Document:

Exhibit 10.38- Borders Group, Inc. Amendment No. 2 to the Second Amended and
      Restated Multicurrency Revolving Credit Agreement dated as of July 31, 2006
      among Borders Group, Inc. its subsidiaries and Parties thereto

    AMENDMENT
      NO. 2 

    to
      the

    SECOND
      AMENDED AND RESTATED MULTICURRENCY 

    REVOLVING
      CREDIT AGREEMENT

    

    This
      AMENDMENT NO. 2,
      dated
      as of August 28, 2007 (the "Amendment"),
      to
      the SECOND AMENDED
      AND RESTATED MULTICURRENCY REVOLVING
      CREDIT AGREEMENT
      is by
      and among (a) BORDERS
      GROUP, INC.
      (“BGI”),
      a
      Michigan corporation, BORDERS,
      INC.,
      a
      Colorado corporation (“Borders”),
      WALDEN
      BOOK COMPANY, INC.,
      a
      Colorado corporation (“Walden”),
      BGP
      (UK) LIMITED,
      a
      company with limited liability organized under the laws of England
      (“BGP (UK)”
and
      together with BGI, Borders and Walden, the “Co-Borrowers”),
      (b)
BORDERS
      (UK) LIMITED,
      a
      company with limited liability organized under the laws of England (the
“UK
      Borrower”),
      (c)
BORDERS
      AUSTRALIA PTY LIMITED, a
      company
      organized under the laws of Australia (the “Australian
      Borrower”),
      (d)
BORDERS
      BOOKS IRELAND LIMITED,
      a
      company with limited liability organized under the laws of Ireland (the
“Irish
      Borrower”),
      (e)
      any other Subsidiary of BGI which becomes a Borrower hereunder pursuant to
§5.16
      (together with the Co-Borrowers, the UK Borrower, the Australian Borrower and
      the Irish Borrower, the “Borrowers”),
      (f)
      the lending institutions listed from time to time on Schedule 1
      to the
      Credit Agreement (as defined herein) (the “Lenders”),
      (g)
BANK
      OF AMERICA, N.A., as
      administrative agent and as collateral agent for itself and such other lending
      institutions (the “Administrative
      Agent”),
      (h)
JPMORGAN
      CHASE BANK, N.A. and
      WELLS
      FARGO RETAIL FINANCE, LLC,
      each as
      a syndication agent for itself and such other lending institutions
      (collectively, the "Co-Syndication
      Agents"),
      (i)
GENERAL
      ELECTRIC CAPITAL CORPORATION and
      LASALLE
      RETAIL FINANCE,
      a
      division of LA SALLE BUSINESS CREDIT, LLC , each as documentation agent for
      itself and such other lending institutions (collectively, the "Co-Documentation
      Agents")
      and
      (j) BANK
      OF AMERICA, N.A.,
      as an
      Issuing Bank hereunder, and with BANC
      OF AMERICA SECURITIES LLC and JPMORGAN SECURITIES INC., as
      Co-Lead Arrangers. Capitalized terms used herein and not otherwise defined
      shall
      be defined as provided in §1.

    

    WHEREAS,
      the
      Borrowers, the Lenders, and the Agents are parties to that certain Second
      Amended and Restated Multicurrency Revolving Credit Agreement dated as of July
      31, 2006 (as amended by that certain Amendment No. 1, dated as of April 2,
      2007
      and as further amended, modified and supplemented and in effect from time to
      time, the “Credit
      Agreement”);

    

    WHEREAS,
      on the
      Term Loan Amendment Effective Date (as defined below), BGI will enter into
      the
      Term Loan Agreement (as hereinafter defined) among BGI, as a borrower, certain
      subsidiaries of BGI as loan guarantors, the lenders from time to time party
      thereto as lenders, JPMorgan Chase Bank, National Association, for itself and
      as
      term administrative agent and collateral agent; and 

    

    WHEREAS,
      the
      Borrowers request that the Lenders waive and amend certain of the terms and
      provisions of the Credit Agreement as set forth herein to allow for, among
      other
      things, (i) BGI’s entry into the Term Loan Agreement, the proceeds of which will
      be used to repay existing Indebtedness and to support the general corporate
      purposes of BGI and its Subsidiaries, and grant of Liens associated therewith
      (subject to the Intercreditor Agreement (as defined below)) and (ii) the
      Borrowers to enter into certain Permitted Restructuring Transactions (as
      hereinafter defined);

    

    NOW,
      THEREFORE,
      the
      Borrowers, the Lenders and the Agents hereby agree as follows:

    

    §1.
      Defined
      Terms.
      Capitalized terms used herein without definition that are defined in the Credit
      Agreement shall have the same meanings herein as in the Credit
      Agreement.

    

    §2. Certain
      Amendments to the Credit Agreement.
      Subject
      to the satisfaction of the conditions to effectiveness set forth in Section
      6 of
      this Amendment, the Credit Agreement is hereby amended as follows:

    

    (a) Amendment to the
      definition of “Applicable Margin”.
      The
      definition of “Applicable Margin” in §1.1 of the Credit Agreement is hereby
      amended by adding the following new sentence at the end of such
      definition:

    

    “Notwithstanding
      the foregoing, the Applicable Margin for the period from the Second Amendment
      Effective Date through the date immediately preceding the Adjustment Date in
      respect of the Compliance Certificate delivered by the Borrowers for the Fiscal
      Quarter ending on or about November 2, 2007 shall be the Applicable Margin
      set
      forth in Level III above.”

    

    (b) Amendment to the
      definition of “Cash Dominion Event”.
      Solely
      for the period from Second Amendment Effective Date to and including November
      2,
      2007, the definition of “Cash Dominion Event” in §1.1 of the Credit Agreement is
      hereby amended by adding the following proviso at the end of such definition
      (it
      being understood that after November 2, 2007 the definition of “Cash Dominion
      Event” contained in §1.1 of the Credit Agreement shall revert back to the
      definition in effect immediately prior to the effectiveness of this
      Amendment):

     

    “provided
      that,
      solely for the purposes of §§8.4(c) (with respect to the delivery of a
      Compliance Certificate), 8.15 and 10.1 for the period from the Second Amendment
      Effective Date to and including November 2, 2007, “Cash Dominion Event” shall
      mean any time either (a) an Event of Default shall have occurred or (b) the
      Total Facility Usage Ratio exceeds 95% for a period of four (4) consecutive
      Business Days.”

    

    (c) Amendment to the
      definition of “Last Out Applicable Margin”.
      The
      definition of “Last Out Applicable Margin” in §1.1 of the Credit Agreement is
      hereby amended by adding the following new sentence at the end of such
      definition:

    

    “Notwithstanding
      the foregoing, the Last Out Applicable Margin for the period from the Second
      Amendment Effective Date through the date immediately preceding the Adjustment
      Date in respect of the Compliance Certificate delivered by the Borrowers for
      the
      Fiscal Quarter ending on or about November 2, 2007 shall be (a) with respect
      to
      Base Rate Loans, 1.25% and (b) with respect to Eurocurrency Rate Loans,
      3.00%.”

    

    (d) Amendments to §1.1 of the Credit Agreement. 
      Section
      1.1 of the Credit Agreement is hereby amended by adding the following new
      definition in the appropriate alphabetical order:

    

    Second
      Amendment Effective Date.
      August
      28, 2007.

    

    Permitted
      Restructuring Transactions
      and
Permitted
      Restructuring Transaction.
      Any one
      or more of the transactions described on Schedule 1.01A hereto so long as any
      such transaction is consummated in accordance with such Schedule
      1.01A.

    

    (e) Amendment to Article
      8 of the Credit Agreement.
      The
      following new Sections 8.18 is hereby added to the Credit Agreement as
      follows:

    

    “8.18
      Permitted
      Restructuring Transactions.
      Notwithstanding the foregoing Article VIII, the provisions of this Article
      VIII
      shall not restrict the ability of the Borrowers and their Subsidiaries from
      consummating any Permitted Restructuring Transaction made in accordance with
      Schedule
      1.01A
      and
      permitted under §9.5.2(d)(iv).”

    

    (f) Amendment to §9.1 of the Credit Agreement. Section
      9.1(i) of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    

    “(i)
      reserved; and”

    

    (g) Amendment to the
      Sections 9.3(f) and (j) of the Credit Agreement.
      Sections 9.3(f) and (j) of the Credit Agreement are each hereby amended by
      deleting each reference to “90%” in each of §§9.3(f) and (j) and substituting
“85%” in lieu thereof.

    

    (h) Amendment to the
      Sections 9.4(c) of the Credit Agreement.
      Section
      9.4(c) of the Credit Agreement is hereby amended by restating such §9.4(c) in
      its entirety as follows:

    

    “(c) BGI
      or
      any of its Subsidiaries may make other Restricted Payments; provided
      that (i)
      no Default or Event of Default has occurred and is continuing or would result
      therefrom, (ii) BGI shall deliver to the Lenders contemporaneously with any
      Compliance Certificate delivered pursuant to §8.4(c) a certificate of the
      principal financial or accounting officer of the Borrowers certifying as
      accurate and complete the monthly pro forma
      financial projections attached thereto and demonstrating immediately after
      giving effect to all Restricted Payments projected to be made during the then
      next Fiscal Quarter (x) the Total Facility Usage Ratio would not exceed 85%
      for
      such Fiscal Quarter and (y) the Total Facility Usage Ratio would not exceed
      85%
      as determined on a pro
      forma
      basis
      over the two (2) Fiscal Quarters next following such Fiscal Quarter, in form
      and
      substance satisfactory to the Administrative
      Agent,
      based
      on reasonable projections of the financial performance of the Borrowers;
provided,
      however,
      that
      BGI may make Distributions after the Second Amendment Effective Date in amounts
      per share of Capital Stock in any year not to exceed those per annum amounts
      per
      share of Capital Stock that BGI has paid consistent with its past practice
      (plus
      an additional 2% increase per annum) without demonstrating compliance with
      this
      clause (ii) (it being understood that any Restricted Payments in excess of
      the
      aforementioned amounts shall be subject in all respects to compliance with
      the
      requirements of this clause (ii)) and (iii) in connection with such certificate
      for any Fiscal Quarter during which the Borrowers project that the aggregate
      Restricted Payments to be made will exceed $25,000,000, BGI shall deliver a
      certificate of an Authorized Officer of the Borrowers dated as of the date
      of
      such certificate as to the solvency of the Borrowers and their Subsidiaries
      following the payment of all such Restricted Payments for such Fiscal Quarter
      and in form and substance satisfactory to the Administrative Agent; provided
      that at
      any time the actual Restricted Payments made during any Fiscal Quarter exceed
      the Restricted Payments projected to be made for such Fiscal Quarter as set
      forth in the certificate described in clause (ii) above, BGI shall promptly
      deliver to the Lenders a certificate of the principal financial or accounting
      officer of the Borrowers certifying as accurate and complete updated monthly
      pro forma
      financial projections attached thereto and otherwise demonstrating compliance
      with the requirements set forth in clause (ii) above based on the actual
      Restricted Payments made and, to the extent applicable, providing the solvency
      certificate described in clause (iii) above.”

    

    (i) Amendment to §9.4 of the Credit Agreement. Sections
      9.4(d) and (e) of the Credit Agreement are hereby amended and restated in their
      entirety as follows:

    

    “(d) [Reserved];

    

    (e) [Reserved]”

    

    (j) Amendment to the
      Sections 9.5.1 of the Credit Agreement.
      Section
      9.5.1 of the Credit Agreement is hereby amended by deleting each reference
      to
“90%” in such §9.5.1 and substituting “85%” in lieu thereof.

    

    (k) Amendment to the
      Sections 9.5.2(d) of the Credit Agreement.
      Section
      9.5.2(d) of the Credit Agreement is hereby amended by (i) restating clause
      (iv)
      of such §9.5.2(d) in its entirety and (ii) adding the following new clause (v)
      immediately following clause (iv), in each case, as follows:

    

    “(iv)
      to
      the extent not otherwise permitted by clauses (i) through (iii) hereof, any
      (x)
      Permitted Restructuring Transaction so long as (A) such transaction is
      consummated within 180 days of Second Amendment Effective Date and (B) no
      Default or Event of Default has occurred and is continuing or would result
      therefrom; and 

    

    (v)
      to
      the extent not otherwise permitted by clauses (i) through (iv) hereof, 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
      that (A)
      no Default or Event of Default has occurred and is continuing or would result
      therefrom, (B) with respect to any such sale, transfer or lease of property
      the
      fair market value of which exceeds $5,000,000 whether in one or a series of
      related dispositions, BGI delivers to the Lenders on or before the date on
      which
      any of its Subsidiaries agrees to or consummates such sale, transfer or lease
      a
      certificate of the principal financial or accounting officer of the Borrowers
      certifying as accurate and complete the monthly pro forma
      financial projections attached thereto and demonstrating immediately after
      giving effect to such sale, transfer or lease (and including all other sales,
      transfers or leases that have occurred since the most recent certificate
      delivered pursuant to this clause (B)) (x) the Total Facility Usage Ratio would
      not exceed 85% and (y) the Total Facility Usage Ratio would not exceed 85%
      as
      determined on a pro
      forma
      basis
      over the six month period immediately following the effective date of such
      sale,
      transfer or lease, in form and substance satisfactory to the Administrative
      Agent,
      based
      on reasonable projections of the financial performance of the Borrowers and
      (C)
      before and after giving effect to such disposition, the Borrowers are in
      compliance with §8.14.”

    

    (l) Amendment to the
      Sections 9.6 of the Credit Agreement.
      Section
      9.6 of the Credit Agreement is hereby amended by deleting each reference to
      “90%” in such §9.6 and substituting “85%” in lieu thereof.

    

    (m) Amendment to the
      Sections 9.15 of the Credit Agreement.
      Sections 9.15 of the Credit Agreement is hereby amended by deleting each
      reference to “90%” in such §9.15 and substituting “85%” in lieu
      thereof.

    

    (n) Amendment to Article
      9 of the Credit Agreement.
      The
      following new Sections 9.17 is hereby added to the Credit Agreement as
      follows:

    

    “9.17
      Permitted
      Restructuring Transactions.
      Notwithstanding the foregoing Article IX, the provisions of this Article IX
      (other than §9.5.2(d)(iv)) shall not restrict the ability of the Borrowers and
      their Subsidiaries from consummating any Permitted Restructuring Transaction
      made in accordance with Schedule
      1.01A
      and
      permitted under §9.5.2(d)(iv).”

    

    (o) Amendment to Section
      10.1 of the Credit Agreement.
      Solely
      for the period from Second Amendment Effective Date to and including November
      2,
      2007, Section 10.1 of the Credit Agreement is hereby amended by adding the
      following new proviso immediately before the period at the end of such Sections
      10.1:

    

    “;
      provided
      that,
      solely for the period from the Second Amendment Effective Date to and including
      November 2, 2007, the reference to “90%” in this sentence shall be deemed to be
      a reference to “95%””

    

    (p) Amendment to Section
      12.8 of the Credit Agreement.
      Solely
      for the period from Second Amendment Effective Date to and including November
      2,
      2007, Section 12.8 of the Credit Agreement is hereby amended by adding the
      following new proviso immediately before the period at the end of such Sections
      12.8:

    

    “;
      provided
      that,
      solely for the period from the Second Amendment Effective Date to and including
      November 2, 2007, the reference to “90%” in this sentence shall be deemed to be
      a reference to “95%””

    

    (q) Addition
      of Schedule 1.01A to Credit Agreement.
      Schedule 1.01A to the Credit Agreement (Permitted Restructuring Transactions),
      as attached to this Amendment as Exhibit
      A,
      is
      hereby added to the Credit Agreement.

    

    §3. Amendments to the Credit Agreement
      Relating to the Term Loan Agreement.
      On the
      Term Loan Amendment Effective Date (as defined below), the Credit Agreement
      is
      hereby amended as follows:

    

    (a) Amendment to the
      definition of “Collateral”. The
      definition of “Collateral” in Section 1.1 of the Credit Agreement is hereby
      amended and restated in its entirety as follows:

     

    “Collateral.
      All of
      the property, rights and interests of the Borrowers and the Guarantors that
      are
      or are intended to be subject to the Liens created by the Security Documents.
      For the avoidance of doubt, the term “Collateral” includes both the ABL Priority
      Collateral and the Term Priority Collateral.”

    

    (b) Amendment to the
      definition of “Loan Documents or Finance Documents”. The
      definition of “Loan Documents or Finance Documents” in Section 1.1 of the Credit
      Agreement is hereby amended to include a reference to “the Intercreditor
      Agreement” immediately following the reference to “Joinder Agreement” in such
      definition.

    

    (c) Amendment to the
      definition of “Investments”. The
      definition of “Investments” in Section 1.1 of the Credit Agreement is hereby
      amended and restated in its entirety as follows:

    

    “Investments”
means
      all expenditures made and all liabilities incurred (contingently or otherwise)
      for the acquisition of stock, membership interests, partnership interests or
      other equity interests, 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.”

    

    (d) Amendment to the
      definition of “Security Agreement”. 
      The
      definition of “Security Agreement” in Section 1.1 of the Credit Agreement is
      hereby amended and restated in its entirety as follows:

    

    “Security
      Agreement.
      The
      Second Amended and Restated Security Agreement, dated as of on or about the
      Term
      Loan Closing Date, among BGI, certain of the Co-Borrowers, certain of the
      Guarantors, any other parties thereto and the Collateral Agent and in form
      and
      substance satisfactory to the Lenders and the Administrative Agent (as the
      same
      may be further amended from time to time), and
      all
      other instruments, agreements and documents executed or delivered pursuant
      to or
      in connection with the Security Agreement (including,
      without limitation, any perfection certificates or collateral certificates
      delivered in connection therewith).”

    

    (e) Amendments to §1.1 of the Credit Agreement. 
      Section
      1.1 of the Credit Agreement is hereby amended by adding the following new
      definitions in the appropriate alphabetical order:

    

    ABL
      Priority Collateral.
      Has the
      meaning given to such term in the Intercreditor Agreement.

    

    Material
      Subsidiary.
      Each
      Domestic Subsidiary which is a guarantor of the obligations under this Credit
      Agreement and each other Subsidiary (i) which, as of the most recent Fiscal
      Quarter of the BGI, for the period of four consecutive Fiscal Quarters then
      ended, for which financial statements have been delivered pursuant to Section
      5.04, contributed greater than five percent (5%) of the Borrowers’ consolidated
      revenues for such period or (ii) which contributed greater than five percent
      (5%) of the Borrowers’ Consolidated Total Assets as of such date; provided
      that, if
      at any time the aggregate amount of the Borrowers’ consolidated revenues or
      Borrowers’ Consolidated Total Assets attributable to Subsidiaries that are not
      Guarantors exceeds ten percent (10%) of the Borrowers’ consolidated revenues for
      any such period or ten percent (10%) of the Borrowers’ Consolidated Total Assets
      as of the end of any such Fiscal Quarter, the Borrower (or, in the event the
      Borrower has failed to do so within ten days, the Term Administrative Agent)
      shall designate sufficient Subsidiaries as “Material Subsidiaries” to eliminate
      such excess, and such designated Subsidiaries shall for all purposes of this
      Agreement constitute Material Subsidiaries.

     

    Intercreditor
      Agreement.
      That
      certain Intercreditor Agreement, dated on or prior to the Term Loan Closing
      Date, among the Administrative Agent, the Collateral Agent, the Term Loan Agent,
      the Borrowers, the Guarantors and the other parties thereto (if any), in form
      and substance acceptable to the Administrative Agent.

    

    Permitted
      Term Loan Payments.
      Collectively, (a) interest and fees payable on the Term Loan Facility in
      accordance with the Term Loan Documents as in effect on the Term Loan Closing
      Date, (b) regularly scheduled principal installment payments pursuant to, and
      in
      accordance with, the Term Loan Agreement and (c) mandatory prepayments of
      principal as required by, and in accordance with the Term Loan Agreement.

    

    Term
      Loan Agent.
      JPMorgan Chase Bank, National Association, in its capacity as term
      administrative agent and collateral agent under the Term Loan
      Documents.

    

    Term
      Loan Closing Date.
      The
      first date on which the conditions to effectiveness set forth in the Term Loan
      Agreement and the other Term Loan Documents have been satisfied and the Term
      Loan Facility is made available to BGI.

    

    Term
      Loan Agreement.
      The
      Term Loan Agreement dated on or about the Term Loan Closing Date, among BGI,
      the
      Term Loan Agent, the Term Loan Lenders and the other parties thereto, in form
      and substance satisfactory to the Administrative Agent.

    

    Term
      Loan Documents.
      Collectively, the Term Loan Agreement and each of the other “Loan Documents”
referred to therein, in each case, in form and substance satisfactory to the
      Administrative Agent.

    

    Term
      Loan Facility.
      That
      certain term loan facility not to exceed $200,000,000 to be provided to BGI
      by
      the Term Loan Agent and the Term Loan Lenders pursuant to the Term Loan
      Documents and having a maturity date not earlier than the sixth anniversary
      of
      the Term Loan Closing Date.

    

    Term
      Loan Lenders.
      Collectively, the lenders under the Term Loan Documents.

    

    Term
      Priority Collateral.
      Has the
      meaning given to such term in the Intercreditor Agreement.

    

    (f) Amendment to Credit Agreement. 
      Section
      8.5 of the Credit Agreement is hereby amended by adding the following new
      Section 8.5.7 immediately following the existing Section 8.5.6 of the Credit
      Agreement:

    

    “8.5.7.
      Notice of Default under the Term Loan Documents.

    

    The
      Borrowers shall, and shall cause each of their Subsidiaries to, deliver to
      the
      Lenders notice of the occurrence of any default or event of default under the
      Term Loan Documents, such delivery to be made promptly after becoming aware
      of
      such default or event of default or after such notice or other communication
      is
      received by any such Borrower or any such Subsidiary.”

    

    (g) Amendment to §8.7 of the Credit Agreement. Section
      8.7 of the Credit Agreement is hereby amended by adding the following new text
      at the end of such Section 8.7:

    

      “The
        Borrowers shall deliver to the Collateral Agent endorsements (x) to all “All
        Risk” physical damage insurance policies on all of the Loan Parties’ tangible
        personal property and assets and business interruption insurance policies
        naming
        the Collateral Agent lender loss payee, as
        its
        interest may appear and
        (y)
        to all general liability and other liability policies naming the Collateral
        Agent an additional insured. In the event the Borrower or any of its
        Subsidiaries at any time or times hereafter shall fail to obtain or maintain
        any
        of the policies or insurance required herein or to pay any premium in whole
        or
        in part relating thereto, then the Collateral Agent, without waiving or
        releasing any obligations or resulting Default hereunder, may at any time
        or
        times thereafter (but shall be under no obligation to do so) obtain and maintain
        such policies of insurance and pay such premiums and take any other action
        with
        respect thereto which the Collateral Agent deems advisable. All sums so
        disbursed by the Collateral Agent shall constitute part of the Obligations,
        payable as provided in this Agreement.”

    

    (h) Amendment to §8.13 of the Credit Agreement. Section
      8.13 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    

      “8.13 Stock
        Collateral.
        Each
        Loan Party will cause (i) 100% of the issued and outstanding Capital Stock
        of
        each of its Domestic Subsidiaries which is a Material Subsidiary and
        (ii)
        if not
        sold or otherwise disposed of pursuant to a Permitted Restructuring Transaction,
        within One Hundred Eighty (180) days of the Closing Date,
        65% (or
        such greater percentage that, due to a change in applicable law after the
        date
        hereof, (1) could not reasonably be expected to cause the undistributed earnings
        of such Foreign Subsidiary as determined for U.S. federal income tax purposes
        to
        be treated as a deemed dividend to such Foreign Subsidiary’s U.S. parent and (2)
        could not reasonably be expected to cause any materially adverse tax
        consequences) of the issued and outstanding Capital Stock in each Foreign
        Subsidiary which is a Material Subsidiary and is directly owned by BGI or
        any
        Domestic Subsidiary to be subject at all times to (i) a first priority,
        perfected Lien in favor of the Term Loan Agent for the benefit of the Term
        Loan
        Lenders and (ii) a second priority, perfected Lien in favor of the Collateral
        Agent for the benefit of the Lenders, in each case pursuant to the terms
        and
        conditions of the Loan Documents and the Term Loan Documents or other security
        documents, subject to the Intercreditor Agreement, as the Administrative
        Agent
        shall reasonably request.”

    

    (i) Amendment to §8.15.1 of the Credit Agreement. Section
      8.15.1 of the Credit Agreement is hereby amended by adding the following new
      sentence at the end of such §8.15.1:

    

    “For
      the
      avoidance of doubt, the Borrowers shall not, and shall not permit any of their
      Subsidiaries to, enter into any Agency Account Agreement (including any deposit
      or securities account control agreements) in favor of the Term Loan Agent and/or
      the Term Loan Lenders without such Agency Account Agreement also being granted
      jointly in favor the Collateral Agent and/or the Lenders.”

    

    (j) Amendment to §9.1 of the Credit Agreement. Section
      9.1(i) of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    

    “(i)
      Indebtedness of BGI in respect of the Term Loan Facility in aggregate principal
      amount not to exceed $200,000,000; provided
      that (i)
      at the time of incurrence of such Indebtedness, no Default or Event of Default
      has occurred and is continuing or would result therefrom and (ii) such
      Indebtedness is, at all times and in all respects, subject to the Intercreditor
      Agreement; and”

    

    (k) Amendment to §9.2 of the Credit Agreement. Section
      9.2 of the Credit Agreement is hereby amended by (i) deleting the “and” at the
      end of Section 9.2(xiii); (ii) replacing the period at the end of Section
      9.2(xiv) with the text “; and”; and (iii) adding the following new clause (xv)
      immediately following existing clause (xiv):

    

    “(i)
      Liens granted to the Term Loan Agent under the Term Loan Documents securing
      the
      Term Loan Facility; provided
      that
      such Liens are, at all times and in all respects, subject to the Intercreditor
      Agreement.”

    

    (l) Amendment to §9.15 of the Credit Agreement. Section
      9.15 of the Credit Agreement is hereby amended and restated in its entirety
      as
      follows:

    

    “9.15 Payments
      of Senior Indebtedness.

    

    The
      Borrowers may not, and may not permit any of their Subsidiaries to, make (a)
      any
      payment (including prepayment), redemption or repurchase of principal (whether
      mandatory, voluntary, upon conversion or otherwise) in respect of the Term
      Loan
      Facility, or (b) any optional or voluntary prepayment, redemption or repurchase
      of any Indebtedness ranking pari passu
      in right
      of payment with the Obligations (each such payment described in clause (a)
      and
      (b) above, a “Senior
      Indebtedness Payment”);
      provided
      that the
      Borrowers may, and may permit any of their Subsidiaries to, make (i) Permitted
      Term Loan Payments at any time and (ii) Senior Indebtedness Payments (other
      than
      Permitted Term Loan Payments) so long as, in the case of this clause (ii),
      (1)
      no Default or Event of Default has occurred and is continuing or would result
      therefrom, and (2) BGI delivers to the Lenders on or before the date on which
      it
      or any of its Subsidiaries agrees to or makes such Senior Indebtedness Payment
      a
      certificate, in form and substance satisfactory to the Administrative
      Agent,
      of the
      principal financial or accounting officer of the prepaying Borrowers certifying
      as accurate and complete the monthly pro forma
      financial projections attached thereto that demonstrate immediately after giving
      effect to such Senior Indebtedness Payment (x) the Total Facility Usage Ratio
      would not exceed 85% and (y) the Total Facility Usage Ratio would not exceed
      85%
      as determined on a pro
      forma
      basis
      over the six month period immediately following the effective date of such
      Senior Indebtedness Payment based on reasonable projections of the financial
      performance of the Borrowers.”

    

    (m) Amendment to Credit Agreement. 
      The
      Credit Agreement is hereby amended by adding the following new Section 9.16
      immediately following the existing Section 9.15 of the Credit
      Agreement:

    

    “9.16.
      Amendments to Term Loan Documents.

    

    The
      Borrowers will not, and will not permit any of their Subsidiaries to, amend,
      supplement or otherwise modify any of the Term Loan Documents in any manner
      that
      shortens the maturity or average life to maturity of the Term Loan Facility
      or
      adds or modifies to make more burdensome on the Borrowers and their Subsidiaries
      the terms of any required prepayments, redemptions or repurchases (other than
      waivers or deferrals thereof) in respect of the Term Loan Facility or in any
      manner that is prohibited by the Intercreditor Agreement, in each case, without
      the written consent of the Required Lenders. The Borrowers will not, and will
      not permit any of their Subsidiaries to, make any payment which would not have
      been made in the absence of an amendment or change of terms of the Term Loan
      Facility unless such amendment or change has been approved by the Required
      Lenders as provided in the preceding sentence.”

    

    (n) Amendment
      to Section 13.1(f) of the Credit Agreement. 
      Section
      13.1(f) of the Credit Agreement is hereby amended and restated in its entirety
      as follows:

    

    “(f) any
      Borrower or any of its Subsidiaries shall fail to pay at maturity, or within
      any
      applicable period of grace, any obligation in respect of the Term Loan Facility
      or any other 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 the Term Loan Facility or other 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;”

    

    §4. Covenant.

    

    (a) Weekly
      Borrowing Base Reporting.
      Each
      of
      the Borrowers, jointly and severally, covenants and agrees, for the period
      from
      the Second Amendment Effective Date to and including December 31, 2007, to
      deliver to the Administrative Agent a Borrowing Base Report, in form and
      substance satisfactory to the Administrative Agent, within five (5) days after
      the end of each calendar week (unless otherwise consented to by the
      Administrative Agent).

    

    §5. Affirmation
      of the Borrowers and Guarantors.
      Each of
      the Borrowers hereby affirms its absolute and unconditional promise to pay
      to
      each Lender, the Issuing Bank, each Swingline Lender and the Agents the Loans,
      the Reimbursement Obligations and all other amounts due under the Notes, the
      Credit Agreement as amended hereby and the other Loan Documents, at the times
      and in the amounts provided for therein, and subject to the terms thereof.
      Each
      of the Guarantors hereby affirms its guaranty of the Obligations in accordance
      with the provisions of the Guaranty. Each of the Borrowers and the Guarantors
      confirms and agrees that (i) the obligations of the Borrowers to the Lenders,
      the Swingline Lenders, the Issuing Bank and the Agents under the Credit
      Agreement as amended hereby are secured by and entitled to the benefits of
      the
      Security Documents and (ii) all references to the term “Credit Agreement” in the
      Security Documents and the other Loan Documents shall hereafter refer to the
      Credit Agreement as amended hereby.

    

    §6. Conditions to Effectiveness.
      This
      Amendment
      (other than the amendments set forth in §3 of this Amendment)
shall
      be
      deemed effective as of the date hereof (the “Second
      Amendment Effective Date”)
      upon
      the satisfaction of the following conditions to effectiveness:

    

    (a) The
      Administrative Agent and the Lenders shall have received this Amendment duly
      executed by the Borrowers, the Guarantors, the Administrative Agent and the
      Required Lenders, and in full force and effect.

    

    (b) The
      Administrative Agent shall have received payment by the Borrowers for the
      benefit of each Lender that executes and delivers to the Administrative Agent
      its signature page to this Amendment by 5:00 p.m. Boston time on August 22,
      2007, in facsimile, .pdf or original form, of an amendment fee in an amount
      equal to five (5) basis points of each such consenting Lender’s Commitment
      and/or Last Out Revolving Commitment, as applicable and payment of all such
      other fees that are due and payable on or prior to the Second Amendment
      Effective Date.

    

    (c) The
      Administrative Agent shall have received from each of the Borrowers and
      Guarantors a certificate, dated as of the Second Amendment Effective Date,
      signed by a duly authorized officer of such Person, certifying that there has
      been no change in the Governing Documents of such Person since the Closing
      Date
      and attaching certified copies of the board minutes and/or resolutions
      authorizing the execution, delivery and performance of this Amendment and all
      related documents to which such Person is a party and (iii) giving the name
      and
      bearing a specimen signature of each individual who shall be authorized to
      sign,
      in the name and on behalf of such Person, this Amendment and all related
      documents to which such Person is a party, in form and substance satisfactory
      to
      the Administrative Agent.

    

    (d) The
      Administrative Agent shall have received all such instruments, documents and
      agreements as the Administrative Agent may reasonably request, in form and
      substance reasonably satisfactory to the Administrative Agent.

    

    §7. Conditions to Effectiveness
      of Term Loan Amendments.
      The
      amendments set forth in §3
      of this Amendment shall
      be
      deemed effective upon the satisfaction of (i) the conditions set forth in §6 of
      this Amendment and (ii) the following conditions to effectiveness (the date
      upon
      which all conditions set forth in §§6 and 7 of this Amendment are satisfied, the
“Term
      Loan Amendment Effective Date”):

    

    (a) The
      Term
      Loan Facility shall have been made available to BGI on terms and conditions,
      and
      pursuant to documentation, satisfactory to the Administrative Agent, and the
      Borrowers shall have delivered an officer’s certificate of the Borrowers dated
      as of the Effective Date certifying that the conditions to the effectiveness
      of
      the Term Loan Documents are satisfied and attaching true and correct copies
      of
      the executed and effective Term Loan Agreement.

    

    (b) The
      Administrative Agent and/or the Collateral Agent shall have reached satisfactory
      intercreditor arrangements with the Term Loan Agent and the Term Loan Lenders,
      and the Administrative Agent shall have received a fully executed Intercreditor
      Agreement, in form and substance satisfactory to the Administrative Agent and
      the Required Lenders, and such Intercreditor Agreement shall be in full force
      and effect.

    

    (c) The
      Administrative Agent shall have received from each of the Borrowers and each
      of
      their Subsidiaries who are or are to become a Borrower or a Guarantor a
      certificate, dated as of the Term Loan Amendment Effective Date, signed by
      a
      duly authorized officer of such Borrower or such Subsidiary, attaching and
      certifying as being true correct and complete, (i) each of its Governing
      Documents as in effect on such date of certification (or certifying that there
      has been no change in the Governing Documents of such Person since the Closing
      Date to the extent such Governing Documents were delivered to the Administrative
      Agent on the Closing Date), (ii) certified copies of the board minutes and/or
      resolutions authorizing the execution, delivery and performance of this
      Amendment, the other Loan Documents entered into in connection therewith, the
      Term Loan Documents and all related documents to which such Person is a party,
      and (iii) giving the name and bearing a specimen signature of each individual
      who shall be authorized to sign, in the name and on behalf of such Borrower
      and
      such Subsidiary, each of Loan Documents (as amended hereby) entered into in
      connection herewith, the Term Loan Documents and any related documents to which
      such Borrower or such Subsidiary is or is to become a party, in form and
      substance satisfactory to the Administrative Agent.

    

    (d) The
      Administrative Agent shall have received (i) the Security Agreement (as amended
      and restated on the Term Loan Amendment Effective Date) together with all
      schedules and attachments thereto, duly executed by the parties thereto,
      together with all other documents, instruments, filings and agreements to be
      delivered in connection with the Security Documents and/or the Collateral and
      (ii) such joinder documents as may be reasonably required by the Administrative
      Agent in connection with the joinder of (x) any existing Guarantors to any
      Loan
      Documents which it is to become a party and (y) any new Guarantors to the Loan
      Documents to which such new Guarantor is to become a party, together with all
      other documents, agreement, instruments and filings related thereto (it being
      understood that the borrower and guarantors under the Term Loan Facility shall
      all be Borrowers and/or Guarantors under the Loan Documents).

    

    (e) The
      Administrative
      Agent
      shall
      have received the results of Uniform Commercial Code searches and intellectual
      property searches indicating no Liens other than Permitted Liens and otherwise
      in form and substance satisfactory to the Administrative
      Agent.

    

    (f) The
      Administrative
      Agent
      shall
      have received (a) a certificate of insurance from an independent insurance
      broker dated as of the Closing Date, identifying insurers, types of insurance,
      insurance limits, and policy terms, and otherwise describing the insurance
      and
      naming the Administrative Agent as an additional insured and a loss payee and
      (b) certified copies of all policies evidencing such insurance (or certificates
      therefore signed by the insurer or an agent authorized to bind the
      insurer).

    

    (g) Each
      of
      the Administrative Agent shall have received an officer’s certificate of the
      Borrowers dated as of the Effective Date as to the solvency of the Borrowers
      and
      their Subsidiaries following the consummation of the transactions contemplated
      herein and by the Term Loan Documents, in form and substance satisfactory to
      the
      Administrative Agent.

     

    (h) The
      Administrative Agent shall have received a favorable legal opinion addressed
      to
      the Lenders, the Agents, and the Issuing Banks dated as of the Effective Date,
      in form and substance satisfactory to the Administrative Agent
      from:

     

    (i) Baker
      & McKenzie LLP, counsel to the Borrowers and their Subsidiaries; and

     

    (ii) Thomas
      Carney, Esq., General Counsel to the Borrowers and their
      Subsidiaries.

    

    (i) The
      Security Documents shall be effective to create in favor of the Administrative
      Agent a legal, valid and enforceable first priority security interest in and
      Lien upon the ABL Priority Collateral and a legal, valid and enforceable second
      priority (subject only to the Lien in favor of the Term Loan Agent) security
      interest in and Lien upon the Term Priority Collateral. All deliveries of
      instruments necessary or desirable in the opinion of the Administrative Agent
      to
      protect and preserve such security interests shall have been duly delivered
      to
      the Administrative Agent.

    

    Each
      Lender hereby (i) authorizes and directs the Administrative Agent and/or the
      Collateral Agent to (A) execute, on behalf of such Lender, the Intercreditor
      Agreement, the Security Documents and any other agreements, documents, filings
      and instruments to be delivered in connection with this Amendment and the
      transactions contemplated hereby, and (B) take any and all actions contemplated
      or required by this Amendment, the Security Documents, the Intercreditor
      Agreement and the transactions contemplated hereby.
      

    

    §8. Representations and Warranties.
      The
      Borrowers hereby represent and warrant to the Lenders, the Agents and the
      Issuing Bank as follows:

    

    (a) Representations and Warranties in Credit Agreement.
      The
      representations and warranties of the Borrowers and their Subsidiaries contained
      in the Credit Agreement, as amended hereby, are true and correct on the date
      hereof (except to the extent of changes resulting from transactions contemplated
      or permitted by this Credit Agreement and the other Loan Documents and changes
      occurring in the ordinary course of business that singly or in the aggregate
      are
      not materially adverse, and to the extent that such representations and
      warranties relate expressly to an earlier date), and, both before and
      immediately after giving effect to the Term Loan Documents, no Default or Event
      of Default has occurred and is continuing. 

    

    (b) Authority,
      No Conflicts,
      Etc.
      The
      execution, delivery and performance of this Amendment and all related documents
      and the consummation of 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 Borrowers or any of their Subsidiaries is subject or any judgment, order,
      writ, injunction, license or permit applicable to any of the Borrowers or any
      of
      their Subsidiaries and (d) do not conflict with any provision of the Governing
      Documents of, the Term Loan Documents or any other agreement or other instrument
      binding upon, any of the Borrowers or any of their Subsidiaries.

    

    (c) Enforceability of Obligations.
      This
      Amendment and the Credit Agreement and the other Loan Documents as amended
      hereby constitute the legal, valid and binding obligations of each Borrower
      and
      each of their respective Subsidiaries party thereto, enforceable against each
      Borrower and each of their respective Subsidiaries, in accordance with their
      respective terms, except as limited by bankruptcy, insolvency, fraudulent
      conveyance, reorganization, moratorium, or other laws relating to or affecting
      creditors’ rights generally, general equitable principles (whether considered in
      equity or at law) and an implied covenant of good faith and fair dealing, 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.

    

    §9. No Other Amendments.
      Except
      as expressly provided in this Amendment, all of the terms, conditions and
      provisions of the Credit Agreement and the other Loan Documents shall remain
      the
      same. It is declared and agreed by each of the parties hereto that the Credit
      Agreement, as amended hereby, shall continue in full force and effect, and
      that
      this Amendment and the Credit Agreement shall be read and construed as one
      instrument.

    

    §10. Execution in Counterparts.
      This
      Amendment may be executed in any number of counterparts and by each party on
      a
      separate counterpart, each of which when so executed and delivered shall be
      an
      original, but all of which together shall constitute one instrument. In proving
      this Amendment, it shall not be necessary to produce or account for more than
      one such counterpart signed by the party against whom enforcement is sought.
      Delivery of an executed signature page of this Amendment by facsimile or
      electronic transmission shall be effective as delivery of a manually executed
      counterpart thereof.

    

    §11. Governing Law. THIS
      AMENDMENT IS INTENDED TO TAKE EFFECT AS AN AGREEMENT UNDER THE LAWS OF THE
      STATE
      OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
      GOVERNED BY THE LAWS OF SAID STATE WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS
      OR CHOICE OF LAW.

    

    §12. Headings,
      etc.
      Headings
      or captions used in this Amendment are for convenience of reference only and
      shall not define or limit the provisions hereof. This Amendment shall constitute
      a “Loan Document” under the Credit Agreement.

    

    §13. Expenses.
      The
      Borrowers jointly and severally hereby agree to pay to the Administrative
      Agent,
      on demand by the Administrative Agent, all reasonable out-of-pocket costs and
      expenses incurred or sustained by the Administrative Agent in connection with
      the preparation of this Amendment, the Intercreditor Agreement and the other
      documents relating hereto and to the transactions contemplated hereby (including
      reasonable legal fees).

    

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    EXHIBIT
      A

    

      SCHEDULE
        1.01A

    

    PERMITTED
      RESTRUCTURING TRANSACTIONS

    

    

      UNITED
        KINGDOM

    

    
      	1.  	
              BGP
                (UK) contributes Borders Superstores (UK) Limited to BGI (UK) Limited
                followed by BGI (UK) Limited’s conversion to an unlimited company, apply
                its assets in buying back its share capital and subsequent complete
                liquidation.

            

    

    
      	2.  	
              Conversion
                of Books Etc. Properties, Ltd. into an unlimited company and application
                of its assets in buying back its share
                capital.

            

    

    
      	3.  	
              Complete
                liquidation of Books Etc. Properties, Ltd., Meridian Books, Ltd.,
                Charing
                Cross Properties, Ltd., and Evermatch Limited into BGI (UK), Limited.
                BGI
                (UK), Limited forgives/waives the inter-company receivables owed
                by
                Borders (UK) Limited to Meridian Books, Charing Cross and
                Evermatch.

            

    

    
      	4.  	
              BGI
                (UK) Limited forgives/waives its inter-company receivable from UK
                Borrower, as well as the amounts UK Borrower owes to Borders Superstores
                (UK) Limited.

            

    

    
      	5.  	
              BGI
                (UK) sells its stock in UK Borrower to a third party
                purchaser.

            

    

    
      	6.  	
              UK
                Borrower forgives/waives intercompany receivable from BGI (UK) Limited,
                BGP (UK) and Books Etc Properties.

            

    

    
      	7.  	
              Forgiveness/waiver
                of intercompany debt among Irish Borrower, UK Borrower and Paperchase
                Products Limited.

            

    

    
      	8.  	
              BPI
                grants a perpetual license to certain trademarks for use in the United
                Kingdom and Ireland by UK Borrower and a third party purchaser on
                terms to
                be determined.

            

    

    
      	9.  	
              Each
                of the preceding transactions may be conducted independently of the
                other
                at any time and in any sequence and shall be deemed to include all
                acts
                and steps necessary for the described
                action.

            

    

    
      	10.  	
              In
                connection with the consummation of transactions, the portion of
                the
                Foreign Sublimit and the Commitments in respect of the UK Borrower
                shall
                be terminated, the Obligations of the UK Borrower shall be repaid
                in full
                and the UK Borrower, after repayment in full of the Obligations of
                the UK
                Borrower, shall be released from its Guaranty (if any) and any other
                Loan
                Documents to which it is party.

            

    

    
      	11.  	
              To
                the extent that it is lawful and would not cause materially adverse
                tax
                consequences to the Borrowers, the remaining proceeds of the foregoing
                transactions (after repayment in full of Obligations of the UK Borrower)
                shall be applied to repay the
                Obligations.

            

    

    
      	12.  	
              The
                transactions described in paragraph 5 above shall (i) be on arm’s length
                terms, (ii) be on terms and conditions (including indemnity and expense
                reimbursement provisions) that are customary for transactions of
                this
                type, (iii) be approved by the Board of Directors of BGI, (iv) not
                result
                in any Borrower or Guarantor incurring any material liability or
                retaining
                any material liability of the UK Borrower (or any other entity related
                to
                the transaction) and (v) be for cash consideration (or, in each case,
                otherwise in form and substance satisfactory to the Administrative
                Agent).

            

    

    
      	13.  	
              The
                Borrowers shall provide the Administrative Agent with all relevant
                documentation related to the forgoing (in a reasonable time in advance
                of
                the consummation of foregoing transactions) so that the Administrative
                Agent can confirm that the foregoing conditions have been satisfied
                together with a certificate of a responsible officer of BGI confirming
                the
                same.

            

    

    

    

      AUSTRALIA

    

    
      	1.  	
              BGI
                (or its relevant Subsidiary) and Borders Pty. Ltd. (Singapore) sell
                their
                respective interest in Australian Borrower to a third party
                purchaser.

            

    

    
      	2.  	
              BPI
                grants a perpetual license to certain trademarks for use in Australia
                by
                Australian Borrower and a third party purchaser on terms to be
                determined.

            

    

    
      	3.  	
              Each
                of the preceding transactions may be conducted independently of the
                other
                at any time and in any sequence and shall be deemed to include all
                acts
                and steps necessary for the described
                action.

            

    

    
      	4.  	
              In
                connection with the consummation of the foregoing transactions, the
                portion of the Foreign Sublimit and the Commitments in respect of
                the
                Australian Borrower shall be terminated, the Obligations of the Australian
                Borrower shall be repaid in full and the Australian Borrower, after
                repayment in full of the Obligations of the Australian Borrower,
                shall be
                released from its Guaranty (if any) and any other Loan Documents
                to which
                it is party.

            

    

    
      	5.  	
              To
                the extent that it is lawful and would not cause materially adverse
                tax
                consequences to the Borrowers, the remaining proceeds of the foregoing
                transactions (after repayment in full of Obligations of the Australian
                Borrower) shall be applied to repay the
                Obligations.

            

    

    
      	6.  	
              The
                transactions described in paragraph 1 above shall (i) be on arm’s length
                terms, (ii) be on terms and conditions (including indemnity and expense
                reimbursement provisions) that are customary for transactions of
                this
                type, (iii) be approved by the Board of Directors of BGI, (iv) not
                result
                in any Borrower or Guarantor incurring any material liability or
                retaining
                any material liability of the Australian Borrower (or any other entity
                related to the transaction) and (v) be for cash consideration (or,
                in each
                case, in form and substance otherwise satisfactory to the Administrative
                Agent).

            

    

    
      	7.  	
              The
                Borrowers shall provide the Administrative Agent with all relevant
                documentation related to the forgoing (in a reasonable time in advance
                of
                the consummation of foregoing transactions) so that the Administrative
                Agent can confirm that the foregoing conditions have been satisfied
                together with a certificate of a responsible officer of BGI confirming
                the
                same.

            

    

    

    

      NEW
        ZEALAND

    

    
      	1.  	
              BGI
                (or its relevant Subsidiary) sells Borders New Zealand Limited to
                a third
                party purchaser.

            

    

    
      	2.  	
              BPI
                grants a perpetual license to certain trademarks for use in New Zealand
                by
                Borders New Zealand Limited and a third party purchaser on terms
                to be
                determined.

            

    

    
      	3.  	
              Each
                of the preceding transactions may be conducted independently of the
                other
                at any time and in any sequence and shall be deemed to include all
                acts
                and steps necessary for the described
                action.

            

    

    
      	4.  	
              To
                the extent that it is lawful and would not cause materially adverse
                tax
                consequences to the Borrowers, the proceeds of the foregoing transactions
                shall be applied to repay the
                Obligations.

            

    

    
      	5.  	
              The
                transactions described in paragraph 1 above shall (i) be on arm’s length
                terms, (ii) be on terms and conditions (including indemnity and expense
                reimbursement provisions) that are customary for transactions of
                this
                type, (iii) be approved by the Board of Directors of BGI, (iv) not
                result
                in any Borrower or Guarantor incurring any material liability or
                retaining
                any material liability of Borders New Zealand Limited (or any other
                entity
                related to the transaction), and (v) be for cash consideration (or,
                in
                each case, in form and substance otherwise satisfactory to the
                Administrative Agent).

            

    

    
      	6.  	
              The
                Borrowers shall provide the Administrative Agent with all relevant
                documentation related to the forgoing (in a reasonable time in advance
                of
                the consummation of foregoing transactions) so that the Administrative
                Agent can confirm that the foregoing conditions have been satisfied
                together with a certificate of a responsible officer of BGI confirming
                the
                same.

            

    

    

    

      IRELAND

    
      	1.  	
              BGI
                (or its relevant Subsidiary) contributes its shares in the Irish
                Borrower
                to Borders International Services, Inc. in exchange for additional
                shares
                in Borders International Services,
                Inc.

            

    

    
      	2.  	
              BPI
                grants a perpetual license to certain trademarks for use in Ireland
                by
                Irish Borrower and a third party purchaser on terms to be
                determined.

            

    

    
      	3.  	
              BGI
                (or its relevant Subsidiary) contributes additional paid in capital
                to the
                Irish Borrower.

            

    

    
      	4.  	
              BGI
                (or its relevant Subsidiary) sells its interest in the capital stock
                of
                the Irish Borrower to a third party
                purchaser.

            

    

    
      	5.  	
              Each
                of the preceding transactions may be conducted independently of the
                other
                at any time and in any sequence and shall be deemed to include all
                acts
                and steps necessary for the described
                action.

            

    

    
      	6.  	
              In
                connection with the consummation of the foregoing transactions, the
                portion of the Foreign Sublimit and the Commitments in respect of
                the
                Irish Borrower shall be terminated, the Obligations of the Irish
                Borrower
                shall be repaid in full and the Irish Borrower, after repayment in
                full of
                the Obligations of the Irish Borrower, shall be released from its
                Guaranty
                (if any) and any other Loan Documents to which it is
                party.

            

    

    
      	7.  	
              To
                the extent that it is lawful and would not cause materially adverse
                tax
                consequences to the Borrowers, the remaining proceeds of the foregoing
                transactions (after repayment in full of Obligations of the Irish
                Borrower) shall be applied to repay the
                Obligations.

            

    

    
      	8.  	
              The
                transactions described in paragraph 4 above shall (i) be on arm’s length
                terms, (ii) be on terms and conditions (including indemnity and expense
                reimbursement provisions) that are customary for transactions of
                this
                type, (iii) be approved by the Board of Directors of BGI, (iv) not
                result
                in any Borrower or Guarantor incurring any material liability or
                retaining
                any material liability of the Irish Borrower (or any other entity
                related
                to the transaction) and (v) be for cash consideration (or, in each
                case,
                otherwise in form and substance satisfactory to the Administrative
                Agent).

            

    

    
      	9.  	
              The
                Borrowers shall provide the Administrative Agent with all relevant
                documentation related to the forgoing (in a reasonable time in advance
                of
                the consummation of foregoing transactions) so that the Administrative
                Agent can confirm that the foregoing conditions have been satisfied
                together with a certificate of a responsible officer of BGI confirming
                the
                same.

            

    

    

    UNITED
      STATES

    

    
      	1.  	
              Convert
                Walden Book Company, Inc. into a single member Limited Liability
                Company
                (“Walden LLC”) and provide advance notice thereof to the Collateral Agent
                in accordance with Section 6 of the Security
                Agreement.

            

    

    
      	2.  	
              Transfer
                Walden Properties, Inc. to BGI and merge it into
                BGI.

            

    

    
      	3.  	
              Contribute
                the newly formed Walden LLC into
                Borders.

            

    

    
      	4.  	
              Walden
                LLC transfers its headquarters staff to Borders.
                

            

    

    
      	5.  	
              Borders
                forms Management, Inc. and contributes the Ann Arbor headquarters
                staff to
                Management, Inc. 

            

    

    
      	6.  	
              Merge
                Borders Outlet, Inc. into Borders.

            

    

    
      	7.  	
              Borders
                contributes its airport stores to Walden, Inc. or Walden
                LLC

            

    

    
      	8.  	
              Borders
                Properties, Inc. will make periodic dividends of cash to Borders
                and
                Borders may make periodic dividends to
                BGI.

            

    

    
      	9.  	
              Each
                of the preceding transactions may be conducted independently of the
                other
                at any time and in any sequence and shall be deemed to include all
                acts
                and steps necessary for the described
                action.

            

    

    
      	10.  	
              Each
                of the foregoing shall be accomplished in compliance with the requirements
                of the Credit Agreement and the other Loan Documents and, for the
                avoidance of doubt, each Domestic Subsidiary formed or otherwise
                created
                in connection with any of the foregoing shall be a Guarantor under
                the
                Loan Documents to the extent required by Section 8.14 of the Credit
                Agreement and/or, if any assets of any such entity will be included
                in the
                Domestic Borrowing Base or Aggregate Borrowing Base, such entity
                shall
                become a Borrower or a Guarantor under the Loan Documents and become
                a
                party to the relevant Security Documents prior to any such
                inclusion.

            

    

    
      
        A/ 72064106.6

        
        

      

      
        
        

        
          

        

      

      
        
        

        --

      

    

    

    IN
      WITNESS WHEREOF,
      the
      parties have executed this Amendment as of the date first above
      written.

     

    

    BORDERS
      GROUP, INC.

     

    By:   /s/EDWARD
      W. WILHELM

    Name:
       Edward
      W.
      Wilhelm

    Title:
        Senior
      Vice President, Finance and Chief Financial Officer

    

     

    BORDERS,
      INC.

    WALDEN
      BOOK COMPANY, INC.

     

    By:  /s/EDWARD
      W. WILHELM

    Name: Edward
      W. Wilhelm

    Title:  
Senior
      Vice President, Treasurer and Assistant Secretary

     

    

     

    BGP
      (UK) LIMITED

    BORDERS
      (UK) LIMITED

     

    By:  /s/EDWARD
      W. WILHELM

    
      	 	 	
              Name:
Edward
                W. Wilhelm

            

    

    Title:
       
      Director

    

     

    BORDERS
      AUSTRALIA PTY LTD

     

    By:
       _/s/EDWARD W. WILHELM

    Name:
      Edward W. Wilhelm

    Title:
       
      Director

     

    By:
       _/s/GEORGE L. JONES

    Name:
      George L. Jones

    Title:
       
      Director

    
      
        
          Amendment
            No. 2 and Waiver to the Second Amended and Restated Multicurrency Revolving
            Credit Agreement

          Signature
            Page 

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          --

        

      

    

     

    BORDERS
      BOOKS IRELAND LIMITED

     

    By:  _/s/EDWARD
      W. WILHELM

    Name:
      Edward W. Wilhelm

    Title:
        Director

    

     

    For
      purposes of §5 hereof:

    BORDERS
      PROPERTIES, INC.

    WALDENBOOKS
      PROPERTIES, INC.

    BORDERS
      OUTLET, INC.

    BORDERS
      ONLINE, INC.

     

    By:
      /s/EDWARD W. WILHELM

    Name:
      Edward W. Wilhelm

           
Title: 
      Senior
      Vice President, Treasurer 

      
      and Assistant Secretary

     

    

    BORDERS
      FULFILLMENT, INC.

     

    By:
      /s/EDWARD W. WILHELM

    Name:
      Edward W. Wilhelm

           
Title: 
      Senior
      Vice President, Finance

      
      and Chief Financial Officer

     

    BORDERS
      ONLINE, LLC

    

    By:
      BORDERS, INC.,
      its
      Sole Member

     

    By:
      /s/EDWARD W. WILHELM

    Name:
      Edward W. Wilhelm

    Title:
       Senior
      Vice President, Treasurer 

      
      and Assistant Secretary

    

    

    
      
        A/72064106.8 

        A/72163047.1 

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

     

    BANK
      OF AMERICA, N.A.,
      individually
      and as Administrative Agent and Swingline Lender

     

     

     

    By:  _/s/ANDREW
      CERUSSI

    Name:
      Andrew Cerussi

    Title:
       Vice
      President

    

     

    BANK
      OF AMERICA, N.A.,
      as
      Issuing Bank

     

     

    By:  _/s/ANDREW
      CERUSSI

    Name:
      Andrew Cerussi

    Title: Vice
      President

    

    

    

     

    JPMORGAN
      CHASE BANK, N.A.

     

     

    By:  _/s/LYNNE
      CIACCIA

    Name:
      Lynne Ciaccia

    Title:  
      VP

    

    

     

    WELLS
      FARGO RETAIL FINANCE, LLC

     

    By:  _/s/ADAM
      DAVIS

    Name:
      Adam Davis 
      Title:  
        AVP

    

     

     

    LASALLE
      RETAIL FINANCE, a Division of LaSalle Business Credit, LLC, as Agent for LaSalle
      Bank Midwest National Association

     

    By:
       _/s/STEVE
      FRIEDLANDER

    Name:
      Steve Friedlander

    Title:  
      EVP 

     

    GENERAL
      ELECTRIC CAPITAL CORPORATION

     

    By:
       _/s/REBECCA
      A. FORD

    Name:
      Rebecca A. Ford 
      Title:  
        Duly Authorized Signatory

    

     

     

    THE
      CIT GROUP/BUSINESS CREDIT, INC.

     

    By:
       _/s/MATTHEW
      V. DEFRANCO

    Name:
      Matthew V. Defranco 
      Title:  
        AVP

    

     

     

    NATIONAL
      CITY BUSINESS CREDIT, INC.

     

    By:
       _/s/DANIEL
      O'ROURKE

    
      	 	 	
              Name:
                Daniel O'Rourke

            

    

    
      	 	 	
              Title:
                Director

            

    

     

     

     

    UBS
      AG, STAMFORD BRANCH

     

    By:
       _/s/DAVID
      B. JULIE_

    Name:
      David B. Julie 
      Title:  
        Associate Director

          Banking
        Products 

          Services
        US

    

     

     

    By:
       _/s/RICHARD
      L. TAVROW

    
      Name:
        Richard L. Tarrow

      Title:   Director

         Bankings
        Products 

          Services
        US 

       

    

     

     

    CHARTER
      ONE BANK, N.A.

     

    By:
       _/s/G.
      TIMOTHY O'ROURKE

    
      	 	 	
              Name:
                G. Timothy O' Rourke

            

    

    
      	 	 	
              Title:  
                Vice President

            

    

    

    

    PNC
      BANK, NATIONAL ASSOCIATION

     

    By:  _/s/LOUIS
      K. MCLINDEN

    Name:
      Louis K. McLinden

    
      Title:  
        Managing Director

    

     

     

    SUNTRUST
      BANK

     

    By:
       _/s/MARK
      PICKERING

    Name: 
      Mark Pickering

    
      Title:   
        Director

    

     

     

    UNION
      BANK OF CALIFORNIA, N.A.

     

    By:
       _/s/NANCY
      A. PERKINS

    Name:
      Nancy A. Perkins

    
      Title:  
        Vice President

    

     

     

    KEYBANK
      NATIONAL ASSOCIATION

     

    By:
       __/s/NADINE
      M. EAMES

    Name:
      Nadine M. Eames

    Title:  
      Vice President

     

    COMERICA
      BANK

     

    By:
       _/s/BLAKE
      ARNETT

    Name:
      Blake Arnett 
      Title:  
        Assistant Vice President

    

     

     

    U.S.
      BANK, NATIONAL ASSOCIATION

     

    By:
       _/s/JOSEPH
      J. SCAGLIONE

    Name:
      Joseph J. Scaglione 
      Title:  
        Vice President

    

    
      	 	 	
               

            

    

     

    

    
      
        
          Amendment
            No. 2 and Waiver to the Second Amended and Restated Multicurrency Revolving
            Credit Agreement

          Signature
            Page 

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

        

      

    

     

    

     

    FORTIS
      CAPITAL CORP.

     

    By:
       _/s/TIMOTHY
      STREB

    Name:
      Timothy Streb 
      Title:  
        Managing Director

    

     

     

    By:
       ______________________________

    Name:
      

    
      	 	 	
              Title:
                

            

    

     

    REGIONS
      BANK

     

    By:  _/s/CYNTHIA
      MARINOS

    Name:
      Cynthia Marinos 
      Title:  
        Attorney In Fact

    

    
 

     

    FIFTH
      THIRD BANK, EASTERN MICHIGAN

     

    By:
       _/s/BRIAN
      JELINSKI

    Name:
      Brian Jelinski 
      Title:  
        Portfolio Manager

    

     

     

    BNY
      CAPITAL MARKETS, INC.

    As
      agent for:
      THE BANK OF NEW YORK

     

    By:
       _/s/WILLIAM
      LEMBERG

    Name:
      William Lemberg 
      Title:   
        Managing DirectorEX-4.2

 

Exhibit 4.2

NOTATION OF GUARANTEE

     For value received, each Guarantor (which term includes any successor Person under the
Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture dated as of December 20, 2006 (the
“Indenture”) among Maxcom Telecomunicaciones, S.A. de C.V. (the “Company”), the Guarantors party
thereto and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”), (a) the due and
punctual payment of the principal of, premium, if any, and interest on, the Notes, whether at
maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on
overdue principal of and interest on the Notes, if any, if lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the Trustee all in accordance
with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 11 of
the Indenture and reference is hereby made to the Indenture for the precise terms of the Note
Guarantee.

     Capitalized terms used but not defined herein have the meanings given to them in the
Indenture.

	 	 	 	 	 
	 	MAXCOM SERVICIOS

ADMINISTRATIVOS, S.A. DE C.V.

	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	OUTSOURCING OPERADORA DE

PERSONAL, S.A. DE C.V.

 
	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

 

 

	 	 	 	 	 
	 	TÉCNICOS ESPECIALIZADOS EN

TELECOMUNICACIONES, S.A. DE C.V.

 
	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	CORPORATIVO EN

TELECOMUNICACIONES, S.A. DE C.V.

 
	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	MAXCOM SF, S.A. DE C.V.

 	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	MAXCOM TV, S.A. DE C.V.

 	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	MAXCOM USA, INC.

 	 
	 	By:  	/s/ Jose Antonio Solbes
 	 
	 	 	Name:  	Jose Antonio Solbes 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

2

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