Exhibit 10.40
(BAKER & MCKENZIE LOGO) [k27278k2727803.gif]
Brand Licence Deed
Borders Properties, Inc.
Spine NewCo Pty Limited
Baker & McKenzie
Solicitors
Level 27, AMP Centre
50 Bridge Street
SYDNEY NSW 2000
Tel: (02) 9225-0200
Fax: (02) 9225-1595

 

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DATE:
PARTIES:

(1)   BORDERS PROPERTIES, INC., a company incorporated in the State of Delaware,
USA and having its principal place of business at 100 Phoenix Drive, Ann Arbor,
MI 48108, USA (“Licensor”); and   (2)   SPINE NEWCO PTY LIMITED, a company
incorporated under the laws of Australia ACN 127 667 314 and having its
registered office at Level 31, 126 Phillip Street, Sydney, NSW 2000
(“Licensee”).

RECITALS:

(A)   Licensor is the registered proprietor of, or has the right to license
and/or sub-license, the Trade Marks (as defined below).   (B)   Licensor has
agreed to license Licensee to use the Trade Marks on the terms of this Deed.  
(C)   Licensor has registered the Domain Names (as defined below) and holds all
right, title and interest in and to the registration of such Domain Names.   (D)
  Licensor has agreed to provide a licence to Licensee to make use of the Domain
Names on the terms set out in this Deed.

TERMS AGREED:

1.   DEFINITIONS AND INTERPRETATION

1.1   Definitions:       In this Deed, where the context so admits, the
following words and expressions shall have the following meanings:

     
“ARW”
  has the same meaning as in the Purchasing Agreement;
 
   
“Borders Australia”
  Borders Australia Pty Limited (ABN 31 082 194 287), a company incorporated
under the laws of Australia and having its registered office c/o Baker &
McKenzie, Level 27, AMP Centre, 50 Bridge Street, Sydney NSW 2000;
 
   
“Borders NZ”
  Borders New Zealand Limited Company No. 944114, a company incorporated under
the laws of New Zealand and having its registered office c/o Minter Ellison Rudd
Watts, Lumley Centre, 88 Shortland Street, Auckland, New Zealand;
 
   
“Borders Singapore”
  Borders Pte. Ltd, a company incorporated under the laws of Singapore with
registered number 19970517Z and having its registered office at 60B Martin Road,
02 08B Singapore Trademart 239067;

 

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“Borders Store”
  a distinctive retail store in the Territory which sells Goods and Services
under the Trade Marks;
 
   
“Breach of Duty”
  the breach of any (i) obligation arising from the express or implied terms of
a contract to take reasonable care or exercise reasonable skill in the
performance of the contract; or (ii) common law duty to take reasonable care or
exercise reasonable skill (but not any stricter duty);
 
   
“Business Day”
  a day (excluding Saturday) on which the banks are generally open for business
in Ann Arbor, Michigan, Sydney, Auckland and Singapore for the transaction of
normal banking business;
 
   
“Competing Business”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Confidential Information”
  in relation to either party, information (whether in written, electronic or
oral form) belonging or relating to that party or, in the case of Licensor,
belonging to a member of Licensor’s Group, relating to its or their business,
affairs, activities, products or services which is not in the public domain and
which (i) either party has marked as proprietary or confidential; (ii) either
party, orally or in writing, has advised the other party is of a confidential
nature; or (iii) due to its character or nature, a reasonable person in a like
position to the recipient of such information under this Deed, and under like
circumstances, would treat as confidential;  
“Control”
  has the same meaning as in section 50AA of the Corporations Act 2001 (Cth);  
“Dispute”
  means a dispute, difference or question relating to this Deed, including any
dispute, difference or question regarding the breach, termination, validity or
subject matter of this Deed or any claim whether in tort, negligence, equity,
under law or otherwise;
 
   
“Domain Names”
  the domain names, short particulars of which are set out in Schedule 4 to this
Deed;
 
   
“Effective Date”
  the date of this Deed;
 
   
“Encumbrances”
  means any mortgage, charge, pledge, lien, encumbrance, assignment,
hypothecation, security interest, title retention, preferential right, trust
arrangement, contractual right of set-off or any other security agreement or
arrangement in favour of any person;  
“Goods ”
  the goods set out in Schedule 2 to this Deed for which the Trade Marks are
registered, including the provision of these goods using the Domain Names or

 

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  corresponding website address but specifically excluding the provision of any
goods via the Internet using any other domain name or other electronic media;
 
   
“Government Agency”
  means: (i) a government or government department or other body; (ii) a
governmental, semi-governmental or judicial person; or (iii) a person (whether
autonomous or not) who is charged with the administration of a law;
 
   
“Holding Company”
  has the meaning given to it in section 9 of the Corporations Act 2001 (Cth).
 
   
“Intra-Group Guarantees”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Licensor’s Group”
  the group of companies comprising Licensor, any Holding Company from time to
time of Licensor and any Subsidiary of Licensor or any such Holding Company and
“member of Licensor’s Group” shall be construed accordingly;
 
   
“Provider Competing Business”
  means a business of selling or distributing books, magazines, CDs, DVDs and
similar products which is controlled or operated by any of the following, one or
more of their Related Bodies Corporate or their successors or assigns:
 
   
 
  (a)    Barnes & Noble, Inc;
 
   
 
  (b)    Dymocks Holdings Pty Ltd;
 
   
 
  (c)    Amazon.Com, Inc;
 
   
 
  (d)    Books-a-Million Inc;
 
   
 
  (e)    Fnac france;
 
   
 
  (f)    Kinokuniya Company Ltd; and
 
   
 
  (g)    Indigo Books & Music Inc;.;
 
   
“Purchasers”
  has the meaning given to it in the Sale and Purchase Agreement;
 
   
“Purchasing Agreement”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Related Body Corporate”
  has the meaning in the Corporations Act 2001 (Cth).
 
   
“Sale and Purchase Agreement”
  the agreement entered into between Borders Group, Inc., Borders Singapore and
the Purchasers effecting the sale of Borders Australia, Borders NZ and Borders
Singapore;

 

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“Seller’s Group”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Services”
  the services set out in Schedule 2 to this Deed for which the Trade Marks are
registered, including the provision of these services using the Domain Names or
corresponding website address but specifically excluding the provision of any
services via the Internet using any other domain name or other electronic media;
 
   
“Sub-Licensee”
  the beneficiary of any sub-license granted pursuant to Clause 8.3;
 
   
“Subsidiary”
  has the meaning given to it in section 9 of the Corporations Act 2001 (Cth);
 
   
“Tax”
  any value-added or goods and services tax, withholding tax, charge (and
associated penalty or interest), rate duty or impost imposed by any Government
Agency at any time, but does not include any taxes on income or capital gains;
 
   
“Territory”
  Australia, New Zealand and Singapore;
 
   
“Trade Marks”
  the trade marks short particulars of which are set out in Schedule 1 to this
Deed;
 
   
“Transaction Document”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Transition Services Agreement”
  the agreement entered between (amongst others) Borders International Services,
Inc., Borders Australia, Borders NZ, Borders Singapore and Licensee in relation
to the provision of certain services; and
 
   
“Year”
  the period from the Effective Date to midnight on the following 31 December,
and any subsequent period of twelve (12) months commencing the following 1
January or any anniversary of that date while this Deed remains in force
(provided that the final Year of this Deed may be a shorter period ending on the
effective date of termination of this Deed).

1.2   In this Deed, unless the context otherwise requires:

    (a)   a reference:

  (i)   to the singular includes the plural and the other way round;     (ii)  
to a gender includes all genders;     (iii)   to a document (including this
Deed) is a reference to that document (including any Schedules and Annexures,)
as amended, consolidated, supplemented, novated or replaced;

 

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  (iv)   to an agreement includes any deed, agreement or legally enforceable
arrangement or understanding whether written or not;     (v)   to parties means
the parties to this Deed and to a party means a party to this Deed;     (vi)  
to a notice means all notices, approvals, demands, requests, nominations or
other communications given by one party to another under or in connection with
this Deed;     (vii)   to a person (including a party) includes:

  (A)   an individual, company, other body corporate, association, partnership,
firm, joint venture, trust or Government Agency;     (B)   the person’s
successors, permitted assigns, substitutes, executors and administrators; and  
  (C)   a reference to the representative member of the GST group to which the
person belongs to the extent that the representative member has assumed rights,
entitlements, benefits, obligations and liabilities which would remain with the
person if the person were not a member of a GST group;

  (viii)   to a law:

  (A)   includes a reference to any constitutional provision, subordinate
legislation, treaty, decree, convention, statute, regulation, rule, ordinance,
proclamation, by-law, judgment, rule of common law or equity or rule of any
applicable stock exchange; and     (B)   is a reference to that law as amended,
consolidated, supplemented or replaced; and     (C)   is a reference to any
regulation, rule, ordinance, proclamation, by-law or judgment made under that
law;

  (ix)   to proceedings includes litigation, arbitration, and investigation;    
(x)   to a judgement includes an order, injunction, decree, determination or
award of any court or tribunal;     (xi)   to time is a reference to Sydney or
Ann Arbor, Michigan time;

  (b)   headings are for convenience only and are ignored in interpreting this
Deed;     (c)   a warranty, representation, covenant or obligation given or
entered into by more than one person binds them jointly and severally;     (d)  
if a period of time is specified and dates from, after or before, a given day or
the day of an act or event, it is to be calculated exclusive of that day;    
(e)   if a payment or other act must (but for this clause) be made or done on a
day which is not a Business Day, then it must be made or done on the next
Business Day;     (f)   the words “including” or “includes” mean “including but
not limited to” or “including without limitation”;

 

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    (g)   where a word or phrase is defined, its other grammatical forms have a
corresponding meaning;       (h)   this Deed must not be construed adversely to
a party solely because that party was responsible for preparing it; and    
  (i)   to $ or dollars are references to the lawful currency of the United
States of America at the date of this Agreement.

2.   GRANT OF RIGHTS

2.1   Subject to the terms and conditions of this Deed, Licensor grants to
Licensee, with effect from the Effective Date and without limit of period, an
exclusive:

    (a)   licence in the Territory to use and apply the Trade Marks on and in
relation to the sale of Goods and the provision of Services in Borders Stores,
or using the Domain Names or corresponding website address, including, without
limitation, in connection with the marketing, use, distribution, sale and
disposal of the Goods and Services as aforesaid. Such licence does not permit
Licensee, and Licensee is prohibited, to use and apply the Trade Marks on or in
relation to the provision of any goods or services via the Internet using any
domain name or other electronic media save as aforesaid; and       (b)  
worldwide right to use the Domain Names in relation to the Goods and Services,
including, without limitation, in connection with the development, manufacture,
marketing, use, distribution, sale and disposal of the Goods and Services. The
right to use the Domain Names in this context means the right to use the Domain
Names in any manner whatsoever including the right to establish uniform resource
locators for each Domain Name, to display at such uniform resource locators such
content relating to the Goods and Services as Licensee shall determine in its
absolute discretion and to establish email addresses using the Domain Names.

2.2   Licensee shall not actively solicit orders for the Goods and Services
outside the Territory but it shall not be prohibited from accepting any
unsolicited orders for the Goods and Services which it may receive from any
other country.

2.3   Licensor reserves the right itself to use and to license others to use the
Trade Marks on or in relation to goods or services (other than the Goods and
Services) in the Territory without recourse to Licensee provided that the other
person does not constitute a Competing Business (as that term is defined in the
Sale and Purchase Agreement).

2.4   Licensee shall at the request of Licensor pay any fees and costs necessary
in connection with the registration, maintenance and renewal of the Trade Marks
and Domain Names in the Territory (in respect of those Trade Marks and Domain
Names which are registered or the subject of an application for registration on
the date of this Deed).

2.5   In the event that any Trade Mark is capable of protection by registration,
and is not already the subject of an application or applications for
registration in any country within the Territory, Licensee shall on Licensor’s
written request, at its own cost, be responsible for the filing and prosecution
of such applications in the name of Licensor and the maintenance and renewal of
any resulting Trade Mark registrations in such countries within the Territory as
it shall nominate. If and to the extent that Licensee does procure such Trade
Mark registrations in the name of Licensor, the rights granted to Licensee under
this Clause 2 shall be deemed to include the right to use and apply the same
subject to the terms of this Deed.

 

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2.6   Subject to receiving the Internet Protocol addresses for Licensee’s domain
name servers in writing from Licensee within five (5) days of the Effective
Date, Licensor agrees to amend, or procure the amendment of, the registration
for the Domain Names within fourteen (14) days of the Effective Date so as to
associate the Domain Names with the relevant domain name server and to make such
further amendments to the registration for the Domain Names as are necessary
from time to time in order to associate the Domain Names with any further or
other domain name servers notified to Licensor by Licensee at any time. Licensor
agrees that any such further amendments to the registration for any of the
Domain Names shall be effected within fourteen (14) days of such a request being
made in writing by Licensee.

2.7   Except to the extent expressly granted to Licensee in this Deed, Licensee
will have none of the powers conferred on authorised users of trade marks by
section 26 of the Trade Marks Act 1995 (Cth).

2.8   Licensee shall only use the BORDERS EXPRESS Trade Mark specified in
Schedule 1 with the prior consent of the Licensor (which consent shall not be
unreasonably withheld) provided however that no such consent shall be required
in respect of Borders Stores that are similar in size to the Borders Express
stores operated by the Seller’s Group and comply with any guidelines in respect
of the BORDERS EXPRESS Trade Mark as specified by the Licensor.

3.   LICENSEE OBLIGATIONS

3.1   In addition to its obligations set out elsewhere in this Deed, Licensee
shall during the term of this Deed:

    (a)   use the Trade Marks only in the form, colour, design, style and manner
directed or approved by Licensor in writing from time to time in accordance with
this Deed, and with appropriate legends as directed or approved by Licensor in
writing clearly identifying Licensor as the owner of the Trade Marks and
indicating, in the form and manner reasonably directed by Licensor, that the
Trade Marks are used under licence from Licensor;       (b)   ensure that:

  (i)   all manufacturing, packaging, storage, marketing and supply operations
by which the Goods are manufactured, packaged, stored, marketed or supplied
under this Deed; and     (ii)   all of the Services that are marketed or
supplied under this Deed;

      are conducted to a standard consistent with good manufacturing, packaging,
storage, marketing and sales practice and in accordance with all applicable
standards, specifications and procedures as specified in Schedule 3 and/or as
communicated by Licensor in writing from time to time and provided that, subject
to the terms of any Transaction Document, nothing in this clause or this Deed
will oblige the Licensee to:

  (iii)   incur further expenses other than in the nature specified in clauses
2.4, 3.2 and 3.3;     (iv)   seek the Licensor’s consent or approval prior to
developing the business of Borders Australia, Borders NZ or Borders Singapore
(including opening new stores) provided that the Licensee complies with clauses
3.2 and 3.3;     (v)   seek the Licensor’s consent or approval prior to sourcing
or selling the Goods and Services provided the Licensee complies with clause
3.1(i);

 

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  (vi)   seek the Licensor’s consent or approval prior to any marketing or
promotions using the Trade Marks provided that the Licensee complies with clause
3.1(i); or     (vii)   seek the Licensor’s consent or approval in connection
with any aspect of operating the business of Borders Australia, Borders NZ or
Borders Singapore provided that the Licensee complies with clauses 3.1(i), 3.2
and 3.3;

  (c)   at Licensee’s expense, provide Licensor, at its request, with samples of
the Goods. Without limitation, samples of the Goods proposed to be marketed or
sold by Licensee or any Sub-Licensee shall be submitted to Licensor for the
Licensor’s records;     (d)   at Licensee’s expense, submit all proposed
(whether by Licensee or any Sub-Licensee) advertising copy and all other
proposed promotional or marketing materials regarding the Goods and Services and
other materials featuring the Trade Marks, including, without limitation,
stationery, wrappings, packaging, point of purchase materials, product
catalogues and television commercials, to Licensor, at its request, for its
records and agrees to comply with clause 3.4;     (e)   not use the Trade Marks
or Domain Names on or in relation to any other goods or services;     (f)   not
use on or in relation to any goods or services any mark or name deceptively
similar to, or substantially identical to, the Trade Marks;     (g)   except
with respect to the Licensee’s Related Bodies Corporate’s trademarks, logo,
domain names or other proprietary or commercial name or designation, not,
without Licensor’s prior written consent, use or apply on or in relation to the
Goods and Services (including as or as part of a corporate, business or trading
name) any other trade mark, logo, domain name or other proprietary or commercial
name or designation;     (h)   not make any representation or do any act which
may be taken to indicate that it has any right, title or interest in or to the
ownership or use of any of the Trade Marks or Domain Names other than under the
terms of this Deed;     (i)   not do, cause or authorise to be done anything
which will or may impair, damage or be detrimental to the reputation or goodwill
associated with Licensor or the Trade Marks or Domain Names, which will or may
adversely affect the value or validity of the Trade Marks or Domain Names, which
may bring the Trade Marks or Domain Names into disrepute or which might
jeopardise or invalidate any registration or application for registration of the
Trade Marks or Domain Names or Licensor’s title to the Trade Marks or Domain
Names (save that Licensor’s remedy for any challenge by Licensee to Licensor’s
ownership of the Trade Marks or Domain Names shall be as set out in Clause
9.2(g));     (j)   not register, in the Territory or elsewhere, the Domain
Names, Trade Marks, business names or any other trade mark, domain name or
business name which is in Licensor’s reasonable opinion substantially identical
with, or deceptively similar to, the Trade Marks or Domain Names or that
constitutes any translation thereof into any language spoken in the Territory;  
  (k)   upon Licensor’s request, provide all information or assistance, and
execute any instrument, that may be necessary or appropriate to register,
maintain or renew the

 

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      registration of the Trade Marks or Domain Names in Licensor’s (or its
nominee’s) name in the Territory, and shall keep Licensor regularly informed of
any costs incurred, or likely to be incurred, in connection with the same;    
  (l)   indemnify Licensor and each member of Licensor’s Group and each of their
respective directors, officers and employees from and against any and all
claims, liabilities, proceedings, costs, damages, losses and expenses (including
legal expenses) incurred by any of them as a result of or in connection with
(i) Licensee’s performance of this Deed or the breach of any term of this Deed;
(ii) the performance by any Sub-Licensee of the relevant sub-licence granted
pursuant to this Deed or the breach of any term of such sub-licence; (iii) or
any other negligent or wrongful act by Licensee or any Sub-Licensee, or any of
their respective directors, officers, employees, agents or contractors; and    
  (m)   use the Trade Marks in a minimum of fifteen (15) Borders Stores.

3.2   The Licensee is required to comply with any direction from the Licensor in
respect of new branding of Borders Stores that are not yet open at the date of
direction provided that the Licensor;

    (a)   also proposes to implement or implements such new branding in respect
of all new Borders branded stores to be opened outside the Territory after the
date of direction; and       (b)   has consulted with the Licensee prior to the
proposed implementation of new branding contemplated in clause 3.2(a).

3.3   The Licensee is required to comply with any direction from the Licensor in
respect of re-branding of Borders Stores existing at the date of direction
provided that the Licensor:

    (a)   has commenced the implementation of such re-branding in respect of at
least 50% of all Borders branded stores in the United States of America;    
  (b)   has consulted with the Licensee prior to the proposed implementation of
the re-branding contemplated in clause 3.3(a); and       (c)   is only required
to implement any re-branding of Borders Stores over an equivalent period of time
as the Licensor has or has undertaken to implement the re-branding contemplated
in clause 3.3(a), and

3.4   If the Licensor notifies the Licensee in writing that a particular use of
the Trade Marks by the Licensee (including in connection with Products,
promotional or marketing materials) is contrary to clause 3.1(i), then the
Licensee must, as soon as practicable, cease that particular usage of the Trade
Marks.

4.   PAYMENTS AND RECORDS

4.1   All sums payable under this Deed:

    (a)   are quoted exclusive of any Tax which shall be paid in addition upon
the provision by Licensor of a valid tax invoice; and       (b)   shall be made
in U.S. dollars to the credit of a bank account to be designated in writing by
Licensor.

4.2   If Licensee fails to pay any sum due under this Deed by the due date,
Licensor shall be entitled to charge interest on that sum at the rate of 2%
above the base lending rate from time

 

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    to time of Australia and New Zealand Banking Group Limited. Such interest
shall accrue on a daily basis and be compounded quarterly.

4.3   Following the provision of reasonable notice by the Licensor to the
Licensee, Licensee shall permit Licensor by its duly authorised representatives
once a Year, on a date and time (to be during business hours) agreed between
Licensor and Licensee to enter upon any premises where the Goods are being
manufactured, packaged or stored or from which the Services are being provided
and to have access to (including the right to review and take copies of) all
relevant books, records, accounts and other information necessary or appropriate
to enable Licensor to verify that Licensee is in due compliance with its
obligations under this Deed, and comply promptly with all instructions and
directions issued by Licensor (or its representatives) on the basis of such
inspection to ensure such compliance. Such records shall, for the avoidance of
doubt, constitute Confidential Information of Licensee (or any Sub-Licensee, as
appropriate).

4.4   If at any time an applicable law obliges Licensee to make a deduction or
withholding in respect of Taxes from a payment to Licensor under this Agreement,
Licensee:

    (a)   must notify Licensor in writing of the obligation promptly after
Licensee becomes aware of it;       (b)   must ensure that the deduction or
withholding does not exceed the minimum amount required by law;       (c)   must
pay to the relevant Government Agency on time the full amount of the deduction
or withholding and promptly deliver to Licensor a copy of any receipt,
certificate or other proof of payment; and       (d)   must pay to Licensor, at
the time that the payment to Licensor is due, an additional amount that ensures
that, after the deduction or withholding is made, Licensor receives a net sum
equal to the sum that it would have received if the deduction or withholding had
not been made.

5.   INTELLECTUAL PROPERTY RIGHTS

5.1   Ownership

    (a)   Licensor warrants that it is the registered owner of the Trade Marks
and the Domain Names listed in Schedules 1 and 4 and can, without breach of any
relevant laws or agreements to which it is a party, enter into, and perform,
this Deed.       (b)   Licensee acknowledges Licensor’s ownership of and/or
right to license the Trade Marks and the Domain Names, and acknowledges that
Licensee’s use of the Trade Marks and Domain Names pursuant to this Deed shall
not give Licensee any right, title or interest in or to the same, save the right
to use the same as expressly permitted by this Deed. Without limitation to the
foregoing, Licensee acknowledges and agrees that all goodwill in or associated
with the Trade Marks and the Domain Names, including any goodwill generated or
arising by or through Licensee’s activities under this Deed, shall accrue for
the benefit of and shall belong exclusively to Licensor.

5.2   Infringement of the Trade Marks and Domain Names

    (a)   Licensee shall as soon as reasonably possible give written notice to
Licensor of any activity which amounts to an infringement of, challenge to or
unauthorised use of, any of the Trade Marks or Domain Names which shall come to
its notice (including, without limitation, any activity or proceedings commenced
in which the ownership,

 

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      validity or registration of any of the Trade Marks or Domain Names is
called into question) providing all details available to Licensee concerning
such activity.       (b)   Licensor shall have conduct of all legal proceedings
relating to the Trade Marks or Domain Names and shall in its sole discretion
take any action as it thinks fit, but shall not institute any action (including
instituting or defending legal proceedings) in respect of any infringement,
challenge or unauthorised use of any of the Trade Marks or Domain Names, where,
in Licensor’s reasonable opinion, formed in good faith and having regard to the
interests of Licensee and all other relevant circumstances, the infringement,
challenge or unauthorised use does not materially adversely affect Licensee’s
exercise of the rights and licences granted under this Deed. The Licensor must
keep the Licensee informed of any action or, where reasonably possible, proposed
action to be taken by the Licensor as contemplated by this clause.       (c)  
Where Licensor takes any action in respect of the infringement of, challenge to
or unauthorised use of, any of the Trade Marks or Domain Names, Licensee
acknowledges that Licensor shall be solely responsible for the conduct of such
action, including the prosecution, defence or settlement of any legal
proceedings, and Licensee shall make no admission as to liability and shall not
agree to any settlement or compromise of any action or legal proceedings, and
shall at Licensor’s expense (subject to Licensor’s prior written approval of the
same) give Licensor all such assistance as Licensor may reasonably require in
connection therewith. The Licensor must keep the Licensee informed, to the
extent reasonably possible or practicable, of the progress of any such action or
proceedings.       (d)   Should Licensor, within twenty-one (21) days of
becoming aware of the infringement, decide not to take any action in respect of
infringement of, challenge to or unauthorised use of, any of the Trade Marks or
Domain Names of which it is advised by Licensee pursuant to Clause 5.2(a), it
shall so notify Licensee in which event Licensee shall be entitled, at its sole
cost, to take such action (including instituting or defending legal proceedings)
as it thinks fit. Licensor shall, at Licensee’s expense, give Licensee all such
assistance as Licensee may reasonably require in connection with such action and
Licensee shall keep Licensor informed of any progress in respect of the same and
shall not make any admission as to liability or agree to any settlement or
compromise of any action or legal proceedings without Licensor’s prior written
consent not to be unreasonably withheld or delayed.

6.   LIABILITY

6.1   To the maximum extent permitted by law, this Clause 6 prevails over all
other Clauses and sets forth the entire liability of Licensor, and the sole and
exclusive remedies of Licensee in respect of the performance, non-performance,
purported performance or delay in performance of this Deed or otherwise in
relation to this Deed or the entering into or performance of this Deed.

6.2   Nothing in this Deed shall exclude or limit either party’s liability:
(i) for fraud or the tort of deceit; (ii) for death or personal injury caused by
its breach of duty; (iii) for any other liability which cannot be excluded or
limited by applicable law.

6.3   Save as provided in Clause 6.2 and to the maximum extent permitted by law,
Licensor shall not have any liability for any loss of actual or anticipated
profit (including loss of profits on contracts), loss of the use of money, loss
of anticipated savings, loss of opportunity, loss of goodwill, loss of
reputation or for any indirect or consequential loss or damage (whether any such
loss or damage was foreseen, foreseeable, known or otherwise) arising out of or
relating to this Deed or any collateral contract (including any liability
expressly provided for under

 

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    this Deed or arising by reason of the invalidity or unenforceability of any
term of this Deed), whether such liability arises in contract, tort (including
negligence) or otherwise.

7.   CONFIDENTIALITY

7.1   Each party shall maintain the confidentiality of the other party’s
Confidential Information and shall not, without the prior written consent of the
other, use, disclose, copy or modify the other party’s Confidential Information
(or permit others to do so) other than as necessary for the performance of its
rights and obligations under this Deed.

7.2   Each party undertakes to disclose the other party’s Confidential
Information only to those of its directors, officers, employees, agents and
contractors to whom, and to the extent to which, such disclosure is necessary
for the performance of its rights and obligations under this Deed and to procure
that such persons are made aware of and agree in writing to observe the
obligations in this Clause 7.

7.3   Each party shall give notice to the other of any unauthorised use or
disclosure, or misuse, theft or other loss, of the other party’s Confidential
Information immediately upon becoming aware of the same.

7.4   The provisions of this Clause 7 shall not apply to information which:

    (a)   is or comes into the public domain through no fault of the recipient,
its directors, officers, employees, agents or contractors;       (b)   is
lawfully received from a third party free of any obligation of confidence at the
time of its disclosure;       (c)   was (demonstrably) independently developed
by the recipient, its directors, officers, employees, agents or contractors;    
  (d)   is required by law, by court or governmental order to be disclosed
provided that, to the extent permitted by law, prior to any disclosure, the
recipient notifies the disclosing party and, at the disclosing party’s request
and cost, assists the disclosing party in opposing any such disclosure.

7.5   The existence and terms of this Deed are confidential and may not be
disclosed by either party without the other party’s prior written consent.

8.   ASSIGNMENT AND SUB-LICENSING

8.1   Licensor may freely assign or otherwise transfer or deal with any or all
of its rights or obligations under this Deed without recourse to Licensee save
that Licensor shall ensure that any purchaser of the Trade Marks or Domain Names
shall take an assignment of this Deed.

8.2   Save as provided in clause 8.3 and 8.4, Licensee shall not assign,
transfer, encumber or otherwise deal with or transfer any of its rights or
obligations under this Deed without the prior written consent of Licensor.

8.3   Licensee may sub-license to any of its Holding Companies, Subsidiaries or
Subsidiaries of its Holding Company any or all of the rights and licences
granted to it under this Deed provided that:

    (a)   Licensee obtains prior written consent from Licensor which consent
must not be unreasonably withheld if:

 

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  (i)   the Licensor is satisfied that the sub-licensee is a respectable and
financially responsible person; and     (ii)   the sub-licensee agrees to comply
with the terms of this Deed and agrees that the sub-licence will terminate
immediately upon the sub-licensee ceasing to be a Holding Company or Subsidiary
of the Licensee;

    (b)   the appointment of any sub-licensee is on terms which specifically
afford to Licensor no less protection of its proprietary interests than that
afforded by the terms of this Deed and which ensure that the scope of rights and
licences granted to sub-licensees does not exceed the scope of rights and
licences granted to Licensee under this Deed; and       (c)   all such
sub-licences shall include a term (i) requiring Licensee to notify Licensor of
any breach of the sub-licence by sub-licensee as soon as Licensee becomes aware
of the same; and (ii) permitting Licensee, at Licensor’s option, a right to
terminate or to assign the sub-licence to Licensor, on termination of this Deed.

8.4   Notwithstanding any other provisions in this Deed, Licensee may
sub-licence any or all of the rights and licences granted to it under this Deed
to Borders Australia, Borders NZ, Borders Singapore and/or Spine Newco
(NZ) Limited Company No. 2010994 as the owner of Borders NZ without the consent
of the Licensor and Licensor agrees that Spine Newco (NZ) Limited Company
No. 2010994, Borders NZ, Borders Australia and Borders Singapore shall have the
benefit of the rights and licences granted under this Deed as if they were the
Licensee provided that the Licensee procures the compliance by those parties
with the terms of this Deed and agrees that the sub-licence will terminate
immediately upon any sub-licensee ceasing to be a Holding Company or Subsidiary
of the Licensee.

8.5   Either party may grant to its financiers from time to time (or any
security trustee on their behalf) Encumbrances over their rights under this
agreement.

9.   TERM AND TERMINATION

9.1   This Deed shall commence on the Effective Date and, unless earlier
terminated in accordance with this Clause 9, shall continue in full force and
effect without limit of period.

9.2   Licensor may terminate this Deed immediately at any time by written notice
to Licensee if:

    (a)   Licensee commits a material breach of this Deed (including any breach
of its payment obligations under this Deed) which is not remediable, or if
remediable, it has failed to remedy within thirty (30) days of receiving written
notice requiring it to do so;       (b)   the Transition Services Agreement is
terminated in accordance with Clauses 12.5 or 12.7 of that agreement;       (c)
  the Purchasing Agreement is terminated in accordance with Clause 13.2 or 13.4
of that agreement;       (d)   the Sale and Purchase Agreement is terminated due
to an uncured material breach of that agreement;       (e)   an obligation
arises on the part of a member of the Seller’s Group to make payment (which, for
the avoidance of doubt, shall not include any payment made by a member of the
Seller’s Group in connection with the granting of a release of the relevant
member of the Seller’s Group from any Intra-Group Guarantee) under an
Intra-Group Guarantee provided that the Licensor may not terminate this Deed
pursuant to this

 

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      clause 9.2(e) if relevant member of the Seller’s Group is paid by a
Purchaser under the indemnity in paragraph 2 of Schedule 3 to the Sale and
Purchase Agreement;       (f)   Licensee ceases to do business, becomes unable
to pay its debts as they fall due, becomes or is deemed insolvent, has a
receiver, manager, administrator, administrative receiver or similar officer
appointed in respect of the whole or any part of its assets or business, makes
any composition or arrangement with its creditors, takes or suffers any similar
action in consequence of debt, an order or resolution is made for its
dissolution or liquidation (other than for the purpose of solvent amalgamation
or reconstruction), enters into liquidation whether compulsorily or voluntarily
or any equivalent or similar action or proceeding is taken or suffered in any
jurisdiction; or shall cease to carry on business.       (g)   Licensee
challenges or disputes the validity or ownership of, or takes any step
inconsistent with, any of the Trade Marks or Domain Names, including by taking
any action either directly or indirectly to oppose the renewal of or to cancel
any registration of the Trade Marks or Domain Names;       (h)   Licensee ceases
to use the Trade Marks or Domain Names in relation to the Goods and Services in
the Territory for a continuous period of twelve (12) months;       (i)  
Licensee acts in a manner which results in material damage to the reputation of
the Trade Marks or Domain Names;       (j)   at any time there is a change in
Control of any of Borders Australia, Borders NZ, Borders Singapore, ARW or any
Purchaser, other than as contemplated by any Transaction Document or where:

  (i)   the relevant change of Control does not result in a Provider Competing
Business acquiring Control of any of Borders Australia, Borders NZ, Borders
Singapore, ARW or any Purchaser; or     (ii)   where the Provider has provided
its prior written consent to the change in Control (which consent must not be
unreasonably withheld to the extent the change of Control is not to a person
referred to in paragraph (i) above); or

    (k)   a Provider Competing Business acquires (directly or indirectly) a
legal or beneficial interest of 20% or more in any of Borders Australia, Borders
NZ, Borders Singapore, ARW or any Purchaser without the Provider’s prior written
consent;       (l)   any Sub-Licensee either (i) does any act or fails to take
any action where such act or omission would constitute a material breach of this
Deed if taken by, or was the responsibility of (as appropriate), Licensee; or
(ii) commits a material breach of its sub-licence which is not remediable or, if
remediable, Sub-Licensee has failed to remedy within thirty (30) days of
Licensee notifying Licensor of the relevant breach; or       (m)   the Trade
Marks are used in less than fifteen (15) Borders Stores.

9.3   Upon expiry or termination of this Deed for any reason:

    (a)   all rights and licences granted to Licensee under this Deed shall
within 90 days cease immediately, and Licensee shall, subject to the remainder
of this Clause 9.3, cease all activities authorised by this Deed and Licensee
shall not thereafter use or apply any of the Domain Names or any of the Trade
Marks or any marks or domain names

 

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      which are, substantially identical with, or deceptively similar to, the
Domain Names or the Trade Marks and shall procure that any Sub-Licensee(s) do
likewise;     (b)   Licensee shall ensure that all references to the Trade Marks
or Domain Names on its or its Sub-Licensee’s premises, vehicles, business
documents or other documents or materials of any nature are removed and shall
remove any reference to the Trade Marks in its company and/or trading name; and
    (c)   Subject to clause 7.4, each party shall promptly return and procure
the return to the other party, or, at the other party’s direction, destroy, all
property of the other party (including without limitation, all Confidential
Information) then in its possession, custody or control and shall not retain any
copies of the same.

9.4   Termination of this Deed for any reason shall be without prejudice to any
rights or remedies available to, or any obligations or liabilities accrued to,
either party at the effective date of termination and shall not affect any
sub-licences granted by Licensee pursuant to the terms of this Deed.

9.5   If any Trade Mark is not used in either New Zealand or Australia for a
twelve month period, the licence for that Trade Mark in the applicable country
shall cease.

10.   NOTICES

10.1   Any notice, demand or other communication (“Notice”) to be given by one
party to the other party under this Deed shall be in writing and signed by or on
behalf of the party giving it. It shall be served by sending it by fax to the
number set out in Clause 10.2 or delivering it by hand, or sending it by
pre-paid recorded delivery or special delivery, to the address set out in Clause
10.2 and in each case marked for the attention of the relevant addressee set out
in Clause 10.2 (or as otherwise notified from time to time in accordance with
the provisions of this Clause 10). Any notice so served by hand, fax or post
shall be deemed to have been duly given:

  (a)   in the case of delivery by hand, when delivered;     (b)   in the case
of fax, at the time of transmission;

    provided that in each case where delivery by hand or by fax occurs after 6pm
on a Business Day or on a day which is not a Business Day, service shall be
deemed to occur at 9am on the next following Business Day.       References to
time in this clause are to local time in the country of the addressee.

10.2   The address and fax numbers of the parties for the purpose of Clause 10.1
are as follows:

     
Licensor
   
 
   
Address:
  100 Phoenix Drive
 
  Ann Arbor MI 48108
 
  United States of America
 
   
Fax:
  +1 734 477 1370
 
   
For the attention of:
  General Counsel
 
   
with a copy to:
   
Address:
  Baker & McKenzie
 
  Level 27, 50 Bridge Street,

 

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  Sydney NSW 2000
Fax:
  +61 2 9225 1595
 
   
For the attention of:
  Steven Glanz
 
   
Licensee
   
 
   
Address:
  Level 14, 379 Collins Street
 
  Melbourne VIC 3000
 
  Australia
 
   
Fax:
  +61 3 8623 1149
 
   
For the attention of:
  the Managing Director
 
   
With a copy to:
  Clayton Utz
 
   
Address:
  Level 19, 1 O’Connell Street
 
  Sydney NSW 2000
 
   
Fax:
  +61 2 8220 6700
 
   
For the attention of:
  Philip Kapp

10.3   A party may notify the other party to this Deed of a change to its name,
relevant addressee, address or fax number for the purposes of this Clause 10
provided that, such notice shall only be effective on:

  (a)   the date specified in the notice as the date on which the change is to
take place; or     (b)   if no date is specified or the date specified is less
than five (5) Business Days after the date on which notice is given, the date
following five (5) Business Days after notice of any change has been given.

10.4   In proving such service it shall be sufficient to prove that the envelope
containing such notice was properly addressed and delivered either to the
address shown thereon or that the facsimile transmission was made and a
facsimile confirmation report was received, as the case may be.

11.   NO PARTNERSHIP OR AGENCY       No provision of this Deed creates a
partnership between the parties or makes a party the agent of the other party
for any purpose. A party has no authority to bind, to contract in the name of or
to create a liability for the other party in any way or for any purpose and
neither party shall hold itself out as having authority to do the same.

12.   INVALID OR UNENFORCEABLE PROVISIONS

12.1   If a provision of this Deed is invalid or unenforceable in a
jurisdiction:

  (a)   it is to be read down or severed in that jurisdiction to the extent of
the invalidity or unenforceability; and

 

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  (b)   it does not affect the validity or enforceability of:

  (i)   that provision in another jurisdiction; or

  (ii)   the remaining provisions.

13.   WAIVER AND EXERCISE OF RIGHTS

  (a)   A waiver by a party of a provision or of a right under this Deed is
binding on the party granting the waiver only if it is given in writing and is
signed by the party or an officer of the party granting the waiver.     (b)   A
waiver is effective only in the specific instance and for the specific purpose
for which it is given.     (c)   A single or partial exercise of a right by a
party does not preclude another or further exercise of that right or the
exercise of another right.     (d)   Failure by a party to exercise or delay in
exercising a right does not prevent its exercise or operate as a waiver.

14.   AMENDMENT

14.1   This Deed may be amended only by a document signed by all parties.

15.   COUNTERPARTS

15.1   This Deed may be signed in counterparts and all counterparts taken
together constitute one document.

16.   FURTHER ASSURANCES

16.1   Each party must, at its own expense, whenever requested by another party,
promptly do or arrange for others to do everything reasonably necessary to give
full effect to this Deed and the transactions contemplated by this Deed.

17.   ASSIGNMENT

17.1   Subject to clause 17.2, a party must not transfer, assign, create an
interest in or deal in any other way with any of its rights under this Deed
without the prior written consent of the other parties.

17.2   Either party may grant to its financiers from time to time (or any
security trustee on their behalf) Encumbrances over their respective rights
under this Agreement.

18.   ENTIRE AGREEMENT

18.1   This Deed represents the whole and only agreement between the parties in
relation to the Trade Marks and the Domain Names and supersedes any previous
agreement (whether written or oral) between all or any of the parties in
relation to the subject matter of any such document save that nothing in this
Deed shall exclude any liability for, or remedy in respect of, fraudulent
misrepresentation.

19.   RIGHTS CUMULATIVE

19.1   The rights, remedies and powers of the parties under this Deed are
cumulative and not exclusive of any rights, remedies or powers provided to the
parties by law.

 

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20.   CONSENTS AND APPROVALS

20.1   A party may give its approval or consent conditionally or unconditionally
or withhold its approval or consent in its absolute discretion unless this Deed
expressly provides otherwise.

21.   SERVICE OF PROCESS

21.1   Each party agrees that a document required to be served in proceedings
about this Deed may be served:

  (a)   if originating process or a subpoena to be served on a company or
registered body by being sent by post to or left at its registered office, and
in all other cases at its address for service of notices under Clause 10; or    
(b)   in any other way permitted by law.

22.   CURRENCY CONVERSION

22.1   For the purpose of converting amounts specified in one currency into
another currency where required, the rate of exchange to be used in converting
amounts specified in one currency into another currency shall be the New York
closing rate for exchanges between those currencies quoted in the Wall Street
Journal for the nearest Business Day for which that rate is so quoted prior to
the date of the conversion.

23.   GOVERNING LAW

23.1   This Deed is governed by the laws of New South Wales, Australia.

Executed as a deed.
Signed for and on behalf of
Borders Properties Inc.
by its duly authorised representative
in the presence of:

           
 
       
Signature of witness
  Signature of authorised representative    
 
         
 
       
Name of witness (please print)
  Name of authorised representative    
 
  (please print)    

         
Signed sealed and delivered for and on behalf of Spine Newco Pty Limited ACN 127
667 314 by its Attorney under a Power of Attorney dated 4 June 2008, and the
Attorney declares that the Attorney has not received any notice of the
revocation of such Power of Attorney, in the presence of:
       
 
       

 

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  Signature of Attorney    
 
         
 
       
Signature of Witness
  Name of Attorney in full    
 
         
 
Name of Witness in full
       

 

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SCHEDULE 1
THE TRADE MARKS

                          Country   Mark   Class     Reg No.     Renewal Date
Australia
  BORDERS     42       613578     13/10/13  
Australia
  BORDERS     42       706042     09/04/16  
Australia
  BORDERS EXPRESS     35       1094083     10/01/16  
Australia
  BORDERS OUTLET     35       1094082     10/01/16  
Australia
  BORDERS REWARDS     35       1112963     10/05/16  
New Zealand
  BORDERS     42       230795     06/10/14  
New Zealand
  BORDERS     38       260777     10/04/17  
New Zealand
  BORDERS REWARDS     35       747673     09/11/15  
Singapore
  BORDERS     16       B801593     14/10/13  
Singapore
  BORDERS     9       801493     14/10/13  
Singapore
  BORDERS     42       3960/96     20/04/16  
Singapore
  BORDERS     35       T99/00633G     25/01/09  
Singapore
  BORDERS     42       T99/01339B     13/02/09

 

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SCHEDULE 2
GOODS AND SERVICES

A.   Services:

Retail book services, including the retailing of books, magazines, calendars,
stationery, pre-recorded books and newspapers; pre-recorded music in various
forms, DVDs, video cassettes, pre-recorded video in various forms and multimedia
and ancillary book search services;
Retail music services, including the retail of pre-recorded music in various
forms such as audio tapes and CDs;
Retail record store services, including the retail of pre-recorded video tape
and DVDs;
Retail mail order services, including books, magazines, calendars, stationery,
pre-recorded books, CD-ROMS, pre-recorded video tapes, DVDs, pre-recorded music
and records through catalogues and newsletters;
Dine-in and carry-out restaurant services; and
Frequent patron programs.

B.   Goods

Music-related products
Tote bags
Electronic gift cards

 

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SCHEDULE 3
LICENSOR’S CRITERIA

 

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SCHEDULE 4
THE DOMAIN NAMES

      Country   Domain Name Australia  
borderstores.com.au
   
 
Australia  
borders.com.au
   
 
Australia  
bordersexpressaustralia.com.au
   
 
Australia  
bordersaustralia.com.au
   
 
Australia  
bordersgiftcentre.com.au
   
 
Australia  
bordersrewards.com.au
   
 
Australia  
bordersnewzealand.com.au
   
 
New Zealand  
borders.co.nz
   
 
New Zealand  
bordersexpress.co.au
   
 
New Zealand  
bordersexpressnz.co.nz
   
 
New Zealand  
giftcentre.co.nz
   
 
New Zealand  
bordersrewards.co.nz
   
 
Singapore  
borders.sg
   
 
Singapore  
borders.com.sg
   
 
Singapore  
bordersrewards.sg
   
 
Singapore  
bordersrewards.com.sg
   
 
Singapore  
bordersstores.com.sg