BORDERS GROUP INC
OMNIBUS AMENDMENT DATED AS OF JUNE 21, 2002
<DOCUMENT>
<TYPE>EX-10.42
<SEQUENCE>4
<FILENAME>k71724exv10w42.txt
<DESCRIPTION>OMNIBUS AMENDMENT DATED AS OF JUNE 21, 2002
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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

                                       38
<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.


</TEXT>
</DOCUMENT>
