
Property, and the related Lessee's future intended use of such Leased Property
under the Lease does not violate any Applicable Law. To the best knowledge of
the related Lessee, no material notices, complaints or orders of violation or
non-compliance have been issued or threatened or contemplated by any
Governmental Authority with respect to any Leased Property or any present or
intended future use thereof. All material agreements, easements and other
rights, public or private, which are necessary to permit the lawful use and
operation of each Leased Property as the related Lessee intends to use such
Leased Property

                                       26

<PAGE>

under the Lease and which are necessary to permit the lawful intended use and
operation of all presently intended utilities, driveways, roads and other means
of egress and ingress to and from the same have been, or to the related Lessee's
best knowledge will be, obtained and are or will be in full force and effect,
and the related Lessee has no knowledge of any pending material modification or
cancellation of any of the same.

         SECTION 4.2 Survival of Representations and Effect of Fundings.

                  (a) Survival of Representations and Warranties. All
representations and warranties made in Section 4.1 shall survive delivery of the
Operative Documents and every Funding, and shall remain in effect until the
Commitments terminate and all of the Obligations are fully and irrevocably paid.

                  (b) Each Funding a Representation. Each Funding accepted by a
Lessee or the Construction Agent shall be deemed to constitute a representation
and warranty by Borders and each other Lessee to the effect of Section 4.1.

         SECTION 4.3 Representations of the Lessor. Effective as of the date of
execution hereof, as of each Closing Date and as of each Funding Date, in each
case, with respect to each of the Leased Properties, the Lessor represents and
warrants to the Agent, the Lenders and the Lessees as follows:

                  (a) Securities Act. The interest being acquired or to be
acquired by the Lessor in such Leased Property is being acquired for its own
account, without any view to the distribution thereof or any interest therein,
provided that the Lessor shall be entitled to assign, convey or transfer its
interest in accordance with Section 6.1.

                  (b) Due Organization, etc. The Lessor is a limited partnership
duly organized and validly existing in good standing under the laws of Texas and
each state in which a Leased Property is located and has full power, authority
and legal right to execute, deliver and perform its obligations under the Lease,
this Master Agreement and each other Operative Document to which it is or will
be a party.

                  (c) Due Authorization; Enforceability, etc. This Master
Agreement and each other Operative Document to which the Lessor is or will be a
party have been or will be duly authorized, executed and delivered by or on
behalf of the Lessor and are, or upon execution and delivery will be, legal,
valid and binding obligations of the Lessor enforceable against it in accordance
with their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by general equitable principles.

                  (d) No Conflict. The execution and delivery by the Lessor of
the Lease, this Master Agreement and each other Operative Document to which the
Lessor is or will be a party,

                                       27

<PAGE>

are not or will not be, and the performance by the Lessor of its obligations
under each will not be, inconsistent with its Partnership Agreement, do not and
will not contravene any Applicable Law applicable generally to parties providing
financing and do not and will not contravene any provision of, or constitute a
default under, any Contractual Obligation of Lessor, do not and will not require
the consent or approval of, the giving of notice to, the registration with or
taking of any action in respect of or by, any Governmental Authority applicable
generally to parties providing financing, except such as have been obtained,
given or accomplished, and the Lessor possesses all requisite regulatory
authority to undertake and perform its obligations under the Operative
Documents.

                  (e) Litigation. There are no pending or, to the knowledge of
the Lessor, threatened actions or proceedings against the Lessor before any
court, arbitrator or administrative agency with respect to any Operative
Document or that would have a material adverse effect upon the ability of the
Lessor to perform its obligations under this Master Agreement or any other
Operative Documents to which it is or will be a party.

                  (f) Lessor Liens. No Lessor Liens (other than those expressly
created by the Operative Documents) exist on any Closing Date on the Leased
Property, or any portion thereof, and the execution, delivery and performance by
the Lessor of this Master Agreement or any other Operative Document to which it
is or will be a party will not subject any Leased Property, or any portion
thereof, to any Lessor Liens (other than those expressly created by the
Operative Documents).

                  (g) Employee Benefit Plans. The Lessor is not and will not be
making its investment hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1)) of the Code.

                  (h) General Partner. The sole general partner of the Lessor is
Atlantic Financial Managers, Inc., and the General Partner is duly organized and
validly existing in good standing under the laws of Texas and each state in
which a Leased Property is located.

                  (i) Financial Information. (A) The unaudited balance sheet of
the Lessor as of April 28, 2002 and the related statements of income, partners'
capital and cash flows for the year then ended, copies of which have been
delivered to the Agent, fairly present, in conformity with sound accounting
principles, the financial condition of the Lessor as of such date and the
results of operations and cash flows for such period.

                  (B) Since January 27, 2002, there has been no event, act,
condition or occurrence having a material adverse effect upon the financial
condition, operations, performance or properties of the Lessor, or the ability
of the Lessor to perform in any material respect its obligations under the
Operative Documents.

                                       28

<PAGE>

                  (j) No Offering. The Lessor has not offered the Notes to any
Person in any manner that would subject the issuance thereof to registration
under the Securities Act or any applicable state securities laws.

                  (k) Investment Company. The Lessor is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.

         SECTION 4.4 Representations of each Lender. Effective as of the date of
execution hereof, as of each Closing Date and as of each Funding Date, each
Lender represents and warrants to the Lessor and to the Lessees as follows:

                  (a) Securities Act. The interest being acquired or to be
acquired by such Lender in the Funded Amounts is being acquired for its own
account, without any view to the distribution thereof or any interest therein,
provided that such Lender shall be entitled to assign, convey or transfer its
interest in accordance with Section 6.2.

                  (b) Employee Benefit Plans. Such Lender is not and will not be
making its investment hereunder, and is not performing its obligations under the
Operative Documents, with the assets of an "employee benefit plan" (as defined
in Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1)) of the Code.

                                   ARTICLE V.
       COVENANTS OF GUARANTORS, BORDERS, THE OTHER LESSEES AND THE LESSOR

         Each of the Lessees and the Guarantors, jointly and severally,
covenants and agrees that, so long as any Funding Party Balance is outstanding
or any Funding Party has any obligation to make any Fundings:

         SECTION 5.1 Punctual Payment. The Lessees will duly and punctually pay
or cause to be paid the Rent, the Facility Fees and all other amounts provided
for in this Master Agreement and the other Operative Documents to which BGI or
any of its Subsidiaries is a party, all in accordance with the terms of this
Master Agreement and such other Operative Documents.

         SECTION 5.2 Maintenance of Office. Each of the Lessees and the
Guarantors will maintain its chief executive office at 100 Phoenix Drive, Ann
Arbor, Michigan or at such other place in the United States of America as such
Lessee or such Guarantor shall designate upon written notice to the Agent, where
notices, presentations and demands to or upon such Lessee or such Guarantor in
respect of the Operative Documents to which such Lessee or such Guarantor is a
party may be given or made.

                                       29

<PAGE>

         SECTION 5.3 Records and Accounts. Each of the Lessees and the
Guarantors will (a) keep, and cause each of its Subsidiaries to keep, true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP, (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves, and (c) at all times engage
Ernst & Young LLP or other independent certified public accountants satisfactory
to the Agent as the independent certified public accountants of the Lessees, the
Guarantors and their Subsidiaries and will not permit more than thirty (30) days
to elapse between the cessation of such firm's (or any successor firm's)
engagement as the independent certified public accountants of the Lessees, the
Guarantors and their Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent.

         SECTION 5.4 Financial Statements, Certificates and Information. The
Lessees and the Guarantors will deliver to each of the Lenders:

                  (a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Lessees and the
Guarantors, the consolidated balance sheet of BGI and its Subsidiaries as at the
end of such year, and the related consolidated statement of income and
consolidated statement of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated statements to be in reasonable detail, prepared in accordance with
GAAP, and certified, without qualification and without an expression of
uncertainty as to the ability of BGI or any of its Subsidiaries to continue as
going concerns, by Ernst & Young LLP or by other independent certified public
accountants satisfactory to the Agent, together with a written statement from
such accountants to the effect that they have read a copy of this Master
Agreement, and that, in making the examination necessary to said certification,
they have obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then existing Default or Event
of Default they shall disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be liable to the Lenders for
failure to obtain knowledge of any Default or Event of Default;

                  (b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three fiscal quarters of
the Lessees and the Guarantors, copies of the unaudited consolidated balance
sheet of BGI and its Subsidiaries as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of cash flow for the
portion of the Lessees' and the Guarantors' fiscal year then elapsed, all in
reasonable detail and prepared in accordance with GAAP, together with a
certification by the principal financial or accounting officer of BGI that the
information contained in such financial statements fairly presents the financial
position of BGI and its Subsidiaries on the date thereof (subject to year-end
adjustments);

                                       30

<PAGE>

                  (c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement certified
by the principal financial or accounting officer of the Lessees and the
Guarantors in substantially the form of Exhibit J hereto (a "Compliance
Certificate") and setting forth in reasonable detail computations evidencing
compliance with the covenants contained in Sections 5.30 through 5.33, the
calculation of the Obligor Group Requirement and (if applicable) reconciliations
to reflect changes in GAAP since the Balance Sheet Date;

                  (d) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities and
Exchange Commission or sent to the stockholders of any of the Lessees and the
Guarantors;

                  (e) from time to time upon request of the Agent, projections
of BGI and its Subsidiaries updating those projections delivered to the Lenders
and referred to in Section 4.1(d)(iii) or, if applicable, updating any later
such projections delivered in response to a request pursuant to this Section
5.4(e); and

                  (f) from time to time such other financial data and
information (including accountants, management letters) as the Agent or any
Funding Party may reasonably request.

         SECTION 5.5 Notices.

                  (a) Defaults. Each of the Lessees and the Guarantors will
promptly notify the Agent and each of the Funding Parties in writing of the
occurrence of any Default or Event of Default, together with a reasonably
detailed description thereof, and the actions the Lessees and the Guarantors
propose to take with respect thereto. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Master Agreement or any other note,
evidence of indebtedness, indenture or other obligation to which or with respect
to which BGI or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, the Lessees and the Guarantors shall
forthwith give written notice thereof to the Agent and each of the Funding
Parties, describing the notice or action and the nature of the claimed default.

                  (b) Environmental Events. The Lessees and the Guarantors will
promptly give notice to the Agent and each of the Funding Parties (i) of any
violation of any Environmental Law that any of the Lessees and the Guarantors or
any of their Subsidiaries reports in writing or is reportable by such Person in
writing (or for which any written report supplemental to any oral report is
made) to any Governmental Authority and (ii) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice from any
agency of potential environmental liability, of any Governmental Authority that
could have a Material Adverse Effect.

                                       31

<PAGE>

                  (c) Notice of Litigation and Judgments. Each of the Lessees
and the Guarantors will, and will cause each of its Subsidiaries to, give notice
to the Agent and each of the Funding Parties in writing within fifteen (15) days
of becoming aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting any of the Lessees, any of the
Guarantor or any of their Subsidiaries or to which any of the Lessees, any of
the Guarantors or any of their Subsidiaries is or becomes a party involving an
uninsured claim against any of the Lessees, the Guarantors or any of their
Subsidiaries that could reasonably be expected to have a Material Adverse Effect
on any of the Lessees, any of the Guarantors or any of their Subsidiaries and
stating the nature and status of such litigation or proceedings. The Lessees and
the Guarantors will, and will cause each of their Subsidiaries to, give notice
to the Agent and each of the Funding Parties, in writing, in form and detail
satisfactory to the Agent, within ten (10) days of any judgment not covered by
insurance, final or otherwise, against any of the Lessees, any of the Guarantors
or any of their Subsidiaries in an amount in excess of $15,000,000.

                  (d) Notice Regarding Certain Events. The Lessees and the
Guarantors will furnish or cause to be furnished to the Agent and the Funding
Parties written notice of (i) promptly after the adoption thereof, any amendment
to the organizational documents of any Lessee or any Guarantor; and (ii)
promptly, the enactment or adoption of any law which could reasonably be
expected to have a Material Adverse Effect.

         SECTION 5.6 Legal Existence; Maintenance of Properties. Each of the
Lessees and the Guarantors will do or cause to be done all things necessary to
preserve and keep in full force and effect its legal existence, rights and
franchises and those of its Subsidiaries and will not, and will not cause or
permit any of its Subsidiaries to, convert to a limited liability company or a
limited liability partnership. It (a) will cause all of its properties and those
of its Subsidiaries used or useful in the conduct of its business or the
business of its Subsidiaries to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment, (b) will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of such Lessee or such Guarantor
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, (c) will maintain in full
force and effect all patents, trademarks, trade names, copyrights, licenses,
permits and other authorizations necessary for the ownership and operation of
its properties and business, and (d) will, and will cause each of its
Subsidiaries to, continue to engage primarily in the businesses now conducted by
them and in related businesses; provided that nothing in this Section 5.6 shall
prevent any of the Lessees or the Guarantors from discontinuing the operation
and maintenance of any of its properties or any of those of its Subsidiaries,
including the existence of any Subsidiary of BGI or the conversions of any
Subsidiary of BGI to a limited liability company or limited liability
partnership, if such discontinuance or conversion is, in the judgment of such
Lessee, desirable in the conduct of its or their business and that do not in the
aggregate have a Material Adverse Effect and, with respect to the conversions of
a Lessee or a Guarantor to a limited liability company or limited liability
partnership, simultaneously with such conversion, such Lessee or such Guarantor
shall have

                                       32

<PAGE>

executed and delivered to the Agent all documentation which the Agent reasonably
determine is necessary to continue such Lessee's or such Guarantor's obligations
in respect of the Operative Documents.

         SECTION 5.7 Insurance. Each of the Lessees and the Guarantors will, and
will cause each of its Subsidiaries to, maintain with financially sound and
reputable insurers insurance with respect to its properties and business against
such casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such periods
as may be reasonable and prudent, including self-insurance to the extent
customary, all as reasonably determined by the Agent. At the request of the
Agent, BGI shall deliver from time to time a summary schedule indicating all
insurance then in force with respect to each of the Lessees and the Guarantors.

         SECTION 5.8 Taxes. Each of the Lessees and the Guarantors will, and
will cause each of its Subsidiaries to, duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon it and its Real Estate,
sales and activities, or any part thereof, or upon the income or profits
therefrom, as well as all claims for labor, materials, or supplies that if
unpaid might by law become a Lien or charge upon any of its property; provided
that any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if such Lessee, such Guarantor or such Subsidiary
shall have set aside on its books adequate reserves with respect thereto; and
provided further that each of the Lessees and the Guarantors and each of their
Subsidiaries will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any Lien that may
have attached as security therefor.

         SECTION 5.9 Inspection of Properties. Each of the Lessees and the
Guarantors shall permit the Funding Parties, through the Agent or any of the
Funding Parties other designated representatives, to visit and inspect any of
the properties of such Lessee, such Guarantor or any of its Subsidiaries, to
examine the books of account of such Lessee, Guarantor and its Subsidiaries (and
to make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of such Lessee, such Guarantor and its Subsidiaries with,
and to be advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Agent or any Funding Party may reasonably
request. At the request of the Agent, but not more frequently than once a year,
the Lessees and the Guarantors and their respective Authorized Officers shall
hold a meeting of the Funding Parties, at which the Lessees and the Guarantors
will present an analysis of the financial performance of BGI and its
Subsidiaries during the previous Fiscal Year and a discussion of the expected
results of operations for the then current Fiscal Year.

         SECTION 5.10 Compliance with Laws, Contracts, Licenses, and Permits.
Each of the Lessees and the Guarantors will, and will cause each of its
Subsidiaries to, comply with (a) the applicable laws and regulations wherever
its business is conducted, including all Environmental

                                       33

<PAGE>

Laws, (b) the provisions of its Governing Documents, (c) all agreements and
instruments by which it or any of its properties may be bound and (d) all
applicable decrees, orders, and judgments, where, with respect to clauses (a),
(c) and (d) only, failure to so comply could have a Material Adverse Effect. If
any authorization, consent, approval, permit or license from any officer, agency
or instrumentality of any government shall become necessary or required in order
that any of the Lessees, any of the Guarantors or any of their Subsidiaries may
fulfill any of its obligations hereunder or any of the other Operative Documents
to which such Lessee, such Guarantor or such Subsidiary is a party, such Lessee
or such Guarantor will, or (as the case may be) will cause such Subsidiary to,
immediately take or cause to be taken all reasonable steps within the power of
such Lessee, such Guarantor or such Subsidiary to obtain such authorization,
consent, approval, permit or license and furnish the Agent and the Lenders with
evidence thereof.

         SECTION 5.11 Employee Benefit Plans. The Lessees and the Guarantors
will (a) promptly upon filing the same with the Department of Labor or Internal
Revenue Service upon request of the Agent, furnish to the Agent a copy of the
most recent actuarial statement required to be submitted under Section 103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in respect of
each Guaranteed Pension Plan, (b) promptly upon receipt or dispatch, furnish to
the Agent any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under Sections 4041A,
4202, 4219, 4242, or 4245 of ERISA and (c) promptly furnish to the Agent a copy
of all actuarial statements required to be submitted under all Applicable
Pension Legislation.

         SECTION 5.12 Use of Proceeds. The Lessees and the Guarantors will use
the proceeds of the Fundings solely for the purposes set forth in Section
4.1(p)(i).

         SECTION 5.13 Subsequent Credit Terms. The Guarantors shall notify the
Agent in writing not less than ten (10) Business Days prior to any Lessee and
any Guarantor entering into any credit agreement or any amendment or
modification to any existing credit agreement in either case as otherwise
permitted hereunder, pursuant to which any Lessee or any Guarantor agrees to
representations, warranties or covenants which are more restrictive, as
determined in the sole discretion of the Agent, than the representations,
warranties or covenants hereof (the "More Restrictive Provisions"). Upon the
execution of such new credit agreement, amendment or modification, the
corresponding covenants, terms and conditions of this Master Agreement shall be
and shall be deemed to be automatically and immediately amended to conform with
and to include the applicable More Restrictive Provisions of such new credit
agreement, amendment or modification; provided that the foregoing shall not be
applicable to or be deemed to affect any provision of this Master Agreement if
any new credit agreement, amendment or modification is less restrictive. Each of
the Lessees and the Guarantors hereby agrees promptly to execute and deliver any
and all such documents and instruments and to take all such further actions as
the Agent may, in their sole discretion, deem necessary or appropriate to
effectuate the provisions of this Section 5.13.

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<PAGE>

         SECTION 5.14 Subsidiary Guaranties. If, with respect to any of BGI's
Domestic Subsidiaries which are not members of the Obligor Group, (a) any such
Domestic Subsidiary's total assets determined in accordance with GAAP at the end
of any Fiscal Quarter constitute more than 10% of Consolidated Tangible Net
Worth determined at the end of such Fiscal Quarter or (b) any such Domestic
Subsidiary's net income determined in accordance with GAAP for any rolling four
Fiscal Quarter period exceeds 10% of Consolidated Net Income for such four
Fiscal Quarters, BGI shall cause such Domestic Subsidiary to become a Guarantor
and agree to be bound by the provisions of the Guaranty, to execute a Joinder
Agreement and to deliver such legal opinions and other documents and instruments
as the Agent may request.

         SECTION 5.15 Further Assurances. Each of the Lessees will, and will
cause each of its Subsidiaries to, cooperate with the Funding Parties and the
Agent and execute such further instruments and documents as the Funding Parties
or the Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Master Agreement and the other Operative
Documents.

         SECTION 5.16 Restrictions on Indebtedness. None of the Lessees or the
Guarantors will, nor will permit any of its Subsidiaries to, create, incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:

                  (a) Indebtedness to the Funding Parties and the Agent arising
under any of the Operative Documents and Indebtedness arising under the
Revolving Credit Agreement or any of the Loan Documents (as defined in the
Revolving Credit Agreement);

                  (b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;

                  (c) Indebtedness incurred in connection with the acquisition
after the Closing Date of any Property (and in any event not more than ninety
(90) days from the date of such acquisition) by such Lessee, such Guarantor or
such Subsidiary as contemplated by Section 5.17(ix);

                  (d) obligations under or guaranties of Capitalized Leases;

                  (e) Indebtedness in respect of Hedging Agreements entered into
for hedging purposes only and not for speculation;

                  (f) Indebtedness existing on the Closing Date and listed and
described on Schedule 5.16 hereto including any extensions or refinancings
thereof on substantially similar terms as the Indebtedness being refinanced and
provided there is no increase in the amount thereof;

                                       35

<PAGE>

                  (g) unsecured Indebtedness of any of BGI's Subsidiaries to, or
in respect of Obligations of, BGI or another Subsidiary of BGI consisting of
intercompany loans and, if no Default or Event of Default shall have occurred
and be continuing at the time such Indebtedness is incurred, any other
Investments;

                  (h) unsecured Indebtedness of BGI to, or in respect of
obligations of, a Subsidiary of BGI consisting of intercompany loans and, if no
Default or Event of Default shall have occurred and be continuing at the time
such Indebtedness is incurred, any other Investments;

                  (i) Indebtedness of Foreign Subsidiaries (other than
Indebtedness permitted under clause (g) hereof) with an aggregate principal
Dollar Equivalent amount outstanding not to exceed $30,000,000;

                  (j) Indebtedness of the Lessees and the Guarantors in respect
of the Operative Agreements and the Existing Synthetic Lease Facility, provided,
however, that the aggregate amount of Indebtedness permitted thereunder (i) on
and after the Documentation Date through October 31, 2002 shall not exceed
$100,000,000 and (ii) on and after November 1, 2002 shall not exceed
$75,000,000;

                  (k) Indebtedness in respect of Permitted Joint Venture
Activity, provided that no Default or Event of Default has occurred and is
continuing or would result therefrom;

                  (l) unsecured Indebtedness of BGI and its Subsidiaries in
respect of the private placement offering of debt securities to be made after
the Closing Date in an aggregate principal amount outstanding not to exceed
$50,000,000 at any time; and

                  (m) Indebtedness of BGI and its Domestic Subsidiaries in
addition to Indebtedness otherwise permitted by clause (a) to (l) above with an
aggregate principal Dollar Equivalent amount outstanding not to exceed 20% of
Consolidated Tangible Net Worth (determined as of the last day of the Fiscal
Quarter most recently ended), provided that at the time of incurrence of such
Indebtedness no Default or Event of Default has occurred and is continuing or
would result therefrom.

         SECTION 5.17 Restrictions on Liens. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, (a) create or incur
or suffer to be created or incurred or to exist any Lien upon any of its
property or assets of any character whether now owned or hereafter acquired, or
upon the income or profits therefrom; (b) transfer any of such property or
assets or the income or profits therefrom for the purpose of subjecting the same
to the payment of Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire, or agree to acquire,
any property or assets upon conditional sale or other title retention or
purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any

                                       36

<PAGE>

Indebtedness or claim or demand against it that if unpaid might by law or upon
bankruptcy or insolvency, or otherwise, be given any priority whatsoever over
its general creditors; or (e) sell, assign, pledge or otherwise transfer any
"receivables" as defined in clause (g) of the definition of the term
"Indebtedness," with or without recourse; provided that any Lessee, any
Guarantor or any of its Subsidiaries may create or incur or suffer to be created
or incurred or to exist:

                  (i) Liens in favor of such Lessee or such Guarantor on all or
                  part of the assets of Subsidiaries of such Lessee or such
                  Guarantor securing Indebtedness owing by Subsidiaries of such
                  Lessee or such Guarantor to such Lessee or such Guarantor;

                  (ii) Liens to secure taxes, assessments and other government
                  charges in respect of obligations and Liens to secure claims
                  for labor, material or supplies, in each cash in respect of
                  obligations not overdue or which are being contested in good
                  faith and by appropriate proceedings and for which such Lessee
                  or such Guarantor or such Subsidiary has set aside on its
                  books adequate reserves with respect thereto;

                  (iii) deposits or pledges made in connection with, or to
                  secure payment of, workmen's compensation, unemployment
                  insurance, old age pensions or other social security
                  obligations;

                  (iv) Liens on properties in respect of judgments or awards
                  that have been in force for less than the applicable period
                  for taking an appeal so long as execution is not levied
                  thereunder or in respect of which such Lessee or such
                  Guarantor or such Subsidiary shall at the time in good faith
                  be prosecuting an appeal or proceedings for review and in
                  respect of which a stay of execution shall have been obtained
                  pending such appeal or review;

                  (v) Liens of carriers, warehousemen, mechanics and
                  materialmen, and other like Liens, securing obligations
                  incurred in the ordinary course of business, in respect of
                  obligations not overdue or which in the aggregate do not have
                  a Material Adverse Effect;

                  (vi) encumbrances on Real Estate consisting of easements,
                  rights of way, zoning restrictions, restrictions on the use of
                  real property and defects and irregularities in the title
                  thereto, landlord's or lessor's liens and other minor Liens,
                  provided that none of such Liens (A) interferes materially
                  with the use of the property affected in the ordinary conduct
                  of the business of the Lessees, the Guarantors and their
                  Subsidiaries, and (B) individually or in the aggregate have a
                  Material Adverse Effect;

                  (vii) pledges or deposits made in the ordinary course of
                  business to secure performance of bids, tenders, contracts
                  (other than for the repayment of

                                       37

<PAGE>

                  Indebtedness) or leases, not in excess of the aggregate amount
                  due thereunder, or to secure statutory obligations, or surety,
                  appeal, indemnity, performance or other similar bonds required
                  in the ordinary course of business;

                  (viii) Liens existing on the Documentation Date and listed on
                  Schedule 5.17 hereto, provided that the principal amount
                  secured thereby is not thereafter increased and no additional
                  assets become subject to such Lien;

                  (ix) purchase money security interests in or purchase money
                  mortgages on Property acquired after the Documentation Date to
                  secure purchase money Indebtedness of the type and amount
                  permitted by Section 5.16(c), incurred in connection with the
                  acquisition of such Property and in any event not more than
                  ninety (90) days from the date of such acquisition, which
                  security interests or mortgages cover only the Property so
                  acquired;

                  (x) Liens in respect of the interests of lessors under
                  Capitalized Leases and Synthetic Leases permitted under this
                  Master Agreement securing obligations of BGI or its
                  Subsidiaries to the lessor under such Capitalized Leases or
                  such Synthetic Leases;

                  (xi) Liens on assets of Foreign Subsidiaries securing
                  Indebtedness permitted under Section 5.16(i);

                  (xii) Liens granted to the Agents, the Lenders and the Issuing
                  Bank (each as defined in the Revolving Credit Agreement)
                  pursuant to Section 16.1 of the Revolving Credit Agreement;
                  and

                  (xiii) Liens on the Properties (as defined in the Existing
                  Synthetic Lease) covered by the Existing Synthetic Lease and
                  related assets granted to the real estate administrative agent
                  under the Existing Synthetic Lease Documents securing
                  obligations of BGI or its Subsidiaries to the lenders under
                  the Existing Synthetic Lease; and

                  (xiv) Liens on assets of BGI and its Subsidiaries not
                  otherwise permitted by clauses (i) through (xiii) above, so
                  long as any Indebtedness secured thereby is permitted under
                  the terms of Section 5.16, and the aggregate fair market value
                  of all property secured by such Liens does not at any time
                  exceed 5% of Consolidated Tangible Net Worth (determined as of
                  the last day of the Fiscal Quarter most recently ended).

         SECTION 5.18 Restrictions on Investments. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, make or permit to
exist or to remain outstanding any Investment except Investments in:

                                       38

<PAGE>

                  (a) marketable direct or guaranteed obligations of the United
States of America (or any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America) that mature
within one (1) year from the date of purchase by such Lessee or such Guarantor;

                  (b) demand deposits, certificates of deposit, bank acceptances
and time deposits maturing within 180 days from the date of purchase thereof of
(i) United States banks having total assets in excess of $1,000,000,000 or (ii)
a commercial bank organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and Development (the
"OECD"), or a political subdivision of such country, and having total assets in
excess of $1,000,000,000, provided that such bank is acting through a branch or
agency located in the country in which it is organized or another country which
is a member of the OECD;

                  (c) securities commonly known as "commercial paper"
denominated in Dollars maturing within 180 days from the date of purchase
thereof that at the time of purchase have been rated and the ratings for which
are not less than "P1" if rated by Moody's, and not less than "A1" if rated by
S&P;

                  (d) money market mutual funds denominated in an Optional
Currency in countries in which BGI or any of its Subsidiaries operates a
business provided that (i) each such fund in which BGI or any of its
Subsidiaries makes an Investment has assets of not less than $50,000,000 and
(ii) the proportional Investment in each such fund by BGI or such Subsidiary
does not exceed five percent (5%) of the aggregate amount of all Investments in
such fund;

                  (e) Investments existing on the Documentation Date and listed
on Schedule 5.18 hereto;

                  (f) Investments consisting of loans and advances to employees
(i) for moving, entertainment, travel and other similar expenses in the ordinary
course of business and (ii) for any other purpose, with such Investments under
this clause (ii) not to exceed $10,000,000 in the aggregate principal amount at
any time outstanding;

                  (g) trade credit extended on usual and customary terms in the
ordinary course of business;

                  (h) Investments by BGI in any Subsidiary of BGI or by any
Subsidiary of BGI in BGI or another Subsidiary of BGI, provided (i) any loans or
advances are unsecured and are evidenced by intercompany notes and (ii) before
and after giving effect to such Investment, the Lessees and the Guarantors are
in compliance with the Obligor Group Requirement;

                  (i) Acquisitions provided (i) no Default or Event of Default
has occurred and is continuing or would result therefrom, (ii) the assets or
business subject to such Acquisition is in substantially the same or a similar
type of business as BGI and its Subsidiaries, (iii) the Board

                                       39

<PAGE>

of Directors and (if required by applicable law) the shareholders of any Person
to be acquired has approved the terms of the Acquisition, and (iv) BGI delivers
to the Lenders on or before the date on which it or any of its Subsidiaries
agrees to or consummates any Acquisition a Compliance Certificate and pro forma
financial statements, in form and substance satisfactory to the Agent, showing
that on a pro forma basis no Default or Event of Default will occur under
Sections 5.30 through 5.33 or with respect to the Obligor Group Requirement over
the 12 month period following the effective date of the Acquisition, based on
reasonable projections of the financial performance of the Lessees and the
Guarantors;

                  (j) Investments constituting Permitted Joint Venture Activity,
provided no Default or Event of Default has occurred and is continuing or would
result therefrom;

                  (k) repurchases of BGI's common stock in accordance with
Section 5.19;

                  (l) guarantees of any obligation of landlord of a Lessee or a
Guarantor to the extent that the obligations relate to funds arranged by a
Lessee or a Guarantor and used to finance or refinance any stores of a Lessee or
a Guarantor and such funds are intended to be repaid through lease payments of a
Lessee or a Guarantor; and

                  (m) Investments in respect of Hedging Agreements entered into
for hedging purposes only and not for speculation.

         SECTION 5.19 Restricted Payments. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, make any Restricted
Payments except that, so long as no Default or Event of Default then exists or
would result from such payment and BGI delivers to the Funding Parties prior to
the date of any Restricted Payment contemplated under paragraphs (a), (d), (e)
or (f) hereof a certificate in form and substance satisfactory to the Agent
calculating the Leverage Ratio on a pro forma basis, including the impact of the
contemplated Distribution in the calculation of Consolidated Total Funded Debt:

                  (a) BGI may make (i) repurchases of shares of its common stock
at prices not exceeding the then existing market price, and it may receive
shares of its common stock as payment of the exercise price of options, or as
payment of taxes associated with the exercise of options or the vesting of
restricted shares, which such delivered shares are deemed to be repurchased by
BGI at fair market value (as defined in BGI's stock option plan) on the date of
delivery to BGI and (ii) other Restricted Payments so long as the aggregate
amount paid by BGI with respect to all such repurchases (including all such
deemed repurchases) and other Restricted Payments does not at any time exceed
the Restricted Payment Amount in effect from time to time;

                  (b) BGI may engage in stock splits (including reverse stock
splits);

                                       40

<PAGE>

                  (c) Wholly-owned Subsidiaries may make Distributions to BGI or
another Wholly-owned Subsidiary;

                  (d) Subsidiaries other than Wholly-owned Subsidiaries may make
Distributions so long as (i) the aggregate amount of Distributions made by any
such Subsidiary to any Person other than BGI or a Subsidiary of BGI in any
Fiscal Year does not exceed 50% of such Person's pro rata share (based on the
percentage of stock or other equity interests owned by such Person) of such
Subsidiary's net income for such Fiscal Year as determined in accordance with
GAAP and (ii) no later than ten (10) days prior to any such Distribution, BGI
shall have given written notice to the Lenders and the Agent thereof, together
with calculations demonstrating that such Distribution complies with this
paragraph (d); and

                  (e) BGI may pay dividends on its preferred stock so long as
the dividend rate on such preferred stock (after taking into account all other
fees and amounts payable on such preferred stock) is less than the interest rate
payable on the Loans.

         SECTION 5.20 Merger, Consolidation, Disposition of Assets and Sale
Leaseback Transactions.

                  (a) Mergers and Consolidations. None of the Lessees and the
Guarantors will permit any of its Subsidiaries to become a party to any merger,
amalgamation or consolidation, except, so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, (a) any Lessee
(other than BGI) may merge or consolidate into another Lessee, (b) any
Subsidiary of BGI may consolidate or merge into any Lessee, a Guarantor or any
Wholly-owned Subsidiary of a Lessee provided a Lessee, a Guarantor or the
Wholly-owned Subsidiary is the surviving corporation of such consolidation or
merger, (c) any Subsidiary of BGI (other than a Lessee or a Guarantor) may
consolidate or merge into any other Subsidiary of BGI (other than a Lessee or a
Guarantor) and (d) any Lessee (other than BGI) or Subsidiary of BGI may merge or
consolidate into another Person so long as both before and after giving effect
to such merger or consolidation the Lessees are in compliance with the Obligor
Group Requirement and (i) the disposition of the assets of such Lessee or such
Subsidiary would have been permitted under Section 5.20(b) or (ii) (A) the
surviving entity, immediately after giving effect to such merger or
consolidation, is or becomes a Lessee or a Guarantor by executing and delivering
to the Agent a Joinder Agreement and the documents referred to therein and (B)
such transaction, if it had been structured as an Acquisition by any Lessee or
Subsidiary of BGI, would not have been prohibited under Section 5.21.

                  (b) Disposition of Assets. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, become a party to
or agree to or effect any disposition of assets, other than:

                                       41

<PAGE>

                  (i) the sale of inventory, the licensing of intellectual
         property and the disposition of obsolete assets, in each case in the
         ordinary course of business consistent with past practices;

                  (ii) any sale, transfer, assignment or lease of Property,
         including without limitation any store closures, in the ordinary course
         of business which are no longer necessary or required in the conduct of
         such Lessee's, Guarantor's or Subsidiary's business;

                  (iii) any sale or transfer of any Property owned by any
         Lessee, any Guarantor or any Subsidiary of a Lessee or a Guarantor in
         order then or thereafter to lease such Property or lease other Property
         that any Lessee, any Guarantor or any Subsidiary of a Lessee or a
         Guarantor intends to use for substantially the same purpose as the
         property being sold or transferred (a "sale-leaseback transaction") in
         the ordinary course of business and provided that no Default or Event
         of Default shall have occurred and is continuing or would result
         therefrom;

                  (iv) any sale, transfer or lease of Property by BGI to any
         Subsidiary of BGI or by any Subsidiary of BGI to BGI or another
         Subsidiary of BGI provided before and after giving effect to such sale,
         transfer or lease, the Lessees and the Guarantors are in compliance
         with the Obligor Group Requirement;

                  (v) any sale, transfer or lease of Property in the ordinary
         course of business which is replaced by substitute Property;

                  (vi) any transfers to Kmart of "Premises" pursuant to the
         Kmart Indemnity (as such term is defined therein) if and to the extent
         that any such transfer does not cause an Event of Default under
         paragraph (r) of Article XII of the Lease;

                  (vii) any sale, transfer or lease of property by BGI or any of
         its Subsidiaries constituting all or a portion of a Permitted Joint
         Venture Activity; and

                  (viii) other dispositions of assets that do not have a
         Material Adverse Effect, provided that (A) the aggregate net book value
         of the assets to be sold plus the net book value of all other assets of
         the Lessees, the Guarantors and their Subsidiaries sold or otherwise
         disposed of under this clause (viii) during the period of time from the
         Documentation Date through the date of such sale does not, at the time
         of such sale or other disposition, exceed 15% of the Consolidated Total
         Assets of the Lessees, the Guarantors and their Subsidiaries, (B) such
         assets are sold or otherwise disposed of in an arm's length transaction
         for fair market value (after giving effect to all tax benefits, if any,
         associated with such sale or other disposition), (C) no Default or an
         Event of Default exists or would result from such sale, and (D) before
         and after giving effect to such

                                       42

<PAGE>

         disposition, the Lessees and the Guarantor are in compliance with the
         Obligor Group Requirement.

         SECTION 5.21 Acquisitions. None of the Lessees and the Guarantors will,
nor will permit any of its Subsidiaries to, enter into any stock or asset
acquisitions (other than the acquisition of assets in the ordinary course of
such Person's business, and Acquisitions permitted under Section 5.18(i) or
become or agree to become a general or limited partner, joint venturer or member
in any partnership, joint venture or limited liability company, as the case may
be, provided that, so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, BGI or any of its Subsidiaries may
own or create (a) any Subsidiary so long as both before and after giving effect
thereto the Lessees and the Guarantors are in compliance with the Obligor Group
Requirement or (b) any Joint Venture so long as any Investment with respect
thereto would constitute a Permitted Joint Venture Activity.

         SECTION 5.22 Compliance with Environmental Laws. None of the Lessees
and the Guarantors will, nor will permit any of its Subsidiaries to, (a) use any
of the Real Estate or any portion thereof for the handling, processing, storage
or disposal of Hazardous Substances, (b) cause or permit to be located on any of
the Real Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a release (i.e., releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Hazardous Substances
on, upon or into the Real Estate or (e) otherwise conduct any activity at any
Real Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law.

         SECTION 5.23 Modifications of Other Documents. None of the Lessees and
the Guarantors will, nor will permit any of its Subsidiaries to, permit or
otherwise consent to any amendment to or modification of any of the Kmart
Agreements, the Existing Lease Credit Agreement, the Existing Lease Financing
Guarantee, the Existing Participation Agreement, any Financed Lease or any other
Operative Agreement (as defined in the Existing Lease Credit Agreement), which
could reasonably be expected to have a Material Adverse Effect, which would have
the effect of materially increasing the obligations of or burdens on the
Lessees, the Guarantors or any of their Subsidiaries thereunder or which would
have the effect of shortening or deleting any notice or cure period provided for
therein.

         SECTION 5.24 Employee Benefit Plans. None of the Lessees, the
Guarantors nor any ERISA Affiliate will:

                 (a) engage in any "prohibited transaction" within the meaning
of ss. 406 of ERISA or ss. 4975 of the Code which could result in a material
liability for any of the Lessees, the Guarantors or any of their Subsidiaries;
or

                                       43

<PAGE>

                 (b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss. 302 of ERISA, whether or
not such deficiency is or may be waived; or

                 (c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of any of the
Lessees, the Guarantors or any of their Subsidiaries pursuant to ss. 302(f)
or ss. 4068 of ERISA; or

                 (d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss. 307 of ERISA or ss. 401(a)(29)
of the Code; or

                  (e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss. 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of such
Plans, disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities; or

                  (f) permit or take any action which would contravene any
Applicable Pension Legislation.

         SECTION 5.25 Business Activities. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, engage directly or
indirectly (whether through Subsidiaries or otherwise) in any type of business
other than (a) with respect to the Lessees and the Guarantors, the businesses
conducted by them on the Documentation Date, substantially as conducted and
operated by such Person as of such date and (b) with respect to any Subsidiary
of a Lessee or a Guarantor, substantially as conducted and operated by a Lessee
or a Guarantor on the Documentation Date or in businesses reasonably incidental
and complementary thereto.

         SECTION 5.26 Fiscal Year. None of the Lessees and the Guarantors will,
nor will permit any of it Subsidiaries to, change its Fiscal Quarter or change
its Fiscal Year.

         SECTION 5.27 Transactions with Affiliates. None of the Lessees and the
Guarantors will, nor will permit any of its Subsidiaries to, engage in any
transaction with any Affiliate (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such Affiliate or, to the knowledge of any of the Lessees or the Guarantors, any
corporation, partnership, trust or other entity in which any such Affiliate has
a substantial interest or is an officer, director, trustee or partner, on terms
more favorable to such Person than would have been obtainable on an arm's-length
basis in the ordinary course of business and provided such transaction is not
otherwise prohibited by this Credit Agreement.

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<PAGE>

         SECTION 5.28 Changes in Governing Documents. None of the Lessees and
the Guarantors will, nor will permit any of its Subsidiaries to, amend in any
respect its Governing Documents in the event such change would be adverse to the
Funding Parties.

         SECTION 5.29 Inconsistent Agreements. Each of the Lessees and the
Guarantors shall not, and shall not permit any of its Subsidiaries to, enter
into or become or remain subject to any restriction on the ability of such
Lessee, such Guarantor or such Subsidiary to make dividends or distributions in
cash or kind to such Lessee, such Guarantor or such Subsidiary, to make loans,
advances or other payments of whatsoever nature to such Lessee, such Guarantor
or such Subsidiary, or to make transfers or distributions of all or any part of
its assets to such Lessee, such Guarantor or such Subsidiary either in its
Governing Documents or in any agreement or contract to which it is a party
(other than restrictions in this Master Agreement, the other Operative
Documents, the Existing Lease Financing Guarantee and the Revolving Credit
Agreement), nor shall any of them enter into any indenture, agreement,
instrument or other arrangement which, (a) directly or indirectly prohibits or
restrains, or has the effect of prohibiting or restraining, or could reasonably
be expected to impose materially adverse conditions upon, the incurrence of the
Obligations under the Operative Documents, any provisions of this Master
Agreement or the amending of any of the Operative Documents, (b) contains any
provision which would be violated or breached by the making of Fundings to any
Lessee or the Construction Agent, the incurrence of Indebtedness by any Lessee
hereunder, or by the performance by any Lessee, any Guarantor or any of its
Subsidiaries of any of its obligations under any Operative Document or (c)
directly or indirectly prohibits any of the Lessees, Guarantors or any of their
Subsidiaries from creating, assuming or incurring any Lien securing the
Obligations upon its properties, revenues or assets or those of any of its
Subsidiaries whether now owned or hereafter acquired, other than (i)
restrictions on specific assets which assets are the subject of purchase money
security interests to the extent permitted under Section 5.17, (ii) customary
anti-assignment provisions contained in leases and licensing agreements entered
into by such Lessee, such Guarantor or such Subsidiary in the ordinary course of
its business, and (iii) restrictions in this Master Agreement, the other
Operative Documents, the Existing Lease Financing Guarantee, the Revolving
Credit Agreement and the other Loan Documents (as defined in the Revolving
Credit Agreement), the private placement offering permitted by Section 5.16(l)
and, with respect to the assets of Foreign Subsidiaries, agreements in respect
of Indebtedness of Foreign Subsidiaries set forth on Schedule 5.16 hereto and
agreements in respect of Indebtedness of Foreign Subsidiaries permitted under
Section 5.16(i).

         SECTION 5.30 Fixed Charge Coverage Ratio. The Lessees and the
Guarantors will not permit the Fixed Charge Coverage Ratio for any Fiscal
Quarter ending during any period described in the table set forth below to be
less than the ratio set forth opposite such period in such table:

<Table>
<Caption>
                Period                          Ratio
                ------                          -----
<S>                                             <C>
                FQ4 2001-FQ4 2002               1.6:1.0
                FQ1 2003-thereafter             1.7:1.0
</Table>

                                       45

<PAGE>

         SECTION 5.31 Leverage Ratio. The Lessees and the Guarantors will not
permit the Leverage Ratio at the end of any Fiscal Quarter to exceed 1.5:1.0.

         SECTION 5.32 Consolidated Tangible Net Worth. The Lessees and the
Guarantors will not permit Consolidated Tangible Net Worth to be less than the
sum of (a) $800,000,000 plus, (b) on a cumulative basis, fifty percent (50%) of
positive Consolidated Net Income for each Fiscal Year subsequent to the
Documentation Date plus (c) one hundred percent (100%) of the proceeds of any
sale by the Lessees of (i) equity securities issued by any Lessee or (ii)
warrants or subscription rights for equity securities issued by any Lessee.

         SECTION 5.33 Capital Expenditures. The Lessees and the Guarantors will
not make or permit any Subsidiary of a Lessee or a Guarantor to make, Capital
Expenditures in any Fiscal Year described in the table below that exceed, in the
aggregate the amount set forth opposite such Fiscal Year in the table below:

<Table>
<Caption>
                Fiscal Year                             Amount
                -----------                             ------
<S>                                                     <C>
                Fiscal Year 2002                        $150,000,000
                Fiscal Year 2003                        $158,000,000
                Fiscal Year 2004                        $148,000,000
                Fiscal Year 2005                        $139,000,000
</Table>

provided, however, that (a) in addition to the amounts described above, the
Lessees and the Guarantors may increase Capital Expenditures during any Fiscal
Year described in the table above by an amount equal to twenty-five percent
(25%) of Consolidated Excess Cash Flow for the immediately preceding Fiscal Year
and (b) if during any Fiscal Year the amount of Capital Expenditures permitted
under the table above and clause (a) hereof (the "Permitted Amount") for that
Fiscal Year is not so utilized, the lesser of (i) one hundred percent (100%) of
such unutilized amount and (ii) fifty percent (50%) of the Permitted Amount for
that Fiscal Year may be utilized in the next succeeding Fiscal Year (prior to
the Permitted Amount for such succeeding Fiscal Year being used) but not in any
subsequent Fiscal Year.

         SECTION 5.34 Further Assurances. Upon the written request of the Lessor
or the Agent, each Lessee, at its own cost and expense, will cause all financing
statements (including precautionary financing statements), fixture filings and
other similar documents, to be recorded or filed at such places and times in
such manner, as may be necessary to preserve, protect and perfect the interest
of the Agent and the Funding Parties in the Leased Properties as contemplated by
the Operative Documents.

         SECTION 5.35 Additional Required Appraisals. If, as a result of any
change in Applicable Law after the date hereof, an appraisal of all or any of
the Leased Properties is

                                       46

<PAGE>

required during the Lease Term under Applicable Law with respect to any Funding
Party's interest therein, such Funding Party's Funded Amount with respect
thereto or the Operative Documents, then the related Lessee shall pay the
reasonable cost of such appraisal.

         SECTION 5.36 Lessor's Covenants. The Lessor covenants and agrees that,
unless the Agent, Borders and the Lenders shall have otherwise consented in
writing:

                  (a) the proceeds of the Loans received from the Lenders will
be used by the Lessor solely to acquire the related Leased Property and to pay
the Construction Agent, as agent for the Lessor, or the related Lessee for
Construction Costs. No portion of the proceeds of the Loans will be used by the
Lessor directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock;

                  (b) it shall not engage in any business or activity, or invest
in any Person, except for activities similar to its activities conducted on the
date hereof, the Transaction and lease transactions similar to the Transaction;

                  (c) it will maintain tangible net worth in an amount no less
than the sum of (i) $100,000 plus (ii) 3% of its total assets (calculated
assuming no reduction in the value of any leased property from its original cost
to the Lessor) and will at all times be solvent (as defined in the Bankruptcy
Code);

                  (d) it will deliver to the Agent and Borders, as soon as
available and in any event within 90 days after the end of each fiscal year, a
balance sheet of the Lessor as of the end of such fiscal year and the related
statements of income, partners' capital and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, prepared in accordance with sound accounting principles, together
with copies of its tax returns, all certified by an officer of the General
Partner (and if the Lessor ever prepares audited financial statements, it shall
deliver copies thereof to the Agent and Borders);

                  (e) it will permit the Agent and its representatives to
examine, and make copies from, the Lessor's books and records, and to visit the
offices and properties of the Lessor for the purpose of examining such
materials, and to discuss the Lessor's performance hereunder with any of its, or
its general partner's, officers and employees, in each case during normal
business hours and upon reasonable notice;

                  (f) it shall not consent to or permit the creation of any
easement or other restriction against any Leased Property other than as
permitted pursuant to Article V of the Lease; and

                  (g) it shall not incur or permit to exist, and will promptly
discharge each Lessor Lien and shall indemnify the Lenders and the Lessees for
any loss, cost, expense or

                                       47

<PAGE>

diminution in value of any Leased Property resulting from, or incurred as a
result of, such Lessor Liens.

                                  ARTICLE VI.
                        TRANSFERS BY LESSOR AND LENDERS;
                     DISTRIBUTION OF PAYMENTS AND PROCEEDS

         SECTION 6.1 Lessor Transfers. The Lessor shall not assign, convey or
otherwise transfer all or any portion of its right, title or interest in, to or
under any Leased Property or any of the Operative Documents, except to a Lessee
in accordance with the Operative Documents, without the prior written consent of
all of the Lenders and, unless a Default has occurred and is continuing,
Borders. Any proposed transferee of the Lessor shall make the representation set
forth in Section 4.3 to the other parties hereto.

         SECTION 6.2 Lender Transfers.

                  (a) Any Lender may make, carry or transfer Loans at, to or for
the account of, any of its branch offices or the office of an Affiliate of such
Lender.

                  (b) Each Lender may assign all or a portion of its interests,
rights and obligations under this Master Agreement and the Loan Agreement
(including all or a portion of its Commitment, its Maximum Commitment and the
Loans at the time owing to it) to any Person; provided, however, that (i) the
Agent and, except during the continuance of an Event of Default, Borders must
give its prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) unless such assignment is to another Lender or
Affiliate of the assigning Lender, (ii) unless such Lender is assigning all of
its Commitment and its Maximum, after giving effect to such assignment, the
Commitment of both the assignor and the assignee is at least $1,000,000 and
(iii) the parties to each such assignment shall execute and deliver to the Agent
an Assignment and Acceptance in substantially the form attached hereto as
Exhibit F, and, a processing and recordation fee of $2,500; provided further
that if such Lender shall be assigning all of its Commitment hereunder to any
Person, such Lender shall also assign all of its [Commitment], if any, under the
Existing Lease Transaction to such Person contemporaneously with the assignment
hereunder. Any such assignment of the Loans shall include both the A Loans and
the B Loans of such assigning Lender, on a pro rata basis. From and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and to the extent of the interest assigned by
such Assignment and Acceptance, have the rights and obligations of a Lender
under this Master Agreement and the Loan Agreement.

                  (c) Each Lender may, without the consent of Borders or any
Lessee, sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Master Agreement and the Loan
Agreement (including all or a portion of its Commitments in the Loans owing to
it), provided, however, that (i) no Lender may sell a participation in its
Commitment (after giving effect to any permitted assignment hereunder) in
an

                                       48

<PAGE>

amount in excess of fifty percent (50%) of such Commitment (provided that (1)
sales of participations to an Affiliate of Lender shall not be included in such
calculation and (2) no such maximum amount shall be applicable to any
participation sold at any time there exists an Event of Default), (ii) such
Lender's obligations under this Master Agreement and the Loan Agreement shall
remain unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) the participating
bank or other entity shall not be entitled to any greater benefit than its
selling Lender under the cost protection provisions contained in Section 7.5 of
this Master Agreement, and (v) Borders, each Lessee, the Agent and the other
Lenders shall continue to deal solely and directly with each Lender in
connection with such Lender's rights and obligations under this Master Agreement
and the other Operative Documents, and such Lender shall retain the sole right
to enforce the obligations of Lessor relating to the Loans and to approve any
amendment, modification or waiver of any provisions of any Operative Document
(except that such Lender may permit the participant to approve any amendment,
modification or waiver which would reduce the principal of or the interest rate
on its Loan, extend the term of such Lender's Commitment, reduce the amount of
any fees to which such participant is entitled, release the collateral for the
Loan except in accordance with the Operative Documents or extend the final
scheduled payment date of any Loan, it being understood that in all events, the
other parties hereto may conclusively rely on such Lender's approval of any such
amendment, modification or waiver and shall have no obligation to ascertain
whether such participant has approved such amendment, modification or waiver).
Any Lender selling a participation hereunder shall provide prompt written notice
to the Agent of the name of such participant.

                  (d) Any Lender or participant may, in connection with the
assignment or participation or proposed assignment or participation, pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to Borders or its Subsidiaries furnished to
such Lender by or on behalf of Borders. With respect to any disclosure of
confidential, non-public, proprietary information, such proposed assignee or
participant shall agree to use the information only for the purpose of making
any necessary credit judgments with respect to this facility and not to use the
information in any manner prohibited by any law, including without limitation,
the securities laws of the United States. The proposed participant or assignee
shall agree not to disclose any of such information except as permitted by this
Master Agreement. The proposed participant or assignee shall further agree to
return all documents or other written material and copies thereof received from
any Lender, the Agent or any Lessee relating to such confidential information
unless otherwise properly disposed of by such entity.

                  (e) Any Lender may at any time assign all or any portion of
its rights under this Master Agreement and the Notes to a Federal Reserve Bank
without complying with the requirements of paragraph (b) above; provided that no
such assignment shall release such Lender from any of its obligations hereunder.

                                       49

<PAGE>

                  (f) The Lenders hereby acknowledge and agree that the Lessees
shall have the right to the quiet enjoyment of the Leased Properties pursuant to
the Lease, whether or not a Loan Event of Default that is not an Event of
Default has occurred and is continuing, so long as no Event of Default has
occurred and is continuing.

         SECTION 6.3 Distribution and Application of Rent Payments.

                  (a) Basic Rent. Each payment of Basic Rent (and any payment of
interest on overdue installments of Basic Rent) received by the Agent shall be
distributed pro rata to the Funding Parties to be applied to the amounts of
accrued and unpaid interest (including overdue interest) on the Loans and
accrued and unpaid Yield (including overdue Yield).

                  (b) Supplemental Rent. Each payment of Supplemental Rent
received by the Agent shall be paid to or upon the order of the Person owed the
same in accordance with the Operative Documents.

         SECTION 6.4 Distribution and Application of Purchase Payment. With
respect to any Leased Property, the payment by a Lessee of:

                  (a) the purchase price for a consummated sale of such Leased
Property received by the Agent in connection with such Lessee's exercise of the
Purchase Option or Partial Purchase Option under Section 14.1 of the Lease or
such Lessee's or the Construction Agent's exercise of its option to purchase
such Leased Property under Section 5.3 of the Construction Agency Agreement, or

                  (b) the payment payable in connection with such Lessee's
compliance with its obligation to purchase the Leased Property in accordance
with Section 14.2 or 14.3 of the Lease, or

                  (c) the Leased Property Balance therefor in accordance with
Section 10.1 or Section 10.2 of the Lease,

shall be distributed by Agent as promptly as possible, to the Funding Parties
pro rata in accordance with, and for application to, their respective Funding
Party Balances in respect of such Leased Property or Properties (including both
that portion of the A Loans and that portion of the B Loans allocated to such
Leased Property or Properties).

         SECTION 6.5 Distribution and Application to Funding Party Balances of
Lessee Payment of Construction Failure Payment. With respect to any Leased
Property, the payment by a Lessee or the Construction Agent of the Construction
Failure Payment with respect thereto pursuant to the Construction Agency
Agreement shall be applied by the Agent, to the Funding Parties pro rata in
accordance with, and for application to, their respective Funding Party

                                       50

<PAGE>

Balances in respect of such Leased Property or Properties (including both that
portion of the A Loans and that portion of the B Loans allocated to such Leased
Property or Properties.

         SECTION 6.6 Distribution and Application to Funding Party Balances of
Sale Proceeds of Leased Property. Any payments received by the Lessor as
proceeds from the sale of any Leased Property sold following the payment of the
Construction Failure Payment shall be distributed (or applied, as appropriate)
by the Lessor as promptly as possible (it being understood that any such payment
received by the Lessor on a timely basis and in accordance with the provisions
of the Construction Agency Agreement shall be distributed on the date received
in the funds so received) in the following order of priority:

                  first, to the Funding Parties or the Agent, as the case may
         be, in reimbursement of all reasonable costs, expenses and taxes, if
         any, incurred by any of them to complete the construction of such
         Leased Property, maintain and insure such Leased Property, remarket
         such Leased Property and sell such Leased Property, pro rata according
         to the amount of such costs, expenses and taxes;

                  second, to the Funding Parties pro rata in accordance with,
         and for application to, their respective Funding Party Balances in
         respect of such Leased Property or Properties (including both that
         portion of the A Loans and that portion of the B Loans allocated to
         such Leased Property or Properties);

                  third, to the Funding Parties pro rata for application to any
         other amount owing to the Funding Parties under the Operative Documents
         with respect to such Leased Property, an amount equal to such other
         amounts; and

                  fourth, to the Lessor.

         SECTION 6.7 Distribution and Application of Payments Received When an
Event of Default Exists or Has Ceased to Exist Following Rejection of the Lease.

                  (a) Proceeds of Leased Property. Any payments received by the
Lessor or the Agent when an Event of Default exists (or has ceased to exist by
reason of a rejection of the Lease in a proceeding with respect to a Lessee
described in Article XII(k) or (l) of the Lease), as

                  (i) proceeds from the sale of any or all of the Leased
         Property sold pursuant to the exercise of the Lessor's remedies
         pursuant to Article XIII of the Lease, or

                  (ii) proceeds of any amounts from any insurer or any
         Governmental Authority in connection with an Event of Loss or Event of
         Taking

shall if received by the Lessor be paid to the Agent as promptly as possible,
and shall be distributed or applied in the following order of priority prior to
the Release Date:

                                       51

<PAGE>

                  first, to the Agent for any amounts reasonably expended by it
         in connection with such Leased Property or the Operative Documents and
         not previously reimbursed to it;

                  second, to the Funding Parties pro rata in accordance with,
         and for application to, their respective Funding Party Balances in
         respect of such Leased Property or Properties (including both that
         portion of the A Loans and that portion of the B Loans allocated to
         such Leased Property or Properties);

                  third, to the Funding Parties pro rata for application to any
         other amount owing to the Funding Parties under the Operative
         Documents, an amount equal to such other amounts; and

                  fourth, to the related Lessee or the Person or Persons
         otherwise legally entitled thereto, the excess, if any.

                  (b) Proceeds of Recoveries from Lessee. Any payments received
by any Funding Party when an Event of Default exists (or has ceased to exist by
reason of a rejection of the Lease in a proceeding with respect to a Lessee
described in Article XII(k) or (l) of the Lease), from a Lessee as a payment in
accordance with the Lease shall be paid to the Agent as promptly as possible,
and shall then be distributed or applied by the Agent as promptly as possible in
the order of priority set forth in paragraph (a) above.

         SECTION 6.8 Distribution of Other Payments. All payments under Section
7.6 of this Master Agreement shall be made to the Funding Parties pro rata in
accordance with, and for application to, their respective Funding Party Balances
in respect of such Leased Property or Properties (including both that portion of
the A Loans and that portion of the B Loans allocated to such Leased Property or
Properties). Except as otherwise provided in this Article VI, any payment
received by the Lessor which is to be paid to Agent pursuant hereto or for which
provision as to the application thereof is made in an Operative Document but not
elsewhere in this Article VI shall, if received by the Lessor, be paid forthwith
to the Agent and when received shall be distributed forthwith by the Agent to
the Person and for the purpose for which such payment was made in accordance
with the terms of such Operative Document.

         SECTION 6.9 Timing of Agent Distributions. Payments received by the
Agent in immediately available funds before 12:00 p.m. (noon), Atlanta, Georgia
time, on any Business Day shall be distributed to the Funding Parties in
accordance with and to the extent provided in this Section 6 on such Business
Day. Payments received by the Agent in immediately available funds after 12:00
p.m. (noon), Atlanta, Georgia time shall be distributed to the Funding Parties
in accordance with and to the extent provided in this Article VI on the next
Business Day.

         SECTION 6.10 Release of Leased Properties. (a) If one or more of the
Lessees shall at any time purchase any or all of the Leased Properties pursuant
to Section 13.3 or Article 14 of the Lease, then, upon application of such
amounts to prepay the related Loans pursuant to this

                                       52

<PAGE>

Master Agreement and the Loan Agreement and the Agent's and the Lenders' receipt
of all accrued interest and any other payments due and owing from the Lessees
and/or the Lessor to the Agent and the Lenders on such date in respect thereof,
such Leased Property or Properties, as the case may be, shall be released from
the applicable Mortgage and the Assignment of Lease and Rents, to the extent
relating to such Leased Property or Properties.

                  (b) Upon the termination of the Lenders' Commitments and the
payment in full of all of the Loans and all other amounts owing by the Lessees
and/or the Lessor hereunder or under any other Operative Document to the Agent
and the Lenders (other than unasserted indemnities), the Leased Properties shall
be released from the Mortgages and Assignments of Lease and Rents.

                  (c) Upon request of the Lessor or a Lessee following a release
of any Leased Property described in clause (a) or (b) above, the Agent shall, at
the sole cost and expense of the Lessees, execute and deliver to the Lessor or
the requesting Lessee such documents as the Lessor or such Lessee shall
reasonably request to evidence such release, including, if requested, a release
of the Assignments of Lease and Rents to the extent relating to such Leased
Property.

                                  ARTICLE VII.
                                INDEMNIFICATION

         SECTION 7.1 General Indemnification. Each Guarantor and each Lessee,
jointly and severally, agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and to
indemnify, protect, defend, save and hold harmless each Indemnitee, on an
After-Tax Basis, from and against, any and all Claims that may be imposed on,
incurred by or asserted, or threatened to be asserted, against such Indemnitee,
whether or not such Indemnitee shall also be indemnified as to any such Claim by
any other Person (provided that no Indemnitee shall have the right to double
recovery with respect to any Claim) and whether or not such Claim arises or
accrues prior to any Closing Date or after the Lease Termination Date, or
results from such Indemnitee's negligence, in any way relating to or arising out
of:

                  (a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof; or

                  (b) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition,
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, disposition, operation, condition, sale (including, without
limitation, any sale pursuant to the Lease), return or other disposition of all
or any part of any interest in any Leased Property or the imposition of any
Lien, other than a Lessor Lien (or incurring of any liability to refund or pay
over any amount as a result of any Lien, other than a Lessor Lien) thereon,
including, without limitation: (i) Claims or

                                       53

<PAGE>

penalties arising from any violation or alleged violation of law or in tort
(strict liability or otherwise), (ii) latent or other defects, whether or not
discoverable, (iii) any Claim based upon a violation or alleged violation of the
terms of any restriction, easement, condition or covenant or other matter
affecting title to any Leased Property or any part thereof, (iv) the making of
any Alterations in violation of any standards imposed by any insurance policies
required to be maintained by any Lessee pursuant to the Lease which are in
effect at any time with respect to any Leased Property or any part thereof, (v)
any Claim for patent, trademark or copyright infringement, (vi) Claims arising
from any public improvements with respect to any Leased Property resulting in
any charge or special assessments being levied against any Leased Property or
any Claim for utility "tap-in" fees, and (vii) Claims for personal injury or
real or personal property damage occurring, or allegedly occurring, on any Land,
Building or Leased Property;

                  (c) the breach or alleged breach by any Guarantor or any
Lessee of any representation or warranty made by it or deemed made by it in any
Operative Document or any certificate required to be delivered by any Operative
Document (without giving effect to any exception in any representation based on
the absence of a Material Adverse Effect);

                  (d) the offer, issuance, sale or delivery of the Notes;

                  (e) any Land, any Building, any Existing Property or any part
thereof or interest therein;

                  (f) the retaining or employment of any broker, finder or
financial advisor by any Guarantor or any Lessee to act on its behalf in
connection with this Master Agreement, or the incurring of any fees or
commissions to which the Agent or any Funding Party might be subjected by virtue
of their entering into the transactions contemplated by this Master Agreement
(other than fees or commissions due to any broker, finder or financial advisor
retained by the Agent or any Funding Party);

                  (g) the existence of any Lien (other than a Lessor Lien) on or
with respect to any Leased Property, the Construction, any Basic Rent or
Supplemental Rent, title thereto, or any interest therein, including any Liens
which arise out of the possession, use, occupancy, construction, repair or
rebuilding of any Leased Property or by reason of labor or materials furnished
or claimed to have been furnished to the Construction Agent, any Lessee, or any
of its contractors or agents or by reason of the financing of any personalty or
equipment purchased or leased by any Lessee or Alterations constructed by any
Lessee, except, in all cases, the Liens described in item (a) of the definition
of Permitted Liens;

                  (h) the transactions contemplated hereby or by any other
Operative Document, in respect of the application of Parts 4 and 5 of Subtitle B
of Title I of ERISA and any prohibited transaction described in Section 4975(c)
of the Code;

                                       54

<PAGE>

                  (i) any act or omission by Borders or any Lessee under any
Purchase Agreement or any other Operative Document, or any breach by Borders or
any Lessee of any requirement, condition, restriction or limitation in any Deed,
Purchase Agreement, IDB Documentation or Ground Lease; or

                  (j) any IDB Documentation;

provided, however, neither any Guarantor nor any Lessee shall be required to
indemnify any Indemnitee under this Section 7.1 for any Claim to the extent that
such Claim results from (i) the willful misconduct or gross negligence of such
Indemnitee (other than gross negligence or willful misconduct imputed to such
Indemnitee solely by reason of its interest in any Leased Property), or (ii) any
Claim resulting from Lessor Liens. It is expressly understood and agreed that
the indemnity provided for herein shall survive the expiration or termination
of, and shall be separate and independent from any other remedy under this
Master Agreement, the Lease or any other Operative Document.

         SECTION 7.2 Environmental Indemnity. In addition to and without
limitation of Section 7.1, each Guarantor and each Lessee, jointly and
severally, agrees to indemnify, hold harmless and defend each Indemnitee, on an
After-Tax Basis, from and against any and all Claims (including without
limitation third party claims for personal injury or real or personal property
damage), losses (including but not limited to any loss of value of any Leased
Property), damages, liabilities, fines, penalties, charges, suits, settlements,
demands, administrative and judicial proceedings (including informal proceedings
and investigations) and orders, judgments, remedial action, requirements,
enforcement actions of any kind, and all reasonable costs and expenses actually
incurred in connection therewith (including, but not limited to, reasonable
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up, remedial, removal or restoration work by any
federal, state or local government agency, arising directly or indirectly, in
whole or in part, out of

                  (i) the presence on or under any Land of any Hazardous
         Materials, or any releases or discharges of any Hazardous Materials on,
         under, from or onto any Land,

                  (ii) any activity, including, without limitation,
         construction, carried on or undertaken on or off any Land, and whether
         by a Lessee or any predecessor in title or any employees, agents,
         contractors or subcontractors of a Lessee or any predecessor in title,
         or any other Person, in connection with the handling, treatment,
         removal, storage, decontamination, clean-up, transport or disposal of
         any Hazardous Materials that at any time are located or present on or
         under or that at any time migrate, flow, percolate, diffuse or in any
         way move onto or under any Land,

                  (iii) loss of or damage to any property or the environment
         (including, without limitation, clean-up costs, response costs,
         remediation and removal costs, cost of

                                       55

<PAGE>

         corrective action, costs of financial assurance, fines and penalties
         and natural resource damages), or death or injury to any Person, and
         all expenses associated with the protection of wildlife, aquatic
         species, vegetation, flora and fauna, and any mitigative action
         required by or under Environmental Laws, in each case to the extent
         related to any Leased Property,

                  (iv) any claim concerning any Leased Property's lack of
         compliance with Environmental Laws, or any act or omission causing an
         environmental condition on or with respect to any Leased Property that
         requires remediation or would allow any governmental agency to record a
         lien or encumbrance on the land records, or

                  (v) any residual contamination on or under any Land, or
         affecting any natural resources on any Land, and to any contamination
         of any property or natural resources arising in connection with the
         generation, use, handling, storage, transport or disposal of any such
         Hazardous Materials on or from any Leased Property; in each case
         irrespective of whether any of such activities were or will be
         undertaken in accordance with applicable laws, regulations, codes and
         ordinances;

in any case with respect to the matters described in the foregoing clauses (i)
through (v) that arise or occur

                  (w) prior to or during the Lease Term,

                  (x) at any time during which a Lessee or any Affiliate thereof
         owns any interest in or otherwise occupies or possesses any Leased
         Property or any portion thereof, or

                  (y) during any period after and during the continuance of any
         Event of Default;

provided, however, no Lessee shall be required to indemnify any Indemnitee under
this Section 7.2 for any Claim to the extent that such Claim results from the
willful misconduct or gross negligence of such Indemnitee (other than gross
negligence or willful misconduct imputed to such Indemnitee solely by reason of
its interest in any Leased Property). It is expressly understood and agreed that
the indemnity provided for herein shall survive the expiration or termination
of, and shall be separate and independent from any other remedy under this
Master Agreement, the Lease or any other Operative Document.

         SECTION 7.3 Proceedings in Respect of Claims. With respect to any
amount that a Guarantor or a Lessee is requested by an Indemnitee to pay by
reason of Section 7.1 or 7.2, such Indemnitee shall, if so requested by such
Guarantor or such Lessee and prior to any payment, submit such additional
information to such Guarantor or such Lessee as such party may reasonably
request and which is in the possession of, or under the control of, such
Indemnitee to

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<PAGE>

substantiate properly the requested payment. In case any action, suit or
proceeding shall be brought against any Indemnitee, such Indemnitee promptly
shall notify Borders of the commencement thereof (provided that the failure of
such Indemnitee to promptly notify Borders shall not affect any Guarantor's or
any Lessee's obligation to indemnify hereunder except to the extent that a
Guarantor's and/or a Lessee's rights to contest are materially prejudiced by
such failure), and the related Lessee and/or Guarantor shall be entitled, at its
expense, to participate in, and, to the extent that such Lessee or such
Guarantor desires to, assume and control the defense thereof with counsel
reasonably satisfactory to such Indemnitee; provided, however, that such
Indemnitee may pursue a motion to dismiss such Indemnitee from such action, suit
or proceeding with counsel of such Indemnitee's choice at the Lessees' expense;
and provided further that the related Lessee and/or Guarantor may assume and
control the defense of such proceeding only if the Lessees and the Guarantors
shall have acknowledged in writing their obligations to fully indemnify such
Indemnitee in respect of such action, suit or proceeding, the Lessees and the
Guarantors shall pay all reasonable costs and expenses related to such action,
suit or proceeding as and when incurred and the related Lessee and/or Guarantor
(as applicable) shall keep such Indemnitee fully apprised of the status of such
action, suit or proceeding and shall provide such Indemnitee with all
information with respect to such action, suit or proceeding as such Indemnitee
shall reasonably request; and, provided further, that neither any Guarantor nor
any Lessee shall be entitled to assume and control the defense of any such
action, suit or proceeding if and to the extent that, (A) in the reasonable
opinion of such Indemnitee, (x) such action, suit or proceeding involves any
possibility of imposition of criminal liability or any material risk of civil
liability on such Indemnitee in excess of $1,000,000 or (y) such action, suit or
proceeding will involve a material risk of the sale, forfeiture or loss of, or
the creation of any Lien (other than a Permitted Lien) on any Leased Property or
any part thereof unless the related Lessee or Guarantor shall have posted a bond
or other security satisfactory to the relevant Indemnitees in respect to such
risk or (z) the control of such action, suit or proceeding would involve an
actual or potential conflict of interest, (B) such proceeding involves Claims
not fully indemnified by the Guarantors and the Lessees which the related
Guarantor and/or the related Lessee (as applicable) and the Indemnitee have been
unable to sever from the indemnified claim(s), or (C) an Event of Default has
occurred and is continuing. The Indemnitee may participate in a reasonable
manner at its own expense and with its own counsel in any proceeding conducted
by a Lessee or a Guarantor in accordance with the foregoing.

         If the related Guarantor and/or the related Lessee fail to fulfill the
conditions to such Person's assuming the defense of any Claim after receiving
notice thereof on or prior to the later of (a) the date that is five (5)
Business Days after receiving notice thereof and (b) the date that is fifteen
(15) days prior to the date that an answer or response is required, the
Indemnitee may undertake such defense, at the Lessees' expense. Neither any
Guarantor nor any Lessee shall enter into any settlement or other compromise
with respect to any Claim which admits any liability or wrong-doing on part of
any Indemnitee or which is in excess of $1,000,000 which is entitled to be
indemnified under Section 7.1 or 7.2 without the prior written consent of the
related Indemnitee, which consent shall not be unreasonably withheld,
conditioned or delayed. Unless an Event of Default shall have occurred and be
continuing, no Indemnitee shall enter into

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any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 7.1 or 7.2 without the prior written consent of
Borders, which consent shall not be unreasonably withheld, conditioned or
delayed, unless such Indemnitee waives its right to be indemnified under Section
7.1 or 7.2 with respect to such Claim.

         Upon payment in full of any Claim by the Guarantors and/or the Lessees
pursuant to Section 7.1 or 7.2 to or on behalf of an Indemnitee, such party or
parties, without any further action, shall be subrogated to any and all claims
that such Indemnitee may have relating thereto (other than claims in respect of
insurance policies maintained by such Indemnitee at its own expense), and such
Indemnitee shall execute such instruments of assignment and conveyance, evidence
of Claims and payment and such other documents, instruments and agreements as
may be reasonably necessary to preserve any such Claims and otherwise cooperate
with the Lessees and give such further assurances as are reasonably necessary or
advisable to enable the Lessees vigorously to pursue such Claims.

         If for any reason the indemnification provided for in Section 7.1 or
7.2 is unavailable to an Indemnitee or is insufficient to hold an Indemnitee
harmless, then each Guarantor and each Lessee agrees to contribute to the amount
paid or payable by such Indemnitee as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnitee on the one hand and by the Guarantors and
the Lessees on the other hand but also the relative fault of such Indemnitee as
well as any other relevant equitable considerations. It is expressly understood
and agreed that the right to contribution provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
other remedy under this Master Agreement, the Lease or any other Operative
Document.

         SECTION 7.4 General Tax Indemnity. (a) Tax Indemnity. Except as
otherwise provided in this Section 7.4, each Guarantor and each Lessee, jointly
and severally, shall pay on an After-Tax Basis, and on written demand shall
indemnify and hold each Tax Indemnitee harmless from and against, any and all
fees (including, without limitation, documentation, recording, license and
registration fees), taxes (including, without limitation, income, gross
receipts, sales, rental, use, turnover, value-added, property, excise and stamp
taxes), levies, imposts, duties, charges, assessments or withholdings of any
nature whatsoever, together with any penalties, fines or interest thereon or
additions thereto (any of the foregoing being referred to herein as "Taxes" and
individually as a "Tax" (for the purposes of this Section 7.4, the definition of
"Taxes" includes amounts imposed on, incurred by, or asserted against each Tax
Indemnitee as the result of any prohibited transaction, within the meaning of
Section 406 or 407 of ERISA or Section 4975(c) of the Code, arising out of the
transactions contemplated hereby or by any other Operative Document)) imposed on
or with respect to any Tax Indemnitee, any Lessee, any Guarantor, any Leased
Property or any portion thereof or any Land, or any sublessee or user thereof,
by the United States or by any state or local government or other taxing
authority in the United States in connection with or in any way relating to (i)
the acquisition, financing, mortgaging, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, purchase,

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ownership, possession, rental, lease, sublease, maintenance, repair, storage,
transfer of title, redelivery, use, operation, condition, sale, return or other
application or disposition of all or any part of any Leased Property or the
imposition of any Lien (or incurrence of any liability to refund or pay over any
amount as a result of any Lien) thereon, (ii) Basic Rent or Supplemental Rent or
the receipts or earnings arising from or received with respect to any Leased
Property or any part thereof, or any interest therein or any applications or
dispositions thereof, (iii) any other amount paid or payable pursuant to the
Notes or any other Operative Documents, (iv) any Leased Property, any Land or
any part thereof or any interest therein (including, without limitation, all
assessments payable in respect thereof, including, without limitation, all
assessments noted on the related Title Policy), (v) all or any of the Operative
Documents, any other documents contemplated thereby, any amendments and
supplements thereto, and (vi) otherwise with respect to or in connection with
the transactions contemplated by the Operative Documents.

                  (b) Exclusions from General Tax Indemnity. Section 7.4(a)
shall not apply to:

                           (i) Taxes on, based on, or measured by or with
         respect to net income of the Lessor, the Agent and the Lenders
         (including, without limitation, minimum Taxes, capital gains Taxes,
         Taxes on or measured by items of tax preference or alternative minimum
         Taxes) other than (A) any such Taxes that are, or are in the nature of,
         sales, use, license, rental or property Taxes, and (B) withholding
         Taxes imposed by the United States or any state in which Leased
         Property is located (i) on payments with respect to the Notes, to the
         extent imposed by reason of a change in Applicable Law occurring after
         the date on which Lender became a Lender hereunder or (ii) on Rent, to
         the extent the net payment of Rent after deduction of such withholding
         Taxes would be less than amounts currently payable with respect to the
         Funded Amounts;

                           (ii) Taxes on, based on, or in the nature of, or
         measured by Taxes on doing business and business privilege, franchise,
         capital, capital stock, net worth, gross receipts or similar Taxes,
         other than (A) any increase in such Taxes imposed on such Tax
         Indemnitee by any state in which Leased Property is located, net of any
         decrease in such taxes realized by such Tax Indemnitee, to the extent
         that such tax increase would not have occurred if on each Funding Date
         the Lessor and the Lenders had advanced funds to a Lessee or the
         Construction Agent in the form of loans secured by the Leased Property
         in an amount equal to the Funded Amounts funded on such Funding Date,
         with debt service for such loans equal to the Basic Rent payable on
         each Payment Date and a principal balance at the maturity of such loans
         in a total amount equal to the Funded Amounts at the end of the Lease
         Term, or (B) any Taxes that are or are in the nature of sales, use,
         rental, license or property Taxes relating to any Leased Property;

                           (iii) Taxes that are based on, or measured by, the
         fees or other compensation received by a Person acting as Agent (in its
         individual capacities) or any Affiliate of any thereof for acting as
         trustee under the Loan Agreement;

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<PAGE>

                           (iv) Taxes that result from any act, event or
         omission, or are attributable to any period of time, that occurs after
         the earlier of (A) the expiration of the Lease Term with respect to any
         Leased Property and, if such Leased Property is required to be returned
         to the Lessor in accordance with the Lease, such return and (B) the
         discharge in full of the Lessees' obligations to pay the Lease Balance,
         or any amount determined by reference thereto, with respect to any
         Leased Property and all other amounts due under the Lease, unless such
         Taxes relate to acts, events or matters occurring prior to the earlier
         of such times or are imposed on or with respect to any payments due
         under the Operative Documents after such expiration or discharge;

                           (v) Taxes imposed on a Tax Indemnitee that result
         from any voluntary sale, assignment, transfer or other disposition or
         bankruptcy by such Tax Indemnitee or any related Tax Indemnitee of any
         interest in any Leased Property or any part thereof, or any interest
         therein or any interest or obligation arising under the Operative
         Documents, or from any sale, assignment, transfer or other disposition
         of any interest in such Tax Indemnitee or any related Tax Indemnitee,
         it being understood that each of the following shall not be considered
         a voluntary sale: (A) any substitution, replacement or removal of any
         of the Leased Property by any Lessee, (B) any sale or transfer
         resulting from the exercise by any Lessee of any termination option,
         any purchase option or sale option, (C) any sale or transfer while an
         Event of Default shall have occurred and be continuing under the Lease,
         and (D) any sale or transfer resulting from the Lessor's exercise of
         remedies under the Lease;

                           (vi) any Tax which is being contested in accordance
         with the provisions of Section 7.4(c), during the pendency of such
         contest;

                           (vii) any Tax that is imposed on a Tax Indemnitee as
         a result of such Tax Indemnitee's gross negligence or willful
         misconduct (other than gross negligence or willful misconduct imputed
         to such Tax Indemnitee solely by reason of its interest in any Leased
         Property);

                           (viii) any Tax that results from a Tax Indemnitee
         engaging, with respect to any Leased Property, in transactions
         unrelated to the Leased Properties or the transactions contemplated by
         the Operative Documents;

                           (ix) to the extent any interest, penalties or
         additions to tax result in whole or in part from the failure of a Tax
         Indemnitee to file a return or pay a Tax that it is required to file or
         pay in a proper and timely manner, unless such failure (A) results from
         the transactions contemplated by the Operative Documents in
         circumstances where a Lessee did not give timely notice to such Tax
         Indemnitee (and such Tax Indemnitee otherwise had no actual knowledge)
         of such filing or payment requirement that would have permitted a
         proper and timely filing of such return or payment of such Tax, as the
         case may be, or (B) results from the failure of a Lessee to supply
         information necessary

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<PAGE>

         for the proper and timely filing of such return or payment of such Tax,
         as the case may be, that was not in the possession of such Tax
         Indemnitee; and

                           (x) any Tax that results from the breach by the
         Lessor of its representation and warranty made in Section 4.3(g) or the
         breach of any Lender of its representation and warranty made in Section
         4.4(b).

                  (c) Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Taxes as to which the
Lessees may have an indemnity obligation pursuant to Section 7.4, or if any Tax
Indemnitee shall determine that any Taxes as to which the Lessees may have an
indemnity obligation pursuant to Section 7.4 may be payable, such Tax Indemnitee
shall promptly notify Borders. The related Guarantor and/or the related Lessee
shall be entitled, at its expense, to participate in, and, to the extent that
such Guarantor or such Lessee desires to, assume and control the defense
thereof; provided, however, that the Guarantors and the Lessees, shall have
acknowledged in writing their obligation to fully indemnify such Tax Indemnitee
in respect of such action, suit or proceeding if the contest is unsuccessful;
and, provided further, that neither any Guarantor nor any Lessee shall be
entitled to assume and control the defense of any such action, suit or
proceeding (but the Tax Indemnitee shall then contest, at the sole cost and
expense of the Guarantors and the Lessees, on behalf of the Guarantors and the
Lessees with representatives reasonably satisfactory to Borders) if and to the
extent that, (A) in the reasonable opinion of such Tax Indemnitee, such action,
suit or proceeding (x) involves any risk of imposition of criminal liability or
any material risk of civil liability in excess of $1,000,000 on such Tax
Indemnitee or (y) will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien) on any Leased
Property or any part thereof unless a Guarantor or a Lessee shall have posted a
bond or other security satisfactory to the relevant Tax Indemnitees in respect
to such risk, (B) such proceeding involves Claims not fully indemnified by the
Guarantors and the Lessees which the Guarantors, the Lessees and the Tax
Indemnitee have been unable to sever from the indemnified claim(s), (C) an Event
of Default has occurred and is continuing, (D) such action, suit or proceeding
involves matters which extend beyond or are unrelated to the Transaction and if
determined adversely could be materially detrimental to the interests of such
Tax Indemnitee notwithstanding indemnification by the Guarantors and the Lessees
or (E) such action, suit or proceeding involves the federal or any state income
tax liability of the Tax Indemnitee. With respect to any contests controlled by
a Tax Indemnitee, (i) if such contest relates to the federal or any state income
tax liability of such Tax Indemnitee, such Tax Indemnitee shall be required to
conduct such contest only if Borders shall have provided to such Tax Indemnitee
an opinion of independent tax counsel selected by the Tax Indemnitee and
reasonably satisfactory to Borders stating that a reasonable basis exists to
contest such claim or (ii) in the case of an appeal of an adverse determination
of any contest relating to any Taxes, an opinion of such counsel to the effect
that such appeal is more likely than not to be successful, provided, however,
such Tax Indemnitee shall in no event be required to appeal an adverse
determination to the United States Supreme Court. The Tax Indemnitee may
participate

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in a reasonable manner at its own expense and with its own counsel in any
proceeding conducted by any Guarantor or any Lessee in accordance with the
foregoing.

         Each Tax Indemnitee shall, at Guarantor's and the Lessees' expense,
supply the related Guarantor or Lessee with such information and documents in
such Tax Indemnitee's possession as are reasonably requested by such Guarantor
or Lessee and are necessary or advisable for such Guarantor or Lessee to
participate in any action, suit or proceeding to the extent permitted by this
Section 7.4. Unless an Event of Default shall have occurred and be continuing,
no Tax Indemnitee shall enter into any settlement or other compromise with
respect to any Claim which is entitled to be indemnified under this Section 7.4
without the prior written consent of Borders, which consent shall not be
unreasonably withheld, unless such Tax Indemnitee waives its right to be
indemnified under this Section 7.4 with respect to such Claim.

         Notwithstanding anything contained herein to the contrary, (a) a Tax
Indemnitee will not be required to contest a Claim with respect to the
imposition of any Tax if such Tax Indemnitee shall waive its right to
indemnification under this Section 7.4 with respect to such Claim (and any
related Claim with respect to other taxable years the contest of which is
precluded as a result of such waiver) and (b) no Tax Indemnitee shall be
required to contest any Claim if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely, unless there
has been a change in law which in the opinion of Tax Indemnitee's counsel
creates substantial authority for the success of such contest. Each Tax
Indemnitee and Borders shall consult in good faith with each other regarding the
conduct of such contest controlled by either.

                  (d) Reimbursement for Tax Savings. If (x) a Tax Indemnitee
shall obtain a credit or refund of any Taxes paid by any Guarantor or any Lessee
pursuant to this Section 7.4 or (y) by reason of the incurrence or imposition of
any Tax for which a Tax Indemnitee is indemnified hereunder or any payment made
to or for the account of such Tax Indemnitee by any Guarantor or any Lessee
pursuant to this Section 7.4, such Tax Indemnitee at any time realizes a
reduction in any Taxes for which the Guarantors or the Lessees are not required
to indemnify such Tax Indemnitee pursuant to this Section 7.4, which reduction
in Taxes was not taken into account in computing such payment by any Guarantor
or any Lessee to or for the account of such Tax Indemnitee, then such Tax
Indemnitee shall promptly pay to Borders (xx) the amount of such credit or
refund, together with the amount of any interest received by such Tax Indemnitee
on account of such credit or refund or (yy) an amount equal to such reduction in
Taxes, as the case may be; provided that no such payment shall be made so long
as an Event of Default shall have occurred and be continuing (but shall be paid
promptly after all Events of Default have been cured) and, provided, further,
that the amount payable to Borders by any Tax Indemnitee pursuant to this
Section 7.4(d) shall not at any time exceed the aggregate amount of all
indemnity payments made by the Guarantors and the Lessees under this Section 7.4
to such Tax Indemnitee with respect to the Taxes which gave rise to the credit
or refund or with respect to the Tax which gave rise to the reduction in Taxes
less the amount of all prior payments made to Borders by such Tax Indemnitee
under this Section 7.4(d). Each Tax Indemnitee agrees to act in good faith to
claim such refunds and other available Tax benefits, and take such other actions
as may be

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<PAGE>

reasonable to minimize any payment due from the Guarantors or the Lessees
pursuant to this Section 7.4. The disallowance or reduction of any credit,
refund or other tax savings with respect to which a Tax Indemnitee has made a
payment to Borders under this Section 7.4(d) shall be treated as a Tax for which
the Guarantors and the Lessees are obligated to indemnify such Tax Indemnitee
hereunder without regard to Section 7.4(b) hereof.

                  (e) Payments. Any Tax indemnifiable under this Section 7.4
shall be paid by the Guarantors and the Lessees directly when due to the
applicable taxing authority if direct payment is practicable and permitted. If
direct payment to the applicable taxing authority is not permitted or is
otherwise not made, any amount payable to a Tax Indemnitee pursuant to Section
7.4 shall be paid within thirty (30) days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the amount so payable, but not before the date that the
relevant Taxes are due. Any payments made pursuant to Section 7.4 shall be made
to the Tax Indemnitee entitled thereto or Borders, as the case may be, in
immediately available funds at such bank or to such account as specified by the
payee in written directions to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of the payee by certified
mail, postage prepaid at its address as set forth in this Master Agreement. Upon
the request of any Tax Indemnitee with respect to a Tax that the Guarantors and
the Lessees are required to pay, Borders shall furnish to such Tax Indemnitee
the original or a certified copy of a receipt for the Guarantors' or the
Lessees' payment of such Tax or such other evidence of payment as is reasonably
acceptable to such Tax Indemnitee.

                  (f) Reports. If any Guarantor or any Lessee knows of any
report, return or statement required to be filed with respect to any Taxes that
are subject to indemnification under this Section 7.4, such Guarantor or such
Lessee shall, if such Guarantor or such Lessee is permitted by Applicable Law,
timely file such report, return or statement (and, to the extent permitted by
law, show ownership of the applicable Leased Property in such Lessee); provided,
however, that if such Guarantor or such Lessee is not permitted by Applicable
Law or does not have access to the information required to file any such report,
return or statement, such Guarantor or such Lessee will promptly so notify the
appropriate Tax Indemnitee, in which case Tax Indemnitee will file such report.
In any case in which the Tax Indemnitee will file any such report, return or
statement, the related Guarantor or Lessee shall, upon written request of such
Tax Indemnitee, prepare such report, return or statement for filing by such Tax
Indemnitee or, if such Tax Indemnitee so requests, provide such Tax Indemnitee
with such information as is reasonably available to such Guarantor or such
Lessee.

                  (g) Verification. At Borders's request, the amount of any
indemnity payment by a Guarantor or a Lessee or any payment by a Tax Indemnitee
to Borders pursuant to this Section 7.4 shall be verified and certified by an
independent public accounting firm selected by Borders and reasonably acceptable
to the Tax Indemnitee. Unless such verification shall disclose an error in any
Guarantor's or any Lessee's favor of 5% or more of the related indemnity
payment, the costs of such verification shall be borne by Borders; otherwise,
such costs shall be

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<PAGE>

borne by the related Tax Indemnitee. In no event shall any Guarantor or any
Lessee have the right to review the Tax Indemnitee's tax returns or receive any
other confidential information from the Tax Indemnitee in connection with such
verification. The Tax Indemnitee agrees to cooperate with the independent public
accounting firm performing the verification and to supply such firm with all
information reasonably necessary to permit it to accomplish such verification,
provided that the information provided to such firm by such Tax Indemnitee shall
be for its confidential use. The parties agree that the sole responsibility of
the independent public accounting firm shall be to verify the amount of a
payment pursuant to this Master Agreement and that matters of interpretation of
this Master Agreement are not within the scope of the independent accounting
firm's responsibilities.

         SECTION 7.5 Increased Costs, etc.

                  (a) Illegality. Notwithstanding any other provision herein, if
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Funding Party to make or maintain LIBOR
Advances as contemplated by this Master Agreement, (a) the commitment of such
Funding Party hereunder to continue LIBOR Advance as such and convert Funded
Amounts to LIBOR Advance shall forthwith be cancelled and (b) such Funding
Party's Funded Amounts then outstanding as LIBOR Advances, if any, shall be
converted automatically to Base Rate Advances on the respective last days of the
then current Rent Periods with respect to such Funded Amounts or within such
earlier period as required by law. If any such conversion of a LIBOR Advance
occurs on a day which is not the last day of the then current Rent Period with
respect thereto, each Guarantor and each Lessee, jointly and severally, shall
pay to such Funding Party such amounts, if any, as may be required pursuant to
Section 7.5(f).

                  (b) Requirements of Law. In the event that reserve
requirements for eurocurrency loans or other obligations or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Funding Party with any request or directive (whether or not having the
force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:

                  (i) shall subject any Funding Party to any tax of any kind
         whatsoever with respect to this Master Agreement, any Note or any LIBOR
         Advance made by it, or change the basis of taxation of payments to such
         Funding Party in respect thereof (except for taxes covered by Section
         7.5(d) and changes in franchise taxes or the rate of tax on the overall
         net income of such Funding Party);

                  (ii) shall impose, modify or hold applicable any reserve,
         special deposit, compulsory loan or similar requirement against assets
         held by, deposits or other liabilities in or for the account of,
         advances, loans or other extensions of credit by, or any other
         acquisition of funds by, any office of such Funding Party which is not
         otherwise included in the determination of the Adjusted LIBOR Rate; or

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                  (iii) shall impose on such Funding Party any other condition;

and the result of any of the foregoing is to increase the cost to such Funding
Party, by an amount which such Funding Party deems to be material, of making,
converting into, continuing or maintaining LIBOR Advances or to reduce any
amount receivable hereunder in respect thereof then, in any such case, each
Guarantor and each Lessee, jointly and severally, shall promptly pay such
Funding Party, upon its demand, any additional amounts necessary to compensate
such Funding Party for such increased cost or reduced amount receivable. If any
Funding Party becomes entitled to claim any additional amounts pursuant to this
subsection in relation to such outstanding LIBOR Advances, it shall promptly
notify Borders, through the Agent, of the event by reason of which it has become
so entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Funding Party, through the Agent, to Borders in
good faith and setting forth in reasonable detail the calculation of such
amounts shall be conclusive in the absence of manifest error. The provisions of
this paragraph (b) shall survive the termination of this Master Agreement and
the Lease and the payment of the Notes and all other amounts payable under the
Operative Documents.

                  (c) Capital Adequacy. In the event that any Funding Party or
corporation controlling such Funding Party shall have determined that any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Funding Party or such corporation with
any request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date hereof
does or shall have the effect of reducing the rate of return on such Funding
Party's capital as a consequence of its obligations hereunder to a level below
that which such Funding Party could have achieved but for such change or
compliance (taking into consideration such Funding Party's policies with respect
to capital adequacy) by an amount deemed by such Funding Party to be material,
then from time to time, after submission by such Funding Party in good faith to
Borders (with a copy to the Agent) of a written request therefor setting forth
in reasonable detail the calculation of such amount (which request shall be
conclusive in the absence of manifest error), each Guarantor and each Lessee,
jointly and severally, shall pay to such Funding Party such additional amount or
amounts as will compensate such Funding Party for such reduction to the extent
imposed generally on other lessees or borrowers with whom such Funding Party has
similar lease or credit arrangements (but in the case of outstanding Base Rate
Advances, without duplication of any amounts already covered by such Funding
Party by reason of an adjustment in the applicable Base Rate). The provisions of
this paragraph (c) shall survive the termination of this Master Agreement and
the Lease and the payment of the Notes and all other amounts payable under the
Operative Documents.

                  (d) Taxes. Subject to Section 7.5(e), all payments made by a
Lessee under the Lease and the other Operative Documents shall be made free and
clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied,

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collected, withheld or assessed by any Governmental Authority, excluding, in the
case of the Agent and each Funding Party, net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Agent or such Funding
Party, as the case may be, as a result of a present or former connection between
the jurisdiction of the government or taxing authority imposing such tax and the
Agent or such Funding Party (excluding a connection arising solely from the
Agent or such Funding Party having executed, delivered or performed its
obligations or received a payment under, or enforced, this Master Agreement or
any other Operative Document) or any political subdivision or taxing authority
thereof or therein (all such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions and withholdings being hereinafter called "Withholding
Taxes"). If any Withholding Taxes are required to be withheld from any amounts
payable to the Agent or any Funding Party hereunder or under any other Operative
Document, the amounts so payable to the Agent or such Funding Party (so long as
such Funding Party is in compliance with Section 7.5(e), as appropriate) shall
be increased to the extent necessary to yield to the Agent or such Funding Party
(after payment of all Withholding Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in the Operative
Documents. Whenever any Withholding Taxes are payable by a Lessee, as promptly
as possible thereafter such Lessee shall send to the Agent for its own account
or for the account of such Funding Party, as the case may be, a certified copy
of an original official receipt received by such Lessee showing payment thereof.
If a Lessee fails to pay any Withholding Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, each of Borders and each Lessee, jointly and
severally, shall indemnify the Agent and the Funding Parties for any incremental
taxes, interest or penalties that may become payable by the Agent or any Funding
Party as a result of any such failure. The agreements in this subsection shall
survive the termination of this Master Agreement and the Lease and the payment
of the Notes and all other amounts payable under the Operative Documents.

                  (e) Tax Forms. Each Lender to this Master Agreement on the
Documentation Date that is not incorporated under the laws of the United States
of America or a state thereof agrees that, on or prior to the Documentation
Date, it will deliver to Borders and the Agent two duly completed copies of (i)
United States Internal Revenue Service Form 8-BEN or 8-ECI or successor
applicable form, as the case may be, and (ii) an Internal Revenue Service Form
W-9 or successor applicable form. Each such Lender also agrees to deliver to
Borders and the Agent two further copies of the said Form 8-BEN or 8-ECI and
Form W-9, or successor applicable forms or other manner of certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to Borders, and such extensions or
renewals thereof as may reasonably be requested by Borders or the Agent, unless
in any such case an event (including, without limitation, any change in treaty,
law or regulation) has occurred prior to the date on which any such delivery
would otherwise be required which renders all such forms inapplicable or which
would prevent such Funding Party from duly completing and delivering any such
form with respect to it and such Funding Party so advises Borders and the Agent.
Such Lender shall certify (i) in the case of a Form 8-BEN or 8-ECI, that it is
entitled to receive payments under the

                                       66

<PAGE>

Operative Documents without deduction or withholding of any United States
federal income taxes and (ii) in the case of a Form W-9, that it is entitled to
an exemption from United States backup withholding tax.

                  (f) Breakage Costs. Each Guarantor and each Lessee, jointly
and severally, agrees to indemnify each Funding Party and to hold each Funding
Party harmless from any loss or expense which such Funding Party may sustain or
incur as a consequence of (a) default by a Lessee in payment when due of the
principal amount of or interest on any LIBOR Advance, (b) default by a Lessee in
making a borrowing or conversion after such Lessee or the Construction Agent has
given (or is deemed to have given) a notice in accordance with this Master
Agreement, (c) default by a Lessee in making any prepayment of LIBOR Advances
after such Lessee has given a notice thereof in accordance with the provisions
of the Operative Documents or (d) the making of a prepayment, payment or
conversion, of LIBOR Advances on a day which is not the last day of a Rent
Period with respect thereto, including, without limitation, in each case, any
such loss (including loss of anticipated profits) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate the
deposits from which such funds were obtained (it being understood that any such
calculation will be made on notional amounts as the Funding Parties are not
required to show that they matched deposits specifically). A certificate as to
any additional amounts payable pursuant to this subsection submitted by such
Funding Party, through the Agent, to Borders in good faith shall be conclusive
in the absence of manifest error. The provisions of this paragraph (f) shall
survive the termination of this Master Agreement and the Lease and the payment
of the Notes and all other amounts payable under the Operative Documents.

                  (g) Action of Affected Funding Parties. Each Funding Party
agrees to use reasonable efforts (including reasonable efforts to change the
booking office for its Loans) to avoid or minimize any illegality pursuant to
Section 7.5(a) or any amounts which might otherwise be payable pursuant to
Section 7.5(c) or (d); provided, however, that such efforts shall not cause the
imposition on such Funding Party of any additional costs or legal or regulatory
burdens reasonably deemed by such Funding Party to be material and shall not be
deemed by such Funding Party to be otherwise contrary to its policies. In the
event that such reasonable efforts are insufficient to avoid all such illegality
or all amounts that might be payable pursuant to Section 7.5(c) or (d), then
such Funding Party (the "Affected Funding Party") shall use its reasonable
efforts to transfer to any other Funding Party (which itself is not then an
Affected Funding Party) its Loans and Commitment, subject to the provisions of
Section 6.2; provided, however, that such transfer shall not be deemed by such
Affected Funding Party, in its sole discretion, to be disadvantageous to it or
contrary to its policies. In the event that the Affected Funding Party is
unable, or otherwise is unwilling, so to transfer its Loans and Commitment,
Borders may designate an alternate lender (reasonably acceptable to the Agent)
to purchase the Affected Funding Party's Loans and Commitment, at par and
including accrued interest, and, subject to the provisions of Section 6.2, the
Affected Funding Party shall transfer its Commitment to such alternate lender
and such alternate lender shall become a Funding Party

                                       67

<PAGE>

hereunder. Any fee payable to the Agent pursuant to Section 6.2 in connection
with such transfer shall be for the account of the Guarantors and the Lessees.

                                 ARTICLE VIII.
                                 MISCELLANEOUS

         SECTION 8.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Master Agreement and any of the
Operative Documents, the transfer of any Land to the Lessor as provided herein
(and shall not be merged into any Deed), any disposition of any interest of the
Lessor in any Leased Property, the purchase and sale of the Notes, payment
therefor and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party hereto or to any of the
other Operative Documents and the fact that any such party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents.

         SECTION 8.2 Documentary Conventions. The Documentary Conventions shall
apply to this Master Agreement.

         SECTION 8.3 Expenses. Whether or not the transactions herein
contemplated are consummated, each of the Guarantors and the Lessees, jointly
and severally, agrees to pay, as Supplemental Rent, all actual, reasonable and
documented out-of-pocket costs and expenses of the Lessor, the Agent and the
Lenders in connection with the preparation, execution and delivery of the
Operative Documents and the documents and instruments referred to therein and
any amendment, waiver or consent relating thereto (including, without
limitation, the reasonable fees and disbursements of Mayer, Brown, Rowe & Maw)
and of the Lessor, the Agent and the Lenders in connection with endeavoring to
enforce the Operative Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees actually incurred
and disbursements of counsel for the Lessor, the Agent and the Lenders), unless
such enforcement action is finally denied by a court on the merits. All
references in the Operative Documents to "attorneys' fees" or "reasonable
attorneys fees" shall mean reasonable attorneys' fees actually incurred, without
regard to any statutory definition thereof.

         SECTION 8.4 Liabilities of the Funding Parties; Sharing of Payments.
(a) No Funding Party shall have any obligation to any other Funding Party or to
any Guarantor or any Lessee with respect to the transactions contemplated by the
Operative Documents except those obligations of such Funding Party expressly set
forth in the Operative Documents or except as set forth in the instruments
delivered in connection therewith, and no Funding Party shall be liable for
performance by any other party hereto of such other party's obligations under
the Operative Documents except as otherwise so set forth. No Lender shall have
any obligation or duty to any Guarantor or any Lessee, any other Funding Parties
or any other Person with respect to the

                                       68

<PAGE>

transactions contemplated hereby except to the extent of the obligations and
duties expressly set forth in this Master Agreement or the Loan Agreement.

         (b) If any Funding Party shall obtain any payment (whether voluntary or
involuntary, or through the exercise of any right of set-off or otherwise) on
account of the Advances made by it in excess of its ratable share of payments on
account of the Advances obtained by all the Funding Parties, such Funding Party
shall forthwith purchase from the other Funding Parties such participations in
the Advances owed to them as shall be necessary to cause such purchasing Funding
Party to share the excess payment ratably with each of them, provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Funding Party, such purchase from each Funding Party shall be
rescinded and such Funding Party shall repay to the purchasing Funding Party the
purchase price to the extent of such Funding Party's ratable share (according to
the proportion of (i) the amount of the participation purchased from such
Funding Party as a result of such excess payment to (ii) the total amount of
such excess payment) of such recovery together with an amount equal to such
Funding Party's ratable share (according to the proportion of (i) the amount of
such Funding Party's required repayment to (ii) the total amount so recovered
from the purchasing Funding Party) of any interest or other amount paid or
payable by the purchasing Funding Party in respect of the total amount so
recovered. Each Funding Party agrees that any Funding Party so purchasing a
participation from another Funding Party pursuant to this Section 8.4 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Funding Party were the direct creditor of such Funding Party in the
amount of such participation.

         SECTION 8.5 Liabilities of the Agent. The Agent shall have no duty,
liability or obligation to any party to this Master Agreement with respect to
the transactions contemplated hereby except those duties, liabilities or
obligations expressly set forth in this Master Agreement or the Loan Agreement,
and any such duty, liability or obligations of the Agent shall be as expressly
limited by this Master Agreement or the Loan Agreement, as the case may be. All
parties to this Master Agreement acknowledge that the Agent is not, and will not
be, performing any due diligence with respect to documents and information
received pursuant to this Master Agreement or any other Operative Agreement
including, without limitation, any Environmental Audit, Title Policy or survey.
The acceptance by the Agent of any such document or information shall not
constitute a waiver by any Funding Party of any representation or warranty of
Borders or any Lessee even if such document or information indicates that any
such representation or warranty is untrue.

                                       69

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Master
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.

                             BORDERS GROUP, INC., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Chief Financial
                                       Officer

                             BORDERS, INC., as a Lessee and as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             PLANET MUSIC, INC., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             BORDERS PROPERTIES, INC., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                                                                          MASTER
                                      S-1                              AGREEMENT

<PAGE>

                             WALDENBOOKS PROPERTIES, INC., as a
                             Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             BORDERS ONLINE, LLC , as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             BORDERS OUTLET, INC., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             BORDERS FULFILLMENT, INC., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                             THE LIBRARY, LTD., as a Guarantor

                             By: /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                                                                          MASTER
                                     S-2                               AGREEMENT

<PAGE>

                             WALDEN BOOK COMPANY, INC., as a
                             Guarantor

                             By:  /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                                                                          MASTER
                                      S-3                              AGREEMENT

<PAGE>

                             BORDERS ONLINE, INC., as a Guarantor

                             By:  /s/ EDWARD W. WILHELM
                                ------------------------------------------------
                                Name Printed: Edward W. Wilhelm
                                Title: Senior Vice President and Treasurer

                                                                          MASTER
                                      S-4                              AGREEMENT

<PAGE>

                             ATLANTIC FINANCIAL GROUP, LTD., as
                             Lessor

                             By: Atlantic Financial Managers, Inc., its General
                             Partner

                             By:  /s/ STEPHEN BROOKSHIRE
                                ------------------------------------------------
                                Name Printed: Stephen Brookshire
                                Title: President MASTER

                                                                          MASTER
                                      S-5                              AGREEMENT

<PAGE>

                             SUNTRUST BANK, as Co-Arranger,
                             Documentation Agent, Agent and as a Lender

                             By:  /s/ JONATHAN B. SIMON
                                ------------------------------------------------
                                Name Printed: Jonathan B. Simon
                                             -----------------------------------
                                Title: Asst. Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-6                              AGREEMENT

<PAGE>

                             FLEET NATIONAL BANK, as a Lender, Co-Arranger
                             and Syndication Agent

                             By: /s/ KATHLEEN DIMOCK
                                ------------------------------------------------
                                Name Printed: Kathleen Dimock
                                             -----------------------------------
                                Title: Director
                                      ------------------------------------------

                                                                          MASTER
                                      S-7                              AGREEMENT

<PAGE>

                             PNC BANK NATIONAL ASSOCIATION,
                             as a Lender

                             By: /s/ PHILIP K. LIEBSCHER
                                ------------------------------------------------
                                Name Printed: Philip K. Liebscher
                                             -----------------------------------
                                Title: Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-8                              AGREEMENT

<PAGE>

                             COMERICA BANK, as a Lender

                             By: /s/ DAVID C. BIRD
                                ------------------------------------------------
                                Name Printed: David C. Bird
                                             -----------------------------------
                                Title: Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-9                              AGREEMENT

<PAGE>

                             HIBERNIA NATIONAL BANK, as a Lender

                             By: /s/ MATT BREAUX
                                ------------------------------------------------
                                Name Printed: Matt Breaux
                                             -----------------------------------
                                Title: Portfolio Manager
                                      ------------------------------------------

                                                                          MASTER
                                     S-10                              AGREEMENT

<PAGE>

                             THE BANK OF NEW YORK, as a Lender

                             By: /s/ DAVID C. JUDGE
                                ------------------------------------------------
                                Name Printed: David C. Judge
                                             -----------------------------------
                                Title: Senior Vice President
                                      ------------------------------------------

                                                                          MASTER
                                     S-11                              AGREEMENT

<PAGE>

                             U.S. BANK NATIONAL ASSOCIATION,
                             as a Lender

                             By: /s/ THOMAS L. BAYER
                                ------------------------------------------------
                                Name Printed: Thomas L. Bayer
                                             -----------------------------------
                                Title: Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-12                             AGREEMENT

<PAGE>

                            WACHOVIA BANK, NATIONAL
                            ASSOCIATION, as a Lender

                            By: /s/ MARTHA M. WINTERS
                                ------------------------------------------------
                                Name Printed: Martha M. Winters
                                             -----------------------------------
                                Title: Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-13                             AGREEMENT

<PAGE>

                             NATIONAL CITY BANK, as a Lender

                             By: /s/ BRIAN T. STRAYTON
                                ------------------------------------------------
                                Name Printed: Brian T. Strayton
                                             -----------------------------------
                                Title: Vice President
                                      ------------------------------------------

                                                                          MASTER
                                      S-14                             AGREEMENT

<PAGE>

                                  SCHEDULE 2.2

                         AMOUNT OF EACH FUNDING PARTY'S
                       COMMITMENT AND MAXIMUM COMMITMENT

<Table>
<S>                                                                          <C>
Lessor Commitment Percentage:                                                           5%

Lender Commitment Percentages:

        SunTrust Bank                                                             13.6667%

        Fleet National Bank                                                        6.6667%

        PNC Bank, National Association                                            17.3333%

        Comerica Bank                                                              6.6667%

        Hibernia National Bank                                                     6.6667%

        The Bank of New York                                                       6.6667%

        U.S. Bank National Association                                            13.3333%

        Wachovia Bank, National Association                                       17.3333%

        National City Bank                                                         6.6667%

Lessor Maximum Commitment:                                                   $  3,750,000

Lender Maximum Commitments:

        SunTrust Bank                                                        $ 10,250,000

        Fleet National Bank                                                     5,000,000

        PNC Bank, National Association                                         13,000,000

        Comerica Bank                                                           5,000,000

        Hibernia National Bank                                                  5,000,000

        The Bank of New York                                                    5,000,000

        U.S. Bank National Association                                         10,000,000

        Wachovia Bank, National Association                                    13,000,000

        National City Bank                                                      5,000,000
</Table>

                                                                          MASTER
                                      S-15                             AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]